[oh_sigh]

Isn't a land value tax punitive to poor people who buy cheap land which then becomes valuable for some reason?

Let's say I have low cash flow and bought a reasonably priced house in silicon valley in 1975. Should I basically be forced out of my house in 2010 because a bunch of ultra wealthy companies opened offices a few miles away?

[ZeroGravitas]

So your example of poor people that it affects punitively is a rich person who owns millions in assets?

I guess that answers your question that it doesn't affect poor people. It's almost directly analogous to saying that the estate tax affects poor people who win the lottery. Both have received massive benefits unrelated to their efforts and are no longer poor, so talking about them as if they were seems like sophistry.

[ThrowawayR2]

On one side, you would have elderly people who would be forced out of homes they've lived their entire lives in and raised their families in. On the other side, there would your pragmatic but rather cold-hearted analysis. Which side do you think public opinion is going to come down on?

A home is more than a structure that one happens to reside in and its value has other dimensions than what the market might be willing to pay in dollars for it.

[ZeroGravitas]

Most land value tax proposals have exemptions for a person's personal home. But even if they didn't, we have financial instruments that can release the value stored in an asset like a home. If the owner looks at the situation and decides to sell and move somewhere cheap and have lots of money to spend then great, if they decide to unlock the value in their land via a mortgage because living exactly there is worth more to them then what they pay in taxes then that's also great. In both situation they are richer, and they have the opportunity to decide how to spend these riches they have accidentally acquired. Either way, they're not poor people.

Poor people would be affected by the lack of affordable housing in areas close to work though.

[aaronchall]

I think we need to better manage expectations of living space. Renters have no right to live forever in the same apartment, and if they can't pay rent, they have to move. Homeowners pay rent in the form of property taxes to the government, and likewise: if you can't pay your rent, you gotta move.

So you won a lottery ticket?

You pay your taxes or go to jail.

So you got lucky with your home purchase?

You pay your taxes or lose your home.

Property is pretty fungible - if your taxes go up, you got lucky, now you probably are sitting on hundreds of thousands more dollars. Stop being stubborn. You've had your turn in that property. Sell. Move to a cheaper place, own it free and clear, and free up housing stock for people who are willing to pay for it.

- Sincerely, the rest of us.

PS - a commenter writes:

> That ignores the possibility that you bought your house as an investment, because you recognized the potential of a neighborhood, or that you were responsible (in part) for building the value of the neighborhood.

Oh, you expected the neighborhood to improve and didn't expect your property taxes to go up? That seems really disingenuous.

> Luck

We all have luck, and for the most part, we make it ourselves. The reality of life is that you shouldn't expect to live in the same place forever. If you've had your turn in one place, but the economy is saying your turn is over, don't fight it. It's not worth it. Make your own luck. Move where the taxes and crime-rates are lower and where the schools and streets are better.

[ImSkeptical]

This seems antithetical to the concept of ownership. If it's my house, why do I have to give it up just because someone with more money wants it? Why should my taxes go up, just because people value my property at an increased rate? Property taxes are supposed to fund the services provided by the local government, not evict poor people for the benefit of the rich.

You suggest that buying a house that people want is like winning a lottery ticket. That ignores the possibility that you bought your house as an investment, because you recognized the potential of a neighborhood, or that you were responsible (in part) for building the value of the neighborhood. Setting those possibilities aside, being rich is a matter of luck too. Your parents were well off, you happened to study the right thing at college, get involved with a startup at the right time, or were even born with the genetics and upbringing to generate a high iq. That's all luck too. Why should the rich person's luck be rewarded by forcing the poor to give up their home and move somewhere worse?

[scarmig]

Two points:

1) Someone's getting taxed, somewhere. The question is what we want to incentivize.

Working hard for a living? Saving money and investing it to grow the economy? Purchasing food to feed and garments to clothe your family? Trading with people outside the country who make things more efficiently than you can?

Or sitting on underutilized land?

No matter what, someone's ox gets gored. The key is that it should be oriented around good public policy, and that people should have the time to incorporate policy changes into their decision making process.

2) You seem unrealistically worried about government coming in and removing people from houses they own at gunpoint. The actual worst case scenario is someone gets a reverse mortgage from the bank to pay property tax with equity from the home, and they end up bequeathing a smaller proportion of wealth to their heirs when they pass.

[ImSkeptical]

>The question is what we want to incentivize.

I disagree with this. This idea is based on the implicit assumption that the purpose of taxation is to change behavior.

As I alluded to earlier, I think the purpose of property tax is to help fund the local government. We need waste disposal, food inspectors, schools, police, fire department, etc. These things are, in part, funded by property taxes.

If people value my house at a greater rate, that doesn't change the amount of education local kids need, I don't get better police protection, and the amount of government services don't necessarily increase. Why am I paying more in property taxes then?

>You seem unrealistically worried about government coming in and removing people from houses they own at gunpoint

My main concern is the idea that we would use property taxes as a tool for taking people's property.

