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We need land value tax bad [1] In Los Angeles I’ve watched business after business close because their rent was increased by their commercial landlord only for

We need land value tax bad [1] In Los Angeles I’ve watched business after business close because their rent was increased by their commercial landlord only for the property to sit vacant in some cases (no exaggeration) for over 5 years! Thats absurd. Also as a business owner who would like some space to work out of your only options are endless swaths of vacant industrial buildings that are tens of thousands in rent a month. I don’t quite get how anyone runs a brick and mortar or has space to do anything profitable. [1] https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax

zem 10mo ago
same thing happens in SF, often to businesses that have been a valued part of the local neighbourhood for years. it's infuriating.
- anigbrowl 10mo ago
  Yep, this has wiped out my favorite deli, local cinemas, and bookstores in the east bay. Basically non-capital-intensive businesses seem to pay the price for the market signal falsification engaged in by landlords and banks. But nobody wants to bite the bullet and risk setting off a repeat of the 2008 financial crisis, so we've ended up with some kind of hypernormalization-style fake economy which is being 'run' by a former reality TV star and a bunch of TV personalities and political entrepreneurs.
dec0dedab0de 10mo ago
Don't underestimate how many businesses are supplementing their income with dirty money.
harmmonica 10mo ago
I’d support a land value tax myself so don’t take this following comment as criticism, but you don’t even need a land value tax in the case of LA. You do need to repeal Prop 13 for investment properties. I wager most of those years-vacant properties have a generous Prop 13 assessment and so the owner can just sit on it because their carrying cost is closer to zero than what it would be in any other tax regime. Then all of us folks around them continue to make the adjacent area nicer and they just ride off into the sunset while the absurd delta between their taxable value and market value increases. Prop 13 is like the anti land value tax. Makes places like Texas look downright progressive.
- spankalee 10mo ago
  We need to repeal Prop 13 completely. The fact that my neighbors pay 1/10th the property tax that I do, despite being younger and less at risk of being forced out of their home due to going fixed income or some financial crisis, is absurd.
  - ricksunny 10mo ago
    I'm a former (i.e. not irrelevant to the question) Californian who also thinks Prop 13 should be repealed, and am probably supportive of LVT; Can you walk through the scenario that younger neighbors pay a tech of the property tax you do? Are they legacies and benefiting from some sort of inherited trust or something?
    - shaftway 10mo ago
      Not OP, but it's probably about inheritance rules. If you inherit a property then you inherit its tax basis. In fact, if I remember correctly, you inherit the tax basis, but the capital gains basis resets. You effectively inherit a property that has a low property tax, but face zero capital gains if you turn around and sell it. All of this is subject to limits and rules and stuff. I think prop 19 made it so that you have to use it for your primary residence for the first year. And I think there's a cap on the difference between property value and tax basis of ~$1m.
      - dragonwriter 10mo ago
        That's a soft cap, you get the full benefit if the value difference is up to $1m (in 2021, adjusted biennally for inflation since) or less, and if its greater you get the amount of value increase beyond the limit is added at full value (but the amount below the limit is still waived) in setting the tax basis value at transfer.
    - epistasis 10mo ago
      As the parallel comment said, this is probably inheritance, and the low tax basis can be passed to children and grandchildren. This was recently modified, due to Prop 19, so that only the first million of property value can escape fair taxation. Since it was passed, there have been two attempts to bring back the landed gentry aspect of Prop 13, and there is a third attempt under way: https://www.mercurynews.com/2025/11/30/third-attempt-to-repeal-prop-19s-tax-burden-on-inherited-property-aims-for-2026-ballot/ https://www.mercurynews.com/2025/11/30/third-attempt-to-repe... The example house used in the story was taxed at $1,300/year before inheritance, on a $2M home value. After inheritance, it's an annual $18,000 bill, discounted from something like $30k-$40k.
coliveira 10mo ago
Some businesses survive because they already own the property or have long time leases.
- kcplate 10mo ago
  Sometimes the last lessee is still on the hook for the remainder of the lease due to landlord improvements for the tenant. Had a friend lease a retail storefront, his business failed, but he still was coughing up rent to the landlord until the space was leased again. He was a sole proprietor and had to personally guarantee the lease. It was in his best interests to pay it rather than take the hit to his credit by defaulting on the lease. My guess is a already wealthy landlord would probably be motivated to ride out the remainder of an existing lease and write off any unpaid amount as a loss before lowering the price to attract another business into the space.
PaulHoule 10mo ago
The article points that adding any more costs just costs the operator money and won't change their behavior unless the costs are so high that the bank is forced to foreclose. Maybe on some that level that is a good thing and clears the market but in the current situation the banks just won't make loans unless this happens. It makes me think of the "poker game" model of nuclear power plant construction where the vendor is quoting a price lower than they know it will cost because otherwise they wouldn't make the sale. If commercial buildings were properly priced at the outset, banks would be financing fewer of them.
