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

#891

Post by Brycee » Wed, Oct 18, 2023, 5:59 PM UTC

AlbertCory wrote: post #516

Brycee wrote: post #502

Earlier quoted context omitted.

If you dramatically reduce taxes to labour and capital, it quickly becomes a very attractive place to move your business or earn an income. And that's the start of a development flywheel. Instead of taxing productivity, land taxes reabsorb the value generated by the community (positive externalities), which would otherwise flow into the pocket of the guy who owns a parcel of land in proximity to the public good. You…

Doesn't it seem to you like ~50 years of decline are too much to erase with one tax law? Have you ever been to Detroit?

I think that certainly makes it harder. Never been to Detroit. Probably still more economic activity there than there was 200 years ago.

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

#892

Post by s1artibartfast » Wed, Oct 18, 2023, 7:01 PM UTC

lmm wrote: post #878

s1artibartfast wrote: post #877

Earlier quoted context omitted.

The point is that money can buy you a lot more than land. A Picasso takes no land. Elons giga factory would pay no land tax because the land vale is zero. It is in the middle of the desert surrounded by employ land that nobody wants.

> A Picasso takes no land. Buying stuff that people make enriches those people and spreads the wealth around. It's good to encourage doing that rather than hoarding land. (While you can hoard individual old paintings, if you drive up the price of paintings then new and innovative painters - like Picasso - emerge, and produce new paintings to meet that demand). > Elons giga factory would pay no land tax because the la…

Lvt is of course a good way for making sure land gets used for its most financially lucrative purpose. I never denied that.

My point is that it's a terrible way to fund a government. The vast majority of economic value created does not require land and would go un taxed. The vast majority of value comes not from land or the raw materials derived from land, but from Human labor used to convert the raw material into Goods, or pure services.

It's also much more regressive than the current system. People like Elon Musk make a million times more than your average person, but they don't use a million times more land or eat a million times more hamburgers. Most of what the rich purchase is labor and human compute.

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

#893

Post by ejstronge » Wed, Oct 18, 2023, 7:56 PM UTC

enragedcacti wrote: post #854

ejstronge wrote: post #811

Earlier quoted context omitted.

> Land with a skyscraper already on it and land next to a skyscraper have related but not equal market values. I agree! But in appraisals that I have seen, there is an effort to assess the highest and best use of a parcel as well as a break-out of the value of the land associated with a parcel. If the highest and best use of a parcel is a skyscraper, a sale of the parcel should occur near the valuation of skyscrapers…

> It would seem that the land value of both parcels should be the same. Yes, the land value is the same. lets say the Land value is $1 million each and the skyscraper is worth $1 million. Lets say property taxes are 1% under the current system: 0.01 * 2,000,000 = $20,000/year for skyscraper plot 0.01 * 1,000,000 = $10,000/year for vacant plot There's a total of $30,000 per year in income so we have to equalize our LV…

Yes, we are on the same page the whole way.

My question is why we need to reframe our extant system as a 'land value tax.' This proposition suggests that we should give concessions to developers in areas where there is a need for more development. But this already happens!

I guess I don't know why we should avoid taxing the value of revenue-generating assets if they are fixed. Buying a truck for a landscaping business is an taxable purchase. Why should this be different when the asset is fixed?

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

#894

Post by 10g1k » Wed, Oct 18, 2023, 9:24 PM UTC

calgarymicro wrote: post #513

10g1k wrote: post #507

Google image search: Detroit abandoned neighbourhoods A city run completely by Democrats. Every policy they have is destructive.

So if Detroit's economic collapse is the fault of local Democrats (and not, say, the death of large parts of the US auto industry), then does that mean we also have to credit local Democrats for Detroit's rapid economic recovery[0][1][2] over the past decade or so? [0] https://detroitmi.gov/news/u-m-economic-forecast-shows-detro... [1] https://www.detroitnews.com/story/business/2023/02/08/michig... [2] https://www.ch…

You should read the materials you linked. They literally fabricated a new economic indicators index to provide a better score than the one previously used.

