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

#591

Post by strken » Tue, Oct 17, 2023, 10:05 AM UTC

oneshtein wrote: post #551

rrrrrrrrrrrryan wrote: post #544

Earlier quoted context omitted.

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.

From memory, the Georgist belief is that whoever collects the tax will spend it, and the spending will distribute the value in a way which is...not necessarily equal, but is closer to equality than the status quo was.

The wealth transfer is a feature rather than a bug, in this case. Speculators sitting on unimproved or underutilised land are seen as literal rent-seekers, and taxing them is seen as reclaiming a natural monopoly at the same time as removing the leeches who're sucking up big chunks of a city's growth.

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

#592

Post by anfilt » Tue, Oct 17, 2023, 10:10 AM UTC

epistasis wrote: post #419

surge wrote: post #340

Earlier quoted context omitted.

I think the same tax should be on vacant rental properties. If you're still sitting on a rental property after 6 months to a year, you're charging too much for it since its apparently above market rate. At the very least you shouldn't be able to claim write off the loss on your taxes past a certain period. Maybe depreciation is another thing that should be fixed.

Pretty sure you can't write off missing rent as a business loss. Depreciation definitely needs to be fixed. You shouldn't be able to claim 3% of a structures value as business loss every year, without some sort of evidence that you will actually tear down the structure in 33 years. And perhaps after it has been counted as depreciated once, future owners shouldn't be allowed to deduct the depreciation either.

Well most structures will need repairs and updates over 33 years. Materials degrade for instance one the most common roofing materials asphalt shingles depending on the style has a life time of about 20 to 30 years. You also have things like heating and cooling system and such (they don't last forever) Plus just generally wear and tear and things like carpet that eventually just become and nasty and needs replaced.

Let alone things just getting dated.

If you look at typical house most of the labor and expense for materials is in the finishing not the rough structure like the framing. Look at the price of 8 ft 1x4 trim piece compared to just 8' 2x4 despite the 2x4 having twice the amount of wood. Then look at what generally needs to be replaced its not the framing unless the building was neglected or poorly built.

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

#593

Post by michaelt » Tue, Oct 17, 2023, 10:10 AM UTC

hiAndrewQuinn wrote: post #575

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…

There are theoretical difficulties, yes. The elegant way out is to have the person owning the land self-assess its value, set the LVT at x% of that value, and be legally bound to sell it to anyone who comes up to them offering that price. Now how do we determine that x%? That's a good question. I think there's no way out of some empiricism even if someone did try this approach. But you can always start it low and rai…

> The elegant way out is to have the person owning the land self-assess its value, set the LVT at x% of that value, and be legally bound to sell it to anyone who comes up to them offering that price.

That doesn't make any sense in the context of a land value tax.

The whole point of a land value tax is that a parcel of city center land is taxed at the same rate whether it's got a parking lot on it or an apartment block.

But the owner of an apartment block would self-assess their land as much more valuable than a parking lot, not wanting to be forced to sell their apartment block for the price of a parking lot. So you'd be back to having a property tax, not a land value tax.

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

#594

Post by fastball » Tue, Oct 17, 2023, 10:10 AM UTC

robertlagrant wrote: post #581

fastball wrote: post #554

Earlier quoted context omitted.

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.

And bureaucrats are unable to use the market itself to help value land because?

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

#595

Post by malta_kano » Tue, Oct 17, 2023, 10:13 AM UTC

red_admiral wrote: post #561

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.

Land value tax is an idea by Henry George - the guy who coined the phrase "the rent is too damn high". His idea is among other things that a property tax discourages investment - one way to make money as an investor is to hold a plot of empty land in a desirable city centre location, watch it go up in value, and neither pay tax on any development on it nor bother with messy things such as tenants. Taxing the land val…

Is that the problem though? Empty land held by speculators?

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

#596

Post by Ghexor » Tue, Oct 17, 2023, 10:19 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…

At worst the assesment will be dysfunctional often and at best this can empower local governance (ideally, "the people") to decide, as you say, on what businesses they'd like to host.

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

#597

Post by red_admiral » Tue, Oct 17, 2023, 10:19 AM UTC

malta_kano wrote: post #595

red_admiral wrote: post #561

Earlier quoted context omitted.

Land value tax is an idea by Henry George - the guy who coined the phrase "the rent is too damn high". His idea is among other things that a property tax discourages investment - one way to make money as an investor is to hold a plot of empty land in a desirable city centre location, watch it go up in value, and neither pay tax on any development on it nor bother with messy things such as tenants. Taxing the land val…

Is that the problem though? Empty land held by speculators?

Georgist thinking, as far as I understand, is that taxing total property value disincentivises investment in a way that is worse for society overall. Empty land is just a subcase of that.

That said, "everybody works but the vacant lot" is a Georgist slogan that has been seen on billboards before now: https://digitalcollections.nypl.org/items/510d47de-036a-a3d9...

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

#598

Post by shawabawa3 » Tue, Oct 17, 2023, 10:42 AM UTC

lend000 wrote: post #520

TulliusCicero wrote: post #46

Earlier quoted context omitted.

Land value taxes don't factor in improvements. Improving the land results in no property tax change, so they incentivize doing more useful things with the land.

I've gone back and forth on LVT, but don't currently support it. The problem is determining what the land is worth. If you use a periodic market-based auction system (the only known way that could possibly yield accurate prices), then you give the government and the wealthy extraordinary power to kick people out of their residences, even ones in which the tenants built the house. Good for the collective perhaps, but…

> If you use a periodic market-based auction system (the only known way that could possibly yield accurate prices)

This system wouldn't work, because you would be measuring the property value not land value

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

#599

Post by Cymrukicks » Tue, Oct 17, 2023, 10:43 AM UTC

malta_kano wrote: post #595

red_admiral wrote: post #561

Earlier quoted context omitted.

Land value tax is an idea by Henry George - the guy who coined the phrase "the rent is too damn high". His idea is among other things that a property tax discourages investment - one way to make money as an investor is to hold a plot of empty land in a desirable city centre location, watch it go up in value, and neither pay tax on any development on it nor bother with messy things such as tenants. Taxing the land val…

Is that the problem though? Empty land held by speculators?

Huge problem over in the UK, its called land banking. The scarcity of affordable property combined with some silly planning laws mean that you can double your money if you buy land and simply sit on it for a decade.

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

#600

Post by atlantic » Tue, Oct 17, 2023, 10:49 AM UTC

fastball wrote: post #594

robertlagrant wrote: post #581

Earlier quoted context omitted.

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.

And bureaucrats are unable to use the market itself to help value land because?

Because the market price is only fixed at the moment of sale. Until then, setting the market value of a property is fairly speculative.