'Forcing everyone in the suburbs to sell their home to an apartment building developer due to ruinously high taxes' is the single most politically unrealistic idea ever proposed. LVT is certainly a clever way to make sure land is used efficiently, and probably a good idea in the abstract, and perhaps we could enact it when we colonize Mars. But implementing it on a country where many of the voters are living in 'inefficient' SFHs now is not ever going to happen
Renters are close to out-numbering non-renters by double digits.
Those are incredibly new phenomena. It's hard to over-state how different things are now compared to even 5 years ago.
I will be surprised if there isn't an open electoral revolt against land owners in my community over the next 10 years. And not just pro-housing policy, but policy explicitly designed to punish.
I don't have an opinion on LVT, but the idea that home owners are the primary organized electoral power base is, I think, shifting quickly in many communities. Landowners, I think, I have two options: find ways to fracture/disempower the rent base in the communities where they invest or else find a way to keep the number of non-renters well over 50%.
I would say they already are disempowered. It is unfortunately pretty hard to organize anything when you have to worry about high rent, not losing your job or having to move every few years. What we have seen in the last decades is that it is now hard to do much at all through organizing unless you can somehow affect the economy. Which you can't if you risk getting fired or evicted doing so. Look at Japan, South Korea, Singapore, Hong Kong etc. for the results.
It's more prudent to look at the ratio of owners and renters, which is 1.85:1, there are almost twice as many owner households than renters.
This didn't sound right to me - according to the census bureau there are nearly twice as many owners as renters in America (1). So I'm not sure what discrepency you're pointing out there.
And anecdotally there was an explosion in demand last year while interest rates were crazy low and the rate of first time home purchasing was similarly crazy in my area. It was very easy for people to get the money to buy homes, but there was a shortage of housing stock.
(1) https://www.census.gov/housing/hvs/files/currenthvspress.pdf
"A greedy land speculator (middle class home owner) refuses to develop a vacant parking lot (refuses to sell to a McMansion developer) because he can let land appreciation pay for his refusal to develop (let him stay in his home).
Since the villainous speculator and the heroic homeowner are economically the same, any consistent LVT has to essentially force the home sale. That is the entire point of the LVT"
A family of four would then have an inherent tax advantage against Blackrock etc. accumulating family housing.
If income tax drops by X% and a LVT of Y% is implemented to, theoretically, keep the same revenues - some people will win and some will lose.
The idea that all of the middle class, upper class, and wealthy will lose seems absurd.
Some people seem poised for a loss - all the people living in SFH in the middle of a city where lots are worth $2M. All the parking lot operators, etc. And that's kind of the point...
Perversely, it's easy to imagine a poorly implemented LVT that incentives the opposite of what proponents want - it reduces overall tax burdens on suburbs because the "land" is less valuable than the cut land - driving people to leave the city and live in the suburbs.
It all comes down to implementation. Blanket statements seem out of touch
Fewer people could afford 2% of land value + mortgage costs + insurance + … at current prices which means there are fewer buyers at those prices. That price drop scales with the LVT so at 10% you would pay more than at 2%, just nowhere close to 5x as much.
Well it would depend on why the land is expensive. What it would do (at least in theory which I do agree with) is force the expensive land to be developed for a useful economic purpose instead of just sitting there.
For single-family homes and such a LVT is likely to be neutral or slightly positive b/c a lot of those homes weren't built on particularly valuable or useful land (which is why it was cheap in the first place).
I really like the idea of focusing taxes on more of a "what am I actually paying for in my community" which LVT and variations of that tend to support, but it'll never happen in the US.
This seems trivially fixable by making the tax revenue neutral (ie. every additional dollar collected by the LVT is counterbalanced by one less dollar in taxes collected elsewhere).
2. Make it revenue neutral? Who's going to do that? Some legislature somewhere? Are they actually going to do it? Or are they going to say "Yay, more money!" and find new things to spend it on?
I have zero confidence that a Georgist tax would be revenue neutral, no matter what theory says should happen, and no matter what promises are made.
Not if it's paired with a citizen's dividend or other form of UBI, which is what most Georgists (myself included) advocate. The idea is that if you're occupying your equal share of land value, then at a 100% LVT rate the tax you pay should be equal to what you're getting back in dividends + public services.
