Hacker News Reader

Comment by ethanbond | Hacker News Reader

Institute high Land Value Tax and eliminate most zoning and JPM can do whatever they want with their money. They’ll just have to compete on units and services provided instead of who had enough capital to capture indefinite land rent.

View on HN

Land value tax which is free if you live in an owner occupied property, without the ability to sublet. Higher if rented out, and then make a linear increasing penalty percentage with the number of properties owned. So if you own one house and live there, zero tax. If you own 5 properties, you pay zero on the one you live in, then regular tax on the second, tax+penalty on the third, tax+higher penalty on the fourth, etc.

It would not make any sense to create real estate ETFs under this world for example because the tax penalty would be extremely high.

This is much better. Why tax families who live in their homes the same way as landlords with large holdings?

That depends on what the purpose of the tax. If it’s to pay for local government services (fire, police, trash removal, schools), then why would you tax them differently?

If taxes are mostly punitive means to shape behavior, then sure.

Family of renters here. Why should we have our labor taxed to support a different families idle wealth accumulation?

Both are benefiting from the labour and value created by the rest of society, outsized to their contributions. Land receives its value due to all the infrastructure, people, businesses, and so on that are around the land, and everyone who owns land benefits from this as their land value increases. Owner-occupiers benefit just as much as landlords (they are, in fact, lords of their land too, but their tenant is themselves). They should return to society the value that society created for them, in the form of a land value tax.

This should of course be offset by a reduction in other taxes, but it is a supremely just and efficient tax and far preferred to most other taxes.

That’s a lot of assertions but one could also make the argument that vacant spaces have far lower land value because there aren’t large numbers of families living there. If this is true, it seems questionable that the people living there are benefiting only in a one-way manner.

Yes, everyone contributes to society in some way, hence "outsized to their contributions." If you sit on a piece of land and wait 10 years in my city, you might have made $500,000 of tax-free land value gains, but without needing to contribute anything to achieve it. In fact, if you do nothing but sit on the land, you're a net negative on society because you deny access to that land from everyone else.

I just don’t see the “outsized to their contributions” part. The bureaucracy is built off the tax dollars of the people who first decided to settle there but you could probably reduce that tax burden and bureaucracy by a large percentage and the people living there, as long as they felt a good reason to do so, would continue to create a decent quality of lives for themselves. Either way, we’re basically just debating ideology at this point.

The easiest way to compare is to look at what a family of renters get vs a family of landowners. In a city with growing land values, the renters get nothing but the landowners get a lot, yet their contributions as "families contributing to society" would be equivalent.

Or make a progressive tax on property value: low tax rates for the first $500k or $1m of value and higher after, for "natural person" (i.e. non corporate) landowners. Let corporate land owners pay the higher tax on all value.

The problem with any of this is with elected government and privately funded campaigns, elected officials are mostly responsive to the needs of the donor class. So good luck getting passed any legislation that benefits the masses over the campaign donors.

So how do you think it will help anyone if it costs more to build more rental units. Every single response so far is going into moral outrage about JPM buying up existing home inventory didn’t even bother to read the bullet points

> The companies plan to acquire up to $1 billion in build-to-rent properties, starting in Atlanta.

The point is that it would incentivize them to sell condos instead, which are then tax-privileged.

And how does that help people who don’t want to commit to buying a house? The end goal should be affordable housing not home ownership. Buying and selling a house has high transactional costs and definitely shouldn’t be the go to. If you need to change jobs, it’s much harder to move if you own a home.

Besides, “owning” a condo when you still have all of the issues of being in an apartment is not ideal. You are still dependent on the condo association to fix common parts of the building , it needs to be a well run association, you have to deal with neighbors and shared walls etc.

Regarding the "owning a condo not being ideal", it's actually the norm in many countries, assuming by "condo" you mean a flat in a shared building with many houses - where I'm from, condominium is the name you give the association of neighbors, not the structure. Almost 50% of the EU residents live in flats[0]and have to indeed communicate with their neighbors and solve common issues together through a management company or directly through the owners association, depending on the building. I think you're making it out to be more complex than it is.

[0] https://www.weforum.org/agenda/2021/07/flats-houses-types-ho...

> Let corporate land owners pay the higher tax on all value.

I'm curious as to who you think will pay the tax.. Wont it be the tenant?

Under your system rent will simply increase by the cost of the tax, which will fully be passed on to the tenant.

This is like applying an "import taxes" and claiming the foreign country "pays". - No they don't domestic consumption pays.

