Why are there suddenly so many car washes?
bloomberg.com
bloomberg.com
The real business of car washes is real estate, it's profitable enough to get 3-4x leverage with a low interest loan.
TBH I think real estate used to have high information asymmetry between local residents and large investors; low property taxes and generous loan terms under this primarily benefited small businesses, individuals, etc. I think the internet and increased observability into far away projects erased this (a ring camera costs a billion dollar PE firm and Single home owner the same); now the same policies we have had are allowing easy arbitrage between low cost fed/PE cash and predictable "dumb" business categories; car wash, self storage, etc.
I take pride in the fact I haven't been to a car wash in probably 3 years and have likely gone myself less than 10 times total. Rain and the occasional wet rag is good enough for a depreciating asset.
I've never been a fan of taxing the value of raw land, mainly because it creates incentives for destroying natural land and extracting as much value as possible from the space. Taxing structures based on the expected economic value can make sense, though even then if its a business there are more direct ways to tax the business's realized revenue or profits.
The point of taxing the value of the land in urban areas is that a lot of the time places essentially squat on land that could be better used. A car wash building will have a low assessed value for its improvements compared to a biotech building. For example, in my city we have a carwash with its improvements valued at $400,000 and a biotech building with its improvements valued at $275,000,000. The biotech building uses only double the land, but pays a ton more taxes.
In my city, there are lots where they're basically abandoned. The owners know that they can just sit on the land and it'll increase in value over time even if it isn't used for a productive purpose. During this time, people need housing, businesses need office space, etc. This isn't "natural land", they're gravel pits.
In fact, lack of a land value tax causes us to destroy natural land. Instead of using land well, we sprawl and pave our way into the suburbs and beyond.
Not all land is equally valuable and land can be made non-valuable from the standpoint of a land value tax like parks and nature reserves. A land value tax isn't really meaningful in rural areas where the land isn't really that valuable due to its location. Where a land value tax is meaningful is in cities where land is scarce and we want to put it to good use.
In a city, we don't want someone keeping an empty lot for decades so they can become richer based off the hard work of others around them - productive investors creating housing and office space, workers and artists making an area more desirable, etc. They sit on their empty lot paying nothing in taxes while others make them richer. A land value tax says: put that land to good use or your investment won't pay off that well. Under the current system based on improvements, they pay almost nothing and leech off the hard work of everyone else.
Land value taxes don't destroy natural land. They'd probably preserve it. A land value tax might destroy surface parking lots in dense cities, but that isn't "natural land". They're a poor use of space. I live in one of the densest cities in the US and around the corner from a lot of 1-story retail. It would be better for the community if that retail had housing on top and a land value tax would encourage that.
The alternative to encouraging good land use is having sprawl. Sprawl doesn't preserve natural land, it destroys it. It also destroys our climate with the carbon emissions from people who then drive everywhere.
A land value tax isn't about taxing all land equally across the US. If you have land in an area where land is plentiful, then it doesn't have a high value (because it's plentiful) and it doesn't need to have a lot of value extracted from it. If you buy land in Manhattan, Boston, etc. and decide that you like it as an abandoned piece of property, that's not good for the community and there should be pressure on you to put it to better use or sell it to someone who will put it to good use. A land value tax is about taxing land in a way that prevents someone profiting off squatting on land.
So my main concern related to destruction of natural land is that there is a disincentive to keep land natural if you have to pay the tax anyway. In dense areas that wouldn't be nearly as much of an issue, but it would still mean that parks would be an unlikely occurrence and likely only feasible when run by the government. I assume most parks in these areas are anyway, so the loss may be limited to smaller neighborhood parks, courtyards, etc.
Finding a clear way to draw a line between what area is dense enough to be taxed and what isn't seems like it would be an ongoing challenge. Not only would you have to define specific measures and thresholds, you would have to eventually move the line as the city evolved. Any thoughts on his this would be done, or already is in areas with a similar tax?
When it comes to "best use" of a piece of land, who decides this? Does that measure really just boil down to whatever spends the most capital to build on the land, without regard for economic or social value, environmental impacts on the land and surrounding area, etc?
It seems like this would lead to a lot of economic and social impacts that aren't necessarily desirable. Is there a clear way to guard this system from building higher and higher economic centers, inflating incomes and forcing even more of a wedge into the wealth gap? In you example, a car wash would be able to employee people at a lower once level in the area where a much more expensive biotech building would mostly employ highly educated people who bring much higher price pressure to the area. Can that be avoided with a tax that incentivizes building more expensive, and likely more technical/specialized, businesses on every plot of land?
Related to that, what's the solution for infrastructure and resource requirements? Large biotech facilities would likely require more power, transportation and delivery access, maintenance, and building materials. If we are simultaneously concerned with environmental impact, creating incentives to build much larger building with much higher resource requirements flies in the face of this. Would we be creating a situation where businesses are pushed to use more energy, concrete, steel, and glass partly because a tax makes smaller businesses less feasible?
---
Well that ended up being a bit of a brain dump with questions mixed in. If you made it this far, thanks for playing along!
There’s no need to limit land value taxes based on density as that’s what’s giving land its value.
With the property if the tax is say 0.2%. An acre of farmland worth in rural Idaho worth 20k would be assessed as being worth 20k in a land value tax and an acre of swamp might be worth 1,000$. Meanwhile an acre in Manhattan might be valued at 200 million, and the ~5 orders of magnitude difference in taxation would therefore apply dramatically different results.
The farmland’s 40$/year in taxes isn’t pushing anyone to sell, the swamp’s 2$/year in taxes is irrelevant for most people. But eating 400k in taxes on a manhattan parking lot is definitely pushing someone to be more productive with it.
I don't think that's an easy assumption to make. Cost of living, average income, and average plot size are very different in rural areas. I don't know Idaho so I can't speak to land value there, but I can say farmable land in rural Alabama goes for between $1k and $6k per acre depending on the land. If you really want to farm it for anything more than a homestead, 40+ acres is a minimum IMO. On the high end that works out to $480/year, but with an average income in the area closer to $25k/year that number isn't insignificant when its a tax just for the right to continue to own land I already bought. Add to that the extreme challenge of even breaking even in farming today, I'd be impressed if anyone farming 40 acres in rural Alabama could reliably turn $25k in profit each year.
Related to that while we're at it, what is the government's justification for taxing the value of land I own outright? Are we classifying land and property ownership as a privilege rather than a right? And in a rural area where land isn't changing hands as frequently and farmland can often sit for sale for months or years, how does the government accurately assess value? In my own experience land value in rural areas is only really adjusted when new structures are built or a specific parcel changes hands, but maybe that is handled differently elsewhere.
I live on around 80 acres (30 hectares?). Our land is a bit unique in the area, and in general there hasn't been a single piece of land sold near us since before the pandemic and all the economic change that came with it. I don't know how the county could possibly know what our land is worth until something similar sells on the open market again.
Well, where I live (which is not in the USA) value-based land taxes go to the municipality and the school board. They pay for municipal services I benefit from: fire, police, EMTs, road maintenance, waste collection and processing, recreational facilities like a park, a library, and a swimming pool. Also schools, but that gets more complicated since some funding for education also comes from a higher level of government which collects income taxes.
Now mind, I live of 25 ha of swampland. But I get excellent value for my land-value-based land taxes.
In the 1970's a group of people decided to setup a micro nation on a small unclaimed island. A nearby country Tonga seeing they where not protected by another state invaded, so ended the micro nation.
Ultimately it's the US governments providing a military and police force that causes a piece of paper to have any impact on who controls a piece of land. Such services require payment. Though we charge for local services ie schools, EMS based with property taxes and protection FBI/Army based on people (income tax). Historically this favors land owners, but we could swap in the future.
Obviously we could lower defense spending but that's a separate question than simply the justification for property taxes.
http://www.queenoftheisles.com/HTML/Republic%20of%20Minerva....
That can't be the case; density is an amenity and is, by definition, not part of the value of the land.
Perhaps this isn't the value of the land as you would like to define it, but rather a way for local government to encourage land be put to more productive usage for everyone who lives or works nearby - without dictating exactly what that usage might be.
This allows you to avoid the logical inconsistency in what counts as land value that most proponents commit, at the minor cost that nothing you say has any meaning. What happens when I try to respond to your new point of view and you reply that, actually, you mean something different by "money" than what is normally understood?
What would you think if you voted to establish a "land value tax" and the tax that was put in place comported with the ordinary definition, instead of yours?
Yes, that's my point. Your use is incompatible with the existing use. You are not responsible for the conventional use of the phrase "land value tax", but you certainly are responsible for presenting your own ideas under the same name and acting confused when people assume you're using the ordinary sense of the phrase.
Also, in blighted areas buying improved land may actually be discouraged by LVT because of demolition costs. Thus vacant land should be more valuable than improved land. Can you resolve the paradox?
What's the paradox?
Two identical pieces of land, both pay the same in taxes, one requires more work to improve it (as it needs a tear down first). So that piece of land will sell for a lower price than its neighbor.
People argue this over things like gold as well. IMO at the end of the day its impossible to tease apart anything other than the total market value, and I think that's where you are at as well sticking to the land's total market value.
Taxation is not about fairness, it's about raising revenue for the rather discretionary spending of the government.
Meanwhile you can an awesome spot in central WV with a nice stream an a scenic waterfall perfect view for a family home. But it's not worth much because it's far from restaurants, office paying six figures etc.
Taxing the land value means there’s no incentive to own land that won’t be productive. The city or municipality can guarantee land it owns can have natural growth on it, whereas when private individuals own it the state can’t really stop the land from transforming into a parking lot.
As to how to value the land: the market decides. What is the price for the land, if you took away all existing improvements on the land itself? There is usually enough vacant similar land around where this is pretty easy to figure out.
The government can charge for services like upgraded electricity and keep the land value low, or they can bring the electricity to the land and count “lots of electricity available” as part of the value of the unimproved land.
That seems to be jumping to an extreme end, that someone owns an empty plot of land that has been cleared and destroyed to bare, dead dirt. My concern is that the same incentive pushing one to sell a pile of dirt would exist for someone owning an undeveloped, natural plot of land. My earlier caveat still exists, maybe this isn't a concern in dense areas though it would add some blockers for anyone interested in turning developed land back into a park.
> Taxing the land value means there’s no incentive to own land that won’t be productive.
One concern I have is the expectation that all land should be optimized for productivity. That goes against my own view on land, I don't think we humans have some innate right yo extract all available value. I also don't like that this likely goes against concerns of environmental impact.
> The city or municipality can guarantee land it owns can have natural growth on it
I can't quite put my finger on a better way to describe this, but it just feels off to me that only the state would be able to allocate land as parks, natural space, sanctuary, etc. Obviously what you are proposing wouldn't block anyone from doing this, but it would create incentives that make it unlikely.
> As to how to value the land: the market decides.
The market only decides on my land's value when I sell it. Until then, is the land valued at what I paid for it? If so that is at least predictable I suppose, that would be helpful so I know what my future tax burden would be.
> The government can charge for services like upgraded electricity and keep the land value low, or they can bring the electricity to the land and count “lots of electricity available” as part of the value of the unimproved land.
I wasn't just asking about how enough power gets to the land - not sure why the government would be responsible for that unless government and industry merge. I was meaning to ask with regards to the environmental impact angle. Taxing to create incentives to build as high-value improvements as possible would inevitably lead to a drastic increase in a locality's energy requirements. Where does it come from, and how do mitigate the environmental impact?
If anything it's not extreme enough. Consider how much area in city downtowns is given over to paved-over parking lots that are just left to sit there rent-keeping for years. That's worse than just dirt fields, because at least the dirt fields can support life!
> My concern is that the same incentive pushing one to sell a pile of dirt would exist for someone owning an undeveloped, natural plot of land.
...if the taxes are high enough to incentivize them to sell.
If you have an undeveloped plot of land in a city where land taxes are high, you should be incentivized to either sell that to someone who will make use of it, or donate it to the city to serve as a public park, rather than getting to have your own private green space somewhere that space is at a premium for everyone else.
