7 ms·

I'm a huge proponent of land tax. Here's why I think it's worth considering: 1. Economic Efficiency: Unlike income or consumption taxes, an LVT is non-distorti

by 303uru 3y ago

I'm a huge proponent of land tax. Here's why I think it's worth considering: 1. Economic Efficiency: Unlike income or consumption taxes, an LVT is non-distortionary. It doesn't discourage productive activities like work, saving, or investment. Land is a fixed resource; its supply doesn't change with price or tax fluctuations. Therefore, an LVT wouldn't distort market incentives, unlike other taxes. By shifting the tax burden onto land, we could potentially reduce the distortionary effects of other taxes and promote economic growth. 2. Wealth Inequality Reduction: Land ownership in the U.S. is highly concentrated. A significant portion of the country's land is owned by a small percentage of the population. An LVT would primarily affect these large landowners, redistributing wealth more evenly across society. Plus, land can't be hidden or moved offshore, making an LVT difficult to evade and an effective tool for wealth redistribution. 3. Sustainable Land Use: Many landowners hold onto vacant or underutilized land as a speculative investment, waiting for its value to increase. This leads to urban sprawl, inefficient land use, and higher housing costs. An LVT would make this kind of speculation less attractive, encouraging landowners to develop or sell their land. This could lead to more efficient land use, less urban sprawl, and potentially more affordable housing.

