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Why a land-value tax is inevitable

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Re: Why a land-value tax is inevitable

#191

Post by Spooky23 »

paconbork wrote: post #161
Spooky23 wrote: post #149

Earlier quoted context omitted.

Why would Walmart make a deal when they could just wait for or lobby the county to valuate your land at some excessive value and force a sale in distress? LVT is just bad policy that sounds ok in concept. In my city, inner city residential property is near worthless once it falls below section 8 standards. The taxes are low too as result. With a LVT scheme, someone would cook up some “true” value subjectively, which…

Can't Walmart already do this? Property assessors already estimate the value of your property and the value of the land plays a part.

Generally no. Values are usually based on sales history.

Re: Why a land-value tax is inevitable

#192

Post by pdonis »

tekkk wrote: post #177

I think this has been implemented already in Finland. The tax administration evaluates the property's value (both land and infrastructure) and taxes it accordingly, eg 0.5%. For unused land the municipality can set an extra tax to coerce the land owner to develop the land, for example 1 to 3 percent. But I wouldn't say it is a miracle maker, just a part of an effective taxation system. What I personally would do, if…

> The tax administration evaluates the property's value (both land and infrastructure)

That's not what the article is proposing; it specifies a tax only on the land, not on whatever is built on the land. The point is to incentivize transferring ownership of the land to whoever can get the highest value use out of it; that only works if the tax itself is only on the land, so it makes sense to build higher value infrastructure on it since that raises the income from the land without raising the tax.

Re: Why a land-value tax is inevitable

#193

Post by mullingitover »

throwaway201103 wrote: post #181
mullingitover wrote: post #98

Earlier quoted context omitted.

> When your sector makes up like three of the five most valuable companies on the planet, we probably should be taxing it more. Agreed. We should be ruthlessly taxing capital gains, and in general should look upon money earned without laboring for it with scorn.

So taking an investment risk so that a startup can grow is to be looked on with scorn? You might be posting in the wrong community.

Really there just shouldn't be any privileged category for capital gains and it should be taxed like regular income, progressively.

Re: Why a land-value tax is inevitable

#194

Post by teddyh »

roenxi wrote: post #166
teddyh wrote: post #157

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, is reasonable. But does…

> ... in essence forcing landowners to always use the land in a way which extracts the maximum amount of money from it ... That incentive already exists, landholders typically use their land in a high-value way. If you cast your eye on Europe there are a large contingent of undeserving people who have generations of wealth that they secure through owning land, which does not degrade over time. The big win of a land t…

The general incentive to make money always exists, yes, but if LVT is implemented, there would, I assume, be an almost insurmountable force compelling landowners to do so. I compared LVT with the idea of “fiduciary duty” with intentional precision; CEOs are also, in general, incentivized to make money, but the idea behind decrying the alleged fiduciary duty is that a CEO is supposedly more or less forced to do whatever makes the most money, regardless if they feel it would be bad in the long run, inhumane, or even unethical.

The same principle seem to apply to LVT: A landowner would, it seems, be forced, by the taxes extracted from them, to generate a matching (or larger) income by the land, regardless if they might feel that the community would be better served by using the land for something which would, incidentally, make less money for them personally.

If the object of LVT is to prevent inter-generational wealth transfer, I would assume that there would be vastly more effective ways to accomplish this more directly. Or there could at least be some carve-out which limits the effect of a LVT to those instances.

Re: Why a land-value tax is inevitable

#195

Post by pdonis »

ocdtrekkie wrote: post #50
supernova87a wrote: post #46

There was a convincing op-ed in WSJ a few years ago about how in all the states that are facing public sector defaults, the ultimate payer of these debts will be homeowners. Since basically the only place left for most governments to go is property value (unless they have huge businesses they can tax). And it is worse in the poorer states, because they don't have high home values to cushion the blow to the individual…

There are big huge businesses we aren't adequately taxing: Big tech. When your sector makes up like three of the five most valuable companies on the planet, we probably should be taxing it more. And Jeff Bezos does not need more money.

> When your sector makes up like three of the five most valuable companies on the planet, we probably should be taxing it more.

