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Does Georgism work? Is land a big deal?

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Re: Does Georgism work? Is land a big deal?

#121

Post by larsiusprime »

MisterMower wrote: post #26

“But won't landlords just raise the rent to make up for the LVT, passing the burden of the tax on to the tenants? Georgists say no, because land is special in that it is scarce and nobody can make any more of it. Indeed, LVT is a rare form of taxation that actually boosts the economy, because it discourages rent-seeking and speculation. Some Georgists even go so far as to say that LVT can raise enough revenue to repl…

Part II includes an empirical assessment of over a dozen studies that assess whether land value, in the actual real world, is passed on to tenants or not. I look forward to your comments after it posts tomorrow.

Re: Does Georgism work? Is land a big deal?

#122

Post by [deleted] »

MrPowers wrote: post #80
PragmaticPulp wrote: post #69

Earlier quoted context omitted.

> There are no tax loopholes to evade land taxes. Of course there is! You just lobby or bribe your politicians to value your land at a lower amount. They make up for it by valuing someone else’s land at a higher amount. So much of the LVT discourse assumes perfect valuations, but if you reduce everything to these variable valuations then the politics will just start modifying the valuations. We’d have an entire book…

All the land value taxes would be public record. Think it'd be hard to have your land valued differently than your neighbor.

[deleted]

Re: Does Georgism work? Is land a big deal?

#123

Post by MrPowers »

pdonis wrote: post #118
MrPowers wrote: post #44

Earlier quoted context omitted.

Nah, it's really easy to calculate the value of the land. Once you calculate the value of the land, then it's pretty much applicable to the whole neighborhood too. It's a one-and-done analysis. This isn't my opinion. There's lots of economic research to back this up. EDIT: some support: https://www.progress.org/articles/the-implementation-of-land...

> it's really easy to calculate the value of the land. No, it's really easy to wave your hands and come up with a number that you claim is "the value of the land". But since that number is not based on actual sales of the land in question, it's just hand-waving. Not to mention that if you ask five different economists to do the estimating, you'll get more than five different answers. Much of the article that prompted…

I'm not sure I agree with this:

> since that number is not based on actual sales of the land in question, it's just hand-waving

Actual land is sold in a lot of markets. That sets a great benchmark for "comparable transaction" types of valuation analyses which tend to be the most reliable.

If one acre of land is sold, there is a great baseline for the whole surrounding area.

I passed all 3 CFA exams and agree it's not an exact science, but as far a valuation analyses go, this one is pretty easy. Valuing something like intellectual property, goodwill impairment analyses, 409a valuations are much harder.

Re: Does Georgism work? Is land a big deal?

#124

Post by AnimalMuppet »

TulliusCicero wrote: post #63
AnimalMuppet wrote: post #51

Earlier quoted context omitted.

But if we go to a land tax, don't you have similar problems? Can you really say that land that has a 20-story highrise condo on it has the same value as the same land with a house on it? Because if you're going to buy the land - no matter what you intend to do with it - you get the land with the existing building. So, if you want to disentangle the price of the land from the price of the building, then you're back to…

> But if we go to a land tax, don't you have similar problems? Can you really say that land that has a 20-story highrise condo on it has the same value as the same land with a house on it? Yes, because we're talking about the land -- really, more like the geographic space than the literal land -- and not the buildings. > Because if you're going to buy the land - no matter what you intend to do with it - you get the l…

Yes, they do that, or at least they claim to. Out where I live, they can probably come close, because there is still some vacant land out here. When it sells, you get an idea of what nearby land would sell for if it were vacant.

But here's a building across the street from Central Park in Manhattan. What's the land price? When was the last time that a vacant lot sold in Manhattan?

I mean, I guess you can go by the cost of the last place that sold with a building on it, and the buyer tore down the building. (Subtracting out the cost of the teardown.) When was the last time that happened across the street from Central Park?

So in the places that the land is already heavily used, this is not all that easy to do.

Re: Does Georgism work? Is land a big deal?

#125

Post by pdonis »

MrPowers wrote: post #123
pdonis wrote: post #118

Earlier quoted context omitted.

> it's really easy to calculate the value of the land. No, it's really easy to wave your hands and come up with a number that you claim is "the value of the land". But since that number is not based on actual sales of the land in question, it's just hand-waving. Not to mention that if you ask five different economists to do the estimating, you'll get more than five different answers. Much of the article that prompted…

I'm not sure I agree with this: > since that number is not based on actual sales of the land in question, it's just hand-waving Actual land is sold in a lot of markets. That sets a great benchmark for "comparable transaction" types of valuation analyses which tend to be the most reliable. If one acre of land is sold, there is a great baseline for the whole surrounding area. I passed all 3 CFA exams and agree it's not…

> Actual land is sold in a lot of markets.

But much more land with improvements on it is also sold, and that's the land that all these hand-waving formulas claim to be determining the "value" of--not the total value of land + improvements, but just the value of the land itself.

