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Comment by gen220 | Hacker News Reader

Churchill was right!

We’ll try everything except for a land value tax, so that we can eventually prove once and for all that LVT is the right thing to do! :)

But actually, it’s good to see movement on the underlying problem (affordability of home ownership). This is The Domestic American Problem of our times, and it deserves to be closer to the center of the Overton window of our politics and policy-making.

Even if we think this step is kind of meaningless, it draws more attention to the problem, which is a good thing.

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Can someone please explain to me a practical way to apply the LVT? Vancouver used to have an LVT, it was too low and there was a housing speculation bubble in the early 1900s, since property was appreciating much faster than the tax rate. And if the LVT is too high, then you will have very little new development. This isn't even mentioning how you determine the value of the land.

Denmark has an LVT and copenhagen affordability is... not good.

As far as I can tell, LVT only achieves what it sets out to do if it’s equivalent to market rent.

As in, you never really “own” your land, you’re just renting it from the sovereign. If you can’t make good enough use out of it to afford that rent, you should move on. You can find comments on this thread that make this argument explicitly in terms of “maximizing land use efficiency”.

This was the economic structure of feudalism. It … wasn’t great. Private ownership of land has its own tradeoffs but a few centuries of historical experimentation in both directions has been fairly decisive.

How is that LVT "rent" different from any other traditional property tax being "rent"?

As near as I can tell, it is just a different way of deciding how the property tax burden is levied.

Downtown property gets taxed much more. Un-developed speculation property that doesn't contribute to the community (and derives value from other people's contributions) get taxed at the same rate as nearby developed property.

Property taxes have to be set high enough to fund services: Voters want more services, they pay more property taxes. The policy goal is delivering services the voters want to households and businesses.

LVT is designed to achieve a different policy goal: Maximize the efficiency of land use. So its rates have to be set to achieve that goal and, for example, force grandma to move out of that condo in a newly revitalized downtown so a young tech kid who can pay more & benefit from it more can move in.

LVT is a tax on the value of the land specifically, not a traditional property tax. This encourages development on valuable land that is currently being put to unproductive uses.

For example, if you own a lot in a downtown metro which is a parking lot you pay low property taxes because parking lots have low property values. You are disincentivised to develop it because your property tax would go up. Opposite incentives with a LVT.

I understand that, but what should the actual rate of the LVT be? If the LVT rate is too high, nobody will want to develop that parking lot at all because the taxes outweigh the possible profit. And if they are lower than land appreciation, speculation is encouraged.

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