Why must land goes used? Is the assumption that we must fully utilize every inch of land in a city, regardless of what people living there or the land owner wants?
Building on as much usable space in an already high density area can and has had downsides that seem to get overlooked in this thread. Higher density means more traffic, higher demand on infrastructure and utilities, and the need to bring in even more resources from outside the city and send out even more waste for someone else to deal with (to name a few).
This assumption that taxing land high enough to make sure that none of it is left undeveloped unless the city owns it is begging for runaway problems, unless these other considerations are factored in. Doing so almost certainly means not having the tax, as the goal of more dense development competes with the other concerns.
If you're not doing anything with land in an in-demand area then it creates an incentive to sell it, yes - that's pretty much the point. Realistically, undeveloped lots in in-demand areas (i.e. cities) are not nice natural landscapes - they're dirt yards at best. It takes a lot of work to maintain a park, and frankly putting a tax on land is more likely to return some of those unused lots to the city who could then open a public parks there, than discourage someone who was maintaining a park privately.
Even in the country, land that's completely untended is rarely pleasant, although in places where land isn't worth much, a tax like this won't make much difference either way.
> One concern I have is the expectation that all land should be optimized for productivity. That goes against my own view on land, I don't think we humans have some innate right yo extract all available value. I also don't like that this likely goes against concerns of environmental impact.
The idea that someone owns land like chattel and can do whatever they want with it is surely worse from that point of view. If you're taxed on the value of your land, you're incentivised to use as little as possible, and leave the rest for the public or nature - e.g. if you can build a factory in half as much space, you've halved your tax bill.
> The market only decides on my land's value when I sell it. Until then, is the land valued at what I paid for it?
No, there would need to be an assessment process, although perhaps backed by a market mechanism (i.e. if you think the assessment is too high you can ask the government to buy you out at that amount, or some such).
> Taxing to create incentives to build as high-value improvements as possible would inevitably lead to a drastic increase in a locality's energy requirements.
It doesn't create a new incentive to build more unless the more you're building is valuable. You can densify by building more in the same space yes, but you can also densify by building the same in less space, and that's what saves you money so presumably that's what people will do (after all, if building more was profitable, wouldn't people already be building more)? For the same amount of economic activity, you'll require the same amount of energy, just in a smaller space, which again is likely to be more efficient and better for the environment (the same number of factories in half the space means fewer cables, less transmission losses etc.).
Now of course if you make business more efficient then maybe you end up with more business, but isn't that a good thing? Again it only makes sense to build more if there's demand for it - otherwise you're better off staying small and cutting your expenses. Land value tax might even help encourage people to not expand prematurely - if doubling the size of your warehouse means paying more tax, maybe you'll put it off a few years until you're actually going to use that space.
This seems like a really dangerous justification, and frankly one that would be a complete no-go for me. You just made it clear that the goal, at least in part, is to make a tax so high that it more often goes unpaid and the city can take the land away from the land owner. They might as well skip the game and claim eminent domain.
Have you ever lived near an empty lot or abandoned building in a city? Yes, I want those going back into circulation, whether via the owner doing something with them, selling them to someone who will, or it falling to the city. You do know we're in a housing crisis? There simply isn't enough space to go round, something has to give; I'd rather see those absentee landowners who don't care enough to do the minimum lose their stuff than have hard working people living n to a room like we do now.
Only if the city/municipality has money to do so. A degenerate example is where the city/municipality own all of the land and thus has no real estate tax base. You may think that this is ridiculous, but check out some blighted areas around the US and you'll see plenty of local governments that have a very shallow real estate tax base reminiscent of the "ridiculous" argument.
> Is there a clear way to guard this system from building higher and higher economic centers
On the social side: In the current system, poor people are forced to live in ghettos and spend 2 hours a day on a round-trip commute. It's too expensive to live near their work. If we had a land tax, the rich enclaves near the city are now financially incentivized to open up their public schools and areas to poor(er) people by building vertically. The current incentives point in the opposite direction.
On the environment side: We will have less sprawl, and by extension less environmental damage. It requires less concrete, less energy, less roads, less driving, less shops, less train lines, etc, to serve a dense area, on a per-capita basis. You are however correct that natural reserves are a public good, technically speaking, and an efficient land tax system will need to account for public goods in its implementation. This is an important implementation detail that I'd defer to economists.
> Related to that, what's the solution for infrastructure and resource requirements?
However, bonding out projects does spread the expenditure in time, more directly charging the future users for infrastructure they use. Sure you could recoup the costs through user fees, but then you're effectively borrowing money from the current tax base, so "bonds" by another name.
On the social side: the gamble is that social growth will outpace the increased economic pressure. Meaning, you need the new vertical growth to create opportunities faster than it increases prices further in the area. A land tax alone wouldn't pull people out of poverty, create affordable housing, or open up public school. Those are all just potential avenues for the city to develop, not guarantees.
On the environment: cities aren't isolated enclaves. Resources needed to build, maintain, and feed the city all come from the outside world. The more you build up the more steel, concrete, glass, energy, etc is needed. The more people packed into the city the more food you need to ship in and waste you need to ship out.
One million people would need about the same amount of food/energy if they lived in 1,000 sq. mi. as they would if they lived in 100 sq. mi. But the cost per person to house and transport people in a dense city is lower than in a sprawling one.
There are a lot of ill defined and bizarre things here. What is "economic pressure"? I have never heard such a term before. Why would there be "price increases" (inflation)? I have never heard anyone serious posit a link between density and inflation. It's the exact opposite because economics of scale and scope can deliver services more efficiently. Why shouldn't a land tax contribute towards "affordable housing" when the economic logic predicts it will have a deflationary impact on housing costs? Why do you think I'm saying that a land tax will "open up [new] public schools"? I said there would be a change in incentives away from excluding poor people from your local school catchment area, which has historically driven local resistance to upzoning. Honestly, it sounds like you should read up on basic economics before you form these opinions. The subject matter is primarily economics and such basic knowledge is a prerequisite to understanding the rationale behind one tax or another.
> The more you build up the more steel, concrete, glass, energy, etc is needed.
No, this is forgetting that you have the same number of people in either scenario. It takes more resources to build 1000 single detached homes (and associated roads, train stations, shops etc) than 10 apartment buildings with 100 homes (with less roads, less train stations than the former scenario).
Price increases are possible here because it all depends on what is built on the currently vacant lots, or on lots that are cleared when the old buildings no longer make economic sense with the new tax. The example given early in this thread was a car wash versus a new biotech facility. A new, expensive biotech facility wouldn't help with affordable house at all but it would bring in more individuals with higher salaries. Prices could also go up if new construction further increases the city's density or population - more people means more demand and higher prices unless supply increases faster.
Economies of scale aren't a given simply because a new land tax would change building incentives. Economies are much to complex for that and can't be boiled down to a single lever or knob. Changing one thing can have a much different outcome than predicted.
I'm not sure why you would expect a land value tax to have a deflationary impact on housing. There's no direct link between a land value tax and an increase in affordable housing, meaning we can't assume there will be more affordable housing created. What we do know is that land owners now have a new tax to pay, and if you are renting out property on the land you will pass a large portion of the new tax onto them in the form of rent increases. This is literally a concept covered in the intro to economics course I took 15 years ago, if you aren't aware of how businesses handle new taxes I'd recommend you read up on it before pushing too strongly for a new tax.
[1] https://www.smartcapitalmind.com/what-is-economic-pressure.h...
That's well and good, but, you know, people still want to wash their cars, and probably don't feel like driving 30 miles out of town to do it.
Consider a farm on the edge of town. Without LVT, the incentive to sell could be considered positive; i.e. the farmer may sell when they're offered sufficient money for it. With LVT, the incentive to sell could be considered negative; they will be charged more and more in taxes from the state as the town develops up to the boundary of the farm until they can no longer afford _not_ to sell. That means that there is a built in sprawl function to LVT - towns will continue eating up the countryside as their centers push value of land up around them.
See https://en.wikipedia.org/wiki/Land_value_tax and https://en.wikipedia.org/wiki/Georgism
That sounds like a horrible situation, and it seems clear why real-world tax systems don't take this approach to its ultimate conclusion.
There's also something very objectionable about attempting to use taxation as a tool to manipulate behavior and engineer outcomes. Where taxation is justifiable, it is justifiable solely as a pragmatic means to fund the necessary operations of government, and never as an end in itself.
The underlying principle is that land - including natural resources as a whole - is finite. It's a common good owned by humanity as a whole; or, failing that, at least in common by the nation-state in which it falls. Allowing individuals to hoard those finite resources is bad for society.
Under a land-value tax system, individuals can do whatever they want, but they're appropriately charged for their negative externalities. Just like we should have a carbon tax to disincentivize people using the shared natural resource of carbon fixing without a good reason, we should have a land tax to disincentivize people using the shared natural resource of flat, arable land without a good reason. You can choose to pay your taxes and do nothing with the land, if you have another source of wealth to make up for it - effectively, you need to express to society just how much it's worth it to you to sit on that land doing nothing, and the way that we express the strength of our convictions in a market economy is with dollars.
> There's also something very objectionable about attempting to use taxation as a tool to manipulate behavior and engineer outcomes.
The goal here is not to manipulate behavior for its own sake, it's to use the power of the state to correct for a mispricing in the market. Market forces alone are incapable of correctly pricing deals involving common goods, because most of the people who are implicitly participating in the transaction (i.e., the rest of humanity that is now deprived of that land/air/resource) are not compensated. It's a problem of negative externalities, for which a Pigouvian tax [1] is a perfectly appropriate remedy. In a democracy, the state is how the public as a whole imposes its collective will; having the state "bid" on behalf of the public interest is the most capitalist solution possible to the externalities problem.
There's a real risk in attempting to define exactly what "socially suboptimal" uses for land are. Everyone will have a different opinion on how they want land to be used.
Worse still, your definition means that any unused land is socially suboptimal and should be disincentivized through taxes. Given that land is finite, how do we guard against eventually using as much land as possible? And where do we get all the resources to develop and maintain the land as well as all the consumables used by everyone living there.
The market is making a decision here via prices, not any centralized power.
Well, the resources in question aren't "common resources", they're economically rival resources that already belong to other people.
So the argument is to artificially constrain people from using their own particular resources to do "socially suboptimal" things, but in this case what's being posited as "socially suboptimal" is actually just a normative "ought" opinion posited by a specific faction in opposition to the observable "is" manifested by society itself.
Dress it up in whatever language you like, but the underlying position remains "I want to force people to conform to my preferences at the expense of their own".
> The underlying principle is that land - including natural resources as a whole - is finite. It's a common good owned by humanity as a whole;
That's a very poor principle. Every question in economics and political philosophy deals with the complex interactions of different subsets of "humanity as a whole", so treating humanity as a whole as a singular agent is outside the realm of any kind of useful analysis.
And the concept of ownership is something we apply to economically rival goods -- including and especially land -- precisely because possession and use of rival goods are inherently exclusive. Ownership must be exercised by some narrowly construed party at the exclusion of others, and all of our models of property rights serve the purpose of resolving competing claims to the same resources precisely because ownership cannot be aggregated.
The relation of high-level abstractions you're invoking here might make for a nice slogan, but "everything aggregated into a singular unit is owned by everyone aggregated into a singular unit" is completely useless as a model of reality.
> Allowing individuals to hoard those finite resources is bad for society.
Individuals, in aggregate, are society, and what's good or bad for society is entirely a function of what is good or bad for the individuals who constitute it.
When different individuals have conflicts of interest or divergences in values that bring them into dispute, we need solutions for resolving those disputes in a manner that is maximally favorable to all sides, and which assiduously respect the rights of all individuals involved. Property rights are an important example of doing exactly that.
