Is that the problem though? Empty land held by speculators?

Georgist thinking, as far as I understand, is that taxing total property value disincentivises investment in a way that is worse for society overall. Empty land is just a subcase of that.

That said, "everybody works but the vacant lot" is a Georgist slogan that has been seen on billboards before now: https://digitalcollections.nypl.org/items/510d47de-036a-a3d9...

I look forward to starving to death as I try to eat a luxury apartment complex

If you were hungry I’d show you compassion and feed you an empty parking lot.

Thank you sir

Huge problem over in the UK, its called land banking. The scarcity of affordable property combined with some silly planning laws mean that you can double your money if you buy land and simply sit on it for a decade.

Not just empty land. The 'little old Lady' who lived happily in her small house for decades, while everything else developed bigger. At one time her house fit in, but now the rest of the block is bigger buildings worth a lot more.

You decide if the above is good or bad.

I'm sure your intent was to express a hypothetical that this might not be a net good, but...

Something like 90% of boomers want to age in place (as opposed to moving in with family, or moving into some assisted living arrangement). This is a problem when that effectively locks up 40% of the housing stock.

Does this "little old lady" need a 1-acre lot for her gardening when she can barely walk to the end of it and back? Or could that lot be parceled up into 4 single-family homes, or dozens of apartment units?

Also: that small house will grow in value (along with the property taxes) until the value of the land almost entirely dominates. My parents are in one such situation -- anyone who would buy their house would assuredly tear it down to build something bigger.

The little old ladies I know keep healthy in their garden. It is a gym program for them. Yes, they are slower than younger adults, but they are still active in that garden.

How dare she live in a house she's been in her whole life when the government knows what's best!

I get that you’re basically right in technical terms. A nice condo development could meet all their physical needs in far less space. And we would all be better off as a society if that is what happened, if it could just spontaneously, voluntarily happen.

However it’s just not compatible with any concept of freedom, as understood by those people themselves. A lot of people have an expectation of fairness that they ought to be able to own a home of their choosing and stay in it until they’re ready to move (or dead). And they are sentimentally attached to their homes where they raised their children.

We in the West have a society whose framework is roughly aligned with that idea. We could change it, but it would require lots of other “the government knows best” policies, and ultimately the massive empowerment of police to enforce those “best practices” when people object. Even one would agree with the outcomes in housing policy, it would be pretty risky to create that kind of totalitarian situation in general, because we might not like the other “most efficient best practices.”

The taxes can be delayed until the property is sold. This still disincentivises using land as investment but works fine for people who just don't want to move.

Does little old lady own her house? If yes, what's the problem with taxing the increase in value of her property caused by the environment becoming more desirable? All in all she's neither losing nor gaining anything.

She probably doesn't have much money. She might, but she might only have social security which wouldn't provide enough to pay those taxes

As others have mentioned, it’s quite easy to structure a land value tax to avoid kicking little old ladies out of their homes. You are arguing against a strawman.

Even if a plot of land isn't literally empty, the ideal behind a land value tax is that it incentivizes maximal utilization of land.

In Oakland at 51st and Broadway there was 1/2 a city block that was empty. For almost 40 years (probably more, it was derelict when I got there in in 1980). A few years ago someone built a 5 story apt building on the land.

It always seemed crazy to me that nothing was done on that very valuable corner for so long.

There are other examples.

And if I know the Bay Area, 47 people with pitchforks came to the community meeting where that development was being considered for approval, screaming about how “their neighborhood” was now being “overrun by gentrifiers,” right?

Anecdotally, I live in corktown (a neighborhood right next to downtown), and while it’s overall a nice place to live and somewhat walkable. There are vacant lots everywhere. Some are totally fenced off and some used as free parking.

I’m new to town but everyone else tells me that the area has massively improved in the last 5 years. Those lots are wasted potential.

What’s currently stopping people from developing them though? Detroit is a huge city and its population has largely vacated to the suburbs. Maybe they havent been developed because the current demand is already being met.

Sure, that's possible. Or maybe Mr. Parking Lot Owner just likes the look of parking lots. But the key point is that today, improving the land is disincentivized because it would increase the owner's tax burden. So we don't know exactly what people would do with all those empty lots if improving them wasn't disincentivized.

Yes, downtown Detroit is a wasteland of parking lots. Some incredibly beautiful old buildings have been demolished and turned into vacant lots, it's a real shame. Downtown really needs more development and I think this is a great way to force the issue. When I lived downtown, I had to drive 20 minutes to the suburbs for groceries. And now I have a house in the suburbs instead of Detroit because of that.

Think of that closed-down K-Mart that's been empty for 25 years on the main shopping drag in a medium-sized town. There's probably 25,000 of those across the USA.

it is specifically in Detroit, they have lots of empty lots as businesses fled the city proper for the suburbs, now as the city is bouncing back there is an incentive to just hold onto empty lots so that new buildings around you increase the value of your land.

I don't understand how that needs a special tax though. Wouldn't the more obvious choice be to just tax all wealth/assets?

E.g. where I live it's just assumed that all your assets produce a yield of 4% yearly, and that is taxed as regular income. Makes the tax declaration also a lot easier, since people don't have to list all exact dividends and profits they might have gotten from investments.

The idea is to change incentive structures around specific types of assets, not to raise money. The idea of rent-collecting landed gentry is economically devastating. Adam Smith wrote extensively about the outcomes, and that is a natural path for economies to take. Wealth consolidates, buys landed, and becomes an informal nobility who collects land and does no work. At some point, it spirals, as rents lets real estate investors buy more land.

Put another way:

If I have $1B, and I buy $1B of land, that creates no value, and raises prices for everyone.

