Thanks for being rational and patient. Unfortunately those are rare qualities these days... As you've clearly studied this more than I, forgive me if some of my questions seem elementary. But when I find someone such as yourself who is willing to share insight and knowledge freely and without pedantry I try to take advantage. SO-
With regard to you first point: agreed. But this is a risky and protracted venture. I think we need to consider the time involved. Idle land always has a hefty opportunity cost, especially in a rising market. I may misunderstand your argument but it seems as though you are positing that a property is worth X in 1998, Joe Landowner has an interest in leaving it idle until 2006 when he (hopes he) can sell for X+2. However, Joe has to consider the money he could have made with the property in the intervening 8 years had he made improvements or leased to someone willing to do so, that revenue might very well be greater than X+2. For these reasons I question the actual prevelance of this sort of speculation. It's my understanding that derelict buildings tend to come about so that they can be counted as an investment loss for the purposes of reducing other taxes of the land owner (income tax, capital gains, etc) when such taxes outweigh the amount the owner might make from improving or selling the property, at least in the short run.
With respect to your third point: again I agree you are basically buying exclusivity. I think if anything this undermines your contention for a land-valued tax. It doesn't make sense that your right to exclude should become more costly (i.e. more public resources are required to ensure that right) just because the market is going up, you're still using the same amount of government services / protections to maintain your exclusivity as you were before.
If Vickery's point were true I don't see how the taxes would encourage more effecient use or increase market liquidity: which if I'm not mistaken was the stated goal of the tax (I'm not even sure if that's an appropriate purpose for taxation, but that's another issue). If the value of the land is still appreciating faster than the tax then one might still have an interest in a speculative hold-out. Moreover, my personal observation finds his assertion to be is false. Maybe it's just because I live in New York City, but I have NEVER seen a municipal government propose: "Because we're now raising money with Tax A, we can now eliminate/reduce Tax B". Even if they use that argument to sell the new tax, somehow it rarely, if ever, comes to pass that the old tax is phased out or reduced. But that's just my anecdotal experience and perhaps not valid in this discussion...
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Date: 2006-07-27 02:07 pm (UTC)With regard to you first point: agreed. But this is a risky and protracted venture. I think we need to consider the time involved. Idle land always has a hefty opportunity cost, especially in a rising market. I may misunderstand your argument but it seems as though you are positing that a property is worth X in 1998, Joe Landowner has an interest in leaving it idle until 2006 when he (hopes he) can sell for X+2. However, Joe has to consider the money he could have made with the property in the intervening 8 years had he made improvements or leased to someone willing to do so, that revenue might very well be greater than X+2. For these reasons I question the actual prevelance of this sort of speculation. It's my understanding that derelict buildings tend to come about so that they can be counted as an investment loss for the purposes of reducing other taxes of the land owner (income tax, capital gains, etc) when such taxes outweigh the amount the owner might make from improving or selling the property, at least in the short run.
With respect to your third point: again I agree you are basically buying exclusivity. I think if anything this undermines your contention for a land-valued tax. It doesn't make sense that your right to exclude should become more costly (i.e. more public resources are required to ensure that right) just because the market is going up, you're still using the same amount of government services / protections to maintain your exclusivity as you were before.
If Vickery's point were true I don't see how the taxes would encourage more effecient use or increase market liquidity: which if I'm not mistaken was the stated goal of the tax (I'm not even sure if that's an appropriate purpose for taxation, but that's another issue). If the value of the land is still appreciating faster than the tax then one might still have an interest in a speculative hold-out. Moreover, my personal observation finds his assertion to be is false. Maybe it's just because I live in New York City, but I have NEVER seen a municipal government propose: "Because we're now raising money with Tax A, we can now eliminate/reduce Tax B". Even if they use that argument to sell the new tax, somehow it rarely, if ever, comes to pass that the old tax is phased out or reduced. But that's just my anecdotal experience and perhaps not valid in this discussion...
I will definitely check out the link, thanks!
Mark