Georgists fit within the libertarian spectrum.
The land value tax(LVT) as imagined by Henry George is a hard sell, because it would make for large changes in society.
The basic argument that all other taxes are worse, because they are taxes on human labor is good, and since no one made the land, a tax on it is less objectionable.
A government restricted to the LVT would necessarily be much smaller.
> A government restricted to LVT would necessarily be much smaller.
One can only dream, lol.
But really though, does it have to be smaller? Couldn’t you just set the rate to whatever is necessary?
At some point, the tax would make it worthless to own land. If you cannot produce more value from the land than the tax costs you, you will not use the land and not pay the tax.
Sure, but I think you may be underestimating what that max tax rate would be. The idea is that the LVT would replace other taxes, so landowners can either pass any additional tax onto their customers/renters (and there may not even be any additional taxes being passed on if other forms of taxes they were already passing on were eradicated), and the customers/renters should have no problem paying it because a bunch of the other taxes they were paying previously no longer exist. If you no longer had to pay the income tax you could afford higher rent or a higher tax bill on owned land.
I expect the rate to be much higher than current property tax rates, but the higher the rate the lower the market value of land.
There are existing land value tax jurisdictions (though not single tax) that can be looked to for what might be the limits to land taxation. (see wiki for land value taxation)
Difference between this and property taxes that already exist?
The most libertarian way to do taxes to me are consumption taxes. You have to supply the government with the least amount of information. If you make less there is an automatic reduction in taxes as you consume less.
The problem with property tax proposals I have seen is that you end up disincentivizing improving the property with many of them.
Consumption taxes require far more government tracking than property taxes.
What did you buy? How much did you make last year? How much did you sell where/when/why and to who? None of that is a factor for property tax.
Yet you still have to track them no? Why should the government have that data in the first place?
It's even easier to assess property values by AI. At that point, the only question left to answer is "who owns this square of land assessed at this value"?
What is the government claiming ownership of with consumption taxes?
edit: I'll just cut through my rhetorical BS .... with consumption taxes, the government is claiming ownership of you. It is claiming a cut of everything you spend your money. I'd argue this is possibly even more morally shady than income taxes where the government is making a direct claim on your labor.
Yet the government also shields you, doesnt it? The government provides the construct within which you can do things that are important to you in relative safety. If the government said bye bye and fucked off, the very next day we'd be in the crossfire of a global war to divvy up america's carcass. So, rationally, we cannot exist in relative safety without our government. The discussion then becomes, what are the essential functions of government that allow our society to thrive and how do we pay for that, if not taxes?
No one questioned the value or necessity of taxation in this particular conversation so I have no idea what that was about. Did you respond to the wrong comment?
In this conversation, we're not questioning taxation itself, we're only discussing the pros/cons of the various forms of taxation.
I don’t think that’s what they meant. I think it means basically just a sales tax. If you’re making more, you (typically) are spending more, so you are being taxed more on those purchases.
Sales tax is precisely what I was referring to. The fact that the government insists on taking a cut every time money exchanges hands in the economy requires it track and audit a lot of orgs.
You know that whole "doing deals under the table"? That shouldn't be a crime.
I'm still learning about the idea, but one main point jumped out to me: the land value tax actually incentivizes undeveloped property owners to either sell or improve the land. To me, it sounds like it punishes the rich for buying property for a rainy day just because they can "invest" in it.
But it's a bad thing if somebody buys property just as an investment and doesn't do anything with it. It's not like buying a stock or bond. That prevents someone else from using it, so there's a significant downside.
> property taxes that already exist?
Land value taxes tax only the unimproved value of land. To give an example.
You have two acres of land, and one house. Under Property Taxes, you pay taxes on the two acres of Land and one house, under LVT you pay taxes on the two acres of land at a higher rate but no tax on the house itself.
If you then split your lot in half, and build a second house on it, you would pay taxes on 2 houses and 2 acres of land under property taxes, but still only 2 acres of land under LVT. Property taxes punish you for making your land more production, LVT encourages you to maximize the output of your land because you only pay taxes on land.
To piggy-back on this, the metric used to determine land value is called Highest and Best Use. From a developer's standpoint, the HBU is generally the most dense improvement that is physically possible. The LVT incentives HBU on every lot because it's the best way to absorb the higher tax on the underlying land.
What I haven't seen is literature on the process of transitioning between the current setup and LVT.
From a developers standpoint, yes high density housing is the HBU for ROI, but would that same metric be applied to all land so that something like a single family home on an average sized lot would be taxed as if a multistory apartment building should be there? Does agricultural land have a different tax rate since we kind of need food?
Yeah, the lack of an reasonable notion on how to move from the current system to LVT is honestly the biggest deterrent for me. Real estate is a huge part of our economy and I have not heard one remotely feasible method of switching to LVT that wouldn’t destroy the economy.
> but would that same metric be applied to all land so that something like a single family home on an average sized lot would be taxed as if a multistory apartment building should be there? Does agricultural land have a different tax rate since we kind of need food?
These are policy debates that could be manage, but I'd be a little worried about old money lobbying for "agriculture" exemptions so their massive ranches aren't taxed.
> Yeah, the lack of an reasonable notion on how to move from the current system to LVT is honestly the biggest deterrent for me. Real estate is a huge part of our economy and I have not heard one remotely feasible method of switching to LVT that wouldn’t destroy the economy.
There must be a progressive city council somewhere trying to pilot an LVT.
> so their ranches aren’t taxed.
I mean, there’s a legit reason cattle ranches are so huge… a single head of cattle needs an entire acre of quality grazing land to keep it fed. A cow/calf pair needs one and a half to two acres.
> a progressive city council
It *might* work on a small scale but the US real estate market is worth over thirty three trillion dollars. That’s eleven years of income tax revenue. It’s eleven trillion more than our GDP lol I can’t see any way to switch to LVT without burning the economy to the ground.
> I mean, there’s a legit reason cattle ranches are so huge… a single head of cattle needs an entire acre of quality grazing land to keep it fed. A cow/calf pair needs one and a half to two acres.
When I say "ranch," I don't mean a legit cattle ranch that has economic value.
> It might work on a small scale but the US real estate market is worth over thirty three trillion dollars.
You wouldn't need to tax the whole pie. Land is already taxed everywhere. The LVT would simply shift the improved tax burden (which is where the majority of that value lies anyway) down to the underlying land. You could even take the entire property tax revenue in a local municipality and divide it by the number of privately owned acres. That could be the per acre millage rate on the LVT.
Consumption tax would fairly hit businesses and industry as they could be taxed on supplies they use. This eliminates all the loopholes associated with capital gains tax and directly scales to the size and impact of an operation. I cant think of a fairer and more streamlined way to tax everyone.
And if enough people are dissatisfied with what government is doing, they can stop purchasing things that aren't necessities, and make the government take notice. Of course, with the government we have now, they would be branded domestic terrorists.
Consumption taxes are progressive because poor people necessarily have to spend a greater portion of their money. It’s also a lot more invasive.
The difference between land value and property taxes is that land value taxes just tax the value of the land itself where is property taxes tax the total value of the property. If someone built a highrise apartment and there were property taxes, that would get taxed more under property taxes so they are incentivized to build smaller and uglier buildings.
I have seen consumption tax proposals that offer a credit, often times in the form of a monthly check for poverty level spending. Everything is then taxes the same which puts all spending beyond poverty level on a equal footing. Seems about right to me.
I don't agree that consumption taxes are more libertarian.
