I've read this twice - interesting, but there are some parts I want to explore a little further.
First, re: the discrimination piece, wouldn't this gentrify the areas on the South Side of Chicago? If an area was taxed at a rate 33 times lower, developers would be incentivized to go develop that area. Residents would get paid out instead of priced out of living there, which is good, but this would result in gentrification, correct?
Second, I'm confused on the San Francisco example. If Land Tax + Property Tax = Residential Tax, and the proposal is to remove the Property Tax piece, wouldn't one's total tax exposure decrease (making it more likely that they could stay in their home)? The Land Tax piece would have to be bumped up, correct?
Gentrification exists because there is a scarcity of housing. Under a land value tax, there would be more housing development across all of Chicago, but the majority of it would go in the places people most want to live. Land value tax would incentivize more development of housing, especially in places with access to jobs, education and other amenities where land values are high. In the Chicago example, it would be more expensive to own undeveloped land on the north side compared to the southside, so the northside would see more dense housing development.
California's property taxes are very low for long time owners of land because California places caps on how much property taxes can increase every year for a land owner. There are homes in San Francisco worth millions of dollars that pay an effective property tax rate of 0.1%. So moving to a tax based on current land values would increase taxes for long term land holders in California. It's worth noting that California has such high income taxes because it has such low property tax revenue. Moving from an income tax to a land value tax would reduce the tax burden on most California residents.
OK, I think I understand this better now. Thank you. I will try to work on a way to incorporate this into Little Nuggets somehow--this is very interesting. Thanks!
Your description of how an LVT corrects inequity is well-put.
Is there a way to make this a win for middle-upper class homeowners?
Would be a win for renters who would (presumably) pay less income tax - enabled by land tax.
One small step may be to shift from property to land tax in a revenue neutral way overall (still won’t be neutral for those in high land value areas).
I've read this twice - interesting, but there are some parts I want to explore a little further.
First, re: the discrimination piece, wouldn't this gentrify the areas on the South Side of Chicago? If an area was taxed at a rate 33 times lower, developers would be incentivized to go develop that area. Residents would get paid out instead of priced out of living there, which is good, but this would result in gentrification, correct?
Second, I'm confused on the San Francisco example. If Land Tax + Property Tax = Residential Tax, and the proposal is to remove the Property Tax piece, wouldn't one's total tax exposure decrease (making it more likely that they could stay in their home)? The Land Tax piece would have to be bumped up, correct?
Gentrification exists because there is a scarcity of housing. Under a land value tax, there would be more housing development across all of Chicago, but the majority of it would go in the places people most want to live. Land value tax would incentivize more development of housing, especially in places with access to jobs, education and other amenities where land values are high. In the Chicago example, it would be more expensive to own undeveloped land on the north side compared to the southside, so the northside would see more dense housing development.
California's property taxes are very low for long time owners of land because California places caps on how much property taxes can increase every year for a land owner. There are homes in San Francisco worth millions of dollars that pay an effective property tax rate of 0.1%. So moving to a tax based on current land values would increase taxes for long term land holders in California. It's worth noting that California has such high income taxes because it has such low property tax revenue. Moving from an income tax to a land value tax would reduce the tax burden on most California residents.
OK, I think I understand this better now. Thank you. I will try to work on a way to incorporate this into Little Nuggets somehow--this is very interesting. Thanks!