{"items": [{"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659467719282", "anchor": "fb-659467719282", "service": "fb", "text": "Jacob Shwartz-Lucas Nate", "timestamp": "1400100881"}, {"author": "Vivian", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659467799122", "anchor": "fb-659467799122", "service": "fb", "text": "Raven Hetzler?", "timestamp": "1400100954"}, {"author": "Nate", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659468452812", "anchor": "fb-659468452812", "service": "fb", "text": "You raise good questions, and there are good answers, but I don't have time at the moment to explain. So for now, I'm just writing myself in to get comment notifications.", "timestamp": "1400101443"}, {"author": "Phillip", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659473338022", "anchor": "fb-659473338022", "service": "fb", "text": "This seem to ignore that cities and towns determine their budget and proportion it to aggregate property owners by some value proportion. Your taxes only go up if the cost of city services go up. Value is a way of apportioning a cost.", "timestamp": "1400104445"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659478951772", "anchor": "fb-659478951772", "service": "fb", "text": "@Phillip: Could you assume for simplicity that we're talking about a national tax? Many LVT proponents want to make it the only tax.", "timestamp": "1400106092"}, {"author": "Rob", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659496611382", "anchor": "fb-659496611382", "service": "fb", "text": "In practice it would be unviable for many varied land owners to coordinate to control any tax increases. So unless one person owns a huge continuous area it won't be very distortionary, as the higher tax is an externality.

There's an essay by Henry George describing a growing frontier town and how neighbours get rich because of the work of others driving up their land values.", "timestamp": "1400113346"}, {"author": "Phillip", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659508342872", "anchor": "fb-659508342872", "service": "fb", "text": "Jeff Kaufman There will be, as you describe, the network effect that increases land's value by improving its desirability. Another observation would be that we can see that improvements don't always improve the value of land, hence the \"tear down\" house that we see in wealthier communities.", "timestamp": "1400115945"}, {"author": "Phillip", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659508477602", "anchor": "fb-659508477602", "service": "fb", "text": "While in some sense this tries to avoid penalizing investment, there will still be the effect you describe, and will penalize the improvement in the value of the land.", "timestamp": "1400116018"}, {"author": "Luke", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659633252552", "anchor": "fb-659633252552", "service": "fb", "text": "Land *value* isn't fixed, it changes due to the presence of capital (on it, around it, connected to it with a railroad, etc.) as well as infrastructure and population.

Land *itself* -- the basic geometric thing -- is fixed in supply. You can create all the floating islands and space habitats you want, and it will never increase the number of buildings of given dimensions that you can fit *within* a 100-meter radius of any given point. This in turn puts hard limits on various physical variables affecting productivity and network effects.

Since the land in any given area is fixed, land owners that underutilize their land (developing it less, etc) represent relative dead weight for the region. They produce less, and reduce the maximum efficiency of other businesses around them. But if you increase land taxes *without* taxing capital, you make it relatively unprofitable *not* to develop that land.

So land value may go down somewhat when you first enact an LVT (i.e. if you aren't doing anything useful enough to merit holding it, or can make the same money elsewhere at lower taxes, you now have incentive to sell), but in the end it is buoyed back up by the increased productivity of what *is* being done with the land (i.e. someone with an ambitious project well suited to the location must have found a way to overcome the tax disadvantage).

Rather than \"distortion\", what we should see is fairly unform pressure in favor of greater development expenditures and more dense kinds of capital. (Negative distortion might be a way of putting it.) Taller buildings, more parking garages, that sort of thing. Because of the efficiency gains this implies, I suspect we could actually be better off taxing land value and *burning* the dollars obtained therefrom, all else equal (i.e. keeping the current tax system in place and making this an additional thing) than not.", "timestamp": "1400178574"}, {"author": "Cameron", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659666111702", "anchor": "fb-659666111702", "service": "fb", "text": "\"LVT proponents are using two different senses of \"unimproved land\". One sense would be the value of the land if all buildings everwhere disappeared.\"

Nope. It is not in the sense that ALL BUILDINGS ELSEWHERE disappear. That makes no sense at all. It is really on the improvements on that particular parcel.

It is probably best to think of land value as location value. That helps some people think more clearly.

\"the kind of land value that LVT proponents would like to tax may be the unimproved value of your lot but it's based on the improved values of adjacent lots. \"

Correct.

