Does Georgism work? Is land a big deal? • Hacker News Board

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

#341

Post by midasuni » Fri, Dec 10, 2021, 12:10 AM UTC

Anderkent wrote: post #311

midasuni wrote: post #224

Earlier quoted context omitted.

> 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,…

>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. This only holds if there's no competition between landlords - so the landlord extracts the maximum possible rent from each tenant. If I'm a tenant…

Where rents are high supply is less than demand - as demand is reduced by people living away and by people cohabiting when they would rather not.

On the opposite situation where properties are empty, they are empty at any price, LVT won’t change the price. They currently can’t be rented out for $50 a month, so why would they be rentable with LVT

The only properties which will be flakey are those where the cost of renting it out (maintenance etc) is lower than the current asking price, but higher once you include LVT.

However as LVT will cost whether you’re renting out or not this will simply increase incentive to sell (if you can’t get enough to rent out), reducing the purchase price, and allowing people to live there.

Given that in cities where rents and land values are highest the number of empty properties is minimal, increasing the cost of owning an empty property won’t increase that number.

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

#342

Post by dnautics » Fri, Dec 10, 2021, 12:39 AM UTC

_dain_ wrote: post #331

dnautics wrote: post #326

Earlier quoted context omitted.

this is a far better situation than rich neighbors moving in next to a lower-middle-class family and driving them out of the neighborhood by bringing up the assessed value.

Since rich people are rare, by definition this wouldn't happen very often. Unlike with the current situation in California where it happens _everywhere_. And such a lower middle class family would still be selling their house at a higher value than for which they bought it, so it's hard to see how they are being robbed. And don't you think it's funny: we can't have rich people moving here because that would drive up…

you're neglecting the important asymmetry. If we fail to tax a rich person, it doesn't actively hurt someone, it may passively prevent some people (who would have wanted to move in) from having an easier time with certain life-paths. If you eject a middle class person from their home, you are actively forcing them to find a new life-path. Suppose that lower-middle class person is a mobility-challenged elderly person on a fixed income that is already being eaten away by inflation. Yes, sure, they get to sell their house at a high mark to market, but they have to suffer the hassle of finding a new place, which at best is equivalent quality minus income tax on LTCG, on an eroding deadline. That is a really shitty situation to be in.

> this wouldn't happen very often

Then, I suppose we would have no reason for the term "gentrification", if it's that damn rare.

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

#343

Post by CryptoPunk » Fri, Dec 10, 2021, 12:48 AM UTC

pydry wrote: post #318

CryptoPunk wrote: post #277

Earlier quoted context omitted.

It's not about rich or poor. Any group, if you threaten their economic interests, will retaliate. Take for instance public sector unions: they have grown from strength to strength over the last 50 years, and today are owed trillions in pensions, from sweetheart collective bargaining agreements, that have massively increased their benefits, while degrading the quality of public services, like public education: https:/…

It's kind of weird that you hold up unions as an example of a group who would go to war if their economic interests are threatened, yet they have not just been threatened they have had a scythe taken to them since the 1970s and yet here we are. No war. But you think that the fascists should have money thrown at them because they're more violent than the rest of us? I don't believe an LVT should be ramped from 0% to 1…

There has been no assault on unions.. in the private sector, they bankrupted every domestic industry where they predominated. That is what caused their membership rates to decline.

In the one sector where expenses are socialized, and thus which doesn't go bankrupt easily, they have gotten increasingly powerful.

Government social welfare spending has rapidly grown, at the behest of public sector unions who increasingly control the political system:

https://ourworldindata.org/grapher/social-spending-oecd-long...

A couple anecdotes illuminates the kind of power these unions wield:

New York has nearly 300,000 unionized public sector employees receiving over $100,000 a year:

https://www.forbes.com/sites/adamandrzejewski/2020/05/26/why...

In California, emergency workers can retire at 55 with 90% of their pension, that averages $108,000 per year.

California now has $1 trillion in pension obligations for its unionized public sector workers.

>>But you think that the fascists should have money thrown at them because they're more violent than the rest of us?

They're not fascists. But many will join fascist movements, like the Jan 6th groups, if they see their economic interests threatened, just as many public sector union members will join insurrectionist socialist/communist movements, if their rent-seeking institutions are dismantled.

>>After the civil war America rebuilt itself into the world's richest and most powerful country.

