10 ms·

A lot of people focus on the fairness of the Land Value Tax, but the consequences of using one are just as interesting if not more. This tax has been put into p

A lot of people focus on the fairness of the Land Value Tax, but the consequences of using one are just as interesting if not more. This tax has been put into practice in some cities in Pennsylvania, and there's evidence that it has a whole bunch of positive effects on the city, due to the way that it incentivises improving your property and making the most of your land (since you're going to be taxed on it pretty much the same either way). https://www.strongtowns.org/journal/2019/3/6/non-glamorous-gains-the-pennsylvania-land-tax-experiment https://www.strongtowns.org/journal/2019/3/6/non-glamorous-g... I think we should be replacing property taxes with land value taxes pretty much everywhere. Aside from the benefits mentioned in the Strong Towns article linked above, putting the right incentives in place to build more densely in high-demand (aka high land value) areas would be a boon to making cities and towns more walkable and more amenable to public transit, and therefore reducing sprawl and pollution. It wouldn't get us all of the way, but it would help.

CydeWeys 6y ago
I sort of agree that replacing property taxes with land-value taxes would make sense, so long as you can actually do the value assessments fairly and impartially. What doesn't remotely make sense to me is the suggestion that LVT should be the primary or even only tax, which you see others arguing for here in the comments.
- tlholaday 6y ago
  > What doesn't remotely make sense to me is the suggestion that LVT should be the primary or even only tax When you were new to arithmetic, did it remotely make sense to you that the number of integers and the number of even integers was the same? If you find a surprising conclusion, consider reading the argument. Perhaps you will discover that you agree with the premises and the reasoning, and the conclusion will seem less surprising.
  - free_rms 6y ago
    If the arithmetic for this tax scheme doesn't seem to remotely work out, ruminations on the nature of infinity aren't going to set me at ease with it. Here in the finite world, most of the money moving around is in services, while most of the land is disconnected from that economy. How are you getting 1-2 trillion in tax revenue from land without making, say, farming economically unviable? Will it just be riddled through with exceptions and carveouts?
    - MiroF 6y ago
      > https://en.wikipedia.org/wiki/List_of_largest_companies_by_revenue https://en.wikipedia.org/wiki/List_of_largest_companies_by_r... It does not seem at all clear to me that most economic activity is in services and not in resources/monopoly ownership. > farming economically unviable Farming is already unviable, that's why we subsidize it so heavily.
      - free_rms 6y ago
        If you filter that list to US companies, it does seem to be mostly in services, with logistics and manufacturing coming up next. I'm fine with taxing the hell out of Exxon, btw, or at least not giving them cash-in-a-briefcase subsidies, but you're not going to replace the income tax on that. We collected 3.46 trillion in income taxes last year. How do you get there on a land-value tax? Do we weight it so Manhattan land owners are paying more in tax than the entire midwest?
        snidane 6y ago
        You don't need to raise as much when you don't need to subsidize rent-controlled housing, unemployment and other expenses related to high cost od living in places of abundant work opportunity. That said, you roll out the new policy gradually by reducing labor related taxes while increasing land and monopoly related ones. After several iterations you should expect convergence to a new stable position. It's better to prefer iterative deployment over big bang changes. Not only in software.
    - LVTfan 6y ago
- pydry 6y ago
  I think a lot of people don't really realize how much free money is creamed off by property owners and resource extractors. Not least because of their constant attempts to disguise what they do as productive. It's not like people are in a coffee shop and seeing "% of this product that goes to rent" built into the prices. They tend to assume that the price of the cup is basically the ingredients (which is why people balk at paying for tap water in restaurants).
  - tryptophan 6y ago
    Good point! Rent is like 12-13% of our countries entire GDP, which is kind of insane for just people paying others for owning a piece of land. If a high (but arguably appropriate and fair) land value tax was implemented and captured like 8-10 % points of that, it would fund like 70% of the government.
  - nybble41 6y ago
    Rent is hardly "free money". Businesses and individuals pay rent in lieu of purchasing the property they use outright. There are times when it makes sense to own your own property and times when it makes sense to rent. If you did away with rent then everyone would be forced to buy property instead—which would be less flexible and not significantly cheaper. (Edit: Fixed typo.)
    - ethanbond 6y ago
      Nobody is proposing doing away with rent. They are proposing to pay landlords for what the landlords provide (some flexibility, maintenance, etc.) and to stop paying them for what they don’t provide (an area worth living in, nearby parks/subways, local job opportunities, restaurants, etc.)
      - nybble41 6y ago
