Does Georgism work? Five years later
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We're about to have a board vote eliminating single-family zoning (I expect us to win) and this rings extremely true about local politics. If you count "votes" in Facebook comments --- Facebook is where all our local politics happen --- you'd think this is the most contentious issue in the world. But in our last mayoral election, you'd draw the same conclusion about the race being tight, and in fact the progressive rinsed the moderate by a huge margin.
The same thing is very true of public meetings; the turnout for comment at those things is almost never representative of the area's median sentiment. "No" turns out for everything; "yes" rarely does.
I spend a lot of time in online arguments with opponents, on the theory that I'm not really writing to the person I'm arguing with but rather to everyone quietly reading comments. But it's almost certainly the case that the only conversations that have really mattered have been with electeds themselves.
You never know until you try.
after five years in the trenches of local housing/urban policy in my city, this is my biggest takeaway. i don’t think i’ve ever even once changed someone’s mind who was a staunch NIMBY, even with a reputation as one of the most accessible and persuasive local policy advocates/writers. but I have been able to build coalitions of hundreds of people by finding people who were already mostly with me, and just shifting them from inactive->active.
there’s also a lot of power in the energy of building for the future. when we passed our big SFH elimination ordinance two years ago, we had a packed city council meeting that, numerically, had 50/50 of residents speaking for/against. but for the city council, watching a parade of retirees 65+ come up and say the same thing over and over again (“i’m not sure this is right for our city”) vs an equal sized but diverse group of people of all ages and life stages speak about all of their different housing needs and dreams for the future, the weight in the room was overwhelmingly in favor; the new zoning passed unanimously.
The right learned this a long time ago. Persuasion does not matter. Our system is winner take all. Winning is all that matters. Online debate is a waste of time. Find your base and activate them instead.
"Yes you worked your whole life for that house that you carefully chose and maintained, but we want to send its value through the floor because we're more powerful".
Around here (Metro DC), that simply hasn't happened. There's so much pent up demand for housing that at worst, the appreciation has slowed, but I'm not even convinced that's happened, as the infill/redeveloped land is actually being used and generating economic activity (vs parking lots or old flats and offices nobody wanted).
What did you do to deserve the massive raise in value of land since you bought that house besides buying early?
Yesterday’s home appreciation is today’s price increase for new home buyers. In most places in the US, home prices have far outpaced inflation for several decades now.
It seems silly to even be arguing about whether or not it’s deserved when we already know that it’s not remotely sustainable.
General public debates with people who disagree do matter a bit because the electeds must believe that there is a group of people who will stand up and defend them (convincingly) from pressure if they take action. A certain amount of background buzz is indirectly helpful.
But yeah, seriously attempting to convince keyboard warriors or hard opponents is a complete waste of time. There often aren't a lot of them and once someone has spent enough time on a topic to adsorb most of the arguments then there isn't any reason to expect them to change their mind later on. Persuasion is for people who haven't formed a clear stance yet and there are occasional rare wins when someone changes their mind although it shouldn't be counted on.
Especially since these days it is entirely unclear whether a given keyboard warrior is actually a human being at all.
I wonder if this movement needs a form of performative extremism somewhere (think bridges being forcibly closed for causes), so that then the mainstream notices the sensible compromise and pushes for it. The YIMBY's have never played Overton Window games, but maybe they need to hold their nose and play it.
Has irritating the Average Joe ever resulted in political support from Joe? I can't help but think that these guys sitting in front of traffic, forcing normal people to be late for work, are just doing damage to their own causes, in hopes of just getting some "visibility" to those causes. Yea, it's visible now--visible as something annoying and ultimately counterproductive.
trump constantly doing annoying stuff for instance, was good for him getting elected.
visibility correlates positively with likeability
The best reading of the literature is that radicals can make moderates look reasonable but reduce overall support for their cause. See these recent papers for the research:
- "Radical flanks of social movements can increase support for moderate factions": Simpson, Willer & Feinberg 2022, https://academic.oup.com/pnasnexus/article/1/3/pgac110/66336...
- "Extreme Protest Tactics Reduce Popular Support for Social Movements": Feinberg, Willer & Kovacheff 2017, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2911177 (this is the working paper, since the published piece is paywalled)
That all being said, I find expropriation to be loathsome, and I think the movement to destroy single-family zoned neighborhoods is a species of evil that borders on satanic.
and while an LVT doesn’t really care about zoning, depending on how close to a city center your SFH is, a well calibrated LVT might dramatically increase your overall tax burden even if you dropped all other taxes. SFH zoning is manufactured scarcity; LVT prices scarcity correctly, and there’s no upper bound on that value, especially since land taxes become divorced from income.
I should have clarified that. I meant it in the context of Georgism. The concept of Georgism was manifestly against the government actually redistributing owned land; instead, landlords would divest themselves of the land if the only utility they got from it was rent. What Georgism says you're paying for when you pay LVT on the land you own is the exclusive right to private use of that land, which comes at the expense of everyone else who doesn't "own" (or essentially, lease) the right to live on it or build on it.
Georgism distinguished between ownership by individuals for productive use and ownership by either (a) individuals for rent-seeking or (b) governments as stewards.
You may be right about LVT pricing scarcity where I live winding up higher than my current tax basis, but even that would make sense since I have to earn a lot and therefore pay inordinate income tax to have the ability to live in a single family home near to a city center already. If where I lived were less important to me, under Georgism, I could simply move to the burbs. But there is a funny corrolary to that which Georgism seems to intuitively grasp and which is orthogonal to the argument between manufactured scarcity and progressive housing policies. (And maybe this is a gap in Georgism's argument):
I live in inner southeast Portland, Oregon. Along all our east-west avenues there are tons of Amazon boxes (what we call studio / one bedroom 4-6 story cheaply constructed wooden apartments with a patina of modern amenity). And tons of local businesses. Between the major arteries it's almost all single family homes. This makes it one of the last cities in America where you can live in a SFH within walking distance of everything, including downtown. Street parking is still free here, and a lot of people don't need a car at all. I live in an SFH within two blocks of apartments where the waiters and bartenders and shopkeepers live who work at the businesses on the avenues. It's truly mixed use. However, they've now rewritten the zoning law to allow tearing down houses as small as mine (1200 sqft) and replacing them with 4-plexes. The problem with the Amazon boxes is that they don't provide room for families. No one is building 3 bedroom apartments with a yard where you can raise your kids in the city. My Dad grew up in a shared row house in Baltimore. No one's building that.
Which gets to the heart of the matter, which is that a major reason that this city and this area are so desirable is precisely because those SFHs exist between all the major streets. The spending value (and social value) of the essentially middle class people who are willing to buy a house where they don't need a car and want to raise their family in the city center is widely overlooked by people campaigning to eliminate SFH zoning; but without those people, you end up with neighborhoods where everyone is under 30 and relatively transient, without much money to spend in the local economy or any deep ties to the place. The apartments decay, and most of the work reasons for living there disappear.
Eliminating SFH zoning is an opinionated, political form of slow redistribution that preferences a certain age group and a certain socioenconomic position over others. It reduces actual diversity, and produces monocultural places like Seattle and Santa Monica where only the very rich can raise a family in town, and everyone else is a young renter.
And here's the kicker where Georgism may be right: In the end, eliminating SFH zoning only redistributes property from individuals and families (like me) to corporate landlords.
