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Wouldn't this scenario also apply under conventional property tax regimes? Is or isn't this already happening in high property tax states? What is the specific

Wouldn't this scenario also apply under conventional property tax regimes? Is or isn't this already happening in high property tax states? What is the specific bad effect you are invoking, and is it having the effects you predict in places where the effective tax rate on land is already fairly high?

WillPostForFood 1y ago
It typically won't apply under conventional property tax regimes. Two common protection are: 1: your rate is based on a sampling of similar houses, not the newest most expensive neighboring house. 2: your rate of increase is capped, so you are insulated (not immune) from rapid change
- larsiusprime 1y ago
  I mean couldn't you do the same thing in a property tax where the buildings are exempted (ie, a Land value tax)?
  - bpt3 1y ago
    Sure, it's possible in theory. The purpose of a LVT is to capture as much property value for the government as possible. Anyone advocating for it is unlikely to recommend exemptions that would interfere with that purpose.
bpt3 1y ago
As I understand it (having it explained to me by Georgists and doing a fair amount of research myself), the value of the land is determined by "best and highest use". That is such a nebulous term that can be manipulated in so many ways (e.g. the example I provided above or zoning changes) that it doesn't seem feasible to use as the basis for any government policy. And to answer your questions, no this wouldn't apply under conventional property tax regimes because overimprovements have no impact on the value of neighboring lots or existing improvements, no this is not already happening in high tax states because the value of the land is (supposed to be) set by market rates and the land value and improvement values are decoupled in the assessment. In practice, assessors do a poor job of this (see the article in question), which is why I have no interest in giving them even more control.
- Based-A 1y ago
  > the value of the land is determined by "best and highest use" Absolutely valid to say that "best and highest use" is vague and untrustworthy at best, but it's said this way to avoid getting trapped in the weeds of what exactly it means. Broadly speaking, "best and highest use" is entirely contextual to the land in question. The "best" use for 40 acres of nutrient-rich soil an hour away from the nearest city is going to be agriculture. While a plot of land smack dab in the middle of mainstreet in a rural town would probably be a commercial building or a mixed use building offering an apartment(s) above a shop or restaurant of some kind. Downtown in a metropolis would be some multi-storied residential or business/commercial building, while the middle of nowhere filled with trees is forestry and maybe mining. Everything is contextual. Who determines the "best" use case is usually delegated to a free market of land value appraisers. It seems counter-intuitive to leave so much leeway at this part, but consider that land value taxation is attempting to best capture the true value of the land. Meaning that land owners want the lowest possible valuation of their land to pay less taxes, but since land can't be hidden, it's (in theory) hard to fake the value of your land. I can't argue my house in an urban community is relatively worthless when A) every neighboring piece of land will have more or less the same value, and B) everyone can see where the land my house is located and what's around it. This plays into your first comment, if your neighbor adds a bunch of improvements to his land, if you and your other neighbors gain benefit from those improvements (they opened a store, or a school, or installed a modern sewer system or clean drinking water system, or created a private land reserve, and you and your property have access to these), then yes your land would see an increase in value as a result. However, these types of improvements are rarely the case, and are mostly handled by some form of government. The same with a neighbor "overpaying", since in theory they wouldn't "overpay", they'd just be paying the value that the land is assessed at. Alternatively, if your neighborhood is run down compared to something brand new and shiny, and all of your neighbors decide to clean things up and do renovations and increase the overall perceived value of the neighborhood, then yes you'd see your property value increase as a result of others actions. But this is no different than when communities go through "urban renewal" and other programs that artificially increase the communities' value as a result of private and public funding.
  - 1y ago

WillPostForFood 1y ago

It typically won't apply under conventional property tax regimes. Two common protection are: 1: your rate is based on a sampling of similar houses, not the newest most expensive neighboring house. 2: your rate of increase is capped, so you are insulated (not immune) from rapid change

larsiusprime 1y ago
I mean couldn't you do the same thing in a property tax where the buildings are exempted (ie, a Land value tax)?
- bpt3 1y ago
  Sure, it's possible in theory. The purpose of a LVT is to capture as much property value for the government as possible. Anyone advocating for it is unlikely to recommend exemptions that would interfere with that purpose.

bpt3 1y ago

As I understand it (having it explained to me by Georgists and doing a fair amount of research myself), the value of the land is determined by "best and highest use". That is such a nebulous term that can be manipulated in so many ways (e.g. the example I provided above or zoning changes) that it doesn't seem feasible to use as the basis for any government policy. And to answer your questions, no this wouldn't apply under conventional property tax regimes because overimprovements have no impact on the value of neighboring lots or existing improvements, no this is not already happening in high tax states because the value of the land is (supposed to be) set by market rates and the land value and improvement values are decoupled in the assessment. In practice, assessors do a poor job of this (see the article in question), which is why I have no interest in giving them even more control.

Based-A 1y ago
> the value of the land is determined by "best and highest use" Absolutely valid to say that "best and highest use" is vague and untrustworthy at best, but it's said this way to avoid getting trapped in the weeds of what exactly it means. Broadly speaking, "best and highest use" is entirely contextual to the land in question. The "best" use for 40 acres of nutrient-rich soil an hour away from the nearest city is going to be agriculture. While a plot of land smack dab in the middle of mainstreet in a rural town would probably be a commercial building or a mixed use building offering an apartment(s) above a shop or restaurant of some kind. Downtown in a metropolis would be some multi-storied residential or business/commercial building, while the middle of nowhere filled with trees is forestry and maybe mining. Everything is contextual. Who determines the "best" use case is usually delegated to a free market of land value appraisers. It seems counter-intuitive to leave so much leeway at this part, but consider that land value taxation is attempting to best capture the true value of the land. Meaning that land owners want the lowest possible valuation of their land to pay less taxes, but since land can't be hidden, it's (in theory) hard to fake the value of your land. I can't argue my house in an urban community is relatively worthless when A) every neighboring piece of land will have more or less the same value, and B) everyone can see where the land my house is located and what's around it. This plays into your first comment, if your neighbor adds a bunch of improvements to his land, if you and your other neighbors gain benefit from those improvements (they opened a store, or a school, or installed a modern sewer system or clean drinking water system, or created a private land reserve, and you and your property have access to these), then yes your land would see an increase in value as a result. However, these types of improvements are rarely the case, and are mostly handled by some form of government. The same with a neighbor "overpaying", since in theory they wouldn't "overpay", they'd just be paying the value that the land is assessed at. Alternatively, if your neighborhood is run down compared to something brand new and shiny, and all of your neighbors decide to clean things up and do renovations and increase the overall perceived value of the neighborhood, then yes you'd see your property value increase as a result of others actions. But this is no different than when communities go through "urban renewal" and other programs that artificially increase the communities' value as a result of private and public funding.
- 1y ago