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Originally posted at http://thehenrygeorgeblog.blogspot.com/

These are interesting times. As home prices go up and long with them, the property taxes associated with those home prices, some consumers are being priced out of the housing market or, in some cases, need to sell their homes.

(cont)

It's partly a supply-and-demand issue. Years of soaring house prices (and recent increases in mortgage rates) have simply priced many people out of the home-buying market. Indeed, the portion of U.S. households owning their own home slipped to 68.5 percent in the first quarter from 69.1 percent a year earlier, according to the Census Bureau.


Wherever I travel in Vermont, I hear stories of the pain being inflicted by rapidly rising property taxes. Property taxes now threaten many of the qualities we cherish in our state.

Legislation lowering the cap on local property-tax increases met resistance right up to the end. Supporters of the property-tax cap told lawmakers that Rhode Islanders are being priced out of their homes by taxes that average $4,000 a year.

In each of these cases one can find the same problems, which are not discussed. Speculators / flippers / developers speculating on land prices, urban sprawl, and rising costs associated with government.

These are the mains reasons why home prices have risen so sharply, which for most people wouldn't be a problem except their property taxes are also going up. But why? If the costs of government remained the exact same or at least kept pace with inflation, the property tax rate should decrease as values increase. However, in many communities, in addition to the escalating rise in values the tax rate is going up as well. This from my own town of Red Hook, NY.

But why do costs with government go up? Sure, wages for teachers should go up, garbage collection fees should go up, and everything else should also go more or less with inflation. But, it doesn't. Why?

Because of urban sprawl, the cost for the government to support one more additional child is greater then it would be in a more condensed city. Those subdivisions with those huge yards each need long roads to connect them. They need power lines. They need cable lines. Buses need to travel further for each additional child. Cars need to travel further and spend more time in traffic.

Drive by your local strip of suburbia big-box stores and what do you see? Parking lots. Lots and lots of parking lots. Think about how many stores in the urban center of any city could be on just one of those massive parking lots, which are rarely used to maximum capacity. Here is the kicker. Those huge stores pay almost nothing in taxes on those parking lots.

For example:

The subsidiesWal-Mart lobbies for run the whole gamut: free or reduced-price land, infrastructure assistance, tax increment financing (TIF), property tax abatements or discounts, state corporate income tax credits, sales tax rebates, enterprise zone tax breaks, job training funds and low-interest tax-exempt loans. The most deals and dollars were found in Texas (30 deals worth $108 million) and Illinois (29 deals worth $102 million).

On top of that, the property tax is a hybrid tax which taxes both capital and land and usually at the same rate. Hence, the majority of the tax falls on the building and improvements. This gives incentive for these firms to take valuable out of production for massive parking lots, which you the consumer need to drive around. Often times this land is some of the most valuable and productive land around. Transforming it into a parking lot is a major cost to all of society. Speculators, who are waiting for "the rise" and will sell when the conditions are right ten or twenty years down the road.

The solution to all of these problems is to tax land. Shift our taxes away from capital improvements and labor, and towards land.

Our cities, towns, and villages need to grow. But they need to grow smartly. Property tax caps, rate caps, subsidies, and portioning were implemented in many cases with the idea of reducing the tax burden or slowing down sprawl. In all cases the opposite has happened.

Land Value Tax would eliminate the sprawl. It would eliminate the speculation associated with the boom / bust cycle in the markets. It would help eliminate much of the poverty associated with the speculation in land markets.

I encourage you to support Land Value Taxation reform. Write your lawmaker and ask if they support LVT reform. Or, you can help me in any of my ongoing projects.

You can learn more LVT taxation at my blog, or you can go to

wealth and want

answers answers

wikipedia

Originally posted to eire1130 on Fri Jun 30, 2006 at 08:21 AM PDT.

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Comment Preferences

  •  Love that little tax cut we got! (6+ / 0-)

    People are complete IDIOTS!

    Here in Texas, property taxes have nearly tripled in the past 5 years.
    Walmart subsidies average $2000 per household in communities that allow walmart to open up shop
    And people think Bush loves the working folk because he gave them a little tax cut

    Tinfoil hats are underrated

    by sinnerjizm on Fri Jun 30, 2006 at 08:29:51 AM PDT

  •  commercial share of real estate taxes dropping (4+ / 0-)
    Recommended by:
    cookiebear, PaulVA, boofdah, eire1130

    in many cases dramatically. Because the property tax formula for all types of property is related to price with little or no consideration of use.

    fact does not require fiction for balance

    by mollyd on Fri Jun 30, 2006 at 08:31:02 AM PDT

    •  totally agree (3+ / 0-)
      Recommended by:
      stillman, PaulVA, boofdah

      best sollution is LVT which takes use into consideration above all other things

      •  Could LVT cause even more sprawl? (0+ / 0-)

        Might not retailers locate further out in the boonies in order to pass on lower taxes in the form of lower prices which attract shoppers to drive out there for a "deal"?

