Comment by Aurornis | Hacker News Reader

Comment by Aurornis | Hacker News Reader

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Land Value Tax (one of the main theories pushed by Georgism proponents) is a favorite of online discussion forums, but becomes progressively less popular as the conversation turns from broad strokes to details.

Every time it comes up it seems many people are also unaware that taxing land value is already common practice. It’s common to have one tax for the assessed value of the land and another tax for the assessed value of the improvements. Policies might include exemptions for the first so many dollars of a person’s primary residence structure.

With a pure Land Value Tax you cover your eyes and pretend the value of the structures and improvements doesn’t count. If one wealthy neighbor builds a $2,000,000 house next to a retired grandma living out her final years in her small, old forever home, the LVT people don’t care. If their lots are the same then they must pay the same taxes because the land value is what matters.

This makes it a very regressive tax structure as the people or businesses with the least valuable structures now subdivide their neighbors with the most valuable structures. This can all be avoided by simply using our existing system of having a tax on land and a tax on structures each at their assessed value.

>This makes it a very regressive tax structure

That's objectively false. Georgism is one of the few reliably progressive tax structures, ask any economist.

The "little old grandma in her forever home surrounded by incredibly valuable real estate" trope is a) fairly uncommon + a very small percentage of total real estate and b) very common in conservative billboards advocating for highly regressive cuts to property tax. At the end of the day, if your little old grandma owns $5M in prime real estate, she is very wealthy and can certainly afford the property taxes, and pretending otherwise is how we get policy disasters like San Francisco.

But of course, the overwhelming majority of unimproved property is not owned by little old grandmas, it is owned by real estate corporations. The half acre of Grandma's house pales in comparison to the literal _billions_ (!) of parking spaces in the US, or empty lots, or empty buildings. Drive around NYC and tell me the ratio of acreage owned by little old ladies to that of underutilized land owned by real estate corporations.

> policy disasters like San Francisco

Then why is the paper about Baltimore? If you want to argue your own local politics, you can do it without crossing the Rockies, I am sure. I am even more sure that you should.

> b) very common in conservative billboards advocating for highly regressive cuts to property tax

It being common on conservative billboards is not an indication of it being wrong.

> That's objectively false. Georgism is one of the few reliably progressive tax structures, ask any economist.

It’s not false at all. Georgism via a LVT purposefully ignores all forms of wealth except land.

Let me simplify it for you: Two neighbors live next door to each other on identical lots. One has $10m in stocks and earns $500k/year. The other is early career and earns $100k/year while trying to build their retirement savings. Under Georgist LVT, you ignore all of this and make them pay the same taxes.

The person who earns less pays a higher percent of their income. This is the definition of regressive.

Where does the average person have most of their wealth stored by retirement? Their house and the land it’s on. Georgist LVT argues that we should tax them out of that land and give it to a business, who should be able to profit from it without paying any taxes on the profits. This is regressive.

The LVT argument holds that we should ignore everything else: Their business ownership, their 401k, their stocks, bonds, cash, and even the house itself. Ignore all of that, tax people based on land.

The 10 story apartment complex and the single family house both might occupy the same land, so they’re taxed the same. Georgists love this in theory because they want those people priced out of their houses and the developers to come in and build those apartment complexes, which those displaced people can come rent.

Efficiency! Sorry typical homeowner, we need to price you out of affording the home you bought and lived in. Our policy needs to force you to sell to this developer who will construct apartment complexes, reap the profits (tax-free now, because it’s not land!) but they’d be happy to rent an apartment to you for a monthly fee.

> Drive around NYC and tell me the ratio of acreage owned by little old ladies to that of underutilized land owned by real estate corporations.

NYC is an outlier. If you’re basing your understanding on economic theories from one of the single most dense and developed cities in the US you’re missing a lot.

Do you think the average person is closer to an NYC parking lot operator? Or closer to the typical homeowner? Why would we pick an entire taxation structure to punish some NYC parking lot owners instead of looking at the typical person? The entire premise is an example of out of touch academic thinking that forgets to even look at what the real world looks like.

Finally, your “ask any economist” appeal to authority does not hold any water. Much has been written about the severe flaws with a Georgist style 100% LVT.

Even the lay discussions on LVT are starting to admit it’s not a panacea. Previously you’d find rationalists championing as the perfect economic format, but even they are waking up to the fact that it’s not so simple. A recently shared HN link: https://www.lesswrong.com/posts/CCuJotfcaoXf8FYcy/some-argum...

> Where does the average person have most of their wealth stored by retirement? Their house and the land it’s on.

Wouldn’t this be expected to change if LVT were to be implemented?

Yes. The whole point is to prevent land from being an unproductive store of wealth.

Also, there's no reason we can't retain an income tax or some other tax alongside a LVT.

As noted, it's common to have partial LVT - in my county, the property tax is a combo of building and land. IIRC, my little lot of valued at ~$200k and the building at ~$400 (on a house I could sell tomorrow for $700k+). On my 1500sqft lot, that's $133sqft.

Which, looking at recent listings, is about 1/3 the value of infill lots in the area. It's not a perfect comparison - the infill lots are much larger and have different zoning.

> The LVT argument holds that we should ignore everything else: Their business ownership, their 401k, their stocks, bonds, cash, and even the house itself. Ignore all of that, tax people based on land.

Land Value Tax is specifically concerned with how property taxes are calculated. You're conflating implementing LVT with the concept of a Single Tax, which aims at replacing all taxes in a nation with LVT and is really only advocated for by pure Georgists. The LVT is a viable tax policy on it's own, and shouldn't be dismissed because of grander aims by a very small group of people.

> The 10 story apartment complex and the single family house both might occupy the same land, so they’re taxed the same.

Yes? They're both in the same area, which means they have access to the same utilities, same services, same amenities, etc. The presence of the apartment building doesn't inherently increase or decrease the value of the land, it's the other way around; higher land values see denser housing to better offset the cost of owning and operating the land. Neighborhoods are not static, unchanging islands immune to the developments that surround them. If a neighborhood solely made up of single family homes was 20+ blocks away from downtown 40 years ago, but is now directly bordering downtown because they city has grown and expanded, there is no reason for that neighborhood to still solely consist of single family homes (unless those homeowners want to pay to have a house right next to downtown).

> Sorry typical homeowner, we need to price you out of affording the home you bought and lived in. Our policy needs to force you to sell to this developer who will construct apartment complexes, reap the profits (tax-free now, because it’s not land!) but they’d be happy to rent an apartment to you for a monthly fee.

This is pure FUD. The "typical" homeowner in an urban-sprawled city would probably see their taxes decrease with LVT, depending on how close they are to high value areas. If your home is on the edge of downtown, you might be priced out because that land is a hell of a lot more valuable than what a single family home can capture. If you live in the "typical" suburban community that is 20+ minutes away from downtown? Negligible change, if not a decrease as most suburban lands have very little value compared to more urban communities. It's been shown time and time again that downtown business districts and other centralized urban communities overwhelmingly subsidize suburban communities.

> Finally, your “ask any economist” appeal to authority does not hold any water. Much has been written about the severe flaws with a Georgist style 100% LVT.

Again, LVT is not entrenched in it's Georgist implementation. No one worth listening too says that LVT solves everything and gives us Utopia. It's simply the least worst way to go about land taxation, and absolutely has its hurdles and flaws that will present themselves.

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