[jimlawruk]

> land value tax is a regressive tax on middle class homeowner

Not if you make the tax progressive. The first 200K could be tax free, for example. Primary residences pay a lower % of the value than 2nd and 3rd homes. I bet there are a ton empty vacation homes in Vermont. It can be applied gradually not to shock the system.

[Aurornis]

> Primary residences pay a lower % of the value than 2nd and 3rd homes.

I think it's funny how every LVT discussion eventually comes back to some inclusion of other factors to adjust the taxes or provide exemptions, which starts to defeat the claimed purpose of a Land Value Tax.

LVT is a concept that sounds amazing and novel in a vacuum, but starts to look less ideal in the real world. The people who think about it enough start to include factors like structure value and different exceptions for how the land is being used, which starts to look a lot like existing tax code in most places.

[niam]

> which starts to defeat the claimed purpose of a Land Value Tax.

What do you think others claim the purpose of an LVT is?

> every LVT discussion eventually comes back to some inclusion of other factors to adjust the taxes or provide exemptions

This argument seems only to follow from a belief that carving exceptions out of policy here is either: inherently bad, lends to a slippery slope towards badness, or is fundamentally incompatible with the professed aims of an LVT (hence my asking).

I don't believe any of those are true, so this sounds to me an unfair indictment against the otherwise legitimate strategy of "keep what's good; change what's bad", which is practical and works for other policy all the time. While I'd scorn the complexity of our current tax code, I wouldn't do so on principle of exemptions being bad, but rather that we've made poor tradeoffs or struck a bad balance.

[some_random]

LVT sounds really smart when you exclusively talk about car parks in downtown NYC or whatever, it's not actually a good tax framework as soon as the conversation shifts from talking about low perceived social value commercial endeavors.

[nerdsniper]

That would somewhat defeat the purpose of the LVT. The point is to force landowners to develop their land. A "fix" would be to make access to capital easier.

Optimum development in many areas isn't necessarily a large mid-rise or high-rise. For most areas, the maximum that the roads and other utilities could support would be dense townhomes, triplexes or quadplexes. Outside of the very highest-demand areas, the LVT would mainly encourage land owners to build additional units on under-utilized square footage or build up a bit. Increasing housing in an area necessarily requires access to capital - so that's what should be provided.

It's not perfectly fair to everyone; it would enrich current landowners. But lower-income/wealth individuals would also benefit because they'd get access to more affordable housing in the areas that they need to live.

[greenie_beans]

> But lower-income/wealth individuals would also benefit because they'd get access to more affordable housing in the areas that they need to live.

how does this create affordable housing? taxes are only one piece of why housing is so expensive. the landowners would need a return on their investment, which they would get by raising rent. this is the core problem imo -- costs for construction and labor and permitting and taxes requiring higher rent in order to make the investment worthwhile.

the offset of lower taxes will absolutely not pay for the cost to "fully utilize" the property.

[some_random]

The theory here is that people who aren't getting "enough value" out of the land will be forced to sell to developers who will turn them into, among other things, houses.

[greenie_beans]

yes i know, that is the "theory" in a logical vacuum. that just reinforces my original point that it will hurt the middle class and only benefit wealthy people. especially since the tax would make the land cheaper (in LVT theory), so when you are forced to sell it you're gonna have to sell at a lower price than you'd like (that is the entire logic of LVT: make land cheaper to encourage more building).

you can't just wave a wand to build housing if the taxes change to LVT. we all know that developers don't build affordable housing. the margins are much more attractive to build luxury housing...it's the incentive structure. housing is expensive to build, and those investors will require an ROI.

terrible idea! the more you look at it, the worse and worse it sounds.

[jimlawruk]

> The point is to force landowners to develop their land.

The point is to ensure landowners don't sit on land. If taxes go up on your vacation home that you spend two weeks a year in, you will be incentivized to sell it or rent it out more. Both of which benefits the public at large. Not to mention it is a fairer tax than an income tax or wealth tax.

[greenie_beans]

most of the vacation homes in vermont are in rural areas. so they wouldn't get penalized by the tax if the purpose of LVT is to increase taxes in urban areas.

[sokoloff]

I don’t think a land value tax is a good idea, because I’ve never heard a satisfactory way to objectively value the land as-if unimproved.

But making you and I pay a different amount of LVT on the same exact piece of land definitely makes it a worse idea in my view.

[eitally]

Afaict, Prop 13 does this in California. Property tax is based on assessed value, and that assessed value isn't just for the improvements, but also the underlying land. So the fact that I pay about $20k/yr in property tax and my back-fence neighbor pays about $3500 (because we purchased in 2016 and they inherited the 1954 home from original owner parents) must indicate that it's not just the improvements that are covered by Prop 13. I had never thought about this before, but at least in California a potential compromise around LVT would be the modify Prop 13 to allow land values to appreciate at market rates while keeping appreciating of improvements capped.

[sokoloff]

There is a market for land plus improvements. What you actually paid in 2016 is presumably the market value of that combination. You probably referred to other similar parcels that had recently sold when contemplating your offer as well.

It’s trying to figure out “what is the land alone under these improvements worth?” that has no market signal to use as a reference (or an extremely weak signal in areas where unimproved lots do sell on the open market).

If you paid $1.5M in 2016, was the land alone $500K, $1M, or $1.25M? If you disagreed with the city’s assessment of just your land, how would you find comps to argue your case?

[eitally]

I think you're missing my specific point that this is a Prop 13 issue.

My land is valued at X and my neighbor's identical rectangular plot is valued at Y, why should that be the case if the land's objective value is identical (which it is, and neither X nor Y are close to current market value Z because Prop 13 caps appreciation at 2%/yr).

No land value or improvements are revalued at market rate until they're sold, obviously, but two things are also true: 1) tax assessors almost never lower assessment values (anywhere), and 2) assessed values are completely detached from reality of the majority of properties in the state of California because of Prop 13.

To answer your question, if I wanted to argue that the assessment of my land is too high, I'd likely not have a case because the assessor could just look at any comps that trades hands in the last few years and those would show assessments far higher than mine. But I absolutely could show that the assessment of others' properties are "too low" relative to my own (or mine to current) just by similarly looking back in time at homes that haven't traded hands in decades, if ever.

[sokoloff]

I originally misread your “Prop 13 does this” to mean the thing in the first paragraph, not the thing in the second paragraph.

[ljlolel]

It’s not application of the tax but (relatively) sudden increases in land value that would price out force out neighborhoods

[greenie_beans]

like i said, terrible idea with a million exceptions