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Redfin Economist says land value tax will fix the economy

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Re: Redfin Economist says land value tax will fix the economy

#101

Post by InefficientRed »

hardwaresofton wrote: post #91

It doesn't have to be this complicated. We don't need a land value tax. The most straight forward way to make people avoid speculating is to heavily tax all non-primary residence homes. Cap the amount people can charge in rent to some %s of purchase value (incentive to have high purchase value) to and set a baseline on the taxes required and make the math for building property empire bleak (absolute destruction of th…

> Cap the amount people can charge in rent to some %s of purchase value (incentive to have high purchase value)

Landlords will figure out how to setup wash sales, or as close to a wash sale as they can legally get, or trade property between entities owned by the same real people, or engage in swapping behavior with other large holders in a cartel-like fashion, etc. Closing all the loop-holes would be difficult.

Tax the net proceeds of rental properties at 90% and slap a 100% capital gains tax on any property that is not owner-occupied. Also, simply rule out renting for huge swathes of property (especially single family homes).

Re: Redfin Economist says land value tax will fix the economy

#102

Post by jemen »

InefficientRed wrote: post #54
hash872 wrote: post #24

A very high LVT is a politically unserious proposition, because it would involve drastically raising taxes on the people who actually vote & hold political power in society- the middle class, upper middle class, and wealthy in suburbs and low-density urban areas. All of the alleged 'efficiency' gains you hear Georgists claim really mean 'middle class homeowners forced to sell their single family home to developers du…

On the other side of that is the also white-hot rage of the under-housed. We live on a street with a bunch of single family homes, almost all of which are rented out. There was a (literal) screaming match between a couple (one of whom is an MD) who couldn't afford the rent increase and a broker who was showing their apartment. Renters are close to out-numbering non-renters by double digits. Those are incredibly new p…

> Landowners, I think, I have two options: find ways to fracture/disempower the rent base in the communities where they invest or else find a way to keep the number of non-renters well over 50%.

I would say they already are disempowered. It is unfortunately pretty hard to organize anything when you have to worry about high rent, not losing your job or having to move every few years. What we have seen in the last decades is that it is now hard to do much at all through organizing unless you can somehow affect the economy. Which you can't if you risk getting fired or evicted doing so. Look at Japan, South Korea, Singapore, Hong Kong etc. for the results.

Re: Redfin Economist says land value tax will fix the economy

#103

Post by WalterBright »

strongpigeon wrote: post #51
fullshark wrote: post #29

Earlier quoted context omitted.

But pollution is a byproduct of being productive?

What I guess the parent is implying is that by taxing something, you’re effectively disincentivizing it. Tax land value, you’re punishing people for making land valuable. Tax pollution, you’re incentivizing people to pollute less.

> Tax pollution, you’re incentivizing people to pollute less.

Exactly. Taxing pollution not only raises needed tax revenue, it reduces pollution as a side effect. It's a winner of a way to run things.

Re: Redfin Economist says land value tax will fix the economy

#104

Post by Retric »

ericmay wrote: post #36
Retric wrote: post #30

Earlier quoted context omitted.

High but realistic LVT at say 2% wouldn’t force people to sell, it would however tank the value of ultra expensive land. Fewer people could afford 2% of land value + mortgage costs + insurance + … at current prices which means there are fewer buyers at those prices. That price drop scales with the LVT so at 10% you would pay more than at 2%, just nowhere close to 5x as much.

> it would however tank the value of ultra expensive land. Well it would depend on why the land is expensive. What it would do (at least in theory which I do agree with) is force the expensive land to be developed for a useful economic purpose instead of just sitting there. For single-family homes and such a LVT is likely to be neutral or slightly positive b/c a lot of those homes weren't built on particularly valuab…

LVT’s don’t cover the cost of education, roads, police, etc that scale with population. What they tax is proximity to places people want to live or resources to be extracted etc.