Isn't restricting what people can lawfully do with their own land a form of expropriation?
Imagine you own land subject to a restrictive covenant. The restrictive covenant might actually have positive value to you – if the entire neighbourhood has a restrictive covenant prohibiting certain land uses, that gives your neighbourhood a character, people are willing to pay for the character the covenant enforces – maybe the existence of the covenant was actually a factor in convincing you to purchase this specific property. Suppose a legislative change invalidates the covenant – that's the government taking away from your land something you value about it. Isn't that an expropriation?
And I don't think there is a fundamental logical difference between a restrictive covenant on the title, and zoning as a government-imposed land use regulation. Some buyers choose a property because of its zoning, its zoning is something they know about and value; if the government changes the zoning, and that takes away from their property something they valued about it, isn't that an expropriation?
Note, I'm not arguing that removal of zoning and restrictive covenants is always wrong – maybe sometimes it is the right thing to do, all things considered. I'm simply arguing against the position "land use limitation = expropriation, removal of it = not expropriation" – even if something is expropriation, sometimes expropriation is justifiable
Here's where Georgism gets clever: The initial Georgism says that land should be taxed up to the value of its land-rent. Some progressive people said, well, that means the landlord wouldn't make any money anyway, so the government should just take (expropriate) the land. George said, basically, no. Let the landlord decide if it's worth it for them to keep the freehold.
Then, there are varieties of Georgism that disagree about whether the government should be allowed to tell you anything at all about what to do with your property. Some say you should be able to do anything on it. Others say not.
When I bought my house, across from an elementary school, I knew I didn't have a right to drill oil on it, or to build a factory making solid rocket boosters and dumping perchlorates in the basement.
That's all written into the code governing the land before you buy it. The Georgist question is: If I'm paying 100% tax on this land's rent value, does that mean I get to despoil it any way I want? Or do some rules apply?
That's a separate and more nuanced question; the answer is probably that the same rules would apply as do now, but that doesn't equate with expropriation.
Zoning and planning distorts land values so georgism alone won't solve land use problems. E.g. Demand for land with fewer property rights (such as single family zoning, or a heritage restriction) will be lower than the site next to it that allowed building a 200 floor residential tower. In turn its land value will be lower.
It might still yield a high rent tho, but maybe not more than a new well maintained apartment.
It wouldn't directly address those planning issues, but it aligns the financial incentives of the body politic between residential homeowners and the rest of the community. Normally residential homeowners have huge financial incentive to make housing scare and expensive, the LVT removes that financial gain from causing misery.
Denser developments are also much more fiscally productive than SFH zoning [1]. This means that cities that upzone will tend to have lower taxes, less debt, and better services in the long run.
That’s the exact opposite of the experience I’ve had in my town.
It seems that money is the primary driver of turnout at town council meetings. I live at the top of a mountain with 1 real road and 2 smaller frequently closed roads down to the city below. Developers really want to build up here, but there’s no way to widen the road, and no realistic way to build more. There’s not enough flat land to build enough jobs, shopping, dining etc… up here, so increasing density just means more cars making the trip 30 minutes into the city.
Every single time there’s an issue about development, you get dozens of real estate agents, developers, and people who work in construction showing up because their bank account depends on it. Every local election, you have candidates bankrolled by out of town developers.
“No” is much less well organized and will only occasionally turn out in larger numbers than “Yes” despite dominating in elections.
That ignores all the people who have other incentives to build.
Depending on the area you probably have about 10% of the people who have jobs that directly benefit from new construction (construction workers, plumbers, electricians etc…) or who are married to people who do. Then you have all the people who work or own businesses in sectors that indirectly benefit from new construction or directly benefit from increased density.
In my town of 8k people, I’ve seen 30 people from those groups show up in support of a new sub division vs half a dozen against.
Put another way, one of the historical critiques of democracy was that it ends up catering to interest groups whose interest may not align with the rest of society. At first that seems paradoxical, because a more knee-jerk critique would expect democracy to just turn into a tyranny of the majority. But the reality is that people generally don't act on things until they are sufficiently incentivized to do so. And that incentivization is often reactive in nature.
as someone who reads a lot but doesn't comment much you've got the topshelf content here consistently, its so obvious when someone has a clue or doesn't if you're in the same areas, very easy to fool others with confident assertions (cough airline issues on HN) but for someone in the industry it's not at all
funnily enough this comment about zoning which isn't your or my field but get the feeling it's on point, is such a massive problem in the western world which has built up over decades, lets just copy someone elses homework in my opinion, Asia gets this stuff right: https://devonzuegel.com/north-american-vs-japanese-zoning
This was made dramatically obvious in Christchurch, New Zealand, after the 2011 earthquake.
Land that previously housed people or businesses in the central city became unsealed carparks run by an overseas company that dominates parking businesses here, for years, and many still are, 15 years on.
Likewise, the owners of buildings rendered unusable by earthquake damage had no compelling reason to demolish and rebuild, as their local taxes dropped significantly, as they're based on land value and improvement (i.e., building) value, and the building was now worth nothing.
So long as the increase in the value of the land outweighed the now minimal local taxes they paid, they'd still come out ahead when they finally sold.
Hence the local government resorted to naming and shaming the so-called "Dirty Thirty", because they had no other levers to pull.
https://ccc.govt.nz/the-council/future-projects/barrier-site...
But this still doesn't address the previously utilized land that is now just a muddy carpark operating for the benefit of a company in Singapore - they have no economic incentive to invest in a parking building when they can just run their business on several hectares of unsealed and frequently muddy and pot-holed sections in the central city while paying minimal local tax.
And in and around Auckland, New Zealand's most populous city and the most expensive to buy or rent a home in, they struggle with the land bankers, and ghost houses - properties owned solely for (largely untaxed) capital gains.
And then we struggle with a housing crisis.
The reasoning makes no sense applied to land value tax though: people improve properties for their own profit, and the land value (on which the tax is raises) increases slower than the value of their own property so they aren't being deterred by the land value tax. People who don't invest on the other hand don't see increase in their profit while their taxes increase because the land value is being pumped up by those who invest.
I’m curious about how to think about the dynamics of a LVT:
- I can imagine urbanism creating a flocking behavior that ruins neighborhoods in 5-10 year cycles. Coffee shop draws more commence drawing more affluent people pushing up LVT driving out residents faster than even the spectre of “gentrification”, only to collapse when a nearby area is cheaper for a cool coffee shop to start. (The problem specifically is that you’ve both driven out people and caused an inefficient overbuild in each area)
- Similarly how do you think about new uses for land emerging? If I lease desert land for a data center because it’s so perfect for it, instead of buying it … how (and when) does it show up in LTV increases? What if I trade you some other benefit to keep it out of LVT impacting records?
- Are you just costing the world coordination surplus by forcing high value enterprises to distribute themselves (inefficiently) just far enough apart that they don’t drive up each other’s LVT? That’s a deadweight loss.
I’m a fan of the idea - these are just some of the tricky challenges I don’t have a good answer to yet.
But a popular coffee house can make the surrounding area more desirable. If that increases what people will pay for locations there, land values rise. At the same tax rate, that means higher LVT for nearby sites, and, potentially the coffee house’s own site. Gentrification by other means.
In a lot of ways, it depends on what the comparative LVT base is. If its just blocks or streets nearby -- a single happening place can push the value up. Spread out to the census tract, the city, the county, and now you can toss more and more of hot coffee shops in the same place with minor impact to the tax base.
