By George! this sure sounds like a good idea!
Is that a pun on Georgism? https://en.wikipedia.org/wiki/Georgism
By George, I think it is.
Detroit wants to be the first big American city to tax land value
81–90 of 910 posts
Re: Detroit wants to be the first big American city to tax land value
#82Since Detroit's population has been declining, from 1.5 million to under 700k, revenue will keep falling. What would they do if they lost more people? Increase taxes?
Re: Detroit wants to be the first big American city to tax land value
#83Earlier quoted context omitted.
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.
California also has the deferment policy.
Re: Detroit wants to be the first big American city to tax land value
#84Earlier quoted context omitted.
(I'm a big proponent of LVT) The two downsides I'm aware of are difficulty in transitioning to an LVT and difficulty in valuing the land. Transitioning to an LVT means that landowners no longer capture land rents for themselves, which is a massive overnight loss in the value they hold. The solutions there typically tax only the difference in land value versus a baseline assessment. So if a lot is worth $100 before LV…
> difficulty in valuing the land This seems by _far_ the biggest difficulty, and I find it strange that this rarely comes up in LVT discussions. Even for nominally 'liquid' land it's not clear who values it or how.
Lots of countries value land and improvements separately (e.g. New Zealand, Australia, Denmark) for council rates (property tax essentially). Here in New Zealand, there are several companies that provide valuation services to local councils (and private individuals if you want to value your property). You can dispute the valuation if you think you're being unfairly valued (usually because you want to pay less property tax).
Re: Detroit wants to be the first big American city to tax land value
#85If a person's primary residence isn't given an exception this will guarantee that people get kicked out of their homes once the land value increases too much.
Similarly, if the tax on a rental property becomes too great the rent will rise to meet it. And again, people will be priced out of their homes.
Re: Detroit wants to be the first big American city to tax land value
#86Pufff, 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?
That's a lot more romantic until you remember it's just going to the government, not some mystical starscape.
Re: Detroit wants to be the first big American city to tax land value
#87Earlier quoted context omitted.
That is already how property tax works, except in California. I think most people agree that the California system is a disaster.
The main reason the California system is a disaster is that long-time owners are grandfathered and pay very little tax, meaning there's no incentive for these people to support more housing. In other words, if California actually did kick out homeowners for their neighborhood getting too popular, it would have been much less of a disaster.
Kicking out long term residents sounds kinda sick doesn't it? Think about it. You're just gonna have homeless old people.
Re: Detroit wants to be the first big American city to tax land value
#88Pufff, 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.
It's the same in Australia. It seems like a pretty sensible way to encourage the best use of high value land.
Re: Detroit wants to be the first big American city to tax land value
#89Earlier 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?
True enough. It doesn't factor in land improvements directly into the calculations, but it could be affected indirectly by whatever the market seems something to be improving the neighborhood in general.
Re: Detroit wants to be the first big American city to tax land value
#90Pufff, 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 people you're paying taxes to didn't create it either.