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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?

#201

Post by ShroudedNight »

mrep wrote: post #185
MrPowers wrote: post #97

Earlier quoted context omitted.

This is a great question. Land taxes are great because there is less of a deadweight loss. Governments need money to operate. All else equal, we should get governments the money they need without wasting people's time to comply with complicated tax laws. Humans also generally agree that progressive taxation is a good idea. Rich people should pay more to fund the government. Rich people own a lot of land, so they'd pa…

Wouldn't a land value taxes be regressive for condos as the more expensive ones are on higher floors and would pay the same rate as people on lower cheaper floors?

Why would they pay the same rate? From my understanding, the condo corporation would receive the tax bill. It would then be up to them to determine how they should charge the individual units.

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

#202

Post by presentation »

mindslight wrote: post #110
throwaway6734 wrote: post #98

Earlier quoted context omitted.

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.

In rural areas though the whole point is that the land isn't very valuable, so the land tax will correspondingly be very low, so feel free to do economically inefficient things like having a giant house in those areas - the cost of your building will probably be far more than the cost of your land, so in practice you're not paying 4x more.

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

#203

Post by neilwilson »

It gets the purposes of taxes wrong, and assumes the usual economic myths of a fixed amount of money and a loanable funds structure, with money being a veil over barter.

Once you realise the latter are a myth, then the entire concept of taxing land makes no sense. Government, in a country with its own free floating currency, has no need of tax money to spend. In fact spending causes taxation from the induced transaction chain that will, without impediment from people saving some of their income rather than spending it, always precisely match whatever government spends.

It's like a stone skipping across a pond.

Taxing reduces the length of spending chains. You tax to release resources for the public use, and the tax imposer is then morally required to hire all those released to avoid unemployment. There is no other operational purpose for taxation.

The natural conclusion of that view is that the best place to tax is to charge business for hiring labour. Then they won't hire as much, and government can then hire them to be teachers, doctors, judges, etc.

The presence of financial saving means that money has an inductive relationship with physical production, not a direct one. Just like we need reactive power in an electrical circuit so that iPhone chargers work properly, we need reactive monetary circulation to make sure that physical production occurs at the maximum amount.

The problem with land is not rent, it is the power of exclusion, which leads to hoarding. Just like any other market. So you tackle the hoard in the same way as any other attempt to corner markets - via anti-trust measures.

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

#204

Post by ItsMonkk »

neilparikh wrote: post #173
CryptoPunk wrote: post #88

Any transition to a LVT should accompany one-time compensation to existing land owners. The same should apply to any other repeal of rent-seeking institutions, whether it's anti-labor-competitive laws privileging labor unions, licensure barriers privileging taxi medallion holders, etc. The British used this method to end slavery throughout their empire, which meant: 1. much more rapid end to slavery, due to less poli…

Just out of curiosity (ie. not trying to ask you a "gotcha" question), would you apply this idea to measures to reduce climate change? Oil companies and companies/individuals dependent on cheap oil would presumably lose a lot. I'm not sure if their current behavior is exactly rent-seeking, but asking them to internalize their externalities is fairly close to abolishing rent seeking I think. And if your answer is yes,…

I don't know the answer to this either, but I'll at least try to give an idea on how one might get to that value.

For the Land Value Tax this question is fairly straight-forward. We have the current market value(say $2.4M from the article). We need to work out the value for the land($2M from the article). That 2M is the losses if a 100% LVT is applied. You can choose to phase in the tax, or you can give a tax subsidy equal to the land value($2M), or you can flat out print money equal to the land value, and you can do some combination of all three. Of those 3, it is better to implement the full tax right away to correct the incentives as soon as possible, but long-term it doesn't matter so long as the incentives get there.

One of the interesting consequences here is if you currently own a home, and understand that we are currently in a bubble, and know the consequences of 2008, you are incentivized to vote for a Land Value Tax with a one time transition subsidy, as it will lower your risk profile from another catastrophic collapse of the housing market.

Similar approaches surely apply to carbon sellers, and the carbon tax and dividend is extremely close in idea as the Land Value tax with UBI. So long as people are disincentivized against using carbon, giving tax credits or cash to these companies seems appropriate.

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

#205

Post by CryptoPunk »

neilparikh wrote: post #173
CryptoPunk wrote: post #88

Any transition to a LVT should accompany one-time compensation to existing land owners. The same should apply to any other repeal of rent-seeking institutions, whether it's anti-labor-competitive laws privileging labor unions, licensure barriers privileging taxi medallion holders, etc. The British used this method to end slavery throughout their empire, which meant: 1. much more rapid end to slavery, due to less poli…

Just out of curiosity (ie. not trying to ask you a "gotcha" question), would you apply this idea to measures to reduce climate change? Oil companies and companies/individuals dependent on cheap oil would presumably lose a lot. I'm not sure if their current behavior is exactly rent-seeking, but asking them to internalize their externalities is fairly close to abolishing rent seeking I think. And if your answer is yes,…

I would definitely apply this to oil companies as part of any CO2 emissions reduction/elimination plan. I'm not qualified to determine how to assess their expected losses, but I assume there are financial analysts that are.

