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Re: [LandCafe] Re: Why is no one talking about Greece?

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  • John David Kromkowski
    I have no problem with a personal exemption (I d favor it), but the devil again is in the details. (One of the bills, I helped get introduced in Maryland had
    Message 1 of 9 , Jul 8 11:16 AM
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      I have no problem with a personal exemption (I'd favor it), but the devil again is in the details.  (One of the bills, I helped get introduced in Maryland had an exemption for the first 40K of land for owner occupied principle place of residence.  BTW, this bill had the most cosponsors.  But I also could provide the legislators actual details of year one effects for any specific property they wanted. Without actual data, elected officials are very reluctant to consider anything.)   It is not enough to say that "you probably could work out the numbers", it is a matter that the number have to actually be done.  You know, after all is said and done; there really should be more done than said.

      But how would propose to calculate the amount of the exemption?
       
      We are both in agreement that pulling numbers out of thin air is not a good method, not only because it can't be accurate  but it will not be perceived as fair. For a number of pragmatic economist with whom I've spoken over the year, the perception that assessments in some places can be this kind of thing is the biggest strike against land value taxation.
       
      But generically saying "based on the transaction data", is not actually saying much because that is what assessors (most of whom try to be professional) already use.  But the transactions in urban areas very rarely involve empty lots or any empty lot which is immediately torn down.  So there needs to be a process of separating out the two components.  If you create a model that good and in current use housing stock is worth nothing or almost nothing, then the model is wrong.  The by-product of creating a model to determine land value from real estate transaction data is that the model must also determine improvement value.  Because it is a model (of which that can be many), testing the outcomes against reality is required.  It is not enough to say well the model says that the house you're living in is worth next to nothing, so it must be true.   Because if someone is living in a house that is in reasonable good shape the value is NOT zero and it certainly not just 20% of the total.  So for Harry and you to say that land valuer does care about the improvements does not make sense?  Unless you are in some rural area, you have to account for the fact that land and improvements are sold together in the majority of situations.  It would be like trying to study individual quarks. You can't do that because they only exist, at least now, only in Hadrons (usually three quarks together in the case of Baryons).
       
      You can keep saying an empty lot that would sell for the same price as the same lot with a structure is a situation where the structure is worth nothing.  But that is circumstance that is almost as rare as the mythical land rich cash income poor widow. (I very much doubt that they really exist, since no one has ever been able to actually name names.)

      So back to Greece.  I posted a link that shows that Greece has an ad valorem real estate (land + improvements) tax and that assessments are done every two years.  If people were serious that Greece should use a LVT to raise sufficient revenues to pay debt without hampering economy, then they would get the data and run the numbers.  Has any Georgist done this? No.  It seems that most were likely unclear whether Greece even taxed land value in any capacity at all. 
    • roy_langston1
      ... The exemption must be per person, not per property, and must also apply to tenants. ... OK, so it was closer to what is needed for popular appeal:
      Message 2 of 9 , Jul 8 1:36 PM
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        --- In LandCafe@yahoogroups.com, John David Kromkowski <jdkromkowski@...> wrote:

        > I have no problem with a personal exemption (I'd
        > favor it), but the devil again is in the details.
        > (One of the bills, I helped get introduced in
        > Maryland had an exemption for the first 40K of land
        > for owner occupied principle place of residence.

        The exemption must be per person, not per property,
        and must also apply to tenants.

        > BTW, this bill had the most cosponsors.

        OK, so it was closer to what is needed for popular
        appeal: restoration of the equal individual right to
        liberty.

        > But how would propose to calculate the amount of
        > the exemption?

        I am leaning toward using the mode: the amount of
        land value the most people use. This can be
        calculated by dividing the land value of each
        residential parcel by the number of people living
        there, and seeing which amount (or range of amounts)
        is most frequent. However, this exemption amount
        only becomes possible when effectively all rent is
        being recovered. During a phase-in period, I would
        suggest starting with 50% of expected initial per
        capita revenue, increasing by 20% of each expected
        revenue increment for the duration of the phase-in.

        > For a number of pragmatic economist with whom
        > I've spoken over the year, the perception that
        > assessments in some places can be this kind of
        > thing is the biggest strike against land value
        > taxation.

