Other comments have alluded to this; but land value tax is very different from property tax in what it incentivises! Property tax just says your house is worth a lot, therefore you can obviously afford to pay a lot of tax, whereas land tax drives efficiency by encouraging density.

How is land value tax not just "your land could potentially produce a lot of value, therefore you can obviously afford to pay a lot of tax"?

From the perspective of the retired person on a fixed income who's lived on the same plot for 50 years while a city sprang up around them, the result is functionally the same.

Sibling comments have provided responses to other aspects, which all also seem right to me.

The proposed land tax in my state has land tax for seniors accrue against the property and is paid upon sale or death.

The objection to this is that it's a "death duty", to which the response is that you did absolutely nothing to help increase that land value. In fact, you worked against increasing efficiency by holding on when the land could be used for more productive purposes.

That's why the Georgist land tax is such a good idea; it taxes you based on the gains that the rest of society generated for you. Whereas a property tax also taxes you for your own investments.

I'd be fine with paying a tax "on the gains that the rest of society generated for you" upon me selling that land to someone else.

Just like capital gains on equities. I don't pay until I realize. I'm happy to pay some property tax in the meantime to keep gov't services running in the area.

But any other method is terrifying to me and makes me start thinking "What super rural state can I move to in retirement to buy a nice parcel and be seriously left alone these days?"

With equities you're helping the economy by keeping your money invested in our companies. We need investors capital to remain competitive and we should incentivze you to stay invested as long as possible.

With land you're continually depriving the local community of the space they need to live and work. Every hour spent commuting past your yard is an hour wasted. You should continually pay for the privilege of exclusive access to an in demand part of the nation.

Or put more simply: land ownership is a form of consumption. Stock ownership is not.

> I'm happy to pay some property tax in the meantime to keep gov't services running in the area.

That's precisely what this is though? Do keep in mind that the for land tax proposals suggest it replace at least a portion of income tax.

> upon me selling that land to someone else. Just like capital gains on equities.

But with your equities investments you don't get any personal gain until you sell. When you hold land, you're benefiting from it the whole time. We're not talking about only the financial benefits from value appreciation, but rather in the main the benefits that you get from society from having the land.

> you did absolutely nothing to help increase that land value

That's pretty unfair. People who lived a lifetime in that house did contribute their bit to making the area thrive and become more valuable by keeping the place nice, being good neighbors etc.

If you think that doesn't contribute at all, consider the opposite. If they lived there for decades and let the house go to ruin and were belligerently antisocial all the time, that drives away nicer people and helps turn the neighborhood into a bad place.

Land value tax doesn't punish development the way that property tax does.

>From the perspective of the retired person on a fixed income who's lived on the same plot for 50 years while a city sprang up around them, the result is functionally the same.

They can sell the land and move

> Land value tax doesn't punish development the way that property tax does.

If you can afford to pay 100% upfront for the cost of doing an addition to your house, then you can almost surely afford the ~1% per year additional taxes. This is technically a 'punishment' but it is a really minor one, and I doubt it actually impacts many people's decisions

Property tax itself is not the issue. The issue is caps on property tax increases that are meant to protect those poor fixed income people. Essentially, people do not make any change that would require the property to be reassessed, which may massively increase the taxes to where they should be. Hence people not doing some minor addition.

But those rules are specific to California? I'm confused why people seem to be suggesting that a land value tax is the only possible solution, when an alternative would be to just make taxes in that state work the same as elsewhere.

California is not unique in capping property tax increases in that way. Other states do it. California has a uniquely bad law though since the capped prices can be passed on to family. I agree that LVT is not the only way to fix those issues but LVT has some other benefits as well (such as discouraging empty lots).

Back when I worked at Google I got to walk past a decrepit shack next to the office everyday thanks to property taxes

This one? https://www.theguardian.com/technology/2016/dec/15/google-ca...

My desk is right across the street. Used to see that shack every day before covid.

Can't see to find it on http://www.taxfairnessproject.org though

Can you really call the results of Proposition 13 "property taxes"? If an owner is currently paying next to nothing in taxes on their O($10M) plot of land, then practically any sane tax scheme is going to be better.

I'd argue actually charging the owner of the shack $100,000/year in property taxes (~1%) wouldn't have a radically different effect than charging them a 2% land value tax.

Under the property tax, they'd be penalized for developing the land. Their fallowing of the land would be effectively subsidized.

Under an LVT, the landowner contributes the same amount to their community regardless of their use of the land -- empty plot, slum, or well maintained building. This is good for the community overall.

So in your example the speculator sitting on an empty plot would see their carrying costs double. How could that not affect their behavior?

