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Comment by bumby | Hacker News Reader

How do you implement B) without causing a disproportionately negative impact on existing homeowners?

For example, would you just tax "new" purchases more heavily? Or scale it into existing homes? Give caveats for fixed-income (elderly and disabled)?

Politically, this seems like a tough road, even if it's the best choice. You have to essentially convince people to vote against their own economic self-interest. I think current tax policy around homes is curious because it's one of the few areas that there is a rather clear consensus around economists that it's bad policy that incentivizes the wrong actions, yet we can't seem to change them.

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Land value tax.

It could be made palatable to regular people by making a high tax free threshold. Most homeowners could be left unaffected.

That leaves 50% of land owned by the 1%. A fair chunk.

Additionally the money could be funneled initially into pensions for the impoverished elderly.

Capital/billionaires would fight back by arguing that it would hit the elderly the hardest just as the howard jarvis taxpayers foundation did with prop 13 but if it was very obvious how many elderly people were helped, crying about grandmothers having to sell multimillion dollar mansions would probably backfire.

They would throw immense resources at trying to discredit and kill this, though. They would use every character assassination trick in the book to stop those pushing it. Some would probably also resort to violence if that failed. It would be an uphill battle the whole way.

"That leaves 50% of land owned by the 1%."

Is a lot of that farm land, like with Gates?

I thought a lot of the investors are involved with apartments, which don't take up much land?

Maybe somebody can clarify, but wouldn't that land also be much less taxable per acre because the value is lower?

That's part of what I'm missing here. How is that value calculated?

LVT is generally conceptualised as proportional to the value of the land, not it's area.

And how do you set that if excluding the type of property that's on it?

I fail to see the relevance, land is zoned for farming or reaidential, that sets it value

You could reform zoning, but its not a requirement

Without reforming zoning, it is largely useless. Sure it might cause some improvements in places underutilizing their land but I think most places are using their land for the highest value thing it is zoned for.

If I have a SFH zoned for SFH in the heart of manhattan next to skyscrapers, the value of the land isn't based on the skyscrapers, it is based on what you can put on it and you can prove that by selling it for which nobody is going to pay as if you could put a skyscraper there.

"underutilizing their land but I think most places are using their land for the highest value thing it is zoned for."

In urban or higher density suburban areas, I think you're mostly right. But in lower density areas, a lot of the land is multi purpose or has few restrictions. So technically, you could build apartments or homes on land that is used as agriculture. However, there might not be demand for it in that area. Essentially, the tax-by-zoning works well in the situations where zoning is restrictive and demand is high. But in low density areas where the actual use is not well defined with a single zoning use, the value would be potentially arbitrary or inaccurate (making property tax a better measure of value).

So I could build a mansion or a small house and pay the same, just because I'm paying for the zoning. And of course zoning could change and much of it can also have dual use. This complicates the calculation and can lead to surprises.

It seems current actual land usage through property tax better accounts for the way the land is being used, is more stable, less arbitrary, and implicitly complies with the existing zoning.

Homestead exemption. If it's your primary residence you get a tax exemption on the first $[geographically_appropriate_median_goes_here].

They did that with the casino money in PA. It's a joke, like a couple hundred bucks, if that.

Homestead exemptions for older folks already exist. Perhaps a higher tax rate for those not living in a property?

I would love to see no tax on primary home property at all. Just for commercial/investment properties. Unfortunately, a lot of that would be passed on to renters unless income taxes were assessed differently. But that would also mean drastically changing school funding, which could be a good opportunity but would likely turn this into every more of an impossible shitshow.

I think one argument is this incentivizes in the wrong way regarding home buying. It seems similar to the mortgage interest rate deduction argument: it incentivizes larger homes, it's regressive because it benefits those with more wealth in property than those with less, increases the likelihood of defaults due to people being incentivized towards more expensive homes, and potentially distorts housing prices, related to excessive borrowing.

Maybe. My idea is to shift property tax to income/capital gains tax. In theory (depending on the structure) that should provide less net income because the number of working years should be lower than the number of years living in any property, and it should impact the higher earners more. This lower net income should lower the amount one is approved for (and hopefully stay the same towards the lower income range). This should reduce the burden on people who are on a fixed income while keeping houses a similar size. Maybe even smaller since the tax is taken off the top rather than perpetually taken off the back end - people tend to notice a smaller paycheck more.

This is an interesting perspective, thanks for clarifying. I think it would also be interesting if it leads to a more equitable method of funding schools.

I think it would be a mix in my view. Most of that should be income taxes at the state level, but still allow for some smaller percentage income tax to be collected at the local level. This should provide a higher base level of per student funding across the state, but still allow local municipalities to collect a smaller amount of funds that wouldn't have state restrictions on them. Maybe something like 95% fed and state funding with 5% local.

It sounds plausible if we could get around the PR issue of any raise in state income taxes being viewed as an evil. (I do think this would cause the need for higher state taxes, considering how many state and local municipalities struggle to fund education programs through general funds).

It reminds me a bit of the universal healthcare push. It seems very hard to convince people that, yes, their income tax levels may go up, but their overall costs will go down.

If you are referencing property taxes funding schools, you should know that it actually only funds about half of total school funding. The other half comes from federal and state governments and the way they give out funding is to selectively counteract that misallocation such that 47 states actually allocate more per-student funding to poor areas than to wealthier ones and according to this article [0], it has been this way since at least 1995.

So if you actually informed people that the wealthy areas don't get more funding, I don't see why it would be an issue.

[0]: https://apps.urban.org/features/school-funding-do-poor-kids-...

I thought it says they are relatively neutral? And that 35 states have policies to counter local discrepancies?

Maybe I'm just missing stuff - that page is a design/user nightmare. But I do agree that the pet student funding tends to be pretty fairly distributed.

"So if you actually informed people that the wealthy areas don't get more funding, I don't see why it would be an issue."

I generally agree. I think the main point that the rich areas would not like, is that often the state money has restrictions on what it can be used for, or comes with policy requirements attached. If I remember correctly, PA schools could lose state funding if they didn't implement and enforce the state's masking policy. This caused a bit of friction in many districts.

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