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Tax the Land

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Re: Tax the Land

#391

Post by dhzhzjsbevs »

ScottBurson wrote: post #377
gameman144 wrote: post #366

I totally get the appeal of land taxes and restriction of land-use regulation at the local level, and by and large they seem like a reasonable approach to poor resource allocation and unequal ownership opportunities. One thing I've not seen addressed, though, is the apparent disincentive to improve communities in meaningful ways. For instance, say I live in a very expensive city and I can no longer afford the land ta…

If you buy property in the second city, then as values rise, yes your taxes will go up but so will the value of your property. Worst case, you have to take out a home equity loan to pay the taxes, but you'll probably still come out ahead. I've long advocated for an arrangement whereby if the value of a property increases by more than some small amount, say 2%, the excess wouldn't come due until the property was sold;…

Do they forgive those previously incurred taxes when land values drop and I can no longer float the lien?

Re: Tax the Land

#392

Post by CryptoPunk »

belorn wrote: post #378
CryptoPunk wrote: post #212

I've long advocated a land value tax. I would suggest that any reform of this nature, that eliminates private capture of economic rent, accompany one-time compensation to the parties that lose that economic rent, so in this case, compensation to make up for the loss in property value that a LVT would incur. The same should apply to any other repeal of rent-seeking institutions: anti-labor-competitive laws privileging…

I am rather skeptic of land value taxes, but I would like to hear your view of why land value tax is better than simply raising the tax on rent and property sales. The main argument that I see against land value taxes is that land doesn't generate any income by itself, which forces people to pay money in situation where they might not have any income to do so. One could bypass this problem by putting in limitations,…

>>I am rather skeptic of land value taxes, but I would like to hear your view of why land value tax is better than simply raising the tax on rent and property sales.

The article goes into the advantages of a land value tax over other types of tax, including a property tax:

The big question land value taxes help answer is: How can a government raise funds without distorting choices and possibly leaving people worse off? If you tax income, it provides a disincentive to work. If you tax property, it provides a disincentive to improve the physical buildings on top of the land. Sometimes the tax is intentionally disincentivizing an activity — think carbon taxes to reduce greenhouse gas emissions or so-called “sin taxes” on tobacco. But there are also taxes governments want to levy to pay for valuable services without changing behaviors too much (or at all).

>>The main argument that I see against land value taxes is that land doesn't generate any income by itself, which forces people to pay money in situation where they might not have any income to do so.

Those people should be selling their land. We should not have a scarce natural resource sitting idle or under-utilized. From the article as well:

In small towns, vacant lots contribute to decline — and if there’s no valuable structure on a property, its delinquent landlords likely only pay a nominal property tax. This both lowers tax revenue and hurts neighborhood quality for everyone else.

**

In Allentown, Pennsylvania, the system worked! According to a 2019 Strong Towns article, after the city adopted an LVT (through a split-rate system that still kept some property taxes in place) in 1996, “construction returned to the city: the number of taxable building permits surged past neighboring Bethlehem, market investment returned and capital improvement reappeared in city budgets. ... The losers in this trade were absentee owners of vacant lots, who had to shoulder much more of the burden.”

Sen. Pat Toomey (R-PA) is quoted touting the benefits of the tax: “The number of building permits in Allentown has increased by 32 percent from before we had a land tax.”*

Re: Tax the Land

#393

Post by Mizza »

gameman144 wrote: post #366

I totally get the appeal of land taxes and restriction of land-use regulation at the local level, and by and large they seem like a reasonable approach to poor resource allocation and unequal ownership opportunities. One thing I've not seen addressed, though, is the apparent disincentive to improve communities in meaningful ways. For instance, say I live in a very expensive city and I can no longer afford the land ta…

Surely this is going to be a problem as long as housing is just another market commodity?

I remember living in a pretty shabby student ghetto district of Boston, and you'd regularly see graffiti saying "Keep Allston Shitty". In Philadelphia, I heard similar rumors of locals occasionally firing off a few gunshots every month, just to keep the white people scared and the rents down. Renters everywhere are basically incentivized to keep their neighborhoods as shabby as unsafe as they can handle.

