Sheesh, more of this? No, it doesn't work. I have 2 hectares. 1 in Boise ID and 1 in California. Some company makes a billion dollars selling squatty potties. Now they some CEO can afford to rent from me for the tax on the land + some rent under the table (or in trade for stock) while I live in Boise ID. There's all kinds of wild assumptions about tracking wealth and how wealth moves that are impractical throughout these thought experiments.
> Imagine I'm a landlord, and I have a vacant lot I'm renting to a tenant who's got a mobile home parked there. What's going to happen if a Land Value Tax is imposed on me? Well, I'm already charging as much as the market will bear.
This kind of assumption that only checks the boundary condition of some LVT appearing, when the very first study cited talks about how the price of the tax increase (coming in 2007) starts to get baked into the home pricing years prior. This is some high-school level analysis.
> The key thing is that land income drives land price and not the other way around. If a property is capable of generating $10,000/year in rents, then the amount I'm willing to pay to buy it is $10,000 times X, where X represents how many years I'm willing to wait to break even on my investment.
No. Cash is deflationary, which is why capitalists love debt. The X*10k I borrow to put down on the property is less than that absolute value. More than that, what you want to pay has nothing to do with what's charged because the seller likely has a debt they ALSO have to pay off. These things aren't important, really?
I mean I can go through it and rip it to shreds, but most people who have any money can see right through it for the simplistic worldview it presents about water 'flow' and land 'stock'. SMH
Land isn't the only thing being traded in a capitalist economy so it becomes a commodity, with the tax priced in, just like anything else. The end.
The article cites over a dozen empirical studies and observes what actually happens in the real world. I would be very interested in your thoughts on that subject and what you think of the quality of the studies.
No, this is a different subject than the article yesterday. That one focused on "what is the overall magnitude of ground rents", this one focuses on "won't the incidence of LVT be passed onto tenants?"
> Georgists assert that landlords cannot pass Land Value Tax (LVT) on to their tenants.
Land isn't the only commodity (sure you can say it's not a commodity and even the author posits buying/selling it as such), so you can't eliminate wealth inequality through it, nor can anyone control rent at some theoretical "optimal" price point via public management day-to-day. There is always corruption, fraud, and laziness among others.
I would argue land is fundamentally different from other commodities.
1) It's essential for basic survival. Humans can't live in the sea.
2) You can't make more of it. Land that exists was created millions of years ago by powerful, continental scale geological processes. We can't create a new continent.
If a greedy individual buys all the toilet paper in a store, I can shop at another store, or order from anywhere in the country, or even overseas if needed. And someone can always decide to create a new company to make toilet paper and undercut the hoarder, though it might not resolve the short logistical problem.
Overall, I think one of the least bad solutions is to centralize zoning powers in a national government, weaken zoning as much as possible, and let the free market do its thing. For example, don't let someone build a chemical plant next to a residential area, but allow developers to build any residential housing they want, without interference from local owners. If a property developer wants to erect a condominium tower in the middle of a suburb full of 1-2 stories single family homes, they should be allowed to. Even if it depresses local home values. Even if it brings more traffic. Even if it blocks the view. Even if it compromises the "character" of the neighborhood (which is almost always code for white and well off). And, yes, it's a denial of local democracy, but it's the right thing to do.
2) You can't make more of it. Land that exists was created millions of years ago by powerful, continental scale geological processes. We can't create a new continent.
Supposed we could. It doesn't seem it would lower the value of New York City, at least at first.
Of course not. Land is not only not like other commodities, it is not a commodity at all. It meets none of the aspects of the definition of commodity. Each piece of land is a completely unique and highly differentiated thing, unlike each piece of gravel or each piece of corn, which are all interchangeable.
How much land devoted to agriculture/mining/manufacturing/power/landfill is required outside of the city to support New York City? Sure, it wouldn’t move the needle on condo rent but land scarcity effects everyone.
I have a question. It seems very unlikely that Georgist policies will take hold in the US any time soon, at least not at the state or federal level. The question then becomes: A) what "Georgist-lite" policies can we realistically hope to get enacted in the US, and B) is it feasible to start new countries built around Georgism? If so, where and how?
