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Tax the Land

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Re: Tax the Land

#181

Post by no_wizard »

eric4smith wrote: post #163

Vox needs a spanking. (As always). Just imagine. I have some land. Lots of people would love to buy it it for different things. But for now, I just want to hang onto it until I'm ready to use it. And my house is sitting right next to it. Yeah, nimby blah, blah blah. But it's my house and my backyard and my land so... I have to be forced to sell it? Brah. Just another socialist redistribution scheme.

You're not "forced" to sell it. You just have to pay a tax relative to its actual market value, as opposed to paying a tax on only the value you purchased it for plus negligible increases in your property tax percentage based on that rate.

Just pay the tax, and you're good to go, even if you never develop it. The idea of a LVT is to make it less palatable to let the land go unused or under-utilized.

Re: Tax the Land

#182

Post by strken »

teddyh wrote: post #164

The idea of land-value tax strongly reminds me of the often cited, and much maligned, so-called fiduciary duty to shareholders which CEOs and/or board members reportedly have. This duty creates, it is said, an incentive towards naked short-term greed, which is often described as a bad thing. Now, even though this duty is also usually derided as fictional, the argument, if this duty did exist, would be reasonable. But…

I don't really buy the monoculture argument, for two reasons.

Firstly, the first nightclub to open in an area with demand for music and alcohol, or cafe with demand for coffee and croissants, is going to very profitable.

Secondly, most businesses rent. They rent from profit-seeking commercial landlords who charge them a market rate. A land value tax is loosely based on the same market rate, just not inclusive of improvements. To argue that commercial tenants will be charged more is to argue that commercial landlords are leaving money on the table, which I don't believe.

Re: Tax the Land

#183

Post by s1artibartfast »

long_time_gone wrote: post #172
s1artibartfast wrote: post #96

Earlier quoted context omitted.

How many years would it take to recoup your down payment if the home value doesn't change? If you pocket 500 per month, you are looking at around 35 years to break even on a $200k down payment. You will never break even when take into account opportunity cost compared to a low appreciation bond or stock.

> If you pocket 500 per month, you are looking at around 35 years to break even on a $200k down payment. Not sure your definition of break even. After 30 years, I will have paid off the entire house.

Key word down payment. You put 200k down on the rental and get 200k in rent. You pay 1.6 million on a 800k loan and own the house at the end. Without appreciation, you are 600k in the hole

Re: Tax the Land

#184

Post by bluquark »

SnowHill9902 wrote: post #175

Tax on land goes against the right to property. If all you have is illiquid land, how are you supposed to pay? You would be forced to sell which ends up being an indirect expropriation.

One of the key arguments in favor of enforcing private property rights when this idea was taking shape during the Enlightenment is that they are a powerful incentive to develop. So an additional incentive to either generate revenue from the land, or sell to someone who is willing to, is very much in the spirit of modern property rights.

Re: Tax the Land

#185

Post by noahtallen »

Hammershaft wrote: post #135
andrepd wrote: post #40

Earlier quoted context omitted.

You need to read books on LVT and Georgism, it's been around for going on 150 years with praise from such diverse figures as Einstein or Tolstoy. Hardly invented by Vox, but judging from your tone you have pre-existing qualms about this particular news outlet.

Also Milton Friedman! Important qualification to recognize this is not just a leftist policy.

It really does seem like an extremely capitalist concept! The idea is to force the market to compete much more thoroughly. Not sure why folks are saying it’s a “leftist redistribution ploy,” when the main benefit is to force owners to make a profit on their land or sell.

Re: Tax the Land

#186

Post by marcus0x62 »

long_time_gone wrote: post #78
bombcar wrote: post #70

Earlier quoted context omitted.

Find banks or real-estate companies that invest in single family homes for the purpose of renting them. If you can find one, you often find that they'd rather let the property sit empty than renting it. Or just look at the cost of buying a house vs renting a similar house, account for maintenance, and see if the numbers line up.

