Destroy the businesses, rental prices go down, land value tax rates punish land owner for keeping land empty, so either land owner sells the property to someone who can make the numbers work, or land owner accepts lower profits.
Obviously, there is pain for the current players, but long term, the landowner should not be able to extract so much profit margin without also providing sufficient utility, such as operating an in demand business.
Something to be said about the number of vampires out there. I think about my own apartment complex. Less than half a dozen units owned by a single landlord. They pay a handiman probably less than $1000 worth of work on the property a year, really nothing major every happens. They pay a crew to come by once every other month and trim the bushes and blow everything out, mostly because the city has fire code saying the bushes cannot touch the structure. Whatever the cheapest two man crew for that costs I guess.
And for that couple hundred in upkeep maybe they pay a year, my landlord clears probably between 150k to 200k in rent doing nothing at all. I think they actually own a couple more similar properties so its more than that.
So here is this couple in this city, that has found for themselves a way to pull out at least 200k from the local economy, and contribute basically nothing back at all. They don't otherwise work. They just cash checks pretty much and text the handiman when an tenant texts them. Imagine how cheap my rent would be not having to pay for these vampires considering actual costs of this building. Probably like $50/mo each between all of us tenants would be plenty to cover typical yearly overhead. I'd certainly go out to eat a ton more and heavily support local economy if I was only losing $50 a month of my pay to rent. I'd probably get away only having to work 10 hours a week. But no I work 40 hours and give them like 30% my gross because my landlord needs 200k to do nothing. Literally all they do is suck my blood. Their whole existence based on sucking my blood.
You’re not just paying the landlord, you’re paying to outbid all the other people who want to live in that space. Even if you could somehow remove the landlord from the equation, there’s no way you’d get your place for $50/month.
But with LVT the rent money would go to the government instead of the landlord
Why are we bidding at all? Should be first come first serve like most other goods.
“basically nothing back at all,” or, “ the time value of money.”
We must differentiate between capital and land. They aren’t the same thing. OP is saying that his landlord is profiting off land. This is indeed doing nothing, and has nothing to do with the time value of money, in the sense that the time value of money is due to capital, not land.
This is a common misunderstanding. Henry George made it very clear in the 1890s where the distinction lies.
Why won't you just buy an apartment/condo then?
Because we've spent the last 50 years with housing inflation above wage inflation and compound interest is the most powerful force. Tax burden has moved ever more to the working classes and away from the wealthy. So we're making less and the price has gone up.
it’s illegal to build more of them in almost all places in the US. San Jose, a city of over 1M people, was zoned 96% SFH until like 5 years ago.
So prices do existing ones are high. Labor is taxed heavily compared to rental income so it’s a slog to break into the capitalist class. This wasn’t the case 50 years ago though, because we let people built apartment buildings then. So plenty of people could buy in at that time.
No money for down payment. Mortgage on the median home would also be another 3-4 grand a month. Hardly any inventory much below the median as usually that is just offered for rent.
But currently, most of the high intensity retail areas tax the landlords on the value of the land PLUS the value of the building ( "improvements" ). They owe this tax even if the building is empty.
How does switching to a land value tax, which only taxes them on the value of the land, help at all ?
I think it makes a lot of sense. Like if you have a $100k empty lot taxed at 1% of total value, and you build a $200k house on it, then your taxes go from $1k to $3k, which somewhat disincentivizes building. You might feel pretty comfortable sitting on the lot at $1k/year, especially if values are increasing at more than a few % per year. But if you tax only the land at 3%, then your taxes are already $3k. There’s no disincentive to build, and it’s a lot more uncomfortable to sit on that empty lot, so you develop it or sell it to someone who will.
In urban and suburban areas, it benefits society to have more development on a given piece of land. Taxing the land only does not mean the nominal tax liability goes down. Taxing the land only means the land owner is incentivized to do something with the land. The more productive the use, the better for their bottom line, and the better for society.
Easiest example is having an empty lot or a detached single family homes taking up 0.2 acre lots in the middle of a city that could house 10x as many people on the land. Right now, leaving it underutilized makes it a cheap savings account for the landowner. Developing it is work. So let's incentivize the development taxing the land only (can be the same or more), so that the only way it makes sense to control that land is to do something sufficiently useful with it.
This feels like a solution at the barrel of a loaded gun.