        Just brainstorming...I actually love the LVT idea.  I live in Texas and tapped out my savings and built my own house for $160,000.  The taxes now are $1000/month!  That is more than my old mortgage payment used to be.  I built this house to be my last house (I', 52 and the house is perfect for visits from my 5 grandchildren, ultra energy efficient, etc) -- but now I am considering selling and adding to sprawl by moving just over the county line into a more rural county where taxes are much, mush lower.

        Republican't Leadership is a dangerous combination of cut-backs and incompetence.

        by casamurphy on Fri Jun 30, 2006 at 08:51:16 AM PDT

        [ Parent ]

        •  productivty (1+ / 0-)
          Recommended by:
          CSI Bentonville

          is key.

          Sure, a walmart could build 60 miles away, but they wouldn't be very productive to do that. Not when a competing target in the center of austin, who shifts more of their dollars towards capital and away from land can offer the same prices to consumers after accounting for the travel costs.

          There are three factors of production, as one becomes more costly, firms will shift their production away from that more costly source and into the less source.

          Take your housing taxes, if your add a garage, your taxes go up, so some people avoid doing upkeep on their homes, costing everyone in the community an eyesore.

        •  as long as the law is written well - no, it cant (1+ / 0-)
          Recommended by:
          CSI Bentonville

          as long as you have land taxed at a higher rate than building in the end and you have it at a reasonable rate to be an incentive for speculators/underusers to move their land into use.

          weirdly nigeria had a very extensive land value taxation process set all up. but the tax was so low and the tax on the buildings were even less and there were no assessments and even less enforcement.

          check out the incentive taxation section at urbantools.net for how sprawl just stops with lvt.

          james kuntsler also writes about this as well.

        •  Wow! (0+ / 0-)

          We live in N. Texas and pay roughly $1.77/$100 in school tax and $1.15 for city, county, etc.  That would be more like $367/mo. on a $160,000 valuation.

          I sure sympathize with you, but it does make me feel better about our taxes!

          The truth always matters.

          by texasmom on Fri Jun 30, 2006 at 09:18:52 AM PDT

          [ Parent ]

          •  Valuation is the problem... (0+ / 0-)

            ...eventhough it cost me $160,000 to build my house, the county values it at $325,000!

            Republican't Leadership is a dangerous combination of cut-backs and incompetence.

            by casamurphy on Fri Jun 30, 2006 at 01:49:53 PM PDT

            [ Parent ]

            •  The LVT (0+ / 0-)

              The site is valued at 165,00 dollars. The question is why is that site valued so highly? Escalating land prices have more to do with speculation then actual productive value in some cases.

              In your specific case the LVT would help you in the following ways:

              1.) It Would remove the speculation causing your site to be valued so highly. [Unless you own 100 acres on the backyard you aren't telling us about ;)]

              2.) When you built your house, your taxes would not go up. They would only reflect the value of the land and not on the buildings and improvments, so you are free to build whatever kind of building you wish without getting taxed on it.

  •  Prop 13 has screwed up CA (7+ / 0-)

    Back in 1967, when CA property was rising and people were getting priced out of their homes due to rising property taxes, the voters passed a referendum freezing taxes for the owner until the home was sold. This has contributed to a skewing of the economy in CA in a variety of unforeseen ways. It will be interesting if it is exported to other states. Every good intention has unintended consequences.

    If not now, when? When they come for you, then it will be too late. Shout it from the rooftops, take it to the streets.

    by tjfxh on Fri Jun 30, 2006 at 08:35:49 AM PDT

  •  Rising real estate and taxes (4+ / 0-)
    Recommended by:
    eire1130, CSI Bentonville, gpdx, kmiddle

    My husband and I were cautious when we sold our home and bought a larger one--we wanted to make sure we could afford the monthly payments if one of us were to lose our jobs, and we're also planning on having a family, so we went modest and put 20% down on our house we bought in November. I was shocked at the younger couple who bought our last house--they went with a no-down loan that was high interest, and were flabbergasted to find that their mortgage when they bought our (smaller) house was much more than even what we're paying for our house now.

    They couldn't afford to put a down-payment on their house, which is why they were stuck with their high payments. I'm sure there are a lot of people out there like them--because of necessity more than anything else. I feel bad--how the hell can new homebuyers afford to buy even a STARTER home in this day and age? :(

  •  I am having some of these problems (0+ / 0-)

    This is in Virginia, where the land is tax :). In fact, the lot has a lot more value than our house. It really hasn't slowed down sprawl in Virginia.

