7 ms·

IMO the biggest issue with property taxes, land taxes, or any other similar idea, is that they arbitrarily tax one kind of wealth over others. Why should a pers

by whakim 5y ago

IMO the biggest issue with property taxes, land taxes, or any other similar idea, is that they arbitrarily tax one kind of wealth over others. Why should a person who owns a house worth $500k (and perhaps has a mortgage on it) pay not only the exact same tax rate, but also the amount of tax as a person who owns a house worth $500k (and doesn't have a mortgage on it), but also has $5 million in other assets? (This isn't even getting into the fact that the wealthier you are, the less of your total wealth is likely to consist of land/property/etc.)

yaacov 5y ago
Georgism makes a distinction between Capital (value produced by labor) and Land (value that existed before humans showed up). Rewarding owners of capital incentives people to make more, but rewarding owners of land benefits nobody other than the landowner.
- whakim 5y ago
  That seems like a bit of a murky distinction, though, right? Taxing land disincentives economic activity a large component of which is in the land value (running a parking garage or hotel in downtown Manhattan, or a farm in a fertile region, etc.) but incentivizes other types of economic activity.
  - awakeasleep 5y ago
    Do you think its murkier than things in life are, usually? Or are you comparing it to an abstraction in code.
  - sooheon 5y ago
    Read this to understand the distinction: https://astralcodexten.substack.com/p/your-book-review-progress-and-poverty https://astralcodexten.substack.com/p/your-book-review-progr... George goes to great lengths to distinguish these factors of production. They are fundamentally different.
  - abathur 5y ago
    This is roughly the point, though. It doesn't _absolutely_ disincentivize these things unless they are operating at a loss. It certainly disincentivizes "economic activity" like opening an at-grade parking lot in a bustling city-center in order to minimize the property tax you pay while the land appreciates in value more than it disincentivizes opening a parking garage there (assuming there's actually enough parking demand to pay to build and maintain). (I don't entirely disagree with you--it seems like this would shunt some investment away from investments that need expensive land. It's less clear to me whether that is good, neutral, or bad.)
- Natsu 5y ago
  > value that existed before humans showed up I'm not sure that meshes with the way it's actually described in the article. They give examples of a small piece of land worth $2M and then another plot in a different location that's worth far less, purely due to proximity to other improvements on the land (i.e. being prime real estate in a city) rather than something inherent to the land itself (e.g. fertility/use for growing crops). And even then, something like fertility isn't really all natural any longer, given how it's impacted by so many farming practices (fertilization, tilling/no-till, crop rotation/nitrogen fixing crops, etc.). Resource extraction (e.g. oil) seems a lot closer, though the actual labor of it vs. the resources of it are another thing. I do see more reason there why the benefit ought to be largely public--and to some extent it is in, e.g., Alaska via the Alaska Permanent Fund. But I think that labor, improvements and whatever the intrinsic value might be are a lot more tied together than seems to be accounted for by the theory. Otherwise why is the intrinsic value of Manhattan's land not measured in some number of beads, with everything else being due to improvements (including those made by neighbors)? And yes, I do realize that beads actually were money for a time due to a lack of actual currency, but still.
  - yonran 5y ago
    You’re right. When Henry George introduced the land value tax, he made it clear that in urban areas he wished to capture the value which is created by the community while the landowner sits and collects increasing rents, not value that existed naturally (https://www.henrygeorge.org/pchp19.htm https://www.henrygeorge.org/pchp19.htm): > All these advantages attach to the land. On this land — and no other — they can be utilized. For here is the center of population: the focus of exchange, the marketplace, the workshop of industry. Density of population has given this land productive power equivalent to multiplying its original fertility a thousandfold.… The most valuable lands on earth, those with the highest rent, are not those with the highest natural fertility. Rather, they are lands given a greater usefulness by population density.
MrPowers 5y ago
This is a great question. Land taxes are great because there is less of a deadweight loss. Governments need money to operate. All else equal, we should get governments the money they need without wasting people's time to comply with complicated tax laws. Humans also generally agree that progressive taxation is a good idea. Rich people should pay more to fund the government. Rich people own a lot of land, so they'd pay a lot of land tax. Poor people generally don't own any land and wouldn't be subject to this tax. Land taxes align well with what a lot of people think is fair.
- sjwalter 5y ago
  > Humans also generally agree that progressive taxation is a good idea. Fairly bold assertion. I'd say most humans don't even really know what progressive taxation means. > Rich people should pay more to fund the government. A static tax regime (i.e., taxes calculated by a simple fixed percentage of wealth or income) leads to the same outcome. E.g., in a 10% fixed tax regime, someone making $10k/a pays $1k in tax and another person making $1mm pays $100k in tax, meeting your desire to have the rich pay more--no progressive taxation required.
  - d3ckard 5y ago
    I’d like to add here that the biggest fallacy is assuming rich pay income tax at all, which leftists across the world all seem to universally believe. I would argue that in 21st century the definition of rich is actually „achieves most of his income through sources which are not subject to income tax”. Progressive income tax mostly hurts well qualified proffessionals nowadays (people actually working for that income) and as such is detrimental to economy at large.
    - whakim 5y ago
      This isn't true. If you define "income" as the sum of an individual's income from capital plus income from labor, it is only in the top 0.1% of the distribution that capital income dominates labor income. (This percentile threshold changes slightly based on country; in countries such as the United States it'll be a bit higher.)