zbrozek 3y ago
At least here in California, I'd be worried that it could get instituted with token or no reduction in other taxes. Otherwise it seems to make a lot of sense, particularly with regard to removing disincentives for development.
- PopAlongKid 3y ago
  Couldn't you remove the first five words of your reply and still make a valid point?
  - AnimalMuppet 3y ago
    Maybe. But maybe California's government has given more reason than other governments to think that they would treat this as an additional form of income, rather than a replacement.
    - PopAlongKid 3y ago
      That's an interesting claim that calls out for more evidence. Just a year ago, when CA had a large budget surplus, it refunded billions of dollars to many of its taxpaying residents in the form of inflation relief payments. That doesn't seem like the behavior of a government that only wants to collect more and more tax.
      - Obscurity4340 3y ago
        Is there any objective and reasonable discussion on the state of CA's finances? Its like the 8th largest economy in the world or something and all I ever hear is right-wing invective about how its a "Failing State" and bankrupt etc. Come to think of it, it seems to mirror the discussion at the Federal level where all I hear the right bitch about is "deficits and interest", which never seems to come up come tax discussion time where they are all too happy to widen said concerning gulf...
AlexandrB 3y ago
> Sustainable Land Use Hmmm, I don't get this point. If the incentive is to sell of develop your land what happens to "fallow" land that serves as a habitat for plants or animals? Seems like this would encourage developing land even if it's in a suboptimal location and would otherwise remain fallow, which seems less sustainable than the status quo.
- sokoloff 3y ago
  The strongest incentive to develop land exists for land which has a high value owing to its location. Land out in the countryside would not be hugely taxed under this system.
  - robertlagrant 3y ago
    But it'd still be taxed.
    - sokoloff 3y ago
      It's taxed now as well (in almost all jurisdictions). It's just also taxed on any buildings that sit on top of it (that latter portion of which provides a disincentive to development).
      - robertlagrant 3y ago
        Understood, although not much of a disincentive. I think I have an aversion to just taxing what people own. When it's a building, at least that is related to services they're likely to consume; it's not just "we want a cut".
        artimaeis 3y ago
        I think that's the jib though - in a lot of countries you don't really "own" the land. You and the government(s) get to just agree that it's your responsibility for a while. LVT cleans up this incentive some by putting taxes in place in areas where the land is more valuable. I think Georgists would argue for doing that _and_ removing property taxes, specifically so you aren't taxed for the things you own.
nwah1 3y ago
To me the key issue is the Law of Rent. It helps explain issues like Elizabeth Warren's Two-Income Trap. Why does technological progress not seem to result in overall increasing leisure and standard of living? That is why Henry George titled his book "Progress and Poverty". He was explaining that paradox using the law of rent developed by Adam Smith and David Ricardo, and proposing their solution with a megaphone.
- throw0101a 3y ago
  > Why does progress not result in increasing leisure and standard of living in many important ways? First off it did: the standard of living of anyone in a Western/industrialized society is ridiculously higher than 100 years ago. And even for less well-developed countries reduced absolute poverty and the diffusion of technology (Germ Theory, vaccines, mobile phones) has done wonders. One interesting metric is that the cost/effort of being about to produce one hour of light has absolutely plummeted over time: * https://www.vox.com/2015/6/9/8749751/historic-cost-of-lighting https://www.vox.com/2015/6/9/8749751/historic-cost-of-lighti... As Terry Pratchett observed: > You can't make people happy by law. If you said to a bunch of average people two hundred years ago "Would you be happy in a world where medical care is widely available, houses are clean, the world's music and sights and foods can be brought into your home at small cost, travelling even 100 miles is easy, childbirth is generally not fatal to mother or child, you don't have to die of dental abcesses and you don't have to do what the squire tells you" they'd think you were talking about the New Jerusalem and say 'yes'. * http://groups.google.com/group/alt.fan.pratchett/msg/ee9e9fb9a4d23837 http://groups.google.com/group/alt.fan.pratchett/msg/ee9e9fb... If you're talking about working hours: > Now it is true that the needs of human beings may seem to be insatiable. But they fall into two classes --those needs which are absolute in the sense that we feel them whatever the situation of our fellow human beings may be, and those which are relative in the sense that we feel them only if their satisfaction lifts us above, makes us feel superior to, our fellows. Needs of the second class, those which satisfy the desire for superiority, may indeed be insatiable; for the higher the general level, the higher still are they. But this is not so true of the absolute needs-a point may soon be reached, much sooner perhaps than we are all of us aware of, when these needs are satisfied in the sense that we prefer to devote our further energies to non-economic purposes. […] > For many ages to come the old Adam will be so strong in us that everybody will need to do some work if he is to be contented. We shall do more things for ourselves than is usual with the rich to-day, only too glad to have small duties and tasks and routines. But beyond this, we shall endeavour to spread the bread thin on the butter-to make what work there is still to be done to be as widely shared as possible. Three-hour shifts or a fifteen-hour week may put off the problem for a great while. For three hours a day is quite enough to satisfy the old Adam in most of us! * John Maynard Keynes, "Economic Possibilities for our Grandchildren" (1930) * http://www.econ.yale.edu/smith/econ116a/keynes1.pdf http://www.econ.yale.edu/smith/econ116a/keynes1.pdf An essay putting forward / hypothesizing four reasons on why the above did not happen (We haven't spread the wealth around enough; People actually love working; There's no limit to human desires; Leisure is expensive): * https://www.vox.com/2014/11/20/7254877/keynes-work-leisure https://www.vox.com/2014/11/20/7254877/keynes-work-leisure
AnimalMuppet 3y ago
Re non-distorionary: It distorts along a completely new axis - whether or not economic activity uses land. It's unclear (at least to me) why Google, say, whose business activity is very non-land-intensive, should be in a favorable tax position compared to, say, farming. You say "because the farmers use more land!" And it's true; they do. But if you don't already believe that land should be the determinant of tax, that explanation doesn't give you any reason to start believing. Re wealth inequality: No, this tax will make the wealthy hold less of their wealth in the form of land. They'll just hold it in some other form, and that other form will be taxed less or none. That might redistribute land more evenly across society, and that might be a net win, but it won't redistribute wealth very much.
