5 ms·

I don't mean to derail the conversation but I wonder how much would it cost to buy a piece of land outright -- with no future obligations in terms of property t

• icedchai 13y ago
  Yes, I think buying land "outright" is impossible. Perhaps in some unincorporated area or whatever? Property taxes are relatively high where I live(about $350/month, though I pay quarterly.)
  • mikeash 13y ago
    I imagine you could purchase some sort of financial product that would pay out continuously to cover your taxes. Basically a perpetual annuity, with some wiggle room built in to account for changes in tax rates and property valuation. I don't know what a realistic rate would be for such a thing, but probably quite low. So you'd probably have to put in something like 50x your annual property tax payment.
    • briandear 13y ago
      While that would be cool, the concept of never owning your land smacks of feudalism. It's almost like we're sharecroppers to the government. Taxes are important, however, those taxes could be collected instead by taxing the consumption of necessary resources rather than just having the piece of ground. For example, fire protection -- it could be argued that the virtue of owning land itself doesn't necessarily require fire protection. So rather than using the land as effective collateral to ensure tax payments, why not simply charge the landowner for fire protection in lieu of taxes? If they refuse to pay, their land isn't seized (as is the case now,) they merely have to assume the fire risk. Of course, getting insurance on the land (or improvements) would necessarily require fire protection, so the tax base would be minimally effected, yet not make a person subject to losing their home and land as a result of taxation. Water and sewer is already paid for by taxes on those services. Really the big issue is with the schools, however existing income and/or sales taxes could compensate. The problem with taxed land is that the taxable value determines the taxed amount rather than some other, more objective measure. Valuations on land and improvements are subject to external, market forces and by their nature are unfair. Imagine a family that purchased unused Napa farmland 100 years ago. Their real income has stayed the same (or declined) yet their taxes have increased with no correlation to their income. Even if the land was prime vineyard, unless they're actually making income from it, the effective output of the land didn't change from when they purchased it. So by the mere fact that they chose not to plant grapes and produce wine, they could lose their land due to an inability to pay the taxes. That then puts economic pressures on landowners that would lead them to selling out to large conglomerates. For example, if you have prime farmland and choose not to capitalize on it, you'd have a big incentive to sell-out to a company like Monsanto, or else lose the land or go bankrupt paying the taxes. Yet if you were taxed on the land's income (and services consumed,) you'd be able to afford the taxes which would be based on output rather than potential output. This would benefit everyone, except perhaps country property appraisal offices. As it is now, you're taxed based on potential market value and not necessarily real value. Real value can't be determined until someone actually pays money for a property -- anything before the actual purchase is just somewhat educated speculation.
      • mikeash 13y ago
        Life, ultimately, requires continuous activity to sustain. So I don't get very bent out of shape about the perpetual nature of property taxes, because it's fairly minor compared to e.g. the perpetual nature of food. You can come up with ways to replace property taxes, without a doubt. There's nothing necessary about any particular tax. The question is just whether it's the best way to do things. Water and sewer would work fine without it, I agree. A bigger problem, I think, is roads. Highways are mostly funded from gas taxes but local roads are not. It's not practical to directly charge for use of local roads. You could compensate with other taxes, but now you're taxing (and thus somewhat discouraging) productive activity. The scenarios you paint don't necessarily seem bad to me. Unfair to the owners, perhaps, but it doesn't seem to benefit everybody else as you say. You correctly infer that property taxes encourage productive use of land and discourage allowing it to sit fallow, but isn't that a good thing? If we make the strong but at least partially true assumption that money is a proxy for value, land that produces enough money to pay for its taxes is producing more value than land that does not. Someone sitting on prime farmland and not actually farming it is a net negative to society unless they're getting more value out of that land than a farmer would. I don't mean to go all Ayn Rand here and start acting like nature, parks, and anything that's not economically productive is valueless. But still, I think there is value to be had in encouraging land owners to put their property to some actual economic use. I'd be more upset if property taxes were higher, perhaps. Here, for example, they're about 1%, which is not much. If you can't afford 1%, then you have an enormous amount of money tied up in your property without much money outside of it. It's hard to fit right into a spot where you could afford to maintain your property, but can't afford the taxes. For the vast majority of property owners, the mortgage is by far the major question when it comes to losing one's house or land because they don't have money. Pay off your mortgage and have some savings and you are nearly safe from losing it due to property taxes.
        • 3825 13y ago
          >Someone sitting on prime farmland and not actually farming it is a net negative to society unless they're getting more value out of that land than a farmer would. To play the devil's advocate: Why stop at land? What about people who have gold under their mattress? Or perhaps (stick with me here) someone who owns the patents for a machine that he refuses to sell anything himself and forbids anyone else from selling anything remotely similar? Also, I hear we pay farmers not to produce crops because we are afraid seasonal over-production could destabilize prices?
• clarkm 13y ago
  https://en.wikipedia.org/wiki/Allodial_title https://en.wikipedia.org/wiki/Allodial_title