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

#791

Post by bombcar » Tue, Oct 17, 2023, 4:03 PM UTC

seanmcdirmid wrote: post #783

bombcar wrote: post #638

Earlier quoted context omitted.

A significant part of the educational budget of the US comes from federal funds and federal funds are almost entirely income taxes (some other sources exist).

Most schools receive very little funding from the federal government. Maybe the poorest school districts this makes up a significant part of their funding, but for most school districts it doesn't.

> In 2021, state and local governments in the United States collected about 630.21 billion U.S. dollars via property taxes.

> In FY 2023, the Department of Education (ED) had $271.01 Billion distributed among its 10 sub-components.

Maybe they just burn that quarter trillion, but I suspect it ends up in the districts eventually.

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

#792

Post by gen220 » Tue, Oct 17, 2023, 4:03 PM UTC

OK, I’ve been cooking this idea for a while, curious to get others thoughts.

What if we applied a nominal real estate tax, but applied a differential rate to real estate that’s used for rent seeking?

i.e. if you rented your property for N/60 of the previous 60 months, you’re taxed progressively and exponentially.

I know this would depress real estate prices and reduce the volume of housing available for rent. This is the goal: I want property to be owned by local residents and affordable to local residents, because I think it makes better communities and citizens.

Can you all help me poke him in this idea?

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

#793

Post by bombcar » Tue, Oct 17, 2023, 4:06 PM UTC

ethanbond wrote: post #719

msla wrote: post #694

Earlier quoted context omitted.

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.

Is a city full of pet stores valuable? I don't see why this would encourage economic homogenization.

Go look at the most valuable real-estate in the USA that is still commercial, it's almost always banks and Starbucks.

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

#794

Post by bombcar » Tue, Oct 17, 2023, 4:07 PM UTC

AlchemistCamp wrote: post #703

sidewndr46 wrote: post #671

Earlier quoted context omitted.

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'…

That claim isn’t true. The book goes into details like this and taxes would go down for ~97% of parcels. It would go up a lot for parking lots in city centers and certain segments of commercial real estate.

So limiting Georgism LVT to only commercial real estate would get you all of the benefit without affecting residential properties?

Then simply enact that, and the voters won't care because their taxes will stay the same (they probably will never actually decrease).

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

#795

Post by groby_b » Tue, Oct 17, 2023, 4:12 PM UTC

KRAKRISMOTT wrote: post #137

groby_b wrote: post #43

Earlier quoted context omitted.

Given that it was never "your" land to begin with (what, did you create it?), that's not an unreasonable approach.

In the US, people have the right to property (unlike say, places like Canada https://www.albertalandinstitute.ca/resources/property-right... ). This is a freedom enshrined in the US Constitution and through the fifth amendment. If the Detroit government pushes too hard and rapidly deprives certain parties of their land, they can expect a constitutional challenge.

This isn't quite as trivial as "but people have a right to property", because the government has rights too. The US has long had property taxes, and they are entirely legal.

I advise reading the 14th amendment as well: "nor shall any State deprive any person of life, liberty, or property, without due process of law"

For an extra twist: There's the fact that land-as-property is not enshrined in the constitution - that's the land ordinance of 1785. Which would make a constitutional challenge interesting.

And of course, none of all that obviates the original point: Nobody worked to create land, so from a moral standpoint, "land ownership" is a very interesting concept.

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

#796

Post by bombcar » Tue, Oct 17, 2023, 4:12 PM UTC

cycrutchfield wrote: post #787

flenserboy wrote: post #737

Earlier quoted context omitted.

You are amazingly blasé about that fact that this would be using taxation to prevent people from using their own property as they see fit. This is utilitarianism run amok.

It’s a finite resource. 100 acres of land being barely used should certainly come with a cost. Of all of the things that could be taxed, this one actually makes the most sense.

People aren't objecting to taxing 100 acres of Manhattan at rates that are associated with the value of the land there, people are upset about the idea that they could buy something, and then through no fault of their own, it becomes worth more and they have to sell because they can't afford to pay. Sure you get a ball of money as a consolation price, but you still had to move on.

But this is more of a straw man than a real objection; as there are various and sundry ways to resolve this (for fixed income, you can have property tax deferral until sale-after-death, you can have homestead exemptions, etc etc).

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

#797

Post by Draiken » Tue, Oct 17, 2023, 4:14 PM UTC

chriswarbo wrote: post #775

Draiken wrote: post #695

Earlier quoted context omitted.

> 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…

> companies will just turn their empty plots into useless parking lots (or some other loophole they will find) to say it's "valuable" Skipping past your other points, I just wanted to reply to this sentence, since it seems to show a deep confusion/misunderstanding (perhaps on my behalf!). - Land owners won't get to "say" how valuable their land is; that's determined by the market, assessors, etc. - Given the chance,…

Oh there's definitely lack of understanding from my part. Thanks for the thorough explanation.

They do need to make sure the tax is higher than the land value growth otherwise it wouldn't really work. Maybe it's not that hard, but with some of the price hikes I've seen, it could happen.

Honestly, I am very curious to see how this will pan out. Hopefully there isn't a giant loophole that will backfire as it happens with so many bills.

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

#798

Post by adverbly » Tue, Oct 17, 2023, 4:21 PM UTC

This is great news. LVT is the best. In the current economic and political climate I think it is probably our best chance for a major policy improvement. Both the left and the right and economists in general are in favor of it because it increases productivity and disincentivizes speculation.

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

#799

Post by YeBanKo » Tue, Oct 17, 2023, 4:23 PM UTC

mywittyname wrote: post #771

ab_goat wrote: post #258

Earlier quoted context omitted.

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…

I built a new house on a newly built road in a semi-urban area. The parcel of land that I bought on the road came with an agreement to pay back the 30 year bond the city took out for the construction of the road and related infrastructure. This amounted to about ~$4MM (in addition to village & city property taxes), so it's a hefty fee even thought its divided among 50 other households. After I moved here, the people…

Does your village had a right to levy income tax? What state are you in?

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

#800

Post by BoiledCabbage » Tue, Oct 17, 2023, 4:25 PM UTC

Draiken wrote: post #697

diffeomorphism wrote: post #650

Earlier quoted context omitted.

> 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 boug…

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

The first is that if someone suddenly became wealthy because their house went up 3x in value and they want to continue living there then they can get a reverse mortgage. Assign that new found wealth in the equity to the bank in exchange for getting a monthly payment to pay the tax. If you're arguing they both should be able to stay, and keep the increase in equity that they contributed to them you're arguing housing should be a speculative investment (which leads to bad incentives).

> 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.

The whole point is it's not. It's incentivising someone to move so they stop screwing over the 10-20 families they would like to buy a house but can't afford to because the supply is so low. By replacing the single story home with multi floor condos, more people can now afford homes in the area.