Land value taxation, Prop 13 reform and single family homeowners

I’ve been participating in a long Twitter discussion about my value capture with somebody who is terribly worried about taxing single-family homeowners out of their homes, since SB827 covers so much of San Francisco.

While our debater was discussing things with me, his responses came back to, again and again: you will “tax them out of their homes.”At one point, he told me that my policy suggestions would be like “forcing people to sell their homes at gunpoint.”

Gah. None of that need be true. Greg Morrow and Dan Immergluck (bless them) joined in to explain various aspects of land value finance tools.

No matter what we say, this particular participant can’t move off his claim about single-family homeowners “being taxed out of their homes.” So he can’t deal with any potential change to Prop 13. But this discussion might help people actually consider the policy tools in play even if he refuses to.

How do we keep from taxing single-family homeowners out of their homes with land value assessments if we don’t keep Prop 13 set in stone forever?

The answer is, in the long-term, we don’t. Guys, I don’t know how to say this any more clearly: having single-family housing by transit stations is a terrible idea. It’s bad for cities, it’s really terrible for transit, and it’s bad for renters and young people. Investing in transit under our current land use conditions, which are heavily, heavily influenced by Prop 13, means throwing away money on transit so that we will never be able to supply it at city-changing levels with the ridership allowed by low-density development patterns. (We may never get the ridership we need–that’s a possibility–but we have well and truly established that low customer densities are bad for every direct service business.)

Prop 13 has hurt our schools. It’s hurt our infrastructure. And so on, and so forth.


Now, mayyyyybe the assumption here is wrong, that Prop 13 locks single-family home ownership patterns in place, but I don’t think it is.

We may feel sorry for individuals who are caught in the whipsaw of prior generations of bad policy decisions and potential reform of those, but Prop 13 is highly, highly problematic even if it does help some homeowners stay in their homes. Over the long term, cities need those single-family homes by transit to become something else. Sorry.

As worried as we might be about homeowners, our current system hurts renters–who as a class are far, far poorer than homeowners, and it hurts transit riders, who are, as a class, ditto.

The problem is that homeowner wealth is not liquid unless they are renting out spaces or doing something else that generates a near-term revenue stream. Otherwise, that wealth is locked up in their homes, and new taxes could be a hardship. Sure.

This is not a reason to hand over absolutely all of the financial benefits of urbanization and public investment to landowners and screw everybody else. Remember your Ricardo.

So first, we can design land value taxation methods to be revenue neutral, even at the payer level. The debater last night had a problem that a person with a 10 unit apartment complex and a single-family home would pay the same in taxes. I don’t actually know why that’s a problem, other than in this person’s mind. Why the entity housing 10 HH should pay more taxes than a person sitting on their land to house 1 HH is a bit beyond me.

But non-problems notwithstanding, your yearly tax bill could basically stay the same for the lifetime of your tenure in the house and the accumulated value of the tax, or some portion, gets extracted at point of sale. That is, when you move and sell, the state captures the public increment out of the sale price. (Ouch, still, but you aren’t being taxed out of anything; if the home value wealth is “paper” wealth until it is made liquid, then it’s merely a “paper” loss to hand over that increment at the end. We’ll see the double-standard in play as people react to that statement).

Moreover, the land value taxation structure means you can improve your house and capture all of the financial benefits yourself rather than splitting them with the state. There are real benefits to land value taxation over property taxation for building owners, too. The real burn in land value taxation happens to people who just expect their land to appreciate in value–they don’t get the value increase they would normally get just from owning land and not doing anything.

Going from a situation where your land investment paid you hand over fist to a situation where it doesn’t pay you at all likely feels like a hardship even though one never should have been able to buy a house, get wealthy-doing-comparatively little in the first place, especially when this strategy was primarily for white people’s benefit.

As dysfunctional as our current public finance is, people have optimized around it. What our debater does not realize is that we might actually have MORE homeowners with land value taxation than with our current system. Why?

Because one of the reasons why housing is so outrageously expensive to buy in California is that the land’s value as a tax shelter is already capitalized into the selling price of the home. That is, you pay up-front for the amortized value of the future tax savings on wealth that you will accrue, which means that price to get into the market are much, much higher up front than they would be if we knew that the public increment of value were not going to the home owner. Such a difference effects how much you were willing to pay.