        The landlord provides a usable piece of land close to these amenities. They, along with others, contribute to making the area worth living in. They aren't being paid for the use of any nearby amenities, just for having the foresight to develop land in the correct location to synergize with the surrounding improvements. Is choosing the location to build not part of their contribution? And likewise for encouraging the later development of facilities in proximity to their own property? Frankly the idea behind the "unearned benefit" narrative—that a landlord ought to earn the same profit for land in a bad location as for land in a good location—is a bit ridiculous. Attempting to negate the value the owner derives from good placement in the community is counterproductive.
- NumberWangMan 6y ago
  I agree. I think the single tax was conceived in a time where most productive activities took the same amount of land. Nowadays, you have farms on the one hand, and something like tech companies on the other. It would be kinda crazy to tax them both based on the amount of land they use.
  - LVTfan 6y ago
    It isn't the AMOUNT of land they use, but the value of what they use. An acre of good farmland might be $2500. An acre in Manhattan might be $250 million and up. The rental value of the land is proportional to the value of the land. And when the Single Tax was conceived, it was already abundantly clear that urban land values were far above rural land values, and rising much faster. Few tech companies will want to locate where there isn't already broadband, good schools, cultural amenities, a range of interesting restaurants, and ready pool of the talents they need, not to mention infrastructure such was water, sewer, medical care, etc. And to the extent that they create jobs in such places, they will probably be quite welcome.
    - NumberWangMan 6y ago
      Hmm, that's a good point. Though, wouldn't an LVT that encourage companies to push all their employees to work from home, where possible? There are certainly benefits to that, but it might mean that certain industries get taxed much more heavily than others. Is it ok if distributed work-from-home software companies pay no tax at all, because they have no offices? The workers would pay tax on their own houses and apartments, but the company wouldn't. I guess it depends on whether you want to consider taxes to be a tool for limiting rent on scarce resources, or for balancing out wealth disparities. (aside from the main goal of raising revenue, of course) The two things are related, but not identical. The first seems like more of a proxy for what we actually want to do, which is to prevent concentration of wealth. Or is it more about the fact that collecting rent isn't an economically productive activity, so if we incentivize everyone to gain wealth by producing value, it'll make us all wealthier? To be fair, the hurdle that LVT has to pass is not to be perfect, but just to be better than what we have, which isn't a high bar. But it is worth thinking about the possible loopholes and edge cases. Should we also assume that switching to a single tax wouldn't exclude things like cigarette taxes and carbon taxes? These taxes are designed intentionally with particular incentives, just like the LVT, and unlike property taxes and income taxes. It would be a shame to take away the single best tool we have for fighting climate change, for example. Anyway, no obligation to reply, a lot of these questions are just me thinking out loud.
- DubiousPusher 6y ago
  The reason Henry George thought it should be the only tax is because of the economic consequences. Since land is by and large fixed in quantity and a society's productive uses of land are largely dictated by the technology of the times then a Land Value Tax would not create inefficiencies in the market the way other taxes like tariffs or an income tax do.
naravara 6y ago
You would probably want to include some tax advantaged incentives to maintain a bit of public space, public art, parks, or just green spaces. Giving over some portion of your land for public benefit, even if limited use, should be encouraged rather than penalized. It would also encourage more interesting usage patterns and development than pure land-use maximization would do. The latter might have you end up with block after block of square high rises, which might glide us past the point of diminishing returns to density.
- LVTfan 6y ago
  Frederick Law Olmsted realized early on that even a huge project like Central Park could be funded from the increase in land value it created in the neighborhoods surrounding it.
  - brudgers 6y ago
    The risk when extrapolating from Manhattan is when extrapolating to places significantly unlike Manhattan. When Central Park was started, Manhattan already had a population density in excess of 10,000 people per km^2. Even Boston today is little more than half that. Munich, less than half. San Jose little more than one fifth. Central Park worked because the existing density was already high and there was no way for Manhattan to grow outward (dredging excepted).
    - IIAOPSW 6y ago
      >Central Park worked because the existing density was already high and there was no way for Manhattan to grow outward Central Park was built before the first subway and before the bridges connecting Brooklyn, Queens and Jersey. The dirt dug from the tunnels was added to lower Manhattan. Prior to elevators buildings rarely went higher than 5 stories. There was in fact ways for Manhattan to grow outwards (effectively).
    - LVTfan 6y ago
      most of that population was still well south of the Central Park area. Streets had been laid out, and the occasional building erected in the area. But the population density was downtown, in the tenements. Astor and others benefited as population expanded north.

