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High property taxes are good

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Re: High property taxes are good

#491

Post by fleddr »

danielheath wrote: post #424
fleddr wrote: post #384

I'm struggling to make sense of the cause and effect in the article: "The high cost of property taxes have long pushed away speculative investors as it has pushed the carrying cost beyond what is profitable to hold as a passive investment long-term." Alright, so now the speculative buyers are gone and we're dealing with ordinary home buyers that actually occupy their home. These genuine owners are paying high propert…

How is “a hefty tax on a good reduces it’s value” a controversial claim requiring substantial evidence? Nobody is willing to pay as much up front for housing that has higher ongoing costs.

Because a suppression of price would also suppress new development? Why would a builder build anything in an area of low profitability, in a backdrop of rising costs and worker shortages?

So how come there's ample low cost high quality housing in Chicago?

The same remark applies to home owners. Your property won't rise in value, so why buy it? You must really want to live in the area, I guess.

And yes, I know the point of a house is to live in it, but almost everywhere it has a double function in also being an appreciating retirement fund.

For now my theory is that a lot of speculative supply got dumped, leading to a one time effect.

Re: High property taxes are good

#493

Post by Retric »

dntrkv wrote: post #490
Retric wrote: post #398

Earlier quoted context omitted.

To be more clear. Depending on the location, those flat parking lots can be pulling in 1+ million per year in profit. That doesn’t mean building a multi level parking garage in that same space is actually a good investment because demand isn’t unlimited. What you see as wasted space can therefore actually be a highly efficient business.

And if you built even a conservative 5 story building, it would generate significantly more value.

Value possibly, profit not necessarily.

Put another way if building a 5 story building would be obviously more profitable then they would do that but the opportunity costs is now 1+ million per year you aren’t getting from the parking business.

Re: High property taxes are good

#494

Post by seanmcdirmid »

samatman wrote: post #284
seanmcdirmid wrote: post #228

Earlier quoted context omitted.

> That seems like the point, though - the land tax makes it so that it is productive to add more density. It will still force density eventually as the home's structure value depreciates (demo costs are the same no matter how much the home is worth). Any new structures will be pushed into higher value uses. BUT let's say we instituted a blind land value tax tomorrow: many people would be forced out of their homes AND…

Jumping straight from one tax regimen to another is a recipe for suffering, sure. Instead, we might imagine a State shifting from 10% income tax to N% land value tax, by lowering the income tax 1% per year, and raising the LVT 1 * (N/10)% per year, until a decade later, the State's income is land value tax, not income tax. That should give everyone the opportunity to make plans, and adjust over time.

Isn't that the case already? Property taxes are already weighted between land value and property improvements. But shifting to too much land value, even if done gradually, can lead to unwanted consequences.

Re: High property taxes are good

#495

Post by karaterobot »

notacoward wrote: post #274
karaterobot wrote: post #248

> And perhaps, the best attribute: the money collected from property taxes doesn't evaporate from a local area like it does when borrowers pay higher interest rates. It goes back into the local neighborhood, leading to better local infrastructure and higher quality schools. This much is demonstrably false, at least where I live. I don't even pay property taxes to the city, I pay them to the county. There's no tie bet…

> I don't even pay property taxes to the city, I pay them to the county. The county is still a lot more local than a bank that might have an HQ across the country and is barely accountable even there. Also, most people's property taxes do go to their town or city, so your sample-of-one is not really a basis for a policy statement.

I was responding to the article's incorrect statement that the money stayed in your neighborhood, which is not correct in my case. I say "my case", but it's the case for everyone who lives in my county, the 12th most populous in the nation. Probably true for others as well.

https://kingcounty.gov/council/budget/budget_basics.aspx

Re: High property taxes are good

#496

Post by mlyle »

brigandish wrote: post #487
chadash wrote: post #95

Earlier quoted context omitted.

The biggest problem (IMO) is that it's not so simple to value land. Where I live, being two blocks over can make a huge difference. It's easy to say "you paid $500k for your house, so we're gonna tax you on $500k". It's much harder to accurately say what someone would have paid for the land were it not developed. I understand the benefits of LVT, but how do you solve this? Are there any good examples of governments t…

> I understand the benefits of LVT, but how do you solve this? Georgism[1], which I'm fascinated by. One way to organise it is to ask people how much tax they're willing to pay, from which the land value can be derived (as that's the real point of assessing land value for someone who isn't willing to sell that's the real order of things). However, if someone bids on the land for that price you must sell. > Are there…

> However, if someone bids on the land for that price you must sell.

