Comment by greenie_beans | Hacker News Reader

Comment by greenie_beans | Hacker News Reader

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land value tax is a regressive tax on middle class homeowners that would ultimately benefit the wealthy. bc middle class single family homeowners would not be able to afford the tax increase or afford the construction to fully utilize the property, which would force them to sell to investors who could afford it.

terrible idea.

not to mention the political debates/decisions over what constitutes "fully utilized". what about public parks? urban agriculture? so many exceptions.

this would be a nightmare policy to retrofit. maybe a good idea if we had started there first, but we didn't.

it's also an ignorant diagnosis of the issue. land values and speculation is not the issue in my location (burlington, vermont) where we have a housing crisis. there are not many vacant lots (i'm guessing maybe a dozen in the entire municipality).

it's just an overly simplified solution to a complex problem.

here is what i believe to be the superior solution: https://www.npr.org/2024/10/07/nx-s1-5119633/housing-crisis-...

> land value tax is a regressive tax on middle class homeowner

Not if you make the tax progressive. The first 200K could be tax free, for example. Primary residences pay a lower % of the value than 2nd and 3rd homes. I bet there are a ton empty vacation homes in Vermont. It can be applied gradually not to shock the system.

> Primary residences pay a lower % of the value than 2nd and 3rd homes.

I think it's funny how every LVT discussion eventually comes back to some inclusion of other factors to adjust the taxes or provide exemptions, which starts to defeat the claimed purpose of a Land Value Tax.

LVT is a concept that sounds amazing and novel in a vacuum, but starts to look less ideal in the real world. The people who think about it enough start to include factors like structure value and different exceptions for how the land is being used, which starts to look a lot like existing tax code in most places.

> which starts to defeat the claimed purpose of a Land Value Tax.

What do you think others claim the purpose of an LVT is?

> every LVT discussion eventually comes back to some inclusion of other factors to adjust the taxes or provide exemptions

This argument seems only to follow from a belief that carving exceptions out of policy here is either: inherently bad, lends to a slippery slope towards badness, or is fundamentally incompatible with the professed aims of an LVT (hence my asking).

I don't believe any of those are true, so this sounds to me an unfair indictment against the otherwise legitimate strategy of "keep what's good; change what's bad", which is practical and works for other policy all the time. While I'd scorn the complexity of our current tax code, I wouldn't do so on principle of exemptions being bad, but rather that we've made poor tradeoffs or struck a bad balance.

LVT sounds really smart when you exclusively talk about car parks in downtown NYC or whatever, it's not actually a good tax framework as soon as the conversation shifts from talking about low perceived social value commercial endeavors.

That would somewhat defeat the purpose of the LVT. The point is to force landowners to develop their land. A "fix" would be to make access to capital easier.

Optimum development in many areas isn't necessarily a large mid-rise or high-rise. For most areas, the maximum that the roads and other utilities could support would be dense townhomes, triplexes or quadplexes. Outside of the very highest-demand areas, the LVT would mainly encourage land owners to build additional units on under-utilized square footage or build up a bit. Increasing housing in an area necessarily requires access to capital - so that's what should be provided.

It's not perfectly fair to everyone; it would enrich current landowners. But lower-income/wealth individuals would also benefit because they'd get access to more affordable housing in the areas that they need to live.

> But lower-income/wealth individuals would also benefit because they'd get access to more affordable housing in the areas that they need to live.

how does this create affordable housing? taxes are only one piece of why housing is so expensive. the landowners would need a return on their investment, which they would get by raising rent. this is the core problem imo -- costs for construction and labor and permitting and taxes requiring higher rent in order to make the investment worthwhile.

the offset of lower taxes will absolutely not pay for the cost to "fully utilize" the property.

