Does Georgism work? Is land a big deal?

Not at all. I'd just prefer more redistribution.

Do you have an example? I'm not aware of any instance of a general change that lowers property values causing the gov't to have to compensate landowners. The "taking" of which I'm aware is use of eminent domain to expropriate land, which requires fair compensation to the owner.

I don't know. I do know that 99 Church Street sold for $170 million, and was demolished, so that that figure is the land price (before adding back the cost of demolition).

> Sure, an improvement may result in higher property taxes which go into effect before the value of the improvement begins being realized, but overall effective property tax rates in the US range between 0.37% and 2.22% per year; this plausibly could make uses where the value would be realized entirely in direct-use by the owner unviable, but there is no way it makes any use where the value is realized through commercial exploitation (whether productive or rent) unviable, even with something of a delay in realization.

Why not?

Suppose you could invest $100,000 to create housing in an area where that would have a 5.5% ROI, compared to a 5% ROI for some non-housing alternative investment with equivalent risk. Then you're going to build housing. Add a 1% property tax and you're going to invest the money in the other thing instead until local rents increase to raise the housing ROI.

> No, especially if they are heavy (as LVT proponents often propose), they don’t merely “stop discouraging” improvements, they make them necessary, because land uses that don’t provide a substantial fraction of the income potential of the land become unviable.

That doesn't actually change the math.

Suppose you could spend $100,000 to construct more housing on your property and then, in the local housing market, the additional housing would have a net present value of $90,000, e.g. because local rents are already low. Then you're not going to do it, because you'd just lose $10,000.

If you suddenly owe a lot of land value tax, you're still not going to do it, because losing $10,000 more doesn't help you pay the extra tax.

Whereas if you could spend $100,000 to produce something with a net present value of $200,000, you were going to do that either way.

The weirdest thing about LVT is that if you got rid of the disincentive to build from property tax (and, of course, restrictive zoning) then the "land value" would crash because if rents were higher than construction costs then construction would happen until they weren't. At which point housing scarcity would be low and collectable rents would be predominantly attributable to construction costs, and only higher in cities to the extent that higher density structures have a higher construction cost per unit area.

But the same thing happens just by getting rid of property tax and restrictive zoning, doesn't it?

> I don't know what that means.

In Henry George’s terminology, he decomposed income into three components based on the three factors of production. Income from competitive labor is called wages, income from competitive capital is called interest, and income from land and other noncompetitive monopolies is called rent. He proposed to tax land and other monopolies heavily, while exempting labor and capital from tax. What I meant is that a progressive income tax has higher rates for people and companies with high profits while exempting capital and labor expenses, which is similar to the Georgist idea of taxing monopolies more heavily than capital and labor.

> You can read the details in "The Flat Tax: Updated Revised Edition"

Thanks for giving the reference to Hall and Rabushka https://www.hoover.org/research/flat-tax. Previously you mentioned making the curve progressive, which is not a flat tax so I just assumed you meant income tax.

In comparison to the current income tax, it seems that Hall and Rabushka do not exclude business interest expenses or personal mortgage interest, but they still do exclude wage expenses. Wages are progressive at the low end (due to the personal allowance) but their tax is not otherwise progressive. And they totally exclude personal capital gains from taxation (such as the sale of your house) (although the current income tax is not very good at taxing capital gains of real estate).

Basically, the point of the flat tax seems to be to eliminate complicated deductions, credits, and depreciation, and they are skeptical of progressivity which they see as “redistribution”.

Note that they themselves admit that their flat income tax should be combined with property taxes: “We believe that taxing housing is properly ceded to local governments under our federal system. Local property taxes capture part of the value of the services of a house.” (from Chapter 5: Q&A)

> Its a harmful distortion of the price system.

I disagree that LVT (tax on scarcity rents) is a harmful distortion on prices. Chapters 1-4 of Rethinking the Economics of Land and Housing is a good book on this topic. https://www.amazon.com/Rethinking-Economics-Land-Housing-Rya... As you note, the whole point of prices is to incentivize capital investment. But the difference with land is that it has a vertical long-term supply curve, so more money in land does not result in the creation of any more land; it’s just a transfer payment to the old owner.

Ownership of natural resources is a major undeserved source of inequality. We see the inequality playing out in San Francisco: residents who happened to own land became rich, whereas residents who did not own land became impoverished, just as Henry George wrote: “it is as though an immense wedge is being driven through the middle. Those above it are elevated, but those below are crushed” https://www.henrygeorge.org/pchp0.htm. It is better for the poor and better capital allocation to “distort” the economy to prevent extreme inequality between rentiers and laborers+capital.