LVT+UBI therefore represents a tax savings for everyone except the wealthiest of land owners.
what's an equal share? land is not fungible.
The same things were said with market value assessment was in introduced in Ontario, Canada:
* https://en.wikipedia.org/wiki/Municipal_Property_Assessment_...
Municipalities were forced to used the market value, but could determine rates themselves. Not much happened IIRC.
Given the fact that renters (who generally have less income than homeowners) can manage to pay the annual land rent every year, homeowners will manage just fine.
"Furthermore, as we discuss in more detail in our paper, the number of net winners from this reform would far exceed the number of net losers, who, if necessary, could be exempted or compensated at little budgetary cost." https://voxeu.org/article/post-corona-balanced-budget-fiscal...
I haven’t fully thought through all the incentives it brings though. However, it seems like a better solution than telling people to reverse mortgage their houses. Especially given how predatory that industry seems to be.
https://dor.wa.gov/sites/default/files/2022-02/PTDeferral_Se...
Forget politics, who thinks its a good idea to force people into economic transactions? I could see a whole new line of blackmail, akin to patent trolls, looking for people who under-priced their property or really don't want to move. It sounds terrible.
Any billionaire could kick you out of your home in a moments notice. Sure you get paid, but you probably don't want to move. How could you even say the property is yours? People get upset with government forces them to sell their property using eminent domain. This strikes me as a hundred times worse.
You are thinking more of something like Glen Weyl's Radical Markets proposals.
That's one approach. Another is for property appraisers to determine the land value - something which is already pretty commonly done.
> How could you even say the property is yours?
It never was. All land "ownership" consists of borrowing a portion of a nation-state's sovereign territory. LVT makes that explicit, requiring land "owners" to pay what's actually due to society (rather than a tiny fraction thereof as is the status quo).
Estonia has an LVT of 0.1—2.5%.
https://www.emta.ee/en/private-client/taxes-and-payment/othe...
>>So it’s kind of just basically a shorthand for I think, being kind of selfish. valuing your property value, your view, your neighborhood character that you want more than building a neighborhood that is welcome for all people or for more people. To be able to afford and live in. So, unfortunately, nimbyism, it’s like a consequence of, I think incentives.
It is not a consequence of incentives, it is a consequence of the fact that when someone moves to a place with a particular quality of life, pays more, and then pays high taxes and high maintenance costs for decades, they themselves have paid for decades to build that quality of life. To say that oh, your neighbor can randomly decide to make a major construction project literally in your backyard and convert a wetlands housing endangered species into a several hundred unit high-density living complex, with years of construction and two orders of magnitude greater traffic on your street forever - yeah, you can expect people to object. (this literally happened to me, and in a matter of weeks we got 10x the largest crowd to show up at a planning board meeting and we gave a presentation to shut it down; not yet permanently, but...)
And rightly so - the developer is literally stealing all the value that you and your neighbors and town created over the past few decades, and then profit from the buyers also.
Now, if you are talking about areas that are already cities and have such high density that there is effectively no wildlife, then it might be different, but again the value of walkable neighborhoods vs random massive development is not to be overlooked.
So, no this proposal is preposterous, aside from being a nonstarter. Young people who might want it are great at making noisy protests and notoriously bad at bothering to vote - the one thing that matters, while older people, and especially those who own property, tend to reliably vote.
> So, no this proposal is preposterous, aside from being a nonstarter. Young people who might want it are great at making noisy protests and notoriously bad at bothering to vote - the one thing that matters, while older people, and especially those who own property, tend to reliably vote.
In other words, "let them eat cake". The "anyone under 45 doesn't deserve to afford shelter" attitude strikes me as a "fuck around and find out" situation.
On a somewhat absurd tangent, I’ve been toying with the idea of something I call a “land dividend” to solve homelessness. If every US citizen had by birthright, a small parcel of land with no taxes owed, they would always have somewhere to go. Even if they lived in a tent. And land is one thing the government has in surplus and divvying it up could could both decrease expenses while also solving a problem without creating new tax burdens.