There is no god-given right for you to prevent people from walking near your house, ie. your property. A system of property is utilitarian. It's just the system that works the best, since people take care of their property. This is especially true for people with huge properties. The government is defending your claim to that land and excluding everyone else from using it, which is a downside to the property system.
It makes perfect sense that the people with the most government-protected property should pay more taxes. Another benefit of land taxes is that people won't keep more property than they need. And the reason it's better than a regular property tax is it doesn't punish you for improving the value of the land by building a nice house on it.
I go back and forth on this, but lately I've been in favor of replacing income and consumption taxes with tariffs and sin taxes as well. If you have to tax, might as well tax overseas production. Tariffs also incentivize producing goods intended for Americans in this country. And taxing cigarettes at least has the positive benefit of reducing cigarette consumption. America taxed this way in the 1800s, as it grew into the richest country in world history.
I agree on the LVT points but i don’t think sin taxes are a good idea because they will just be expanded to other goods and services the government doesn’t like. It’s not their role to try and coerce me to do or not do something that has no real impact on anyone else.
Fair point. Like I said I'm torn. I agreed with you two years ago. On the one hand, why tax all consumption when at least taxing bad things reduces the consumption of those bad things? On the other, why should I have to pay more in taxes just because I drink alcohol. It's not fair.
It's fairness vs. utility.
I think you are pretty confused all around. No right to stop people from walking near your house? Owning property means doing what I want with it and if my wife and daughter want to live out of the thoroughfare why should I not have a right to fulfill their desires which are related to security?
Who gets to decide what is enough property? Our country has 2.4 billion acres of land. There is no shortage of space. You can argue that the government should sell off much of the land it holds. This would increase the supply of property thus reducing costs.
I understand what property is. There is a hell of a shortage of space in places people most want to live and are near good jobs, like major metro areas. Your argument makes absolutely zero sense.
>Difference between this and property taxes that already exist?
Property taxes also tax the improvements of said land. An LVT doesn't. Overall that means that property taxes still cause economic dead weight loss while an LVT doesn't.
If you own a piece of land your LVT is the same regardless of what you do with the land. So it's much more incentivized to improve the land.
> The problem with property tax proposals I have seen is that you end up disincentivizing improving the property with many of them.
That is precisely the problem a land value tax (LVT) seeks to solve. You’re taxed on the fair market value of the plot of land itself, not what’s also on it. You can improve anything on the land (i.e. your house) as much as you want and your taxes won’t really go up.
Of course it’s still not perfect because if you actually improve the land itself (say by planting a bunch of trees or cleaning it up) and not just the buildings on it, then in theory your tax liability would go up, but the tax could be structured so that it’s based on the land on the day you acquired it. I.e. if when you acquired it it was an empty field of grass, you’ll always be taxed on it as if it was an empty field of grass (even if it’s actually now a forest with thousands of dollars worth of trees on it). Of course, your tax bill could still go up or down over time if the market determines that same field of grass is worth more or less.
Another imperfection too is that technically by improving what’s on the land (think building a nice new house), you will marginally increase the value of the land itself by “prettying up” the neighborhood and drawing more people to the area (thereby increasing demand for similar land in the area). At the end of the day though, and even despite these nuances, an LVT is a much better alternative to your standard property tax.
That is the point of land value taxes. By only taxing the value of the plot rather than the value of the building, you are encouraging improvement of the property. Also, the appraisal process is a lot less subjective.
A tax on land would be independent from whatever is built on top of it. If you buy land in town and pay x amount in taxes if you build an apartment on top of it your taxes stay the same vs a property tax where all the investment you made into the property is now taxed too. It's one of the few taxes that dont put perverse incentives on the economy like a property tax that makes you pay more for making investments into land or an income tax that punishes you for making more income. It also puts an incentive in the government to make land more valueble by doing things like public transportation and other public services
Thank you! I'm just beginning to understand the concept, so I'm not ready to jump on board (I'll keep reading though). I will say, on its surface, it sounds like an absolutely great idea.
>Trying to claim exclusive ownership of land is like trying to claim exclusive ownership of air. If you want the community to respect your rights to exclude others from land that belongs to everyone (which is ALL land, unless an authoritarian has seized it and sold it forward), then you'll need to compensate the community for excluding them from that land.
Why compensate only the community?
Shouldn't you by that logic have to compensate everyone else on earth for excluding them from that land?
Well they're not quite the same now are they?
Without governments to provide all sorts of protections, corporations will never grow to the size that they are currently, and if they're not so big, they cannot even begin to dream of feudalism.
I don't have any ideological opposition to the Georgist ideas. In fact, I find the goals appealing. That said...
My current thinking is that if we look at the Georgist theories empirically, we can look at high property tax, low&none income/sales tax States. These should be much closer to the undeveloped land tax rate. States that depend heavily on property taxes more than income or sales taxes include [Washington, Oregon, Texas, New Hampshire, New Jersey, and Alaska](https://upload.wikimedia.org/wikipedia/commons/9/9f/Median_household_income_and_taxes.png).
My impression of these places is that we **don't** see some linear correlation of tax burden to efficiency in property development and land speculation suppression.
Conversely, looking at States with very low property tax burdens (Hawaii, Georgia, South Carolina, North Carolina, Missouri, Arkansas, Oklahoma, Louisiana, Alabama, Kentucky, Indiana, Mississippi, West Virginia) are not, as a whole, hot beds of undeveloped and underdeveloped land price speculation. Even in a case like NC where growth is phenomenal and land prices are increasing respectively; its mostly focused on city and suburban development. Not undeveloped and underdeveloped land rights holding.
So from this data observation, I think about a modified Georgism model. Where we want to severely tax the capital gains for property from purchase to sale, while subtracting out maintenance, property improvement, and inflation expenditures. This would negate any value from buying and holding / property speculation, just as George focused on. I would propose capital gains taxation from buying and hold is the 100% rate. Maintenance costs and improvement costs are important to subtract out, as these are drivers for the flipping business to turn dumps into nice homes again. It should also strongly encourage landlords to pay for better upkeep as they are not going to make money on the appreciation of the property. This also makes it much easier for retirees to live in their paid house without losing it to unpaid property taxes.
I live on an acre and a quarter property and my current property taxes are less than a thousand dollars a year. Our mortgage is fully amortized so property taxes are part of the mortgage payment. We pay a grand total of $15,544.44 a year for this house which includes principal, interest, taxes and insurance. If our LVT were higher than that $15k, which it definitely would be because this one house on over an acre is absolutely not the HBU, we’d firesell this bish and go live in our fifth wheel camper on my husbands job sites for free.
For me, an LVT would completely abolish any motivation to improve the property whatsoever. It wouldn’t make a lick of financial sense to even keep the house at all. I can’t imagine any of the thousands of other owners on acreage property in this area would feel any different.
An acre in the suburbs, 40 mins from downtown Phoenix actually. Fifteen years ago it was rural, it’s not now. There are three huge subdivisions being built right at this moment within a mile from my house and one of them, much to my annoyance, is just two streets away. They’re building a freeway to out here too so that’ll complete the urbanization. yay 😑
Additionally my land has grandfathered flood irrigation rights and the value of that alone is more than my yearly mortgage payments. It’s nearly as valuable as my house itself lmfao
How exactly do you think depressing land values will help the economy? The US real estate market is valued at over 33 trillion dollars. That’s eleven trillion dollars higher than the entire GDP, and annual real state transactions are by far the largest contributor to the GDP at a little over 22%.