    •  With the exception of.. (0+ / 0-)

      ... two communities who are just now trying it out, most towns and cities in the commonwealth (4.5 years in hampton roads myself) tax capital and land at the exact same rate.

      If only land land was taxed, or taxed at a higher rate, you would see a low down of the sprawl or a reverse.

    •  its great that the land has value (0+ / 0-)

      if only other assemments were as good butif the land was taxed rather than the buildings the sprawl will slow. taxes for homeowners will stay the same or drop. home and rental prices will stabilize or drop slightly.

      development and jobs will follow.

      check out urbantools.net

  •  I have been curious about this for some time (0+ / 0-)

    I used to live in NJ, which has enormously high prooperty taxes, and skyrocketing home values.

    Yet, the state, county, city, and school district all claimed extreme poverty.

    Where is all that money going?  I'm having a cognitive disconnect over this. Seriously. Is there an expert on state and local taxes out there who can explain this?

    The power of accurate observation is commonly called cynicism by those who have not got it -- GB Shaw

    by kmiddle on Fri Jun 30, 2006 at 08:51:03 AM PDT

    •  I still live in NJ and pay the taxes (2+ / 0-)
      Recommended by:
      LionelEHutz, Sharon in MD

      NJ has some unique problems that are related to home rule. For example, NJ has 600 school districts, including about 50 that don't even operate schools. This leads to a lot on needless duplication and expense. Each small township or school district has to pay for police, fire, roads, phone service, etc. there are NO economies of scale.

    •  Progress and Poverty (1+ / 0-)
      Recommended by:
      CSI Bentonville

      Henry George in his magnum opus "Progress and Poverty" explained the exact paradox you are seeing.

      Speculators, seeking a place to sink their wealth with little to no tax burden, withhold that land from production. Walk around any of those cities like Newark and you will find empty lots with chained fence around them. Some person owns that lot and they are withholding it from production waiting for "the rise" like a new highway, stadium or something else like that.

      Much of that money you mention is being spent on the problems created with NOT taxing land.

      If we were tax land, people would be forced to bring those empty chained lots back into production. Those empty dillapidated factories would be torn down and replaced with modern industry. Those empty store fronts would have buisnesses.

      More capital build on the land means more people building that capital which means more labor which means more wages. More capital on the land means more people working with that capital which means more labor which means more wages.

      Withholding the land cuts off all of that. Just like the fire triangle taking away oxygen from a fire snuffs out a fire even if it still has fuel and heat.

    •  it is a boondoggle (0+ / 0-)

      recently i met with the mayor of a small bedroom community in northern NJ very close to paterson.

      sprawl and property taxes are killing his town. particularly pressure from paterson - which is an economic wreck.

      eight story buildings where there were previously two stories.

      the firetruck ladders wont reach the top of the buildings but he isn't raising enough revenue to buy new trucks and hire more firefighters.

      anyway...this mayor saw the connection between land value vs. building value and how taxing one (land) could help his town and surrounding towns while taxing the other (buildings) creates a greater rich poor gap and undesireable building.

      in new jersey we are trying to amend the constitution so that taxing buildings is even allowed at all.

      •  Interesting point about tall buildings (0+ / 0-)

        White Plains and New Rochelle in Westchester have been seeing taller and taller RESIDENTIAL buildings go up......

        BUT the local fire departments may not be able to deal with a fire in some of he taller buildings.  

        A Fire Captain in New Rochelle has privately expressed concern about the latest to go up there - he doesn't have the resources to deal with a problem there.....  but the City gives out tax breaks to ENCOURAGE such buildings.....  gotta love the insanity...

        At least most of these are geared to wards commutes into Manhattan and aren't bringing in more families - and higher school populations..... though the illegal population is doing that anyway.....

        And SCHOOLS are the real local cost - half our local taxes since the burden is LOCAL.

    •  Link to the New Jersey State Budget (0+ / 0-)

      NJ State Budget

      We have the same problems in New York, but I think that a lot of it has to do with the school tax and the idiotic village/town/city/county municipal structure that we are cursed with.   There are duplicative services all over the place in NY government.  I imagine that the same is true in NJ.  Here in NY the dysfunctional legislators in Albany think that an election year $300 property tax rebate is going to placate people over their property tax bills.  Newsflash: it's not going to do that at all.

      When I talk to people around where I live in NY now I like to tell them about how it's done in Maryland, where I lived for about 6-years.  Maryland isn't perfect, but in comparison to NY it's genius -- County government with a few incorporated municipalities and school districts that are county wide, not divided by town/village (My county alone has at least 5 school districts, probably more).        

      One thing that is significantly different about NY and MD is that MD counties have their own income tax that can be set up to a certain level.  There's also a state and county property tax, but in comparison to NY, which only has a state income tax, MD's property tax is low.   People on fixed incomes have a better time in MD than NY, even with all of NY's property tax credit and rebate gimmicks.  The home I sold in MD was valued more than 200K over the jome I bought in NY, but the property taxes I pay here are far above those that I paid in MD.    

      Don't be so afraid of dying that you forget to live.

      by LionelEHutz on Fri Jun 30, 2006 at 09:23:19 AM PDT

      [ Parent ]

      •  Counterpoint (1+ / 0-)
        Recommended by:
        texasmom

        Themultitude of separate school districts in NY and elsewhere exist BECAUSE voters want them.

        The quality varies enormously - along with the value of the housing as a result.

        If our smallish school district combined with the larger adjacent city, people would be horrified because the standards would drop.....

        "Westchester 2000" was a plan drawn up over a decade ago to deal with increasing costs.  The basic recommendation was merging municipalities and school districts.  Never happened - actually the OPPOSITE did.  Rye Brook left Port Chester - the more affluent village (with its own school District already) became independent to establish greater "local" control.  Edgemont (again with its own separate school system) has talked of seceeding from Greenburgh...... Edgemont has a great school system - Greenburg a problem one.......

        THe reality is that people are still willing to foot the bill for higher taxes IF they feel that they have greater control and GREATER VALUE as a result....

        Frankly I'd be horrified at having my kids in a mega school where there are 1000 kids in a graduating class - miles and miles away.  SO I pay the costs of a local school system graduating less than 300 a year - where kids walk to local elementary schools.  And property values here - though affected by higher taxes - are still far higher that adjacent larger communities where schools are not as good..... and being blunt, "class" and race are probably a factor.  We are a "diverse" community - something I like compared to where I grew up - more of a solid middle white place whereas here has a wider range.

        BUT the size here makes things more manageable compared to larger schools elsewhere, with serious problems.   Yes, higher costs in some ways, but would I want my kids in adjacent districts to lower my taxes only marginally?   I don't think so....

        •  Same here (0+ / 0-)

          We chose this house because of the school district, sent 2 kids through it, so we can hardly complain about the taxes.  That is a price we are willing to pay - along with the 12 mile drive to our jobs.

          The truth always matters.

          by texasmom on Fri Jun 30, 2006 at 09:45:23 AM PDT

          [ Parent ]

          •  People make the same choices in Maryland (0+ / 0-)
            and when we moved to New York we made the same decision and have 4 mile commutes.  

            The whole point of what I wrote was to compare how things are done in Maryland to what is done in New York.  I think there is a problem in New York when compared to Maryland we pay more in combined income/property taxes on home valued less than 250K than a person who owns a home in Montgomery County Maryland valued at greater than 400K and the school results and government services in general in New York are not as good.  

            I'd rather see less administration and more services (i.e. more teachers for the schools for example) if I am going to be paying more.  

            Also, cost of living wise, Montgomery County Maryland is as expensive as living in New York.  The only difference I have found in Tompkins County is the actual cost of a home, not the mortgage/taxes/insurance payment or the cost of goods or services in the area.    

            Don't be so afraid of dying that you forget to live.

            by LionelEHutz on Fri Jun 30, 2006 at 11:13:40 AM PDT

            [ Parent ]

        •  Montgomery County MD has one school district and (0+ / 0-)

          five of their high schools are ranked in the top 100.  There isn't one HS, one middle school, one elementary school, etc... for Montgomery County there are several in the different incorporated and unincorporated 'towns' throughout the county.  

          By comparison, Tompkins County NY has at least 7 high schools between the 7 separate school districts and not one is within the top 200 despite a higher percapita spending than Montgomery County Maryland.  In fact, spending per student is not equal between the school districts.    

          HS rankings

          11 |Richard Montgomery* | Rockville | Md. |  5.029 | 13
          17 |Wootton |  Rockville |  Md. |  4.307 |  2
          29 |Bethesda-Chevy Chase* |  Bethesda |Md. |3.874 |  10
          71 |  Churchill |  Potomac |  Md. |  3.048 |  2
          80 |  Walter Johnson |  Bethesda |  Md. |  2.951 |  4

          These are all from affluent parts of Montgomery County but all of the high schools receive the same amount of money per student (about $10,000).

          There are places in NY that spend far more than that but get worse results.  

          Here's a link to a map of school spending and taxes on the NYCO blog.  

          The point is that in NY Counties with multiple school districts you have multiple school boards, superintendents, administrative staffs, etc..., and that job can clearly be handled by one board, superintendent, etc...  That's money that could either be spent elsewhere or not at all.  

