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georgiststeve.bsky.social Profile picture
@GeorgistSteve
May 17, 2024 • 10 tweets • 7 min read • Read on X
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🔰 Here's the basic case for turning property taxes into a land value tax (LVT), as presented to the Colorado Commission on Property Tax back in January 🧵

LVT shifts:
🔰 boost business activity & construction of multifamily housing
🔰 are neutral for the typical homeowner, tend to increase tax bills on vacant/underutilized land, provide tax relief for multifamily housing
🔰 are strictly better for tenants as a tax which does raise rents is replaced by one which does not.

leg.colorado.gov/sites/default/…Image
🔰 What is a land value tax? 🔰

* LVT is a recurring tax charged to property owners in proportion to the value of the land they own (which includes its location value).
* LVT shifts involve a revenue-neutral increase in LVT used to fund tax cuts for homes & other buildings.Image
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(If you want more detail about how an LVT shift works in practice, see here:
)schalkenbach.org/how-does-a-lan…
🔰 What is the impact of a LVT shift on housing? 🔰

* As the old saying goes "if you want less of something, tax it"
* Traditional property taxes penalize development by taxing the new buildings.
* Not so for an LVT shift, which rewards construction.

(Data on this below) Image
🔰 What is the impact of a LVT shift on tax bills? 🔰
It depends

Rule-of-thumb: calculate a property's Intensity Ratio (IR) by taking Improvement Value divided by Total Value

⬇️ Properties with an above-average IR get a tax cut from an LVT shift
⬆️ Below-average IRs pay more
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The upshot of the above is that typically LVT shifts cause tax bills to:
⬆️ for vacant land/car parks
⬆️ for industrial uses
⬇️ for multifamily housing
⬇️ for commercial buildings
⬇️/⬆️ have a range of effects for single family homes (depending on the intensity ratio):
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🔰 What is the impact of LVT on rents? 🔰

Answer: Unlike taxes on buildings, land taxes do not get passed on to tenants. Full explanation in the QT.

Shifting the tax base from improvements to land will increase housing supply and reduce rents.

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🔰 Okay but what evidence do you have about the real-world effects of LVT? 🔰

In Pennsylvania it expanded entrepreneurship, rewarded renovations & boosted building (especially multifamily).


A recent US-wide study finds the same:
schalkenbach.org/wp-content/upl…


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🔰Is LVT supported by economists? 🔰
Answer: Yes! From across the political spectrum!

Back in 1990, 30 econ profs urged Gorbachev to tax land: ()

A recent poll of economists found strong support for Detroit's LVT:
en.wikisource.org/wiki/Open_lett…

Image
For the Colorado context (which has fairly strict legal constraints on the property tax system), we recommended a few specific approaches to an LVT shift.

You can read more about them in our Primer available here:
drive.google.com/file/d/1IGgjm3…

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More from @GeorgistSteve

georgiststeve.bsky.social Profile picture
May 22, 2024
✨ Blog: Universal Land Dividend ✨

Why we should have a Universal Basic Income (UBI) funded from natural resource rents, and why it works so well with a Land Value Tax (LVT).

Let me explain 🧵
💰 What is a Universal Basic Income? 💰

UBI has these key features:
💸 it is a cash payment (rather than vouchers or direct provision of eg housing/healthcare)
👍 it is unconditional (no means-testing, no welfare cliffs if your pay goes up)
🌌 it is universal (everyone gets it) Image
💰 What's good about UBI? 💰

UBI's benefits are myriad & well-trodden, see the links below:



reddit.com/r/BasicIncome/…
Read 12 tweets
georgiststeve.bsky.social Profile picture
May 3, 2024
Patrick Condon's housing model is wrong. But it's wrong in some pretty interesting & pseudo-Georgist ways.

So let's go through them. 🧵
Image
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First, let's steelman him:

@pmcondon2 says that when you upzone a single family home to allow apartments, you a) gift land value to the property owner, because the additional redevelopment option immediately makes their property more valuable.

His model also claims b) that even if you build the apartments, their internal per sqft price will be unchanged, and thus that there's no affordability gains.

From this, he argues that you should not upzone without a tax on the gifted land value, and that affordability can not be improved by YIMBY, only public housing.Image
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The first way Condon is wrong is pretty trivial but it can be distracting, so let's get it out of the way:

Construction costs per sqft increase as you build taller, so residual land value captured by landowners declines with each additional storey of legal capacity.

A more realistic version of Condon's diagram would look like the second image here.

(Note that I've set up my diagram to keep Condon's core claims a) to d) intact. So let's tackle them:)Image
Image
Read 13 tweets
georgiststeve.bsky.social Profile picture
Feb 21, 2024
Homeownership is a lumpy, non-diversified investment asset, whose value derives in large part from rents, whose owners become fanatically devoted to lobbying government to limit their taxes, ban competing supply or poor people living nearby.

It's a garbage thing to promote.
"But homeownership is a great mechanism for forced savings"

a) only for people who can get a downpayment together,

b) if forced savings is a policy goal, let's just do Singapore-style mandatory savings accounts.
"But homeownership creates good citizens interested in building their community"

No, it turns them into sociopaths:
1
2
Read 5 tweets
georgiststeve.bsky.social Profile picture
Feb 18, 2024
"Why are YIMBYs only concerned with upzoning and never with cutting immigration?!"

One simple answer to this question is that, while you *can* reduce prices either by reducing demand or expanding supply, the latter *increases* wellbeing while the former reduces it:

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There are other reasons of course, such as a principled belief that it's good when people are free to move to locations which give them better opportunities in life, and that it's bad when govt force is used to privilege incumbents instead.
For me there's also a rank-ordering, insofar as I don't like immigration policy to be subservient to bad housing policy

I prefer to 1st set immigration levels based purely on e.g. economic or humanitarian factors, and 2nd ensure housing supply can respond
Read 4 tweets
georgiststeve.bsky.social Profile picture
Feb 15, 2024
Wanted to share my Prop 13 lit review from last night's @CACommonGround event.

Details in 🧵 below, but basically Prop 13 led to:
💰 worse taxes instead
🚚 people moving less
🏗️ fewer houses built (=⬆️prices & ⬆️rents)
☹️ welfare loss
⚖️ iniquity

stephenhoskins.notion.site/Lit-Review-Cal…
🕰️ Quick history lesson: California passed Prop 13 in 1978 and had five key features:

1⃣ Property taxes capped at 1% of assessed value
2⃣ Assessed value of property is pegged to purchase price, not its current market value
3⃣ Assessed values grow at max 2% per year
5⃣ 'Ad valorem' taxes are banned (which makes a land value tax in CA very difficult 😢)
5⃣ Tax increases require a 2/3rds majority to pass

This triggered a 'tax revolt' against property taxes throughout the US, resulting in similar policies all-over.
Read 14 tweets
georgiststeve.bsky.social Profile picture
Jun 13, 2023
📌 As an urban economist, YIMBY, Georgist & altogether adequate bloke, this pinned tweet contains an ever-expanding collection of my favorite poasts 🧵

🗺️ How does zoning change the size & shape of land rents?
🔰 Land & Liberty to Build: The Great LVT-YIMBY Symbiosis 🏗️
❎ Polling YIMBY: A collection of surveys testing which demographies tend to support more housing in their neighborhoods ✅
Read 13 tweets

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