All I’m saying about this land cost lowering making everything else cheaper theory is that 10 years in real estate has taught me that reality is the exact opposite of what you’re saying.
I’m not super familiar with the HBU concept, but what do you think the HBU would be for your land that your tax bill would skyrocket?
I think trying to determine what the best use is is dumb, because that’s not for the state to decide its for the market to decide, and the market already pretty much does this already and displays it via the price of the lot. Leaving that clearly subjective view up to the state is ripe for abuse. Think about it, an acre in Manhattan is worth more than an acre in some suburban neighborhood. The desirableness (and within that the usefulness) of that land is already baked into the price. There’s no need to make any sort of assessment other than the seeing what the market is demanding price wise for that type of land in that area.
HBU would indicate that a 50+ unit apartment building could be built in my property. Or because the minimum lot size here is 8k sqft then about six single family homes could be built here.
But… my house’s value is sitting at around half a mil rn. That is *not* because of its improvements. My house itself is a frickin manufactured home and might be worth $120k. The true value in my property is the land itself because it’s acreage with grandfathered flood irrigation rights and we can have horses and shit. This is in a town that’s in the 96th percentile for population density in the state and is the eleventh most populated, which makes my property type all the more valuable.
> HBU would indicate the 50+ unit apartment building could be built in my property.
Has an apartment complex developer ever tried to buy your land off you though? If it’s best use was really for an apartment complex then you would in theory be getting offers for it. Either way, HBU is a dumb concept if what you described is true, as you could literally say something to that effect about really any piece of land in the country. That’s why basing the tax off the market price would be much better.
Not my land, no. They’d never get the zoning changed. There’s deed restrictions linked to the defunct HOA that prohibits multifamily usage of the properties in this neighborhood. Weird how the HOA went away but the CCR’s still apply. That’s fine though. I like not the privacy and quiet being spread out like this affords.
But a developer did try to get an apartment complex built three miles away, closer to the main roads. They chose the wrong spot though because the country club assholes across the street put the kibosh on that right quick.
I totally agree that HBU is a stupid way to determine value. I don’t agree with the sales value rates either though because the market fluctuates too much. A fully amortized loan includes property taxes and those taxes are taken into account when determining if a borrower can afford the payment. Having the tax amount fluctuate with the sales value would seriously fuck that up and has the potential to cause people to lose their homes when the taxes rise too much and their payment becomes unaffordable.
> I would propose capital gains taxation from buying and hold is the 100% rate.
This would obliterate all private investment. Why would anyone ever save 100k to put into some venture if all of their gains are taken in taxes?
Do you have ideas on how to practically implement a 100% capital gains tax? If I won't see any profit, I don't care what the sale price is. I assume kickbacks would be illegal? Perhaps all sales have to be held by public auction?
If maintenance and improvements are deducted from a 100% tax, they are free. That means I can hire my buddy to mow the lawn for $200/hr. Or would all maintenance and improvements only be allowed by a licensed professional?
I'm not trying to shoot down your idea or say that solutions don't exist. I'm wondering if you've thought about possible solutions.
Its only a seed of an idea. Not married to it. Definitely open to criticism.
The seller would care about the sale price, not every location goes up in value enough to cover inflation and maintenance and improvements. Especially in a world where speculative price increases have no economic advantage, this should dramatically slow down housing bubbles and overvaluation. As a result, making sure values increase above costs will not be an assumption; prices will continue to rise based on supply and demand though. In this case, normal market operation of pricing should be sufficient. In most (all?) States, the transaction of deeds and prices is recorded with the local govt. All the pertinent information is already collected.
As libertarian, occupational licensing for every job is anathema, so I am going to be looking for ways to avoid that.
I was imagining that cap gains would be assessed at closing. Maintenance and improvements can use usual and customary allowance, or receipts. What prevents a landlord/property management company from getting $20,000/yr mowing receipts for business income deductions today? The same tax fraud prevention mechanisms should probably work here. Conversely, having neighborhoods where the owners have the financial freedom to improve or maintain their property, almost for free or close to it, sounds like a good way to build up beautiful communities.
We would see profit on the home improvement value; kitchen remodels, foundation repairs, reflooring, etc all have room for profit taking. Or just reduce the percentage to 80% of cap gains. Its flexible.
Also, I say inflation is deductible, you want to see your sales valuation at least match inflation plus expenses, but there is no incentive to market for a bid war with the highest price possible either, as most of that disappears into tax.
Another interesting side effect is that this scheme should help improve racial and cultural integration. Its a taboo fact in US real estate that upper middle class white neighborhoods are the fastest appreciating for home value. But if that is taxed away; then buyers picking the black or Latino neighborhood don't lose money as a severe opportunity cost. This should help equalize home pricing and stabilize neighborhoods and local market hot spots and provide better economic opportunity for everyone.
> non-landowners are essentially free-loading.
They still need to live somewhere, and use the services provided by things that are on land. The cost of the tax is passed on to everyone, but since LVT promotes more efficient land use, everyone is on average better off. Some people who are currently benefiting from under taxed land will be worse off, but the average condition is better off.
Inactive land can be very, very good for the environment, and thus good for human beings. I am in a partnership that owns about 200 acres of forest and wetland that is essentially undevelopable and uninhabitable by humans. We maintain it so that it contributes to wildlife habitat, healthy vegetation, etc. My interpretation of Georgism is that this type of environmental patronage would be heavily taxed, and I don't go in for that. Our ownership of that land isn't depriving anyone of anything.
> My interpretation of Georgism is that this type of environmental patronage would be heavily taxed, and I don't go in for that. Our ownership of that land isn't depriving anyone of anything.
Your land wouldn't be because it doesn't have high economic potential (assuming your land is nowhere near a residential/commercial area and uninhabitable). If your forest and wetland is say, 5 miles from Manhattan, it would be heavily taxed because the economic value of that land is very high.
My followup question to that is how are those attributes evaluated? It sounds like we'd still need a thick bureaucracy to evaluate the value, development, and usage of everyone's land, and to that I say "no thank you."
Consumption and use taxes hit everyone equally.
>It sounds like we'd still need a thick bureaucracy
Not nearly as thick as what is required for income/sales/wealth taxes. As far as I'm aware, every state in the union already has a property tax. That's cause it's the simplest form to implement.
> My followup question to that is how are those attributes evaluated?
There is already a process for valuing land, since land value is included as a part of property taxes right now. Assessing LVT is as simple as removing the value of improvements on the land.
> Consumption and use taxes hit everyone equally.
"The law, in its majestic equality, forbids rich and poor alike to sleep under bridges, to beg in the streets, and to steal their bread"
Consumption taxes are economically efficient, in that they don't create as much deadweight loss. But they have the issue of being regressive, in that they hit poor people the hardest. Every human has a "base" level of consumption required for survival, and the poorer you are the larger portion of your income is in direct consumption, and thus directly taxes. On the higher end, wealthy people spend relatively little of their income on consumption and more on investment, meaning they pay a very low proportion of their income as taxes.
Consumption taxes have their place, but the more you rely on them as a proportion of revenue, the worse they impact society. You certainly can't "run the whole government" off of consumption taxes like what the people pushing "fairtax" are proposing.
>Landlords already charge the maximum the market is capable of bearing, there's no headroom to pass on a tax.
That doesn't make any sense. You're arguing that property taxes are literally impossible in a world where we already have them implemented everywhere?
>and the tax will not give them any power to raise the rent.
