LVT should be incorporated with an occupancy tax, it's the only fair way to fund government services. If I own a farm, and my neighbor sells their farm to turn into a housing estate with 99 single family homes, then it is fair to say that my land is now more valuable and I should pay more to keep you it, but it isn't fair to say that my taxes should rise to cover half of the local budget just because I own half of the land in region
This is how every argument about LVT goes once people start thinking about the details: They start thinking of various edge cases and exceptions that highlight how it's not as fair as proponents claim, until eventually we're back to the current taxation systems where land value is part of the tax, but other factors are also considered.
An LVT would need relatively few exceptions and rules in order to function well and is unavoidable by design. What we have right now for most taxes is the exact opposite of that - e.g. with sales, income taxes, etc.
Mostly there are just pearl clutchers complaining about how elderly cash poor people sitting in large old houses on expensive land they've lived in for 20 years would be financially nudged into downgrading.
The real roadblock for LVT is not in the slightest bit technical, but simply that it would undermine a lot of privately held oligarchic wealth.
Land owners make up a plurality of voters. In some cases those land owners are retirees living in a house they bought 45 years ago others are people who own 500 houses.
The land value tax “equally” punishes them for their inefficient land usage. But at some point we need to pay our fair share on taxes and the later group hiding behind the former group is how you end up with California’s dumpster fire of a housing crisis.
I agree with this. I really do not know why in the hell one person or entity owning 500 houses wouldn't pay more in taxes for the 500th house than the 1st house. You pay more income tax on the 500,000th dollar than the first dollar. Land is taxed regressively in favor of oligarchs.
First house is claimed as homestead and gains on sale aren't taxed, but the yearly property tax should work similarly.
Where I live homestead status affects yearly taxes as well.
This is a negative for anyone who is renting since they now have to pay more rent to cover those taxes. (taxes set a floor on rent long term, though of course tax is only one factor in rental prices)
"Mostly there are just pearl clutchers complaining about how elderly cash poor people sitting in large old houses on expensive land they've lived in for 20 years would be financially nudged into downgrading"
I wonder if you wouldn't be clutching your pearls if you were being forced (sorry, "financially nudged") out of your home of 20 years?
These cash poor elderly folks aren't exactly "oligarchic".
“Beat it, grandma! We have better ideas on how to use the land and house you raised a family in!” is unlikely to be a winning campaign platform. (Thankfully.)
You may be happy running an economy on vibes, but it makes no sense for old people who have a house intended for them and kids close to their work to remain there when their kids have moved out and they've retired. The fact that you can't afford to live somewhere isn't some crime. They can go move somewhere nicer and more suitable for them, freeing up that land for densification (or just proper occupancy).
Why do you think it's up to you to decide what's more suitable for someone else? Where do you get that right?
The problem you're running into is that it doesn't matter if it makes sense to you what these people want to do with their private property. What you think is "proper occupancy" doesn't matter, because we have private property rights.
You advocating for policies that infringe on that right is an attempt to exercise power over these people that you have no right to, whether or not you hide behind some collective sense of what's best.
Currently renting retirees are forced out already if they dont pay their rent.
Can you confirm that you wish to see this practice completely banned (i.e. no payment of rent) to prove that you're not taking a two faced stance on this issue?
What we are talking about is different - a tax incentive to move to somebody who has benefitted from a large capital gain.
I’m fine with (and in support of) market forces to let grandma decide that it’s worth selling her home; I’m not okay with using government mechanisms with no market reference points to price her out of it. (Raise everyone’s property tax rate and reference appraisals to market sales? Fine. Determine that her specific piece of land is worth $X despite no comparison of open-market land-only transactions? Not fine.)
From that, it’s fair to conclude that I’m ok with renters having to pay market rent, regardless of their age or matriarchal status.
>I’m fine with (and in support of) market forces to let grandma decide that it’s worth selling her home
Ok. Sounds like you are in favor of market forces driving grandma on to the street when she rents but not in favor of market forces driving grandma to sell up and move to a smaller cheaper property.
Maybe the pearl clutching about poor grandmas was a little overstated.
>Determine that her specific piece of land is worth $X despite no comparison of open-market land-only transactions? Not fine.)
LVT is calculated and imputed using open market transactions. If unimproved property values all jump in an area thats coz the land value went up.
Show me a way that LVT can applied referencing open market transactions for unimproved land in a developed area and I’m interested to learn more about it.
Grandma can decide to sell her house on the market if the property taxes get too high. That’s good. She shouldn’t be able to be targeted by the city for her land value alone increasing despite no or weak supporting comps.
LVT is theoretically good. My problems with it are practical ones.
What a lot of jurisdiction do to deal with this situation is to allow elderly folks to accrue what is essentially a lien on their house for the property taxes going up more than a certain amount.
This way these folks don't have to pay much more than before, can stay in their house and the county gets its share when these people die or move out.
In this scenario your property value would go up and with higher taxes you'd be incentivized to sell for a profit and move your farm farther away in a different zoning.
The incentives you've presented are correct. However, my friends from rural areas always complain about rich outsiders moving in, buying everyone else out, and raising the cost of living. If LVT is just a way to "[incentivize farmers] to sell for a profit", why would people in these areas support LVT? I'm afraid it would just turn into another partisan issue, regardless of merits. And I like LVT!
Perhaps a solution is to create "LVT Zones" in metro areas, and perhaps replace current residential / commercial / agriculture / industrial zoning with them?
And LVT that replaces zoning basically just lets the highest bidder do whatever they want with the land. An LVT that augments zoning could perhaps be tenable but I would argue that in VHCOL areas there's already something of an LVT in place. My SFH in San Jose is assessed as having equal value for the 8800sqft as it is for the house built on it. What I wonder is how the actuaries and policy makers responsible for assessing property values for county taxation actually do that, and how much of the formula is already based on land value.
Let's be real: if this scenario unfolded today, your land would be worth more as housing/infrastructure/commercial/etc. than as farmland, some real estate developer would buy it from you, and you'd make a lot of money without having to do anything. If there was a 75% LVT then you'd just make less money.
The reason I brought up this argument is because this exact scenario is happening all over the UK and Ireland right now. One of the houses my wife and I looked at purchasing was built about 20 minutes outside Belfast on old farmland that was converted into a new housing estate. The farms surrounding this housing estate have been incorporated into a new village.
Isn't this case just revealing the opportunity cost of keeping the land as a farm in that location? For example, what incentive is there to buy an acre of downtown Miami and convert it to farm land? Should we lower that acre's property tax now?
This goes back to my top-level comment: the assessment of your property should not be based on sales of nearby property but on observed rental values. Just because your neighbor has sold their plot and the new owner has the intent to build 99 houses on is so far inconsequential ... we have yet to observe any actual rent increases and likely will not until those houses are actually constructed and rented/sold themselves. Only then can we accurately observe the potential rental value of your adjacent land.
It's a good point.
Usually farms are on land classified as agricultural and residential buildings are on residential land. It's easy to design a system that values residential land higher (because it's in fact more valuable if you can build residences on it). You wouldn't pay half the taxes until you convert it to residential at which point you should in fact be paying half the LVT (maybe with a few years leeway).
Isn't this covered by zoning? But it also just proves a point that you can't smart regulate the market to do everything. Sometimes communities just have to make decisions about what they want the land to be used for and create the according rules and do the investment themselves.