The real burden, even with point of sale protections, comes from the policy change itself. People brought property with the expectation that it would be a tax shelter for retirement savings at a higher price than otherwise, and then, boom, with the policy change, the buyers looking at your home no longer have that tax shelter and thus are not willing to pay for it. Thus existing landowners get soaked because they paid in the sale pricesomething that policy both giveth and taketh away.

Some policy thinkers aren’t terribly worried about that wipe-out. After all, people should not be in the habit of assuming public policy owes them a risk-free wealth generator, and the risks of policy change are just as real as the risks of other types of shocks. But I do think it’s a problem. These losses are real to individuals, and good government should center on trying to help people regardless of individual desert. (There, I said it, come at me, bro).

I’d prefer to phase in changes to Prop 13 over the long term, and to do so in a way that repays at least in part homeowners for their capital loss. Lots of ways exist to do that; I generally prefer a give-back on income taxes commensurate with the amortized yearly loss of the value of the tax shelter. That retains the incentive structure of tax policy change so that people still have an incentive to sell up and move when they should, but they are not made significantly poorer. If they really really love their homes (and people do), they could use that give-back to pay the tax change. Or they can pocket it, sell off, and move to a location where they aren’t paying for transit service they don’t value enough to pay for it. Or whatever. This way, it changes the relative price of hanging onto a SF in a place where society unfortunately doesn’t want SF homes.

Isn’t this all terribly complicated?


There are no simple, easy, painless solutions to Prop 13 reform, just like there are no simple, painless solutions to spinal surgery. Prop 13 was a game changer for California, and its effects are everywhere, both positive and negative, and if we want to protect people from the effects of backing off from the policy that never should have passed in the form that it did, it will take time and effort.

Reasons why we shouldn’t conclude Vision Zero “hasn’t produced results” in Los Angeles yet

We had this story from the Times’ Laura Nelson this past week:

Pedestrian deaths in L.A. rise sharply but officials remain committed to traffic safety program.

First off, this quote from Nat Gale is true:

Many of the changes were installed last summer and fall. Typically, cities wait for one to two full years of data before gauging their success, Vision Zero division manager Nat Gale said.

The city also saw a decrease in deaths involving cyclists, drunk driving and hit-and-run crashes, the Los Angeles Police Department said.

So Nat is right, you want to give programs time, but there are some other reasons why we want to have controls in place rather than just looking at rates and the timing of the program.

If people are walking and biking more in general, then backgrounds for collisions could easily go up; walking and biking could go up for any given year for a bunch of reason, other than just year-to-variation in numbers:

A) better weather; less heat, less rain etc;

B) more employment among those who walk and bike;

C) Improvements on high-demand corridors prompt people to walk and bike more (this would be bad, as it would mean that improvements are not zeroing out collisions. But there may be few collisions per hour flow than there were before, which means there is actually an improvement in the slope of incidence if not the raw numbers);

D) The passage of Vision Zero signaled a greater commitment to bike safety, and it prompted more people to engage in the activity;

E) More collisions are reported, even potentially less serious ones, because people are expecting different/better driver behavior or simply due to a random blip in reporting, or because traffic division officers have been urged or incentivized to write up more;

F) etc.

We should probably be thinking about a case-control method here–maybe Marlon could figure one out–but I don’t know how you control for a case like LA City–you have, I suppose, boundaries between LA City and LA County but I am not sure the policing effort is otherwise the same.

The Chron for all y’all shedding tears about men losing their livelihoods over #MeToo

In the “but what about the menz” department, I’ve got people all over the Fboo deciding that #MeToo has gone too far and this is a new form of political correctness and WHAT ABOUT THE MENZ?

“But it could cost a man his livelihood.”

Yeah, well, it’s about damn time because this garbage has harmed women economically for ages. Here is a terrific piece from the Chronicle on an egregious case at Harvard (of course) titled, simply, She left. He got to stay.

That’s the whole story, for lots of women, but I suggest reading all of it.