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

#895

Post by mos_basik » Wed, Oct 18, 2023, 9:49 PM UTC

hiAndrewQuinn wrote: post #874

robertlagrant wrote: post #776

Earlier quoted context omitted.

I'm only a few pages in, and perhaps this paper redeems itself later, but here's my problem: > To put this problem starkly: allocative efficiency and thus an efficient market economy is impossible in the presence of private ownership. What the paper's early pages are saying is that study A found that things could be allocated more efficiently, and study B found that sometimes people hold out from selling things now t…

> I might value a property at X because at that moment it's worth that much to me. It might change in the future, or depend on how markets are doing. Should I instantly sell because I have an ice cream shop and people are all eating gelato? Think at the margin here. You're not saying you should instantly sell because the gelato/ice cream enthusiast ratio has increased slightly. You're saying everyone all at once deci…

I like this subthread; both of you seem respectful and clear and I'm doing my best to follow the arguments.

But I'm having trouble as a result of the choice of icecream/gelato words.

I interpreted @robertlagrant to be in the "gelato is icecream" camp (which seems reasonable to me in a "baguettes are bread" sense).

But @hiAndrewQuinn, you seem to be in the "gelato is not icecream" camp. I would call this is an arguably correct position similar to "chicken tikka masala is not Indian food," but I doubt most people holding either of these positions would consider these kinds of small differences likely to be the trigger for a business becoming unviable. So perhaps you didn't know what gelato was?

In either case, I think you two need to be using the same definitions for your illustrations to make sense. And I really want them to make sense because I want to understand :)

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

#896

Post by lmm » Wed, Oct 18, 2023, 10:30 PM UTC

AmericanChopper wrote: post #879

lmm wrote: post #868

Earlier quoted context omitted.

There's a huge difference between saying that people shouldn't be able to rent out capital they've legitimately earned (by creating value through their own efforts), and saying people shouldn't be able to seek rent from things they didn't create but just squatted on - radio spectrum, land, IP addresses, fraudulent patents...

That's a big revision from your previous comment >The "owner" of a piece of land does nothing to produce its value, they just take money for nothing because they hold a scarce resource As soon as anybody owns any piece of land or capital, they are not doing anything to produce any value that is derived from it, they are simply collecting money for controlling a scarce resource. Those two factors of production can cre…

> That's a big revision from your previous comment

It's not, but semantic arguments are pointless. If you want to use "rent seeking" to mean something different from what it normally means, fine, I don't mind using different words.

> As soon as anybody owns any piece of land or capital, they are not doing anything to produce any value that is derived from it, they are simply collecting money for controlling a scarce resource. Those two factors of production can create ongoing value without any intervention from their owners, and you either support a persons right to own those resources, and collect some portion of the value they create, or you don't.

> Also, what's wrong with unearned capital? If I give somebody a hammer, do you have some sort of moral objection to them deriving income from the increased productivity that would create for them? Because I would suggest that the only thing that matters there is whether I had a legitimate ownership claim to the hammer in the first place.

Right; the point is that land and capital are very different. People can legitimately own hammers, which are the work of human hands (yes, access to the means of production could be a factor, but if we assume that production of hammers is now widespread then it's irrelevant). Claims of ownership of land (or radio spectrum, or so on), if you mean chattel ownership, can't ever be legitimate, because people can't make land, only seize it.

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

#897

Post by jjav » Wed, Oct 18, 2023, 10:52 PM UTC

reaperman wrote: post #888

jjav wrote: post #882

Earlier quoted context omitted.