\"what if I had kept my city as one single giant lot, leasing sections out instead of selling them? Then the \"unimproved value\" of my land wouldn't go up as the city was built, would it?\"

Yes it well. This same aggregation problem happens all the time with things like shopping centres. Individually the shop spaces are worth a lot, but only conditional upon the existence of the rest of the shopping centre. So as a whole the shopping centre is worth nothing?

You've forgotten your previous point - that the land is valuable not because of the improvements on it,but those surrounding it. It's locational context if you like.

So the shopping centre site as a whole gets is value as follows. Say the buildings burnt to the ground, what would the site be worth then? What would the market pay for the empty site? Logically, they would pay the value of the shopping centre less the cost of reconstruction.

In you whole-city example, the same applies. What would someone pay for the city? What does it cost to rebuild the city (replace improvements). Subtract that cost from the city's market value and there's you site value.", "timestamp": "1400198272"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659667299322", "anchor": "fb-659667299322", "service": "fb", "text": "Cameron: \"It is not in the sense that ALL BUILDINGS ELSEWHERE disappear. That makes no sense at all.\"

Unfortunately this sense, the one we both agree is unworkable, is the only one which the theoretical claims about supply and demand apply to. That's the only sense of land value in which supply is fixed and so taxation can't change supply.", "timestamp": "1400199068"}, {"author": "Cameron", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659667409102", "anchor": "fb-659667409102", "service": "fb", "text": "I have no idea what that means. The supply (quantity) of land is fixed. The value is not. The tax is on the value. While it will change the value because of the actions of other in nearby locations, the quantity of land available will not (indeed cannot) change.

Maybe you need to explain exactly what you believe to be the theoretical claim?", "timestamp": "1400199215"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659669809292", "anchor": "fb-659669809292", "service": "fb", "text": "Cameron: \"explain exactly what you believe to be the theoretical claim?\"

The economic claims in
http://en.wikipedia.org/wiki/Land_value_tax#Efficiency

Specifically that an LVT creates no deadweight loss because the supply of the thing being taxed is fixed.", "timestamp": "1400200981"}, {"author": "Cameron", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659669889132", "anchor": "fb-659669889132", "service": "fb", "text": "So how is that inconstant with you point? The supply curve is vertical for each lot no matter where the demand curve intersects it", "timestamp": "1400201051"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659766630262", "anchor": "fb-659766630262", "service": "fb", "text": "@Cameron: \"The supply curve is vertical for each lot \"

The supply curve is only vertical for raw land, not land value. With the (admittedly extreme) example of building a city in a desert, you can do things to land you own that result in paying more LVT. The higher the LVT rate, the less you're willing to do that, which means a normal non-vertical supply curve.", "timestamp": "1400252011"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659766745032", "anchor": "fb-659766745032", "service": "fb", "text": "@Luke: \"Rather than 'distortion', what we should see is fairly uniform pressure in favor of greater development expenditures and more dense kinds of capital.\"

This is a great argument, and is part of why I like LVT.

I just wish we could get LVT advocates to stop with the claim that \"the total amount of land is fixed\" implies there will be a vertical supply curve.", "timestamp": "1400252128"}, {"author": "BDan", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659769070372", "anchor": "fb-659769070372", "service": "fb", "text": "In any case, the history of the city of Boston (and several others) demonstrates pretty clearly that the supply of land is *not* fixed when new land will be more valuable than the cost to create it. (I suspect this doesn't actually affect the arguments here, though.)", "timestamp": "1400253739"}, {"author": "David Chudzicki", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659769080352", "anchor": "fb-659769080352", "service": "fb", "text": "It doesn't seem like a bad approximation, Jeff. I can sympathize with LVT advocates choosing not to express this nuance, or even choosing not to bother understanding it.

As simplifications go, this isn't such a bad one.