The US was already on its way to becoming the richest and most powerful country in the world in the early 19th century. That outcome was predicted by British thinkers since long before the Civil War.

The Civil War was massively destructive, both in terms of economic resources, and human lives - in killing 600,000 people, and later US economic growth was despite of it, not because of it.

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

#344

Post by whakim » Fri, Dec 10, 2021, 1:04 AM UTC

roenxi wrote: post #213

whakim wrote: post #183

Earlier quoted context omitted.

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 pa…

The post I was responding to makes the distinction between things we can't create more of (land) and things we can (paintings). I used scarcity as an (erroneous) proxy for this distinction, even though obviously there are scarce things that we can create more of.

> Land is quite unique. It is the resource with the weakest argument that humans produce it.

I mean, not really. What about water or oxygen? What about carbon taxes insofar as they're related to the inherent value of the earth's climate? There are plenty of resources that don't require any human effort to produce, but that doesn't make them better suited to taxation. It just seems like an entirely arbitrary distinction to make.

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

#345

Post by whakim » Fri, Dec 10, 2021, 1:15 AM UTC

d3ckard wrote: post #253

sjwalter wrote: post #151

Earlier quoted context omitted.

> Humans also generally agree that progressive taxation is a good idea. Fairly bold assertion. I'd say most humans don't even really know what progressive taxation means. > Rich people should pay more to fund the government. A static tax regime (i.e., taxes calculated by a simple fixed percentage of wealth or income) leads to the same outcome. E.g., in a 10% fixed tax regime, someone making $10k/a pays $1k in tax and…

I’d like to add here that the biggest fallacy is assuming rich pay income tax at all, which leftists across the world all seem to universally believe. I would argue that in 21st century the definition of rich is actually „achieves most of his income through sources which are not subject to income tax”. Progressive income tax mostly hurts well qualified proffessionals nowadays (people actually working for that income)…

This isn't true. If you define "income" as the sum of an individual's income from capital plus income from labor, it is only in the top 0.1% of the distribution that capital income dominates labor income. (This percentile threshold changes slightly based on country; in countries such as the United States it'll be a bit higher.)

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

#346

Post by neilparikh » Fri, Dec 10, 2021, 1:24 AM UTC

zapataband1 wrote: post #330

neilparikh wrote: post #187

Earlier quoted context omitted.

(Copy pasting my comment from elsewhere) > Our gov is effectively captured by financial interests. The "financial interests" that would provide you the biggest opposition in imposing a LVT are the financial interest of the average voter! The majority of voters are homeowners, and thus their material interests lie in land values rising. As a concrete example of this, Prop 13 was passed by a referendum, not politicians…

If financial interests largely decide who gets enough funding to run in an election then how is it up to the average voter? To choose which corporate funded lackey they get? I don't know what left we are talking about but most people I talk to left or liberal or right seem to agree that large financial interests or 'the elite' are sucking us dry, they pretty much just disagree on taxes. It is a theory with some prett…

> If financial interests largely decide who gets enough funding to run in an election then how is it up to the average voter?

You're responding to something completely unrelated from what I claimed. I didn't say anything about how controls the government or election funding or anything like that.

My point was that if you tried to implement LVT (or any other policy that would have the effect of reducing land/home values), you would face the biggest opposition from the average voter, who has a large chunk of their net worth (and often retirement savings) in their home. They have a material interest in their home value increasing.

Take a look at who is the primary opposition to building new housing in metro areas and drives NIMBYism. Is it the "wealthy" or "financial interests"? No. It's the average homeowners who live in that community/city.

> It is a theory with some pretty strong evidence, showing that normal poor people do not get their interests heard in government.

That study is irrelevant, because it looks at Congress. Housing is not a federal issue though, it's a mostly local issue (with a bit of involvement at the state level). At the local level, average voters have a lot more power. If corporate interests are that powerful, do you really think the Bay Area would like it is now? Tech companies have been fairly unsuccessful in getting what they want in Bay Area cities.

Again, we're not going to fix housing by yelling at the rich elites. They're not the ones stopping housing from being built, it's the average homeowner.

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

#347

Post by whakim » Fri, Dec 10, 2021, 2:14 AM UTC

pydry wrote: post #234

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…

>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 ) cre…

> 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.

Yeah, but pretty much all private wealth is built on top of thousands of years' worth of accumulated community knowledge. The startup you founded wouldn't be worth anything if not for electricity, computers, and the internet.