- estearum 10mo ago
  > The article points that adding any more costs just costs the operator money and won't change their behavior unless the costs are so high that the bank is forced to foreclose. That is assuming operators are roughly zero-IQ automatons who can't factor future costs into present decisions?
- marcosdumay 10mo ago
  Yes, the idea of a land value tax is to make it high enough to for banks to foreclose. The entire thing is about making sure land is used on the most socially benefiting way possible.
  - dragonwriter 10mo ago
    > The entire thing is about making sure land is used on the most socially benefiting way possible. The idea of land value tax is to make the government effectively the universal landowner and everyone else renters, and renters paying a high enough rent that it is economically infeasible to use land for any but the most financially remunerative purpose. Having it optimizing for social utility rather than maximizing negative externalities requires a finely optimized system of Pigovian taxes and subsidies, otherwise you are nailing the accelerator to the floor on the divergence between market incentives and social utility.
    - epistasis 10mo ago
spwa4 10mo ago
How does land value tax change the scenario in the article? It plays out exactly the same way with and without land value tax.
- spankalee 10mo ago
  Land value tax mainly helps with severely under-utilized properties like parking lots. Right now a parking lot is taxed far, far lower than a lot with a building, so the owner can keep it for parking when it would be better utilized as residential, commercial, or office space. If it didn't pencil out to just site on empty land, we'd get better development.
  - spwa4 10mo ago
    So it does not help with commercial property? How does that work? I don't understand the reasoning. Because this is of course not true unless it lowers the value of that land to below zero. And if it lowers the value of that land even just to zero, it'll just be undeveloped entirely ...
    - ImPostingOnHN 10mo ago
      > So it does not help with commercial property? The opposite: It does help with commercial property > if it lowers the value of that land even just to zero, it'll just be undeveloped entirely It's not that the value of the land is zero, but rather the price can drop to zero. The price is a factor of both the land value and the taxes on the land. For example, suppose you buy land for $50, and you wish to 10x your investment, and won't resell for less than $500 (which nobody will pay). Suppose further that the land value tax is $0/mo. You can sit on the land doing nothing, ruining the community, and it won't cost you much. Now suppose the land value tax is raised/added to the tune of $1/mo. You would need to find some use for the land that raises more than $1/mo, or else you're losing money every month. Costing money every month means the land is now worth less, let's say $25. But what if you don't want to use the land, because you're a speculator, not a business owner? Well, you can choose to either keep losing money monthly, or sell the land for $25. Economically speaking, you might choose to sell the land if you would otherwise keep it empty for >25 months. If you choose to sell the land, whether for $25 or $0, then I could buy it and run a business from there, and as long as the business makes more than $1, I stand a chance to profit. Thus, I win, and also the community wins, because the storefront that the original speculator kept empty gets filled with something useful. In fact, in this scenario, everybody wins except the real estate speculator who was ruining the community by keeping storefronts empty, and that person deserves to lose and be punished. With any luck, the speculator realizes that what they're doing is both bad and unprofitable, and either finds a useful way to contribute to the community, or fucks off forever. Either way, the community wins!
atoav 10mo ago
And I don't even think it is controversial. People who squat on needed resources without using them are a drain on society, thus society should try to create an incentive structure for using spaces. A tax can be part of this.
scifi 10mo ago
True. What I don’t get, is how is vacancy a good move for the landlord? Wouldn’t it make more sense to have a tenant during that time?
- bobthepanda 10mo ago
  Commercial loans are not like residential mortgages and often the loan is based on a minimum rent. If you go below that then you are in default.
  - deleted 10mo ago
    [deleted]
  - triceratops 10mo ago
    How do they make mortgage payments without rent?
    - bobthepanda 10mo ago
      * own a portfolio of real estate, so losses in one area can be offset * own a mixed use building, so an empty ground floor retail space can be offset by multiple floors of apartments also, if the rise in equity outpaces the losses in rents it can still be net positive
- duskwuff 10mo ago
  I don't like just saying "read the article", but this is precisely what the article explains. In short: the rental rates are a condition of the property owner's loan.
danjl 10mo ago
What about incentivizing switching the building from commercial to residential? Given that commercial brick and mortar are generally on a downward trend, and the need for housing continues to increase, it would seem better to switch the property zoning in the long run. Since I'm clueless about the financial details of commercial real estate, I'm sure this proposal is full of holes, but, as a rule, I prefer incentives rather than penalties to motivate change.
seanmcdirmid 10mo ago
Is it because of Prop 13 that commercial property owners aren't paying adequate property taxes that would act to encourage use?

