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I used to have similar feelings, but then realized that this idea of ownership, where you can just sit back and relax and "own" something in perpetuity, is a fo

I used to have similar feelings, but then realized that this idea of ownership, where you can just sit back and relax and "own" something in perpetuity, is a fool's errand. Why? Because reality doesn't work that way. And I don't just mean social reality - physical reality doesn't either. Entropy will swallow up your property and your society, and the money you pay in taxes largely goes to things like keeping the roads clear, the sewers flowing, the criminals out of town, etc. The ability to sit back and relax secure in your property ownership is basically the ability to freeload off of everyone else who got there afterwards. I'm now much more in favor of a Georgist-style land value tax, where wealth taxes on natural monopolies like land are the only form of taxation. This biases the society toward action (if you don't make enough money to afford the opportunity cost of your continued ownership of the land, you lose it) and aligns incentives much more between renters, landlords, entrepreneurs, and municipal governments. I do think there needs to be standardized, publicized assessment methods that are independent of politics and local government employees. Otherwise there's too much of an incentive for governments to fudge the assessments to increase the tax revenues they can generate. Really, this is a task for a computer: run a regression on comparable sales and take human judgment out of it.

s5300 1y ago
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sokoloff 1y ago
> run a regression on comparable sales and take human judgment out of it. It's extremely rare to find enough comparable sales of parcels of land only to run a regression on. In an intensely developed area, the overwhelming majority (like 98+%) of sales will be inextricably linked sales of land and improvements of that land. I have some intellectual agreement with LVTs, but the practical implementation is daunting and it seems to make it much harder to appeal a bad assessment.
- nostrademons 1y ago
  You wouldn't run the regression on parcels of land only. You'd run the regression on parcels of land + improvements, run a PCA on the various attributes of both the land (acreage, viewshed, proximity to amenities, transit access) and the improvements (square footage, # BR/BAs, year of construction, presence of pool, presence of deck) to determine which factors materially affect valuation, and use the regression coefficients to subtract that out. So for example, you might find that going from 1BR->2BR costs an extra $200K, going from 2BR->3BR costs an extra $600K, a 9-rated school is an extra $500K, etc. Now you take a sample of sales within the area of the parcel in question, subtract out the regressed values for the improvements, and smooth & average it, and you have a rough approximation for the value of the land. It's not going to be perfect: it assumes that features are linearly independent, for example. But it should be close enough, and doesn't suffer from the same incentive problems as letting a human assessor put in values for those features.
  - sokoloff 1y ago
    When I was shopping for homes, I found several things: the city's records of improvements was comically disconnected from the ground truth (admittedly much of that was due to taxation of improvements which would wash out in the long-run) and that the inherent human judgment ("this one was done by a blind, half-assed house-flipper", "this one needs $100K of maintenance soon", "this one was last updated in 1970", "this one was designed and built by absolute master craftspeople", "this one is next door to a known problem house", "this school is a GreatSchools 9, but buyers believe it sucks") could swing the price between two spreadsheet-identical homes by 40%. Either you need to bring in human judgment to account for those factors, or have enough data to hope that people will accept that these differences will reliably come out in the wash. If you could, Zillow probably wouldn't have lost around $1B robo-buying during a massive real-estate boom.
    - nostrademons 1y ago
      Could also introduce a mechanism for homeowners to correct the official city record, with documentation. Under a LVT the incentives would be in place for this, because undocumented improvements generally improve the structure value of the house, which homeowners are not taxed on, yet if the structure value is subtracted from the recent sale price it would reduce the land value, which homeowners are taxed on. (This is not the case with a straight property tax, where homeowners have every incentive to lie about improvements to avoid a re-asssessment.) And it's in the city's interest to have accurate records about the state of each home.
- fernmyth 1y ago
