[hpaavola]

"or the owner of the land doesn't want to redevelop it"

I don't know the English terms here, but that kind of situation where individuals are earning massive profits because everybody else built city around them, is just wrong. That unearned rise in the property value should be taxed away.

So, just zone more apartments in that area and put big enough property tax on underdeveloped land area. That way the economic incentive of the property owner aligns with the interest of the whole city.

[rplst8]

> That unearned rise in the property value should be taxed away.

That is so wrongheaded I don't know where to start. Increasing property taxes is the exact reason you have older folks be forced out of their homes after having lived there most of their life.

No one should have a continuously growing tax burden over time.

[ThrustVectoring]

This idea is pretty hard to square with economic incentives for infrastructure development. If the state builds a freeway or a fire station or other development, one major effect is that it enables a lot of valuable economic development. For public goods, it's hard to capture that value - even though it makes society better off, it's not worthwhile for any one economic actor to do it.

Property taxes (specifically on the unimproved value of the land) offers a way out of this dilemma. If you can do more valuable economic activity with a piece of land, you can and should pay more for it, so it'll be worth more. So if you spend $10MM/yr in financing for building a bridge, and it increases land value in the catchment area by $100MM, and you have a 12% land-value tax, the state responsible makes more money.

[CuriouslyC]

Why should society subsidize someone using a piece of land, when another potential tenant will pay taxes on its true value? The government has to fund itself, so a reduction in property taxes means increases in other taxes. If the replacement taxes apply to everyone equally, that means wealth is effectively being transferred from average people (who are likely in debt with little savings) to people who completely own homes often worth 800k+.

The old person will make a good amount of money selling their home, and they can use that windfall to buy a nice new home somewhere warm and cheap, so it isn't like they're being trampled on.

[zardo]

>The old person will make a good amount of money selling their home, and they can use that windfall to buy a nice new home somewhere warm and cheap, so it isn't like they're being trampled on.

It deconstructs communities.

This land is too valuable to allow you people to squat on it. We'll compensate you, so it's all fine and fair, now get out.

It's not hard to understand why people don't like being treated that way.

[rplst8]

> Why should society subsidize someone using a piece of land, when another potential tenant will pay taxes on its true value?

Subsidize? I think your concept of private property rights is under developed.

[ThrustVectoring]

They're subsidized by building infrastructure. If the state builds a bridge that allows a homeowner in town A to commute to work to town B, this directly increases the land value in town A. The state paid for this bridge, not the homeowner. This is what the subsidy is - having access to state-provided infrastructure by virtue of location. Why should the homeowner have exclusive right to that increase in land value?

This is the gigantic pitfall of overly-individualistic property rights - that socially beneficial infrastructure development doesn't happen, because nobody has the power to siphon off enough of the value created to make it worth doing.

[dragonwriter]

> I don't know the English terms here, but that kind of situation where individuals are earning massive profits because everybody else built city around them, is just wrong. That unearned rise in the property value should be taxed away.

Prop 13 prevents this, and in fact makes it so that only redevelopment or change of ownership allows increases in property value to be taxed, which is one reason owners might prefer not to redevelop.

Full value assessment (even retaining the Prop 13 limit on tax rates) would encourage redevelopment because underdeveloped properties would still be paying taxes based on value increases from potential uses.

[watwut]

"that kind of situation where individuals are earning massive profits because everybody else built city around them"

Like so what? Your property value, whether house or some artistic drawing, can go up or down based on other peoples actions. There is nothing wrong with that, that is how ownership of anything works.

When people loose business or work because those around them abandoned area or supermarket appears, they get no reimbursement. It is market force in practice. Therefore, when the same people earn on others coming in, they should not be punished either.

[muninn_]

> because somebody else built a city around them

Doesn't sound like that's the property owner's problem. They didn't ask for the city to be built around them.