This tends to minimize the distance people travel to work, but it’s hardly go to force a billionaire to sell land they want to keep.

Re: Redfin Economist says land value tax will fix the economy

#105

Post by Wowfunhappy »

SllX wrote: post #85
Wowfunhappy wrote: post #65

Earlier quoted context omitted.

Isn't the idea that a LVT would improve the use of land? If that premise is correct, it could cause the city to flourish and grow ahead of its neighbors. Implementing the change more narrowly would allow you to test that assumption.

That’s optimistic. You’re reframing tax-policy to shape landowner behavior towards your desired outcome on the presumption that this will be an improvement of the land by increasing the cost of owning it by fiat. Sin taxes exist for a similar reason and have similar problems. Taxes should not be conceded as an instrument of power to reorient society into a form viewed by a subset of society as correct, but recognized…

> Taxes should not be conceded as an instrument of power to reorient society into a form viewed by a subset of society as correct

Why? If taxes are going to have side effects anyway, I think we should try to make those effects positive instead of negative.

> Regardless of reason, taxation is a taking of assets from its owners, and this is a moral compromise we tolerate in service of having a government at all.

I don't think I agree with that.

For example, I also think we should have a (revenue neutral) carbon tax. Part of the tax's purpose would indeed be to fund the government, but the other purpose would be to make people pay for the actual social cost of emitting carbon into the atmosphere, as opposed to passing them on to the broader public. This would allow the free market actually work properly.

Re: Redfin Economist says land value tax will fix the economy

#106

Post by pyradius »

abakker wrote: post #98
pyradius wrote: post #96

Earlier quoted context omitted.

Getting to a 'very high LVT' is not something proposed to happen overnight. Mortgage debt also has to be considered since this is simply 'capitalized future rents'. Additionally, the process would include a tax shift, that is the reduction of other taxes as the tax on land is raised. Only after a revenue-neutral tax shift was concluded would further increases in land value taxation occur. Given the fact that renters…

Homeowners already pay "rent" in the form of property tax. Depending on where you are, this might be quite a high payment already. For a mortgage holder with property tax, a great deal of that payment is fees and taxes already.

Property tax falls on both the land and improvements. Inasmuch as they pay a 'property tax on land', they paid a reduced price to purchase said land. If there had been no tax on land, they would have simply paid that much more in lump sum for their fee simple ownership.

The premise behind a land value tax is to take an increasing amount of the land rent in taxation, which at the extreme end would reduce the selling price of land to $0.

The objective is both to make the land markets work better and one of distributive justice. It isn't to punish homeowners. It is to redirect the privatization of land rent and return it to the rightful recipients (those who are excluded from using a location with the public acting on their behalf).

In other words, if the Georgist solution had been in place, the price of land would have been close to $0. I can assure you this is nowhere near the case. In fact, here in Salt Lake City, the land share of real estate value is around 70%.

Of course, transitions can be challenging. The prior owners of the land got away with legalized theft and you can trace this back in time from each former landowner capturing the land rent from the next buyer. This is what Georgists aim to stop.

Re: Redfin Economist says land value tax will fix the economy

#107

Post by foogazi »

zip1234 wrote: post #74
anonymouse008 wrote: post #47

9 times out of 10 the issue with housing isn't that housing is truly in short supply - it's housing within a reasonable travel time of desired locations that is in short supply. To view the solution myopically as we must change people to allow more housing in their backyard, is only one frame - and not even the most effective one. Innovating the urban -> rural transport chain is the most challenging, but its implicat…

Or we could just do the completely free thing that is removing rules preventing construction of homes where they are desired...

What if there are already homes there ?

