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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

#201

Post by somethoughts »

ethanbond wrote: post #170
somethoughts wrote: post #160

Earlier quoted context omitted.

Agreed - the many counties in the US already have a portion of the property tax bill coming from a land value tax/Georgianism. California property tax bills have two components [1][2]: - structure/improvement assessed value - land value assessed value The land value component is re-accessed frequently and changes based on comparables (presumably but its mostly black box). The question is to what degree/portion of Geo…

Why would the land value spiral upwards? At some point the land becomes not worth buying/developing, so there’s still downward pressure on price. Or are you suggesting the tax rate will spiral upward infinitely? Again, at some point that just means it’s not worth buying the land unless the productivity possible on it is through the roof as well.

Here would be an example:

North Texas homeowners getting 'sticker shock' with new property tax appraisals

https://www.youtube.com/watch?v=Nu5jAqB88tc

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

#202

Post by avar »

sideshowb wrote: post #183
avar wrote: post #163

Earlier quoted context omitted.

> 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.

You can trivially structure such a tax in such a way that going through a "forced sale" is going to be very lucrative (edit: elaborated in a sibling comment: https://news.ycombinator.com/item?id=37909570).

> It also defeats the object of land ownership[...]

So no, most people could keep land they'd like to keep in practice.

The entire notion of any sort of property tax is also predicated on the idea that individual land ownership is a tradeoff between the interest of the individual and society at large.

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

#203

Post by eru »

Gigachad wrote: post #127
josnyder wrote: post #73

Earlier quoted context omitted.

Yes, by design. One major goal is to prevent a landowner from squatting on an empty lot while their neighbors build prosperity around it. The "squatter" then cashes in, having done nothing themselves. "Everyone works but the empty lot" is the commonly used phrase. The goal of an LVT is to insulate a landowner's tax bill from being affected by their own improvements. Its anti-goal is to insulate a landowner from chang…

Another benefit is that it encourages more efficient use of land. Existing taxes mean that if you demolish a high density retail strip and replace it with a McDonald’s or Walmart with large parking lot/drive thru, the tax income plummets while the cost to maintain the roads and plumbing remains the same.

Just to be clear: land value taxes by themselves don't encourage more efficient use of land. Removing taxes on improvements (and on capital and labour) encourages more efficient use of land, and a land value tax can help finance those other tax reductions.

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

#204

Post by s1artibartfast »

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.

Thats one perspective.

Another is that the government is simply a service provider which you pay a yearly subscription to.

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

#205

Post by friend_and_foe »

Oh man, I was hoping that this would be one of those things where they tax land to encourage new building, but it's just another city hurting for revenue looking to squeeze it's population a little more.

Not that it won't spur development. It will. But not as much as anyone hopes. They have to eliminate taxes on all improvements to the land and tax the land itself only. Also remove code and zoning restrictions on it. They could rebuild the city if they got serious about it.

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

#206

Post by brianwawok »

lbarrow wrote: post #145
phkahler wrote: post #99

Earlier quoted context omitted.

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

Yes, that's exactly the idea. We have a problem in the US where many metro areas do not have enough housing, in part because building big things is penalized by the tax code. By changing the tax code to not penalize construction, we hope to get more construction.

Detroit still has more houses than people wanting to live there.

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

#207

Post by quickthrower2 »

WorkerBee28474 wrote: post #78
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 government didn't create it either. The only reasonable recipient of the 2%/year tax is God.

The government is meant to represent the commons.

God doesn’t need money. Money is a human concept!

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

#208

Post by nickik »

While I love this in general. It should also be mentioned that there are systematic falures in how land valuation works in the US currently. While in general taxing land value makes much more sense, with a proper system of land value valuation this is still far from optimal.

There is a real question on how utilities and services should be paid for. There are places where water is really cheap to provide and then subburbs that require multible expensive pump stations yet they pay the same amount for water.

This incurages building in the wrong places and a land value tax by itself does not fix these things.

In addition the city also needs to strongly evaluate how it uses its land, specially things like on street parking.

Check out some of the work by Urban3 on land value, tax income and so on. Thy have fantastic visualisation that have changed my view on some things.

So yeah, land value tax, go for it, much better system. It allignes insentives better, but there are many otjer distorting effects. Its one piece of a much larger puzzle in terms of how to make great cities with great urbanism.

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

#209

Post by harimau777 »

jonhohle wrote: post #110
koolba wrote: post #51

Earlier quoted context omitted.

> 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?

I think that it's less about being addicted to spending and more about people being able to meet their basic needs. With the gap between those with and without wealth growing and income falling behind cost of living, the only way to address people's desire to meet their basic needs is with plans like this.

A much better option would be to target the wealth inequality that is driving a lot of these problems (e.g. by ensuring basic needs like medical care, encouraging unionization, etc.). However, there isn't the political will to do that.

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

#210

Post by maxerickson »

tzs wrote: post #182
unyttigfjelltol wrote: post #150

Earlier quoted context omitted.

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…

It's easy to charge a use fee for wastewater (my city bills based on water consumption). If the demand for a service increases dramatically, it's likely practical to make more of it available.
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