8 ms·

> Land taxes are efficient. They are difficult to dodge; you cannot stuff land into a bank-vault in Luxembourg. Whereas a high tax on property can discourage in

• Frozenlock 12y ago
  The harm for the owner in leaving the lot vacant for a decade is opportunity cost. If he is in a valuable spot, it would be advantageous to sell and just do something else with the money. Imagine high land taxes in the middle of the desert. Is it an incentive to build? Quite the contrary.
  • omegaworks 12y ago
    >Imagine high land taxes in the middle of the desert. Can't build something more profitable then the land taxes? Then sell it, or give it back to the state.
  • panglott 12y ago
    This is the point of land-value taxes rather than simple land taxes. https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax The site-value of unoccupied desert is pretty low, so the land-value taxes on it would be low, which gives incentive to build there rather than elsewhere. Whereas an empty lot on valuable real estate in the city would face not merely the opportunity cost but also a high land-value tax. A lot of tax policy in John Locke and Henry George's day was about getting "unused" land into "productive" uses.
    • Frozenlock 12y ago
      But the point was that the vacant lot was somehow "free" to the owner. It's not, he is sacrificing any value he might get by selling it. If someone sees a better potential use of the land (able to get more value out of it), he can propose to buy it at a higher price. A land-value taxes is just a multiplier of the opportunity cost, but without any real economic foundation (no one is proposing to buy the land at a higher price).
      • mrob 12y ago
        It's correcting the common market failure of humans undervaluing opportunity costs. The economic foundation is behavioral economics, or maybe a more advanced model of rational actor economics which takes into account the often high cost of measuring opportunity costs.
        • Frozenlock 12y ago
          All value is determined by humans; you can't say that humans undervalue something. That simply doesn't make sense. What you can say, however, is that humans prefer the statu quo. (Or as you would say, the cost of measuring opportunity costs.) Any transaction need to provide at least some additional benefit to be considered worthwhile. For example, I won't sell you my car for only 5% over the market value because it's not worth it for me. You coming every day and breaking a mirror, a whipper, or steeling a wheel would not correct any economic calculation 'error'.
      • andkon 12y ago
        Maybe that's a good idea: multiplying the opportunity cost ends up punishing the people who hold valuable land and don't develop it. The more valuable the land, the greater the punishment. That seems exactly what you'd want to do to encourage that West Oakland lot to get developed.
        • Frozenlock 12y ago
          But why do you even want to punish? There's already a cost associated with doing nothing with the land! Why do you consider it's not enough? Imagine a world where if you take a day off (or just slack off). You not only don't get paid, but also receive a negative salary because 'punishment'. The punishment would also be proportional to the salary of comparable individual (not you, other people). The more they work, the more you must pay for not working in addition of not getting paid. All this in the name of maximizing your contribution to society... How would you feel about that? Wouldn't you say that 'not getting paid' is plenty already?
  • charlesdm 12y ago
    Land is leverage-able, at low interest rates (think mortagage at 1-2%). So, if he believes that the value of a certain area will increase by 50-100% over the next decade, and he can borrow against it for cheap, it actually wouldn't be advantageous to sell it. If land taxes would be higher, he would probably sell it.
  • deleted 12y ago
    [deleted]
• jes 12y ago
  I don't wish to be confrontational, but in my view, taking other people's property without their voluntary consent is wrong. As I understand the last paragraph of your comment, you wish to see the owner of the vacant lot forced into a situation where he had to act in some way other than how he currently chooses to act. In other words, you want to substitute your judgment for his, when it comes to the use of his property. Again, I don't mean to be confrontational, but this is how I see the situation. How do you see it?
  • krschultz 12y ago
    That the value of land is substantially based on the environment around it, one that is largely driven by societal factors. 1 acre of land in Manhattan is extremely expensive. 1 acre of land 20 miles north of Manhattan is not expensive. The difference is everything surrounding the land. If the people in a community have decided to spend a lot of their money to reduce crime, improve transit, improve schools, and improve the economy, every land owner benefits. Yet the way that we do taxes (based on the improved value of the land), means that those that sit on the sidelines and do nothing gain quite a bit of value by freeloading on those around them. If we figured out the taxes based on the underlying value of the land, then the vacant lot owner would be paying as much as the person that just invested in building a new business next store. That seems fairer to me considering that the vacant lot is now worth more due to its proximity to a shiny new building.