        Yes, many people think assessments are more or less
        arbitrary.

        > But generically saying "based on the transaction
        > data", is not actually saying much because that is
        > what assessors (most of whom try to be professional)
        > already use.

        "Misuse" would be more accurate.

        > But the transactions in urban areas very rarely
        > involve empty lots or any empty lot which is
        > immediately torn down.

        Demolition does not have to be all that immediate to
        give an accurate basis of land value. Unless there has
        been substantial damage to the improvements, a zoning
        change, etc., a few years would not make any difference,
        as the improvements would not have lost very much value
        in the interim. And IMO privately owned land should not
        be rezoned in any case. If designated land use is to
        change, the city should buy the land at market, change
        the zoning, then sell it back into the market, retaining
        any capital gain. This would also provide significant
        land value information.

        > If you create a model that good and in current use
        > housing stock is worth nothing or almost nothing,
        > then the model is wrong.

        That premise is objectively false, as already proved.

        > The by-product of creating a model to determine land
        > value from real estate transaction data is that the
        > model must also determine improvement value. Because
        > it is a model (of which that can be many), testing the
        > outcomes against reality is required.

        Right: against reality, not against false assumptions.

        > It is not enough to say well the model says that the
        > house you're living in is worth next to nothing, so
        > it must be true.

        It's truer than an arbitrary and unsupported assumption
        that improvements in use can't be worth less than some
        arbitrary amount.

        > Because if someone is living in a house that is in
        > reasonable good shape the value is NOT zero

        That assumption is objectively false. If the property
        would sell for the same amount with or without the
        house, the value of the house is zero. Period.

        > and it certainly not just 20% of the total.

        Depending on the market, it can be. It is probably
        close to that in the City of Vancouver.

        > So for Harry and you to say that land valuer does
        > care about the improvements does not make sense?

        It makes perfect sense. It is your objectively false
        assumption that improvements have to have value just
        because they are in use that does not make sense.

        > Unless you are in some rural area, you have to
        > account for the fact that land and improvements are
        > sold together in the majority of situations.

        So? Sausages are almost always sold with a certain
        amount of insect parts, rodent hairs, etc. in them.
        That doesn't mean the insect parts and rodent hairs
        are worth anything.

        > You can keep saying an empty lot that would sell
        > for the same price as the same lot with a structure
        > is a situation where the structure is worth nothing.

        Correct. I can keep saying it -- in fact, I will --
        and it will keep being objectively true.

        > But that is circumstance that is almost as rare as
        > the mythical land rich cash income poor widow. (I
        > very much doubt that they really exist, since no
        > one has ever been able to actually name names.)

        They certainly exist -- it is statistically pretty
        much inevitable -- as do improvements without value.

        > So back to Greece. I posted a link that shows that
        > Greece has an ad valorem real estate (land +
        > improvements) tax and that assessments are done every
        > two years. If people were serious that Greece should
        > use a LVT to raise sufficient revenues to pay debt
        > without hampering economy, then they would get the
        > data and run the numbers. Has any Georgist done this?
        > No. It seems that most were likely unclear whether
        > Greece even taxed land value in any capacity at all.

        It appears that Greece's property tax is a kind of
        ideal: it is so small and so marvelously complex that
        its revenue barely covers its cost of administration.

        -- Roy Langston
      • John David Kromkowski
        ... Yes, ideally per capita. The tenants don t get a property tax bill so do you give them a check equal to their per capita share? Then you are not talking
        Message 3 of 9 , Jul 8 2:45 PM
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          > I have no problem with a personal exemption (I'd
          > favor it), but the devil again is in the details.
          > (One of the bills, I helped get introduced in
          > Maryland had an exemption for the first 40K of land
          > for owner occupied principle place of residence.

          The exemption must be per person, not per property,
          and must also apply to tenants.


          Yes, ideally per capita. 

          The tenants don't get a property tax bill so do you give them a check equal to
          their per capita share?  Then you are not talking about a personal exemption but
          a CD.

          Do you have a check off on the LVT tax bill, where you identify the amount of people living there and then deduct from amount owed?
          How do you verify? 


