Quote:
Originally Posted by maccoinnich
I'm no expert on this, but I think changing the property tax system would require voter approval to change the Oregon constitution. So I think the chance of it happening are remote at best.... But I think the biggest effect would that it would quicken the pace at which Downtown properties owned by the Goodmans etc are developed. And if they had to develop, they wouldn't choose to do it at heights less than 100'.
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Right. So snowball's chance in hell, but if passed, the main effect would be to encourage owners to develop their property to its highest and best use.
As Henry George envisioned it (if I understand right), the other purpose of a strong LVT was to eliminate (or perhaps greatly reduce) the speculative value of real estate. If every increase in value is taxed proportionally (and at a high rate), then land is no longer a good investment. Its value would thus undergo an adjustment; it would subsequently reflect what the market would
theoretically be willing to pay in rent
were the property to be developed to its highest and best use. Thus, I imagine, land in the Pearl would
still cost significantly more than what it does on Williams (because there's more demand to live there, and because allowable height is taller). The city, presumably, and not property owners would ultimately benefit financially from the higher rents that residents of more desirable areas must pay (which is only fair, since the city pays for all the amenities that make it a desirable area to live in). But if
land (as opposed to improvements) is no longer valuable as an investment, would land everywhere in the city become cheaper? And if land values drop but the housing stock increases as properties are developed to their full potential, would this cause rents to plummet?
It sounds like a fantastic win for Portland. (For renters anyway, if not for landlords). If Portlanders wanted to limit buildings above any given height in any district they could amend the zoning code accordingly -- and property owners would have less reason to object, since their LVT would decline proportionally to the property's diminished potential. Indeed, they would really only have cause to object if the city
raised height limits beyond the landlord's capacity to develop, forcing them to sell.
Can you identify any flaws in this appealing vision?
[Edit: I finally got curious enough to just google the thing myself.
This Economist article gives a pretty clear explanation of an LVT's effects on the housing market: land values decline, development increases, rents decrease. And concludes, depressingly: 'The bigge[st] barrier is political. LVTs would impose concentrated costs on today’s landowners, who face a new tax bill and a reduced sale price. The benefit, by contrast, is spread equally over today’s population and future generations. This problem is unlikely to be overcome. Economists will continue to advocate LVTs, and politicians will continue to ignore them.']
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