    • jes 12y ago
      Thank you for your comment, and for obviously being concerned with issues of fairness. If a person makes an investment, and that investment goes up in value, even substantially, and even with no additional effort on the part of the investor, does that justify others taking some or all of the resulting value? If I bought stock in Apple years ago, because I thought it was a smart thing to do, and I simply held the stock, should other people get a cut of my gains when I sell? What if the stock goes down? Am I then entitled to someone else's gains?
      • mikeklaas 12y ago
• logfromblammo 12y ago
  I should point out that a tax to promote efficient use of land surface area should not include the value of improvements to the property. Most municipalities in the US tax property based upon assessed market value, which discourages more efficient use of land. If you knock down your single-family house and erect a multistory condo, the value of the improvement will swamp the value of the land, and you will be punished with much higher property tax. Georgists (http://en.wikipedia.org/wiki/Georgism http://en.wikipedia.org/wiki/Georgism) explored the probable effects of land taxes extensively, though I don't agree with the premises of their reasoning. For one, Henry George drew the supply curve for land as a vertical line, to reflect the idea that you can't make more land. But different areas of land have different suitability for any given purpose. It is true that you can't increase the surface area of the Earth, but you can still rank every hectare by how much effort it takes to reach it from the center of global trade. The economic projection of the world map is basically one huge ocean in the middle, a ring of port cities around it, roads and rivers spreading outward from there, and deserts and wilderness way out at the edges. Those peripheral lands are the ones that get used last, when land prices are highest, and that's why the supply curve for land is not vertical. Besides that, it is difficult to separate the value of the land itself from the improvements on it, or even the improvements near it. Is it just for you to be taxed more when someone else builds a train station near your house? I think the way to levy a land tax that is least susceptible to abuse or political manipulation is to calculate it based purely upon surface area. A hectare in the furthest backwater of the jurisdiction is taxed at the same rate as one in the busiest urban center.
  • panglott 12y ago
    But a hectare in an isolated backwater has less value than a hectare in an urban area. The land-value tax boils down to a tax on the site-value of land, which necessarily has to account things like proximity/distance to commercial centers.
    • logfromblammo 12y ago
      That's why a land-value tax discourages inefficiency in land use to a lesser extent than a land-surface-area tax. You generally want people to increase their density, because that makes it possible to provide more efficient services with a distance, area, or volume component less expensively. Electrically-powered commuter trains are more efficient movers of people than automobiles, but the capital requirements are such that you need a minimum population density to run the train profitably. The commuter train increases the desirability of property near the stations. Taxing that value discourages use of the train. A hectare in the country is the same area as a hectare in the city. Land value usually has an inverse relationship with population density. You could either tax based on area alone, or try to cancel the value effect of increased density by dividing the land value by the density of the census tract.
• tn13 12y ago
  That is very shallow logic. If there is a land tax, any product or service that uses land will become more expensive for everyone. Whatever gain in productivity we might get by making vacant lands usable will be simply negated by the loss in productivity due to the land tax. Also, taxation is meant for government to run to do its primary duties and not affect the market forces.
  • arfar 12y ago
    >Also, taxation is meant for government to run to do its primary duties and not affect the market forces. I don't think this is the case for every tax. Look at the different carbon tax systems. This is a tax to try to drive the market towards greener solutions/products. I guess an argument could be made that the tax is a way to quantify damage to the environment done and the money it's going to take to repair it, but I don't think that's the way most people see it.
    • tn13 12y ago
      I dont agree with any logic behind the carbon taxes however, there is good case for taxation in case of pollution. The key problem with pollution is that no single person owns the air or water bodies and hence no one minds degrading it even thought everyone loses collectively. This is a very hard problem to solve and taxation may not be one of those. If US government puts stronger restriction on US companies, they lose the competitive edge against Chinese and Indian who do not have to pay any such tax.
• omegaworks 12y ago
  There's actually weird disincentives to building built right into the tax code: http://www.forbes.com/sites/anthonynitti/2013/12/31/tax-geek-tuesday-does-the-sale-of-property-generate-ordinary-income-or-capital-gain/ http://www.forbes.com/sites/anthonynitti/2013/12/31/tax-geek... It's about capital-gains tax vs income tax. Because the rates are dramatically different and the case law is so convoluted, people who hold land as an investment don't touch it. If they touch it in the wrong way, the sale of that land is taxed as regular income instead of capital-gains. In America, regular income tax is DOUBLE capital-gains tax.