I'm arguing that a 10x increase in property taxes (or whatever 100k/year works out to) would already be enough to trigger the current owner to sell.

Once the property is sold, a developer will find that their profit from constructing a building is roughly proportional to the floor area regardless of whether there is a 1% property tax or not. This is because the profit they earn per-sqft is more than the resulting net present value of future property taxes on it. Therefore they maximize the density as allowed under zoning and we end up with an efficient use of the land.

(Of course dumb zoning laws messes everything up, but that's a whole separate topic...)

And the new development will ~~i~~ensure there be cheap apartments they can move too.

Unless the new development is writing premiums as well, I suspect you mean to say that the new development would ensure that there are cheap apartments to move to.

Yes, thanks :)

I thought the whole point was that they don't own the land, only lease it.

Yes. Henry George basically said it's too hard (utopian?) to just switch to everyone leasing their land, so a land value tax is a pragmatic approximation that still allows for the traditional sense of property ownership.

land value tax is not assessed on the basis of who is presumed able to afford it. it's assessed against the use of a public good --- the ability of more people to live and work in the city that perhaps makes the land more valuable than when the owner bought it.

also observe that the purpose of the tax is not strictly to raise revenue, but to address what would otherwise be an externalized cost and make the housing market more efficient.

> also observe that the purpose of the tax is not strictly to raise revenue, but to address what would otherwise be an externalized cost and make the housing market more efficient.

In a time and place where we can deficit spend well, and more demand unlocks more growth, this should be the primary purpose of most taxation.

California's property tax system is completely messed up to prevent that person from ever having to move or be impacted in any way. Why does that person get to be exempt from change when everyone else has to deal with it?

"The person causing change should pay for it" seems equally reasonable as a starting point. Perpetual growth has problems of its own.

California's mistake may be ONLY protecting homeowners from newcomers bringing change, and leaving renters out to dry.

I don't think "perpetual growth," is really what people complain about. what they really mean is that they want to shortchange everyone who does not already have housing.

There are a finite number of people with finite needs. Growing the housing stock to house this finite number of people is not "perpetual growth" and it's downright offensive to say that when we camps of homeless people, camps of people in RVs without other housing, camps of people in their cars, people working full time but only able to afford overcrowded housing, and at the same time enormous wealth within miles.

A society that allows such destitution while others have enormous wealth is not one that is running well. It shortchanges us all, economically.

They could just file for postponement or use a reverse mortgage/HELOC to pay their societal obligations. This idea that people should get to keep the entire windfall while shortchanging their communities is ridiculous.

If a retiree was sitting on highly valuable land, why couldn't they just get a reverse mortgage? High home equity plus short remaining life expectancy will support high monthly payments.

LVT should be quite high to make that not work: you should have to sell your land to someone that will develop it to cash in, otherwise your cashing in isn't worth it to society.

I don't think anyone's seriously advocating for a tax so high that you couldn't pay it with loans for a few years.

They actually are. As LVT goes up, the price of ownership goes down as land becomes a bit of a "hot potato". That's actually fine: what we are left with in the extreme is all land is rented from the state, and there is no permanent ownership. That's great!

You don't have to go that far, but it's good to know it's "safe" to do so. Land isn't produced so there's no "100 Laffer curve is 0" type problem in the slightest.

Even if you capture 100% of the increase in land value with land rents, that's only been about 5%-10% per year in hot markets. And even as you're taking out loans for last year, there's additional increases you can borrow more money from. So people that truly don't care about profiting from their land can handle it pretty much indefinitely.

However, once you can no longer gain money from speculating on its increase in value, that also means that there's going to be a ton more land available for increased use. The coercive effect of a land value tax is balanced by the a reduction in people speculating.

For practical purposes many reverse mortgages are rip offs. the idea is sound, but few get a fair deal.

Wouldn't a purely land value tax be even more punishing? The mere fact that you are in a desirable area and could build an expensive structure on your plot would mean that you have to pay high taxes.

If you live in an apartment in the tallest building around, you do just great. And that's the exact incentive we need.

Seems like NJ is ranked 2nd to Illinois for states with the most debt [1]. Not coincidentally, NJ has the highest property taxes of any state, and IL has the 2nd highest [2].

It's a rough spot, but I don't think there's any tax policy that could prevent that sort of outcome when you're dealing with such a high debt burden.

[1] - https://www.forbes.com/sites/andrewdepietro/2020/11/23/state...

[2] https://www.illinoispolicy.org/illinois-again-ranks-no-2-in-...

Yes, there's a few tax jurisdictions where the per taxpayer debt burden is a few standard deviations from the norm.

https://www.truthinaccounting.org/news/detail/financial-stat...

