4 ms·

Does Georgism Work? Part 2: Can Landlords Pass Land Value Tax on to Tenants?

36 points by feross 5y ago

Supermancho 5y ago
[flagged]
- larsiusprime 5y ago
  The article cites over a dozen empirical studies and observes what actually happens in the real world. I would be very interested in your thoughts on that subject and what you think of the quality of the studies.
- bufordsharkley 5y ago
  No, this is a different subject than the article yesterday. That one focused on "what is the overall magnitude of ground rents", this one focuses on "won't the incidence of LVT be passed onto tenants?"
  - Supermancho 5y ago
    > Georgists assert that landlords cannot pass Land Value Tax (LVT) on to their tenants. Land isn't the only commodity (sure you can say it's not a commodity and even the author posits buying/selling it as such), so you can't eliminate wealth inequality through it, nor can anyone control rent at some theoretical "optimal" price point via public management day-to-day. There is always corruption, fraud, and laziness among others.
- Victerius 5y ago
  I would argue land is fundamentally different from other commodities. 1) It's essential for basic survival. Humans can't live in the sea. 2) You can't make more of it. Land that exists was created millions of years ago by powerful, continental scale geological processes. We can't create a new continent. If a greedy individual buys all the toilet paper in a store, I can shop at another store, or order from anywhere in the country, or even overseas if needed. And someone can always decide to create a new company to make toilet paper and undercut the hoarder, though it might not resolve the short logistical problem. Overall, I think one of the least bad solutions is to centralize zoning powers in a national government, weaken zoning as much as possible, and let the free market do its thing. For example, don't let someone build a chemical plant next to a residential area, but allow developers to build any residential housing they want, without interference from local owners. If a property developer wants to erect a condominium tower in the middle of a suburb full of 1-2 stories single family homes, they should be allowed to. Even if it depresses local home values. Even if it brings more traffic. Even if it blocks the view. Even if it compromises the "character" of the neighborhood (which is almost always code for white and well off). And, yes, it's a denial of local democracy, but it's the right thing to do.
  - kiba 5y ago
    2) You can't make more of it. Land that exists was created millions of years ago by powerful, continental scale geological processes. We can't create a new continent. Supposed we could. It doesn't seem it would lower the value of New York City, at least at first.
    - jeffbee 5y ago
      Of course not. Land is not only not like other commodities, it is not a commodity at all. It meets none of the aspects of the definition of commodity. Each piece of land is a completely unique and highly differentiated thing, unlike each piece of gravel or each piece of corn, which are all interchangeable.
    - manwe150 5y ago
      The country of the Netherlands also might like to disagree with this
      - dehrmann 5y ago
        And for some uses, building up effectively makes more land.
    - Nbox9 5y ago
      How much land devoted to agriculture/mining/manufacturing/power/landfill is required outside of the city to support New York City? Sure, it wouldn’t move the needle on condo rent but land scarcity effects everyone.
newellbill 5y ago
Great article!
gautamcgoel 5y ago
I have a question. It seems very unlikely that Georgist policies will take hold in the US any time soon, at least not at the state or federal level. The question then becomes: A) what "Georgist-lite" policies can we realistically hope to get enacted in the US, and B) is it feasible to start new countries built around Georgism? If so, where and how?
- kiba 5y ago
  If there's something feasible for solving political problems, I would like to know as well.
- garmaine 5y ago
  > If so, where and how? Serious answer: Mars. The outer space treaty prevents terrestrial nations from claiming sovereignty over mars, so mars itself would be in a position to set and collect its own taxes in an entirely new regime. And unlike today’s service economies, nearly all of Martian GDP would be derived from land (in the georgist sense: natural resources).
  - deleted 5y ago
    [deleted]
- SilasX 5y ago
  A) Counties typically already distinguish site value from improvement value but still tax both at the same rate. So a lite reform could be to lower the tax rate on improvements and raise it on site value.
- jareklupinski 5y ago
  Might be (hopefully) sooner; Biden is from a Georgist-like town: https://en.wikipedia.org/wiki/Arden,_Delaware https://en.wikipedia.org/wiki/Arden,_Delaware > founded in 1900 as a radical Georgist single-tax community by sculptor Frank Stephens and architect Will Price
- epistasis 5y ago
  There are significant inroads that can be made, even in California's situation, with the extremely anti-Georgist Prop 13: http://cacommonground.org/pdf/2020-12_Transit_Value_Capture.pdf http://cacommonground.org/pdf/2020-12_Transit_Value_Capture....
snidane 5y ago
Try passing rent onto tenants with LVT in place where all the real estate sitting idle suddenly enters the market. Just try. You either adopt LVT or your civilization ends. With sky high real estate prices you can choose a fast death by civil conflict and war or slow death by having birth rates below replacement. Either way, you die. The next civilization repeats the cycle.
- arwineap 5y ago
  > where all the real estate sitting idle suddenly enters the market Even if we assume 10% of housing is consumed by people intentionally holding their property vacant (what is it that would motivate them to do this exactly?) would that really move the needle on anything? Existing rentals are not going to lower their prices, so these new rentals that are coming into market are simply going to match the existing rentals, because otherwise they would be leaving money on the table
  - 6510 5y ago
    I think the height of taxation makes the difference. Your 10% would go up if the tax is higher. IMHO (or call it a gut feeling) the best way to ruin market value is not higher or lower taxation. You have to change the tax often and dramatically. Tie it to the difference between highest and lowest temperatures measured in the previous year every 13th full moon.
  - throwoutway 5y ago
    > Even if we assume 10% of housing is consumed by people intentionally holding their property vacant (what is it that would motivate them to do this exactly?) would that really move the needle on anything? It’s a way to store money now, and drives up the appreciation. Sometimes the money is illicit or hidden from taxes or govs. Ask Vancouver how many vacant homes they have, yet “no housing”. The government is now making changes to stop it
    - arwineap 5y ago
      Drives up appreciation... I guess, but that can only be realized when you sell, or you refi out and get charged more money for holding it vacant. > Ask Vancouver how many vacant homes they have, yet “no housing”. The government is now making changes to stop it Seems like the government made changes in 2017 with the Empty home tax. Gotta say, the numbers do not look that interesting. 1,627 vacants in 2020 out of 195,012 residences. The doc notes that in 2017 there were 2,193 vacants, which indicates that the problem wasn't really that much worse than it is now. https://vancouver.ca/files/cov/vancouver-2021-empty-homes-tax-annual-report.pdf https://vancouver.ca/files/cov/vancouver-2021-empty-homes-ta... Is it possible that it's something other people intentionally losing money on vacant properties?
fourtrees 5y ago
Wow, Georgism is actually being discussed again. I guess cats do have nine lives. I for one hope it makes its way back into the political mainstream, as unlikely as that might be. It's really quite a brilliant and simple system of taxation.