Gentrification and decay are already cycles, and maybe those cycles would accelerate somewhat; but a prediction that they would drop to below decade level would be a bold assertion.
Of course any government can jack up taxes, and some may use LVT as an excuse. That's already a problem. But the _ideal_ LVT replaces property tax. So I'm skeptical that LVT will be a large exacerbating factor.
The real problem is that gentrification drives up demand, and that's baked into the premise - and necessarily precedes any LVT uprating. I expect LVT's contribution to the problem to be marginal. More data needed.
Imagine that there's somebody who wants to build unpleasant things. Let's say there's a group "association of people for ugly and genuinely unpleasant buildings" who build their collections of ugly buildings, buying up the cheap land that becomes available as people who no longer want to live near them move out.
Well, that group is rewarded by this system.
I think the problem is really: LVT makes sense, there's no reason to tax buildings, but if it is to be fair, it must actually tax the unimproved land, and this means it can't punish people who buy things next to someone building something attractive and then not doing anything useful with it, so that particular goal, sometimes held up as one of the points of a pure LVT is not achieved.
Since that would reduce demand in the area, there's a real risk that we'd infer that the neighbourhood is more inherently undesirable and drop the rates there, even though we shouldn't.
I think you're really basically just saying "but no one would do this". People would absolutely do this. People even do this today in inter-group conflict about who is to live in specific neighbourhoods.
1. "Coffee shop draws more commence drawing more affluent people pushing up LVT driving out residents faster than even the spectre of “gentrification”"
This is an impossible premise. The relationship between the cost of the LVT and the popularity are directly and inseparably linked. LVT only goes up (and stays higher) when the neighbourhood is popular. It drops (and stays lower) if the neighbourhood falls out of popularity. In real life it would reach an equilibrium, but it might encounter some volatility along the way.
This is overshadowed by many more factors than a small increase in taxes, and I would propose that an LVT is a minor factor in the popularity of neighbourhoods.
2. Similarly how do you think about new uses for land emerging? If I lease desert land for a data center because it’s so perfect for it, instead of buying it … how (and when) does it show up in LTV increases? What if I trade you some other benefit to keep it out of LVT impacting records?
The tricky part about LVT is that it requires an assessment of value prior to realisation. Popular methods include using a combination of average of realised land prices in the area, against a velocity coefficient (the general gain/loss over a period of time), modified by negatively and positively correlated correlates like proximity to public transport and parks. There are countless ways proposed to do just this so I won't retread worn ground.
In the case of the desert data centre, it is likely that the land will not increase much in value. This is by design, because we want data centres (and similar industry) to move into the middle of nowhere so that scarce land is instead used for more productive enterprise like housing for workers so they can get to work easily.
3. Are you just costing the world coordination surplus by forcing high value enterprises to distribute themselves (inefficiently) just far enough apart that they don’t drive up each other’s LVT? That’s a deadweight loss.
This is the brilliant part of Georgism, and the reason I "converted." A well designed LVT imputes the social costs (implied by their economic costs) of the use of land. It then gives the businesses the fully informed choice of how to deploy their capital. It could be that the efficiency you allude to is real, and is worth remaining on high value land. So be it. The business is the best actor to make that decision. On the other hand, if the deadweight loss is lower than the LVT, then the land should be better utilised by another company which would have better utility for its location.
Georgism aligns social costs with business interests in a way no other tax currently does. Meaning that businesses act in their best interests, and in doing so, act in the best interests of society.
Land value taxes only go up if the land value (and thus the demand) is overall going up. The taxes lower desirability, but are also proportional to desirability. So, it's more like a frictional force: inherently counter-cyclical, able to slow down a property value increase but not to reverse it.
So the theory says "nobody goes to the ballpark, it's too crowded" shouldn't happen. And even imagining weird time-delays, mismodeling, etc that could cause it, everything in your scenario is directionally the same with normal property taxes. If it happened, we'd see it today.
georgism doesn't solve gentrification. neither does anything else solve N people desiring limited things.
it solves many other issues around it though. the focus of the linked author is fixing the freeriders with lots of capital.
Maybe if the tempo were increased the cycle would be so flagrantly visible that possible for the general populace to say "no screw you you and the ideas you peddle are bad"
Also Georgism is 100% LVT -> A land tax alone has been the recommendation of many economists before and after George - From Smith, Riccardo, Mill to Friedman. Across classical, neoclassical, Keynesian, Austrian schools. If there's one thing economists can agree on, it's that land tax is better than income tax.
It does become complicated when the scarce inputs are things like highly specialized labor. Georgism wouldn't tax that monopoly, though our current systems (progressive income taxes) do. Many people would want a system which penalizes businesses for buying up e.g. all the veterinarians in a city and charging monopoly prices.
Taxing specialized labor goes against that spirit, because specialized labor can be created. And in fact taxing the labor would result in less of it being there, the exact opposite of the optimal result.
As powerful as taxes are to create change, you don't need to use them to solve every problem out there.
Although, maintaining a monopoly by owning land becomes more difficult with a LVT. It theoretically becomes easier for a new vet to find a place and setup shop in the city, and then the Monopoly is busted.
What if they just moved? Or should we have US-style global taxes following them around even then?
What both have in common is that economists from all different schools of thought widely agree that they're the least distortionary taxes.
The bad news is now you have to assess the value of a lot more things in order to do this (the value of clean waterways in a certain state, the value of IP taken away from the common culture) that may not have a direct market value.
These things have different values to different people. While most everyone wants them in some form, there is a huge spectrum between “it won’t kill me this month” and “living in pristine Mt. Fuji”.
Should private companies be allowed to pollute sparse remote areas with no population?
Does it have a financial value if nobody goes there?
“Undesirable behavior” is overly broad to the point of being actively misleading, and gets you into sin taxes. smut or drugs are not the scarce resources anybody is talking about here.
Full LVT never works. It always ends up shot through with exceptions and loopholes and, in the case study, inducing corruption. And it's all predictable, too, if you know anything about taxation policy and American political culture. For full LVT you'd need to start from a blank slate, not just from a legal perspective but from people's expectations about property ownership.
I get why an LVT makes sense from an economic perspective, but in practice it feels nearly as unfair as the above. Residents especially, but small and medium sized businesses would very quickly lobby to eviscerate an LVT. Imagine long-time residents getting kicked out not because a developer wants to make buck, but because the tax system requires that to happen. There's zero chance such a scheme could survive intact politically. In Pittsburg it's an LVT in name only, with a long list of exceptions and curious appraisals. And once it's applied ad hoc, which it must, there's all manner of distortions and incentives for corruption.
There are many ways for land use and tax policy to improve, but you have to come at from the perspective of improving the existing system, not revolutionizing it with an LVT. And you could probably get closer to an LVT by smart incremental reform than you could by trying to nominally pursue an LVT.
Some of us think that would be a good thing. My elderly neighbour has been living on her own in a five bedroom house for twenty five years meanwhile there are people nearby struggling to raise a family in one or two bedroom houses. She doesn't need that house, she is just there out of inertia. Letting the tax system nudge people in the right direction is a good thing.
You even pay rent when you buy a house. The value of the land is the market expectation of the value of future rents.
You can have a less than 100% LVT to get some of the advantages without upsetting the apple cart. Common in many jurisdictions.
