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Land isn't taxed based on the purchase priced, it's taxed at the current assessed value. If the land Grandpa bought for $300 is now worth a million bucks, it's taxed based on a million bucks. And if not, it's the local assessor's fault, not the system's.
You're confusing "assessed value" with "salable value". The "worth" of a land is what someone is willing to pay, the "assessed value" is based on intrinsic value more than real value.
You live in Iowa so you should understand the difference especially with regards to farmland. My parent's farm might have an assessed value of $4000/ acre but the salable value is between $15,000 and $18,000/ acre. If we were taxed on salable value, farmers wouldn't be able to sustain their farming operations because of how much they'd be paying in taxes. A lot of people can pay taxes on $400,000, but fewer can afford to pay taxes on $15 million.
You're confusing "assessed value" with "salable value". The "worth" of a land is what someone is willing to pay, the "assessed value" is based on intrinsic value more than real value.
You live in Iowa so you should understand the difference especially with regards to farmland. My parent's farm might have an assessed value of $4000/ acre but the salable value is between $15,000 and $18,000/ acre. If we were taxed on salable value, farmers wouldn't be able to sustain their farming operations because of how much they'd be paying in taxes. A lot of people can pay taxes on $400,000, but fewer can afford to pay taxes on $15 million.
I'm not confusing anything. As a former mayor whose budget was primarily dependent on property tax levies, I'm well aware of the fact that assessed values typically lag behind market values especially in times or rampant inflation (as we're seeing with farmland in Iowa right now) or deflation. Sometimes these differences are politically motivated, but usually it's just the fact that the county assessor isn't able to make real time updates to assessed values due to time constraints. Tax levies are lower for agriculture property than residential or commercial property (I have the certification report from my former community in front of me, in our case ag levies were less than 1/3 the rate of regular levies); this is how farmers get their break on taxes, not by capping assessed values. If your parents' farm is assessed at $11,000-$14,000 per acre below market value it's either because the assessor just hasn't made it out to their place since the latest boom or he's a golfing buddy of your dad's.
But all of this is beside the point I was making, which is that original purchase price has nothing to do with how much property tax a person will pay on a piece of land.
Which is why we need a progressive property tax. The more valuable your land is, the more the owner should be taxed. This would require them to do something with the land or sell it. Just because grandpa bought the land 63 years ago for $300 does not mean the will benefactors are entitled to this land (and cheap taxes to go with it) forever. If they don't use it for benifit, then they should sell it to someone who can.
This is absurd. That property taxes are linear is enough. If property taxes are 2%, then as the value goes up, the taxing entity will collect more and more each year.
If you consider that property taxes are usually paid to nearby entities such as cities and counties, undeveloped land requires very little local infrastructure. No children, so the school district earns revenue for zero students.
Beach front parcels usually sells at a premium. The federal government owns a lot of it but unless it is a nature reserve it does not appear to held for its highest and best use. The Presidio, Camp Pendleton, all the ocean and lake forts. I also noticed that the federal use does not seem to fit the use's footprint. Has the federal government ever held a surplus property sale?
But seriously land is always a good investment. Richard Branson is one of the smartest businessmen I know. From buying his own island (Necker island) to his airlines and media, he is one smart dude.
I can understand how increases in the cost to build a house is okay economically, it means the builders make more. However I do not understand how increasing the value of the land, especially to astronomical values helps an economy.
on one hand, high land prices are a reflection of a strong economy.
on the other hand, enacting policies in an attempt to increase land prices seems to weaken an economy.
i don't know that enough people make this distinction. in any case, landowners are often a political force in many countries so it doesn't matter what's good or bad, it just matters who dictates policy.
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Federal Beach Front Property
But seriously land is always a good investment. Richard Branson is one of the smartest businessmen I know. From buying his own island (Necker island) to his airlines and media, he is one smart dude.
