Tax the Land
vox.com
vox.com
The same should apply to any other repeal of rent-seeking institutions: anti-labor-competitive laws privileging labor unions, licensure barriers privileging taxi medallion holders, etc.
The British used this method to end slavery throughout their empire, which meant: 1. much more rapid end to slavery, due to less political opposition to its abolition, 2. no costly civil war and enduring sociopolitical grievances that emanated from it.
Economic analyses indicate that compensating rent-seekers at an amount equal to the expected loss of economic utility over their lifetime from the elimination of their rent-seeking opportunity, as part of a reformation to end the institutions that enable their rent-seeking, leads to net economic gains, because the economic efficiency gains from expedited abolition of the rent-seeking far outweighs the cost of the compensation.
Important land is always unique, and therefore taxation would be have be incredibly dialed-in, no? A busy major international port would need to be taxed very differently than a sparsely attended beach just a mile away. This seems very difficult to get right.
Have there been practical applications that show that's not a concern?
you could imagine that the taxation is tied to the value of the land, which can be calculated as the rent income, minus the value of improvements upon the land (such as any buildings, which can be estimated by the cost of construction and maintenance over the useful life time, which is already a figure that is needed for depreciation purposes).
This is the reason why LVT cannot be passed onto the renter, because if you increase the rent, you would pay more taxes as the value of the land must have increased if the renter accepts this higher rent without any changes to the building.
The very first thing that will happen upon implementation of LVT is simple "rebranding" of "renting" into "mortgages".
What tax do you charge then? some LLC "owns" the port. some bank provides it a "mortgage".
What's the tax due on such mortgaged property? Previous rent? What if such rent was never charged and it was mortgaged from day zero? What then? What if there is no comparable entity to compare to? Just some half-ass guess?
What's the LVT tax on the Suez Canal? Panama Canal?
It's FAR from trivial.
Not everyone will likes that idea, but it shows that a non subjective solution exists, it and where there is one, there may be more.
Transitioning to a steep LVT is difficult because the assumption is that the LVT drops the value of the land if the yearly tax payment is too high. A $1 million dollar plot of land isn't supposed to pay $50k in taxes. The payment you are willing to make is say $10k per year which means the value of the land drops to $200k. Making that jump is extremely difficult. It's only really viable if you started with the LVT from the beginning.
The reason why Germany can transition to an LVT is because the property taxes it charges are laughably low to begin with. Around 200€ to 1000€ per year. There is no plan to increase taxes to lower the value of land and put pressure to solving the housing problem.
What's nice about looking at the improvements is we should always be able to figure out the cost to build the building initially, we can look at the repair costs.
Say we have a house that was just built. We know for sure that this cost $500k to construct. We have the bills. Make the market price of the lot and house cost $500k and the tax is perfect. Done. If the tax is above the correct value, the auction bid will be under $500k, that's bad! Lower the tax.
Now let's say it's 10 years later. There has been depreciation on the house. It's no longer worth the $500k. If we still tax the building as if its worth $500k, what happens? It turns out we under-tax the 100% LVT. But as we know, under-taxing is okay, not perfect, but okay. It's over-taxing that is harmful!
What happens if someone bids $600k for it? Now we know we are significantly under-taxing the area and have good reason to increase the tax, and send out an appraiser to look at it.
Lastly I just need to point out that in a LVT world, it is kinda going to be like the "Don't fight the Fed" line. If you know that bidding $600k on a $500k house is going to force a tax inspection, you might not be so happy to lose $100k, so you might bid less. You might even bid $500k simply because that's what the home is worth, you might fund the appraisal yourself so that you don't risk your $100k. As the speculation is driven out of the market, the values of homes will be much more steady than they are today, and land appraisal will therefore become much easier and uniform. Even Zillow could do appraisal's with a LVT.
One could bypass this problem by putting in limitations, like an requirement to be high-income before the tax is applicable. One could also limit land tax to specific zones outside of low density residential areas so it doesn't go into effect when the land owner and the person living there is the same person.
The article goes into the advantages of a land value tax over other types of tax, including a property tax:
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. Sometimes the tax is intentionally disincentivizing an activity — think carbon taxes to reduce greenhouse gas emissions or so-called “sin taxes” on tobacco. But there are also taxes governments want to levy to pay for valuable services without changing behaviors too much (or at all).
>>The main argument that I see against land value taxes is that land doesn't generate any income by itself, which forces people to pay money in situation where they might not have any income to do so.
Those people should be selling their land. We should not have a scarce natural resource sitting idle or under-utilized. From the article as well:
In small towns, vacant lots contribute to decline — and if there’s no valuable structure on a property, its delinquent landlords likely only pay a nominal property tax. This both lowers tax revenue and hurts neighborhood quality for everyone else.
**
In Allentown, Pennsylvania, the system worked! According to a 2019 Strong Towns article, after the city adopted an LVT (through a split-rate system that still kept some property taxes in place) in 1996, “construction returned to the city: the number of taxable building permits surged past neighboring Bethlehem, market investment returned and capital improvement reappeared in city budgets. ... The losers in this trade were absentee owners of vacant lots, who had to shoulder much more of the burden.”
Sen. Pat Toomey (R-PA) is quoted touting the benefits of the tax: “The number of building permits in Allentown has increased by 32 percent from before we had a land tax.”*
If we have that attitude to people owning things, then the first thing should be wealth tax on jewelry, cars, boats, and other luxury items which if you can't afford to pay the tax then you should be forced to sell it. I remember how popular that concept where here in EU when refugees had their jewelry taken by the government in order to pay for expenses and basic living. People have this weird attachment to objects that defy rational thought.
I get the sentiment, but in term of winning popular support it has some distinct emotional drawbacks.
If we want to specifically address vacant lots within city boundaries, a tax on that seems fair. Not many low income home owners live in their property owned vacant lots located inside city boundaries.
Private ownership of the latter is both just, because the original owners comes to own it by producing it, and economically advantageous, because ownership incentivizes production, which leads to its supply increasing. With land, there is no moral justification for private ownership, as no private party created the land, and private ownership does not have the economic effect of leading to the supply of it expanding, since land cannot be produced.
Land cannot be produced but homes can be designed, constructed and built. If we want to tax land but not homes, and we want to tax gold but not jewelry, I would find that perfectly consistent. People rarely form attachment to unused land, similar to how people don't form attachment to solid gold bars or ingots. Incentivizes production of unused land and vacant properties is something I would support, while I am rather suspicious of taxing ownership of man-made resources.
>>a home is built on land which people form emotional attachments to
I would argue people should be encouraged to not form an emotional attachment to a house, because the land it occupies is part of a larger society which may come to need it more than the person does.
You may have grown up in a house your grandfather built, but the neighborhood of that house may have changed from a sparsely populated district of a small city, to the densely populated economic core of a major metropolis and regional shipping/trading hub. The land needs to be repurposed to benefit the greatest number of people, and I don't think a perpetual land claim stemming from the principle of first possession should trump that imperative.
I don't think the distinction being present are convinceing me. I can agree that undeveloped natural resources might need to be treated differently than developed resources, on that ground that undeveloped natural resources are inherently limited, scares and in general useless unless developed. Undeveloped land don't serve anyone except as an investment, and thus special rules might be needed.
I will also say that while I can agree that people should not form emotional attachments to objects, and I will include here any object, it is part of human behavior to do so. Be that a house, car, boat, jewelry, guitar, a sport players T-shirt, or what have you. For most people a house is just a house. For others it a family heirloom, built and maintained for hundred of years by the same family. We don't generally repurpose objects in order to benefit the greatest number of people, and I doubt there is a very strong support for that.
For practical purposes, gold is not finite for the time being. We can keep mining it to expand supply for a long time to come.
Maybe for some elements, it would make sense to apply a usage tax to discourage under-utilization of the existing supply, but that day hasn't come for gold.
>>You need land first and it need to be one of a few special locations on earth where such mining is profitable.
There are many places where one can purchase mining rights, and profitably mine gold. It's just a matter of investing the resources to do it.
Denmark had a law in place during the mass refugee crisis in Europe, where if a refugee owned valuables then they had to sell that first before they were allowed to receive government help. The idea was that people should first help themselves if they could, and by doing so helped the greater good since then the government could afford to help more people.
Ask people to sell their wedding rings and people get a bit upset, and so people compared it to Nazi Germany when they striped people of valuables. A lot of people wanted that the government should respect and thus protect peoples emotional attachments. Desperate people can't eat gold, and you don't want to force people to sell the last remaining object of emotional attachment that they own. I think even some refugees spoke on the news that they would rather die than sell off their heirlooms.
That actually makes sense if you want to avoid price gouging and scalping over the short term.
If you tax wealth then people will try to reduce the amount of wealth they have which is undesirable over the long term. If you tax land, people will reduce the amount of land they use, which is exactly what you want in an urban environment.
Does it make sense to always optimize for nothing but maximum ROI for each plot of land?
For example: imagine how many untold billions of extra value and tax revenue could be generated in Manhattan by tearing down Central Park and building it all full of dense housing towers.
But would Manhattan be a better place to live as a result?
No, but we can have special provisions for public goods like parks. Outside of properties that generate these kinds of public goods, the revenue a property generates is generally a proxy for social good it does. For example, a condo building with 150 residential units and 10 commercial units on the ground floor will do more social good than a parking lot, and that is easily revealed by how much more revenue it generates.
I think this would be an important component of a YIMBY or Georgist future, to have public open space and park resources owned and managed explicitly rather than implied on each parcel.
LVT isn't about whether the land is developed or undeveloped. The idea is to tax it based on its maximally productive usage. So for example if a plot of land has a single house but it could fit an apartment building, it should have an apartment building.
Of course Central Park is a treasure! But based on LVT, open fields in the middle of Manhattan is not the maximally productive economic use for that land. Filling it with high rise apartments would yield far more economic value.
Clearly I'm not promoting that it would be a good idea. It would be a disaster. But it's a great example of why blindly applying LVT to everything is not a good idea.
I'm not sure this is true though. Manhattan wouldn't be close to what it is today without central park. It's not very hard to make the claim that central park provides more value than putting up apartment buildings would. Central Park makes that island some of the most expensive land in the world.
It certainly wouldn't and I wouldn't argue the contrary.
But from the perspective of analyzing LTV and its implications, how would that be written into the tax code formula?
Surely it'd be possible to take some of the Central Park area and convert to highrises without meaningfully diminishing the benefits of having a Central Park. But how much area would be ok to build to maximize economic value? 1%? 5%? 50%? 80%?
Because at the end of the day, a tax law needs rules and formulas to compute the tax, so how do those get defined in a way that preserves open space but pushes for highrise development everywhere else (if that's the goal)?
I think the way it would work is the government would have to pay LVT on land it owns, and people would have to decide whether the LVT would be worth more than the current use through elections. Sure, NYC could probably get $10 billion or so a year (who knows maybe its $100 billion) if they sold off central park while under this taxation scheme. I think hardly anyone would want that though, and NYC would just continue to pay itself the LVT instead of collecting the money from citizens that bought the park land. By the way this is a gross oversimplification since the LVT collected from the properties surrounding the park, and probably all of Manhattan if not NYC, would be drastically lowered if the park was developed.
> pushes for highrise development everywhere else (if that's the goal)?
I don't think this is the goal. The goal is efficient land use. That might mean high rise development instead of empty lots. It might mean national parks that people cherish. It might mean a great big park in the middle of manhattan. What matters is that the question "is this land being used optimally?" is being considered.
Tax has nothing to do with raising money. It’s about releasing real resources for the public good - largely people to provide public services. Ideally the tax needs to be incident on the private sector entities that would otherwise hire the people the public sector needs to hire instead - military, judiciary, police, healthcare, education, etc.
Government has no need of land, therefore it makes no sense to tax it. Expecting the incidence to end up in the correct place requires a faith in fungibility that just isn’t borne out in practice.
Taxation is entirely about raising money.
>>It’s about releasing real resources for the public good - largely people to provide public services.
What does "releasing real resources" mean, and how does taxation achieve that? And how does a land value tax fail to achieve that?
>>It’s about releasing real resources for the public good - largely people to provide public services.
I'm puzzled as to how you conceive of government not needing land, when many government services do in fact need it, or how you perceive other objects of taxation being needed by government in a way that land is not.
It isn't. Government has no need of it. Taxes are essentially shredded and deleted.
All very simple when you realise there isn't a fixed amount of money and it grows and shrinks as required by the economy.
What is spent and what is taxed are inductively connected, not directly connected. That's how we have 'deficits'. It's a function of the accounting.
"What does "releasing real resources" mean, and how does taxation achieve that?"
If you tax employment directly, private firms offer fewer jobs because there would be insufficient money in circulation to employ everybody (wages are insufficient to purchase output due to the tax take). The public sector then hires those who can no longer get jobs in the private sector.
The LVT fails to target the areas required, and it lacks a countercyclical behaviour. An employment tax, for example, collects more when the economy is hot and less when it is cooler. That's part of the automatic stabilisation mechanism.
"I'm puzzled as to how you conceive of government not needing land, when many government services do in fact need it"
Government is largely service based rather than goods based. What it needs is people.
Georgism is based upon a view of money that isn't actually the case. So it doesn't work.
That is not what happens to tax revenue. I recommend you look at a government budget, and see the source of much of the money spent.
>>If you tax employment directly, private firms offer fewer jobs because there would be insufficient money in circulation to employ everybody (wages are insufficient to purchase output due to the tax take). The public sector then hires those who can no longer get jobs in the private sector.
Private firms don't offer fewer jobs when you tax employment. They offer less for the jobs they offer when you tax employment.
Government can hire people because it can offer wages competitive with those provided by the private sector, and it can offer those wages because of the funds it acquires through taxation.
Governments have no need to tax employment to hire workers. This is trivially shown by jurisdictions with no taxes on employment and many government workers.
>>Government is largely service based rather than goods based. What it needs is people.
Abstractly, people need land, so government can trade access to land for services rendered for the public, i.e. for employment with the government.
I hope that it is interesting and noteworthy for you to learn that many, many smart and thoughtful economists do not agree with that. In fact, they strongly disagree.
Current thinking in modern economics - specifically in MMT[1] - is that money is created by loans and destroyed by taxes.
Which is to say, the government (provided it is a sovereign issuer of its own debts, like the US or the EU) has no particular use for revenues since they can just create whatever money they need. What is actually happening when money is taxed is that it is, effectively, destroyed.
Modern economists by and large do not subscribe to MMT. It has about as much support amongst academic economists as climate change denial.
Income tax has nothing to do with raising money. It’s about releasing real resources for the public good - largely people to provide public services. Ideally the tax needs to be incident on the private sector entities that would otherwise hire the people the public sector needs to hire instead - military, judiciary, police, healthcare, education, etc.
Government has no need of private income, therefore it makes no sense to tax it. Expecting the incidence to end up in the correct place requires a faith in fungibility that just isn’t borne out in practice.
When the government uses income taxes to fund public infrastructure like a subway, it improves the land that is incident to that subway which raises the value of that land. The government created a lot of private value that could be taxed to pay for the infrastructure it built. As it stands right now, the government just takes your income with no incentive to actually deliver as it does not benefit directly from its own investments. This allows corruption to creep in as politicians would rather fund massive boondoggles that line up their pockets rather than small incremental improvements that increase government revenue in proportion to how much value it provides.
This scene gets the point across very clearly: https://www.youtube.com/watch?v=XL3n59wC8kk&t=1803s
The government invests in the commons. Access to the commons (proximity to infrastructure) is owned by private individuals who benefit from the investment. The government does not benefit from the investment it made. It's effectively running a charity for a handful of people.
the land value tax is aimed squarely at taking economic rents of real property down to zero via taxation. in the ideal scenario, the land value tax would be exactly equal to the economic surplus (generated by poor policy or anything else) for each property, to negate the ability to extract economic rents, leaving only productive uses to generate income (perhaps in the form of a rent payment).
https://today.uconn.edu/2021/03/there-was-a-time-reparations...
Granted, it is hard to decide how to read this history. Specifically, the civil war did not start because the federal government tried freeing slaves; but because the eventual confederacy states feared it would. Abolition wouldn't become union policy until well into the civil war (largely due to the sunk cost of fighting the far). And, the 4 union slave states would eventually abolish slavery as well.
Still, given how costly the civil war was (both in terms of money, lives, and politics), it is worth considering the counterfactual where did a compensated abolition, which seems to have worked out better when it was attempted.
[0] The act to search for is District of Columbia Compensated Emancipation Act
enact the tax gradually, say over 5 years, and the property market will adjust accordingly.
As for the moral argument, I find it hard to believe that individuals should know that the laws that society collectively agreed on and implemented, are unjust. To some extent we rely on society to inform us of right and wrong, and there is no clearer example of that expression than the laws and policies the government institutes through at the behest of elected representatives.
So I think the fault of unjust laws, where they exist, should fall on society as a whole, as opposed to those who as a matter of circumstance, just happened to make investments of time or money that depended on those laws.
Finally, not compensating landowners means far more political opposition to instituting such a tax, and therefore delays in doing so, and that in itself is costly. Consequently, insisting on landowners being punished for benefiting from the legal status of land ownership will be harmful to society. It would be a case of prioritizing vengeance over society's wellbeing.
certainly it means more political opposition in the form of money, but not in votes, which is the more pertinent metric.
That is not true. Greater incentives translates to more investment, and more investment is socially beneficial.
>>it's the same fallacious argument used to keep progressive taxes at bay (oh noes, the rich people will leave america for... ???).
There is nothing fallacious about this argument. Disincentives to investment lead to less investment. Less investment means less gains in productivity and wages, which also means less taxable income that can support the mandatorily funded safety net leftists support.
>>certainly it means more political opposition in the form of money, but not in votes, which is the more pertinent metric.
Historically, measures that threaten major special interests are difficult to pass due to the opposition they face. Ignoring that is putting ideology ahead of pragmatic results.
historically, disenfranchised masses revolt, violently.
bonus point: a more equitable distribution of wealth would lead to smarter investment overall and a more productive economy.
The percentage of income invested fluctuates, based on factors that include security of property rights and expected return on investment.
Creating a reliable regulatory and tax regime would mean greater annual inflow of money into investments.
>>historically, disenfranchised masses revolt, violently.
All the better then to remove the obstacles to the enfranchisement of the masses, by offering compensation to the current beneficiaries of rent-extracting institutions in exchange for recruiting them in the drive to abolish these institutions.
Violent revolutions that overturn power structures are actually quite rare and far more common is persistence of structural forces of rent-extraction for decades or centuries, and thus the threat of revolution is not an effective motivator for those in power to relinquish their privileges. The pragmatic reality is that we are more likely to get to a more just and efficient economy without these structures if we reach a settlement that removes the opposition of these structures' beneficiaries from the drive to eliminate them.
>>bonus point: a more equitable distribution of wealth would lead to smarter investment overall and a more productive economy.