If I have $1B and I start or fund a company which produces a new medical device, computer, or car, I've created massive economic value, both in the inputs (hiring people) and outputs (new technology).

Land is also a scarce resource we all need to share fairly (for whatever 'fairly' means). If you have more, everyone else has less. On the other hand, if you're investing in making movies, I can make my own movies too. There is no fundamental limit to that sort of economic growth.

Land specifically has uses (people live there, grow stuff, build a business on top of, have community things like a park etc).

Most people won't care about some Rolex that someone around the world is willing to pay $100K for.

Land has purposeful value rather than just 'worth'

The problem is, what if it doesn't produce that much? What if it doesn't produce anything?

Imagine someone buying a house somewhere cheap. Then some gentrification, a new microsoft campus built nearby, etc., and the price of the house jumps 10x+. You're on a fixed income, and your taxes are now higher then you can afford.

If you have multiple houses, sure, tax the second, third, etc. one (evn though the taxes are then charged as higher rents if you lease those properties), but the first, primary residence should not be taxed as a "profit maker".

Maybe it's a cultural difference, but here in the balkans, people rarely move, and telling a 75yo grandma that she'll have to move, since her socialist built apartment is now worth 500k eur+, because "investors" want it for airbnb, and she cannot afford taxes on it, is just evil.

One way you could look at it is that this person's inability to afford the land value tax signals that they are not making effective use of the land and that it would be in society's best interest if the land were to change hands to someone who could use it in a way that lets them afford the taxes on it.

What? I must be misunderstanding your comment.

Are we seriously saying that if someone can no longer afford tax on a land they already own because the rich need to get richer, you should sell?

Basically you're asking for normal people to work, get raises forever and hope nothing crazy happens that can raise land value in their neighborhood in order to keep the land they already own.

No, this is not in "society's best interest". This is in the capitalist's best interests. Those are very different.

Comments like these make me not want to live in this world anymore. I really hope I misunderstood the comment. What the f***.

That can already occur with regular property tax. Some regions have "homesteader" tax relief programs to counteract the problem and I see no reason we couldn't do the same on a land value tax scheme.

It isn't an extra tax. It is a rebalancing tax. The rich have nothing to do with this.

It is purely about how much land you sit on and where. That's it.

> Basically you're asking for normal people to work, get raises forever

Nope, it mostly incentivizes real estate hoarders to start making productive use of there land. It allows normal people to buy houses because this system inventivizes the increase of supply.

> land they already own because the rich need to get richer, you should sell?

If your lad value tax increases enough to be unpayable, then your house has likely appreciated 3x+. This makes you one of the rich.

There are no new houses in the neighborhood so the normal person can't afford a house. With land value tax, you can sell the land, make bank, and allow access to greater housing through upzoning. The normal person benefits greatly.

Either housing is an investment or an essential commodity. It can't be both.

> It isn't an extra tax. It is a rebalancing tax. The rich have nothing to do with this.

So effectively normal people that don't own empty land will not pay this or pay an equivalent of the previous taxes?

> If your lad value tax increases enough to be unpayable, then your house has likely appreciated 3x+.

I guess you could try to argue that but I still feel like that's going to hurt folks. Imagine a scenario where I live somewhere for decades. Suddenly there's a new subway or some other factor that increases the value of the land enough that I can't pay for it.

Now I'm forced to leave this place when it finally becomes better to live in. In theory if I sold it, it would make me some money, but that's not the same as saying I'm a rich person now.

It's also not free in the sense that I still have to move somewhere else, which will probably be worse than the current place I live, since I will be required to buy a house with a lower tax (less valuable).

I can see the benefits if this was part of a bigger set of changes that would overall benefit everyone. But in isolation it seems like it will hurt normal folks and companies will just turn their empty plots into useless parking lots (or some other loophole they will find) to say it's "valuable".

> I guess you could try to argue that but I still feel like that's going to hurt folks. Imagine a scenario where I live somewhere for decades. Suddenly there's a new subway or some other factor that increases the value of the land enough that I can't pay for it.

I can imagine it.

That is exactly what happened to my neighborhood in India. Small residential condo community where Dad and I grew up. Everyone knows everyone sort of place. Our neighborhood suddenly turned into the hipster capital of India and began gentrifying and taxes started becoming unaffordable.

You know what people did ?

Took a deal to have their 5-storey condo redeveloped into a 30 storey one over 3 years. Everyone gets decent upfront cash, a huge rental allowance for the duration of the construction, 2x larger houses and more luxurious amenities.

Everyone is falling over themselves to have these deals signed. Yes, people waited till the last generation passed away, since they didn't want huge changes for those in their 80s. But, as those in their 50s-60s are heading into retirement, they are delighted to be able to retire wealthier, in a bigger house for 'free'.

The community has not been displaced, since everyone who lives here will still live here. Young families can buy apartments in one of the most accessible parts of town. Quality of life is better for everyone.

That's very interesting. Never heard of this!

Who offers these deals? Is it the government or private corporations? I'm struggling to see how one profits from this (which is normally the only reason companies do anything) so I'm very curious.

This really does sound like a win/win situation if it's like you described it! Here I only hear/read stories about people losing their homes without any other option other than selling.

Private builders.

The 5 floor condo gets converted into a 30 floor tower. The residents gets 2x space and the first 10-ish floors. The rest goes to the private builder to sell to whoever they want as profits. It often involves demolition of 3-4 buildings into 1 large building. So a lot of wasted space also gets brought into building floorspace.

> companies will just turn their empty plots into useless parking lots (or some other loophole they will find) to say it's "valuable"

Skipping past your other points, I just wanted to reply to this sentence, since it seems to show a deep confusion/misunderstanding (perhaps on my behalf!).