The moment we adopt a "winner take all" model for resolving social conflict, we raise the stakes of participating in society in the first place, and and up on the road to social dissolution. As high minded as the abstractions you're invoking seem to be on the surface, the practical reality of your proposal is that the state will act as a universal landlord, and put control over how everyone is using their own property in the hands of whichever faction is politically dominant, absolutely leading to a "winner take all" scenario where those most skilled at politics can usurp the property rights of everyone else. It's a recipe for disaster.
> Under a land-value tax system, individuals can do whatever they want, but they're appropriately charged for their negative externalities.
We already have a system of legal liability for holding people responsible for their negative externalities, and it works very appropriately, by making people who cause negative externalities financially responsible to the specific parties who those externalities have harmed.
The approach you are proposing would be universally preemptive, rather than remediative, charging people across the board regardless of what externalities they have or have not caused. And it would put the proceeds of those charges not in the hands of the people who were harmed by the externalities, but rather in the hands of a separate organization entirely, one which may or may not have an incentive to apply those funds toward the remediation of the externality, but might have entirely unrelated purposes that it diverts those funds to.
> Market forces alone are incapable of correctly pricing deals involving common goods, because most of the people who are implicitly participating in the transaction
There are precious few genuinely common goods to which markets are applicable in the first place. Markets conduct trade in scarce and rival goods, but common goods are definitionally non-rival hoods, for which a single unit of production satisfies every disparate instance of consumption simultaneously. A classic example is military defense, where a single army deters aggression against the country as a whole, and does not produce distinct units of defense consumed individually by each resident.
We already typically rely on non-market solutions for common goods, e.g. having them provided directly by political states and funded via taxation. There are lots of problems with this, especially the principal-agent problem, and many people are trying to come up with ways to make pluralistic markets applicable to these goods by disaggregating them. But here you are proposing to take things that aren't common goods, like land, and make them subject to the same failure modalities we experience with common goods.
> In a democracy, the state is how the public as a whole imposes its collective will;
No, this is absolutely false, and is indeed an extremely dangerous idea that twists democracy into a kind of quasi-totalitarian system. Democracy is a tool for ensuring that the political state is accountable to the public generally, as a means of preventing abuses of power. It functions as a brake pedal, not as a gas pedal.
A large and pluralistic society dos not have any sort of singular "collective will" in the first place -- societies are aggregations of lots of disparate individuals, who often organize into subcultures and factions who have very different goals and interests -- and the purpose of law and politics is to mediate between them in a way that enables each to maximally pursue their own particular will within their own particular boundaries without conflicting with each other.
Democratic processes are meant to ensure that that meditative process remains honest and accountable, not to attempt to replace it with some pretended distillation of everyone's diverse values into a single set of principles -- the latter is logically impossible, and attempts to do this invariably result in a single faction imposing its values forcefully onto everyone else.
But I will note that the closest thing that resembles the "collective will" of society as a whole are the patterns that emerge from the interactions of all individuals, communities, and organizations, at all levels of scale and complexity. The behavior of the state, one particular artificial institution within the vast complexity of society, is absolutely not a reliable indicator of the nature of the whole, no matter how democratic its processes may be.
The idea of LVT is to put an economic value (i.e. dollar amount) on the fact that you're preventing people from using land. It's a market correction. If you want to express that some values are actually good beyond what the market is equipped to reward, then you need to correct further. In theory, this means that the government - acting on behalf of the public good, or its citizens, or the future of humanity, or whatever your preferred vision for the social contract is - should offer its own contribution to the cost to be paid. In practice, this means there could be a significant tax credit for meaningful nature preserves, commensurate with the value of that preserve. Taken to its limit, this tax credit could mean a negative tax (i.e. subsidy) that's enough to pay for maintaining the land in its natural state, and oh look we just reinvented public parks.
Regulation is necessary in some cases, though it should be the exception not the norm. Regulation that requires yet more regulation should be avoided if at all possible in my opinion.
This is the whole basis for the business model behind golf course development. Developers acquire a large plot of land in a nice area and build a golf course on part of it. The rest of the land (surrounding the golf course) is divided up into plots and used to build luxury housing. The existence of the golf course (and all of the landscaping in the area in general) dramatically increases the desirability (and hence property value) of the houses.
If you didn't build the golf course at all you could fit more houses on the land overall. The problem with that is that without the golf course the houses are less desirable and worth less -- and also more capital intensive to build than a golf course -- so the overall profit is lower.
https://boxwell.co/section-179-tax-benefit-for-relocatable-s...
>Relocatable storage units are portable and moveable. Therefore, they can be classified as equipment instead of as a building or permanent structure. Not only does this help self-storage operators bypass the lengthy process of permitting and zoning. But it’s also a great tax advantage when classifying these convenient storage units as equipment. In most cases, the units are eligible for 100% deduction after just one year.
edit typo
There are so many loopholes and games that can be played with US taxes that I've gotten to the point where I can't blame anyone for trying. We need a much simpler tax code that can be easily understood and enforced IMO.
In other words, with taxes I ended up landing on "don't hate the player, hate the game"
You don't come off here as well as you think you do.
(must be nice to live in a place without salt on the roads!)
I've never washed a car I've owned and my frame is fine.
This feels like one of those iceberg tips where I'm really glad I'm not in the kind of social circle where having a spotless car matters at all.
I've driven four going on five cars to 200k miles having never gave any shits about car washes and haven't had any problems.
I only needed to rinse my car off once a year, max, and did that with a garden hose. It was fine otherwise. Car washes are a waste.
I have everything at home to clean our vehicles, but I can’t just run the hose during the winter when it’s most important because of the MgCl; so I’ll take our rigs to the wash if we are in town (nearest car wash is 60 minutes away) to clean the undercarriage and minimize rusting.
If my shoes were that dirty, then heck yeah I would clean them. What a mess, it's easy to get your clothes dirty when the outside of your car is filthy. My kid's white dobok is especially sensitive to dirt on the car.
Fashion statement is actually a pretty good explanation, thank you.
Whether I wash my car or not, it changes nothing - the car will get dusty and rained on over and over regardless of what I do. When I first got my car I would wash it sometimes, but it's inevitably going to rain in the next day or so and return to exactly the same state. Washing it once a year is enough to remove any grease/carbon from the roads.
Why bother? I don't think it's actually "maintenance" if it doesn't maintain the car in any meaningful way.
As usual, it varies. Some outdoor environments can cause pollen/pinetar/birdpoop to accumulate and form a layer of weather-resistant plaque which slowly degrades the paint. Some indoor storage environments are open-air, which can lead to a stubborn buildup of oil/pollution/dust with a similarly negative impact.
Of course, there's also the general idea that, if you baby something, it'll last longer. Inspecting how the car looks on a semi-regular basis might lead one to noticing any number of issues -- a soft tire, a fluid leak, a faulty tail-light, etc. It's not a bad ritual to have if you rely on the good working function of such things.
With all of this being said, I don't exactly practice what I preach... Driving bores me and I'd rather pay someone else to do the associated maintenance even though I've been thoroughly taught how to do it myself. I very much belong to the "carwashes for thee and not for me" school of thought
Even a 3 year old car that has been washed twice a week at an automatic wash is going to look a lot worse than a 5 year old car that occasionally gets a good hand wash. The constantly auto washed car is going to be full of swirls and maybe even a screwed up antenna or spoiler or rear wiper blade because car washes like eating those.
Plus even the most aggressive automatic car wash isn't going to actually CLEAN a car. Even the laziest 20 minute rinse/soap/rinse/dry is going to clean a car better than an automatic car wash does. And if you use good microfiber towels ($13 for a pack of 36 at costco) and pretty much any microfiber sponge ($5 at walmart or whatever), and something like meguairs gold class wash and wax ($15 for a big bottle at walmart) you're set for at least 2-3 years.
Err anyway... "doesn't take care of their stuff" - I reserve that for people who never clean the inside of their car, people who ram into curbs and mess up their bumper getting out, and people who slam their doors into other peoples' cars.
Thank god we haven't optimized that fully. This is how small businesses like local cafes, delis, bookstores, and "mom and pop" stores are able to survive in cities.
I wouldn't want to live in any capitalist shit-hole where land value taxes force high-value businesses.
Nonsense. Those aren't the businesses that take up masses of land - hell, a lot of the best of those are run by people who live above the store, meaning the extra land use is zero. The businesses that benefit from a lack of land value tax are parking lots, drive thrus, distribution centres, that sort of thing.
How about starting with the actual argument to make it less rude?
>Those aren't the businesses that take up masses of land
Which is neither here, not there. They are still types of businesses gravely affected by high property taxes and land value taxes (the parent even spells it out: "low property taxes and generous loan terms" (...) primarily benefited small businesses, individuals, etc"), and are also what the parent calls "low-value business" (low monetary value, of course).
Don't conflate two very different things. A business is affected by land value taxes to the extent that it uses expensive land (that's the point). A business that takes up zero land, such as one that can be run from the same building you live in, ipso facto pays zero land value tax.
Local bookstores, delis, cafes, specialty shops, and so on, (a) use "expensive land", and (b) are not, usually, run "from the same building you live in".
I'm not talking about rural shops (those are a whole other thing, and die due to other reasons, like the economic decline and abandoment of rural areas).
I'm talking about beloved shops in major cities, replaced by expensive real estate getting them demolished to build whatever luxury mega-crap, and driving up rents contributing to gentrification.
Living over a shop like that is normal where I live, which is far from rural; I've been to many small cafes and similar that were clearly someone's (barely) converted home. Of course if you have dumb zoning it may make that impossible, but, uh, don't do that then.
> I'm talking about beloved shops in major cities
So what's over those shops if not living space?
> replaced by expensive real estate getting them demolished to build whatever luxury mega-crap, and driving up rents contributing to gentrification
"gentrification" is a spook. Making a place nicer is a good thing. The only reason nice places are unaffordable is because you build too few of them.
I think this is just another instance where private equity is creating imaginary business model of subscriptions and selling it to its investors. The money managers will get huge management fees and will disappear before the whole thing collapses in coming years. Meanwhile, they will run a lot of good and necessary businesses out of town.
These car washes are not simple, nor cheap. They aren't talking about places where you wash your own car, they're talking about the increase in automated ones.
The government also benefits from sales taxes, licenses, permitting fees, etc.
They won't be getting much in the way of sales tax if the business is low-value, by definition.
The argument is that good business spots are a limited community resource that it makes sense to tax, like radio spectrum. If you can make good use of the space you're taking up, go ahead, but you should compete fairly with other uses of the space. If anything taxing space use makes more sense than taxing profits; a profitable business is probably one that's serving the community well, whereas a business that takes up space and doesn't generate much profit is no good for anyone. From the article:
> “A car wash does not provide a lot of jobs for the community, and they take up a lot of space,” Broska said. “If you want to invest your dollars into a car wash, then God bless you. But at the same time, I’m responsible for 17,500 people and have to be cognizant of their wishes.”
> the largely automated facility wasn’t the best use for a prominent Main Street site
I think that attributes a lot more to profitability than such a metric deserves. Perhaps in a more narrow and ruthlessly capitalistic sense profitability signifies that a business is doing what it's trying to do well, but it's a big leap to get from there to how well its serving whatever is considered to be a community these days. Among other problems, just because some tiny amount of that money conceivably stays around in the region and people can buy stuff does not mean that the cost of the business being there isn't quite a lot higher, hence the term tragedy of the commons and the hollowing out of let's say America
This argument reminds of the argument googlers to explain why placing paid ads ahead of organic results is better for the user: they say thay if someone can pay more for an ad than means that can get more money from the user, and therefore the user likes it more. Lol
No, profit is profit, it doesn't mean anything else.
If cheaper options are made less accessible or clearer, and customers are intentionally mislead to more expensive products, as a result they will pay more too.
I do agree with the principle that a space-hogging marginally profitable business is detrimental to a community. Just that the opposite is not necessarily true; profitability does not imply beneficiality.
Humans do not fit the model of "rational self-interested agent" commonly applied for economic models. Gambling and addictive substances are two hugely profitable business sectors that would not exist if it we're remotely accurate.