Another bonus of eliminating rent-seeking institutions is that it reduces wealth inequality. Compensation to expedite the removal of a structural force that contributes to wealth inequality would likely be a net-gain for equity in the distribution of wealth, because the former is a one-time action while the latter has a recurring impact.
investors and politicians, on the other hand, like to say things like "investment will go away", but those are lies told to the susceptible to get pet policies enacted, not to reflect reality, better the economy, or improve the lives of ordinary citizens.
history books are literally chocked full of governments being overturned, and it's happened dozens of times in the past century. it's anything but rare.
These are proven economic prescriptions that expedite the removal of costly encumberences to increasing the efficiency of the market and reducing rent extraction by the few.
>>investment will happen regardless. the money literally has nowhere else to go.
You don't seem to understand the point I'm making. Some percentage of income is invested. That represents investment inflow, that leads to capital formation. The percentage varies between countries and eras, based on factors like the average ROI rate, tax/regulatory stability, and security of property.
It stands to reason that more tax/regulatory stability would lead to a larger percentage of income being invested.
>>investors and politicians, on the other hand, like to say things like "investment will go away", but those are lies told to the susceptible to get pet policies enacted, not to reflect reality, better the economy, or improve the lives of ordinary citizens.
You're allowing conspiracy theories to overwhelm your thinking. Your certainty in bad faith motivating these arguments is causing you to not even comprehend the arguments before you reject them, as in the case of you not making the minimal effort to understand my point about a variable rate of investment that's dependent on multiple factors.
>>history books are literally chocked full of governments being overturned, and it's happened dozens of times in the past century.
There have been hundreds of states in existence at any one time for the last several millennia. Many instances of a type of event does not imply that this event is common. The fact is, relative to how many states exist, and how large of a time period most historical analyses cover, the number of successful revolutions by the lower classes is very few, and thus the event is rare in the context how likely it is that it will occur in any one country in a given era.
Although again, the Georgist point is that this is specifically not true for land: the land is there whether you invest in it or not.
A Georgist would counter that land is special in this regard: unlike investment in productive enterprise, we don't actually need investment in land to create wealth. I think it's an open question whether markets would actually buy this designation, or see it as open season on all kinds of property. The latter would be very, very bad!
less than roughly 1% of the land area of the US would have such pressures, so you'd have plenty of tax-free land to choose from, and it'd be cheaper to buy too. productive land should be put to its "highest and best use".
Eh, this is a fine line. If Henry had his way we'd have a 100% tax on land, which means unimproved land is now worthless since you can't make any profit off it. A true LVT tax is effectively the same as a seizure of your unimproved land, as its entire value has been collapsed.
I'm not fully clear on this statement. Is it putting forth that local governments shouldn't be controlled by the people who are local, or is it saying that homeowners hold more power than renters? If the former, that's just silly. If the latter, renters get the same one vote per person as everybody else. If they don't care enough to vote that's their problem.
Homeowners, like everybody else, vote in their own best interest. If you want higher-density housing figure out a way that it makes a place better for its inhabitants, not worse. Personally I've never lived in a city that got better as it got bigger and I vote accordingly.
It's based on population densities. Localities can designate industrial and commercial areas, but can't deviate from federal guidelines to prevent growth.
Instead of single family homes they allow triplexes where a percentage of space can be used for a low-impact business, like a barber shop or something. They have setbacks geared towards making sure that you don't build three stories on top of your neighbor's house.
They have neighborhoods. They don't have a housing shortage. They don't have a system that doesn't empower developers who want to clear-cut cheap land on the outskirts of town and build sprawling anti-social subdivisions of oversized identical houses.
Here's some more information: https://www.youtube.com/watch?v=wfm2xCKOCNk
This idea would be terrifying for most of the US homeowners.
The life of a renter is completely different from that of a homeowner. Most renters are of a lower class, living paycheck to paycheck. All they think about is staying afloat, not getting involved in local politics. You need a surplus of time and energy, and roots, to get involved.
Comments like this ignore the conditions under which people live and how these conditions modify their behavior.
Democracy sounds egalitarian in principle, but in reality, economics on the ground insulates a large number of people from the power process.
I get what you are saying about not wanting these clueless people to have a say in how things are run, but they weren't born in a jungle...they were were made into what they are by the system.
And your proposed alternative is?
Democracy has always been a dog and pony show where the interests of the rich and powerful are sublimated into a socially acceptable "war of ideals." Behind every issue, some group is playing power politics. Abortion, for example, isn't about the issue in itself, but about subverting traditional GOP values, thereby weakening their platform and making them look bad.
We must fundamentally alter human beings in order to avoid doomsday. In particular, we must suppress the life instinct which demmands continual growth or death. If everyone--not just workers-- could be made to be content with just sitting in their houses, the world would be saved.
Your life isn't the success story you think it is. You bought into an overpriced housing market--probably, I don't know where you live--and had to live as a slave for 35 years.
You will continue living as a slave as you continue to pay your mortgage to a banking system that is completely antagonistic to your class interests.
Sorry man, you were taken as a fool. Enjoy your trophy for being a good compliant slave.
It's not just directly voting for a city councilor, planning board member, etc. that counts. Showing up to public meetings to show support or disagreement with something can do much to pressure those elected officials. But renters are going to have a much more difficult time showing solidarity for pro-development action, not only because of the difference in socioeconomic status (e.g. living paycheck to paycheck vs. a homeowner who has a stable, white-collar job).
1. Homeowners can shoot down a proposed development by demonstrating a strong response against threats on just their street or block. As long as homeowners defend their turf locally, and it can be counted on them to do so across town, they win. Renters, on the other hand, have an asymmetrically difficult battle: pro-development individuals need to show up to all the proposed-development meetings, not just one for a particular street or block, if they want to expand housing.
2. Homeowners are probably much more strongly driven to show up because the focus is on what they lose. Character of neighborhood, traffic, safety, noise, etc. and the threat against the status quo seems more likely to trigger that visceral defense mechanism. Renters probably focus on what they gain: affordable housing, access to new communities, etc. My intuition is that the perception of losing something is a greater call to action than the possibility of gaining something.
3. Homeowners are well-defined and known individuals. They already exist, and their turf is already developed. Renters, on the other hand, are an abstract group of people who may or may not even move in, should something be built. I currently rent an apartment - but will I show up to a neighboring town's planning board meeting to voice my support for some proposed apartment complex that's still in the early stages, could flop at any point, and even if it succeeds I may not even move there? The renters of a future complex may not even know who they are yet, if they aren't adamant on moving in there should a place be built.
4. There's strong stigma against renters, to the point of being demeaning and tribal. A local council near me voiced their opposition to building more affordable developments, and the chairman said he was concerned about "derelicts" (exact word) moving in to the neighborhood and said if they built more affordable units, you'd see a rise in street drug vendors, threatening the local children. How can renters and low-income earners combat such ridiculous accusations when local leaders cast them as criminals, just because they can't afford to buy a median $400,000 house?
Your comment ignores so much of the asymmetric power dynamic between owners and renters.
Not just those. For most home-owners, their homes are by far the highest-value assets they own, and especially given the lack of strong social safety net in the US, they often represent a large store of value that home-owners expect to be able to support them in retirement, in the event of unforeseen emergencies, etc. The thread of homes losing their value can be much more tangible than just fears about neighborhood character (and those aren't nothing).
It's not homeowners vs renters, it's homeowners vs property developers. Property developers who, I can assure you, are perfectly capable of sticking up for themselves.
> Homeowners are probably much more strongly driven to show up because the focus is on what they lose. Character of neighborhood, traffic, safety, noise, etc. and the threat against the status quo seems more likely to trigger that visceral defense mechanism.
Are these.. bad reasons to be opposed to development?
> Homeowners are well-defined and known individuals. They already exist, and their turf is already developed. Renters, on the other hand, are an abstract group of people who may or may not even move in, should something be built.
This is all the more reason to listen to homeowners vs renters.
> There's strong stigma against renters, to the point of being demeaning and tribal. A local council near me voiced their opposition to building more affordable developments, and the chairman said he was concerned about "derelicts" (exact word) moving in to the neighborhood and said if they built more affordable units, you'd see a rise in street drug vendors, threatening the local children.
Sleight of hand there. Renting != affordable housing. To be blunt, although maybe not as much as that councilman: poor people commit more street and petty crime. This is inarguable. Most people commit crimes near where they live. Also inarguable. He's not wrong.
I'd argue that current zoning laws and processes encourage large developers. They are the only ones who can navigate the system.
That's why so much new construction in the last several decades (at least) has been by large developers who buy cheap land on the outskirts of town, cut down all the trees, build a bunch of identical cheaply made houses isolated from everything else, sell them all at once, and hand over management to a homeowners association where rules are enforced to ensure conformity.
It's obviously the case that local voters do not get "unchecked authority" over their local government. They can't vote to say that black people aren't allowed to live there, they can't vote to build an unregulated chemical factory, etc. The proposition that local voters should be allowed total control over zoning is defensible, but it's not a given.
The main real problem is FYIGM, which means that in a local area with all land used there's no incentive for those living there to vote to change how it is.
aka, somebody else deciding that there should be more homes.
I think that's the wrong perspective to take. I don't want an authority to decide this - the locals should make their own choices (right or wrong).
But the flip side of that coin is local authorities that have zoning laws that allow the big and powerful builders to build pretty much whatever they want, wherever they want. Which always turns out to be high-rise condos for multi-millionaires and billionaires, most of whom have them as investment properties and don't actually live there.
You see that here in Austin, all along the river, especially downtown.
I wish we had some NIMBYism that we could actually aim at those plans for high-rise condos.
And without downtown, I don't know what your view or skyline would be of, other than an empty blue sky, of which 99.99% of Texas offers you that, if you want it.
Oh well, like you said, NIMBYism is certainly a thing.
The expensive single-family homes further up the river may take up a lot of horizontal space, but they don't ruin the skyline and since you have to dig down about as far as the building will be tall, they don't cause such massive damage to the natural surroundings.
Moreover, most of them are occupied. Most of the hi-rise condos are not occupied. They are pure empty investment properties from people who have more money than they know what to do with. If those condos came with a local residence requirement, then I'd feel a lot better about them being there.
I saved for a decade to buy my home in an area I enjoy, at a level of density I enjoy.
You can do the same, or you can choose to live somewhere cheaper that you can afford.
It’s your choice to live somewhere expensive, and to not want to save for a decade to get what you want.
That's normal. Median first-time homebuyer is 34, and that's for a starter house, which most people refuse to do nowadays.
Consider the question for states or countries. Would it make sense for Massachusetts residents to vote in Connecticut‘s elections? Or Canadian residents to vote in the US’s elections?
They do. Residents of Massachusetts, Connecticut and other states all vote for President, Congressfolk and Senators.
For instance, Presidents, Senators, and Representatives are all Federal positions. The states (or for President, the state's electors) get to pick their own representatives, though, and it would be odd for one state to elect another state's representatives to Federal office (e.g. a Massachusetts vote being counted in the Connecticut US Senate election.)
Likewise, all counties in a state vote in State elections, but don't vote in each others' county elections. This goes down the line to cities within counties, districts within cities, etc.
Not that I disagree with your point (it's totally valid to point out that elections from multiple areas can all serve in one body), but I think the question was more about citizens from outside a region voting for policies/representatives within that region.
"Does it make sense that the people voting today can decide to stop other people from voting here in the future?"
That's what zoning, housing policy and other local government decisions are capable of doing.
Likewise, I don't want non-Americans living in Europe or elsewhere voting in state or federal elections because they might someday choose to become American citizens.
In both cases, those people might vote then end up never following through on their half of the commitment.
It's about whether the people currently living in X should be able to arrange things so that certain other groups of people will be impeded from living in X in the future.
There's clearly room for some debate there: most people would agree that nations can set their own standards for immigration and that these may exclude large classes of people.
However, if a town explicitly said "we do not want anyone who earns less than 400% of median household income to move here", I think that most people would find that at least a little troubling.
There really are not any mechanisms that would allow a US municipality to say that explicitly. However, things like zoning laws can be used to go fairly far in this direction in a more implicit way.
I think that's wrong.
The municipality is a more or less arbitrary level of aggregation at which to make land use decisions.
If I live in Ward 10 of the city, why should the people of Ward 11 have any say in the by-laws for a neighbourhood that they don't live in? I'd argue because cohesive planning across neighbourhood boundaries is necessary for a healthy city.
The difference between your position and that of the grandparent is not one of fundamental principle. You're just at different places on a continuous scale.
There’s no inalienable right to live in a popular place you cannot afford.
Can you articulate an ethical argument for why it’s a problem that not everyone can afford to move to the most desirable cities?
It's impossible to have an informed discussion on this topic in the US without acknowledging that basic reality.
There’s nothing inherently wrong if not everyone can afford to live in desirable cities.
Doesn’t that answer my question, then?
There’s nothing inherently wrong if not everyone can afford to live in desirable cities.
teakettle42: How could one address AlotOfReading's concerns about exclusionary policy making and resource allocation?
I'm of the thinking that it is fine to say one subscribes to the belief that one can't simply live where one chooses for a variety of reasons, but it's another thing to condone, implicitly or otherwise, that only certain classes of people may live in desirable areas. I feel doing so is antithetical to a society that values social mobility.
What I _do_ feel is an under discussed thread of this topic are policies and practices that could be put in place to allow for a greater number of people to have an _opportunity_ to live in such areas. Low income housing, zoning changes, and tax incentives geared towards improving the socioeconomic diversity of an area are some approaches.
Unfortunately, none of these things are possible without local political support or overarching legislation/policy requiring it--bringing us full circle to Manuel_D's original comment.
This is just a subsidy for employers; they can pay a less-than-living wage, keep the profits, and rely on tax-payer-subsidized housing programs to close the gap.
> zoning changes
This is a give-away to developers.
Increases the entry costs for development beyond what anyone but huge real-estate investment firms can afford. They build out rental units, grow the permanent rental class, and extract rent from the population in perpetuity.
> tax incentives geared towards improving the socioeconomic diversity of an area
Why is socioeconomic diversity in coveted cities a desirable outcome, and specifically, why is it something the government should attempt to engineer using our tax dollars?
Is it ethical for a select few to grow enormously wealthy by driving up the cost of living for the many by deliberately causing a shortage of a basic need?
People need jobs to live. They also need a roof over their heads. The jobs are becoming increasingly concentrated in a few metro areas, but the home-owning class constrains the supply of housing and drives up the price of their own assets. Disincentivizing this sort of rent seeking behavior is precisely the kind of thing property taxes accomplish.
There’s no housing shortage.
There’s a limited supply in highly desirable locations because they’re highly desirable.
People can and do live elsewhere, working local jobs or commuting.
> The jobs are becoming increasingly concentrated in a few metro areas
That’s just one of many problems of scale; the solution is not to keep scaling up.
> … the home-owning class constrains the supply of housing and drives up the price of their own assets.
Nobody is obligated to destroy their own community to accommodate the interests of rent-seeking land developers and people who don’t live there.
Part of the reason is the lack of social housing provision, with most EU governments reducing or all together abandoning their post war commitments to low cost housing.
Another reason is that, even in this era of remote work, the enormous majority of high paying jobs do require living in a large population centre.
Perhaps the largest reason is the financialisation of housing as an asset class by hedge and other vulture funds. Italy alone seems to have kept the housing crisis / shortage localised to wealthy cities - and it is the only wealthy EU country to have done so. Germany, Ireland, France etc, all have rents and housing costs far higher than their median citizens capacity to comfortably pay, even in very remote and economically depressed areas.
Italy by contrast charges high taxes on 2nd and 3rd properties, effectively blocking the aggregation of empty / underused housing stock. Which has resulted in rural areas and less populous cities being reasonably priced to live in. This is not the case anywhere else in Western Europe.
Outside the west coast and parts of the northeast which are geographically limited in building new houses, we basically have infinite land to build housing which is why inflation adjusted price per square foot hasn't really changed in decades [1].
[0]: https://www.numbeo.com/property-investment/rankings_by_count...
[1]: https://www.supermoney.com/inflation-adjusted-home-prices/
This is a great policy. Owning land you don't live on is perversity on the scale of deciding a patch of ocean is yours and shooting at any boat that crosses it.
Financialization of housing has had no negative impact on housing affordability in regions of the US, mostly in the South, that allow housing supply to grow, instead of constricting it with zoning restrictions. On the contrary, basic economic theory would dictate that more advanced financial markets that facilitate greater volumes of investment into housing would be good for housing affordability, by expanding housing supply, and by doing so, increase the number of units available for rent relative to people looking to rent.
Consider which city has the highest rental rates in the world: San Francisco. It has the most stringent restrictions on housing development, and housing use by owners, of any city in North America.
Inhibiting the market is what creates shortages, and housing is no exception.
We want housing to be commodified, and mass-produced by collections of profit-motivated individuals. Consider: construction has kept rent in Chongqing, China to $75 a month.
https://www.nytimes.com/2019/04/11/world/asia/chongqing-chin...
_No_ economy can _sustain_ American style suburban growth.
Read about 'the growth ponzi scheme' [1] or watch a video
Cities and states have no obligation to set urban policy in a way that is favorable to home owners -- a minority in most urban centers -- while frustrating the major economic benefit of cities. Growth and scale is what makes those places cool and what drives many of the benefits -- variety of restaurants, quality of goods, and so on -- that make them worth visiting and make them attractive to those who live in them. It is what makes them of value to the state and country. The idea that urban homeowners should be able to put brakes on the process is nuts; people who chose to own homes in significant or up-and-coming urban centers knew what they were getting into. It is just people trying to pull the ladder up after themselves, and this is not in the interest of most urban residents, of most people in any state, or of most people in the country. One does not have a "property right" to "the community just as it was when I got here".
That's literally what a shortage is. This is like saying, "there's no shortage of chips, people just need to buy less electronics."
> Nobody is obligated to destroy their own community to accommodate the interests of rent-seeking land developers and people who don’t live there.
The real rent-seeking behavior is curbing the supply of housing to drive up one's property values. "Rent-seeking behavior" is not very aptly named. A developer that builds a high rise apartment that rents to dozens of households is improving the use of land and expanding housing availability. A homeowner that keeps shooting down development proposals is not improving housing availability. The latter is the real rent-seeking behavior.
Not being able to buy a $100k car doesn’t mean there’s a car shortage, and not being able to buy a home in Boulder doesn’t mean there’s a housing shortage.
There’s plenty of housing.
Folks aren’t homeless for lack of affordable housing.
> The latter is the real rent-seeking behavior.
The propaganda coup of real-estate investors is astounding.
They have people like you advocating for their ability to extract rent in perpetuity as if it was a moral imperative.
Meanwhile, you think the individuals that own a home and enjoy being a part of their community are the bad actors.
It’s truly amazing what they’ve managed to convince people like you of.