- Land owners won't get to "say" how valuable their land is; that's determined by the market, assessors, etc.

- Given the chance, land owners would try to say their land's less valuable; since higher value means a higher tax bill.

- Land value tax is (as the name suggests) based on the value of the land; not what's on it. The tax for an empty lot is the same as a parking lot (or a skyscraper, for that matter).

- If anything, turning an empty lot into a car park may increase the company's tax bill. For example, if a lack of parking bottlenecked the area's economic growth, the new lot would allow more development nearby, increasing the area's land value, and hence increasing the company's tax bill.

- Turning an empty lot into a parking lot has construction costs (I'm assuming our company doesn't care about ongoing maintenance). Since the land value tax is unaffected (or even increased!), the only reason to construct a car park is when its predicted revenue is higher than its construction cost. The predicted revenue of a purposefully-useless parking lot is low, so there's no incentive to pay its construction cost: better to leave the plot empty!

- If the company can't use the land to bring in revenue that (a) pays off any initial capital/construction costs, and (b) exceeds the ongoing costs (including the constant land value tax!), then it should sell the land to avoid having to pay the tax.

- The only ones willing to buy the land off them (and hence take on its tax burden) are those who can make use of that land (either a company able to make a profit despite the tax liability; or people wanting to live there who are fine with paying the tax). In which case, the sale is incentivised and the land is put to better use.

PS: "From the outside" I'm sure there will be loopholes in theory, and in practice in Detroit. However, your example is pointing in the complete opposite direction of all the incentives, which looks "from the inside" like a lack of understanding.

Oh there's definitely lack of understanding from my part. Thanks for the thorough explanation.

They do need to make sure the tax is higher than the land value growth otherwise it wouldn't really work. Maybe it's not that hard, but with some of the price hikes I've seen, it could happen.

Honestly, I am very curious to see how this will pan out. Hopefully there isn't a giant loophole that will backfire as it happens with so many bills.

> Are we seriously saying that if someone can no longer afford tax on a land they already own because the rich need to get richer, you should sell?

devil's advocate: No, not because of the rich but because of the poor. Buying a house decades ago was very possible on an average single person's salary. Nowadays, even upper income range couples have large troubles financing a house. So the situation is that you have lots of old people living in houses that they could never, ever afford at today's prices. The claim (no comment on whether it is correct or not) is that this causes massive distortion and that this proposal would fix it (doubt it, but that is the discussion).

> What the f*.

That is not helpful for a discussion. There is a problem stated and a (probably bad) proposal to address it. Instead of just saying "f*", address the problem and make a different proposal.

Homeownership rate has not changed much over the last 60 years. Housing is still affordable overall in the US. It's only some regions that have gone nuts.

> That is not helpful for a discussion.

Fair enough. Edited that part off. I was simply extremely shocked at the implications, if I understood it correctly.

> So the situation is that you have lots of old people living in houses that they could never, ever afford at today's prices.

I don't think punishing people for what companies have done to inflate house prices is a good move though.

Screwing over people that bought houses that they live in instead of fixing the root cause issues that cause all this insane price hikes seems completely backwards to me.

Remember that companies or rich folks might have to pay some extra taxes but, in general, they can freaking afford it. Normal folks more often than not, can't.

> Screwing over people that bought houses that they live in instead of fixing the root causes

The point of the proposal is that it is not an either or. In order to fix things you will have to also "screw over" people that have bought houses or people that currently can't buy houses. Long running problems are not quick and easy to fix and a fix will have collateral damage, not just "companies or rich folk".

Again: I am not taking a position on either side, but you are currently attacking a straw man.

> I don't think punishing people for what companies have done to inflate house prices is a good move though.

The first is that if someone suddenly became wealthy because their house went up 3x in value and they want to continue living there then they can get a reverse mortgage. Assign that new found wealth in the equity to the bank in exchange for getting a monthly payment to pay the tax. If you're arguing they both should be able to stay, and keep the increase in equity that they contributed to them you're arguing housing should be a speculative investment (which leads to bad incentives).

> Screwing over people that bought houses that they live in instead of fixing the root causes for all these insane price hikes seems completely backwards to me.

The whole point is it's not. It's incentivising someone to move so they stop screwing over the 10-20 families they would like to buy a house but can't afford to because the supply is so low. By replacing the single story home with multi floor condos, more people can now afford homes in the area.

The entire Georgist argument is that you can’t own land, you simply rent it from society via a land tax. It’s also worth noting that George’s land value tax was devised as a way to pay a citizens dividend (the profit gets distributed evenly among all citizens) not to fund a bureaucracy as will happen here.

You're looking at a persons home as an economic investment and not as a social thing. It's a home. Someone will live in that house. You just want to replace a poor grandma with someone who can pay more taxes, while the use of the land/house/apartment will stay the same, even with airbnb, someone will just use that apartment to sleep in.

It's the society's best interest that people can afford places to live and not live under threat that some new fad will make something they already own (and need to survive) unaffordable.

Land value tax often goes hand in hand with lax zoning.

In your example, if the grandma's house went from 200k to a 1million, then she isn't poor anymore. She is very rich.

She doesn't have to leave the neighborhood. She can give her house away for redevelopment into a condo. Get the nice penthouse flat and a pretty penny on the same land. Now, she has enough liquidity to pay the land value tax, which is also lower per person because it's distributed over the whole condo.

This is happening in India right now. Apartments are redeveloped into towers. Old residents get 2x the floor space and decent relocation $$ for the construction period. No one is being kicked out of their house. Most people move to another spot within a 10 minutes walk from their home for 3 years and then come back when the building is done.