The theory here is that people who aren't getting "enough value" out of the land will be forced to sell to developers who will turn them into, among other things, houses.

yes i know, that is the "theory" in a logical vacuum. that just reinforces my original point that it will hurt the middle class and only benefit wealthy people. especially since the tax would make the land cheaper (in LVT theory), so when you are forced to sell it you're gonna have to sell at a lower price than you'd like (that is the entire logic of LVT: make land cheaper to encourage more building).

you can't just wave a wand to build housing if the taxes change to LVT. we all know that developers don't build affordable housing. the margins are much more attractive to build luxury housing...it's the incentive structure. housing is expensive to build, and those investors will require an ROI.

terrible idea! the more you look at it, the worse and worse it sounds.

> The point is to force landowners to develop their land.

The point is to ensure landowners don't sit on land. If taxes go up on your vacation home that you spend two weeks a year in, you will be incentivized to sell it or rent it out more. Both of which benefits the public at large. Not to mention it is a fairer tax than an income tax or wealth tax.

most of the vacation homes in vermont are in rural areas. so they wouldn't get penalized by the tax if the purpose of LVT is to increase taxes in urban areas.

I don’t think a land value tax is a good idea, because I’ve never heard a satisfactory way to objectively value the land as-if unimproved.

But making you and I pay a different amount of LVT on the same exact piece of land definitely makes it a worse idea in my view.

Afaict, Prop 13 does this in California. Property tax is based on assessed value, and that assessed value isn't just for the improvements, but also the underlying land. So the fact that I pay about $20k/yr in property tax and my back-fence neighbor pays about $3500 (because we purchased in 2016 and they inherited the 1954 home from original owner parents) must indicate that it's not just the improvements that are covered by Prop 13. I had never thought about this before, but at least in California a potential compromise around LVT would be the modify Prop 13 to allow land values to appreciate at market rates while keeping appreciating of improvements capped.

There is a market for land plus improvements. What you actually paid in 2016 is presumably the market value of that combination. You probably referred to other similar parcels that had recently sold when contemplating your offer as well.

It’s trying to figure out “what is the land alone under these improvements worth?” that has no market signal to use as a reference (or an extremely weak signal in areas where unimproved lots do sell on the open market).

If you paid $1.5M in 2016, was the land alone $500K, $1M, or $1.25M? If you disagreed with the city’s assessment of just your land, how would you find comps to argue your case?

I think you're missing my specific point that this is a Prop 13 issue.

My land is valued at X and my neighbor's identical rectangular plot is valued at Y, why should that be the case if the land's objective value is identical (which it is, and neither X nor Y are close to current market value Z because Prop 13 caps appreciation at 2%/yr).

No land value or improvements are revalued at market rate until they're sold, obviously, but two things are also true: 1) tax assessors almost never lower assessment values (anywhere), and 2) assessed values are completely detached from reality of the majority of properties in the state of California because of Prop 13.

To answer your question, if I wanted to argue that the assessment of my land is too high, I'd likely not have a case because the assessor could just look at any comps that trades hands in the last few years and those would show assessments far higher than mine. But I absolutely could show that the assessment of others' properties are "too low" relative to my own (or mine to current) just by similarly looking back in time at homes that haven't traded hands in decades, if ever.

I originally misread your “Prop 13 does this” to mean the thing in the first paragraph, not the thing in the second paragraph.

It’s not application of the tax but (relatively) sudden increases in land value that would price out force out neighborhoods

like i said, terrible idea with a million exceptions

Yeah, no LVT proponent has successfully explained to me how it does not cause the erasure of urban or even suburban green spaces, be they public parks, private parks, gardens, etc. If a park increases neighboring land values, then the taxes incurred by the park go up without recompense to the owner (assuming the park is not held by the government).

How many private parks are there? Pretty much every one I've been to has been government run, other than small outdoor spaces next to private buildings and large pay for admission gardens that are usually way out in the boonies on the grounds of an old plantation or manor.

I can't think of how a private, but still public-access, park survives without a rich benefactor eating the losses, even today.

all of my favorite hiking areas in the birmingham, alabama area were privately owned. churches have public areas that you can enjoy as a non-member of the church. i'm sure we could think of more

edit: oh i just realized a huge one in my daily life: the intervale in burlington is owned by the intervale center but the community garden is managed by the city's parks & rec. also there are a ton of public trails on that private property.