It means there's a housing shortage in Boulder. The car analogy is not effective because a Camry does the exact same thing as a BMW. But a house in Oklahoma doesn't help you if your job is in Boulder.
Actually, it is very easy to have enough housing for everyone and yet make it impossible for everyone who could live in that area to actually live there.
There are two solutions to that problem. Governments could either make it easier to rent in the increasingly concentrated metro areas, or reverse the trend of increasingly concentrated metro areas.
During Covid there were quite a few government created incentives for remote work. If government started to use tax law to further incentivize remote home, maybe we can start to cut out all those officer workers from needing to live in metro areas, only keeping people tied to cities who need to physically be in the city.
I'm not saying people should stop living there, but stopping densification will not help curb climate change and sustainable environment.
Also, not everyone wants to live in non-dense places.
It also not clear if using existing numbers of rural living makes sense since most people do not work from home. If the norm is to travel to work, the further people live away from said employment the bigger the footprint will be. Existing numbers reflect that culture.
Looking at CO2 per capita, does the very high density cities of japan have better numbers than say India? No. Japan has 10 times higher than India. Of course we all likely know that that wealth influence emissions, which mean it not that simple to just say that concentrated metro areas are better for the environment than sprawl. Emission rates depend on multiple factors.
Prohibiting companies from hiring more than X employees? What keeps them from just setting up another company and hiring them as consultants?
Or is there going to be a fixed cap on the number of people who are permitted to be employed? If someone moves to the city, and it's already at it's max number of workers they're just prohibited from working?
Jobs becoming concentrated in certain hubs is natural emergent phenomenon. You're not going to legislate your way out of it, at least not without resorting to oppressive systems like hokou.
Strange question to ask, given we've been seein the decentralization of jobs happening pretty strong for two years now. Jobs are remote now, wheneve possible, and people are moving to areas they want to live instead of being chained to the commute to an office.
One option is building for remote work. Up the definition of "broadband" to include something people can actually use for work, and mandate that employees are allowed to work remotely, with full pay, unless employers can demonstrate the job cannot be done remotely. Workers who have to be local should either get the same tax break, or the company should have to pay those taxes instead. It might also require simplifying (or at least simplifying the administration of) state/local taxes. There are a lot of people, myself included, that live in dense areas for work rather than by choice. My hangup is that I want to live in a nice house, but don't want the risk of buying/building a nice house that I have to sell at a loss because I have to move for work.
Another option is to add population density as a factor on taxes. Raise taxes and then offer a discount for people in low population density areas. Or you could tie the discount to the median income.
Anecdata, but a lot of the people I know don't really want to live in urban areas so much as that they have to because of jobs. We either need to decouple workers from physical proximity, or force companies to disperse. The first option decouples workers, and the second incentivizes companies to disperse.
My government currently have tax reduction programs in place to enable people to commute to work. The same program could be applied to work from home, giving people tax reduction if they do not travel to work and thus lighten wear on the road system and reduces the pressure on mass transport systems.
In the transportation sector there could be government programs to further incentives technologies that enable direct-to-customer delivery. During the pandemic we saw how reducing crowded stores had some very positive effect on reduced transmission rates, how viruses other than covid also saw a strong reduction. It is possible also that by improving direct-to-customer delivery we end up with less waste, fewer middle men, and possible less impulsive purchases.
We don't need to impose quotas. Make it easier, cheaper and convenient to live outside of large cities and a lot of people will jump for the chance to do so.
That would require both negative interest rates and a land value tax because both are intended to neutralize liquidity preference. Negative interest rates prevent the build up of financial capital by overproducing "elites" which means people in rural areas will have those earning opportunities instead.
There is nothing wrong with wanting to keep a town smaller and more simple. If the residents were there first and exerted their way into the community they have that right.
I don’t really understand any other argument. There are lots of up and coming cities nowadays, you are free to live there, you are also free to be creative and make more money.
That's true both in a world of laws and in a world of power.
There are zero inalienable rights
Urban environments can’t be stamped onto cornfields; they only occur when sparser environments become expensive. I don’t think there’s a right to live in any arbitrary expensive town. I do think there’s a right to have the expensive-town-to-city pipeline running somewhere at more than a trickle, so that urbanism is not impossible to access.
Urbanism in a desirable location is expensive, everywhere in the world.
It’s an inescapable problem of scale.
You’re free to live like a sardine in a dense city, but it will be expensive. You cannot avoid that.
Actually it is because car centric design was associated with wealth and status that the “backwards” old ways became prohibited. This inversion now, where walkable environments seem to be luxurious, is a legacy of that prohibition more than anything else.
There's no right to anything that people don't stand together to say they have a right to.
> Can you articulate an ethical argument for why it’s a problem that not everyone can afford to move to the most desirable cities?
People shouldn't have to commute for hours so other people can live there because that impacts their health and opportunities for life, liberty, and the pursuit of happiness. If this is where the jobs are, there should be homes here as well.
This is ignoring the point: positive rights should not exist. They require taking rights from others, through violence, to enforce.
> People shouldn't have to commute for hours so other people can live there because that impacts their health and opportunities for life, liberty, and the pursuit of happiness
Ok. Then don't.
I mean, it's an option, but a just society could easily do better.
The majority are screwed over by an ultra-rich minority, personally I think that deserves addressing.
Positive rights for all do not require violence provided those who benefit from others not having simple rights will give up their excess for the greater good. The demos may need to use violence, but that's only because those who, by no greater virtue, have acquired wealth refuse to act justly and recognise the equal dignity of man.
Or work near where you can afford to live? If there aren't jobs that support living there, live somewhere else? You're presenting an absurd dichotomy.
> The majority are screwed over by an ultra-rich minority, personally I think that deserves addressing.
No, they aren't. Wealth inequality is not a real problem. It's politicized jealousy. Wealth is not zero-sum, and someone having more than someone else is irrelevant.
> Positive rights for all do not require violence provided those who benefit from others not having simple rights will give up their excess for the greater good.
"Right" means it must be enforced. "provided .. will give up" means taking by that same force if they choose to not turn over what they own.
Taking to support a right absolutely requires violence.
> but that's only because those who, by no greater virtue, have acquired wealth refuse to act justly and recognise the equal dignity of man.
Why should they? What is their obligation? You have undoubtedly acquired more wealth than a subsistence farmer in rural India: why do you refuse to act justly and recognize their equal dignity?
That assumes that's possible. I think the point being made is that it's often very much not possible.
There are serious problems with our built environment and this is one of them.
If there is demand for jobs locally and an economy to support it, they can start their own company.
If there is no economy to support it, then the community isn’t viable.
This is straightforward to understand, and not a problem to be solved. And certainly not one to be solved through stage violence.
And what happens when there's no jos where you live, and the only places where jobs exist have extreme housing shortages? You can spend hours commuting each day, but then you're probably burning just as much money through gas - not to mention destroying the environment.
Then you start a small business, employing others and building up your community. How do you think the ‘places where jobs exist’ started?
> the only places where jobs exist have extreme housing shortages?
If it’s intolerable to enough people, they won’t be able to hire. They’ll have to move, or pay more to overcome the housing shortage.
The fact that it isn’t, and they aren’t, shows this isn’t actually a problem.
The idea that anyone can just start a business is seriously indicative of how our of touch this forum can be.
What if there's no goods or services that are in demand in your immediate community? What if your community is impoverished and dying? What if you have no capital to start a business?
> How do you think the ‘places where jobs exist’ started?
Often it was because of natural resources, or geographic factors that made it conductive to establishing a population center (like river or harbour access).
> If it’s intolerable to enough people, they won’t be able to hire. They’ll have to move, or pay more to overcome the housing shortage.
The latter is what's happening: prices of housing are skyrocketing and locking people into poverty.
I’m confused by this statement. You don’t have an inalienable right to keep the area around your home exactly how you want it either. That’s a positive right and requires taking the rights of others, for example by enforcement of zoning laws that affect land owned by other people.
Negative right: nobody must do something to me.
The right of self-governance is a negative right. I can see how it can be confusing since you can re-phrase anything as either positive or a negative action e.g. "you must stop stealing my stuff so property is a positive right" and "you should not deny my need for healthcare ergo it's a negative right" so here is a trick you can use to distinguish one from another: a negative right will remain even in the absence of all other people while a positive right will disappear in such a case.
So, for this case, the right of self-governance will remain if everyone else disappears since you can still make laws, obey them and enforce them on yourself thus it's a negative right.
"I have the right to tell you what you can and can't build in my neighborhood."
Which one is positive and which is negative?
> Also the former does not exist in reality
Irrelevant, we're discussing how things should work not how they are.
This is really such a silly and pointless thread.
2) Property is delimited in scope. You own your parcel. You do not own the neighborhood, even partially. If someone else wants to put up dense housing on their parcels, their property, there is no negative-right violation against you. You are, at that point, just a rent-seeking highway robber.
> If someone else wants to put up dense housing on their parcels, their property, there is no negative-right violation against you.
That's another POV you are entitled to but the courts found otherwise in the Village of Euclid v. Ambler Realty Co.
My "faith" doesn't matter. The logic of the argument matters. And frankly, you don't seem to be putting forward very logical arguments.
>> If someone else wants to put up dense housing on their parcels, their property, there is no negative-right violation against you.
> That's another POV you are entitled to but the courts found otherwise in the Village of Euclid v. Ambler Realty Co.
That's not what the court found in that case. In that case, the court found that zoning was a valid extension of the authority of local governments. Local governments do not create negative-rights claims. Indeed, the zoning ordinance in question didn't even purport to do so.
Now, I've never been arguing that local governments lack the authority to pass zoning restrictions, even if I think some zoning is bad substantively. I've been arguing that you, as a private individual, do not have a negative right to make up your own personal zoning code and enforce it on others, without the democratic authority of the local government.
My argument here is entirely consistent with Euclid vs Amber, and frankly, your reference to the ruling is a non-sequitur.
What is your logic and do you have an example of a negative right, that doesn't require enforcement?
And I agree that as a private individual I don't have a right to deny construction wholly. Same as I don't have a right to elect anyone. The community has the entire right, I only have a right to vote.
No it isn’t. We allow the state to enforce it on our behalf. In most reasonable states, you can defend against the commission of a felony on your property with deadly force.
Also, owning property is not a right. That’s the entire point.
I agree. I was responding, in context, to the idea that people should be able to live wherever they want affordably.
That's like, your opinion man, and I don't know if you mean aspirationally, as in, there shouldn't be racist classist assholes out there so we shouldn't need positive rights to protect the dignity we all deserve, or you mean you so libertarian you side with the racist classist assholes like Ayn Rand, but surely if you meant to debate Kant and Shue: I wouldn't be the first to argue that a fundamental right to freedom is worthless if people aren't able to exercise that freedom, and you can just google search "criticisms of the virtue of selfishness" if you want; People write proper papers and thesis on this stuff, not internet comments.
So I still won't comment on whether positive rights should or should not exist, and instead say it is undignified to have to live in fear and that a lack of equity fosters fear, and ideologically I don't care how we do it, so I believe it ethical to support things like traffic laws, minimum-wage laws, health-and-safety laws especially in farms, restaurants and hotels, and maybe even a commuter-premium to prevent companies from exploiting another way humans are willing to degrade themselves.
Well, and the opinion of people that don't like slavery and theft.
> I don't know if you mean aspirationally, as in, there shouldn't be racist classist assholes out there so we shouldn't need positive rights to protect the dignity we all deserve
I mean positive rights cannot be established without evil. They should never exist, and any you can think of should be abolished.
> I wouldn't be the first to argue that a fundamental right to freedom is worthless if people aren't able to exercise that freedom
You don't need to take from others to be free. That is, in fact, the opposite of freedom.
> you can just google search "criticisms of the virtue of selfishness" if you want; People write proper papers and thesis on this stuff, not internet comments.
This isn't about selfishness. Well, kind of. Selfishness on the part of people demanding the positive rights, which _forces_ others under threat of violence to make their lives easier, regardless of whatever efforts they make on their own.
> So I still won't comment on whether positive rights should or should not exist
I maintain they should not.
> and instead say it is undignified to have to live in fear
So don't.
> and that a lack of equity fosters fear
Equity is impossible without violence and restrictions on freedom. It's not equitable that one person should be lame and another not: it only becomes equitable when we break the other person's legs.
> and ideologically I don't care how we do it
Neither did Mao, Stalin, or Pol Pot.
> so I believe it ethical to support things like traffic laws, minimum-wage laws, health-and-safety laws especially in farms, restaurants and hotels, and maybe even a commuter-premium
None of those things are rights.
> to prevent companies from exploiting another way humans are willing to degrade themselves.
If someone is willing to 'degrade themselves', why are you preventing them from doing so?
But irrelevant: Things have already taken from others and they want it back.
> Equity is impossible without violence and restrictions on freedom.
Agreed, so because violence was used to obtain an UN-equitable position, they want it back.
(I feel a little bit like I'm repeating myself; what's another way to say this?)
People the color of your skin used violence to take people with different skin-colors freedoms and property, and they used it to finance schools and police forces that resulting in you opportunities or advantages that other people with other skin-colors no longer had the possibility of as a result. You don't deserve that advantage, and so they want it back.
> I mean positive rights cannot be established without evil. They should never exist, and any you can think of should be abolished.
If "positive rights" can also be established in response to evil, then I don't see why they cannot be used to correct for equity. Property-rights are enforced by taxes, so on some level, if these are "positive rights" then they're just like a minimum-wage law designed to correct previous evils. Maybe one day they will not be necessary and can be abolished, but in the meantime, I think we need them and I support them in that aim.
> It's not equitable that one person should be lame and another not: it only becomes equitable when we break the other person's legs.
I think that's fair. Your parents poison them which makes it more likely for them to be born lame, so I think it's perfectly fair to break your legs if you can't find another way to make that right.
I'd like to think I'm just trying to find another way that doesn't involve more violence; surely an expansion of minimum-wage is less violent than breaking your legs?
> If someone is willing to 'degrade themselves', why are you preventing them from doing so?
Why do I tell a slave that they do not need to be a slave? Gosh, again, people write papers on this stuff. We tell people they don't need to be slaves because that's how we stop slavery -- by making it so nobody believes they need to be a slave in order to survive. The only rights we have are the ones we can convince other people we have. I already said this, but you chose to narrowly interpret rights which will make it hard to understand why I can't help myself: I don't want to be a slave, I don't know what kinds of torture I would be able to refuse, but I don't think that would be a life worth living, so I tell anyone who will listing they don't need to be a slave.
> Well, and the opinion of people that don't like slavery and theft.
And yet here is someone who does not like slavery or theft, who does not have that opinion because I'm not a racist asshole.
See how that works? Don't characterize me. I don't deserve to have my supporting of taxation to be equated with supporting theft just because you don't like to pay taxes, any more than you deserve to be equated with other racist assholes just because you're quoting racist assholes. You want me to take you seriously? You have to do the same.
Who took what, from who, when?
> Agreed, so because violence was used to obtain an UN-equitable position, they want it back.
Again: what, from who, when? There are two answers to this: something that isn't actually violence (agreeing to employment), or something from hundreds of years ago ('stolen land'). Neither are good arguments, in any way.
> People the color of your skin used violence ...
I'm brown. Want to try again? Maybe without criticizing someone's position based on their race?
> If "positive rights" can also be established in response to evil, then I don't see why they cannot be used to correct for equity.
I don't think you read that sentence correctly. Three things:
1) Positive rights should not exist, because: 2) Positive rights cannot exist without violence and slavery 3) Equity, and demands for it, are inherently evil.
> Property-rights are enforced by taxes
No, they aren't. Property rights are _usually_ enforced by the state, because of their monopoly on violence. There is nothing stopping me from defending my property myself.
> on some level, if these are "positive rights" ...
They aren't. As I explained.
> Your parents poison them which makes it more likely for them to be born lame, so I think it's perfectly fair to break your legs if you can't find another way to make that right.
Sins of the father, huh? Maybe we should punish out to 3 generations? Seems like you'd love the DPRK.
> Why do I tell a slave that they do not need to be a slave?
There are more slaves alive now than there have ever been in history. Someone working a minimum wage job in the US is very much not that, and it's patently absurd. Comparing a retail job to chattel slavery is disgusting.
> who does not have that opinion because I'm not a racist asshole.
Are you sure? You supported breaking my legs when you thought I was white. Now that you know I'm not, what now?
I mean, I know the answer: break them anyway, he's probably a counter-revolutionary.
This is exactly what's wrong with your entire philosophy. It's based on violence to get what you want, because you're incapable of achieving it any other way. Try harder.
> 1) Positive rights should not exist, because: 2) Positive rights cannot exist without violence and slavery
Violence exists regardless of whether "positive rights" exist. You are stating this again, but you haven't proven any kind of relationship beyond the tautological one.
I can't move on to the third point until you clear this up. Everything else seems like a distraction:
If we can agree that violence and slavery is bad, why can't we agree that some kind of retribution is required? Maybe this is why:
> something that isn't actually violence (agreeing to employment), or something from hundreds of years ago ('stolen land'). Neither are good arguments, in any way.
They're excellent arguments. Even agreeing to be "employed" for room-and-board in exchange for work could be slavery, especially if the person agreeing doesn't know if they have other choices. "Stolen land" was still stolen. What's the good reason for a statute-of-limitations on this?
I think you are dismissing these out-of-hand, and if you can't address them, maybe this is what is wrong with your entire philosophy?
> There is nothing stopping me from defending my property myself.
Of course there is. What are you going to use to defend your property besides violence?
I agree, that's why single family households should have a higher property tax and high density a lower one. Currently single family households are subsidized.[1]
[1]: https://www.strongtowns.org/journal/2020/4/16/when-apartment...
Now the question is whether one can show that the people are in a very general sense better off if a desirable city is affordable accessible compared to the alternative. I say “very general sense” because I want to avoid any argument that involves the minutiae of utilitarianism; it should be overwhelmingly in favor regardless of your exact ethical framework.
With that in mind, my argument would be that [cities should be affordable] is the obvious ethical choice if and only if the city in question is designed / planned in a pro-social manner. Where pro-social is defined such that the addition of new people is positive.
This should sound fairly tautological so let me give a few examples:
Pro-social design:
shops that rely on foot traffic are pro-social because adding more people (housing etc) to the immediate vicinity increases foot traffic
Mass transportation is pro-social because as more people are added to a particular neighborhood, this justifies expansion of train lines, bus routes, etc
Anti-social design:
Shops that rely on car traffic are usually anti-social because (a) adding people to other neighborhoods can still increase traffic to the shop, (b) removing parking space to add housing is a net negative to the shop (as parking capacity dictates shopping throughout)
Road systems are anti-social because adding more people to the system increases traffic at a nonlinear rate (ie: a road system at capacity decreases in throughput as more cars are added)
In other words, cities designed like cities benefit from more people, and thus everyone benefits from lower housing prices.
