Does Georgism work? Is land a big deal? • Hacker News Board

Re: Does Georgism work? Is land a big deal?

#41

Post by bradleyjg » Thu, Dec 09, 2021, 3:35 AM UTC

MrPowers wrote: post #7

I'm not a huge fan of how deadweight loss is defined in the article: > virtually all economists agree that land value tax has zero "deadweight loss"–a fancy word for a drag on the economy that makes certain activities no longer profitable Property taxes tax the land + the building. Building taxes are complicated to assess. They require tax assessments, appraisers, tax code, accountants to compute depreciation schedul…

Land taxes are far far more difficult to calculate than property taxes. Impossible to do well in some cases. To know what land and the buildings on it are worth you can look to what people are willing to pay to buy them. There’s no similarly straightforward way to value the separate parts. So you’ll end up with a lot more wasted expert time for a less accurate result.

Re: Does Georgism work? Is land a big deal?

#42

Post by harimau777 » Thu, Dec 09, 2021, 3:36 AM UTC

runnerup wrote: post #21

pasquinelli wrote: post #11

Earlier quoted context omitted.

Just make it a constitutional ammendment. I mean, obviously nothing of significance is going to change in terms of public policy, at all. This should be obvious after Obama->Trump->Biden, and covid, and on and on really. So, given that fact, it's a little funny to poo-poo a public policy thought experiment (which is all it is) on the grounds that the courts would strike it down-- as if any change of any significance…

Indeed! Thank you. Too many people don't see the constitution as the living document it was intended to be. It's so weird to me to keep hearing "that would be unconstitutional" as if it's some ultimate argument-ender for these thought experiments. Also, in real life, I'd be happy to see a constitutional convention to resolve quite a few things - 2A, 4th amendment, abortions, 100-mile constitution-free-zone, etc. Seem…

How would we go about actually changing the constitution? It seems like there's too much polarization and entrenched interests for that to happen.

Re: Does Georgism work? Is land a big deal?

#43

Post by mindslight » Thu, Dec 09, 2021, 3:36 AM UTC

MrPowers wrote: post #7

I'm not a huge fan of how deadweight loss is defined in the article: > virtually all economists agree that land value tax has zero "deadweight loss"–a fancy word for a drag on the economy that makes certain activities no longer profitable Property taxes tax the land + the building. Building taxes are complicated to assess. They require tax assessments, appraisers, tax code, accountants to compute depreciation schedul…

> Property taxes can discourage you from using your land to its highest and best use

I agree.

> Land taxes offer the opposite incentives. They encourage you to make your property better.

But it doesn't make the converse true. At most, you can say that high enough land value taxes encourage making real estate generate more revenue, to pay the tax. But given the current economy's tendency to optimize everything legible and whisk away the surplus upwards, it's dubious whether being pushed harder into the economic grindstone is "better".

For a rural example, well separated houses on a few acres are much nicer than ticky-tack suburban panopticon developments (or even worse an HOA). It's hard to prevent the latter from occurring over time due to the economic gradient (eg parents die and kids want the most money possible, so they subdivide), but we shouldn't be pushing it through policy.

Re: Does Georgism work? Is land a big deal?

#44

Post by MrPowers » Thu, Dec 09, 2021, 3:38 AM UTC

bradleyjg wrote: post #41

MrPowers wrote: post #7

I'm not a huge fan of how deadweight loss is defined in the article: > virtually all economists agree that land value tax has zero "deadweight loss"–a fancy word for a drag on the economy that makes certain activities no longer profitable Property taxes tax the land + the building. Building taxes are complicated to assess. They require tax assessments, appraisers, tax code, accountants to compute depreciation schedul…

Land taxes are far far more difficult to calculate than property taxes. Impossible to do well in some cases. To know what land and the buildings on it are worth you can look to what people are willing to pay to buy them. There’s no similarly straightforward way to value the separate parts. So you’ll end up with a lot more wasted expert time for a less accurate result.

Nah, it's really easy to calculate the value of the land. Once you calculate the value of the land, then it's pretty much applicable to the whole neighborhood too. It's a one-and-done analysis. This isn't my opinion. There's lots of economic research to back this up.

EDIT: some support: https://www.progress.org/articles/the-implementation-of-land...

Re: Does Georgism work? Is land a big deal?

#45

Post by JamesBarney » Thu, Dec 09, 2021, 3:38 AM UTC

runnerup wrote: post #16

The pro-Georgist essayist lists the three biggest challenges to Land-Value Tax as: > 1) Land might have been a big deal in 1879, but it just doesn't matter much today > 2) Landlords will just pass Land Value Tax (LVT) on to tenants, so it won't work > 3) In real life you can't accurately assess land value separately from improvements, so even if LVT would work in theory, it doesn't work in practice I personally under…

Would it really be disastrous?

Say a house rents for $2,000 / month. $1,000 of that is the land, and $1,000 the house.

The land value tax is $1,000. We'll pretend this is an ideal world. If the interest rate is 12% then house+land is worth 100,000.

But imagine the they misappraise the land. So instead they charge 1,500 a month. Then that means the house+land is worth $50,000. That's not ideal but it doesn't seem catastrophic.