- virgildotcodes 3y ago
  Presumably farmland would be worth much less, and be thus taxed much less, than land in San Francisco, NYC, etc where Google's offices would typically lie.
- 303uru 3y ago
  Sure, the LVT is not designed to be a wealth tax, but rather a tax on the unimproved value of land. Its primary purpose is to encourage efficient use of land and discourage speculative land holding, which can lead to artificial scarcity and inflated property prices. If the wealthy do decide to hold their wealth in other forms, this could potentially free up land for more productive uses or for those who might not have had access to land ownership before. This could lead to a more equitable distribution of land, which is a form of wealth in itself. The argument that the wealthy will simply shift their wealth to other less-taxed or non-taxed forms is not necessarily a critique of the LVT, but rather a critique of the overall tax system. If other forms of wealth are undertaxed, the solution would be to reform these areas of the tax system, rather than reject the LVT.
  - AnimalMuppet 3y ago
    As best as I recall, every time I've heard people argue for LVT, they have wanted to replace other taxes, not supplement them. If you're going to keep the other taxes, well, land is usually already taxed in most places, and the tax is usually somewhat proportional to the value of the land. If you keep other taxes, what does an LTV do that we aren't already doing? And your original claim was: > Therefore, an LVT wouldn't distort market incentives, unlike other taxes. By shifting the tax burden onto land, we could potentially reduce the distortionary effects of other taxes and promote economic growth. If you keep the other taxes, that benefit is reduced, compared to if other taxes were eliminating. (Though, on re-reading, I do see several bits of language that indicate you were thinking about not eliminating other taxes.)
fredgrott 3y ago
I can tell you have never talked to any family farmers. May I suggest a more accurate tax....Capital Value Added Tax...we have extremely large warping of the tax systems and political systems by uncontrolled capitalism run amok. Start with hedge fund tax of 3%, ah ah before you complain several large hedge funds have stated they would be in favor of such a tax as it addresses inequality without damaging hedge funds.
unshavedyak 3y ago
As an aside, i'd be curious how this strategy would work for long term farming. Ie 40+ year tree farms, where they own thousands (millions?) of acres which sit for 40 years, harvest, and then go back to being idle. You could say that they can set the land to being a special tax code for tree farming or w/e. Which is something that already exists. I've been looking for a 10 acre plot (being picky on location, shape, etcetc) for a couple years now and most plots are already taxed at a lower rate due to this sort of tax code. So my question/point is, people who are selling land (presumably as part of an investment) would be muddled in with people who are holding thousands of acres for tree farming. At least, in my experience. What's the solution in this area? Be more restrictive on who gets the relaxed tax incentive? Perhaps not care, and assume wood prices will go up dramatically since tree farming is now much more expensive? Just curious on your thoughts
- dfxm12 3y ago
  It's rare that demand is so high to live so close to such big tree farms, no? The value of that land is likely lower than you are picturing, and thus the tax as well. That said, implementations of LVT vary. Some have lower rates or exemptions for ag.
  - unshavedyak 3y ago
    Depends on the area, i imagine. In Washington, literally 100% of the lots i looked at were within a mile of hundred+ acres of tree land. A few big companies own a _ton_ of land in WA. Also, i'm picturing the value of the land literally by what i'm trying to buy it as. Not sure how much more accurate it can get than that (at least, it's as practical as it can get. Since it's literally the sell price). These are pretty rural, fwiw. 5-10 acres, ranging from 150-250k. Heavily depends on distance to towns, interstates, etc. Fun fact, a couple of the companies that own these lands i refer to also have a few (very limited) special gated communities. Lots that are ~20 acres, with a ton of HOA-like (CCRs) restrictions on preserving the trees. It looks a lot like living _in_ a park. Trails everywhere, etc. I was really close to getting one of those, but wetlands make a lot of purchases difficult here in WA.
- dublinben 3y ago
robertlagrant 3y ago
Just some possibly ill-thought out comments: > Unlike income or consumption taxes, an LVT is non-distortionary. It doesn't discourage productive activities like work, saving, or investment It's not great for anyone who chose to invest in land based on the current rules, and then the rules change. > Many landowners hold onto vacant or underutilized land as a speculative investment, waiting for its value to increase This is a symptom, not a root problem. > encouraging landowners to develop or sell their land The land may now be worth less than it was, as it has an instant and recurring negative sign attached to it.
- jeezfrk 3y ago
  a symptom of rent-seeking? speculation... wasteful monopolization and other rotten externalities ARE the problem. and since when are prices of land decreasing suddenly a terrible thing?
  - robertlagrant 3y ago
    Due to the way you phrase your comments, I'm struggling to pull any neutral points out to respond to. Maybe this one: > and since when are prices of land decreasing suddenly a terrible thing? Because if it decreases, then it will discourage people from selling. You think it will increase selling (and for some reason think that's good); I'm saying that this might counteract that.
    - AnimalMuppet 3y ago
      No, if the price of land decreases, it only discourages people from selling if they think that the price will come back some time in the future. A permanent tax change won't make people think that. More: If the tax rate has gone up enough that the price has gone down, then if I hold it, I'm also having to pay the higher taxes year after year. That's going to encourage selling, not discourage it. I don't like Georgism for other reasons, but I think that part will work as advertised.
      - 3y ago
voisin 3y ago
Questions: 1) How does Land Tax differ from Property Tax? 2) How do you account for the difference in land value (seaside versus downtown versus suburban, views versus no views, etc)?
- xboxnolifes 3y ago
  1) property taxes increase when you make property improvements.
dzhiurgis 3y ago
What are the downsides?

by 303uru 3y ago

zbrozek 3y ago

At least here in California, I'd be worried that it could get instituted with token or no reduction in other taxes. Otherwise it seems to make a lot of sense, particularly with regard to removing disincentives for development.

PopAlongKid 3y ago
Couldn't you remove the first five words of your reply and still make a valid point?
- AnimalMuppet 3y ago
  Maybe. But maybe California's government has given more reason than other governments to think that they would treat this as an additional form of income, rather than a replacement.
  - PopAlongKid 3y ago
    That's an interesting claim that calls out for more evidence. Just a year ago, when CA had a large budget surplus, it refunded billions of dollars to many of its taxpaying residents in the form of inflation relief payments. That doesn't seem like the behavior of a government that only wants to collect more and more tax.
    - Obscurity4340 3y ago
      Is there any objective and reasonable discussion on the state of CA's finances? Its like the 8th largest economy in the world or something and all I ever hear is right-wing invective about how its a "Failing State" and bankrupt etc. Come to think of it, it seems to mirror the discussion at the Federal level where all I hear the right bitch about is "deficits and interest", which never seems to come up come tax discussion time where they are all too happy to widen said concerning gulf...

AlexandrB 3y ago

> Sustainable Land Use Hmmm, I don't get this point. If the incentive is to sell of develop your land what happens to "fallow" land that serves as a habitat for plants or animals? Seems like this would encourage developing land even if it's in a suboptimal location and would otherwise remain fallow, which seems less sustainable than the status quo.

sokoloff 3y ago
The strongest incentive to develop land exists for land which has a high value owing to its location. Land out in the countryside would not be hugely taxed under this system.
- robertlagrant 3y ago
  But it'd still be taxed.
  - sokoloff 3y ago
    It's taxed now as well (in almost all jurisdictions). It's just also taxed on any buildings that sit on top of it (that latter portion of which provides a disincentive to development).
    - robertlagrant 3y ago
      Understood, although not much of a disincentive. I think I have an aversion to just taxing what people own. When it's a building, at least that is related to services they're likely to consume; it's not just "we want a cut".
      - artimaeis 3y ago
        I think that's the jib though - in a lot of countries you don't really "own" the land. You and the government(s) get to just agree that it's your responsibility for a while. LVT cleans up this incentive some by putting taxes in place in areas where the land is more valuable. I think Georgists would argue for doing that _and_ removing property taxes, specifically so you aren't taxed for the things you own.

nwah1 3y ago

To me the key issue is the Law of Rent. It helps explain issues like Elizabeth Warren's Two-Income Trap. Why does technological progress not seem to result in overall increasing leisure and standard of living? That is why Henry George titled his book "Progress and Poverty". He was explaining that paradox using the law of rent developed by Adam Smith and David Ricardo, and proposing their solution with a megaphone.

