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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

#481

Post by flagrant_taco »

InspiredIdiot wrote: post #472
flagrant_taco wrote: post #451

Earlier quoted context omitted.

Property taxes that factor in existing improvements doesn't leave the owner as far behind chasing potential value that they are already being taxed for. When your tax burden is a factor of expected market value of the land plus permanent improvements they're taxing you on what you already have. When it's based on an expected optimal value of the lad they're taxing you on what *they* think your land *should* be worth…

> Higher density cities require more outside inputs brought in from outside the city. Surely, it can't possibly be that simple. Sometimes that's true, sometimes it is not. If I want fiber to my house in the country I might be paying $30k to get that line all the way to my one house whether I want 100MB/sec or 10GB/sec. In the city it might be shared with hundreds and only need to run a few yards. Same for sewage. Sam…

Oh it's definitely not simple, I don't mean to input that.

Your examples only really touch on one relevant example though, sewage. Sewage isn't really an issue in rural areas, off grid seltic systems process waste on site and more compelling systems can even compost human waste with very little effort. Modern central sewage system only exist because of dense cities, they weren't needed before that.

High speed internet is purely a convenience and really shouldn't be a concern if there's any meaningful environmental impact from it. Police and fire similarly are conveniences that may turn into necessities in highs density areas. I live in a rural area where police may show up tomorrow if I call them now and our fire is mostly volunteer.

I've never heard of anyone having real issues from either. Volunteer fire still respond quickly enough and it's amazing how much less import policing is when people are more spread out and the expectation of turning to police for every problem isn't the norm.

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

#482

Post by injeolmi_love »

BoiledCabbage wrote: post #450
injeolmi_love wrote: post #376

Earlier quoted context omitted.

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 traf…

Remember when reviewing the impacts of a new policy, they are always at the margin. So the appropriate situation to imagine for your bookstore is one where the benefits of land in the core are slightly greater than benefits from land in the periphery. Since LVT makes land in the core more expensive due to taxes, on the margin all businesses and residences would migrate towards the periphery.

Property tax creates its own distortions, just like all taxes. But it is less distortive since going back to the example of a manufactury or a bookstore, no matter where they locate the property tax changes less than a land value tax, meaning the decision on where to locate is based on efficiency rather than taxes.

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

#483

Post by jandrewrogers »

eru wrote: post #383
jandrewrogers wrote: post #354

Earlier quoted context omitted.

> If you can afford the rent for your home, you can afford to own it via a mortgage. This does not follow. It assumes the landlord has the same cost basis and cashflow requirements as the person with the mortgage, which is almost never the case. Your mortgage interest payments alone can be higher than a rent that allows a landlord to make a profit. This is not uncommon. Rents in Seattle, for example, are far lower th…

Why does anyone in Seattle buy then?

Because most people don’t live their life by min-maxing their finances. They have other non-financial objectives that take priority over being efficient with money. You might as well ask why people buy nice cars, eat out at restaurants, etc. If people optimized for financial efficiency then the world would look very different, and the median household in the US has a lot of cash leftover to burn even after accounting for ordinary lifestyle expenses (~$12,000 per year, per the US BLS). Seattle, of course, is much wealthier and higher income than the US median so there is more money to burn.

That said, most people struggle with financial and investment math generally, even when they sincerely attempt to make prudent financial decisions. I can’t really blame people for not knowing how to build and reason about financial models, it isn’t a skill you ordinarily pick up in day-to-day life.

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

#484

Post by flagrant_taco »

Karrot_Kream wrote: post #478
flagrant_taco wrote: post #454

Earlier quoted context omitted.

How do those small urban footprints survive though? They bring in outside resources, external zing the impact elsewhere and adding in the cost of transporting goods into and waste out of the urban centers. There isn't a magic answer to it, but simply saying dense areas use less footprint for shelter ignores all the other necessities and conveniences consumed by the people living there.

5 single-family homes will consume the same amount of food and water as 5 units in a few duplexes or a five-over-one. The SFHs will consume more energy for heating and cooling (related to larger footprints) and use more resources to send power and water (larger distances to send power and water.) An SFH consumes more resources than a multifamily-housing unit holding the same number of people.

That really does entirely depend on the size and style of the SFH, location on the land, lifestyle, etc.

Single family homes are often easier to power off-grid with solar if that's on the table, though again with regards to externalities the solar power equipment likely sends those costs to multiple countries on the other side of the planet.

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

#485

Post by dheera »

nemo44x wrote: post #443
dheera wrote: post #305

Earlier quoted context omitted.

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, corru…

You see where I live, cars get smashed all the time, and the police does nothing about it. They just sit on their lazy asses. Property taxes where I live are also some of the highest in the state.

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

#486

Post by zone411 »

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.

Infrastructure spending is dwarfed by expenditures on education, healthcare, or public safety.

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

#487

Post by conductr »

kaibee wrote: post #332
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…

> 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 agree simply on the fact my head filled with half a dozen loopholes within seconds of reading "blight" and "vacant" as measures for tax.

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

#488

Post by flagrant_taco »

lern_too_spel wrote: post #468
flagrant_taco wrote: post #454

Earlier quoted context omitted.

How do those small urban footprints survive though? They bring in outside resources, external zing the impact elsewhere and adding in the cost of transporting goods into and waste out of the urban centers. There isn't a magic answer to it, but simply saying dense areas use less footprint for shelter ignores all the other necessities and conveniences consumed by the people living there.

Suburbs also bring in outside resources. The difference is that distributing those resources and collecting waste within the city is less costly than distributing resources and collecting waste within the suburb.

Suburbs may very well be the worst of both worlds, being more spread out but still not spread out enough to be fairly self sufficient.

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

#489

Post by salamanderss »

BoiledCabbage wrote: post #167
xboxnolifes wrote: post #123

Earlier quoted context omitted.

It very much is the government's job to deal with tragedy of the commons situations. It's arguably it's only job, outside of contract enforcement and national defense.

> It's arguably it's only job, outside of contract enforcement and national defense. Which funnily enough are both just other forms of tragedy of the commons.

Yep you've found the debate point between minarchism and anarchism.

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

#490

Post by s1artibartfast »

ItsMonkk wrote: post #417
s1artibartfast wrote: post #325

Earlier quoted context omitted.

No, I think it is the opposite. The more options available for your land and that of your neighbors, the higher your land is valued. This means you want the maximum restrictions to keep the value low, for both you and your neighbors.

And what is your take on when Minneapolis voted to allow multi-family units[0] and rents dropped[1] relative to other cities? Shouldn't those new units have brought higher land values, and with it higher rents? [0]: https://archive.ph/7oCO6 [1]: https://archive.ph/lO8xY

rents =/= land value.

you can put a duplex or quad-plex on a parcel and have much lower rent, but higher parcel land value.

If you are a homeowner who wants lower land value tax, you should fight tooth and nail to prevent higher density zoning,

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