After putting up, deflecting, and trying to report horrendous behavior on the part of Jorge Dominguez, Terry Karl wound up leaving Harvard, and while her story ends fine, it might not have for all the reasons:

Karl’s departure from Harvard threatened to ruin her promising academic career. It already seemed to her that she had wasted precious time filing grievances rather than finishing her book. As she searched for positions at other universities, she had to contend with whispers of scandal. In the end, Karl accepted an offer from Stanford University, earned tenure, and finished that book. While she’s given talks about sexual harassment over the years, she did her best to put the ugly episode at Harvard behind her.

Meanwhile, Dominguez got to stay at Harvard, happy as a little clam, continuing to abuse his female colleagues.


Yep, yessiree, it’s sad when false accusations can end or sidetrack a career. That’s too bad. But you see, most universities design systems to make sure that abusers are protected and victims tire themselves out trying to get some protection from the abuse.

And, importantly: Are you also equally sad when a failure to follow up on legit problem ends or sidetracks a career?

If you are worried about the first but not the latter, then you are part of the problem and you should pull your head out of your butt.

Now, Professor Karl is a educated, high-profile, white, extremely privileged member of the academic labor force experiencing this at the very top of the academic hierarchy (Harvard). What adjuncts and staff have to tolerate in order to retain their livelihood is bound to be on par, or worse, and it has to stop and the only way it stops is by changing norms so people SHOULD be cautious about to stepping over lines, and where abusers are required show care, tiptoe if they have to for a bit, and act professionally if they want to keep their jobs.

I came up in a world where crying at work was the ultimate professional sin. And yet we have allllllllll the excuses for abusing your colleague’s trust and dignity made for dudes.

But hey, they aren’t *crying*.

Another burr under my saddle came across my desk with a widely shared Tweet I can no longer find about somebody worrying about her male friends with difficulties in social contexts, including those with Asperger’s, failing to understand the social cues of consent and running afoul of #MeToo when they don’t mean to.

Sure, absolutely. We should always be concerned about people with social differences from majorities, as it’s very easy for them to become victims themselves.

And yet, are you worried about LGBTQIA or women who may also be neuro-atypical, and who also have problems understanding social cues and, as a result, often find themselves targeted for abuse and exploitation?

Because if you aren’t, then again, you are part of the problem.

We are trained from birth onward to worry about male well-being in a million different ways–some of which are highly harmful to men, btw–and to downplay the sacrifices and harms that others experience. Retraining ourselves has to involve thinking about people as individuals, about their well-being, and about how we are either supporting them or harming them in our homes, workplaces, and institutions.

Right of return rental protections and other good additions to SB827

Senator Weiner has provided some clarifications along with amendments to his SB827 here, and a discussion of them on Medium.

The big-ticket rental protection here is right of return, although it’s really nice to have the explicit language about inclusionary zoning. There’s no reason to believe that 827 in it original form would have removed IZ reqs, but the clarification is nicer.

I’ve seen Right to Return work well, I’ve seen it encounter problems. Has anybody studied it in a rigorous way? Surely it’s a management problem for both developers and households. Jordon Downs here in LA encountered a real problem with remediation that, when discovered, was likely to delay families’ return, and the longer it takes, the harder it is on everybody and the less likely people are to return. I wonder about the incentives that gives developers; on the one hand, they need to get that occupancy permit ASAP. On the other, the longer the process takes, the less likely they will have to allow those residents to return. I also wonder to what degree R2R units become the default units for IZ requirements; I’m not sure that matters, and I’m not sure it doesn’t matter.

I kind of think that Return units should be automatic approval of additional units, though. Maybe cities will do this anyway, but my general sense is that if the developers is obliged for 14 units, the city should be willing to approve an additional 15-20 units, period, if the developer wants it. Depending on the footprint, that’s easily two floors. Since the idea here is to allow more vertical building anyway…seems like a Pareto trade to me.

Why am I reading slower the older I get?

H1: I just have less time for reading in general because responsibilities proliferate after you attain tenure, unless you are very slippery and capable of saying no more than I am.

I don’t like saying no to students, in particular.

