4 ms·

land value tax is a regressive tax on middle class homeowners that would ultimately benefit the wealthy. bc middle class single family homeowners would not be a

land value tax is a regressive tax on middle class homeowners that would ultimately benefit the wealthy. bc middle class single family homeowners would not be able to afford the tax increase or afford the construction to fully utilize the property, which would force them to sell to investors who could afford it. terrible idea. not to mention the political debates/decisions over what constitutes "fully utilized". what about public parks? urban agriculture? so many exceptions. this would be a nightmare policy to retrofit. maybe a good idea if we had started there first, but we didn't. it's also an ignorant diagnosis of the issue. land values and speculation is not the issue in my location (burlington, vermont) where we have a housing crisis. there are not many vacant lots (i'm guessing maybe a dozen in the entire municipality). it's just an overly simplified solution to a complex problem. here is what i believe to be the superior solution: https://www.npr.org/2024/10/07/nx-s1-5119633/housing-crisis-solution-public-housing-mixed-income-maryland https://www.npr.org/2024/10/07/nx-s1-5119633/housing-crisis-...

jimlawruk 1y ago
> land value tax is a regressive tax on middle class homeowner Not if you make the tax progressive. The first 200K could be tax free, for example. Primary residences pay a lower % of the value than 2nd and 3rd homes. I bet there are a ton empty vacation homes in Vermont. It can be applied gradually not to shock the system.
- nerdsniper 1y ago
  That would somewhat defeat the purpose of the LVT. The point is to force landowners to develop their land. A "fix" would be to make access to capital easier. Optimum development in many areas isn't necessarily a large mid-rise or high-rise. For most areas, the maximum that the roads and other utilities could support would be dense townhomes, triplexes or quadplexes. Outside of the very highest-demand areas, the LVT would mainly encourage land owners to build additional units on under-utilized square footage or build up a bit. Increasing housing in an area necessarily requires access to capital - so that's what should be provided. It's not perfectly fair to everyone; it would enrich current landowners. But lower-income/wealth individuals would also benefit because they'd get access to more affordable housing in the areas that they need to live.
  - jimlawruk 1y ago
    > The point is to force landowners to develop their land. The point is to ensure landowners don't sit on land. If taxes go up on your vacation home that you spend two weeks a year in, you will be incentivized to sell it or rent it out more. Both of which benefits the public at large. Not to mention it is a fairer tax than an income tax or wealth tax.
    - greenie_beans 1y ago
      most of the vacation homes in vermont are in rural areas. so they wouldn't get penalized by the tax if the purpose of LVT is to increase taxes in urban areas.
  - greenie_beans 1y ago
    > But lower-income/wealth individuals would also benefit because they'd get access to more affordable housing in the areas that they need to live. how does this create affordable housing? taxes are only one piece of why housing is so expensive. the landowners would need a return on their investment, which they would get by raising rent. this is the core problem imo -- costs for construction and labor and permitting and taxes requiring higher rent in order to make the investment worthwhile. the offset of lower taxes will absolutely not pay for the cost to "fully utilize" the property.
    - some_random 1y ago
      The theory here is that people who aren't getting "enough value" out of the land will be forced to sell to developers who will turn them into, among other things, houses.
      - greenie_beans 1y ago
        yes i know, that is the "theory" in a logical vacuum. that just reinforces my original point that it will hurt the middle class and only benefit wealthy people. especially since the tax would make the land cheaper (in LVT theory), so when you are forced to sell it you're gonna have to sell at a lower price than you'd like (that is the entire logic of LVT: make land cheaper to encourage more building). you can't just wave a wand to build housing if the taxes change to LVT. we all know that developers don't build affordable housing. the margins are much more attractive to build luxury housing...it's the incentive structure. housing is expensive to build, and those investors will require an ROI. terrible idea! the more you look at it, the worse and worse it sounds.
- ljlolel 1y ago
  It’s not application of the tax but (relatively) sudden increases in land value that would price out force out neighborhoods
- sokoloff 1y ago
  I don’t think a land value tax is a good idea, because I’ve never heard a satisfactory way to objectively value the land as-if unimproved. But making you and I pay a different amount of LVT on the same exact piece of land definitely makes it a worse idea in my view.
  - eitally 1y ago
    Afaict, Prop 13 does this in California. Property tax is based on assessed value, and that assessed value isn't just for the improvements, but also the underlying land. So the fact that I pay about $20k/yr in property tax and my back-fence neighbor pays about $3500 (because we purchased in 2016 and they inherited the 1954 home from original owner parents) must indicate that it's not just the improvements that are covered by Prop 13. I had never thought about this before, but at least in California a potential compromise around LVT would be the modify Prop 13 to allow land values to appreciate at market rates while keeping appreciating of improvements capped.
    - sokoloff 1y ago
      There is a market for land plus improvements. What you actually paid in 2016 is presumably the market value of that combination. You probably referred to other similar parcels that had recently sold when contemplating your offer as well. It’s trying to figure out “what is the land alone under these improvements worth?” that has no market signal to use as a reference (or an extremely weak signal in areas where unimproved lots do sell on the open market). If you paid $1.5M in 2016, was the land alone $500K, $1M, or $1.25M? If you disagreed with the city’s assessment of just your land, how would you find comps to argue your case?