Yep, great analogy. LVT is the optimum tax from the point of view of maximising production incentives, but actually practical ways of extracting significant revenues from people tend to skew towards "this person/organization has liquid funds available and wants to do something enough to pay the tax on top". (For related reasons LVT-style approaches to taxation work rather well when the finite resource being taxed is something like broadcast spectrums which the average person doesn't own)
As for Single Taxing, convincing the public theres some ethical principle that PE funds buying tech stocks deserve to keep all of the rewards for risking their money on a particular venture and homeowners who lived through the area's dodgy-reputation years don't is a complete non-starter even though anyone with an economics degree can tell you why such an argument might be made...
Yeah, I looked at the map in the article and thought, wait a minute, why is Pennsylvania not colorcoded if Pittsburgh has a land value tax? So the map is only showing states that do? I didnt know there were any states that tax land. But do remember being confused when I moved to Pittsburgh by there being two separate taxes - for land and for property.
I also think that the pittsburgh example shows that LVT is meaningless. All homeowners care about here is their total real estate tax. How it is split between land and property nobody pays attention to.
Right, because there's already a home on the property.
Anyone who owns a parking lot or vacant lot, will care very much about the split.
Georgeism is just silly from economics standpoint
Those who use their fair share are no change, those using more see taxes go up, those using less see a rebate.
The more valuable Land a business uses the more they have to pay, encouraging more efficient utilisation. Their competitor using less Land has lower taxes and can thus out compete them.
Land of course isn’t just dirt, it’s any limited natural resource.
But it probably is also a cooperation problem, thus we prefer a slow but accelerating apocalypse.
All these graduates need some value from their education after all, and if we reduce doing actively harmful things like the current tax system, others will be superior to us by transforming resources more quickly into waste.
Since the latter process is extremely profitable, and again, so many people have education in optimizing the resources->money->waste pipeline, it would be a luddite and anti-science thought to listen to the science and stop this.
Apart from that, there's a very common and profitable way of getting yield from people's everyday life while also rewarding them: cars.
Live somewhere, but everything you do requires a vehicle.
You'll see so many beautiful places.
But you also have to rant about the evil urban population that pays for your car, gas, roads, parking space and special subsidies.
It would be unlivable out there in the wilderness without this totally natural subsidization.
This is overstating the case by a lot. There is a lot of discussion about land value taxes being efficient for various means, but there are far fewer economists who would suggest that 100% LVT is a good idea.
It just wouldn’t be popular. It would instantly get filled with holes and exceptions and distorted until it tries to approximate something else.
Some of the high level economic features that 100% LVT advocates want, like forcing people out of their properties when they become too valuable for other uses, are actually extremely unpopular with people who actually live in homes. You would get a wave of cases where grandma got pushed out of her forever home because the LVT got too expensive and a developer bulldozed it to build a strip mall instead. Under the economic model this is a good thing because the land is being used for its best value, but people actually hate this stuff.
Land value taxes are also really bad at progressive taxation. The hardcore LVT people think this is a good thing because they talk about taxes as “disincentivizing extra work” but we all know that taxes have never stopped people from earning money. Going full LVT puts us in ridiculous situations where someone who earns $500K for a tech company but works remote from a luxurious house somewhere where land is not valued much will pay almost nothing in taxes, but a family with modest income who works a trades job (which generally requires being close to a population center) will have to live in some form of housing subject to very high taxation, therefore paying a lot in taxes.
If you still don’t see it, imagine the outrage when people realized that some billionaires are barely paying more in taxes than a family of four in a modest house in a city where land is valuable.
The more you read about Georgism you more you realize how it’s not as popular with economists as it’s portrayed. There is valuing in taxing land, but we already do that! The debates about eliminating other taxes and replacing them all with LVT is something else, and it’s not universally popular at all.
Yeah that's the exact distinction I was drawing. The article says Georgism but talks about land tax in general, which is popular with many non-Georgist economists.
However, I have to take issue with your example
1) Land is effectively nationalized under 100% LVT. Worker likely own (the profits of) more land than before
2) The value of the land where the tradesman works is already used against him, to extract the majority of hte profits of his labor. He already pays the land value tax - to his landlord. From his perspective, the burden changes little while the wealthier lose an avenue to make money without working.
3) A luxurious house / lifestyle still requires paying land tax on the things you consume (the land of course and notably energy sources, minerals, timber, building materials, etc). The kind of spartan lifestyle required to truly avoid this tax works now too - incorporate as a company and don't pay yourself a salary.
4) I think very few people care about a $500k salary tech workers, or footballers, or what have you. It's the billionaire oligarchs influencing politics who attract the most attention.
5) Current day oligarchs derive a lot of their wealth from land and other monopoly rents, not from simply 'working more' or 'contributing more value'. This is resented by many. When people get rich by contributing (relatively more) value, they are usually widely praised
You're close to understanding why people wouldn't like it.
100% LVT schemes are basically a mechanism for letting the government force people to do things that the government wants. You want to live in your forever home that you and your husband worked for 50 years to afford? Sorry, government has other plans for that land and now it's too expensive for you to keep it.
The utopian use case that proponents talk about is replacing parking lots with high rise apartment buildings, which everyone loves because it feels like a win for the people and a loss for developers. The more realistic use cases would be much less popular, like the 90-year old couple getting forced out of their forever home because it's close to a substation, which suddenly turned that land into highly valuable property for data centers, which will happily pay those taxes and bulldoze the homes.
Every time I read a 100% LVT piece it's focused on the parking lots to houses type story. They either ignore the more obvious problems of people being forced out of their homes everywhere for businesses to take over, or they do a hand-wavey thing to say it's all for the greater good and we shouldn't care.
Every 100% LVT argument turns into an argument against private property ownership and in favor of a central planning type land reallocation, but with the final use case going to the highest bidder.
People do not actually want this.
If you incorporate and don’t pay yourself a salary you still owe corporate taxes.
People absolutely care about the tax rate techies making 500k are paying. They’ll care even more when the billionaires start blasting the airwaves with ads about how unfair it all is.
Athletes have the highest tax rate in the country, why do you think people don’t care about their tax rate?
As far as I know the only tech billionaire with significant land holdings is gates. Zuckerberg and Ellison have big holdings too but not compared to the land per wealth that normal Americans have.
I suspect a lot of younger people would welcome it. Especially in areas where there is a real shortage of family homes.
Like most ideas in this category, they become less popular as people grow older and build up some of their own assets. I would expect popularity of this idea to fall of sharply around the age that people start buying a home and see their property tax bill go up.
Practically, this makes it a complete dead end. Much to my lament in every election, younger people don't vote as much as they post online and respond to polls. Older people don't post online and respond to polls as much as they actually go out and vote.
This is why the Georgism thing always seems popular on niche internet boards, but would never get anywhere in a real political system.
Allowing the elderly to stay where they are isn't just about protecting vulnerable boomers, it's about not being a problem for responsible people in the next generation. You could also be one of those no-contact assholes and never have to deal with your parents when they get screwed by displacement, land value tax away.
> Land, however, is not built. Land is inelastic in supply, and landowners don’t “provide” land the way laborers provide labor and investors provide capital; they un-provide land by excluding others from using it. Building supply can change in response to a tax change, but land supply cannot.