          > But how would propose to calculate the amount of

          > the exemption?

          I am leaning toward using the mode: the amount of
          land value the most people use. This can be
          calculated by dividing the land value of each
          residential parcel by the number of people living
          there, and seeing which amount (or range of amounts)
          is most frequent. However, this exemption amount
          only becomes possible when effectively all rent is
          being recovered. During a phase-in period, I would
          suggest starting with 50% of expected initial per
          capita revenue, increasing by 20% of each expected
          revenue increment for the duration of the phase-in.

          > For a number of pragmatic economist with whom
          > I've spoken over the year, the perception that
          > assessments in some places can be this kind of
          > thing is the biggest strike against land value
          > taxation.

          Yes, many people think assessments are more or less
          arbitrary.


          Sometimes they think this even when they aren't arbitrtary.
           

          > But generically saying "based on the transaction
          > data", is not actually saying much because that is
          > what assessors (most of whom try to be professional)
          > already use.

          "Misuse" would be more accurate.

          How can you make such a generic critique without reference to actual data.



          > But the transactions in urban areas very rarely
          > involve empty lots or any empty lot which is
          > immediately torn down.

          Demolition does not have to be all that immediate to
          give an accurate basis of land value. Unless there has
          been substantial damage to the improvements, a zoning
          change, etc., a few years would not make any difference,
          as the improvements would not have lost very much value
          in the interim. And IMO privately owned land should not
          be rezoned in any case. If designated land use is to
          change, the city should buy the land at market, change
          the zoning, then sell it back into the market, retaining
          any capital gain. This would also provide significant
          land value information.

          There just is not enough data for pure land value (or effectively mostly land value because of imminent or recent demolition)  transactions
          to translate Sales data (land+imp.) into land value without make some reference to a model which includes improvement value.

          Cities do not have money to buy back land, change zoning and sell back to the market.  It is a completely convoluted mechanism that you are proposing.

          > If you create a model that good and in current use
          > housing stock is worth nothing or almost nothing,
          > then the model is wrong.

          That premise is objectively false, as already proved.


          Proved by whom?

          > The by-product of creating a model to determine land
          > value from real estate transaction data is that the
          > model must also determine improvement value. Because
          > it is a model (of which that can be many), testing the
          > outcomes against reality is required.

          Right: against reality, not against false assumptions.

           

          > It is not enough to say well the model says that the
          > house you're living in is worth next to nothing, so
          > it must be true.

          It's truer than an arbitrary and unsupported assumption
          that improvements in use can't be worth less than some
          arbitrary amount.


          Perhaps it would be helpful for me to better understand where you are coming from if I understood what you do for a living.

          Are you an economist?
          Do you own your own home?

          Would you agree that when a person leases an apartment, they are paying for two things:  one is the right to live in a particular location and two
          is the actual structure that will have a place for them to sleep without rain, and which is the proper temperature and to make dinner and to eat and to keep their stuff?
           


          > Because if someone is living in a house that is in
          > reasonable good shape the value is NOT zero

          That assumption is objectively false. If the property
          would sell for the same amount with or without the
          house, the value of the house is zero. Period.

          If they are living there then it would not sell for the same amount with or without the house.
          You have created a condition that really does not exist in reality or exists so infrequently that it has no meaning.

          If people are living in a structure that according to you has no value, why aren't they just living in the street or sidewalk in front of the house for free?

          > Unless you are in some rural area, you have to
          > account for the fact that land and improvements are
          > sold together in the majority of situations.

          So? Sausages are almost always sold with a certain
          amount of insect parts, rodent hairs, etc. in them.
          That doesn't mean the insect parts and rodent hairs
          are worth anything.


          My great-grandfather and great uncle and even my father who still has his meat-cutters card (even though he's been an academic for nearly 50 years), all made and sold
          sausage.    The best kielbasa is South Bend, Ind. and probably the best in the world.

          And it did not have insect parts nor rodent hairs in it.  I've made sausage too.  No insects or rodent hairs.
          I also worked on Capitol Hill a long time ago, so I also know how sausage is metaphorical made too.

          I'm suspecting that you've never made sausage in your life.






           


          > You can keep saying an empty lot that would sell
          > for the same price as the same lot with a structure
          > is a situation where the structure is worth nothing.