The kicker is, the United States doesn’t have a single city designed as a city. We have dense pro-social urban cores surrounded by anti-social suburbs and exurbs.
In contrast to a place like Tokyo where literally every resident has a bus or train (or combination thereof) to get downtown, America has split between two designs, and progressing along one design hurts anyone living in the other.
A noteworthy corollary is that if you live in a suburb or exurb (and are a homeowner protected from rent increases), property values going up to the moon are almost always positive, because your environment is anti-social in the first place. While in the city core it’s more complicated, because your property value going up raises your net worth but harms the pro-social environment around you.
It's that the NIMBY subset of homeowners has disproportionate power in local government over other residents.
> If the former, that's just silly. If the latter, renters get the same one vote per person as everybody else. If they don't care enough to vote that's their problem.
This is facile -- zoning decisions are essentially never put up to a democratic vote. The outsized NIMBY power doesn't come from voting; it's from activities like attending local government functions, filing complaints, advocating to their representatives, etc. These are not things everyone has time or know-how to do.
Well, that's not quite true -- there's many (highly paid) immigrants living in my building. None of them can vote on housing policy even though it directly affects their lives.
> Well, that's not quite true -- there's many (highly paid) immigrants living in my building.
But the variable there is immigration status, not homeownership status.
Non-citizen immigrants who are homeowners don't get a vote either.
> I'm not fully clear on this statement.
Me neither. It is a very often repeated sentiment and I've asked in various threads, but there has never been an explanation how homeowners supposedly have any kind of influence over local government, beyond the single vote everyone gets.
For the record, as a homeowner, I've never had any access to any local (or non-local) government representative. They don't ask what I think, they certainly don't seem to care what I think. I get one vote in the elections, but so does everyone in the county.
Be that as it may, I think it's a problem with our system that homeowners are given such a strong incentive to keep housing scarce.
It may be, as in this case, that homeowners actively try to protect their asset by excluding non-homeowners from the market, perhaps by obstructing the construction of new houses, or by supporting the inflation of house prices. Is that a good situation just because it is sanctioned by a majority?
In liberal societies, there are side-constraints on what a demos can sanction - it cannot, for example, curtail the free speech of individuals. There is no reason why that should not be the case with respect to certain basic means of life, like housing.
1) Zoning laws have to change as well to actually allow development of the land being taxed toward more productive ends.
2) 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. A homeowner sitting on a million dollar piece of property in California taxed at ~1% is still unlikely to build an apartment complex if they like their single family home just fine and are making $200k+/year in income.
3) It could be personal bias, but a lot of LVT arguments seem to implicitly assume that more rental units is a good thing, which I don't really agree with. Personally, I'd rather see 2nd homes taxed into absolute oblivion, and I say that as someone who was a landlord for several years. Affordable housing to me means "affordable housing you can actually buy" as much as it means "affordable rent". The two do not go hand-in-hand if rental income is incentivized enough that people buy as many properties as they can get loans for (California today).
It’s one of the reasons banks and companies aren’t in the single family rental business.
The main thing that covers for it is property appreciation - the rent is used to just offset carrying costs while you wait for the property to go up in value.
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.
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.
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.
And yes, I’ll agree that some portion of the ROI on a house is the expected appreciation, but we’ve setup a system where that’s effectively guaranteed in many locations and simultaneously unavailable to renters. There’s a reason “be a landlord” is now the go-to “get rich” strategy for a large number of people.
I've been a landlord of a non-mortgaged property and am about to become one again (reluctantly). We charge a below market rental rate, and typically make around 4-6% (pretax) of the nominal property value a year (we typically divert 1-2% of the rent into a maintainance fund).
I would also getting the increased equity in the house as each mortgage payment lowers the total loan amount.
If you pocket 500 per month, you are looking at around 35 years to break even on a $200k down payment.
You will never break even when take into account opportunity cost compared to a low appreciation bond or stock.
Not sure your definition of break even. After 30 years, I will have paid off the entire house.
In other words, you could not make a profit.
You need to consider all costs, not just mortgage. Taxes, insurance, maintenance, repairs, downtime (when it sits empty between renters).
If your mortgage is $3000 and you can only rent it for less than $4000, you can't make a profit.
I go through this math often while daydreaming of renting my house and retiring somewhere cheaper. There isn't any scenario I can come up with where it would actually be profitable.
The reason why liquidity preference exists is that land can be used for almost anything, is limited in supply and going up in value, making an early commitment can lose you a lot of potential profit. For example, a 10 year lease to a farmer could turn out to be a bad decision if 3 years into the lease, a power utility offers to build wind turbines on the land and you are still stuck with 7 years on that lease. The power company moves on and you lost your opportunity.
It turns out, a land value tax neutralizes liquidity preference.
Source: been doing this spreadsheet exercise for more than a decade. Have never found a property I could buy and rent out at a profit.
> Today, built-to-rent homes make up just over 6% of new homes built in the U.S. every year, according to Hunter Housing Economics, a real estate consulting firm, which projects the number of these homes built annually will double by 2024. The country’s largest home builders are planning for that future. Backed by banks and private investment firms, they have already bet billions on the sector, and will put down some $40 billion more during the next 18 months, Brad Hunter, founder of Hunter Housing Economics, projects. Built-to-rent subdivisions have been constructed or are under development in nearly 30 states. Taylor Morrison Home Corp. , Mr. Wood’s development partner and the nation’s fifth-largest builder, has said built-to-rent could soon become 50% of its total business. The company didn’t disclose the current share.
> Homeownership is expected to decline over the next two decades—a trend that started with the generation after the baby boomers, according to the Urban Institute, a Washington, D.C., think tank that advocates for homeownership. Prices are rising faster than ever, leaving more people, including those with higher incomes, more likely to rent.
https://www.nytimes.com/2020/03/04/magazine/wall-street-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.
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.
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).
It’s also politically difficult to get passed. However, it seems if we were to try to turn the tide on just one policy, it would be LVT, as it solves a lot of other political problems downstream.
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 becomes just the price of the house - the cost of the materials and labor. The land value should drop to zero. You then take that money, maybe use some of it for some public goods, might use some of it to get rid of bad taxes like property, income and sales, then give the rest back just as with the carbon tax.
The transition needs to be done with care(I heavily like giving everyone tax credits equal to the current value of their land, others like phasing in the tax over decades), but once we are in a land value tax environment everyone will be better off.
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).
It's the exact same thing in reverse with interest rates over time. As mortgage interest rates drop, the monthly payment is what people look at, so home prices go up.
As the land value will always be zero, there is little value in holding land that you are not using productively, so speculation will drop heavily.
You say all this as if there isn't any meaningful supply-and-demand to be had in the secondary market.
I find proposals to reduce land value close to $0 extreme. After all, it would require some absurd tax rate like 100000% land value tax. The value of the land is 2k€ at 100% LVT representing the maximum in taxes one would pay for the property. At 100000% the payment is still 2k€ but the value of the land is now 2€ and you are paying 1000x on top of that land value in land value taxes. This means you can purchase the land for very little upfront. However, a 100% LVT would be more than sufficient because people can easily afford to prepay one year of taxes.
The most optimal result, the result that we call 100% LVT(although 101% is much worse than 99%, so we try to aim cautiously) - is if the new market price after a LVT is implemented is $500k. Maybe that means a $24000/year tax. Maybe it means more. We keep raising the tax until the sale price asymptotes at the value of the improvements. Let's say it ends up at $24000/year. $24000/year is the value of the positive externalities that is being captured by this property, and we are therefore taxing the entirety of it.
It might help to also show you the lot next to it[0]. It's totally unimproved. It's going for $2 million. The goal for the land value tax is if the new sale price of that lot is $0. You'll note that if you try to do some math of current sale price to get some tax percent, you can't ever really get to zero. It would need to be an infinite percent tax. But that's because the tax is not based on the market price, but a set amount based on the lot. Because we know the lot next door is exactly the same size, and we know this lot is verrry very slightly closer to a train line, and we can see the general trend of the city is that lots closer to the train are worth more, so this lot based on some algorithm might be $24005/year, and we confirm that when someone buys it for $0. If someone bids thousands of dollars for it, next year we adjust the tax on it slightly up.
[0]: https://www.zillow.com/homedetails/736-Hyde-St-San-Francisco...
Having had many many bad landlords of single family homes in the past, I'd prefer somebody like Blackrock as a land lord as they are less slokey and more likely to follow the law then a lot of landlords I've been forced to deal with.
California needs a constitutional convention that gets rid of the stupid proposition law. Every random suburban town has a market worse than Manhattan because there is a fundamentally inequitable tax system.
3) LVT would (theoretically) equally encourage the development of condos as it would rental units.
The house you 'own', in fact is nothing more than tenancy. Just a different kind of tenancy. Stop paying property taxes and find out you still have a landlord.
I think far bigger issue is how to apply LVT. a cookie-cutter approach is guaranteed to fail. an overly complex system is just another byzantine labyrinth of a tax code that'll be gamed.
This is addressed to some extent, with the argument that zoning reforms are more practical because existing property owners are incentivized to support rather than fight zoning updates that allow more development, so they can fully maximize the ratio of their revenue against the tax. (“It turns NIMBYs into YIMBYs,” she quotes a researcher as saying.)
Regular people who own some land are not going to have the capital or skillset to tear down their house and build a highrise on the plot of land.
So what a LVT does, is to force individual landowners to sell land off to giant developer corporations who do have the resources to make it happen.
Consolidation of all ownership onto a few large players is not a good thing for society.
For the past few decades a large percentage of new housing has been built by large developers who buy cheap land just outside of town, clear cut it, then build a bunch of cheaply made identical houses in complexes with nothing else allowed, leaving behind an HOA to enforce conformity. The laws encourage these large developers, and sprawl. It's too much overhead for an individual or a small developer to build in an established neighborhood, especially if they are not building expensive housing.
Even lately hedgefunds and other large investors have been buying up housing at a greater rate, because they know the supply has been restricted by law. They'll squeeze everyone they can for money and lobby to keep their gravy train going.
Now those giant corporations are finally paying their damn taxes.
This is a personal bias because you are trying to prevent other people from making their own decision on how they want to live. An uncharitable interpretation of your comment could be that you are forcing your will upon other people against their will.
The fact that an LVT increases personal freedom is usually ignored because personal freedom counts for nothing these days. I find it particularly amusing that we have this group of people called liberals wanting their fake freedom.
Of course it will distort choices and leave some people worse off. If the author can't see that, then they have a serious bias problem. The whole point of the land value tax is to tax land to encourage higher density and higher cost use. This is especially damaging to people who hold land that is developed around. If I have .75 acres with a single family home and 30 years later the area around me is developed, them I will be financially forced off of my land because I could theoretically put an apartment building on it. We already see standard property tax forcing the elderly out of their homes in many areas.
Please, show me how an appropriately set income tax disincentivizes work. I'm guessing they can't and are equally uneducated on that subject. Income tax would only provide a disincentive to work if the alternative (assistance programs) is more attractive. Which doesn't seem to be the case. The people at that lowest level of income aren't paying (or gets refunded) income tax. Most of the tax at that level on income is for programs like social security and Medicare.
I think this is exactly the framework. The idea is that that person right now is benefitting from increased community wealth (which would be realized in actual moneys upon sale of their property), and hence, should be taxed more.
Maybe there are some sophisticated ways to strike a balance, to avoid the situation you are describing. For example, people could pay less tax, but then they (or their estate) cannot pocket the capital gain upon sale of their property.
In any case, I think a land tax is much more equitable, because it punishes landholding, rather than punishes improving land. It's the poor use of land right now that I believe is the main driver of poor affordability of housing.
If it were taxed only when realized, that would make sense.
"It's the poor use of land right now that I believe is the main driver of poor affordability of housing."
It's the preference of a large number of people to live in a small area. You could fix this by capping the number of jobs so that increases in population would be forced to distribute more evenly through the country. This would also address issues like retrofitting existing infrastructure. Otherwise, prices/salaries will increase to make the scheme moot for the upper working class. That's basically how the mess got here in the first place, otherwise competition and property tax would have made a dent. It's all futile if you have FAANG paying absurd money with the capability and will to pay even more.
The tax man does not like this. They like wealthy people to always pay something, each year. Hence, property taxes, so it can siphon off something at least. Also, why we have the alternative minimum tax schedule to prevent stock compensation to be used as a means to avoid taxes.
The little old lady _is_ wealthy, a speculator effectively. She owns a valuable asset, the land her home sits on. The fact that she moved there 30 years ago, in your scenario, gives her an inherent claim to that asset. It's because of that same view we basically have Prop 13.
Land value tax is a radical statement, in that people should not be able to profit from the value created by the community, of speculation basically.
Your scenario highlights nicely how that causes friction with some of our innate sense of right and wrong. Deferring taxes to sale, may be a way to address this, but if history is a guide, it will instead create avenues for tax dodging.
Interesting idea. But wondering how this would work in practice.
The Federal government often does this when they distribute their own facilities across the country.
Businesses already flock to places were cost of labor is low, but can only that in industries that require less specialization.
> otherwise competition and property tax would have made a dent
You said it. There is no competition, because housing supply is constrained (zoning), and property tax does not make a dent, because it favors speculation over improvements (further inhibiting competition).
I see the real problem as too many people wanting to live in one spot. To me, my solution is addressing the root problem.
There is simply no way to solve that equation without something breaking.
Can you? A restaurant is very busy and want to hire a new server. But, what, a city official says they can't because the city hit its jobs limit?
If someone has their property for 30 years and decides not to sell, isn’t that a reflection of the market not sufficiently valuing their property? Everyone has their price in a free market, exorbitant as it may seem to others.
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.
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.
One can accept that the government owns the land while simultaneously believing that the government can abuse that power, just like a bad landlord can.
https://en.wikipedia.org/wiki/Allodial_title#Nevada
Proper use of allodial title and homeowner's exemptions could go a long way.
The basis for this assertion is that land supply is fundamentally very scarce, so this is zero-sum game. If some have too much, others have little, and the former can extract substantial economic rent from the latter.
If its not the governments, it still belongs to the natives the government stole it from. The individual's legitimacy comes from the government's claims over the land
Even that could be debated. Some tribes also subscribed to the right of conquest, such as the Lakota. Not a pretty thought but just thought it was worth mentioning.
The vast majority of the comforts of modern life are afforded specifically and only because other people contribute to the common cause. You reject your responsibility to contribute to same but gleefully consume the benefits which are allocated to you. What an ass.
Everyone wants to believe they'd be great survivalists. Very few appreciate the level of knowledge and skill needed to do it alone. Even fewer can ever gain all that knowledge and all those skills. There's a reason humans organize into packs: division of labor is nothing less than a paradigm shift in productivity for groups of people. Civilization today is that same basic concept scaled up to support your consumptive ass along with the rest of humanity.
We are all in it together, but we will all be better off when others stop trying to appropriate everything from me and give it to others just because they want it.
I work hard for what I have. I shouldn’t have to have it taken away if I don’t continue to work (add value) into perpetuity.
You continue to derive value in perpetuity (from living in a society where we collectively pitch in to make it nice); why should you not continue to contribute to it?
If you want to stop working, save enough to cover your future obligations.
Over where? Organizations (gov, corp, etc) always grow and want more power. There is no place free of it or opt-in only.
"Everyone wants to believe they'd be great survivalists."
I think this is a gross misconception. I doubt most people want to be survivalist. It's possible they just want less government telling them what to do, especially in their private life. You could have a minarchist government where people want to contribute to their government/community. We see this to an extent in rural areas.
I actually agree. "Should" is such a terrible word that I don't think we should use it at all. But we do do the things that most people want, because that is by construction the primary desire on a societal scale. You are part of a bigger machine, whether you like it or not.
> Thats called tyranny by the majority.
Really funny that American neo-con reactionaries have introduced such a concept. Anywhere else, it's just called "democracy".
>Really funny that American neo-con reactionaries have introduced such a concept. Anywhere else, it's just called "democracy".
Your bias is showing... "Neo-con reactionaries" didn't introduce the concept. John Quincy Adams first did in 1788. It was popularized by John Stuart Mill in 1859.
What do homeowners want? Well, they don't want higher home prices if no one is around to support the local economy. So clearly they want some level of distribution of access.
"What do homeowners want? Well, they don't want higher home prices if no one is around to support the local economy. So clearly they want some level of distribution of access."
I'd imagine that only applies for a small area (SV, NYC). Outside of that area, it's not a real issue (people don't talk about that in the areas I have lived).
I'm a part of the public, and I don't want it. I imagine there is a sizable number of others that don't want it too.
We could just force people to do whatever we want because a majority wants it, but that's no different than mob rule.
So far I haven't heard a compelling argument that this approach would solve more issues than it causes. The precise implementation would influence this greatly, but it isn't well defined. If we want to control housing prices in specific locations, I think a better approach is to cap the number of jobs in an area based on its carrying capacity. This would also provide more even distribution thorough out the state/country, reduce infrastructure concerns, and reduce property prices. But good luck convincing the politicians - they already like attracting jobs/companies by offering tax breaks, zoning variances, etc.
That's not mob rule, that's simple majority rule. We have access to other forms of consensus algorithms, but so far simple-majority seems to be the most anyone can stomach. That is very unfortunate.
> would solve more issues than it causes.
That's not the metric though, right? The metric is: are things better under that system vs this one? We want to measure whether B(enefits)2 - C(osts)2 >= B1 - C1, not whether B2 - C2 >= 0.
I strongly agree with what I think you're implying, which is that we need more metropolitan areas, but I think we are not going to get very far with limits. You will get a lot more participation and a lot less tumult (not to mention orders of magnitude less bureaucratic overhead) if you offer carrots rather than sticks. People management is a real consideration: people are not identical particles subject to the continuum hypothesis.
More starkly, it seems to me that it's a redistribution scheme that exists primarily to enrich those who already have abundant capital. Who's going to be building and owning those high density structures afterwards? Not the people who are getting displaced from their homes, I suspect.
In short, it feels as though we're being told that it is right and just that you should be driven from your own home, so long as there exists some millionaire who would like to tear it down and build an apartment building in its place.
This is about as far from true as it can get.
Ordinary working class people who just happened to buy a cheap house in a place that many decades later became a hot-spot of real estate development.. are still ordinary working class people. Often very poor, even.
I don't agree. If you own an asset worth a million dollars you are not working class. You may choose to work, but you are not forced to. IMO working class means you need to work to live. Choosing not to sell you home is not being forced to work in order to afford necessities.
I’m sure they appreciate your support.
If you imply "all" then I simply need to find one counter example to prove your statement wrong. I know people who have sold their homes in the middle of a city to make way for high density housing and they are not "the wealthiest and most powerful ever to have lived".
The end game of these LVT policies is that we will all be living in apartments and paying rent in perpetuity. When we die our kids will take on the burden of that rent. This is how it works in Switzerland today. All apartment buildings are owned by private investment firms. A key feature of the USA is the ability to build generational wealth through land ownership.
That’s not how it works. The more you get paid, the more you can pay land owners.
When demand is higher than supply prices rise to capture all excess income.
Here's the thing to understand: anyone buying property now in a popular area, where prices have been increasing rapidly for the last two or three decades, is effectively paying an LVT. The thing is, they're not paying it to the locality, which could use it for infrastructure and services; they're paying it to the previous owner, because the higher purchase price means a higher mortgage payment. That's redistribution too.
This is one of my current issues with land value tax: pricing out existing residents. One mitigation I think that would help would be only adjusting the LVT of a plot on sale / ownership transfer. It would likely need a bit more nuance than that, as it doesn't quite work with company owned land (doesn't really switch owners like a sfh owner dying).
The land will eventually get more efficient use, but there isn't the recurring threat of being priced out of your home.
I don't think society will be bettered by creating evermore trust fund babies. I'm generally in favor of making it hard to pass on wealth that is so high your offspring's families never have to work. I think one of the major challenges of the US in the future is the accumulation of wealth in smaller group of people over time, and the vast amount of income difference between the masses in the US.
This can only lead to no appropriately set Scotsmen.
This was exactly the narrative that led to Prop 13, and what it has led to is the most inflated property market in the entire world because there is nearly no carrying costs for a first (LA), second (Palm Springs), third (Atherton), or fourth (Tahoe) home!
Sure, a random subset of boomers can die in their empty 6 bedroom houses now, but countless people are moving to places like Texas where land value/property taxes have keep real estate prices relatively low (due to huge carrying costs).
I love CA, but the income vs. wealth/property tax split is what will kill it (at least in its current form).
“Has become” implies that was ever not that.
You're still paying property tax on all those homes, and that propery tax goes up 2% every year. So "nearly no carrying costs" is not true.
Yes, ofc You are still paying property tax, just way less than you would in nearly any other jurisdiction. It’s capped at 1% of total assessed value and that value can only go up 2% a year (i.e. way less than market).
That was the meaning of the word “nearly.”
EDIT: Just to contextualize this a bit, let’s assume those four houses were bought ten years ago for a total of $4m at the time. They are now worth $10m, but the owner pays $50k a year in tax to carry that “investment” that has gained on average $600k a year. Not exactly a meaningful carrying cost.
> It’s capped at 1% of total assessed value
Sort of. The California property tax bill has many line items, one of which is "General tax rate". That's the one everyone talks about and it is 1% of the assessed value. However, all applicable jurisdictions can (and thus, will) add all kinds of add-on percentage fees to the property taxes and those are not subject to any limitations.
My property tax bill (California) which I just paid two weeks ago, was actually 1.4% of the assessed value.
> that value can only go up 2% a year (i.e. way less than market)
True on average over long term. Good to keep in mind though that it goes up 2% every year regardless of market. So when the market is up double percentages like 2020-2021, it only goes up 2%. But when the housing market crashes, it also goes up 2%. Which is fine, it's basically a damping function so that instead of having the taxes swing wildly up and down year to year, they just go steadily up.
Also be aware that the 2% increase is on the "general tax rate". The additional fees which are included in the property taxes, those have no cap on increase rates.
There have been many years when my property taxes have gone up quite a bit more than 2%.
I feel that because the housing market has been on such a long bull run, people have either forgotten, or are too young to have experienced, that housing markets can also crash hard. Having an increased zestimate value of your home is not actual wealth unless you sell it, and the valuation on paper can evaporate any moment when the next housing crash comes. I've been through three market crashes in my current house, two of which left me underwater for a few years.
It's reasonable to offer options to low-income retirees, for example allowing them to defer property tax payments until death. Texas does this, it works alright.
Note that a single family dewlling on .75 acres likely costs the government a lot of money to provide services (plumbing, sewer, electric etc) and is likely already a net debtor to the city/county. This style of development is why American (and Canadian) cities are going broke.
Also, many places could have well and septic, so that's all private costs. Off grid solar is also being a (small) option, where allowed.
Amusingly enough I knew a guy who lived in a suburb of a major CA city, but since his house had been built when it was rural, he was unknowingly on a septic system even though everyone else on his block was on city sewer.
Maybe in a dying city nobody wants to live in anyway.
Most costs aren't spending the entire budget on plumbing/sewer/electric. All of those are often billed separately, with surcharges for infra development. RE developers are on the hook for those in new developments.
Largest costs usually are: education, police, fire, roads. Except roads, these are orthogonal to density.
So in short, your argument: people are net debtors because we have roads. Plainly false.
I'd suggest educating yourself on how infrastructure maintenance is actually paid for.
Here's a video to start: https://youtu.be/7IsMeKl-Sv0
There is a whole playlist about this: https://youtu.be/7IsMeKl-Sv0
To me that just suggests we have a massive over-supply of labor. Whether labor is employed or not, it comes with a non-zero resource maintenance cost, which exacerbates things like climate risk, etc. Setting tax policies in such a way to maximize the number of meatbags assembling widgets strikes me as directing us towards an erroneous local maximum. Feeding fewer mouths, but doubling the resource allocations to each would be preferred.
Under our current system we subsidize low value land uses by subsidizing the crap out of infrastructure to expansions of suburban areas zoned for single family homes.
https://www.youtube.com/watch?v=7Nw6qyyrTeI
The only revenue positive portion of nearly any modern american city/town are the few sparse walkable mixed use neighbourhoods and the dense urban core. Policies like a land value tax that push for higher value land uses are necessary to stave off the oncoming wave of municipal bankruptcies America faces.
> Income tax would only provide a disincentive to work if the alternative (assistance programs) is more attractive.
You are thinking in absolute terms and not on the margins. If the marginal income tax beyond a threshold jumps by %10, then even discounting the increasingly marginal value of each additional dollar earned I will value the return on work less when I hit that tax threshold.
Even then most places rely on state and federal grants to make ends meet. Do you have have any examples of cities actually net positive without outside funds?
"You are thinking in absolute terms and not on the margins."
I think my position still stands. The claim was that people would not work because income is taxed. What you describe is reduction in work incentive when you hit the next bracket. I'm saying that in order to not work you would have to value the support systems more than making any income.
And of course, most people are no where near the level income that they don't want to make more. We're pretty talking about the 1% ($600k), or maybe the top 5% ($240k). So not particularly useful for designing policy for the other 95-99%. In fact, it could be beneficial for those high earners to drop out and allow new people to take their place.
Did you watch the video? It's short and demonstrates incredibly well through data the problems with our model of urban development.
> I think my position still stands. The claim was that people would not work because income is taxed. What you describe is reduction in work incentive when you hit the next bracket. I'm saying that in order to not work you would have to value the support systems more than making any income.
On the margins, income taxes lower the incentive to work more hours.
And given you don't want that dollar, and given the dollar is still on offer (the work's still gotta get done) someone else will earn it instead. This is probably a net gain because you got to do something else with your time and the other person got money they (probably) needed more than you.
Maybe, maybe not. The supply of work to be done isn't static. It might well be that the work is unpleasant, and everyone qualified to do it would now earn less than they did before because of the increased taxes, and it's now no longer worth it to any of them, so you can only get anyone to do it by paying more... but maybe now whatever the work product is isn't worth the higher cost, and you decide to just not offer the service or make the widget anymore, or it becomes worth it to automate it and not employ anyone, etc. etc.
It's almost tautological that taxing income disincentivizes work. Of course, it does not mean that a 30% income tax will disincentivizes work so much as to completely stop it (the "optimal" point in the Laffer curve is around the 30% point), but it is obvious that on the margin people will start dedicating less to work if their returns are lowered due to taxes.
The most relevant phenomenon is
https://en.wikipedia.org/wiki/Deadweight_loss#Deadweight_los...
What might be confusing is that relatively few people are incentivized by an income tax to do no work at all, but many people may be incentivized to do less paid work than they otherwise would. (In fact, under idealizing assumptions which don't quite apply in all cases, you would expect every person facing an income tax to do at least very slightly less paid work than without the tax.)
1. Live in a rural area that is very unlikely to be developed.
2. Make sure to buy a piece of land that is "original system" tagged instead of "LVT" tagged.
3. Buy "property tax increase" insurance. If your land's value goes up, the insurance pays the difference, and you don't notice the cost change.
If those 3 options don't turn out to be sufficient, then probably there's some hacky provision that could be tacked on, like LVT doesn't go up for individuals until they sell their land, or something along those lines. But of course that should only apply to people who are actually living in their own homes, not to landlords.
Anyway, the question is, why go to all this trouble? Why have an LVT at all? The answer is the following: No one created the land. When you're renting from a landlord, some of your rent is for the building, and all the effort the landlord puts into maintaining it. It makes sense that the landlord should be paid for that. Under the current system, though, some of your rent is for the land. That makes a lot less sense. Why pay the landlord for the land, even though the landlord didn't create the land?
Imagine some travellers find an oasis in the desert surrounding a fresh water spring. They (for some reason) decide to settle there, and need to decide how to split up the daily 10 000 gallons of water that the spring produces. I think that probably the travellers would decide to split the water evenly: 100 travellers means that each gets 100 gallons per day. It would be weird if they decided that some of them should be considered "waterlords" and get 2000 gallons per day, and the rest should get 0, and would have to pay the waterlords for their daily water.
Splitting the water evenly wouldn't be communism or anything. If Alice uses her share of the water to grow food, she wouldn't be obliged to share that food with anyone else, since she's the one who laboured to produce it. Everyone still gets to keep or sell whatever they produce, but the spring gushes whether anyone works or not, so the water gets split evenly.
Objection: Maybe some settlers will specialize in farming, and some won't. Obviously the farmers will need to use more water, so shouldn't they get a higher fraction of the water?
Answer: Yes, the farmers will use more water, but they can get it by trading the food they produce with their neighbours in exchange for water to put on their crops. The farmers would essentially be selling their ability to convert water into crops.
Objection: Wouldn't it be an equally good system if instead of trading in water people could trade shares in fractions of the water produced? So 10 000 shares are split equally among all the initial settlers, and each share is worth 1 gallon per day.
Answer: This has a few issues. The main one is that as new people are born and grow up, they would get an equal fraction of the water to everyone else in the "divide up the daily water production" scheme, but they would get nothing in the "divide up the shares" scheme, since all the shares would have been distributed already.
Here's a proof that income tax disincentivizes work:
Would you work an extra hour a week if it were paid at 1000x your normal rate? I confidently assert that you would.
Would you work it for 100x your normal rate? Almost certainly.
10x? Probably.
0.5x? Probably not.
0.01? Almost certainly not!
So, earning more or less than some threshold hourly amount incentivizes or disincentivizes that hour to be worked. This is exactly the effect of income taxation.
Now, I sympathise with people who have worked hard, paid tax on income and bought property. They don't want to, in addition, be charged to own that property. I myself am in the same boat.
But I also sympathise with people who have studied hard and learned skills. They don't want to, in addition, be charged to use those skills!
The only argument I can see for income tax over property tax is "I expected the former but not the latter, so you've violated my expectations". I don't find that argument very convincing.
I expect that our world does not sufficiently resemble that one for your conclusion to be wrong, but I think we don't get it for free.
This is why I disagree so strongly with the idea. Do I want to live in a society where every square meter of land is forced to be used for the highest possible ROI? No, absolutely not. There is already far too much drive to maximize profit on everything. We need less of that, not more.
Just a small sampling of land uses which are economically suboptimal: parks, playgrounds, bike trails, dog parks, community sport areas, nature conservation areas/greenbelts. And so many more.
I want to live in a town which has a lot more of all of the above, not less.
If the only thing that mattered was maximizing profit per square foot, it would be optimal to raze all the above and build them up with high-density housing towers.
It's not each piece of land that you are optimizing, but the community as a whole. If you were to build up Central Park, yes, you could get more income for that space. Because people get less access to things that they want, everyone would move out to CT or NJ. Less tourists would come. The surrounding land would all drop, it would hurt NYC land values as a whole.
In fact, with proper zoning in place that does not incentivize scarcity, one thing we would quickly find is that middle housing would finally be able to be built, and that middle housing would then lead to less skyscrapers in all but the biggest cities and central-most downtowns.
How do you propose finding the optimal balance, and even tricker, to encode that into the tax code for computing LVT for each lot?
Let's say paving over all of Central Park with highrise apartments makes NYC less attractive (I'll agree) and that leads to people moving out and housing prices collapsing (I'm not so sure about that, people might tolerate less nice living in exchange of economic opportunity of NYC).
What if only 50% of the Central Park land area is built up? Or 64%? Where exactly is the sweet spot that will extract as much value as possible while still not driving too many people away?
That's all going to be very speculative, there's no way to know exactly. And to encode the optimal answer into tax law? Seems impossible.
Also when you say:
> It's not each piece of land that you are optimizing, but the community as a whole.
Every proponent of LVT I've heard, always says that every plot of land should be taxed based on its maximum economic potential. I had not heard arguments about trying to balance it over the community as a whole. And how do you encode that balancing goal into tax law?
Another thing to consider here is if instead of putting skyscrapers into Central Park, what would happen if it was instead paved over into a single massive parking lot? I think one way to handle this is to treat each 'scope'(local, state, federal) of government as its own land value tax, and your taxes would go to your local community, but a piece of which would then need to pay the state tax, etc... It would be in the interests of NYC to use their land to the best use that they determine. If they choose poorly and paved over Central Park, this would meaningfully impact their finances.
And what of the privately owned Bryant Park, would they need to pay the Land Value Tax despite the fact that they are just as positive externality driving as Central Park? Grand Central Station was another case of this, where the city disallowed the company that owned it to knock it down and build a skyscraper, as renting out the skyscraper would earn the company more money.
Georgists care very deeply about tracking the capturing of positive externalities, but this is the opposite. This is attempting to value the release of positive externalities. I don't have a perfect answer for this, but it's clear there are 'privately-owned' places that act as publicly-owned, and thus if we exempt from taxes public, they deserve to as well. I don't like exemption, - it will surely breed corruption - but I see no real way to find out what that value really is.
For instance, say I live in a very expensive city and I can no longer afford the land tax. I decide to move to a less expensive city and set up roots there. This new city is crummier: the city government is inefficient, there are fewer amenities available, and local institutions are poorly organized and executed.
I spend some time petitioning the local government to make reforms, I work with local groups to improve city amenities, and I vote for policies to revive local institutions. As I do this, the city becomes much nicer. However, it also becomes more attractive for other folks from the expensive city who can afford to buy up local property and drive up the value/taxes of my land. If this goes on, I'll once again be in a situation where I can't afford to live in my home because others want to live there too.
Say if, after moving to my cheaper city, I had instead decided to keep the city as crummy as possible while meeting my own needs. I drive a car, so I vote against bike lanes. I don't have young kids, so I lobby against school levies. I don't swim, so I vote against a public pool. This is objectively worse for the city as a whole, but if I want to be able to afford to live in a city that meets my needs these are the actions I should take.
There are always going to be tradeoffs between the opportunities of people who live in places and those who want to live in those places. Stringent local regulations weigh heavily in favor of those who currently live in places, and this is widely recognized (e.g. the term NIMBY is widely known). Land taxes and deregulated local zoning seem to weigh heavily in the opposite direction, but I rarely see this addressed or acknowledged. Moreover, land taxes in particular seem like they actively disincentivize pro-social or civically minded policies for existing residents (whereas local regulations allow communities to improve themselves without being priced out through other means).
If I'm missing some context here let me know, but it's one of my main critiques when these proposals pop up that I've never seen satisfactorily addressed.
At least for our locale: property taxes are still based on assessed value, sales tax is collected on purchases, and income tax & business permits still apply. All of these get more expensive if the community improves...
For sales tax and income tax, these would apply regardless of location, and apply at the individual level instead of cross-pollinating between individuals. If my neighbor makes twice as much, or buys twice as much, it's easy to rationalize that they pay twice as much tax as me. If my neighbor just bought an identical house to mine for twice what I paid five years ago, though, it is harder to stomach that my tax bill should be twice was it was five years ago as well.
I've long advocated for an arrangement whereby if the value of a property increases by more than some small amount, say 2%, the excess wouldn't come due until the property was sold; the locality would hold a lien on the balance. This, IMO, is how Prop. 13 should have worked -- seniors on fixed incomes facing rising property values aren't really poor; they just have a cash flow problem, which could and should have been solved without taking money from the localities. Anyway, such a provision would make it unnecessary, in many cases, to take out a home equity loan to pay an LVT.
Of course, renters wouldn't benefit directly from property value gains, but as an LVT would incentivize construction, it would help bring rents down.
Wouldn't this rise in your property's value only matter when you sell?
Home equity loans aren't a thing in France as far as I know, so maybe I'm completely off here, but wouldn't you need to pay back that loan anyway? So if you're intending to sell the property (which I assume is the case, since OP's main complaint was being forced to move), how do you come out ahead?
I'd say also, anyone who is capable of producing all those improvements should be able to make a good living, and their wage should improve with the monetary value of land in the area. Meaning the land tax shouldn't, on average, be harmful.
Perhaps these are just my European sensibilities talking, but a house is not a hamburger, that you consume and then discard when you're done with it. It is your home, and your children's, and possibly their children's too. It's part of the link to your community, your memories, your history. Not a market good like any other, measured only in dollars.
You despair why communities are dying, why people don't know their neighbors, why they are becoming increasingly isolated - well here's your answer.
For instance, single-family homeowners voting to keep their areas single-family zoned are cast as "pulling up the ladder". This is fair: incumbents are trying to keep newcomers from changing the things they prioritize.
One could make a similar case for public lands, though: why is it fair that residents of a city should allocate huge tracts of land for public parks, when that land could otherwise be used to build dense housing and make the city more affordable for newcomers? It feels strange, but this seems like the same tradeoff: incumbents enjoy the presence of parks, so they prioritize them over the potential needs of newcomers (more affordable housing).
Or at a more global level, we could make a similar (very controversial) case for climate change regulation: the current rich-world countries built up their economies largely on the back of environmentally damaging practices. Now that we're developed, though, there is a large push for global regulation of climate policy, punishing polluting countries. This is because the incumbent rich countries prioritize a solution to global warming over the desires of some (though certainly not all) developing economies looking to grow rich through the same environmentally-damaging practices we used.
The phrase "pulling up the ladder" feels like it's always used to illustrate the greed or selfishness of those who want to deny others the privileges they had. It's very clear, though, that there are some cases where we're totally fine with "pulling up the ladder" when it's the things that we ourselves prioritize (in this example, public parks over affordable housing, or climate-change prevention over economic development).
While tangential to your point, it should be emphasized that when the current rich-world countries built up their economies, low-emission energy such as solar, wind, and nuclear were not available (or much more expensive). And it is those same rich countries that developed those technologies, that the rest of the world now has access to. In this light, requesting that countries minimize fossil fuel use is not so unfair.
I remember living in a pretty shabby student ghetto district of Boston, and you'd regularly see graffiti saying "Keep Allston Shitty". In Philadelphia, I heard similar rumors of locals occasionally firing off a few gunshots every month, just to keep the white people scared and the rents down. Renters everywhere are basically incentivized to keep their neighborhoods as shabby as unsafe as they can handle.
Also a running subplot in the show Shameless.
They do this because they think they would be abandoned by society immediately the moment they are fired. It's kind of ironic. People want power not because they need it but instead to shield themselves from the bad side effects that not having power entails. In other words, people want to have power to protect themselves from those in power.
One of the major reasons that our cities become expensive in our "modern" society is that we don't have land value taxes. If we have a land value tax, then when someone decides they can't afford to keep paying the tax, they sell it to someone who can OR they find a way to make the things built on that property much more valuable so that the tax is affordable. It provides a very strong incentive for property owners to do things like tearing down single family homes and building multi-unit condos in their place. Because there are multiple units where there was previously only one, the cost of living actually goes down. This is why it's considered a very beneficial tax: it promotes efficient use of land from economic perspectives. (This also applies to businesses: if a business isn't able to afford the land value tax for their property, they have strong incentives to find a way to make the use of their land more valuable or to sell it to someone who can. And if the value of their land is going up more than they can afford, that implies that there likely are potential buyers who could make better use of it.)
For us to go from where we currently are to a land value tax would require a transition period, because it takes time to tear things down and build new things. But a society that was implementing a land value tax would see new properties opening up like I described above on a regular basis. So if you couldn't afford the land value tax, you would still be able to stay in the same city (and probably more cheaply and in a nicer, newer condo) unless you absolutely required a single family home or similar low-density housing.
Put another way, their concern was based on them specifically paying more taxes on land while society stays the same in regards to use of land. But that doesn't make sense because they're not the only person who would be paying land taxes; everyone who owns land would be, and that changes everyone's incentives for how they use land.
If you mean the part about "how could this ever overcome NIMBY" / tradeoffs between people who already live somewhere and people who want to live somewhere, then yeah, that wasn't what I was talking about.
No! That's not what OP said. He talked about the problem of _a change_ in the height of the tax on the same land over time and this making it become too expensive.
That's not the same thing, because while the land tax would not cause such a problem (as you correctly said) but rather improve the situation due to more efficient use, the problem of _change_ stays.
San Fransisco is a good example, where new housing is not being built to satisfy demand, causing property values to increase, and property taxes are prevented from increasing.
Children can't afford to live in the neighborhood where they grew up because housing costs too much, older people can't downsize because they'll loose their tax breaks, teachers and police officers can't afford to live in the neighborhoods they service, the character of the neighborhood changes as it gentrifies as only the rich can afford to move there, increasing income inequality as the rentier class grows richer through their subsidized investments, etc.
I fail do get that point and in your example, you don't explain how property value increases would have not happened in the existance of a land value tax.
The OP mentioned concerns about changing to a land value tax. I was throwing out there the fact that there are also problems under the current zoning regime, like those I mentioned in San Fransisco, a drastic example.
For instance, say I want to have a small patch of grass for my dog to run around, and moved to my area so that I could have that. As the value of my land grows, you're definitely right that I could sell it to a developer and then move into a more affordable apartment in a multi-tenant building. For humans, though, housing isn't fungible: the home that I grew my family in, the availability of that patch of grass for my dog, and the privacy I enjoyed were all things that cannot be replaced by more dense housing. While the cost of any home is stabilized (which is why it benefits newcomers), the cost of equivalent homes is not (which is why it works against existing residents).
To be clear, I'm not saying that it's wrong to prioritize density. I'm only trying to point out that any policy is going to benefit one group to the detriment of another group; taxation to incentivize more efficient land use is doing so at the expense of those who want to stay in the homes they've lived in.
Restrictive zoning and rent/tax controls benefit incumbent residents at the expense of newcomers, which is widely recognized. Land value taxes improve the efficiency of land use to benefit newcomers at the expense of incumbent residents.
To reiterate, I think land value tax is a good tool for what it aims to accomplish. The main point of my post, though, is that there are legitimate reasons for existing residents to oppose it (e.g. being priced out of their existing home) which most discussions on the matter tend to skip over.
In the end the OP has a point. And even if this point alone is certainly not major and would ve a reason to drop the concept of a land tax, it's also relevant enough to warrant a serious discussion about it imho.
Or am I completely off-base here?
If your property doubles in value in and you sell it and pay 25% to 40% of the increase:
the gross profit is: 200 - 100 = 100
the tax is: 25% to 40% of 100 which is 25 to 40
the profit post tax is: 100 minus 25 to 40 or, in other words, 75 to 60But if you tax me for the increase in the value of my land while I still own it, and then tax me on the profit I made from selling it when I decided I didn't want to pay those taxes anymore, that just seems like double-dipping. Isn't the whole point of the LVT that it makes buy-and-hold speculation unprofitable via the LVT itself? So if someone pays their LVT until it becomes so high that the expense of moving is less than the expense of saving, haven't they already effectively paid for their share of the increased value?
I think LVT's are interesting, but the practical considerations involved are enormous.
Some other problems with your thinking:
* Property tax is, in general, much lower than capital gains.
* Taxes paid to a state can not cover your federal tax bill (the lion's share of capital gains taxes are federal). In other words, it's not the same "you" in all cases listed above.
The problem that I'm trying to point out is the converse disincentive to stay which these policies can introduce. For instance, my family, friends, social and professional networks, and history are all within the region I currently live. If I'm priced out of this current region but am okay with moving to a different region, then this is a great situation: everyone's happy.
If, on the other hand, I want to keep living the life I've built over decades, the ability to cut-and-run with the increase in my property value is little consolation; I'll be a richer man, but I'll be forced away from my home.
I've mentioned it a few times in the thread, but just want to clarify: I'm not saying that from a policy perspective we shouldn't force these people to move in order to accommodate the needs of more people. All I'm saying is that we are giving those people who want to stay in their homes the short end of the stick with these policies.
If we look at towns and cities with super-restrictive policies (e.g. single-family zoning, locked in property tax bills, rent control, etc.), they are objectively inefficient in how they allocate land. Being a resident in one of these places, though, would lead to a pretty good and stable life.
To the residents of these locations, heavy land and property tax policies are essentially telling them "Other, richer people want to live here but it's too full, so you should find somewhere else to live". It's not hard to imagine the human aspect of the opposition (including restrictive zoning in the status quo), which conversely say "Other, richer people want to live here but it's too full, so they should find somewhere else to live.".
Again, inefficient in the aggregate, and I wouldn't argue that it's the foundation we should build policy on, but it's hard to blame someone for taking that stance.
The average Californian (could not find median) pays about 6945 USD to the state in income tax (using 106916 USD as the income figure). The median California home was about 650000 USD in 2020; it is projected to be 800000 USD in 2022. Assuming an LVT of 1% (the actual property tax rate is somewhat lower in California), the taxes would be 6500 USD in 2020 or 8000 USD in 2022. These are of the same order as the income tax they would replace.
This is remarkable, given that we are considering an LVT in the context of a badly overheated housing market -- the situation an LVT is designed to prevent.
In California, there is not only high income tax but high sales tax, capital gains tax, and many other miscellaneous costs. If the government is too expensive, it's too expensive; you may be forced to move because of that, but it's not because of a particular tax strategy. Any tax strategy can be used to charge you too much money. This is one of many reasons that a dysfunctional property tax regime does not support a good and stable life.
Excess Burden https://www.jstor.org/stable/43817496?read-now=1&refreqid=ex...
The Incidence of Taxation https://www.jstor.org/stable/43817496?read-now=1&refreqid=ex...
Neutrality and Super-Neutrality https://www.jstor.org/stable/43817496?read-now=1&refreqid=ex...
Can Land Value Taxation Prevent Monopolistic Behavior? https://www.jstor.org/stable/43817496?read-now=1&refreqid=ex...
Capital Formation https://www.jstor.org/stable/43817496?read-now=1&refreqid=ex...
I would add that while zoning reform is something that all Georgists should get behind, land rent as public revenue is really a separate issue. It is worth doing even with the present zoning in place. Consider a scenario where society is at a technological level where the only type of development possible is a single-family home. Rent as public revenue is still the most efficient and ethical tax base for society. Land assessment is based upon the highest and best legally-permitted use. If it is -only- possible to build single-family homes, this does not diminish the case for land rent as the tax base.
Land value tax doesnt feel like a fair solution. The value of your land is what you sell it for, not what a realtor guesses it is worth.
If you “buy a house in San Francisco before the tech boom” and never sell it, you shouldn’t have to pay some extra sour-grapes tax because everyone else is jealous of the perceived value of your land. How do they know you don’t have dry rot / radon / ghosts? Do you have to allow home inspections to “value” your property?
Conversely, if you cash out at 20x the value you paid then we already have a tax for that: Capital Gains.
All bets are off if you own land that isn’t the place where you live. If you own more than one home, neither is your permanent home, so enjoy being taxed on both.
> The LVT also has an appealing underlying moral framework: The luck to own a piece of land that happens to appreciate — say, you bought a house in San Francisco before the tech boom — should not come with it the ability to extract rents without providing value.
It seems a bit presumptious to say it is all luck - that somebody couldn't have predicted that the land would appreciate and thus bought early as a strategic move.
That said, there is a remaining question: should (by which I mean: is it socially desirable) the component of randomness leading to land value appreciation also multiply * the value of improvements?
* I wrote 'multiply' without evidence, largely based on an educated guess. To what degree is this a reasonable claim?
It's sometimes that absurde, that nearby lots have 3 times the building capacity.
We already have a land tax called "Grundsteuer", but it's useless in the way it is.
Vox is a dumpster fire and the owners have been hyperbolic rage bait farmers for over a decade.
But more importantly, the part where you speak of "state taxes" makes me think you have no idea what you're talking about, since the original idea of Henry George was to distribute the LVT in the form of a citizen's dividend, equally among every person regardless of any criteria. A prescient form of UBI if you will.
As of the time of writing we do pay taxes on land as well as taxes on labor, taxes on commerce, taxes on investments, taxes on inheritance, taxes on imports, taxes on value added to goods, sin taxes, tax stamps for government services, taxes on energy, taxes on roadways, taxes on gifts, taxes to enter or leave airports, and even taxes to live in certain cities. In the US these did not exist until after the civil war and since then they've become the rule and not the exception, to repeal all of them and replace them with a LVT is great, but to expect the modern state to not feature creep every single one of the current taxes back in place within a few decades gives me a huge pause.
As grandparent said, every tax causes this kind of incentive. So people thought long about what was the least worst of all the options and came up with LVT and similar ideas. They cause the minimum harm to the economy and have the least side effects and "unintended consequences"
It forces landowners to account for the opportunity costs they impose on society by not utilizing the land optimally, even if (and especially if) those costs change over time.
https://www.gameofrent.com/content/can-lvt-be-passed-on-to-t...
The best empirical evidence available shows pretty strong signs that land value taxes are not passed on to tenants
If property taxes are raised and my mortgage/interest/tax payment are now 1350$ you will raise rent accordingly unless you are running a charity or expect a roof to repair itself. I don't need a theoretical analysis from a game developer who has to imagine himself as a landlord as I have personally owned rental property before, have known people who have owned rental property and rented property before.
Great, because I didn't provide you with a theoretical analysis, I provided you with an empirical analysis that actually looks at the evidence from the real world.
Regardless of my credentials or your credentials, I'm not particularly impressed with anyone who cites an N of 1 from their own personal experience and thinks it proves anything in particular.
That's rich. As someone who is a landlord, I'm already charging what two owners ago was charging when they died and the city won't let raise the rent because of COVID and beyond that, there is a rent stabilization ordinance which will never allow my rents to catch up to market rate.
I would like to see zoning fixed before we add more market distortions. This really doesn't account for the cost of construction as well. If you have a property that can earn $2,500 per unit, and it costs $300k, you can break even in $10 years. Now the government is taking half, it takes 20 years to break even. You just eliminated people who would invest in new housing. Does the LVT magically affect construction costs?
So then land gets cheaper because the government is taking half the potential revenue (not even profit, which makes renting incredibly unprofitable considering expenses). What stops wealthy people from just buying it as single family homes then? You have just lowered the price of the land, so they will come in a scoop it up.
It seems insane to me that we have these distortions that ruin the housing market (zoning, rent control) and the answer is to add another distortion (LVT) rather than eliminating the ones currently in place. You're disincentivizing people from renting their land if you cut into the profit of doing so. Make building not a bureaucratic nightmare and I will build. Revoke RSO and I won't shut down my property and convert it to a SFH for myself.
On the other hand if you renovate a building and now can charge twice as much for rent, that hardly effects the land value at all -- it's one building in the area, it won't have a huge effect generally on the land value of adjacent buildings. So you'd get to reap the rewards of your work -- you improved the property and now get to make money from that improvement. LVT explicitly does not tax improvements, only the site-value of the land.
I'm certainly for eliminating rent control and massively liberalizing land use (you may still need very broad classes of zoning, ala Japan with 12 total zones all of which allow mixed use and multi-family dwellings and non of which except industrial zones restricts the minimum size/use in an area, but my preference would be to just have a separation between industrial and non-industrial use cases). That would help a lot! But it doesn't address the fact that when for instance Los Angeles installed the Expo Line for ~$3.5B the people who owned apartments nearby suddenly got a massive 20+% boost in the rent they could charge, a total value of which would have been large enough to pay for the line's construction & operation!
The value of that public investment ought to have come back to the city to be spent on yet more improvements, not pocketed by private property owners who happened to buy a building nearby a decade or more earlier.
>You didn't make that happen basically at all but get to reap the rewards.
The landlord did make that happen by making their property available for rent to others. Rents would be even higher if they took it off the market. Don't forget who owns the land.
The assumption that everyone who wants to live in {place} should be able to do so is interesting.
It's quite likely that {place} is a good place to live because there aren't too many people who live there. If that's true, we either come up with some way to limit the number of people or we destroy {place}.
As to the "but what about the poor people who provide services?" - sorry - I don't have have any sympathy for rich people who don't pay the help enough. Said rich people can do without.
Citation needed. Intuitively to me, it seems that {place} is a good (or bad) place to live because of a lot of reasons, not just one, as you suggest.
However, "{place} won't be a good place to live if there are too many people there" is intuitively obvious.
Consider Yosemite Valley. Do you really think that it would still be a good place if 1M people lived there? Okay - how about 100k? (There are easily 100k people who would love to live in YV.)
Heck - consider Disneyland. Too many people is a horrible experience.
Some people think that YV already has too many people while others would be happy with 1M people.
That said, it's not true that every place can remain good with an arbitrarily large number of people.
More to the point, it's not true that every {good} place can remain good with as many people who would like to live there.
a) Permitting systems are biased towards preferences for lower intensity; it is asymmetrically easier to block buildings than to force them through.
b) People who would prefer to live in more intense settings are just as harmed by low-intensity settings as you would be by higher intensity. Their preferences are just as important. There has to be a sorting. But…
c) Postwar suburban sprawl, with its quarter acres and strip malls and pedestrian hostility, is the near universal law of the land. Even in those places that are crying out to be more urban, like the vacant lots within or the slightly lower intensity suburbs neighborhoods encircling the cores of our thriving cities. Even though there is so much diversity in preference and place-appropriateness, the space of what can be built today is extremely homogeneous. The iconic neighborhoods, vistas, differences the character of the built environments of different places mostly comes down to how much is left, of which eras, prior to the disastrous suburban mania we’re stuck with today.
Not so fast. Rome wasn't strengthened by the Visigoths.
More to your argument, while London is arguably unchanged by the addition of 1k or even 10k people, it is changed by the addition of 100M or even 10M. Maybe it's still good, but by a different definition.
Forward reference: adding 10M people to London will necessarily destroy many of the "iconic neighborhoods" you're so fond of below.
> Even in those places that are crying out to be more urban, like the vacant lots within or the slightly lower intensity suburbs
There's a huge difference between a vacant lot in Manhattan and the burbs, which aren't "slightly lower intensity".
> the cores of our thriving cities
Our thriving cities where?
> The iconic neighborhoods, vistas, differences the character of the built environments of different places mostly comes down to how much is left, of which eras, prior to the disastrous suburban mania we’re stuck with today.
There's a typo in the above that I can't error-correct.
That said, the suburbs didn't cause urban decay. As to the vistas, you're only counting urban vistas, and nothing that has happened in the suburbs has affected the NYC skyline.
I get that you want to live in an "iconic neighborhood", whatever that means, but the other residents of those neighborhoods get to vote too, and many of them have decided "the hell with that." More to the point, what happens in suburbs has nothing to do with how those neighborhoods have fared over time.
Of sprawl we can always print more. Of places worth caring about we’re stuck forever with whatever we had before we the automobile. That’s bad!
London’s role as a center of civilization and culture is more important than its role as an architecture museum. I wouldn’t advocate zero museum pieces, but London could find some set of museum pieces to preserve that are consistent with non-museum districts actually serving the needs of people who live and work in the area.
> The suburbs encircled the places worth caring about.
How do suburbs keep SF from thriving?
Apart from giving people someplace else to go that is.
When people leave cities for suburbs, they're saying that they prefer suburbs to cities, that they don't prefer what you assert that they prefer, that those "iconic neighborhoods" don't serve their needs. (Those neighborhoods are just as walkable as before.)
> Now we can’t have any more of the places worth caring about because to do so would threaten the historic fast food joints on their peripheries.
You're seriously arguing that McDonalds in Daly City doomed SF? It wasn't Long Island that destroyed Penn Station.
> London’s role as a center of civilization and culture is more important than its role as an architecture museum.
You're ducking the question of what 10M more people would do to London.
And you gave up on the "iconic neighborhoods" which were so important just a couple of messages ago.
Indeed, forget iconic. Places whose design is merely not utterly deranged are so rare in North America, yet so desired, that your choices are to be extremely wealthy or else to consume very little of them. You can't get the extra bedrooms to raise kids in reasonably hospitable urban settings because adults wiling to pay $2500/mo outnumber them.
People leave for the suburbs because they're cheap. They're cheap because they're abundant. They're abundant because of a comprehensive suite of restrictions and subsidies designed to make them so.
Wander down the El Camino Real. An endless ribbon of stroad, fast cars, parking lots, strip malls. A place whose sidewalks are a farce. A place that makes it very clear you are not mean to be outside your car except in the smallest doses. A place no one really likes driving, either. That's a choice. All that mileage could instead have the character of San Francisco's loveliest neighborhoods. Could be a place worth caring about. Could be community and home and identity and leisure. If you allowed it.
I would like proper urbanism to be be on a few hundred more blocks, or a few thousand blocks, maybe even a few hundred thousand blocks. Still nowhere near 10% of the developable or inhabited land area.
But no, not only does “not everyone want to live stacked on top of each other,” we must make sure walkable communities are kept so rare that one of those little hell boxes “nobody wants” costs $3 million. Every single unit permitted is its own little bloodbath, because no place, not even the heart of a city, is allowed to grow as a city anymore. All sprawl, all the time, exclusively.
Ideally a typical person shouldn't have to pay land tax on their home, otherwise they are effectively renting their own property.
Morally I feel government shouldn't tax a home and generally should aim tax to be as small as possible on life essentials. E.g Things like the home, food goods and medical treatment should have as little tax placed on them as possible.
Land tax would be best done at a cumulative value. Add up everything you own and apply a progressive rate against that. So a normal personal would be below the threshold while someone owning 100+ properties is at a rate likely to encourage them to divest to other asset classes or as the article suggests, extract more value.
There'd need to be some rules about trust/company ownership at top value to reduce people obvfuscating ownership. And separate rules for residential, rural and industrial/commercial zones.
Something like land tax isn't good or bad until you know the detail.
then there is area wise "property tax" which is an annual tax paid to local municipalities, small but it adds up.
when you are building a house, you pay "GST" or indirect tax on all consumables, wood, steel, cement, sand, bricks, glass, appliances, tiling, roofing, electricals, every darn thing and you cannot "claim" this tax as input so the government gets this.
what more do you want them to impose?
The point of land value tax is to remove all those other taxes (at least, I wouldn't support introduction unless it did).
It could and would disincetivize keeping lands in their natural state, since one is compelled to build in order to have the land not be a financial burden. Unless there is some kind of exclusion for that, it could result in sprawl.
I think the idea is that in that situation the owner sells, though.
[0] https://www.strongtowns.org/journal/2021/8/4/the-question-ev...
The other side of the coin is municipalities abusing power to disenfranchise legitimate landowners. It seems like rules around all of this could be made clearer.
Sometimes it seems like you can go so far in avoiding a slippery slope that you're nowhere near one, but also nowhere near where you need to be.
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.
Anyway, to be clear, I'm not advocating for land taxes per se. I have also seen many, many examples of corrupt seizure of, or valuation of, property by the government and that's its own set of problems. What I'm saying is it should be possible to codify into law some "red line" circumstances where properties do get taxed or seized. Someone who is living on the property would be exempt, for example. Neglected property in an area that is targeted for renewal, with multiple serious offers that economists agree are more than fair, being refused by a party who resides in another region, over long periods of time, seems like a different issue.
Maybe this is all more difficult than I think. It just seems to me there are some cases that are so clearly egregious that the vast majority of the population agrees there are problems (in either direction: with government overreach or private overreach) that you could define those circumstances. Right now it seems to me a lot of time is wasted on controversial land use issues and not enough on addressing things where there is more consensus.
I think you basically get it. It all comes down to property rights vs public good. Take the extreme case of someone with a vacant lot in downtown Manhattan.
On one hand, the development could help the city and improve general prosperity. On the other hand, someone owns it and is free to use it (or not) as they see fit.
My understanding is that the current state of eminent domain is that public good is necessary, but not sufficient to justify the forced sale of the land. The city can not take it because someone else could develop it for the public good. The city could take it in very narrow cases, like if they wanted to put in a metro station and there were no viable alternatives.
Whether this is a feature or a bug is really a matter of perspective. Is the goal of the government and law to optimize for the greater good, or protect individuals against the greater good as long as they aren't harming anyone (and opportunity costs don't count!). I tend to land on the latter side, but get that others don't feel the same way.
Over a hundred years ago[1] economist Henry George was advocating for a “single tax” on economic rents, from land to intellectual property. The idea being that those who own monopolistic rent extractors (only the owners of the land can use it to make money, etc) tend to be wealthier, and taxes on economic activity like income and sales tend to fall disproportionately on the poor.
So this is all based on the assumption that the government knows what the best use of your land is.
I'm very fond of self-declared valuations with enforced sale back to the commons if anyone is willing to front the value.
Add a tax free threshold a bit above the mean wealth so anyone can declare their 100k house is worth $1m or whatever without risking paying the costs of moving due to someone maliciously forcing sale.
Do we burn witches too?
You can read more on this subject in Taxation: The Lost History in the following section:
All Taxes Indirectly Fall on Land Values - https://www.jstor.org/stable/43817496?read-now=1&refreqid=ex...
and in the "Trickle-Up Economics" report - https://www.prosper.org.au/wp-content/uploads/2018/04/Trickl...
Of course, we should first replace the existing bad taxes for multiple reasons. Nonetheless, as a matter of economic and social justice, -any- amount of land rent that exists should be publicly collected and distributed on a per-capita basis.
This does not increase the user-cost of land as land has no cost of production. Of course as a transitional issue there will be net winners and net losers (for which we could create policies to address the transitional effects). The ultimate effect of the full public collection of land rent would be to bring the selling price of land down to $0, while the rental value would remain the same (not counting the dynamic effects).
In reality, land value taxation isn't really a tax when properly understood. You either pay a previous owner in selling price or you pay the public the annual rental value. Most people don't properly consider that the selling price is simply the capitalized ability to capture future rents. In an ethical society, this privilege would not exist.
why not? paying for the use of privately owned property (land or car) seems like a natural and ethical transaction.
If ownership exists, this privilege also must exist.
That is pretty much how existing property taxes work.
That being said, I think we want to do something to avoid becoming a nation of land barons
We have it here in Denmark, and I believe it's very wrong. It effectively means that you cannot own land here. You can only buy the privilege to rent it from the state, it is never yours, and if your source of income goes away, and you cannot pay the rent, the land is taken away from you.
Taxing land will not create more housing; if it was profitable it would happen regardless of tax.
> “It doesn’t disappear — so you can lower taxes on things that do go away.”
It absolutely goes away. The only value of land is its utility to humans - the infrastructure, buildings, utilities. Just look at all the ghost towns that lost their economic viability. That land now has negative value since old buildings need to be demolished before being developed. Measured in acreage, there is effectively infinite land, but without infrastructure and buildings it has no value to people.
The value of land that is polluted and needs to be rehabilitated becomes negative.
Completely false.
Prop 13 is the reason you have parking lots that generate less than 1% per anum on the value of land in some of the most expensive pieces of real estate in CA.
Prop 13 means the property tax is next to nothing - so the 1% is still cash-flow positive. It also artificially reduces supply since prices are high because no one wants to sell because buying something new would mean taxes 10-1000x higher.
On the vast majority of lots in CA - you cannot buy from the owner and put enough additional stock on the market for it to make sense for anyone. It's just so much better for the existing owner who is paying 90% less property tax and getting all those unrealized gains they can HELOC out tax-free if they really want.
So many major cities are moving the way of California and either passing laws to limit property tax increases (Michigan) or simply never re-assessing home values (Pittsburgh).
In a market where prices are re-assessed and everyone pays the same taxes - I agree. But that's not the way it works in ~50% of the US.
I'd do a lot of fucked up things to prevent that from being taxed into oblivion.
When the lease it up, the government takes it back. Between those two time points you’re free to buy and sell.
This would put gentrification on overdrive. Did the author think this one through?
the owner of the land is part of a long transaction chain that started from the initial development and ownership of that land.
They provide value. The value is in allowing the existing owner exit. The fact that this exit is possible makes investment in the land less risky and therefore, investments happen.
So gentrification?
That sounds like a fantastic way for a developer to force out all of "the poors" around them by developing an area and making the value of their land skyrocket. Since they cant hold it they have to sell which kicks them out of their home for less than what their property would be worth.
Might work fine for NYC where no one actually owns anything. Sounds like a hard deal for a majority of the country where people can conceivably own land.
These proposals would generally be revenue-neutral, so the same amount of total tax would be collected, but assessed by parcel (adjusted for demand) rather than by parcel + improvements. An area where there was demand to house lots of people might still have high taxes because the land would be in high-demand because of its potential to host big buildings, whether the buildings were there or not. In other words: they'd have to build the building to afford the tax, because if they put a parking lot on it or whatever, the taxes would swamp any revenue.
As to small businesses/homeowners: ideally in such a scheme, improvements they might want to make would be more affordable than they are under the current system, because they wouldn't owe taxes on the increased value. Ultimately though, you're right: systems like this are meant to address a circumstance where nobody can afford housing because there's way more need than there is supply, by incentivizing increasing the density of housing in such areas, which means some small structures will need to be torn down and replaced with bigger ones, and people unwilling or unable to do that will be incentivized to sell to someone who can. Their well-being gets weighed against the hypothetical well-being of the larger number of people that might otherwise be housed by the larger structures that would replace where they live now.
Of course there are bad tenants, but I suspect, like most things, we focus on those negatives and ignore all the low maintenance tenants when thinking about it.
all are guarantees even with the lowest maintenance tenants.
I was just hypothesizing that the "Bad Tenant tax" is potentially overblown. Sure it can be an absolute nightmare if you're unlucky (or bad at screening), but on average I suspect it's pretty minor. I honestly don't have anything but anecdotal data to back that up though. I just suspect, like a lot of things where exceptional horror stories are propagated, we could be over-weighting the negatives.
Let alone actually getting a bad tenant. It may be a low chance, but if it comes up, you can be hosed out of the entire value of the house (usually you can still sell the land, but in the absolute worst cases where the property was turned into a meth factory, you may be out more than the entire value).
1. Immediately turn a profit would mean that monthly rent is higher than the cost of the property. This is not a thing. If they person you are replying to means “cash flow positive” then sure in 20-30 years the renter will have paid off the property for the landlord.
2. Renting provides choices. Tenant wants to move across the country or across the street? No problem: ride out your lease and move when ready. If you own the property you need to sell it to move in most cases. Ever try to sell when the market changed and suddenly your property lost 30% in value and you are suddenly underwater? I have. On the other hand if you are renting you can just move on a relatively short timeframe and get the fuck out of dodge no matter where property values are.
3. The responsibility for maintaining the building is on the landlord. Sure, some are bad at this but know your rights and interview your landlords well and it won’t be a problem.
4. Rentals provide inventory. If you don’t have $500,000 saved up for a large single family home in an expensive state (like where I have been stuck for the past decade), what do you do for housing? Mortgage your life away and hope jobs and markets go your way? Or rent for a small premium over a mortgage payment with no money down and a 12 month commitment?
For most people renting is actually a much better choice provided they save the difference between renting and owning the home and invest it wisely. Over a lifetime there are few places in the US where you’d be better off buying instead. NYT had a nice comprehensive calculator to this effect.
The majority of cash single-family landlords are because they're paying a mortgage on 2005 prices whilst charging 2020s rent. But to properly do the accounting you'd want to compare selling the house and buying it again vs the rents.
Buying is usually worse than renting unless you value the relative freedom to do what you want with the property and even then renters have the ability to change the house they're in (unless they're effectively stuck because of grandfathered in lower-than-market rates).
The idea that housing problems are caused by landlords is obviously false on its face, as each landlorded house already has people living in it. Speculators sitting on empty inventory and refusing to landlord, now that could be a cause.
And in the end, I'm not sure it matters? I've lived in cities where despite being able to afford ownership, I choose to rent. I'm glad to exchange my money for exclusive use of a house that I take no financial risk on, have no obligation to maintain, has only negligible transaction costs and I can walk away from with a months notice. All of those things have intrinsic value to me, some of those being services that I don't have to perform.
I mean, is it unfair when someone rents out their cars on Turo and make a profit each month? Are they "extracting rents"?
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.
I think the answer is that much of the landlord’s initial profit is more or less income from working a job (buying, insuring, readying, showing, screening, fixing, collecting, etc) as evidenced by the share that a property management company takes if you don’t want to do all that work. That share is often enough to push a small positive cashflow into a moderately negative cash flow, meaning it’s the job aspect not the passive ownership aspect that’s profitable initially.
I laugh everytime someone calls being a landlord “passive income”. I’m not one because I saw the aggravation and effort my parents went through with a series of crappy tenants.
No one calls the pizza shop owner a “parasitic middleman between inexpensive ingredients and $15 cheese pizzas”. Because they can see that it’s work; they imagine being a landlord isn’t.
Because capital is privatised and scarce, therefore a working-class family wishing to buy a home to live on cannot do so since they're outbid by those with capital. This leaves them with two choices: (1) pay rent to a middleman with capital, who buys the house, or (2) beg a private entity for a capital advance to be repaid with future expected cash flows, i.e. a bank loan.
The fundamental issue was always there, but for a time the house prices where well within what working/middle-class people could afford. Now that capital, incl. behemoth investment funds, have pushed these prices well outside what most people can reasonably afford, it becomes much more visible. It's kinda silly that your take is "well why don't working-class people just bid $1 above Blackrock"?
What people picture is owning houses. Landtax will not meaningfully make that more affordable. It will make holding on to land more expensive, therefore really putting pressure to extract the most value from it. Homes really aren't doing that. That will mean more capital improvements; more units on smaller lots, more apartments, ...
It will curb speculation, lower rents in the aggregate, but ownership of land will remain expensive, especially for poorly improved land like family homes.
It can simultaneously be true that being a landlord is a bunch of work, and that is being parasitic middleman. That's because being a landlord is composed of two parts: providing access to the land, and building/maintaining a shelter that sits on top of the land. People generally aren't upset with the latter, but are with the former. Lars Doucet explains it more in depth:
>[...] don't landlords deserve compensation for their work? What about Ms. Nguyen, the nice lady who manages your apartment block and went the extra mile for you when your A/C went out last summer?
>I like Ms. Nguyen too, but let's contrast her with Mr. Slumlord, who owns the apartment block next door that's superficially identical, but who won't help you when your A/C goes out in the middle of summer.
>Ms. Nguyen charges higher "rent" for her much better maintained units because part of that "rent" is actually her justly compensated wages for her labor in managing them, as well as interest from returns on the capital she's invested in their ongoing improvement and maintenance. She also collects a good bit of true Georgian rent because she is, after all, a landlord.
>Mr. Slumlord puts in as little work as he can get away with and invests as little capital into maintenance as will keep the state off his back. His return is almost entirely rent. And the only reason he can charge rent in the first place is because of the valuable location – value the community produced, not him.
>And that's the real injustice of land rent – the community produces the value, but the landlord charges rent to access it.
https://astralcodexten.substack.com/p/your-book-review-progr...
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 ownership, especially single family home ownership, since it's such a poor use of land. Instead, I think it will tilt to more affordable housing in the aggregate. Lower rents, but a lot higher capital improvements in what's now underdeveloped land. More apartment buildings basically. More units, more affordable, closer to amenities, but smaller overall.
> buy-to-rent a property and immediately turn up a profit
That's just never the case (at least, the immediate part of it), maybe only in the most lopsided markets. Buying a property is a huge capital investment, and can take decades to start seeing meaningful ROI. It does create cash flow quickly.
Landlords take property that could be owned outright by the resident and extract, at best, a middleman's fee.
Some landlords also provide access to services such as repair, cleaning, etc and combine those fees with the rent, but there is no reason those could not be equally available to owner-residents without the landlord acting as a middleman, and there is nothing inherent in the nature of being a landlord that implies offering such services.
Why do you assume every resident wants to own their property? When I lived in Baltimore you can be damn sure I didn't want to own anything in that city. There are valid reasons for renting to exist, landlords do provide valuable services, and there are people who do want landlords and renting to exist. It's okay to say you personally don't like landlords without making it seem like they're some kind of demons
See, it's actually precisely the opposite: I don't hate people personally for owning and renting homes, I dislike the system for being broken and allowing such parasitical inefficiencies. "Hate the game not the player" etcetera
Actually, I don't. I know that there are people who would prefer not to.
But because of the way the system is set up, it is so trivial and common for landlords to be extremely abusive. I would rather see things changed so that some people who would prefer to rent have to shrug and buy something instead—but actually have that option, because what would have been set up as rental properties are instead genuinely low-cost housing for purchase—than see the system continue as it is now.
I also know it's very unlikely that the status quo is going anywhere, so this is almost entirely a theoretical discussion.
This would make things even worse. Imagine having to go through the whole house buying process every time you want to move. What are young people or poor supposed to do, live with their parents until they can hopefully afford a house? What if someone just can't afford a house?
I get what you're saying, but it reads like sophistry. Yes, _technically_, a landlord, can delegate all services. In practice, there's no single "tenant" who would do anything remotely capital-intensive, like fixing a roof. They just up-and-leave.
> owner-residents
It's called home-ownership. It's expensive for a reason, and the fact that parts of the housing stock are for rent, and there's a middle-man, is not it.
> the landlord acting as a middleman
Many people do not have the wherewithal and look for a middleman. Young, seniors, people on the move, rich people who have no emotional attachment to a house, ...
The fact that Blackrock owns single family homes is due to an unfortunate combination of zoning, tax-structure, job concentration, ... creating the unique conditions that makes single family homes an attractive investment. Not because there's inherently something "extractive" about landlording.
(I guess, in core Adam Smith terms, there is a case, the way he frames "rent" as distinct from capital and labor, but it's a theoretical framework, and much of it still stemmed from the feudal legacy in Europe, where landlords had divine and aristocratic rights to family property. And in any case, it's not the same as "rent", the check Americans write every month, which usually has a large labor component).
I find speculation much more parasitic, and it's precisely that which land tax tries to address.
That's missing the point.
Removing landlords from the equation removes neither the need for such services, nor the ability to provide them collectively, for the (admittedly more common) case of apartment buildings and other dense living spaces.
Thus, providing those services is not inherent to being a landlord, and making changes to our regulations, laws, or tax structure that effectively removes landlording as an economically viable option would not stop those services from being provided.
Furthermore, I'm sure pretty much everyone has heard (whether first-, second-, or third-hand) stories of landlords who do not meaningfully provide these services: apartment buildings where maintenance just doesn't happen, where the pipes leak and the roof drips and plugging something into an outlet carries a constant risk of electric shock. Landlords who only care about the inherently extractive rent they get.
the outsourcing might increase efficiency of provision of the services due to economies of scale.
This efficiency gain is then reflected as the profit.
People ignore the risks, but they are real and they will return.
So why don't the residents do it? Ownership requires capital, which presumably the residents don't have access to.
So the landlord is providing the capital required for the building's initial investment, just shifted across time. They don't necessarily have to be there at the inception of the building's initial investment phase, but they are party to the entire chain of transaction, and is necessary for the initial owner's exit out of this investment.
If the landlord would not buy at _this_ price, the initial owner of the land/building may not have had the risk appetite to build the building in the first place.
And tapeworms are attractively slimming!
Point taken.
If the same person serves both roles then they are wearing two hats. Just as if someone were a stockholder and an employee of the same company.
> Because the titleholder is not obligated to do anything at all. Their role is to own, not to do.
their role is to provide capital to purchase the title. And in the future, some other capital holder will buy the title off you.
