> Why does the ability to borrow against unrealised gains (with the lender speculating on the return on those gains) matter compared to paying a tax on unrealised gains (which is due now, not deferred and barely speculative)
You can borrow to pay the taxes. Or you can 'realise' your gains via a sale to pay the taxes. That avoids the leverage that you point out.
Why do you want to punish anyone? What's that strange obsession.
Land Value Tax is simply an efficient tax system that minimalises dead weight losses. Yes, Henry George was a big fan of them, but he was just one proponent. LVT does not live and fall with Henry George.
> Borrowing and taxation are completely different concepts. Unless I am the only idiot who hasn't asked for their tax back with interest. Possible.
I am saying that your specific objections to taxing unrealised gains do not apply.
> They aren't poor in that they have at least one valuable asset. The kind of asset that helps people stay afloat when they have issues with income or domestic violence. Regressive taxes are regressive because they simply do not look at income. Someone can be retired, living on nearly no income, and have a single valuable asset. It is not the role of government to significantly disrupt peoples lives because they have 1 good thing going. IIRC home ownership is the single best indicator of mental health.
You are proving too much. Holding down a steady job is also a great indicator of mental health. So the government shouldn't tax your job either? Ie income tax bad?
You have to tax something to run the government.
Btw, you could run a land value tax but give everyone a universal basic income equivalent to the LVT paid by the median person. That means only people who sit on more than the median amount of land (by value) would pay a net tax. Everyone else would see a net income from the system. That would immediately knock out all of your arguments about those poor widows and orphans.
(In taxation and income, medians tend to be lower than averages, so the above system would leave money left over to use for general government revenue. If you want more of that, instead of paying the median amount, you could pay UBI at eg the 20%-ile level. That would still protect those people who only 'have 1 good thing going' from net outflowing payments.)
>I am saying that your specific objections to taxing unrealised gains do not apply.
I dont see how referencing borrowing is relevant to taxation.
>Ie income tax bad?
Yes its horrible. But if you tax 10% on income, you are left with 90% of your income on an ongoing basis, and that can accrue. People can become wealthier. People without income dont pay the tax so arent negatively affected. If you tax someone with 5 bucks in their bank account and no job, 10% of their 200K property, they arent going to accrue 90% of their property on an ongoing basis. Their wealth will shrink. Which is bad on average.
>Btw, you could run a land value tax but give everyone a universal basic income equivalent to the LVT paid by the median person.
I often see these joined but IIRC I did some math on this, and UBI would make your LVT extremely punishing. I wouldnt group them together as proposals.
> If you tax someone with 5 bucks in their bank account and no job, 10% of their 200K property, they arent going to accrue 90% of their property on an ongoing basis. Their wealth will shrink. Which is bad on average.
Again, that's the whole idea behind LVT: it minimizes non-productive use of land, like housing.
No, LVT does not minimise non-productive use of land at all.
I like LVT just as much as the next guy, but we can't have it both ways: _either_ LVT has no deadweight losses, because it doesn't change any opportunity costs for land use and thus has no (direct) influence on land use. _Or_ LVT does have an influence, and you want to argue that it's the 'correct' one.
However: with or without LVT, the opportunity cost differences in different land uses are exactly the same. The same amount of LVT is due no matter what you do with the land or who owns it.
LVT might have an indirect influence on land use, because financing your government via LVT means you can potentially lower other less efficient taxes. Removing these other more distorting taxes can have an influence on land uses.
I am having a hard time understanding your last sentence.
How is housing a non-productive use of land? Why would housing be something to be minimized?
> I often see these joined but IIRC I did some math on this, and UBI would make your LVT extremely punishing. I wouldnt group them together as proposals.
What's with you and punishment?
LVT should be set to approximately tax all land rents. Given current prevailing interest rates, setting LVT to, say, a yearly 10% of land value should accomplish that. (But the exact value doesn't matter too much, because of arbitrage. I can explain that, if you want to. Basically, as LVT goes up, market prices for land go down. So even setting an LVT of 50% per year won't get you more of a tax take then saner values.)
Just to be clear, I don't propose the UBI above as something anyone could live off. I proposed to mechanically set it to eg the 20%-ile of LVT payments, so that the land-poorest 20% of the population have no net LVT payments to make. Thus forestalling only your very specific objection.
That suggestion was not meant to pay for any specific living standard on its own.
> Yes its horrible. But if you tax 10% on income, you are left with 90% of your income on an ongoing basis, and that can accrue.
Why are you so obsessed with income that's measured in money? There's also plenty of in-kind income. Eg when you have an apple tree, you get apples. If you have a house, you get housing.
It's generally good, if the tax system doesn't care, if you rent his house and she rents yours, or if both of you live in your own home. (Neither scenario has any net flows of money, but the first one has gross flows of money.)
Interestingly, in Switzerland people actually pay taxes on the imputed rental income they get from being owner-occupiers.
> You must account for the cost of the random new UBI you addressed to cover your other arguments.
I already accounted for that in the original comment https://news.ycombinator.com/item?id=44188857 https://news.ycombinator.com/item?id=44188857 so I see that it was perhaps a bit too implicit:
> (In taxation and income, medians tend to be lower than averages, so the above system would leave money left over to use for general government revenue. If you want more of that, instead of paying the median amount, you could pay UBI at eg the 20%-ile level. That would still protect those people who only 'have 1 good thing going' from net outflowing payments.)
The less UBI you pay, the more you have left over for general government revenue. The more UBI you pay, the less you have left over for general government revenue.
> Land value as it stands is fucked in large part because the government holds so much of it. The solution is to release more land, not lock more of it up in state ownership.
It doesn't really matter, as long as they lease it out to the highest bidder.
> Its highly likely that people will end up with a significantly increased tax bill, especially if they had low/no income previously. Again this is stated intention, its just the flip side of encouraging more efficient use, is discouraging people from living within their means on a block of land they own that's near things property evaluators value.
LVT does not encourage (or discourage) any land use, efficient or otherwise. It makes no change to opportunity costs between different uses.
> You need to solve for the entire budget, not a number you made up.
I have no clue what you are on about?
If you want a clear suggestion of what I would prefer:
Auction off all the plots of land for eg 30 years at a time. Do the auction for the next lease 5 years before the old lease ends. Stagger the auctions to have around 0.28% of plots being auctioned off every month.
(Don't bother with UBI etc, unless you want UBI for other reasons anyway. Those were just suggestions to solve specific concerns about orphans and widows you brought up. I would suggest to just use the regular, existing means-tested social safety net for them, instead of spinning up something bespoke.)
Singapore does something reasonably similar, but I think 99 year leases are too long, especially since the country is young enough that the giving back at the end of leases has essentially never been tested.
I'm not sure why you bring up the US government spending? I don't know how much LVT could raise in the US. But some people have tried to figure that one out.
> If someone lives in a caravan sitting on a 200k valued piece of land that they own outright (hoping to develop one day), making minimum wage, and they get a tax bill for 20k, or even 10 or 5k their life just ended. If you want them to borrow with no income to offset their tax, they wont get that loan.
That's fine. They can sell the land to get rid of those hopes and dreams and tax obligations.
You can write similar sob stories about any tax at all. And most are worse than what you get with LVT.
With an established LVT, your caravan dweller would never get this weird idea in the first place.
And I admit that whenever you make an adjustment to the tax system, the people who made plans based on the previous system will have those plans torpedoed. Them's the breaks.
So we have to decide what we want to discuss: how an LVT system would work in the steady state, or how we could (or could not) transition to one.