6 ms·

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 impartiall

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
    An acre of farmland might be worth $2500 or $5000, and that land has been improved by clearing, draining, fencing, etc. (improvements done by the current or an earlier owner or his tenant). LVT is based on the UNIMPROVED value of the land, so if there were an as-yet-uncleared acre nearby, it and the acre of farmland would be assessed at the same value. An acre in midtown Manhattan might be worth $250 million to as much as $1.25 billion, before we look at the building that is on it. (An acre is a big lot in Manhattan -- a whole city block.) A tiny lot in Manhattan sells hundreds of thousands of dollars, due to its location, which the seller didn't create. The old building on it may be worth nothing. And the 100x100 lot with a new hotel on it and the 100x100 lot next door with just a parking lot, or maybe just a chain link fence, would be assessed identically. The unimproved value of the land. Farmers would pay little under LVT. In fact they'd be advantaged, because their buildings and equipment would not be taxed. The owners of sites in our major cities would pay in proportion to the value of their site. And frequently the land is already leased to someone who puts a building on it, which gives a sense of the value of the land at the time the lease was negotiated -- a value which is not always made public. And why would we want to tax wages, or sales, if we could obtain from the value of land much of the revenue we need, while providing a boost to the economy via removing the deadweight loss of dumb taxes?
    - free_rms 6y ago
      So it's all on the assessor to decide the 'proper' unimproved land values to raise enough revenue while not driving the wrong people out of business? At a national scale? On that note, is the inherent land value of a lot in Bushwick way higher then 20 years ago now that they've gentrified? Is neighborhood desirability an 'unimproved' attribute? I very much get where you guys are coming from in a philosophical sense, but I feel like there are a million wrenches in the works that everyone's ignoring because the theory is so nice.
      - jrs235 6y ago
        >On that note, is the inherent land value of a lot in Bushwick way higher then 20 years ago now that they've gentrified? Is neighborhood desirability an 'unimproved' attribute? Yes. Desirability and infrastructure near land increases it's unimproved value.
  - CydeWeys 6y ago
    I've never seen the numbers proposed in a way that makes sense. We know what the total budget is right now, at a national, state, and local level. And we know where that income is coming from -- mostly a mix of income, property, sales, payroll, corporate, and other taxes. And crucially we know exactly what the breakdown of that taxation burden is on various people in various financial situations. I want to see the numbers on this Georgian proposal that show the total revenue at federal, state, and local levels. Is the total amount of tax the same? Or are we talking about radically reduced tax revenue in total? And how does the distribution of who pays this tax change under the new system? Then, and only then, with these figures, we can look at the proposal and see if it remotely makes sense using the typical criteria of (a) is there enough funding for current levels of government services at all levels, (b) are the changes in who's paying how much in taxes fair and equitable, etc. I really want to see a full proposal on exactly what a typical individual and corporate tax bill for a variety of common situations, and I want to see that those numbers all add up to enough revenue.
    - epistasis 6y ago
      The problem with looking at it this way is that we can see what will happen in the first months or years of the new tax system, because values take a while to change. But what we really care about is what the system looks like a decade in, after property values have massive changes. And what it looks like 50 years in, after cities have been remade to reflect the shift in tax costs. I don't think any modern day Georgist argue for "single tax." Remember that income tax wasn't in place in the US when Henry George started writing! So any modern plan will Lokey include shifting tax bases, over time, to rely more heavily on LVT and less on sales tax and other regressive taxes. This will require adaptation and policy change over the years and decades, rather than saying ahead of time that they can predict the future with absolute certainty.
      - CydeWeys 6y ago
        I don't think there's many people that want what essentially amounts to a 50-year revolution. It seems implausible that something like that would ever succeed; it would be long-aborted before then because citizens (rightfully) will not wait two generations for results.
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.

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
  An acre of farmland might be worth $2500 or $5000, and that land has been improved by clearing, draining, fencing, etc. (improvements done by the current or an earlier owner or his tenant). LVT is based on the UNIMPROVED value of the land, so if there were an as-yet-uncleared acre nearby, it and the acre of farmland would be assessed at the same value. An acre in midtown Manhattan might be worth $250 million to as much as $1.25 billion, before we look at the building that is on it. (An acre is a big lot in Manhattan -- a whole city block.) A tiny lot in Manhattan sells hundreds of thousands of dollars, due to its location, which the seller didn't create. The old building on it may be worth nothing. And the 100x100 lot with a new hotel on it and the 100x100 lot next door with just a parking lot, or maybe just a chain link fence, would be assessed identically. The unimproved value of the land. Farmers would pay little under LVT. In fact they'd be advantaged, because their buildings and equipment would not be taxed. The owners of sites in our major cities would pay in proportion to the value of their site. And frequently the land is already leased to someone who puts a building on it, which gives a sense of the value of the land at the time the lease was negotiated -- a value which is not always made public. And why would we want to tax wages, or sales, if we could obtain from the value of land much of the revenue we need, while providing a boost to the economy via removing the deadweight loss of dumb taxes?
  - free_rms 6y ago
    So it's all on the assessor to decide the 'proper' unimproved land values to raise enough revenue while not driving the wrong people out of business? At a national scale? On that note, is the inherent land value of a lot in Bushwick way higher then 20 years ago now that they've gentrified? Is neighborhood desirability an 'unimproved' attribute? I very much get where you guys are coming from in a philosophical sense, but I feel like there are a million wrenches in the works that everyone's ignoring because the theory is so nice.
    - jrs235 6y ago
      >On that note, is the inherent land value of a lot in Bushwick way higher then 20 years ago now that they've gentrified? Is neighborhood desirability an 'unimproved' attribute? Yes. Desirability and infrastructure near land increases it's unimproved value.
- CydeWeys 6y ago
  I've never seen the numbers proposed in a way that makes sense. We know what the total budget is right now, at a national, state, and local level. And we know where that income is coming from -- mostly a mix of income, property, sales, payroll, corporate, and other taxes. And crucially we know exactly what the breakdown of that taxation burden is on various people in various financial situations. I want to see the numbers on this Georgian proposal that show the total revenue at federal, state, and local levels. Is the total amount of tax the same? Or are we talking about radically reduced tax revenue in total? And how does the distribution of who pays this tax change under the new system? Then, and only then, with these figures, we can look at the proposal and see if it remotely makes sense using the typical criteria of (a) is there enough funding for current levels of government services at all levels, (b) are the changes in who's paying how much in taxes fair and equitable, etc. I really want to see a full proposal on exactly what a typical individual and corporate tax bill for a variety of common situations, and I want to see that those numbers all add up to enough revenue.
  - epistasis 6y ago
    The problem with looking at it this way is that we can see what will happen in the first months or years of the new tax system, because values take a while to change. But what we really care about is what the system looks like a decade in, after property values have massive changes. And what it looks like 50 years in, after cities have been remade to reflect the shift in tax costs. I don't think any modern day Georgist argue for "single tax." Remember that income tax wasn't in place in the US when Henry George started writing! So any modern plan will Lokey include shifting tax bases, over time, to rely more heavily on LVT and less on sales tax and other regressive taxes. This will require adaptation and policy change over the years and decades, rather than saying ahead of time that they can predict the future with absolute certainty.
    - CydeWeys 6y ago
      I don't think there's many people that want what essentially amounts to a 50-year revolution. It seems implausible that something like that would ever succeed; it would be long-aborted before then because citizens (rightfully) will not wait two generations for results.

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.