I'll also preempt someone's inevitable assertion that the burden of verification should lie on the consumer. In informationally antagonistic environment, it's absurd to expect each individual to individually vet every service and product. That's a phenomenal waste of labor that favors only well-funded organizations practiced in deception. Any rational group would pool resources and have a single org do the research and share it with everyone. Oops we've reinvented a government.
I thought you where talking about Google Maps reviews but OK.
> Any rational group would pool resources and have a single org do the research and share it with everyone. Oops we've reinvented a government.
The firse quote precludes the second.
They generally do -- the misalignment comes from analyzing people's behavior according to presumptive interests which have been externally attributed to them, instead of observing behavior in order to ascertain what people's interests actually are.
> Gambling and addictive substances are two hugely profitable business sectors that would not exist if it we're remotely accurate.
No, gambling and addictive substances exist because people enjoy them. Large numbers of people exhibit a manifest preference for short-term pleasure over long-term stability; expecting such people to act in ways that pursue long-term stability over short-term pleasure is itself irrational.
> I'll also preempt someone's inevitable assertion that the burden of verification should lie on the consumer. In informationally antagonistic environment, it's absurd to expect each individual to individually vet every service and product.
Unfortunately, your attempt at preemption has failed. Only the consumer has the relevant criteria necessary to determine how well a given good or service fits his own particular needs or desires. Being rational, most other people intuitively use the experiences and advice of others as Bayesian indicators of product suitability or unsuitability (even if they don't know what Bayesian indicators are), but they're still using those external resources as tools with which to make their own decisions.
> Any rational group would pool resources and have a single org do the research and share it with everyone. Oops we've reinvented a government.
No, you've reinvented Consumer Reports. Except for the "single org" part, anyway -- there's no single determination that could be applicable to all people all the time, so people will naturally develop a variety of parallel solutions that apply different criteria to the evaluation process.
Or, to put it another way, the irrationality is a matter of having contradictory desires in the first place; choosing to act upon one and dismiss the other resolves the irrationality. The fact that some people make the trade-off in the opposite direction that you would doesn't make them irrational, it just demonstrates that people are different.
Gee I wonder what's wrong with that argument.
Sure it does. For some definitions of the word preference.
If it's really such a prime desirable spot then that would drive up the value of the land to the point that the low value business wouldn't have been able to afford it?
I don't understand saying it's such valuable land and detaching that from what a business was actually able to pay for it.
Also, the arguments made against car washes are the same as those made against bank branches which also generate relatively little sales tax.
Anyway, if there is a surplus of car washes they will eventually dry up.
The land continues to appreciate, so the business can hold it based on its value. Especially if they've locked in a mortgage at a low rate. The car wash "business" can profit through land appreciation, which they don't pay any tax on (another flaw in the regulatory regime), and free-ride while the spot becomes more valuable through the efforts of others.
I'm not sure I follow the reasoning here. How does the existence of economic scarcity imply that it makes sense to tax anything?
> If you can make good use of the space you're taking up, go ahead, but you should compete fairly with other uses of the space.
But that's already inherent in the nature of scarcity -- the more demand there is for a scarce resource, the higher the price is. So businesses making use of high-value prime real estate are already paying more for it. The law of supply and demand already does what you are proposing. How does paying additional fees to a separate institution with its own perverse incentives add anything to the equation?
> the largely automated facility wasn’t the best use for a prominent Main Street site
This was the personal opinion of a local bureaucrat who thought his personal opinion should be policy. That's why the company is suing.
Land in the right place is not merely economically scarce, it's economic land.
> But that's already inherent in the nature of scarcity -- the more demand there is for a scarce resource, the higher the price is. So businesses making use of high-value prime real estate are already paying more for it. The law of supply and demand already does what you are proposing.
Supply and demand doesn't work for land because there's no new supply. No matter how much the price goes up, people aren't going to make more.
I don't see how there's anything particularly special about land that warrants construing it as something fundamentally different from any other scarce resource.
> Supply and demand doesn't work for land because there's no new supply.
I'm not sure that I agree that there is no new supply of land in an economic sense -- developments that increase the productivity of land use are functionally equivalent to those that increase the physical supply -- but regardless, the law of supply and demand operates the same whether the supply on the market is new or old.
I’ve overheard enough conversations between high net worth individuals to say there’s absolutely unique qualities about land as an asset class or they wouldn’t hold so much of it.
read some solid reasons for land focused tax regimes long ago but couldn’t remember deets on why they were compelling so googled helped me remember …
‘Immobility: Land doesn’t move, making it a stable tax base. (Important for local services like deciding whether a town can afford the new school(s) or a road).
Scarcity: No more land is being created, so taxing it efficiently is crucial. (Kind of like capital itself)
Non-distortionary: Taxing unimproved land doesn’t distort transactions.
Local Funding: LVT may be an effective way to fund local government since land cannot be moved to avoid taxes’ (1)
(1) which BTW is the main reason often given why ordinary folks have to pay higher payroll taxes vs capital gains the wealthier brackets ‘pay’ because you know capital will just up and move somewhere else if we ask too much of them.
Well just tax the land, and if the capital holders want to move all their wealth out of the community, fine, but good luck extracting wealth from a local community without owning any land near it.
So yeah. Tax the damn land already. Especially to fund local government and services, which you kinda need to have a functioning society.
I clicked through because I’ve wondered often why there’s a dozen of these new washes in my community with ten more on the way and figured it was some financing/tax write off hack.
Every asset class has its own uniquely defining characteristics in financial terms. There are unique qualities of stocks, of bonds, of index funds, etc. But I don't see any fundamental difference between land and any other scarce resources in real economic terms, and definitely nothing sufficient to treat land differently as a fundamental philosophical principle!
> Immobility: Land doesn’t move, making it a stable tax base.
Lots of things don't move in any meaningful way with respect to taxing jurisdictions.
> Scarcity: No more land is being created, so taxing it efficiently is crucial.
I disagree that no more land is being created in an economic sense. As I mentioned above, developments that increase efficiency of particular use cases for land are economically equivalent to the supply of land expanding.
And there are even some cases where new land is even being created in a literal physical sense -- see the Netherlands, for example.
> Non-distortionary: Taxing unimproved land doesn’t distort transactions.
It certainly does distort transactions for unimproved land. And what is "unimproved land" in the first place? Whose definitions apply, and how do we handle edge cases. If I purchase a plot of land for the specific purpose of maintaining it in its natural state as a preserve, is it improved or unimproved?
> Local Funding: LVT may be an effective way to fund local government since land cannot be moved to avoid taxes
But there are lots of other ways of avoiding taxes. Still, this purely pragmatic point -- which correctly understands taxation as a means to fund the necessary operations of government, and not a tool to manipulate behavior or as an end in itself -- explains why a large portion of local government funding already comes from property taxes.
I'm not sure what trying to take what already works and reconstitute it according to Georgist principles (which are logically weak and entail a lot of dangerous implications) brings to the table.
> So yeah. Tax the damn land already. Especially to fund local government and services, which you kinda need to have a functioning society.
Property is already widely taxed, local governments are already funded, and society is already functioning, car washes and all.
> If there's a loophole such as lack of sales tax for car washes, fix that, but let the playing field remain even.
My claim is that the playing field is not currently even rather it is massively in favor for low-capital, low-labor, and low-regulatory businesses (like car washes) and additionally incentives ostensibly designed to encourage real estate development (1031 like-kind, treatment of real estate as depreciating, etc.) are now primarily used to either speculate on existing real estate or build the minimum to gain ownership/interest in speculation. If you take all the cash you have, you can only buy a finite amount of land. If you build a low-capital but profitable business like a car wash, you are only limited by the leverage limits imposed by lenders.
> If desirable high value businesses aren't able to compete with car washes, isn't that the market doing it's thing? > but what are the 2nd and 3rd order effects of such a change?
Tautology yes, as desired no. Technically yes because the market is shifting towards low-capital and low-regulatory businesses because they have a more predictable ROI. The goal isn't to disfavor the more capital & regular intensive businesses just regulate them. i.e the influx of car washes is the undesired 2nd order effect of some other policy e.g. minimum parking for restaurants and apartments (likely no such rule exists for car washes so now you need less land a car wash vs a restaurant).
Raising regular property taxes (land+improvements) is just easier solution than waiting for far-reaching tax reform like LVT. IMO it's better to correct the market even if it means raising taxes overall in the short term.
You are still just moving it around at the end of the day. Presumably as you grow more profitable and wealthy you would relocate to higher value real estate. If not then you are spreading the wealth to lower value areas which is also a good thing. Seems like all good things in the end.
The term ‘rent seekers’ comes to mind.
And it doesn't sound appealing to me, as an individual. I don't want to feel like a peasant constantly paying a tax to the monarch/state: so at very least the first property an individual owns should be tax free (not annual land value tax / property tax). I happen to live in a country where that's the case (but it's not the reason I moved there): no yearly property tax.
If you're not paying your dues, why do you think the state should have an obligation to protect you and your property?
2. That's what states are for.
Warren v. District of Columbia http://en.wikipedia.org/wiki/Warren_v._District_of_Columbia
Castle Rock v. Gonzales http://en.wikipedia.org/wiki/Castle_Rock_v._Gonzales
Davidson v. City of Westminster , 32 Cal.3d 197 http://scocal.stanford.edu/opinion/davidson-v-city-westminst...
Hartzler v. City of San Jose (1975) , 46 Cal.App.3d 6 http://www.lawlink.com/research/caselevel3/51629
Linda Riss v. City of New York http://www2.newpaltz.edu/%7Ezuckerpr/cases/riss.htm
DeShaney v. Winnebago County http://en.wikipedia.org/wiki/DeShaney_v._Winnebago_County
Susman v. City of Los Angeles269 Cal. App. 2d 803 http://law.justia.com/cases/california/calapp2d/269/803.html
South v. Maryland, 59 U.S. (How.) 396, 15 L.Ed.433 (1856) http://www.endtimesreport.com/NO_AFFIRMATIVE_DUTY.htm
…and many more! https://archive.is/MbIeH
I don't expect to live in an area without paying something to maintain it.
Eternal wealth to those lucky enough to have been born and bought in the past or born to families who bought in the past sounds plenty dystopian to me; pay up regularly or let someone else who will contribute to society step in.
> pay up regularly or let someone else who will contribute to society [raze your forest to sell wood chips].
Forcing mountain men off their land to work in the factories, sounds plenty dystopian to me. The Industrial Revolution and its consequences have been a disaster for the human race…
What is even the problem here that needs to be fixed? People have found a business model that is able to generate value from low-cost land that might otherwise lie vacant. Great, more power to them.
The idea that people's use of their own property should restricted or manipulated so the government can maximize tax revenue is the epitome of the tail wagging the dog.
The real root of the problem was touched upon by the OP - the past two plus decades of ridiculously low interest rates as set by the Fed in support of one talking-head crisis or another. Borrowed money can only be invested in things banksters can understand, which given their limited imaginations is chiefly single family beige spec homes.
It's strange, because almost all property tax systems in the US are based on ad valorem taxation.
I'm personally opposed to the concept as a matter of fundamental principle. Society can't function if people's property rights are constantly under the threat of being usurped by someone whose intended uses might generate more tax revenue for the state. People should have a right to use the property they own in the way that generates maximum value for them -- that's the point of property ownership. It's also why real-world ad valorem tax regimes usually include homestead exemptions or something similar.
Some of these LVT proposals amount to just turning the whole of society into a tax farm, and suppressing all variation and outlier use cases in the name of maximizing tax revenue. Georgism is fundamentally flawed in its precepts, and would result in a rent-seeking political state acting as a monopolist landlord.
The Georgist LVT is much more bizarre than that. Your taxes don't go up as a result of the improvements you make to your land, but rather they go up as a result of the improvements your neighbors make to their land, if such improvements lead to increased perceived market value for the entire area.
