Millionaires and billionaires are typically NIMBYs, not YIMBYs (although in SF being a millionaire is common enough that this probably isn't totally true)
Most of the millionaires in SF are homeowners that bought at a tiny tiny fraction of that price, and they tend to be the NIMBYiest of them all, since their wealth comes from rentierism. The YIMBYs who became millionaires through wages are far less sympathetic to continue the housing displacement that creates SF homeowner-millionaires through capitalist exploitation. (At least, it's capitalist if you take a classic Marxist view of capitalism, which groups landowners in with business-owning capitalists. Smith and Ricardo hate landowner rentiers with the same fury as Marx, but don't seem to think of them in the same capitalist class.)
Yeah, the property tax structure in California is a very big contributor to the problem, in my estimation. It's certainly not the ONLY factor, but it is absolutely a cancer on the state of California -- a cancer they don't know how to kill, unfortunately.
That would help to some degree. I think an even better approach is to only assess the land, and reassess the land every single year. Then it doesn't matter at all what you build, and the speculator holding on to a vacant lot, withholding land from productive use, has to pay back to society for what they are taking away from everyone else.
Annually assessing property as the combo of structure + land is what most areas do, but assessing just the land is somewhat easier and is less biased. There are enough vacant land sales, in addition to some very simple regression models that come up with straightforward values per square foot of land. Much harder to game, and less sensitive to the extreme and systematic racial bias that pervades real estate valuation, even to this day.
> I think an even better approach is to only assess the land, and reassess the land every single year.
If you're only assessing the land, what would change when you reassessed it every year? Is the idea that property taxes will go down during droughts and back up during wetter weather?
It’s based roughly on the price of the market value of the land. Land in the middle of nowhere by a radioactive dump is not worth much, vs land in the city center. It has nothing to do with agricultural productivity.
That's a good question, and could get philosophical: what is value? The tax would be based on the market value, how much the land could be exchanged for. But where does that come from? There's sort of two ways of looking at, in my understanding (which may not be fully complete): how much can the land produce, and what is the mismatch between supply of a location and demand of a location.
The first way is that the value comes from what you can do with the land economically, what economic opportunities does that piece of land afford people?
So take plot of land zoned for a office anywhere in Pals Alto and compare it to a plot for offices, in St. Louis. The values are going to be immeasurably different, because there are economic opportunities in Palo Alto that simple don't exist in St. Louis, and being physically present in Palo Alto affords connections and value, at least according to what people are willing to pay for access to that land. This "land rent" is the same whether you're bringing in gigantic government contracts as Palantir, or if you are selling insurance in offices on University Avenue, but the prices are generally set by the greatest opportunity.
Secondly, looking at plots of land for single family homes in Palo Alto and St. Louis, the big difference in the value of the land, millions of dollars, largely comes from the mismatch in supply. Many people in Palo Alto are raking in the gigantic economic opportunities of building software companies on the network of highly specialized labor and capital that exists in Silicon Valley--and they need to live nearby. And there's not enough land to go around, so prices increase until the poorest have been kicked out and are set at the price of that least wealthy wealthy person. In St. Louis, the same number of wealthy people wouldn't have that impact becuase there's enough land to go around to them and more.
The idea of a land value tax is that it make more land available by encouraging far more productive use of that land. The person hoarding a vacant lot has zero carrying costs essentially under a typical property tax, so while land prices are rising, they have very little incentive to develop it. If they wait another five years, they might be allowed to build an even larger structure for even more profit, and in any case the land gains in value provide little incentive to sell.
And unlike commodities, where the cure to high prices is high prices, they aren't making more land. It's finite and limited. So high prices do not result in more land production. Instead, we need to set up the economic system to that as land prices rise, each bit of land itself becomes more productive: it must be put to better use.
Traditional property taxes disincentivize increasing the productivity of the land. But a land tax shifts the property speculation equation: it's never profitable to hold onto land that is less productive than it could be, on the thought that it will result in a windfall of future money. Or rather, it puts a high price on that speculation that matches the amount of value that the land speculator is taking away from society.
> So take plot of land zoned for a office anywhere in Pals Alto and compare it to a plot for offices, in St. Louis. The values are going to be immeasurably different, because there are economic opportunities in Palo Alto that simple don't exist in St. Louis, and being physically present in Palo Alto affords connections and value
The conceptual problem here is that the value of being present in Palo Alto isn't part of the value of the land. It's a development on the land. There's a fashion for Georgism going around right now, but people absolutely refuse to acknowledge this point.
> And there's not enough land to go around, so prices increase until the poorest have been kicked out and are set at the price of that least wealthy wealthy person. In St. Louis, the same number of wealthy people wouldn't have that impact becuase there's enough land to go around to them and more.
And here we see an example of that mistake being made. There's no shortage of land in San Francisco. There's a shortage of floor space. We could easily have ten times the floor space on the same amount of land.
In the absence of development, the land under San Francisco would have inherent value as a port.
By contrast, the land under Los Angeles would have no inherent value of any kind.
It's quite possible that I'm misunderstanding your points, because I can't come up with a definition of land that is consistent with what you are asserting here.
There are a couple of ways to define land, for example, 1) ownership of land confers rights in a society, and 2) an economic factor that has finite supply.
I'm not sure if I can reconcile any definition I know, with what you say here:
> the value of being present in Palo Alto isn't part of the value of the land. It's a development on the land
These two things are inextricably intertwined. The value of the land is partially what can be developed on the land, but nearly all of it comes from what is nearby. There's a reason that the real estate motto is "location, location, location" and that's all about what having that piece of land give one access too.
