11 ms·

The article is about (among other things) Henry George, and his ideas about a single land value tax being the best way to fund government. Interestingly, moder

• paganel 11y ago
  When you think about it's the perfect tax: it's regressive (and the people in power love regressive taxes) and it effects the middle classes (and the people in power don't care one bit about the middle classes, no-one I've heard of has ever said to him: "My ideal in life is to improve the condition of the middle class!" while I've heard of lots of people saying to themselves and others: "I want to eradicate poverty!"). A land tax would be regressive because it would have a bigger effect on middle class people compared to the 1%, because for a person representing the middle class a house purchase (which includes the land the house sits on) it's gonna be the biggest ever purchase from his/her life, while for a hedge-fund manager worth $5+ billion an extra money that he would have to pay on his Hamptons house is a blip in the ocean. You mentioned a lot of economists, but you left out J.S. Mill, who at some point was strongly in favor of proportionally higher inheritance taxes. That kind of tax wold effect the hedge fund managers a little more, and it sounds fairer to the middle classes.
  • nabla9 11y ago
    Do you think middle class people pay more for their house than they pay in other taxes during their lifetime? By the way. Higher property tax confiscates the profits from the ownership of the property and property prices decline accordingly. It's hard to follow trough all the consequences and feedback loops involved.
  • lumberjack 11y ago
    The regressiveness of the tax can be fixed. Most countries with land taxes have them so you only pay tax on land that is not part of your main residence. So in that case the middle class only starts paying the tax when they start investing some of their savings into real estate.
  • Lazare 11y ago
    > When you think about it's the perfect tax: it's regressive Not really. (Tax incidence is one of those things that trips people up if they're not quite familiar with the subject.) One of the attractions is that it is progressive, and very, very difficult to pass on. Also note that we are talking about the value of the land, not the buildings, and that housing is only one of many uses land is put to. As for J.S. Mill, you might be surprised; he wrote that: "Landlords grow rich in their sleep without working, risking or economizing. The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title." He and Henry George had many philosophical disagreements, but not about that.
    • mcguire 11y ago
      I'm unclear on how it's difficult to pass on. The land value is higher because tenants are willing to pay more to use it.
      • larsiusprime 11y ago
        see: http://kaalvtn.blogspot.co.uk/2013/01/g-lvt-would-benefit-rich-and-hurt-poor.html http://kaalvtn.blogspot.co.uk/2013/01/g-lvt-would-benefit-ri...
• lumberjack 11y ago
  It might be more "economically efficient" whatever that means but it is only taxing a small percentage of wealth owners (those invested in land). I don't see how that is politically viable given that they aren't the only ones benefiting from all that government and society provide. It seems to me that this only made sense when land was the main form of wealth for any given estate at the time.
  • em500 11y ago
    > It might be more "economically efficient" whatever that means It means it has smaller [deadweight loss from taxation](https://en.wikipedia.org/wiki/Deadweight_loss https://en.wikipedia.org/wiki/Deadweight_loss) than most other common taxes (which are mainly based on income or transactions).
• adventured 11y ago
  Except for the fact that land taxes are regressive and extraordinarily evil toward the bottom ~50%, the people that have by far the most difficulty affording their property taxes each year. Ted Turner isn't having a problem paying his property taxes. The rich will never have a problem paying their property taxes. It's the poorest that struggle with it. Fully distributed land value taxes discourage property ownership by the non-wealthy, which will increase wealth inequality. If you then plan to create exclusion lines based on wealth or income, that drop people out of having to pay property taxes - well then you're just going to create a lot of other problems in which you're punishing people just above that line that can hardly afford the tax either. If you want to use a very finely graduated property taxation approach, good luck fairly managing it across a nation as large and diverse as the US in terms of incomes / land values / standards of living / et al. If you make a person pay $3,000-$4,000 annually on their homeowners taxes per year, with said person having a median income in a house valued at the median, then what you'll accomplish is every ten years you're guaranteed to have completely wiped out all value gain created by that person owning their home and paying down their mortgage. Property taxes are just about the most regressive taxation device ever implemented. The only thing worse is the basic income, in which the rich are given a welfare hand-out.