          County level school administration works in Maryland and it would probably work in New York too if it were attempted.  How much would it save? I haven't a clue.  But, Maryland seems to get great results while spending less money and having a lower tax burden.  New York placed a lot of schools in the top 200 on that list but it also spends more.  

          I think that consolidating school administrations (and town/village governments) in New York would not affect the school size or the quality of services but instead would give counties an opportunity to shift administrative monies to other necessary projects or provide tax relief and still provide high quality services.  

          I'm not advocating doing things on the cheap but instead advocating that we do more with what we have.      

           
          If you're intereste here is a map ofschool spending and school taxes in New Yorkthat is linked to by the NYCO blog. The map appears to include information for Westchester/Long Island/NYC too.

          Don't be so afraid of dying that you forget to live.

          by LionelEHutz on Fri Jun 30, 2006 at 11:23:55 AM PDT

          [ Parent ]

      •  When I was in OH (0+ / 0-)

        The property tax rate was fixed. Homeowners would have the exact same property tax every year.

        If a taxing authority (city, country, school district) wanted more money, they had to ask for an increase in the tax rate. Sometimes the voters said yes, sometimes no. Which made the taxing authorities very conservative (a good word in this instance) about when and how much of an increase they asked for.

        When you sold your house, the property was revalued to the selling price. That way, property taxes were consistent with what the owner bought the house for. And the taxing authorites got an increase in what they collected. So their income from property taxes was not static, but went up incrementally as each property was sold. But people who held onto their houses for years and years and years weren't penalized.

        Every 10 years, the whole district was revalued to "fair market value" for all properties.  However, the tax rates were then rolled back so that taxing authorities received the same amount of money -- there was no windfall profit. Some properties did get a tax increase; but there was a system of adjustments so a taxpayer (usually, the rich folk, not the poor or seniors) could complain to a local board.

        There were some inequities. And there were definitely anti-tax communities that virtually starved their school districts into laying off teachers, dropping sports, music, art, etc. But it was always a big deal; communities were acutely aware of when taxes were being raised. And there were state-mandated minimums.

        In NJ, the school district (and cities, too, I think) presents a "budget" every year in an election that few people vote in; but this has the effect of raising the tax rate. Very confusing, in my mind. And puts a lot of onus on the taxpayer to be extra vigilent about understanding the budget and its impact on their taxes. A lot of seniors just vote "no", and since the timing of these elections is during neither a primary nor a general election, the seniors hold a lot of power (because they have the time to pay attention). So there's a lot of animosity built up.

        I'd love for some expert in local taxation to compare and contrast the various systems.

        The power of accurate observation is commonly called cynicism by those who have not got it -- GB Shaw

        by kmiddle on Fri Jun 30, 2006 at 09:46:23 AM PDT

        [ Parent ]

  •  housing market manipulated (1+ / 0-)
    Recommended by:
    CSI Bentonville

    because of government fiscal policy. First easy money was applied through interest rate easing by the Federal Reserve to get us to spend, as their has been no real increase in productivity in this economy for years. The only way to get Americans to spend was to tap into their home equity and to ease credit card rates.

    This caused a boom in debt-based spending. Now those with interest-only mortgages and balloon payments and variable interest rates risk losing their homes as rates rise, and they will.

    Rates will rise because the US has floated so much debt to finance war. You and I can't write checks against an overdrawn balance, but your government can. It may be called US Treasury Bonds or Notes, but it is still debt. And when those Notes and Bonds mature and are replaced by even more debt, ultimately this exerts inflationary pressure on the dollar, because the countries, individuals, and institutions holding this debt will want higher interest rates to offset the larger amount of dollars afloat in the world.

    Look at it this way. If there is a limited supply of anything that is desirable, prices rise to meet the demand. When there is alot of something, prices tend to fall because so much is available. The dollar behaves like this. Now there are more dollars than ever afloat in the world, and they are worth less as a result. To keep this boat afloat, the Fed has raised interest rates, penalizing those of us who need to borrow.

    This is more government in action, and needs to be stopped. We have been so bombarded by evil in other guises that many long range miseries that have been inflicted on America by the administration can get overlooked. The fiscal misery easy money led the unknowing and unwary of us into is only beginning. America will pay the cost of the Bush Administration for many years.

    Republicans are not smart enough to protect America. Howard Dean

    by 4Freedom on Fri Jun 30, 2006 at 09:11:54 AM PDT

  •  Some caps don't make much sense, though (2+ / 0-)
    Recommended by:
    CSI Bentonville, gpdx

    Oregon passed a law in the mid-90s capping how much property taxes could rise. Essentially, unless you did renovations on your house that required permits and reassessment, you were locked at a lower rate.

    Which is great for people on a fixed income in a rapidly rising market. They do need protection.