In my country, a previously ~100k condo apartment now costs 500k+... sometimes even less than that before (city center, no easy parking, lots of noise) and more now (airbnb).

If grandma owns a house in a place where people want to build an apartment block, she's not poor. By definition.

In my country, the apartment block is already there, but the previously shitty apartment (noise, no easy parking) just became expensive because of stuff like airbnb and speculative investmnts.

The 10x seems very unrealistic. But assuming that were the case, the taxes would be the least of your worries because things like supermarkets, electricity, phone, water, heating... would also go up heavily.

The more realistic picture is that grandma living alone in a rather large, old house, whose price, heating etc. went up quite drastically. That is already happening, in particular the heating part. Just have a look at Europe and the UK. The question then is, and I am not picking a side here, whether you spend public money so she can afford to stay in that large house or you make changes.

groceries may be a bit more expensive, but "phone, water, and heating" go up with a real estate boom? not in my experience. Price per kilowatt/water meter is the same if you're in the ghetto or "affluent" neighborhood.

Not unrealistic at all. After the fall of socialism, we had a law, where current tennats could buy apartments from the government for very very cheap.. we're talking about a mid-range new car prices back then (to avoid having to calculate inflation), and quite a few years after that the prices were very low. If we're talking the attractive parts of the city center, a one bedroom apartment can easily cost 500keur now. For comparison, even ~15-20 years ago, that would cost maybe 100keur (with some inflation until now), especially if it didn't have parking options nearby (but airbnb investors don't really care about that that much, they can rent a parking spot a few 100 meters away in a parking garage.

We had a law, that somehow got repelled by some lobbyist, where all the public money given to help was then taken out of inheritance (so the kids had to either pay it back, or property got sold at an auction, government took the money and the kids got the rest). This would solve the help-money issue.

Every tax jurisdiction I've lived in has some sort of homestead exemption to protect people from the situation where the taxes in the house they own and live in go up to where they can't afford it.

I see homestead as completely, 100% incompatible with a LVT. Not because there's any law of man or nature that says the 2 can't work together, but because as soon as an area becomes "hot", that land will spike in value and the government will want its revenue to increase, and at that point they'll fight tooth and nail to overturn any homestead protection that exists.

The outcome Detroit wants from this is for the land to be developed. Governments are likely to get directly involved with empty lots, not already developed land. This is also setting aside that kicking pensioners to the streets is generally political suicide, and one of the reasons these homestead exemptions exist in the first place.

While moving is certainly not costless, keep in mind that this grandma moving and selling has just had a huge windfall.

Why is it evil? She's richer than she used to be, through no fault of her own. Just a little less richer because of the tax.

This is like looking at an algorithm, thinking of the worse case scenario, running a single step, and deciding that it's not worth it from that alone. This is not a one-and-done rule, and the same dynamics that might push an old lady to move in one situation, might make things much better for her in another, and more importantly, over time might lead to a better situation for her grandchildren when they grow up.

In practice, that grandma is stuck in a city where her children and grandchildren can no longer afford to buy real estate in. Friends and neighbors who rent are priced out and have to move regardless. The local goods and services rise in price and taxes go up, all under the current system. Her support network and community evaporate and soon she finds nothing left but to sell to a corporation, who is the only entity left that can afford the prices her house demands.

The first order effect of a Land Value Tax is that it shifts who pays the biggest burden of taxes. Grandma A who owns a big house in the center of a vibrant city where lots of young families are looking for homes near their jobs might see an increase in her taxes, but the Grandma B who owns a Condo in a larger complex will likely see her taxes drop. Grandma C who lives in a nice well-maintained house way out in the burbs will likely see a drop as well, most of her value is in the nice home she has been tenderly caring for her whole life.

A second order effect of LVT is it creates a suppressive effect on real estate prices. When prices in an area are going up across the board, this is entirely in the value of the land, which means LVT taxes are going to rise correspondingly. This additional tax liability significantly helps counteract a speculative rise in prices, leading to a lower and more stable pricing, and pushing out those who are just looking to speculate on trends. The value that a government creates for its citizens is recaptured and able to be reinvested, instead of going directly in the pockets of land speculators.

The third order effect is that this shifts the incentives around value creation vs value capturing. Perhaps the house next door to Grandma's is currently owned by a deadbeat landlord, Pennybags, who lets the house fall into disrepair, hoping to turn around and sell it as the market rises. Now all of a sudden Pennybag's plan is quickly becoming a bad investment. With LVT his property value is more heavily correlated with the actual quality of the house and less with value of the land. He is finding that despite an increasing demand in the area, his property is actually dropping in price. Meanwhile good ole Grandma has been diligently been taking care of her home, and adding value and the price of her home has actually gone up faster than the rise in taxes. She's able to use to use the increase in value to take out a loan to build an accessory unit she uses to now help her cover her increased taxes, which further increases her property value. Despite all of that, her taxes have not gone up at all!

Detroit and most places in the US already have property tax. Little old grandma already has to pay more every year when her property becomes more valuable. And homestead exemptions already exist to prevent kicking grandma to the street.

A LVT would just shift property tax burden more toward empty lots or less-developed parcels and away from more-developed parcels. It wouldn't result in killing little old ladies.

It might at some level, but taxing all assets would disincentivize the creation of new assets. For most assets we probably don't want that - we probably want more home construction for instance.

Taxing land only disincentivizes land from being hoarded and being used inefficiently. It's not going to prevent the creation of new land.

Theres also the issue of fairness. Land owners didn't create the land or make it valuable. They just use it to extract rents. Asset creators did make their assets valuable and if they do rent them the value of the rents will be in proportion to the value of the work they put into them.

