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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

#221

Post by yumbaya »

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 system length that’s the bigger cost. If people are disincentivized from developing land, then the result is sprawl, with far greater infrastructure costs due to the enormous system lengths. Same goes for road costs, police, fire, schools, etc.

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

#222

Post by dclowd9901 »

quickthrower2 wrote: post #191
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.

If they don’t then you are taking it away from other people by owning it.

And then they are taking it away from you with guns because no one can fund public safety.

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

#223

Post by maxerickson »

ab_goat wrote: post #176

I've been thinking about local taxes a lot recently (I've been a locally elected selectman for a tiny town in MA) and realized that the automobile ruined the way we value land, which ultimate ruined the way that municipalities are able to control costs and spend their taxes to add value. I'd write more, but only if someone responds to this.

I'm pretty sure that underfunded pensions are a bigger problem than anything else.

Especially for services (where the value is concentrated at the time of delivery).

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

#224

Post by tantalor »

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.

Maybe property tax should be inversely related to improvements, considering that improved land generates tax revenue in other ways, e.g. wage tax, sales tax, etc.

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

#225

Post by knappa »

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…

The rest are different, but in the several US localities I've lived in, water and sewer are paid as separate metered services. (Only the water is metered, the sewer is billed proportionally to the water usage.)

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

#226

Post by eru »

AmericanChopper wrote: post #187
harimau777 wrote: post #142

Earlier quoted context omitted.

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…

> 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.

You know that this is not true in most places?

If you put a hundred dollar bill under your pillow, it will be worth less and less as time goes by thanks to inflation. And if you use that hundred dollar bill to buy an asset that hopefully keeps its real value, you pay capital gains taxes on the nominal increase in value (even if there was no real increase in value).

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

#227

Post by nickik »

AmericanChopper wrote: post #187
harimau777 wrote: post #142

Earlier quoted context omitted.

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…

Much of the lands values comes from public infrastructure and services provided. A piece of land somewhere in the desert is gone be worth very little.

A house in a city has lots of resources deployed there and land value tax pays for those things.

This tax makes better for people who invest locally and hurts people who don't.

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

#228

Post by nickik »

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.

That's certaintly not the view of the current legal system.

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

#229

Post by somethoughts »

KptMarchewa wrote: post #199
somethoughts wrote: post #192

Earlier quoted context omitted.

Perhaps my response was a bit long but I did attempt to address it. Perhaps I can elaborate: The question is to what degree/portion of Georgianism to apply and what to do when the land value component starts going up infinitely that its starts hurting the electorate. - Do you introduce alternative tax sources (i.e. increase income taxes on billionaires instead as in California)? - Do you introduce caps on annual land…

Proper, non prop 13 land value tax limits this infinite value growth.

Agree - I think pure land value/pure Georgism works best when there are no limits on development (zoning/water availability/topography) and there's room for infinite sprawl into adjacent flat land.

As mentioned I think Texas will be interesting to watch as its pretty close pure Georgianism - the state's revenue is mostly/all LVT property taxes - but they are starting to see exponential growth - so it will be interesting to see if they stick to it or resort to California style Prop 13.

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

#230

Post by s1artibartfast »

harimau777 wrote: post #168
saxonww wrote: post #152

Earlier quoted context omitted.

Someone created the improvements on it, though. Which is most of what you're paying for when you buy or rent a place to live. This isn't going to change much about landlords. If anything, it will increase the amount of housing rented through landlords, because the land value tax will make it uneconomical for more people to own their own homes. In a high value area, the only people who would be able to do so are the v…

A land value tax seeks to only tax the value of the land itself, not the improvements. Of course that's not always easy to assess, but neither are property values for normal property taxes. Even setting that aside, if the land value taxes on the land that someone owns dramatically increase then that means the value of their property has dramatically increased, and they can sell the land for a dramatic profit. Certain…

The land value in absence of human activity is zero.

All value stems from improvements made by people, either on the land, or nearby.

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