You can't "tax magic carrot stick <buzzword1>, <buzzword2>, blah, blah, <dogwhistle>" your way around this fundamental economic reality. But you absolutely can screw it up more.
Now, in a low regulation environment you probably could just up the taxes and let owners make do. A bunch of random low end income earning crap (storage lots or whatever, heavy on the whatever) will pop up to pay the tax bill. But Baltimore is not that so you'll probably just get the city owning a bunch of that vacant property instead which is a lateral or a step backward due to increased friction of development.
Tangentially, the author forgets that the reason cities like Baltimore adopted such policy was to encourage the bulldozing of uninhabitable structures lest they become less than legally inhabited. I get that a certain type of people love to screech about tax intake being an unalloyed good here but what's really happening is that the city is amortizing the cost of bulldozing crack dens over time via tax incentive for owners of "teardown" quality structures to take that step (which up's adjacent property values).
I'm not sure that the city owning a lot of land is actually a bad thing, compared to the current situation where it just sits there and rots. It's not like Baltimore has the best results doing things, but the alternative is clearly very bad.
They have been good for low income housing (often at the expense of lower income housing), low rent commercial spaces, low rent industrial spaces, amusement parks, real estate development, etc.
But this is gentrification and if you think it is necessary, then very quickly you will realize it is a problem. It homogenizes neighborhoods to support only a certain class of people while destroying other people.
As for revenue, that's a political decision. The thing is that elected officials control the tax rate, not SDAT. SDAT only values the properties.
Rising property values don't have to mean rising taxes, the elected officials can lower the tax rate in response -- this what the term "no new revenue rate" is for.
It's also not just about pushing tax burden onto vacant lots. When property A is undervalued relative to property B, property B picks up more of the property taxes. So if a lot of vacant land is undervalued, that means a lot of improved land is paying more taxes proportionately. It seems sub-optimal that property where nobody lives is given a tax subsidy and the difference is realized in rising taxes for everyone else.
The main point is that the law requires that everyone be valued at market rate. That should be done first. Then any special case exemptions, write-downs, discounts, and the tax rate itself, should be handled at the political layer, where they are explicit and conscious rather than implicit.
We can debate what the relative impact of this is in the big picture, but this seems like something that is worth fixing.
True but the law can’t bend physics on this: what is fair market value? One interpretation is, whenever FMV appears in policy, something is broken.
Arguably, speculation should always be unprofitable and we should ideally regulate against it in every way, shape and form. I'd ask what purpose does holding onto a unproductive piece of land serve at all to society beyond an easy to grease financial vehicle?
They're trading risk.
Sell to a speculator and you turn an uncertain future into cash right now.
Buy from a speculator and you get to enter the market at the moment of your choice.
It unlocks specialization - house builders can focus on building houses, and corn farmers can focus on growing corn. As soon as they're done with a house / harvest, either a consumer or a speculator buys it and they can focus on producing the next house/crop. Without speculators, they'd have to not only do their value-add, they'd also have to predict the market and hope enough customers show up in future. With speculators, this is significantly mitigated.
If I do nothing to my property, my taxes stay the same. If I add a shed, deck, pool, or whatever external feature to my property then the tax man comes and wants more money. The lesson? Don’t improve your property.
The problem is a far more fundamental one, because just as I’m trying to get people to understand related to this movement or initiative to do away with property taxes, certain government and asset holder support for that is likely more about personal enrichment and/or expanding total tax receipts by other means, i.e., ulterior motives.
The fundamental issue here is the very premise of how the tax system functions not what kind of taxes are stolen and extracted where; and then redistribute to whom, usually for corrupted reasons and purposes.
The effectively unlimited and unbounded, detached, and inconsequential nature of the tax system now is really the core problem. It’s currently other people’s money and mostly even future people’s money, squandered without any meaningful limits, barriers, or even rules regarding conflicts of interests; and there are virtually zero actual and real, immediate consequences for malfeasance by people charged with the duty of responsible allocation of funds. It’s a corrupt and rotten system from the very top to the very bottom.
