Comment by 0xDEAFBEAD
1 year ago
I believe the idea is to avoid punishing people for improving the land.
Landowners should be taxed in a way that factors in opportunity cost. If the city has a massive housing shortage, and the bodega owner refuses to sell to a developer (thus exacerbating the shortage), that may be their right -- but there's also no reason why it shouldn't be reflected in their tax bill.
Remember also that the skyscraper can be taxed in other ways, e.g. corporate income tax or sales tax. But a traditional property tax incentivizes keeping a lot empty, because as soon as you create something on it, you start having to pay more tax -- regardless of whether the thing you created is generating revenue.
Another way of thinking about it is: most taxes, including income and property taxes, disincentivize productive economic activity. Land value taxes improve allocation and reduce commute times, so instead of acting as a drag on the economy they act as an accelerant -- while also helping fund the government, just as other taxes do. A neat trick.
>But a traditional property tax incentivizes keeping a lot empty,
Looking around, i think you're incorrect.
>as soon as you create something on it, you start having to pay more tax -- regardless of whether the thing you created is generating revenue.
you're paying your fair share for the police, fire protection, etc. as building something increases the need for such services even when you don't gneerate revenue.
>Another way of thinking about it is: most taxes, including income and property taxes, disincentivize productive economic activity.
That is patently false. The taxes in no way disincentivize me going to work, and they don't affect my desire to make even more money and to start my own business.
There are taxes designed to decrease activity, like 90% income tax, yet they pretty rare, far from the "most".
>Looking around, i think you're incorrect.
77,000 vacant lots in NYC: https://commongroundorwa.org/3019-2/
>There are taxes designed to decrease activity, like 90% income tax, yet they pretty rare, far from the "most".
How about an 85% income tax? 80%? 75%? Where do you draw the line? The truth is, it's a matter of degree. Even a 10% tax disincentivizes work a little bit.
>77,000 vacant lots in NYC: https://commongroundorwa.org/3019-2/
Not "vacant":
"New York City alone has more than 77,000 lots that are either vacant or have a building that is less than half the size of what zoning allows"
add to that that those lots/buildings may have already sold their "air rights" and thus aren't allowed to build more.
>Altus, which is a real-estate analytics and advisory firm, counted private lots larger than 3,000 square feet that are likely suitable for development.
no mentioning of air rights. That is how you distinguish real analytics from a propaganda job.
And even with totally vacant and still having their air rights lots, that 77000 would still be a pretty healthy rate of 7%.
>How about an 85% income tax? 80%? 75%? Where do you draw the line? The truth is, it's a matter of degree. Even a 10% tax disincentivizes work a little bit.
the lines are well known. Across the world taxes less than 20% are called "low", higher than 40% - "high". People understand that they need to pay their share to maintain commons.
>Even a 10% tax disincentivizes work a little bit.
I never heard/seen/read about such a phenomenon in real life. That seems like you're doing a pure theoretical stretch of the 90% model.
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> But a traditional property tax incentivizes keeping a lot empty, because as soon as you create something on it, you start having to pay more tax -- regardless of whether the thing you created is generating revenue.
I know this is what LVT advocates say, but it's not true in practice. An unimproved lot is a liability from a cash flow perspective unless the tax rate is 0%. That's an incentive to improve the lot and derive value from it (which can be income, or some sort of personal benefit like shelter).
> Another way of thinking about it is: most taxes, including income and property taxes, disincentivize productive economic activity. Land value taxes improve allocation and reduce commute times, so instead of acting as a drag on the economy they act as an accelerant -- while also helping fund the government, just as other taxes do. A neat trick.
This claim is largely theoretical, as the LVT has very limited adoption worldwide (I believe Denmark is the only country that uses it without broad exemptions for residential real estate and other common uses, though feel free to correct me) and does not seem to have produced a radical transformation in those limited applications within some countries and a few depressed US cities.