      - eitally 1y ago
        I think you're missing my specific point that this is a Prop 13 issue. My land is valued at X and my neighbor's identical rectangular plot is valued at Y, why should that be the case if the land's objective value is identical (which it is, and neither X nor Y are close to current market value Z because Prop 13 caps appreciation at 2%/yr). No land value or improvements are revalued at market rate until they're sold, obviously, but two things are also true: 1) tax assessors almost never lower assessment values (anywhere), and 2) assessed values are completely detached from reality of the majority of properties in the state of California because of Prop 13. To answer your question, if I wanted to argue that the assessment of my land is too high, I'd likely not have a case because the assessor could just look at any comps that trades hands in the last few years and those would show assessments far higher than mine. But I absolutely could show that the assessment of others' properties are "too low" relative to my own (or mine to current) just by similarly looking back in time at homes that haven't traded hands in decades, if ever.
- greenie_beans 1y ago
  like i said, terrible idea with a million exceptions
- Aurornis 1y ago
  > Primary residences pay a lower % of the value than 2nd and 3rd homes. I think it's funny how every LVT discussion eventually comes back to some inclusion of other factors to adjust the taxes or provide exemptions, which starts to defeat the claimed purpose of a Land Value Tax. LVT is a concept that sounds amazing and novel in a vacuum, but starts to look less ideal in the real world. The people who think about it enough start to include factors like structure value and different exceptions for how the land is being used, which starts to look a lot like existing tax code in most places.
  - some_random 1y ago
    LVT sounds really smart when you exclusively talk about car parks in downtown NYC or whatever, it's not actually a good tax framework as soon as the conversation shifts from talking about low perceived social value commercial endeavors.
  - niam 1y ago
    > which starts to defeat the claimed purpose of a Land Value Tax. What do you think others claim the purpose of an LVT is? > every LVT discussion eventually comes back to some inclusion of other factors to adjust the taxes or provide exemptions This argument seems only to follow from a belief that carving exceptions out of policy here is either: inherently bad, lends to a slippery slope towards badness, or is fundamentally incompatible with the professed aims of an LVT (hence my asking). I don't believe any of those are true, so this sounds to me an unfair indictment against the otherwise legitimate strategy of "keep what's good; change what's bad", which is practical and works for other policy all the time. While I'd scorn the complexity of our current tax code, I wouldn't do so on principle of exemptions being bad, but rather that we've made poor tradeoffs or struck a bad balance.
webstrand 1y ago
Yeah, no LVT proponent has successfully explained to me how it does not cause the erasure of urban or even suburban green spaces, be they public parks, private parks, gardens, etc. If a park increases neighboring land values, then the taxes incurred by the park go up without recompense to the owner (assuming the park is not held by the government).
- Nasrudith 1y ago
  I think you might be slightly confused. Wouldn't the issue be not that the parks themselves are expensive to the owner tax (not only is thr landscaping not that expensive, as LVT excludes your own improvements), but instead that they are effectively discouraged by increasing the tax on everyone adjacent and thus peversely encouraging NIMBYism of towards a common good by imposing a negative externality which does not exist otherwise? The issue wouldn’t be that it would add a tax burden upon the park owner, but that it turns operating a common good into a 'sadistic' act that pushes costs onto others. A LVT could thus accidentally wind up like a window tax in that it could wind up discouraging efficient improvements to human conditions out of a misguided attempt at improving perceived fairness.
- kfajdsl 1y ago
  How many private parks are there? Pretty much every one I've been to has been government run, other than small outdoor spaces next to private buildings and large pay for admission gardens that are usually way out in the boonies on the grounds of an old plantation or manor. I can't think of how a private, but still public-access, park survives without a rich benefactor eating the losses, even today.
  - greenie_beans 1y ago
    all of my favorite hiking areas in the birmingham, alabama area were privately owned. churches have public areas that you can enjoy as a non-member of the church. i'm sure we could think of more edit: oh i just realized a huge one in my daily life: the intervale in burlington is owned by the intervale center but the community garden is managed by the city's parks & rec. also there are a ton of public trails on that private property.
strbean 1y ago
The bottom 50% in terms of wealth in the US only own 10% of the land. How on earth is this a regressive tax? The top 10% own over 40% of the land. https://fred.stlouisfed.org/graph/?g=1KsUt https://fred.stlouisfed.org/graph/?g=1KsUt
- greenie_beans 1y ago
  how much of US land is housing? probably much less than 10% edit: yep https://www.visualcapitalist.com/america-land-use/ https://www.visualcapitalist.com/america-land-use/ amusing attempt at using data for an argument
  - strbean 1y ago
    What is the relevance of that? LVT is not exclusive to land with houses on it. > amusing attempt at using data for an argument Rude and unnecessary, and entertaining when your response seems to be a total non sequiter.
    - greenie_beans 1y ago
      i was responding to the "how on earth?" rudeness that i was given first. farmland, forests, etc owned by the top 10% isn't relevant to this debate. rural land (which is most of america) has nothing to do with urban housing policy. further, in my original comment that you responded to, i described succinctly the market dynamics that make this regressive to the middle class. the data you shared supports that. are you suggesting that the middle class doesn't own single family homes so it doesn't matter to them? because that is the point you are making if you don't realize that.