NJ/CT/IL have $50k debt per taxpayer, and the next highest state is HI at $31k per taxpayer. And I assume those are understated amounts due to lack of laws requiring governments to perform proper calculation of present value of liabilities for deferred compensation.

Some of the cities are way out of the norm too:

https://www.truthinaccounting.org/news/detail/financial-stat...

NYC: $68k Chicago: $41k

The only way that works out for the average individual is if the economic growth in those places outpaces the alternatives to make up for all that debt, but I think there's a slim chance of that.

If someone has high property taxes and has trouble paying them, they either (1) bought a house they couldn't actually afford, or (2) have made a lot of money on their house.

For (1), that's unfortunate, but doesn't garner a lot of sympathy.

For (2), we should do some rebranding where the house itself pays the taxes and no one feels pressured to take it out of their own pocket if they don't want to.

That's an interesting way of putting it -- "the house itself pays the taxes". I guess you mean the solution I favor, which is to allow the property owner to defer some of the tax until the property is sold. I suggest that Prop. 13 in California, for example, should have limited not the growth rate of the tax, but the growth rate of the amount that actually had to be paid in a given year. The balance would be covered by a lien due at sale.

California already has a means-tested property tax postponement program: https://sco.ca.gov/ardtax_prop_tax_postponement.html

It should be expanded, state income tax ended, and prop 13 repealed.

This is already effectively how it works -- it's almost unheard of for a local government in California to kick someone out of their primary residence they own because of back taxes.

I guess if you aren't working over a period of years, you are just increasing commute times by occupying the densest areas and Georgism is incentivizing you to move farther out or build vertical (it's on land, not structures).

But how does that change the big question mark inherent to both taxes: "What's the value of the smallest defined unit of land?"

As long as land is bought and sold, it isn't hard to assess.

In the maximal form of LVT there is 0 value of owning land, the LVT becomes in effect rent to the state (which can be redistributed in a dividend to the people), and rather than assess at all land can be simply rented at at auction.

>>As long as land is bought and sold, it isn't hard to assess.

If I sell my land to someone for a dollar, does that mean the land is worth a dollar? Or is a county assessor pulling a magic number out of his hat that I would have to fight in court? I would say that so long as there isn't a dollar figure attached to the very atoms or molecules that make up the ground beneath one's feet, assessment will always be a blackbox.

>>In the maximal form of LVT there is 0 value of owning land, the LVT becomes in effect rent to the state (which can be redistributed in a dividend to the people), and rather than assess at all land can be simply rented at at auction.

In essence, this is Communism.

> Or is a county assessor pulling a magic number out of his hat that I would have to fight in court?

Or, you know, he can look at what the land around yours is going for to determine what the LVT should be.

> I would say that so long as there isn't a dollar figure attached to the very atoms or molecules that make up the ground beneath one's feet, assessment will always be a blackbox.

Considering that this is true for all atoms and molecules why is it a problem in this case and not in all the other cases where we figuratively attach dollar figures to atoms or molecules?

> In essence, this is Communism.

I would love to hear why you think that.

>>Or, you know, he can look at what the land around yours is going for to determine what the LVT should be.

And who determines what the land around me is worth? Or the land around that land ad infinitum? In all cases, there is an assessor pulling a magic number out of his hat. The only fair assessment is an agreed upon flat percentage multiplied by the sale price (what one has already paid) with depreciation factored in. Not what a "reasonable person" would want to pay on the basis of what my next-door neighbor pays (property taxes as currently calculated) nor what the government expects to extract from the ideal "best person" (land value tax). These latter two taxes are speculative (that is if they aren't worked backwards as sneaky graduated taxes on top of paying for local services) and ultimately punitive to the people who rightly purchased their property but somehow live "economically wrong" to the county/government. It's the burden of a country club without any of the benefits.

>>Considering that this is true for all atoms and molecules why is it a problem in this case and not in all the other cases where we figuratively attach dollar figures to atoms or molecules?

LVT assumes that land has a tangible and intrinsic value and that ownership provides solely to its the owner opportunity to derive a monetary value that is upto and including its "best use". Does that assumption hold? If we are discussing fiefs and manors. Yes. Mines and riverways? Yes. 19th century factories? To a lesser degree, but still yes. Thus there would be a basis in multiplying a dollar amount by some base unit of hydrocarbon, nitrogenous compound, water, or metal ore. But these days what constitutes a "best use" of land is completely divorced from where people derive their monetary value. In one year, people can make more money with a laptop in a tiny cubicle in New York than they do running a corn farm in Idaho. Does one then come to the conclusion that corn farming is an inefficient use of the land compared to an office tower and ought to be taxed as such? If you do, you're being consistent (to the possible detriment of the national diet). But if you don't, the only way to settle the value of a corn farm is the price at which someone makes a voluntary real sale (by private contract or open market) or by fiat. And that brings us to your next point.

