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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?

#211

Post by lelanthran »

runnerup wrote: post #153
davjhan wrote: post #150

I really liked this article. I had a question about it. Could there be a case where existing unpleasant rental properties in highly dense urban cities suddenly have negative rental value? For example, imagine there was a run-down house that is livable, but is one of the most undesirable in SF. Adjacent to it, let's say there's a shiny desirable house with the same land characteristics. If I understand correctly, thes…

In areas of housing shortages, the rent with LVT would be whatever it currently is without LVT. Theoretically, landlords are already extracting the maximum rent price possible in housing-constrained markets like NYC/SF/etc. What would change is that the land-owner would make less profit. Potentially, a unit which is currently renting for $1100/mo in Manhattan might be assigned an LVT of $1500/mo. In that case, the la…

> In areas of housing shortages, the rent with LVT would be whatever it currently is without LVT. Theoretically, landlords are already extracting the maximum rent price possible in housing-constrained markets like NYC/SF/etc.

But that doesn't mean that the maximum rent (whatever the market can bear) will remain the same if all landlords had their costs go up by the same amount at the same time. It could fall as landlords get out of the renting business because the costs are above what the market will bear, but I think that it is equally likely that landlords will first raise the rents to try to stay in business.

What makes an area expensive to rent/buy in is not "greedy landlords", it's primarily the fact that the demand is high. Any solution that doesn't involve matching the demand to the supply is bound to fail in the long term.

Land may be a scarce resource, but that's only in select places. It might be better to spend the effort making the undesirable places more desirable than by knocking down existing buildings and replacing them with high-density buildings.

A non-CBD area that has high-speed internet, quick+cheap public transport to the CBD, electricty and clean water supplies should be fairly desirable to live in. Those who want an address in the middle of the city shouldn't expect to pay the same as those who are prepared to travel to the middle of the city.

I don't think that building more housing units in the middle of the city is going to solve the problem of expensive housing in the middle of the city. The middle of the city is always going to be expensive.

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

#212

Post by dredmorbius »

larsiusprime wrote: post #199
dredmorbius wrote: post #131

Earlier quoted context omitted.

Out of curiosity, where specifically do you find this definition within Smith's writings?

Here's some https://www.goodreads.com/quotes/6536394-as-soon-as-the-land... https://www.adamsmithworks.org/documents/chapter-xi-of-the-r...

I was hoping OP would respond.

I'm familiar with both passages.

Neither contain a definition of "free market".

(That's a term Smith uses exceedingly rarely. Only once AFAIR.)

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

#213

Post by roenxi »

whakim wrote: post #183
lmm wrote: post #128

Earlier quoted context omitted.

Owning huge amounts of land is uniquely antisocial in a way that owning huge amounts of other stuff isn't. If Mr Moneybags buys ten thousand paintings, we can always produce more paintings (and the rising price of paintings will push more people to take up careers in art). But if Moneybags buys ten thousand acres, the rest of us are ten thousand acres worse off in a way that we can't really fix.

So why not tax gold or bitcoin or the Mona Lisa if the main difference between taxable assets and non-taxable assets is scarcity?

The post didn't use the word scarcity. Land isn't even scarce, most land is effectively uninhabited compared to the population densities most people live at. Humanity at large is not short of land.

Land is quite unique. It is the resource with the weakest argument that humans produce it. Gold, for example, requires human labour to be dug up. Bitcoin requires humans to run machines. The Mona Lisa requires humans to paint. Land behaves differently.

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

#214

Post by runnerup »

lelanthran wrote: post #211
runnerup wrote: post #153

Earlier quoted context omitted.