chrismcb 5y ago
If I buy a hamburger should the sales tax depend on my wealth? The property tax should be based on the value of the property, period. If you want to tax mythical wealth do it via some other means. And whether the person owns the property outright or borrowed money shouldn't have any bearing on the value of the tax.
- hellbannedguy 5y ago
  I have felt for awhile societal fees/fines should be tied to income. A wealthy man gets a $270 red light ticket. (This is the one where turning right on a red light is illegial. It seems like they arbitrarily decide which intersection to enforce?). The wealthy man casually mentions it over din din. Goes to sleep, and has the help drive his spawn to private schools. Yea--I live in a county filled with rich people, and they are obnoxious on so many levels. To the poor man it might be part of his rent. So yes--if I ran things; The wealthy would pay more at DMV, bail, patent fees, incorporation fees, etc., and especially property taxes. You want a third mansion so you don't have to look at your neighbors---get ready to pay Zuck. I would love to see Jay Leno pay a $100,000 speeding ticket. (I believe they are trying this in Sweden?)
  - CRConrad 5y ago
    > I believe they are trying this in Sweden?) No... They aren't "trying" anything; it's been standard practice for decades, probably over half a century. Not just for speeding tickets, but many fines in general. And not just Sweden, but most of the Nordic countries, plus Germany. https://en.wikipedia.org/wiki/Day-fine https://en.wikipedia.org/wiki/Day-fine
ineptech 5y ago
eh, what? The tax on $500K worth of stock or gold is zero. Also, home ownership is disincentivized by property taxes but also incentivized by the mortgage interest deduction, one of the largest non-corporate tax subsidies in America. And rental property is taxed very differently from property you live on. I think it's better to say that land is sort of a one-off that is treated differently from every other asset than to try to compare it to other kinds of wealth.
adgjlsfhk1 5y ago
One good reason to tax land is that its one of the few resources that we can't expand production of. Until traveling to other planets is cheap, land is a very limited resource so it is a major benefit to prevent the rich from hoarding it. For much of early Roman history, it was illegal for anyone to own more than a certain amount of land.
- youngtaff 5y ago
  It also doesn't move! Income tax can be shifted to capital gains, of corporation tax can be shifted to other domiciles etc.
lmm 5y ago
Owning huge amounts of land is uniquely antisocial in a way that owning huge amounts of other stuff isn't. If Mr Moneybags buys ten thousand paintings, we can always produce more paintings (and the rising price of paintings will push more people to take up careers in art). But if Moneybags buys ten thousand acres, the rest of us are ten thousand acres worse off in a way that we can't really fix.
- nickff 5y ago
  Those are ten thousand paintings which the public cannot experience or enjoy! In many ways, the paintings are more precious, as they could go on worldwide tours, and be experienced by millions of people; most land has virtually no uniqueness, and cannot be shared.
  - derekjdanserl 5y ago
    See: Owning huge amounts of land is uniquely antisocial. The point here is to maintain a society and some things must come first, namely material things which paintings are not. Of course, art history shows us time and time again the vital importance of material sustenance in creating and preserving works of art. If you really care about art, you have to care about the material foundations that make rich and meaningful social livelihoods possible.
    - nickff 5y ago
      You emphasize "antisocial", and I am not sure why. I looked it up to double-check, and the main definition is "contrary to the laws and customs of society; devoid of or antagonistic to sociable instincts or practices." Could you please explain what you mean by "uniquely antisocial"? >"If you really care about art, you have to care about the material foundations that make rich and meaningful social livelihoods possible." I care about all the tiers of Maslow's hierarchy of needs, and I think that many paintings are worth a lot more than most 10k acres. The paintings also have the benefits of being able to contribute to shared experiences all over the world, and fulfilling more challenging needs.
parineum 5y ago
>IMO the biggest issue with property taxes, land taxes, or any other similar idea, is that they arbitrarily tax one kind of wealth over others. In theory. IMO the practical biggest issue with property tax is that it is usually spent locally, keeping rich neighborhoods well funded and poor neighborhoods poor.
- FeepingCreature 5y ago
  That sounds like you want a tax on communities, not a tax on land. Inasmuch as this is due to a location/group-based "neighbourhood value-add", it seems better to tax the neighbourhood as an organization than to tax the ground they happen to be on.
  - parineum 5y ago
    Not at all. I'd just prefer more redistribution.
pydry 5y ago
>IMO the biggest issue with property taxes, land taxes, or any other similar idea, is that they arbitrarily tax one kind of wealth over others. Exactly. They tax wealth created by nature and/or the community rather than wealth created by individuals. The land Trump Tower sits on isn't valuable because Trump owns it. It's valuable because all of New York surrounds it. A $5 million fleet of cars is wealth (mostly) created by human hands. Those human hands ought to decide what happens to them. Right? There's also raw materials, but they would be subjected to a georgist tax too.
- whakim 5y ago
  > Exactly. They tax wealth created by nature and/or the community rather than wealth created by individuals. The land Trump Tower sits on isn't valuable because Trump owns it. It's valuable because all of New York surrounds it. Yeah, but pretty much all private wealth is built on top of thousands of years' worth of accumulated community knowledge. The startup you founded wouldn't be worth anything if not for electricity, computers, and the internet.
truculent 5y ago
Taxes aren't an objective truth handed down from on high; so, in some sense, all taxes could be considered arbitrary. In this case, taxing one kind of wealth more than another is a lever the state has to (dis)incentivise certain behaviours and thus create a better society (although in some cases, you may fairly ask - better for whom?).