But many cities actually can increase their land supply via land reclamation. This can be done by filling in waterways or otherwise altering the landscape to make it suitable to build on. Chicago, for example, built the land under the Adler Planetarium by filling in rubble along the shore of Lake Michigan. Boston is an even more impressive example; Back Bay used to be a bay of the Atlantic Ocean, not an entire neighborhood of a city with very high cost of living.
Cities can also lose land. Sometimes this is due to natural causes like erosion, sea level rise, or disasters like earthquakes and volcanic eruptions. Other times a lack of regulation might permit pollution to make land unlivable or infeasible to build on. Land owners can't create natural disasters, but they can advocate for policies that strongly influence effective land supply, such as whether building codes allow building on certain kinds or soil or require resistance to earthquakes.
Does this change the calculus from a Georgist economic perspective? If not, why?
Alternatively, reclaimed land is usually a state initiated enterprise in most cases. In those situations, the land can simply be leased out by the state. This is literally what NYC did with Battery Park city!
https://blog.landeconomics.org/p/georgism-through-land-leasi...
It isn't actually perfectly inelastic, but looking at land reclamation (and erosion!) relative to the ease with which places to live can be added to a locale, the supply of land is relatively inelastic. Even then, that kind of misses the core of George's argument about land value.
George himself distinguished land from labor and capital by looking at it through the lens of whether the economic value of a piece of land needed to be attributable entirely to improvements undertaken on that land. This is his "all natural opportunities or forces," and those are where the constraint lies.
For land reclamation in particular, there are two things to look at: (1) the value attributable to the land reclamation effort; and (2) the residual site value. (2) is land rent, and the Georgist model really is predicated on the relationship the surrounding community has with a piece of land. As it goes, if the community's feelings toward, say, a reclaimed waterfront are tepid, that reclaimed land won't have much value (even if the land reclamation were undertaken at great expense!), and won't command high land rents.
When georgists refer to land, they are referring to locations - not dirt.
Locations refer to the sections of physical 2D space that makes up a country. Why 2D when the world is 3D? Because parcels are allocated and segmented based on a 2D model.
Locations are best thought of as being similar to "spectrum" (what typically gets auctioned off every few years to the highest bidder) - there is a total fixed amount. Nobody made the physical space, and nobody will make more of it in the future. It all existed before life even began on this planet, and it will exist long after all of us are dead.
Although we don't have LVT in the UK, it interesting that we have another restriction on the creation of Locations: Planning laws in the UK are extremely hard and expensive to navigate and get permission to build pretty much anything, so the creation of new Locations is pretty much impossible. And that doesn't seem to be a good thing.
The premise of Georgism is that there is no creation of locations (at least unless you're in the business of creating planets).
> Places that were too far from London to be useful suddenly became Locations
No, those were always locations, before and after the construction of railways made them more valuable. Accordingly, Georgists ain't interested in taxing the gains of the railways themselves; we're only interested in taxing the gains of the landowners profiting off of their land suddenly being more valuable from no contribution of their own. Under LVT the railway companies still would've made their money back in droves — probably moreso if they're only paying taxes on the land under the railroads instead of the actual railroads themselves!
Since unreclaimed "land" if it can be owned, can not generate any rents, it won't be taxed at all. But if all the additional value of making it usable were taxed away with a full LVT, it creates very little incentive to reclaim it and make it usable.
I think the best thing to do would be to exempt reclaimed land from land value tax for a period of time. Just like we grant monopolies for patents for a fixed value of time to incentivize sharing of the secrets.
If you got 50 years on reclaimed land without tax, it would heavily incentivize its creation.
> Cities can also lose land. Sometimes this is due to natural causes like erosion, sea level rise,
When there's a full LVT, the transactional sale price for land is very close to $0, because your land rents are taxed away. That leaves only the buildings as something that's lost to the natural disaster, so in many ways this might be far better for property owners.
It would also alleviate many of the challenges with relocation when necessary, from flooding, etc. Since the land is no longer the valuable part of the relationship estate, only the building must be moved/replaced.
The reality is that in the vast majority of places the valuations just aren’t there.
When you align one idea with an external one, you are adopting all that external baggage - it's a cheap way to get a few additional people to agree, but at the cost of a bunch of other people seeing what they perceive as warning signs of a class of ideas they are suspicious of.
It's important to have confidence in your idea, on its own merits.
At least, that's my opinion. Carrot based economic policies have a tendency of working in multiples of the money involved, and penalties a bit less than that.
Care to explain how it would work in practice?
The fuel of capitalism is a large population of consumers. To be extent that we have inequality and we have lots of people that are unable to make economic choices due to poverty, we limit the growth of the economy.
What I've noticed, especially in online spaces is that advocates have quite disperate notions of what it's supposed to do and how it's supposed to work.
Relatively contentious and complex arguments about 2nd and 3rd order effects seem to dominate. EG rent will decrease because of incentives and political economies.
I think this comes from defensive arguments.
Here, he defends against the argument thelat taxes will be passed on to tenents. I agree that the answer is no, but how that is established is important. It's core to understanding the whole framework.
The premise of georgism is that land is scarce. Hi demand, and low supply yields a price. That price does not change because the landlord owes taxes. Supply and demand remain the same, and yields the same price/rent.
LVT is the maximum, non distorting tax rate. The rate at which land itself is worth zero. If tax exceeds LVT building becomes unprofitable and land has negative value.
When tax equals lvt... Tax revenue is maximized and land value is zero.... in the theoretical chalkboard economy.
This is the whole core reasoning underlying Georgism. It is about capturing the value of land, in taxes. All of it, ideally.
Price, scarcity, abundance, affordability... These are peripheral. Also the same rules, more or less apply.
Skipping onto YIMBY, supply constraints and whatnot tends to obfuscate the key parts.
Georgism wants to crash the property market. Zero out the location component of real estate value.
If I actually instituted, an enormous class of wealth goes poof.
That's the key fact to consider.
On the other hand, structures on the land are produced, they are not in fixed supply. Therefore Georgism does not advocate taxing the structure -- only the land itself.
Because land is in fixed supply, it is impossible to pass on costs to renters of land. In a market economy where prices are set by supply and demand, the only mechanism for sellers to pass on costs is a reduction in supply (since they cannot influence demand), because for all goods (not just land), the sellers always charge the maximum the market can bear. Once this price is established, they cannot "choose" to raise prices, because this suggests they were charging less than the market would bear before. Therefore threats to raise prices even more are always hollow. Landlords are not charities, they always charge the maximum that renters can pay, irrespective of the landlords' own costs.
In that environment, the only way for land rent prices to go up higher is a reduction in supply, as demand curves bend downward. But with land, supply is fixed so reductions in supply are impossible. This is the insight of Ricardo.
Now the argument is that land, encumbered with a tax, is worth less to the land buyer than unencumbered land, so that what happens as property taxes rise is that the land falls in value due to the tax burden. It never falls to zero, of course, even at a one million percent tax rate the land has some positive value, if even just a few pennies -- at which it will be sold, and so the result is the capture of the value of the land by the state, while people get to keep the value of what they produce (the structure on the land), which is not taxed. It's important to recognize that not taxing produced goods is an important part of Georgism also. This incentivizes people to invest in produced goods rather than non-produced goods, and to save by acquiring capital rather than land, as there is no social benefit for people to bid against each other for ownership of something in fixed supply like land, because no matter how many bidders there are, the same amount of land will be supplied every year, regardless of what price it is.
This is simply not true in the same way that consumers are not always rational and always pay the exact correct price.
