Redfin Economist says land value tax will fix the economy

It seems that the LVT has a lot in common with the recent (insane) proposal to tax unrealized capital gains on stocks. Property taxes are already bad enough, but at least they’re based on actual sales figures not estimated/imaginary “potential market value”

Not even going to get into the weird incentives/pressure this would create for zoning boards.

Two equivalent lots next to each other should taxed the same or very close to it.

Beachfront vs non beachfront isn’t equivalent, but two random fields in Northern Virginia next to each other with similar features should be. Anyway, LVT definitely doesn’t care about what you built on the property so this distinction just doesn’t matter.

I don't think that this is a correct model of how a high LVT would work. But more importantly, let's say it did- now you don't get any of the supposed 'efficiency' gains.

I think LVTs are a great idea for a brand new society, and they certainly would work- by making land too valuable for SFHs, so that it has to be used for its highest & best usage. But if you're not forcing homeowners to do that, you're not capturing any of the efficiency gains, so LVT just becomes another tax. It's either forcing landowners to develop apartment buildings on valuable land or it isn't- you have to pick one

I could have just as easily said the higher population density property had a lower LVT as it’s an arbitrary choice. Perhaps the higher population density is in the worse school district as the better one. Hell the district boundaries my have changed last week specifically to shift the burden to a different school district.

So sure, it’s of course possible for properties next to each other to have significantly different values per acre, but nothing says the higher density one must have a higher or lower value so let’s just assume their identical for simplicity. Any way you slice it it’s clear LVT doesn’t care about the actual population on the land.

> The economist in the podcast was explicitly asked why doing things like "heavily tax all non-primary residence homes" wouldn't work. Do you have any argument as to why she was wrong?

Can you point out the timestamp, I don't see it in the transcript and I just listened and I don't hear any discussion of speicfically heavily taxing non-primary residences.

I listened to this same economist making the rounds (another really good indication they're talking their book) on Odd Lots[0][1].

Just as on Odd Lots, the entire conversation was tilted -- they jumped right past the simple solutions and right to the hard-to-understand, change-the-paradigm solution. Of course Redfin wants this solution -- they don't care about the land tax (and they don't have to pay it), but they do want more units to broker.

They bang on NIMBYism and zoning problems that could open up space for new housing, and that's great, but this is a different problem right under our noses -- and that's rampant speculation and rent-seeking activity in the housing market.

I don't want to be unduly critical here, but the odd lots interview was slightly better. There is so much nuance being lost (a throw away allegory to stopping littering with PR, when the real problem was companies not being taxed for the externality that is plastic/styrofoam packaging).

> The many changes that you are proposing, and the tax evasion that will occur, and the modifications to stop those evasions, and the changed behaviors to those modifications are where the complexity lies. A Land Value Tax isn't a complicated thing. In fact, in a single land tax + carbon tax world, many things would be drastically simpler.

My initial proposal was a bad one -- someone pointed this out and made a better suggestion, an even more direct tax, right on the capital gains. That's a much better proposal.

A land value tax is more complicated than simply increasing capital gains tax (or even my previous suggestion) on rental property.

We do not need to create new tax machinery (which is what a land value tax would require) for this, and in the end a land value tax is a proxy for what we really want. What we want is to disincentivize speculative and profit-via-rent-seeking purchasing of homes. The easiest, most straight forward way to do that is to tax that specific activity.

Fairweather did this as well -- I don't think it's a good idea to mix in carbon taxes, equity & equality, and other things with this issue. Just stick to the one issue. In practice those issues are related, but that doesn't mean we must solve them all at once.

> The beautiful thing about a Land Value Tax is that it is incredibly hard to evade. You own the land, you pay the tax. You don't want to pay the tax? Sell the land.

This is stated simply, but implementation will not be simple, vary from state to state, and likely contain lots of the tax evasions/loopholes as well.

The refinement on my original suggestion (increasing capital gains on rent-seeking activity) is simpler.

> This disincentives building, and would harm rent prices over the long run. The land value tax does not have this downside.

It's a market -- building will be disincentivized until supply is constrained enough to raise prices. It will balance out, and this time the speculative turbulent forces will be gone, meaning housing will be easier to predict and plan out.

The land value tax is a way for the same circus we have to keep going, and the government to collect more taxes from the circus, but the circus is the problem. It's better to attack the problem directly than indirectly.

The land value tax encourages building bigger structures to juice the ROI on a single plot of land. That is not what I want, at least right now, and it is an indirect way of reducing demand. Remove the 2nd, 3rd, 4th, 100th home buyers from the market, and demand will plunge. Maybe our goals are different, but I mean what I said -- I want to disincentivize rent-seeking behavior.

In fact, the land value tax is probably actually harmful to my stated goals -- making land more expensive without reducing property tax much would actually make land ownership less affordable for the common homebuyer, and a cost of doing business for professionals who can pass along land ownership taxes to the 1st level tenants (with renters becoming the 2nd level tenants).

[0]: https://www.bloomberg.com/news/articles/2022-06-13/transcrip...

[1]: https://podcasts.google.com/feed/aHR0cHM6Ly93d3cub21ueWNvbnR...