    But it's not so great for the schools, which are funded disproportionately by property taxes (there is no sales tax in Oregon) and are in near-crisis mode every year, in part because already-affluent neighborhoods that see huge gains in housing values don't contribute a reasonable share to the coffers.

    The thing is, Portland has a great Web site that lets you see the taxes paid on every property. The  gorgeous house for sale about 7 blocks away, which sits on a lot six times the size of ours (and is priced at about 5 times what we paid for our house) has property taxes barely more than twice what we pay, because it hasn't been reassessed since the 1990s. It will be 'adjusted' when the house sells, but until then (and for the past 10 years of incredible value increases in Portland), that's a lot of money not being paid into the schools' coffers. I'm not sure that's fair.

    •  Agreed (0+ / 0-)

      Our valuation (house & 4 ac.) went up $14,000 this year after 4 years with no increase.  And the school taxes are up because of a new bond issue to build a new elementary.

      BUT we sent two sons through our really great school system which prepared them well for college and meeting the world.  So we really can't complain.  

      The truth always matters.

      by texasmom on Fri Jun 30, 2006 at 09:25:14 AM PDT

      [ Parent ]

    •  as you... (0+ / 0-)

      ... tax land, the disfunctions you notice would go away. For example, the speculation that drives prices up and down.

      Wealth is always concentrated to a higher degree then anything else. Taxing the land does a better job of capturing this wealth and using it for public good.

      It isn't fair, as you said, for that person to wait for "the rise" and then sell. In the mean time, they  are costing society.

  •  My Property Taxes are $1200 a Year. (0+ / 0-)

    So I guess it depends on where you live and the tax structure in your state.

    We have no income tax and a nearly 9% sales tax on everything but food and drugs.

    We have a house in the old part of town that has a low overall valuation, but big trees, good neighbors and irrigation water at $90 a year.  OK, it's in the middle of nowhere, but we still get out once in a while.  ;)

    Baaaa! Baaaa! :::Chomp!::: Beat Doc! www.wright06.com

    by InquisitiveRaven on Fri Jun 30, 2006 at 09:20:50 AM PDT

  •  Florida Homestead (0+ / 0-)

    If you have your home homesteaded (actually live in it) The property tax can only increase a maximum of 3% a year. All other property including 2cd homes or commercial property increase as the value of the prperty tax increases. I purchased my home for $125,000 several years ago. Since then homes in my neighborhood are selling for more than $250,000, but my house is only taxed at $140,000. My brother has a house he rents out and he has to pay the taxes on the the whole $250,000.

    •  My county in NY just passed a 3-year assessment (0+ / 0-)

      cycle, where the home's assessed value (which is done at the alleged market value) is set every three years.  The tax is then calculated by using the tax rate applied to 100% of the assessed value.  

      The county I lived in in Maryland had a 3-year assessment cycle but the tax was calculated by applying the tax rate to something like 60 to 70% of the assessed value.  In addition, the amount that you actually paid in property tax could only go up a maximum of 10% per year no matter what the new property calculation showed.  

      Don't be so afraid of dying that you forget to live.

      by LionelEHutz on Fri Jun 30, 2006 at 09:32:54 AM PDT

      [ Parent ]

  •  Interesting Idea (1+ / 0-)
    Recommended by:
    raines

    Yours is certainly an interesting idea but I see some holes.  In cities it is not the case that "the majority of the tax falls on the building and improvements."  In cities the majority of the value (and tax basis) is the land.  I do mortgages for a living.  As values increase here in San Francisco almost all of the increases value is ascribed to the land.

    Some practical questions:  what about condo's?  These seem to fall well outside your "tax the land" paradigm.  Almost all new development in SF is condos.

    Perrsonally, I a "city guy."  I was born in The Bronx and have lived in SF since 1970.  I have no idea why folks have such negative attitude about the suburbs and "sprawl."  If folks want to live there let them.  Folks who have children often leave SF for the suburbs because they are (to put it mildly) unhappy with public education in the City and move to the suburbs because they see their choice as private school in the city (can approach $20,000/year/kid) or public school in the suburbs.

    Also, your notion about "big back yards" is not what is happening here.  In the Bay Area the strange phenomenon is that the suburbs (especially Contra Costa County to the East) and starting to resemble the City where may lots now have enormous homes with little yard space.  This is something which, franky, is in the "you have to see it to believe it" category.  I do not know to what extent this is happening elsewhere.

    Your notions about parking lots is plain silly.  Developers do not build parking lots as a means of saving property taxes they build them out of practical necessity.  The suburbs do not have the public transportation infrastructure and require that folks "drive to the mall."

    I have no desire to dictate to those who choose to live in the suburbs how to rearrange their lives.  Folks here in San Francisco also ask those in the suburbs to tolerate any odd behaviors they might see here and butt out.  