  Here's a dumb idea: - Take the most recent sale prices of all neighboring parcels within a quarter mile - Take the land-area weighted average price per square foot - Assess the given property as its land area times that average Practically, this can be assessed without ever visiting any of the properties, and there are no games for either the assessors or the owners to play to manipulate it. Each neighbor serves as an example of the potential use (and therefore value) of local parcels. Yes, your hole-in-the-ground gets taxed the same as a skyscraper of the same size. Have you considered building something useful on it? (Yes, as usual, parks, churches, and other non-economically-extractive community amenities would be exempt from _paying_ the tax, but that doesn't change the assessment)
  - sokoloff 1y ago
    It’s simple, hard to game, and executable which puts it ahead of many other ideas on the topic. But: Land above a subway station or in a main business square is worth A LOT more than the same amount of land 1300 feet away. Waterfront land is wildly more valuable than the land just across the street. In districts with front setbacks, corner lots are less valuable per square foot than mid-block lots. And I’d really hate to own a normal mini-skyscraper 4 blocks away from the skyscrapers overlooking Central Park and have my building’s land be valued as the average of the sum of all the units overlooking the Park. But your “dumb” idea is smarter than most I think.
zdragnar 1y ago
It also biases society in favor of large investment landlords over the elderly, poor and young. When you massively increase the cost of something, only the wealthy will be able to afford it.
- nostrademons 1y ago
  Georgism actually massively decreases the cost of land, because the tax on land comes out of the future rental cash flows, and if set to equal the average rental opportunity cost of the parcel, washes them out to zero. You're left with only the structure value as the market price, which in many municipal areas is much lower. In practice, it's likely going to incentivize large corporate landlords and tall residential towers near city centers (where this allows the greatest number of tenants to enjoy the natural amenities nearby), while pushing the poor and elderly out to the outskirts (where land is cheaper and structures are smaller). But that's probably what you want, since a larger number of income-generating residents can enjoy the inner-city amenities while the elderly have less use for them.
AnimalMuppet 1y ago
> I'm now much more in favor of a Georgist-style land value tax, where wealth taxes on natural monopolies like land are the only form of taxation. Why only natural monopolies? Why should Google, say, be taxed on the value of the land under their buildings, but not on the value of the google.com domain name?
- nostrademons 1y ago
  Simply put, because we want to incentivize people to build things that have not been built before, and by nature these are always monopolies when they get started. While with natural monopolies, no person built them, they were taken from nature, and so we don't want to incentivize people to profit simply from plundering what as there before. There's also a justice argument: most people are okay with people owning and profiting from work that they themselves did, but not okay with people profiting from taking control of the commons. The idea of a "natural" monopoly is also fairly broadly applied in modern Georgism. Things like the natural resources, the electromagnetic spectrum, pollution, and greenhouse gas emissions are included, for example, in addition to land. There's a good argument for things like utility rights of way. Some proponents (more radical than I) also favor including IP in it, which actually would cover the google.com domain name. I'd prefer some other mechanism (outside the scope of Georgism) to handle cases where "You built a monopoly through your own efforts to deliver a superior product, but now you've moved on and the current managers are mismanaging this resource to the detriment of society, but since it's a private monopoly there are no ways the get them to stop doing it." This is a really common problem in the economy today, and I'd like to find a way to manage it that preserves the incentive to invent new things while also removing the ability to prevent others from inventing new things.
  - AnimalMuppet 1y ago
    Good answer. It's all about incentives. I'm not sure I totally agree, but it's a reasonable answer. To answer your problem in the last paragraph, we should recognize that the world is moving much faster now, and so 20 years for a patent in tech is ridiculously long. Even more ridiculous is 95-year-long copyrights. Those should revert to 14 years like they originally were. That doesn't let you do something specifically for a mismanaged company, but I'm not sure there's much you can do under anything like our current legal system. Also, it doesn't do anything about domain names, but those aren't exactly IP, are they? IP is patents, copyrights, trademarks, and trade secrets. Domain names can be related to a trademark, but they aren't exactly the same.
deleted 1y ago
[deleted]
jrs235 1y ago
I think of it as: You don't own land. You don't buy land. You purchase and own the title to exclusive use of the land that is recognized and protected by the government. That's what one is paying for and typically any additions (real property, i.e. structures) attached to the land. Property taxes (id prefer land tax) are the annual "protection" fees.