zem 10mo ago

same thing happens in SF, often to businesses that have been a valued part of the local neighbourhood for years. it's infuriating.

anigbrowl 10mo ago
Yep, this has wiped out my favorite deli, local cinemas, and bookstores in the east bay. Basically non-capital-intensive businesses seem to pay the price for the market signal falsification engaged in by landlords and banks. But nobody wants to bite the bullet and risk setting off a repeat of the 2008 financial crisis, so we've ended up with some kind of hypernormalization-style fake economy which is being 'run' by a former reality TV star and a bunch of TV personalities and political entrepreneurs.

dec0dedab0de 10mo ago

Don't underestimate how many businesses are supplementing their income with dirty money.

harmmonica 10mo ago

I’d support a land value tax myself so don’t take this following comment as criticism, but you don’t even need a land value tax in the case of LA. You do need to repeal Prop 13 for investment properties. I wager most of those years-vacant properties have a generous Prop 13 assessment and so the owner can just sit on it because their carrying cost is closer to zero than what it would be in any other tax regime. Then all of us folks around them continue to make the adjacent area nicer and they just ride off into the sunset while the absurd delta between their taxable value and market value increases. Prop 13 is like the anti land value tax. Makes places like Texas look downright progressive.

spankalee 10mo ago
We need to repeal Prop 13 completely. The fact that my neighbors pay 1/10th the property tax that I do, despite being younger and less at risk of being forced out of their home due to going fixed income or some financial crisis, is absurd.
- ricksunny 10mo ago
  I'm a former (i.e. not irrelevant to the question) Californian who also thinks Prop 13 should be repealed, and am probably supportive of LVT; Can you walk through the scenario that younger neighbors pay a tech of the property tax you do? Are they legacies and benefiting from some sort of inherited trust or something?
  - shaftway 10mo ago
    Not OP, but it's probably about inheritance rules. If you inherit a property then you inherit its tax basis. In fact, if I remember correctly, you inherit the tax basis, but the capital gains basis resets. You effectively inherit a property that has a low property tax, but face zero capital gains if you turn around and sell it. All of this is subject to limits and rules and stuff. I think prop 19 made it so that you have to use it for your primary residence for the first year. And I think there's a cap on the difference between property value and tax basis of ~$1m.
    - dragonwriter 10mo ago
      That's a soft cap, you get the full benefit if the value difference is up to $1m (in 2021, adjusted biennally for inflation since) or less, and if its greater you get the amount of value increase beyond the limit is added at full value (but the amount below the limit is still waived) in setting the tax basis value at transfer.
  - epistasis 10mo ago
    As the parallel comment said, this is probably inheritance, and the low tax basis can be passed to children and grandchildren. This was recently modified, due to Prop 19, so that only the first million of property value can escape fair taxation. Since it was passed, there have been two attempts to bring back the landed gentry aspect of Prop 13, and there is a third attempt under way: https://www.mercurynews.com/2025/11/30/third-attempt-to-repeal-prop-19s-tax-burden-on-inherited-property-aims-for-2026-ballot/ https://www.mercurynews.com/2025/11/30/third-attempt-to-repe... The example house used in the story was taxed at $1,300/year before inheritance, on a $2M home value. After inheritance, it's an annual $18,000 bill, discounted from something like $30k-$40k.

coliveira 10mo ago

Some businesses survive because they already own the property or have long time leases.

kcplate 10mo ago
Sometimes the last lessee is still on the hook for the remainder of the lease due to landlord improvements for the tenant. Had a friend lease a retail storefront, his business failed, but he still was coughing up rent to the landlord until the space was leased again. He was a sole proprietor and had to personally guarantee the lease. It was in his best interests to pay it rather than take the hit to his credit by defaulting on the lease. My guess is a already wealthy landlord would probably be motivated to ride out the remainder of an existing lease and write off any unpaid amount as a loss before lowering the price to attract another business into the space.