Re: Tax the Land

#394

Post by psyc »

Mizza wrote: post #393
gameman144 wrote: post #366

I totally get the appeal of land taxes and restriction of land-use regulation at the local level, and by and large they seem like a reasonable approach to poor resource allocation and unequal ownership opportunities. One thing I've not seen addressed, though, is the apparent disincentive to improve communities in meaningful ways. For instance, say I live in a very expensive city and I can no longer afford the land ta…

Surely this is going to be a problem as long as housing is just another market commodity? I remember living in a pretty shabby student ghetto district of Boston, and you'd regularly see graffiti saying "Keep Allston Shitty". In Philadelphia, I heard similar rumors of locals occasionally firing off a few gunshots every month, just to keep the white people scared and the rents down. Renters everywhere are basically inc…

I knew you were talking about Allston before I got to the Allston part.

Also a running subplot in the show Shameless.

Re: Tax the Land

#395

Post by djokkataja »

gameman144 wrote: post #366

I totally get the appeal of land taxes and restriction of land-use regulation at the local level, and by and large they seem like a reasonable approach to poor resource allocation and unequal ownership opportunities. One thing I've not seen addressed, though, is the apparent disincentive to improve communities in meaningful ways. For instance, say I live in a very expensive city and I can no longer afford the land ta…

> For instance, say I live in a very expensive city and I can no longer afford the land tax.

One of the major reasons that our cities become expensive in our "modern" society is that we don't have land value taxes. If we have a land value tax, then when someone decides they can't afford to keep paying the tax, they sell it to someone who can OR they find a way to make the things built on that property much more valuable so that the tax is affordable. It provides a very strong incentive for property owners to do things like tearing down single family homes and building multi-unit condos in their place. Because there are multiple units where there was previously only one, the cost of living actually goes down. This is why it's considered a very beneficial tax: it promotes efficient use of land from economic perspectives. (This also applies to businesses: if a business isn't able to afford the land value tax for their property, they have strong incentives to find a way to make the use of their land more valuable or to sell it to someone who can. And if the value of their land is going up more than they can afford, that implies that there likely are potential buyers who could make better use of it.)

For us to go from where we currently are to a land value tax would require a transition period, because it takes time to tear things down and build new things. But a society that was implementing a land value tax would see new properties opening up like I described above on a regular basis. So if you couldn't afford the land value tax, you would still be able to stay in the same city (and probably more cheaply and in a nicer, newer condo) unless you absolutely required a single family home or similar low-density housing.

Re: Tax the Land

#396

Post by car_analogy »

pbhjpbhj wrote: post #388
vladvasiliu wrote: post #380

Earlier quoted context omitted.

> If you buy property in the second city, then as values rise, yes your taxes will go up but so will the value of your property. Worst case, you have to take out a home equity loan to pay the taxes, but you'll probably still come out ahead. Wouldn't this rise in your property's value only matter when you sell? Home equity loans aren't a thing in France as far as I know, so maybe I'm completely off here, but wouldn't…

You don't need a house after you die. So, you borrow money against the increase in value of the house. The OP is saying that when the estate (wealth of dead person) is concluded the balance will be such that loans against the property (aka 'equity release') will ask be paid easily by the sale of the property. Ergo, no loss to the hypothetical improver of the locality. I'd say also, anyone who is capable of producing…

> You don't need a house after you die.

Perhaps these are just my European sensibilities talking, but a house is not a hamburger, that you consume and then discard when you're done with it. It is your home, and your children's, and possibly their children's too. It's part of the link to your community, your memories, your history. Not a market good like any other, measured only in dollars.

You despair why communities are dying, why people don't know their neighbors, why they are becoming increasingly isolated - well here's your answer.

Re: Tax the Land

#397

Post by djokkataja »

beambot wrote: post #373
gameman144 wrote: post #366

I totally get the appeal of land taxes and restriction of land-use regulation at the local level, and by and large they seem like a reasonable approach to poor resource allocation and unequal ownership opportunities. One thing I've not seen addressed, though, is the apparent disincentive to improve communities in meaningful ways. For instance, say I live in a very expensive city and I can no longer afford the land ta…

How is this concern not equally-relevant in the current status quo? At least for our locale: property taxes are still based on assessed value, sales tax is collected on purchases, and income tax & business permits still apply. All of these get more expensive if the community improves...