(I guess Wikipedia is less forgivable, though.)", "timestamp": "1400253742"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659769225062", "anchor": "fb-659769225062", "service": "fb", "text": "@David: \"It doesn't seem like a bad approximation\"

Except if we switched to a \"Single Tax\" version of LVT there would be a really strong incentive to cut your land values by grouping parcels. So instead of a group of shops next to each other you might push towards malls renting space out.", "timestamp": "1400253881"}, {"author": "David Chudzicki", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659769429652", "anchor": "fb-659769429652", "service": "fb", "text": "Maybe we'd still value the shops separately? (But then we get the distortionary mall-creation disincentives you're worried about.)", "timestamp": "1400254067"}, {"author": "David Chudzicki", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659769559392", "anchor": "fb-659769559392", "service": "fb", "text": "Maybe disincentivizing private cities (etc.) is actually a benefit of that system.", "timestamp": "1400254204"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659769888732", "anchor": "fb-659769888732", "service": "fb", "text": "@David: It incentivizes building private cities where one entity owns all the land.", "timestamp": "1400254423"}, {"author": "David Chudzicki", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659769973562", "anchor": "fb-659769973562", "service": "fb", "text": "I mean my version where the pieces are valued separately.", "timestamp": "1400254491"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659769998512", "anchor": "fb-659769998512", "service": "fb", "text": "@David: how do we determine what the pieces are?", "timestamp": "1400254514"}, {"author": "Neil", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659770118272", "anchor": "fb-659770118272", "service": "fb", "text": "It doesn't matter. Lay down a grid of 1 acre plots, whatever.", "timestamp": "1400254589"}, {"author": "David Chudzicki", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659770148212", "anchor": "fb-659770148212", "service": "fb", "text": "I dunno. Lots of details to work out. (Neil: It probably does matter.) Maybe they're not really work-able out.", "timestamp": "1400254617"}, {"author": "David Chudzicki", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659770218072", "anchor": "fb-659770218072", "service": "fb", "text": "My point was just that if the oversimplification helps LVT get a spot in the public discourse (which I suspect is true), then I'm all for it. Jeff, I didn't mean to discount the value of raising these complexities, though. Sorry about that. Good post/discussion.", "timestamp": "1400254695"}, {"author": "Neil", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659770228052", "anchor": "fb-659770228052", "service": "fb", "text": "I don't know, I think you'd get a pretty good approximation.", "timestamp": "1400254698"}, {"author": "Luke", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659773955582", "anchor": "fb-659773955582", "service": "fb", "text": "I can't see how private ownership of a city provides any real advantage. The land value still goes up as far as I can tell, i.e if you *were* to sell a section it would have all the positive externalities of infrastructure, capital, and population. You'd end up being taxed on that.", "timestamp": "1400257652"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659781340782", "anchor": "fb-659781340782", "service": "fb", "text": "@Luke: \"I can't see how private ownership of a city provides any real advantage.\"

It really depends on the particulars of how you set up the tax. Are you taxing the value of a given sq foot if:

* That sq foot and all other land were cleared of improvements? (probably not)
* That sq foot and any other land that's part of the same parcel were cleared? (maybe; this is what insurers care about)
* That sq foot and some kind of buffer around it independent of the parcel size?
* That sq foot alone? (probably not)

When you say \"if you *were* to sell a section it would have all the positive externalities of infrastructure, capital, and population\" it sounds like you're talking about an LVT based on one of the last two?", "timestamp": "1400262608"}, {"author": "David Chudzicki", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659784923602", "anchor": "fb-659784923602", "service": "fb", "text": "Weird nuances are also introduced by zoning: \"[If you] simply take the restrictive zoning as an unchangeable given [], urban buildings are actually a lot like land. The supply of buildings is essentially unresponsive to a change in financial incentives. Under the circumstances even really high taxes on buildings won't lead to less building, so you might as well jack them up.\"

