5 ms·

See also: The Law of Rent Land, and natural opportunities in general, are the original and most fundamental source of rent. Even the electromagnetic spectrum

by nwah1 12y ago

See also: The Law of Rent Land, and natural opportunities in general, are the original and most fundamental source of rent. Even the electromagnetic spectrum is monopolized. And although the holders of these exclusive rights do pay the FCC, they pay very little compared to the actual value. Likewise, people pay very little in taxes compared to the true value of their land. Imagine if instead of having to pay income taxes and sales taxes, which disincentivize labor and business, we instead charged people for the use of land. We could reform property taxes such that we exempt all building and improvement value, and just tax land. This would encourage efficient use of land, reduce sprawl, and boost productivity because it would remove the deadweight loss of other taxes. It would also be cheaper and simpler to collect, and less invasive.

21echoes 12y ago
see https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism and https://en.wikipedia.org/wiki/Single_tax https://en.wikipedia.org/wiki/Single_tax
sliverstorm 12y ago
What is the true value of the land under your house? Or do you simply object to the current property tax rates rather than valuation?
- nwah1 12y ago
  Assessment needs to become more accurate and more of our taxation should shift to land, and away from productive activity. It may even be possible in many locales to use self-assessment, with the concept being that if you set it too low, others may outbid you according to a certain set of rules to keep things fair and reasonable. Current property tax assessors are licensed professionals, and each county in the US handles it differently. Sometimes they are elected, sometimes they are appointed. One could also imagine the local governments outsourcing assessment to private tax assessment companies. Zillow and many companies already have assessments for most of the country freely available on their website.
  - mullingitover 12y ago
    > Assessment needs to become more accurate Doesn't the market already provide reasonably accurate assessment, via insurance companies?
    - nwah1 12y ago
      That is a good point, there are multiple industries which have solved the problem of land assessment. I'm sure leveraging these insurance assessments could be another way to supplement some of the other approaches I mentioned.
Yen 12y ago
As an interesting thought experiment - What if we taxed land, but the tax rate was based entirely on the size of the parcel, and the total valuation (land + improvements) of all nearby parcels, not including the current one. In theory, this adjusts the price of holding the land based on how desirable it is, encouraging either efficient use, or selling, and doesn't encourage trickery where someone tries to keep their appraisal low so as to reduce their tax burden.
- nwah1 12y ago
  Taxing by size is how Israel does it. It isn't a good idea, though, because it falls disproportionately on rural owners, and it ignores the central insight of the law of rent. The point is that monopolization of prime locations is what drives "real" wages down. In other words, the amount you can afford after rent and taxes take their cut, is determined by these factors. You should instead pay for what you use, by value. If that doesn't happen, rents will just flow as unearned income to owners of the best land, and wages will be depressed. And then we'll additionally need to tax productive activity to make up the shortfall. The "margin of production" is the best available rent-free land, and the point is that the better this land is, and the more productivity is possible upon it, the better your next best alternative to paid labor is. Thus, employers must pay you more, or landlords must demand less... because otherwise you'll take that next best alternative. Of course, the alternative includes all subjective and intangible things too... but that is what I mean by "real wage."
scotty79 12y ago
My gripes with land tax and property tax is that they are linear. They should be highly progressive. It should be so high that it would be more economical for you, if you own 10 apartments to sell one or few than to pay tax on all 10. To avoid loopholes ... if you own entity that owns some land or property, you need to pay the tax as if that property was your own (minus the tax already paid by this entity). Also arable land should have slower progression to not discourage efficient farming.
- nwah1 12y ago
  Taxing land by value encourages efficient farming. It will make farmers want to economize on land, just like a carbon tax would make people want to have fewer emissions. Also, the gini coefficient for landownership, by value, is actually higher than income virtually everywhere. Thus, a land value tax is actually more progressive than an income tax. Taxing by market value also raises the most revenue, for the same reason why a rational landlord only wants to charge market rent. Charging either more or less is just leaving money on the table. And if it is less, the difference will be pocketed by landlords. Because they know what the market value is.

by nwah1 12y ago

21echoes 12y ago

see https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism and https://en.wikipedia.org/wiki/Single_tax https://en.wikipedia.org/wiki/Single_tax

sliverstorm 12y ago

What is the true value of the land under your house? Or do you simply object to the current property tax rates rather than valuation?

nwah1 12y ago
Assessment needs to become more accurate and more of our taxation should shift to land, and away from productive activity. It may even be possible in many locales to use self-assessment, with the concept being that if you set it too low, others may outbid you according to a certain set of rules to keep things fair and reasonable. Current property tax assessors are licensed professionals, and each county in the US handles it differently. Sometimes they are elected, sometimes they are appointed. One could also imagine the local governments outsourcing assessment to private tax assessment companies. Zillow and many companies already have assessments for most of the country freely available on their website.
- mullingitover 12y ago
  > Assessment needs to become more accurate Doesn't the market already provide reasonably accurate assessment, via insurance companies?
  - nwah1 12y ago
    That is a good point, there are multiple industries which have solved the problem of land assessment. I'm sure leveraging these insurance assessments could be another way to supplement some of the other approaches I mentioned.

Yen 12y ago

As an interesting thought experiment - What if we taxed land, but the tax rate was based entirely on the size of the parcel, and the total valuation (land + improvements) of all nearby parcels, not including the current one. In theory, this adjusts the price of holding the land based on how desirable it is, encouraging either efficient use, or selling, and doesn't encourage trickery where someone tries to keep their appraisal low so as to reduce their tax burden.

nwah1 12y ago
Taxing by size is how Israel does it. It isn't a good idea, though, because it falls disproportionately on rural owners, and it ignores the central insight of the law of rent. The point is that monopolization of prime locations is what drives "real" wages down. In other words, the amount you can afford after rent and taxes take their cut, is determined by these factors. You should instead pay for what you use, by value. If that doesn't happen, rents will just flow as unearned income to owners of the best land, and wages will be depressed. And then we'll additionally need to tax productive activity to make up the shortfall. The "margin of production" is the best available rent-free land, and the point is that the better this land is, and the more productivity is possible upon it, the better your next best alternative to paid labor is. Thus, employers must pay you more, or landlords must demand less... because otherwise you'll take that next best alternative. Of course, the alternative includes all subjective and intangible things too... but that is what I mean by "real wage."

scotty79 12y ago

My gripes with land tax and property tax is that they are linear. They should be highly progressive. It should be so high that it would be more economical for you, if you own 10 apartments to sell one or few than to pay tax on all 10. To avoid loopholes ... if you own entity that owns some land or property, you need to pay the tax as if that property was your own (minus the tax already paid by this entity). Also arable land should have slower progression to not discourage efficient farming.

nwah1 12y ago
Taxing land by value encourages efficient farming. It will make farmers want to economize on land, just like a carbon tax would make people want to have fewer emissions. Also, the gini coefficient for landownership, by value, is actually higher than income virtually everywhere. Thus, a land value tax is actually more progressive than an income tax. Taxing by market value also raises the most revenue, for the same reason why a rational landlord only wants to charge market rent. Charging either more or less is just leaving money on the table. And if it is less, the difference will be pocketed by landlords. Because they know what the market value is.