In addition to the idea that this tax is designed to make better use of land, the best tax is one that will pass. I think most people who support a land value tax would also support a wealth tax. A land value tax is more politically viable.

Also, importantly, you can't "hide" land (from taxation) by moving it out of the country.

I'm not sure about this. I think soaking the rich is likely more viable (at least in popular vote terms) than a regressive tax like land value. Middle class people will at certain points in their life have over 100% of their net worth in land (perhaps even 1000% if they can barely afford a 5% down mortgage for a property that is half structure half land). Meanwhile profiles for the ultra-wealthy are typically 13% real estate. Taxing one person on 1000% of their wealth and one person on 13% of their wealth is nothing like a wealth tax.

Land is unique because it's a productive asset with fixed supply. The problem with most taxes on assets is that they decrease the amount of productive assets in service by making the economics less favorable. A tax levied against land however, will (obviously) not change the total amount available and therefore have no negative effect on total wealth created.

As far as I understand, the idea is to incentivise the kind of wealth-creation that is good for society by taxing it less than other kinds. The idea is definitely not to introduce a land tax on top of all the existing taxes.

Historical Georgists were also called "single taxers" because of the idea to abolish all other taxes, but make up for this by a tax on land ownership that leaves the state with the same income stream as before. Apart from being (in their view) socially good, this would also have the advantage that landowners couldn't just move their land to the Cayman Islands to evade the tax.

I don't think modern Georgists are quite that single-minded, but I do get the argument that, for example, VAT is a tax on the poor in the sense that even people whose income is low enough that they're not paying income tax in the usual sense have to pay it every time they buy something (unless it's exempt), but taxing land would truly be a tax on the more affluent only, at least in a country where most poor people rent their accommodation.

To tax is to discourage. We don't want to discourage work. We don't want to discourage housing. But land (by definition) can not be produced. Taxing land does not discourage anything except hoarding.

If you want to tax properties, why not taxing both the land and what is build upon it?

And wardrobes, tables, books or computers (every year) but that's another story.

According to the article, taxing the land at one rate and the property built on it at another rate is exactly what Detroit is proposing.

The idea is that you tax the land only as if it was being used for best use - so that every property is encouraged to develop to maximum density.

I suspect that in actual use it would end up having a small to no effect.

In actual use it would, in most cases, ensure that people would not, could not have long-term ownership of land passed down from generation to generation. There would be significant social downstream effects & likely upheaval caused by this, & that would be compounded by the deleterious results of forcing more & more people to live shoulder to shoulder in the name of that maximum density you mention. No system of taxation is going to be perfect, or even nearly so, but some significantly increase the likelihood of abuse & unintended consequences of bad ideas allowed to run wild. All this without the need for malicious or corrupt action on the part of those in charge of the system, though it strikes me that a system such as the one proposed here would treble the power of officials to strike at groups & ways of life with which they disagree.

Detroit is a city. They already try to encourage high-density living through the types of zoning they have. I don't see a fundamental issue with aligning their taxes to better facilitate their development goals.

Similar arguments would go for rural municipalities that might want to encourage multi-generational agricultural living, for example, if that's what you're getting at.

Someone once remarked that American society is anti-Georgist, in that land speculation is actually seen as the only honorable engagement with real estate.

Having un-utilized land in your family generation after generation codes as noble, but economically this is much worse than owning an AirBnb or a vacation home or being a Chinese investor who collects vacant luxury condos, or any of the other boogeymen of housing discourse. These people hold one unit off the market, and in the meantime they maintain it or finance its construction. The landowner builds and holds wealth for nothing but parasitism.

So you're against someone who gets 100 acres, plants a house in the middle of it, & lives there simply because they want to, & they don't want to have to put up with the existence of neighbors? That's not parasitism — that's doing with one's property what one wishes to do. The economy is not the universe.

They are welcome to do so, but it would probably be cost prohibitive to do that in a highly desirable area. I’m not sure what the hangup is.

You are amazingly blasé about that fact that this would be using taxation to prevent people from using their own property as they see fit. This is utilitarianism run amok.

We prevent people from using their property as they see fit all the time via zoning. It is in fact mostly those with generational wealth that use this power.

Most people don't care about zoning, but they really do care about zoning changes that affect them.

Being told you can't live in your house anymore because it is now zoned commercial gets people riled up, and being told the same because it's now too expensive does the same.

It's a hot-button issue but you can defuse it by putting safeguards in, though they're not always successful - see eminent domain scandals.

Actually this entire construction is wrong: currently people who improve their land get penalized by higher taxes. If there are only land value and not property taxes, we are in fact increasing your freedom to make changes to your land without penalty.

Your argument ignores that changes to neighbors' property would then cause an increased burden to a land owner. This would not seem to be an improvement for freedom

It’s a finite resource. 100 acres of land being barely used should certainly come with a cost. Of all of the things that could be taxed, this one actually makes the most sense.

People aren't objecting to taxing 100 acres of Manhattan at rates that are associated with the value of the land there, people are upset about the idea that they could buy something, and then through no fault of their own, it becomes worth more and they have to sell because they can't afford to pay. Sure you get a ball of money as a consolation price, but you still had to move on.

But this is more of a straw man than a real objection; as there are various and sundry ways to resolve this (for fixed income, you can have property tax deferral until sale-after-death, you can have homestead exemptions, etc etc).

> buy something, and then through no fault of their own, it becomes worth more and they have to sell because they can't afford to pay

I fail to see why that’s a problem. Those taxes go to fund local services (like schools, police, fire, etc.) whose costs likely scale when the local cost of living and land values scale. Buying land doesn’t mean you should get to lock in the price you pay for these services for perpetuity.