    -- Dick Lepre

    •  Actually, building codes for commercial (0+ / 0-)

      buildings usually require a set number of parking spaces based on square footage. Ours is 1 space per 250 sf of building - which would be 200 spaces for a 50,000 sf building.

      The truth always matters.

      by texasmom on Fri Jun 30, 2006 at 09:30:09 AM PDT

      [ Parent ]

    •  response (0+ / 0-)

      Yours is certainly an interesting idea but I see some holes.  In cities it is not the case that "the majority of the tax falls on the building and improvements."  In cities the majority of the value (and tax basis) is the land.  I do mortgages for a living.  As values increase here in San Francisco almost all of the increases value is ascribed to the land.

      yes, that is true. But, if people were to build further on that land and imrpove it further, what happens? Their taxes go up so the land is under utilized.

      Some practical questions:  what about condo's?  These seem to fall well outside your "tax the land" paradigm.  Almost all new development in SF is condos.

      Condo's need to be in a building which then sits on the land.

      If folks want to live there let them.

      I agree

      Also, your notion about "big back yards" is not what is happening here.  

      I am not saying that big back yards is a good or bad thing (which was what your example was based on). I am saying that in certain communities the land is under utilized or misappropriated.

      Your notions about parking lots is plain silly.  Developers do not build parking lots as a means of saving property taxes they build them out of practical necessity.  The suburbs do not have the public transportation infrastructure and require that folks "drive to the mall."

      Maybe not. But, is it? Other then what the other poster has under this thread, how often do you see parking lots filled to the max or even half way?

      Why do firms locate to the margin, with lots of cheap parking instead of into the urban center? If land was taxed, how would that change this scenario? How is that different now? Which is more costly, marginal land or urban land?

      I have no desire to dictate to those who choose to live in the suburbs how to rearrange their lives.

      I agree.

      •  Condos Again (0+ / 0-)

        You missed my point about condos.  I understand that a condo is built on land but the problem is that you want to highly correlate property tax with land value.  For condos this simply does not work.  The land value does not increase to any significant extent becaue a 30 story project rather than a 5 story project is built thereon.

        Maybe you are saying that condo owners should pay close to nothing compared to single-family home owners.  I don't really know.

        I am saying that your model does not correctly address condos because there the value of the condo has little correlation to the land value.  If you believe strongly in your thesis I respectfully suggest that you do some work on it to make condos make sense under it.

        I don't quite get your emphais on the importance of land utilization or underutilization.  I do not see underutilization as per se bad.  Variety is good. Your thesis, in my opinion, seems to imply that City life is somehow making better use of things that suburban life.  Personally, I place a great deal of value in variety.  Maybe I missed your point here.

        •  response (0+ / 0-)

          The land value does not increase to any significant extent becaue a 30 story project rather than a 5 story project is built thereon.

          yes that is true. But, we are still talking about inner city development here. I don't know of many 30 story condo's out in the middle suburbia. Why? Because land is costly in the inner city and so we need to build upwards.

          hence

          Maybe you are saying that condo owners should pay close to nothing compared to single-family home owners.

          is not the case at all.

          This is because urban land is costly. 1 million dollar condo's sell for 1 million dollars because of the land value it sits on. This has nothing to do with mortar and brick in the walls. If condo's are appreciating, that means the land value they sit is appreciating. The two simply can not be seperated.

          If you take a urbantools.net or marylandlandtax project. you will see that a land value tax will mean that for the majoriy (around 80%) of single family homes their taxes will actually decrease.

          I don't quite get your emphais on the importance of land utilization or underutilization.  I do not see underutilization as per se bad.  Variety is good.

          and I agree with you. I can't speak for the suburbia of CA, but here in NY, and when I lived in VA and IL the subdivisions that went up all looked the exact same with usually three or four styles of modular homes. They are almost always laid out in the same way.

          When I use the term "underutiliziation" I am not saying that each parcel should have a 100 story building on it. Some parcels most efficient use is a corn field, or a mountain top with snow, or in others a single family and still others, that 100 story building. It depends on the area and the site value.

          However, in most cases and areas, the land is under utilized or misallocated. I do not know your local area, but I am sure if you drive around you can find areas where there are chained off empty lots or decaying buildings. You mentioned the bronx. Just take a look at S bronx. That place is legendary. Building owners would torch the tenement for the insurance and hold the land until the city would bail them or a neighbor and then sell for "the rise". All the while, peoples rents would go up and poverty abound.

          Read my other article on the disapearing farm and how they are related here:

          http://thehenrygeorgeblog.blogspot.c...

          I enjoy your questions and I hope you continue to ask more.