Ad valorem taxes already do this to some extent, but are tempered by assessment rules and annual caps on increases, to prevent people from losing their own property just because of external fads or the subjective feelings of others.
I guess I just don't get what benefit the LVT proposals are bringing to the table. Ad valorem taxation already exists, it's already well-developed enough to have safeguards against the worst-case outcomes, and all the Georgist LVT would do is reinvent the wheel, but this time using design principles anchored in a fundamentally incoherent ideology that brings along a lot of other dangerous implications.
I have to ask what real-world problem any of these proposals are a solution to, because from my vantage point, I don't really see one. I see devotees of an abstract doctrine going out of their way to contrive scenarios to apply their doctrine to.
In short, ad valorem taxes land+improvement and LVT just taxes land. Various tweaks that have been made to ad valorem systems could also be made to LVT and don’t constitute a difference between ad valorem and LVT.
The objections you raise about how your neighbor’s development raises your taxes apply to both LVT and ad valorem tax regimes.
Why would a democratic society tax itself needlessly? LVT is by definition limited to a certain proportion.
The entire thesis of my OP is that the last 200 years of protections of property rights are now quickly leading to a "rent-seeking state by a plurality of various oligarchies". At least the political state uniformly distributes power instead of dividing the country between land/home owners and renters.
> People should have a right to use the property they own in the way that generates maximum value for them
A LVT only encourages you to do so efficiently... you could easily move to a rural/undesirable area and have all that freedom and now much lower overall tax rate. If you aren't paying the LVT back to society you are by definition depriving someone else of the very freedom you wanted to protect. It's a fantasy to think that everyone can have the property freedoms you describe.
There is no such thing as a democratic society, only democratic states, where the state is a single institution within society, not some distillation of the whole. Political states are administered by particular fallible humans, operate under a complex of incentives that is not necessarily aligned with the interests of the surrounding society, and operate under processes that are often subject to manipulation by factions with ulterior motives.
The examples of democratic political states acting in ways that are either unrelated to or even antagonistic to the presumed interests of the societies they operate within are endless, and arguably much more prevalent than examples of markets producing outcomes that are not aligned with the interests of their particpants.
> The entire thesis of my OP is that the last 200 years of protections of property rights are now quickly leading to a "rent-seeking state by a plurality of various oligarchies".
I'd attribute that outcome to the last 200 years of erosion of property rights, largely by well-intentioned people making severe mistakes on account of failing to reconcile theoretical propositions with concrete reality.
It seems very bizarre indeed to recognize the problem of a "rent-seeking state by a plurality of various oligarchies" and to propose as a solution that the very state in question should act as everyone's de facto landlord.
Is there any evidence of this? Companies like Mister Carwash lease nearly all their properties and when they purchase plots seem to alway try to do a sale and lease. Their latest results claim they run 436 sites and lease 427:
https://ir.mistercarwash.com/news-events/press-releases/deta...
$5B in closed transactions in the last 5 years.
Adapted from Pratchett, “Guards, Guards!”
https://www.goodreads.com/quotes/7949916-and-although-the-sp...
What I see in both car washes and the storage business suggested by one of the child posters is low-labor cash flow. I can't speak for all geographies, but locally what I observe is car washes are built on low-value land where these new heavily automated car washes have got to be a cash cow once they are paid off, especially with monthly subscriptions. I do unfortunately see a lot of storages built on what could be much higher value land, which does cause me to wonder what kind of financial engineering I'm not seeing on the surface.
Firstly, the location, visibility and site layout are obviously perfect.
Secondly, the old brown-field gas station has sludge-filled underground tanks that cost a lot to remove, and do a full environmental clean-up. There are long delays to wait for a deep-pocketed developer, or for the site value to rise. In the meantime, lease it out to a bunch of enterprising migrants (in UK, often E.Europeans).
https://www.theguardian.com/uk-news/2022/dec/26/more-than-90...
getting a building permits for a car wash is much much much easier than for something higher value, and in absence of LVT ...
A company I previously worked for did rent 4-5 office buildings at ripoff prices, to a company belonging to one of the board members.
I don't see a correlatiopn between depreciation and the cleaning of the asset. My body for example started to depreciate after it was appr. 30 years old, but I still wash it every day. I think cleaning is an operational expense that does not support the lifespan of the object, it merely maintains an experience threshold.
And about experience, I also never washed my car until I got kids: car washes are an experience in its own right nowadays.
In case of real estate, depreciation offers income tax deferral because real estate retains much of its value and sometimes even appreciates despite being fully depreciated. It may be a part of or analogous to the borrow and die scheme of tax avoidance.
To others, it's a source of pride. They love driving a car that still look factory new despite being 15+ years old.
And others, it's a source of fun.
I'm in both of the latter two. I drive a performance EV because it's fun, and I really like it being clean and shiny. I got it wrapped in paint protection film, then covered in ceramic, to help keep it looking its best.
Will it help it maintain value? Not really. Certainly won't get any of the $6,000 I spend on the PPF and ceramic back. But I don't care. Not everything you buy needs to be considered an "asset" that you worry about losing value on. It's okay to buy things purely because you enjoy them.
How are other businesses excluded from low property taxes? This is clearly unfair, and could be easier addressed by removing barriers instead of erecting new ones.
If they someday redevelop the car washes, they will just be replaced with a tall building that has a car wash on the first floor, well, when all cars are electric that will be feasible.
It has quite an impact -- this is why it's much harder to find intact cars older than a couple decades or so in the north as opposed to the desert west.
> Rain and the occasional wet rag is good enough for a depreciating asset.
Now they cost $10-15 at least!
I have to wonder if they are actually making profit without the real estate games too!
Four (or even five) doesn't sound that much? What's the actual problem here?
How is a local politican supposed to determine what is the correct density of any particular type of service within her juristidiction? Assuming all other laws and ordinances are being complied with, and that there is no actual "nuisance", why should a politician need to step in to regulate, rather than letting the market decide?
Last night I stayed at a hotel very close to London Heathrow Airport. There, on the Bath Road, there are (literally) dozens of hotels, one right next to another. This is a feature not a bug! Apparently, there is lots of demand for hotels at that location, which isn't exactly a surprise. If the market were too small, the weakest would fail, right? Right?
https://www.heathrow.com/content/dam/heathrow/web/common/doc...
Admittedly, the local bus services around the airport which used to be free of charge (prior to 2021) are now chargable, but at less than £2 per trip the services are hardly expensive and are fairly fast and very frequent ... unlike the Hotel Hoppa services which seem primarily designed to rip off unsuspecting visitors.
On the contrary, the ever increasing dysfunction in US politics is largely because the players have hacked their way past the constraints of this model.
Even if it were true, I'm not sure that that shows there are too many car washes, just that consumer behavior surrounding car washes has changed dramatically in recent years.
I find it interesting that we have sayings like this, and sayings like "the market can stay irrational longer than you can stay solvent."
> why should a politician need to step in to regulate, rather than letting the market decide?
Because the market doesn't price in externalities. Sure the market will figure out which car washes live. But what about the ones that don't and the people who subsequently lose their jobs.
It's a fair question to ask if you're building too many of a certain service, especially when the ones that fail leave behind abandoned husks and unemployed people. Ya know, the people that the local politician is supposed to help. Local leaders should be at least thinking about these questions.
There's a lot going on in your statement to dig through.
The article specifically says these car washes barely add jobs.. but let's ignore that.
When a business opens and starts to hire people, there is no guarantee it will exist long term. When a person applies for a job, they need to do some due diligence researching the business to see if it sounds like something that will be around as long as they want to have a job.
Are you proposing we shouldn't allow "risky" business to start and hire people because there is no certainty they will be around in 1-5 years? Of course that doesn't make any sense.
If a business fails, people will lose their jobs, but that is not a reason to prevent business from starting. In fact, if we did prevent them, those jobs would have never existed!
This is a nitpick as I agree with the rest of your comment, but most people are absolutely not qualified to make that assessment. (In fact, it's debatable whether anyone can make that claim with any amount of certainty. Even the most successful investors are often wrong.)
People are pretty smart.
> People will ask friends who work if company is a good place to work.
I 100% agree with this, but that has nothing to do with what we're talking about.
In practice, the politicians supposed to be looking out for the externality damage instead merely redirect outcomes to benefit themselves and their friends. The result is invariably worse than whatever damage is wrought by the open and free market.
This is not a failure or shortcoming of any one particular attempt to corral the market towards social good; it is an inevitable and expected broken-by-design outcome of attempting to do so.
I think you'll find that the majority of humanity (those who aren't libertarians) actually agree that policing the negative externalities of business should be part of government's function.
Stuff like "we're destroying the ozone layer," "L.A's air is mostly smog," and "this factory keeps tearing children limb from limb" were effectively solved by government policing these negative externalities, not by "the market."
I specifically said externalities are real problems that bear addressing.
The problem is that once politicians are turned loose, they never stop. They cannot stop. They can't say, "well done, problem solved, let's pack up and go home." That would mean giving up their hard-won power -- and the concominant benefits to themselves and their friends that came with it.
So they must always seek yet another supposed outrage to feed their power. When they can't find one, they manufacture one, to increasingly absurd and implausible lengths, eventually wrecking the system.
But even if I grant you the argument that the same system that bans child labor necessarily leads to the neoliberal brainworms of "let's create a 3% tax credit for businesses that used to be car washes," I'm still very happy we addressed the real problems. And I'd say that government intervention worked, even if some of the laws they pass are stupid or trivial.
Child labor laws? Pollution laws? Seat belt laws? Labor safety laws? Drug-safety laws?
The irrational market isn't a problem for politicians it is for investors: people with money, let them learn their lesson. As for the jobs lost, at least the rich investors paid them while the wash was running, they will move on. The jobs are not high skill so no real loss when they are gone.
Under this comparison, the foolishness of an investor has resulted in a comparative net loss for themselves and the community.
USSR tries to optimize business from top but selecting what would be produced and how much. Didn’t work well for community or customers.
The point is that a "Local" government deciding on how many of one kind of business shows up in one spot isn't optimizing from the top (you could consider that the state or federal government). Instead you could consider it optimizing it from the middle. The local people are electing officials and having them implement their will. Trying to call that communism would be... odd.
As opposed to a central planning model in which a foolish planner can cock up the entire thing because they are usually far less accountable for failure and recieve little reward for success other than continued survival.
"Local people electing a local government choosing what gets built locally is communism"
And for whatever it’s worth there aren’t nearly enough car washes where I live.
If the local government can simply declare "there are enough X, no more are allowed" then the rich, powerful and well-connected elite can solidify their privileged positions forever. Raise prices, lower wages, provide poor service - it doesn't matter, their buddies on the city council will guarantee no one is allowed to open a competing business.
If you want to protect the lower class and middle class, you don't want to hand the elite a tool to turn their business into a local monopoly for the price of a campaign contribution.
The elite have all the tools they need already, they always have had that. Representative government is the modern change that keeps them from dominating everything.
This exists in America, in ways that have generally escaped the label of "Communism". The most basic example of this most will be familiar with is zoning laws, but there is significant precedent otherwise. There will always be a gradient of control, and claiming that a singular government action in expansion is therefore communist is not intellectually honest.
The difference is here the people making the guess are also taking on the risk of what if they are wrong. When someone else makes the decision they don't have the risk and thus less incentive to get it right. Also that "someone" making the decision tends to be making a lot of decisions and so are unlikely to spend enough time researching it, or alternatively since they don't feel any pain they will spend far too much time on research. (there is no objective way to say what is enough time in research)
As an adult if you can't weather a couple of weeks of unemployment you've seriously screwed up somewhere - probably overcommitting to expenses based on assuming that your income is guaranteed.
The mindset that someone should be stopped from even offering a job because it might not be forever is completely ass backwards. It's never forever, act accordingly.
Only 64% of Americans could cover an expected bill of $400.
https://www.federalreserve.gov/publications/2021-economic-we...
There are a _lot_ of really short sighted people out there.