  • pjc50 11y ago
    completely wiped out all value gain created by that person owning their home Think about this for a second: where does this value come from? Most capital assets depreciate. We're too used to property as an eternally appreciating asset.
    • XorNot 11y ago
      Because land is a finite resource compared to all other sources of capital. There is no more of it to be had.
      • kimdouglasmason 11y ago
        There are vast amounts of land, even within American cities, that is very cheap. The amount of usable land for urban purposes might as well be infinite. Land is only expensive in a few select locations that have specific infrastructure and industries. It is the infrastructure and industries that provide the value; even the most picturesque accessible fertile land is quite cheap if it's not in a city.
• mseebach 11y ago
  There are many, many things government could do that are economically better, not just in areas of taxation, but pretty much every area. Also, I'm not talking about the things crackpot far left/right wing blog readers consider obvious, these are perfectly orthodox Econ 101 insights. They aren't implemented because they are incompatible with political dogma (I won't even call it ideology, as this implies a level of intellectual consistency), and these issues are used as tribal rallying calls which are much more valuable to politicians than implementing better policy ever was. Land use tax, no matter how economically efficient, won't get implemented because the villains of taxation these days aren't heavy land users. I can run a hedge fund from a few floors in a Manhattan sky scaper. It would have the land footprint of perhaps 10 large coffeeshops. Google and Apple have barely any land footprint compared to any factory of any size. Any land tax implementation that would see hedgefunds, Google and Apple "pay their fair share" (while raising enough revenue to replace income and sales taxes) would be grotesque and certainly not economically efficient.
  • rory096 11y ago
    > I can run a hedge fund from a few floors in a Manhattan sky scaper. It would have the land footprint of perhaps 10 large coffeeshops. Google and Apple have barely any land footprint compared to any factory of any size. That hedge fund skyscraper is on a prime plot of land in Lower Manhattan. The factory is in an industrial zone in rural South Carolina. The hedge fund gets taxed more – LVT is not regressive.
    • Houshalter 11y ago
      The hedge fund would still pay less tax then the paper company in the adjacent office. And both would pay less than the coffee shop on the street which has really valuable real estate.
    • mseebach 11y ago
      First, I don't care if LTV is technically regressive, I care if political opponents of LTV can claim it is, and they can. Second, I actually included meaningful comparisons. My hedge fund gets taxed the same per sqft as the coffee shop in the same building (probably less, because the storefront property is more valuable, a 56th floor coffeeshop doesn't get the same foot traffic as the street level one, my hedge fund works equally well whatever floor it's on). Also, I'd put my back office operation in SC, which is great for me and SC, but looks a lot like me dodging my fair share. This might be economically efficient but it's not politically efficient. Googles datacentres are in the same industrial zones as those factories. Google's offices are right next to malls and cinemas who would get billion-dollar tax bills if Google were to be taxed "fairly".
• Houshalter 11y ago
  Is this different than regular property taxes? The general objection is that it's pretty unfair to farmers. And well, all land owners. What's special about land? What's the difference between someone with a million dollars worth of gold and a million dollars worth of land? The first pays no tax. And maybe they shouldn't, if you aren't earning anything or spending on anything. Income tax fairly taxes everything that is earning money. It distributes taxes over the whole economy rather than specific parts, which is why it's the most politically acceptable solution.
  • larsiusprime 11y ago
    Property tax includes the value of what's ON the land, land tax is the value of just the unimproved empty lot. IE, the location. Creating value on the land is yours to keep, capturing value the community created (the location value) should go to the community. Otherwise you profit and rent seek from value you didn't create. That's the theory at least.
• mediascreen 11y ago
  Are you sure it's never been tried? The Wikipedia page lists seven countries that use it: https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax
  • vidarh 11y ago
    George's intent was to replace most other taxes with it. That has as far as I know not been tried. Many have had some form of land value tax as part of a wider tax system, but that may counteract many of the claimed benefits of it.