That feels like the reason I am reading less for both pleasure and business overall , not the reason I feel like I am reading more slowly than every before.

H2: My brain works differently.

That’s a possibility.

H3: I am more patient overall, more willing to spend time reading things closely.

Another possibility. I used to skip more things, get impatient with authors and description, give up on books more easily.

H4: I am reading way more philosophy and theory than I did when I was young, or at least theory of a different type.

My youth was spent primarily with economic theory, which I acquired fairly quickly, except for macro. Now I read philosophy regularly, and I do so in original languages as much as possible, which slows me down, naturally.

H5: Much more newspaper and media reading.

When young, I didn’t care as much about keeping up. Now I am a bit obsessive. I also let myself fritter too much on social media.

All these, I suppose are possible contributors. All I know is that I woke up this morning thinking about this as both a sign of my changing mind and body. I no longer read as quickly as I used to–far fewer notches on the “done” column–and instead savor things more.

How to disagree with Lisa or complain to her bosses about rent control or anything else

Ok, so my rent control post was not sufficiently pro rent control for a gentleman in Oregon who went at me on Twitter to “dialogue” and I straight up said: I no longer interact with people who are nasty, and he was nasty. My post was also apparently too favorable towards rent control for other people. Okey dokey.

There are people in the world who do not deserve civility, as Drew Magary points out nicely here in GQ. I don’t feel like I am one of them because when people disagree with me politely, I am polite back–and if you write me a reasoned argument in an email that I see, I’m very likely to ask you to put up your post as guest post to serve as a counterpoint to mine because I care about helping people think about cities, and all I want here is to launch ideas and deliberation.

In particular, the gentleman who wanted to yell at me about his personal experience wanted me to understand that rent control really saved his life. That’s awesome. It’s great the policy helped him. I totally agree: policies that genuinely help people when they are in need have to treated with respect in public policy.

And I also understand that it can be very irritating to have some academic discuss a policy in a bland, abstract terms when that policy has been really important in helping you or really harmful to you or the people you care about. Don’t get me started about student loan programs, for instance.

But talking about the various pros and cons that researchers and others have pointed out about urban policies and politics is my job. The world does not need me to be a single-minded advocate for anything other thinking hard about urban policy and planning. There are plenty of true believers out there. The only thing I really really believe in is having special concern for those who are impoverished and oppressed in public policy.

I would love to advocate for all the right things all the time.

Unfortunately, I don’t know what those are, and I strongly suspect people who do think they know what the right things are all the time are full of shit–and often very, very damaging to precisely the people they tell themselves they are helping.

As I said before, I support carefully crafted rent controls. I’d be pleased to have the outraged gentleman write up his story and put it up here. I’ve had other people fill my ears about how terrible it is they couldn’t live in Berkeley, and they blame rent control. I would also be willing to post that up, too, if you send it and it’s readable.

I’m not afraid of a little hot debate, but I am tired of having to be polite and reasonable to people who are neither. Twitter thrives with little boys who want to “score points” instead of really get into the issues. I don’t have time to teach people public finance or urban economics in 230 characters, and if you don’t know the difference between the property tax and land value taxation, then yeah, ducks, I do know more about the subject than you do, and if you don’t understand how new mixed use by transit can lead to higher rents rather than lower (the amenity effect overshadows the new supply effect), then you best not be too loud about shouting at people worried about it.

But since the angry person calling me has threatened to go to my superiors, and should you wish to join him to complain about me to my bosses, here’s the list, starting with the lowest level of authority to the highest:

  1. Marlon Boarnet (department chair) (Marlon’s on Twitter (
    @Marlon_Boarnet) and is really, really brilliant except when he disagrees with me, which is when he’s wrongity wrong wrong, but he is also unfailingly courteous.)

  2. Mike Nichol (vice dean)
  3. Jack Knott (dean)
  4. Michael Quick (provost)
  5. Max Nikias (president)
  6. My mom (who eschews all social media and is kinda more worried about my weight and whether I’m saving for retirement than my policy views, but you could try, as she is the only one of these people who won’t bore the pants off you with talk about academic freedom when you complain.)