But surely you have improvements on the land and friction from moving...

I like LVTs, but there's some significant devils in the implementation details.

Re: High property taxes are good

#497

Post by danielheath »

amerkhalid wrote: post #440
8ytecoder wrote: post #401

Earlier quoted context omitted.

Even if this is provable, why not have a progressive property tax rate? Owner occupied properties can be charged half the rate of rented properties. Rather than increase it for everyone and making it harder on the very people who are likely to sell it to a speculative investor.

Landlords will just pass the extra tax to tenets. And mostly low income tenets will bear the cost as they are least likely to have enough money for down payment.

"We can't tax landlords, they'll make the tenants pay for it" is not how markets work. Pricing is held down by ability to pay, because - as far as landlords are concerned - getting paid some money is better than getting none.

Longer term, the impact on rental costs depends on whether you think this policy would increase the amount of housing available for people to live in.

Where I live, many properties are bought and kept empty - the rental income isn't worth the hassle and they are being held for capital gains. High property taxes would presumably result in some of those properties being sold to occupiers.

Consider an extreme case - a land value tax of 20% (meaning you pay the government the full value of the unimproved land every 5 years). Land values would plummet, right? Lets say it were introduced over 30 years, so prices could adjust smoothly instead of crashing. What does the steady state look like after 30 years?

Re: High property taxes are good

#498

Post by midoridensha »

jelliclesfarm wrote: post #471
turbinerneiter wrote: post #327

Earlier quoted context omitted.

What makes you think this idea is popular? I don't even think the author is fully behind it, seemed more like a thought experiment as a reply to grandparent. Regarding grandma: I don't want to kick her out of the house. But there is a real issue here: young families can't find affordable places, while old families live in places, that are too big for them because the kids left. If they rent, they also pay significant…

Multigenerational families are the answer. Move in with grandma. Problem solved.

What if grandma lives in a city where there's no jobs for me? Asking people to move in with their relatives is not the answer; the answer is very simple: build more housing. Eliminate zoning rules and start replacing older buildings with new, larger and taller buildings.

Re: High property taxes are good

#499

Post by mlyle »

horsawlarway wrote: post #267
bbbobbb wrote: post #260

Earlier quoted context omitted.

I don't get the joke. So in your scenario people are basically not allowed to own land and the benefit is what?

There is no benefit, this is a terrible plan. Marginally shorter cycles before property becomes more useful in exchange for completely fucking over the elderly, marginalized groups, and those without free capital. It's a bonkers bad idea.

> Marginally shorter cycles before property becomes more useful in exchange for completely fucking over the elderly, marginalized groups, and those without free capital.

As others point out, most LVT schemes have significantly improved treatment for owner-occupied housing.

The big idea here: land value is something that is established publicly and collectively rather than by any individual owner. It makes sense to tax use of this public good to reduce deadweight losses .... instead of primarily taxing improvements which disincents investment and increasing DWL.

A land value tax can be expected to reduce the cost of housing. That is, it incentivizes more effective land uses-- as opposed to property taxes that include improvements, which reduce the incentive to build higher densities.

Re: High property taxes are good

#500

Post by klipt »

fleddr wrote: post #491
danielheath wrote: post #424

Earlier quoted context omitted.

How is “a hefty tax on a good reduces it’s value” a controversial claim requiring substantial evidence? Nobody is willing to pay as much up front for housing that has higher ongoing costs.

Because a suppression of price would also suppress new development? Why would a builder build anything in an area of low profitability, in a backdrop of rising costs and worker shortages? So how come there's ample low cost high quality housing in Chicago? The same remark applies to home owners. Your property won't rise in value, so why buy it? You must really want to live in the area, I guess. And yes, I know the poi…

I think there are higher order effects at play.

For example low property taxes encourages NIMBYism which results in lower density zoning which reduces new supply.

If high property taxes reduce NIMBYism by making homeowners feel the housing crisis themselves, that alone could ultimately increase affordability.

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