http://www.slate.com/.../land_value_tax_it_s_great_but_it...", "timestamp": "1400264435"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659785861722", "anchor": "fb-659785861722", "service": "fb", "text": "@David: \"... The other is to reject the notion that restrictive zoning is unchangeable. If a city wanted to have robust population growth, affordable housing, and lots of construction sector job opportunities then it could easily change its zoning code to allow for more housing. Having upzoned for density, prosperity, and environmental sustainability, it would find itself in a situation where a land value tax is much smarter than a traditional property tax. But for the already-built-up, already-expensive, restrictively-zoned cities of America you need to fix your zoning first.\"", "timestamp": "1400264889"}, {"author": "David Chudzicki", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659786415612", "anchor": "fb-659786415612", "service": "fb", "text": "Yeah.", "timestamp": "1400265240"}, {"author": "Luke", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659790452522", "anchor": "fb-659790452522", "service": "fb", "text": "I'm not really sure what system would be optimally used to assess it. However, my instinct is to try and set up the tax to *not* give advantage for simply having more contiguous land ownership, as that does not necessarily imply more efficient use of the land. Having ten apartment complexes next to each other as a single parcel with a single owner is not obviously better for the city than ten apartment complexes distributed to optimal locations, or together but with different owners. Also, the owner is already receiving nominal efficiency gains from clustering their business gains due to reduced positive externalities, so giving them a tax advantage would not have much of a point.", "timestamp": "1400267794"}, {"author": "Cameron", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659806415532", "anchor": "fb-659806415532", "service": "fb", "text": "Supply and demand curves represent quantities. The x axis is quantity. the y axis is price. So I don't really get your point. A vertical supply curve means that supply won't change in response to price. And no you can't 'do things' to change the land (location) price.", "timestamp": "1400276259"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659850097992", "anchor": "fb-659850097992", "service": "fb", "text": "@Cameron: \"And no you can't 'do things' to change the land (location) price.\"

Let's say I take some random land outside of town and build a mall of independent buildings. Does that change the land price? What if I sell off the buildings as separate plots of land? Don't they now have higher land prices?

What if I do transit oriented development? I buy some land, build apartments on it, build a subway out to it. Isn't the land served by the subway more valuable than before?", "timestamp": "1400294582"}, {"author": "Cameron", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659857807542", "anchor": "fb-659857807542", "service": "fb", "text": "\"Let's say I take some random land outside of town and build a mall of independent buildings. Does that change the land price? \"

No.

\"What if I sell off the buildings as separate plots of land?\"

No.

\"What if I do transit oriented development?\"

No.

You need to think about how land price is actually calculated. For a vacant site the value is the capitalised revenue stream from its highest value use minus the cost of construction that use. Hence, the vacant lot nearby some transit station is worth the same with or without the constructed building.

In your first mall example, how can building the mall change the land value?

You go out to buy some land to build a mall. The seller knows roughly what it will be worth to you and can extract all the value up to the capitalised revenue from the mall minus construction cost. If the don't capture that, they won't sell and will build the mall themselves to make the profit they would have otherwise given away to the buyer.

\"I buy some land, build apartments on it, build a subway out to it. Isn't the land served by the subway more valuable than before?\"

Yes, the subway enhances the value of the location that is now more accessible. But isn't that an investment by someone who is not the landowner? Isn't a subway, by definition, external to the location being accessed?", "timestamp": "1400301175"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659863880372", "anchor": "fb-659863880372", "service": "fb", "text": "@Cameron: \"Yes, the subway enhances the value of the location that is now more accessible. But isn't that an investment by someone who is not the landowner?\"

What if the same entity builds subways and housing? This is one funding model for public transit: make your money back by capturing the increase in value of the land around the subway stops.", "timestamp": "1400304593"}, {"author": "Cameron", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659864279572", "anchor": "fb-659864279572", "service": "fb", "text": "Sure, building a subway increases land values in newly accessible locations. That is well known and doesn't really change anything about incentive effects of LVT, since an individual land owner can't make the decision to build a subway or not.", "timestamp": "1400304765"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659864748632", "anchor": "fb-659864748632", "service": "fb", "text": "@Cameron: \"an individual land owner can't make the decision to build a subway or not\"

Why? Most of the subways in the US were privately built.", "timestamp": "1400304926"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659869893322", "anchor": "fb-659869893322", "service": "fb", "text": "(While US subways aren't generally built or run by private companies anymore, this applies to any situation where one thing you could build would make nearby locations more valuable.)", "timestamp": "1400305610"}, {"author": "Cameron", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659873575942", "anchor": "fb-659873575942", "service": "fb", "text": "\"Most of the subways in the US were privately built.\"

So?

Okay, let's work with a simple example. I own two vacant lots adjacent each other. If I build a really beautiful house on one lot it may have the effect of increasing the price of my second lot because of some positive locational externality from having a house instead of a vacant lot.

Does that make your point? Or have I still missed what you are trying to say?

Because in that case I'm not sure why a land value tax changes anything. You still win from building and lose form not building. All the changes to land values still happen in proportion with the LVT as they do without it.", "timestamp": "1400312307"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=659895057892", "anchor": "fb-659895057892", "service": "fb", "text": "@Cameron: \"Does that make your point?\"

Yup! That's an example we can work with.