Huh? You have to pay property taxes now and those could end up being too high for subsequent generations to afford. That happens all the time and is a common reason why property gets subdivided. This is simply a question of whether the value of structures on that land should be included.

If anything a pure land value tax should be more predictable than a property tax, I got hit with a major property tax increase and looked into it, the town had calculated the new property tax based on an incorrect square footage and number of bedrooms for my house. After filing an appeal and going to court I got it fixed, but that was a more capricious process than if it was simply based on the value of the land under the house.

The problem with that is that would displace virtually everyone from many cities in the US. There are plenty of cities with single family housing near the metro area. It was built before the city expanded. Nowadays the city engulfs it. Obviously the best use for most of that is medium density housing or some commercial use. The idea of taxing a house with a backyard like it's a $3 million quad-plex of town homes isn't very appealing.

That claim isn’t true. The book goes into details like this and taxes would go down for ~97% of parcels. It would go up a lot for parking lots in city centers and certain segments of commercial real estate.

Taxes never really go down. That's always the ploy - say the tax is a limited time, or only a specific low rate, then extend it. In this case, the people in power can play with the tax rates, but even more so in the zoning. An added avenue of getting screwed is not very appealing when taxes are already high. Let's not forget rhat if the goal is to utilize more space, that means more infrastructure and services costs. If we actually make a big impact on the space front, those infrastructure costs will go up and require substantially more revenue. I'm skeptical of the claim that most taxes will go down.

So limiting Georgism LVT to only commercial real estate would get you all of the benefit without affecting residential properties?

Then simply enact that, and the voters won't care because their taxes will stay the same (they probably will never actually decrease).

That isn't quite what I said, but I really suggest Lars's book, if you have a genuine interest in this!

You won't get an absolutely black and white one sentence solution from it, but it is thought-provoking and contains some really useful ideas, IMO.

On the contrary, that's exactly what most cities need in order for property prices to drop from insane to less insane.

LVT would exclusively take from people and corporations who own land. This in turn will allow more people to own their home.

So people will be paying a higher tax than they ought to be if they aren't trend-chasing the economy to always be engaging in that "best use" from year to year?

That sounds perverse in itself, especially since an economy needs diversity to function, and if everyone is incentivized to chase a single thing per region you end up with overproduction of that and underproduction of everything else.

Is a city full of pet stores valuable?

I don't see why this would encourage economic homogenization.

Go look at the most valuable real-estate in the USA that is still commercial, it's almost always banks and Starbucks.

It would because anyone who isn't in the best-paying part of the economy would be taxed higher than their actual income could support, leading them to either switch businesses or go broke.

Land that’s already been improved would pay less in taxes. Empty lots, parking lots, and other unimproved land would pay more tax. Calling an economic incentive to do something with your empty lot in an urban area “perverse” seems.. extreme.

But the post I responded to implied that if you weren't in the most-profitable economic sector, you'd be taxed as if you were, causing excessive loss, leading to people switching businesses to be in that one Golden Sector regardless of what the economy needs and can support.

Besides:

> Empty lots, parking lots, and other unimproved land would pay more tax.

Believe it or not, we need ranches and farms. Taxing them out of existence would be bad.

> The idea is that you tax the land only as if it was being used for best use - so that every property is encouraged to develop to maximum density.

Maximum value, not maximum density.

They may tend to be the same thing, but that's not necessarily the case.

What a nightmare that would be! (unironically)

Thank God we are far from reaching that point.

We already tax revenue and/or profits in various ways anyway.

If land is in a city, that gives it a high value and revenue earning potential due to no work or expenditure from the land owner, but ongoing costs to the taxpayer to provide the infrastructure and services that give it this value and potential. Roads, schools, hospitals, etc. these are very costly to the public but increase the value of nearby land.

The land value tax gives the owner an incentive to invest in improvements and get the maximum economic return on the land, and dissincentivising sitting on land in order to benefit 'for free' from it's improving value. So it's about making sure the public gets the maximum benefit from it's investments that improve the value of the land. Taxing improvements directly would have the opposite effect.

Always wondered how this works on modern times, where income per square foot varies wildly per industry.

Let's say because of rising taxes, a bakery or a shop has closed and a lawyers office has opened in that spot. Who exactly us "the public" in this case and what are the "maximum benefits" that they are getting from that change? Because if I actually lived nearby, I sure wouldn't be happy about my favorite vakery/shop being closed.

And don't say "increased tax base" - for that, you can tweak existing system and increase income taxes so you collect more from the lawyers while still keeping bakeries alive.

Density.

The current property tax system makes it more likely that (in your example) the law firm will push out the bakery. Because improvements are taxed adding more commercial space means paying more taxes, which makes it less likely to happen.

With an LVT, expanding the building (up or out) to add a second store/office) is cheaper so you’re more incentivized to provide space for both

Income per square foot in _rent_.

The important thing isn't that the lawyer's office makes more money. That's just correlated with the important thing, which is that the lawyer's office is willing to pay more rent. Note the lawyer isn't operating a charity for property owners here; they're only going to pay as much for rent as required for the market.

If prevailing rent is high enough such that only lawyers get retail square footage, then clearly property should be taxed as such. That's the value of the land. But then more development will happen, eventually reaching an equilibrium.

Saying rent isn't quite right. These land value taxes are usually taxed on potential as zoned. Empty land isn't bringing in rent. The whole point of these land value tax schemes is to tax it based on its highest zoned value so you force (re)development of the highest use case.

> Let's say because of rising taxes, a bakery or a shop has closed and a lawyers office has opened in that spot.