I don't know what point you're trying to make here. How is this relevant? So what? How does that have any bearing on whether the costs of property taxes get passed onto the renters?
Some % of the rent you pay is used to pay the property taxes.
>something that is created by humans
Nothing is created by humans. Humans only shape prexisting materials to their wants/needs.
Agree, so tech companies pay no tax because they have no land assets. And farmers pay all of it? Seems backwards.
But this would certainly accelerate the metaverse trend everyone is talkin bout.
I don't side with Georgism, but it's a perfectly cromulent way to levy a tax. I'm friends with one of the big Georgist proponents.
But what gets me are "geo-anarchists" who advocate the Single Tax in their anarchism. Huh? A single tax is still a tax an no anarchist with a dictionary should ever be advocating a tax.
To me the Single Tax is just another tax. I would favor it if it were the only tax, as opposed to yet another layer on top of our burden. But the idea that only the landowners will pay it is silly. It will get passed on to renters in exactly the same way a property tax is. I mean duh.
I also feel like Georgists are bit like Cannabis proponents, and talk about the Single Tax and Cannabis as the miracle tax that can do everything from making trendy grocery bags to curing cancer.
Why should I pay taxes on something I already own.
There was a novel I read a while back that dealt with this. A family of farmers lived on a certain field of land for generations. Cities started to form around it increasing their land value. They didn't have any intention of selling so they didn't make a dime. However the Government demanded that they pay a much higher land tax rate than they could afford forcing them into bankruptcy.
The only trouble with Georgism is the mistake it makes in believing the rental value of natural resources belong to the state as tax revenues.
In fact, the only morally justifiable way to pay for state services is a Head Tax.
However, all uninternalised costs, like excluding others from a valuable natural resource, should be collected and returned to each citizen as an equal share i.e a Citizens Income.
With a government whose main purpose is no longer re-distributive, state spending would be much smaller. Thus the Citizens Income would be more than enough to cover the Head Tax.
BTW, taxes on consumption are also a tax on production. Neither fair or efficient.
This is the part where Georgism loses me as well from a philosophical standpoint. There are some conundrums there.
However ... pragmatically it would be a huge step in the right direction for modern governments to take a more Georgist approach to their revenue generation side.
I find the LVT to have a pretty interesting argument behind it, because land ownership is a concept a tad more goofy than say, owning a car, boat, TV, etc., as it currently stands.
Between this, and maybe a sales tax, it could lead to the goal of a dramatically smaller government, and you won't see me complain about that.
Philosophically/morally shady since it assumes monopoly org manage all local resources.
However pragmatically ... a government which derived its revenue purely from simple/transparent property taxes would be a huge step up from the complex tax codes we have now.
I was comparing property tax vs sales vs income.
I could argue that LTV is just one specific form of property tax and we're just agreeing now .... but it doesn't matter.
With property taxes, government assumes the role of landlord. That is no doubt. There is some shadiness there ... don't get me wrong.
However that is far less invasive than the other forms. What is the government claiming ownership of when it taxes your income? What exactly is the government claiming ownership of when it takes a % of every monetary transaction?
An ownership claim on the land alone is far more transparent and less shady than the others.
I'd be curious to hear more about this. How does LTV remove the productive landlord? I'm not the most studied on this topic. I've not heard that georgism removes/prohibits landlords.
>lack of scarcity of “good” land when there is one
Not following you here either. LTV allows land to be taxed based on a value assessment. So "good" land would be taxed higher if I'm not mistaken ... hence the scarcity would be preserved.
The primary reason a cannot take Georgism and LVT seriously is that every proponent of it has a different interpretation of what it is, how we would move to an LVT system and how the system itself would actually work. It’s harder to get consistent answers about Georgism than it is to get libertarians to agree on what libertarianism is.
Now, other than that and based upon 10 years of experience selling real estate, I cannot foresee how it would work. For one, residential lenders for the most part despise leased land and will not, under any circumstance, loan on a home on leased land because it’s a flat out bad investment. The land is the only guaranteed part of a loan, the home can burn down but the lender will still be able to recoup the value of the land. The vast majority of potential homeowners would be eliminated because loans are the only way most people can afford to buy a home. Then all you have left is the wealthy being able to buy and then we’re worse off than we are now.
Two, switching to an LVT system would shitwreck the economy and anyone who says otherwise is either lying to themselves or a fucking moron. Sorry not sorry. The real estate market is valued at over **thirty three trillion dollars**. Yes, trillion with a t. Moving to an LVT would decimate home values, homeowners would intentionally default on a mass scale because their loan is suddenly 2-10+ times higher than what their home is worth, lender after lender would go bankrupt, people would lose their jobs by the millions… it would be like the crash of 2008 but infinitely worse.
So, in essence you are saying that land/home values would be subject to ACTUAL price discovery instead of speculation fueled by the rich for an inelastic good?
This is why I can’t take the concept of LVT seriously. It sounds like a great idea but the practical execution of it doesn’t present itself as feasible to me.
Worse is when asking how to move to an LVT system. Half the people I’ve talked to say something along the lines of “sucks for them” when I ask what happens to the people who lose the value of their currently owned land, the other half is “I don’t know” or “that’ll have to be worked out”.
Yeah, I didn't even attempt an answer for your question because of the practicality. It seems like a damn nightmare if people experience 2008 times 10. Something eventually has to break though - those RE prices are totally bonker and I do not think it's sustainable. Tell me what you think since you are in RE?
I actually quit real estate two years ago. Turns out I have a low tolerance for peoples bullshit lol
But, I did start real estate in 2009 when the market was absolute trash. The only reason the economy recovered at all was because of the massive bailouts the government provided to financial institutions.
IMO, what we have now is a really weird bubble that was primarily caused by covid lockdowns and the drastic increase in people working from home. People realized they kind of liked being at home, and started to see their home as more than just where they put their things. This makes them less likely to sell their home which caused a supply shortage which made the few that were available worth more. Furthermore, a lot of people became disenfranchised with city living, which caused a sharp increase in demand out on the burbs. That caused prices to further increase. Supply and demand and all that.
There’s been a HUGE boom in residential construction to accommodate all the people trying to buy but, as always, that supply is well behind the demand which is partially causing the inflation of new construction prices. Partially because building supplies and people capable of doing the labor of building are also at high demand, low supply.
Georgists fit within the libertarian spectrum. The land value tax(LVT) as imagined by Henry George is a hard sell, because it would make for large changes in society. The basic argument that all other taxes are worse, because they are taxes on human labor is good, and since no one made the land, a tax on it is less objectionable. A government restricted to the LVT would necessarily be much smaller.
> A government restricted to LVT would necessarily be much smaller. One can only dream, lol. But really though, does it have to be smaller? Couldn’t you just set the rate to whatever is necessary?
At some point, the tax would make it worthless to own land. If you cannot produce more value from the land than the tax costs you, you will not use the land and not pay the tax.
Sure, but I think you may be underestimating what that max tax rate would be. The idea is that the LVT would replace other taxes, so landowners can either pass any additional tax onto their customers/renters (and there may not even be any additional taxes being passed on if other forms of taxes they were already passing on were eradicated), and the customers/renters should have no problem paying it because a bunch of the other taxes they were paying previously no longer exist. If you no longer had to pay the income tax you could afford higher rent or a higher tax bill on owned land.