\"I'm not sure why a land value tax changes anything. You still win from building and lose form not building.\"

With an LVT you win slightly less from building than you would with no tax. When both lots are vacant I pay $X/year for each lot in LVT. When I build a beautiful house on lot A its LVT stays $X, but the LVT on B goes from $X to $X+$Y. If $Y is more than my expected profit I won't build that house and we get a deadweight loss.", "timestamp": "1400338625"}, {"author": "Ben", "source_link": "https://plus.google.com/103845430563202343559", "anchor": "gp-1400522110197", "service": "gp", "text": "In the City you built you have created demand for the facilities you have produced. The return you get from this is interest on a capital investment which you should keep 100% of.\n
\n
\nHowever, you did not produced the land your improvements occupied. Unlike your Capital investment the most productive locations in your City(usually the centre due to the effects of agglomeration) is fixed and cannot be competed away.\n
\n
\nTherefore any return you get from this is 100% monopoly rent. Taxing this at 100% would not lower the normal rate of interest(now untaxed so it's higher) you'd get from your capital improvements.\n
\n
\nIndeed, because monopolies create there own set of \u00a0deadweight costs you'd be getting rid of those too.\n
\n
\nLand produces Capital, not the other way round. You've produced the value people demand for your Capital investments, but the demand for the best locations you did not. That is purely a collective endeavour the value of which you have no moral right to.\n
\n
\nWhat is morally correct is also economically efficient.", "timestamp": 1400522110}, {"author": "Ben", "source_link": "https://plus.google.com/103845430563202343559", "anchor": "gp-1400522816720", "service": "gp", "text": "BTW if you skip to 52.15 in this BBC documentary on maths\n
\n
\nhttps://www.youtube.com/watch?v=rSNGKkR-AFo\n
\n
\nyou will have it explained far more eloquently than I can the effects of agglomeration. \u00a0It's this \"potential\" that creates land values, not capital improvements.\n
\n
\nHopes this helps.\u00a0", "timestamp": 1400522816}, {"author": "Jeff Kaufman", "source_link": "https://plus.google.com/103013777355236494008", "anchor": "gp-1400547541261", "service": "gp", "text": "@Ben\n\u00a0Consider a more conventional case. \u00a0I own two nearly identical adjacent vacant lots in the middle of the city. \u00a0They have the same land value and each pay LVT of $X. \u00a0I build a nice house on one of them, which doesn't change it's land value and so still owes LVT of $X. \u00a0The still vacant lot next to it, however, now has higher value because it's now next to a nice house instead of a vacant lot. \u00a0So its LVT rises from $X to $X+$Y.\n
\n
\nA capital improvement on one lot I own can increase the value of a neighboring lot.", "timestamp": 1400547541}, {"author": "Ben", "source_link": "https://plus.google.com/103845430563202343559", "anchor": "gp-1400594272337", "service": "gp", "text": "\nI did say so what? It's your work and enterprise that created the value of house. Your work and enterprise did not create any uplift in the site value of the two plots(a tiny increase if at all in your example, but no matter).\u00a0\n
\n
\nThat was pure market discovery i.e a collective endeavour.\n
\n
\nOn any given day the market will under/over value any given plot.\n
\n
\nOf course, what you want to know is if any uplift is \"taxed\" away does this create a deadweight loss? No, because this uplift is entirely unearned.\n
\n
\nOnly taxation of work and enterprise causes a deadweight loss.\n
\n
\nBTW, subsidies and monopolies cause deadweight losses. Landowners are monopolists in receipt of subsidy. If you do not pay compensation for your right to exclude to the State(all of us), that is an implicit subsidy.\n
\n
\nThis causes mis-allocation and inefficiency in the property market.\u00a0", "timestamp": 1400594272}, {"author": "Jeff Kaufman", "source_link": "https://plus.google.com/103013777355236494008", "anchor": "gp-1400595203528", "service": "gp", "text": "@Ben\n\u00a0\"Only taxation of work and enterprise causes a deadweight loss.\"\n
\n
\nIncreasing my LVT on one plot because I built something on an adjacent plot is taxation of work and enterprise, and causes deadweight loss.", "timestamp": 1400595203}, {"author": "Ben", "source_link": "https://plus.google.com/103845430563202343559", "anchor": "gp-1400611488214", "service": "gp", "text": "Seeing as you initial LVT bill would have been based on maximum(productive) permitted use, I don't see why you think it would go up.\n
\n
\nIf it did, it would be because it was priced incorrectly in the first place.\u00a0\n
\n
\nThe maximum potential value is always present in any location. It's up to the market, and assessors to discover it.\n
\n
