Re: Land tax -- appraisals, the worst tax mechanism (Re: RoyL, Lysander - LVT question.
- From: royls@xxxxxxxxx
- Date: Thu, 20 Mar 2008 23:00:57 GMT
On Wed, 19 Mar 2008 00:13:34 -0400, RogerDodger <none@xxxxxxxxxxxx>
wrote:
On Tue, 11 Mar 2008 17:24:20 GMT, royls@xxxxxxxxx wrote:
On Mon, 10 Mar 2008 21:53:01 -0500, Les Cargill <lcargill@xxxxxxxxxx>
wrote:
Roy, has anybody done a good study of costs of administration of an LVT
versus say, the IRS?
Sure, there's tons of data -- just compare today's proprety tax
systems to other taxes: income, payroll, sales, etc.
And see how property tax comes out best.
Any appraisal-based tax system -- real estate property tax being by
far the biggest -- involves an appraiser valuing each unique property
separately, with the property owner having many arguments to contest
the appraisal, and the right to appeal it up through a tax appeals
system all the way to and through the courts.
Same as any tax. Are you perhaps unaware that income tax cases
generate a huge number of audits and appeals that end up in the
courts, with all the associated costs, or are you just lying again?
Very little common sense is needed to divine this is a *hugely* more
costly administratively than any other tax -- payroll tax, income tax,
sales tax, etc.
Except that in fact, that is just flat false as a matter of objective
fact. You are deliberately trying to deceive the readers of this
newsgroup as to the cost of property tax systems by counting only the
_administrative_ cost, and ignoring the _compliance_ cost, which is
INCOMPARABLY greater with income tax, payroll tax, sales tax, etc.
than with property tax. The reason for this is obvious, and shows why
property taxes are inherently fairer and less subject to error than
other taxes: property taxes are calculated by the tax authority, while
those other taxes are calculated by those who remit the tax.
I have spanked you for your relentless dishonesty on this matter
before.
And any Georgist who is interested in facts can verify this common
sense intuition in just a couple minutes (though I never saw one who
bothered).
I have verified that you are flat, outright wrong, though I concede
that you are a very skilled and probably highly paid disinformation
artist.
For instance:
~~quote~~
The Massachusetts Appellate Tax Board (ATB) ... hears and decides
cases on appeal from any state or local taxing authority.
Ninety percent of the petitions filed at the Board are appeals of
local property taxes.
The remaining cases are appeals by taxpayers regarding all state
taxes, including the income tax, sales and use taxes, the bank excise
tax, the corporate excise tax, and others.
http://en.wikipedia.org/wiki/Massachusetts_Appellate_Tax_Board
~~~~~~
Property taxes in Mass. produce about 28% of state and local revenue,
let's say 30%.
Yet property tax appeals account for *nine times* the number of
appeals from all other kinds of taxes combined -- 10% of appeals come
from all the other taxes that produce 70+% of tax revenue.
Those capable of arithmetic can deduce from this that property taxes
result in *21 times* as many appeals per $1 of tax collected as all
other taxes.
So common sense and factual reality agree -- fancy that!
Except that this is just more arrant deceitfulness on your part,
because you are carefully eliding the fact that property taxes are
calculated by the taxation authority, while ALL the other taxes the
board hears appeals on are calculated by those who pay them.
Obviously, the payers of ALL those other taxes are not going to appeal
THEIR OWN tax calclulations. So when there is a dispute about them,
as there very often is, it almost ALWAYS takes the form of an AUDIT by
the tax AUTHORITY, not an APPEAL by the tax PAYER. By the exact same
"logic" you are using, property tax assessments almost never lead to
an AUDIT, unlike income tax, payroll tax, sales tax, excise tax, etc.
You are destroyed.
It's very little different from running an ordinary property tax
system,
Well yes -- see above. Only worse -- see below.
Without reading any further, I predict that you will be refuted and
destroyed below.
but you don't have to value improvements,
Obviously false.
No, it is true, and you are just a liar.
Under the common system where the rental value of a whole improved lot
is taxed, you just value the whole thing -- that's *relatively* simple
Nope. Wrong. Any competent real estate appraiser can tell you it is
FAR simpler to value land than improvements.
-- though complex enough to result in 21X more appeals per each $ of
tax collected than all other taxes combined, of course.
I have exposed your deceitful cherry-picking of numbers, above.