36 points by feross 5y ago

Supermancho 5y ago

[flagged]

larsiusprime 5y ago
The article cites over a dozen empirical studies and observes what actually happens in the real world. I would be very interested in your thoughts on that subject and what you think of the quality of the studies.
bufordsharkley 5y ago
No, this is a different subject than the article yesterday. That one focused on "what is the overall magnitude of ground rents", this one focuses on "won't the incidence of LVT be passed onto tenants?"
- Supermancho 5y ago
  > Georgists assert that landlords cannot pass Land Value Tax (LVT) on to their tenants. Land isn't the only commodity (sure you can say it's not a commodity and even the author posits buying/selling it as such), so you can't eliminate wealth inequality through it, nor can anyone control rent at some theoretical "optimal" price point via public management day-to-day. There is always corruption, fraud, and laziness among others.
Victerius 5y ago
I would argue land is fundamentally different from other commodities. 1) It's essential for basic survival. Humans can't live in the sea. 2) You can't make more of it. Land that exists was created millions of years ago by powerful, continental scale geological processes. We can't create a new continent. If a greedy individual buys all the toilet paper in a store, I can shop at another store, or order from anywhere in the country, or even overseas if needed. And someone can always decide to create a new company to make toilet paper and undercut the hoarder, though it might not resolve the short logistical problem. Overall, I think one of the least bad solutions is to centralize zoning powers in a national government, weaken zoning as much as possible, and let the free market do its thing. For example, don't let someone build a chemical plant next to a residential area, but allow developers to build any residential housing they want, without interference from local owners. If a property developer wants to erect a condominium tower in the middle of a suburb full of 1-2 stories single family homes, they should be allowed to. Even if it depresses local home values. Even if it brings more traffic. Even if it blocks the view. Even if it compromises the "character" of the neighborhood (which is almost always code for white and well off). And, yes, it's a denial of local democracy, but it's the right thing to do.
- kiba 5y ago
  2) You can't make more of it. Land that exists was created millions of years ago by powerful, continental scale geological processes. We can't create a new continent. Supposed we could. It doesn't seem it would lower the value of New York City, at least at first.
  - jeffbee 5y ago
    Of course not. Land is not only not like other commodities, it is not a commodity at all. It meets none of the aspects of the definition of commodity. Each piece of land is a completely unique and highly differentiated thing, unlike each piece of gravel or each piece of corn, which are all interchangeable.
  - manwe150 5y ago
    The country of the Netherlands also might like to disagree with this
    - dehrmann 5y ago
      And for some uses, building up effectively makes more land.
  - Nbox9 5y ago
    How much land devoted to agriculture/mining/manufacturing/power/landfill is required outside of the city to support New York City? Sure, it wouldn’t move the needle on condo rent but land scarcity effects everyone.

