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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?

#181

Post by jl2718 »

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 themselves would have to take some portion of the tax revenue as interest. This has some interesting equilibrium properties because it aligns interests of all parties: owners, bidders, and government.

Likewise, negative valuation in Pigouvian taxation is also very difficult. There could be, for instance, a way of matching the tax required to continue an activity, with a multiple of the amount raised to stop it.

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

#182

Post by carom »

JamesBarney wrote: post #45
runnerup wrote: post #16

The pro-Georgist essayist lists the three biggest challenges to Land-Value Tax as: > 1) Land might have been a big deal in 1879, but it just doesn't matter much today > 2) Landlords will just pass Land Value Tax (LVT) on to tenants, so it won't work > 3) In real life you can't accurately assess land value separately from improvements, so even if LVT would work in theory, it doesn't work in practice I personally under…

Would it really be disastrous? Say a house rents for $2,000 / month. $1,000 of that is the land, and $1,000 the house. The land value tax is $1,000. We'll pretend this is an ideal world. If the interest rate is 12% then house+land is worth 100,000. But imagine the they misappraise the land. So instead they charge 1,500 a month. Then that means the house+land is worth $50,000. That's not ideal but it doesn't seem cata…

>That's not ideal but it doesn't seem catastrophic.

>If a piece of land is underdeveloped and they charge a little too much, the person just surrenders that land to the government which auctions it off.

I would say a situation where I surrender my land to the government is catastrophic. Feels like it would easily turn into forced sales.

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

#183

Post by whakim »

lmm wrote: post #128
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…

Owning huge amounts of land is uniquely antisocial in a way that owning huge amounts of other stuff isn't. If Mr Moneybags buys ten thousand paintings, we can always produce more paintings (and the rising price of paintings will push more people to take up careers in art). But if Moneybags buys ten thousand acres, the rest of us are ten thousand acres worse off in a way that we can't really fix.

So why not tax gold or bitcoin or the Mona Lisa if the main difference between taxable assets and non-taxable assets is scarcity?

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

#184

Post by zajio1am »

hash872 wrote: post #48
runnerup wrote: post #21

Earlier quoted context omitted.

Indeed! Thank you. Too many people don't see the constitution as the living document it was intended to be. It's so weird to me to keep hearing "that would be unconstitutional" as if it's some ultimate argument-ender for these thought experiments. Also, in real life, I'd be happy to see a constitutional convention to resolve quite a few things - 2A, 4th amendment, abortions, 100-mile constitution-free-zone, etc. Seem…

When people use 'you'd have to change the Constitution' as a criticism, they are mostly noting that it's extremely difficult to change the Constitution, and are probably not motivated by a deep reverence for the document. The US has the most difficult-to-change constitution of any democracy- you'd have to pass two-thirds majorities in the House & Senate, and then get three-quarters of the states to sign on. It's more…

> The US has the most difficult-to-change constitution of any democracy

Well, still easier than changing 'constitution' (treaties) of EU - you would need parliaments of all member countries to ratify it and some countries would even organize referendums for it.

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

#185

Post by mrep »

MrPowers wrote: post #97
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…

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?

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

#186

Post by neilparikh »

nwah1 wrote: post #70
MrPowers wrote: post #55

Earlier quoted context omitted.

For the winners / losers computation, one thing that's clear is that land value taxes are highly progressive. Rich people own most of the land. There are no tax loopholes to evade land taxes.

That's the real reason it "won't work." Enormous vested interests oppose it. Of course, an engaged and educated populace could overcome that. Or an enlightened elite class who realized they could boost overall wealth and technological advancement with efficient fiscal policy... short run pain for elites in exchange for long run benefits (for them and everyone else).

> Enormous vested interests oppose it.

> Of course, an engaged and educated populace could overcome that.

The "populace" is the "vested interest" that opposes it! 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.

As a general point, I think housing is the major weak policy point for the left. The overarching theory that drives their politics is that the wealthy and powerful are the major barriers to positive change. Housing is the one area where that isn't true; the barrier to improvement is the "average" person.

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

#187

Post by neilparikh »

zapataband1 wrote: post #75

Really thorough argument. While it seems like a great idea, the last bit is what gets me: the wealthy owns the vast majority of the land. Our gov is effectively captured by financial interests. At what point will the rich give this up? We can come up with a million reasons for taxation but the rich will evade them like it's their job. The problem is still wealth inequality caused by greed. I had never heard of Georgi…

(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.

As a general point, I think housing is the major weak policy point for the left. The overarching theory that drives their politics is that the wealthy and powerful are the major barriers to positive change. Housing is the one area where that isn't true; the barrier to improvement is the "average" person.

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

#188

Post by tofukid »

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?

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

#189

Post by ac29 »

whakim wrote: post #183
lmm wrote: post #128

Earlier quoted context omitted.

Owning huge amounts of land is uniquely antisocial in a way that owning huge amounts of other stuff isn't. If Mr Moneybags buys ten thousand paintings, we can always produce more paintings (and the rising price of paintings will push more people to take up careers in art). But if Moneybags buys ten thousand acres, the rest of us are ten thousand acres worse off in a way that we can't really fix.

So why not tax gold or bitcoin or the Mona Lisa if the main difference between taxable assets and non-taxable assets is scarcity?

Everyone needs a certain number of square meters to live, work, and grow food in (or indirectly, for others to grow food for them). The same isn't true for the assets you mentioned.

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

#190

Post by lmm »

whakim wrote: post #183
lmm wrote: post #128

Earlier quoted context omitted.

Owning huge amounts of land is uniquely antisocial in a way that owning huge amounts of other stuff isn't. If Mr Moneybags buys ten thousand paintings, we can always produce more paintings (and the rising price of paintings will push more people to take up careers in art). But if Moneybags buys ten thousand acres, the rest of us are ten thousand acres worse off in a way that we can't really fix.

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 value of gold is mostly the cost of labour etc. to extract it; to the extent that it's just the value of the land that it was dug out of, sure, I'd support taxing it. Most Georgists support extending the land value tax to other kinds of economic land e.g. slices of radio spectrum. But physical land is the big one that affects society (particularly because everyone needs some land to live on), so it's the most important one to tax.
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