Georgism • Hacker News Board

Re: Georgism

#251

Post by CydeWeys » Sun, May 17, 2020, 11:59 PM UTC

epistasis wrote: post #158

CydeWeys wrote: post #139

Earlier quoted context omitted.

I've never seen the numbers proposed in a way that makes sense. We know what the total budget is right now, at a national, state, and local level. And we know where that income is coming from -- mostly a mix of income, property, sales, payroll, corporate, and other taxes. And crucially we know exactly what the breakdown of that taxation burden is on various people in various financial situations. I want to see the nu…

The problem with looking at it this way is that we can see what will happen in the first months or years of the new tax system, because values take a while to change. But what we really care about is what the system looks like a decade in, after property values have massive changes. And what it looks like 50 years in, after cities have been remade to reflect the shift in tax costs. I don't think any modern day Georgi…

I don't think there's many people that want what essentially amounts to a 50-year revolution. It seems implausible that something like that would ever succeed; it would be long-aborted before then because citizens (rightfully) will not wait two generations for results.

Re: Georgism

#252

Post by IIAOPSW » Mon, May 18, 2020, 12:17 AM UTC

brudgers wrote: post #248

LVTfan wrote: post #210

Earlier quoted context omitted.

Frederick Law Olmsted realized early on that even a huge project like Central Park could be funded from the increase in land value it created in the neighborhoods surrounding it.

The risk when extrapolating from Manhattan is when extrapolating to places significantly unlike Manhattan. When Central Park was started, Manhattan already had a population density in excess of 10,000 people per km^2. Even Boston today is little more than half that. Munich, less than half. San Jose little more than one fifth. Central Park worked because the existing density was already high and there was no way for M…

>Central Park worked because the existing density was already high and there was no way for Manhattan to grow outward

Central Park was built before the first subway and before the bridges connecting Brooklyn, Queens and Jersey. The dirt dug from the tunnels was added to lower Manhattan. Prior to elevators buildings rarely went higher than 5 stories. There was in fact ways for Manhattan to grow outwards (effectively).

Re: Georgism

#253

Post by jl2718 » Mon, May 18, 2020, 12:22 AM UTC

AnimalMuppet wrote: post #173

jl2718 wrote: post #130

Earlier quoted context omitted.

It works if everybody puts up a defensive value because tax rates would drop for constant revenue. Also consider how much value would be assessed for all property, e.g. google.com. In the US there is $16T currency, $38T stocks plus a roughly equal amount in corporate internal valuation, ~$30T small business, $33T houses, $17T commercial real estate, plus commodities, any other mark to market securities, vehicles, col…

OK, wait a minute. The tax is on the value of the land , right? It's not supposed to change just because I build a house on it, right? (Though having power and sewer to the lot may improve the value.) So if I don't value it highly enough myself, someone else can come in and take the land. But the house is on the land. So I'm going to have to adjust the price to the actual price of the house + land, or someone else wi…

Yes; that’s true, it’s not a land tax. But many have pointed out that land fails to capture the scarce raw material that makes up an economy, such as human attention. These are very hard to assess. Land is too, and frankly the productivity of land alone is probably not enough to pay for the government, so all profits get collected as tax and the value of the land drops to zero.

Re: Georgism

#254

Post by nostrademons » Mon, May 18, 2020, 12:22 AM UTC

naravara wrote: post #205

NumberWangMan wrote: post #67

A lot of people focus on the fairness of the Land Value Tax, but the consequences of using one are just as interesting if not more. This tax has been put into practice in some cities in Pennsylvania, and there's evidence that it has a whole bunch of positive effects on the city, due to the way that it incentivises improving your property and making the most of your land (since you're going to be taxed on it pretty mu…

You would probably want to include some tax advantaged incentives to maintain a bit of public space, public art, parks, or just green spaces. Giving over some portion of your land for public benefit, even if limited use, should be encouraged rather than penalized. It would also encourage more interesting usage patterns and development than pure land-use maximization would do. The latter might have you end up with blo…

There is a theorem (called the "Henry George Theorem", but ironically discovered by Joseph Stiglitz in 1977) [1] that an LVT in the presence of democratic government results in an optimal tax rate and allocation of public/private benefits, and that an LVT can solely fund government.

The idea behind the theorem is that all of these public benefits - open space, parks, museums and cultural attractions, mass transit, transportation, safety, etc. - increase the relative attraction of living in a location. Hence, they raise the rents that landlords can charge. Places like NYC or the Bay Area are attractive in a large part because of public investments in social goods there. The increase in rent due to public goods is specifically the increase in land value - private improvements to an individual property are not reflected in the LVT, but that portion of the property's value that is common among all properties in the area is.

