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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

#901

Post by AmericanChopper »

lmm wrote: post #896
AmericanChopper wrote: post #879

Earlier quoted context omitted.

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…

> People can legitimately own hammers, which are the work of human hands

> 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.

These two claims aren't logically consistent. As a factor of production, land includes all natural resources. 100% of the input materials used for the production of a hammer are land, and so are 100% of the input materials used for the entire hammer supply chain. If you claim that ownership of land is never legitimate, then how can ownership of a hammer ever be legitimate if it's made of 100% land? Nobody made the iron or the wood in the hammer with their own hands.

I can see that you prefer to invent your own vocabulary, rather than use the long established vocabulary of economics. But that doesn't make the inconsistencies in your arguments dissapear. The only thing you've consistently expressed that a person can have a legitimate ownership claim over is labor (which yet again, takes us back to seizing the means of production).

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

#902

Post by lmm »

AmericanChopper wrote: post #901
lmm wrote: post #896

Earlier quoted context omitted.

> 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…

> People can legitimately own hammers, which are the work of human hands > 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. These two claims aren't logically consistent. As a factor of production, land includes all natural resources. 100% of the input materials used for the production of a hammer are land…

> As a factor of production, land includes all natural resources. 100% of the input materials used for the production of a hammer are land, and so are 100% of the input materials used for the entire hammer supply chain. If you claim that ownership of land is never legitimate, then how can ownership of a hammer ever be legitimate if it's made of 100% land? Nobody made the iron or the wood in the hammer with their own hands.

No, but the overwhelming majority of the value of the hammer is from human efforts, not from the raw materials. Like yes technically you could say that whoever takes the hammer should have to pay tax on the value of 100g of unrefined iron or whatever, and if we ever reach a point where good iron for the tools that you need for good jobs is so expensive that only the children of rich families are able to hope to own those tools and the rest of us have to rent them at extortionate rates then maybe that would be a policy worth adopting. In theory nothing is 100% land and nothing is 100% product. But in practice you can draw the distinction pretty easily and say which things are scarce enough that taking them out of circulation has an impact on your fellow citizens and which aren't.

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

#903

Post by nostrademons »

msla wrote: post #886
nostrademons wrote: post #871

Earlier quoted context omitted.

That's why the tax is in proportion to the unimproved value of the land. Marginal land has almost zero value; therefore it will have almost zero tax. The landowner gets to keep rent due from any improvements (like structures) on the land.

> That's why the tax is in proportion to the unimproved value of the land. https://news.ycombinator.com/item?id=37913341 > 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.

In practice a LVT is usually applied statistically. You run a regression on the features of the buildings across all parcels, determine a coefficient of value for various structures and usages (eg. multifamily is worth $X in cash flow for a certain size apartment, extra bedroom in a SFH is worth $Y, pool is worth $Z), subtract out the computed value of the structure, and then smooth across all properties in a given local area to compute the value of the land alone. That's what you're taxed on.

"Tax the land as if was being used for best use" is an oversimplification. The government can't realistically know what the best use of land is, or what value that would command. That's for the market to decide. But the point of an LVT is that you're taxed on the base value of the land (as measured by how much profit your neighbors are making off it), and so only usages of the land that are better than average remain profitable. If none of your neighbors can turn a profit on it either, tax will be negligible.

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

#904

Post by AlbertCory »

Brycee wrote: post #891
AlbertCory wrote: post #516

Earlier quoted context omitted.

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.

True of nearly every city on the planet.

Still less than 70 years ago, which is more relevant.

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

#905

Post by lend000 »

TulliusCicero wrote: post #900
lend000 wrote: post #864

Earlier quoted context omitted.

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 actu…

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

You might be surprised if you visit r/georgism.

But the point is that if you don't do auctions, you don't know how to price the LVT, and you don't actually know if the resulting inefficiencies are more significant than the core problem with taxing productive land use that Georgism tries to address.

> You're arguing with ghosts.

You're selectively arguing with a fraction of a comment.

