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> renting location should be a revenue neutral activity > Renting something that is the product of your labor or capital investment … should of course be compe

> renting location should be a revenue neutral activity > Renting something that is the product of your labor or capital investment … should of course be compensated. Land ("location") is a scarce economic good, with different locations being valuable for different purposes. Rendering it revenue-neutral would lead to misallocation. Land is also capital—a durable good used to produce other goods—so land ownership is a form of capital investment, and a tax on "ground rent" is a tax on capital. All economic value is the result of human action. When the scope of "improvements" is properly understood to include all human activity relating to the land—not just obvious things like builidngs but everything done to deliberately or incidentally increase the value of the land—there is no "unimproved" value left to tax.

sooheon 5y ago
> Land ("location") is a scarce economic good, with different locations being valuable for different purposes. Rendering it revenue-neutral would lead to misallocation. This is the core of your misunderstanding. Yes, location is a scarce economic good. Rendering the ownership of it (rent collection) revenue neutral, while keeping the utilization of it (productive activity at a location) totally untaxed, is how to guarantee correct allocation. Those who can be most productive at a given location will come to utilize it. Allowing the monopolistic ownership of location without utilization to be profitable is what leads to misallocation. Those rich enough to bid for a location will collect rent from those who productively utilize it. https://upload.wikimedia.org/wikipedia/commons/a/aa/Everybody_works_but_the_vacant_lot_%28cropped%29.jpg https://upload.wikimedia.org/wikipedia/commons/a/aa/Everybod...
sooheon 5y ago
> Rendering it revenue-neutral would lead to misallocation. Rendering ownership of land revenue-neutral does not imply rendering all economic activity on said land revenue-neural. In fact it does the opposite, ensuring that the returns to labor and capital are allocated justly. > When the scope of "improvements" is properly understood to include all human activity relating to the land—not just obvious things like builidngs but everything done to deliberately or incidentally increase the value of the land—there is no "unimproved" value left to tax. Sure there is. All natural resources on that land, which existed before humans ever set foot on it, comprise the unimproved value of land. There is also the value of location arising from the community (infrastructure, proximity to labor, proximity to customers) which is not attributable to any improvements upon the land.
imtringued 5y ago
I honestly can't comprehend how you are talking about a tax on land being a tax on capital. The owner of the land didn't create it, taxing the owner of the land doesn't discourage his production of additional land. If you were to introduce a 100% land tax no land would disappear as a result, instead the value of the land would shrink until people can afford to pay 100% of the value of the land every single year. As people who can use the land more productively can pay a higher land tax they would outbid anyone who intends a less productive use of the land.
- nybble41 5y ago
  > I honestly can't comprehend how you are talking about a tax on land being a tax on capital. "Capital" in economics is a fairly broad category. One definition from Merriam-Webster would be "accumulated goods devoted to the production of other goods". Land is at least as qualified on that score as a manufacturing plant or a home (creating goods such as "shelter" and "storage") or machinery or hand tools or any other durable property used in the production of other goods. > The owner of the land didn't create it, taxing the owner of the land doesn't discourage his production of additional land. Being created by the owner (or by humans in general) is not a necessary qualification for status as "capital". Still, it is important here to distinguish between "land" in the colloquial sense and what economists would refer to as "land" (unowned resources). While land might not be created through human action, property is. You are not taxing the land, you're taxing the conversion of land into property—the act of identifying useful, unowned resources and claiming them for human use. And when you tax something you naturally get less of it; in this case there is less incentive for people to go out and discover new resources. A 100% LVT would nullify any economic motive to expend effort locating new sources of minerals or suitable farmland (etc.) since 100% of the value of whatever you discovered would be taken by the LVT. That's assuming the LVT is limited to the hypothetical value of a bit of land in isolation. It gets worse when the scope of the LVT is increased to include the economic value of "location" with respect to other human developments—for example land inside a city being taxed more than physically equivalent land in a rural area. At that point you're not basing the amount of the tax on the land at all, but rather the capital investment and expenditure of human labor in the surrounding area. This form of "land value tax" is deceptively named; it should really be referred to as a tax on gross external benefits received. Which has some obvious flaws, for example that the property owner has little control over external benefits others may unilaterally choose to create, and also that one pays extra tax on any contribution one makes to one's own community which has the effect of raising property values. (In fact, under a LVT system unilaterally contributing to the community and making it a nicer place to live might well be considered harmful since it raises everyone's taxes…)