Re: Redfin Economist says land value tax will fix the economy

#108

Post by InefficientRed »

uberman wrote: post #90
sudden_dystopia wrote: post #32

Disagree. We should go the other way, abolish all primary residence property taxes and replace with value added taxes. Other lands for secondary and commercial properties can still be taxed. Otherwise you are really just leasing land from the government. On a somewhat absurd tangent, I’ve been toying with the idea of something I call a “land dividend” to solve homelessness. If every US citizen had by birthright, a sm…

Any attempt to solve homelessness should be applauded. However, There are plenty of places in the USA where homes with utilities can be traded for smart phones: https://time.com/3478199/trade-iphone6-for-detroit-house/ There are places where in bulk (sections) you can get land for less than $500 an acre (you would not want to live there admittedly) often land already owned by the state or the fed as you alluded to. G…

That's not a home. It's a piece of land with a structure on it that needs to be demolished before the land can be used for anything.

Also, the purchaser is sometimes on the hook for the back taxes (in his case $6K). I'm not sure how MI law works, but if the purchaser is on the hook then he's actually selling a lot with a condemned house for $6,500. Which is not an amazing deal, since vacant land in nicer rust belt cities goes for $10K-$30K and demolition is expensive. Again, not sure, but if that's how it works in MI then it makes sense that he's having trouble selling a lot with a condemned building and $6K in back taxes at pretty much any price. You're going to burn mid five figures before you have lien-free empty land, which can be had at that price with much less hassle.

In some cities, a condition of sale for city-owned property is that the buyer rehabs or rebuilds within a given timeframe.

> Giving an acre to a homeless person and relocating them there though would be a death sentence.

That's probably a massive over-statement -- even in the most dangerous communities in the US a homeless man probably isn't going to be killed for no reason. And this is Detroit, not the Alaskan wilderness, so there are shelters and so on. But it is true that the land would be totally worthless to a homeless person.

Re: Redfin Economist says land value tax will fix the economy

#109

Post by notahacker »

InefficientRed wrote: post #54
hash872 wrote: post #24

A very high LVT is a politically unserious proposition, because it would involve drastically raising taxes on the people who actually vote & hold political power in society- the middle class, upper middle class, and wealthy in suburbs and low-density urban areas. All of the alleged 'efficiency' gains you hear Georgists claim really mean 'middle class homeowners forced to sell their single family home to developers du…

On the other side of that is the also white-hot rage of the under-housed. We live on a street with a bunch of single family homes, almost all of which are rented out. There was a (literal) screaming match between a couple (one of whom is an MD) who couldn't afford the rent increase and a broker who was showing their apartment. Renters are close to out-numbering non-renters by double digits. Those are incredibly new p…

Can't speak for your jurisdiction, but I live in the UK where houses are (i) infamously unaffordable and (ii) 65% of the population owns a home, generally sitting on its own plot of land which in much of the country represents a large fraction of the value of the house, and generally representing something that will [have] take[n] a couple of decades to pay off. The remaining 35% obviously skews towards politically uninfluential groups (the young, the poor, the immigrant, those not tied to particular place) and of course people that want to buy a house to set them up for life asap. Home ownership is falling, but not to the extent that the government doesn't see keeping house prices rising as one of its highest political priorities.

Re: Redfin Economist says land value tax will fix the economy

#110

Post by throw0101a »

Also interviewed on the Odd Lots podcast a little while ago:

> Housing in the US is a constant source of frustration. On the way up, prospective homebuyers worry that they're missing out on their chance to jump on the housing ladder. On the way down, homeowners worry about losing their equity and their nest egg. So is there a better way? Is there a way to make housing more equitable, and to separate the investment component from the shelter component? On this episode we speak with Daryl Fairweather, the chief economist at Redfin, about a land value tax and how it could help us reposition housing so that it's less of a financial asset that spirals people higher, and blocks so many people out.

* https://play.acast.com/s/oddlots/2f88bd35-04b5-4956-b770-aeb...

* https://podcasts.apple.com/us/podcast/daryl-fairweather-on-t...

* https://open.spotify.com/episode/6tIIjEet2Byi8kSWkmoQEt

* https://podbay.fm/p/odd-lots/e/1655107200

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