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Detroit wants to be the first big American city to tax land value

economist.com

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Re: Detroit wants to be the first big American city to tax land value

#71

Post by cameldrv »

TulliusCicero wrote: post #34
ekianjo wrote: post #30

Earlier quoted context omitted.

So if your neighborhood gets popular you get kicked out? Sounds like a healthy policy. Have you ever thought more than 2 minutes about it?

You could provide exceptions for a primary residence where the increased taxes would be sufficiently burdensome on the owner's income. Doesn't have to be all or nothing. Just don't do what Prop 13 did in California where they applied the property tax limit even to commercial property for some reason.

You could also do what they do in Texas which is to allow anyone over 65 to defer any increased property tax amount (with interest) until sale or the death of the owner.

The California approach is to let the owner get massive appreciation, which they receive at sale, but never pay tax on any of it.

Re: Detroit wants to be the first big American city to tax land value

#72

Post by causality0 »

t-writescode wrote: post #44
ekianjo wrote: post #30

Earlier quoted context omitted.

So if your neighborhood gets popular you get kicked out? Sounds like a healthy policy. Have you ever thought more than 2 minutes about it?

Sounds like a way to convert single family homes into multiplexes as population rises so everyone can be closer to amenities. I’m very for that, especially if the former owner could find a guaranteed way to get one of the units on their land so they can stay.

"Don't worry, the law guarantees that after taxes on the land and home you spent decades paying for are so high you can't afford them you can get one of the pieces after we take it away and chop it up" is one of the most dystopian things I've ever heard.

Re: Detroit wants to be the first big American city to tax land value

#73

Post by josnyder »

ses1984 wrote: post #52
TulliusCicero wrote: post #46

Earlier quoted context omitted.

Land value taxes don't factor in improvements. Improving the land results in no property tax change, so they incentivize doing more useful things with the land.

Don’t improvements in nearby plots change the value of a plot of land?

Yes, by design. One major goal is to prevent a landowner from squatting on an empty lot while their neighbors build prosperity around it. The "squatter" then cashes in, having done nothing themselves. "Everyone works but the empty lot" is the commonly used phrase.

The goal of an LVT is to insulate a landowner's tax bill from being affected by their own improvements. Its anti-goal is to insulate a landowner from changes in land use around them.

Re: Detroit wants to be the first big American city to tax land value

#74

Post by ensignavenger »

koolba wrote: post #51
BirdieNZ wrote: post #41

Earlier quoted context omitted.

Gentrification, which displaces renters (rents become too expensive for existing tenants so they need to leave the area), will start displacing some land owners as well. LVT would increase due to land value increasing, and the current land owners may not be able to afford the increased tax. If you don't allow deferment of the tax, pensioners might have to move unwillingly (low income that may not cover the tax). Most…

> Most proposals allow deferment for retirees until sale of the property, though, so it's kinda a non-issue. Ah more carve outs for boomers. I knew it had to be in there somewhere .

A deferment should be allowed for anyone on one primary residence. Then it isn't a carve out just for boomers. Also, the deferment doesn't mean the taxes don't get paid- they just don't have to be paid until the person moves out or transfers the property (or dies, which triggers a transfer).

Re: Detroit wants to be the first big American city to tax land value

#75

Post by phkahler »

s17n wrote: post #38
ekianjo wrote: post #30

Earlier quoted context omitted.

So if your neighborhood gets popular you get kicked out? Sounds like a healthy policy. Have you ever thought more than 2 minutes about it?

That is already how property tax works, except in California. I think most people agree that the California system is a disaster.

>> That is already how property tax works, except in California.

Not in Michigan (where Detroir is). The rate of increase on property taxes is capped, so if prices go up quickly your tax doesn't. It gets reset to market if you sell.

The most valuable thing you can have for retirement is a home free and clear. Incentives to disrupt that in favor of what others think is a "better use" are very un-American IMHO.

Re: Detroit wants to be the first big American city to tax land value

#76

Post by caminante »

TulliusCicero wrote: post #45
slashdev wrote: post #13

Earlier quoted context omitted.

I’ve heard economists champion the idea, but I’ve heard little talk about what the tradeoffs are. What are the downsides?

The main downside is that you end up essentially kicking people out if their land gets too valuable. You can always provide an exception though, for a primary residence where the increase in taxes would be burdensome on the owner's income.

Doesn't that happen already at the margins, albeit not quite as fast if someone's "land rich"?

On the flipside, I bet there are locales where the buildings have a lot of improvements with multi-story dwellings and the land tax could be worse.

The article goes into detail about why this tentatively works for Detroit where the majority of tax bills will decrease.

Re: Detroit wants to be the first big American city to tax land value

#77

Post by r00fus »

woliveirajr wrote: post #37

Pufff, Brazil does that since forever. By paying some tax over your land, basically your government is taking it from you every generation or two. Roughly, 2% each year and in 50 years and it's gone.

"We sit together

The mountain and me

Until only the mountain remains"

-Li Po

Maybe the land isn't really yours to begin with?

Re: Detroit wants to be the first big American city to tax land value

#78

Post by WorkerBee28474 »

groby_b wrote: post #43
woliveirajr wrote: post #37

Pufff, Brazil does that since forever. By paying some tax over your land, basically your government is taking it from you every generation or two. Roughly, 2% each year and in 50 years and it's gone.

Given that it was never "your" land to begin with (what, did you create it?), that's not an unreasonable approach.

The government didn't create it either. The only reasonable recipient of the 2%/year tax is God.

Re: Detroit wants to be the first big American city to tax land value

#79

Post by notatoad »

TulliusCicero wrote: post #45
slashdev wrote: post #13

Earlier quoted context omitted.

I’ve heard economists champion the idea, but I’ve heard little talk about what the tradeoffs are. What are the downsides?

The main downside is that you end up essentially kicking people out if their land gets too valuable. You can always provide an exception though, for a primary residence where the increase in taxes would be burdensome on the owner's income.

the exceptions essentially nullify the point of the land value tax though.

the whole point of an LVT is to aknowledge that land is a valuable resource to the community at large, and using it ineffectively is a harm to the community and should be discouraged through taxation. every exception you make not only removes the incentive, but then creates an incentive to not change the usage of that land to something more beneficial, because the people who've received the exception don't want to give it up.

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