Unfortunately not enough people care, understand, or might even like it because they benefit from it and think they will die before the music stops. That’s how we get $37 trillion in national realized debt, another $74 trillion in unfunded liabilities, and another $9 trillion in state and local debt for a total national debt of $120 trillion in America’s public debt burden as of today.
It happens all the time.
Half the time you see a facility that's using "temporary" tarp shelters and/or containers and/or trailers for some amount of it's covered area it's doing it for the taxes. The other half the time is for the expediency and flexibility (a sub component of which is fewer government approvals and government mandated steps, so basically taxes of another form).
Any time you have a commercial development across multiple lots they run the numbers both ways and/or they'll subdivide a big lot or they'll buy adjacent parcels crossing a jurisdiction boundary to minimize expense (not just taxes, construction as well).
It's worse than that. If you sit on the property, but your neighbours improve it, make it a better place to live, create businesses that attract people, OR the public treasury builds a park, or a metro stop, or a new road, your property value increases, letting you capture the value that others worked for!
1ac parking lot = easy and definite, just buy land, simple permits, etc.
.25ac parking garage = difficult permits with many more places for various parties to whimsically drag their dick all over it at great expense to you, etc.
Investing in a commercial structure carries massive financial risk because there are all sorts of steps along the way where the government has reserved the right to balloon your cost so 1mil of land, 2.5mil of structure and $100k of bullshit could potentially be 1mil,5mil,500k once everyone is done screwing you.
The parking lot on $4mil of land and $100k of construction and $100k of bullshit can only balloon to $4mil, 200k, 200k in the worst case.
Now, I pulled those numbers out of my ass but it's the basic workflow that underpins most of the "stupid" things we see being built.
I wish that was the case, but in both counties I've owned houses, the tax appraisal increases every year regardless. They don't even drive by, they just use automation to increase it. I protest every year and "win" which means the increase is reduced or eliminated, but it's a fight to keep your taxes the same regardless.
At least that's the way it generally works where I live.
The unintended consequence is that cities get much more in taxes from businesses tban residents. California has therefore overbuilt its business base while underbuilding housing. The result is a severe housing shortage and sky high rents.
Sounds more like the Substack is trying to raise poverty by raising cost of living and prices.
It's just that a lot of that housing is in awful shape, and the places where it exist aren't desirable neighborhoods (although let's be clear, many of them are right next to expensive and desirable neighborhoods, it's really bad.) This should be a situation that rights itself automatically, but it's not.
Time is money and taxes are already amortized into any potential developer's math, regardless of what the rate nominally is. If the properties aren't economically developable in a "it costs us pennies to sit on them so we'll take our sweet time" paradigm then they're sure as shit not developable in a "I'm paying the same tax rate no matter what so I gotta put something up ASAP so I can a)get income b) sell" paradigm.
Those people are potentially treating it like an investment. If the cost to hold onto it for longer is very low, why not sit and wait until the value appreciates and a developer offers you more money in the future?
Increasing the cost to hold the investment might encourage sales at today's prices instead of waiting for years.
I'm not sure that helping developers buy land cheaper is the right solution or a complete one, but I do think increasing the cost of holding property as an investment would have an effect.
Or they double down and hold longer to "make it back" later when conditions are more favorable.
>I'm not sure that helping developers buy land cheaper is the right solution or a complete one, but I do think increasing the cost of holding property as an investment would have an effect.
We are all developers, comrade.
The more you increase costs the more you'll squeeze out the little guys leaving BigCos that DGAF and are copy pasting the same things everywhere with no regard because they're operating at the statistical level.
I don't mind taxing the BigCos more and more money to hold land.
When you own land, you have taxes, insurance, mortgage perhaps, upkeep etc. Easier to invest in stocks.
Anyhow, you have land with the idea that when the conditions warrant you can develop. Hopefully soon. But conditions may not develop quickly and you have to bear high holding costs.