However, to tax *just the land* one must value the whole lot, then
value the improvements on them separately, and then subtract their
value to get the value of the land as a residual.
Nope. Wrong. The land residual method is the same ridiculously
flawed method the Fed used to calculate that the value of all the
corporate owned land in the USA was NEGATIVE. The building residual
method is far more accurate.
This is because in developed urban areas with the highest land prices
and the great bulk of land value, land is almost *never* owned or sold
without improvements,
That is a flat-out lie. On Manhattan Island, one of the most
intensively used patches of real estate in the world, over 3% of the
land area is vacant land. Not parks, not roads, not "open space," not
even ground-level parking lots. VACANT.
http://www.nyc.gov/html/dcp/pdf/landusefacts/landuse_tables.pdf
In other cities, the vacant fraction is typically far higher.
You are destroyed.
and even more rarely than that sold without
leases, cross-leases, easements etc, on it, which have the effect of
improvements and change market price.
Nope. They are not improvements, and do not have the effect of
improvements. Easements are considered in land value, as are lease
obligations independent of improvements. You are just lying again.
Valuing just improvements entails "cost segregation analysis" which is
very costly to taxpayers, hugely complex, and generally impenetrable
to tax assessors.
And not needed to value the land.
For example, the value of each *component* in a building, the total
of which is used to determine its total value, may be determined by:
cost, or depreciated cost, or replacement cost, or expected revenue
allocable to it -- (which of course is extremely subjective and
arguable) or obsolescence, or the depreciation category it is
allocated to ... etc., etc. All of which both the appraiser and the
taxpayer can argue about all the way up to and through the courts.
Nope. Flat wrong, as usual. The cost of building components is
completely irrelevant to building value, which is determined by
property value less land value, period.
Are we getting an idea of where that 21x appeals per revenue dollar
comes from?
I exposed your deceitfulness above, lying garbage.
And that's without going through the separate step of valuing the land
itself.
Which is so easy, so simple, so straightforward that even ancient
societies that barely had arithmetic and a written language were able
to do it.
Land values are extremely volatile -- much more so than building
valuations.
Only where the land tax rate is low. The present value equation
implies that as growth rate and real discount rate are usually quite
close, a low land tax rate makes present value highly dependent on the
expected future relationship between the growth rate and the discount
rate. In the absence of any significant land tax, a 1% increase in
expected growth rate can result in an ORDER OF MAGNITUDE increase in
land value. Consequently, the US states with the highest property tax
rates, like New Hampshire, New Jersey, and Wisconsin have much less
volatile land values than the states with the lowest property tax
rates, like Alabama, Arkansas and Hawaii.
With a building, once you get through all the cost, trouble and
appeals of valuing it you pretty much have its value semi-permanently.
So when property values are mostly attributed to buildings,
reappraisaling only once every few years is fairly equitable. And
that's the norm most everywhere.
But land -- like any item in inelastic supply -- is highly volatile as
to market price. This is because supply doesn't vary with demand
(increasing to mitigate price rises, declining to mitigate price
falls). Thus the *entire* weight of change in demand, up and down,
results in change in price, up and down. Sharp and big.
As explained above, that is a naive and superficial account of land
price volatility. The problem is that the variable "demand" for land
is not demand for land to use but rather largely speculative demand,
which will disappear when publicly created land rent is recovered for
the purposes and benefit of the public that creates it. Demand for
land to USE is very stable, as shown by the stable land values in
places where speculation is not a significant factor in land values.
This is econ 101 and is absolutely unavoidable with items in inelastic
supply. It the other side of the Georgist coin of "land is in totally
inelastic supply, so..."
Refuted above.
Thus, if your tax system is focused on *land value tax*, you can't
just appraise its value once every few years like you can buildings.
Yes, you can, once the speculative demand has been eliminated.
You have to appraise it *every year*, in light of land price
volatility. Otherwise your tax values are bogus.
Wrong again. Once volatility is eliminated by eliminating speculative
demand, individual appraisals need only be done when land changes
hands, when improvements are destroyed or demolished, or when the type
or intensity of land use is changed. That frequency of appraisal is
quite sufficient to generate the value data needed to maintain an
accurate land value map by continuous computer modeling.
And, of course, as each plot of land is unique, you can always argue
about and appeal its appraisal.
