Why a land-value tax is inevitable
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Why a land-value tax is inevitable
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Re: Why a land-value tax is inevitable
#2Maybe add a (2018) to the title
Re: Why a land-value tax is inevitable
#3> At the top of an economic cycle, governments are collecting their peak tax revenues — yet even so, many are still running large fiscal deficits and have large existing public debts.
They’re also spending more than they ever have before in history.
> The LVT is not the same as a property tax, as it does not punish those who put the land to use; it taxes only the land, not the structure built on top of it.
I’m not convinced this is that different than what’s happening now. For a $1m house in the Bay Area, only a quarter or a third of that value is the structure.
> However, most of all, it is one of the rare taxes that does not diminish economic activity, and in fact stimulates it.
How do they arrive at this conclusion? A bakery that’s been around for 100 years finds itself in a hip part of town (which maybe it helped foster), and then has to move out because the only type of business that can support the LVT in the area is luxury apartments. The higher the LVT, the more risk of a monoculture in land usage, not the other way around.
Re: Why a land-value tax is inevitable
#4> At the top of an economic cycle, governments are collecting their peak tax revenues — yet even so, many are still running large fiscal deficits and have large existing public debts. They’re also spending more than they ever have before in history. > The LVT is not the same as a property tax, as it does not punish those who put the land to use; it taxes only the land, not the structure built on top of it. I’m not co…
Governments do, indeed, spend significantly more than they used to.
The problem in the Bay Area is simply that taxable value assessed only at sale.
Re: Why a land-value tax is inevitable
#5LVT has to be mixed with an occupancy tax however. If I own a large field capable of supporting 10 homes right in the middle of the suburbs, I shouldn't be paying the equivalent taxes that 10 households should be paying. You have to separate out the taxes used to pay for services like trash from the taxes meant for ownership of the land. (although you could argue that large parts of the government are needed to service, protect, and legislate ownership of land)
Re: Why a land-value tax is inevitable
#6> At the top of an economic cycle, governments are collecting their peak tax revenues — yet even so, many are still running large fiscal deficits and have large existing public debts. They’re also spending more than they ever have before in history. > The LVT is not the same as a property tax, as it does not punish those who put the land to use; it taxes only the land, not the structure built on top of it. I’m not co…
Governments do, indeed, spend significantly more than they used to. The problem in the Bay Area is simply that taxable value assessed only at sale.
> The problem in the Bay Area is simply that tax is not reassessed regularly.
No, tax-basis value is assessed annually. However, increases in assessed value are limited to a maximum of 2% per year outside of certain events qualifying for full-value assessment of the property or particular improvements. (And this is statewide, not Bay Area specific).
Re: Why a land-value tax is inevitable
#7LVT has to be mixed with an occupancy tax however. If I own a large field capable of supporting 10 homes right in the middle of the suburbs, I shouldn't be paying the equivalent taxes that 10 households should be paying. You have to separate out the taxes used to pay for services like trash from the taxes meant for ownership of the land. (although you could argue that large parts of the government are needed to servi…
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Re: Why a land-value tax is inevitable
#8> At the top of an economic cycle, governments are collecting their peak tax revenues — yet even so, many are still running large fiscal deficits and have large existing public debts. They’re also spending more than they ever have before in history. > The LVT is not the same as a property tax, as it does not punish those who put the land to use; it taxes only the land, not the structure built on top of it. I’m not co…
> For a $1m house in the Bay Area, only a quarter or a third of that value is the structure.
So the first problem is zoning, but imagine if zoning is fixed. Now the taller the building is, the smaller the portion of the taxable value derives from the land itself.
The fact of the matter is single family suburbia is a scourge, and we need redevelopment not more development. We can subsidize affordable housing, or we can structure the taxes such that the only economical thing to do is massively denser buildings immediately. The latter is better because it is simpler and less subject to regulatory capture.
Re: Why a land-value tax is inevitable
#9LVT has to be mixed with an occupancy tax however. If I own a large field capable of supporting 10 homes right in the middle of the suburbs, I shouldn't be paying the equivalent taxes that 10 households should be paying. You have to separate out the taxes used to pay for services like trash from the taxes meant for ownership of the land. (although you could argue that large parts of the government are needed to servi…
That's the whole point. If you want to sit on an acre of land in a dense area, you should be taxed at the highest and best value of that land.
You make a valid point about services that can be measured, but the point of a Georgist land value tax is that land is the thing that is least distortionary to tax.
I'm not fully bought in and think a transition would be very difficult, but this is one of the reasons I don't like California's Prop 13 (even if I think all the proposed reforms would leave us in a worse state).
Re: Why a land-value tax is inevitable
#10LVT has to be mixed with an occupancy tax however. If I own a large field capable of supporting 10 homes right in the middle of the suburbs, I shouldn't be paying the equivalent taxes that 10 households should be paying. You have to separate out the taxes used to pay for services like trash from the taxes meant for ownership of the land. (although you could argue that large parts of the government are needed to servi…
You most certainly should be paying the equivalent of 10 households. You deny 9 others the ability to use the land.
If you have real use for the land, paying the lvt won’t be an issue. If you can’t use it efficiently, an lvt will incentivise you to sell what you don’t use.