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Does Georgism work? Is land a big deal?

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

#101

Post by chrismcb »

whakim wrote: post #91
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…

IMO the biggest issue with property taxes, land taxes, or any other similar idea, is that they arbitrarily tax one kind of wealth over others. Why should a person who owns a house worth $500k (and perhaps has a mortgage on it) pay not only the exact same tax rate, but also the amount of tax as a person who owns a house worth $500k (and doesn't have a mortgage on it), but also has $5 million in other assets? (This isn…

If I buy a hamburger should the sales tax depend on my wealth? The property tax should be based on the value of the property, period. If you want to tax mythical wealth do it via some other means. And whether the person owns the property outright or borrowed money shouldn't have any bearing on the value of the tax.

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

#102

Post by MrPowers »

aeternum wrote: post #90
MrPowers wrote: post #44

Earlier quoted context omitted.

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...

This really doesn't make sense. Views matter for example, land with a blocked view should be worth less than land without the blocked view. Land immediately adjacent to a golf course or park is often valued higher. Land immediately next to railroad tracks or industry, not so much while the discount drops off steeply just a few blocks away. Water rights, drainage, soil quality, contamination, roadway access all matter…

I agree that different factors cause some land to be more valuable than others.

I'd argue that the factors you've listed are relatively easy to factor into an appraisal.

Property taxes, in comparison, are really hard to compute. Each jurisdiction has different rules. There are different valuation methodologies. If you add a 2 car garage, what the useful life. What depreciation schedule should be used. How should inflation be accounted for.

I agree with your comment generally and am not sure what part of the original comment doesn't make sense to you.

EDIT: Reread my original comment and see your point now. I phrased the "easy" part too strongly. I mean "easy" in relative terms... compared to what's being done currently, but agree the wording wasn't great.

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

#103

Post by hogFeast »

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…

People who benefit from higher land prices are already taxing everyone else.

Housing is the one of a few things that people have to buy. Choosing to essentially tax everyone in society to buy that product is...unthinkably stupid (a subtle effect is also that because the turnover of properties is so low, this has massive inter-generational effects...this isn't clear now because only people born 20-30 years ago are getting taxed, everyone else is just sitting on their capital gain...as these people die and that gets realised, the effect on wealth inequality will be incredible).

Another comment here mentioned that you have to be very educated to think something so daft is stupid...it is actually quite simple and requires no education.

Imagine that everyone ate only bread. What we have done is create a system in which bread manufacturers produce no extra output but benefit from bread price increases of 5-10%/year...for multiple decades. The economy is now largely based around bread, people whose parents were fortunate enough to own a licence to produce bread are now multi-millionaires, everyone else is a peon. Bread is so expensive that the rest of society is actually struggling to feed the bread manufacturers. The fallacy is believing that we aren't already paying a massive price.

It isn't expropriation of land, it is reversing expropriation by returning land to the people who always owned it (i.e. no-one and everyone). It is completely fair (unless you are a bread manufacturer). For economies in the West, it will be massively enhancing to productivity because it only taxes value which generates no gain for society (tbh, I am not sure anyone can really know what the consequence would be...it would change the economics of commercial ownership of resi property completely because landlords couldn't pass on costs, the only risk is disincentivizing housing production...I don't think it does this, if anything it would incentivize production...where I am, housebuilders sit on land for years and wait for house prices to go up...I live near a development of fifty or so houses, the developer has taken four years to put up houses there because land is rising so fast here, an adjacent development of the same size went up in 12 months...as I said before, no-one can look at that and think this is productivity enhancing, it is just nonsense, this is a grievous tax on productivity).

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

#104

Post by throwaway98211 »

MrPowers wrote: post #80
PragmaticPulp wrote: post #69

Earlier quoted context omitted.

> There are no tax loopholes to evade land taxes. Of course there is! You just lobby or bribe your politicians to value your land at a lower amount. They make up for it by valuing someone else’s land at a higher amount. So much of the LVT discourse assumes perfect valuations, but if you reduce everything to these variable valuations then the politics will just start modifying the valuations. We’d have an entire book…

All the land value taxes would be public record. Think it'd be hard to have your land valued differently than your neighbor.

https://en.wikipedia.org/wiki/Williamson_Act

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

#105

Post by entangledqubit »

TulliusCicero wrote: post #49
bradleyjg wrote: post #41

Earlier quoted context omitted.

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.

At least for Seattle, the assessor's office has a breakdown but it turns out to be fairly bogus unless there's been a remodel or new building -- resulting in a new assessment. Quite a few cities also seem to have pretty bogus values on the books.

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

#106

Post by ineptech »

whakim wrote: post #91
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…

IMO the biggest issue with property taxes, land taxes, or any other similar idea, is that they arbitrarily tax one kind of wealth over others. Why should a person who owns a house worth $500k (and perhaps has a mortgage on it) pay not only the exact same tax rate, but also the amount of tax as a person who owns a house worth $500k (and doesn't have a mortgage on it), but also has $5 million in other assets? (This isn…

eh, what? The tax on $500K worth of stock or gold is zero. Also, home ownership is disincentivized by property taxes but also incentivized by the mortgage interest deduction, one of the largest non-corporate tax subsidies in America. And rental property is taxed very differently from property you live on.

I think it's better to say that land is sort of a one-off that is treated differently from every other asset than to try to compare it to other kinds of wealth.

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

#107

Post by epistasis »

temp8964 wrote: post #68

I always hate those kind of policy discussions. They assume the world is a dead water. They make some policies and small changes follow, like throw a small rock into a pond. The reality is that if their proposed policy changes really get implemented, the change in the real world will be chain reactions. Not the changes you want to see will happen, lots of things will happen. People will change their behaviors. Develo…

Those ripples and downstream effects are the actual goal here. The LVT isn't the goal, the end to rentierism and better use of a finite resource, towards the elimination of poverty, are the actual goal.

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

#108

Post by larsiusprime »

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.

Part III, concerning assessments, will post in a few days. Interested in your thoughts when that one goes up.

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

#109

Post by adgjlsfhk1 »

whakim wrote: post #91
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…

IMO the biggest issue with property taxes, land taxes, or any other similar idea, is that they arbitrarily tax one kind of wealth over others. Why should a person who owns a house worth $500k (and perhaps has a mortgage on it) pay not only the exact same tax rate, but also the amount of tax as a person who owns a house worth $500k (and doesn't have a mortgage on it), but also has $5 million in other assets? (This isn…

One good reason to tax land is that its one of the few resources that we can't expand production of. Until traveling to other planets is cheap, land is a very limited resource so it is a major benefit to prevent the rich from hoarding it. For much of early Roman history, it was illegal for anyone to own more than a certain amount of land.

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

#110

Post by mindslight »

throwaway6734 wrote: post #98
mindslight wrote: post #43

Earlier quoted context omitted.

> 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…

Who pays for the roads, water, electricity, internet, and postage that connects rural regions?

Well either way they're paid with real estate taxes. So the question is should someone on two acres be paying four times as much as someone on a half acre. Or the same as a 16 unit apartment building?

Cost proportional to area doesn't even make sense for utilities or roads (average distance only goes up as the square root), never mind straightforward per-resident costs such as public school or trash disposal.

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