There’s no need to limit land value taxes based on density as that’s what’s giving land its value.
With the property if the tax is say 0.2%. An acre of farmland worth in rural Idaho worth 20k would be assessed as being worth 20k in a land value tax and an acre of swamp might be worth 1,000$. Meanwhile an acre in Manhattan might be valued at 200 million, and the ~5 orders of magnitude difference in taxation would therefore apply dramatically different results.
The farmland’s 40$/year in taxes isn’t pushing anyone to sell, the swamp’s 2$/year in taxes is irrelevant for most people. But eating 400k in taxes on a manhattan parking lot is definitely pushing someone to be more productive with it.
I don't think that's an easy assumption to make. Cost of living, average income, and average plot size are very different in rural areas. I don't know Idaho so I can't speak to land value there, but I can say farmable land in rural Alabama goes for between $1k and $6k per acre depending on the land. If you really want to farm it for anything more than a homestead, 40+ acres is a minimum IMO. On the high end that works out to $480/year, but with an average income in the area closer to $25k/year that number isn't insignificant when its a tax just for the right to continue to own land I already bought. Add to that the extreme challenge of even breaking even in farming today, I'd be impressed if anyone farming 40 acres in rural Alabama could reliably turn $25k in profit each year.
Related to that while we're at it, what is the government's justification for taxing the value of land I own outright? Are we classifying land and property ownership as a privilege rather than a right? And in a rural area where land isn't changing hands as frequently and farmland can often sit for sale for months or years, how does the government accurately assess value? In my own experience land value in rural areas is only really adjusted when new structures are built or a specific parcel changes hands, but maybe that is handled differently elsewhere.
I live on around 80 acres (30 hectares?). Our land is a bit unique in the area, and in general there hasn't been a single piece of land sold near us since before the pandemic and all the economic change that came with it. I don't know how the county could possibly know what our land is worth until something similar sells on the open market again.
Well, where I live (which is not in the USA) value-based land taxes go to the municipality and the school board. They pay for municipal services I benefit from: fire, police, EMTs, road maintenance, waste collection and processing, recreational facilities like a park, a library, and a swimming pool. Also schools, but that gets more complicated since some funding for education also comes from a higher level of government which collects income taxes.
Now mind, I live of 25 ha of swampland. But I get excellent value for my land-value-based land taxes.
In the 1970's a group of people decided to setup a micro nation on a small unclaimed island. A nearby country Tonga seeing they where not protected by another state invaded, so ended the micro nation.
Ultimately it's the US governments providing a military and police force that causes a piece of paper to have any impact on who controls a piece of land. Such services require payment. Though we charge for local services ie schools, EMS based with property taxes and protection FBI/Army based on people (income tax). Historically this favors land owners, but we could swap in the future.
Obviously we could lower defense spending but that's a separate question than simply the justification for taxes.
http://www.queenoftheisles.com/HTML/Republic%20of%20Minerva....
That can't be the case; density is an amenity and is, by definition, not part of the value of the land.
Perhaps this isn't the value of the land as you would like to define it, but rather a way for local government to encourage land be put to more productive usage for everyone who lives or works nearby - without dictating exactly what that usage might be.
This allows you to avoid the logical inconsistency in what counts as land value that most proponents commit, at the minor cost that nothing you say has any meaning. What happens when I try to respond to your new point of view and you reply that, actually, you mean something different by "money" than what is normally understood?
What would you think if you voted to establish a "land value tax" and the tax that was put in place comported with the ordinary definition, instead of yours?
Yes, that's my point. Your use is incompatible with the existing use. You are not responsible for the conventional use of the phrase "land value tax", but you certainly are responsible for presenting your own ideas under the same name and acting confused when people assume you're using the ordinary sense of the phrase.
Also, in blighted areas buying improved land may actually be discouraged by LVT because of demolition costs. Thus vacant land should be more valuable than improved land. Can you resolve the paradox?
What's the paradox?
Two identical pieces of land, both pay the same in taxes, one requires more work to improve it (as it needs a tear down first). So that piece of land will sell for a lower price than its neighbor.