Yeah, this was already happening with people moving from the bay area to Phoenix.

Re: Tax the Land

#398

Post by gameman144 »

beambot wrote: post #373
gameman144 wrote: post #366

I totally get the appeal of land taxes and restriction of land-use regulation at the local level, and by and large they seem like a reasonable approach to poor resource allocation and unequal ownership opportunities. One thing I've not seen addressed, though, is the apparent disincentive to improve communities in meaningful ways. For instance, say I live in a very expensive city and I can no longer afford the land ta…

How is this concern not equally-relevant in the current status quo? At least for our locale: property taxes are still based on assessed value, sales tax is collected on purchases, and income tax & business permits still apply. All of these get more expensive if the community improves...

Property taxes are definitely in the same vein, and I'd be curious about the same aspect there. Currently, local government regulation seems to be the main mechanism to deter this today (e.g. rent control, senior citizen exemptions, single-family zoning), but the "current residents" vs "newcomers" tradeoff is absolutely strong here. One differentiating factor between land tax and property tax, though, is that if I'm taxed on all the additional private developments I make to my property, public development becomes a more attractive option (which I'd expect would make the disincentive weaker with property taxes). For instance, if I would have to pay $2k more a year in tax if I built a pool on my property, I might be more inclined to support the public pool. This would not apply with land value taxes.

For sales tax and income tax, these would apply regardless of location, and apply at the individual level instead of cross-pollinating between individuals. If my neighbor makes twice as much, or buys twice as much, it's easy to rationalize that they pay twice as much tax as me. If my neighbor just bought an identical house to mine for twice what I paid five years ago, though, it is harder to stomach that my tax bill should be twice was it was five years ago as well.

Re: Tax the Land

#399

Post by belorn »

CryptoPunk wrote: post #392
belorn wrote: post #378

Earlier quoted context omitted.

I am rather skeptic of land value taxes, but I would like to hear your view of why land value tax is better than simply raising the tax on rent and property sales. The main argument that I see against land value taxes is that land doesn't generate any income by itself, which forces people to pay money in situation where they might not have any income to do so. One could bypass this problem by putting in limitations,…

>>I am rather skeptic of land value taxes, but I would like to hear your view of why land value tax is better than simply raising the tax on rent and property sales. The article goes into the advantages of a land value tax over other types of tax, including a property tax: The big question land value taxes help answer is: How can a government raise funds without distorting choices and possibly leaving people worse of…

> Those people should be selling their land. We should not have a scarce natural resource sitting idle or under-utilized. From the article as well:

If we have that attitude to people owning things, then the first thing should be wealth tax on jewelry, cars, boats, and other luxury items which if you can't afford to pay the tax then you should be forced to sell it. I remember how popular that concept where here in EU when refugees had their jewelry taken by the government in order to pay for expenses and basic living. People have this weird attachment to objects that defy rational thought.

I get the sentiment, but in term of winning popular support it has some distinct emotional drawbacks.

If we want to specifically address vacant lots within city boundaries, a tax on that seems fair. Not many low income home owners live in their property owned vacant lots located inside city boundaries.

Re: Tax the Land

#400

Post by valenterry »

djokkataja wrote: post #395
gameman144 wrote: post #366

I totally get the appeal of land taxes and restriction of land-use regulation at the local level, and by and large they seem like a reasonable approach to poor resource allocation and unequal ownership opportunities. One thing I've not seen addressed, though, is the apparent disincentive to improve communities in meaningful ways. For instance, say I live in a very expensive city and I can no longer afford the land ta…

> For instance, say I live in a very expensive city and I can no longer afford the land tax. One of the major reasons that our cities become expensive in our "modern" society is that we don't have land value taxes. If we have a land value tax, then when someone decides they can't afford to keep paying the tax, they sell it to someone who can OR they find a way to make the things built on that property much more valua…

All you say is interesting and probably true, but you did not address OP's specific point at all.
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