by whakim 5y ago

yaacov 5y ago

Georgism makes a distinction between Capital (value produced by labor) and Land (value that existed before humans showed up). Rewarding owners of capital incentives people to make more, but rewarding owners of land benefits nobody other than the landowner.

whakim 5y ago
That seems like a bit of a murky distinction, though, right? Taxing land disincentives economic activity a large component of which is in the land value (running a parking garage or hotel in downtown Manhattan, or a farm in a fertile region, etc.) but incentivizes other types of economic activity.
- awakeasleep 5y ago
  Do you think its murkier than things in life are, usually? Or are you comparing it to an abstraction in code.
- sooheon 5y ago
  Read this to understand the distinction: https://astralcodexten.substack.com/p/your-book-review-progress-and-poverty https://astralcodexten.substack.com/p/your-book-review-progr... George goes to great lengths to distinguish these factors of production. They are fundamentally different.
- abathur 5y ago
  This is roughly the point, though. It doesn't _absolutely_ disincentivize these things unless they are operating at a loss. It certainly disincentivizes "economic activity" like opening an at-grade parking lot in a bustling city-center in order to minimize the property tax you pay while the land appreciates in value more than it disincentivizes opening a parking garage there (assuming there's actually enough parking demand to pay to build and maintain). (I don't entirely disagree with you--it seems like this would shunt some investment away from investments that need expensive land. It's less clear to me whether that is good, neutral, or bad.)
Natsu 5y ago
> value that existed before humans showed up I'm not sure that meshes with the way it's actually described in the article. They give examples of a small piece of land worth $2M and then another plot in a different location that's worth far less, purely due to proximity to other improvements on the land (i.e. being prime real estate in a city) rather than something inherent to the land itself (e.g. fertility/use for growing crops). And even then, something like fertility isn't really all natural any longer, given how it's impacted by so many farming practices (fertilization, tilling/no-till, crop rotation/nitrogen fixing crops, etc.). Resource extraction (e.g. oil) seems a lot closer, though the actual labor of it vs. the resources of it are another thing. I do see more reason there why the benefit ought to be largely public--and to some extent it is in, e.g., Alaska via the Alaska Permanent Fund. But I think that labor, improvements and whatever the intrinsic value might be are a lot more tied together than seems to be accounted for by the theory. Otherwise why is the intrinsic value of Manhattan's land not measured in some number of beads, with everything else being due to improvements (including those made by neighbors)? And yes, I do realize that beads actually were money for a time due to a lack of actual currency, but still.
- yonran 5y ago
  You’re right. When Henry George introduced the land value tax, he made it clear that in urban areas he wished to capture the value which is created by the community while the landowner sits and collects increasing rents, not value that existed naturally (https://www.henrygeorge.org/pchp19.htm https://www.henrygeorge.org/pchp19.htm): > All these advantages attach to the land. On this land — and no other — they can be utilized. For here is the center of population: the focus of exchange, the marketplace, the workshop of industry. Density of population has given this land productive power equivalent to multiplying its original fertility a thousandfold.… The most valuable lands on earth, those with the highest rent, are not those with the highest natural fertility. Rather, they are lands given a greater usefulness by population density.