For poor kids, it's even worse, because all they have other than sub-par school lunches is whatever microwave meal their parents can afford not just financially but also time-wise. Cooking for a family takes time and energy, both scarce when you gotta work two jobs to make ends meet.
[1] https://www.aecf.org/blog/exploring-americas-food-deserts
https://www.pewresearch.org/short-reads/2013/11/13/obesity-a...
That's literally the first point I listed.
> and lack of anything that resembles a decent food culture.
Yep. I mean, I'm European so I'm a bit biased - here over the pond, we associate American food culture with "tons of fat and sugar".
> It is absolutely possible to maintain a quick and healthy diet on low budget - there are infinite reddit threads and substack articles on the topic.
It is, if you have the resources: a car to get to a place where healthy food is sold, most especially, and time and energy to cook.
It simply is not possible to drag oneself out of poverty by the bootstraps. Most of these "live on a frugal budget" peddlers are highly privileged: they can afford to buy in bulk when stuff is on sale, they can afford to store bulk supplies without them going bad, they can afford to drive a lot just to get the best deals. Take these three points out of the equation and most "frugal" influencers get revealed as patronizing scammers who I believe have zero right to exist and bullshit others on the Internet. And the politicians who reference to these bullshit peddlers should be thrown into jail and be served nothing more than dry bread and water for a few weeks, just to get some humility into them.
I'm sick and fucking tired of all of that. Fix poverty instead of patronizing those who are in direst needs.
In my experience, none of those three are that key at food cost cutting anyway. The key is choosing what to eat. If you make food at home out of cheap, nutritious ingredients, you will do well. The bag of beans that is only 1 lb and is at the expensive convenience store, is a much better deal than the 40 lb Costco crate of frozen pizza or something.
Beans, rice, potatos, eggs, oats. Start with staples like these and it really doesn't matter whether you are getting the name brand or the bulk discount....
> and lack of anything that resembles a decent food culture.
...ah, but here's the problem. If your food culture consists of habits around pizza and burgers, around eating fast food and heating frozen things in microwaves ..... if you never even learned to cook beans, in fact, never learned to even enjoy them and are grossed out by them, if you have no idea how to make a raw potato edible and delicious in 5 minutes.... then... yeah, you won't have any good mental "software" to help you easily feed yourself with stuff like the aforementioned. Instead you'll have to expend valuable time and energy on experimenting and learning new habits and recipes. Until you spend that time you are locked out of the cheaper food and locked into the expensive processed food trap.
> I'm sick and fucking tired of all of that. Fix poverty instead of patronizing those who are in direst needs.
And I'm sick and tired of both sides of this argument. Yes, fix poverty rather than patronizing thoese in need -- but acnowledge the real poverty is primarily cultural, not monetary, and tailor solutions to that, by somehow helping people relearn cultural food skills that were lost during the 20th century industrialization program.
You're still ignoring the point that it can be very hard to even get access to basic staples, and I'm not just talking about the financial aspect but moreso about "how to get to a grocery store", especially in areas with no or derelict public transportation.
> but acnowledge the real poverty is primarily cultural, not monetary
Way over half of Americans can't cover an unexpected $500 emergency bill [1]. America's greatest problem is widespread poverty and income insecurity, everything else stems directly from that.
[1] https://www.cnbc.com/2023/08/31/63percent-of-workers-are-una...
You will get fat if you eat more than you need to maintain your weight.
If anything, personal experience, with processed foods it can actually be easier to maintain weight because the calories are known.
[1] https://www.bloomberg.com/opinion/articles/2023-08-03/actual...
Most of the time they are looking into bringing businesses in that will have long term staying power, and backing that by offering low interest loans or tax breaks via a number of different programs. No, cities do not want boom/bust type scams that are going to eat up real estate and leave a dilapidated building in the future.
>As an adult if you can't weather a couple of weeks of unemployment you've seriously screwed up somewher
Or rent/housing/food/healthcare has exploded in cost in the past few years and you're like a large percentage of the country living paycheck to paycheck. But hey, screw them anyway, "let them eat cake", what could possibly go wrong.
Especially considering that back when "we all" farmed, the common amount of savings to have was an entire year's worth, since that's how long it is between harvests (in some climates -- perhaps half a year depending local variation)
We don't generally say that about small businesses that need cash flow
It's kind of odd to frame intervention in anything car related as an intrusion on the free market when it's one of the most artificially and politically constructed sectors to begin with.
This looks like a claim that car owners should be required to have even more insurance, which seems inconsistent with your claim that widespread car ownership is the product of onerous regulation.
All in all I think this is a pretty glib take that I’ve seen enough times that I’m bored with it. Suffice to say that most of the regulations you’re complaining about mostly postdate the widescale adoption of cars. Nobody was instituting parking minimums or insurance mandates ahead of time in order to encourage car ownership; instead, as soon as car companies figured out how to make cars cheaply enough that even their own factory workers could afford them, governments made regulations in response to the overwhelming number of cars that everyone ended up buying.
But that’s a fundamentally different mindset. Back then, living in a democracy where everybody was buying cars meant that the government’s job was to notice that people wanted to drive cars and work to accommodate that. These days, people think the government’s job is to decide for us what we should want and then shape the regulatory environment in such a way as to shape our behavior, because they know better than we do.
how is this inconsistent? Insurance raises have to be approved at the state level, again this is not a free market, and for political reasons many states have kept insurance rates at decades old price levels. Insurers actually lose money in most places because they cannot raise prices. (https://www.economist.com/united-states/2024/01/18/why-car-i...) and as a result often health insurance and other institutions have to cover the cost, which is to say the public pays.
Just to see how absurd this is. Minimum liability in a lot of states is 50k. In Germany and much of Europe minimum liability is seven million.
It's the governments job to take externalities into account and design urban environments rationally, not to coddle car obsessed consumers and have everyone else pay for the cost they impose on others and the environment.
Without regulation, minimum liability would be zero.
> It's the governments job to take externalities into account and design urban environments rationally, not to coddle car obsessed consumers
Finally your true colors come out. You believe the government’s job is to decide for us what we should want and then shape the regulatory environment in such a way as to shape our behavior, because they know better than we do. You’re the authoritarian trying to redesign society. Just own up to it and be honest with yourself instead of cynically and disingenuously trying to argue based on principles you don’t even hold.
As the article says, automated or even semi-automated car washes don't provide much employment or sales tax revenue. On sunny days, some of these washes have vehicles sitting in line, waiting their turn...most with their engines idling.
I live in an apartment so managing my own washing is impractical, and is actively discouraged by the landlord. My 15-year-old car goes through the wash three or four times a year, and it's finish is still fine, thanks.
To be fair "market" is referring to two different things in those two sentences. Different markets can have different characteristics.
How can the market be irrational? People either are purchasing enough of these services to make the business viable, or they are not.
> Because the market doesn't price in externalities.
Legal liability for harmful externalities factors directly into the market for insurance and other operating expenses. Preemptive regulation is usually unnecessary, and often entails its own deleterious effects.
However, the saying about "the market can stay irrational longer than you can stay solvent." is that even if you can point out that say Enron / Wirecard / FTX are fraudulent, good luck making any money on that. Michael Burry nearly messed up his timing for '08 and could've lost to an investor revolt [2]; but he has messed up timing for Tesla (peak 400, current 200) and many other stocks causing him to exit those positions before making money.
[1]: https://www.theverge.com/2024/2/8/24065999/uber-earnings-pro...
[2]: https://en.wikipedia.org/wiki/Michael_Burry#Investment_caree...
This is true, but it's not clear to me how it relates to either the discussion of whether markets are rational or the discussion of whether common-law liability is more effective than preemptive regulation. Can you explain the connection?
If the implication is that people choosing to bear risk in the expectation of achieving a long-term profit is irrational, then I'm not sure how to respond, because this seems almost axiomatically false to me. In fact, given that we live in an observably stochastic universe, where cause-and-effect is best represented by probability models and not deterministic logic, I'd regard that rationality itself includes probabilistic decision-making, and that attempting to preempt all risk is itself highly irrational.
Its tangential. The Market-Irrational quote is all about how even if you know the stock market is wrong (especially due to large scale fraud by that company) you may not be able to profit from that knowledge because the market can continue to buy that stock (be irrational) longer than you can afford to have the contrary position (be solvent).
People (probably myself as well) use it to describe other situations though. Such as a Taxi-like company selling 20$ car rides for 10$. No matter how irrational having your only revenue source be a loss-leader for decades; if you bet against Uber at IPO you'd be out 30/share right now (current 70, IPO 40).
To get back to the actual origin of this tangent [1], although Uber still exists but imagine you only had a Taxi industry and Uber comes in and all the Taxi drivers get fired. Then Uber goes bankrupt and all the Uber drivers are fired. Now all you have are a bunch of unemployed people. Society did not benefit here. That's the scenario being described in the origin of our tangent. In these situations there might not be somebody with a large pile of cash that they feel like investing into re-starting the taxi industry so that region may just not have taxis anymore or just the richer parts of the region have a rebirth of the taxi industry and the poorer parts are un/underserved. So it would be rational for people to have a NIMBY approach to something that in the long term will only cause problems.
> I'd regard that rationality itself includes probabilistic decision-making, and that attempting to preempt all risk is itself highly irrational.
Betting with 1:-1 odds is irrational unless you're running a money laundering scheme. If you think that a region can only support 4 car washes then as a local government official you should prevent the 20th from being built because it's just not sustainable (or at least force them to prove 20 can be supported).
A new car wash recently popped up on the main road near my house, and it has definitely had a substantial negative impact on the traffic patterns surrounding it. Basically every time I go that way I have to maneuver around people clogging up the road waiting to turn into it.
It's not enough to cause me any real pain, but it's definitely enough to make me feel less than kindly towards the proliferation.
Maybe it helps to consider the idea that the government (which already has considerable influence, positive and negative to markets) is part of how preferences are expressed.
For something like a car wash that doesn't really affect the people around it much, why would we need to regulate that? Oh no, there are more car washes than some people on Nextdoor think are necessary? Who cares?
If there is sufficient demand for car washes that all of them stay in business, then they'll stay, because the local area wants that many car washes. If they aren't binging in money, they'll close. Or just pay out to their employee and landlord indefinitely.
"Oh no, the city had to put in a few million in pipes to supply additional water to an area that had a huge demand spike taking a long term bond on the issue... and now they are all out of business and earning no taxes to pay for the expense. Too bad we didn't actually plan for reasonable growth and resource usage. Hopefully someone can bail us out"
As for "doesn't affect the people around it."
Oh, sigh. So I'm pretty familiar with local governments and the work they do, and one thing is abundantly clear; very very many people have no clue "what affects them," until the thing they're used to changes.
A TON -- probably the overwhelming majority -- of local government work is "invisible stuff that the people never notice precisely because that local government is doing its job correctly."
If we taxed land, then sure, we'd get efficient use of land. But we (mostly) don't, so here we are, surrounded by car washes and parking lots.
Just because we don't have Georgism doesn't mean we don't already tax land a ton. Annual property tax revenue for the entire US is ~$600 billion. By comparison, federal income tax revenue is about $2.6 trillion annually.
Just one of those things takes up the space of 3 or 4 normal gas stations.
The crazy thing is that after a small wave of initial enthusiasm, they hardly ever even have customers.
My hometown of 40,000 has five; one which replaced the only movie theater in the county (a one-hour radius) that closed at the end of 2020. The local government remarked the car wash will provide jobs. Three employees are needed, according to the "local" news. (Actually, the local newspapers were replaced years ago by a nationwide chain of "independent, regional" news sourcers.)
I'm glad I got away from that place. The most fun you could have on a Friday night was meeting friends at Walmart and then driving to an empty parking lot.
It’s not like Adam Smith’s invisible finger didn’t touch the cupcake bakery mania, froyo, etc.
A few years ago, mattress stores were popping up all around my neighborhood. Today most of them are gone. These things seem to come in waves and I’ve never understood what drives it.