throw0101a 3y ago
> Why does progress not result in increasing leisure and standard of living in many important ways? First off it did: the standard of living of anyone in a Western/industrialized society is ridiculously higher than 100 years ago. And even for less well-developed countries reduced absolute poverty and the diffusion of technology (Germ Theory, vaccines, mobile phones) has done wonders. One interesting metric is that the cost/effort of being about to produce one hour of light has absolutely plummeted over time: * https://www.vox.com/2015/6/9/8749751/historic-cost-of-lighting https://www.vox.com/2015/6/9/8749751/historic-cost-of-lighti... As Terry Pratchett observed: > You can't make people happy by law. If you said to a bunch of average people two hundred years ago "Would you be happy in a world where medical care is widely available, houses are clean, the world's music and sights and foods can be brought into your home at small cost, travelling even 100 miles is easy, childbirth is generally not fatal to mother or child, you don't have to die of dental abcesses and you don't have to do what the squire tells you" they'd think you were talking about the New Jerusalem and say 'yes'. * http://groups.google.com/group/alt.fan.pratchett/msg/ee9e9fb9a4d23837 http://groups.google.com/group/alt.fan.pratchett/msg/ee9e9fb... If you're talking about working hours: > Now it is true that the needs of human beings may seem to be insatiable. But they fall into two classes --those needs which are absolute in the sense that we feel them whatever the situation of our fellow human beings may be, and those which are relative in the sense that we feel them only if their satisfaction lifts us above, makes us feel superior to, our fellows. Needs of the second class, those which satisfy the desire for superiority, may indeed be insatiable; for the higher the general level, the higher still are they. But this is not so true of the absolute needs-a point may soon be reached, much sooner perhaps than we are all of us aware of, when these needs are satisfied in the sense that we prefer to devote our further energies to non-economic purposes. […] > For many ages to come the old Adam will be so strong in us that everybody will need to do some work if he is to be contented. We shall do more things for ourselves than is usual with the rich to-day, only too glad to have small duties and tasks and routines. But beyond this, we shall endeavour to spread the bread thin on the butter-to make what work there is still to be done to be as widely shared as possible. Three-hour shifts or a fifteen-hour week may put off the problem for a great while. For three hours a day is quite enough to satisfy the old Adam in most of us! * John Maynard Keynes, "Economic Possibilities for our Grandchildren" (1930) * http://www.econ.yale.edu/smith/econ116a/keynes1.pdf http://www.econ.yale.edu/smith/econ116a/keynes1.pdf An essay putting forward / hypothesizing four reasons on why the above did not happen (We haven't spread the wealth around enough; People actually love working; There's no limit to human desires; Leisure is expensive): * https://www.vox.com/2014/11/20/7254877/keynes-work-leisure https://www.vox.com/2014/11/20/7254877/keynes-work-leisure

AnimalMuppet 3y ago

Re non-distorionary: It distorts along a completely new axis - whether or not economic activity uses land. It's unclear (at least to me) why Google, say, whose business activity is very non-land-intensive, should be in a favorable tax position compared to, say, farming. You say "because the farmers use more land!" And it's true; they do. But if you don't already believe that land should be the determinant of tax, that explanation doesn't give you any reason to start believing. Re wealth inequality: No, this tax will make the wealthy hold less of their wealth in the form of land. They'll just hold it in some other form, and that other form will be taxed less or none. That might redistribute land more evenly across society, and that might be a net win, but it won't redistribute wealth very much.

virgildotcodes 3y ago
Presumably farmland would be worth much less, and be thus taxed much less, than land in San Francisco, NYC, etc where Google's offices would typically lie.
303uru 3y ago
Sure, the LVT is not designed to be a wealth tax, but rather a tax on the unimproved value of land. Its primary purpose is to encourage efficient use of land and discourage speculative land holding, which can lead to artificial scarcity and inflated property prices. If the wealthy do decide to hold their wealth in other forms, this could potentially free up land for more productive uses or for those who might not have had access to land ownership before. This could lead to a more equitable distribution of land, which is a form of wealth in itself. The argument that the wealthy will simply shift their wealth to other less-taxed or non-taxed forms is not necessarily a critique of the LVT, but rather a critique of the overall tax system. If other forms of wealth are undertaxed, the solution would be to reform these areas of the tax system, rather than reject the LVT.
- AnimalMuppet 3y ago
  As best as I recall, every time I've heard people argue for LVT, they have wanted to replace other taxes, not supplement them. If you're going to keep the other taxes, well, land is usually already taxed in most places, and the tax is usually somewhat proportional to the value of the land. If you keep other taxes, what does an LTV do that we aren't already doing? And your original claim was: > Therefore, an LVT wouldn't distort market incentives, unlike other taxes. By shifting the tax burden onto land, we could potentially reduce the distortionary effects of other taxes and promote economic growth. If you keep the other taxes, that benefit is reduced, compared to if other taxes were eliminating. (Though, on re-reading, I do see several bits of language that indicate you were thinking about not eliminating other taxes.)

