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Book Review: Progress and Poverty

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Re: Book Review: Progress and Poverty

#21

Post by mynameishere »

bee_rider wrote: post #4
TimPC wrote: post #2

Progress and Poverty was once the most popular economics book ever written. The Georgist Theory in it, and the land value tax proposed by it is still endorsed by economists today. This review clearly illustrates the ideas from George that land captures gains that in a more fair society we'd want to go to labour.

I may have to pick this up -- as someone with no economics training at all, a land value tax seems extremely appealing and intuitive to me. I'd already like to become a complete partisan in favor of this policy, but I guess it would make sense to read what the actual justification is, for it, haha.

It seems extremely unappealing to me. It seems like something a wealthy apartment-dweller in a tall building in a dense city would come up with to move taxation from himself to the guy in the country with two acres and a mobile home.

The more I think about it, the more I'm sure that's the actual motivation.

Re: Book Review: Progress and Poverty

#22

Post by MiddleEndian »

On a personal level, I like the LVT as a single tax because then I wouldn't have to do any paperwork. They give me a bill, I pay a bill, there's no exceptions, I can improve (or fuck up) my property, and overall the numbers won't change (unless a ton of people improve or fuck up their properties around me as well). Nice and easy.

But it also seems effective overall. After I quit my last job and before I got my current job, I did not work for several years (some due to choice, some due to circumstance). During this time, I obviously paid no income tax. But I still paid my mortgage (some of which obviously went to property tax, but mostly to the bank). Presumably with a land value tax, my payment to my mortgage company would be notably less less and the tax would notably be more, so during that time instead of paying a bank I would be paying taxes that go to infrastructure and welfare and whatnot.

I think this sort of thing is more accurate than an income-based source of taxes, because I obviously wasn't really in the same economic situation as an underemployed person who truly couldn't find a job for several years. It also allows you to assess your own level of taxation. For instance, I could have sold my place or rented it out, and moved elsewhere to a cheaper place (or I guess a more expensive place, were I so inclined to do so while not having a job).

Of course, the big disadvantage, as mentioned elsewhere in this thread, is that it is difficult to assess land value sometimes. It also seems like it may force people to move a bit more often, and moving is exhausting. And also presumably you'd have to convince people to pair this form of taxation with more lax zoning laws (with some stricter exception for farmland or something to keep the value per square foot low enough for it to still make sense).

Even weighing these factors, it seems like an improvement over the current system. But I guess the real issue is that in the current world of mortgages and such, even if 90% of the population decided it truly did make sense as a form of tax, the transition seems nearly impossible.

Re: Book Review: Progress and Poverty

#23

Post by danbolt »

mynameishere wrote: post #21
bee_rider wrote: post #4

Earlier quoted context omitted.

I may have to pick this up -- as someone with no economics training at all, a land value tax seems extremely appealing and intuitive to me. I'd already like to become a complete partisan in favor of this policy, but I guess it would make sense to read what the actual justification is, for it, haha.

It seems extremely unappealing to me. It seems like something a wealthy apartment-dweller in a tall building in a dense city would come up with to move taxation from himself to the guy in the country with two acres and a mobile home. The more I think about it, the more I'm sure that's the actual motivation.

Wouldn’t a LVT mean that the taxes on the mobile home be much less than the apartment in the dense city?

Re: Book Review: Progress and Poverty

#24

Post by CuriousSkeptic »

mrob wrote: post #9
scythe wrote: post #6

Earlier quoted context omitted.

The biggest problem with LVT is surprisingly simple: accurately assessing the value of land is very hard, and ensuring that the assessment process is fair is therefore extremely hard. LVT experiments in history tend to run into problems when people feel that their land has been valued incorrectly, leading to a vocal minority that despises the law. That results in something like this: https://nassimtaleb.org/2016/08/i…

People who disagree with their assessed value should be given the option to declare whatever value they like. If they take this option, the state should have the option of buying their property at the declared value, plus some extra to cover transaction costs.

At the surface it seems there should be a market solution for this.

One approach might be to do something clever with mortages and property rights. Basically keep trying to keep the current mechanics of borrowing and just shifting around the parties involved so that the all the interest gets collected as LVT.

Might even let the central bank handle both collection and dividends of it all.

Another option might be to create economic incentives for some party to get the assessment right. Like insurance companies and banks loose either customers or revenue when getting it wrong.

