Comment by afiori | Hacker News Reader

Comment by afiori | Hacker News Reader

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You are talking about different things.

The land of a 15M people city has huge value but low unimproved value.

Georgist believe that if you buy a piece of land and build value on it you should not be punished. Georgist taxation is meant to encourage individuals to develop their own land.

In practice likely the taxation would apply on a lot by lot basis, so you would have to count your huge land ownership as 150 thousand small lots each with significant unimproved value.

Another way to look at this is that you should tax a piece of land exactly the market value of renting that piece of land. So that the only value in owning land is the corresponding control and not the value extraction of ownership.

In this formulation you would pay a lot of taxes on the thousand of hectars the city is build on but no more and no less than you can get your tenants to pay you.

My main criticism of georgism is that it aggregate owneship to the rich, as you might not have the capital to make your land productive enough to cover its rent value.

E.g a small bed and breakfast in a scenic location could easily be developed into a 10 story hotel has an unclear undevaloped value.

A lot of Boston is built on old swampland. Would Georgists say that the 2023 tax value of all of Back Bay is $0?

> no more and no less than you can get your tenants to pay you

Tenants will pay you for both the use of the land and the use of the improvements, though, so if you're going to pin the tax to the rent value, the tax must be the lease value only of the use of the land. You are allowed to profit, untaxed, from the rent of buildings on the land.

> A lot of Boston is built on old swampland. Would Georgists say that the 2023 tax value of all of Back Bay is $0?

This is exactly what I was addressing in:

> In practice likely the taxation would apply on a lot by lot basis, so you would have to count your huge land ownership as 150 thousand small lots each with significant unimproved value.

Let's play an experiment: in the middle of nowhere Alice and Bob each own two closeby land lots. Each lot by itself is worth essentially 0 dollars so neither Alice nor Bob pay any taxes on it.

One year Alice builds an hotel on her lot, her unimproved landvalue remains unchanged but Bob's increases to X dollars.

Another year Bob builds a restaurant on his lot, his unimproved landvalue remains unchanged at X but Alice's increases to Y dollars.

Honestly I am not sure how this would handle infrastructure development like a road or a railroad

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For georgist taxation to work you need to set a sensible limit to how big or small a lot can be: an entire city is too big and a square foot is to small.

The possible failure mode of this taxation is that all but the most efficient use of land can become impossible, but right now I believe that the problem of excessive rent-seeking and "parked land" are more critical

The question here is "what's the unimproved land condition?" not "how many lots is Back Bay?"

When left as swampland, Back Bay is essentially valueless, both in aggregate and lot-by-lot. Someone in the past came along and improved that condition to the current relatively firm earth.

Quoting wikipedia https://en.wikipedia.org/wiki/Land_value_tax

> A land value tax (LVT) is a levy on the value of land without regard to buildings, personal property and other improvements upon it.

So if you were to own the lan under the Shamrock Pub in 501 E 8th St, Boston, MA 02127, United States you would pay taxes on that piece of land as if the Shamrock Pub was not there but obviously still considering the city around it.

Georgism asks you to not consider the improvements UPON your land, not to ignore those AROUND it.

The question of what that value is is quite easy to answer, it is the price of a similar empty lot in the same area, with the same developments around it.

Here's where I think you're going wrong: the unimproved land value of Alice's land does kinda change? If you try to do it specifically at the lot level, you go crazy. Do it at the neighborhood or block level on a per square foot basis, and you'll be able to levelize the value of two lots next to each other. And this handles someone building a private road or a subway or something: them building it increases the land value of the entire neighborhood, including the property the improvement is on, but the value of the improvement isn't included.

It's having access to a subway, or having a hotel nearby, or a restaurant nearby that improves values, and they stack. There might be some adjustments on a lot level, but that's due to things like: water access might increase the value of the lots that have it, but not on the other side of the street that doesn't have access.

And here's the thing: cities already calculate the value of the land separately from the stuff on top. I do look at my property taxes, and they break it into the two values.

By "lot by lot" I mean that for each lot of land you determine how much that land is worth considering everything around it. I believe that we are sort of saying the same thing.

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