Therefore, every landowner has an incentive to pass a tax increase iff it will raise the rent they can collect (or the implicit rent, for an owner-occupied property) by greater than the amount of the tax. And they have an incentive to ensure that the tax is spent on benefits that actually improve the appeal of living in a place, because otherwise they're losing money on the deal. Hence the theory implies that a LVT is not only the optimal way of collecting revenue for a government, but also leads to an optimal size of government, making it popular among many left-libertarian types.

[1] https://en.wikipedia.org/wiki/Henry_George_theorem

Re: Georgism

#255

Post by crazygringo » Mon, May 18, 2020, 12:26 AM UTC

VHRanger wrote: post #243

crazygringo wrote: post #203

Earlier quoted context omitted.

I don't believe so. It's considered to remove distortions in land use , as compared to property taxes that include the value of structures. In other words, you get less vacant lots and more productive use of land. Which there are good arguments for. But proposing to replace income and sales taxes with land value taxes, making it the primary tax -- which would necessarily skyrocket the land value tax to produce the sa…

> I don't believe so. Thanks for giving your off the cuff opinion against a consensus of people studying the question > which would necessarily skyrocket the land value tax to produce the same tax revenue at the end of the day -- would be extremely distortionary. It's distortionary against the existing distortions, by reducing them. Anything reducing tax distortions is "distortionary" by your argument's logic

Thanks for assuming that it's an "off-the-cuff opinion", as opposed to what might have been gathered from a great deal of expert reading. I was trying to be polite -- unlike yourself, sadly.

Why don't you educate yourself? Starting here:

https://en.wikipedia.org/wiki/Optimal_tax

As you can plainly see, land value tax is hardly the centerpiece of strategies to minimize distortion. In fact, it's left for the end of the last section of the article. Because while it's a proposal for sure, it's certainly anything but a consensus, in reality.

Re: Georgism

#256

Post by nybble41 » Mon, May 18, 2020, 12:31 AM UTC

TheCoelacanth wrote: post #244

free_rms wrote: post #124

Earlier quoted context omitted.

So it's all on the assessor to decide the 'proper' unimproved land values to raise enough revenue while not driving the wrong people out of business? At a national scale? On that note, is the inherent land value of a lot in Bushwick way higher then 20 years ago now that they've gentrified? Is neighborhood desirability an 'unimproved' attribute? I very much get where you guys are coming from in a philosophical sense,…

That's the same assessments for property taxes work now except that they are looking at the value of improvements in addition to the value of the unimproved land.

Sure, except that there is an objective standard for total value with improvements (the sale price) and there is no such standard for the "unimproved" value of the property. No one is going to tear down any existing improvements and leave the land untouched to revert back to nature for a century or so before putting it up for auction. The dividing line between "improved" and "unimproved" value is arbitrary, and biased against the property owner.

What LVT proponents really want is some kind of oracle that will tell them just how much of the (estimated) market value of a property is due to the direct efforts of the past and present owners of the property and how much is external benefit from the actions of others. Two problems with this approach are (a) there is no such oracle and (b) the "unimproved" value includes external benefits property owners provide to their communities which are not included in the assessed value of any obvious material improvements to their own properties. There is something fundamentally self-defeating in any proposal which would result in taxing people extra for their contributions to the public good.

The idea that land has any "unimproved value" to be taxed is flawed from the start. In fact land has no economic value until someone claims it and puts it to use. If you walled off a piece of land such that no one could reach it, even an otherwise choice parcel in the middle of Manhattan, it might as well not exist. All economic value is the result of human improvements, though they don't always take the form of physical changes to the property. LVT takes physical improvement as a proxy for improvements attributable to the property owner(s), but this is at best a lower bound and significantly understates the owners' own contributions to the property value.

Re: Georgism

#257

Post by nostrademons » Mon, May 18, 2020, 12:33 AM UTC

CydeWeys wrote: post #251

epistasis wrote: post #158

Earlier quoted context omitted.

The problem with looking at it this way is that we can see what will happen in the first months or years of the new tax system, because values take a while to change. But what we really care about is what the system looks like a decade in, after property values have massive changes. And what it looks like 50 years in, after cities have been remade to reflect the shift in tax costs. I don't think any modern day Georgi…

I don't think there's many people that want what essentially amounts to a 50-year revolution. It seems implausible that something like that would ever succeed; it would be long-aborted before then because citizens (rightfully) will not wait two generations for results.