With no restrictions on use of the land, this is obviously unsustainable and impossible to make fair. Not all land is equal and if someone trashes their lot then it can't be used by the next generation.
> Even if they lived in a tent
This already exists -- it's called public lands.
You can already do this on BLM and some USFS land. 14 days in any 25 mile radius. If you have a car then it's hard to go unnoticed but moving around to stay in compliance is easy. If you only have a tent then you could go unnoticed basically forever if yo aren't stupid so the 14 day rule doesn't really matter.
Incidentally, most homeless folks have issues that make it impossible to live out of a tent on public lands. Deeding them a small plot that is technically theirs wouldn't really solve that issue.
This is largely the point of Georgism. Basically the premise is that land is the most valuable asset a society has and since all profits tend to accrue to land holders in the long run it is immoral to have any system other than the government being the only landholder with the people being able to enter perpetual leases for the full value of the land.
They even made a song about it https://en.wikipedia.org/wiki/The_Land_(song)
From ground level, access to property does not seem to be any part of the problem here. Plus, you'd want that property to be somewhere close to jobs and services or you're just going to be pushing problems from the downtown core to wherever you manage to build these homes.
And at some point you run out of land, after which point you'd need to shrink everyone else's parcels to make room for new birthright parcels. Further, not all land is equal; if one parcel has a bunch of features that another lacks, then it stands to reason that unless the former is smaller than the latter, the citizens assigned to either would be on an unequal footing.
In short: what you call a "land dividend", once you've addressed the above, is literally Georgism - specifically, LVT plus a citizens' dividend (more modernly known as "UBI"). This results in a self-balancing system for ensuring every American enjoys one's equal share of America's land value. Own more than your fair share? You pay more LVT than you get from UBI. Own less than your fair share? You get more UBI than you pay LVT.
https://time.com/3478199/trade-iphone6-for-detroit-house/
There are places where in bulk (sections) you can get land for less than $500 an acre (you would not want to live there admittedly) often land already owned by the state or the fed as you alluded to.
Giving an acre to a homeless person and relocating them there though would be a death sentence.
Also, the purchaser is sometimes on the hook for the back taxes (in his case $6K). I'm not sure how MI law works, but if the purchaser is on the hook then he's actually selling a lot with a condemned house for $6,500. Which is not an amazing deal, since vacant land in nicer rust belt cities goes for $10K-$30K and demolition is expensive. Again, not sure, but if that's how it works in MI then it makes sense that he's having trouble selling a lot with a condemned building and $6K in back taxes at pretty much any price. You're going to burn mid five figures before you have lien-free empty land, which can be had at that price with much less hassle.
In some cities, a condition of sale for city-owned property is that the buyer rehabs or rebuilds within a given timeframe.
> Giving an acre to a homeless person and relocating them there though would be a death sentence.
That's probably a massive over-statement -- even in the most dangerous communities in the US a homeless man probably isn't going to be killed for no reason. And this is Detroit, not the Alaskan wilderness, so there are shelters and so on. But it is true that the land would be totally worthless to a homeless person.
I'm sorry, but if you can't see the numerous problems with this high school level idea about solving homelessness, maybe housing policy isn't something you should opine about.
Additionally, property tax rates vary massively from state to state and there's pretty strong correlation between property tax rates and housing supply and housing affordability. The legacy of California's Proposition 13 and its effects on housing supply are very well studied.
Property tax still has inefficiencies (it can punish someone who builds relative to someone who holds an empty lot), and Land Value tax would be more efficient in aligning incentives properly.
https://dailyanarchist.com/2012/06/12/what-is-georgism-follo...
Want something to tax? Tax pollution.
The most straight forward way to make people avoid speculating is to heavily tax all non-primary residence homes. Cap the amount people can charge in rent to some %s of purchase value (incentive to have high purchase value) to and set a baseline on the taxes required and make the math for building property empire bleak (absolute destruction of the housing-as-a-financial-asset model).
If you want people to buy homes to live in them, and not as a store of value or speculative instruments, we can disincentivize that behavior directly.
It encourages productivity instead of rent-seeking and restores housing stock to people who are trying to live in a place, rather than extract value and it puts more taxes in government coffers from the likes of companies like BlackRock and REITs.