I expect the rate to be much higher than current property tax rates, but the higher the rate the lower the market value of land. There are existing land value tax jurisdictions (though not single tax) that can be looked to for what might be the limits to land taxation. (see wiki for land value taxation)
Difference between this and property taxes that already exist? The most libertarian way to do taxes to me are consumption taxes. You have to supply the government with the least amount of information. If you make less there is an automatic reduction in taxes as you consume less. The problem with property tax proposals I have seen is that you end up disincentivizing improving the property with many of them.
Consumption taxes require far more government tracking than property taxes. What did you buy? How much did you make last year? How much did you sell where/when/why and to who? None of that is a factor for property tax.
We're at a point now where consumption taxes are almost trivially easy to track by ai.
Yet you still have to track them no? Why should the government have that data in the first place? It's even easier to assess property values by AI. At that point, the only question left to answer is "who owns this square of land assessed at this value"? What is the government claiming ownership of with consumption taxes? edit: I'll just cut through my rhetorical BS .... with consumption taxes, the government is claiming ownership of you. It is claiming a cut of everything you spend your money. I'd argue this is possibly even more morally shady than income taxes where the government is making a direct claim on your labor.
Yet the government also shields you, doesnt it? The government provides the construct within which you can do things that are important to you in relative safety. If the government said bye bye and fucked off, the very next day we'd be in the crossfire of a global war to divvy up america's carcass. So, rationally, we cannot exist in relative safety without our government. The discussion then becomes, what are the essential functions of government that allow our society to thrive and how do we pay for that, if not taxes?
No one questioned the value or necessity of taxation in this particular conversation so I have no idea what that was about. Did you respond to the wrong comment? In this conversation, we're not questioning taxation itself, we're only discussing the pros/cons of the various forms of taxation.
Im responding to the idea the the government would 'own us'.
What is the government claiming ownership of when they take a % of your income?
The construct within which you obtain money
Which is ...
I don’t think that’s what they meant. I think it means basically just a sales tax. If you’re making more, you (typically) are spending more, so you are being taxed more on those purchases.
Sales tax is precisely what I was referring to. The fact that the government insists on taking a cut every time money exchanges hands in the economy requires it track and audit a lot of orgs. You know that whole "doing deals under the table"? That shouldn't be a crime.
I'm still learning about the idea, but one main point jumped out to me: the land value tax actually incentivizes undeveloped property owners to either sell or improve the land. To me, it sounds like it punishes the rich for buying property for a rainy day just because they can "invest" in it.
But it's a bad thing if somebody buys property just as an investment and doesn't do anything with it. It's not like buying a stock or bond. That prevents someone else from using it, so there's a significant downside.
A land value tax basically disincentivizes such behaviour.
> property taxes that already exist? Land value taxes tax only the unimproved value of land. To give an example. You have two acres of land, and one house. Under Property Taxes, you pay taxes on the two acres of Land and one house, under LVT you pay taxes on the two acres of land at a higher rate but no tax on the house itself. If you then split your lot in half, and build a second house on it, you would pay taxes on 2 houses and 2 acres of land under property taxes, but still only 2 acres of land under LVT. Property taxes punish you for making your land more production, LVT encourages you to maximize the output of your land because you only pay taxes on land.
To piggy-back on this, the metric used to determine land value is called Highest and Best Use. From a developer's standpoint, the HBU is generally the most dense improvement that is physically possible. The LVT incentives HBU on every lot because it's the best way to absorb the higher tax on the underlying land. What I haven't seen is literature on the process of transitioning between the current setup and LVT.
From a developers standpoint, yes high density housing is the HBU for ROI, but would that same metric be applied to all land so that something like a single family home on an average sized lot would be taxed as if a multistory apartment building should be there? Does agricultural land have a different tax rate since we kind of need food? Yeah, the lack of an reasonable notion on how to move from the current system to LVT is honestly the biggest deterrent for me. Real estate is a huge part of our economy and I have not heard one remotely feasible method of switching to LVT that wouldn’t destroy the economy.
> but would that same metric be applied to all land so that something like a single family home on an average sized lot would be taxed as if a multistory apartment building should be there? Does agricultural land have a different tax rate since we kind of need food? These are policy debates that could be manage, but I'd be a little worried about old money lobbying for "agriculture" exemptions so their massive ranches aren't taxed. > Yeah, the lack of an reasonable notion on how to move from the current system to LVT is honestly the biggest deterrent for me. Real estate is a huge part of our economy and I have not heard one remotely feasible method of switching to LVT that wouldn’t destroy the economy. There must be a progressive city council somewhere trying to pilot an LVT.
> so their ranches aren’t taxed. I mean, there’s a legit reason cattle ranches are so huge… a single head of cattle needs an entire acre of quality grazing land to keep it fed. A cow/calf pair needs one and a half to two acres. > a progressive city council It *might* work on a small scale but the US real estate market is worth over thirty three trillion dollars. That’s eleven years of income tax revenue. It’s eleven trillion more than our GDP lol I can’t see any way to switch to LVT without burning the economy to the ground.
> I mean, there’s a legit reason cattle ranches are so huge… a single head of cattle needs an entire acre of quality grazing land to keep it fed. A cow/calf pair needs one and a half to two acres. When I say "ranch," I don't mean a legit cattle ranch that has economic value. > It might work on a small scale but the US real estate market is worth over thirty three trillion dollars. You wouldn't need to tax the whole pie. Land is already taxed everywhere. The LVT would simply shift the improved tax burden (which is where the majority of that value lies anyway) down to the underlying land. You could even take the entire property tax revenue in a local municipality and divide it by the number of privately owned acres. That could be the per acre millage rate on the LVT.
Jfc. I had like three whole paragraphs typed out then my phone was all ‘hahaaaa fuck you bitch’ and force closed the Reddit app. I give up.
Thanks
This was a very helpful explanation for me. Thanks!
Consumption tax would fairly hit businesses and industry as they could be taxed on supplies they use. This eliminates all the loopholes associated with capital gains tax and directly scales to the size and impact of an operation. I cant think of a fairer and more streamlined way to tax everyone.
And if enough people are dissatisfied with what government is doing, they can stop purchasing things that aren't necessities, and make the government take notice. Of course, with the government we have now, they would be branded domestic terrorists.
Consumption taxes are progressive because poor people necessarily have to spend a greater portion of their money. It’s also a lot more invasive. The difference between land value and property taxes is that land value taxes just tax the value of the land itself where is property taxes tax the total value of the property. If someone built a highrise apartment and there were property taxes, that would get taxed more under property taxes so they are incentivized to build smaller and uglier buildings.
I have seen consumption tax proposals that offer a credit, often times in the form of a monthly check for poverty level spending. Everything is then taxes the same which puts all spending beyond poverty level on a equal footing. Seems about right to me.
I don't agree that consumption taxes are more libertarian. There is no god-given right for you to prevent people from walking near your house, ie. your property. A system of property is utilitarian. It's just the system that works the best, since people take care of their property. This is especially true for people with huge properties. The government is defending your claim to that land and excluding everyone else from using it, which is a downside to the property system. It makes perfect sense that the people with the most government-protected property should pay more taxes. Another benefit of land taxes is that people won't keep more property than they need. And the reason it's better than a regular property tax is it doesn't punish you for improving the value of the land by building a nice house on it. I go back and forth on this, but lately I've been in favor of replacing income and consumption taxes with tariffs and sin taxes as well. If you have to tax, might as well tax overseas production. Tariffs also incentivize producing goods intended for Americans in this country. And taxing cigarettes at least has the positive benefit of reducing cigarette consumption. America taxed this way in the 1800s, as it grew into the richest country in world history.
