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High property taxes are good

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Re: High property taxes are good

#361

Post by kuang_eleven »

cbm-vic-20 wrote: post #6

Land value taxes are even better. Property taxes provide a disincentive to making the land more productive. A land value tax would incentivize residential landowners to build more units which provides more supply and would lower rents.

Land value taxes are not functionally different than just regular property taxes in the places where it matters. In all of the areas that are in the worst of the housing crisis, property value is already dominated by land value; LVT doesn't really change much.

The problem, just like the source says, is that the tax is too low, not mention the absolute disaster that is Prop 13 in California.

Re: High property taxes are good

#362

Post by rcoveson »

nomel wrote: post #341
bcatanzaro wrote: post #100

Earlier quoted context omitted.

Grandma is a millionaire. She can take out a reverse mortgage to pay her taxes and she'll still be a millionaire. Or she can agree to a lien that pays her taxes upon her death or move. We don't need to worry about grandma losing her house.

> Grandma is a millionaire. You must come from a privileged family.

In California, being a millionaire at "grandma" age is no more privileged than average.

Re: High property taxes are good

#363

Post by frumper »

tptacek wrote: post #342
frumper wrote: post #335

Earlier quoted context omitted.

The evidence is that people would rather drive 2 hours each way so their family can have less density where they live. They vote with their time and wallet. This isn't some theory, it's true all over the US

They can do that. But people who live 15 minutes from downtown also want to have less density where they live --- most homeowners would! --- and that is a problem.

You just said increased density isn't a problem for families and then describe people wanting less density a problem. If it's a problem for society that families want less density, then it's a problem for families if society want more density.

Re: High property taxes are good

#364

Post by abeppu »

btilly wrote: post #107
throwthroyaboat wrote: post #73

Earlier quoted context omitted.

Doesn't Prop 13 also apply to commercial property? And second/third/30th houses? I think they smuggled a bear in as a rabbit with this one.

It does, but commercial property tends to change ownership and undergo construction more often. Therefore property taxes on commercial property tends to be higher. As a result, cities have an incentive to build commercial property over residential homes. The result is that the people working in those offices are competing for limited residential space (leading to high prices) and often have to settle for long commute…

Even if commercial property is changing hands, there are well-known loopholes to structure that as multiple transactions, none of which transfer more than a 50% stake, and which therefore do not trigger a Prop 13 Reassessment.

https://journal.firsttuesday.us/change-the-law-close-prop-13...

Re: High property taxes are good

#365

Post by tptacek »

frumper wrote: post #363
tptacek wrote: post #342

Earlier quoted context omitted.

They can do that. But people who live 15 minutes from downtown also want to have less density where they live --- most homeowners would! --- and that is a problem.

You just said increased density isn't a problem for families and then describe people wanting less density a problem. If it's a problem for society that families want less density, then it's a problem for families if society want more density.

I don't believe it is a problem, but people can have preferences for things that don't rise to the level of public policy problems, and if they'd prefer to live out in the country, God bless them.

A lack of density closer to cities is a real problem: it makes living close to where you work prohibitively expensive, and promotes sprawl.

Re: High property taxes are good

#366

Post by veritas20 »

it saddens me that we have not put more thought into this topic and we constantly put our education, safety, and services on the economic roller coaster.

no matter how much your home is worth today or in ten years you and other in the community want a standard level of education, safety, and services from your local governments. this should be priced as a service based on the cost to provide it to the members of the community and not based on dynamically changing home values

property taxes should have a baseline cost to cover the essential services (schools, critical infrastructure, safety, etc.) that is the same for everyone (no exemptions) and a variable cost for the non-essential services (parks, beautification projects, etc.) (very limited exemptions) that can be based on the value of your home or land

this way the essential services are always funded and not impacted by economic downturns or property appraisal disputes/challenges and local governments don't have to play the game of increase the millage rate to make up costs for essential services

Re: High property taxes are good

#367

Post by colinmhayes »

naasking wrote: post #348
colinmhayes wrote: post #219

Earlier quoted context omitted.

The only thing land value tax incentives is raising the building value to land value ratio. It says nothing about what kind of building is optimal.

It doesn't explicitly say anything no, but what does an LVT entail given how humans tend to value property? For instance, in NYC would it incentivize building a bunch of shoeboxes or actual livable space?

It would incentivize building a comparatively more expensive building that maximizes the developers profit. Whether that means shoeboxes or livable space depends on how much those things cost to build and how much people are willing to pay for them.

If you just want single family homes with a big lawn you probably shouldn’t be living in Manhattan, which is the point of lvt.

Re: High property taxes are good

#368

Post by arrosenberg »

nomel wrote: post #346
mikeyouse wrote: post #46

Earlier quoted context omitted.

Nah, rents aren't determined by owners' costs (except at the margin where property owners are debating whether to 'stay in the game') - they're determined by bog standard supply/demand and usually set to the maximum rate the market will bear.

> Nah, rents aren't determined by owners' costs I don't understand this. The owners have pay mortgage, taxes, insurance, and repairs. How can it be decoupled? The landlords I know would have to sell if they lost their renters, or if the rental income fell below a certain amount.

If the market cost of renting a unit drops below the landlords' cost to maintain the unit, the renter doesn't go "oh well, that's a shame, I guess I will pay the higher amount."

The landlord either eats the loss or gets out of the game. Since vacancy is the worst possible outcome for a landlord, they can't just hold their units off the market to get the price they want.

Re: High property taxes are good

#369

Post by trgn »

wizofaus wrote: post #196
Retric wrote: post #19

Earlier quoted context omitted.

I don’t think that’s a meaningful difference. It would take an extreme property tax to actually incentivize an empty field over productive use of that space. It might in theory make a difference when considering replacing a 40 story building with a 42 story one, but in practice you really don’t see that kind of construction project. In that context pushing for larger jumps before replacement might actually be economi…

In Australia at least local government rates are based on "improved property value", i.e. you get taxed more from building a house on your land. It absolutely does lead to land-sitting even in higher density inner-city suburbs.

Taxing improvements is a proxy for progressive taxation. ie. rich should pay more. LVT is effectively a flat tax on acreage normalized by community wealth. To the broad middle class, taxing improvements "feels" more fair.

Re: High property taxes are good

#370

Post by [deleted] »

tesseract wrote: post #360
arrosenberg wrote: post #343

Earlier quoted context omitted.

Insured price is based on the structure, not the land. If your house burns down, that's the part they need to spend money replacing. Valuing a structure's replacement cost is (fairly) straightforward based on materials, current labor costs, etc.

And so there is a way to get a reasonable approximation of land value: Subtract the insured value of the improvements (which should be accurate by virtue of being determined by a profitable insurance company in a competitive market) from the appraised property value (which there are generally accepted methods for figuring).

[deleted]
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