s5300 1y ago

[dead]

sokoloff 1y ago

> run a regression on comparable sales and take human judgment out of it. It's extremely rare to find enough comparable sales of parcels of land only to run a regression on. In an intensely developed area, the overwhelming majority (like 98+%) of sales will be inextricably linked sales of land and improvements of that land. I have some intellectual agreement with LVTs, but the practical implementation is daunting and it seems to make it much harder to appeal a bad assessment.

nostrademons 1y ago
You wouldn't run the regression on parcels of land only. You'd run the regression on parcels of land + improvements, run a PCA on the various attributes of both the land (acreage, viewshed, proximity to amenities, transit access) and the improvements (square footage, # BR/BAs, year of construction, presence of pool, presence of deck) to determine which factors materially affect valuation, and use the regression coefficients to subtract that out. So for example, you might find that going from 1BR->2BR costs an extra $200K, going from 2BR->3BR costs an extra $600K, a 9-rated school is an extra $500K, etc. Now you take a sample of sales within the area of the parcel in question, subtract out the regressed values for the improvements, and smooth & average it, and you have a rough approximation for the value of the land. It's not going to be perfect: it assumes that features are linearly independent, for example. But it should be close enough, and doesn't suffer from the same incentive problems as letting a human assessor put in values for those features.
- sokoloff 1y ago
  When I was shopping for homes, I found several things: the city's records of improvements was comically disconnected from the ground truth (admittedly much of that was due to taxation of improvements which would wash out in the long-run) and that the inherent human judgment ("this one was done by a blind, half-assed house-flipper", "this one needs $100K of maintenance soon", "this one was last updated in 1970", "this one was designed and built by absolute master craftspeople", "this one is next door to a known problem house", "this school is a GreatSchools 9, but buyers believe it sucks") could swing the price between two spreadsheet-identical homes by 40%. Either you need to bring in human judgment to account for those factors, or have enough data to hope that people will accept that these differences will reliably come out in the wash. If you could, Zillow probably wouldn't have lost around $1B robo-buying during a massive real-estate boom.
  - nostrademons 1y ago
    Could also introduce a mechanism for homeowners to correct the official city record, with documentation. Under a LVT the incentives would be in place for this, because undocumented improvements generally improve the structure value of the house, which homeowners are not taxed on, yet if the structure value is subtracted from the recent sale price it would reduce the land value, which homeowners are taxed on. (This is not the case with a straight property tax, where homeowners have every incentive to lie about improvements to avoid a re-asssessment.) And it's in the city's interest to have accurate records about the state of each home.
fernmyth 1y ago
Here's a dumb idea: - Take the most recent sale prices of all neighboring parcels within a quarter mile - Take the land-area weighted average price per square foot - Assess the given property as its land area times that average Practically, this can be assessed without ever visiting any of the properties, and there are no games for either the assessors or the owners to play to manipulate it. Each neighbor serves as an example of the potential use (and therefore value) of local parcels. Yes, your hole-in-the-ground gets taxed the same as a skyscraper of the same size. Have you considered building something useful on it? (Yes, as usual, parks, churches, and other non-economically-extractive community amenities would be exempt from _paying_ the tax, but that doesn't change the assessment)
- sokoloff 1y ago
  It’s simple, hard to game, and executable which puts it ahead of many other ideas on the topic. But: Land above a subway station or in a main business square is worth A LOT more than the same amount of land 1300 feet away. Waterfront land is wildly more valuable than the land just across the street. In districts with front setbacks, corner lots are less valuable per square foot than mid-block lots. And I’d really hate to own a normal mini-skyscraper 4 blocks away from the skyscrapers overlooking Central Park and have my building’s land be valued as the average of the sum of all the units overlooking the Park. But your “dumb” idea is smarter than most I think.

zdragnar 1y ago

It also biases society in favor of large investment landlords over the elderly, poor and young. When you massively increase the cost of something, only the wealthy will be able to afford it.

nostrademons 1y ago
Georgism actually massively decreases the cost of land, because the tax on land comes out of the future rental cash flows, and if set to equal the average rental opportunity cost of the parcel, washes them out to zero. You're left with only the structure value as the market price, which in many municipal areas is much lower. In practice, it's likely going to incentivize large corporate landlords and tall residential towers near city centers (where this allows the greatest number of tenants to enjoy the natural amenities nearby), while pushing the poor and elderly out to the outskirts (where land is cheaper and structures are smaller). But that's probably what you want, since a larger number of income-generating residents can enjoy the inner-city amenities while the elderly have less use for them.

AnimalMuppet 1y ago

> I'm now much more in favor of a Georgist-style land value tax, where wealth taxes on natural monopolies like land are the only form of taxation. Why only natural monopolies? Why should Google, say, be taxed on the value of the land under their buildings, but not on the value of the google.com domain name?

nostrademons 1y ago
Simply put, because we want to incentivize people to build things that have not been built before, and by nature these are always monopolies when they get started. While with natural monopolies, no person built them, they were taken from nature, and so we don't want to incentivize people to profit simply from plundering what as there before. There's also a justice argument: most people are okay with people owning and profiting from work that they themselves did, but not okay with people profiting from taking control of the commons. The idea of a "natural" monopoly is also fairly broadly applied in modern Georgism. Things like the natural resources, the electromagnetic spectrum, pollution, and greenhouse gas emissions are included, for example, in addition to land. There's a good argument for things like utility rights of way. Some proponents (more radical than I) also favor including IP in it, which actually would cover the google.com domain name. I'd prefer some other mechanism (outside the scope of Georgism) to handle cases where "You built a monopoly through your own efforts to deliver a superior product, but now you've moved on and the current managers are mismanaging this resource to the detriment of society, but since it's a private monopoly there are no ways the get them to stop doing it." This is a really common problem in the economy today, and I'd like to find a way to manage it that preserves the incentive to invent new things while also removing the ability to prevent others from inventing new things.
- AnimalMuppet 1y ago
  Good answer. It's all about incentives. I'm not sure I totally agree, but it's a reasonable answer. To answer your problem in the last paragraph, we should recognize that the world is moving much faster now, and so 20 years for a patent in tech is ridiculously long. Even more ridiculous is 95-year-long copyrights. Those should revert to 14 years like they originally were. That doesn't let you do something specifically for a mismanaged company, but I'm not sure there's much you can do under anything like our current legal system. Also, it doesn't do anything about domain names, but those aren't exactly IP, are they? IP is patents, copyrights, trademarks, and trade secrets. Domain names can be related to a trademark, but they aren't exactly the same.

deleted 1y ago

[deleted]

jrs235 1y ago

I think of it as: You don't own land. You don't buy land. You purchase and own the title to exclusive use of the land that is recognized and protected by the government. That's what one is paying for and typically any additions (real property, i.e. structures) attached to the land. Property taxes (id prefer land tax) are the annual "protection" fees.