The question is to what degree/portion of Georgianism to apply and what to do when the land value component starts going up infinitely that its starts hurting the electorate.
- Do you introduce alternative tax sources (i.e. increase income taxes on billionaires instead as in California)?
- Do you introduce caps on annual land value increases (i.e. Prop 13 as in California) or add a bunch of waivers for specific use cases (i.e. primary homes also know as the homestead exception, day cares as they are starting to do in Texas)?
Exempting by use, like primary homes or day cares, now means that the government is in the business of snooping on you to make sure that the primary home you declare is also your actual primary home. You also give well-off people with a bigger primary home (or owning a home at all instead of renting) a big tax break. Welfare for the well-off is not an efficient use of funds.
> - Do you introduce alternative tax sources (i.e. increase income taxes on billionaires instead as in California)?
If you do that, you lower your land value tax take. (Of course, if you already already sabotaged your land value tax base via exemption and limits, as per your second point, then bad decisions beget more bad decisions and special taxes on billionaires seem like a good idea..)
However in reality its a difficult ask to have all people purchasing single family homes to be able to build a 40 year financial model/projection of a regions growth prospects when the buy a home.
Or have them move away from their family and friends support network.
I think Georgianism works best:
- when there's expansive flat land and slow growth and no zoning/resource constraints (i.e. Texas pre-2010).
- you build higher density subsidized housing so people can stay in their neighborhood (i.e. Singapore)
Georgism doesn't require that any more than the current system. In fact, for people who haven't already bought a home, the cost under a Georgist system are almost exactly the same as before:
The yearly outlay for owning a place is the same, because market forces will adjust land prices to make it so. The sum of cost of capital plus all taxes is roughly only dependent on demand / what recurring benefit you can derive from the land. Under LVT your mortgage will be smaller, but you have more taxes on the land.
Assume a long time single family home elderly owner on a fixed income (i.e. social security) that had modeled for only linear increases in accessed land value (and associated taxes) but experienced exponential accessed land value appreciation (and tax increases).
Would the proposed solution be for the original long time elderly owner to sell 50% rights to the property in exchange for another future owner to tear down the single home and replace it with a duplex for the original owner and new co-owner to live in together?
Or is the assumption that only well capitalized apartment owners are the only ones who own the land and have the capability to teardown and re-build as more units or renovate and raise rents?
Compare to right now, where every generation can’t afford to live in their own hometown, because there’s only upwards pressure on housing costs, so families and support networks are constantly being torn apart.
OR you have proper planning and build it into the city charter. The city needs to have planned for the locations of future additional schools/recreational infrastructure/transporation a priori and have sufficient resources (water, gas, electricity, sewage).
There also need to be proper addendums to any purchase agreements to highlight the potential for severe property tax increases.
Post facto switchovers to or continuation of pure LVT don't seem like they would work realistically.
As mentioned I think Texas will be interesting to watch as its pretty close pure Georgianism - the state's revenue is mostly/all LVT property taxes - but they are starting to see exponential growth - so it will be interesting to see if they stick to it or resort to California style Prop 13.
If you stay put and don't move, your property taxes won't go up much. So you can vote for all the govt spending you want: don't move and you won't have to pay for it.
I'm not saying people are "getting away with" low taxes. I'm saying that people are "getting away with" high spending.
There’s no reason why commercial land should get the same benefits.
[1] https://www.dallasnews.com/news/watchdog/2022/04/20/property...
"What we're trying to do is value that land as if it were vacant — or that lot — and ready to be put to its highest and best use, which is to build a single-family home on, And we do that by looking at lot sales of what would be a competitive or a substitute product."
In a pure LVT system the structure should play no part. The landowner should be free to build whatever they want on their land without such building causing a change to their taxes. A partial step towards LVT would be a “split rate” system, where the value of the land is taxed at a higher rate, say 5%, than the value of the structures, which could be 0.5%.
Pennsylvania is the example case here in the US:
https://www.strongtowns.org/journal/2019/3/6/non-glamorous-g...
Bonus points if we can crank up the tax bill on families which inherited their home but never had the money to make improvements.
Or are you suggesting the tax rate will spiral upward infinitely? Again, at some point that just means it’s not worth buying the land unless the productivity possible on it is through the roof as well.
North Texas homeowners getting 'sticker shock' with new property tax appraisals
And the municipalities -- their local elected representatives -- complied. They didn't reduce the millage rate each year to stay revenue neutral. No, they used those funds to supply those desired public goods.
And as land values rose, taxes rose. And eventually, people whose homes were appreciating by half (or 100% or more) of their annual incomes, increasing their home equity at an awesome rate, started objecting to the taxes that were paying for all those public goods.
Remember that in those days, California's colleges and universities were regarded as among the very best. And they changed a lot of lives, particularly of those in the school districts so well funded by those taxes that were ever-rising because the local officials didn't lower the tax rate to remain revenue neutral.
I don't see any sign that California, under Prop 13, has any resemblance to Georgism.
Take a look at a listing at realtor.com for a home in any California city or suburb, and focus on the "Property History" section, on (1) asking and selling prices; and, under that (2) assessment and tax history. (Choose the "see more" option in each section.) Then look at the assessments vs the current asking price. The land and "additions" figures rise by no more than 2% per year, while the asking and selling prices are far above the assessment on which taxes are based.
"The land value component is re-accessed frequently and changes based on comparables (presumably but its mostly black box)." No, they rise by 2% per year, until a sale takes place, at which point their sum is adjusted to the selling price.
But the house next door, of similar age and condition, but not sold in 20 or 40 years, is receiving a huge subsidy, paying a tiny fraction of what the newly sold neighboring buyers are paying.
Where is the equity in that?
The answer, for other states, is not assessment caps or capping taxes at a certain percentage of assessed value, but reducing the millage rate to remain revenue neutral, unless the local property owners approve a millage rate that is higher than revenue neutral because they actively desire more services, better schools, etc.
It's just not purist Georgism.
And even if LVT was the only source of tax income - it could be done at punitive level to prevent all land speculation or be more relaxed.
I think somethings that I haven't seen addressed by pure Georgists:
- Where to stick schools and playgrounds to support the newly built residential towers
- Water/sewage/gas improvements/transportation stresses
- Displaced people who get kicked out of the single family home if no private developer wants to build condos for them
From what I can tell - it'd require proper pre-planned zoning when the city is in its early stages and for the stuff to be written into the city charter.
Or some strong government intervention that could just plop new 3 story schools and 10 store public housing towers where it wants.
So the older residential suburb has become a denser urban city, and the new residential towers are supported by the schools having been rebuilt taller.
And for some value of “works” this does seem to be doable. Most land uses are stackable, though I’ve never personally seen a multi-story gas station.
Our land underwent a reassessment and the value was calculated as “more realistic” (50% more!) but our property taxes went down in absolute dollars because the budget was the same this year, but new houses have been built in the town.
California seems to collect money and then decide where it should go.
California property tax bills have two components [1][2]:
- structure/improvement assessed value
- land value assessed value
The land value component is re-accessed frequently and changes based on comparables (presumably but its mostly black box).
The question is to what degree/portion of Georgianism to apply and what to do when the land value component starts going up infinitely that its starts hurting the electorate.
Do you introduce alternative tax sources (i.e. income)? Do you introduce caps on annual land value increases or add a bunch of waivers for specific use cases (i.e. primary homes, day cares)?
Or do you just stick with the unrelenting assessed value increases and go free market/no pain no gain/survival of the fittest on the electorate?
Basically Texas is basically the US experiment closest to pure Georgianism.
[1] https://www.propertytax.lacounty.gov/Home/AnnualSecuredPrope...