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

#551

Post by oneshtein » Tue, Oct 17, 2023, 7:23 AM UTC

rrrrrrrrrrrryan wrote: post #544

flagrant_taco wrote: post #416

Earlier quoted context omitted.

This argument has often confused me when so many people are concerned with global warming. Why should a city incentive land owners to develop and commoditize their land? If we want to reduce human impacts on the planet, why not incentive the opposite and incentive leaving the land natural? Land value taxes prioritize GDP and profit above all else. Isn't that how we got into this mess in the first place?

LVT doesn't encourage infinite development on all land - it encourages the efficient use of land. If you replaced property taxes with land value taxes and held revenue equal: For rural areas, not much would change. Land is cheap and taxes would remain low. For suburban areas, there would be a moderate shift in tax burden. People with homes on large plots of land would pay more; people with homes on smaller plots of l…

With %100 LVT, city will be owner of most land in 1 year. With 10% LVT - in 10 years. Value based tax means that value is transferred from owner to a new owner no matter what. Owner is just working for a new owner.

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

#552

Post by reaperman » Tue, Oct 17, 2023, 7:25 AM UTC

jjav wrote: post #537

chongli wrote: post #392

Earlier quoted context omitted.

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…

> Simple taxes that are difficult to avoid (such as LVT) Can you explain how is it simple? Who gets to set the theoretical value of a plot of land, disconnected from all current uses? Since it's theoretical, it's very subjective. Who do we give this power to make or destroy the owners based on purely subjective speculation on what it might be worth? How do we guarantee that this entity won't abuse the power to set ar…

> How do we guarantee that this entity won't abuse the power to set arbitrary tax valuations?

We don't. They already do that with "normal" property taxes. This wouldn't change that.

Soon-to-be gentrified neighborhoods are often ignored by property tax assessors and code enforcement for many years, then one day a developer reaches out to the tax assessors and says "hey the taxable assessment values in this neighborhood should really be higher". Then the people living there have taxes raised 10-20% every year until they are forced to sell for low prices because they can't afford to hold onto their property until the gentrification is actually well underway when they'd finally see their property value actually go up.

At least, that's how it goes in Texas.

I don't think this system would be worse in that sense, probably roughly equivalent. But it makes sense to at least attempt to tax undeveloped and under-developed land at high enough rates to encourage at least some healthy amount of development. It won't be perfect, but it shouldn't be worse either.

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

#553

Post by somethoughts » Tue, Oct 17, 2023, 7:27 AM UTC

eru wrote: post #469

somethoughts wrote: post #249

Earlier quoted context omitted.

I generally agree with LVT/Georgianism in principal. However in reality its a difficult ask to have all people purchasing single family homes to be able to build a 40 year financial model/projection of a regions growth prospects when the buy a home. Or have them move away from their family and friends support network. I think Georgianism works best: - when there's expansive flat land and slow growth and no zoning/res…

> However in reality its a difficult ask to have all people purchasing single family homes to be able to build a 40 year financial model/projection of a regions growth prospects when the buy a home. Georgism doesn't require that any more than the current system. In fact, for people who haven't already bought a home, the cost under a Georgist system are almost exactly the same as before: The yearly outlay for owning a…

Interesting - perhaps I don't understand quite clearly though?

Assume a long time single family home elderly owner on a fixed income (i.e. social security) that had modeled for only linear increases in accessed land value (and associated taxes) but experienced exponential accessed land value appreciation (and tax increases).

Would the proposed solution be for the original long time elderly owner to sell 50% rights to the property in exchange for another future owner to tear down the single home and replace it with a duplex for the original owner and new co-owner to live in together?

Or is the assumption that only well capitalized apartment owners are the only ones who own the land and have the capability to teardown and re-build as more units or renovate and raise rents?

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

#554

Post by fastball » Tue, Oct 17, 2023, 7:31 AM UTC

jjav wrote: post #533

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

> For one, it doesn't introduce the problem of needing to define 'vacant land'. But it introduces, unless I'm completely misunderstanding, the need to establish a theoretical value for a plot of land that's unrelated to any sale or use value we can objectively measure today. At best, it seems the assesment will be very wrong often. At worst, it'll be a political tool for local government to drive out whoever they wan…

How is an assessment which includes improvements (the status quo) less complicated than one which does not?