This isn’t really a source though, it’s requiring the other commenter to prove the point you made. Anecdotally, I know people who buy single family homes and rent them for profit. My 3 bed, 2 bath single-family home has a $3,000/monthly mortgage, I could easily rent it for more than $3,500 (closer to $4,000). Take out 10% for maintenance fees, and I net $200 a month.

Average expenses for a landlord on a well-managed SFH run 45 - 50% of gross rents.

Re: Tax the Land

#187

Post by SnowHill9902 »

bluquark wrote: post #184
SnowHill9902 wrote: post #175

Tax on land goes against the right to property. If all you have is illiquid land, how are you supposed to pay? You would be forced to sell which ends up being an indirect expropriation.

One of the key arguments in favor of enforcing private property rights when this idea was taking shape during the Enlightenment is that they are a powerful incentive to develop. So an additional incentive to either generate revenue from the land, or sell to someone who is willing to, is very much in the spirit of modern property rights.

Developed land does not have to bring revenue (or even profit). May I not have just an illiquid house on a plot of land and no other assets?

Re: Tax the Land

#188

Post by teddyh »

strken wrote: post #182
teddyh wrote: post #164

The idea of land-value tax strongly reminds me of the often cited, and much maligned, so-called fiduciary duty to shareholders which CEOs and/or board members reportedly have. This duty creates, it is said, an incentive towards naked short-term greed, which is often described as a bad thing. Now, even though this duty is also usually derided as fictional, the argument, if this duty did exist, would be reasonable. But…

I don't really buy the monoculture argument, for two reasons. Firstly, the first nightclub to open in an area with demand for music and alcohol, or cafe with demand for coffee and croissants, is going to very profitable. Secondly, most businesses rent. They rent from profit-seeking commercial landlords who charge them a market rate. A land value tax is loosely based on the same market rate, just not inclusive of impr…

I believe that some things which are necessary for a healthy society are, are not, and cannot be made to be, profitable by themselves. Nightclubs was my guess as to what one of those things could be, parks was another. Other examples which are usually brought up are public transit and the postal service. These might never earn enough income to afford the space they take up in a city center, but it is still vital that they exist there.

> To argue that commercial tenants will be charged more is to argue that commercial landlords are leaving money on the table, which I don't believe.

Getting more money might involve tearing down and rebuilding (which is expensive) and forgoing income while the rebuilding is taking place. If one were cynical, one could assume that most landlords simply don’t have the capital on hand to do this, and/or can’t get rid of their current tenants easily enough. A more charitable view might be that the landlord likes having a nightclub where it is.

Re: Tax the Land

#189

Post by noahtallen »

flenserboy wrote: post #23

This would be a great way to destroy (privately held) farms and significantly, permanently raise food prices.

It seems like you’re assuming farmers don’t get taxed on land. According to a brief Google search, “Nationally, 1.9 million farms paid $9.4 billion in property taxes.”

The question would be whether removing that in favor of a land tax would really change that. I’m not sure it would make it worse, given that there are (relatively speaking) fewer “property” improvements on top of the land in a farm.

Either way, I don’t think this is a fair reason to dismiss LVT outright, as it completely depends on the implementation.

Re: Tax the Land

#190

Post by noahtallen »

sokoloff wrote: post #36
andrepd wrote: post #30

Earlier quoted context omitted.

> If that were the case, why has someone else not bid $1 more to buy that house and rent it out? Because capital is privatised and scarce, therefore a working-class family wishing to buy a home to live on cannot do so since they're outbid by those with capital. This leaves them with two choices: (1) pay rent to a middleman with capital, who buys the house, or (2) beg a private entity for a capital advance to be repai…

The question is “if Blackrock can buy and turn an immediate profit, why didn’t MAA, Starwood, AvalonBay, or one of 100 others not bid it up from the easy-money, too-cheap level?”

From experience in Portland and Seattle, large management companies are purchasing as many properties as they possibly can.
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