MrPowers 5y ago

This is a great question. Land taxes are great because there is less of a deadweight loss. Governments need money to operate. All else equal, we should get governments the money they need without wasting people's time to comply with complicated tax laws. Humans also generally agree that progressive taxation is a good idea. Rich people should pay more to fund the government. Rich people own a lot of land, so they'd pay a lot of land tax. Poor people generally don't own any land and wouldn't be subject to this tax. Land taxes align well with what a lot of people think is fair.

sjwalter 5y ago
> Humans also generally agree that progressive taxation is a good idea. Fairly bold assertion. I'd say most humans don't even really know what progressive taxation means. > Rich people should pay more to fund the government. A static tax regime (i.e., taxes calculated by a simple fixed percentage of wealth or income) leads to the same outcome. E.g., in a 10% fixed tax regime, someone making $10k/a pays $1k in tax and another person making $1mm pays $100k in tax, meeting your desire to have the rich pay more--no progressive taxation required.
- d3ckard 5y ago
  I’d like to add here that the biggest fallacy is assuming rich pay income tax at all, which leftists across the world all seem to universally believe. I would argue that in 21st century the definition of rich is actually „achieves most of his income through sources which are not subject to income tax”. Progressive income tax mostly hurts well qualified proffessionals nowadays (people actually working for that income) and as such is detrimental to economy at large.
  - whakim 5y ago
    This isn't true. If you define "income" as the sum of an individual's income from capital plus income from labor, it is only in the top 0.1% of the distribution that capital income dominates labor income. (This percentile threshold changes slightly based on country; in countries such as the United States it'll be a bit higher.)

chrismcb 5y ago

If I buy a hamburger should the sales tax depend on my wealth? The property tax should be based on the value of the property, period. If you want to tax mythical wealth do it via some other means. And whether the person owns the property outright or borrowed money shouldn't have any bearing on the value of the tax.

hellbannedguy 5y ago
I have felt for awhile societal fees/fines should be tied to income. A wealthy man gets a $270 red light ticket. (This is the one where turning right on a red light is illegial. It seems like they arbitrarily decide which intersection to enforce?). The wealthy man casually mentions it over din din. Goes to sleep, and has the help drive his spawn to private schools. Yea--I live in a county filled with rich people, and they are obnoxious on so many levels. To the poor man it might be part of his rent. So yes--if I ran things; The wealthy would pay more at DMV, bail, patent fees, incorporation fees, etc., and especially property taxes. You want a third mansion so you don't have to look at your neighbors---get ready to pay Zuck. I would love to see Jay Leno pay a $100,000 speeding ticket. (I believe they are trying this in Sweden?)
- CRConrad 5y ago
  > I believe they are trying this in Sweden?) No... They aren't "trying" anything; it's been standard practice for decades, probably over half a century. Not just for speeding tickets, but many fines in general. And not just Sweden, but most of the Nordic countries, plus Germany. https://en.wikipedia.org/wiki/Day-fine https://en.wikipedia.org/wiki/Day-fine

ineptech 5y ago

eh, what? The tax on $500K worth of stock or gold is zero. Also, home ownership is disincentivized by property taxes but also incentivized by the mortgage interest deduction, one of the largest non-corporate tax subsidies in America. And rental property is taxed very differently from property you live on. I think it's better to say that land is sort of a one-off that is treated differently from every other asset than to try to compare it to other kinds of wealth.

