Yes, unfortunately California seems to require unraveling Prop 13. Even if building abatements were possible, it'd be a mess with all of Prop 13's distortions of true market value of properties. Tax caps make LVT implementation weird.
As a workaround, what about a capital gains tax on land value, such that the seller pays a significant tax on the increased value of the land from the time that they purchased it?
Yes. Texas is a bit challenging and is an interesting case for me. They do have exemptions, but the exemptions are written mostly in the constitution. However, they also have reinvestment zones which grants the state authority to allow cities to encourage development.
With this provision, it is possible the state could authorize a city to exempt improvements using a city-wide reinvestment zone. As currently written in the statute by the state, the reinvestment zones are a bit confined, but the state has ability to change that. It's possible a city is best served by drawing a zone around its urban core, where most of the land value is, and requesting reinvestment zone status for that core.
There is no uniformity problem in Australia. The Federal government has full taxation power under s.51(ii) of the constitution. There was a federal land tax in 1928 but it was ditched in 1956 in favour of income tax.
By the way, it is an error to talk of taxing at some rate of value, set by politicians presumably. This would be abused & manipulated for partisan reasons.The full anual rental value of sites (ignoring improvements) should be collected in lieu of all oher taxes.
Ah, ok, I see it there now. It's just shifted to a different place compared to the original constitution text that seems to have been quoted in the article. Thank you!
Great insights Greg on some of the legal difficulties of enacting a land value tax. I had never heard of “uniformity” laws on property tax. But I can say this….
if such a law is interpreted such that it would prevent LVT: there is something deeply wrong with the legal/legislative system. As I have said before many times, humanity was at “fork in the road” circa 1900…
Just before we got the income tax, we had the opportunity to lean into land taxes. We failed. We created a tax code, administrative structure, infrastructure, and vested interests around taxes on production.
We then built an expensive and unsustainable welfare system to paper over the issues created by a complex and perverse tax code. It is much harder to change course now.
My understanding is that here in California, Prop. 13 presents an absolute barrier to localities that want to enact an LVT. Do you agree?
Yes, unfortunately California seems to require unraveling Prop 13. Even if building abatements were possible, it'd be a mess with all of Prop 13's distortions of true market value of properties. Tax caps make LVT implementation weird.
As a workaround, what about a capital gains tax on land value, such that the seller pays a significant tax on the increased value of the land from the time that they purchased it?
The Texas Supreme Court has already ruled that land value taxes violate uniformity.
https://houstonhistorymagazine.org/wp-content/uploads/2014/02/Stephen-Davis-Joseph-Jay-Pastoriza-and-the-Single-Tax-in-Houston-1911-1917.pdf
Yes. Texas is a bit challenging and is an interesting case for me. They do have exemptions, but the exemptions are written mostly in the constitution. However, they also have reinvestment zones which grants the state authority to allow cities to encourage development.
https://law.justia.com/constitution/texas/sections/cn000800-01-g00.html
With this provision, it is possible the state could authorize a city to exempt improvements using a city-wide reinvestment zone. As currently written in the statute by the state, the reinvestment zones are a bit confined, but the state has ability to change that. It's possible a city is best served by drawing a zone around its urban core, where most of the land value is, and requesting reinvestment zone status for that core.
Are you aware of Houston’s brief experiment with an LVT? That’s what provoked the TX Supreme Court Case.
https://en.wikipedia.org/wiki/Joseph_Jay_Pastoriza
Yup! The reinvestment zone provision in the constitution came decades after JJ and offers some hope for feasibility without constitutional amendments.
There is no uniformity problem in Australia. The Federal government has full taxation power under s.51(ii) of the constitution. There was a federal land tax in 1928 but it was ditched in 1956 in favour of income tax.
By the way, it is an error to talk of taxing at some rate of value, set by politicians presumably. This would be abused & manipulated for partisan reasons.The full anual rental value of sites (ignoring improvements) should be collected in lieu of all oher taxes.
The text cited from the WA Constitution appears to be the *original* text. The text as currently amendmended doesn't offer the flexibility that is referenced in this article. See https://leg.wa.gov/state-laws-and-rules/washington-state-constitution/?section=ARTICLE%20VII#SECTION-1
It seems, unless I am missing something, that Washington State can offer exemptions:
"Such property as the legislature may by general laws provide shall be exempt from taxation."
Ah, ok, I see it there now. It's just shifted to a different place compared to the original constitution text that seems to have been quoted in the article. Thank you!
Oh yup my apologies
Great insights Greg on some of the legal difficulties of enacting a land value tax. I had never heard of “uniformity” laws on property tax. But I can say this….
if such a law is interpreted such that it would prevent LVT: there is something deeply wrong with the legal/legislative system. As I have said before many times, humanity was at “fork in the road” circa 1900…
Just before we got the income tax, we had the opportunity to lean into land taxes. We failed. We created a tax code, administrative structure, infrastructure, and vested interests around taxes on production.
We then built an expensive and unsustainable welfare system to paper over the issues created by a complex and perverse tax code. It is much harder to change course now.