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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

#391

Post by yumbaya »

balderdash wrote: post #236
slashdev wrote: post #13

Earlier 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?

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…

Conventional property taxes already cause tax foreclosures on homes. This was a big problem in Detroit, where structures were systematically overvalued, forcing a lot of people out of their homes. Land-only assessments are arguably much easier to pull off than land-plus-house assessments.

LVT concentrates development efficiently. It would actually increase green space, since people wouldn’t have to develop sprawling exurbs to escape high rents (too little housing) in the city center. So no, LVT would produce significant quality of life improvements over what we have now.

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

#392

Post by chongli »

jrockway wrote: post #372
kaibee wrote: post #332

Earlier quoted context omitted.

> They should implement a blight tax or a vacant land tax instead. A land value tax is a much more elegant solution. For one, it doesn't introduce the problem of needing to define 'vacant land'. Is a parking lot vacant land? etc

I don't think tax law fears complexity. You make a table and there is an entry for "parcel of land with grass taller than 6 inches and containing one or more 1980s automobile with 3 or more tires" right alongside "parking lot" or "hospital".

I don't think tax law fears complexity

Of course it does. Complexity in the tax law is regressive. It lets wealthier people and businesses take advantage of more deductions and writeoffs to lower their tax burden, due to the ability to hire accountants full time to work on it. Simple taxes that are difficult to avoid (such as LVT) are best if you want a progressive tax regime.

One of the best features of LVT is that it taxes unearned increases in the value of land. While you can do any improvements you want to the property without increasing the LVT, improvements made by the city or other private interests to the area around your land absolutely will increase its value, thus increasing your tax burden.

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

#393

Post by seabird »

pfannkuchen wrote: post #322

Detroit is an interesting example of a North American disposable city. Conditions changed and everyone left. Could this even happen somewhere like Europe where land is more scarce?

Saying "conditions changed and everyone left" is extremely reductive.

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

#394

Post by Nathanba »

lmm wrote: post #365
Nathanba wrote: post #302

Earlier quoted context omitted.

>No man is an island; land should be seen as something rented from the people right but if this is my only piece of land where I live on, I am "the people". I need to live somewhere, I have no choice. It's like asking a prisoner to pay weekly tax for the cell he lives on: He has no choice, he has to live in some cell. Instead tax it intelligently so that I'm exempt for my first and only house on a moderately sized pi…

> right but if this is my only piece of land where I live on, I am "the people". I need to live somewhere, I have no choice. It's like asking a prisoner to pay weekly tax for the cell he lives on: He has no choice, he has to live in some cell. Instead tax it intelligently so that I'm exempt for my first and only house on a moderately sized piece of land. We all need to live somewhere bruh, you're not special. If you…

Can you calm down? I didn't say that I was special and I'm not your "bruh". The few super rich people who buy 100 million dollar properties in the middle of a city for personal use as their only home are not the problem. By all means, add a clause so the tax exemption only applies for land values below a threshold. In fact I already thought of this by writing "moderately sized". The solution is never to tax working people even more just because they want to have a home.

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

#395

Post by ughitsaaron »

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.

A project I worked on a while back highlighted the problem of speculation in Detroit’s land market.

https://umdearborn.edu/news/mapping-detroit-new-tool-aims-id...

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

#397

Post by eru »

AmericanChopper wrote: post #299
eru wrote: post #226

Earlier quoted context omitted.

> 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…

The shortcomings of modern monetary policy and the impact of inflation is a seperate topic. When inflationary systems are well controlled, they do create some positive incentives (primarily to spend money and put capital to productive use). As a tax they’re generally not a problem unless you go full Weimar mode. But you’re right that they can also represent a tax, especially in jurisdictions that have a capital gains…

My adopted home also doesn't have a capital gains tax. I agree that if you want to have a capital gains tax, it should be inflation adjusted. (You can put in place an explicit wealth tax, if that's what you want.)

> When inflationary systems are well controlled, they do create some positive incentives (primarily to spend money and put capital to productive use).

I find that those incentives are a bit silly. First, the central bank can print enough money to get any level of aggregate nominal spending they fell like. No need for inflation. George Selgin's book 'Less than Zero' even makes a convincing argument in favour of deflation. (He essentially argues for a fixed nominal GDP, and an economy that's growing in real terms would thus see the price of goods decline.)

Inflation is also not an incentive to put capital to good use. That's because money isn't real capital. If I have a factory or a piece of land that sits idle, that's a real cost to the economy. But if I have a hundred dollar bill that's siting idle under my pillow, nothing of value has been lost: hundred dollar bills are essentially free to print.

The central bank can put them in and out of circulation by buying and selling assets. So when I remove my bill from under my pillow to spend it, the central bank can react by selling assets. (They don't need to monitor my pillow. They can just go by statistical measures of spending or inflation.)

In fact, in order for me to have a hundred dollar bill under my pillow, it means I refrained from consuming some real goods earlier. So those real goods are available for investment by the wider economy while my pillow serving as a piggy bank.

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

#398

Post by bitshiftfaced »

eru wrote: post #382
bitshiftfaced wrote: post #309

Earlier quoted context omitted.

Also with land value tax without the proposed land valuation method. The difference is how in one case you're never secure in your home even if you can afford your theoretically fairly assigned tax bill. There is always someone out there rich enough to uproot a family from their home, even if you're otherwise financially secure.

Your weird scenario can happen with most other assessment scenarios either. If Warren Buffett wants to increase the value of my land, he can bid up all the surrounding plots, and make bids for my land. Any sane assessment method will see that the value of my land has increased, and will increase my property tax or LVT, and I'll have to pay or face the consequences. (In the self-assessment case, you can give people th…

I don't see that as a fair comparison. The number of people who are rich enough to buy a particular home for more than the hypothetical actual value is orders of magnitude greater than the number of people who can afford to buy up all the lots around a home at a premium and affect its property value. As a result, the perceived threat to the homeowner is substantially different. I also think you're ignoring the psychological costs of this. It doesn't actually have to happen, just the potential that it could happen would be a real fear for many people. Moving is one of the most stressful events in people's lives, much less unplanned moving. There's also empirical data showing negative outcomes for children.

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

#399

Post by somethoughts »

LVTfan wrote: post #284
somethoughts wrote: post #160

Earlier quoted context omitted.

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 mil…

Agreed. I was primarily highlighting that California (and many states) tax code has components of LVT already and therefore have elements/influences of Georgism.

It's just not purist Georgism.

And even if LVT was the only source of tax income - it could be done at punitive level to prevent all land speculation or be more relaxed.

I think somethings that I haven't seen addressed by pure Georgists:

- Where to stick schools and playgrounds to support the newly built residential towers

- Water/sewage/gas improvements/transportation stresses

- Displaced people who get kicked out of the single family home if no private developer wants to build condos for them

From what I can tell - it'd require proper pre-planned zoning when the city is in its early stages and for the stuff to be written into the city charter.

Or some strong government intervention that could just plop new 3 story schools and 10 store public housing towers where it wants.

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