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.
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 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.
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.
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.
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.
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.
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.
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.
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.
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.
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***.