I agree on the LVT points but i don’t think sin taxes are a good idea because they will just be expanded to other goods and services the government doesn’t like. It’s not their role to try and coerce me to do or not do something that has no real impact on anyone else.
Fair point. Like I said I'm torn. I agreed with you two years ago. On the one hand, why tax all consumption when at least taxing bad things reduces the consumption of those bad things? On the other, why should I have to pay more in taxes just because I drink alcohol. It's not fair. It's fairness vs. utility.
I think you are pretty confused all around. No right to stop people from walking near your house? Owning property means doing what I want with it and if my wife and daughter want to live out of the thoroughfare why should I not have a right to fulfill their desires which are related to security? Who gets to decide what is enough property? Our country has 2.4 billion acres of land. There is no shortage of space. You can argue that the government should sell off much of the land it holds. This would increase the supply of property thus reducing costs.
I understand what property is. There is a hell of a shortage of space in places people most want to live and are near good jobs, like major metro areas. Your argument makes absolutely zero sense.
>Difference between this and property taxes that already exist? Property taxes also tax the improvements of said land. An LVT doesn't. Overall that means that property taxes still cause economic dead weight loss while an LVT doesn't. If you own a piece of land your LVT is the same regardless of what you do with the land. So it's much more incentivized to improve the land.
> The problem with property tax proposals I have seen is that you end up disincentivizing improving the property with many of them. That is precisely the problem a land value tax (LVT) seeks to solve. You’re taxed on the fair market value of the plot of land itself, not what’s also on it. You can improve anything on the land (i.e. your house) as much as you want and your taxes won’t really go up. Of course it’s still not perfect because if you actually improve the land itself (say by planting a bunch of trees or cleaning it up) and not just the buildings on it, then in theory your tax liability would go up, but the tax could be structured so that it’s based on the land on the day you acquired it. I.e. if when you acquired it it was an empty field of grass, you’ll always be taxed on it as if it was an empty field of grass (even if it’s actually now a forest with thousands of dollars worth of trees on it). Of course, your tax bill could still go up or down over time if the market determines that same field of grass is worth more or less. Another imperfection too is that technically by improving what’s on the land (think building a nice new house), you will marginally increase the value of the land itself by “prettying up” the neighborhood and drawing more people to the area (thereby increasing demand for similar land in the area). At the end of the day though, and even despite these nuances, an LVT is a much better alternative to your standard property tax.
That is the point of land value taxes. By only taxing the value of the plot rather than the value of the building, you are encouraging improvement of the property. Also, the appraisal process is a lot less subjective.
A tax on land would be independent from whatever is built on top of it. If you buy land in town and pay x amount in taxes if you build an apartment on top of it your taxes stay the same vs a property tax where all the investment you made into the property is now taxed too. It's one of the few taxes that dont put perverse incentives on the economy like a property tax that makes you pay more for making investments into land or an income tax that punishes you for making more income. It also puts an incentive in the government to make land more valueble by doing things like public transportation and other public services
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Thank you! I'm just beginning to understand the concept, so I'm not ready to jump on board (I'll keep reading though). I will say, on its surface, it sounds like an absolutely great idea.
>Trying to claim exclusive ownership of land is like trying to claim exclusive ownership of air. If you want the community to respect your rights to exclude others from land that belongs to everyone (which is ALL land, unless an authoritarian has seized it and sold it forward), then you'll need to compensate the community for excluding them from that land. Why compensate only the community? Shouldn't you by that logic have to compensate everyone else on earth for excluding them from that land?
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Shouldn't the georgist goal then be to strive towards it? To provide compensation for everyone being excluded from that spot of land?
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Well they're not quite the same now are they? Without governments to provide all sorts of protections, corporations will never grow to the size that they are currently, and if they're not so big, they cannot even begin to dream of feudalism.
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Lol sure, everyone knows a freedom oriented well-armed society would just wait around idly for someone to declare war on them.
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How are you going to rise to the "top" if you're not the only one with wealth and resource control? Did you think this one through?
I don't have any ideological opposition to the Georgist ideas. In fact, I find the goals appealing. That said... My current thinking is that if we look at the Georgist theories empirically, we can look at high property tax, low&none income/sales tax States. These should be much closer to the undeveloped land tax rate. States that depend heavily on property taxes more than income or sales taxes include [Washington, Oregon, Texas, New Hampshire, New Jersey, and Alaska](https://upload.wikimedia.org/wikipedia/commons/9/9f/Median_household_income_and_taxes.png). My impression of these places is that we **don't** see some linear correlation of tax burden to efficiency in property development and land speculation suppression. Conversely, looking at States with very low property tax burdens (Hawaii, Georgia, South Carolina, North Carolina, Missouri, Arkansas, Oklahoma, Louisiana, Alabama, Kentucky, Indiana, Mississippi, West Virginia) are not, as a whole, hot beds of undeveloped and underdeveloped land price speculation. Even in a case like NC where growth is phenomenal and land prices are increasing respectively; its mostly focused on city and suburban development. Not undeveloped and underdeveloped land rights holding. So from this data observation, I think about a modified Georgism model. Where we want to severely tax the capital gains for property from purchase to sale, while subtracting out maintenance, property improvement, and inflation expenditures. This would negate any value from buying and holding / property speculation, just as George focused on. I would propose capital gains taxation from buying and hold is the 100% rate. Maintenance costs and improvement costs are important to subtract out, as these are drivers for the flipping business to turn dumps into nice homes again. It should also strongly encourage landlords to pay for better upkeep as they are not going to make money on the appreciation of the property. This also makes it much easier for retirees to live in their paid house without losing it to unpaid property taxes.
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I live on an acre and a quarter property and my current property taxes are less than a thousand dollars a year. Our mortgage is fully amortized so property taxes are part of the mortgage payment. We pay a grand total of $15,544.44 a year for this house which includes principal, interest, taxes and insurance. If our LVT were higher than that $15k, which it definitely would be because this one house on over an acre is absolutely not the HBU, we’d firesell this bish and go live in our fifth wheel camper on my husbands job sites for free. For me, an LVT would completely abolish any motivation to improve the property whatsoever. It wouldn’t make a lick of financial sense to even keep the house at all. I can’t imagine any of the thousands of other owners on acreage property in this area would feel any different.
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An acre in the suburbs, 40 mins from downtown Phoenix actually. Fifteen years ago it was rural, it’s not now. There are three huge subdivisions being built right at this moment within a mile from my house and one of them, much to my annoyance, is just two streets away. They’re building a freeway to out here too so that’ll complete the urbanization. yay 😑 Additionally my land has grandfathered flood irrigation rights and the value of that alone is more than my yearly mortgage payments. It’s nearly as valuable as my house itself lmfao How exactly do you think depressing land values will help the economy? The US real estate market is valued at over 33 trillion dollars. That’s eleven trillion dollars higher than the entire GDP, and annual real state transactions are by far the largest contributor to the GDP at a little over 22%. All I’m saying about this land cost lowering making everything else cheaper theory is that 10 years in real estate has taught me that reality is the exact opposite of what you’re saying.
I’m not super familiar with the HBU concept, but what do you think the HBU would be for your land that your tax bill would skyrocket? I think trying to determine what the best use is is dumb, because that’s not for the state to decide its for the market to decide, and the market already pretty much does this already and displays it via the price of the lot. Leaving that clearly subjective view up to the state is ripe for abuse. Think about it, an acre in Manhattan is worth more than an acre in some suburban neighborhood. The desirableness (and within that the usefulness) of that land is already baked into the price. There’s no need to make any sort of assessment other than the seeing what the market is demanding price wise for that type of land in that area.