People argue this over things like gold as well. IMO at the end of the day its impossible to tease apart anything other than the total market value, and I think that's where you are at as well sticking to the land's total market value.
Taxation is not about fairness, it's about raising revenue for the rather discretionary spending of the government.
Meanwhile you can an awesome spot in central WV with a nice stream an a scenic waterfall perfect view for a family home. But it's not worth much because it's far from restaurants, office paying six figures etc.
Taxing the land value means there’s no incentive to own land that won’t be productive. The city or municipality can guarantee land it owns can have natural growth on it, whereas when private individuals own it the state can’t really stop the land from transforming into a parking lot.
As to how to value the land: the market decides. What is the price for the land, if you took away all existing improvements on the land itself? There is usually enough vacant similar land around where this is pretty easy to figure out.
The government can charge for services like upgraded electricity and keep the land value low, or they can bring the electricity to the land and count “lots of electricity available” as part of the value of the unimproved land.
That seems to be jumping to an extreme end, that someone owns an empty plot of land that has been cleared and destroyed to bare, dead dirt. My concern is that the same incentive pushing one to sell a pile of dirt would exist for someone owning an undeveloped, natural plot of land. My earlier caveat still exists, maybe this isn't a concern in dense areas though it would add some blockers for anyone interested in turning developed land back into a park.
> Taxing the land value means there’s no incentive to own land that won’t be productive.
One concern I have is the expectation that all land should be optimized for productivity. That goes against my own view on land, I don't think we humans have some innate right yo extract all available value. I also don't like that this likely goes against concerns of environmental impact.
> The city or municipality can guarantee land it owns can have natural growth on it
I can't quite put my finger on a better way to describe this, but it just feels off to me that only the state would be able to allocate land as parks, natural space, sanctuary, etc. Obviously what you are proposing wouldn't block anyone from doing this, but it would create incentives that make it unlikely.
> As to how to value the land: the market decides.
The market only decides on my land's value when I sell it. Until then, is the land valued at what I paid for it? If so that is at least predictable I suppose, that would be helpful so I know what my future tax burden would be.
> The government can charge for services like upgraded electricity and keep the land value low, or they can bring the electricity to the land and count “lots of electricity available” as part of the value of the unimproved land.
I wasn't just asking about how enough power gets to the land - not sure why the government would be responsible for that unless government and industry merge. I was meaning to ask with regards to the environmental impact angle. Taxing to create incentives to build as high-value improvements as possible would inevitably lead to a drastic increase in a locality's energy requirements. Where does it come from, and how do mitigate the environmental impact?
If anything it's not extreme enough. Consider how much area in city downtowns is given over to paved-over parking lots that are just left to sit there rent-keeping for years. That's worse than just dirt fields, because at least the dirt fields can support life!
> My concern is that the same incentive pushing one to sell a pile of dirt would exist for someone owning an undeveloped, natural plot of land.
...if the taxes are high enough to incentivize them to sell.
If you have an undeveloped plot of land in a city where land taxes are high, you should be incentivized to either sell that to someone who will make use of it, or donate it to the city to serve as a public park, rather than getting to have your own private green space somewhere that space is at a premium for everyone else.
Why must land goes used? Is the assumption that we must fully utilize every inch of land in a city, regardless of what people living there or the land owner wants?
Building on as much usable space in an already high density area can and has had downsides that seem to get overlooked in this thread. Higher density means more traffic, higher demand on infrastructure and utilities, and the need to bring in even more resources from outside the city and send out even more waste for someone else to deal with (to name a few).
This assumption that taxing land high enough to make sure that none of it is left undeveloped unless the city owns it is begging for runaway problems, unless these other considerations are factored in. Doing so almost certainly means not having the tax, as the goal of more dense development competes with the other concerns.
If you're not doing anything with land in an in-demand area then it creates an incentive to sell it, yes - that's pretty much the point. Realistically, undeveloped lots in in-demand areas (i.e. cities) are not nice natural landscapes - they're dirt yards at best. It takes a lot of work to maintain a park, and frankly putting a tax on land is more likely to return some of those unused lots to the city who could then open a public parks there, than discourage someone who was maintaining a park privately.