Serious answer: Mars. The outer space treaty prevents terrestrial nations from claiming sovereignty over mars, so mars itself would be in a position to set and collect its own taxes in an entirely new regime. And unlike today’s service economies, nearly all of Martian GDP would be derived from land (in the georgist sense: natural resources).
A) Counties typically already distinguish site value from improvement value but still tax both at the same rate. So a lite reform could be to lower the tax rate on improvements and raise it on site value.
Try passing rent onto tenants with LVT in place where all the real estate sitting idle suddenly enters the market. Just try.
You either adopt LVT or your civilization ends. With sky high real estate prices you can choose a fast death by civil conflict and war or slow death by having birth rates below replacement. Either way, you die. The next civilization repeats the cycle.
> where all the real estate sitting idle suddenly enters the market
Even if we assume 10% of housing is consumed by people intentionally holding their property vacant (what is it that would motivate them to do this exactly?) would that really move the needle on anything?
Existing rentals are not going to lower their prices, so these new rentals that are coming into market are simply going to match the existing rentals, because otherwise they would be leaving money on the table
I think the height of taxation makes the difference. Your 10% would go up if the tax is higher.
IMHO (or call it a gut feeling) the best way to ruin market value is not higher or lower taxation. You have to change the tax often and dramatically. Tie it to the difference between highest and lowest temperatures measured in the previous year every 13th full moon.
> Even if we assume 10% of housing is consumed by people intentionally holding their property vacant (what is it that would motivate them to do this exactly?) would that really move the needle on anything?
It’s a way to store money now, and drives up the appreciation. Sometimes the money is illicit or hidden from taxes or govs. Ask Vancouver how many vacant homes they have, yet “no housing”. The government is now making changes to stop it
Drives up appreciation... I guess, but that can only be realized when you sell, or you refi out and get charged more money for holding it vacant.
> Ask Vancouver how many vacant homes they have, yet “no housing”. The government is now making changes to stop it
Seems like the government made changes in 2017 with the Empty home tax. Gotta say, the numbers do not look that interesting. 1,627 vacants in 2020 out of 195,012 residences. The doc notes that in 2017 there were 2,193 vacants, which indicates that the problem wasn't really that much worse than it is now.
LVTs can't fix sky high real estate prices as that's principally a problem with zoning. In fact, communities can and will and do (remember, as the article mentions an LVT is hidden inside traditional property taxes) use zoning to prevent assessment increases.
Fixing zoning will do much more to address inequity than even a complete switch to an LVT. Don't fix zoning and LVT won't actually accomplish much of anything. That's why you see similar patterns of development across the board, regardless of LVT. When homeowners begin to feel the displacement effects of LVT, one of two things invariably happens: LVT is dropped (or otherwise moderated--e.g. geographically selective decreases in tax rate), or development is restricted through zoning and similar regulations.
LVT is undeniably a great solution, it's just a solution to the wrong problem.
Why not both? It's not entirely clear that either solution is going to magically make life wonderful by itself but both are going to have very positive effects on society and have some overlap in effect.
Wow, Georgism is actually being discussed again. I guess cats do have nine lives.
I for one hope it makes its way back into the political mainstream, as unlikely as that might be. It's really quite a brilliant and simple system of taxation.
28 comments
[ 2.6 ms ] story [ 80.2 ms ] thread> Imagine I'm a landlord, and I have a vacant lot I'm renting to a tenant who's got a mobile home parked there. What's going to happen if a Land Value Tax is imposed on me? Well, I'm already charging as much as the market will bear.
This kind of assumption that only checks the boundary condition of some LVT appearing, when the very first study cited talks about how the price of the tax increase (coming in 2007) starts to get baked into the home pricing years prior. This is some high-school level analysis.
> The key thing is that land income drives land price and not the other way around. If a property is capable of generating $10,000/year in rents, then the amount I'm willing to pay to buy it is $10,000 times X, where X represents how many years I'm willing to wait to break even on my investment.
No. Cash is deflationary, which is why capitalists love debt. The X*10k I borrow to put down on the property is less than that absolute value. More than that, what you want to pay has nothing to do with what's charged because the seller likely has a debt they ALSO have to pay off. These things aren't important, really?