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

#206

Post by nickff »

lmm wrote: post #193
nickff wrote: post #132

Earlier quoted context omitted.

Those are ten thousand paintings which the public cannot experience or enjoy! In many ways, the paintings are more precious, as they could go on worldwide tours, and be experienced by millions of people; most land has virtually no uniqueness, and cannot be shared.

Most paintings sit in museum storage and are hardly ever seen by anyone (maybe the occasional grad student specialising in that particular artist). Obviously I'm assuming an equal monetary value of paintings vs land; my point is not about how many acres equal how many paintings but about the impact on other people that taking $1M of paintings vs $1M of land out of circulation has.

I completely agree with you regarding museums holding large collections which they do not exhibit; in fact, I think it highlights how a sort of 'George-ish' tax on paintings might be helpful!

With respect to your second point, I think that taking each out of circulation has different effects. I would guess that most assets have a value of about what they're worth (i.e. the price mechanism works). I think Georgism is at least a valuable paradigm, and would be in favour of at least some pseudo-Georgist measures, such as only taxing land, to encourage higher-value uses rather than land+structures, and taxing all sorts of land at the same rate.

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

#207

Post by jorge-fundido »

I'm not commenting on the merits of Georgism or the article. I found it curious that Krugman was quoted 5 times in the article. Is that someone to be taken seriously? Wondering if he was used as a straw man. He (Krugman) seems like a paid shill to me. While I loves me some Asimov Foundation, how is it that the mainstream takes him seriously after things like:

https://www.forbes.com/sites/modeledbehavior/2016/11/19/paul...

I remember hearing about him discussing this shortly after the Great Recession. My first reaction was "Hooray, the psycho-historians DO exist!" Paul Volcker is our version of Hari Seldon? I don't know much, but it's hard to take any economist seriously. They remind me of String Theorists.

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

#208

Post by radu_floricica »

intrasight wrote: post #169

We have LVT in my county. And it changes - nothing. So what am I missing? Why is this even discussed? A much more interesting discussion is to ask the question: Should there be no private land ownership. That's the case in many places. In such locals, the ownership right is in the long-term lease of that land. And it changes - nothing. Tax on private property is the price we pay to have the property protected by a po…

Which country? and how is it applied?

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

#209

Post by radu_floricica »

neilparikh wrote: post #173
CryptoPunk wrote: post #88

Any transition to a LVT should accompany one-time compensation to existing land owners. The same should apply to any other repeal of rent-seeking institutions, whether it's anti-labor-competitive laws privileging labor unions, licensure barriers privileging taxi medallion holders, etc. The British used this method to end slavery throughout their empire, which meant: 1. much more rapid end to slavery, due to less poli…

Just out of curiosity (ie. not trying to ask you a "gotcha" question), would you apply this idea to measures to reduce climate change? Oil companies and companies/individuals dependent on cheap oil would presumably lose a lot. I'm not sure if their current behavior is exactly rent-seeking, but asking them to internalize their externalities is fairly close to abolishing rent seeking I think. And if your answer is yes,…

In the case of current land owners we'll be changing the way they pay for what they get. Currently they pay a lump sum when they buy the land, and we're switching to a model where the land would be a lot cheaper but tax on land would be high. Not compensating them at all would have them pay twice. I'm all for breaking eggs to make omelet, but it is unfair.

Polluters simply generate negative externalities. They've benefited so far by making a profit without compensating society for the harm they cause. Fair would be hitting them with backcharges. Adding various taxes and regulations to bring them closer to a net zero harm is a bare minimum.

As an aside, in both cases we're talking about commons. Land owners enjoy for free the commons of being in an urban place (other people, infrastructure, access to interesting places, clients, employees and employers). Polluters hurt the commons of clean air and clean water.

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

#210

Post by AnthonyMouse »

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…

> The deadweight loss of property taxes is the economic loss of having resources devoted to filling out property tax filings.

This is true, but it's minor. The main one is this:

> Property taxes also distort incentives. If you improve your property, then you pay more tax. Property taxes can discourage you from using your land to its highest and best use.

In particular, it's what happens after the incentives are distorted. It becomes unprofitable to increase the housing stock, so housing becomes more expensive, so people have to pay more for it. This can be a huge amount of money and it's deadweight loss.

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

It's not that they encourage it so much as that they stop discouraging it. You don't pay any less LVT if you develop your land, but you also don't pay any more.

> Land taxes would arguably help a lot of the housing crises.

This still depends on zoning. It doesn't matter how profitable it would be to have a 4-plex on your lot when building one is prohibited by zoning. And fixing the zoning would have the larger benefit, because in the places that matter, that's already the constraint, which LVT on its own can't get you out of.

Of course, we could do both.

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