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There's a alternate hypothesis [1] put forward that increasing inequality is mostly due to an increase in housing costs. If this is the case, then it would lik

There's a alternate hypothesis [1] put forward that increasing inequality is mostly due to an increase in housing costs. If this is the case, then it would likely be better to implement land taxes. Land taxes are probably better than most taxes for a variety of reasons, but if we are directly looking to decrease inequality land taxes would strike at the root cause. I am not an economist, so I'm not equipped to evaluate either set of claims. Is there anyone here who might know what they're talking about who can weigh in? [1]http://www.mit.edu/~mrognlie/piketty_diminishing_returns.pdf http://www.mit.edu/~mrognlie/piketty_diminishing_returns.pdf

VLM 11y ago
It would be a fair way to fund socialized medical care, as almost all medical care is provided to locals. Care is mostly rationed today on a large scale based on the wealth of the local area so very little would change other than cutting out many extremely wealthy and politically influential middlemen like insurance companies. People who hate the moral and ethical idea of pooled medical costs could trivially move into the wilderness where there's unfortunately no medical care at all other than long ambulance rides, therefore the prop tax paid to the local medical offices (which don't exist) would be quite low, which is kind of a self correcting problem. Much as we have "over 55 only" communities for places that refuse to fund elementary schools. The biggest problem with prop tax is the general social aversion to kicking people off "their" land. As if any land is truly privately owned, LOL, and the government messing with the rent is going to shine quite a bright light on that little social problem. You'd need some kind of plan to deal with temporarily un and under employed vs permanently un and under employed landowners, not to mention enormous numbers of homeless elderly retired people.
delecti 11y ago
What's to stop land-owners who are renting their land from just increasing the rents? I can't see that not happening, and that would have a big impact on poor renters. That would really only hit people who own their own homes, or who own land that they aren't renting.
- Zach_the_Lizard 11y ago
  >What's to stop land-owners who are renting their land from just increasing the rents? The supply of land is fixed is the difference. If you tax a good with fixed supply, the price of that good will tend to decrease. A good that is not fixed will tend to increase in price after a tax, because the higher costs will tend to reduce supply. >I can't see that not happening, and that would have a big impact on poor renters. Taxing improvements reduces the incentive to build--costs rise--which is why property taxes can be passed on to renters. Because land is fixed in supply (keep quiet, Kansai International Airport!), it isn't actually possible to pass on a land value tax to renters. Land taxes actually make land cheaper to buy (though with an ongoing tax obligation). >That would really only hit people who own their own homes The tax falls on those who own land, who tend to be the wealthiest in society. Because its a tax on land value, those with the most valuable land pay the brunt of the tax. Think of Midtown Manhattan; the land owners there would pay a large proportion of the taxes in NYC since they have a comparatively large portion of the land value. Someone in deep Queens would have relatively low taxes since their land is not nearly as valuable, even for the same acreage. >or who own land that they aren't renting. If you own land you aren't renting in a high value area, yes, it punishes you for that by design. Think vacant lots in the city center. If you own such land, you are likely rich. If you are attempting to use NIMBY rules to prevent development, it will utterly destroy you. I think this is a feature, not a bug.
  - chatmasta 11y ago
    > If you tax a good with fixed supply, the price of that good will tend to decrease. If anybody else found this claim to be counter-intuitive, the wiki article on 'Land value tax' helped me understand. [1] I am not convinced. The biggest problem I see is the practical one of appraising the value of the land, which depends on what the land will be used for. A landlord will almost always outbid a homeowner when buying a plot of land, because the landlord intends to monetize the land, while the homeowner intends to live on it. A land value tax would favor monetization over personal use, increasing rental prices and expanding the size of the "renter class" while shrinking the size of the "homeowner class". The result would be an effective increase in the relative price of owning a home compared to renting one. Paying rent is obviously economically inferior to owning property, and any policy that encourages rental growth over homeowner growth will only increase the inequality gap. Only the wealthiest benefit from increased rental volume. [1] https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax

VLM 11y ago

It would be a fair way to fund socialized medical care, as almost all medical care is provided to locals. Care is mostly rationed today on a large scale based on the wealth of the local area so very little would change other than cutting out many extremely wealthy and politically influential middlemen like insurance companies. People who hate the moral and ethical idea of pooled medical costs could trivially move into the wilderness where there's unfortunately no medical care at all other than long ambulance rides, therefore the prop tax paid to the local medical offices (which don't exist) would be quite low, which is kind of a self correcting problem. Much as we have "over 55 only" communities for places that refuse to fund elementary schools. The biggest problem with prop tax is the general social aversion to kicking people off "their" land. As if any land is truly privately owned, LOL, and the government messing with the rent is going to shine quite a bright light on that little social problem. You'd need some kind of plan to deal with temporarily un and under employed vs permanently un and under employed landowners, not to mention enormous numbers of homeless elderly retired people.

delecti 11y ago

What's to stop land-owners who are renting their land from just increasing the rents? I can't see that not happening, and that would have a big impact on poor renters. That would really only hit people who own their own homes, or who own land that they aren't renting.

Zach_the_Lizard 11y ago
>What's to stop land-owners who are renting their land from just increasing the rents? The supply of land is fixed is the difference. If you tax a good with fixed supply, the price of that good will tend to decrease. A good that is not fixed will tend to increase in price after a tax, because the higher costs will tend to reduce supply. >I can't see that not happening, and that would have a big impact on poor renters. Taxing improvements reduces the incentive to build--costs rise--which is why property taxes can be passed on to renters. Because land is fixed in supply (keep quiet, Kansai International Airport!), it isn't actually possible to pass on a land value tax to renters. Land taxes actually make land cheaper to buy (though with an ongoing tax obligation). >That would really only hit people who own their own homes The tax falls on those who own land, who tend to be the wealthiest in society. Because its a tax on land value, those with the most valuable land pay the brunt of the tax. Think of Midtown Manhattan; the land owners there would pay a large proportion of the taxes in NYC since they have a comparatively large portion of the land value. Someone in deep Queens would have relatively low taxes since their land is not nearly as valuable, even for the same acreage. >or who own land that they aren't renting. If you own land you aren't renting in a high value area, yes, it punishes you for that by design. Think vacant lots in the city center. If you own such land, you are likely rich. If you are attempting to use NIMBY rules to prevent development, it will utterly destroy you. I think this is a feature, not a bug.
- chatmasta 11y ago
  > If you tax a good with fixed supply, the price of that good will tend to decrease. If anybody else found this claim to be counter-intuitive, the wiki article on 'Land value tax' helped me understand. [1] I am not convinced. The biggest problem I see is the practical one of appraising the value of the land, which depends on what the land will be used for. A landlord will almost always outbid a homeowner when buying a plot of land, because the landlord intends to monetize the land, while the homeowner intends to live on it. A land value tax would favor monetization over personal use, increasing rental prices and expanding the size of the "renter class" while shrinking the size of the "homeowner class". The result would be an effective increase in the relative price of owning a home compared to renting one. Paying rent is obviously economically inferior to owning property, and any policy that encourages rental growth over homeowner growth will only increase the inequality gap. Only the wealthiest benefit from increased rental volume. [1] https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax