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He does benefit from the increase in value, because land increases in value due to increased services and amenities. If you put a train station nearby someone's house, their property hugely increases in value, and they benefit from the nearby train (or school, or fire station, or port, or whatever else).

Now, we could certainly defer the payment of the tax until sale of the property for, say, pensioners, as no one wants to be kicking out retirees from their homes.

However, the issue of people losing their homes due to increases in value already exist for a massive section of the population: those who rent. As rents increase, many renters are forced to move. They don't even get to benefit from an increase in land value, from the community they helped build and improve.

A fantastic way to solve this issue would be a land value tax that taxes the economic rent of the land, in conjunction with removing all income and sales tax. This means that land sale prices are low, renters have more income to spend on things besides rent, and people sitting on land don't benefit enormously without returning that value to society.

The tax can be deferred until sale of the property for pensioners, for their primary residence.

Lets take the example above as being too much money (as "too much" is hard to pin down). In exchange for losing a home due to the $2k payment you will receive $80k.

Generally speaking 40 years worth of "I couldn't afford it" is a pretty decent apology.

This is working of NJ which has the highest rate at 2.5%, most states are lower.

Sure it sucks that you are paying $1k instead of $2k because your house is worth $200k instead of $100k but you know... You could sell your house for a profit of $100k.

Consider the cost to the community, not just the people being priced out.

The first people we lose are often those who have been here the longest, contributed greatly to the community, but are on a fixed income and cannot afford the tax increase.

Case in point, we’re losing our volunteer fire department’s rookie coordinator and training captain because he’s been priced out of the area.

He’s elderly, been a member of the department for decades, is hugely valuable and has a trove of institutional knowledge.

I’m glad he’s able to move elsewhere with the payout he’s getting from his home, but the loss to our community is enormous.

How is arbitrarily forcing people out of the communities they’ve built the moral (or constructive!) thing to do?

Taxes can have negative consequences but a single anecdote of negative consequence doesn’t prove that overall tax is net negative.

Every household that moves out of a neighbourhood is replaced by the household moving into a neighbourhood. A society where the most valuable neighbourhoods for working families aren’t disproportionately occupied by retirees paying a tiny fraction of the true cost of living there has benefits. Some households in the Bay Area are being undercharged in property tax by over $50,000/year at current rates. That’s $50,000 a year less for schools and services. It also means other, newer home owners have to pay a disproportionate amount more since if property taxes were based on market rates the percentage rate of the tax would go down.

Your arguments for social engineering are based in ignoring the true individual human cost, and the true cost to the communities you’d happily destroy in pursuit of your bland generalized vision of how things should be.

That seems immoral to me, and I’m not convinced you’ve actually thought through the implications of your idealized grand vision.

“Your lost decades-long community members will be replaced by brand new people” is not the argument you seem to think it is, and could only be made by someone who had no experience building a functioning community.

My primary point is not that the old people are replaced by new people. My primary point is that you have huge costs related to maintaining the community you want in the form of massive subsidies that reduce taxation and collect resources in an unfair and biased way from the community.

I’m pretty sure it’s a bad idea because it’s pretty much a historical accident in California and implemented just about nowhere else. California can’t get rid of it because the policy creates a huge amount of inertia but people have tried on many occasions because the policy is also extremely bad.

The solutions to property tax rising are myriad. A person can take a mortgage out against the gains in property value. Since property taxes are well under 1%, this can pay for the property tax for 50 years easily and the only drawback is not owning 100% of the property. A person can also downsize to a smaller home or condo in the community, providing the community gets its act together enough on housing to provide said options. Ultimately, your community is losing someone because they decided the best option was to cash in the value of their home, take their profits and leave. They also decided there best bet for cheaper housing was elsewhere, which is something the community could have done something about with better policy. People should have that choice. The problem in this scenario is not property taxes going up with land value increases.

Lastly, artificially keeping communities together through massive subsidies to people who’ve been there a long time is just as much social engineering as having a property tax that’s based on current market value.

> massive subsidies

You’ve invented this idea whole-cloth.

We’re not subsidizing someone’s existence just because we could derive much more value from their land if we forced them to sell it to us.

> A person can also downsize to a smaller home or condo in the community, providing the community gets its act together enough on housing to provide said options.

We’re not obligated to pave over our community and turn our population into a permanent rental class, pouring wealth into the pockets of rent-seeking developers that will extract it from the local economy, just because you don’t like how we live.

I realize this is a bit inappropriate for yc, but just about everything you’ve said demonstrates a gross moral failing inherent in believing you have a rightful interest in forcing others to behave the way you want them to, instead of the way they’ve chosen to live.

We are subsidizing their existence when we charge them below market property tax rates based on property values that are 40 years old instead of current market rates.