It's simple. Tax people who buy homes they don't plan to live in heavily.
Landlords will figure out how to setup wash sales, or as close to a wash sale as they can legally get, or trade property between entities owned by the same real people, or engage in swapping behavior with other large holders in a cartel-like fashion, etc. Closing all the loop-holes would be difficult.
Tax the net proceeds of rental properties at 90% and slap a 100% capital gains tax on any property that is not owner-occupied. Also, simply rule out renting for huge swathes of property (especially single family homes).
Ah thanks for this criticism, the amount of loop holes would be pretty staggering/annoying.
> Tax the net proceeds of rental properties at 90% and slap a 100% capital gains tax on any property that is not owner-occupied. Also, simply rule out renting for huge swathes of property (especially single family homes).
LGTM, ship it.
This is backwards. Such a tax will be a strong incentive to never ever sell since the seller would hand off all gains to the tax man. Who would want to sell?
Instead, you'd want to actually incentivize selling if you're not living on the property. Make the capital gain tax very low, that makes selling it off the most attractive option.
LVT + UBI would accomplish the same thing (and then some) more fairly and efficiently; UBI would subsidize the LVT for your primary residence, while secondary residences (and residences owned by corporations and other non-residents) would see no such benefit.
Sure that could work, but it looks like 5x the complexity and political will required.
Also, I'm not fully sold on UBI, because I haven't heard a convincing argument on why it wouldn't lead to persistent inflation. As the economy moves towards a you-will-own-nothing stance (to be fair, I'm contributing to this in trying to launch and operate SaaS services)
Even if UBI was the answer, the political fight is bigger, I think. Let's just be honest and straightforward about what we (well, some of us -- it is a democratic republic after all) want, we want people to stop speculating on houses and use them for living.
Assuming we can agree on the premise, tax the behavior we want to disincentivize as directly as possible, be clear about why we're doing it. Clear hearts, full hearts, can't lose. Just kidding this is politics so absolutely can lose but you get the idea.
I would be happy to swap out my property, school, state, and income taxes for one where I paid what it would cost to lease the land I currently own. It would reduce my tax burden by 99%
I know because my neighbor leases a large parcel (several times my lot size) from the federal government. I would be delighted to swap my current property, school, state and income taxes for what he pays for what he leases.
I fear that if people like me don't pay these taxes, things like public schools and municipal services will simply fail where I live.
It seems great to cash in on high demand until you look at the flip side and consider what happens when there is no demand. From my perspective LVT just looks like an expensive urban cash grab that utterly breaks down when demand softens.
With a LVT there is no "here is your % of the district tax burden apportioned by what you own" only a "here is what we estimate it would cost to lease this property for a year".
Sure, it would get rid of some vacant buildings, and we do need a way to discourage land and property banking that turns hot money into high prices for home buyers, but taxes are what you impose when you have a policy that nobody would win re-election on voting for. It's literally what nobody wants. Nudging taxes are inferior back door policymaking by regulators (in their own interest) who can't get the political traction for an actual policy. Who is nimby'ism a problem for? Arguably, people who want to impose unwanted experimental policy, and in-effect loot the wealth that cohesive local communities and their cultures invested in and built. Nimby'ism as concept is a slur that makes a villain of anyone with a home and investment in their local community, and who may be skeptical of centralized policymaking. I'd question the underlying values behind advocating an LVT, as they tend to be within a degree of some other very technocratic impositions that mainly benefit their administrators.
Oh, we're talking about zoning?
>The main thing a LVT creates is constant churn as (retired) people cease to be able to afford to live in their homes, incentivizes being a landlord, and punishes family wealth creation via home ownership (which is a barrier to class mobility)
Yes, this is in fact literally the point.
You can't have a growing population, and then depend on land ownership to generate wealth in perpetuity. There's only so much land. The class mobility point is especially hilarious. Yeah, Joe the Waiter is really going to be able to afford the $1.5 million 2000 sq ft house in Seattle to move his family up the ladder.
This hypothetical couple took a risk by moving into an area that was blighted by related naive policymaking the OP was advocating, and a LVT just penalizes them for their rapacious capitalist gentrification of a progressive policy failure.