No, you can't, because the value would be generated by a computer
model, not an individual appraisal, and the only plausible grounds for
appeal would be an unsuccessful attempt to sell. And that is easily
taken care of by just making all the appraisals 95% of market value.
Appeals would be effectively non-existent.
I'll skip the cost to the government of lost revenue in years when
land prices sharply fall -- when land prices are rising, you have to
assess them on every lot every year. Costwise, this multiplies both
assessment costs themselves *and* appeals from assessments.
Stupid garbage conclusively refuted above.
Consider the meltdown of the land tax assessment system in Pittsburgh,
the only decent-sized US city that's ever tried it.
In 2001 its land assessors raised the assessed value of land by 80%
from what it was in 2000. Well, land value is volatile, and that was a
boom economy year -- land value went up a lot!
No, you are just lying about what they did. The assessments had not
been done for many years, and land values had not only risen greatly
in the interim, but unevenly. A new Republican-dominated county
government went in and FIRED 85 trained assessors, replacing them with
a private contractor that horrendously botched the assessments. The
assessments were so bad, so uneven, so inequitable that there is
little doubt the private contractor was TOLD to do whatever it took to
destroy Pittsburgh's split-rate property tax system. And that is what
they did.
The result was over 170,000 appealed assessments on the city's 500,000
properties. Of course that was *impossible* to manage.
Indeed, and it was obviously done deliberately, to MAKE it impossible
to manage.
Many politicians said the assessors had to be systematically wrong.
Which they unquestionably were, because the whole thing was
deliberately sabotaged.
There were law suits. The courts ordered studies, which took time,
halting tax collection. The studies said the assessment methods were
systematically correct,
That is a flat-out lie. The assessments were systematically
falsified, and obviously so, and this was established beyond any
question by four (4) separate investigations:
"The office of the Pittsburgh City Controller, Tom Flaherty, first saw
the Sabre valuation figures and recognized that it had resulted in
systematic overassessment of homes in low and moderate income
neighborhoods and underassessment in more affluent neighborhoods.
[Gee, I wonder why that would be? -- RL] Sabre's computer model
leaned too heavily toward replacement cost and away from market
values. The Controller's office brought this to the attention of
others. Four subsequent independent reviews essentially said the same
thing. One was by the County Controller's office, a second one was by
a consultant hired by the County Comptroller's office to evaluate
their review, a third was by the Pittsburgh Post Gazette, and another
independent review was commissioned by the County Council."
You are just a liar.
land values had gone up like that -- *but* of
course, the assessors could be and were wrong in many individual
cases, so all the 170,000+ individual appeals had to continue to be
processed. More than four years later, tens of thousands of them had
not been resolved yet, remaining in litigation.
This fiasco made the Massachusetts property tax assessment appeal cost
of 21x that of all other taxes look like *a free lunch*!
Now of course, that is obviously just another bald lie on your part.
You know very well that the NUMBER of appeals is not the same as the
COST of appeals. You have provided no evidence whatever that the
average COST of a property tax appeal case is the same as that of an
income tax, payroll tax, sales tax, excise tax, etc. case, nor have
you provided any evidence that the total cost of property tax appeals
per revenue dollar is 21 times the cost of appeals of all other taxes.
And I predict that you will never provide any such evidence.
It was impossible. Pittsburgh repealed its land tax.
<sigh> What you carefully do not mention is that if the same sort of
deliberate sabotage had been arranged for an ordinary property tax
system with no split rate, the result would have been the same. The
only difference is that wealthy Republican landowners don't have the
same financial incentive to arrange for the destruction of an ordinary
property tax system.
Oh, yeah, there's nothing simpler or less expensive than imposing a
big land tax! ;-)
Of course, no one has said that, evil, lying garbage.
than half as much per property to administer, or roughly 1/10 as much
per revenue dollar...
Some people create their own worlds to live in. Let's hope they enjoy
residing there. ;-)
I have proved, above, that you are a liar; and in my professional
opinion, you are a highly skilled and probably well paid anti-geoist
disinformation artist -- a liar for hire.
if you recover all the rent.
Remember, it costs
the same amount to value a land parcel whether the tax rate on that
value is 0.01% or 100%.
Although the higher the tax, the more often you have to assess and the
higher the appeals rate. ;-)
No, lying garbage, the exact opposite is the case, as proved above.
If Pittsburgh's land tax rate was higher, it surely could have had a
good deal more than 170,000 appeals.