newellbill 5y ago

Great article!

gautamcgoel 5y ago

I have a question. It seems very unlikely that Georgist policies will take hold in the US any time soon, at least not at the state or federal level. The question then becomes: A) what "Georgist-lite" policies can we realistically hope to get enacted in the US, and B) is it feasible to start new countries built around Georgism? If so, where and how?

kiba 5y ago
If there's something feasible for solving political problems, I would like to know as well.
garmaine 5y ago
> If so, where and how? Serious answer: Mars. The outer space treaty prevents terrestrial nations from claiming sovereignty over mars, so mars itself would be in a position to set and collect its own taxes in an entirely new regime. And unlike today’s service economies, nearly all of Martian GDP would be derived from land (in the georgist sense: natural resources).
- deleted 5y ago
  [deleted]
SilasX 5y ago
A) Counties typically already distinguish site value from improvement value but still tax both at the same rate. So a lite reform could be to lower the tax rate on improvements and raise it on site value.
jareklupinski 5y ago
Might be (hopefully) sooner; Biden is from a Georgist-like town: https://en.wikipedia.org/wiki/Arden,_Delaware https://en.wikipedia.org/wiki/Arden,_Delaware > founded in 1900 as a radical Georgist single-tax community by sculptor Frank Stephens and architect Will Price
epistasis 5y ago
There are significant inroads that can be made, even in California's situation, with the extremely anti-Georgist Prop 13: http://cacommonground.org/pdf/2020-12_Transit_Value_Capture.pdf http://cacommonground.org/pdf/2020-12_Transit_Value_Capture....

snidane 5y ago

Try passing rent onto tenants with LVT in place where all the real estate sitting idle suddenly enters the market. Just try. You either adopt LVT or your civilization ends. With sky high real estate prices you can choose a fast death by civil conflict and war or slow death by having birth rates below replacement. Either way, you die. The next civilization repeats the cycle.

arwineap 5y ago
> where all the real estate sitting idle suddenly enters the market Even if we assume 10% of housing is consumed by people intentionally holding their property vacant (what is it that would motivate them to do this exactly?) would that really move the needle on anything? Existing rentals are not going to lower their prices, so these new rentals that are coming into market are simply going to match the existing rentals, because otherwise they would be leaving money on the table
- 6510 5y ago
  I think the height of taxation makes the difference. Your 10% would go up if the tax is higher. IMHO (or call it a gut feeling) the best way to ruin market value is not higher or lower taxation. You have to change the tax often and dramatically. Tie it to the difference between highest and lowest temperatures measured in the previous year every 13th full moon.
- throwoutway 5y ago
  > Even if we assume 10% of housing is consumed by people intentionally holding their property vacant (what is it that would motivate them to do this exactly?) would that really move the needle on anything? It’s a way to store money now, and drives up the appreciation. Sometimes the money is illicit or hidden from taxes or govs. Ask Vancouver how many vacant homes they have, yet “no housing”. The government is now making changes to stop it
  - arwineap 5y ago
    Drives up appreciation... I guess, but that can only be realized when you sell, or you refi out and get charged more money for holding it vacant. > Ask Vancouver how many vacant homes they have, yet “no housing”. The government is now making changes to stop it Seems like the government made changes in 2017 with the Empty home tax. Gotta say, the numbers do not look that interesting. 1,627 vacants in 2020 out of 195,012 residences. The doc notes that in 2017 there were 2,193 vacants, which indicates that the problem wasn't really that much worse than it is now. https://vancouver.ca/files/cov/vancouver-2021-empty-homes-tax-annual-report.pdf https://vancouver.ca/files/cov/vancouver-2021-empty-homes-ta... Is it possible that it's something other people intentionally losing money on vacant properties?

fourtrees 5y ago

Wow, Georgism is actually being discussed again. I guess cats do have nine lives. I for one hope it makes its way back into the political mainstream, as unlikely as that might be. It's really quite a brilliant and simple system of taxation.