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Comment by teddyh | Hacker News Reader

The idea of land-value tax strongly reminds me of the often cited, and much maligned, so-called fiduciary duty to shareholders which CEOs and/or board members reportedly have. This duty creates, it is said, an incentive towards naked short-term greed, which is often described as a bad thing. Now, even though this duty is also usually derided as fictional, the argument, if this duty did exist, is reasonable. But does not a LVT create the same incentives in landowners – in essence forcing landowners to always use the land in a way which extracts the maximum amount of money from it? Why then is a LVT a good thing while the duty thing would be bad?

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> ... in essence forcing landowners to always use the land in a way which extracts the maximum amount of money from it ...

That incentive already exists, landholders typically use their land in a high-value way. If you cast your eye on Europe there are a large contingent of undeserving people who have generations of wealth that they secure through owning land, which does not degrade over time. The big win of a land tax is about breaking ultra-low-risk inter-generational wealth transfer. If wealth is transferred between generations there at least has to be some level of competent management demonstrated by each new layer of the family tree.

The general incentive to make money always exists, yes, but if LVT is implemented, there would, I assume, be an almost insurmountable force compelling landowners to do so. I compared LVT with the idea of “fiduciary duty” with intentional precision; CEOs are also, in general, incentivized to make money, but the idea behind decrying the alleged fiduciary duty is that a CEO is supposedly more or less forced to do whatever makes the most money, regardless if they feel it would be bad in the long run, inhumane, or even unethical.

The same principle seem to apply to LVT: A landowner would, it seems, be forced, by the taxes extracted from them, to generate a matching (or larger) income by the land, regardless if they might feel that the community would be better served by using the land for something which would, incidentally, make less money for them personally.

If the object of LVT is to prevent inter-generational wealth transfer, I would assume that there would be vastly more effective ways to accomplish this more directly. Or there could at least be some carve-out which limits the effect of a LVT to those instances.

Fiduciary duty isn't that big of a deal compared to the general incentive to make money. When CEOs are hired they are screened to be the sort of people who want to make money. If I had a controlling share of a company and the CEO didn't want to make profitable decisions there isn't any special legal construct needed - he'd be gone and somebody new would be hired. Most shareholders are the same.

> ... regardless if they might feel that the community would be better served by using the land for something which would, incidentally, make less money for them personally ...

The community obviously disagrees with our landholder in this scenario, or the community can stump up the cash to pay the land taxes or hold the land publically.

It is just 1 more expense. It isn't like running a soup kitchen was ever free, someone is paying for the soup. Giving a donation of space is the same as giving a donation of time and materials.

There are incentives, but there isn't anything especially new here. It isn't going to be radically different from a mortgage in the short term, and in the long term the change is competent people will own land instead of old families.

In your first paragraph, you’re talking about actual fiduciary duty, but I was making an analogy not with what fiduciary duty actually is, but instead with the idea of it which people usually argue against. People usually say that fiduciary duty creates and even enforces thoughtless short-term greed, and argue that is bad for society and also the company in the long run. Regardless of what fiduciary actually is in reality, how is then LVT any different from creating the same short-term enforced greed?

The rest of your text can be summarized as “whoever has money deserves to have it, and should be trusted to make decisions which override any community which, in aggregate, have less money”. I believe this to be a somewhat controversial stance.

The idea of a LVT is that valuable land should an efficient use - the obvious example of inefficiency are the upper middle class neighborhoods on the SF Peninsula - Silicon Valley. The aggressive zoning and relatively low tax situation mean that it's impossible for people who get job in Silicon Valley to live there, causing crazy spill over to the rest of the SF Bay Area. Theoretically, forcing up taxes would force more efficient uses of land - allow the building of apartment high rises and so generally increase the affordability of housing.

But that's theoretically. Whether you could actually impose this regime is a different matter. What the "real" value of land isn't a clear thing thing imo. A town might that since it's zoning prevents building much, it's land isn't worth much.

But a city needs different buildings with different uses, no? However, IIUC, a LVT would tax a plot of land by what use it could theoretically be put to in order to make the most money. And this is evaluated individually for each plot of land, with no regard for what would actually happen in reality if every single plot of land would actually be put to use in the most money-making way. Would a LVT not force a monoculture of, say, only lofts, where previously each landowner might have opted to allow things like nightclubs or the occasional park or other forms of variation and whimsy? If you tax every land owner as if they have the maximum possible income, do you not essentially force every landowner to implement that way in order to acquire it?

This is an interesting thought. It's like how we want developers to build affordable housing, but through the market they are forced to only create "luxury" developments in order to make up for the large fixed cost of the land.

Food for thought: profit per square foot could stay the same by decreasing unit size and increasing the number of units if zoning allowed it.

Large apartment complexes are typically worth a lot more per land area than luxury developments.

It's interesting and I need to do some more thinking and research. On the one hand I don't think that one should be forced off one's land because others could be using it in a more valuable way. However the whole idea of property rights is founded in improvement or creation of value. Abandonment is a thing, and if you do nothing to improve or derive value from land you can lose your property rights in it.

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