• AnthonyMouse 11y ago
  I don't get land value tax. The idea is theoretically supposed to be that you only pay tax on the value of the land, but the value of the land is because of what's on/around it. There is plenty of perfectly good land in rural Texas or Iowa but it isn't as valuable as land in San Francisco because there isn't a city right there. So you have somebody who is going to build a factory and they pick a nice piece of low value rural land. But once there is a factory, people build housing for the workers and stores and so on, and now you have a whole town centered on the factory and the value of the land goes up. But the reason the value of the land goes up is because of the factory. So the next thing you know the factory owners realize they're sitting on a "high value" piece of land, so they put all the machinery on trucks and carry it fifty miles down the road where the land is still cheap and they don't have to pay high taxes. And then the process repeats. It seems like the result would be a preposterous amount of urban sprawl and inefficiency. Anything that doesn't actually care about its location but attracts other investment would keep getting moved, which would destroy the value of the third party investment. Third parties would then respond by making their investments mobile (e.g. living in mobile homes or selling food from food trucks instead of building houses or restaurants). Every time the taxing authority said the piece of land where everybody is has significantly more value than the piece where nobody is, everything moves down the road again. And that's the extreme case but you get the same thing in the suburbs. You don't want a house which is near anything because the land value will be higher which is now a liability, so build it a little further out and you'll have a longer commute but your taxes will go down by $10,000/year. Because it isn't the land that has value, it's the people and the stuff. If you tax land highly non-uniformly then the people and stuff will spread out.
  • larsiusprime 11y ago
    Actually what happens is without land value tax, you get land speculation. In practice with Land tax, you'd have cheaper land than without it because there is no incentive to speculate and hold productive land out of use hoping its value will go up (which is where most of the price of real estate comes from -- it's a "safe bet" that land values increase as long as the area's population increases, so there is no incentive NOT to speculate and drive prices way up). An interesting phenomenon like this played out in EVE online where an economist independently re-discovered the land tax: http://www.gamasutra.com/blogs/RaminShokrizade/20130405/189984/How_I_Used_EVE_Online_to_Predict_the_Great_Recession.php http://www.gamasutra.com/blogs/RaminShokrizade/20130405/1899...
• vidarh 11y ago
  This is the full criticism from Marx: https://www.marxists.org/archive/marx/works/1881/letters/81_06_20.htm https://www.marxists.org/archive/marx/works/1881/letters/81_... I doubt he was afraid it would work: > I said of it in 1847, in my work against Proudhon: “We can understand that economists like Mill” (the elder, not his son John Stuart, who also repeats this in a somewhat modified form) “Cherbuliez, Hilditch and others have demanded that rent should be paid to the state in order that it may serve as a substitute for taxes. This is a frank expression of the hatred which the industrial capitalist dedicates to the landed proprietor, who seems to him a useless and superfluous element in the general total of bourgeois production.” Basically, the concept of paying land/ground rents was well established in many European countries, only usually the recipients would be land owners that were often the nobility, rather than the state. So replacing ground rents to one of the large estates with taxes to the state to replace other taxes was naturally attractive to the capital-owners in countries where this was widespread. Marx recognised elsewhere that George and others were going further, but saw it basically de-facto as a means for the capitalists to rip the rug out under the last of the landed nobility and make them rather than the bourgeoisie the source of funding for the state. So yes, a delay for socialism, and that may be one reason for Marx to dislike it, but I read his criticism more as disdain over basically dragging up an old idea as a halfway house when in his eyes there were already far better alternatives on the table. But this history of ground rents also gives you the reason it has not and will not be enacted anytime soon: Many of these land owners were, and still are, tremendously powerful. And many new large land-owners have arisen. In the UK, for example, large parts of central London is in the hands of a handful of large estates which still collects ground rent or rents out land on a shorthold basis, after they eventually managed to reverse the decline that followed the introduction of estate taxes. Many of these major London estates are still in the original family ownership (e.g. Grosvenor, Portman, Cadogan, Bedford) - and you will find similar estates if not often of the same age - all over the place. The vested interests in fighting such a tax regime is in most countries vast and extremely well connected. It is a fight few would want to take.