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High property taxes are good

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Re: High property taxes are good

#551

Post by yellowapple »

Dracophoenix wrote: post #522
yellowapple wrote: post #504

Earlier quoted context omitted.

> Any improvements on one's own property (separate from the land itself) would be factored into LVT through an indirect tax on improvements via a higher assessment value. No, because that's already subtracted out of the total property value to produce the land value. > And if COVID telecommuting is an indication of market preferences, home-owning adults prefer small, out-of-the-way towns with plenty of space, low pro…

> No, because that's already subtracted out of the total property value to produce the land value. On paper yes, but in practice there will be a de facto tax on improvement due to higher demand caused by what an physical improvement of one's own property signals. > The exodus from city centers stems from farther-out places being cheaper - i.e. having lower land value. Lower cost is not necessarily lower value . It's…

> On paper yes, but in practice there will be a de facto tax on improvement due to higher demand caused by what an physical improvement of one's own property signals.

...which is already subtracted out along with the rest of the improvements' contribution to land values. You could argue that it ain't a perfectly accurate subtraction - and that'd be a valid and reasonable argument - but that margin of error cuts both ways (i.e. overestimating improvement value instead of underestimating it).

> Lower cost is not necessarily lower value.

Land cost is land rental value times some amount of time (usually based on the expected cap rate).

> There are, for instance, empty parcels of land in Idaho that now go for more than whole apartment buildings in Detroit

Are the two parcels the same size? Are they representative of surrounding parcels and not outliers? Are they the same distance (in transit time/cost) as the nearest town/city center?

Re: High property taxes are good

#552

Post by bradgessler »

smugma wrote: post #545
bradgessler wrote: post #450

Earlier quoted context omitted.

I don’t know about NY, but in SF property taxes are effectively frozen based on the value of your home when purchased. I rented a house once in West Portal where the landlord was paying property taxes on the 1970 value of the home, which was something like $70k. The owner was gifted this house and taxes basis from their parents, who originally bought it. The tax bill came out to just a few thousand dollars as of 2020…

This website makes it easy. I looked up West Portal and there are several homes paying 1-3K, many in the 15-20K, and some 30K+ https://www.officialdata.org/ca-property-tax/#37.74219147779...

Yeah! This site is what gave me the idea for sidewalk chalking tax rates on the neighborhood sidewalks.

Re: High property taxes are good

#553

Post by InefficientRed »

bbatha wrote: post #168
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…

Outside of California "you paid $500k for your house, so we're gonna tax you on $500k" is not how property taxes work. The town/city/county typically does property assessments on regular basis (usually annually). These are based on doing comparisons with like houses in your neighborhood and are equal prone to "2 blocks over is way more desirable".

The property assessors are either elected or appointed by elected officials. I have yet to see a single property where the tax assessment is remotely close to the asking price. Can you give some zillow/redfin links?

Re: High property taxes are good

#554

Post by conductr »

lmm wrote: post #533
conductr wrote: post #351

Earlier quoted context omitted.

Not sure I agree. Or doesn't fit with my experience/city/state. All zoning is exclusionary to my knowledge. That's the entire point. It's not necessary but it exists because it exists. And, it's sticky. It was established most likely when the entire city was raw land and undeveloped; so it served as a plan for development. There was no NIMBY because people were building their BY. Because there was a plan, you could d…

> It was established most likely when the entire city was raw land and undeveloped; so it served as a plan for development. There was no NIMBY because people were building their BY. Because there was a plan, you could decide where you wanted to build that BY. That's not really true. Zoning was usually set up later. Often the existing buildings wouldn't be permitted by the zoning rules but were "grandfathered in". (If…

>That's not really true. Zoning was usually set up later. Often the existing buildings wouldn't be permitted by the zoning rules but were "grandfathered in". (If we made this practice illegal and insisted that you have to demolish anything that doesn't fit the new zoning laws, that might be one way to keep zoning laws sane). Even if the final state of those people's buildings is legal, often the process by which they were built wouldn't be.

No disagreement there, I'm no expert but think it just wasn't as formal as we current have it. But informally it still roughly matches how we currently do it (residential areas, commercial area, industrial areas, etc). Building codes, technologies, materials, etc change much more frequently which is a bigger reason that old buildings wouldn't exist today. I happen to reside in a part of the US that has seen massive sprawl and growth in just the past ~50-70 years, so it's been mostly planned. I can currently see how the next generation of exurbs will be developed and I think it's been that way for at least 30 years.

