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

231–240 of 910 posts

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

#231

Post by eru »

username332211 wrote: post #189
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.

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…

If you want to have a government at all, you must finance it somehow. Usage fees can go a long way, but you most likely also need some general taxation. Taxing land value is the least bad thing to tax, because the supply of land is fixed.

Yes, you can see this alternatively as the government renting out the land. And that's a fine view. Landlords pass on the land, but also put buildings on top. What you pay monthly for your apartment is partially for the land (which would go to the government, indirectly) and partially for the building and amenities and maintenance.

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

#232

Post by gnopgnip »

somethoughts wrote: post #160
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.

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…

The economy is not a zero sum game. If a land tax leads to increased economic activity it can actually result in a lower tax rate and generate more than enough tax to pay for the services the government provides.

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

#233

Post by eru »

somewhereoutth wrote: post #169
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.

Where I live the government is by, of, and for the people.

Ostensibly.

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

#234

Post by eru »

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.

Only some parts of Australia, isn't it?

They also have silly things like stamp duty, which is a sin tax on giving land to someone who has a better use for it.

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

#235

Post by harimau777 »

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…

When I say rent seeking, I mean something like "gaining profit by owning capital rather than by performing labor". Under that definition, all value extracted from capital would be rent seeking[1]. Strictly speaking, I'm not necessarily opposed to extracting value by owning capital; in many cases someone bought that capital with the profits from their labor, and more broadly the world isn't black and white. However, I do see taxing profit from owning capital as more just than taxing profit from labor.

In that respect, I generally see property taxes as more just than income taxes. However, I am sure that there are exceptions and any tax code would need to be nuanced.

[1] Although owning capital may allow you to do some labor that you couldn't otherwise in which case the profit gained from that labor would not be rent.

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

#236

Post by balderdash »

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?

1) it increases the likelihood of forced sales by owners (think a pensioner having to sell their long time home because property taxes have increased unaffordably due to the gentrification of their neighborhood 2) best use of land in this scheme is solely based on economic productiveness, it doesn’t take into consideration environmental and quality of life factors (to name a few) - think of all the local institutions that wouldn’t be around under this scheme, or the reduction of green space

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

#237

Post by eru »

AnimalMuppet wrote: post #193
harimau777 wrote: post #154

Earlier quoted context omitted.

I think that you may be missing the point of the argument that you are replying to. As I understand it, what they are getting at is that no one created the land, it was already here. Therefore, it's not valid to say that the person who originally claimed the land had a right to it in the same sense that, for example, a farmer has a right to what they grow because of the labor they put into growing it. In effect, the…

Well, in the US at least, the one who first claimed the land is the one who built a cabin there, often broke the land to the plow, and then held it against anyone who tried to take it from them. It wasn't just "claiming" the land. They had to work to improve it.

Conveniently ignoring the people who might have lived there before for millennia?

Or even just the Mexicans from whom large parts of the US where conquered? (How Mexico got the land is another story.)

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

#239

Post by Kalium »

andreygrehov wrote: post #178
ItsMonkk wrote: post #115

Earlier quoted context omitted.

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…

Ok, this is rebalancing. Thanks for the explanation. This shift in 'weight' may potentially deter large developers or businesses from investing in land within the city, especially if they're looking at larger parcels for development.

Discouraging "investing in land" is the point. Detroit struggles with stasis imposed by property speculation. Encouraging speculators to sell their assets to those who wish to develop is the goal.

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

#240

Post by bagels »

jghn wrote: post #23
thinkerswell wrote: post #6

I thought Detroit has been in decline for decades. If anything, you’d think they’d want to attract people back with _less_ taxes.

If it replaces property tax wouldn't this be lowering taxes for people who actually develop on their land?

Depends on the rates.
Post reply on HN