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Comment by bombcar | Hacker News Reader

The idea is that you tax the land only as if it was being used for best use - so that every property is encouraged to develop to maximum density.

I suspect that in actual use it would end up having a small to no effect.

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In actual use it would, in most cases, ensure that people would not, could not have long-term ownership of land passed down from generation to generation. There would be significant social downstream effects & likely upheaval caused by this, & that would be compounded by the deleterious results of forcing more & more people to live shoulder to shoulder in the name of that maximum density you mention. No system of taxation is going to be perfect, or even nearly so, but some significantly increase the likelihood of abuse & unintended consequences of bad ideas allowed to run wild. All this without the need for malicious or corrupt action on the part of those in charge of the system, though it strikes me that a system such as the one proposed here would treble the power of officials to strike at groups & ways of life with which they disagree.

Someone once remarked that American society is anti-Georgist, in that land speculation is actually seen as the only honorable engagement with real estate.

Having un-utilized land in your family generation after generation codes as noble, but economically this is much worse than owning an AirBnb or a vacation home or being a Chinese investor who collects vacant luxury condos, or any of the other boogeymen of housing discourse. These people hold one unit off the market, and in the meantime they maintain it or finance its construction. The landowner builds and holds wealth for nothing but parasitism.

So you're against someone who gets 100 acres, plants a house in the middle of it, & lives there simply because they want to, & they don't want to have to put up with the existence of neighbors? That's not parasitism — that's doing with one's property what one wishes to do. The economy is not the universe.

They are welcome to do so, but it would probably be cost prohibitive to do that in a highly desirable area. I’m not sure what the hangup is.

You are amazingly blasé about that fact that this would be using taxation to prevent people from using their own property as they see fit. This is utilitarianism run amok.

We prevent people from using their property as they see fit all the time via zoning. It is in fact mostly those with generational wealth that use this power.

Most people don't care about zoning, but they really do care about zoning changes that affect them.

Being told you can't live in your house anymore because it is now zoned commercial gets people riled up, and being told the same because it's now too expensive does the same.

It's a hot-button issue but you can defuse it by putting safeguards in, though they're not always successful - see eminent domain scandals.

Actually this entire construction is wrong: currently people who improve their land get penalized by higher taxes. If there are only land value and not property taxes, we are in fact increasing your freedom to make changes to your land without penalty.

Your argument ignores that changes to neighbors' property would then cause an increased burden to a land owner. This would not seem to be an improvement for freedom

It’s a finite resource. 100 acres of land being barely used should certainly come with a cost. Of all of the things that could be taxed, this one actually makes the most sense.

People aren't objecting to taxing 100 acres of Manhattan at rates that are associated with the value of the land there, people are upset about the idea that they could buy something, and then through no fault of their own, it becomes worth more and they have to sell because they can't afford to pay. Sure you get a ball of money as a consolation price, but you still had to move on.

But this is more of a straw man than a real objection; as there are various and sundry ways to resolve this (for fixed income, you can have property tax deferral until sale-after-death, you can have homestead exemptions, etc etc).

> buy something, and then through no fault of their own, it becomes worth more and they have to sell because they can't afford to pay

I fail to see why that’s a problem. Those taxes go to fund local services (like schools, police, fire, etc.) whose costs likely scale when the local cost of living and land values scale. Buying land doesn’t mean you should get to lock in the price you pay for these services for perpetuity.

Detroit is a city. They already try to encourage high-density living through the types of zoning they have. I don't see a fundamental issue with aligning their taxes to better facilitate their development goals.

Similar arguments would go for rural municipalities that might want to encourage multi-generational agricultural living, for example, if that's what you're getting at.

Huh? You have to pay property taxes now and those could end up being too high for subsequent generations to afford. That happens all the time and is a common reason why property gets subdivided. This is simply a question of whether the value of structures on that land should be included.

If anything a pure land value tax should be more predictable than a property tax, I got hit with a major property tax increase and looked into it, the town had calculated the new property tax based on an incorrect square footage and number of bedrooms for my house. After filing an appeal and going to court I got it fixed, but that was a more capricious process than if it was simply based on the value of the land under the house.

The problem with that is that would displace virtually everyone from many cities in the US. There are plenty of cities with single family housing near the metro area. It was built before the city expanded. Nowadays the city engulfs it. Obviously the best use for most of that is medium density housing or some commercial use. The idea of taxing a house with a backyard like it's a $3 million quad-plex of town homes isn't very appealing.

That claim isn’t true. The book goes into details like this and taxes would go down for ~97% of parcels. It would go up a lot for parking lots in city centers and certain segments of commercial real estate.

So limiting Georgism LVT to only commercial real estate would get you all of the benefit without affecting residential properties?

Then simply enact that, and the voters won't care because their taxes will stay the same (they probably will never actually decrease).

That isn't quite what I said, but I really suggest Lars's book, if you have a genuine interest in this!

You won't get an absolutely black and white one sentence solution from it, but it is thought-provoking and contains some really useful ideas, IMO.

Taxes never really go down. That's always the ploy - say the tax is a limited time, or only a specific low rate, then extend it. In this case, the people in power can play with the tax rates, but even more so in the zoning. An added avenue of getting screwed is not very appealing when taxes are already high. Let's not forget rhat if the goal is to utilize more space, that means more infrastructure and services costs. If we actually make a big impact on the space front, those infrastructure costs will go up and require substantially more revenue. I'm skeptical of the claim that most taxes will go down.

On the contrary, that's exactly what most cities need in order for property prices to drop from insane to less insane.

LVT would exclusively take from people and corporations who own land. This in turn will allow more people to own their home.

> The idea is that you tax the land only as if it was being used for best use - so that every property is encouraged to develop to maximum density.

Maximum value, not maximum density.

They may tend to be the same thing, but that's not necessarily the case.

So people will be paying a higher tax than they ought to be if they aren't trend-chasing the economy to always be engaging in that "best use" from year to year?

That sounds perverse in itself, especially since an economy needs diversity to function, and if everyone is incentivized to chase a single thing per region you end up with overproduction of that and underproduction of everything else.

Land that’s already been improved would pay less in taxes. Empty lots, parking lots, and other unimproved land would pay more tax. Calling an economic incentive to do something with your empty lot in an urban area “perverse” seems.. extreme.

But the post I responded to implied that if you weren't in the most-profitable economic sector, you'd be taxed as if you were, causing excessive loss, leading to people switching businesses to be in that one Golden Sector regardless of what the economy needs and can support.

Besides:

> Empty lots, parking lots, and other unimproved land would pay more tax.

Believe it or not, we need ranches and farms. Taxing them out of existence would be bad.

Is a city full of pet stores valuable?

I don't see why this would encourage economic homogenization.

It would because anyone who isn't in the best-paying part of the economy would be taxed higher than their actual income could support, leading them to either switch businesses or go broke.

Go look at the most valuable real-estate in the USA that is still commercial, it's almost always banks and Starbucks.

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