Even in the country, land that's completely untended is rarely pleasant, although in places where land isn't worth much, a tax like this won't make much difference either way.
> One concern I have is the expectation that all land should be optimized for productivity. That goes against my own view on land, I don't think we humans have some innate right yo extract all available value. I also don't like that this likely goes against concerns of environmental impact.
The idea that someone owns land like chattel and can do whatever they want with it is surely worse from that point of view. If you're taxed on the value of your land, you're incentivised to use as little as possible, and leave the rest for the public or nature - e.g. if you can build a factory in half as much space, you've halved your tax bill.
> The market only decides on my land's value when I sell it. Until then, is the land valued at what I paid for it?
No, there would need to be an assessment process, although perhaps backed by a market mechanism (i.e. if you think the assessment is too high you can ask the government to buy you out at that amount, or some such).
> Taxing to create incentives to build as high-value improvements as possible would inevitably lead to a drastic increase in a locality's energy requirements.
It doesn't create a new incentive to build more unless the more you're building is valuable. You can densify by building more in the same space yes, but you can also densify by building the same in less space, and that's what saves you money so presumably that's what people will do (after all, if building more was profitable, wouldn't people already be building more)? For the same amount of economic activity, you'll require the same amount of energy, just in a smaller space, which again is likely to be more efficient and better for the environment (the same number of factories in half the space means fewer cables, less transmission losses etc.).
Now of course if you make business more efficient then maybe you end up with more business, but isn't that a good thing? Again it only makes sense to build more if there's demand for it - otherwise you're better off staying small and cutting your expenses. Land value tax might even help encourage people to not expand prematurely - if doubling the size of your warehouse means paying more tax, maybe you'll put it off a few years until you're actually going to use that space.
This seems like a really dangerous justification, and frankly one that would be a complete no-go for me. You just made it clear that the goal, at least in part, is to make a tax so high that it more often goes unpaid and the city can take the land away from the land owner. They might as well skip the game and claim eminent domain.
Have you ever lived near an empty lot or abandoned building in a city? Yes, I want those going back into circulation, whether via the owner doing something with them, selling them to someone who will, or it falling to the city. You do know we're in a housing crisis? There simply isn't enough space to go round, something has to give; I'd rather see those absentee landowners who don't care enough to do the minimum lose their stuff than have hard working people living n to a room like we do now.
Only if the city/municipality has money to do so. A degenerate example is where the city/municipality own all of the land and thus has no real estate tax base. You may think that this is ridiculous, but check out some blighted areas around the US and you'll see plenty of local governments that have a very shallow real estate tax base reminiscent of the "ridiculous" argument.
> Is there a clear way to guard this system from building higher and higher economic centers
On the social side: In the current system, poor people are forced to live in ghettos and spend 2 hours a day on a round-trip commute. It's too expensive to live near their work. If we had a land tax, the rich enclaves near the city are now financially incentivized to open up their public schools and areas to poor people by building vertically. The current incentives at play make this extremely difficult.
On the environment side: We will have less sprawl, and by extension less environmental damage. It requires less concrete, less energy, less roads, less driving, less shops, less train lines, etc, to serve a dense area, on a per-capita basis. You are however correct that natural reserves are a public good, technically speaking, and an efficient land tax system will need to account for public goods in its implementation. This is an important implementation detail that I'd defer to economists.
> Related to that, what's the solution for infrastructure and resource requirements?
However, bonding out projects does spread the expenditure in time, more directly charging the future users for infrastructure they use. Sure you could recoup the costs through user fees, but then you're effectively borrowing money from the current tax base, so "bonds" by another name.
On the social side: the gamble is that social growth will outpace the increased economic pressure. Meaning, you need the new vertical growth to create opportunities faster than it increases prices further in the area. A land tax alone wouldn't pull people out of poverty, create affordable housing, or open up public school. Those are all just potential avenues for the city to develop, not guarantees.
On the environment: cities aren't isolated enclaves. Resources needed to build, maintain, and feed the city all come from the outside world. The more you build up the more steel, concrete, glass, energy, etc is needed. The more people packed into the city the more food you need to ship in and waste you need to ship out.
