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Comment by smallmancontrov | Hacker News Reader

Also, the idea is to make it heavy enough to neutralize the incentive to just hold the land, which is clearly not productive yet still lucratively "compensated." It's a highly regressive tax. The original highly regressive tax, as can be seen in some of the terminology (landlord) even if the details have drifted since.

I think there's far too much wiggle room in the analysis of land-value vs improvement and would strongly prefer a solution that moves away from perpetual ownership and towards revolving leases instead. The way to do this non-coercively would be to gate the enormous tax benefits we bestow to real estate windfalls (1031 exchanges, the $500k exclusion, the 15% and 20% capital gains rates) behind conversion to a 99 year lease. We won't see the shade beneath those trees but our grandkids will.

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> the idea is to make it heavy enough to neutralize the incentive to just hold the land

This isn't really a problem in downtown Brooklyn or Austin, though.

Anytime you see a plot that is just a parking lot with an attendant in a dense city, that is just a land speculation play. That parcel is still extremely underused, but putting a parking lot on it lets the owner extract some rent in the mean time. A land value tax would ideally be high enough that the owner of that plot would be losing significant amounts of money even with that parking lot there, and would be incentivized to sell it to someone who wants to actually develop it immediately.

The suburban version of this phenomenon is the self-storage place. Build cheap steel structure(s) that can generate a little income now while holding land that will presumably be more valuable in the future.

Isn't NY notorious for having a "paradoxically" huge vacancy rate due to the strong incentive to never show a decrease in rent, even if it comes at the expense of a vacancy? It's the same problem, just with different clothes: a blighted building in the middle of an expensive city rather than a vacant field in the middle of an expensive suburb.

I can't speak to Austin, but I would expect to see the same thing in the form of low-value land use. It happens whenever appreciation competes with or outstrips productive activity. Which is extremely common.

Investors should pay the collective for exclusive use of a scarce resource, they should not get paid for holding exclusive access to a scarce resource. That's bad and backwards. Unless you're an investor, of course ;)

> Isn't NY notorious for having a "paradoxically" huge vacancy rate due to the strong incentive to never show a decrease in rent, even if it comes at the expense of a vacancy?

Yes, but that's due to financing restrictions. Unless one is planning on putting a tax burden on every piece of real estate analogous to full leverage, the cost of financing an empty unit providing unsufficient motivation to fill it seems to imply a similarly-scaled LVT wouldn't either.

These loans are typically fixed rate and long term. The cost of leverage is nothing next to what appreciation has been, and it's the latter that LVT seeks to neutralize. So it would increase the incentive to actually use the land rather than simply hold a deed to the land.

Again, I think that calculating LVT is highly problematic. If you ask me to defend it, I simply won't. Rolling leases are the way.

>Again, I think that calculating LVT is highly problematic.

It isn't possible to calculate the tax with 100% accuracy, but that doesn't mean it is problematic to calculate with a close enough approximation. The process of multivariate analysis is relatively simple, relies upon public data, can be open sourced and is self correcting over time (with the addition of new data via sales).

It's also absolutely impossible to avoid. $0 needs to be spent on enforcement. You can't cart land off to a tax haven. If you don't pay you forfeit the land and property - simple. You don't need legions of forensic tax accountants to uncover a trail of transactions like you would for income taxes. You don't need arbitrary rules about where somebody's main residence is. You don't need elaborate machine learning models to detect VAT carousel fraud.

You need a bunch of publicly available data and a very simple model.

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