This whole process is what enables investment in the land in the first place. It's the same idea as shareholders buying shares off other shareholders. These "secondary" buyers don't directly contribute to the company (analogous to the land), but their role is necessary to distribute the risk of investment across time. High risk takers buy the IPO, and lower risk takers buy after the company has proven to be successful.
This isn't any different from land holding. High risk buyers would buy new land (offered by the crown/gov't), and perhaps develop it (or not, if they want to take on a loss since undeveloped land is money-losing). But once the land is proven valuable - e.g., the city is expanding into this new land now - the value grows, and they can sell to a different title holder who want more certainty of the value of the land.
Is anyone in this discussion against title-holding per se? Not that I can see. The point is that title-holding should come with some responsibilities, specifically to pay a tax proportional to the value of the title. For comparison, someone is not necessarily against work because they believes that earning income comes with responsibility to pay taxes proportional to that income.
Would you also agree then, that holding onto shares of a company would also require you to pay a proportion of the value of those shares in tax? In other words, this is a wealth tax?
[1] although I'm optimistic about it and might become a proponent in the future if it seems like an effective policy.
Being a landlord does provide a service, the service of managing the land and property. I don't want to buy a house right now because I'm not ready yet, so I _want_ landlords to provide properties so that I can have a home without having to go through the process of buying one just to sell it a year or so later.
Property managers receive a return on their labor (services to their tenants) and their investments of capital (maintenance and improvements to the building).
Conventional landlords are a mixture of property managers and "pure" landlords. A "pure" landlord makes money only off of gatekeeping access to the land.
The fact that it is entirely possible for a landlord to outsource property management to a 3rd party and still have a profitable venture is a telling sign. In a land value tax system, you would only be able to profit from property management, not from "pure" landlordism of holding a scarce asset nobody can make and waiting for it to go up in value or collecting rent to let people access it.
I was interviewed by Jerusalem in the piece and have written an in-depth series with many citations from the empirical literature about this subject: www.gameofrent.com
That's being a property manager, not a landlord. Landlords provide no services. One can be a landlord AND a property manager, but the role of landlord is distinguished simply by owning something that others want.
A landlord has a similar risk associated with the property, and not just in loss of value but other real risks, such as lawsuits, etc. The stockholder is protected from many risks and can't lose more than his investment (ignoring cases where he owns so much of the company that the corporate veil can be pierced) - but a landlord easily can - especially with a mortgage, but even without.
Insurance can be purchased to mitigate some of those risks, but few do beyond what a bank may require.
Let's take the example of landlords of property in areas threatened by climate change; real risks exist there that the renter doesn't have to worry about beyond considering moving.
Now, if we look at why the three major religions prohibited money lending with interest, we can see where the true parasitic middlemen are: the money lenders.
Money lending is as natural as money spending. It allows future improvements to be funded, and is critical to development of a society.
Could you please post here a handful of links (zillow/redfin/etc) to properties one could buy-to-rent and immediately turn up a profit? (Considering all costs.)
I've been looking for over a decade and haven't found one, so it would be most helpful to see a few examples.
Rather than treating it as an asset owned in perpetuity, it could be leased out both as a direct revenue source and as a means of maintaining control and achieving social/development objectives.
In my city, we had a large shopping centre that had emptied out in the 90s/early 2000s. The landowner spent two decades playing chicken with the city over subsidies to redevelop it, and meanwhile it's crumbling and behind fences, probably hosting all sorts of vermin to infest neighbouring buildings. I'd be unsurprised if its abandonment dragged down the rest of the area (the main shopping mall for the area, directly across the street, declined and finally shuttered in 2018.)
If the shopping centre developer had to lease the land from the city on a "renegotiated/renews every N years" basis, it would have gone differently. Either:
1. Once the centre stops covering its costs in rents, the developer simply abandons the lease, likely in the early 2000s, and the city has a still-in-decent-shape shopping centre they can re-lease or redevelop. It never becomes a crumbling wreck in the first place.
2. The developer can make grand promises of redevelopment, but after one or two renewal periods where no meaningful work is done, the city has a lever to respond to the BS, by refusing to renew the lease. Maybe they have to do some minor refurbishment, but the buildings are still usable. This is a much lower-friction process than having to declare eminent domain or a public hazard.
3. The developer tosses money into the void, keeping up with mandated maintenance and land rent, in the hopes that the neighbourhood gentrifies to the point where the complex is viable again. The city at least gets revenue and can enforce a minimum standard of maintenance to keep the lease. Careful tweaking of rent rates will likely eventually push them into one of the other options.
4. The developer has to actually deliver on his plans to justify continuing to pay the rent.
Bear in mind, this is the a fairly benign model for this: using it primarily as a blight-prevention device. A more assertive government could say things like "we won't renew the lease under your Pollution Factory unless you comply with higher-than-national cleanliness standards" or even "we're discontinuing single-family leases here to enable the construction of higher-density housing."
This also would allow redevelopment to take predictable and manageable waves. Rather than the comical scenarios where people get multi-million dollar paydays because they refuse to vacate the last square metre needed for a new development project, there would be a clear process where the new development could be negotiated in advance and existing leases would simply expire with no renewal option.
Moving land ownership to the state also politicizes it in a good way. The famous "the rent is too damn high" guy now has a means to actually manage it. The state can acquire direct control over residential property by refusing to renew leases to landlords, or asking for untenable sums, and then flip around and direct rent them to the residents at more appealing prices. At the scale this would operate at, there's plenty of opportunities to rob Peter to pay Paul.
Just imagine. I have some land. Lots of people would love to buy it it for different things. But for now, I just want to hang onto it until I'm ready to use it. And my house is sitting right next to it.
Yeah, nimby blah, blah blah.
But it's my house and my backyard and my land so... I have to be forced to sell it?
Brah. Just another socialist redistribution scheme.
Of course I would be forced to sell it because the taxes would be too high. That's the whole point. Because of tax policy I would be forced to sell the land that I want to keep and sell later for appreciation value.
Sometimes we forget that this is a capitalist free market country. I'm free to do what I want with my own land and my own capital.
Sometimes it is not optimal, but if you take that part away, what incentive do people have to do business anymore?
This is the literal point of the LVT: to make it more expensive to hold land unused for speculative purposes, and thus incentivize doing something productive with it instead.
Just pay the tax, and you're good to go, even if you never develop it. The idea of a LVT is to make it less palatable to let the land go unused or under-utilized.
land is both inelastic and valuable and that is why land tax is perfectly economically efficient and creates no deadweight loss.
the fact that it is also necessary for life and production while being finite is what makes it a moral imperative to redistribute land rents to the proper owners (i.e. society and not an individual, who pays society for the right to a local monopoly over a piece of land).
for me lvt is not about building condos, in some areas it will incentivise that, in other it wont. it's a fundamental moral and philosophical issue on par with slavery; it's about transitioning away from a feudal model and towards a freer market and more participatory and empowering society.
for the true believer lvt must replace other taxes, and in theory all taxes come out of rent, so abolition of sales or income tax will increase lvt even more, in a virtuous cycle.
the appropriate amount to tax land is as close to 100% as you can get.
Yeah, praised by socialists like Milton Friedman.
Granted I think LVT is kind of dumb too (saying this as a communist, fyi). I think the incentives it sets up are interesting and could make sense in a lot of cases in a market system, however short of a country run by an oligarchy of economists, it seems to me nobody would willingly turn over their property so such a system. Also, I can't help but think about how value assessment would actually work...seems it would be an easily corruptable process.
Imagine if somebody purchased half of the existing radio spectrum and then decided to just leave it unused for decades. We wouldn't allow it. Perhaps if they compensated society by paying a tax for the exclusive use (or non-use) of it then we could justify it.
Thus the equitable way to distribute any wealth gained is to give it back to society, since the "public" helped give your land value.
I think the provocative thing about Georgism in the present context is, while NIMBYs have gotten a lot of mileage out of a theory of community interest in keeping uses low-intensity that supersedes the rights of owners, we can actually articulate the same kind of community interest in making those uses intense and productive. A vacant lot is anathema to a vibrant block in the same way that an industrial plant is anathema to a residential neighborhood.
It would be fine from my perspective if those two simply cancelled out and we reverted to more individual autonomy.
This only further hurts people living here by chasing them out of their homes and taking control of their communities away from them.
We can't solve the problems of every country in the world by destroying our own. That only makes things worse for everyone.
It's not a supply-side problem (or not only or even majorly a supply-side problem). We can see this because the housing bubble is occurring in widely different places with widely different construction rules: both very restrictive and very lax. This is fundamentally a finance bubble.
no matter what we do on the supply side, it will be eaten up by the unlimited demand from investors.
while housing outperforms other investments or until regulators curtail the activity, housing will remain expensive.
Housing is entirely local. The US has plenty of cheap land to build housing. People choose to live where the jobs are or where QOL is high. High prices reflect that. And that's good - it's a signal we should be building housing and opening new businesses elsewhere.
[1] https://eyeonhousing.org/2021/03/immigrants-in-construction-...
Tokyo has a huge demand in accommodation and guess what, they keep building a lot of apartment buildings and it works.
Chill out with the racist "we're running out of room" diatribes. We are decidedly not running out of room.
if you live in it, then a land value tax is equivalent to the state charging you a tax on the imputed rent you receive from owning your own abode.
If you don't live in it, but rent it out, then that's self explanatory - you use the rental income to pay the tax.
If you don't rent it out, then it's your loss as you have to pay the tax out of pocket. This means you will need to rent it out.
The reality is that it’s a highly regressive tax. Taxes shouldn’t be a prime driver of economic activity.
Further, while land value tax would reduce the average tax burden on the average farmer, it would change the incentives because it would make passively holding onto land less valuable of an activity on the margin even if there's a net savings to the average farmer.
I'm not a fan of factory farming either, but the point you're missing is that the kind of agricultural strategy you and I don't like optimizes NOT for highest yield per acre, but highest yield per dollar of input.
Efficiency is not mono-dimensional, it's not about "more efficiency" it's about "more efficient AT WHAT." And what industrial farming is efficient at is not using money and not using human labor. One of the chief ways it does this is externalizing most of its costs (pesticides, herbicides, runoff, erosion, antibiotics, etc), and grabbing up more land to make up for its lower per-acre efficiency.
Well, of course, but surely the comparison is with regard to total tax receipts.
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.
Imagine trying to asses the value of a modern farm today for the hypothetical where a connecting aqueduct had not been built 70 years ago.
Exempting improvements also undermines the argument that LVT puts the land to it's best possible use.
When you improve land, the best possible use is now different. ostensibly, that's why you improved it in the first place.
Building the aqueduct, or a city building a train terminal, both provide positive externalities for the entire region. Those externalities should be taxed.
The soil quality or clearing of forest itself is an improvement much the same way a house is, so that would not be taxed.
I fundamentally disagree on grounds of consent and equity.
It is one thing to recoup costs and upkeep for a collectively endorsed project. It is entirely different to claim and capture perpetual dividends on the positive externalities.
If a city builds a train terminal, the citizens pay for it once in taxes and bonds. The city should not be able to extract further value beyond upkeep. After investment costs are covered, the entirety of the benefit should belong to the people.
How many times over is it equitable to expect citizens to pay for a project?
This is the difference between non-profit and rent-seeking behavior, and I think governments should ask more as a non-profit.
This is why use and service taxes are far superior for taxing benefit.
The true unjust behavior is the monopolization of land, land that through many inheritences and sales ultimately comes from force and violence. Us Georgists understand that monopolization of land is a good thing, and allows much further uses that an anarchist model would allow, but you need to pay your fair share.
After investments are covered, the entirety of the benefit DOES belong to the people. Ultimately those taxes are coming back to the citizens the way that the citizens decide is the best use of them.
And this is before we get into how the bad incentives produce all sorts of car-centric and SFH-centric developments, as those waste the most amount of land, and the more the land is wasted the more it costs. Rising costs allow the speculator to buy even more land to waste. This eventually makes those train stations unviable, which hurts everyone.
Can Land be Assessed at Highest and Best Use? - https://www.jstor.org/stable/43817496?read-now=1&refreqid=ex...
and
Administrative Simplicity - https://www.jstor.org/stable/43817496?read-now=1&refreqid=ex...
and https://www.jstor.org/stable/43817496?read-now=1&refreqid=ex...
As a simple practical matter, the "Highest and Best Use" is ultimately subservient to "demand for land". Simply because you -could- build the Empire State Building in the desert does not make it so that every plot of land in this desert is assessed at this level. In fact, if you were to build the Empire State Building in the middle of nowhere, the rental value of the plot and the surrounding plots would remain at or near $0. It is inaccurate to suggest that the improvement gives the land its value. People give the land its value, and the location value is not equal to the improvements. Why would I pay someone else rent (which is ultimately what we're discussing here) when I could make those same improvements elsewhere? Louis F Post gets into this point below
It is also important to recognize that the principle of assessment should be seen more about adjacent activity not your own activity. See: http://www.wealthandwant.com/themes/Neighbors%27_Actions.htm...
"Q6. If a land-owner builds, does not that increase the value of his land and consequently the amount of the tax he would have to pay? If so, would not he be taxed for his improvement? A. No. Upon the value of the building he would never pay any tax. It is true that his improvement might attract others to the locality in such numbers as to make land there scarcer and consequently dearer. His own lot would in that case rise in value with the other land and be taxed more, just as the rest would be. But that would not take any of his labor in taxes; he would still have his building free of taxation. Thus: If on a lot worth $1000 a building worth $1000 were erected, making the whole worth $2000, the tax would fall only upon the $1000 which represents the value of the lot. If land then became so scarce that the lot rose in value to $1500 the tax would be raised. But the owner's improvement would be still exempt. When his property was worth $2000 he was taxed on $1000, the value of the lot, leaving $1000, the value of the building, free; and now, though he is taxed on $1500, the value of the lot, $1000, the value of the building, is still free."
and
https://masongaffney.org/publications/G44Philosophy_of_Publi...
Land and its value is the joint product of at least three things:
• nature, which created it;
• government, which acquired it from other sovereigns and protects it from other powers and extends public works for the public's benefit; and
• synergism, which is the increment to value that spills over from social and economic activity in the neighborhood of each parcel of land.
Value stemming from all these elements is regarded as unearned by the individual landowner. It is the product of outside forces and therefore a fit object of taxation
I have two criticisms.
1) The claimed purpose of sate to allocate resources to the "Highest and Best Use" seems in conflict with the purpose of the state to protect individual autonomy and freedoms. Placing economic development and growth above the latter is essentially economic utilitarianism, and carries all of the baggage that goes along with it.
2) It models the state as a sovereign to the people, with overlying claims to any positive externalities of development, opposed to the servant of the people, who retain the rights to these externalities. I think this is apparent in the idea that the three value streams are unearned, and therefor belong to the government.
>Land and its value is the joint product of at least three things:
• nature, which created it;
-I see this as neutral, as this predates both the existence of the government and the people.
• government, which acquired it from other sovereigns and protects it from other powers and extends public works for the public's benefit
-As the servant of the people, the government is not entitled to the benefits of public works. These belong to the people, who commissioned the public works. By analogy, If a city builds a train terminal, the citizens pay for it once in taxes and bonds. The city should not be able to extract further value beyond upkeep. After investment costs are covered, the entirety of the benefit should belong to the people. How many times over is it equitable to expect citizens to pay for a project?
• synergism, which is the increment to value that spills over from social and economic activity in the neighborhood of each parcel of land.
-As I understand it, incremental value is generated by the social and economic activity of the people. It is the result of the labors, improvements, and collaboration with the community. It seems that the people have more collective claim than the government.
In summary, the people and the government have a working relationship. Is the model one where government behaves like a employer which entitled to the excess value after services rendered, or is the government the employee and the people entitled to the excess value after services rendered. I prefer the latter, and it seems LVT assumes the former.
* https://en.wikipedia.org/wiki/Greenbelt_(Golden_Horseshoe)
The question would be whether removing that in favor of a land tax would really change that. I’m not sure it would make it worse, given that there are (relatively speaking) fewer “property” improvements on top of the land in a farm.
Either way, I don’t think this is a fair reason to dismiss LVT outright, as it completely depends on the implementation.
So, for all of the farm land we average to ~5k/farmer? It sounds like what is being discussed in this thread is a tax that would be debilitating to the land speculation market. 5k would not prevent a speculator from holding a plot of land.
I think this because, as far as I'm able to understand, the fiat currency system is a kind of "infinite money machine" (or something like it) which makes a certain high-enough level of government free from requiring being funded by taxes.
this occurred to me after reading a bit about the book "how to pay for the war on terror". and I also recall reading how the USA government has been steadily de-funding the IRS, which would make no sense under the notion that taxes are necessary to fund the government.
Note: I am 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 duty actually is in reality, how is then LVT any different from creating the same short-term enforced greed?
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?
(Adapted from texts originally written here:)
• https://news.ycombinator.com/item?id=25319095
Sale price already nudges you to preserve, improve, or augment the value of the land.
So I think your concern either already would have happened, or if not, a Georgist land value tax makes it no more likely. Thanks for the opportunity to think this through this far; what am I missing?
Firstly, the first nightclub to open in an area with demand for music and alcohol, or cafe with demand for coffee and croissants, is going to very profitable.
Secondly, most businesses rent. They rent from profit-seeking commercial landlords who charge them a market rate. A land value tax is loosely based on the same market rate, just not inclusive of improvements. To argue that commercial tenants will be charged more is to argue that commercial landlords are leaving money on the table, which I don't believe.
> To argue that commercial tenants will be charged more is to argue that commercial landlords are leaving money on the table, which I don't believe.
Getting more money might involve tearing down and rebuilding (which is expensive) and forgoing income while the rebuilding is taking place. If one were cynical, one could assume that most landlords simply don’t have the capital on hand to do this, and/or can’t get rid of their current tenants easily enough. A more charitable view might be that the landlord likes having a nightclub where it is.
Hang on, what does loss-making public infrastructure paid for by taxes have to do with the taxation of the land it sits on? If the government already pays for railway stations and parks and post offices, why would it be a problem for the government to tax itself more?
I agree that there are things which have positive externalities that are not profitable in themselves. Those things already exist and the government pays for them using taxes.
> A more charitable view might be that the landlord likes having a nightclub where it is.
If the business owners were accepting below market rate because they wanted to keep a business there, then they're effectively spending money on charity. In that case, yes, raising taxes on them might cause them to give less. Suggesting that we leave the surplus value of land with landlords because they're going to use some of it on charitable giving, instead of to the government, is a coherent position.
I'm not sure I agree with it, though. I think a small fraction of landlords will give low rents to businesses they like, but most of them will just charge tenants close to market rate. I think in that case, I'd rather give most of the surplus value to governments instead.
Sure. But are you arguing that all use of current buildings are already at their theoretical maximum profit limit, and therefore no real estate property tax could incentivize landlords to convert a building from a museum to, say, lofts? If so, I am doubtful, but I have no evidence to present against your position.