> There's no shortage of land in San Francisco. There's a shortage of floor space.
You can't have a shortage of floor space without that shortage of land, because they are linked by law. And even if there was no limit on floor space in law, the value of the land is still linked to floor space because it costs both time and money to change the amount of floor space.
> In the absence of development, the land under San Francisco would have inherent value as a port.
It only has value as a port if there is development elsewhere around San Francisco that makes San Francisco a valuable location for a port. This is a fundamental Georgist point: development and access to what the amenities of the developments are what makes land valuable.
>By contrast, the land under Los Angeles would have no inherent value of any kind.
Los Angeles has lots of value as a port because of the rail lines that connect it to so much development. And the initial value may have come from the developments on top of land that made Los Angeles a good port, but now there's lots of additional value from the networks of labor and skills that have concentrated in LA.
You seem to be making extremely skeptical mention of Georgism, but at the same time, I think that you are making extremist Georgist points. In most cities, the value of the land isn't from the land itself. Rather, the value of the land is in getting access to all the development around that piece of land. And that gap, between the development on a particular piece of land, and all the development around a piece of land, is what Georgists point to as both a fundamental economic inefficiency and as a way that workers get exploited.
> There are a couple of ways to define land, for example, 1) ownership of land confers rights in a society, and 2) an economic factor that has finite supply.
No. All economic factors have finite supply. Many of them are more tightly restricted than land is. Gold would be a paradigm of a "non-land" good, but it is not known for its elastic supply.
> You can't have a shortage of floor space without that shortage of land, because they are linked by law.
I don't think this says what you wanted to say. Your sentence states that, by law, there is a minimum amount of floorage buildable on any given area of land. This is most certainly not the case in California, where the state will go to great efforts to prevent even one story from being built on much of the land.
>> In the absence of development, the land under San Francisco would have inherent value as a port.
> It only has value as a port if there is development elsewhere around San Francisco that makes San Francisco a valuable location for a port.
This is incorrect. San Francisco has a lot of value as a port, regardless of whether there is a port or any other development there, because the location of ports, like the location of farms, is not arbitrary. Denver has no value as a port. This is (part of) the "land value" that Georgism proposes to tax. San Francisco is on better land.
More generally, agricultural, logistical, and military value often inhere in a particular plot of land, but "proximity" value doesn't.
> Los Angeles has lots of value as a port because of the rail lines that connect it to so much development.
Nope. It is a matter of record why the port in Los Angeles (technically, Long Beach) was built - the longshoremen's union in the (then significant, now dead) port of San Francisco objected to container shipping, so the shipping companies paid for the construction of a new port in an area with no longshoremen. That was the value of being in Los Angeles.
> This is a fundamental Georgist point: development and access to what the amenities of the developments are what makes land valuable.
Except that the Georgist proposal is to assess no taxes on developments. People say that access to developments will still be taxed, but this is logically incoherent. Access to developments is itself a development.
Consider the appropriate taxes on the Bay Area. A small plot of land in San Francisco has access to many nearby amenities, and we can assess an imputed value based on that access without needing to take account of anything that might or might not exist on the plot.
But when we analyze the Bay Area all at once, our small plot of land in San Francisco has access to nothing. (Nothing, that is, that we haven't pledged to ignore while we assess land value.) Now it's nearly worthless. So is the rest of the land in our (very large) plot. The assessed value of the Bay Area is probably outright less than the assessed value of the small plot in San Francisco.
This means that implementing a land value tax will inexorably cause intense concentration of landownership, because owning more land lowers your property taxes. Do you see that as a goal of Georgism?
> In most cities, the value of the land isn't from the land itself.
Which means that a land value tax will raise almost no revenue.
> Rather, the value of the land is in getting access to all the development around that piece of land. And that gap, between the development on a particular piece of land, and all the development around a piece of land, is what Georgists point to as both a fundamental economic inefficiency
Again, the inefficiency will be solved by large-scale ownership, so that there is nothing of significance around the plot being assessed. It will all be internal.
It appears that our definitions for words do not align enough to have a productive discussion.
I would like to acknowledge my misuse of the word "finite" in the definition of economic land though, that was sloppy. It should be "fixed". And gold would usually not be considered economic land because it is continually mined and the supply continues to grow. However, factors of production, besides physical bits of the earth, are also economic land.
If someone has a giant tumor taking over their heart, one "obvious" answer is to cut their heart out. Problem solved.
I mean, patient killed, but ...details.
I don't know the answer. I do know that some of the tax incentives related to real property in California are seriously problematic. How to fix them? I don't know. Tax law is not one of my areas of expertise.
> I do know that some of the tax incentives related to real property in California are seriously problematic. How to fix them?
Repeal prop 13, and replace it with property tax deferral, as done in Texas. If an elderly homeowner living in their house cannot (or does not want to) pay their property taxes, they can elect to defer them for as long as they want to, with some interest accruing. The county puts a lien on the property for the amount of tax due.
When the owner passes away, moves out of the property, or sells it, the tax lien needs to be paid, which can be done with the proceeds from selling the property.
I don't know if that actually works, but I do know Prop 13 is a big problem and this is the first I recall seeing some meaningful attempt to suggest an alternative that is actually in use somewhere, so has some hope of being not completely nuts.