The number of appeals had nothing whatever to do with the land tax
rate, lying garbage, and you know it very well. It was purely the
inaccurate ASSESSMENTS, which were DELIBERATELY FALSIFIED in order to
DESTROY Pittsburgh's split-rate tax sytem.
Another thing that goes up with the tax rate, of course, is land tax
*evasion* by shifting value from land to the buildings on it (and into
other backroom deals, etc.)
Can't be done when land value is derived from a computer-generated
land value map.
Remember all that cost segregation analysis.
Remember that I have proved it is completely spurious.
Sticking to pro-land tax authorities, Michael Hudson says 50% of land
value is eliminated this way now. Mason Gaffney says more, a huge
amount.
Because the assessors are colluding with landowners to shift senior
governments' tax loads elsewhere. If they were not appraising
buildings, both their motive and their opportunity to do this would
vanish.
The head of the land tax assessment system in Pittsburgh, George
Donatello, claimed that a big part of the problem leading to all the
assessment appeals was "People in the past kept land values low,
artificially low, because of the way the tax rate was structured.?
George Donatello was a senior executive with Sabre Systems, the
PRIVATE CONTRACTOR that replaced the 85 trained property tax assessors
the Republicans had fired with their own untrained and totally
unqualified staff. He was HIRED specifically to botch and falsify the
assessments, and he did so. He was not, repeat, NOT an official of
the Pittsburgh or Allegheny County tax office. The whole sad tale of
how Donatello's company deliberately sabotaged and destroyed
Pittsburgh's split-rate property tax system, presumably on the orders
of big, rich landowners, is described here:
http://www.progress.org/cg/sabre01.htm
"Kevin Forsythe, an attorney in the City Controller's office,
demonstrated the lack of consistency of Sabre's land assessments with
a map of properties in three blocks of Walnut Street in the prominent
Shadyside business district. Each rectangle on the map is a lot, and
the land [value] per square foot in the business district of Shadyside
should be roughly the same from one property to another. In the second
block, bounded by Copeland and Bellefont St., two lots are the exact
same size and adjacent to each other, but one is at $67.51 per sq.
ft., and it is right next to one at $110.47 per sq. ft. In the next
block bounded by Bellefont and Filbert Sts., of the first two
properties, one is $191 per sq. ft., and the lot next to it is $14.71
per sq. ft."
Clearly, such bizarrely inconsistent valuations can only be the result
of deliberate falsification.
This all is with only a modest tax penalty on land -- not
confiscation.
No, it is with a deliberately sabotaged and falsified assessment, as
PROVED above.
How many times have I asked here for the Georgists to say how *their*
appraisal system is going to keep the Hudson/Gaffney/Donatello shift
of land value to other assets from happening??
Well, I've asked several times -- no answers yet that aren't mere
denial and dreamin'.
You are a liar. I have explained it clearly. Working from a
computer-generated land value map, there is no need to appraise
buildings at all, and all the allegedly insuperable problems you harp
on just vanish.
I just keep reading how the Georgist system will be "very little
different from running an ordinary property tax system" today --
except that the result will be *entirely* different! ;-)
Yep. Just as adding a spoonful of vanilla to a milkshake is very
little different from adding a spoonful of vinegar, but the result is
ENTIRELY different.
So an appraisal-based tax system, summed up:
* The worst administrative expense per dollar of revenue, *by far*.
That is a bald lie, for which you have provided, and will continue to
provide, zero (0) evidence.
* The worst for evasion and value shifting -- nobody pretends that
income tax, payroll tax, etc. are underassessed by anything like the
Hudson/Gaffney 50%+
Again, that is a bald lie. If buildings are not even appraised, there
will be no way to shift land value onto them.
* When combined with volatile land tax is *even much worse yet* -- see
the self-immolation of the Pittsburgh land tax.
Another lie. It was not volatility of the land tax or land value that
destroyed Pittsburgh's sytem, it was deliberately falsified
assessments, as proved above.
As evidenced by all the data, examples and experience of the real
world.
Lie. Inevitably.
Georgists who are unimpressed by same are of course free to continue
living in their own.
Anyone who remains convinced by your now-conclusively-refuted
anti-geoist disinformation campaign is of course free to sacrifice
their integrity and their minds on the altar of landowner greed, as
you have done.
-- Roy L
.
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