\nIf you think capitalists need the extra bonus of under valued land to make work and enterprise a worthwhile endeavour, \u00a0you are joining the ranks of Neo-Classical doctrinaires.\u00a0", "timestamp": 1400611488}, {"author": "Jeff Kaufman", "source_link": "https://plus.google.com/103013777355236494008", "anchor": "gp-1400613478591", "service": "gp", "text": "@Ben\n\u00a0\"The maximum potential value is always present in any location. It's up to the market, and assessors to discover it.\"\n
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\nLet's say there's a town square in a relatively poor working class suburb of a city. \u00a0Diesel freight trains run through it noisily, blocking traffic when they do, and the intersection is a complicated high-speed mess where people want to get through it as fast as possible. \u00a0There are some cheap restaurants and several bars, but it's not trendy or hip. \u00a0A house right on the square burns to the ground leaving a mostly vacant lot, and the owner sells it to someone who wants to build a new house, agreeing on a price of $A. \u00a0 This $A is approximately the number assessors would use to determine the amount of LVT due, right?\n
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\nNow let's say someone comes in and puts a subway stop there, and now the square is a 20 minute ride from the city's downtown. \u00a0Yuppies move in, new bars and restaurants open, working class residents start to get pushed out to areas without subway service by the raising rents, and\u00a0houses start selling for more and more. \u00a0The same house from before burns down (again), and this time the mostly vacant lot sells for $B, which is much bigger than $A. \u00a0This new $B number is what the assessors would use now in calculating the LVT, right? \u00a0And if $B is 5 times higher than $A then the lot's LVT would now be 5 times higher than it was back before the square was gentrified?\n
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\nOr is the LVT bill always based on the maximum productive use? \u00a0Such that even when the lot was in the middle of a poor neighborhood it still had high LVT because that neighborhood could instead be an area where richer people lived? \u00a0And the lot always owed LVT based on $B, with $A being irrelevant?", "timestamp": 1400613478}, {"author": "Ben", "source_link": "https://plus.google.com/103845430563202343559", "anchor": "gp-1400619188678", "service": "gp", "text": "LVT is based on rental values not selling prices. Under LVT selling prices equal zero, while at the same time rents rise by (almost) the difference in taxes on capital reduced.\n
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\nMaximum productive use only means the highest rent achievable for that location, at that point in time.\n
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\nNaturally, things change and rents (usually) rise. For many reasons.\n
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\nLVT isn't best thought of as a \"tax\". In fact that's not helpful.\n
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\nWhen you occupy land, you are creating an externality on the rest of us. You are taking away our natural opportunity. \u00a0LVT is really just a market based way of calculating the cost of compensation due.\n
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\nWe all are excluded equally, we all respect your freehold rights, we should all therefore be compensated equally.\n
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\nAs I keep coming back to, it's purely the \"market\" that creates Land values. You cannot say the same about Capital.", "timestamp": 1400619188}, {"author": "Ben", "source_link": "https://plus.google.com/103845430563202343559", "anchor": "gp-1400619571119", "service": "gp", "text": "If I pay $1m dollars for a plot of land, that it turns out is only worth $100, would you say I have(though my own work and enterprise) destroyed land values, or am I just an idiot?", "timestamp": 1400619571}, {"author": "Jeff Kaufman", "source_link": "https://plus.google.com/103013777355236494008", "anchor": "gp-1400673799136", "service": "gp", "text": "@Ben\n\u00a0\"Under LVT selling prices equal zero\"\n
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\nI'm not seeing this. \u00a0Unless you're talking about setting the tax rate to 100%?\u00a0 But I've mostly heard LVT advocates for a lower percentage.\n
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\n\"Maximum productive use only means the highest rent achievable for that location, at that point in time.\"\n
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\nI'm still confused. \u00a0In my gentrification example with the subway, what is the \"highest rent achievable\" for that location before it gentrifies? \u00a0Is it the low land value of the working class neighborhood or the high land value of the trendy neighborhood it could become?", "timestamp": 1400673799}, {"author": "Ben", "source_link": "https://plus.google.com/103845430563202343559", "anchor": "gp-1400686213552", "service": "gp", "text": "If you ask freeholders to pay 100% of the rental value of land, it's capitalised value ie selling prices fall to zero.\n
