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

#691

Post by theamk » Tue, Oct 17, 2023, 1:25 PM UTC

simonh wrote: post #658

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.

We already tax revenue and/or profits in various ways anyway. If land is in a city, that gives it a high value and revenue earning potential due to no work or expenditure from the land owner, but ongoing costs to the taxpayer to provide the infrastructure and services that give it this value and potential. Roads, schools, hospitals, etc. these are very costly to the public but increase the value of nearby land. The l…

Always wondered how this works on modern times, where income per square foot varies wildly per industry.

Let's say because of rising taxes, a bakery or a shop has closed and a lawyers office has opened in that spot. Who exactly us "the public" in this case and what are the "maximum benefits" that they are getting from that change? Because if I actually lived nearby, I sure wouldn't be happy about my favorite vakery/shop being closed.

And don't say "increased tax base" - for that, you can tweak existing system and increase income taxes so you collect more from the lawyers while still keeping bakeries alive.

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

#692

Post by cwmma » Tue, Oct 17, 2023, 1:25 PM 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?

it is specifically in Detroit, they have lots of empty lots as businesses fled the city proper for the suburbs, now as the city is bouncing back there is an incentive to just hold onto empty lots so that new buildings around you increase the value of your land.

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

#693

Post by nonethewiser » Tue, Oct 17, 2023, 1:27 PM UTC

mattgibson wrote: post #611

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 prices go up when poeple have more mooney and go down when people have less. The root cause is that land is unique in the economy because it both cannot be manufactured and cannot be moved. Each piece of land is therefore unique and no one can increase supply in response to demand. Renting or purchasing land is essentially an auction and the price is set by the highest bidder. Economists call this a "monopoly pr…

> Land value is therefore a really weird part of the economy that allows people to charge money without doing any work or providing any value in return. If we confiscate all the money people charge to rent or buy land, nothing changes because no work was ever happening. The land is still there and still just as useful. Contrast that with anything where work is actually done - the industry would collapse if you confiscate the money. Taxing land value therefore allows the government to reclaim the money which those people should not be able to charge in the first place

You say they shouldn’t be able to charge for it, but instead of disallowing it you just change the beneficiary?

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

#694

Post by msla » Tue, Oct 17, 2023, 1:30 PM UTC

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.

So people will be paying a higher tax than they ought to be if they aren't trend-chasing the economy to always be engaging in that "best use" from year to year?

That sounds perverse in itself, especially since an economy needs diversity to function, and if everyone is incentivized to chase a single thing per region you end up with overproduction of that and underproduction of everything else.

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

#695

Post by Draiken » Tue, Oct 17, 2023, 1:32 PM UTC

screye wrote: post #652

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…

It isn't an extra tax. It is a rebalancing tax. The rich have nothing to do with this. It is purely about how much land you sit on and where. That's it. > Basically you're asking for normal people to work, get raises forever Nope, it mostly incentivizes real estate hoarders to start making productive use of there land. It allows normal people to buy houses because this system inventivizes the increase of supply. > la…

> It isn't an extra tax. It is a rebalancing tax. The rich have nothing to do with this.

So effectively normal people that don't own empty land will not pay this or pay an equivalent of the previous taxes?

> If your lad value tax increases enough to be unpayable, then your house has likely appreciated 3x+.

I guess you could try to argue that but I still feel like that's going to hurt folks. Imagine a scenario where I live somewhere for decades. Suddenly there's a new subway or some other factor that increases the value of the land enough that I can't pay for it.

Now I'm forced to leave this place when it finally becomes better to live in. In theory if I sold it, it would make me some money, but that's not the same as saying I'm a rich person now.

It's also not free in the sense that I still have to move somewhere else, which will probably be worse than the current place I live, since I will be required to buy a house with a lower tax (less valuable).

I can see the benefits if this was part of a bigger set of changes that would overall benefit everyone. But in isolation it seems like it will hurt normal folks and companies will just turn their empty plots into useless parking lots (or some other loophole they will find) to say it's "valuable".

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

#696

Post by ensignavenger » Tue, Oct 17, 2023, 1:34 PM UTC

eru wrote: post #474

ensignavenger wrote: post #375

Earlier quoted context omitted.

Reverse mortgages are generally only available in the US after you reach a certain age.

Interesting. Is that due to federal or state regulation? Or a choice by the banks?

I am not sure, it seems to be a combination. The FHA requires the homeowner to be 62 or older for an FHA reverse mortgage. I have never seen a private reverse mortgage advertised, but apparently they exist and from what I have read online, are offereed to those as young as 55- but apparently are marketed to those with fairly expensive homes.

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

#697

Post by Draiken » Tue, Oct 17, 2023, 1:40 PM UTC

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…

> That is not helpful for a discussion.

Fair enough. Edited that part off. I was simply extremely shocked at the implications, if I understood it correctly.

> So the situation is that you have lots of old people living in houses that they could never, ever afford at today's prices.

I don't think punishing people for what companies have done to inflate house prices is a good move though.

Screwing over people that bought houses that they live in instead of fixing the root causes for all these insane price hikes seems completely backwards to me.

Remember that companies or rich folks might have to pay some extra taxes but, in general, they can freaking afford it. Normal folks more often than not, can't.

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

#698

Post by notacoward » Tue, Oct 17, 2023, 1:41 PM UTC

ab_goat wrote: post #258

chrisweekly wrote: post #179

Earlier quoted context omitted.

I'm a homeowner in MA interested to hear more.

I come from Western Massachusetts, which is characterized by smaller populations and lower budgetary allocations. The most significant budget item in most municipalities here is education, followed by road maintenance, which is often extremely costly. In Massachusetts, the basic cost estimate for repaving a standard road is approximately $1 million per mile, and this investment typically only lasts about a decade bef…

Great explanation. Seems like the Cliff's Notes version is that values are based on supply and demand, ignoring costs, and car culture has distorted both. I've been a Georgist since forever, but I'd never looked at things from that angle before. Thank you.

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

#699

Post by causality0 » Tue, Oct 17, 2023, 1:41 PM UTC

harimau777 wrote: post #119

causality0 wrote: post #72

Earlier quoted context omitted.

"Don't worry, the law guarantees that after taxes on the land and home you spent decades paying for are so high you can't afford them you can get one of the pieces after we take it away and chop it up" is one of the most dystopian things I've ever heard.

When you say "...home you spent decades paying for..." it comes across like you are implying that the money you spent is somehow disappearing or being stolen. However, if the land value taxes have dramatically increased, then that means that the value of your property has dramatically increased, so you can sell for a dramatic profit. It would still suck to have to sell, but it's not nearly as dark as you seem to be s…

Why should you have to do anything? My binder of pokémon cards is worth thousands of times what I paid for it but nobody has the right to levy an unending amount of taxes on it until I can't afford to not sell it.

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

#700

Post by bnt » Tue, Oct 17, 2023, 1:45 PM UTC

pmontra wrote: post #613

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…

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.

So basically own nothing and be happy? What then drives people to create any meaningful value to the economy?