> Guess they should've had the foresight to get born earlier? It seems absurdly unfair to say that zoning set up for a population that was half the size should bind the current generation. I get that it's individually rational to want to pull the ladder up behind you, but it's disgusting. (And for the "people shouldn't be forced out of their home" crowd: my generation gets forced out of our homes every 2-3 years because we can't afford to own and have to rent. So I won't shed any tears for boomers getting forced out of their home once in several decades)

Are we out of land in the US? (I'm assuming you're in US). Why do you need that specific piece of land that the person you are displacing already owns? Job/commute, convenience, etc are unacceptable answers in my book. Employers can and should be dispersing, you're likely broadly employable and could find work elsewhere. They could put their office elsewhere. But you're choosing to live in an area that you can't afford to own (and they're choosing to office out of a location that their employees can't live in). Ignoring those or pushing them on the current land owners makes no sense. Curious if you have any evidence that rents are not market driven? It's my opinion your generation is forcing each other's rents up by refusing to move to a more affordable location. When a boomer bought that house, decades ago, it probably wasn't as desirable of a location as it is today. I happen to believe you are more in control of the entire situation than you care to admit but would rather stay put and blame the boomers or change the rules because you don't like the cards you were dealt. The "shed no tears" thing goes both ways, but they did get there first and they do already own their house, so it's an uphill battle for you.

Re: High property taxes are good

#555

Post by mlyle »

brigandish wrote: post #547
mlyle wrote: post #496

Earlier quoted context omitted.

> 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.

I agree, I often think about such things and wonder if they'd work as this hasn't been tried. I'm wary of taking the road to Hell with my "good" intentions/ideas. For the improvements on the land bit, you could project at the beginning of the year what you think the land will be worth by the end of the year, due to planned improvements. That locks in the value for the year. I can see problems with that too, but the r…

But the idea with a land value tax is you tax the value of the land, and not any property on it. So it's not just improvements added in a year, but any improvements residing on the property.

If the land is worth $100, and your house is worth $200-- it's worth $300 to you. But a LVT should just be taxing that $100.

Re: High property taxes are good

#556

Post by mikeyouse »

nomel wrote: post #524
arrosenberg wrote: post #368

Earlier quoted context omitted.

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.

I see. The dynamics are much more complicated than I, naively, thought.

It's often easier to think about the reverse situation -- imagine there's an error at the bank and the property owner's mortgage goes poof and his cost of operating the rental is cut in half -- do you think he'd lower the rent for his tenants? Of course not.

It's not a perfect market, rents are sticky, landlords don't profit maximize all of the time (e.g. they might keep the rent the same for several years for good tenants), but in general landlords will charge the highest amount they can charge at all times regardless of what their cost basis looks like.

Re: High property taxes are good

#557

Post by housedrafta »

bradgessler wrote: post #450
ed25519FUUU wrote: post #419

Earlier quoted context omitted.

> And what on earth does Chicago have to do with San Francisco or New York? This was such a laughable comparison because BOTH of these cities have high property taxes compared with more affordable cities in other states.

I don’t know about NY, but in SF property taxes are effectively frozen based on the value of your home when purchased. I rented a house once in West Portal where the landlord was paying property taxes on the 1970 value of the home, which was something like $70k. The owner was gifted this house and taxes basis from their parents, who originally bought it. The tax bill came out to just a few thousand dollars as of 2020…

Not only keep the peace, but you probably already understand that West Portal residents likely do not care about wealth inequality, or care about it in the opposite way that you seen to. I mean you don't wind up there by accident.

Re: High property taxes are good

#558

Post by raxxorraxor »

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…

I think it is utopia to compete with investors on price. Sure, you can make it too expensive for them. It will be too expensive for everyone else too.

Why not make property tax cumulative with the amount of property owned and impose a progressive tax here? It would have an equalizing effect on ownership and speculation would be less attractive for those that already own o lot of properties.

Sure, you have to fix a lot of holes to circumvent taxes so that not every company creates a large amount of holdings, but such strategies are a problem with every tax.

To now say a high property tax would scare away investors doesn't sound workable at all.

Re: High property taxes are good

#559

Post by simonh »

giaour wrote: post #404
tesseract wrote: post #360

Earlier quoted context omitted.

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).

Sort of, but that would give you the "social value" of the land, which it only has because of its present use and its proximity to other land used for specific purposes. E.g., the land under my house is worth $X because it's in a residential area in a major metropolitan area. If I were to build a dense mixed use complex on a large plot of land, I would probably increase the land value (since density would make it a d…

The point of an LVT is to tax all those external factors that increase the value of the land, such as local amenities, zoning, etc. The idea is the only value added by owners of the property was the structure they built, that’s theirs, the rest of the value is in a sense un-earned. Much of it is due to government investment in infrastructure and facilities, for example. Taxing the social value is the intention.

Re: High property taxes are good

#560

Post by parineum »

ketchupdebugger wrote: post #353
parineum wrote: post #314

Earlier quoted context omitted.

Property taxes paying for local services keeps poor people poor. I don't understand why people think this is ethical. Property tax is possibly the worst way to fund the government. The only thing it's really good at is imposing a market force. It's largely regressive. In fact it's almost identical to gas tax. All flat taxes are regressive.

on the contrary, property tax is actually a good way for people to pay for what they voted for. If your town voted to increase the education budget, your property tax directly goes into that. You are not paying for something that your town did not vote for. Property tax can be regressive within a community, but can often be progressive within a county/state. Different towns can have different property tax rates. Rich…

> on the contrary, property tax is actually a good way for people to pay for what they voted for.

It's also a great way for poor neighborhoods to not be able to afford what they need.

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