On that note, is the inherent land value of a lot in Bushwick way higher then 20 years ago now that they've gentrified? Is neighborhood desirability an 'unimproved' attribute?
I very much get where you guys are coming from in a philosophical sense, but I feel like there are a million wrenches in the works that everyone's ignoring because the theory is so nice.
Yes. Desirability and infrastructure near land increases it's unimproved value.
If you want to pay less taxes, you move to an area that doesn't do this sort of investment. If you want nice stuff, you can move in and pay for it, and be content that people who are against improvement are kicked out by higher taxes.
So we need additional correctives to the additional injustices that capitalism has invented since Henry George's time, like our NIMBY-promoting land use decision system. We could, for example, adopt something like Japan's more federal system.
What LVT proponents really want is some kind of oracle that will tell them just how much of the (estimated) market value of a property is due to the direct efforts of the past and present owners of the property and how much is external benefit from the actions of others. Two problems with this approach are (a) there is no such oracle and (b) the "unimproved" value includes external benefits property owners provide to their communities which are not included in the assessed value of any obvious material improvements to their own properties. There is something fundamentally self-defeating in any proposal which would result in taxing people extra for their contributions to the public good.
The idea that land has any "unimproved value" to be taxed is flawed from the start. In fact land has no economic value until someone claims it and puts it to use. If you walled off a piece of land such that no one could reach it, even an otherwise choice parcel in the middle of Manhattan, it might as well not exist. All economic value is the result of human improvements, though they don't always take the form of physical changes to the property. LVT takes physical improvement as a proxy for improvements attributable to the property owner(s), but this is at best a lower bound and significantly understates the owners' own contributions to the property value.
The situation is almost tautological. I mean, suppose Amazon builds a giant shipping depot in the middle of nowhere. The land was worth nothing before. Without the depot, it would be worth nothing now. Then town arises around giant depot. Town tries to raise taxes on Amazon says "still worth nothing if we leave". Who's right?
Edit: Some of this is more or less what’s happening when buying a property based on a mortgage. The bank decides what the property might be worth, and what the new owner will be able to pay in rent. It must be possible to do slight adjustments in this scheme so that the rent ends up as tax instead.
As Bushwick becomes popular, because of better transit, or community amenities or whatever, yes, the unimproved value of the sites served by them go up. A school develops an excellent reputation? Up go the land values. (Some say that in most suburban towns, the superintendent of schools is the highest paid employee, in part because s/he can influence "property values" -- more precisely, land values -- more than any other single person.)
My first acquaintance with Elizabeth Warren came from a book she wrote about 2003, whose title was something like "The Two Income Trap: How Middle Class Parents are Going Broke" and in part it was from seeking the best public schools for their children, and paying a huge share of their income for it, seldom to be matched by single parents.