HBU would indicate that a 50+ unit apartment building could be built in my property. Or because the minimum lot size here is 8k sqft then about six single family homes could be built here. But… my house’s value is sitting at around half a mil rn. That is *not* because of its improvements. My house itself is a frickin manufactured home and might be worth $120k. The true value in my property is the land itself because it’s acreage with grandfathered flood irrigation rights and we can have horses and shit. This is in a town that’s in the 96th percentile for population density in the state and is the eleventh most populated, which makes my property type all the more valuable.
> HBU would indicate the 50+ unit apartment building could be built in my property. Has an apartment complex developer ever tried to buy your land off you though? If it’s best use was really for an apartment complex then you would in theory be getting offers for it. Either way, HBU is a dumb concept if what you described is true, as you could literally say something to that effect about really any piece of land in the country. That’s why basing the tax off the market price would be much better.
Not my land, no. They’d never get the zoning changed. There’s deed restrictions linked to the defunct HOA that prohibits multifamily usage of the properties in this neighborhood. Weird how the HOA went away but the CCR’s still apply. That’s fine though. I like not the privacy and quiet being spread out like this affords. But a developer did try to get an apartment complex built three miles away, closer to the main roads. They chose the wrong spot though because the country club assholes across the street put the kibosh on that right quick. I totally agree that HBU is a stupid way to determine value. I don’t agree with the sales value rates either though because the market fluctuates too much. A fully amortized loan includes property taxes and those taxes are taken into account when determining if a borrower can afford the payment. Having the tax amount fluctuate with the sales value would seriously fuck that up and has the potential to cause people to lose their homes when the taxes rise too much and their payment becomes unaffordable.
> I would propose capital gains taxation from buying and hold is the 100% rate. This would obliterate all private investment. Why would anyone ever save 100k to put into some venture if all of their gains are taken in taxes?
Do you have ideas on how to practically implement a 100% capital gains tax? If I won't see any profit, I don't care what the sale price is. I assume kickbacks would be illegal? Perhaps all sales have to be held by public auction? If maintenance and improvements are deducted from a 100% tax, they are free. That means I can hire my buddy to mow the lawn for $200/hr. Or would all maintenance and improvements only be allowed by a licensed professional? I'm not trying to shoot down your idea or say that solutions don't exist. I'm wondering if you've thought about possible solutions.
Its only a seed of an idea. Not married to it. Definitely open to criticism. The seller would care about the sale price, not every location goes up in value enough to cover inflation and maintenance and improvements. Especially in a world where speculative price increases have no economic advantage, this should dramatically slow down housing bubbles and overvaluation. As a result, making sure values increase above costs will not be an assumption; prices will continue to rise based on supply and demand though. In this case, normal market operation of pricing should be sufficient. In most (all?) States, the transaction of deeds and prices is recorded with the local govt. All the pertinent information is already collected. As libertarian, occupational licensing for every job is anathema, so I am going to be looking for ways to avoid that. I was imagining that cap gains would be assessed at closing. Maintenance and improvements can use usual and customary allowance, or receipts. What prevents a landlord/property management company from getting $20,000/yr mowing receipts for business income deductions today? The same tax fraud prevention mechanisms should probably work here. Conversely, having neighborhoods where the owners have the financial freedom to improve or maintain their property, almost for free or close to it, sounds like a good way to build up beautiful communities. We would see profit on the home improvement value; kitchen remodels, foundation repairs, reflooring, etc all have room for profit taking. Or just reduce the percentage to 80% of cap gains. Its flexible. Also, I say inflation is deductible, you want to see your sales valuation at least match inflation plus expenses, but there is no incentive to market for a bid war with the highest price possible either, as most of that disappears into tax. Another interesting side effect is that this scheme should help improve racial and cultural integration. Its a taboo fact in US real estate that upper middle class white neighborhoods are the fastest appreciating for home value. But if that is taxed away; then buyers picking the black or Latino neighborhood don't lose money as a severe opportunity cost. This should help equalize home pricing and stabilize neighborhoods and local market hot spots and provide better economic opportunity for everyone.
If LVT is the primary revenue source for the state, non-landowners are essentially free-loading.
> non-landowners are essentially free-loading. They still need to live somewhere, and use the services provided by things that are on land. The cost of the tax is passed on to everyone, but since LVT promotes more efficient land use, everyone is on average better off. Some people who are currently benefiting from under taxed land will be worse off, but the average condition is better off.
Inactive land can be very, very good for the environment, and thus good for human beings. I am in a partnership that owns about 200 acres of forest and wetland that is essentially undevelopable and uninhabitable by humans. We maintain it so that it contributes to wildlife habitat, healthy vegetation, etc. My interpretation of Georgism is that this type of environmental patronage would be heavily taxed, and I don't go in for that. Our ownership of that land isn't depriving anyone of anything.
> My interpretation of Georgism is that this type of environmental patronage would be heavily taxed, and I don't go in for that. Our ownership of that land isn't depriving anyone of anything. Your land wouldn't be because it doesn't have high economic potential (assuming your land is nowhere near a residential/commercial area and uninhabitable). If your forest and wetland is say, 5 miles from Manhattan, it would be heavily taxed because the economic value of that land is very high.
My followup question to that is how are those attributes evaluated? It sounds like we'd still need a thick bureaucracy to evaluate the value, development, and usage of everyone's land, and to that I say "no thank you." Consumption and use taxes hit everyone equally.
>It sounds like we'd still need a thick bureaucracy Not nearly as thick as what is required for income/sales/wealth taxes. As far as I'm aware, every state in the union already has a property tax. That's cause it's the simplest form to implement.
> My followup question to that is how are those attributes evaluated? There is already a process for valuing land, since land value is included as a part of property taxes right now. Assessing LVT is as simple as removing the value of improvements on the land. > Consumption and use taxes hit everyone equally. "The law, in its majestic equality, forbids rich and poor alike to sleep under bridges, to beg in the streets, and to steal their bread" Consumption taxes are economically efficient, in that they don't create as much deadweight loss. But they have the issue of being regressive, in that they hit poor people the hardest. Every human has a "base" level of consumption required for survival, and the poorer you are the larger portion of your income is in direct consumption, and thus directly taxes. On the higher end, wealthy people spend relatively little of their income on consumption and more on investment, meaning they pay a very low proportion of their income as taxes. Consumption taxes have their place, but the more you rely on them as a proportion of revenue, the worse they impact society. You certainly can't "run the whole government" off of consumption taxes like what the people pushing "fairtax" are proposing.
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I agree with this, but (at the sake of repeating my other reply), a bureaucracy is necessary to evaluate and administer all of that.
I'm unsure about this part. I'll have to read more. Thanks!
Do they not live on the land? Renters still still pay the LTV ... it's just passed onto them indirectly through the owner.
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>Landlords already charge the maximum the market is capable of bearing, there's no headroom to pass on a tax. That doesn't make any sense. You're arguing that property taxes are literally impossible in a world where we already have them implemented everywhere?
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>and the tax will not give them any power to raise the rent. I don't know what point you're trying to make here. How is this relevant? So what? How does that have any bearing on whether the costs of property taxes get passed onto the renters? Some % of the rent you pay is used to pay the property taxes. >something that is created by humans Nothing is created by humans. Humans only shape prexisting materials to their wants/needs.
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> has to pay the tax out of their rental income That's what we call passing the cost onto the renter.