Re: Does Georgism work? Is land a big deal?

#126

Post by throwaway34241 »

PragmaticPulp wrote: post #18

I was excited to read this article, but by the end it felt like a jumble of unrelated conjectures examined in isolation from each other that all seem to be presented in a way that deliberately ignores any downsides: For example: > Also, keep in mind that LVT would see the elimination of the portion of property tax that falls on buildings. I just checked my own property tax records (I live in the suburbs of a medium-s…

> The second part looks to be more interesting: I’d like to see some arguments for why a LVT wouldn’t just be passed along to the renters like every other expense is currently.

I think the general idea goes something like: a new apartment can collect $10k/mo rent, and so after construction expenses a developer can pay say $5k/mo for the land. These numbers don't change with a LVT or not.

Without the LVT, the $5k/mo that they can afford translates to say a $500k mortgage, which roughly determines the land price (as multiple developers bid for the same land).

With a LVT, there's say a $2k/mo tax, so they only have $3k/mo to pay the mortgage, which translates to a $300k land price using the same logic.

So by working backwards in this simple thought experiment the LVT is just reducing the value of the land without changing much else about the housing market. Intuitively it also sounds reasonable that taxing land values might reduce land values as a result.

I'd be interested to see the upcoming detailed analysis though.

Re: Does Georgism work? Is land a big deal?

#127

Post by larsiusprime »

AnimalMuppet wrote: post #124
TulliusCicero wrote: post #63

Earlier quoted context omitted.

> But if we go to a land tax, don't you have similar problems? Can you really say that land that has a 20-story highrise condo on it has the same value as the same land with a house on it? Yes, because we're talking about the land -- really, more like the geographic space than the literal land -- and not the buildings. > Because if you're going to buy the land - no matter what you intend to do with it - you get the l…

Yes, they do that, or at least they claim to. Out where I live, they can probably come close, because there is still some vacant land out here. When it sells, you get an idea of what nearby land would sell for if it were vacant. But here's a building across the street from Central Park in Manhattan. What's the land price? When was the last time that a vacant lot sold in Manhattan? I mean, I guess you can go by the co…

Part III goes into assessments in detail.

Re: Does Georgism work? Is land a big deal?

#128

Post by lmm »

whakim wrote: post #91
MrPowers wrote: post #7

I'm not a huge fan of how deadweight loss is defined in the article: > virtually all economists agree that land value tax has zero "deadweight loss"–a fancy word for a drag on the economy that makes certain activities no longer profitable Property taxes tax the land + the building. Building taxes are complicated to assess. They require tax assessments, appraisers, tax code, accountants to compute depreciation schedul…

IMO the biggest issue with property taxes, land taxes, or any other similar idea, is that they arbitrarily tax one kind of wealth over others. Why should a person who owns a house worth $500k (and perhaps has a mortgage on it) pay not only the exact same tax rate, but also the amount of tax as a person who owns a house worth $500k (and doesn't have a mortgage on it), but also has $5 million in other assets? (This isn…

Owning huge amounts of land is uniquely antisocial in a way that owning huge amounts of other stuff isn't. If Mr Moneybags buys ten thousand paintings, we can always produce more paintings (and the rising price of paintings will push more people to take up careers in art). But if Moneybags buys ten thousand acres, the rest of us are ten thousand acres worse off in a way that we can't really fix.

Re: Does Georgism work? Is land a big deal?

#129

Post by dredmorbius »

hahaxdxd123 wrote: post #35
MisterMower wrote: post #26

“But won't landlords just raise the rent to make up for the LVT, passing the burden of the tax on to the tenants? Georgists say no, because land is special in that it is scarce and nobody can make any more of it. Indeed, LVT is a rare form of taxation that actually boosts the economy, because it discourages rent-seeking and speculation. Some Georgists even go so far as to say that LVT can raise enough revenue to repl…

Landlords in California might benefit from Prop 13, in which case their property taxes might be 10% of the landlord across the street. Yet all things equal, they charge the same. Landlords already charge what the market will bear. Taxing them more or less does not change that or else there would be $600/mo 4BRs in SF for rent. Since your comment is deliberately inflammatory, I will do the same - do you have any basic…

Your comment is excellent when limited to the first paragraph alone.

Re: Does Georgism work? Is land a big deal?

#130

Post by aunty_helen »

SilasX wrote: post #87
floober wrote: post #39

Earlier quoted context omitted.

> 2. it's unfair to change the rules in the middle of the game Is that not the very purpose of legislation? Laws are not written in stone

True, but this is a case where a difference in degree becomes a difference in kind. There’s a huge difference between “taxes are higher this year” and “taxes will be specifically levied in a way to make that asset of yours worthless”. Generally, the latter is considered a taking that merits compensation like in the case of eminent domain.

“Worthless” is a false dichotomy, people will still need, use and pay for land.

And progressively levying a LVT would make a lot more sense than flipping a switch and upside downing the economy.

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