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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?

#221

Post by midasuni »

TulliusCicero wrote: post #73
thesausageking wrote: post #32

> It's more expensive to live in the heart of New York City than in the middle of Nebraska. That's not because construction costs are orders of magnitude more expensive in New York, but because the land is orders of magnitude more expensive. This is missing a key element: The value of a parcel in NYC is partly from the land itself but most of it comes from the development rights. If you have parcel which a 5 story bu…

Okay. Does that interrupt their point though? It seems like what would happen with a land tax in this case is that if an area got rezoned to allow buildings 20x the height, the land value would skyrocket and thus so too would the land tax. That would then incentivize actually building a really tall building on that land, which is probably what you want (both in the sense of what land tax proponents want, and what you…

The problem comes with the city then deciding to rezone as a punitive measure. Rezone 10-19th street to make it unaffordable for the existing 3 story houses and you get rid of that community. Meanwhile 20-29th street isn’t, and they get to stay.

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

#222

Post by midasuni »

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?

You calculate the rent at day $500 per month and tax at 550 per month.

Remember the valuation is based on the rental value of the land, not the capital purchase of the land.

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

#223

Post by TulliusCicero »

midasuni wrote: post #221
TulliusCicero wrote: post #73

Earlier quoted context omitted.

Okay. Does that interrupt their point though? It seems like what would happen with a land tax in this case is that if an area got rezoned to allow buildings 20x the height, the land value would skyrocket and thus so too would the land tax. That would then incentivize actually building a really tall building on that land, which is probably what you want (both in the sense of what land tax proponents want, and what you…

The problem comes with the city then deciding to rezone as a punitive measure. Rezone 10-19th street to make it unaffordable for the existing 3 story houses and you get rid of that community. Meanwhile 20-29th street isn’t, and they get to stay.

Doing that only works if the land becomes super valuable. Whoever owns that space gets rich.

You’re right, but you can use almost any city policy to punish some group if you wanted. It’s not reason to avoid otherwise sound policies.

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

#224

Post by midasuni »

larsiusprime wrote: post #152
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…

So you're basically describing the slumlord situation. Let me grab a figure from the book review: https://cdn.substack.com/image/fetch/w_1456,c_limit,f_auto,q... So imagine that the return from land was taken away. The only thing a landlord can charge rent on now is providing a nice building (capital) and good service & maintenance (labor). The first property, "a nice house" would be able to charge rent -- because it…

> thus can't be passed on to tenants

Currently you charge tennant a as much as you can until they no longer live there. That works out to be as much as they can pay for the benefit they get. If you charge 1k a month now, the reason you don’t charge 1200 is because they won’t pay it.

If you have a LVT, and try to increase the rent, your tennent wouldn’t be gaining any more value from the land that they currently are, so you still won’t be able to charge 1200.

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

#225

Post by dragonwriter »

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…

> It becomes unprofitable to increase the housing stock, so housing becomes more expensive

There's no way that this occurs with actual property taxes at the levels they are in the US. Sure, an improvement may result in higher property taxes which go into effect before the value of the improvement begins being realized, but overall effective property tax rates in the US range between 0.37% and 2.22% per year; this plausibly could make uses where the value would be realized entirely in direct-use by the owner unviable, but there is no way it makes any use where the value is realized through commercial exploitation (whether productive or rent) unviable, even with something of a delay in realization. Including things like densifying housing for rent or sale.

Yes, abstractly it might be a problem with property taxes, if you had a system where property taxes were the principal tax in society. Of course, the only people who even propose real estate taxes as the primary tax are…Georgists arguing for a heavy LVT replacing other taxes.

> It’s not that they encourage it so much as that they stop discouraging it

No, especially if they are heavy (as LVT proponents often propose), they don’t merely “stop discouraging” improvements, they make them necessary, because land uses that don’t provide a substantial fraction of the income potential of the land become unviable. In fact, land ownership by people who don’t have capital for both improvements and to stay afloat until those improvements bear fruit becomes unviable; a heavy LVT is an efficient way to assure acceleration of the concentration of land ownership.

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

#226

Post by lelanthran »

runnerup wrote: post #214
lelanthran wrote: post #211

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. 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 pa…

> 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.

Thanks, I understand a little better now. I'm still not convinced that such a thing will be viable, though.

The end result is still going to be that people will be willing to pay more to live in Manhattan rather than Detroit ($4000 vs $800, for example), and thus the effective rent being charged is not going to change.

> 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.

Maybe; I remain unconvinced that simply replacing low-density houses with high-density houses in the middle of (for example) Manhattan is going reach a point where supply:demand ratio is the same as Detroit.

It would be interesting to see how this plays out, so I'm quite happy for this to happen :-)

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

#227

Post by imtringued »

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…

According to dirk löhr a big chunk of stock market valuation is based on real estate and ultimately land. Once you include other land like monopolies like spectrum or patents you're looking at more than 60% of the value of a given stock being tied up in those things. Bill gates owns a huge amount of farm land. Land is still one of the biggest factors of production and the biggest driver of inequality in the 21th century.

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

#228

Post by imtringued »

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…

The corporal protection racket not only protects your life but also built the schools and roads that made you want to live there in the first place. Why should your money go to a land owner which forces the government to levy taxes on income instead?

You'll pay twice.

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

#229

Post by imtringued »

trophycase wrote: post #27

Is Georgism the new fad philosophy? Seems like every few years you see things like this crop up and the technies go all nuts over it. Stoicism was the last big one. I know they aren't strictly related but seeing these fad philosophies is interesting.

Georgism is a technical requirement to implement negative interest rates.

Falling interest rates are a millenium old fad.

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

#230

Post by panick21_ »

spurgu wrote: post #146
panick21_ wrote: post #133

A simple flat tax is clearly a far superior system in every single way. If you are really hardcore about richer people paying even larger part then simply make the curve slightly progressive. If you want poorer people to pay even less make the minimum number required for max tax higher. This would make the overall tax system 1000x simpler releasing a gigantic amount of labor and would allow IRS to actually check effe…

I tend to agree, and definitely on the surface of it. But what about for example incentives to cut down on carbon emissions, how would you achieve those? Or stopping investors for buying up all the great real estate in an area and boost up the rent prices? I believe that there needs to be some "punishment" taxes, to regulate things that might otherwise go out of hand (which is important in order for capitalism to fun…

> I believe that there needs to be some "punishment" taxes, to regulate things that might otherwise go out of hand (which is important in order for capitalism to function well).

First of all I don't think that actually is true.

Second, even assuming this is true. Using the tax system is about the worst possible way of achieving these things. Making the tax system complex to micromanage all possible situations on a federal level is just not a smart way of achieving almost anything.

For really big picture issues, I would make revenue neutral taxes. So if you really want a carbon tax, it would be revenue neutral. Meaning all the money made from the carbon tax would be used to reduce the taxes for everybody (or alternative use it to raise the minimum income line so poorer people have to pay less.

If you just want to give a general reward or punishment for doing the right or wrong thing, those should be individual acts of congress or from bureaucracies based on their executive power, and not somewhere in 6000 page of tax code.

> Also I don't think you have to be "really hardcore" to support progressive taxation. It just makes sense. As long as it's not "overly progressive".

Well its % based so its already progressive as in you pay far more if you are richer. So if you want to also pay higher % if you are richer.

> Edit: A too simple of a system makes it too easy to game the system. I wish there was a clear way out of it.

Its the opposite. A simple system makes it incredibly hard to game the system.

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