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Landlords will just raise the rent to compensate for the tax. It guarantees the post-UBI rent increase, because landlords will feel justified. If the tax is s

by _rpd 10y ago

Landlords will just raise the rent to compensate for the tax. It guarantees the post-UBI rent increase, because landlords will feel justified. If the tax is somehow indexed to rent, once again you are engineering an inflationary spiral. What's the reasoning that a land value tax could be helpful? Edit: after some reading, the apparent intent of the land value tax is to encourage landlords to build denser housing to share the burden of the new tax among more renters. But this is like proposing a Slow Driver Tax while ignoring that the speed limit has been set at 15 mph everywhere in the city. Landlords already want to build multiple housing units, but they are prevented by zoning laws. Attempts to change zoning laws are some of the most vicious political battles in existence. Everyone knows that more density/supply is needed to make housing more affordable, but it just hasn't happened (at least in the US).

malloryerik 10y ago
Well, first, there are a few different versions of land value taxes, and a few different rationales for them. I'm not an expert on this but do find it interesting and important. In the version that I was thinking of, a land value tax would pay for the basic income. If the land value tax provided all of the funds for the basic income, then there would presumably be no excess for landlords to siphon off, except maybe as one region gained in popularity at the expense of another, etc. The eventual goal would be to have all or almost all income from rents within a country be distributed to the citizenry. Land owners would also receive the income.
- benjiwengy 10y ago
  The reason why a Basic Income paid out from a LVT is a good idea, is because it reduces costs by leveling the field for all participants in the immovable property market. So that market can then allocate resources at optimal efficiency. A UBI paid out of taxes on produced factors (income,capital) distorts resource allocation, so we all end up poorer. Rents would go up, but then so would the LVT and then the UBI until an equilibrium point is reached. In the US, without any other changes to your tax/welfare system the LVT/UBI would result in every man,woman and child getting around $4000 each. That would rise as rents went up. That would go up even further if other taxes and benefits were reduced.
  - malloryerik 10y ago
    Very interesting, thanks. As I'm sure you've been thinking, it seems important because of the looming threat of human labor becoming an obsolete means for the satisfactory distribution of wealth and necessities throughout society. Do you have any other thoughts about how to address this problem?
    - benjiwengy 10y ago
      I don't think humans adding value with their time, and selling it on the market will ever stop. This has been a misplaced fear for thousands of years, yet we work just as hard as ever. Technology just makes us more productive. So will robots. The argument for the LVT/BI is that it is not a benefit or a welfare payment, but should be view as a basic human property right. Without which, we are not free. The LVT really only means we would all be equal share landlords of the value derived from scarce resources supplied for free by nature/god. Basic Income/Public spending is that equal share. Without that, humans cannot share this Earth as equals, thus will not have taken the final step from being savages to truly civilized beings. Yes, it really is that big a deal;)
benjiwengy 10y ago
No. Landlords will not just raise their rents. They are already charging the maximum the market will bear. However the result of LVT would increase the disposable incomes of those that rent, from which they will apportion some of on purchasing more/better location, the rest of more goods and services. Rents will rise for this reason, and so will the amount an LVT can collect. But this isn't an infinite spiral. There will reach an equilibrium, as there is now, where renters apportion are certain % of their income on valuable locations. Which is collected by the landlord and taxed away by the LVT. The LVT would not make landlords build denser housing, they have exactly the same incentive anyway. It would how ever reduced vacancy and under occupation among owner occupiers, and would increase the average size of dwellings, even if that meant they were more densely clustered by building upwards.
- _rpd 10y ago
  > No. Landlords will not just raise their rents. They are already charging the maximum the market will bear. However the result of LVT would increase the disposable incomes of those that rent, from which they will apportion some of on purchasing more/better location, the rest of more goods and services. The day after the BI-increase, the housing supply and demand will be exactly the same, but renters will have a greater capacity to pay. The maximum amount that the market will bear will have risen exactly by the extent of the increase. It is hopelessly optimistic to think that landlords won't increase rents to claim almost all of it. Until zoning laws permit greater density/supply (building upwards is great but often prohibited by local laws), the situation won't change, and a tax linked to rent will just cause an inflationary spiral. I won't even go into the difficulties of separating land value from building value, since it's clear that objective land value isn't intended to be a factor in setting the tax level.
  - benjiwengy 10y ago
    No, a tax on the rental value of land would move the demand curve over to the left. This would reduce both rental incomes and selling prices. ie a reduction in demand. So the rise in rents would be cancelled out by the fall in selling prices. ie No inflation. Landlords do not currently claim most of peoples disposable incomes. That ratio hasn't, nor would it change because renters get more income via the BI. Landlords would in fact be keeping a lot less of peoples income once equilibrium has been reached. There are no difficulties in separating the value of location from that of the buildings. Easy to do. Besides as far as LVT is concerned, its the structure rather than value taxed that is important. But I'd need to write more than I've got time for here to explain why that is.