> I don't think this system would be worse in that sense, probably roughly equivalent. But it makes sense to at least attempt to tax undeveloped and under-developed land at high enough rates to encourage at least some healthy amount of development. It won't be perfect, but it shouldn't be worse either. I don't see how it can't not be much worse. If the tax is based on the actual value of the property, there are two i…

> You can easily prove or disprove whether the valuation makes sense. Just look at comparable sales nearby. In the Houston area the appraisal board just doesn’t care. They raise taxes across the board for the whole neighborhood by the same amount every year and appealing has limited effect. You cant really argue comparables because the whole neighborhood raises in lockstep by a shocking amount every year (since well…

> You cant really argue comparables because the whole neighborhood raises in lockstep

Comparables refers to actual sales of similar homes nearby. If all sales in the neighborhood have been +/- $200K over the last year, they should not be able to claim the property is worth 500K. Or they could, but should be easy to disprove.

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

#898

Post by lmm » Wed, Oct 18, 2023, 10:58 PM UTC

s1artibartfast wrote: post #892

lmm wrote: post #878

Earlier quoted context omitted.

> A Picasso takes no land. Buying stuff that people make enriches those people and spreads the wealth around. It's good to encourage doing that rather than hoarding land. (While you can hoard individual old paintings, if you drive up the price of paintings then new and innovative painters - like Picasso - emerge, and produce new paintings to meet that demand). > Elons giga factory would pay no land tax because the la…

Lvt is of course a good way for making sure land gets used for its most financially lucrative purpose. I never denied that. My point is that it's a terrible way to fund a government. The vast majority of economic value created does not require land and would go un taxed. The vast majority of value comes not from land or the raw materials derived from land, but from Human labor used to convert the raw material into Go…

> The vast majority of economic value created does not require land and would go un taxed. The vast majority of value comes not from land or the raw materials derived from land, but from Human labor used to convert the raw material into Goods, or pure services.

The value gets created by human labour but it ends up captured by landowners. I believe there's an economic theorem to that effect, but it's also pretty clear in Silicon Valley: some new innovation increases productivity, workers and investors get paid more, rents go up and all the gains end up in the pockets of San Francisco landlords.

> It's also much more regressive than the current system. People like Elon Musk make a million times more than your average person, but they don't use a million times more land or eat a million times more hamburgers. Most of what the rich purchase is labor and human compute.

In theory I take the point. Do those people actually pay a million times more tax under the current system though?

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

#899

Post by jncfhnb » Wed, Oct 18, 2023, 11:13 PM UTC

jonhohle wrote: post #501

J_Shelby_J wrote: post #149

Earlier quoted context omitted.

Where did the value of your grandmother's "generational wealth" come from? It came from renters and first time home owners putting money into the housing market. Your grandma is doing the looting.

She (and my grandfather) invested in building in an undeveloped area with their own money. They earned it by working and paying for their house and land. Now public spenders think she owes them what she spent her life building.

The only world in which grandma cannot afford her LVT is if the value of her land has grown so high that she can make a disproportionately large gain by selling the house. This is very unlikely. And if it is the case, it’s not like the government is stealing her house, they’re just saying she has to realize some of her enormous unrealized gains.

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

#900

Post by TulliusCicero » Wed, Oct 18, 2023, 11:14 PM UTC

lend000 wrote: post #864

mactrey wrote: post #848

Earlier quoted context omitted.

No, you are wrong. The two cases are analogous. Under a LVT, if their tax goes up, it's because their land became more valuable. So when they sell they get more money. And under a LVT, if they spend money to build or improve a house, then they also get a benefit when they sell for a corresponding higher price. It's just that those improvements would not be reflected in a higher tax bill.

Sell what to who? Isn't everyone a lessor under Georgism? I don't see how having regular auctions to determine what the land is actually worth is compatible with true land ownership. You auction the land to determine the tax, someone pays more than the current lessor, then that highest bidder gets to lease the land from the government and kick out the old lessor. Where does ownership of land and ability to sell it an…

> I don't see how having regular auctions to determine what the land is actually worth is compatible with true land ownership. You auction the land to determine the tax, someone pays more than the current lessor, then that highest bidder gets to lease the land from the government and kick out the old lessor. Where does ownership of land and ability to sell it and profit from improvements come into play?

Nobody's actually suggesting randomly auctioning off people's land at periodic time intervals.

You're arguing with ghosts.