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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

#441

Post by snapplebobapple »

flagrant_taco wrote: post #421
onlyrealcuzzo wrote: post #268

Earlier quoted context omitted.

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 ho…

Land value taxes are generally set arbitrarily high. Localities are incentivized to set values as high as they can attempt to justify. They end up modeling what they think could be the most profitable or valuable development on the land then tax you as if that were already done. Eventually the land ends up in the hands of the few willing and able to abuse the land to that level, prioritizing profit above all else.

your first paragraph applies pretty much equally to taxing land+developments. Also, in the context of a city building to the maximum of the zoning is a good thing in nearly all instances because higher density means you need less land to provide shelter for the inhabitants and it's way, way easier to provide most services to higher density.

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

#442

Post by glompers »

flagrant_taco wrote: post #421
onlyrealcuzzo wrote: post #268

Earlier quoted context omitted.

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 ho…

Land value taxes are generally set arbitrarily high. Localities are incentivized to set values as high as they can attempt to justify. They end up modeling what they think could be the most profitable or valuable development on the land then tax you as if that were already done. Eventually the land ends up in the hands of the few willing and able to abuse the land to that level, prioritizing profit above all else.

If that were true it would not be the case that Detroit will be the first to do it. Land Value Taxation is a concept with a history going back to the Gilded Age when someone realized that NY's prosperity was in fact related to its higher levels of homelessness, and that that was due to the land rents that were free-riding on the economic production of the urban area, as they do to this day.

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

#443

Post by nemo44x »

dheera wrote: post #305
nemo44x wrote: post #293

Earlier quoted context omitted.

The IRS has nothing to do with property taxes. Property taxes mainly go to your town and some to your state. They mainly fund your local schools, streets, parks, maintenance, etc. Do you think all these things just magically exist?

Same thing, it's a bunch of inefficient brats taking my money and not giving me that amount of value in return. I could do things much more efficiently with the same amount of money. Hence, owning property isn't attractive to me at all right now unless they can stop taxing it.

You sound like a great community member!

Where I live we see tremendous value in the property taxes we pay. The kids get a quality education, the parks are well maintained, the streets are good and the walkways are clean. It’s not cheap but it’s all accounted for in a public ledger. And if you don’t like it you’re able to run for office to change it.

Look - I’m with you when it comes to government inefficiency, corruption, etc. the further from home the worse it is. At least property taxes go into my community and we directly benefit. It makes a place desirable.

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

#444

Post by DavidKarlas »

londons_explore wrote: post #432

One approach to assessing land value is to have the property owner self declare. But then that self declaration gets published in an official register, and anyone offering 1.5x that declared value gets to buy the land without the owners ability to refuse.

So my house is worth 500k, someone looking for house in range 500k-700k, really really likes my house and just kicks me out for 750k? Sounds like terrible idea.

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

#445

Post by js8 »

londons_explore wrote: post #432

One approach to assessing land value is to have the property owner self declare. But then that self declaration gets published in an official register, and anyone offering 1.5x that declared value gets to buy the land without the owners ability to refuse.

That sounds a bit extreme. What if your land suddenly appreciates without you knowing?

I think this is not a very fair system and would cause lot of middle class people lose their home to large owners.

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

#446

Post by londons_explore »

viknesh wrote: post #440
londons_explore wrote: post #432

One approach to assessing land value is to have the property owner self declare. But then that self declaration gets published in an official register, and anyone offering 1.5x that declared value gets to buy the land without the owners ability to refuse.

…what? I get the idea, but having money shouldn’t mean you should be able to just choose someone’s land and decide its yours.

With enough money you can already do this. You just propose a road building scheme through your enemies garden, sponsor the scheme so it looks like a great deal to local government, and the government will compulsory purchase the garden.

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

#447

Post by zone411 »

londons_explore wrote: post #426

France does this. End result is that french people go to great lengths to make their house look un-valuable. For example, they never paint anything and never do repairs. Some even have holes in the roof so they can claim buildings are worthless when in fact there is some 2nd roof underneath keeping the inside dry.

That doesn't make sense. The building's value wouldn't affect the land tax.

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

#448

Post by yumbaya »

somethoughts wrote: post #422
yumbaya wrote: post #339

Earlier quoted context omitted.

Texas is not Georgist. Property tax is assessed on the full market value of property, not on land. And Texas’s land speculation and sprawling, inefficient land use reflects this.

Agreed - its not pure Georgism. It is however the closest experiment to Georgism in the US as far as I can tell having looked at their tax revenue sources (mostly property taxes with some petroleum production tax and no income tax) and the fact that they will attempt to increase the property taxes to market value on an empty lot. For now at least... [1] https://www.dallasnews.com/news/watchdog/2022/04/20/property...…

It’s good they’re trying to match market value. They come up with that assessment by assessing the land value, and the structure value, and adding them together. But they are still taxing improvements at the same rate as the land. Sure, land value can rise and become a greater portion of the total market value. But this is still conventional property taxation.

In a pure LVT system the structure should play no part. The landowner should be free to build whatever they want on their land without such building causing a change to their taxes. A partial step towards LVT would be a “split rate” system, where the value of the land is taxed at a higher rate, say 5%, than the value of the structures, which could be 0.5%.

Pennsylvania is the example case here in the US:

https://www.strongtowns.org/journal/2019/3/6/non-glamorous-g...

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

#449

Post by porb121 »

londons_explore wrote: post #426

France does this. End result is that french people go to great lengths to make their house look un-valuable. For example, they never paint anything and never do repairs. Some even have holes in the roof so they can claim buildings are worthless when in fact there is some 2nd roof underneath keeping the inside dry.

Go ahead and reread what a land value tax is

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

#450

Post by BoiledCabbage »

injeolmi_love wrote: post #376
BoiledCabbage wrote: post #144

Earlier quoted context omitted.

> LVT encourages urban sprawl by punishing retail, industrial, and residential concerns that choose to agglomerate with higher taxes. Can you explain more? I don't see it. If a place already has high property taxes, and they are currently assessed on the land and the improvements then improved land in an area will receive a relative "tax reduction" compared to a full encompasing property tax. This means it is benefic…

First order effects are usually stronger than second order effects. Imagine you are considering to start a small manufactory, say for artisanal socks. You can purchase land anywhere, since the bank will lend to you at a cheap rate backed by the land as collateral. You consider two options; option 1 is in a dense urban area, close to your workers and walkable with lots of public transit. The land is expensive due to n…

First, most places in the US at least already have a form of property tax. So you should be comparing LVT to property tax, not LVT to no tax. So most the above doesn't apply.

But even if you did use your example above. Imagine as well there is someone else trying to open a fancy large bookstore containing as well hangouts like cafe, a bar and lecture halls for reading and book discussion. Their main draw is foot traffic and to be a neighborhood lounge where people will stroll by and stop in to pass some time about a subject they like.

They also want use of the same land, and for them the downtown location will also benefit their employees but critically it is also extremely important for their expected customers. For them, they would profit more from their location downtown and wouldn't likely be able to stay in business in the exurban location. So they would be willing to pay more for that dense urban location because it largely benefits the greater economic activity and better use of the locaiton - they would correctly outbid the manufacturer who can open a manufacturing plant just about anywhere and only marginally benefits from being in the dense urban location.

So in result if the LVT means less manufacturing in downtown (where it really isn't needed), and more businesses can operate where they benefit from the density then that's a plus for society and LVT working as is should.

And even all of tht said, neither of these are really the main examples to show the true benefit of LVT.

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