Since people can barely afford land and homes as it is, I’d love to hear how this will help make land more affordable or available.
The article says that they expect it to lower tax for 97% of residents.
Detroit wants to be the first big American city to tax land value
281–290 of 910 posts
Re: Detroit wants to be the first big American city to tax land value
#282Earlier quoted context omitted.
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 n…
>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).
That's because capital gains taxes that don't account for inflation (which is most of them) are essentially a stealth wealth tax.
Re: Detroit wants to be the first big American city to tax land value
#283Earlier quoted context omitted.
>I shouldn't have to pay rent for owning land That land is provided ongoing services, security, and utilities which cost money each year to maintain. Ownership is not some fundamental law of physics. It's a made up concept which is defined however the society you live in wants to define it.
> That land is provided ongoing services, security, and utilities which cost money each year to maintain Yeah, and I already pay PG&E, Comcrap, and whoever else is maintaining those services, I don't need to pay it again to the IRS. The IRS wouldn't do jack shit on land I own.
Good news, the IRS doesn’t levy property taxes.
Re: Detroit wants to be the first big American city to tax land value
#284Perhaps 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…
As I understand it, what prompted Prop 13, aside from the desire to serve the owners of the best land, was that while land values were rising astronomically, municipalities and elected representatives were eager to serve their constituents, who naturally wanted all the amenities that their governments cared to offer.
And the municipalities -- their local elected representatives -- complied. They didn't reduce the millage rate each year to stay revenue neutral. No, they used those funds to supply those desired public goods.
And as land values rose, taxes rose. And eventually, people whose homes were appreciating by half (or 100% or more) of their annual incomes, increasing their home equity at an awesome rate, started objecting to the taxes that were paying for all those public goods.
Remember that in those days, California's colleges and universities were regarded as among the very best. And they changed a lot of lives, particularly of those in the school districts so well funded by those taxes that were ever-rising because the local officials didn't lower the tax rate to remain revenue neutral.
I don't see any sign that California, under Prop 13, has any resemblance to Georgism.
Take a look at a listing at realtor.com for a home in any California city or suburb, and focus on the "Property History" section, on (1) asking and selling prices; and, under that (2) assessment and tax history. (Choose the "see more" option in each section.) Then look at the assessments vs the current asking price. The land and "additions" figures rise by no more than 2% per year, while the asking and selling prices are far above the assessment on which taxes are based.
"The land value component is re-accessed frequently and changes based on comparables (presumably but its mostly black box)." No, they rise by 2% per year, until a sale takes place, at which point their sum is adjusted to the selling price.
But the house next door, of similar age and condition, but not sold in 20 or 40 years, is receiving a huge subsidy, paying a tiny fraction of what the newly sold neighboring buyers are paying.
Where is the equity in that?
The answer, for other states, is not assessment caps or capping taxes at a certain percentage of assessed value, but reducing the millage rate to remain revenue neutral, unless the local property owners approve a millage rate that is higher than revenue neutral because they actively desire more services, better schools, etc.
Re: Detroit wants to be the first big American city to tax land value
#285Earlier quoted context omitted.
I’ve heard economists champion the idea, but I’ve heard little talk about what the tradeoffs are. What are the downsides?
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…
> 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
maybe this would encourage them to actually pay attention to the plight of their neighbors instead of the "fuck you, I've got mine" NIMBY attitudes they so regularly take.
Re: Detroit wants to be the first big American city to tax land value
#286I'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’d be interested to hear your thoughts, this jibes with mine on the subject to an extent.
Re: Detroit wants to be the first big American city to tax land value
#287Earlier quoted context omitted.
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.
People are perfectly capable of protecting their own land when it's not illegal for them to do so, as demonstrated in the early history of the US. You're much less safe in somewhere like Chicago with "well funded" public safety than you were anywhere in the US in the 1800s.
Re: Detroit wants to be the first big American city to tax land value
#288Earlier quoted context omitted.
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…
And right now they can afford to wait forever! But with an LVT they have a big incentive to either develop it immediately or sell to someone else who will.
It's no coincidence that people who support LVTs are typically YIMBYs -- we want to reform urban planning and land use to make it easier to build things.
Re: Detroit wants to be the first big American city to tax land value
#289Earlier quoted context omitted.
I come from Western Massachusetts, which is characterized by smaller populations and lower budgetary allocations. The most significant budget item in most municipalities here is education, followed by road maintenance, which is often extremely costly. In Massachusetts, the basic cost estimate for repaving a standard road is approximately $1 million per mile, and this investment typically only lasts about a decade bef…
> Bridges are even more financially burdensome. Recently, we replaced a culvert that was so small I could easily jump over it, and yet it set us back $700,000. Why? Why didn't you all agree to go down to Home Depot and load up on one big short metal pipe and some cement if that's the case? How was 700K spent?
State-mandated design and build engineering requirements
Re: Detroit wants to be the first big American city to tax land value
#290Seattle (and maybe Washington state) has been changing the formulas to tax land more and improvements. So given my townhome on a small parcel of land, my property taxes have actually been falling for the last few years. It is a bit weird, but I guess this encourages improvements over hoarding land. I bet that my tax break is being paid by WFHs on larger parcels.
Nothing as drastic as Detroit, of course, and I don't think Seattle is alone in moving the bar gradually to taxing land more and improvements less.