Land Value Tax is not incident on tenants.

https://gameofrent.com/content/can-lvt-be-passed-on-to-tenan...

tldr: if landlords could raise the rent and still get tenants they'd do it right now

"simply increase by the cost of the tax"

The "simple" part isn't correct. Renters will pay some share of the tax, but it's unlikely that the owners would be able to shift 100% of the burden.

So you want to punish developers building apartment complexes in high-demand cities, while billionaires can enjoy their hundred million dollars tax free? NIMBYs tend to be private homeowners, so this would defeat much of the purpose of the LVT.

> So you want to punish developers building apartment complexes in high-demand cities

I don't know about the US but in other places you can actually buy an apartment which would solve that problem.

You could develop a giant complex and sell the units to individuals instead of renting!

Or there could also be a different tax rate depending on density. Single family home would be taxed the highest. Lower taxes for townhomes. Lower still for apartments.

The rate would still increase with number of units that a single entity owns, but by a smaller amount for more-dense housing.

This is the system we have in Sweden, although it has a problem in that it sometimes happens that developers saddle the resulting condominium association with debts, which are sometimes substantial.

Developers can sell apartments to private citizens or other corporations. They don't have to rent out apartments themselves.

This is very inferior to just a regular land value tax if you understand the incentive structure

"I'd tell you why you're wrong but I'm busy" can be said to anyone about anything. Care to expand?

The point of an LVT is to incentivize the efficient use of land and to compensate the public for the recognition of exclusionary title to use of a location. This doesn't change based on who it is that is using the land or what they are using it for. Take a $20 million plot of land in LA; it makes no sense to exempt a person with a mansion there from paying a tax and penalizing a developer who builds a huge apartment building that can house 50 families! By keeping the LVT flat and not exempting particular uses, you avoid distorting the market and- in the case of a homestead exemption- punishing people who build apartments over single family homes, etc.

> The point of an LVT is to incentivize the efficient use of land and to compensate the public for the recognition of exclusionary title to use of a location.

I'd say an additional point should be to try and not make it so that the path of least resistance for the system of taxes being for a few corporations to accumulate all the available real estate. From what you say you're fine with one company owning all the land as long as they pay the tax. What I'm proposing is similar except the tax gets more and more prohibitive the more you own, instead of being a flat rate.

A heavy, mostly-flat LVT should be the end goal, but would have to be phased in over a generation to be politically viable and not cause tremendous social disruption.

Nobody's going to get behind a law that kicks grandma out of the house she's been living in for 50 years.

You have to start with residential properties owned by investing companies first, then phase it into nonprimary residences owned by individuals, then primary residences over a certain dollar amount for people under 65, etc. Then you slowly ramp up land value taxes and dial back traditional property taxes until they're entirely replaced.

Exactly this. Here's a good source for the two-pronged approach that's necessary to solve this problem, in case anyone's curious:

https://progressandpoverty.substack.com/p/land-and-the-liber...

JPM and the capitalists effectively own the Congress so they would never implement a Land Value Tax

They give diversity and abortion to the left wing plebes and guns and religion to the right wing plebes but would never do anything that costs the capitalists money or power.

I don't think Congress even matters anymore now that the Supreme Court and lower courts are owned by the Federalist Society. I suspect any attempts to tax capital will be determined to be unconstitutional now. The US is locked in all the way.

Are you seriously suggesting there's a judiciary dictatorship installed in the USA right now? There's one where I live and also in many other south american countries but I never expected the US to be that corrupt.

Nah the Supreme Court is pretty deferential to Congress especially on powers of taxation, this is a load of nonsense

For 50 years in the US, women had some rights of bodily autonomy that they lost this year because of the Supreme Court. Whether you agree with that outcome, it seems hard to deny the immense power there, and why there has been a multi-decade campaign on the right to control it.

Look up the controversy over a wealth tax - most Conservatives would tell you it's unconstitutional and/or wildly impractical, but I pay property taxes every year which sure feel like a wealth tax.

We should start with Federal ban on zoning.

So you wouldn't mind if someone surrounds your house with landfills and nuclear waste storage?

Most zoning seems to make life worse for renters.

But not all zoning is bad.

I mean zoning for house development. Article is about homes, isn't it?

No neighbors and a safe neighborhood? Don't temp me.

fwiw where I live in Los Angeles we have actual operational oil derricks right in the middle of residential neighborhoods but it's nearly impossible to build apartment buildings.

https://www.theatlantic.com/photo/2014/08/the-urban-oil-fiel...

If zoning can't prevent the heaviest of heavy industries from sharing space with schools and playgrounds then I don't see why keeping it around to kill new housing projects is so useful.

Reply on news.ycombinator.com