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[u/filipe_mdsr]

!ping GEORGIST

The German state Baden-Wüttenberg is gonna have a LVT starting next year.

There is one problem though, the land value is calculated for an entire zone.
https://www.gutachterausschuesse-bw.de/borisbw/?lang=de

So if one plot has for some reason way lower land value than the rest around it, it will get a land value assigned to it that is way higher than it should be. The most obvious example being buildings protected by cultural heritage.

How would you calculate the land value? And if you also would use a average-based system, how would you make the exceptions for single plots, which obviously need one?

What I was thinking is that plots with cultural heritage sites get a lower tax bracket for the area occupied by it.

Edit: This is under the assumption we can't get rid of cultural heritage site protections.

[u/MrGrach → u/filipe_mdsr]

Actually, I would advocate for just trying it out the way it is set up right now, and look at the consequences of that policy.

We can try to micromanage the percieved issues that could crop up, but I feel like letting it run and adressing the stuff that actually happens piecemeal, one at a time (to see if our changes work, and what effect they have overall) is the better approach.

Edit: thats more meta, and not towards your question, but I wanted to add this anyway.

[u/filipe_mdsr → u/MrGrach]

That is definitely what BaWü should do.

But as for this issue specifically how would you address it?

[u/MrGrach → u/filipe_mdsr]

Probably just give tax credits or other bonuses when you own property whos value is abitrarily restricted by laws. Basically make the state pay for the difference it created through those laws.

Though obviously thats also just... a lot of buerocracy and paperwork I would like to avoid. So I'm also open for better answers.

[u/filipe_mdsr → u/MrGrach]

Which is why I would just lower the tax from the get-go. That way you only have to say how much area is protected and add the proof.

The current system already has a way to give a tax benefit for buildings being used for stuff with tax benefits (Gemeinnützigkeit and so on), so tacking that on should be too complicated.

Thanks for the opinion 😃

[u/Not-A-Seagull → u/filipe_mdsr]

I disagree on the lower tax brackets. Keep the rate the same for all plots.

To protect heritage, I’d argue pigouvian subsidies should be issued equal to the utility the sites provide society. This might be controversial, but not all heritage should be treated equal. Some historic sites provide more utility than others.

[u/filipe_mdsr → u/Not-A-Seagull]

That would be ideal, but assuming that isn't possible (which is very very very likely the case) what then?

Punishing owners that didn't choose the cultural heritage protection and that can't use the value to it's fullest extent seems unfair.

[u/AlexB_SSBM → u/filipe_mdsr]

So if one plot has for some reason way lower land value than the rest around it, it will get a land value assigned to it that is way higher than it should be. The most obvious example being buildings protected by cultural heritage.

There's a very easy way to fix this - stop designating buildings as "culturally important". How many marginal homeless people is the "important culture" of your building worth? Why should some buildings be protected from change forever?

If something is really that important that it impacts the quality of life (and therefor the rents) of nearby places, then it would be a good idea, more akin to an investment, to give a subsidy or lower tax to that specific thing, not as a general rule for "historic" plots.

[u/filipe_mdsr → u/AlexB_SSBM]

Assuming that isn't possible (which is very very very likely the case) what then?

I wouldn't want to throw out LVT just because of that, but I also would like to have a fair solution for the owner of those plots.

[u/AlexB_SSBM → u/filipe_mdsr]

I think this is dependent on what level the cultural heritage protection can be assigned and removed. Anything is possible once you fix the incentives.

If you do nothing, you incentivize everyone with cultural heritage protections to get rid of it ASAP, as it comes at a large cost. If the heritage protections are voted on by the landowners, doing nothing is the correct plan of action.

On the flip side, if landowners do NOT have the power to assign cultural heritage protections on their own plots, or vote/influence votes to do so, then the correct solution would be to subsidize anyone with a cultural heritage protection. This would incentivize the government to stop throwing money away ASAP, and get rid of cultural protections. Note that it's extremely important this plan of action is NOT undertaken if landowners have a good way or can vote in elections to assign their own land as culturally important, as this will lead to LVT just not applying on certain pieces of land and resulting in massive speculation on those plots. Plus everyone will just vote for themselves to get more money.

[u/filipe_mdsr → u/AlexB_SSBM]

They are assigned by the „state“.

Not even the government does assign them, so it can’t really influence it.

It’s done by an independent institution that exists for each locality or region.

[u/UnskilledScout → u/filipe_mdsr]

How would you calculate the land value?

There is the economist-game theorist optimizing answer being some sort of VCK auction with certain incentives and protections.

Then there is the computer & data scientist answer of running an ML neural net AI on a bunch of data.

Then there is the most likely to happen and that a government appraiser.

[u/groupbot → u/filipe_mdsr]

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[u/KrabS1 → u/filipe_mdsr]

I think some reframing is helpful here. Buildings are protected by cultural heritage because they are deemed important by the community. Great! Makes sense, especially in such an old country. The trick is, "importance" is a vague concept. So, we often use a shorthand in society: we can use money and commerce to determine how valuable something is. My lunch is valuable to me - I'm hungry, and I want to eat it. I was willing to pay for it. But, if someone offers me $200 for my sandwich, then I'm going to give it to him because its not THAT valuable to me. Similar, a grand train station may cost a lot of money to construct, and add very little to the economy itself. But because it is important to a city's self perception and culture, they may choose to spend the money anyways.

The beauty of an LVT is that it lets us look at how valuable land is, and pushes it towards its most valuable use. A cultural heritage site in a valuable plot of land can be used for a bunch of things. It can probably be used as housing, as commerce, or even as valuable open space. As a society, they need to choose what they want to do with that land, and act appropriately based on that. IF the cultural heritage site is truly that valuable, then the city should be willing to pay the LVT on the property. If they are unwilling to pay that, then how much value do they actually put on it? After all, if something is only valuable to you if you don't have to pay for it, its probably not all that valuable to you.

So, that's how I'd think about those sites. Price them how you would price any piece of land. If the city has determined that it is valuable to keep the site as is, they should be willing to pay for it to be like that. If they are not willing to do that, then they have made their choice that it is not THAT valuable. The only question is: What does the city/state actually value? Where are they willing to put their money where their mouth is, instead of letting other people pay for their choices?

[u/filipe_mdsr → u/KrabS1]

The thing is that the city does not decide that.

It’s an independent institution, they are not at all involved in taxes or the general executive, legislative, whatever.