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Book Review: Progress and Poverty

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Re: Book Review: Progress and Poverty

#51

Post by colinmhayes »

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…

Maybe Im heartless, but I don't see why people should be allowed to stay in a home they can't afford just because they've been there a while. Especially when the reason they can't afford it is because the community thinks it should support high density housing but they have a low density home.

Re: Book Review: Progress and Poverty

#52

Post by TimPC »

SilasX wrote: post #47
aesh2Xa1 wrote: post #11

Earlier quoted context omitted.

I have wondered this, too. "Is/was Georgism really so popular?" Do you have any papers/writing which specifically criticise Georgism?

Paul Birch had a long essay criticizing it. Here’s where I mentioned it on HN to summarize the key points: https://news.ycombinator.com/item?id=17605751

Thanks for sharing this it's interesting. The first thing I've noticed is that his estimate of the tax revenue is far lower than other far more detailed estimates I've seen by economists.

But by far my biggest objection to his arguments is that he ignores the way density impacts land value over time. If we build huge skyscrapers in the countryside it's reasonable that businesses will spring up around them. Various economists have modelled this and land value increases in proportion to the income of its occupants. It's one of the reasons cities need to pay developers to get affordable housing. The allocation of people into housing that was once affordable in the market sense will naturally result in rising land values and rising rents. In no time and no place in history has density made land cheap.

If we choose to dot the countryside in huge towers the land on which those huge towers are built and the land of the shops immediately beside those huge towers will have a high value that tapers off quickly as you head further into the now empty countryside. You end up with a strange peaky distribution. In practice, the increasing land rents of the building and the decreased land rents of the countryside would encourage occupants to leave for greener pastures. And the developers would know this would happen before even building a huge building in the countryside because it is economically well understood.

He also makes far too big a deal out of the need for a negative land market. You can keep abandonment if you just have a 95% LVT instead of a 100% LVT and you now have a market where land values are overwhelmingly positive.

Re: Book Review: Progress and Poverty

#53

Post by colinmhayes »

mynameishere wrote: post #50
danbolt wrote: post #23

Earlier quoted context omitted.

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

I'm just going by the headline definition: "A land value tax is a levy on the value of land without regard to buildings, personal property and other improvements." That's the basic idea. I think people need to keep in mind the actual purpose of taxation: One group is taking resources from another. Nobody is pushing this tax (or any) because it's "efficient" or whatever. They are pushing it because they will come out…

The more I read about LVT the more clear it is to me that it legitimately solves many, many problems society is currently facing. The housing price crisis is effectively solved by LVT. The "greedy landlord" meme is effectively solved by LVT. Income tax being distortionary is solved by LVT. NIMBYism caused by people wanting their home to be worth more is solved by LVT. Yes, some are better off, some are worse. It's not as clear as you think though. Rural land is worth very little compared to urban. The real losers are people who have single family homes in desirable areas.

Re: Book Review: Progress and Poverty

#54

Post by MiddleEndian »

TimPC wrote: post #48
zozbot234 wrote: post #41

Earlier quoted context omitted.

Nobody is arguing for a literal 100% LVT. You'd want to still leave a fraction of land rent (say 10% or so) untaxed, since this introduces a desirable market mechanism in property assessment - and George even acknowledges this. What's nutty is to let land speculators capture all of that value for no real reason.

I think the group that is capturing the most value is actually landlords, followed by speculators. I also agree that 90% LVT may be better in practice, although I do know people who still argue for 100% and various auction mechanisms to determine the LVT.

As much as I think LVT makes sense, having to go to some sort of annual auction for my own land does seem worse than just paying taxes. Along with that being a tedious process, that could put you at the mercy of malicious actors who may just dislike you and have enough cash to outbid you.

Any implementation would have to not include this for people to be able to have stable lives.

Re: Book Review: Progress and Poverty

#56

Post by rufus_foreman »

For those who think a Georgist tax makes sense, why not apply the same type of logic to income?

If someone is employed as say, a teacher making $75,000 a year, but would be most productive as a software developer making $200,000 a year, should we tax them on $200,000 a year?

Re: Book Review: Progress and Poverty

#57

Post by TimPC »

mynameishere wrote: post #50
danbolt wrote: post #23

Earlier quoted context omitted.

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

I'm just going by the headline definition: "A land value tax is a levy on the value of land without regard to buildings, personal property and other improvements." That's the basic idea. I think people need to keep in mind the actual purpose of taxation: One group is taking resources from another. Nobody is pushing this tax (or any) because it's "efficient" or whatever. They are pushing it because they will come out…

Land buildings are on tends to become extremely valuable due to all the surrounding businesses that emerge due to a high density of people. If you look at land value maps of cities you get very noticeable spikes in cities.

I’ve seen land as cheap as $489 an acre and land as expensive as $6,000,000 for a half-lot. Even assuming $12,000 an acre in the countryside in California which can be found now on the internet, it’s quite believable that 10 square feet of land beneath a skyscraper is going to be worth more than $24,000. That 10 square feet is an underestimate as well because the unit will be responsible for more than 1/60th of its floor plan.

Re: Book Review: Progress and Poverty

#58

Post by jmole »

zozbot234 wrote: post #27
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.

Look at the case of Atherton, CA - multi-million dollar home values due to city ordinances around minimum lot size and land usage. The land value here is created by scarcity, and driven largely by the success of the greater metro area.

But if you are trying to value this land from a Georgist perspective, and one that takes into account property zoning and use requirements, the land is worth much less than it should be due to the restrictions, and would be taxed lower than parcels of similar size in nearby cities.

This seems, in theory, to reward obstinate enclaves of low-density development within larger metros. The homeowners have no reason to elect a council that would vote against their interests in this respect, and their taxes would stay low.

Re: Book Review: Progress and Poverty

#59

Post by TheCoelacanth »

colinmhayes wrote: post #49
mcguire wrote: post #39

Earlier quoted context omitted.

Absolutely! The biggest advantage for most, particularly readers of HN, is described in part II ( http://gameofrent.com/content/can-lvt-be-passed-on-to-tenant... ): "...landlords cannot pass Land Value Tax (LVT) on to their tenants..." Renting an apartment in SF would therefore both be cheap, because the LVT encourages high-density, and tax-advantaged, especially if the LVT is (as it is supposed to be) the only tax.…

Rental prices would not change, it's just that more of the money would go to government instead of the landlord, especially for low density housing.

They probably would decrease somewhat, because there's no longer an incentive for landowners to prevent people from building housing to keep the supply low.

Re: Book Review: Progress and Poverty

#60

Post by lordnacho »

its_ethan wrote: post #12
bee_rider wrote: post #8

Earlier quoted context omitted.

Huh. Property tax is already a thing of course, but I guess if the LVT was going to replace all taxation the stakes would be much higher. In an urban setting, it seems to me that the land value should be... reasonably uniform, unlike property, which should make assessing much easier, right? But that's just getting the number. Whether people are happy with the number is a whole 'nother problem.

I would have assumed exactly the opposite in terms of urban land being uniform in value. 10 acres that are 30 minutes from Des Moines, IA are going to be very similar in value (price people are willing to pay) compared to 10 acres that are 10 miles down the road. Rural land is generally quite uniform and more likely to be functionally the same. In an urban area, say Los Angeles, 10 acres in Malibu (an area with very…

Someone came up with this delicious game:

Landowners decide for themselves what value their land has, and pay tax accordingly. But whatever they say the value is, someone else is allowed to buy it for.

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