One reason to limit the number is to prevent them all dying out - I saw a situation near my house years ago where there was a successful laundromat, another opened nearby and both were doing OK but not amazing, and then a third opened up - and all three ended up dying. There was no laundromat for awhile and finally a new fourth one opened up nearby.
One hotel (hub) with differentiated service levels could be more efficient, effective, and ecologically minded. Think Vegas casino property without the casino.
For customers the area that has many hotels that compete with each other will be better than the area that just has one. The area with one hotel would have a single hotel that would have no incentive to be efficient or effective.
When deciding whether competition is the best governance should take into account system scope or level for that competition. Are you competing at the level of hotel rooms and restaurants within a hotel, at the level of hotels, at the neighborhoods clusters of hotels are in, at sectors of ecosystems like hotels versus transportation versus other people uses of land and resources.
I think there's competition at all of those levels, and that's a good thing.
What I'm trying to say is I don't understand your point.
Seems a bit much?
The concerns over land use and pollution suggest that the car washes are not paying for negative externalities, removing a natural cap on their proliferation. Smells like market failure. Why wait for the businesses to fail?
American small businesses are disappearing because that's what consumers want (what they vote for with their dollars, as opposed to what they say in polls).
Absolutely no one in my area likes trends in veterinary care, for example, but there are only so many options.
I skimmed the article and don’t see mention of that?
I'm not saying taking an uber everywhere is an alternative to having a car. It's part of the system. There's public transport (tube, DLR, overground, trams, busses), there's rental bikes, rental scooters, there's uber/taxi, there's walking. You use the "car ownership alternative" (or a combination of them) that works for each given situation.
You aren’t commuting daily in an Uber, nor driving kids to school and activities with all their gear and car seats. Those are the activities which might have moved the needle on needing Uber level frequency of car washes (but even then, I assume an Uber is washed every other day or so, or perhaps I just have a cynical view of humanity keeping the inside of taxis clean).
True, I believe that’s the reason too, a while ago I used to park in an underground parking with a free washing area, the car next to me used to be clean all the time and the guy washes it every day, one time I asked him about such dedication, he said simply he is an uber driver!
It is not in West/Fargo. There is almost no rideshare capacity (there are a couple people) and the taxis use their own wash. Even Google does not capture the new 12 washes that have appeared in the last 18 months. Some of them can't staff and are closed much of the time. Especially during winter, when you want washes, it seems like land improvement. Add sewer, power, water, network to undeveloped land as a "business". Hold for a decade. Profit.
The last cab company I worked for had a car wash in the yard that usually managed to make the car dirtier than it was before it was washed. But that was their 'standard', it was free and I really didn't care so...
Growing up in the West and Midwest, these things were absolutely normal for the first 30 years of my life. Some of them would even change the oil too. But I haven't found anywhere within 50 miles of me that will do it here. I'm not talking "detailing." This was $35 including the oil.
They don't offer an oil change though, I've never seen a wash+detail+oil change in the area. At scale I'd assume they could do it for closer to $50, if $35 was a 2005 price that's on par with inflation and beating inflation for some industries like food.
Oil changes require following environmental regs, careful disposal, paying for same and it makes a 1000x more sense to integrate them with a business that actually works on cars and can capture additional dollars for other maintenance and repair.
You also want a comparatively skilled and trustworthy individual not someone who moved up from vacuuming to oil changes and a business than can easily write a check if their employee does mess up your expensive asset rather than an owner who will have to decide between writing you that check and paying their rent and employees. This is also why you don't want to get your oil change at walmart.
If you could have it the oil change would have to cost $50-$60 to justify its existence because there would be no chance of capturing additional revenue. If it had full service and 2 people spent 15 minutes we are talking about another $30. This is only true if you can actually keep relatively busy and aren't implicitly bearing the cost of labor while people are waiting for customers.
Then there is competition from both auto repair who are offering 29.99 oil changes and 5-9.99 automated car washes.
I expect the main difference between the US and UK versions are that the latter are typically set up in disused urban plots with pop-up tents and temporary chain-link fences rather than having any investment.
Either way, if you're getting 3-5 people washing your car for a tenner, the people you're handing you money to are probably receiving minimal pennies on the dollar.
>They're legit
It is hard to know whethr they are working legally.
No?
These big wash machines are typically staffed by only 2 or 3 people hence the complaints that they don't even create jobs.
That being said, I wish there were more automated washes near me. We find ourselves making excuses to drive by the one we pay a subscription for.
Reputable shops I more often see do something more like a 'Prepaid' discount where you get X washes (maybe in the next Y months) for Z dollars, and ideally it's something like you get one wash a month at a 10-20 percent discount.
The profit-gouging ones, either do a 'assume 3-4 washes a month to see real benefit' or assume you are washing once a week in their sub... or do all the other 'tricks' above schemes can allow.
But I never see anyone using the subscription car wash in town, so who knows? The new ones connected to the gas station see some action.
As an aside, the entire experience is awful. "Pay $25/month and get as many $8 washes as you want!" ...but I only get a car wash every 2 months and since you're tracking my license plate, you already know that.
Or, sometimes a combination of the two.
The setups for the DIY shops are usually fairly cheap IMO (Just looking at what's going on at them and the BOM) and the main thing outside of market saturation is having a good ingress/egress setup (If one sucks to get in and out of, folks won't come back.)
That's not to say that there aren't hand car washes as well, however I only tend to see those where I grew up (not too far from here, mind you,) or when it is some sort of school/church/etc fundraiser.
The weird thing you can run into in some cases, even at the automated shops though, is either weird 'implied consent' about extras by folks on one end or another of the line, or in the case of any of them, 'memberships' that are priced to where you'd really be following that 'one wash a week' rule to get your money's worth.
[0] - Often with a warning that they are not responsible for damage to vehicles older than X years and/or with more than Y miles
[1] - These can be surprisingly small, to the point some gas stations have one on the side and a purchase gives a 5/10c discount per gallon. Which, to the general point of 'pennies on the dollar' they made money on long term.
Most casual work was done by teens and middle aged women through history but now it's mostly foreigners.
Anything done by citizens attracts huge markups.
I guess it's too hard on the storm drains to have soap and dirt and stuff going down them
Or maybe city council is just in some kind of racket with car wash owners or something
But either way, that's why we have so many car washes here... And it sucks ass
In the northern foothills here bordering Phoenix, Arizona, to the north, there are an understandable number of automated carwashes.
However, i've found no manual (pressure wash sort) carwashes, which are easy to find in California and Illinois, for two examples. I don't know why this is.
I can kind of speak for some of L.A.'s use of manual car washes. There's many who live in apartments or places that don't have places to wash at home. Manual car washes fill the void for people that want to clean their own car but don't have space.
https://ncswash.com/what-is-a-car-wash-water-recycling-syste...
The pay/pressure wash systems I've ever seen are all older, I don't know how many new ones they're building. I suspect automatic washers are cheap "enough" now that you can't build a new pay to wash that comes out substantially cheaper.
When I was a kid it was $2 for the power wash for quarters type, and $10 for automatic or by hand, now it's $8 for the automatic decades later.
They can't or won't clean that and it is contaminating in even small amounts. E.g. one drop of oil contaminates 500l of water.
At least for Germany.
Regions where it rains frequently like the PNW have rain gardens, vegetated swales, catch basins/filters, and other mitigation strategies all over the place whereas e.g. California might just have them throughout the drainage system like at the end of the LA river.
Some cities have combined or separated sewer systems. Even if combined, it may be designed to overflow during heavy rain, so it's not a guarantee that car wash water with dirt, soap and oil will not go into into a stream somewhere although in that case you're also sending literal shit there. Also when combined, there may still be old infrastructure that drains to a stream or river so a blanket ban is a good idea.
Typically a car wash would be required to have an oil-water separator (with maintenance records and occasional checks) and discharge effluent to the sanitary sewer. Not sure about everywhere but in Vancouver (I have experience working in water treatment there) you also need to have the car wash covered and send collected rainwater to the storm sewer.
Perhaps there could be a middle ground where you're allowed to wash in your driveway but only with a specific soap, and not allowed to degrease your engine bay. There's basically no way to enforce that though,.
Also might as well note here that in Vancouver storm drains that connect to the storm sewer have little fish stenciled by them.
That's fair, but it doesn't explain why the bylaw won't even let you rinse the mud off your car with nothing but water
Places like Vancouver use street cleaning machines in the spring to sweep up any salt on the streets.
I’m skeptical of the ‘big clean’ lobby being able to buy this law, I could be wrong.
First, there's a distinction between sewer vs. stormwater. Sewer lines go to a treatment facility that's built specifically to take all the bad stuff out of the water before flushing that treated water into your local streams. Washing your car into a sewer drain, all good.
Stormwater drains shuttle water directly into your streams.
Stormwater drainage is purpose-built to handle the overflow rain during storms, and only that. In fact, the first goal of stormwater management is to not drain it at all! You want the stormwater to flow through your local ecosystem naturally, generally as groundwater. Nonetheless, storms conspire to drench our non-porous surfaces (asphalt, concrete, etc.) at a rate or duration above the designed for drainage of the system, resulting in overflow. Overflow leads to things like flooding or public safety hazards for cars driving on undrained roads, so a secondary goal of stormwater management becomes shuttling excess water out of the local ecosystem.
What's all this have to do with washing the mud off your car? Well, the first goal of stormwater management is to keep it in your local ecosystem. So, if you can ensure the runoff from washing your car goes into your grass or a specifically designed catch basin, then you're all good. But, if you wash it off into the stormwater drain, well then you're using that drain for a purpose it wasn't built to serve. Your water is neither excess nor should it bypass your local ecosystem. As far-fetched as it may sound, that mud may have local nutrients, pollen, chemicals, etc. that could serve your local ecosystem, and by bypassing that you are disrupting your ecosystem's natural cycles.
A note to the astute reader that says well, we already disrupt our ecosystems with other human activities. Yes, you are correct. That doesn't mean that we can't nor shouldn't take actions to minimize or eliminate further disruptions when they are within our sphere of control. We must strive to find a balance in ecological systems.
I appreciate you taking time to explain all of this, it is pretty baffling otherwise
I wonder how many cities still have a combined system. At least where I live, I could totally see the amount of water coming from the sky regularly beating the amount coming from household drains. Along those lines, our city is spending money replacing private sewer laterals (normally a 10-20K job the homeowner is responsible for) just to cut down on the water intrusion the old laterals (especially party lines) let into the sewer. It's cheaper to pay for the new laterals than it is to build a larger treatment plant.
Shouldn't we ban people showering under the same logic? I use about the same amount of soap to wash my car as I do in the shower, but I shower a lot more often.
My understanding is that the UK has a combined system where rainwater and waste go into the same system and is all treated the same. More because of history than because anyone now thinks that is a good idea. Maybe someone who knows more about this could confirm?
... and the city spends thousands a year on billboards, vinyl printed banners across main roads... "Save water - use a car wash!"
Ugh.
How does this even get enforced? Are the police driving by everyone’s house regularly, looking for those dastardly hoses? Or do they rely on nosey neighbors ratting on each other? I can’t imagine this is the most important crime for the local law enforcement to be investigating.
Enforcement is on a council-by-council basis, but of course in urban areas I imagine this is pretty hard to enforce. In rural settings it must be pretty much impossible. Having said that, I haven't really seen many people at all washing their car at home. Maybe it depends where you live, if you have neighbours who do it a lot it probably feels like everyone does it.
In the last few years, there have been a load of "wash your own car" car wash stations opening up. They're cheap (you can do the car for <100kr - $10 or so), way less than the drive in station, and have things you wouldn't have at home (e.g. cleaning underneath the car, handy for washing off the salt that has come off the road in winter). Not really enforcement but a pretty effective way of nudging people to doing the "right thing".
They also have a hotline for tattletales and HOAs and the police can also report you.
Unfortunately sometimes things don't work like anyone would want them to. https://www.phoenixnewtimes.com/news/victims-wonder-why-arpa...
https://engineeredtaxservices.com/the-unique-benefits-of-cos...
