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

101–110 of 910 posts

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

#101

Post by MikeTheGreat »

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.

I always thought this sounded like a good idea too (let the original owner stay, just in a new apartment-amongst-many) but (at least in the US) this doesn't seem reasonable.

Besides any legal hiccups (how common are such contracts? Is this well-understood law or are we trailblazing this?) there's the practical concern that if I sell my place and it takes a year or two to build the housing complex, well, I still need a place to live while it's under constructions.

I think the best that current American society could do is "...if the former owner could be guaranteed enough money from the sale to move someplace else nearby".

Still - if anyone has ideas about how to sell one's current residence so that more dense housing could be built, and then one could move into an apartment/condo in that new, denser, housing I'd be really curious to hear them.

(Depending on how life goes, it might be relevant to myself in the next 5-10 years)

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

#102

Post by oh_sigh »

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.

They don't directly factor in improvements, but the improvements are generally why land value increases/decreases.

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

#103

Post by xboxnolifes »

causality0 wrote: post #90
groby_b wrote: post #43

Earlier quoted context omitted.

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.

In theory (and ideally), the people the taxes go to includes yourself.

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

#104

Post by WillPostForFood »

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.

I think most people agree that the California system is a disaster.

Prop 15, a modest modification to Prop 13 that wouldn't have affected homeowners, just commercial property, failed. Removing Prop 13 protections for homeowners would be much less popular.

Maybe people in California do think the system is a disaster, but they like it and don't seem to want to change it.

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

#105

Post by phkahler »

Yodel0914 wrote: post #88
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.

It's the same in Australia. It seems like a pretty sensible way to encourage the best use of high value land.

But who gets to decide the best use? It seems like everyone but the owner.

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

#106

Post by jlhawn »

jlhawn wrote: post #95
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?

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,…

For anyone who think "oh this is just California's Proposition 13 but with a time limit"... not exactly. The tax rate in California is 1% of assessed value where assessed value can't grow more than 2% or the rate of inflation (whichever is lower). In this alternative system the base tax rate would be significantly higher. Ideally, high enough to capture the majority of the land's rental value at first. It also sets inflation as a floor while prop 13 has it or 2% as a ceiling.

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

#107

Post by saxonww »

andreygrehov wrote: post #49

I'm confused. How will this make things better? Does that mean a Detroit house-owners will suddenly have to pay more taxes? Isn't Detroit barely breathing?

I've spent 5 minutes reading about this, but the key difference between this and regular property tax that most of us are used to (in the US anyway) is that it taxes the value of the land, irrespective of any buildings on it. So it encourages land owners to maximize the utility of land they own, vs. leaving it underdeveloped.

Right now, there's less incentive to improve or repair buildings on existing land if taxes are high, since those improvements would make taxes go even higher. By tying it to the land value irrespective of improvement, the thinking is that it should encourage development.

As a homeowner, this sort of thing does concern me, though. I live in a low density, single-family area. A taxing authority might decide that my area is worth more - e.g. politically if there was a push for higher density housing - and proceed to value the land higher and my taxes would go up. This might make it unappealing to own and live in the house, and I would have to leave. Of course, this is seen as the correct outcome by a lot of people.

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

#108

Post by xboxnolifes »

jmatthews wrote: post #20

Virtually every effective hedge against inflation is taxed heavily. There is no respite from dilution. When you look at it from that perspective you see a systematic attack against any safe harbor.

Which, from some points of view, is the point. The government wants money to be going toward investments (real, productive kinds), not sitting around as an inflation hedge.

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

#109

Post by r00fus »

EA-3167 wrote: post #86
r00fus wrote: post #77

Earlier quoted context omitted.

"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.

The government owns all the land and gives you a more-or-less yearly subscription to keep your land at a reasonable cost. If you are a landlord then you're just a middle-man who can profit.

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

#110

Post by jonhohle »

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 .

My grandmother (greatest generation) built her house in the 50s and lives on a fixed income. Should she be forced to sell (assuming she couldn’t afford LVT) for an investment she took all the risk to develop?

We’re so addicted to spending that anything that leads to generational wealth is fair game for governments to loot?

Post reply on HN