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Tax the Land

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Re: Tax the Land

#81

Post by drewcoo »

giantg2 wrote: post #13

"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." Of course it will distort choices and leave some people worse off. If the author can't see that, then they have…

> show me how an appropriately set income tax disincentivizes work

This can only lead to no appropriately set Scotsmen.

Re: Tax the Land

#82

Post by drewcoo »

trgn wrote: post #29
andrepd wrote: post #7

There is something deeply wrong with the fact that you can buy-to-rent a property and immediately turn up a profit, essentially inserting yourself as a parasitic middleman in the process, providing no service, and extracting an economic rent.

> providing no service Landlords are not parasites and provide a valuable service. I think a land tax would be great to curb speculation. Buying property, not providing any service (neither by renting nor capital investment in improvements), and just pocketing the appreciation, I agree, that's parasitic on the community. FWIW - I don't think a landtax would create a meaningful tilt towards more affordable home owners…

> Landlords are not parasites and provide a valuable service.

And tapeworms are attractively slimming!

Re: Tax the Land

#83

Post by s1artibartfast »

ItsMonkk wrote: post #61
flenserboy wrote: post #23

This would be a great way to destroy (privately held) farms and significantly, permanently raise food prices.

Land taxers believe in the removal of income and property taxes. Since farm land is (pardon the pun) dirt cheap, the tax money that they would have to pay for that land would be low. So long as the farm is in rural territory, the average farmer would have lower taxes than currently.

This is only true if the tax doesn't account for improvements to the land. If you clear, level, and plant the land, it is suddenly more valuable. Alternatively, If you pay to bring an aqueduct into a desert, it is vastly more valuable.

Re: Tax the Land

#84

Post by throwaway894345 »

larsiusprime wrote: post #72
throwaway894345 wrote: post #38

Earlier quoted context omitted.

While incentivizing denser factory farms over free range. Similarly, it incentivizes higher-yield GMOs over organic/local. I’ve been seeing a lot of this pro-density stuff pop up and it seems like urbanites trying to solve for urban problems on a national level despite that much of the nation doesn’t have urban problems. See also the various anti-car/everyone-should-bike-everywhere debates.

Have you actually run the numbers? Land value tax would most likely reduce the taxes on most farms, the vast majority of land value is concentrated in urban spaces. The majority of farmland is almost certainly getting a tax break under a land value tax regime, especially if its used to offset existing sales and income tax. Further, while land value tax would reduce the average tax burden on the average farmer, it wou…

Whether it reduces tax depends on the specific tax rates. I’m not inquiring about whether it will reduce or increase taxes for farmers, but what kind of farming it incentivizes. If your taxes increase per unit land area, it incentivizes higher density agriculture which is generally going to lean more on chemicals and antibiotics (organic and free range). Unless LVT also increases the costs of inputs and labor, I don’t see how it could possibly incentivize better farming practices.

Re: Tax the Land

#85

Post by trgn »

refurb wrote: post #46
andrepd wrote: post #34

Earlier quoted context omitted.

But I have been a landlord, I rented out my old apartment for several years after I moved to my new home. I don't pretend the income I got was for "services rendered". It is trivially easy to demonstrate that: you can outsource all tasks (cleaning, maintenance, even management and accounting) and still turn up a profit, which implies that this profit is entirely due to your monopoly on capital wrt. the rentee, and no…

But the rental market and home purchase markets as separate markets . There is nothing that says rent has to be more than the cost of ownership. Go to a big city like Toronto and you'll meet plenty of landlords taking a loss each month. And there is nothing that says it has to remain static. Rents can drop while housing prices go up (see SF during Covid). And in the end, I'm not sure it matters? I've lived in cities…

That's it. Tons of homeowners are letting at a loss in the superstar cities. They're banking on appreciation, or see inherent value to stake a foothold in their city, possibly for generations.

The cost of renting in the most expensive markets is much lower than the cost of home-ownership in those same markets. It's not because of supposed rent-extraction of landlords that housing is expensive.

Renters will be in for a cold shower if they think that the cost of rent is just because of parasitic extraction from landlords right now. It's because of a zoning structure and tax-code which punishes capital investment in land, and favors speculative landholding. Without meaningful change to either, there won't be downward pressure on rents.

Re: Tax the Land

#86

Post by bombcar »

long_time_gone wrote: post #78
bombcar wrote: post #70

Earlier quoted context omitted.

Find banks or real-estate companies that invest in single family homes for the purpose of renting them. If you can find one, you often find that they'd rather let the property sit empty than renting it. Or just look at the cost of buying a house vs renting a similar house, account for maintenance, and see if the numbers line up.