> Housing in the US is a constant source of frustration. On the way up, prospective homebuyers worry that they're missing out on their chance to jump on the housing ladder. On the way down, homeowners worry about losing their equity and their nest egg. So is there a better way? Is there a way to make housing more equitable, and to separate the investment component from the shelter component? On this episode we speak with Daryl Fairweather, the chief economist at Redfin, about a land value tax and how it could help us reposition housing so that it's less of a financial asset that spirals people higher, and blocks so many people out.
* https://play.acast.com/s/oddlots/2f88bd35-04b5-4956-b770-aeb...
* https://podcasts.apple.com/us/podcast/daryl-fairweather-on-t...
LVT is a good idea. If it convinces neighborhoods to accept re-zoning then fine. If not then just use the tax dollars to promote housing. One good use would be improving transit to help neighborhoods handle more residents and to reduce the need for cars. Fewer cars could mean fewer garages, which in turn could become more auxiliary dwelling units.
Better yet, do both.
Extra supply in already dense/popular areas is fighting symptoms, an uphill battle that will always lag behind actual relief. Doesn't mean you shouldn't try that, I'm just saying to include a wider framework of ideas.
For example, can we rethink how and where we work and how we commute to it? I know this is easier said than done, but I find it bizarre that the number one reason for urbanization, work, is just not included into the thinking. At all.
Further, plan for the boomer exit rather than calling them names. In my country, the Netherlands, many boomers would love to scale down in housing. But those units don't exist. Up to the 90s, we'd have communal living for the elderly where they have small private housing with shared facilities and care, but now most of this is gone.
So they have nowhere to go. You can call them names, tax them (whilst most have no liquid income), none of this is a solution. I'm not saying to pity them, I'm saying a rational and intelligent plan needs to include them whether you like it or not.
* Major issue: LVT is related to valuation, but valuation depends on mortgage rates. House valuations are mostly driven by interest repayments, not scarcity. This was demonstrated in Christchurch because there were homes going for say 30% of “value”, even though housing was in short supply due to the 2010 earthquake. A property could not be insured so buyers could not get a mortgage, and without a mortgage properties were going very cheaply. I bought a uninsurable home for ~$200k that would have sold for about $600k if it was insurable. Insurance was unavailable because the floor was out of level by 60mm due to land movement - but the home was fine. I see friends buy a house based on how much they can afford to pay on the mortgage: the housing market value is not related to what houses are worth but mostly to what people can afford. Mostly a zero-sum game where buyers bid against each other for how much they can pay, and the bank wins.
* An LVT is expensive for retirees. An average home in Christchurch is $750000 which has rates (LVT) ~$5000, a single retiree gets about $21k. There is a rebate of up to $665 from the government for low earners (like retirees). Forcing people to move from their home is pretty shitty - I would like to be able to retire in fair comfort without being forced into a shitty retirement home.
* The NZ government introduced a bipartisan law to force allow infill housing without NIMBY constraints in all cities - overriding almost all city district rules. Housing density will go up, a lot. https://bonded.co.nz/news/what-do-the-new-medium-density-hou...
* Locals complain about farming land being wasted for residential subdivision. This is bollox. Land around Christchurch is low value for farming unless you can get irrigation - water is the resource limitation therefore land is not being wasted. I see similar nonsense reasoning supporting an LVT.
* After the 2010 Christchurch earthquake, about 8000 homes were permanently removed (redzoned[1]). Thousands of new sections were created on existing farmland (greenfield sections) but new housing requires infrastructure that takes many years to build[2]. There are between 100k and 200k homes in Christchurch (depending on when and how you count).
* Saying that LVT is only land value and not the house, is crappy misdirection. Land value is related to the value of the surrounding properties, which depends on the developed value of the surrounding properties. This really shows in Christchurch where a home in a good suburb pays far more rates (LVT) than a similar home in a bad suburb. Land gets revalued by the government, but the figures are kind of made-up.
[1] https://en.wikipedia.org/wiki/Residential_red_zone
[2] https://www.stuff.co.nz/the-press/news/70270288/5000-greenfi...
