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Tangential to the discussion, but: Economist Henry George (1839-1897) proposed that taxing land, but not the property constructed on that land, better reflecte

Tangential to the discussion, but: Economist Henry George (1839-1897) proposed that taxing land, but not the property constructed on that land, better reflected the fact that land is a limited shared community resource. [0] This arrangement has both moral and economic efficiency benefits. Among them, is the rich 1% are less incentivized to use limited land as an investment vehicle (like gold, or today, Bitcoin), a practice that has runaway price increasing effects, resulting in more affordable land for 99%. So real estate investment bubbles are less likely, or likely to be less severe. Since constructing on land does not directly raise its taxes, there is a strong incentive to use it most productively (greater multi-housing development, etc.) Suppressing availability and productive use of land, by holding unused land as a financial hedge, or unused dwellings as a common step in money laundering, both become much less economically viable. And there are other benefits of aligning tax (a shared rent) against land (a shared resource), instead of taxing property (the result of individual effort & resources). —- How that would apply here: In Lahaina’s case, investors would be less incentivized to scoop up land since a land tax would not have dropped due to the disaster. No land was destroyed. Whereas currently, property taxes, where property was destroyed, will have fallen significantly, incentivizing investors to use the disaster to acquire as much of the limited land as they can. The more land investors take off the market, the higher the land prices will go, creating a self-reinforcing situation where regular people will be much less likely to ever be able to acquire land in the future. [0] https://en.m.wikipedia.org/wiki/Henry_George https://en.m.wikipedia.org/wiki/Henry_George

voisin 3y ago
As sympathetic to Georgism as I have found myself to be, I still cannot understand why proponents view it as such a panacea. It amounts to shifting property taxes from the improvement on the land to the land itself and ensuring that the tax is high enough to push owners to make use of the land. So the rich, who can afford the ongoing tax rate and can afford to make use of the land by developing it, are the ones that benefit anyways and take it off the market in the same manner as current.
- Nevermark 3y ago
  You are missing a huge sector of the real estate market. Vast quantities of real estate are completely, or partially, valued as a store of value, due to its limited supply, and lower taxes for land owners who avoid developing the land vs. those that develop land (as development is taxed). Virtually every balanced portfolio includes real estate as a financial hedge. Given limited land for this (or any other use) this drives up land prices immensely. Billionaires own fortunes in unused plots, empty homes & apartments, and vast sparsely undeveloped land expanses, left completely or mostly unused. Because without property on it, land is currently taxed very lightly. This pervasive circular-demand created by the financial instrument role of land also magnifies real estates role in financial bubbles and crashes. Just as limited Bitcoins circular dynamics as a store of wealth encourage booms and busts: more demand => more value => more demand; and the reverse loop. What makes land different from other resources is that it is both limited (especially habitable land near important resources), and necessary for every individual’s survival (you have to be, and store your artifacts of life, somewhere). So demand for land doesn’t decrease when prices go up. As land prices go up, demand (in total dollars or other currency) goes up, not down. UNLESS this combination of limitation and necessity is balanced by the economically sensible view that land is a limited common inheritance (nobody created it) and taxed to compensate citizens jointly. AND development on land is not taxed, thus eliminating an effective double tax on the income that paid for the development (or equivalently, the income that pays off a development loan). Then then land taxes cancel out speculative returns. The rich adapt by using another financial store of value vehicle that isn’t a survival necessity (gold, silver, Bitcoin, …), and land gets BOTH cheaper AND more productively used.
  - voisin 3y ago
    > Vast quantities of real estate are completely, or partially, valued as a store of value, due to its limited supply, and lower taxes for land owners who avoid developing the land vs. those that develop land (as development is taxed). > Billionaires own fortunes in unused plots, empty homes & apartments, and vast sparsely undeveloped land expanses, left completely or mostly unused. Because without property on it, land is currently taxed very lightly. Presumably the taxes on the land take into account the developable value or relative attractiveness of the land. So oceanfront land (developed or not) would be taxed higher than desert land. Assuming this is correct, then isn’t there already an incentive by owners to develop the land and get the most value out of it? E.g. You don’t see many undeveloped lots in Manhattan just being held as an investment hedge by a billionaire. And for billionaires holding vacant condos and houses all over the place, aren’t they already being hit with the friction that a land tax would create in that they pay tax as if it weren’t vacant? Unless Georgism just boils down to increasing the friction of holding vacant land as an incentive to make use of the land? If Billionaires are willing to own houses all over the place that are vacant and still pay taxes I am not sure this solves the problem by increasing the taxes owing on vacant land.

voisin 3y ago

As sympathetic to Georgism as I have found myself to be, I still cannot understand why proponents view it as such a panacea. It amounts to shifting property taxes from the improvement on the land to the land itself and ensuring that the tax is high enough to push owners to make use of the land. So the rich, who can afford the ongoing tax rate and can afford to make use of the land by developing it, are the ones that benefit anyways and take it off the market in the same manner as current.

Nevermark 3y ago
You are missing a huge sector of the real estate market. Vast quantities of real estate are completely, or partially, valued as a store of value, due to its limited supply, and lower taxes for land owners who avoid developing the land vs. those that develop land (as development is taxed). Virtually every balanced portfolio includes real estate as a financial hedge. Given limited land for this (or any other use) this drives up land prices immensely. Billionaires own fortunes in unused plots, empty homes & apartments, and vast sparsely undeveloped land expanses, left completely or mostly unused. Because without property on it, land is currently taxed very lightly. This pervasive circular-demand created by the financial instrument role of land also magnifies real estates role in financial bubbles and crashes. Just as limited Bitcoins circular dynamics as a store of wealth encourage booms and busts: more demand => more value => more demand; and the reverse loop. What makes land different from other resources is that it is both limited (especially habitable land near important resources), and necessary for every individual’s survival (you have to be, and store your artifacts of life, somewhere). So demand for land doesn’t decrease when prices go up. As land prices go up, demand (in total dollars or other currency) goes up, not down. UNLESS this combination of limitation and necessity is balanced by the economically sensible view that land is a limited common inheritance (nobody created it) and taxed to compensate citizens jointly. AND development on land is not taxed, thus eliminating an effective double tax on the income that paid for the development (or equivalently, the income that pays off a development loan). Then then land taxes cancel out speculative returns. The rich adapt by using another financial store of value vehicle that isn’t a survival necessity (gold, silver, Bitcoin, …), and land gets BOTH cheaper AND more productively used.
- voisin 3y ago
  > Vast quantities of real estate are completely, or partially, valued as a store of value, due to its limited supply, and lower taxes for land owners who avoid developing the land vs. those that develop land (as development is taxed). > Billionaires own fortunes in unused plots, empty homes & apartments, and vast sparsely undeveloped land expanses, left completely or mostly unused. Because without property on it, land is currently taxed very lightly. Presumably the taxes on the land take into account the developable value or relative attractiveness of the land. So oceanfront land (developed or not) would be taxed higher than desert land. Assuming this is correct, then isn’t there already an incentive by owners to develop the land and get the most value out of it? E.g. You don’t see many undeveloped lots in Manhattan just being held as an investment hedge by a billionaire. And for billionaires holding vacant condos and houses all over the place, aren’t they already being hit with the friction that a land tax would create in that they pay tax as if it weren’t vacant? Unless Georgism just boils down to increasing the friction of holding vacant land as an incentive to make use of the land? If Billionaires are willing to own houses all over the place that are vacant and still pay taxes I am not sure this solves the problem by increasing the taxes owing on vacant land.