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\nOr put another way, if you end a subsidy it's capitalised value falls to zero.\n
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\nTheoretically at least, because when you stop taxing incomes and capital, rental values rise. So you have to keep upping the LVT rate to absorb this(an equilibrium will be found at some point). Which is why all State revenues could be covered only by Land rents.\n
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\nMaximum permitted use at that point in time.\u00a0\n
\nSo before gentrification.\n
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\nhttp://kaalvtn.blogspot.co.uk/p/valuations-and-potential-lvt-receipts.html\n
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\nIf you check out the above website, you'll find you questions answered more thoroughly.\u00a0\n
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\nIf you leave a comment, you'll get a full explanation in reply.\u00a0\n
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\n\u00a0", "timestamp": 1400686213}, {"author": "Ben", "source_link": "https://plus.google.com/103845430563202343559", "anchor": "gp-1400686688945", "service": "gp", "text": "This one it also relevant to your enquiry.\n
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\n\u00a0\nhttp://kaalvtn.blogspot.co.uk/2013/01/s-land-owners-create-land-values-land.html#2", "timestamp": 1400686688}, {"author": "Jeff Kaufman", "source_link": "https://plus.google.com/103013777355236494008", "anchor": "gp-1400780737571", "service": "gp", "text": "@Ben\n\u00a0The examples in your \"2. Larger landowners create their own rental values\u2028\u2028\" are pretty much along the direction I'm trying to go, and are the basic idea behind the (extreme) example of an someone that builds a whole city in the desert from scratch. \u00a0They start off with land that is no different from the surrounding area, could even have been picked at random, and by investing a huge amount in infrastructure change the location from worthless desert into valuable city. \u00a0This raises their LVT dramatically, right? \u00a0Let's say this tax increase is $Z. \u00a0If $Z is more than their expected annual profit they won't build this city. \u00a0So here LVT, like basically all other taxes, is causing a deadweight loss.", "timestamp": 1400780737}, {"author": "Ben", "source_link": "https://plus.google.com/103845430563202343559", "anchor": "gp-1400793109149", "service": "gp", "text": "This boils down to the argument that Capitalists need to augment their returns with Land rents( ie a subsidy) otherwise they won't bother making capital investments. Which is nonsense.\n
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\nFarmers and large multi-nationals make the same plea for special privileges too, yet economists have no trouble identifying the deadweight costs this causes.\n
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\nYou are locked into the idea only individuals create wealth. Which is why I hoped you'd watch and understand that Youtube Clip. Land rents are commonly created. \u00a0It's the people who occupy cities that create land rents, not the buildings.\u00a0\n
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\nThat 15% bonus every time a population doubles in size. Who should that belong to?", "timestamp": 1400793109}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=720160635192", "anchor": "fb-720160635192", "service": "fb", "text": "http://www.forbes.com/.../the-problem-with-100-land.../ has more analysis and better examples of spillover effects.", "timestamp": "1429740631"}, {"author": "David", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=999002024812", "anchor": "fb-999002024812", "service": "fb", "text": "The claim that due to the development the land value will rise is not necessarily true. Normally and naturally, developments happen when there is an inflow of people and a concentration of them in a new community. Then the usefulness of the more central sites of land will grow due to the ease of communications and lower transportation costs when compared to sites further away. But the case being described Jeff is an artificial one, where the development comes first and the area is unpopulated before it occurs. Only subsequently when a community subsequently has gathered itself and the part of the development that is close to the greater density of people, does the land participate in creating greater economic rent and consequently more value. Otherwise it is like the tail wagging the dog.\ud83d\ude0e", "timestamp": "1561010187"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/659467524672?comment_id=999195666752", "anchor": "fb-999195666752", "service": "fb", "text": "At the time I initially wrote about this I thought it was speculative, but this is something that happens today with private companies buying cheap land, building large housing developments, and building rapid transit to it.", "timestamp": "1561085161"}]}