          Correct. I can keep saying it -- in fact, I will --
          and it will keep being objectively true.

          > But that is circumstance that is almost as rare as
          > the mythical land rich cash income poor widow. (I
          > very much doubt that they really exist, since no
          > one has ever been able to actually name names.)

          They certainly exist -- it is statistically pretty
          much inevitable -- as do improvements without value.

          > So back to Greece. I posted a link that shows that
          > Greece has an ad valorem real estate (land +
          > improvements) tax and that assessments are done every
          > two years. If people were serious that Greece should
          > use a LVT to raise sufficient revenues to pay debt
          > without hampering economy, then they would get the
          > data and run the numbers. Has any Georgist done this?
          > No. It seems that most were likely unclear whether
          > Greece even taxed land value in any capacity at all.

          It appears that Greece's property tax is a kind of
          ideal: it is so small and so marvelously complex that
          its revenue barely covers its cost of administration.

          -- Roy Langston





          --
          Very truly yours

          John D. Kromkowski
          6803 York Road -- Suite 207
          Baltimore, MD 21212

          Tel     410-377-6248
          Fax     410-372-0624
          Mobile  443-271-0500

          This communication, along with any documents, files or attachments, is intended only for the use of the addressee and may contain legally privileged and confidential information. If you are not the intended recipient, you are hereby notified that any dissemination, distribution or copying of any information contained in or attached to this communication is strictly prohibited.

          If you have received this message in error, please notify the sender immediately and destroy the original communication and its attachments without reading, printing or saving  in any manner.
        • roy_langston1
          ... No, they just fill in a form, and their exemption is applied to their place of residence in lieu of part of their rent. ... No, it s an exemption. No cash
          Message 4 of 9 , Jul 9 12:13 AM
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            --- In LandCafe@yahoogroups.com, John David Kromkowski <jdkromkowski@...> wrote:

            > The tenants don't get a property tax bill so do you
            > give them a check equal to their per capita share?

            No, they just fill in a form, and their exemption is
            applied to their place of residence in lieu of part
            of their rent.

            > Then you are not talking about a personal exemption
            > but a CD.

            No, it's an exemption. No cash payment is involved.
            Their landlord just pays that much less property tax,
            while they pay that much less rent.

            > Do you have a check off on the LVT tax bill, where
            > you identify the amount of people living there and
            > then deduct from amount owed?

            Something like that. The tenant would fill out and
            sign a form indicating their address, and their
            exemption would apply to that address.

            > How do you verify?

            Tenant signature cross-checked against residence of
            record.

            > > Yes, many people think assessments are more or less
            > > arbitrary.
            >
            > Sometimes they think this even when they aren't
            > arbitrtary.

            Of course. But the perception is often justified.

            > > > But generically saying "based on the transaction
            > > > data", is not actually saying much because that is
            > > > what assessors (most of whom try to be professional)
            > > > already use.
            > >
            > > "Misuse" would be more accurate.
            > >
            > How can you make such a generic critique without
            > reference to actual data.

            I've looked at enough assessment rules to know they are
            often garbage. Appraisers at least have a market
            discipline, but tax assessments by government assessors
            are often required by law to be wildly wrong.

            > There just is not enough data for pure land value
            > (or effectively mostly land value because of
            > imminent or recent demolition) transactions
            > to translate Sales data (land+imp.) into land
            > value without make some reference to a model
            > which includes improvement value.

            Improvement value is only included in the sense
            that it is part of the assessment data. The
            purpose of the model is to prune it away, leaving
            just land value.

            > Cities do not have money to buy back land, change
            > zoning and sell back to the market.

            Yes, they do. They have revenue from somewhere, and
            are paying expenses with something. You claim they
            can't afford to recover the land value increments
            they create by rezoning? Wrong. What they can't
            afford is to keep giving them away.

            > It is a completely convoluted mechanism that you
            > are proposing.

            It is extremely simple: buy low, sell high.

            > > If you create a model that good and in current use
            > > > housing stock is worth nothing or almost nothing,
            > > > then the model is wrong.
            > >
            > > That premise is objectively false, as already proved.
            >
            > Proved by whom?