Landlords regularly charge less than full market rate, for example when they have a good tenant, as the costs of a new tenancy and the risk of a void are higher than the incremental marginal rent (once taxed at the landlord's marginal rate) is worth to that landlord. Unlike what most people seem to assume, being a landlord is not a zero-labour job. Things that require additional labour on the part of the landlord have to be worth it.
The thing that changes this calculation is an increase in costs. You are right that landlords are not charities, so they will generally avoid a loss. The primary costs for most landlords are mortgage interest and taxes. Increase the taxes and some of these landlords will now be underwater and will increase prices towards highest market rate as a result.
The point is that the price is determined by supply and demand, primarily. Speculative market responses at the margins if the transition is analyzing the noise. Besides the point.
The much bigger issue at transition, is that landlords are going to be underwater across the board. The whole point here is a permanent transition from high land prices to near-zero land prices.
You are just adding complications but not really changing the argument. We can also talk about hotels versus longer term rentals versus residential rent. Why does a hotel charge more per night than a residential rental? Because hotels have much higher vacancy rates, in order to have a unit available. A good hotel strives to be 3/4 full at any time. That would bankrupt most landlords of residential housing, where vacancy rates are 5-7%, not 20-30%.
As the rent goes up above the average rent for your area, so does the cost and time of finding someone willing to pay that rent, and in this way, there is an optimal rent that maximizes your revenue that may not be the highest rent paid but is the highest revenue received over time. That is why good, stable tenants often pay less.
Henry George talks about "fixed supply" and a lot of his language speaks to the conomic ideas of the time. Remember that the liberal philosophy of property rights was all about adding your own labour to establish value and property rights.
But... We've moved on from those things.
We both said the same thing, just using different words. But... Using simple, modern economic explanations makes it a lot easier to follow.
I think people get totally lost unless they understand (in modern, marginalist microeconomic terms) why (a) rent does not change (b) the value of land becomes near-zero (c) what "land value" attempts to describe.
Meanwhile, the part of this that inevitably dominates the politics and decision making is this: (x) land loses all it's value and real estate investing no longer yields capital gains (y) Homeownership is no longer a safe haven. Owner-occupiers becomes exposed to future housing costs, just like renters.
These are two major changes, and Georgism and needs to own them (imo) to maintain coherence. There's no room for confusion here.
>It never falls to zero, of course, even at a one million percent tax rate the land has some positive value
No. The land can have negative value, if the tax is too high. This is the kind of confusion I'm talking about... and where georgism gets genuinely confusing.
The "land value" in Geogist land-value-tax.. is not market price. It is whatever the land price would be.. in a market without property taxes. It is a theoretical price. The tax rate is applied to the theoretical price. That is LVT.
The whole business with theoretical prices is why Georgism was dismissed as a form of communism. Soviet economics was developing similar concepts in the 60s-90s. Eg linear programming.
In all honesty, I don't think this is all that important. Irl georgist policies would have to make do with an innacurate estimate of LVT, erring on the side of low taxe rates relative to "real/theoretical" LVT. They could even abandon the concept entirely, and go with a more tangible proxy.
But... long before you get to that point, you have to contend with the losers of this paradigm shift. (1) Anyone holding valuable real estate loses. Both homeowners and investors. That is a lot of private wealth disappearing (2)Then, the economic safety of home ownership disappears. You can no longer buy to lock in a price and guarantee yourself housing forever.
It's important to remember that in most periods, Georgists like georgism because it is a better tax system. It's not really a solution to housing availability or affordability... not directly.
There are interesting discussions to be had about indirect consequences.. but you can only have those once you have the direct consequences straight.
There are real, genuine tradeoffs. Policy advocacy tends to obfuscate these... and that balloons out into a general confusion.
This (the calculation) is addressed by the author.
I think the answer to this is because a tax increase is something they know every other landlord they’re competing with will be subject to as well. Raising it right now makes yours an oddly expensive apartment. Once the law passes though, even before implementation date, every landlord knows every other landlord will want to preserve the same cash flow they had before, by raising the rent by roughly the amount of the tax.
Unless of course you have mass vacancy rates already, and those rent raises would be more than the market can bear. But decent rentals in desirable cities have been in shortage for decades which is why rent steadily rises already. Even if your current tenants refuse to renew at a raised rent, someone else will come along, trading slightly down if necessary in terms of quality/amenities.
Even if such a cartel could be sustainable (say, because the vast majority of rental units are under a couple of massive property management firms instead of thousands of smallhold landlords), it'd only “work” until people get sick of it and move to other cities, thus producing more vacancies, thus (under LVT) causing those landlords to hemorrhage more money.
Put differently: every landlord already knows every other landlord wants to maximize cash flow, so if landlords were actually capable of coordinating to the degree necessary to raise rents in response to LVT without bankrupting themselves, then why are they not doing that already? Why have they not yet all gotten together and decided “we're all going to charge infinity dollars per month per square foot”?
So the revenue comes through in resales once leases end.
Super simple: no valuation (only market sales); no annual expenses to consider (all upfront); development issues are simply a matter for leases to expire; speculation is capped given the capped lease length (although it can still get to stupid valuations).
Implementation is also extremely simple if you’re already onboard with taxation as expropriation: the state just legislates that all property is now a 99 year lease and they own it at that point (alternatively they compensate you 2-5% of market value, and retain existing annual taxes, or cut existing annual taxes to compensate, or they just do it without compensation!)
The state is technically repossessing it when you own a lease, but it’s not something you had rights to anyway, or had paid for. The terms of what you own are up to the lease end date, under the terms of the lease.
All land¹ is already owned by the state and leased to the “owners”; the only differences are in how much the state charges those “owners” for rent.
In light of this, the difference between a 100% LVT rate v. the state issuing land leases is just semantics.
----
¹ within any state's territory, of course.
Suppose you see an area in upward economic trajectory, you buy a bunch of land/properties, then do fuck-all for the next 30 years while the hard work of everyone around that land causes your land's value to increase. You contribute nothing, while benefitting from others' contributions. All this while someone who could have used that land/property for a more productive used is deprived of it. Georgism directly counters that by taxing any 'base land value' that you own.
Georgism and the 'taxing progressively higher any property a person directly/indirectly owns after first N properties' are seriously very much needed around the world, economic rent-seeking steals from future generations.
I don't see it in the article, but the progressive nature of the tax is important. It makes it harder for large landowners to pass along the tax, since they must compete with smaller landlords. The net effect should also stabilize land appreciation, which will no longer rise with rapidly increasing wealth disparity as it has in the past couple of decades. And we won't need clunky, patchwork solutions like the ban on home ownership by private equity.
In a market economy, if it's a known fact that the area is in an upward economic trajectory, then the future increase in usefullness of that land will already be priced into the land today. You can't just make profit (in expectation) by going and buying land in an area that the market already knows is going to become more productive. Competition amongst investors will drive expected profit to 0.
The only way that you can actually make a profit as a speculator, is by bringing new information to the market. The rest of society thinks this area has no potential, but you have good insight that is costly to figure out, which tells you that the area is going to be more productive. You take a risk and purchase the property. You are compensated for the risk and effort you undertook, and if you're wrong, you are punished by losing money.
I would worry that you just substitute a rent seeking landlord with a rent seeking government (local?).
Broadly, government is not called rent-seeking because it does things to justify its keep: law, defense, roads, bins, etc etc.