Taxes will rise in neighborhoods where improvements have happened. To determine the neighborhood is improving, we need a metric, for instance traffic. We expect the donut shop in an improved neighborhood to see increased traffic and more sales. If traffic doesn't increase then land value hasn't actually increased and the taxes have been applied inappropriately. Maybe we can come up with a better indicating mechanism for land value, I admit I have not read Henry George's work.

In your example, bakeries usually don't own land in highly desirable cities, they lease it from the owner. I think that's fine. The incentives here are against huge capital behemoths that can buy land and afford not to develop it, costing the cities in potential consumer revenue, population growth, broken windows theory, etc. Lawyers might own the building and be able to afford the tax. I think it's fine to expect bakers cannot afford buildings in very expensive cities (unless you're some luxury brand). If owners are incentivized to develop and lease their properties, there should be more supply for a cheaper rental market.

"but ongoing costs to the taxpayer to provide the infrastructure and services that give it this value and potential"

Empty land isn't using any of those things. Any future improvement would use those things and be taxed accordingly. If you're concerned about infrastructure costs, the. You want to use a per capita tax or the current property tax that taxes the improvements (where people work or live) since they are using the infrastructure.

We already tax utility users based on “usage”, but the cost to provide service is more like y=mx+b with a very large b and small m. Charging based on usage is just a way to allocate the large fixed costs amongst your users. (Electricity may be the exception with higher variable costs, but still significant fixed costs.)

But even if you’re not using them, the utility services (water, power, sewer) still have to pass by the property. Power lines and poles are there, they have to be maintained, your water main can’t be leaking, etc. There are real costs to do all that.

> Empty land isn't using any of those things

It doesn't have to use them to benefit from their proximity. Land in the middle of a barren desert is usually worth far less than a similar piece of land near a populous city.

Sure, your point? The government benefits on the higher sale tax revenue too. It's only a true benefit when something is realized. The densest areas of many cities are seeing decreases in population, so maybe that infrastructure isn't the main driver of value.

The point of a land value tax is to incentivise that realisation. In prosperous cities the reduction is inner city population is due to land being used commercially, and maybe up to a point that's fine. You can always adjust the value tax based on type of actual usage. The important thing is that it's used efficiently in a way that benefits the community.

"In prosperous cities"

Yeah, but we are seeing that many cities are not prosperous and are seeing population reductions. You can't will the creation of value. Just because it gets taxed like the land will create value doesn't mean it actually will.

"in a way that benefits the community."

These taxes don't guarantee this at all. There could be any number of uses, many of which could be detrimental or wasteful (and this will vary based on perspective as not everyone wants the same thing).

So we're paying for all those facilities, infrastructure and so on, and it's going to waste. That's inefficient. We want that land being used productively, contributing to the economy, making profits which pay taxes, to pay for these services.

You're leaving out the usage/ capacity side. If you actually fill all the empty spaces, you'll need to add additional facilities. Current facility usage is usually near capacity already.

That's not universally true. The sewer system in my town was overbuilt in anticipation of a development that fell through. That's why sewer / water bonds are typically up for vote separately from property taxes because there's such an interplay with development.

That's still cheap when you're looking at the whole picture. Sewer is much cheaper than police, EMS, road construction/maintenance, schools, etc.

Sure, to some extent, but overall it's clearly in our interests to have that land be used productively. If we want some land to be fallow, as policy, again there are better options than it just being underdeveloped, such as park land or gardens.

"but overall it's clearly in our interests to have that land be used productively."

Sure, but the real question is what does one consider productive enough? Should we tax a single family home at the rate of an apartment building just because the zoning changed? My opinion is that this type of scheme will be abused to force some people out of their homes in the name of benefiting society. My guess is developers and apartment companies can "persuade" politicians in many areas to change zoning to force people out, possibly the "wrong" kinds of people.

If you want productive uses, then you'd be better off charging a vacancy tax to already developed property. You wouldn't be able to fill all those spaces because the physical economy has shrunk, or people don't want to live/work in a rundown area, etc. There's plenty of open commercial real estate around me. The problem is you don't have customers to support the businesses that already exist.

If you really want to micromanage property types you could always adjust the land value tax based on actual usage.

Wouldn't that effectively punish the owner for improving the property?

A tax purely on the land has the same justification as a windfall tax. The value goes up or down independently of any action of the owner. i.e. They didn't do anything to deserve the increase in their wealth. The value comes from what the land is surrounded by.

The current situation can punish the owner for improving the property, because you pay based on the overall value of your house. A new roof and siding could make your home more valuable, increasing your tax. Land value tax would make your individual changes a non-factor.

It could instead leave you on the hook for increases in the desirability of the neighborhood which you have no say in. So it would mean that homeowners get screwed even harder if their neighborhood gets gentrified.

The steelman for it is that society should incentivize denser development of more desirable land, by disincentivizing maintaining sparse development of it.

> screwed even harder if their neighborhood gets gentrified.

Meaning, their land value and therefore wealth has gone up. Many people would love to be "screwed" like this, and in fact very hard at getting into the position amenable to "screwing."

Their wealth goes up but they can only access that wealth by selling. And in the meantime, if they don’t sell, simply living on the property becomes increasingly expensive. So yes, they won’t be walking away with nothing, but no, I can’t imagine the too many people enthused about the idea that a home that was affordable when they bought it is no longer affordable because the neighborhood is nicer.

If the property has gone up in value, the area has clearly changed. Either they don't like the changes and can cash out their unearned windfall, or they do like the changes and can spend it.

As a class, real property owners are wealthier and have means relative to people who don't own real property. The idea that they're some oppressed underclass is ridiculous.

> society should incentivize denser development of more desirable land, by disincentivizing maintaining sparse development of it.