More likely that we'll see a disintegration of the dominant 20th-century political order (anyway; independent of Georgism), and then a number of local communities will try different socioeconomic systems in the rubble. Hopefully some will try Georgism, they'll do better than their neighbors that try say socialism or fascism, and over that 50 year period the best economic system will win. If there's free migration between states then people will vote with their feet; if there's not you'll likely see successive state collapse and revolution in the states that do not have systems that meet the needs of their people.

Re: Georgism

#258

Post by nostrademons » Mon, May 18, 2020, 12:36 AM UTC

CydeWeys wrote: post #139

free_rms wrote: post #101

Earlier quoted context omitted.

If the arithmetic for this tax scheme doesn't seem to remotely work out, ruminations on the nature of infinity aren't going to set me at ease with it. Here in the finite world, most of the money moving around is in services, while most of the land is disconnected from that economy. How are you getting 1-2 trillion in tax revenue from land without making, say, farming economically unviable? Will it just be riddled thr…

I've never seen the numbers proposed in a way that makes sense. We know what the total budget is right now, at a national, state, and local level. And we know where that income is coming from -- mostly a mix of income, property, sales, payroll, corporate, and other taxes. And crucially we know exactly what the breakdown of that taxation burden is on various people in various financial situations. I want to see the nu…

One of the other consequences of an LVT is that it creates incentives to "right-size" the government, since the people who benefit from public goods are the ones funding them. It's very likely that the government is wrong-sized right now. We should expect a pretty dramatic change in the structure and size of government with the adoption of Georgism (or more likely, we shouldn't expect to adopt Georgism within the existing political system but it could be an option for a new nation).

Re: Georgism

#259

Post by joe_the_user » Mon, May 18, 2020, 12:44 AM UTC

TheCoelacanth wrote: post #244

free_rms wrote: post #124

Earlier quoted context omitted.

So it's all on the assessor to decide the 'proper' unimproved land values to raise enough revenue while not driving the wrong people out of business? At a national scale? On that note, is the inherent land value of a lot in Bushwick way higher then 20 years ago now that they've gentrified? Is neighborhood desirability an 'unimproved' attribute? I very much get where you guys are coming from in a philosophical sense,…

That's the same assessments for property taxes work now except that they are looking at the value of improvements in addition to the value of the unimproved land.

Sure, it's the same process ... but it's now putting a lot more weight something that's more nebulous - just the value of the land. Now, whether the final price of a property is the land or the improvements isn't important and so as long as an appraiser matches the market, they can be considered more or less right, whatever weight.

The situation is almost tautological. I mean, suppose Amazon builds a giant shipping depot in the middle of nowhere. The land was worth nothing before. Without the depot, it would be worth nothing now. Then town arises around giant depot. Town tries to raise taxes on Amazon says "still worth nothing if we leave". Who's right?

Re: Georgism

#260

Post by nybble41 » Mon, May 18, 2020, 12:44 AM UTC

snidane wrote: post #179

rikroots wrote: post #159

Earlier quoted context omitted.

The Inquiry didn't kill LVT, and efforts to promote it haven't stopped just because Lyons didn't recommend it as a solution going forward. > ... extremely wealthy landlords ... killing LVT LVT would not be an appropriate method for targeting tax extraction from extremely wealthy landlords. They would (probably) make up their losses through rent increases and additional service charges - effectively passing on the tax…

This has been shown to be false already. Landlords cannot pass tax burden of LVT to tenants. "The producer is unable to pass the tax onto the consumer and the tax incidence falls on the producer. In this example, the tax is collected from the producer and the producer bears the tax burden. This is known as back shifting." From section "Inelastic supply, elastic demand" https://en.m.wikipedia.org/wiki/Tax_incidence If…

Perhaps individual landlords can't raise rents but the burden will still be passed to the tenants in the end. If you cut the profits of landlords enough to be statistically significant then it will cease to be profitable to be a landlord. (Former) landlords will then invest their money elsewhere, leaving people to buy their own property instead of renting, which incidentally means that they're paying the LVT themselves as well. The end user of the property always pays, no matter what clever scheme you cook up to squeeze money out of the underappreciated middleman.

Being a landlord is not some easy path to free money. It is a great deal of trouble and expense for (usually) marginal profit, and yet somehow people manage to be uniquely ungrateful for the services being performed on their behalf even as they freely choose to rent rather than own.