Comment by seanalltogether
1 day ago
LVT should be incorporated with an occupancy tax, it's the only fair way to fund government services. If I own a farm, and my neighbor sells their farm to turn into a housing estate with 99 single family homes, then it is fair to say that my land is now more valuable and I should pay more to keep you it, but it isn't fair to say that my taxes should rise to cover half of the local budget just because I own half of the land in region
This is how every argument about LVT goes once people start thinking about the details: They start thinking of various edge cases and exceptions that highlight how it's not as fair as proponents claim, until eventually we're back to the current taxation systems where land value is part of the tax, but other factors are also considered.
An LVT would need relatively few exceptions and rules in order to function well and is unavoidable by design. What we have right now for most taxes is the exact opposite of that - e.g. with sales, income taxes, etc.
Mostly there are just pearl clutchers complaining about how elderly cash poor people sitting in large old houses on expensive land they've lived in for 20 years would be financially nudged into downgrading.
The real roadblock for LVT is not in the slightest bit technical, but simply that it would undermine a lot of privately held oligarchic wealth.
Land owners make up a plurality of voters. In some cases those land owners are retirees living in a house they bought 45 years ago others are people who own 500 houses.
The land value tax “equally” punishes them for their inefficient land usage. But at some point we need to pay our fair share on taxes and the later group hiding behind the former group is how you end up with California’s dumpster fire of a housing crisis.
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"Mostly there are just pearl clutchers complaining about how elderly cash poor people sitting in large old houses on expensive land they've lived in for 20 years would be financially nudged into downgrading"
I wonder if you wouldn't be clutching your pearls if you were being forced (sorry, "financially nudged") out of your home of 20 years?
These cash poor elderly folks aren't exactly "oligarchic".
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In this scenario your property value would go up and with higher taxes you'd be incentivized to sell for a profit and move your farm farther away in a different zoning.
The incentives you've presented are correct. However, my friends from rural areas always complain about rich outsiders moving in, buying everyone else out, and raising the cost of living. If LVT is just a way to "[incentivize farmers] to sell for a profit", why would people in these areas support LVT? I'm afraid it would just turn into another partisan issue, regardless of merits. And I like LVT!
Perhaps a solution is to create "LVT Zones" in metro areas, and perhaps replace current residential / commercial / agriculture / industrial zoning with them?
And LVT that replaces zoning basically just lets the highest bidder do whatever they want with the land. An LVT that augments zoning could perhaps be tenable but I would argue that in VHCOL areas there's already something of an LVT in place. My SFH in San Jose is assessed as having equal value for the 8800sqft as it is for the house built on it. What I wonder is how the actuaries and policy makers responsible for assessing property values for county taxation actually do that, and how much of the formula is already based on land value.
Let's be real: if this scenario unfolded today, your land would be worth more as housing/infrastructure/commercial/etc. than as farmland, some real estate developer would buy it from you, and you'd make a lot of money without having to do anything. If there was a 75% LVT then you'd just make less money.
The reason I brought up this argument is because this exact scenario is happening all over the UK and Ireland right now. One of the houses my wife and I looked at purchasing was built about 20 minutes outside Belfast on old farmland that was converted into a new housing estate. The farms surrounding this housing estate have been incorporated into a new village.
This goes back to my top-level comment: the assessment of your property should not be based on sales of nearby property but on observed rental values. Just because your neighbor has sold their plot and the new owner has the intent to build 99 houses on is so far inconsequential ... we have yet to observe any actual rent increases and likely will not until those houses are actually constructed and rented/sold themselves. Only then can we accurately observe the potential rental value of your adjacent land.
Isn't this case just revealing the opportunity cost of keeping the land as a farm in that location? For example, what incentive is there to buy an acre of downtown Miami and convert it to farm land? Should we lower that acre's property tax now?
It's a good point. Usually farms are on land classified as agricultural and residential buildings are on residential land. It's easy to design a system that values residential land higher (because it's in fact more valuable if you can build residences on it). You wouldn't pay half the taxes until you convert it to residential at which point you should in fact be paying half the LVT (maybe with a few years leeway).
Would it be even more fair to assess taxes based on services allocated?
Why would the cost of local services be related to the tax on the value of the land?