Perhaps can play with some margin for speculation such that lender and borrower get to share some profit.

Or just make lenders outbid each other on who can extract most rent for the property.

I guess one concern here is to make sure the commons have a representation, so that not all land get appropriated to private use

Re: Book Review: Progress and Poverty

#26

Post by zozbot234 »

danbolt wrote: post #23
mynameishere wrote: post #21

Earlier quoted context omitted.

It seems extremely unappealing to me. It seems like something a wealthy apartment-dweller in a tall building in a dense city would come up with to move taxation from himself to the guy in the country with two acres and a mobile home. The more I think about it, the more I'm sure that's the actual motivation.

Wouldn’t a LVT mean that the taxes on the mobile home be much less than the apartment in the dense city?

Correct. Land "in the country" is worth zilch compared to a similar plot in a dense urban core. GP has it backwards, they're perhaps thinking of some flat tax on land based on square footage whereas LVT is based on assessed value.

Re: Book Review: Progress and Poverty

#27

Post by zozbot234 »

jmole wrote: post #19

It seems like the biggest challenge to Georgism is that municipality/county/state/federal regulations on land use would have a significant effect on land value. A landlord might lobby for restrictive land use policy while sitting on a parcel, and then lobby for opening those restrictions when it comes time to sell. Essentially avoiding the tax by using government policy to suppress the true land value. There are solu…

> municipality/county/state/federal regulations on land use would have a significant effect on land value.

That's not "a challenge" it's a positive side effect. Those government institutions would be enabled to internalize the value that they create, which is presently being captured by random private parties that did not create it.

Re: Book Review: Progress and Poverty

#28

Post by TimPC »

scythe wrote: post #6
bee_rider wrote: post #4

Earlier quoted context omitted.

I may have to pick this up -- as someone with no economics training at all, a land value tax seems extremely appealing and intuitive to me. I'd already like to become a complete partisan in favor of this policy, but I guess it would make sense to read what the actual justification is, for it, haha.

The biggest problem with LVT is surprisingly simple: accurately assessing the value of land is very hard, and ensuring that the assessment process is fair is therefore extremely hard. LVT experiments in history tend to run into problems when people feel that their land has been valued incorrectly, leading to a vocal minority that despises the law. That results in something like this: https://nassimtaleb.org/2016/08/i…

My city already does a two-factor assessment that includes land value and structure value for assessing my property tax. I don't think just doing the land value component is substantially harder although I do agree it's slightly harder.

Re: Book Review: Progress and Poverty

#29

Post by its_ethan »

mynameishere wrote: post #21
bee_rider wrote: post #4

Earlier quoted context omitted.

I may have to pick this up -- as someone with no economics training at all, a land value tax seems extremely appealing and intuitive to me. I'd already like to become a complete partisan in favor of this policy, but I guess it would make sense to read what the actual justification is, for it, haha.

It seems extremely unappealing to me. It seems like something a wealthy apartment-dweller in a tall building in a dense city would come up with to move taxation from himself to the guy in the country with two acres and a mobile home. The more I think about it, the more I'm sure that's the actual motivation.

That sort of assumes that the owner of the apartment-dweller's property doesn't just increase their rent (pass along that tax).

As other people pointed out, there should/would have to be some mechanism to value the land for the LVT. The land the apartment building is built on in the city would have a higher value than some 2 acres out in the country. The owner of that land would have to pay the LVT, and the rent for an apartment on that land would reflect that - ultimately making everyone who lives in the apartment pay that tax, if indirectly.

Re: Book Review: Progress and Poverty

#30

Post by TimPC »

notahacker wrote: post #20
scythe wrote: post #6

Earlier quoted context omitted.

The biggest problem with LVT is surprisingly simple: accurately assessing the value of land is very hard, and ensuring that the assessment process is fair is therefore extremely hard. LVT experiments in history tend to run into problems when people feel that their land has been valued incorrectly, leading to a vocal minority that despises the law. That results in something like this: https://nassimtaleb.org/2016/08/i…

The biggest problem with it as presented in Progress and Poverty (i.e. as a Single Tax to fund the government budget, not some small supplementary levy to fund something like local services) is that the size of the tax bears relatively little relation to the ability of someone to pay it (at least, to pay it without selling their house). Turfing pensioners out of their house because the land it sits on gained in value…

Most modern day versions proposed allow you to defer the tax until the sale of your home or pay it as part of the settling of your estate.
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