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View Diary: Dear New Orleans, Here is how to recover from destruction. Love, San Francsico (59 comments)

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  •  A matter of persepctive I suppose (0+ / 0-)

    "Interesting" was placed in quotes, because from my perspective (living in one of those smaller single story homes) I am not excited to see the McMansions going up in the area. Not a good thing for my neighborhood - ambience, character, home value, water run-oof effects, etc.

    On the other hand, I suppose if I had dreams of owning a 500-600K McMansion with no yard, near downtown, I would be watching the area with a different level of interest in hopes that many of more McMansions would come into being so I could have one of my very own.

    Practice absurdus interruptus - Support ePluribus Media.

    by Catte Nappe on Mon Jun 26, 2006 at 11:41:16 AM PDT

    [ Parent ]

    •  I think you just hit the nail... (1+ / 0-)
      Recommended by:

      ... on the head.

      As time goes by, in your neighborhood for whatever reason. Maybe a new road went in, maybe your area has become "trendy", maybe it has become known as being a safe area to live, etc. more and more speculators will look with eyes of wolf on the hunt towards the property going for sale. Some of those homes will get knocked down and cookie cutter homes will go up in their place. The point that you can observe this right now is critical and frankly, most people don't actually see it happening until they can no longer afford their homes.

      Now, maybe this one home is just a fluke and, frankly, we are never going to stop they guy down the road from painting his house hotpink if he wants to (i actually had a neighbor who did that as revenge towards another neighbor. heh) Anyway.

      the way the system is set up now, it actually favors those who have a lot of money regardless who values the lot the most.

      here is an example, very easy to follow.

      Lets say there are two people, rich and Jamie. Jamie is poor, rich is rolling in it. Jamie really values this particular lot and needs a loan. Rich also values this lot, but not as much as jamie, and he also needs a loan.

      Rich believes he can get an income of 300 dollars from this lot. Jamie is poor but is really productive and believes he can get an income of 600 dollars because he has a great business idea. Who will the land go to? Let's see.


      Rent(R) = 300
      Interest (i) = .05

      Value (V) = 6000


      Rent(R) = 600
      Interest (i) = .20

      Value (V) = 3000

      jamie looses, the speculator gets the land. Too bad, so sad. No jobs created.

      But, lets see what happens when we tax land.

      If we tax the rental value of land, then the rental value is R- T and so V = R-T / i

      Lets start with a tax of 100 dollars on the rent.


      Rent(R) = 300 -100 = 200
      Interest (i) = .05

      Value (V) = 4000


      Rent(R) = 600 – 100 = 500
      Interest (i) = .20

      Value (V) = 2500

      Now with a 200 dollar tax


      Rent(R) = 300 -200 = 100
      Interest (i) = .05

      Value (V) = 2000


      Rent(R) = 600 – 200 = 400
      Interest (i) = .20

      Value (V) = 2000

      So, any tax > then 200 in this scenario will cause the land to go to the most productive user of the land. Interesting, no? Now, in real life there are many bidders. Sometimes the most productive person is the wealthiest person. Sometimes, however, the most productive person is least well off and sometimes it's the family in the little neighborhood who doesn't like salt run off.

      •  Not a fluke (0+ / 0-)

        It is not just one home. I just did a typical pairing for an example. Depending on the street or general neighborhood it is somewhere between 5%-40% of homes.

        As to the most "productive", that has to be our version of Rich. Whether or not good ole Rich makes a profit on building and selling his McMansion (we presume he does, or he wouldn't keep buying/demolishing/building), the city and county are quite happy to have the taxes jump from 7K to 15K.

        Practice absurdus interruptus - Support ePluribus Media.

        by Catte Nappe on Mon Jun 26, 2006 at 12:21:26 PM PDT

        [ Parent ]

        •  Not rich (0+ / 0-)

          As to the most "productive", that has to be our version of Rich.

          Take a look at those houses again, and tell me, after adding up all those costs, do you think they are more "productive" then anyone else? By what you have told me, I sincerely doubt it. Frankly, they sound fairly waistful to me.

          the city and county are quite happy to have the taxes jump from 7K to 15K.

          ahh, and here you have found another truth.

          if only land was taxed and not buildings, would the city and county have an incentive to propel this sort of sprawl? You can complain all you won't vote for them now, but they don't care, because others will move in who will vote for them.

          The fact is, a land tax would keep out those speculators and would keep it in the hands of people who deserve it.

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