fredgrott 3y ago

I can tell you have never talked to any family farmers. May I suggest a more accurate tax....Capital Value Added Tax...we have extremely large warping of the tax systems and political systems by uncontrolled capitalism run amok. Start with hedge fund tax of 3%, ah ah before you complain several large hedge funds have stated they would be in favor of such a tax as it addresses inequality without damaging hedge funds.

unshavedyak 3y ago

As an aside, i'd be curious how this strategy would work for long term farming. Ie 40+ year tree farms, where they own thousands (millions?) of acres which sit for 40 years, harvest, and then go back to being idle. You could say that they can set the land to being a special tax code for tree farming or w/e. Which is something that already exists. I've been looking for a 10 acre plot (being picky on location, shape, etcetc) for a couple years now and most plots are already taxed at a lower rate due to this sort of tax code. So my question/point is, people who are selling land (presumably as part of an investment) would be muddled in with people who are holding thousands of acres for tree farming. At least, in my experience. What's the solution in this area? Be more restrictive on who gets the relaxed tax incentive? Perhaps not care, and assume wood prices will go up dramatically since tree farming is now much more expensive? Just curious on your thoughts

dfxm12 3y ago
It's rare that demand is so high to live so close to such big tree farms, no? The value of that land is likely lower than you are picturing, and thus the tax as well. That said, implementations of LVT vary. Some have lower rates or exemptions for ag.
- unshavedyak 3y ago
  Depends on the area, i imagine. In Washington, literally 100% of the lots i looked at were within a mile of hundred+ acres of tree land. A few big companies own a _ton_ of land in WA. Also, i'm picturing the value of the land literally by what i'm trying to buy it as. Not sure how much more accurate it can get than that (at least, it's as practical as it can get. Since it's literally the sell price). These are pretty rural, fwiw. 5-10 acres, ranging from 150-250k. Heavily depends on distance to towns, interstates, etc. Fun fact, a couple of the companies that own these lands i refer to also have a few (very limited) special gated communities. Lots that are ~20 acres, with a ton of HOA-like (CCRs) restrictions on preserving the trees. It looks a lot like living _in_ a park. Trails everywhere, etc. I was really close to getting one of those, but wetlands make a lot of purchases difficult here in WA.
dublinben 3y ago

robertlagrant 3y ago

Just some possibly ill-thought out comments: > Unlike income or consumption taxes, an LVT is non-distortionary. It doesn't discourage productive activities like work, saving, or investment It's not great for anyone who chose to invest in land based on the current rules, and then the rules change. > Many landowners hold onto vacant or underutilized land as a speculative investment, waiting for its value to increase This is a symptom, not a root problem. > encouraging landowners to develop or sell their land The land may now be worth less than it was, as it has an instant and recurring negative sign attached to it.

jeezfrk 3y ago
a symptom of rent-seeking? speculation... wasteful monopolization and other rotten externalities ARE the problem. and since when are prices of land decreasing suddenly a terrible thing?
- robertlagrant 3y ago
  Due to the way you phrase your comments, I'm struggling to pull any neutral points out to respond to. Maybe this one: > and since when are prices of land decreasing suddenly a terrible thing? Because if it decreases, then it will discourage people from selling. You think it will increase selling (and for some reason think that's good); I'm saying that this might counteract that.
  - AnimalMuppet 3y ago
    No, if the price of land decreases, it only discourages people from selling if they think that the price will come back some time in the future. A permanent tax change won't make people think that. More: If the tax rate has gone up enough that the price has gone down, then if I hold it, I'm also having to pay the higher taxes year after year. That's going to encourage selling, not discourage it. I don't like Georgism for other reasons, but I think that part will work as advertised.
    - 3y ago

voisin 3y ago

Questions: 1) How does Land Tax differ from Property Tax? 2) How do you account for the difference in land value (seaside versus downtown versus suburban, views versus no views, etc)?

xboxnolifes 3y ago
1) property taxes increase when you make property improvements.

dzhiurgis 3y ago

What are the downsides?