This isn’t really a source though, it’s requiring the other commenter to prove the point you made. Anecdotally, I know people who buy single family homes and rent them for profit. My 3 bed, 2 bath single-family home has a $3,000/monthly mortgage, I could easily rent it for more than $3,500 (closer to $4,000). Take out 10% for maintenance fees, and I net $200 a month.

That shows exactly the point, 10% for maintenance isn't enough, doesn't cover taxes, insurance, and other costs, and netting $200/month on a (assumed) $450k+ house isn't great, that's less than the interest earned on a deposit of the same amount.

Even if you only count the downpayment, $2400 a year on $90k is a 2.6% return; you therefore are getting the majority of your return from appreciation.

To actually make a profit on the rental portion, you need to discount the appreciation. You can do this if you're paying into a mortgage from 20 years ago and renting at todays prices, but that's just ignoring the fact that you could sell the property.

The biggest risk that most small landlords don't account for is a bad tenant - they exist and they will quickly eat through your $200/net a month.

The final proof is no company anywhere is building single-family rentals. If there was money to be made there, they would; but you need to get to apartments and the cost-savings inherent in them before it makes sense.

Re: Tax the Land

#87

Post by giantg2 »

ItsMonkk wrote: post #60
giantg2 wrote: post #21

Earlier quoted context omitted.

"The land tax amount needs to be high enough that the pain of the tax effectively forces owners to improve what's on the land" The author likely isn't aware of that. If the author made that argument then it would undermine their argument about affecting people's choices minimally or not at all.

The carbon price and dividend shows a great example of how to correctly set incentives. You tax the carbon. That tax money is then put into an account. At the end of the year, every single individual is then given an equal share. The disincentives the use of carbon, while at the same time providing means that a majority of people actually get a net benefit. The land tax should be set so that the price of the house be…

"The land tax should be set so that the price of the house becomes just the price of the house - the cost of the materials and labor."

How is that even possible? The root cause of property values being high in specific areas is because demand is high. Without changing demand, I don't see how it can just be labor and materials, especially since the buyer will be paying land value tax as well (since it's not a condo, high rise apartments, etc).

Re: Tax the Land

#88

Post by giantg2 »

pj_mukh wrote: post #27
giantg2 wrote: post #21

Earlier quoted context omitted.

"The land tax amount needs to be high enough that the pain of the tax effectively forces owners to improve what's on the land" The author likely isn't aware of that. If the author made that argument then it would undermine their argument about affecting people's choices minimally or not at all.

The reform of zoning laws (atleast in California) is blocked by property owners sitting on low-tax properties. Raising the land value tax would be a surefire way to make the opposition disappear as property owners would have to scramble to make their land more productive.

Or they'll block land value tax just as they so zoning.

But you seem to be agreeing with my point that it inherently is designed to affect choices (eg changing land usage to be more productive).

Re: Tax the Land

#89

Post by s1artibartfast »

derbOac wrote: post #43

I don't think the issue is taxing land per se, or even property, it's making illegal and taxing practices that are seen as immoral or not in societys best interest. This gets dangerously vague, but it has always been puzzling to me why actually blighted properties, essentially abandoned by owners not living anywhere near the area, werent taxed at ridiculously high rates. The other side of the coin is municipalities a…

> it has always been puzzling to me why actually blighted properties, essentially abandoned by owners not living anywhere near the area, werent taxed at ridiculously high rates.

Because the governments don't want to take possession o the houses.

If you tax them high, the owners default, because taxes exceed the property value. Then the government is the owner of a low value deteriorating asset that nobody wants.

This is beside the point that such high taxes would essentially be justifying government taking property from those unable to pay because of aesthetics.

Re: Tax the Land

#90

Post by giantg2 »

aperson_hello wrote: post #53
giantg2 wrote: post #13

"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." Of course it will distort choices and leave some people worse off. If the author can't see that, then they have…

Getting that 0.75 acres to turn over is exactly the point. Incentivizing them to leave (or better yet: subdivide and sell the land) is good for society. This policy only makes sense where zoning is also loosened enough to actually build on the land though...if zoning doesn't allow you to do anything with the land to make more money (building apartments, subdividing, etc.), this just becomes a tax on poor landowners.

"Getting that 0.75 acres to turn over is exactly the point. Incentivizing them to leave (or better yet: subdivide and sell the land) is good for society."

I doubt the affected person feels it's good. Quite frankly, the land value tax ideas seem absurd to me. It's just another redistribution scheme - work hard, retire, get forced off your land via tax. It seems it's the government's and everyone else's desire to just drain people until they have nothing. Make other's lives harder to make your own easier, seems to be the motto of today. It feels like mob rule to me.

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