At some point, it becomes free land for anyone willing to use it.
Assess the empty properties to their actual value, and then lower the overall rate.
That is one angle of view. Alternatively, you could be encouraging vacant lot (or equivalent structure) owners to sell if neighbors are improving properties while they are not.
However, it depends. An area might have enough demand for a single improvement, like a 7-11 or something, but no prospects for any more.
Punishing neighbor properties for not getting that one deal is an interesting but not ideal solution.
The point of the article is not "Baltimore should raise more taxes" -- raising more revenue is a political decision, and that is not actually under SDAT's purview. SDAT's job is simply to assess property at market value. What to do with that value is for the elected officials (and the voters who elect them) to decide.
If property A is undervalued relative to property B, property B faces an unfair burden of taxes, and property A receives an unfair tax break. That's all this report is trying to say -- all property should be assessed at its market value, as the law requires.
Any exemptions, discounts, write-offs, and the tax rate itself, are political decisions. Those should be made explicitly by elected officials, not implicitly by unequal valuations.
That is usually the case, outside of the very few core competencies and purposes of government which simply are not what our governments in the West focus on at all anymore. In many, if not all cases western governments even actively undermine the beneficial things they should be engaged in because they are all corrupt, captured, and at the very least borderline illegitimate.
Every empty lot in my neighborhood had valuations of 50k and they just sat for 20 years until cov.
In a place like Baltimore, the city ends up owning the blight, and are generally not capable of effectively cleaning it up (due to their general mismanagement that causes an environment where blight is the norm in the first place).
The tax upon land values is, therefore, the most just and equal of all taxes. It falls only upon those who receive from society a peculiar and valuable benefit, and upon them in proportion to the benefit they receive. It is the taking by the community, for the use of the community, of that value which is the creation of the community. It is the application of the common property to common uses. When all rent is taken by taxation for the needs of the community, then will the equality ordained by Nature be attained. No citizen will have an advantage over any other citizen save as is given by his industry, skill, and intelligence; and each will obtain what he fairly earns. Then, but not till then, will labor get its full reward, and capital its natural return. — Henry George, Progress and Poverty, Book VIII, Chapter 3
Very relevant to this particular article: https://en.wikipedia.org/wiki/Georgism#/media/File:Everybody...
>"EVERYBODY WORKS BUT THE VACANT LOT" I paid $3600, for this lot and will hold till I get $6000. The profit is unearned increment made possible by the presence of this community and enterprise of its people. I take the profit without earning it. For the remedy read "HENRY GEORGE"
If someone comes along and overimproves their land near me (or overpays for a lot), does that mean the entire area should be compelled to pay taxes as if all landowners made the same incorrect decision?
1: your rate is based on a sampling of similar houses, not the newest most expensive neighboring house.
2: your rate of increase is capped, so you are insulated (not immune) from rapid change
Every time it comes up it seems many people are also unaware that taxing land value is already common practice. It’s common to have one tax for the assessed value of the land and another tax for the assessed value of the improvements. Policies might include exemptions for the first so many dollars of a person’s primary residence structure.
With a pure Land Value Tax you cover your eyes and pretend the value of the structures and improvements doesn’t count. If one wealthy neighbor builds a $2,000,000 house next to a retired grandma living out her final years in her small, old forever home, the LVT people don’t care. If their lots are the same then they must pay the same taxes because the land value is what matters.
This makes it a very regressive tax structure as the people or businesses with the least valuable structures now subdivide their neighbors with the most valuable structures. This can all be avoided by simply using our existing system of having a tax on land and a tax on structures each at their assessed value.
That's what happens when you have absolutely no ideas to innovate or bring new businesses. Or you ignore other realities, like Baltimore is a really dangerous city.
Cities are not revenue generators as some politicians or people assume. Cities capture and manage value created somewhere else. If there is no value to capture, the city die. People move on to other places to capture value and it is totally fine.
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paul7986•2h ago
snapcaster•26m ago