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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

#111

Post by s1artibartfast »

salmonellaeater wrote: post #66
MattGaiser wrote: post #26

Earlier quoted context omitted.

High levels of displacement and instability. The proponents of this I have met are generally wanting to use it force seniors with paid off homes out of them so they can live in them instead (or often build on them, as they are property developers). It also assumes that NIMBYism remains at the same level, which is challenging, as every new build or development nearby increases your own taxes. It would also encourage t…

> It also assumes that NIMBYism remains at the same level, which is challenging, as every new build or development nearby increases your own taxes. It would also encourage the childless to fight things like schools, as they would pay extra tax having them nearby. This is the same as the existing tax system, where tax is proportional to (land value + buildings' value). > High levels of displacement and instability. Ta…

The Current system has property tax as one revenue stream of many. Income tax brings in by far the most funds, and there are sales taxes ect.

If you retire, or loose income, people currently pay less income taxes. You can also live frugally to cut down on sales taxes.

With LVT, taxes are detached from income and spending. Your taxes are also based on the whims of others. If your neighborhood gets trendy, you tax bill might double.

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

#112

Post by ijustlovemath »

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?

You could easily incentivize the behavior you want:

- a delay or cap on taxes for first time/single home owners; to make it not so punishing if you're just buying it to live there

- a number of properties below which the tax isn't applied or is reduced; to allow people to build equity in their house and maybe a vacation home or two, but stops someone from owning 5+ homes and locking up all the supply

- a tax that applies more heavily to corporate owners of residential homes; to keep the Blackrock's of the world from snapping up significant amounts of residential homes for padding their portfolios. Could even apply to LLCs of a certain size.

We just need to get creative!

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

#113

Post by injeolmi_love »

slashdev wrote: post #13
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

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

Whenever something is taxed, less of it is produced. In the case of LVT, the tax is on land that is in a desirable location with lots of nearby amenities. LVT encourages urban sprawl by punishing retail, industrial, and residential concerns that choose to agglomerate with higher taxes. LVT means less walkable cities and more LA style sprawl.

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

#114

Post by Narkov »

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.

^ this. In Queensland, Australia, your family home (principal place of residence) is exempt and any other property gets no land tax up to a certain personal land holding value ($600k?). Once you go over the threshold, it's a percentage of value.

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

#115

Post by ItsMonkk »

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?

No. The way taxes work is first you work out how much taxes need to collect, then you work out how much weight everyone has afterwards and split it all up according to that weight. This plan plans to reduce the weight of property and more than double the weight for land.

The city forecasts[0] that the average Detroit homeowner will get a 17% permanent property tax cut in 2025. 97% of all Detroit homeowners will get a tax cut.

[0]: https://detroitmi.gov/departments/office-chief-financial-off...

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

#116

Post by phkahler »

elteto wrote: post #96
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.

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.

>> You wouldn’t own _anything_ worth any value in the modern world.

That seems to be the goal. If everyone rents everything that would increase dollars flowing in the economy right? We are all here to work for the man, and rent the air when we inhale.

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

#117

Post by ksherlock »

edrxty wrote: post #25
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.

Municipal bonds?

Munis pay lower rates than taxable bonds so tax free status is a wash.

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

#118

Post by doctorpangloss »

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.

Is it? I can tell you now, I have no difficulty asserting that the value is near zero for the depreciating, crumbling houses on top of most of the land in the Mission in San Francisco. All the appreciation, which means nearly all of the sales price, of a typical home here, is the land.

BuT rEnNoVaTiOnS. Listen, I’m not trying to give you a comprehensive answer. I’m just trying to show that it’s not by far the biggest difficulty, not in the places LVT is most impactful, such as cities with extremely high vacancies like San Francisco.

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

#119

Post by harimau777 »

causality0 wrote: post #72
t-writescode wrote: post #44

Earlier quoted context omitted.

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.

When you say "...home you spent decades paying for..." it comes across like you are implying that the money you spent is somehow disappearing or being stolen. However, if the land value taxes have dramatically increased, then that means that the value of your property has dramatically increased, so you can sell for a dramatic profit.

It would still suck to have to sell, but it's not nearly as dark as you seem to be suggesting.

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

#120

Post by phkahler »

xboxnolifes wrote: post #108
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.

It's not the governments job to care about that.
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