CydeWeys 6y ago

I sort of agree that replacing property taxes with land-value taxes would make sense, so long as you can actually do the value assessments fairly and impartially. What doesn't remotely make sense to me is the suggestion that LVT should be the primary or even only tax, which you see others arguing for here in the comments.

tlholaday 6y ago
> What doesn't remotely make sense to me is the suggestion that LVT should be the primary or even only tax When you were new to arithmetic, did it remotely make sense to you that the number of integers and the number of even integers was the same? If you find a surprising conclusion, consider reading the argument. Perhaps you will discover that you agree with the premises and the reasoning, and the conclusion will seem less surprising.
- free_rms 6y ago
  If the arithmetic for this tax scheme doesn't seem to remotely work out, ruminations on the nature of infinity aren't going to set me at ease with it. Here in the finite world, most of the money moving around is in services, while most of the land is disconnected from that economy. How are you getting 1-2 trillion in tax revenue from land without making, say, farming economically unviable? Will it just be riddled through with exceptions and carveouts?
  - MiroF 6y ago
    > https://en.wikipedia.org/wiki/List_of_largest_companies_by_revenue https://en.wikipedia.org/wiki/List_of_largest_companies_by_r... It does not seem at all clear to me that most economic activity is in services and not in resources/monopoly ownership. > farming economically unviable Farming is already unviable, that's why we subsidize it so heavily.
    - free_rms 6y ago
      If you filter that list to US companies, it does seem to be mostly in services, with logistics and manufacturing coming up next. I'm fine with taxing the hell out of Exxon, btw, or at least not giving them cash-in-a-briefcase subsidies, but you're not going to replace the income tax on that. We collected 3.46 trillion in income taxes last year. How do you get there on a land-value tax? Do we weight it so Manhattan land owners are paying more in tax than the entire midwest?
      - snidane 6y ago
        You don't need to raise as much when you don't need to subsidize rent-controlled housing, unemployment and other expenses related to high cost od living in places of abundant work opportunity. That said, you roll out the new policy gradually by reducing labor related taxes while increasing land and monopoly related ones. After several iterations you should expect convergence to a new stable position. It's better to prefer iterative deployment over big bang changes. Not only in software.
  - LVTfan 6y ago
pydry 6y ago
I think a lot of people don't really realize how much free money is creamed off by property owners and resource extractors. Not least because of their constant attempts to disguise what they do as productive. It's not like people are in a coffee shop and seeing "% of this product that goes to rent" built into the prices. They tend to assume that the price of the cup is basically the ingredients (which is why people balk at paying for tap water in restaurants).
- tryptophan 6y ago
  Good point! Rent is like 12-13% of our countries entire GDP, which is kind of insane for just people paying others for owning a piece of land. If a high (but arguably appropriate and fair) land value tax was implemented and captured like 8-10 % points of that, it would fund like 70% of the government.
- nybble41 6y ago
  Rent is hardly "free money". Businesses and individuals pay rent in lieu of purchasing the property they use outright. There are times when it makes sense to own your own property and times when it makes sense to rent. If you did away with rent then everyone would be forced to buy property instead—which would be less flexible and not significantly cheaper. (Edit: Fixed typo.)
  - ethanbond 6y ago
    Nobody is proposing doing away with rent. They are proposing to pay landlords for what the landlords provide (some flexibility, maintenance, etc.) and to stop paying them for what they don’t provide (an area worth living in, nearby parks/subways, local job opportunities, restaurants, etc.)
    - nybble41 6y ago
      The landlord provides a usable piece of land close to these amenities. They, along with others, contribute to making the area worth living in. They aren't being paid for the use of any nearby amenities, just for having the foresight to develop land in the correct location to synergize with the surrounding improvements. Is choosing the location to build not part of their contribution? And likewise for encouraging the later development of facilities in proximity to their own property? Frankly the idea behind the "unearned benefit" narrative—that a landlord ought to earn the same profit for land in a bad location as for land in a good location—is a bit ridiculous. Attempting to negate the value the owner derives from good placement in the community is counterproductive.
NumberWangMan 6y ago
I agree. I think the single tax was conceived in a time where most productive activities took the same amount of land. Nowadays, you have farms on the one hand, and something like tech companies on the other. It would be kinda crazy to tax them both based on the amount of land they use.
- LVTfan 6y ago
  It isn't the AMOUNT of land they use, but the value of what they use. An acre of good farmland might be $2500. An acre in Manhattan might be $250 million and up. The rental value of the land is proportional to the value of the land. And when the Single Tax was conceived, it was already abundantly clear that urban land values were far above rural land values, and rising much faster. Few tech companies will want to locate where there isn't already broadband, good schools, cultural amenities, a range of interesting restaurants, and ready pool of the talents they need, not to mention infrastructure such was water, sewer, medical care, etc. And to the extent that they create jobs in such places, they will probably be quite welcome.
  - NumberWangMan 6y ago
    Hmm, that's a good point. Though, wouldn't an LVT that encourage companies to push all their employees to work from home, where possible? There are certainly benefits to that, but it might mean that certain industries get taxed much more heavily than others. Is it ok if distributed work-from-home software companies pay no tax at all, because they have no offices? The workers would pay tax on their own houses and apartments, but the company wouldn't. I guess it depends on whether you want to consider taxes to be a tool for limiting rent on scarce resources, or for balancing out wealth disparities. (aside from the main goal of raising revenue, of course) The two things are related, but not identical. The first seems like more of a proxy for what we actually want to do, which is to prevent concentration of wealth. Or is it more about the fact that collecting rent isn't an economically productive activity, so if we incentivize everyone to gain wealth by producing value, it'll make us all wealthier? To be fair, the hurdle that LVT has to pass is not to be perfect, but just to be better than what we have, which isn't a high bar. But it is worth thinking about the possible loopholes and edge cases. Should we also assume that switching to a single tax wouldn't exclude things like cigarette taxes and carbon taxes? These taxes are designed intentionally with particular incentives, just like the LVT, and unlike property taxes and income taxes. It would be a shame to take away the single best tool we have for fighting climate change, for example. Anyway, no obligation to reply, a lot of these questions are just me thinking out loud.
DubiousPusher 6y ago
The reason Henry George thought it should be the only tax is because of the economic consequences. Since land is by and large fixed in quantity and a society's productive uses of land are largely dictated by the technology of the times then a Land Value Tax would not create inefficiencies in the market the way other taxes like tariffs or an income tax do.

