3 ms·
Real estate(the land, not the mansion) is a really good long term storage of wealth as it is fixed, finite, and doesn't depreciate in value except through marke
by kiba 11mo ago
Real estate(the land, not the mansion) is a really good long term storage of wealth as it is fixed, finite, and doesn't depreciate in value except through market trend and it basically only go up as long as the economy itself grow.
However, this causes land speculation which drives the price of land up, and people do not want to develop properties because it would means investing in buildings which costs money to build and maintain and entails risk and ongoing effort.
The correct solution to this is a land value tax, which if implemented correctly, should drive down the price of land down to zero and force Jack Ma's family to either commit to actually investing in UK's economy or park their wealth elsewhere.
- bmitc 11mo agoWhat's the difference between land value tax and property tax?
- trueismywork 11mo agoA land value tax (LVT) is a tax on the unimproved value of land only, while a traditional property tax is levied on the combined value of both the land and any structures or improvements on it . Consequently, LVT taxes the land's community-created value, which is not the result of the owner's labor, and does not tax improvements like a house. This encourages development because it disincentivizes property owners from letting vacant land sit idle and penalizes land speculation.
- andyferris 11mo agoOur local government taxes are entirely LVT and yet our housing prices still spiral upwards. I'm not sure how to work this to everyday people's benefit - are the taxes to be so large punative that half of everyday home owners need to sell up? (I mean, the tax will only depress value if sales are avoided, or existing owners choose to sell, right?) I'm probably in the "increase supply until no one else wants one" camp...
- twoodfin 11mo agoYou got it. The LVT doesn’t work unless it’s so high it can force Grandma out of the house she grew up in, the one she thought was built on “her” land in Alameda. It has to act like a market rent paid to the government, or it can’t induce the behavior changes it’s supposed to. Hard to believe Americans, at least, would accept that shift in property rights.
- lotsofpulp 11mo ago> are the taxes to be so large punative that half of everyday home owners need to sell up? Yes, either you are rich enough to occupy land in an expensive area for a suboptimal use (usually means central to transportation and population), or you have to give it up to someone who can make use of it. Note that homeowners who live further away from stuff are not impacted. It’s for underutilized lots that are being squatted on due to someone laying claim to it first decades ago, but that is not an efficient way to allocate resources in a society. Hence, why China can develop rapidly to benefit 80% of its population, while other developed countries are stuck catering to 20% of its population who got theirs first (or really, their ancestors did).
- twoodfin 11mo agoBy “laying claim” you mean “holding a legally recognized title to the real estate”? That’s a property rights regime that applies to everyone. If you want to get rid of it you have to get rid of it for everyone, you can’t say “titles are no longer valid if the land they cover is valuable enough, but otherwise, out in the boonies, still good”. If nothing else, that’s a Constitutional takings problem.
- lotsofpulp 11mo agoThe constitution already allows for it, via what happens when you don’t pay property tax. And property rights are very much a political negotiation (just before things get violent). The government takes a piece of everyone’s income with no problem. And land owners use the most resources of everyone. All the military spend to protect their asset, all the education, police, and judicial expenses to keep an orderly society, all the energy to move resources around the land. Right now, we take more, proportionally, from income earners (workers) who live in tiny apartments compared to rent seekers who squat on underutilized lots that use up a lot more of society’s resources.
- numpad0 11mo agoSo like, LVT encourages land owners to build increasingly denser and pricier improvements? Sounds opposite of the goal. Isn't land values proportionate to population density? Whatever tax systems that intend to combat rising land values should force density on down trend, no?
- lotsofpulp 11mo agoDenser areas are cheaper per housing unit. Building an apartment building might cost 10x as much as building a house, but it can probably house more than 20x the households. LVT in an urban/suburban area incentivizes building more housing units per surface area. And a power law formula LVT would especially align incentives, as land that is worth more has even more incentive to be developed.
- numpad0 11mo agoThat doesn't make a lot of sense. That's just increasing scarcity of lands. What that example means is that land that the apartment is built has minimum 20x more value over each individual units. It would make sense if your argument is that $1m/unit, 50-150 floors tall, 500 units total apartments intended exclusively for young and current childless dual income investment bankers households, seen everywhere in developed cities such as NYC or Shanghai or Singapore or likes, is exactly the intention of LVT and desired steady state of land price inflation control, but I assume it's not?