The problem is that increasing the corporate income tax rate just doesn't provide enough revenue. Corporate income taxes are only 7% of the US government's annual tax revenue, for example. Even if we doubled the corporate income tax rate, that's still only another 7% of the total tax revenue, which is way too small to make up for the annual US budget deficit.

> Jeff Bezos does not need more money.

While I don't disagree with this, taxing the wealth of the rich also just doesn't provide enough revenue. Suppose we set a hard cap on personal wealth of $1 billion--everything over that, the government takes in tax at a rate of 100%. The net worth of the 400 richest people in the world is around $3 trillion, so we'd be taking $2.6 trillion of it. And that would fund...the US government for about 6 months. Or all 50 US states for...a little more than a year. And then the wealth is gone, and what do you do next?

In other words, all the complaining about low corporate tax rates and wealth inequality is complaining about something that, even if it were "fixed" (and fixed without depressing wealth creation, which is highly implausible), would not do much of anything about the real problem: that we expect governments to do far too much and give them far too much power. And that translates into chronic overspending and deficits, which end up being paid by the middle class, because that's the only source of revenue large enough to pay it.

Re: Why a land-value tax is inevitable

#196

Post by pyuser583 »

Rickvst wrote: post #18

Land-value tax doesn't have huge inefficiencies like some other taxes. But the hard part is assessing "value". How should land value be decided? The book "Radical Markets" has some good insights on how to find the value of every plot of land by using markets.

For a LVT, the value is whatever it was purchased for.

Re: Why a land-value tax is inevitable

#197

Post by mullingitover »

throwaway201103 wrote: post #169
mullingitover wrote: post #104

Earlier quoted context omitted.

> But the hard part is assessing "value" Insurers have no problems assessing land value and have been doing it for centuries.

Insurers assess improvement value. Land is not insured, because it really can't be destroyed. If you house burns down, the land is still there. The only thing you lost is the house.

Exactly! So when you get a mortgage, you're paying for land plus house in the mortgage. Insurers have to know the value of the land alone so they can know the difference and insure just the house.

Re: Why a land-value tax is inevitable

#198

Post by paul_f »

scarmig wrote: post #171
Rickvst wrote: post #18

Land-value tax doesn't have huge inefficiencies like some other taxes. But the hard part is assessing "value". How should land value be decided? The book "Radical Markets" has some good insights on how to find the value of every plot of land by using markets.

I'm curious what mechanisms it proposes. One of the funner ones I've heard of is that the owner and payer of the property tax performs the valuation of the land: it makes implementation pretty much free and uncontroversial! The only caveat is that whatever value the owner lists as the value is an amount they must accept for the land in a sale (plus some meaningful fee to drive off trolls). So, sure, you can list the…

This is a land value tax, not a tax on the improvements. If you have a lot worth $50,000 and a house worth $250,000, and place a value of $50,000 on it for tax purposes, do you propose people can buy your house for $50,000?

Re: Why a land-value tax is inevitable

#199

Post by pdonis »

mullingitover wrote: post #98
ocdtrekkie wrote: post #50

Earlier quoted context omitted.

There are big huge businesses we aren't adequately taxing: Big tech. When your sector makes up like three of the five most valuable companies on the planet, we probably should be taxing it more. And Jeff Bezos does not need more money.

> When your sector makes up like three of the five most valuable companies on the planet, we probably should be taxing it more. Agreed. We should be ruthlessly taxing capital gains, and in general should look upon money earned without laboring for it with scorn.

> money earned without laboring for it

Tell that to startup founders whose only income from all the work they put in on their startup is capital gains.

Re: Why a land-value tax is inevitable

#200

Post by paul_f »

mullingitover wrote: post #197
throwaway201103 wrote: post #169

Earlier quoted context omitted.

Insurers assess improvement value. Land is not insured, because it really can't be destroyed. If you house burns down, the land is still there. The only thing you lost is the house.

Exactly! So when you get a mortgage, you're paying for land plus house in the mortgage. Insurers have to know the value of the land alone so they can know the difference and insure just the house.

Actually, no, they don't. Insurers make no valuation on the land, only on the improvements. There is no appraisal done when buying a homeowners or business insurance policy
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