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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

#181

Post by jandrewrogers »

MikeTheGreat wrote: post #101
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.

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…

While it isn't exactly analogous, property developers that build residential high-rises often have as part of their contract an option for a desirable unit in the building on very generous terms. Builder occupied units in new buildings are not that uncommon. There is no reason you could not extend such terms to the landowner.

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

#182

Post by tzs »

unyttigfjelltol wrote: post #150
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.

They are loading the tax burden on the land rather than on structures. So, you can build the Taj Mahal or leave the lot a burned out wreck-- either way you pay the same tax. Many comments on the thread overstate what this is. I happen to think it's interesting, but for reasons unrelated to the article-- it's kinda goofy for the state to tax personal property that happens to be fixed to a location, like a fireplace, s…

What's the tax used for, though?

In many places a large part of what property tax is for is things like roads, water, sewer, police, fire, and schools.

For most of those how much money is needed for them depends a lot more on what is on the land than on the land itself. E.g., the amount of sewer capacity needed for a lot is proportional to the number of people who live on the lot. It thus seems sensible to have a tax that includes as a factor what is built on the lot.

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

#183

Post by sideshowb »

avar wrote: post #163
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. It's rather easy to value the land: Have the owner decide what it's worth, then they pay a tax as a percentage of that valuation. Now, obviously given that system everyone's going to value their land at $0. To adjust for that land owners must be obligated to sell their land to anyone willing to buy it at the declared valuation. Such a mechanism doesn't only keep the current owners ho…

Given the friction (inconvenience) in having to move house/business etc, that hardly seems fair. It also defeats the object of land ownership if you can be kicked off it at any time.

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

#184

Post by trostaft »

jackcosgrove wrote: post #172
r00fus wrote: post #109

Earlier quoted context omitted.

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.

If the government owns all the land then the rentiers will get out of the real estate business and into politics.

... implying that they aren't already? At-least speaking US, there are plenty of real-estate focused PACs.

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

#187

Post by AmericanChopper »

harimau777 wrote: post #142
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.

You are already paying taxes, Land Value Taxes just seek to be a more efficient (since they try to target rent seeking rather than profitable labor) and more just (since they target land that the owner didn't create) form of taxation. So arguing that it's effectively the government stealing your property is only a valid argument if you are arguing that all taxation is theft. If that's what you believe then that's fin…

Property taxes and wealth taxes undermine property rights in ways that normal income taxes don’t. If I earn $100 and pay tax on it, whatever’s left over is mine forever, and I never have to pay tax on that income again. If I buy $100 worth of property, I have to pay tax on it again every year forever, which basically means I’m only buying the right to rent it from the government in perpetuity.

Your use of the phrase “rent seeking” is also a bit weird. It sounds like any extraction of value from capital would meet your definition. It’s fine if you object to a persons right to extract value from their capital, but rent seeking typically describes attempting to extract value from capital _without_ reciprocating any productive value to the person who’s paying you. Which is certainly not the case with land use.

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

#188

Post by Alupis »

harimau777 wrote: post #180
Alupis wrote: post #134

Earlier quoted context omitted.

The problem you're glossing over is what value should be assigned to the land. If some land developer wants to build a new arena next to your plot of land - boom you're value just skyrocketed. If the same land developer backs out of the deal - boom your land is worth less (or is actually worthless). Your taxes depend on exactly when the assessment was made... and even professionals cannot agree on valuation (as we're…

Wouldn't that apply to existing property tax systems or any tax where the value it is based on is only assessed periodically?

Yes, and it's been long bemoaned about how people game that system and how unfair it has a tendency of being. Which was one of the points I was raising.

There is no objective valuation for anything really... particularly when it comes to more-or-less unique, speculative properties such as land and/or improvements.

The only reason everyone mostly agrees on, say a car's value is there's a lot of cars exactly like it that have been sold recently in whatever area you are in. Yet, every plot of land is mostly unique and has a tremendous amount of potential, debatable factors when it comes to value.

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

#189

Post by username332211 »

r00fus wrote: post #109
EA-3167 wrote: post #86

Earlier quoted context omitted.

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.

Hmm. So in your view landlords are zamindars, there to extract value from the land and to give a little bit of it to their overlord?

I presume in your view, it would be best if governments cut the middle man and seized all land, but alas, they are too incompetent to extract any value from it. So like the EIC of old, they must rely on landlords.

That is an interesting view of private property. It certainly explains a lot about about modern rental problems.

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

#190

Post by bitshiftfaced »

avar wrote: post #163
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. It's rather easy to value the land: Have the owner decide what it's worth, then they pay a tax as a percentage of that valuation. Now, obviously given that system everyone's going to value their land at $0. To adjust for that land owners must be obligated to sell their land to anyone willing to buy it at the declared valuation. Such a mechanism doesn't only keep the current owners ho…

I don't love this idea, and I suspect many others wouldn't either. If you raised your family in a house and have lived there for decades, it has intangible value to you, but not others. Yet because of this value, you must pay potentially much much more than your neighbor, who objectively speaking may have a lot of equal value.

What's more, even if you pay more than you ought to, you'll never feel secure in your home, knowing that at any time you may be forced to sell.

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