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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

#671

Post by sidewndr46 »

bombcar wrote: post #620
pmontra wrote: post #613

Earlier quoted context omitted.

If you want to tax properties, why not taxing both the land and what is build upon it? And wardrobes, tables, books or computers (every year) but that's another story.

The idea is that you tax the land only as if it was being used for best use - so that every property is encouraged to develop to maximum density. I suspect that in actual use it would end up having a small to no effect.

The problem with that is that would displace virtually everyone from many cities in the US. There are plenty of cities with single family housing near the metro area. It was built before the city expanded. Nowadays the city engulfs it. Obviously the best use for most of that is medium density housing or some commercial use. The idea of taxing a house with a backyard like it's a $3 million quad-plex of town homes isn't very appealing.

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

#672

Post by bombcar »

inglor_cz wrote: post #590
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 t…

Most things like that are owned by the city itself, and so they are exempt from the taxes (because it would just slosh the money in a circle).

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

#673

Post by saxonww »

shiroiuma wrote: post #362
saxonww wrote: post #152

Earlier quoted context omitted.

Someone created the improvements on it, though. Which is most of what you're paying for when you buy or rent a place to live. This isn't going to change much about landlords. If anything, it will increase the amount of housing rented through landlords, because the land value tax will make it uneconomical for more people to own their own homes. In a high value area, the only people who would be able to do so are the v…

>If anything, it will increase the amount of housing rented through landlords, because the land value tax will make it uneconomical for more people to own their own homes. You do realize condominiums exist, right? You don't need to own an entire parcel of land to own your own home.

Do you think condominiums are more or less common than apartments for rent?

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

#674

Post by treis »

diffeomorphism wrote: post #650
Draiken wrote: post #627

Earlier quoted context omitted.

What? I must be misunderstanding your comment. Are we seriously saying that if someone can no longer afford tax on a land they already own because the rich need to get richer, you should sell? Basically you're asking for normal people to work, get raises forever and hope nothing crazy happens that can raise land value in their neighborhood in order to keep the land they already own. No, this is not in "society's best…

> Are we seriously saying that if someone can no longer afford tax on a land they already own because the rich need to get richer, you should sell? devil's advocate: No, not because of the rich but because of the poor. Buying a house decades ago was very possible on an average single person's salary. Nowadays, even upper income range couples have large troubles financing a house. So the situation is that you have lot…

Homeownership rate has not changed much over the last 60 years. Housing is still affordable overall in the US. It's only some regions that have gone nuts.

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

#675

Post by Kinrany »

waveBidder wrote: post #241
rconti wrote: post #5

Earlier quoted context omitted.

Fascinating. First I've heard of this. I can see the obvious advantages, though I'm sure there are disadvantages I'm missing.

Historically, whoever controls the land also tends to control political power. But also, assessment is a really tricky proposition.

Here's one idea. Effective land tax drives the sale price to 0, so it may be better to make taxes absolute, not relative to value. When someone wants to give up land because the taxes are too high, they just tell the city government. From that point, the tax goes down over time until someone decides to take the land at the current (absolute) tax rate. The old owner still pays the tax and can use the land in the meantime.

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

#676

Post by robertlagrant »

fastball wrote: post #635
robertlagrant wrote: post #603

Earlier quoted context omitted.

This measure will be harmful. Not just due to the person being a bureaucrat who can be bad at their job and/or influenced to achieve certain outcomes; not just because the info is instantly out of date on purchasing decisions; not just because the pricing info is specific to that purchaser . But because everything like this adds more drag into systems that have enough drag already. People can't do anything useful if…

Again, property taxes already exist. This is simpler .

As I understand it, property tax is simple when there's been a recent sale. The complexity comes from a similar issue to land value: no recent sale. In this case it's worse because valuing the land outside of what it's used for is a mess.

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

#677

Post by screye »

injeolmi_love wrote: post #113
slashdev wrote: post #13

Earlier quoted context omitted.

I’ve heard economists champion the idea, but I’ve heard little talk about what the tradeoffs are. What are the downsides?

Whenever something is taxed, less of it is produced. In the case of LVT, the tax is on land that is in a desirable location with lots of nearby amenities. LVT encourages urban sprawl by punishing retail, industrial, and residential concerns that choose to agglomerate with higher taxes. LVT means less walkable cities and more LA style sprawl.

This only happens if zoning limits housing supply.

As urban demand goes up, builders are incentivized to keep building denser ...... until equilibrium is reached.

LVT's main benefit is that it helps remove zoning confusion. It makes houses, parking, offices and factories compete on comparable financial ground. And promotes a minimum level of upzoning based on the value of the land. (Usually corresponding to demand for said land)

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

#678

Post by nonethewiser »

Ghexor wrote: post #596
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…

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.

That sounds ripe for abuse. “Yeah sorry we don’t really want a donut shop” but secretly they just hate the family because they’re gingers.

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

#679

Post by bluedino »

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?

Think of that closed-down K-Mart that's been empty for 25 years on the main shopping drag in a medium-sized town. There's probably 25,000 of those across the USA.

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

#680

Post by nonethewiser »

robertlagrant wrote: post #603
fastball wrote: post #594

Earlier quoted context omitted.

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

This measure will be harmful. Not just due to the person being a bureaucrat who can be bad at their job and/or influenced to achieve certain outcomes; not just because the info is instantly out of date on purchasing decisions; not just because the pricing info is specific to that purchaser . But because everything like this adds more drag into systems that have enough drag already. People can't do anything useful if…

> pricing info is specific to that purchaser

This is a nightmare. Can you elaborate?

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