In areas of housing shortages, the rent with LVT would be whatever it currently is without LVT. Theoretically, landlords are already extracting the maximum rent price possible in housing-constrained markets like NYC/SF/etc. What would change is that the land-owner would make less profit. Potentially, a unit which is currently renting for $1100/mo in Manhattan might be assigned an LVT of $1500/mo. In that case, the la…

> In areas of housing shortages, the rent with LVT would be whatever it currently is without LVT. Theoretically, landlords are already extracting the maximum rent price possible in housing-constrained markets like NYC/SF/etc. But that doesn't mean that the maximum rent (whatever the market can bear) will remain the same if all landlords had their costs go up by the same amount at the same time. It could fall as landl…

> Those who want an address in the middle of the city shouldn't expect to pay the same as those who are prepared to travel to the middle of the city. I don't think that building more housing units in the middle of the city is going to solve the problem of expensive housing in the middle of the city. The middle of the city is always going to be expensive.

Indeed. Proponents seem to argue that most of that high rent paid by tenants will be captured by taxes and redistributed.

Proponents goal is to make "similar" improvements provide the same net profit across the country, even if the rent for it is $800 in Detroit and $4000 in Manhattan. The taxes would be $300 in Detroit and $3500 in Manhattan. Therefore a developer looking for $500/mo profit could just as easily build in Detroit as in Manhattan.

After the demand for housing was satisfied by supply rents would fall, and LVT would fall as well, such that landlords continue making $500/mo profit on each of those identical units.

At least, that seems to be the ideal situation presented by proponents as I understand it.

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

#215

Post by youngtaff »

adgjlsfhk1 wrote: post #109
whakim wrote: post #91

Earlier quoted context omitted.

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.

It also doesn't move!

Income tax can be shifted to capital gains, of corporation tax can be shifted to other domiciles etc.

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

#216

Post by djokkataja »

larsiusprime wrote: post #175
djokkataja wrote: post #171

Just for fun, purely as a thought experiment... Could digital "real estate" or "territory" be taxed in the same way -- not literal digital territory, like in games, but considering "ad spaces" as virtual territory? I suppose more generally, any "technology company" which primarily makes its profits by virtue of establishing a network effect, wherein they earn ever more money as more people show up. One possible objec…

You mean like domain names?

In terms of ownership structure, yeah, that's pretty similar.

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

#217

Post by runnerup »

AnimalMuppet wrote: post #134
epistasis wrote: post #100

Earlier quoted context omitted.

Did you read the rest of the article where it established the fraction of wealth in the nation that is due to land? Why are all the dumpy and decrepit houses in Silicon Valley worth 10x what they would be in the rest of the country? What is the value of the lane in Silicon Valley versus the market caps of the various companies there? If there's a trillion dollar company, and the houses around it go for 2 million each…

No, I did not in fact read the whole thing. My life is too short. Only 400k houses? I don't think that supports your point very much. Apple, Amazon, or Google have land footprints that are far smaller than 400,000 houses. And, the growth in inequality is coming from land? The top 0.01% have what percent of their assets in land? And, which came first? Did they make their money on stocks and then buy the land to divers…

> In its 2019 10-K filing with the U.S. Securities and Exchange Commission last week, Amazon listed its global real estate footprint at the end of 2018 at an astounding 288 million square feet of offices, warehouses, retail stores and data centers.

That's 10.3 sq. miles. SF has a density of 17,246 people per square mile. Manhattan has a density of 75,000 people per square mile. Granted, most of Amazon's real estate are warehouses in sparsely-populated areas.

Main point is that not all homes are houses. Many are high-rise condominiums/apartments.

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

#218

Post by midasuni »

AnthonyMouse wrote: post #210
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 disto…

Encourages in the sense that leaving land empty while it gains value is easy and free. Once you are paying for that land you have to do something with it otherwise it costs more than the inflation of the value.

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

#219

Post by akvadrako »

smnrchrds wrote: post #179
ItsMonkk wrote: post #174

Earlier quoted context omitted.

If you tax the land at a rate greater than a 100% LVT, the market price of the building will be less than the improvement value, and therefore there will not be a good reason for builders to build. This will create distortions that are harmful and you will ultimately see less tax money.

More than 100% over how long?

Its basically rent so it doesnt matter if you calculate it by day or by year.

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

#220

Post by midasuni »

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?

Do people on the lower floors pay for lift maintenance?
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