Quote:
Originally Posted by PKDickman
That is not the way TIFs work.
In a TIF district, those that benefit do not pay more, they pay the going rate. But the city bleeds of a portion of this to fund improvements.
The rest of the taxpayers pay more to make up the difference.
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The rate is the same but the amount is different. The point is, if I want to finance a project which will improve property values in River North, do I get the revenue from people in River North or Bronzeville? TIF districts are the mechanism to capture the value; whether the rate is different or not is irrelevant here.
Quote:
Originally Posted by PKDickman
It is not a tax, it is the purchase price of additional development rights.
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So, the government sets an arbitrary limit (justified or not), charges one to change that limit, and that's not a tax? So I guess there's no such thing as an income tax, since that's just the price of selling my labor.
Regardless, the effect is the same as a property tax; additional improvements on the land require more payment to the government.
Quote:
Originally Posted by PKDickman
Taxing improvements on land isn't that what a property tax does? We may argue it's efficiency and impact, but it is the law of the land
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A property tax is a tax on the land and improvements on the land. The tax on the land is efficient; the tax on improvements is not. Efficiency here refers to whether or not it discourages socially desirable outcomes. Consider how an empty lot that has a negative impact is taxed little relative to an identical lot where someone makes improvements. We should not be discouraging such investment unless it would be harmful.
Quote:
Originally Posted by PKDickman
A parcel's zoning is nothing less than the line on a stock certificate that says " the owner of 100 shares of Capital Stock.of The City of Chicago".
While sometimes it is advisable to issue new shares to raise capital, to issue new shares to a subset of shareholders without extracting their market value dilutes the stock and is pretty much Zuckerberg and Saverin all over again
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That's a ridiculous analogy. If Facebook has a set market value M, n shares will each have value of M/n. But the total value of land and the improvements on the land in Chicago is not fixed. Consider an extreme example, where the City restricts all development to single family homes; then, the value of a lot of the land would plummet, since the value of land is the expected present value of the rent that can be earned on that land.
To your point, another extreme where there is *no* zoning would also cause values to plummet but for a different reason: lack of coordination and separation of uses. If factories were opening up next to homes, the homes would have reduced value and the factories might also have trouble moving things around.
Zoning has two main functions: separation of uses and regulation of density. The former on net likely improves the total value of land regulated by the municipality. The second is less clear, but most likely reduces the total value. The City has a monopoly on the amount of development that can occur within its jurisdiction, and like any monopoly it will somewhat restrict output in order to maximize its take (assuming the City has such incentives). But there are benefits to society greater than the revenue this monopoly enjoys, and like any monopoly there's usually a good case for regulating it to get more output than it wants (in this case, that means getting the city to produce more, not less).
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