From: stephen@sprunk.org   
      
   On 29-Mar-15 12:05, Adam H. Kerman wrote:   
   > Stephen Sprunk  wrote:   
   >> On 28-Mar-15 18:39, Adam H. Kerman wrote:   
   >>> I suppose if one doesn't wish to use the existing building, or   
   >>> the current building is a wreck due to fire, but it's still   
   >>> desireable to build on the site, once money is spent to clear the   
   >>> site, the value of the vacant site could be higher than the value   
   >>> of the site that requires clearance.   
   >   
   >> If the current use is not the highest and best use of the land,   
   >> then the total property value should be less than the land value,   
   >> to account for the cost of clearing the current improvements.  IOW,   
   >> the improvements' value would be negative--yet another reason to   
   >> tax only land value.   
   >   
   > Quite so. You've done some reading on this since last we spoke.   
      
   P&P was the first economics book I've had that actually makes sense,   
   though it's so different from what I was taught in school that it took a   
   while (and several re-readings) for it to fully sink in.   
      
   TSoPE is brutal, though; I've been working on it for six months and   
   haven't even gotten halfway through.   
      
   >> Also, improvements depreciate (absent major remodeling), so they   
   >> should naturally be less and less of the property's value over   
   >> time, eventually turning negative as above.   
   >   
   > Hah! Try arguing about the concept of depreciation with the   
   > assessor, and why brand-new homes should be assessed at a higher   
   > value... Assessors typically take the position that it gets fully   
   > assessed until something happens to it that requires a major   
   > replacement or it's unusable.   
      
   ... which is patently wrong; it's just not worth arguing with them about   
   it when both parts of a property are taxed the same.   
      
   For instance, my home is supposedly worth >$50k more than when it was   
   built 15 years ago.  Even someone with no knowledge of accounting can   
   see that's ridiculous; it should be worth >$50k _less_ simply due to   
   age.  The difference in total value is really due to land value, but the   
   appraisal on that portion hasn't changed in 11 years--and the previous   
   bump was negligible too.   
      
   > I suppose a homeowner that needs a new   
   > roof but can't afford it for a year could get a one-time reduction,   
   > but good luck.   
      
   Well, folks here fight their appraisals all the time, and most of them   
   get some sort of reduction.  The problem is that state law prohibits   
   mortgages for more than the appraised value, limiting what buyers can   
   pay unless they have a substantial down payment, so fighting the taxes   
   usually ends up a net loss after you sell the house.   
      
   >> My jurisdiction gets this wrong, increasing my home's value every   
   >> year but leaving the land value constant--despite a new freeway,   
   >> major commercial developments, etc. nearby that have pushed up the   
   >> value of every property in the city.  It isn't worth arguing about,   
   >> though, since the tax is on the total value; if they taxed only my   
   >> land value, I bet they'd get it right.   
   >   
   > Assessors like to use automatic inflation factors calculated from   
   > comparable real estate sales. Given that the improvement tends to be   
   > about 2/3 of the real value, and the land 1/3 (simply a wild-assed   
   > guess), if they impose automatic inflation on the 2/3 bit, this tends   
   > to result in owners of existing buildings paying more than their   
   > proportionate share of taxes than owners of newer buildings.   
      
   Land is supposedly ~1/4 of the total value of my property, but I think   
   it should be at least 1/2.   
      
   Still, if the value goes up $50k, then it doesn't really matter whether   
   you assign that increase to the land or the improvement--under the   
   current system.   
      
   If they taxed only land value, I'm sure the appraisers would be putting   
   all of the increase in value to the land--plus properly accounting for   
   the depreciation of the improvements.   
      
   > So when the arguments were made that X was partially responsible for   
   > the transformation instead of Y (Y being differential tax on land   
   > value), people went for the mix of taxes that most cities like to   
   > impose.   
      
   Ah.  One of the reasons real estate is so cheap in Texas is that cities,   
   counties and school districts get pretty much all of their funding from   
   property taxes.  (Cities get some sales tax money too, but not a lot.)   
   That keeps property values low and stable, growing roughly with the   
   general rate of inflation.  Since land values indirectly affect the   
   price of everything, that keeps the total cost of living down.  And we   
   do have the usual exemptions for homesteads and seniors.   
      
   I'd prefer a flat land value tax, but the general property tax is high   
   enough to get most of the benefits (e.g. no speculative bubbles, very   
   little idle land, etc.) without the resistance any major change would   
   incite.   
      
   There are a few folks that want to abolish the property tax and replace   
   it with a state income tax (probably regressive, but that's unclear),   
   but even mentioning the latter here is political suicide; you don't   
   really need to defend the former at all.   
      
   S   
      
   --   
   Stephen Sprunk         "God does not play dice."  --Albert Einstein   
   CCIE #3723         "God is an inveterate gambler, and He throws the   
   K5SSS        dice at every possible opportunity." --Stephen Hawking   
      
   --- SoupGate/W32 v1.03   
    * Origin: LiveWire BBS -=*=- UseNet FTN Gateway (1:2320/1)