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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

#261

Post by lmm »

s1artibartfast wrote: post #230
harimau777 wrote: post #168

Earlier quoted context omitted.

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.

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

Sure. Most of the value comes from the efforts of people who have nothing in particular to do with the "owner" of the land though.

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

#262

Post by harimau777 »

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…

Most leftists see landlords as people who unjustly make money without doing any work by taking money from their renters who do work. It's fairly common for leftists to describe them as parasites.

What they think should be done about that depends on exactly what type of leftist they are. However, most do not think that the land should be seized by the government. Many are fine with private ownership but feel that systems (such as the land value tax in this discussion) should be put into place to help ensure that the land's value is shared by society. On the other hand, anarchists might feel that land should be owned collectively by those living on it and managed by them democratically.

I think that most leftists would agree with you; realizing that landlords didn't actually do any labor to earn the money that they receive opens ones eyes to a lot of the problems in our current system of housing.

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

#263

Post by tyingq »

marcell wrote: post #159
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…

Property taxes can apply to all types of property. The idea is the more valuable the property, the more expensive it is for the state to defend it for you (via police, etc.) In practice, real estate is the 20x more valuable than any other personal property, so it doesn't make sense to tax anything else. Cars are subject to a registration fee. If you own expensive business machinery, that may be subject to tax in some…

My state levies taxes on businesses for the address they are leasing/renting, based on some estimation of the value of the "stuff" in it.

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

#264

Post by balderdash »

lbarrow wrote: post #242
BirdieNZ wrote: post #41

Earlier quoted context omitted.

Gentrification, which displaces renters (rents become too expensive for existing tenants so they need to leave the area), will start displacing some land owners as well. LVT would increase due to land value increasing, and the current land owners may not be able to afford the increased tax. If you don't allow deferment of the tax, pensioners might have to move unwillingly (low income that may not cover the tax). Most…

Yes, that's exactly the idea. In Chicago, where I live, there are surface parking lots in the middle of the downtown surrounded by skyscrapers. In a logical system, the owner of those parking lots would have to pay just as much in land taxes as the skyscraper owners next to them -- and since they couldn't possibly afford to do so, they'd be forced to sell to someone who would develop the land and put it to more produ…

You realize all those parking lots are owned by big developers who want to develop the land, but are waiting for the right conditions…

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

#266

Post by ab_goat »

maxerickson wrote: post #223
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).

Underfunded pensions are a problem only because tax revenue must be spent on maintaining unsustainable infrastructure that was originally built on an expectation of never-ending growth.

If that infrastructure costs were not so high, there would be sufficient money to pay people what they deserved.

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

#267

Post by eru »

lelandbatey wrote: post #200
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…

In high value land areas, the only people who own their own homes are those who are either very rich, or who were very lucky in the past and who are now very rich due to having bought a home in the past.

I appreciate the sentiment, but that's not really true.

If you can afford the rent for your home, you can afford to own it via a mortgage. (Assuming functioning capital markets and assuming low enough transaction costs.)

Something like this has to be true, because that's how landlords pay for their cost of capital and maintenance etc. If rent couldn't cover that, but for some reason home prices still stayed high, and sane land lord would sell the property and put the proceeds in some investment that does cover its cost of capital.

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

#268

Post by onlyrealcuzzo »

zip1234 wrote: post #214
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…

Detroit has blight. LVT addresses property speculators that buy land to sit on it for 10 years and do nothing with it. With LVT they have to either pay up, develop it, or sell it. All options good for the city.

They should implement a blight tax or a vacant land tax instead.

I don't see how this helps Detroit's problems - unless they arbitrarily set high values on land where land is possibly already worthless. The areas with the most blight have the lowest land values already.

The city already owns 75k out of 380k lots (~20% of the city - most of it vacant) - and instead of trying to sell the lots - the Detroit Land Bank holds onto them to arbitrarily inflate land values.

This seems like another recipe for a negative feedback loop that makes bad areas even worse.

Just tax blight outright.

Give away the damn land to anyone that will build something on it and live there - or get someone else to live there, pay taxes, and be a valuable part of the community - rather than a vacant lot that's a breeding ground for crime.

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

#269

Post by tzs »

notatoad wrote: post #79
TulliusCicero wrote: post #45

Earlier quoted context omitted.

The main downside is that you end up essentially kicking people out if their land gets too valuable. You can always provide an exception though, for a primary residence where the increase in taxes would be burdensome on the owner's income.

the exceptions essentially nullify the point of the land value tax though. the whole point of an LVT is to aknowledge that land is a valuable resource to the community at large, and using it ineffectively is a harm to the community and should be discouraged through taxation. every exception you make not only removes the incentive, but then creates an incentive to not change the usage of that land to something more be…

> the exceptions essentially nullify the point of the land value tax though

Or they just time shift it until the person receiving the exception moves away and the property goes to someone without the exception.

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

#270

Post by harimau777 »

s1artibartfast wrote: post #218
somewhereoutth wrote: post #169

Earlier quoted context omitted.

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

Thats what I learned growing up, but it seems like time have changed and reversed it. Now people live by, for, and at the discretion of the government. There is no personal property, only what the government allows you temporarily posses.

For what it's worth, I see it somewhat differently:

People now live by, for and at the discretion of the corporations. The government is just a tool that the rich use to exert their will upon the people.

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