sooheon 5y ago

> Land ("location") is a scarce economic good, with different locations being valuable for different purposes. Rendering it revenue-neutral would lead to misallocation. This is the core of your misunderstanding. Yes, location is a scarce economic good. Rendering the ownership of it (rent collection) revenue neutral, while keeping the utilization of it (productive activity at a location) totally untaxed, is how to guarantee correct allocation. Those who can be most productive at a given location will come to utilize it. Allowing the monopolistic ownership of location without utilization to be profitable is what leads to misallocation. Those rich enough to bid for a location will collect rent from those who productively utilize it. https://upload.wikimedia.org/wikipedia/commons/a/aa/Everybody_works_but_the_vacant_lot_%28cropped%29.jpg https://upload.wikimedia.org/wikipedia/commons/a/aa/Everybod...

sooheon 5y ago

> Rendering it revenue-neutral would lead to misallocation. Rendering ownership of land revenue-neutral does not imply rendering all economic activity on said land revenue-neural. In fact it does the opposite, ensuring that the returns to labor and capital are allocated justly. > When the scope of "improvements" is properly understood to include all human activity relating to the land—not just obvious things like builidngs but everything done to deliberately or incidentally increase the value of the land—there is no "unimproved" value left to tax. Sure there is. All natural resources on that land, which existed before humans ever set foot on it, comprise the unimproved value of land. There is also the value of location arising from the community (infrastructure, proximity to labor, proximity to customers) which is not attributable to any improvements upon the land.

imtringued 5y ago

I honestly can't comprehend how you are talking about a tax on land being a tax on capital. The owner of the land didn't create it, taxing the owner of the land doesn't discourage his production of additional land. If you were to introduce a 100% land tax no land would disappear as a result, instead the value of the land would shrink until people can afford to pay 100% of the value of the land every single year. As people who can use the land more productively can pay a higher land tax they would outbid anyone who intends a less productive use of the land.

nybble41 5y ago
> I honestly can't comprehend how you are talking about a tax on land being a tax on capital. "Capital" in economics is a fairly broad category. One definition from Merriam-Webster would be "accumulated goods devoted to the production of other goods". Land is at least as qualified on that score as a manufacturing plant or a home (creating goods such as "shelter" and "storage") or machinery or hand tools or any other durable property used in the production of other goods. > The owner of the land didn't create it, taxing the owner of the land doesn't discourage his production of additional land. Being created by the owner (or by humans in general) is not a necessary qualification for status as "capital". Still, it is important here to distinguish between "land" in the colloquial sense and what economists would refer to as "land" (unowned resources). While land might not be created through human action, property is. You are not taxing the land, you're taxing the conversion of land into property—the act of identifying useful, unowned resources and claiming them for human use. And when you tax something you naturally get less of it; in this case there is less incentive for people to go out and discover new resources. A 100% LVT would nullify any economic motive to expend effort locating new sources of minerals or suitable farmland (etc.) since 100% of the value of whatever you discovered would be taken by the LVT. That's assuming the LVT is limited to the hypothetical value of a bit of land in isolation. It gets worse when the scope of the LVT is increased to include the economic value of "location" with respect to other human developments—for example land inside a city being taxed more than physically equivalent land in a rural area. At that point you're not basing the amount of the tax on the land at all, but rather the capital investment and expenditure of human labor in the surrounding area. This form of "land value tax" is deceptively named; it should really be referred to as a tax on gross external benefits received. Which has some obvious flaws, for example that the property owner has little control over external benefits others may unilaterally choose to create, and also that one pays extra tax on any contribution one makes to one's own community which has the effect of raising property values. (In fact, under a LVT system unilaterally contributing to the community and making it a nicer place to live might well be considered harmful since it raises everyone's taxes…)