This is the argument again Georgism I have the hardest time countering.
If they could raise rents, why haven't they already?
And if their costs go up and they can't make ends meet, they will sell the property, possibly at a loss, and the lower value will lower taxes.
But this won't happen, because the landlord's taxes won't rise. They'll almost certainly fall, as shown in the abundant data. And if for some reason the landlord's property tax does rise, it's because it's a ridiculously underused parcel in an area of really really high value, like a duplex next to 10+ story buildings. Which means it may be best to let 100-300 people use that parcel rather than ~10.
The LVT shifts tax burden away from homes and businesses and towards empty lots and parking lots.
To put it another way, why not raise taxes to $1M/sq.ft.? $1B/sq.ft.? If if were true that it wouldn't be passed on to tenants then you've found the magic money tree.
The first effect Georgism would have is, more effective utilization of real estate. If you go to any big city, there is simultaneously a shortage of properties while a significant number of vacant properties. This would disincentivize vacant properties, so more supply (or at least more tax collected on vacant properties that the city can use for better purposes).
Also, the reason for making progressive tax larger on larger landlords means renting out a few homes is significantly more economically attractive while beyond a certain number, it is no longer viable, which pins prices down.
Georgism ignores how many voters are vehemently anti-development. Just visit any hearing where housing is discussed, people really hate the idea of getting more homes built.
If you have something you want done in your town, and you come with the work done AND not asking for funding, you're likely to get it.
If you come with the work done and a PLAN for getting the funding, you also have a good chance of success.
I am very open to be told strategies to fight this more effectively without becoming a full time career activist for years on end for one issue at a time.
Just in general saying "please fix professional licensing" isn't actionable, you aren't doing the work for them. You're asking them to turn a vague idea into law, when it wasn't their problem to start with.
Ie. if we implemented an LVT but also loosened zoning restrictions, the net development (and net taxes) on the single-family areas may well see the highest growth. The interaction between these two reforms performed simultaneously seems unclear.
> The UK just elected a new prime minister, Andy Burnham
He wasn't elected by anybody. The country didn't get a say and he was unopposed in his party.
I do wish he had called an election though (I suspect he may still do that).
> in January 2025, the German state of Baden-Württemberg implemented a new LVT
More exact: On 4 November 2020, a law was enacted in the state of Baden-Württemberg which shall apply for the first time to real estate tax for the calendar year 2025 and constitutes a form of LVT.
The text of the law can be found here (in German): https://www.landesrecht-bw.de/bsbw/document/jlr-NNLBW00007EB...
Some brief information on the Web-site of the State of Baden-Württemberg (in German): https://fm.baden-wuerttemberg.de/de/service/presse-und-oeffe...
Did it actually increase the amount of housing? Reduce wealth disparity? Got enough taxes so cities can make commutes better?
I wish I could describe how optimistic this sentence made me. Ever since I read Leverage Points[0] I developed this paradoxical impotence in enacting change because I felt like the best way to do anything was by finding (or becoming) the leaders who can change the paradigm. But this? This is a breakthrough. We can just do the work.
0: https://donellameadows.org/wp-content/userfiles/Leverage_Poi...
The goal is putting vacant lots in so much tax debt that they go underwater. After that the city can seize them, pay off the other creditors and put the land to better use as housing projects, a community center or low rent small business space. Leaving everything to markets is a big mistake.
See every enterprise project. The code for s written, the app is promoted as working in this department and the the project gets funded and approved. Under some other manager
It's hard enough to survive but in our world you have to do survive while everyone else is incentivised to take money from you
Life shouldn't just be about efficiencies it should be about things that make us human, sharing and community used to be a big part of that
Like we're geared up for taking but not giving - like petting my dog in the global competition I'm incentivised to give him up he costs me time and money I could be grinding the next facebook
There should be a point of abundance where we reflect on what the point of all this competition is
Because I predict in the end it will be one guy with all money and everyone else in desperation
It's funny/sad that some people have so much capital they could live in absolute abundance, they could light up the lives of an entire country but they're the most robotic and desperate of all of us
As things are at the moment they're our future until we can imagine a world where everyday is not a slow decline into the end stages of a monopoly game
Anyone who lives in a first world nations lives an infinitely better life than even kings did just a century or two ago. I think it is easy to see the negatives that living in our world entails, but in truth, there are so many positives, and I think it behoves us to remember that.
To be clear, I am not claiming that everyone is universally better off today than 20 years ago. Obviously that would be silly. I’m making the case that modern society affords many benefits in aggregate.
As economist, this entire sentence repulses me. No, it wasn't thanks to frantic capitalism. None of the "mechanism" that are adjudicated to frantic capitalism alone mean everything to bring most people out of poverty. What actually has brought more people out of poverty was consistent growth paired with a fairer distribution of the gains in productivity... which is not an economic system feature
Thanks to technology. Productivity increases are due to technology.
Contrary to what Reddit might tell you, the majority of new drugs are developed by private industry, not universities. These include life changing drugs like propranolol, fluoxetine, sildenafil, atorvastatin, semaglutide, and many more.
Elon Musk didn’t build globally distributed internet for a laugh. He hasn’t reduced the cost of space logistics by 90% for fun. He did it because he wanted more money. He was incentivised to risk his entire fortune on more than one occasion.
As a UK resident
“Ouch”
Really
“Ouch”
It's best to avoid people who will challenge your ideas and instead create a large group of loud people who believe your promises. What could go wrong?
- I've spent the last five years dutifully responding to each and every criticism I've found online. My entire original article series was about responding to the three most significant critiques of the movement. On my blog you can find many other such replies to critiques that have come in since then.
- This is important to do for epistemic reasons. However, it has nothing to do with actually changing things. You simply do not change the world by responding to your most hard-bitten critics. That's an entirely orthogonal problem.
You don't get it done from discussion; you learn if you should do it. But if everyone who disagrees is a "keyboard warrior" then maybe you won't.
So the author is right that at a certain point you should disengage with these types and focus on racking up real world wins.
That's never been true anywhere I've lived. Landlords generally charge the maximum the market will bear. In high-demand areas, letting is highly profitable. A London flat, say, will generally net five figures above the mortgage.
LVT is, definitionally, only high in those places.
Does this help you understand?
But say there is an urban area that is 60% parking, by default LVT would probably make that uneconomical and the land owners would be incentivized to redevelop or sell.
A concrete example is I used to work at a warehouse in Boston as a teen that had hundreds of parking spaces… in one of the most housing constrained cities in the whole country in relatively prime real estate. I hope that lot gets turned into condos or something it would be a huge win for the city.
One wonders whether they are rebutting their critics' actual arguments - I simply cannot imagine that a serious critic would make the quoted claim.
At the very least, it would be great if politicians implemented it as tax neutral and as originally designed: the ONLY tax, and including renters. Some jurisdictions are doing it that way.
It’s unclear to me what problem it seeks to solve. Market value changes for every asset, not just land, and unearned wealth creation is common. Should all software engineers return the 50% of their salary that market forces caused to increase and give it to typists?
I will probably believe it more when the proponents act on their recommendations, say, if Lars sells his house and sends the 50% appreciation he says in his blog he didn’t earn, as a gift to the Federal Government so that Trump can hire a few more ICE agents.
My concern is also aligned with Orwell in Notes on Nationalism: “One has to belong to the intelligentsia to believe things like that: no ordinary man could be such a fool.”