>In essence, this is Communism

>>I would love to hear why you think that.

If an LVT was administered by a private group of individuals and was backed by some sort of resource value table with reassessments made every 2-5 years reflecting market value, I wouldn't have as strong an opposition as I do (although I would still have reservations). However, the scenario posited by the previous poster is that (from what I understand) a maximal land tax allows for a de facto monopoly over the land by government while private individuals merely become renting stewards of the soil they supposedly own. Should the net value of owned land being zero be a good thing to achieve as a policy? If so, how is this any different than collectivization in results, if not means? My statement wasn't a remark on LVT per se but what the previous poster expected to see achieved with it.

LVT, while ostensibly fair if one only looks at the separation between land and real estate, possesses many of the same problems as regular property tax. Ultimately it's not a much of a difference so long as the government is both assessor and rentier. I'd rather have a verifiable and justifiable reason to pay a fee based on what I own and my usage of it rather than quibble over the kinds of financial weapons that government uses to extract value from its citizens as though owing taxes at all was a forgone conclusion. A motive behind the tax must justify itself on its terms before justifying it's means or ends.

Lucky! Here in Portland we get the 3% per year plus nearly every election has a property based bond that always pass. Such that over the last 10 years our property taxes have more than doubled.

Measure 50 is super toxic -- if the real number is 5%, it's ridiculous to limit to 3% and ensure that you never get there. It creates a system where the friction for selling a house is even higher than it already is, and where new and less-established people are paying more for the same thing as richer, more-established people.

Property value have doubled in Portland in the past 10 years, from a median of $250k [1] in 2010 to $500k [2] in 2020.

Whatever small pain home owners feel from this, it's absolutely nothing, nothing, compared to the pain of renters. If you bought in 2010, and property taxes were 20% of your housing cost, and increased to 40% of your housing cost, your total housing costs only increased 20%, plus your home doubled in value, dwarfing any cost from an increase in taxes. In contrast, renters' housing costs increased 100%, and they saw zero equity gain.

Complaints about property tax should not be even entertained, IMHO, until there is a more fair way of distributing the massive economic gains that property owners enjoy through rentierism. If their gains were due to their labor, fine, but their gains are not, it's only through the suffering of others. It's from creating a zero sum gain where the homeowners profit and those with less starting money pay for it, regardless of who was more productive.

[1] https://www.oregonlive.com/business/2010/01/portland_home_pr...

[2] https://www.oregonlive.com/realestate/2020/11/portland-homes...

To be clear, you mean that Oregon limits property tax increases by 3% every year -- independent of property value. So if your house goes up 25% in value one year your taxes only go up 3%. No?

NJ charges 2-3% assessed at current market value.

Yes.

> independent of property value

I think the word "value" is mis-used here. The potential sale price of my home has no value at all to me unless and until I decide to sell.

I pay taxes on my home based on the price I paid for it -- based on what I can afford. Neighbors coming in and paying 2x that for their houses will not change what I can afford. Is it right that my taxes should go up because of their wealth? It's not unlike changing the terms of a contract after I've signed it.

And should I decide to sell, the buyers will pay taxes based on the new sale price -- based on what _they_ can afford. This seems eminently more just than people being forced to sell due to rising taxes simply because their new neighbors can afford to pay more.

If you don't value your home that much, but somebody else does, then why don't you move?

The reality is that you value the location, just as others value it, and you also value not having to move probably, but you don't want to pay for it.

I think that you should have a right to stay where you are. And more than that, I think that everybody should have that right, be they renter or owner, as housing should be a human right.

However, land is a limited resource. And by limiting its use, you stand to profit handsomely. You may not think of yourself as a land speculator, but if you profit not through your own labor but because you are manipulating access to a scarce resource, land, then that is actual speculation.

If you truly do not care about the speculation and profit, and just want to keep your place and the labor you put into it, then may I suggest a compromise: you can keep your low taxes, while others pay more to support the community, as long as the increase in the value of the land is taxed at 100% at sale. Because unless you are putting labor into improving your house, any increase in value comes only from the increase in value of the land, something that you did not create, and claim that you do not even want.

If you are willing to agree to this, full capture of the land value increase, then I think we can create a reasonable society. But if you insist on profiting without labor and also at the same time denying people access to something that lots of people want, I'm not sure that society can continue for much longer.

> home has no value at all to me unless and until I decide to sell

Buy. Borrow. Die.

Why isn't the NJ Senior Freeze a sufficient solution for you?

Does your comment imply that people who are out of work or on social security are better off renting? A property tax seems manageable like any other expense if you live within your means.

No, it means if you're not working you can't afford to live here. Maybe that is a fair result, but its not a place you can raise a family who live their whole lives here.

Where can you afford to live without working in the USA? It can't be many places.

Are you in a single family home? If so, I have 0 sympathy. Downsize.

NJ has the highest property tax (I think). Note it’s property tax not land value tax so while it has some effect on real estate prices it doesn’t quite create the same incentive for more efficient land use.

I'd say it may have an inverse effect.

Build a nice house on your lot, pay a ton every year.

Stay in a shack on that same lot, save a ton every year.

The value of the land still counts towards the total property value, so it's not an inverse effect, but it does decay the more is built until there's no marginal incentive one way or the other.

No I'm in an 2br apartment with my wife and teenage daughter. Taxes are $1600/mo. Still cheaper than the suburbs with good schools.

Glad to hear you are in an apartment in the good transit part of NJ!

Then a LVT is definitely in your interest as the others say. More stories => less taxes!

You’re apartment is valued at $700,000?

Probably higher. I'm not saying I'm struggling, I'm just trying to get some push back on property taxes and how toxic they are. When I was laid off the taxes are a huge burden. I have a mortgage that fixed for 30 years, but property taxes keep going up every year.

To reiterate on the original reply, a land value tax is on the value of the land your apartment sits on, but crucially, not on the value of the apartment. If there's a derelict tyre place next door that's on the same area of land and selling for significantly less, your entire building combined pay the same LVT as its owner.

Why would you assume that a LVT would be lower than current property taxes? If your land is built up the same as the average density of the surrounding area, then you probably were already paying comparable taxes to all your neighbors and your taxes should be unchanged under LVT.

I didn't actually say that. I said that if you have an apartment you'd pay less than a derelict tyre place on the same amount of land. If you live in high density residential apartments you'll pay less than lower density neighbours.

If the entire area is equally high density, then congratulations, it sounds like you live in a very desirable location in the middle of a lot of public and private infrastructure: if that's the case, you should be taxed, to encourage even higher density development and even more productive use of the land you're on.

Aha! we'll here's the joy of different types of averages / https://en.wikipedia.org/wiki/Jensen%27s_inequality

How do we take the average density? Is it the average height weighted by land area, or floor area?

"average height of building on a piece of land" vs "average height of building a piece of floor is in"

Well, unless all buildings are the same height, the second average will always be higher, because taller buildings have more floor!

Most people would go with the former for the average. And it does make sense in general to average over the fixed thing. But that mean building will pay a greater portion of the total tax revenue than before.

That’s not a lot for a 2BR with a reasonable commute to New York.

$700k+ is objectively a large amount of money to spend on housing, more than double the median US home price. Even if it's a middle class home in its local market.

In California we have Prop 13 which is the polar opposite of the situation in NJ.

$700k is half what I'd need to buy a place and still end up with an hour long freeway commute.

Also our schools are a joke compared to NJ.

But at least taxes are low here. Wait...

Yes. What Prop. 13 has done is taken all the tax money that would go to fund local services, and instead given it to former property owners. From a cash flow perspective, there's no difference between paying a large mortgage and small property tax, or a smaller mortgage and larger property tax that total to around the same amount. But the difference to the local economy is that the tax money would stay in it, while the mortgage payment effectively funds a large payout to the previous owner, who then most likely takes the money out of local circulation.

> From a cash flow perspective, there's no difference between paying a large mortgage and small property tax, or a smaller mortgage and larger property tax that total to around the same amount.

Not initially. When you pay off the mortgage around the time you retire and have no more steady income, it's night and day difference.

> $700k is half what I'd need to buy a place and still end up with an hour long freeway commute.

Yeah, but that’s because you live and work in a place that is ridiculously expensive by California standards. (I'm guessing SFBA.)

Housing is inherently local. You can't aggregate over multiple commute sheds and have your conclusion mean anything.

Is there some way to look at $700,000 and not think, "Holy shit that's a life changing amount of money for nearly any American."?

FOMO is the biggest reason I find not to sell and rent for a while. If I want to buy again in a few years, there is no way to know if the equivalent house would be out of my price range. And I can't think of too many places I would feel safe investing that amount of money given current asset price inflation.

Becoming a landlord while renting out something new may be a good option though. Or moving to a low cost of living area.

Life-changing would be living in nicer arrangements, consuming more stuff, doing less work, being more secure.

That’s not what’s going on here.