Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

economist.com

Post reply on HN
Print view View original

91–100 of 910 posts

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

#91

Post by bigstrat2003 »

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 .

You realize that democratic government requires compromise, right? Scoff all you want, but this is the sort of measure which is required to get people to accept policies which directly cost them (but benefit everyone else).

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

#92

Post by xboxnolifes »

hhmc wrote: post #69
josnyder wrote: post #53

Earlier 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.

It doesn't seem that different from what normally is done for property tax. Property tax is already generally based on land and structure (Just look at property taxes on the million dollar tiny houses on prime real estate). LVT is just removing the structure portion.

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

#93

Post by [deleted] »

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 .

[deleted]

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

#94

Post by harimau777 »

s1artibartfast wrote: post #70
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?

It is based on 1800's economics where primary production (using raw materials) was the primary source of value creation. It doesn't make much sense for a modern service based economy. Your typical service sector worker, programmers, doctors, CEOs, would have essentially no taxes as long as they have a small geographic footprint. Of course it sounds good to tech b

How does this interact with the fact that housing is maybe the biggest economic issue that America is currently dealing with? That suggests to me that land is still pretty important.

This doesn't apply to what Detroit is doing, but you could probably also take the underlying logic of land taxes (rent seeking should not be protected from taxation) and apply it to other more modern forms of property.

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

#95

Post by jlhawn »

ekianjo wrote: post #30
mjamesaustin wrote: post #9

I'm a big proponent of Land Value Tax. In theory it is one of the healthiest forms of taxation since supply is fixed. It encourages efficient use of land and discourages owners from squatting on undeveloped land just to reap value from its location. https://en.wikipedia.org/wiki/Land_value_tax

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?

I have thought about this for years. If your land value increases dramatically over a short period of time, _theoretically_ you should be able to use this as an opportunity to take advantage of that increase by constructing more housing or office/retail space.

In reality, individuals and businesses like to make long term plans. This expectation makes it incredibly unreasonable for a recently constructed home, office, or retail space which has an expected useful lifetime of decades. They shouldn't be expected to replace it all only after a few years.

This is why I think a reasonable compromise is to have a type of limited "rent control" for land value tax where it is only allowed to increase by no more than 1 percent more than the rate of inflation. This limit comes into affect when a building is constructed and lasts for the duration of the expected lifetime of the building, perhaps 55 to 65 years. That's at least 2 full depreciation cycles (if you're familiar with that). It resets to market value if the property is sold but the limit is not extended any further into the future.

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

#96

Post by elteto »

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.

That device you used to post that comment, what, did you create it? Those clothes you are wearing, did you create them? The car you drive, did you create it?

I’m not saying anything pro/con the LVT. But measuring ownership by whether you created it or not is a pretty terrible measure. You wouldn’t own _anything_ worth any value in the modern world.

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

#97

Post by causality0 »

Proziam wrote: post #85

If 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.

Right. If this is aimed squarely at blighted and/or unused lots I fully and completely support it. If this applies to retired people living in family homes it can fuck off.

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

#98

Post by BirdieNZ »

ekianjo wrote: post #30
mjamesaustin wrote: post #9

I'm a big proponent of Land Value Tax. In theory it is one of the healthiest forms of taxation since supply is fixed. It encourages efficient use of land and discourages owners from squatting on undeveloped land just to reap value from its location. https://en.wikipedia.org/wiki/Land_value_tax

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?

This is the case for renters everywhere.

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

#99

Post by phkahler »

TulliusCicero wrote: post #46
ejstronge wrote: post #39

Perhaps someone who has thought about this more can explain how a 'land value tax' differs from existing property tax regimes that explicitly examine the value of improvements and the value of land... This Detroit case is interesting because there are different rates of taxation on the land, but the difference in rate could also be obtained by increasing the land component of a parcel's value.

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.

Land in Detroit is cheap already. This sounds like a way for investors to build big things and not increase their tax bill.

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

#100

Post by TulliusCicero »

notatoad wrote: post #79
TulliusCicero wrote: post #45

Earlier quoted context omitted.

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 be…

It reduces the impact of the land tax, it doesn't nullify it, because it would apply only to a minority of the land owning population -- likely a small minority.
Post reply on HN