Drlee wrote:Of course I understand TTPs Georgist feelings.
Just not the facts they are based on.
I do not disagree with George that (especially in his day) land rent tend to capture some of the surplus from economic progress.
It takes all the surplus, and often even more, as George explained; and the fraction of GDP taken in land rent is significantly larger now than in George's day, as the Law of Rent dictates. Even more recently, in my grandfather's day, you could buy a single family building lot in a newly developed area for a year's after-tax wages. Now it's 5 years' wages, 10 years', or even more, because THE MORE WE HAVE TO PAY IN TAXES ON EVERYTHING BUT LAND, THE MORE WE HAVE TO PAY FOR LAND.
This was certainly more marked in George's time than it is now.
Garbage. It is far more marked now, as the astronomical value of land relative to labor just flat-out PROVES.
I am certainly no economist but Stiglitz is and he also agrees with a land tax versus other forms of taxes aimed at income redistribution and it is hard to argue with him.
Most of the greatest economists have known that location subsidy repayment is the fairest and most efficient form of taxation. Here is an open letter to Mikhail Gorbachev signed by dozens of eminent western economists including four (count 'em, FOUR) Nobel laureates, urging him to retain land in public ownership and recover its rent as the principal source of public revenue in the desocializing USSR:
Dear Mr. Gorbachev:
The movement of the Soviet Union to a market economy will greatly enhance the prosperity of your citizens. Your economists have learned much from the experience of nations with economies based in varying degrees on free markets. Your plans for freely convertible currency, free trade, and enterprises undertaken and managed by individuals who receive the profit or bear the losses that result from their decisions are all highly commendable. But there is a danger that you will adopt features of our economies that keep us from being as prosperous as we might be. In particular, there is a danger that you may follow us in allowing most of the rent of land to be collected privately.
It is important that the rent of land be retained as a source of government revenue. While the governments of developed nations with market economies collect some of the rent of land in taxes, they do not collect nearly as much as they could, and they therefore make unnecessarily great use of taxes that impede their economies--taxes on such things as incomes, sales and the value of capital.
Social collection of the rent of land and natural resources serves three purposes. First, it guarantees that no one dispossesses fellow citizens by obtaining a disproportionate share of what nature provides for humanity. Second, it provides revenue with which governments can pay for socially valuable activities without discouraging capital formation or work effort, or interfering in other ways with the efficient allocation of resources. Third, the resulting revenue permits utility and other services that have marked economies of scale or density to be priced at levels conducive to their efficient use.
The rental value of land arises from three sources. The first is the inherent natural productivity of land, combined with the fact that land is limited. The second source of land value is the growth of communities; the third is the provision of public services. All citizens have equal claims on the component of land value that arises from nature. The component of land value that arises from community growth and provision of services is the most sensible source of revenue for financing public services that raise the rental value of surrounding land. These services include roads, urban transit networks, parks, and public utility networks for such services as electricity, telephones, water and sewers. A public revenue system should strive to collect as much of the rent of land as possible, allocating the part of rent derived from nature to all citizens equally, and the part derived from public services to the governmental units that provide those services. When governments collect the increase in land value that results from the provision of services, they are able to offer services at prices that represent the marginal social cost of these services, promoting efficient use of the services and enhancing the rental value of the land where the services are available. Government agencies that use land should be charged the same rentals as others for the land they use, or services will not be adequately financed and agencies will not have adequate incentive or guidance for economizing on their use of land.
Some economists might be tempted to suggest that the rent can be collected publicly simply by selling land outright at auction. There are a number of reasons why this is not a good idea. First, there is so much land to be turned over to private management that any effort to dispose of all of it in a short period would result in an extreme depression in prices offered. Second, some persons who could make excellent use of land would be unable to raise money for the purchase price. Collecting rent annually provides access to land for persons with limited access to credit. Third, subsequent resale of land would enable speculators to make large profits unrelated to any productive services they offer, resulting in needless inequity and dissatisfaction. Fourth, concern about future political conditions would tend to depress offers. Collecting rent annually permits the citizens of future years to capture the benefits of good future public policies. Fifth, because investors tend to be averse to risk, general uncertainty about the future will tend to depress offers. This risk aversion is sidestepped by allowing future rental payments to be determined by future conditions. Finally, the future rent of land can more justly be claimed by future generations than by today's citizens. Requiring annual payments from the users of land allows each year's population to claim that year's rent. While the proceeds of sales could be invested for the benefit of future generations, not collecting the money in advance guarantees the heritage of the future against political excesses.