If a piece of land is underdeveloped and they charge a little too much, the person just surrenders that land to the government which auctions it off. If no one wants to buy it they know they mispriced the land.

Re: Does Georgism work? Is land a big deal?

#46

Post by GavinMcG » Thu, Dec 09, 2021, 3:39 AM UTC

slibhb wrote: post #28

I think the biggest problems with Georgism are 1. in some sense it calls for the expropriation of land by the government 2. it's unfair to change the rules in the middle of the game and 3. it's logistically difficult to carry out. As far as unfairness goes, imagine a couple, 65, retired, paid off their mortgage, paid income taxes all their lives until retirement, now living off their savings. It's unfair to start tax…

Saying that something has a side effect (here: unfairness) is a really shallow criticism. The real question is whether the side effect can be productively/efficiently dealt with.

Re: Does Georgism work? Is land a big deal?

#47

Post by Hermitian909 » Thu, Dec 09, 2021, 3:39 AM UTC

PragmaticPulp wrote: post #18

I was excited to read this article, but by the end it felt like a jumble of unrelated conjectures examined in isolation from each other that all seem to be presented in a way that deliberately ignores any downsides: For example: > Also, keep in mind that LVT would see the elimination of the portion of property tax that falls on buildings. I just checked my own property tax records (I live in the suburbs of a medium-s…

> all seem to be presented in a way that deliberately ignores any downsides

If I understand correctly, the point of this article (one of several) is just to establish that a land tax would constitute a large amount of money. I get the impression the article was supposed to merely establish whether a land tax would generate a substantial amount of money whether good or bad, though admittedly the author tips his hand as to what his conclusion is. I'm also hopeful for the next article, I've been wanting a good reference on Georgism that wasn't book length to point people at for years.

Re: Does Georgism work? Is land a big deal?

#48

Post by hash872 » Thu, Dec 09, 2021, 3:39 AM UTC

runnerup wrote: post #21

pasquinelli wrote: post #11

Earlier quoted context omitted.

Just make it a constitutional ammendment. I mean, obviously nothing of significance is going to change in terms of public policy, at all. This should be obvious after Obama->Trump->Biden, and covid, and on and on really. So, given that fact, it's a little funny to poo-poo a public policy thought experiment (which is all it is) on the grounds that the courts would strike it down-- as if any change of any significance…

Indeed! Thank you. Too many people don't see the constitution as the living document it was intended to be. It's so weird to me to keep hearing "that would be unconstitutional" as if it's some ultimate argument-ender for these thought experiments. Also, in real life, I'd be happy to see a constitutional convention to resolve quite a few things - 2A, 4th amendment, abortions, 100-mile constitution-free-zone, etc. Seem…

When people use 'you'd have to change the Constitution' as a criticism, they are mostly noting that it's extremely difficult to change the Constitution, and are probably not motivated by a deep reverence for the document. The US has the most difficult-to-change constitution of any democracy- you'd have to pass two-thirds majorities in the House & Senate, and then get three-quarters of the states to sign on. It's more likely that I'll join an NBA team than that a measure to basically increase taxes is going to get that level of legislative support. So, the unlikelihood of this happening is meant to be the ultimate argument-ender, as you put it

Re: Does Georgism work? Is land a big deal?

#49

Post by TulliusCicero » Thu, Dec 09, 2021, 3:39 AM UTC

bradleyjg wrote: post #41

MrPowers wrote: post #7

I'm not a huge fan of how deadweight loss is defined in the article: > virtually all economists agree that land value tax has zero "deadweight loss"–a fancy word for a drag on the economy that makes certain activities no longer profitable Property taxes tax the land + the building. Building taxes are complicated to assess. They require tax assessments, appraisers, tax code, accountants to compute depreciation schedul…

Land taxes are far far more difficult to calculate than property taxes. Impossible to do well in some cases. To know what land and the buildings on it are worth you can look to what people are willing to pay to buy them. There’s no similarly straightforward way to value the separate parts. So you’ll end up with a lot more wasted expert time for a less accurate result.

Property taxes are already commonly broken down into the value of the land vs buildings, IIRC.

Re: Does Georgism work? Is land a big deal?

#50

Post by reducesuffering » Thu, Dec 09, 2021, 3:39 AM UTC

sokoloff wrote: post #10

hammock wrote: post #4

Earlier quoted context omitted.

Why does everyone assume new policy has to be enacted at the federal level? Whatever happened to states rights? This is a perfect use case, have a couple states try it and a couple not and see what happens.

In part because the article makes the very common argument “[LVT would raise] a bunch of revenue that can lower or even eliminate other less efficient taxes, such as sales and income taxes.” It’s often argued (more strictly than above) that LVT could replace or substantially reduce income taxes and that pretty much means it’s federal or it won’t offset much.

There are plenty of states with 0 income taxes. Plus, the article mentions benefits that are orthogonal to tax revenue, like more efficient resource allocation. A trial run at the state level could be a 0 income tax state keeping their tax revenues equal by substituting property tax with LVT. Building structures will be taxed less and the land underneath taxed more.