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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

#581

Post by robertlagrant »

fastball wrote: post #554
jjav wrote: post #533

Earlier quoted context omitted.

> 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.

In real estate property value is constantly being corrected by an actual market. Prices aren't set by bureaucrats; they're paid by people for whom that price is worth it.

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

#582

Post by developer93 »

glompers wrote: post #442
flagrant_taco wrote: post #421

Earlier quoted context omitted.

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.

I didn't completely understand that, could you elaborate or rephrase maybe with an example? If you have time. Sounds interesting.

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

#583

Post by dukeyukey »

flagrant_taco wrote: post #454
dionidium wrote: post #437

Earlier quoted context omitted.

Human beings have to live somewhere and gathering them together in a small urban footprint is better for the climate, not worse.

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.

Spread-out suburbs require more heating, transportation infrastructure, and more physical land to exist than alternatives. You can argue for them based on other gactors, but they use more resources, full stop.

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

#584

Post by chongli »

leoedin wrote: post #576
Kbelicius wrote: post #557

Earlier quoted context omitted.

> 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.

I think the problem is, for many people, the value of their land is kind of irrelevant. If you are using land by living on it, and want to live on it because it's near your friends, family, community, place of work etc, then the value of that land to someone else doesn't really matter. Maybe when you die and pass it to your kids, it would be great if it was valuable. But in the mean time (which for most people is man…

You can’t make everyone happy all the time. I’m a lot more okay with a situation in which a person is compelled to sell their very valuable property because they can’t afford the taxes than I am with people being unable to afford housing.

If LVT helps to loosen up some undeveloped/underdeveloped land and get it into the hands of a willing developer then that is a big win for the fight against the housing crisis.

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

#585

Post by bigDinosaur »

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.

There are many ways of implementing it and many reasons it may fail or succeed, but you've made your extreme bias clear. What was the purpose of your comment? To feel superior despite not having the slightest actual argument to present? Let me guess, you feel the same way about congestion taxes.

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

#586

Post by dukeyukey »

flagrant_taco wrote: post #416
zip1234 wrote: post #214

Earlier quoted context omitted.

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.

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?

> Why should a city incentive land owners to develop and commoditize their land?

Because otherwise newcomers are stuck paying high rents to people who got there first, causing misery and impoverishing young people to the benefit of the old. And when young people lack opportunity, violence happens.

> why not incentive the opposite and incentive leaving the land natural?

We do. All over the place. But for the cost of a square mile of Central London being natural, we could have a dozen square miles of natural land just 50 miles away. Because way more people want to live in Central London than a commuter town.

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

#587

Post by mcny »

mathgeek wrote: post #573
bagels wrote: post #565

Earlier quoted context omitted.

Or the city just says taxes are $x per square foot of land. Desired tax revenue / total parcel area.

I'm no economist, but it seems like such a flat tax would result in a lot of defaults on land the further you get from popular areas.

Maybe that's a sign that the "city" is too big? Much of what we call Dallas is not in Dallas, they are a different city. It makes sense to have a flat rate for all of Frisco and that tax rate will be different from that of Waxahachie.

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

#588

Post by developer93 »

flagrant_taco wrote: post #481
InspiredIdiot wrote: post #472

Earlier quoted context omitted.

> 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 interne…

Your environmental footprint for transport is higher though right unless you're cycling everywhere, because you need to travel further? Which involves everything you need that you don't produce yourself. Or you're all entirely self sufficient and never leave your smallholdings? I don't mean to sound like a dick, just trying to engage :-)

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

#589

Post by orwell_bruh »

dukeyukey wrote: post #580
orwell_bruh wrote: post #547

Earlier quoted context omitted.

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.

The benefit is the land you own is now more valuable.

This benefit is hypothetical as long as you are not selling your land.

So, up to the point where you would actually sell your land, LVT is simply a liability. Even if eventually you sell are not guranteed to actually make the amount implied by the LVT you have been paying.

Let's think about what structures and incentives and ways of thinking we would foster here. Everyone a property speculator! That worked out so well with housing.

Meanwhile the people who just want to raise a family in peace and stability can now be priced out of their homes because their neighborhood got too "good". And that's just the goldilocks analysis.

In grim reality, city councils can use this to soft-evict anyone, anywhere without giving a reason by simply raising the estimated land value. The corruption is going to be off the charts.

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

#590

Post by inglor_cz »

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.

Unlike property tax, land value tax punishes you for leaving valuable land (e.g surrounded by lively business buildings) intentionally undeveloped or underdeveloped.

The only problem that I can see with this approach is landscaping. It is valuable to have a nice park in the center of a city, if only for the cooling down that it provides, but parks don't make money and land value tax would incentivize people who own them to bulldoze the park and build something in its place.

Perhaps this could be solved with certain exemptions. But these are subject to the usual corruption, e.g. someone leaves a really bad parking lot in place and his friends in the town hall simply categorize it as a park.

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