adgjlsfhk1 5y ago

One good reason to tax land is that its one of the few resources that we can't expand production of. Until traveling to other planets is cheap, land is a very limited resource so it is a major benefit to prevent the rich from hoarding it. For much of early Roman history, it was illegal for anyone to own more than a certain amount of land.

youngtaff 5y ago
It also doesn't move! Income tax can be shifted to capital gains, of corporation tax can be shifted to other domiciles etc.

lmm 5y ago

Owning huge amounts of land is uniquely antisocial in a way that owning huge amounts of other stuff isn't. If Mr Moneybags buys ten thousand paintings, we can always produce more paintings (and the rising price of paintings will push more people to take up careers in art). But if Moneybags buys ten thousand acres, the rest of us are ten thousand acres worse off in a way that we can't really fix.

nickff 5y ago
Those are ten thousand paintings which the public cannot experience or enjoy! In many ways, the paintings are more precious, as they could go on worldwide tours, and be experienced by millions of people; most land has virtually no uniqueness, and cannot be shared.
- derekjdanserl 5y ago
  See: Owning huge amounts of land is uniquely antisocial. The point here is to maintain a society and some things must come first, namely material things which paintings are not. Of course, art history shows us time and time again the vital importance of material sustenance in creating and preserving works of art. If you really care about art, you have to care about the material foundations that make rich and meaningful social livelihoods possible.
  - nickff 5y ago
    You emphasize "antisocial", and I am not sure why. I looked it up to double-check, and the main definition is "contrary to the laws and customs of society; devoid of or antagonistic to sociable instincts or practices." Could you please explain what you mean by "uniquely antisocial"? >"If you really care about art, you have to care about the material foundations that make rich and meaningful social livelihoods possible." I care about all the tiers of Maslow's hierarchy of needs, and I think that many paintings are worth a lot more than most 10k acres. The paintings also have the benefits of being able to contribute to shared experiences all over the world, and fulfilling more challenging needs.

parineum 5y ago

>IMO the biggest issue with property taxes, land taxes, or any other similar idea, is that they arbitrarily tax one kind of wealth over others. In theory. IMO the practical biggest issue with property tax is that it is usually spent locally, keeping rich neighborhoods well funded and poor neighborhoods poor.

FeepingCreature 5y ago
That sounds like you want a tax on communities, not a tax on land. Inasmuch as this is due to a location/group-based "neighbourhood value-add", it seems better to tax the neighbourhood as an organization than to tax the ground they happen to be on.
- parineum 5y ago
  Not at all. I'd just prefer more redistribution.

pydry 5y ago

>IMO the biggest issue with property taxes, land taxes, or any other similar idea, is that they arbitrarily tax one kind of wealth over others. Exactly. They tax wealth created by nature and/or the community rather than wealth created by individuals. The land Trump Tower sits on isn't valuable because Trump owns it. It's valuable because all of New York surrounds it. A $5 million fleet of cars is wealth (mostly) created by human hands. Those human hands ought to decide what happens to them. Right? There's also raw materials, but they would be subjected to a georgist tax too.

whakim 5y ago
> Exactly. They tax wealth created by nature and/or the community rather than wealth created by individuals. The land Trump Tower sits on isn't valuable because Trump owns it. It's valuable because all of New York surrounds it. Yeah, but pretty much all private wealth is built on top of thousands of years' worth of accumulated community knowledge. The startup you founded wouldn't be worth anything if not for electricity, computers, and the internet.

truculent 5y ago

Taxes aren't an objective truth handed down from on high; so, in some sense, all taxes could be considered arbitrary. In this case, taxing one kind of wealth more than another is a lever the state has to (dis)incentivise certain behaviours and thus create a better society (although in some cases, you may fairly ask - better for whom?).