jimlawruk 1y ago

> land value tax is a regressive tax on middle class homeowner Not if you make the tax progressive. The first 200K could be tax free, for example. Primary residences pay a lower % of the value than 2nd and 3rd homes. I bet there are a ton empty vacation homes in Vermont. It can be applied gradually not to shock the system.

nerdsniper 1y ago
That would somewhat defeat the purpose of the LVT. The point is to force landowners to develop their land. A "fix" would be to make access to capital easier. Optimum development in many areas isn't necessarily a large mid-rise or high-rise. For most areas, the maximum that the roads and other utilities could support would be dense townhomes, triplexes or quadplexes. Outside of the very highest-demand areas, the LVT would mainly encourage land owners to build additional units on under-utilized square footage or build up a bit. Increasing housing in an area necessarily requires access to capital - so that's what should be provided. It's not perfectly fair to everyone; it would enrich current landowners. But lower-income/wealth individuals would also benefit because they'd get access to more affordable housing in the areas that they need to live.
- jimlawruk 1y ago
  > The point is to force landowners to develop their land. The point is to ensure landowners don't sit on land. If taxes go up on your vacation home that you spend two weeks a year in, you will be incentivized to sell it or rent it out more. Both of which benefits the public at large. Not to mention it is a fairer tax than an income tax or wealth tax.
  - greenie_beans 1y ago
    most of the vacation homes in vermont are in rural areas. so they wouldn't get penalized by the tax if the purpose of LVT is to increase taxes in urban areas.
- greenie_beans 1y ago
  > But lower-income/wealth individuals would also benefit because they'd get access to more affordable housing in the areas that they need to live. how does this create affordable housing? taxes are only one piece of why housing is so expensive. the landowners would need a return on their investment, which they would get by raising rent. this is the core problem imo -- costs for construction and labor and permitting and taxes requiring higher rent in order to make the investment worthwhile. the offset of lower taxes will absolutely not pay for the cost to "fully utilize" the property.
  - some_random 1y ago
    The theory here is that people who aren't getting "enough value" out of the land will be forced to sell to developers who will turn them into, among other things, houses.
    - greenie_beans 1y ago
      yes i know, that is the "theory" in a logical vacuum. that just reinforces my original point that it will hurt the middle class and only benefit wealthy people. especially since the tax would make the land cheaper (in LVT theory), so when you are forced to sell it you're gonna have to sell at a lower price than you'd like (that is the entire logic of LVT: make land cheaper to encourage more building). you can't just wave a wand to build housing if the taxes change to LVT. we all know that developers don't build affordable housing. the margins are much more attractive to build luxury housing...it's the incentive structure. housing is expensive to build, and those investors will require an ROI. terrible idea! the more you look at it, the worse and worse it sounds.
ljlolel 1y ago
It’s not application of the tax but (relatively) sudden increases in land value that would price out force out neighborhoods
sokoloff 1y ago
I don’t think a land value tax is a good idea, because I’ve never heard a satisfactory way to objectively value the land as-if unimproved. But making you and I pay a different amount of LVT on the same exact piece of land definitely makes it a worse idea in my view.
- eitally 1y ago