You went to ad hominem very quickly on having your ideas challenged. It’s not a gross moral failing to want property tax to work the way it’s supposed to and does in nearly every jurisdiction on the planet. Except California because of weird historical accident.

> below market property tax rates

There’s no such thing as a “market rate” when you’re discussing invented taxation schemes.

> You went to ad hominem very quickly on having your ideas challenged.

No, I went very quickly to calling out the immorality of your position upon your succinctly demonstrating the same.

> It’s not a gross moral failing to want property tax to work the way it’s supposed to …

Taxation schemes are an arbitrary invention. They’re not supposed to do anything other than whatever they’re designed to do.

Furthermore, the LVT scheme you proposed is not how property tax works in nearly every jurisdiction on the planet, and is designed to force people from their homes, coerce them into selling their property, and control how that property may be used under penalty of ruinous taxation for a failure to comply.

You are ignoring the numbers because they don't support your version of events.

A $500,000 home is taxed $12,500 a year or a little over $1,000 per month in New Jersey the state with the highest property tax in the United States.

However that is an extreme example given few homes outside of super dense urban areas are worth that much and most states have much lower property taxes.

If we replace it with a $300,000 home and a tax rate of 1% (which is representative of most of the country) you instead get $3,000 a year or $250 a month. HoA fees are higher than that in many communities. That isn't ruinous at all.

There is also the issue that by failing to build low-cost housing it’s your community’s responsibility for pricing people out and not giving them the option to downsize within their community. Giving artificial tax breaks to subsidize bad housing policy seems to me more like a cause of Bay Area problems than a solution to anything substantial.

> … not giving them the option to downsize within their community

The “option to downsize” is an odd euphemism for “forcing people from their homes to live the way I think they should have to”.

> Giving artificial tax breaks …

The tax itself is already an artificial, arbitrary construction.

Forced to sell is quite ridiculous he could take out a small loan against the increased property value without having to sell. He would lose less money from the loan than the unrealized gain on the property even if he paid the increase in property taxes this way for 50 years. The idea that homeowners need to maintain 100% ownership of their home no matter what their finances are and no matter how much their home goes up is a bad one.

>Except he doesn't benefit any more from the increased value

Thats the same for literally any product or service in the world which you like which goes up in price due to increased demand. Is that immoral?

The only difference is that if LVT goes up it does mean you can charge more rent so you potentially could benefit even if you choose not to.

While renters in the same area are exposed to the same market forces. Theres no potential benefit to them they just need to pay more money.

> Thats the same for literally any product or service in the world which you like which goes up in price due to increased demand.

I already own the home.

Imagine that sales tax was assessed yearly on every item you already own, based on the current market value if you were to chose to sell it that year.

> The only difference is that if LVT goes up it does mean you can charge more rent so you potentially could benefit even if you choose not to.

How does that help me if I’m not a rent-seeking landlord?

How does that help the community that you want to forcibly dismantle?

>I already own the home.

A privileged position the poorer half of the population doesnt share. They have to deal with rising rents along with rising gas prices.

>Imagine that sales tax was assessed yearly on every item you already own, based on the current market value

Imagine instead that it was limited just to the roof over your head. Voila youve just imagined rent. Something the poorer half of the population HAS to deal with.

Im just proposing leveling the playing field between renters and owners by limiting owners' right to capitalize on land value increases.

That is, taking away what are effectively handouts given to you. Free money. Wealth you didnt earn because the land value isnt about you or your house.

>How does that help me if I’m not a rent-seeking landlord

1. The option is always there. Whether you exercise it or not having the option of an additional stream of income DOES help you.

2. Your net worth literally goes up. You can easily convert that net worth into cash if you choose. Reverse mortgages, etc.

>How does that help the community that you want to forcibly dismantle?

With a higher land value tax land would HAVE to be used more efficiently. Denser housing etc. That means lower rents. That means renters who were priced out of their homes, forcibly dismantling their community, get to stay.

Some people think forcibly dismantling communities of renters is fine. Perhaps they dont think they matter coz theyre typically less white communities. Perhaps this is what they really want.

> Im just proposing leveling the playing field between renters and owners by limiting owners' right to capitalize on land value increases.

Nobody is capitalizing on unrealized land value increases. That’s literally the definition of “unrealized”.

“Make everything terrible for everyone” is one way to level a playing field, but rarely a good way.

> That is, taking away what are effectively handouts given to you. Free money. Wealth you didnt earn because the land value isnt about you or your house.

What free money? The wealth is unrealized. If I want to continue living in my community, it may never be realized.

When and if it ever is, you can tax it.

> With a higher land value tax land would HAVE to be used more efficiently

Forcing more people from their homes and destroying their community.