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

#348

Post by lmm » Fri, Dec 10, 2021, 2:28 AM UTC

nickff wrote: post #206

lmm wrote: post #193

Earlier quoted context omitted.

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…

> 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!

I'm not convinced; after all these collections are often already in public ownership. If there was something more beneficial to the public to be done with them, one would hope that would already be happening.

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

#349

Post by MisterMower » Fri, Dec 10, 2021, 3:26 AM UTC

hahaxdxd123 wrote: post #35

MisterMower wrote: post #26

“But won't landlords just raise the rent to make up for the LVT, passing the burden of the tax on to the tenants? Georgists say no, because land is special in that it is scarce and nobody can make any more of it. Indeed, LVT is a rare form of taxation that actually boosts the economy, because it discourages rent-seeking and speculation. Some Georgists even go so far as to say that LVT can raise enough revenue to repl…

Landlords in California might benefit from Prop 13, in which case their property taxes might be 10% of the landlord across the street. Yet all things equal, they charge the same. Landlords already charge what the market will bear. Taxing them more or less does not change that or else there would be $600/mo 4BRs in SF for rent. Since your comment is deliberately inflammatory, I will do the same - do you have any basic…

And if you raise property taxes on those landlords, you think they’re not going to try and recover those costs from their tenants? They’ll just sit back and absorb those costs? Do you have any basic economic training?

What is HN but a bunch of software devs and IT professionals pontificating about topics in which they no experience or training? I mean, the guy who wrote the article is a game developer, not an economist. Seems like I’m just as qualified as anybody else in this thread.

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

#350

Post by MisterMower » Fri, Dec 10, 2021, 6:48 AM UTC

larsiusprime wrote: post #121

MisterMower wrote: post #26

“But won't landlords just raise the rent to make up for the LVT, passing the burden of the tax on to the tenants? Georgists say no, because land is special in that it is scarce and nobody can make any more of it. Indeed, LVT is a rare form of taxation that actually boosts the economy, because it discourages rent-seeking and speculation. Some Georgists even go so far as to say that LVT can raise enough revenue to repl…

Part II includes an empirical assessment of over a dozen studies that assess whether land value, in the actual real world, is passed on to tenants or not. I look forward to your comments after it posts tomorrow.

You rely very heavily on the Høj, Jørgensen, and Schou paper. The paper states clearly and convincingly that property prices adjust for changes in property tax rates. I don't think that's surprising to anyone. Figure 1 in the paper shows this very clearly: lower property tax rates raise property values, and vice versa.

You then jump very quickly to the assumption that this means that landlords are unable to pass increased property taxes onto their tenants. The causal link is sorely lacking.

"With a Land Value Tax, the owner has to pay that tax every month whether they have a tenant or not. They're already charging the highest amount the market will bear, and as we've already shown, they are unable to change the supply of land. All the leverage is on the side of the tenants, which forces the landlord to eat the tax. The price to buy the land goes down, the price for a tenant to rent it goes down, but the total amount of income the land itself produces ("land rent") stays the same. A portion of it is just being collected by the taxing agency."

"Landlords are unable to change the supply of land" is, frankly, an idiotic statement, for a number of reasons. No landlord says "well, the quantity of land is fixed so I can't raise the rent now that my taxes are higher."

And furthermore, while that statement is true in a very academic sense, tenants don't live on land by itself. They live on land with a building on it. There is plenty of land out there that can support new construction. The supply of land in this sense is not fixed.

Provided the right incentives, nearby vacant land will be developed with new housing. And other buildings will be repurposed into housing if that's their most profitable use. Over the long run, housing supply is very elastic. People will get roommates or choose to live in RV's if the incentives are right. The iron law of supply and demand works for housing, just like cigarettes and gasoline.

Landlords operate to make a profit. They look at all of their expenses when deciding what to set their rents at. They don't care if the land is taxed, or the structure is taxed. They're looking at total expenses and seeing if they can get a tenant in their property paying rent at a level that gives them some amount of profit beyond their expenses. If you make it unprofitable for them to rent, you'll go from sky high rents to no rental units available in a heartbeat.

You're basically arguing for sky high property taxes, with the cherry on top being your Citizen's Dividend: "look what we could do with this new tax revenue!" That's fine, but maybe you should try owning a rental property before you make such authoritative claims with such little basis in reality.