  Afaict, Prop 13 does this in California. Property tax is based on assessed value, and that assessed value isn't just for the improvements, but also the underlying land. So the fact that I pay about $20k/yr in property tax and my back-fence neighbor pays about $3500 (because we purchased in 2016 and they inherited the 1954 home from original owner parents) must indicate that it's not just the improvements that are covered by Prop 13. I had never thought about this before, but at least in California a potential compromise around LVT would be the modify Prop 13 to allow land values to appreciate at market rates while keeping appreciating of improvements capped.
  - sokoloff 1y ago
    There is a market for land plus improvements. What you actually paid in 2016 is presumably the market value of that combination. You probably referred to other similar parcels that had recently sold when contemplating your offer as well. It’s trying to figure out “what is the land alone under these improvements worth?” that has no market signal to use as a reference (or an extremely weak signal in areas where unimproved lots do sell on the open market). If you paid $1.5M in 2016, was the land alone $500K, $1M, or $1.25M? If you disagreed with the city’s assessment of just your land, how would you find comps to argue your case?
    - eitally 1y ago
      I think you're missing my specific point that this is a Prop 13 issue. My land is valued at X and my neighbor's identical rectangular plot is valued at Y, why should that be the case if the land's objective value is identical (which it is, and neither X nor Y are close to current market value Z because Prop 13 caps appreciation at 2%/yr). No land value or improvements are revalued at market rate until they're sold, obviously, but two things are also true: 1) tax assessors almost never lower assessment values (anywhere), and 2) assessed values are completely detached from reality of the majority of properties in the state of California because of Prop 13. To answer your question, if I wanted to argue that the assessment of my land is too high, I'd likely not have a case because the assessor could just look at any comps that trades hands in the last few years and those would show assessments far higher than mine. But I absolutely could show that the assessment of others' properties are "too low" relative to my own (or mine to current) just by similarly looking back in time at homes that haven't traded hands in decades, if ever.
greenie_beans 1y ago
like i said, terrible idea with a million exceptions
Aurornis 1y ago
> Primary residences pay a lower % of the value than 2nd and 3rd homes. I think it's funny how every LVT discussion eventually comes back to some inclusion of other factors to adjust the taxes or provide exemptions, which starts to defeat the claimed purpose of a Land Value Tax. LVT is a concept that sounds amazing and novel in a vacuum, but starts to look less ideal in the real world. The people who think about it enough start to include factors like structure value and different exceptions for how the land is being used, which starts to look a lot like existing tax code in most places.
- some_random 1y ago
  LVT sounds really smart when you exclusively talk about car parks in downtown NYC or whatever, it's not actually a good tax framework as soon as the conversation shifts from talking about low perceived social value commercial endeavors.
- niam 1y ago
  > which starts to defeat the claimed purpose of a Land Value Tax. What do you think others claim the purpose of an LVT is? > every LVT discussion eventually comes back to some inclusion of other factors to adjust the taxes or provide exemptions This argument seems only to follow from a belief that carving exceptions out of policy here is either: inherently bad, lends to a slippery slope towards badness, or is fundamentally incompatible with the professed aims of an LVT (hence my asking). I don't believe any of those are true, so this sounds to me an unfair indictment against the otherwise legitimate strategy of "keep what's good; change what's bad", which is practical and works for other policy all the time. While I'd scorn the complexity of our current tax code, I wouldn't do so on principle of exemptions being bad, but rather that we've made poor tradeoffs or struck a bad balance.