In New York, you sometimes find unofficial community parks / third spaces on unused plots of land which for whatever reason (such as a strange shape) are difficult to develop. These are maintained by enthusiastic local residents, and the land owners turn a blind eye to it as long as there are no complaints.

If LVT is implemented, land owners will have a financial incentive to sell off the plots, and the spaces will be gone.

What incentive to sell off the plot does LVT create that doesn't already exist, maybe with a marginally lower degree? I'm guessing the reason they can't sell a tiny weirdly shaped lot is that no one wants it. If they didn't want it and they could sell it, they already have ample financial incentive to sell.

Sell them to who? How much would someone pay for land that's difficult to develop?

If someone else can develop the land, why doesn't the current land owner

Around here, there are a bunch of private parks in that you pay a fee to enter the park or you can purchase a membership. The fee is minimal and mostly just serves to maintain the park. These are privately held parks, too, not owned by local or state government.

As far as I am aware, they are able to survive on their membership or visitor fees. But major improvements do take larger donation.

Private park, where you can’t even walk without paying an upright fee? Sounds like dystopian late stage capitalism. If it’s a well maintained garden I understand, but a sqare lawn should be free put your foot on.

I think we're defining park differently. Yes, I mean a large maintained garden with maintained trails. Not just a blank piece of grass, which I wouldn't honestly call a park.

I think you might be slightly confused. Wouldn't the issue be not that the parks themselves are expensive to the owner tax (not only is thr landscaping not that expensive, as LVT excludes your own improvements), but instead that they are effectively discouraged by increasing the tax on everyone adjacent and thus peversely encouraging NIMBYism of towards a common good by imposing a negative externality which does not exist otherwise? The issue wouldn’t be that it would add a tax burden upon the park owner, but that it turns operating a common good into a 'sadistic' act that pushes costs onto others.

A LVT could thus accidentally wind up like a window tax in that it could wind up discouraging efficient improvements to human conditions out of a misguided attempt at improving perceived fairness.

I guess if everywhere's zoned for max density. If it's zoned as a public park, so no ability to develop it and generate revenue, or close it off for private use, then its rated value would be close to zero. Possibly negative if ownership imposes some maintenance obligations on the owner.

Parks built for the public benefit as 501c3 don’t pay property taxes.

I'm not really sure that's a complete solution. Couldn't you just spin up a 501 c3 org to hold onto properties until you want to do something with them, bypassing the LVT?

I wasn't suggesting a solution. I was just describing it as it is today. Presumably if you don't show 501c3 activities, you'd lose the status.

Any LVT would just involve scaling up land portion and setting building portion to zero in our current regimen. It wouldn't require anything novel. The 501c3 exemption is not something new I'm suggesting.

> taxes incurred by the park go up without recompense to the owner

The value of the park is going up, is that not recompense?

There will be more land for public parks if land use is more efficient due to a LVT

The bottom 50% in terms of wealth in the US only own 10% of the land. How on earth is this a regressive tax? The top 10% own over 40% of the land. https://fred.stlouisfed.org/graph/?g=1KsUt

how much of US land is housing? probably much less than 10%

edit: yep https://www.visualcapitalist.com/america-land-use/

amusing attempt at using data for an argument

What is the relevance of that? LVT is not exclusive to land with houses on it.

> amusing attempt at using data for an argument

Rude and unnecessary, and entertaining when your response seems to be a total non sequiter.

i was responding to the "how on earth?" rudeness that i was given first. farmland, forests, etc owned by the top 10% isn't relevant to this debate. rural land (which is most of america) has nothing to do with urban housing policy.

further, in my original comment that you responded to, i described succinctly the market dynamics that make this regressive to the middle class. the data you shared supports that.

are you suggesting that the middle class doesn't own single family homes so it doesn't matter to them? because that is the point you are making if you don't realize that.

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