Detroit wants to be the first big American city to tax land value • Hacker News Board

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

#491

Post by s1artibartfast » Tue, Oct 17, 2023, 4:36 AM UTC

eru wrote: post #368

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.

If the land of Joe's neighbours has no restrictions at all, it will be valuable. But if Joe's land has a weird zoning that says 'can only be used by Joe' that land would be nearly worthless on the market, but good for Joe. Less extreme, if you have a neighbourhood with plots that allow unlimited building and a few plots that only allow single family homes, the latter would be a lot cheaper.

Exactly what I am saying.

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

#492

Post by pdonis » Tue, Oct 17, 2023, 4:39 AM UTC

unyttigfjelltol wrote: post #150

ejstronge wrote: post #39

Perhaps 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.

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…

> Tax a house on a foundation; no tax for a house on wheels?

Most states do tax mobile homes, they just classify them as vehicles. Whether that actually makes a difference in the tax rate depends on the state.

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

#493

Post by s1artibartfast » Tue, Oct 17, 2023, 4:42 AM UTC

epistasis wrote: post #407

s1artibartfast wrote: post #230

Earlier quoted context omitted.

The land value in absence of human activity is zero. All value stems from improvements made by people, either on the land, or nearby.

Exactly. And that's why taxing the land itself—and therefore access to all those improvements and amenities—is a good way to allocate it. If somebody is sitting on a prime seat in the hot tub, and they don't really care very much about it, and there's a line of 20 people waiting to get in, we have a wasted resource. Revealing true preferences by having people put some skin in the game means that more people are happy…

That is a great argument for never building a hot tub, or participating in a project to build one.

Why bother making a tub, a neighborhood, or a community if it can simply be taken from you.

Id rather burn mine to the ground than have it taken away just because someone else wants it more. They might not even want it more, but they just have more money.

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

#494

Post by jandrewrogers » Tue, Oct 17, 2023, 4:44 AM UTC

SoftTalker wrote: post #367

eru wrote: post #267

Earlier quoted context omitted.

I appreciate the sentiment, but that's not really true. If you can afford the rent for your home, you can afford to own it via a mortgage. (Assuming functioning capital markets and assuming low enough transaction costs.) Something like this has to be true, because that's how landlords pay for their cost of capital and maintenance etc. If rent couldn't cover that, but for some reason home prices still stayed high, and…

And in fact your mortgage would almost certainly be less than the rent for the same property, since the landlord will be using commercial financing which costs more, and will be paying taxes as a non-resident owner, which are higher. The landlord will also need to buy commercial property and liability insurance, which costs more. Your residential mortgage will be at a lower rate and you will have property tax exempti…

Why do you assume the landlord has a significant mortgage or any mortgage at all? Most landlords have owned the properties for decades. I know quite a few that bought the properties with cash and never had a mortgage.

If you buy a place for $1,000,000 at 7%, you can’t compete with someone that owes $100,000 at 2.5% on the same place, which is often the reality.

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

#495

Post by Brycee » Tue, Oct 17, 2023, 4:47 AM UTC

dkbrk wrote: post #265

r721 wrote: post #2

https://en.wikipedia.org/wiki/Georgism

https://www.astralcodexten.com/p/your-book-review-progress-a...

This is well worth a read, as is the Progress and Poverty substack if you're curious about the subject.

https://progressandpoverty.substack.com/

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

#496

Post by ComputerGuru » Tue, Oct 17, 2023, 4:48 AM UTC

unyttigfjelltol wrote: post #150

ejstronge wrote: post #39

Perhaps 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.

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…

LVT doesn’t punish people for making improvements to their homes.

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

#497

Post by krupan » Tue, Oct 17, 2023, 4:58 AM UTC

It's so weird to me that with our income tax laws we to try and make sure they are fair and taxing people according to their means. You make more income, you pay more taxes, you make less income, you pay less taxes. But then we layer on property/land taxes that absolutely do not follow that principle. Retired Grandma living off social security has land that she bought 50 years ago is now worth 50 times what it was? Too bad Grandma, gotta pay up or sell it and move!

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

#498

Post by cosmojg » Tue, Oct 17, 2023, 4:58 AM UTC

gred wrote: post #129

I hope they do try it. If they do, one of two thing will happen. Either it will fail dramatically, in which case the LVT muppets can finally shut up about it... or it will succeed, all of our cities will migrate to this new utopian taxation scheme, and the LVT muppets can finally shut up about it.

Indeed, I can't wait to shut up about this!

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

#499

Post by flownoon » Tue, Oct 17, 2023, 5:00 AM UTC

lbwtaylor wrote: post #477

harimau777 wrote: post #142

Earlier quoted context omitted.

You are already paying taxes, Land Value Taxes just seek to be a more efficient (since they try to target rent seeking rather than profitable labor) and more just (since they target land that the owner didn't create) form of taxation. So arguing that it's effectively the government stealing your property is only a valid argument if you are arguing that all taxation is theft. If that's what you believe then that's fin…

>> Land Value Taxes just seek to be a more efficient (since they try to target rent seeking rather than profitable labor) and more just So someone like Musk should pay basically no tax personally because he doesn't own any land? I think the idea LVT comes from a period of time when land was a good proxy for wealth. These days, I think that's only true for the middle class, who gets crushed by LVT while the true wealt…

Most of Musk’s money comes from astronomical stock valuations. Most of that stock is bought by hedge funds and the financial sector. That money mostly comes from mortgages and loans, which allow the financial sector to capture the land value that could otherwise belong to the people.

So basically land value (which nobody creates through their own labor- its created by a community and should be owned by the community) is vacuumed up by the financial sector, which they throw at tech.

For more on this process, look into Michael Hudson, who accurately forecasted the 08 financial crisis.

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

#500

Post by aldonius » Tue, Oct 17, 2023, 5:02 AM UTC

danShumway wrote: post #408

aldonius wrote: post #58

Earlier quoted context omitted.

Sometimes people want to sit on underdeveloped-for-the-location land not because it's a low-effort way to ride capital gains but for non-economic reasons. Examples include conservation projects and urban farms, but the big one is empty-nesters ageing in place (while the city has grown around them). If you've seen the start of the movie Up you'll recall that Mr. Carl Fredrickson owns a detached home which now has apar…

It's been a while since I saw Up, but isn't the moral of that movie that Carl is holding onto the past too tightly and that doing so has separated him from the outside world and the people around him and colored his perception of them? The emotional climax of the film is Carl throwing away all of his antique furniture that is metaphorically and literally weighing him down, and then the film ends by Carl dropping his…

Yes, I think that's a fair interpretation of the moral. Note that Carl changes his mind about what's important to him over the course of the movie. First he lets go of the land (literally, by taking flight) and then later the house.