by _rpd 10y ago

malloryerik 10y ago

Well, first, there are a few different versions of land value taxes, and a few different rationales for them. I'm not an expert on this but do find it interesting and important. In the version that I was thinking of, a land value tax would pay for the basic income. If the land value tax provided all of the funds for the basic income, then there would presumably be no excess for landlords to siphon off, except maybe as one region gained in popularity at the expense of another, etc. The eventual goal would be to have all or almost all income from rents within a country be distributed to the citizenry. Land owners would also receive the income.

benjiwengy 10y ago
The reason why a Basic Income paid out from a LVT is a good idea, is because it reduces costs by leveling the field for all participants in the immovable property market. So that market can then allocate resources at optimal efficiency. A UBI paid out of taxes on produced factors (income,capital) distorts resource allocation, so we all end up poorer. Rents would go up, but then so would the LVT and then the UBI until an equilibrium point is reached. In the US, without any other changes to your tax/welfare system the LVT/UBI would result in every man,woman and child getting around $4000 each. That would rise as rents went up. That would go up even further if other taxes and benefits were reduced.
- malloryerik 10y ago
  Very interesting, thanks. As I'm sure you've been thinking, it seems important because of the looming threat of human labor becoming an obsolete means for the satisfactory distribution of wealth and necessities throughout society. Do you have any other thoughts about how to address this problem?
  - benjiwengy 10y ago
    I don't think humans adding value with their time, and selling it on the market will ever stop. This has been a misplaced fear for thousands of years, yet we work just as hard as ever. Technology just makes us more productive. So will robots. The argument for the LVT/BI is that it is not a benefit or a welfare payment, but should be view as a basic human property right. Without which, we are not free. The LVT really only means we would all be equal share landlords of the value derived from scarce resources supplied for free by nature/god. Basic Income/Public spending is that equal share. Without that, humans cannot share this Earth as equals, thus will not have taken the final step from being savages to truly civilized beings. Yes, it really is that big a deal;)

benjiwengy 10y ago

No. Landlords will not just raise their rents. They are already charging the maximum the market will bear. However the result of LVT would increase the disposable incomes of those that rent, from which they will apportion some of on purchasing more/better location, the rest of more goods and services. Rents will rise for this reason, and so will the amount an LVT can collect. But this isn't an infinite spiral. There will reach an equilibrium, as there is now, where renters apportion are certain % of their income on valuable locations. Which is collected by the landlord and taxed away by the LVT. The LVT would not make landlords build denser housing, they have exactly the same incentive anyway. It would how ever reduced vacancy and under occupation among owner occupiers, and would increase the average size of dwellings, even if that meant they were more densely clustered by building upwards.

_rpd 10y ago
> No. Landlords will not just raise their rents. They are already charging the maximum the market will bear. However the result of LVT would increase the disposable incomes of those that rent, from which they will apportion some of on purchasing more/better location, the rest of more goods and services. The day after the BI-increase, the housing supply and demand will be exactly the same, but renters will have a greater capacity to pay. The maximum amount that the market will bear will have risen exactly by the extent of the increase. It is hopelessly optimistic to think that landlords won't increase rents to claim almost all of it. Until zoning laws permit greater density/supply (building upwards is great but often prohibited by local laws), the situation won't change, and a tax linked to rent will just cause an inflationary spiral. I won't even go into the difficulties of separating land value from building value, since it's clear that objective land value isn't intended to be a factor in setting the tax level.
- benjiwengy 10y ago
  No, a tax on the rental value of land would move the demand curve over to the left. This would reduce both rental incomes and selling prices. ie a reduction in demand. So the rise in rents would be cancelled out by the fall in selling prices. ie No inflation. Landlords do not currently claim most of peoples disposable incomes. That ratio hasn't, nor would it change because renters get more income via the BI. Landlords would in fact be keeping a lot less of peoples income once equilibrium has been reached. There are no difficulties in separating the value of location from that of the buildings. Easy to do. Besides as far as LVT is concerned, its the structure rather than value taxed that is important. But I'd need to write more than I've got time for here to explain why that is.