That is exactly what a land value tax does, in a negative way. It disincentivizes buying land in a desirable neighborhood and then doing nothing with it, waiting for prices to rise.

With capital value taxation (the other alternative), a person doing that pays less tax than someone providing buildings for people to live in or businesses to operate in. So they can do it for longer.

Because any buildings on the land are not taxed, construction is not disincentivized. Well, it wouldn't be, if permitting were not insane...

So basically own nothing and be happy? What then drives people to create any meaningful value to the economy?

Own nothing and be happy, but pay taxes on all the things you don’t own, or else.

Don't threaten me with a good time :)

Cheekiness aside, you'll find the overlap of people who support both a land value tax and a wealth tax to almost be a circle.

I don't think that's true. There's a reason many LVT'ers are called (and consider themselves) "single-taxers."

This isn't true. Land Value Tax is more regressive than wealth tax. There is a large contingent of Georgists who call themselves geolibertarians who basically support land value tax as the only tax that has a moral basis. They are fine with the inequality that comes from such a class (Middle class people often have 400% of their net worth in land/real estate at certain points in their lives, but high wealth people have portfolio's that are roughly 13% real estate). If you're taxing one person on 400% of their net worth and one person on 13% of their net worth that functions very differently to a wealth tax.

But property tax already exists, so apparently that regressive nature is fine. And middle class people mostly own land that’s been improved. It’s unimproved land that would be taxed much more with a land value tax. I don’t think it’s obvious which land owners would pay more or less - it depends on the structure of the tax and the relative value of their land vs the improvements on it.

The overlap vd of people with no wealth and those that want to be taxed on it would be more of a circle.

I do not support Wealth taxes. I would heartily support a land value tax.

Though popularised by George it was first rigourously analysed by Adam Smith in the Wealth of Nations.

We are, ultimately, all tenants of our sovereign. Our sovereign protects us from enemies both foreign and domestic. They do not protect our incomes, or our assets but by and large most societies do agree that it is a matter of fact that can be arbitrated in a dispute as to who owns which piece of land.

Because people choose to build upon it, but the land itself was always there regardless of human action.

The arguments for an LVT fall into both economic & moral categories. The economic argument is that the elasticity for land is zero. It's always there, always will be there, and no human action is going to change that (barring things like landfill, which are a literal edge case that doesn't matter much in the grand scheme of land area). The only economic questions are "Who owns the land?", "What kind of returns can be generated from it?" and "How is it distributed?" As a result, a tax on land has zero deadweight loss. Most taxes reduce economic activity by disincentivizing the transaction they're taxing; as a result, productive activity that would've occurred without the tax never occurs. Land is different. The land will still be owned, just by different people, regardless of how high it is taxed. That means that the government can raise revenue without curtailing economic activity.

The moral argument is that nobody built the land out of their own labor, they only conquered it. And so what right do they have to monopoly returns from its ownership? Land was commons that existed before humanity, and so returns from ownership of it should go back to the commons, in the form of funding (presumably democratically elected) government and public-sector improvements that raise the value of the land for all.

Property on the land is different, in that it is built through human labor & ingenuity, and the returns to doing that should accrue to the people who actually do it (or compensate them for creating the built infrastructure).

> The land will still be owned, just by different people, regardless of how high it is taxed. That means that the government can raise revenue without curtailing economic activity.

And this is a fantasy. Some land is marginal: Taxing it more would reduce the profit anyone could make from it to nothing, leading to empty lots that aren't owned by anyone because the last owners were delinquent on taxes to the point the local government took the land from them and is now trying to auction it off. Look at houses in Detroit being sold for a dollar for an example of this. The city makes no money from those.

https://99wfmk.com/detroits-one-dollar-houses/

> It sounds like a good deal...a dollar for an old decrepit house – but then what? Then you have to pay for all the repairs, renovations, excavation (if needed), property taxes, lawn work.....so you fork out just one whole dollar but you wind up spending no less than six figures getting it in shape. Whether you plan to keep it or sell it is a moot point. You're still out that money.

Plus:

> The moral argument is that nobody built the land out of their own labor, they only conquered it.

Turn a piece of land into a farm and say that.

That's why the tax is in proportion to the unimproved value of the land. Marginal land has almost zero value; therefore it will have almost zero tax. The landowner gets to keep rent due from any improvements (like structures) on the land.

> That's why the tax is in proportion to the unimproved value of the land.

https://news.ycombinator.com/item?id=37913341

> The idea is that you tax the land only as if it was being used for best use - so that every property is encouraged to develop to maximum density.

>Marginal land is land that has little or no agricultural or industrial value.

So by definition, the "best use" isn't very valuable. I suppose the definition doesn't strictly include residential usage, but it's not hard to see that some land is inherently less valuable for residential as well, because location matters.

In practice a LVT is usually applied statistically. You run a regression on the features of the buildings across all parcels, determine a coefficient of value for various structures and usages (eg. multifamily is worth $X in cash flow for a certain size apartment, extra bedroom in a SFH is worth $Y, pool is worth $Z), subtract out the computed value of the structure, and then smooth across all properties in a given local area to compute the value of the land alone. That's what you're taxed on.

"Tax the land as if was being used for best use" is an oversimplification. The government can't realistically know what the best use of land is, or what value that would command. That's for the market to decide. But the point of an LVT is that you're taxed on the base value of the land (as measured by how much profit your neighbors are making off it), and so only usages of the land that are better than average remain profitable. If none of your neighbors can turn a profit on it either, tax will be negligible.

> If you want to tax properties, why not taxing both the land and what is build upon it?

That's Detroit's plan.

Makes sense. I didn’t know taxing didn’t already work that way