241–250 of 910 posts
https://en.wikipedia.org/wiki/Georgism
Fascinating. First I've heard of this. I can see the obvious advantages, though I'm sure there are disadvantages I'm missing.
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I’ve heard economists champion the idea, but I’ve heard little talk about what the tradeoffs are. What are the downsides?
Gentrification, which displaces renters (rents become too expensive for existing tenants so they need to leave the area), will start displacing some land owners as well. LVT would increase due to land value increasing, and the current land owners may not be able to afford the increased tax. If you don't allow deferment of the tax, pensioners might have to move unwillingly (low income that may not cover the tax). Most…
The gentrification situation is similar: if someone is living in a single-family home in an area that is filling up with apartments, they're using the land much less efficiently than a replacement structure would. As land values slowly increase, the owner would be prompted to eventually sell to someone who would put it to higher value use. You could have some speed bumps in the policy to make sure this doesn't happen too fast, but if you stop it entirely you're just giving up on productive land use.
It's worth noting that property taxes have the same dynamic, since they also incorporate land value in them. The difference though is that _property taxes discourage development_, which contributes to higher rents. Land value taxes do not have this problem; a world where we suddenly swap to LVTs is a world with many more buildings and much lower average rents.
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(I'm a big proponent of LVT) The two downsides I'm aware of are difficulty in transitioning to an LVT and difficulty in valuing the land. Transitioning to an LVT means that landowners no longer capture land rents for themselves, which is a massive overnight loss in the value they hold. The solutions there typically tax only the difference in land value versus a baseline assessment. So if a lot is worth $100 before LV…
> difficulty in valuing the land. It's rather easy to value the land: Have the owner decide what it's worth, then they pay a tax as a percentage of that valuation. Now, obviously given that system everyone's going to value their land at $0. To adjust for that land owners must be obligated to sell their land to anyone willing to buy it at the declared valuation. Such a mechanism doesn't only keep the current owners ho…
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They are loading the tax burden on the land rather than on structures. So, you can build the Taj Mahal or leave the lot a burned out wreck-- either way you pay the same tax. Many comments on the thread overstate what this is. I happen to think it's interesting, but for reasons unrelated to the article-- it's kinda goofy for the state to tax personal property that happens to be fixed to a location, like a fireplace, s…
Detroit has blight. LVT addresses property speculators that buy land to sit on it for 10 years and do nothing with it. With LVT they have to either pay up, develop it, or sell it. All options good for the city.
Not quite.
They have to pay up while they own the land.
They can develop it in ways that may generate revenue sufficient to cover the tax (e.g. a landlord-developer)
They can develop it in ways that won't generate revenue, but that satisfies their own goals, and pay the tax from some other source (e.g. a homeowner)
They can sell it to drop the tax liability.
Can you legally relinquish ownership of a parcel to no longer have the tax burden of the empty land in a dying city?
I think in this scenario there'd be a couple of options:
1. The land is worth a lot. If that is the case, you should be able to sell it reasonably easily.
2. The land is worth very little. In that case the tax would be insignificant because the land has so little value.
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You are already paying taxes, Land Value Taxes just seek to be a more efficient (since they try to target rent seeking rather than profitable labor) and more just (since they target land that the owner didn't create) form of taxation. So arguing that it's effectively the government stealing your property is only a valid argument if you are arguing that all taxation is theft. If that's what you believe then that's fin…
Property taxes and wealth taxes undermine property rights in ways that normal income taxes don’t. If I earn $100 and pay tax on it, whatever’s left over is mine forever, and I never have to pay tax on that income again. If I buy $100 worth of property, I have to pay tax on it again every year forever, which basically means I’m only buying the right to rent it from the government in perpetuity. Your use of the phrase…
No man is an island; land should be seen as something rented from the people, especially in cities, where most of its value comes from the efforts of others. I'm sympathetic to the idea that one is entitled to the sweat of their brow and the work of their hands, but land is neither; property in general may not be theft, but private land ownership is, because land rightly belongs to everyone and no-one.
> Your use of the phrase “rent seeking” is also a bit weird. It sounds like any extraction of value from capital would meet your definition. It’s fine if you object to a persons right to extract value from their capital, but rent seeking typically describes attempting to extract value from capital _without_ reciprocating any productive value to the person who’s paying you. Which is certainly not the case with land use.
There's a reason "rents" are called "rents"; land rent is the most classic example of them. The "owner" of a piece of land does nothing to produce its value, they just take money for nothing because they hold a scarce resource.
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Presumably to the government, who might use it -- or sell it -- later.
Under the US system, I could see this having issues if the State, Federal, or County/Municipality holds it. What if the current entity doesn't do what the other wants performed with it?
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Land value taxes don't factor in improvements. Improving the land results in no property tax change, so they incentivize doing more useful things with the land.
They don't directly factor in improvements, but the improvements are generally why land value increases/decreases.
The provision of good emergency services and hospitals and libraries and other amenities raises the land values within their service areas. (They don't raise the value of the buildings.)
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Perhaps my response was a bit long but I did attempt to address it. Perhaps I can elaborate: The question is to what degree/portion of Georgianism to apply and what to do when the land value component starts going up infinitely that its starts hurting the electorate. - Do you introduce alternative tax sources (i.e. increase income taxes on billionaires instead as in California)? - Do you introduce caps on annual land…
Exceptions are a bad idea, and as bad ideas tend to go, popular with voters. Exempting by use, like primary homes or day cares, now means that the government is in the business of snooping on you to make sure that the primary home you declare is also your actual primary home. You also give well-off people with a bigger primary home (or owning a home at all instead of renting) a big tax break. Welfare for the well-off…
However in reality its a difficult ask to have all people purchasing single family homes to be able to build a 40 year financial model/projection of a regions growth prospects when the buy a home.
Or have them move away from their family and friends support network.
I think Georgianism works best:
- when there's expansive flat land and slow growth and no zoning/resource constraints (i.e. Texas pre-2010).
- you build higher density subsidized housing so people can stay in their neighborhood (i.e. Singapore)
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Yes, that's exactly the idea. We have a problem in the US where many metro areas do not have enough housing, in part because building big things is penalized by the tax code. By changing the tax code to not penalize construction, we hope to get more construction.
Maybe property tax should be inversely related to improvements, considering that improved land generates tax revenue in other ways, e.g. wage tax, sales tax, etc.
Build a 200 unit apartment complex in an area with a housing problem and jobs currently unfilled ... yep.
Build a gigantic house to be occupied by a single very wealthy family .. not so much.
But how to measure the difference? The simple market value of the improvements is not going to be accurate.