            By me.

            > > > It is not enough to say well the model says that the
            > > > house you're living in is worth next to nothing, so
            > > > it must be true.
            > >
            > > It's truer than an arbitrary and unsupported assumption
            > > that improvements in use can't be worth less than some
            > > arbitrary amount.
            >
            > Perhaps it would be helpful for me to better understand
            > where you are coming from if I understood what you do
            > for a living.

            I don't see how.

            > Are you an economist?

            It's a dirty job, but someone has to do it.

            > Do you own your own home?

            I don't speculate in residential real estate for a
            living, if that's what you mean.

            > Would you agree that when a person leases an
            > apartment, they are paying for two things: one
            > is the right to live in a particular location
            > and two is the actual structure that will have
            > a place for them to sleep without rain, and
            > which is the proper temperature and to make
            > dinner and to eat and to keep their stuff?

            No, they are also paying for maintenance, insurance,
            security, administration, etc. These can account
            for a substantial fraction of their rent bill if
            they are in a low-rent building.

            > > > Because if someone is living in a house that is in
            > > > reasonable good shape the value is NOT zero
            > >
            > > That assumption is objectively false. If the property
            > > would sell for the same amount with or without the
            > > house, the value of the house is zero. Period.
            > >
            > If they are living there then it would not sell for
            > the same amount with or without the house.

            It might well do so. People often live in buildings
            right up to the time they are demolished -- in fact,
            they sometimes have to be removed by force so the
            demolition crew can do their job. Such buildings
            self-evidently and indisputably have no value.

            You are just objectively wrong. That will continue
            to happen as long as you presume to dispute with me.

            > You have created a condition that really does not
            > exist in reality or exists so infrequently that it
            > has no meaning.

            It exists fairly often in areas where land value has
            risen a lot, because people who can afford expensive
            land don't want to live in cheap old houses. Such
            houses are so common there is even a special word for
            them -- "teardowns" -- and they have no value:

            http://www.realtylink.org/prop_search/Summary.cfm?ComID=&agentid=&areatitle=Vancouver%20West&ARPK=37,44,36,26,10105,41,21,32,30,28,23,33,22,39,24,43,29,40,34,853,31,35,42,27&rowp=1&BCD=GV&imdp=&RSPP=5&AIDL=27,35,31,28,34,29,30,32,43,24,22,23&SRTB=P_Price&ERTA=false&MNAGE=0&MXAGE=200&MNBT=1&MNBD=1&PTYTID=5&MNPRC=200000&MXPRC=1990000&SCTP=RA&Page=Next&

            Start reading the listings, and note how many of
            them specify land value only, or invite offers from
            builders or developers. All the houses listed are
            in livable condition, some are even quite nice, but
            the real estate listings themselves state explicitly
            that they have no value. I have explained all this
            before.

            > If people are living in a structure that according
            > to you has no value, why aren't they just living in
            > the street or sidewalk in front of the house for
            > free?

            Probably because they are not stupid.

            > > Unless you are in some rural area, you have to
            > > > account for the fact that land and improvements are
            > > > sold together in the majority of situations.
            > >
            > > So? Sausages are almost always sold with a certain
            > > amount of insect parts, rodent hairs, etc. in them.
            > > That doesn't mean the insect parts and rodent hairs
            > > are worth anything.
            >
            > My great-grandfather and great uncle and even my
            > father who still has his meat-cutters card (even
            > though he's been an academic for nearly 50 years),
            > all made and sold sausage. The best kielbasa is
            > South Bend, Ind. and probably the best in the world.

            I have no doubt of it.

            > And it did not have insect parts nor rodent hairs
            > in it.

            Yes, unless they made it in a clean room suitable
            for a chip foundry, using ingredients cleaned by
            microscopic examination, it almost certainly did.
            Just not enough for them to notice.

            > I've made sausage too. No insects or rodent hairs.

            So you seem to believe. Microscopic and/or DNA
            analysis would almost certainly find some.

            > I also worked on Capitol Hill a long time ago,

            I'm sure that's a shocker to some....

            > I'm suspecting that you've never made sausage in
            > your life.

            How special for you.

            -- Roy Langston
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