PaulHoule 10mo ago

The article points that adding any more costs just costs the operator money and won't change their behavior unless the costs are so high that the bank is forced to foreclose. Maybe on some that level that is a good thing and clears the market but in the current situation the banks just won't make loans unless this happens. It makes me think of the "poker game" model of nuclear power plant construction where the vendor is quoting a price lower than they know it will cost because otherwise they wouldn't make the sale. If commercial buildings were properly priced at the outset, banks would be financing fewer of them.

estearum 10mo ago
> The article points that adding any more costs just costs the operator money and won't change their behavior unless the costs are so high that the bank is forced to foreclose. That is assuming operators are roughly zero-IQ automatons who can't factor future costs into present decisions?
marcosdumay 10mo ago
Yes, the idea of a land value tax is to make it high enough to for banks to foreclose. The entire thing is about making sure land is used on the most socially benefiting way possible.
- dragonwriter 10mo ago
  > The entire thing is about making sure land is used on the most socially benefiting way possible. The idea of land value tax is to make the government effectively the universal landowner and everyone else renters, and renters paying a high enough rent that it is economically infeasible to use land for any but the most financially remunerative purpose. Having it optimizing for social utility rather than maximizing negative externalities requires a finely optimized system of Pigovian taxes and subsidies, otherwise you are nailing the accelerator to the floor on the divergence between market incentives and social utility.
  - epistasis 10mo ago

spwa4 10mo ago

How does land value tax change the scenario in the article? It plays out exactly the same way with and without land value tax.

spankalee 10mo ago
Land value tax mainly helps with severely under-utilized properties like parking lots. Right now a parking lot is taxed far, far lower than a lot with a building, so the owner can keep it for parking when it would be better utilized as residential, commercial, or office space. If it didn't pencil out to just site on empty land, we'd get better development.
- spwa4 10mo ago
  So it does not help with commercial property? How does that work? I don't understand the reasoning. Because this is of course not true unless it lowers the value of that land to below zero. And if it lowers the value of that land even just to zero, it'll just be undeveloped entirely ...
  - ImPostingOnHN 10mo ago
    > So it does not help with commercial property? The opposite: It does help with commercial property > if it lowers the value of that land even just to zero, it'll just be undeveloped entirely It's not that the value of the land is zero, but rather the price can drop to zero. The price is a factor of both the land value and the taxes on the land. For example, suppose you buy land for $50, and you wish to 10x your investment, and won't resell for less than $500 (which nobody will pay). Suppose further that the land value tax is $0/mo. You can sit on the land doing nothing, ruining the community, and it won't cost you much. Now suppose the land value tax is raised/added to the tune of $1/mo. You would need to find some use for the land that raises more than $1/mo, or else you're losing money every month. Costing money every month means the land is now worth less, let's say $25. But what if you don't want to use the land, because you're a speculator, not a business owner? Well, you can choose to either keep losing money monthly, or sell the land for $25. Economically speaking, you might choose to sell the land if you would otherwise keep it empty for >25 months. If you choose to sell the land, whether for $25 or $0, then I could buy it and run a business from there, and as long as the business makes more than $1, I stand a chance to profit. Thus, I win, and also the community wins, because the storefront that the original speculator kept empty gets filled with something useful. In fact, in this scenario, everybody wins except the real estate speculator who was ruining the community by keeping storefronts empty, and that person deserves to lose and be punished. With any luck, the speculator realizes that what they're doing is both bad and unprofitable, and either finds a useful way to contribute to the community, or fucks off forever. Either way, the community wins!

atoav 10mo ago

And I don't even think it is controversial. People who squat on needed resources without using them are a drain on society, thus society should try to create an incentive structure for using spaces. A tax can be part of this.

scifi 10mo ago

True. What I don’t get, is how is vacancy a good move for the landlord? Wouldn’t it make more sense to have a tenant during that time?

bobthepanda 10mo ago
Commercial loans are not like residential mortgages and often the loan is based on a minimum rent. If you go below that then you are in default.
- deleted 10mo ago
  [deleted]
- triceratops 10mo ago
  How do they make mortgage payments without rent?
  - bobthepanda 10mo ago
    * own a portfolio of real estate, so losses in one area can be offset * own a mixed use building, so an empty ground floor retail space can be offset by multiple floors of apartments also, if the rise in equity outpaces the losses in rents it can still be net positive
duskwuff 10mo ago
I don't like just saying "read the article", but this is precisely what the article explains. In short: the rental rates are a condition of the property owner's loan.

danjl 10mo ago

What about incentivizing switching the building from commercial to residential? Given that commercial brick and mortar are generally on a downward trend, and the need for housing continues to increase, it would seem better to switch the property zoning in the long run. Since I'm clueless about the financial details of commercial real estate, I'm sure this proposal is full of holes, but, as a rule, I prefer incentives rather than penalties to motivate change.

seanmcdirmid 10mo ago

Is it because of Prop 13 that commercial property owners aren't paying adequate property taxes that would act to encourage use?