naravara 6y ago

You would probably want to include some tax advantaged incentives to maintain a bit of public space, public art, parks, or just green spaces. Giving over some portion of your land for public benefit, even if limited use, should be encouraged rather than penalized. It would also encourage more interesting usage patterns and development than pure land-use maximization would do. The latter might have you end up with block after block of square high rises, which might glide us past the point of diminishing returns to density.

LVTfan 6y ago
Frederick Law Olmsted realized early on that even a huge project like Central Park could be funded from the increase in land value it created in the neighborhoods surrounding it.
- brudgers 6y ago
  The risk when extrapolating from Manhattan is when extrapolating to places significantly unlike Manhattan. When Central Park was started, Manhattan already had a population density in excess of 10,000 people per km^2. Even Boston today is little more than half that. Munich, less than half. San Jose little more than one fifth. Central Park worked because the existing density was already high and there was no way for Manhattan to grow outward (dredging excepted).
  - IIAOPSW 6y ago
    >Central Park worked because the existing density was already high and there was no way for Manhattan to grow outward Central Park was built before the first subway and before the bridges connecting Brooklyn, Queens and Jersey. The dirt dug from the tunnels was added to lower Manhattan. Prior to elevators buildings rarely went higher than 5 stories. There was in fact ways for Manhattan to grow outwards (effectively).
  - LVTfan 6y ago
    most of that population was still well south of the Central Park area. Streets had been laid out, and the occasional building erected in the area. But the population density was downtown, in the tenements. Astor and others benefited as population expanded north.