          One last thing. This is not my theory. This idea goes back to David Ricardo and smith and was refined in the 1800's by Henry George. People like Churchill, einstein, tolstoy, MLK jr, among others.

          •  Hate to Keep Beating This Condo Thing but.. (0+ / 0-)

            Condo owners don't own the land.  They are not taxed on the land but on the 3 dimensional "box" which they own.  I am not arguing with you thesis but only suggesting that it needs modification as regards condos.

            I think that I feel more comfortable letting folks decide how to use or underuse  the land in their community rather than imposing on them exogenous values.

            I have no problem with sprawl as long as "sprawl" is a place where folks are free to move into or move out of. I feel uncomfortable with folks throwing around "sprawl" as if it were a form of cancer.

            Here in California, land usage is limited largely by the availablity of water. The water is almost all in the Eastern half of the state.  The population is mostly in the Western half.  Nature puts the water where it is.  Choice puts people where they are.

            •  and the point is... (0+ / 0-)

              ... the value of their condo is reflectiv of the land under which it sits, no matter if it is on the ground or 50 stories up. Indeed, condo's higher are worth more because of the technology to get them up high and, as my former upper east side girlfriend told me, the higher up you go, the better the view of the park and the less noise.

              If a condo building is 10 stories, 1 unit per story, costs 100 dollars to build, and is worth 200 when I sell it, the value of each unit to build is 10 dollars. The rental cost, or the cost associated is 10 dollars.

              Now, if I decide to build a 20 story buildin on that peice of land for 300 dollars, since building costs do not scale linearly with each added unit. Now, when I sell the building it is worth 400 dollars.

              each unit is worth 15 dollars plus the 5 dollars for land.

              The tax burden for the marginal person in the taller building is less then compared with the smaller building.

              Out in the middle of the country where we find the single family homes, buildings are often worth twice as much, or in my mom's case, 5 times as much as the land it sits on. The tax burden for that person is going to be teeny tiny compared to a person in a condo in the city.

              I think that I feel more comfortable letting folks decide how to use or underuse  the land in their community rather than imposing on them exogenous values.

              People are still free to underuse all they want to. However, this is a priviledge to underuse and is a cost to everyone in society. When there is a paved over building in the downtown area and made into a parking lot, that costs me because there are fewer buisnesses and fewer jobs. When there are huge giant parking lots, that costs me because I need to drive for miles to get around all those parking lots. All of those costs add up.

              Right now, people have less choice then they would under the LVT. Right now, people get priced out their homes and it happens all the time due to land speculation. Right now, as you drive out into the farmland, you will see a development, with fields, and then another development... checkboard development. The people moving 40 miles out on the margin don't have the choice to move 30 miles out, because the developers are holding onto that land waiting for the rise. Eventually, the city or town will spend thousands or millions to build roads into that area and THEN they will sell, taking those windfall gains along with them. Just take a look at the latest Dennis Hastert example. That sort of thing happens all the time.

              Here in California, land usage is limited largely by the availablity of water. The water is almost all in the Eastern half of the state.  The population is mostly in the Western half.  Nature puts the water where it is.  Choice puts people where they are.

              The entire irrigational system in California was an LVT/ Georgist program and the main reason for California's stunning growth.

              On water issues I read this section

              http://www.wealthandwant.com/...

              On the California irrigation project:

              They raised funds by taxing land; most of them delivered water free of variable cost. Likewise, no one charged them for taking our water from our rivers. There was ample water, so it seemed, running to waste, or into swamps. The result, from 1900-30, was to convert California from pasture and wasteland to the #1 farm state in America. It was a Georgist object lesson, and a brilliant success story.

              Quoth Albert Henley, a prominent attorney,

                 "The discovery of the legal formula of these organizations was of infinitely greater value to California than the discovery of gold a generation before. They are an extraordinarily potent engine for the creation of wealth."

              and also some stuff here:

              http://www.wealthandwant.com/...

        •  one more thing (0+ / 0-)

          You might enjoy reading this article about san fran.

          http://www.masongaffney.org/...

  •  Stop the 'flippers' (0+ / 0-)

    To all those whose neighborhoods are "up and coming" thanks to gentrification:

    Do you see those signs sprouting up saying something like

    "Sell Your House Fast"

    or

    "We Buy Houses"

    or similar? I've watched them spread from neighborhood to neighborhood in my city, and it struck me the other day that residents of local areas who don't want speculators coming in and "flipping" houses and artificially driving up prices should simply go out and TAKE THEM DOWN.

    Anybody know what I'm talking about? What do you say, people?

  •  Fun discusion (0+ / 0-)

    I'll check back in an hour or so. I am happy to see how  much interest there is in LVT reform. If you have any other questions please don't hesitate to ask.

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