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Culture War Roundup for the week of October 10, 2022

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The recent Georgist uprising in the rat-sphere seems to be spreading outward, and gathering steam if anything. Lars Doucet, who wrote the original ACX post that blew up, is now releasing a book called Land is a Big Deal which summarizes his writings thus far.

There was also a major takedown of Detroit land assessment practices by a major land parcel data collector, ReGrid that dropped a few days ago. Major takeaways:

  • Property tax assessment is widely variable - some houses have *double* the tax burden of identical houses literally across the street.
  • Landowners tend to have far better valuations (i.e. pay less taxes) than homeowners, probably because they have more time/incentive to protest valuations.
  • Poor taxing and tax foreclosure in Detroit are likely a large part of why the city has fallen on such hard times in recent years.

In addition, some fairly mainstream political candidates such as Chloe Brown who's running for Mayor of Toronto, seem to be gaining steam. Land value tax is a large plank in her platform.

I got interested in land reform through the original series of ACX posts, and frankly I'm surprised how interesting the problem is and how overall neglected the topic seems to be. Even extremely intelligent and well read folks I talk to about it are surprised when they learn that land value is usually just pulled out of thin air - the industry standard is to just take 25% of the purchase price and not give a shit about location or any other factors, which seems bizarre upon a critical review.

I've seen some discussion about Georgism/LVT here, but curious if anyone else has been following this?

Also, what are the arguments against LVT, besides low-effort "taxes are always bad and raising them is evil?" Genuinely curious for well thought out reasons why an LVT would be a bad idea.

Edit: For those new to this idea, a Land Value Tax in it's most basic form simply says we should tax away the value of the land, and only let people who sell land profit off of the 'improvements' they make, such as buildings, restorations, etc. For instance if you bought a piece of land and tried to sell it 1 year later off pure speculation, doing nothing to the land, you would not receive any profit.

Also, what are the arguments against LVT, besides low-effort "taxes are always bad and raising them is evil?" Genuinely curious for well thought out reasons why an LVT would be a bad idea.

My understanding is that this is effectively an opportunity cost tax. I.e., if you are sitting on a valuable plat which could generate 10 M$ in rents with 1 M$ of improvements, the market value of the plat should be about 9M$, and you would be taxed on that value, even if you were only generating 100K$ of rents (including imputed rents).

This is economically very efficient, as it encourages land to be used for its most economically efficient purpose. However, this butts directly up against peoples' real-world desires to "settle" - to establish a home in a place and be able to stay there indefinitely. If, for reasons beyond their control, the price of their property increases, they can be financially forced from their homes, which is about as soulcrushing as being foreclosed upon, while also seeming much more unfair. It destroys a person's ability to make stable long-term plans regarding a very fundamental fact of life. It also destroys residential community, by creating a disincentive to make a community that people want to live in, which has the natural effect of increasing property value. These are already problems with existing property taxes, that would be greatly amplified by taxing away all of the land value (leaving only rents).

After all, most people recoil about applying the same logic in other contexts: should a person's income tax be based on the amount of money they theoretically could be earning, if they worked as much as possible in the most valuable field they are qualified for, in the location with the highest salary? Hard-core utilitarians have seriously proposed this, but the concept of being treated as an economic ends with no function other than to produce social benefit, rather than a sapient being with noneconomic needs and desires makes most people reject this with prejudice.

This is a good argument, thank you for giving me this perspective!

If, for reasons beyond their control, the price of their property increases, they can be financially forced from their homes, which is about as soulcrushing as being foreclosed upon, while also seeming much more unfair.

I'm definitely more of a YIMBY, I understand that losing a house can be a serious blow, but I am more concerned with the fact that our cities are becoming increasingly less dense, losing valuable network effects, and wasting huge swathes of land.

It also destroys residential community, by creating a disincentive to make a community that people want to live in, which has the natural effect of increasing property value.

To me this is the most salient problem you bring up, although I tend to come to the opposite conclusion. Yes a poorly implemented immediate LVT would absolutely destroy community, the idea is to slowly introduce it at say 30% of land value, and raise it over time to soften the blow.

From what I can tell though, one of the big issues of community being destroyed in the U.S. especially is the lack of density. It's much harder to have a strong social group when you have to drive 15-30 minutes to see any of your friends, being able to walk to another building one block over is much easier. That being said, we do tend to have an issue building ugly, dystopic dense housing which actively disincentivizes community. That's a separate problem we need to fix.

After all, most people recoil about applying the same logic in other contexts: should a person's income tax be based on the amount of money they theoretically could be earning, if they worked as much as possible in the most valuable field they are qualified for, in the location with the highest salary?

I could never get behind this, and you're changing my mind on the 100% LVT. How would you feel about an LVT that taxed away 80% of the land value?

I'm definitely more of a YIMBY, I understand that losing a house can be a serious blow, but I am more concerned with the fact that our cities are becoming increasingly less dense, losing valuable network effects, and wasting huge swathes of land.

Build new cities! Sounds glib, I know, but there is really no shortage of unzoned, unoccupied land in the United States, in nearly every temperate zone. Sure, the best port locations and the most ideal of weather locations are taken, but this isn't Europe. There's no reason that building the cities you want must entail destroying the ones that exist, unless you are unwilling to settle for anything less than the maximum possible ideal locations, in which case no amount of land reform is ever going to solve the problem that millions of people want to live in those places without also living in proximity to millions of other people.

From what I can tell though, one of the big issues of community being destroyed in the U.S. especially is the lack of density. It's much harder to have a strong social group when you have to drive 15-30 minutes to see any of your friends, being able to walk to another building one block over is much easier.

I disagree, I think too much density is also harmful to community. There is balance between not having enough people to form a community and having so many people proximate that your community is too large to meaningfully participate in. I suspect that in reality, the ideal community is within an order of magnitude of Dunbar's number, and the physical size of one's "community" is simply scaled by the density. In a small town, the entire town is your community. In a suburb, it is your residential neighborhood. In a larger city, your block, and in a megalopolis, your building, or maybe even your elevator stop.

I could never get behind this, and you're changing my mind on the 100% LVT. How would you feel about an LVT that taxed away 80% of the land value?

Better, but still not very positive.

Build new cities! Sounds glib, I know, but there is really no shortage of unzoned, unoccupied land in the United States, in nearly every temperate zone.

I'm also on the build new cities train. I think the problem is building a new city is extremely hard. Not the actual infrastructure, but the getting people to move there. To be clear if we do institute a LVT, I think we should test it extensively on smaller/new cities and areas instead of just roll it out immediately.

I disagree, I think too much density is also harmful to community. There is balance between not having enough people to form a community and having so many people proximate that your community is too large to meaningfully participate in. I suspect that in reality, the ideal community is within an order of magnitude of Dunbar's number, and the physical size of one's "community" is simply scaled by the density. In a small town, the entire town is your community. In a suburb, it is your residential neighborhood. In a larger city, your block, and in a megalopolis, your building, or maybe even your elevator stop.

Interesting point here. I definitely find it compelling, and it's a huge problem. I'd like to think a Georgist system where people can name their price for a piece of land would enable stronger communities but a lot of people in this thread seem to disagree.