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

#906

Post by BariumBlue »

ejstronge wrote: post #893
enragedcacti wrote: post #854

Earlier quoted context omitted.

> 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 busines…

Ahh, I think I get what you're saying now.

For "This proposition suggests that we should give concessions to developers in areas where there is a need for more development."

Development is a good thing. Maintaining your house or property, improving it, developing businesses are all good things. I'm not sure we should restrict these things to "areas where there is a need for more development". I don't want to live next to someone who has a rotting ruin of a house, who didn't maintain their place in order to pay less in taxes.

Someone maintaining their roof isn't a developer, and isn't going to be making money from their investment but they still pay more in taxes because they do it. They always won't get any government concessions or subsidies to do it (in general).

Similarly, a small business owner usually does not get concessions for starting their business. Usually they instead have to pay extra for permitting and such.

The parking lot owner next the skyscraper, however, gets FREE value from the skyscraper construction - essentially leaching off of another's productivity.

As for the argument how we SHOULD be taxing assets ... every tax takes money from the economy, and some ways of doing that are "better" than others, in that they result in more desired outcomes. LVT seems to provide better outcomes than other ways of taxation.

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

#907

Post by mattgibson »

nonethewiser wrote: post #693
mattgibson wrote: post #611

Earlier quoted context omitted.

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 confis…

Given it's an auction mechanism, it's hard to stop people offering to pay for the land they want. The options seem to be either allowing that money to flow into private hands so someone gets a free lunch, or to capture it as tax, enabling all other taxes to be reduced or eliminated. The latter seems fairer to me as it eliminates the free lunch and keeps people's earnings in their own pockets via e.g. eliminating income tax.

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

#908

Post by phkahler »

jackson1442 wrote: post #343
phkahler wrote: post #151

Earlier quoted context omitted.

Have you tried to park downtown? If you want fewer lots it's gonna need structures.

This is exactly what LVT is supposed to incentivize.

>>> Have you tried to park downtown? If you want fewer lots it's gonna need structures.

>> This is exactly what LVT is supposed to incentivize.

How? If people don't think building a parking structure is going to be more profitable than keeping a parking lot, how is raising their cost going to change their mind?

I suppose some of the lots might be sold as unprofitable which might lead to less parking and higher prices, which might lead to someone building a structure. Is that the logic? It seems pretty flimsy, but I don't otherwise see how LVT would incentivize building parking structures.

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

#909

Post by AnimalMuppet »

phkahler wrote: post #908
jackson1442 wrote: post #343

Earlier quoted context omitted.

This is exactly what LVT is supposed to incentivize.

>>> Have you tried to park downtown? If you want fewer lots it's gonna need structures. >> This is exactly what LVT is supposed to incentivize. How? If people don't think building a parking structure is going to be more profitable than keeping a parking lot, how is raising their cost going to change their mind? I suppose some of the lots might be sold as unprofitable which might lead to less parking and higher prices…

If you (where "you" may be a group of businesses) need X parking spaces, and land becomes more expensive, your tradeoffs shift on how you get those spaces. You are incentivized to use less land, so you are more likely to build a parking structure rather than a sprawling parking lot.

I'm not an LVT advocate, but as I understand it, that's the theory.

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

#910

Post by calgarymicro »

10g1k wrote: post #894
calgarymicro wrote: post #513

Earlier quoted context omitted.

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.

Where does it say that? Among the metrics they use are unemployment, job openings, and GDP growth. Seems pretty standard to me. The Fed article that discusses a new index isn't 'fabricating' a new index; they developed a way to separate the performance of the metropolitan area from the city proper so good performance for the overall metro area wouldn't give an I correctly rosy picture of the city proper. If you're gonna tell me to read my links, maybe you should make sure you read them first.

Please do quote me exactly where it says this new Detroit-only metric shows the city doing better than the metro-inclusive metric. I'm particularly curious to see where it says that since the article explicitly points out that the Detroit-only index performed worse than the metro-inclusive index.

> Moreover, the city’s economic growth more frequently dropped back into negative territory than the MSA’s:

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