Distinguishing between lot value and property value is already a very common exercise in the real estate business.

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

#555

Post by piaste » Tue, Oct 17, 2023, 7:34 AM UTC

jjav wrote: post #533

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

> For one, it doesn't introduce the problem of needing to define 'vacant land'. But it introduces, unless I'm completely misunderstanding, the need to establish a theoretical value for a plot of land that's unrelated to any sale or use value we can objectively measure today. At best, it seems the assesment will be very wrong often. At worst, it'll be a political tool for local government to drive out whoever they wan…

While it's not trivial, assessing un-improved land value does not seem too different from other complicated accounting tasks that both governments and private organisations have been performing for a long time. Cost segregation studies are already a thing.

A good starting point can be the relevant part of the Georgist primer published on ACX:

https://www.astralcodexten.com/p/does-georgism-work-part-3-c...

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

#556

Post by injeolmi_love » Tue, Oct 17, 2023, 7:36 AM UTC

BoiledCabbage wrote: post #530

injeolmi_love wrote: post #482

Earlier quoted context omitted.

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…

You're still muddling two distinct concepts together. Let's start with a simpler case where it is easier for people to reason about. There is a single lot in the urban core. There are two proposed businesses vying for the lot. The first is an empty parking lot, the second is a two story parking garage. Under a property tax, the second group would be taxed for the improvements of building the above ground garage they…

> land is not substitutable

Then why do realtors do showings for multiple locations? It’s because the locations are substitutable, with buyers balancing price and amenities. Land is substitutable.

> confusing second and first order

Prices are a second order effect, not a first order effect (unless there’s price fixing). LVT makes land with amenities relatively less attractive, which lowers demand. Lower demand then moves the price, but the quantity demanded will still be lower since the demand curve has shifted down. This causes an exodus from urban centers to the periphery.

>property taxes disincentivize development

True. Assuming constant revenue, a move from property to land value tax would create a relative migration from city cores to a highly developed exurbia. If the LVT was high enough, we’d get single plot high rises with multistory garages only accessible by freeway surrounded by untouched nature reserves.

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

#557

Post by Kbelicius » Tue, Oct 17, 2023, 7:51 AM UTC

orwell_bruh wrote: post #547

chongli wrote: post #392

Earlier quoted context omitted.

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…

One implication of what you write seems to be that every property owner is incentevized to NIMBY any improvements to the area that they don't care about. For example, if I am "child free" I will now oppose the building of schools and playgrounds on the basis that they make my LVT go up with no benefit to me. This looks more like a way to destroy society than prudent tax policy.

> For example, if I am "child free" I will now oppose the building of schools and playgrounds on the basis that they make my LVT go up with no benefit to me.

It would raise the value of your land.

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

#558

Post by Neil44 » Tue, Oct 17, 2023, 7:51 AM UTC

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.

I wish they would do that here. Our nearest city has tons of derelict and decaying buildings that sit on the books of faceless organisations far away staffed by people who've never set eyes on them, and don't have to live in the resulting s** hole next to them.

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

#559

Post by palmfacehn » Tue, Oct 17, 2023, 7:52 AM UTC

simonsarris wrote: post #366

quasse wrote: post #306

Earlier quoted context omitted.

In case you're not joking, government entities in the US are not allowed to build road structures that will collapse the first time a farmer drives a loaded grain hauler over them.

I'm being a little facetious but I really would like to know how 700K actually gets spent line by the line, here.

In the ideal world we would be able to compare a privately built and insured road to a public road with tax payer liability for mishaps. I suspect the reality of a privately maintained road is still subject to regulatory overhead.

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

#560

Post by hknmtt » Tue, Oct 17, 2023, 7:58 AM UTC

Strangely, I am in europe and here there is separate property and land tax and as far as i know it always was like that. Land is based on size and property based on purchasing price. Although some politicians want to change the land tax(so people pay more).