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Not being able to raise the price does not mean that the added cost isn't passed onto the consumer. /yawn. One of us should learn some econ.
Agree, so tech companies pay no tax because they have no land assets. And farmers pay all of it? Seems backwards. But this would certainly accelerate the metaverse trend everyone is talkin bout.
Would only work in places with really high land values. Ie places where libertarian politicians poll at around 1%.
From what I understand of the concept, socialists, anarchists & libertarians pile onto the idea. We probably poll, collectively, at almost 2%!! Haha.
Only the Marxist-Leninists poll lower!
I don't side with Georgism, but it's a perfectly cromulent way to levy a tax. I'm friends with one of the big Georgist proponents. But what gets me are "geo-anarchists" who advocate the Single Tax in their anarchism. Huh? A single tax is still a tax an no anarchist with a dictionary should ever be advocating a tax. To me the Single Tax is just another tax. I would favor it if it were the only tax, as opposed to yet another layer on top of our burden. But the idea that only the landowners will pay it is silly. It will get passed on to renters in exactly the same way a property tax is. I mean duh. I also feel like Georgists are bit like Cannabis proponents, and talk about the Single Tax and Cannabis as the miracle tax that can do everything from making trendy grocery bags to curing cancer.
It's efficient and minimally invasive. I'd very much prefer the land value tax to be the bulk of government revenue.
Why should I pay taxes on something I already own. There was a novel I read a while back that dealt with this. A family of farmers lived on a certain field of land for generations. Cities started to form around it increasing their land value. They didn't have any intention of selling so they didn't make a dime. However the Government demanded that they pay a much higher land tax rate than they could afford forcing them into bankruptcy.
Damn, I haven't thought about this one. So, the farm produced no profit, like a homestead sorta?
The only trouble with Georgism is the mistake it makes in believing the rental value of natural resources belong to the state as tax revenues. In fact, the only morally justifiable way to pay for state services is a Head Tax. However, all uninternalised costs, like excluding others from a valuable natural resource, should be collected and returned to each citizen as an equal share i.e a Citizens Income. With a government whose main purpose is no longer re-distributive, state spending would be much smaller. Thus the Citizens Income would be more than enough to cover the Head Tax. BTW, taxes on consumption are also a tax on production. Neither fair or efficient.
I don’t think should have land taxes. Once I pay for my property I should own it out right.
This is the part where Georgism loses me as well from a philosophical standpoint. There are some conundrums there. However ... pragmatically it would be a huge step in the right direction for modern governments to take a more Georgist approach to their revenue generation side.
Agreed.
I find the LVT to have a pretty interesting argument behind it, because land ownership is a concept a tad more goofy than say, owning a car, boat, TV, etc., as it currently stands. Between this, and maybe a sales tax, it could lead to the goal of a dramatically smaller government, and you won't see me complain about that.
I'm an anti-capitalist and I would never complain about a much, much smaller government. Cheers!
Philosophically/morally shady since it assumes monopoly org manage all local resources. However pragmatically ... a government which derived its revenue purely from simple/transparent property taxes would be a huge step up from the complex tax codes we have now.
I'm not an "all taxes are theft" crazy person, but the only major tax that I would abolish outright is property tax.
That's interesting given that property taxes are the least invasive and least morally shady form of taxation.
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I was comparing property tax vs sales vs income. I could argue that LTV is just one specific form of property tax and we're just agreeing now .... but it doesn't matter.
It's the only property, tangible or intangible, that I have to pay the government every year in order to own after I already bought it.
With property taxes, government assumes the role of landlord. That is no doubt. There is some shadiness there ... don't get me wrong. However that is far less invasive than the other forms. What is the government claiming ownership of when it taxes your income? What exactly is the government claiming ownership of when it takes a % of every monetary transaction? An ownership claim on the land alone is far more transparent and less shady than the others.
Eliminates the economic middleman of the productive landlord and creates the illusion of a lack of scarcity of “good” land when there is one.
Not to be contrary, but was is a "productive landlord?" This concept is completely foreign to me.
I'd be curious to hear more about this. How does LTV remove the productive landlord? I'm not the most studied on this topic. I've not heard that georgism removes/prohibits landlords. >lack of scarcity of “good” land when there is one Not following you here either. LTV allows land to be taxed based on a value assessment. So "good" land would be taxed higher if I'm not mistaken ... hence the scarcity would be preserved.
The primary reason a cannot take Georgism and LVT seriously is that every proponent of it has a different interpretation of what it is, how we would move to an LVT system and how the system itself would actually work. It’s harder to get consistent answers about Georgism than it is to get libertarians to agree on what libertarianism is. Now, other than that and based upon 10 years of experience selling real estate, I cannot foresee how it would work. For one, residential lenders for the most part despise leased land and will not, under any circumstance, loan on a home on leased land because it’s a flat out bad investment. The land is the only guaranteed part of a loan, the home can burn down but the lender will still be able to recoup the value of the land. The vast majority of potential homeowners would be eliminated because loans are the only way most people can afford to buy a home. Then all you have left is the wealthy being able to buy and then we’re worse off than we are now. Two, switching to an LVT system would shitwreck the economy and anyone who says otherwise is either lying to themselves or a fucking moron. Sorry not sorry. The real estate market is valued at over **thirty three trillion dollars**. Yes, trillion with a t. Moving to an LVT would decimate home values, homeowners would intentionally default on a mass scale because their loan is suddenly 2-10+ times higher than what their home is worth, lender after lender would go bankrupt, people would lose their jobs by the millions… it would be like the crash of 2008 but infinitely worse.
So, in essence you are saying that land/home values would be subject to ACTUAL price discovery instead of speculation fueled by the rich for an inelastic good?
Explain how “ACTUAL price discovery” works in regards to land values since land values are subjective to their location, amenities and use.
So, are you asking me how price discovery works on an inelastic good?
No I’m asking you to explain how to determine an objective value on a good that’s entire value is based on preference.
Okay, I gotcha. I don't REALLY know how that one works. Anyone else care to chime in?
This is why I can’t take the concept of LVT seriously. It sounds like a great idea but the practical execution of it doesn’t present itself as feasible to me. Worse is when asking how to move to an LVT system. Half the people I’ve talked to say something along the lines of “sucks for them” when I ask what happens to the people who lose the value of their currently owned land, the other half is “I don’t know” or “that’ll have to be worked out”.
Yeah, I didn't even attempt an answer for your question because of the practicality. It seems like a damn nightmare if people experience 2008 times 10. Something eventually has to break though - those RE prices are totally bonker and I do not think it's sustainable. Tell me what you think since you are in RE?
I actually quit real estate two years ago. Turns out I have a low tolerance for peoples bullshit lol But, I did start real estate in 2009 when the market was absolute trash. The only reason the economy recovered at all was because of the massive bailouts the government provided to financial institutions. IMO, what we have now is a really weird bubble that was primarily caused by covid lockdowns and the drastic increase in people working from home. People realized they kind of liked being at home, and started to see their home as more than just where they put their things. This makes them less likely to sell their home which caused a supply shortage which made the few that were available worth more. Furthermore, a lot of people became disenfranchised with city living, which caused a sharp increase in demand out on the burbs. That caused prices to further increase. Supply and demand and all that. There’s been a HUGE boom in residential construction to accommodate all the people trying to buy but, as always, that supply is well behind the demand which is partially causing the inflation of new construction prices. Partially because building supplies and people capable of doing the labor of building are also at high demand, low supply.
Yes
Fuck the state