The attached Appendix provides a brief technical discussion of issues of the duration of rights to use land, the transfer of land, the assessment of land, social protection against the abuse and subsequent abandonment of run-down property, and redistribution among localities to adjust for differences in natural per capita endowments. While these issues need to be addressed, none of them present insoluble problems.
A balance should be kept between allowing the managers of property to retain value derived from their own efforts to maintain and improve property, and securing for public use the naturally inherent and socially created value of land. Users of land should not be allowed to acquire rights of indefinite duration for single payments. For efficiency, for adequate revenue and for justice, every user of land should be required to make an annual payment to the local government, equal to the current rental value of the land that he or she prevents others from using.
Nicolaus Tideman, Professor of Economics
Virginia Polytechnic Institute and State University
William Vickrey, President for 1992
American Economic Association
Mason Gaffney, Professor of Economics
University of California, Irvine
Lowell Harriss, Professor Emeritus of Economics
Jacques Thisse, Professor of Economics
Center for Operations Research and Econometrics
University Catholique de Louvain, Belgium
Charles Goetz, Joseph M. Hartfield Professor of Law
University of Virginia School of Law
Gene Wunderlich, Senior Agricultural Economist
Economic Research Service, U.S. Department of Agriculture
Daniel R. Fusfeld, Professor Emeritus of Economics
University of Michigan
Elizabeth Clayton, Professor of Economics
University of Missouri at St. Louis
Robert Dorfman, Professor Emeritus of Political Economy
Carl Kaysen, Professor of Economics
Massachusetts Institute of Technology
Tibor Scitovsky, Emeritus Eberle Professor of Economics
Susan Rose-Ackerman, Eli Professor of Law and Political Economy
Yale Law School
James Tobin, Sterling Professor Emeritus of Economics
Richard Musgrave, Professor Emeritus of Political Economy
Franco Modigliani, Professor Emeritus of Economics
Massachusetts Institute of Technology
Warren J. Samuels, Professor of Economics
Michigan State University
Guy Orcutt, Professor Emeritus of Economics
Eugene Smolensky, Dean of the School of Public Policy
University of California, Berkeley
Ted Gwartney, Real Estate Appraiser and Assessor
Oliver Oldman, Learned Hand Professor of Law
Zvi Griliches, Professor of Economics
William Baumol, Professor of Economics
Gustav Ranis, Frank Altschul Professor of International Economics
John Helliwell, Professor of Economics
University of British Columbia
Giulio Pontecorvo, Professor
Graduate School of Business, Economics and Banking, Columbia University
Robert Solow, Institute Professor of Economics
Massachusetts Institute of Technology
Ithaca, New York
Harvey Levin, Augustus B. Weller Professor of Economics
http://www.earthrights.net/docs/letter_ ... achev.html
I guess it is fair to say that there is widespread support for increased land value taxes and I agree with many of them.
No, the support for location subsidy repayment is quite narrow, as it is restricted to those who are intelligent, informed, and honest.
The problem is that as a practical matter they are devilishly hard to administer
No. Land value taxation is so simple, it was used successfully even in ancient societies where hardly anyone could read.
and politically almost impossible to enact.
True. Political parties, even of the left, are completely in thrall to landed interests.
How do you decide how to fairly do it?
It would be almost impossible to do it in a way that was less fair than not doing it.
Does the urban farmer with an extra quarter of an acre have to build on the property to pay the taxes?
The rule is quite simple and indisputably fair: you are preventing others from using the land; so either use it productively enough to make just compensation to them for what you are taking from them, or relinquish the land to someone who will.
Will elderly urban homeowners find themselves unable to keep the family home?
Possibly. One of the benefits of liberty and justice is that they encourage more efficient and productive allocation of scarce resources.
The more important question is: By what right do elderly urban homeowners prevent others from accessing and using the services and infrastructure government provides, the opportunities and amenities the community provides, and the advantageous physical qualities nature provides at that location? They did not create that location, and they did not create its value. By what right do they appropriate it for themselves, and stop others from using what they would otherwise be at liberty to use?