There is an accelerated depreciate for car washes that runs out in 2026 I think.
https://engineeredtaxservices.com/the-unique-benefits-of-cos...
> The Tax Cuts and Jobs Act (TCJA) of 2017 made a significant change in this area, currently allowing businesses to write off 80% of the cost of qualifying property in the year it's placed in service
Why depreciate over 39 years when you can do 80% in one year.
And there's nothing in there to do with car washes specifically, though? Just general MACRS etc?
The tax act of 2017 has special provisions where almost nothing but car washes qualify.
A nice summary of why things don't get fixed. There are legitimate problems with car washes: traffic tie ups, pollution. Instead of regulating to fix those problems, they regulate to limit the number of locations instead. So, the demand that exists isn't met, and nothing gets better because the existing businesses can continue being nuisances just like always.
There are private equity funds that might aquire 50 of these businesses at 2-5M each, roll them into an index, and sell the index. Same with doctors/dentist practices.
The financing of these businesses is so opaque.
Is it really entrepreneurship though? Seems like "Buy, squeeze, rinse, and repeat" - which is killing businesses rather than creating them.
VCs certainly see it this way, and so do the pedigreed people they fund. The only people thinking its different, are the ones on the outside looking in.
Each car wash is operated by a different entity, offering unique apps and subscription plans.
It's hard to imagine this being profitable given the circumstances. But what do I know, I wash my own car.
I would try it to puzzle it out, but its one of those spinnybrush antenna destroyers and I'm not gonna risk it.
Sophisticated machinery, lots of plumbing?
They also have a giant sign in front of the building stating it’s for lease.
They seem like just about one of the easiest businesses to run. Minimal employees, low variable costs, likely a reasonable long term investment in the actual rental estate.
In many ways, this the same as gas stations, convenience stores, and CVS/rite-aid/walgreens. People don’t want to go out if their way.
I suspect some of this all is them being "sold" and in a few years a bunch will be gone, unable to make the payments on the loans taken.
We're seeing more car washes opening up around here, but I think that is just as much about having the area under services for ages. Now I don't have to wait in line for 45 minutes, or risk a fine for cleaning my car in the drive way (which I don't think you should be doing anyway).
IMO that's also why they all have monthly memberships with unlimited washes. The vast majority of their customers are regulars driving by on their way to work so the subscription makes sense for everyone.
Granted, there are benefits to laundering money with literal cash, but you still want some legitimate money trail even if you don't actually hand over the claimed goods or services—enough at least to cover the actual expenses of the business, i'd presume.
Also made me think why in the country I live, in stores like 7Eleven you cannot pay with a credit card for gift cards, google pay cards, etc.
Create a very basic "game" that technically meets Valve's requirements. As long as it runs well enough then it won't be blocked. Have people buy Steam gift cards with cash, then buy the games you have published.
Valve takes 30% and you get a nice check with a verified source of funds from a legitimate company.
I would say this is the cheapest, simplest, and (arguably) safest way to wash your car, especially if you buy the rinseless wash concentrate by the gallon. It's easy enough that it allows me to wash my car nearly every week. I only need about 3 gallons of water and 1.5 fluid ounces of ONR to fully wash one car.
It's because the cars aren't the only thing being cleaned. If you have a lot of illicit cash that needs to wind up in your bank account, these are the kinds of places you need to own.
2) If the problem is that subscription users aren’t paying local sales taxes, why not charge property taxes? (or, Land Value Tax!)
I've spent $200 - $350 on car detailing as a service several times now. They drive to your home and work on your car for several hours to get it looking brand new.
As someone who drives an SUV, has dogs in the car frequently, and gets my vehicle muddy on the inside, this is a fantastic service.
A bunch of my neighbors use the exact same service.
Read reviews. Ask around at nearby dealerships if they use one.
Not me because I don't care about my car enough, but that doesn't seem like a particularly outrageous number to me.
There was hardly a time there wasn't a short line to go through and many had the subscriptions, you can tell because the attendant just guides you into the track and there was an RFID tag on your windshield and if the attendant didn't have to take payment you knew they had the subscription.
This seems like the most likely reason to me. It's a way to hold on to land in a way that normalizes gas-station-like traffic patterns without the "gas station" stigma. They can be easily converted in the future once electric cars are a large enough percentage of cars that everyone will come to accept fueling as a 30-minute activity instead of a 30-second activity. If they tried to just buy land and keep it empty they would have a hell of a time convincing NIMBY types to tolerate the introduction of charger traffic patterns where none existed in the meantime.
I always thought the car wash construction boom had something to do with water conservation, Phoenix being in the desert, but apparently not.
I'm sure the beancounters love the idea of everyone using Starbucks as their 30-minute car-fueling-and-now-also-drinks stop. It solves all of the (from the corporate point of view) downsides of running an actual store with, like, chairs and shit. It practically guarantees each "seat" turns over in that amount of time since the act of showing up to use the charger implies they have somewhere else to be. Nobody's sat there for hours on their laptop. No problematic h̵o̵m̵e̵l̵e̵s̵s̵ ̵h̵o̵u̵s̵e̵l̵e̵s̵s̵ unhoused people shooting up in the restroom unless they happen to be living out of an $80000 car. Corporate wet dream lol
The first Flagship car wash arrived 10 years ago, and they are always busy.
Still, how many can a town support?
FWIW, I've used a paid car wash <10x in my life so it doesn't matter that much to me.
Someone opens a car wash in a central area. They self-declare a tax value for the land and its improvements.
We also allow that anyone can forcibly buy that land by paying that same self-declared tax value + X%. The sale can't be blocked.
We've ended the monopoly of land ownership, and imposed a free market on land purchasing.
Car washes that are a waste of the land they are placed on will get bought out and converted to other uses. If they are not, they will remain.
This, by the way, is very close to a land value tax, and all we've done is force a fair appraisal of potential value for a parcel, rather than the current, possibly underutilized value.
It would be necessary to block sales of a personal or vindictive nature, so the local rich guy can't force their enemies out of their homes.
And have robust antitrust. And correct the perverse incentive towards poison pills, such as polluting the land to make it undesirable.
If Musk wants to get pissed at me and buy my house for $3m I'll be there to sell.
There are certain areas in the country that are struggling with low housing affordability and high rates of renters, but that can't explain excess car washes in the Midwest.
[0] https://fred.stlouisfed.org/series/RHORUSQ156N
[1] https://www.reddit.com/media?url=https%3A%2F%2Fi.redd.it%2Fp...
In my mind, it's kind of like how above $20/hr or so (and >= 5ish employees), it's a no-brainer for businesses to pay for lunch. It's more cost effective for the business to pay, and it results in less dead time and more camaraderie. The experience of automatic or manual car washes is bad; your car doesn't get that clean; it's shockingly expensive for what you get; you don't have the proper tools/time to clean the interior or wax and dry the outside; you have a variety of quickly deprecating fake-currency scams (where the unit costs are a prime number not dividing the amounts you're allowed to use to pay for the fake currency, and the fake coins only sometimes work in the machines and are replaced every 2yrs or so to deprecate anything you may have bought in the past); and so on.
Like, I average $5/mo or so cleaning the cars in my household. Doing it at my apartment with my own tools would be a strictly better experience. Most tenants I've talked to agree. In our complex, that's a (ballpark) >=$12k/yr opportunity. Is it that expensive to place a spigot and outlet close to a private road? Have bad actors made this infeasible? What actually keeps landlords from providing that amenity?
The classic method was to build a trailer park or a drive-in theater. You could keep steady cash coming in until you were ready to build something more substantial, then simply evict the trailer owners (space rent was typically month-to-month) or tear down the movie screen and grade the parking lot flat, in both cases with very little demo cost.
Trailer parks and drive-in theaters were both way bigger than car washes. These guys are pikers.
With a dying manufacturing base, at least it's better than selling hamburgers to each other.
God I love this country.
There's actually a game theory explantation for this called Hotelling's Law: https://sciencetheory.net/hotellings-law-1929/
> Especially true in the American two-party system, political parties want to maximize vote allocated to their candidate. Political parties will adjust their platform to comply with the median voters’ demand. The Comparative Midpoints Model represents this idea best: Both political parties will get as close to the competing party’s platform while preserving its own identity
[1] https://www.doncasterfreepress.co.uk/news/crime/nine-people-...
Probably a lot of people are conditioned that they need to have a clean car.
Isn't this an indicator that economy is fine, people are fine, since they can spend this type of money on car washes? How can something this worthless be booming, if people are struggling.
At 1 car every 14 minutes on average, a single bay will easily clear $1,000/day of revenue.
However my neighbor used to own a chain of car washes in the suburbs and going by his 11,000 sq-ft house, I'm guessing it was pretty profitable!
I've seen other sites state up to 120 cars per hour. Assuming 750/day @ $20 wash, that's an annual gross of about $5.5M. I doubt they're running at that rate consistently, just at peak. But I would be surprised if $2M wasn't the average in town. That's pretty good for a low labor enterprise.
Why are there so many cars?
Because our country is ultimately designed and developed by urban sprawl madmen with a highway fetish and zero vision for a better way for humans to live and operate.
I love how we hyper fixate on stupid questions about car washes while pretending like car dependency isn't the problem.
Not to cause us to need more car washes. But it was by design.
Then why don't they? It seems a taxable event has occurred, so tax it?
Maybe the current regulations count it as something else, so it has no sales tax.
My car washing consists of occasional use of the gas station scrubber.
Selling a teaspoon of soap and 4 gallons of water for $10 is a darn good deal. And if you're already paying all the fixed costs, you want to sell as many as you can.
And the cause for their spread has been widely and publicly known for years: somebody found out that these things print cash. You own the land, you pay for one or two employees on-site max. Once PE woke up to the “strategy,” it was game on.
PE gets excited and overdoes it, wealth extraction hearkens enshittification, corner car washes are the new dollar store.
So I almost didn’t read past the subtitle, what’s actually new here? Oh:
“The omnipresence of the car wash in American life may be underappreciated: There are twice as many car wash outlets as McDonald’s and Starbucks locations combined.”
That’s almost unbelievable. Twice as many as McDonalds+Starbucks!
(Another concern: Who’s on the hook for all the PFAS cleanups when the scheme goes bust? Because you know it won’t be PE.)
186,000 gas stations vs 60,000 car washes.
And a quick sanity check of my town - we have more gas stations than car washes (though some have car washes) and way more burger joints than car washes, and also more coffee shops than car washes.
You don’t have to move much material and you can get large volumes of “sales”
Perhaps people want to launder money or be as cool as Heisenberg/Walter White.
They are popping up because it is good, mostly passive income if you are in the right area.
(Edit: maybe "sure sign" is a little bit hasty, but I think the other possible reasons for a "credit card only" sign are actually worse morally than money laundering)
Maybe some tax avoidance scheme, not money laundering.
Unless you advertise as credit card to outsiders but take cash as part of some scheme
> But the industry’s biggest recent innovation involves its business model, which has increasingly focused on membership and recurring revenue.
...
> Now, washes can take just 90 seconds, labor costs have been automated down, and recurring revenue from memberships has eliminated weather risks. Plus, the tax reforms enacted in 2017 by former president Donald Trump allowed car wash owners to claim 100% depreciation on new equipment — a generous subsidy to further investment. While that incentive was written to shrink over time, the tax proposal currently in Congress would restore the 100% depreciation allowance.
...
> In analyzing usage patterns, the industry soon found that the convenience of wash memberships translated to higher profits. A typical non-member may come in three or four times a year, while a typical member gets that many washes each month. But at $20 a month, that’s a huge jump in annual spending — more than enough to cover the costs of accommodating heavy users who may scrub their SUVs dozens of times a month.
SO - at least where I live, the number of monthly payment/unlimited washes car washes has exploded in recent years. Even so, there's often a line (of very new, very expensive) vehicles waiting at them.
L A U N D E R I N G