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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

#311

Post by tzs »

cameldrv wrote: post #71
TulliusCicero wrote: post #34

Earlier quoted context omitted.

You could provide exceptions for a primary residence where the increased taxes would be sufficiently burdensome on the owner's income. Doesn't have to be all or nothing. Just don't do what Prop 13 did in California where they applied the property tax limit even to commercial property for some reason.

You could also do what they do in Texas which is to allow anyone over 65 to defer any increased property tax amount (with interest) until sale or the death of the owner. The California approach is to let the owner get massive appreciation, which they receive at sale, but never pay tax on any of it.

Does that ever lead to old people getting stuck? E.g., you've been getting deferrals for 25 years and now finally want to sell and move to be nearer family, but paying back the 25 deferred years and interest will not leave you with enough after the sale to afford a new place. And so you just have to stay until you die.

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

#312

Post by gnopgnip »

PaulDavisThe1st wrote: post #259
gnopgnip wrote: post #232

Earlier quoted context omitted.

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.

Could you provide some examples of where this has happened?

Yes, Japan, Korea and Signapore are examples where a more efficient property tax system led to a huge economic expansion. Japanese Land Tax Reform of 1873 is probably the most well known example. It also involved lowering property tax rates.

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

#313

Post by bee_rider »

tantalor wrote: post #224
lbarrow wrote: post #145

Earlier quoted context omitted.

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.

Then you have to come up with a way to evaluate the improvements, which might be tricky and subjective

It seems easier to just have a land value tax, so you don’t specifically disincentivize development. Then, you can spend that tax money to provide services that promote the other stuff: beautify downtown and add public transit, that sort of thing.

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

#314

Post by ItsMonkk »

s1artibartfast wrote: post #175
J_Shelby_J wrote: post #156

Earlier quoted context omitted.

Under building is caused by NIMBYISM which exists without opposition because we don't value and tax land fairly. Stop letting low tax paying SFHing leech off the system, and we will be incentivized to build more.

Lvt would just make nimbyism worse, it doesn't punish it. Up zoning and public infrastructure increases property value. The best way to keep your land value tax low is to ensure that zoning restricts its use and Light Rail never gets built.

Under the existing system you are incentivized for your own land to be zoned as highly as possible while your neighbors land is restricted as possible to keep supply low. Since everyone votes against you and you vote against everyone, zoning is low just about everywhere.

Under a land value tax this flips, and the majority vote would go to up-zoning.

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

#315

Post by maxerickson »

ab_goat wrote: post #266
maxerickson wrote: post #223

Earlier quoted context omitted.

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.

pay people what they deserved.

Yeah, that's not the point. The point is that taxpayers receiving services should pay for what it costs to pay people what they deserve, not saddle the future with those costs.

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

#316

Post by lmm »

lbwtaylor wrote: post #132
josnyder wrote: post #53

Earlier quoted context omitted.

(I'm a big proponent of LVT) The two downsides I'm aware of are difficulty in transitioning to an LVT and difficulty in valuing the land. Transitioning to an LVT means that landowners no longer capture land rents for themselves, which is a massive overnight loss in the value they hold. The solutions there typically tax only the difference in land value versus a baseline assessment. So if a lot is worth $100 before LV…

- There are deeper problems with valuing land. Land values in cities are directly related to approved zoning (i.e. what you are allowed to build), so the city government can rezone neighborhoods and unilaterally alter the land values the residents pay tax on. This may not agree with everyone's view of fairness. - LVT encourages building tall and is hostile to lowrise development and unbuilt/green spaces. Those policy…

> Land values in cities are directly related to approved zoning (i.e. what you are allowed to build), so the city government can rezone neighborhoods and unilaterally alter the land values the residents pay tax on.

Cities were already able to rezone neighbourhoods and unilaterally alter the values of residents' land (also just through everyday building - if they build a transit station in one neighbourhood and a sewage treatment plant in another, that alters everyone's property values), and this was already a very corruptible process. In theory LVT should improve it a little since now the city has an incentive to increase everyone's land value as much as possible.

> LVT encourages building tall and is hostile to lowrise development and unbuilt/green spaces.

Yes and no - it encourages making valuable use of expensive land, and moving less valuable uses onto cheap land, but it's agnostic about what that "valuable" is. If people prefer - that is, will pay more to use - lowrise buildings or green spaces, then that's what LVT will deliver.

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

#317

Post by [deleted] »

PaulDavisThe1st wrote: post #250
tantalor wrote: post #224

Earlier quoted context omitted.

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.

That's quite hard to measure. Build a 200 unit apartment complex in an area with a housing problem and jobs currently unfilled ... yep. Build a gigantic house to be occupied by a single very wealthy family .. not so much. But how to measure the difference? The simple market value of the improvements is not going to be accurate.

[deleted]

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

#318

Post by eru »

AnimalMuppet wrote: post #197
josnyder wrote: post #53

Earlier quoted context omitted.

(I'm a big proponent of LVT) The two downsides I'm aware of are difficulty in transitioning to an LVT and difficulty in valuing the land. Transitioning to an LVT means that landowners no longer capture land rents for themselves, which is a massive overnight loss in the value they hold. The solutions there typically tax only the difference in land value versus a baseline assessment. So if a lot is worth $100 before LV…

To me, the biggest downside is that the government is running this. If the government turns on an LVT, do you trust them to turn off other forms of funding? Or do you think they're just going to decide that their income went up? I kind of trust them, but I don't have very high confidence that they won't decide that they "need" the extra money, maybe just for some "emergency" situation...

The nice thing is that lowering other taxes automatically increases the LVT tax take via higher property prices.

You can see that dynamic on the border between Switzerland and Germany: Swiss income taxes are a lot lower, so their property prices are higher. (You can probably see similar things happening on some borders between American states?)

Without an LVT, those higher property prices only benefit the land owner. With an LVT, the government gets some incentive to lower those taxes.

> If the government turns on an LVT, do you trust them to turn off other forms of funding? Or do you think they're just going to decide that their income went up?

I guess it depends. Governments have an incentive to get themselves more budget, but taxes also aren't just ratcheting up all the time. Eg the US still has lower income taxes than most of Europe. And tax rates also change over time.

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

#319

Post by s1artibartfast »

harimau777 wrote: post #270
s1artibartfast wrote: post #218

Earlier quoted context omitted.

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.

I would say the two sentiments are connected.

If the role of the individual is to serve the needs of the government, it is easy to corporations to control the whims and goals of the government. The individual doesnt have to understand whys and wants of the government, just serve it.

However, if the roles are reversed and the purpose of the government is to serve the individual, than each person can judge if their personal interests are being served.

That is to say, I think the idea of people as a servant of the government is instrumental in corporate capture of the institution. The idea of serving a greater good, without voluntary consent, is just an exploit opportunity for capture by corporations or others.

When people view the government as their servant, they just say no, I dont want that policy.

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

#320

Post by lmm »

bitshiftfaced wrote: post #190
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…

I don't love this idea, and I suspect many others wouldn't either. If you raised your family in a house and have lived there for decades, it has intangible value to you, but not others. Yet because of this value, you must pay potentially much much more than your neighbor, who objectively speaking may have a lot of equal value. What's more, even if you pay more than you ought to, you'll never feel secure in your home,…

I'm from the younger generation who's been economically forced to move every couple of years because the older generation made it too hard to build houses. So I'll shed few tears for boomers being forced to move once after 20 or 30 years.
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