Done honestly, land tax replaces property tax. The problem of tax increases is orthogonal. Your paragraph doesn't address LVT, it addresses cities being broke.
> It's unclear to me what problem it seeks to solve
Unfairness of existing tax; rent-seeking; insufficient housing supply; unpriced externalities; take your pick.
> unearned wealth creation is common
...and, typically, taxed. I have a Capital Gains liability for mine, which comes due when i sell.
> Should all software engineers return the 50% of their salary that market forces caused to increase and give it to typists?
No; they were presumably taxed on it already; and it's currently dropping, also due to market forces. But that's beside the point. Their income, inflated or not, was earned. LVT is about pricing in an externality that currently goes unpriced, that is deemed to be owned because someone a long time ago planted a flag. We do not need to abolish the concept of land ownership, but we should question assumptions about it.
> I will probably believe it more when...
That's just insane.
> My concern is also aligned with Orwell
No, you merely quoted Orwell out of context. FFS. By all means borrow a pithy line, but don't claim an authority who doesn't agree with you.
Orwell was a passionately radical and progressive. He fought in the Spanish civil war. He wrote "Down And Out In Paris And London". I don't know if he ever wrote about LVT, but my bet is that he would have been strongly in favour of it.
The government needs money. It prints a fixed budget for the year say 10% of money supply. Boom, 10% instant inflation spread evenly across all money holders, those who have more, those who have less. In one second, one enter key, all the money government needs right in their pockets, no need for infrastructure, monitoring, personnel, overhead, nothing. Clean money ready to use.
Land Value Tax as Henry George proposed, while philosophically sound, it still requires collection, measurement, vigilance, etc while Money Printing Tax MPT does not. We have a trillion dollars in circulating money, we print 100 billions. Next year we print 110, and so on (whatever the math is) and they both cover the same principle, money for the government to work extracted the most equitably from all at once
If the government ever needs more money say for real wars, threats, national disasters, it prints more (special circumstances approved by congress 75/25), everybody contributes proportionally to their wealth, and nobody would ever complain
You say in less than ten years the money supply would double and the currency debase? So what? In real life, the government printing money only benefit those who get the money first, while with this method everybody is affected equally so there is no advantage at all
Thing is, the insatiable appetite of the state for money no matter where it comes from is impossible to tame and no matter how many ethical thoughts we put on it, thieves in power won't ever care as that's their nature
I am also a programmer, so I try to find solutions to everything, or at least interpretations of my own thoughts toward an optimization of a real or imagined problem
Laugh at this if you want
> You handle that the same way income taxes do: the first X amount is exempt, like a standard deduction, applied to the land under someone's primary residence. Pair it with a rolling multi-year average for assessment so value spikes phase in gradually instead of hitting all at once. Keeps the incentive against passive land-holding everywhere else intact, without the blanket caps that also protect speculators. Instead of using one tool to fix it all, you use multiple tools that work together to make efficient systems
https://news.ycombinator.com/item?id=49842540
And also:
> Yeah, no. The only land that should be exempt is the one under your primary residence. If you're doing something productive with it, like extracting value, renting it out, whatever, it's not just your residence anymore, and it should be taxed like any other land. The whole point is that productive/extractive use is supposed to generate enough return to cover the tax. If it doesn't, that's the market telling you it's not being used efficiently enough to justify holding it
1) Families and marriages formally splitting so that each member can keep one residence
2) People selecting their highest value commercial property at cost as their primary residence regardless of practicality to exempt the tax.
3) Many of the best positive effects of the tax on gradually reorganizing urban geography are seriously lessened.
About 3, the exemption isn't total. It's a flat land-value floor, the same for every household, set from median income rather than land value, so it moves with what a typical earner can afford rather than with the market. Below that floor, land goes untaxed. Above it, you pay like anyone else. If your land's worth outpaces that floor, that's the market saying it's better used commercially than as housing you can no longer actually afford
I mean putting a line on your pay slip called "lvt contribution" and then state the pre-lvtc salary in job descriptions and stuff like that.
Similarly with vat and related taxes. The incentive in both cases being to signal: here's what we would pay/charge if it weren't for the government. Which is presumably the current incentive to state before tax salary/cost (this assumption could well be totally wrong).
Dredging
Serendipity, I guess.
It never ends.
I think it's better to say that HN readers have a soft spot for clever solutions that seem like hacks. And the LVT is really a huge societal hack to unlock a lot of prosperity and eliminate a lot of poverty.
Allow to me cite another beloved HN blog by way of explanation for why this mostly appeals to people without a strong understanding of the systems they want to “fix”.
https://johnsalvatier.org/blog/2017/reality-has-a-surprising...
This is the hack that fixes inequality in the 21st century, provides for a UBI, fixes the housing shortage, lowers inflation, ___and___ is astonishingly libertarian in a way that would still achieve a lot of those progressive goals, but could be embraced by self-employed / founder / developer / capitalist / middle-class and upwardly mobile non-bitching people like myself... even those of us who do own land.
Next thought was that I should start a political campaign based on it. It probably would function as a sort of systemic broad-spectrum antibiotic for our current monopolist "late capitalism", at least on a street level.
Then a week later it's topping HN, so why bother ;)
> An explanation sufficient to convince me otherwise would need good answers to these four questions:
> 1. Why don’t landlords cut rents when their operating costs fall?
I genuinely can't imagine what happened in the mind of the person writing this question.
2. Even if it didn't work, Georgism is fundamentally a more just and fair system.
3. The world really needs it right now. Housing, wealth inequality, climate change, the inability for most populations to understand how to properly balance aspects of capitalism and socialism.
Friends let their friends know about Georgism! Do the right thing!
So if we're going to start taxing me at a million per year, can I start taxing those loud people a million a year so I can live in the city to pay for medical bills for my brain to go through the bouncing basketball.
Mind you, everyone else in my area has 10 - 15 acres and it's just a dead area. Just people that ran away from the city. There's absolutely no "value" in this land as no one wants to even be here and drive 40 minutes to get to a grocery store.
Obviously this assumes a single tax-base; if you are not in the same tax base of the city, then you're probably still fine, since if everybody has similarly valued lots, the taxes will be shared similarly between them.
Land in a city center? Hefty taxes, identical for a parking lot and a skyscraper, because the parking lot could be a skyscraper instead.
Land in a low population rural area? Low taxes, because the likely uses are homes or businesses that could be built in any other rural area.
You've been here a long time, and it's dismaying to see a longstanding user degrade the site like this.
If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.
(I suppose I'd better add that this has nothing to do Georgism. You're welcome to make substantive points thoughtfully, but this was not that.)
if you were to couple Georgism with a massive reduction in state spending i would be more on board i think.
Also, I don't think it precludes a sales tax or tariffs, etc.
We needed a government to crush the majority’s house values yesterday. As a consolation prize, we got ‘08. It sucked investment out of housing, and we got a booming economy.
The average citizen should not own a home and be allowed to vote at the same time. Canada experienced the consequences of a psychotic ideological homeownership push, China dodged it by intentionally deflating property values, the US will pay the price if people keep voting for property values to go up.
but yes, home ownership is becoming increasingly unaffordable for a number of reasons, including increasing government spending...
Generally enjoyed this blog post, however this is either the most naive question, or worst strawman argument I've read in a long time.
It's usually up against some insane shit like Prop 13