I mean I can go through it and rip it to shreds, but most people who have any money can see right through it for the simplistic worldview it presents about water 'flow' and land 'stock'. SMH
Land isn't the only thing being traded in a capitalist economy so it becomes a commodity, with the tax priced in, just like anything else. The end.
Land isn't the only commodity (sure you can say it's not a commodity and even the author posits buying/selling it as such), so you can't eliminate wealth inequality through it, nor can anyone control rent at some theoretical "optimal" price point via public management day-to-day. There is always corruption, fraud, and laziness among others.
1) It's essential for basic survival. Humans can't live in the sea.
2) You can't make more of it. Land that exists was created millions of years ago by powerful, continental scale geological processes. We can't create a new continent.
If a greedy individual buys all the toilet paper in a store, I can shop at another store, or order from anywhere in the country, or even overseas if needed. And someone can always decide to create a new company to make toilet paper and undercut the hoarder, though it might not resolve the short logistical problem.
Overall, I think one of the least bad solutions is to centralize zoning powers in a national government, weaken zoning as much as possible, and let the free market do its thing. For example, don't let someone build a chemical plant next to a residential area, but allow developers to build any residential housing they want, without interference from local owners. If a property developer wants to erect a condominium tower in the middle of a suburb full of 1-2 stories single family homes, they should be allowed to. Even if it depresses local home values. Even if it brings more traffic. Even if it blocks the view. Even if it compromises the "character" of the neighborhood (which is almost always code for white and well off). And, yes, it's a denial of local democracy, but it's the right thing to do.
Supposed we could. It doesn't seem it would lower the value of New York City, at least at first.
Serious answer: Mars. The outer space treaty prevents terrestrial nations from claiming sovereignty over mars, so mars itself would be in a position to set and collect its own taxes in an entirely new regime. And unlike today’s service economies, nearly all of Martian GDP would be derived from land (in the georgist sense: natural resources).
> founded in 1900 as a radical Georgist single-tax community by sculptor Frank Stephens and architect Will Price
http://cacommonground.org/pdf/2020-12_Transit_Value_Capture....
You either adopt LVT or your civilization ends. With sky high real estate prices you can choose a fast death by civil conflict and war or slow death by having birth rates below replacement. Either way, you die. The next civilization repeats the cycle.
Even if we assume 10% of housing is consumed by people intentionally holding their property vacant (what is it that would motivate them to do this exactly?) would that really move the needle on anything?
Existing rentals are not going to lower their prices, so these new rentals that are coming into market are simply going to match the existing rentals, because otherwise they would be leaving money on the table
IMHO (or call it a gut feeling) the best way to ruin market value is not higher or lower taxation. You have to change the tax often and dramatically. Tie it to the difference between highest and lowest temperatures measured in the previous year every 13th full moon.
It’s a way to store money now, and drives up the appreciation. Sometimes the money is illicit or hidden from taxes or govs. Ask Vancouver how many vacant homes they have, yet “no housing”. The government is now making changes to stop it
> Ask Vancouver how many vacant homes they have, yet “no housing”. The government is now making changes to stop it
Seems like the government made changes in 2017 with the Empty home tax. Gotta say, the numbers do not look that interesting. 1,627 vacants in 2020 out of 195,012 residences. The doc notes that in 2017 there were 2,193 vacants, which indicates that the problem wasn't really that much worse than it is now.
https://vancouver.ca/files/cov/vancouver-2021-empty-homes-ta...
Is it possible that it's something other people intentionally losing money on vacant properties?
LVTs can't fix sky high real estate prices as that's principally a problem with zoning. In fact, communities can and will and do (remember, as the article mentions an LVT is hidden inside traditional property taxes) use zoning to prevent assessment increases.
Fixing zoning will do much more to address inequity than even a complete switch to an LVT. Don't fix zoning and LVT won't actually accomplish much of anything. That's why you see similar patterns of development across the board, regardless of LVT. When homeowners begin to feel the displacement effects of LVT, one of two things invariably happens: LVT is dropped (or otherwise moderated--e.g. geographically selective decreases in tax rate), or development is restricted through zoning and similar regulations.
LVT is undeniably a great solution, it's just a solution to the wrong problem.
I for one hope it makes its way back into the political mainstream, as unlikely as that might be. It's really quite a brilliant and simple system of taxation.