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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?

#231

Post by endisneigh »

amablue wrote: post #163
endisneigh wrote: post #64

Land is already taxed, Georgism is already in play. If one is arguing for higher property (addition + land) tax then that’s another discussion. The housing issue is a zoning issue, and consequently solely a political one, not a tax one.

Land is taxed at very low rates, and it's almost always bundled with property taxes. Instead of taxing land at a few percent, Georgism says we should be taxing it at 100%. That's a huge difference from what we have in play today.

I don’t disagree - which nations have a 100% land value tax? Either way, increasing the tax or reforming zoning, the crux of the issue is political.

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

#232

Post by panick21_ »

yonran wrote: post #164
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 think in principle, an income tax is similar to a land value tax in that both of them are trying to capture monopoly rents. Compared to the property tax, the land value tax exempts investing in improvements, just as the income tax exempts capital investments and interest. The important differences are in what they exempt from taxation. America’s income tax exempts imputed rent, so a business or household who happen…

I don't know about the specifics of the US tax code.

> I think in principle, an income tax is similar to a land value tax in that both of them are trying to capture monopoly rents.

I don't know what that means. An income tax simply a uniform tax does not distinguish for type of income. "Monopoly rents" or whatever else.

You can read the details in "The Flat Tax: Updated Revised Edition"

> A bakery’s land taxes don’t go up at all if he puts in twice as much effort, whereas his income taxes would at least double. So LVT incentivizes work, making land value tax better than income tax.

What it actually does is make totally arbitrary value judgments on different types of income and totally distorts who pays what in totally random way based on a huge number of factor unique to each industry or trade. Its a harmful distortion of the price system. The justification for that are some 19th century theories about the special place for land that doesn't make sense.

The whole point of a flat tax is to not distort capital allocation. Anybody that earns more, pays more. That's it.

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

#233

Post by pydry »

neilwilson wrote: post #203

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 transact…

>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.

Tax keeps a lid on inflation and can be used to discourage socially undesirable activity. It absolutely makes sense to keep inflation down and prevent productive land from being hoarded or used inefficiently with a tax at the same time.

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

#234

Post by pydry »

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…

>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.

Exactly. They tax wealth created by nature and/or the community rather than wealth created by individuals. The land Trump Tower sits on isn't valuable because Trump owns it. It's valuable because all of New York surrounds it.

A $5 million fleet of cars is wealth (mostly) created by human hands. Those human hands ought to decide what happens to them. Right?

There's also raw materials, but they would be subjected to a georgist tax too.

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

#235

Post by pydry »

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?

This question is out of the scope of land value taxation. The overall tax burden would fall on the institution running the condo (HOA/company/whatever). How they decide whom to charge and how much, etc. would be a separate question government by different rules and laws.

Which is not to say that the outcome would be fair, but whether it is or not would depend upon how these organizations are regulated and run.

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

#236

Post by BirdieNZ »

aunty_helen wrote: post #135

I would like to table a point about how this will prevent urban sprawl. The maps showing land value peaking in cities should be a good indicator of this but the opposite conclusion is being formed. If land is expensive, it will be taxed at a considerable amount per year driving people out of these areas or into condos where they can share the costs with those on the floors above and below them. Perhaps there will be…

> at the cost of suburban homes.

Suburban homes have a much larger footprint than urban homes, so it would reduce urban sprawl if you have fewer suburban homes and more urban homes.

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

#237

Post by pydry »

PragmaticPulp wrote: post #77
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…

> This is missing a key element:... This is where I get frustrated with Land Value Tax articles: They tend to ignore all of the complexity by sweeping it into the idea that Land Value is something that can be accurately and arbitrarily assessed in a vacuum, without influence from politics, zoning or other real-world factors.

Usually, such a valuation process commences with a measurement of the most and least valuable land within the taxation area. A few sites of intermediate value are then identified and used as "landmark" values. Other values are filled in between the landmark values. The data is then collated in a database and linked to a unique property reference number.

Over time with the use of sales data the map should become more accurate.

The assessment will only be close, of course, it'll never be "perfect".

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

#238

Post by pydry »

tofukid wrote: post #188
jl2718 wrote: post #181

Income tax persists because it avoids the problem of valuation. These ideas are largely moot with a robust mechanism for value discovery. One such possibility is the open auction. In a value tax system, somebody puts money into an escrow bond as a bid on the property, and the owner has a choice of either paying the tax for the duration of the escrow, or exchanging the property for the escrow. The escrow bonds themsel…

Doesn’t that enable hostile takeover of land? If I own a school or restaurant, and Apple wants to replace it with a store, they can place a bid such that I can no longer afford the taxes and am forced to sell to them. Wouldn’t such a system just exacerbate business and the wealthy being able to snatch up land?

This isn't at all different to what happens today when a restaurant has its rent jacked up and it has to move.

The only difference is that instead of an individual landlord getting disgustingly rich out of dispossessing restaurants, the whole community gets a pile of cash.

The rich will be much more upset that they are exposed to the same market forces that the rest of us are than they will benefit from being able to dispossess others by offering to pay higher taxes.

The rich also wouldn't be nearly as rich if land stopped being an asset that could be capitalized. LVT would slash wealth inequality precisely because land is such a large component of wealth.

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

#239

Post by pydry »

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…

>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, these 2 apartments would have the same land value tax right?

>What kind of effect will this have on the rental price of the bad house? What will dictate the floor of it?

The bad house would have the same rent it would without LVT. The only difference is that the landlord would be making a loss if the house is too shitty or too low density.

The landlord is then faced with 4 choices - 1) make eye watering losses by not renting it out. 2) continue to make losses renting it out, 3) sell up to somebody who will redevelop, 4) redevelop themselves.

LVT should put upward pressure on the quality of housing (and density in big cities) because landlords will eat losses if they don't.

You'd probably need separate rules for historic buildings (e.g. an LVT discount) since it will become an amplified driver to knock them down and replace them with high rises without some impediment from doing so.

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

#240

Post by pydry »

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…

>I think that it is equally likely that landlords will first raise the rents to try to stay in business.

They might try and they certainly would threaten but if they jack up rents and as a result can't get any tenants then they're in an even worse position than before as they have an LVT bill and no income to support it.

Without a restriction in supply or an increase in demand (neither of which would happen), rents can't go up.

It would cause a precipitous decline in property values and a lot of landlords (mostly amateurs) would scramble to sell up and get out of the landlording business as it became more like an actual business and less of a license to print money.

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