[cellularmitosis]

    My main concern is the idea that we would use property taxes as a tool for taking people's property.

If I buy a wrench, it is mine, outright, forever. Owning a home isn't like that. You only get to keep the home for as long as you can afford to pay the property taxes. there are different meanings of the phrase "property ownership". I think the misunderstanding here is that you are applying the expectations of the wrench kind of property ownership to the housing kind of property ownership.

Maybe a thought experiment is useful. Imagine owning a car, where at any point in time, the market can decide to magically upgrade your car to a high-end luxury sports car. On the one hand, your car is now much more valuable, but on the other hand, gas and insurance rates just exploded, and you may no longer be able to afford the car anymore. Home ownership is less like owning a wrench, and more like owning a magical transforming car.

[ImSkeptical]

If I was applying the expectations of the wrench kind of ownership, then I would be arguing that property taxes should not exist. That's not what I wrote in the comments above. In fact, I specifically articulated the reason why property taxes exist - to pay for the services of local government.

Instead, I am arguing that property taxes should change based on their reason for existence, funding the local government, and not be used as a tool to deprive people of the ownership of their property.

For example: A storm blows over a big tree, which severely damages the local elementary school. The school has been underperforming anyway so we need to hire new teachers and outfit the classrooms with better technology. All of this means the school needs more money. Local government officials decide that this may be funded by an increase on property tax. This is the reason that property taxes exist, so the argument to raise it here may be good, even if the value of my property hasn't changed.

As a different example: A big tech company comes to town and hires many thousands of workers. The high paid tech workers want houses in town, and the additional demand drives up house prices. Why should I pay more taxes? People with more money may want my house, and they are free to offer me their money. Using their demand for housing to justify asking me to pay more money or lose my property is unreasonable and unethical. This is what I'm arguing should not be done.

[ThrowawayR2]

> The actual worst case scenario is someone gets a reverse mortgage from the bank to pay property tax with equity from the home, and they end up bequeathing a smaller proportion of wealth to their heirs when they pass.

In other words, a permanent and widespread subsidy that enriches the banking industry at the expense of the public. Don't we have enough of those already?

[scarmig]

I'm confused how you'd consider reverse mortgages a subsidy.

[ThrowawayR2]

How could one not? See https://www.consumerfinance.gov/ask-cfpb/what-are-the-costs-...

Reverse mortgages don't happen for free. The interest and all those fees go to the banking & other industries. By making reverse mortgages a considerably more frequent scenario, those industries clearly benefit.

[fuzzfactor]

>Property taxes are supposed to fund the services provided by the local government, not evict poor people for the benefit of the rich.

Not so from my observations.

But your taxing authority would like you to think so. They actually have always been rich too, and that's who they favor even if none of their people are individually paid that much.

Property taxes are directly based on "socage" and "quitrents" which provided a clear legal framework to formalize the right to evict poor people for the benefit of the rich.

https://www.britannica.com/topic/socage

OTOH inheritance or estate tax is based on the medieval concept of "relief" where the tenant's next-of-kin is supposedly giving relief to the landowner who would otherwise not know where his next Shilling was coming from once the previous tenant passed away. Or the landowner is giving relief to the surviving inheritors so they will not be evicted as long as they pay what amounts to a windfall bonus for the taxing authority who can then celebrate the death of a taxpayer in appropriate style. Whatever.

https://www.britannica.com/topic/relief-medieval-tax

US states originated as British colonies under this system and it has changed as little as possible with the continuous enforcement of your local constable.

There was also the effect which requires a tenant (owner or lessor) to produce enough from the land itself or remit in some other way, otherwise the parcel will be confiscated and someone else will be given a try.

The idea was to keep "all men are created equal" from coming true financially for the disadvantaged at a time when the King held ultimate title to all land. His local representatives would be today's county judge and tax assessor-collector, with the enforcer being the county sheriff and whatever his punishment at the time happened to be. No surprise that it seems so medieval to almost be unbelievable today, but that is the unbroken history.

Property taxes would not actually be necessary in a truly free country based on commerce, free enterprise and fairness.

Rather than perpetuating the differential between landowner and peasant as much as possible, untaxed land would tend toward flatter stewardship of the most desirable parcels allowing the maximum utilization of a limited resource when needed without the landowner requiring such a high income from the property itself to support all of today's effective "middlemen" just to retain title to it.

Interesting case study:

http://scholarship.law.marquette.edu/cgi/viewcontent.cgi?art...

>Why should the rich person's luck be rewarded by forcing the poor to give up their home and move somewhere worse?

Sometimes that's the only reward being seeked by those whose riches originated in similar ways, or through no productive effort of their own.

"Today's weirdness is tomorrow's reason why"__Hunter S. Thompson

[throwawaybbqed]

The companies are ultra-wealthy because they are producing high value for society.

[TheOtherHobbes]

Or enclosing the value generated by others.

Because that works too.

[polotics]

High-value non poaching agreements?