One million people would need about the same amount of food/energy if they lived in 1,000 sq. mi. as they would if they lived in 100 sq. mi. But the cost per person to house and transport people in a dense city is lower than in a sprawling one.
There are a lot of ill defined and bizarre things here. What is "economic pressure"? I have never heard such a term before. Why would there be "price increases" (inflation)? I have never heard anyone serious posit a link between density and inflation. It's the exact opposite because economics of scale and scope can deliver services more efficiently. Why shouldn't a land tax contribute towards "affordable housing" when the economic logic predicts it will have a deflationary impact on housing costs? Why do you think I'm saying that a land tax will "open up [new] public schools"? I said there would be a change in incentives away from excluding poor people from your local school catchment area, which has historically driven local resistance to upzoning. Honestly, it sounds like you should read up on basic economics before you form these opinions. The subject matter is primarily economics and such basic knowledge is a prerequisite to understanding the rationale behind one tax or another.
> The more you build up the more steel, concrete, glass, energy, etc is needed.
No, this is forgetting that you have the same number of people in either scenario. It takes more resources to build 1000 single detached homes (and associated roads, train stations, shops etc) than 10 apartment buildings with 100 homes (with less roads, less train stations than the former scenario).
Price increases are possible here because it all depends on what is built on the currently vacant lots, or on lots that are cleared when the old buildings no longer make economic sense with the new tax. The example given early in this thread was a car wash versus a new biotech facility. A new, expensive biotech facility wouldn't help with affordable house at all but it would bring in more individuals with higher salaries. Prices could also go up if new construction further increases the city's density or population - more people means more demand and higher prices unless supply increases faster.
Economies of scale aren't a given simply because a new land tax would change building incentives. Economies are much to complex for that and can't be boiled down to a single lever or knob. Changing one thing can have a much different outcome than predicted.
I'm not sure why you would expect a land value tax to have a deflationary impact on housing. There's no direct link between a land value tax and an increase in affordable housing, meaning we can't assume there will be more affordable housing created. What we do know is that land owners now have a new tax to pay, and if you are renting out property on the land you will pass a large portion of the new tax onto them in the form of rent increases. This is literally a concept covered in the intro to economics course I took 15 years ago, if you aren't aware of how businesses handle new taxes I'd recommend you read up on it before pushing too strongly for a new tax.
[1] https://www.smartcapitalmind.com/what-is-economic-pressure.h...
So my main concern related to destruction of natural land is that there is a disincentive to keep land natural if you have to pay the tax anyway. In dense areas that wouldn't be nearly as much of an issue, but it would still mean that parks would be an unlikely occurrence and likely only feasible when run by the government. I assume most parks in these areas are anyway, so the loss may be limited to smaller neighborhood parks, courtyards, etc.
Finding a clear way to draw a line between what area is dense enough to be taxed and what isn't seems like it would be an ongoing challenge. Not only would you have to define specific measures and thresholds, you would have to eventually move the line as the city evolved. Any thoughts on his this would be done, or already is in areas with a similar tax?
When it comes to "best use" of a piece of land, who decides this? Does that measure really just boil down to whatever spends the most capital to build on the land, without regard for economic or social value, environmental impacts on the land and surrounding area, etc?
It seems like this would lead to a lot of economic and social impacts that aren't necessarily desirable. Is there a clear way to guard this system from building higher and higher economic centers, inflating incomes and forcing even more of a wedge into the wealth gap? In you example, a car wash would be able to employee people at a lower once level in the area where a much more expensive biotech building would mostly employ highly educated people who bring much higher price pressure to the area. Can that be avoided with a tax that incentivizes building more expensive, and likely more technical/specialized, businesses on every plot of land?
Related to that, what's the solution for infrastructure and resource requirements? Large biotech facilities would likely require more power, transportation and delivery access, maintenance, and building materials. If we are simultaneously concerned with environmental impact, creating incentives to build much larger building with much higher resource requirements flies in the face of this. Would we be creating a situation where businesses are pushed to use more energy, concrete, steel, and glass partly because a tax makes smaller businesses less feasible?
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Well that ended up being a bit of a brain dump with questions mixed in. If you made it this far, thanks for playing along!