Will the complexion of our cities change as land taxes encourage/force people to cram more and more folks onto less and less land?
They will certainly be better, as more compact development enables better use of infrastructure investment. Cities, in case you hadn't noticed, are places where cramming more and more folks onto less and less land is the best way to solve many problems. And before you make a fool of yourself with more false claims, consider the implications of the fact that a park can increase the value of nearby land by more than the value of the land it occupies. Land value taxation, uniquely of all taxes, aligns government's financial incentives with the public interest in efficient public spending and optimum land use.
Do we want cities with only multifamily housing
Those who could afford to make just compensation to the community for what they are taking from others would still be able to afford single family homes. Why do you want some people to be privileged to steal from others and not make just compensation for their thieving?
and the possibility of single family home ownership beyond the dream of the average worker?
WHAT DO YOU THINK HAS ALREADY HAPPENED, IN THE ABSENCE OF LVT, HMMMMMMMMMMMMMM?
The truth is, single family homeownership would be much MORE accessible for the average worker under LVT, because he wouldn't have to pay for a ticket on the landowners' escalator, and would only have to pay for government services and infrastructure once, instead of twice. Until you can wrap your head around such facts, nothing you have to say on this subject will be accurate or of any interest.
How do you phase such a tax in without bankrupting landowners forced to repurpose their land to pay the tax.
Two major ways: a uniform per-capita individual exemption analogous to the individual income tax exemption, and an amortizing exemption for the purchase value of the land.
And FYI, it is factually incorrect to claim that any landowner would be "forced" to "repurpose" their land: if they did not want to use it productively enough to make just compensation to the community of those whom they are depriving of it, they would have a simple remedy: relinquish the land, sell the improvements at their market price, and seek a location better suited to their needs and means.
So I tend to agree with Hayek that the challenges of assessment nearly insurmountable.
And you are consequently just as wrong as Hayek. Every professional real estate appraiser proves Hayek wrong, and a fool, an ignoramus, or a liar, every working day of his life.
What everyone agrees on though is that addressing income inequality through land taxes (and that is where this ultimately goes) would take decades to implement and would be devilishly hard to do.
Not everyone agrees with that, because it is false. It could be done in one year, and would actually be easy -- except POLITICALLY, because too many people have made themselves financially dependent on injustice, much as they did by buying slaves in former times, making it devilishly hard to emancipate the slaves. The only difference between slavery and landowning is that slavery removes people's rights to liberty one person at a time, landowning removes them one right at a time. This is enough to fool most thoughtless people into believing landowning is meaningfully different from slavery. It's not.
And the process would involve making profound decisions about what we want our future to look like.
Right: do we want to continue with the current system where our future will look like more tyranny, oppression, injustice, instability and poverty, or do we want a future of liberty, justice, and prosperity with LVT?
More importantly though is that there are steps we can take immediately to help deal with the problem.
But nothing we do will actually solve the problem until we address the land problem. Everything we try to do for workers and consumers will just end up increasing the subsidy to landowners at the expense of workers, consumers and taxpayers.
We can work on health care.
Landowners will just charge everyone else full market value for access to it.
We can end business subsidies (especially those that depress wages).
That would be a positive step, as subsidies typically just go straight to landowners. But that isn't going to solve the poverty problem.
We can consider public sector employment programs.
Nope. Won't work. If you put people to work supplying desirable services or infrastructure, it will just increase the rents they have to pay landowners for access to those services and infrastructure.
We can look at minimum wage levels.
Won't work. They'll just have to pay more rent to their landlords for access to minimum wage job opportunities.
That kind of stuff.
None of which will solve the problem until you solve the land problem.
We've been here. All this stuff has already been tried, and it has never worked. The only thing that can possibly work -- solving the land problem -- is the only thing the socialist left refuses to try, because it involves liberty, justice, and truth, and socialists will have none of that.
One thing that a LVT could theoretically do is raise so much revenue that the state might consider some sort of national earnings floor for all citizens.
Yes, but it would be better to implement a universal individual LVT exemption, restoring people's right to access opportunity, and invest more in public services and infrastructure the market can't provide efficiently, making access to that opportunity even more valuable.
That will not play well with competing ideas in American politics though I would be willing to risk trying.
Americans love universal individual tax exemptions. It would certainly have been impossible to pass an income tax without one. So that solves that problem.