Comment by Nevermark | Hacker News Reader

Comment by Nevermark | Hacker News Reader

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If land was taxed (the physically exclusionary resource that should be taxed), but property/development on it was not, the economics of building big and building up would be much cheaper. No more annual wealth tax (on the same value, year after year!) on development.

And holding land to parasitically benefit from neighbors improving the neighborhood would become unprofitable. With land no longer a money parking/hedging instrument of the rich, all that non-functional demand would disappear and land would get cheaper.

Interesting that eliminating a recurrent wealth tax would help the non-rich so much. (Who could also improve their properties without raising their own taxes).

But carefully aligning incentives in the market, in the direction of encouraging not disincentivizing investment on par with other options, I.e. not treating different kinds of investments differently tax wise, usually helps everyone in the end.

Today a wealthy person with one house on 100 acres, pays a significantly lower tax per acre than a regular person with that same house on a fraction of an acre. The poor are subsidizing rich land ownership.

This seems like a system that can only work in a fully urbanized country.

Otherwise, a nonexhaustive list of problems it seems guaranteed to cause:

- Push those currently in rural poverty over the edge into homelessness. Their homes will stand vacant and fall to ruin, leaving large swaths of land dotted with the wreckage of houses, trailers, and even whole villages. Some of it will be highly toxic. Many of the people will die, because the area they're in has precious few services for them, and they're too far from cities, with no means of getting there (because their cars have already been repossessed).

- Destroy green spaces. Parks, wildlife refuges, and even fallow fields are vital for the health of our ecosystems, the conversion of CO2 into oxygen, erosion prevention, temperature mitigation, and even mental health. And that's assuming there are explicit exemptions for farmers.

- Wreck entertainment businesses like theme parks, water parks, etc.

I'm deeply skeptical that a land-value-tax system can be calibrated so that it's sufficient incentive for developers to build up within a city, while not also causing these devastating knock-on effects in rural and suburban areas. And regardless of one's feelings about urban vs suburban vs rural living, I think we can probably all agree we don't actually want to make the entire surface of our planet into skyscrapers.

Your reversing the effect.

A steeper land tax, but no development tax, discourages sprawl and incentivizes parsimonious & maximally effective use.

Which would be the opposite dynamic to the one you are concerned about.

An income tax break on food production would be a good way to keep food prices lower, while maintaining a farmers incentive to use land efficiently.

And is good economics: matching a national tax break directly to a real national commons benefit, food security, while maintaining efficiency incentives.

I still don't see how this doesn't punish non-rich people in rural areas.

ETA: You seem to have edited your post after I made mine. However, your edit does not in any way explain how "steeper land tax" does not hurt people in rural areas. I'm not concerned with sprawl; I'm concerned with rural people near the poverty line being taxed out of their homes with no recourse.

Also, "income tax breaks for food production" a) do not scale proportionally with farmer land use, and b) would seem, on first glance, to encourage overfarming, rather than letting fields lie fallow periodically, which would be a short-term gain for long-term losses and damage to the soil.

Those are good questions.

In total taxes stay the same (for an area), with empty land tax increasing, land with property decreasing (because the property taxes disappear, and land tax increases proportionally to result in the same total tax).

So it will impact different people in an area, with different situations, differently obviously.

But you are clearly right, there will be additional factors that need to be handled.

The umbrella principle, is the law should simply correct a market's oversight of external/commons costs and needs, in proportion to their real value. Then the market can do its job of optimizing resources properly.

Things like farming practices that impact land value, should be incentivized or disincentives in direct proportion to the real value being lost or gained.

(Another addition would be that any tax change impacting investments already made, should transition over a time interval long enough individuals and businesses to realign their private economics, without sudden hardship.)

That's Henry George.

I don't understand all consequences yet, except one, that the wealthy and powerful object to it because it hurts them and so the Land Value Tax is rarely introduced. Even if it gets introduced, it will abolished soon thereafter.

> That's Henry George.

Yes! He was a very clear thinker. Refreshing when you find someone who manages to see things as they are, right in front of you the whole time, independent of the numbing filter of unexamined cultural momentum.

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> the wealthy and powerful object to it

The poor, whose property to land ratio is high (even if they individually own very little in absolute terms), subsidize the rich whose property to land ratio is low (even if in absolute terms they own more). And it compounds, because this makes land, like Bitcoin, a place to park money and reap the rewards of other people's growing population demand for something limited, and other people's investment in development. So housing for anyone but the rich becomes more and more of a financial challenge. And market warping mechanisms are tried, like rent freezes, etc. But somehow, simply taxing the precious limited resource (land) more, and dropping the tax on developing useful property on land, which is what is required to increase housing, rarely gets tried. And as you say, quickly gets reversed when it happens.

So many ways the poor, middle class, and not so rich, pay the taxes of the very rich.

And the very rich do a very good job of framing things, so the want-to-be rich believe they need to keep things that way -- to their own, and everyone else's, detriment.

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