- jjav 11mo ago> Denser areas are cheaper per housing unit. That's not exactly true. Now sure, if everything else is equal then yes it is true. Building a small apartment building on the same land as a single house will result in more units than the cost multiplier of the build, so as you say, they'll be cheaper. But everything else is never equal. It only makes sense to do such increased density in an area that is becoming more and more expensive and the delta increased density will make the area even more expensive. NYC is the densest area in the US, and is not exactly known for the cheaper per-unit housing costs.
- zukzuk 11mo agoI don’t get why people ask questions like this nowadays when the Wikipedia article or an LLM will give you a much better answer than what someone could type in a reply. https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax also take a look at https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism
- stavros 11mo agoSometimes it's nice to interact with other humans, even if it's online. But an LLM could have told you this.
- trollbridge 11mo agoHenry George enters the chat
- jdasdf 11mo ago>Real estate(the land, not the mansion) is a really good long term storage of wealth as it is fixed, finite, and doesn't depreciate in value except through market trend and it basically only go up as long as the economy itself grow. None of this is true. Step by step: >as it is fixed Something not being able to be moved is a negative, not a positive >finite New land is created all the time. The netherlands has created an entire new province. > and doesn't depreciate in value Only true legally. I can assure you land does depreciate, as can any farmer that has used it to farm the same crop for years and now finds its yields reduced as a result. >except through market trend So, just like any other asset? > it basically only go up as long as the economy itself grow. Untrue, simply check any number of rural areas that have had the life drained out of them over the past 50 years. Land is useful, but let's not pretend like it's something it isn't.
- ageitgey 11mo ago> New land is created all the time. The netherlands has created an entire new province. You're 'technically correct' but the total amount of land being created is so small as to be meaningless in a global sense. Your arguments are fixated on extreme corner cases. I'm not sure what you are arguing for.
- caminante 11mo agoReal estate includes land and structures. There's too much overlooked survivor bias with "I wish I owned real estate..." retrospectives. What people are really saying is that they wish they had speculated, but that's no different than "I wish I owned [NVDA]..." Take homes values. On a real$ basis, "home prices show a strong tendency to return to their 1890 level[s]" [0]. 1. People just move if things get expensive. Urban land area is only 2.6% of total US. 2. Tech improvements unlock cheaper and more durable homes. What Jack Ma's doing is a completely different level of personal estate management and a flight to safety. [0] https://en.wikipedia.org/wiki/Case%E2%80%93Shiller_index#Economic_implications https://en.wikipedia.org/wiki/Case%E2%80%93Shiller_index#Eco...
- wakawaka28 11mo agoSpeculation is a legitimate market activity. People make predictions about what will be valuable in the future and marshall those resources toward the most valuable future use. If speculators are wrong, they lose money. There's no free lunch here like you make it sound. >The correct solution to this is a land value tax, which if implemented correctly, should drive down the price of land down to zero We have prices to help decide what is the most valuable use of a resource. Trying to implement a bunch of policy to cancel out price signals will lead to all kinds of dysfunctional situations. Fixed percentage property tax based on market data and legitimate appraisals is the right kind of tax on land (or as correct as it gets; the ideal is that people pay for what public services they use and no more). >force Jack Ma's family to either commit to actually investing in UK's economy or park their wealth elsewhere. They are investing in the UK economy by owning land there. A mansion requires maintenance and property tax payments. The UK is not entitled to tell people how they must spend the fruits of their labor. If you'd rather the mansion not go to a foreign rich person, you could ban foreign purchases of mansions. But this would no doubt hurt the people who build and maintain them. Furthermore, Jack Ma probably has limits placed on him by his country. He may only be free to buy a mansion. He will no doubt use it... Leaving a country takes time. If you want to be mad about land prices, be mad at the infinite deficits and credit bubbles being inflated in the West.
- robocat 11mo ago> The correct solution to this is a land value tax, which if implemented correctly, should drive down the price of land down to zero Isn't most land already 'taxed' by a mortgage? Or for a cash purchase it is 'taxed' by the opportunity cost of the investment? Plus rates (taxation) for commercial land in my city are also expensive compared to cost. Yet these costs don't drive the price of land to zero.