webstrand 1y ago

Yeah, no LVT proponent has successfully explained to me how it does not cause the erasure of urban or even suburban green spaces, be they public parks, private parks, gardens, etc. If a park increases neighboring land values, then the taxes incurred by the park go up without recompense to the owner (assuming the park is not held by the government).

Nasrudith 1y ago
I think you might be slightly confused. Wouldn't the issue be not that the parks themselves are expensive to the owner tax (not only is thr landscaping not that expensive, as LVT excludes your own improvements), but instead that they are effectively discouraged by increasing the tax on everyone adjacent and thus peversely encouraging NIMBYism of towards a common good by imposing a negative externality which does not exist otherwise? The issue wouldn’t be that it would add a tax burden upon the park owner, but that it turns operating a common good into a 'sadistic' act that pushes costs onto others. A LVT could thus accidentally wind up like a window tax in that it could wind up discouraging efficient improvements to human conditions out of a misguided attempt at improving perceived fairness.
kfajdsl 1y ago
How many private parks are there? Pretty much every one I've been to has been government run, other than small outdoor spaces next to private buildings and large pay for admission gardens that are usually way out in the boonies on the grounds of an old plantation or manor. I can't think of how a private, but still public-access, park survives without a rich benefactor eating the losses, even today.
- greenie_beans 1y ago
  all of my favorite hiking areas in the birmingham, alabama area were privately owned. churches have public areas that you can enjoy as a non-member of the church. i'm sure we could think of more edit: oh i just realized a huge one in my daily life: the intervale in burlington is owned by the intervale center but the community garden is managed by the city's parks & rec. also there are a ton of public trails on that private property.

strbean 1y ago

The bottom 50% in terms of wealth in the US only own 10% of the land. How on earth is this a regressive tax? The top 10% own over 40% of the land. https://fred.stlouisfed.org/graph/?g=1KsUt https://fred.stlouisfed.org/graph/?g=1KsUt

greenie_beans 1y ago
how much of US land is housing? probably much less than 10% edit: yep https://www.visualcapitalist.com/america-land-use/ https://www.visualcapitalist.com/america-land-use/ amusing attempt at using data for an argument
- strbean 1y ago
  What is the relevance of that? LVT is not exclusive to land with houses on it. > amusing attempt at using data for an argument Rude and unnecessary, and entertaining when your response seems to be a total non sequiter.
  - greenie_beans 1y ago
    i was responding to the "how on earth?" rudeness that i was given first. farmland, forests, etc owned by the top 10% isn't relevant to this debate. rural land (which is most of america) has nothing to do with urban housing policy. further, in my original comment that you responded to, i described succinctly the market dynamics that make this regressive to the middle class. the data you shared supports that. are you suggesting that the middle class doesn't own single family homes so it doesn't matter to them? because that is the point you are making if you don't realize that.