A land value tax seems like such an obvious solution to so much that ails our societies. Allowing legacy land owners to accrue vast sums of untaxed value due to the economic activity of everyone else in the vicinity of their land creates such perverse incentives.
A great example near me is in midtown Atlanta. For decades there have been empty lots that just sat empty and empty and empty until enough economic growth happened around them that their owners finally sold it for development. Even today, there are empty lots and vacant decrepit buildings in some of the most valuable locations for hundreds of miles because we are not taxing the value of the land these people are accruing.
I agree that a land value tax is great. But it won't, by itself, change how much development happens. That's the whole point of a land value tax: the opportunity costs between different land uses are unaffected by a land value tax, that's why it doesn't have any deadweight losses.
With or without a land value tax, if you don't use your land you lose the difference between leaving your land fallow and leasing it out to the highest bidder. The opportunity costs are exactly the same.
Most states tax land at the time of sale and annually. It's just that the millage is low for raw land.
Taxing something based on hypothetical value is an extremely dangerous proposition. Why not tax people an imputed income tax based on what we thing a person's labor is worth? It makes more sense to tax money when money is actually made.
Land value taxes are fundamentally opposed to freedom and liberty by implicitly forcing an owner to do use the land for use that others want based on hypothetical uses.
I think your position is true - it does compel people to use their land for value creation (even if they don't want to). There is a positive trade-off though; a system that derives tax from rent-seeking activities can reduce the tax it levies on value-creating/facilitating activities.
"Value creation" is euphemism for making profit. It forces use of land towards the currently most profitable in an area, which is not necessarily what is socially valuable, because if you do not get enough money to pay for the hypothetical value you cannot do anything else. Eg in places where tourism is a prevailing source of making the most money it would mean that you cannot do anything else than short renting to tourists or stuff directed to tourists, which can be destructive for a lot of local businesses and communities (there are already problems and this would make it worse). Similar to other types of using land that may or may not be always attainable for every single piece of land even.
It also sounds like a mechanism to induce appropriation of property of small landowners to big corporations and interests, and not sure this furthering of concentration of land and wealth is great for local communities either. It basically gives more power to those who already have more power.
You're absolutely right about value creation being a euphemism for profit. A gaping hole in economic theory is that we don't have a general theory of value. Our so-called theories of value are in fact theories of price, and we don't actually know how to properly value things.
If you had such a theory, you would have a much easier time using taxes to reward things that society benefits from, and dissuade things that society suffers from. It's a complicated subject.
Holding raw land doesn't become a rent-seeking activity until it is sold. The owner could be waiting to accuse capital for development, waiting to purchase an ajoining property to expand, etc. A transfer tax fits this better than a land value tax.
On the other hand you could argue that someone who had a better strategy for accruing capital should instead have purchased that land. The opportunity cost of nothing happing on that land is there regardless of the users intended future development.
There'll definitely be people in that camp, with good reasons for holding on to land. Flipside, there are many other people that know the land value mechanic and take advantage.
A transfer tax is decent, but it can be sidestepped by just holding land and selling when the tax changes. Land holding is a long game.
The obscene limitation on freedom and liberty is the idea that a person can stake a claim to earth's productive power and deny everyone else the upside under threat of injury or death.
This makes no sense at all unless you believe that nobody should own property. The government is much more likely to be the one using threat of force to take your property for lack of tax payment than anyone else is for any other reason.
The value of land is only what people make of it. It's mostly hypothetical as to what you could use it for. The driving factor in land "value" is location, which is an artificial factor created by humans. That same empty lot in a city that everyone complains about needing to have a land value tax assessed against it is pennies on the dollar our in the county. Perhaps we should look at efficient use of resources and population distribution policies rather than focusing on the symptoms rather than the problem.
No, people should own property that they created or that someone else created and willingly sold to them. Land values are by definition neither of those things.
> The government is much more likely to be the one using threat of force to take your property for lack of tax payment than anyone else is for any other reason.
Physical coercion is much more common to enforce evictions than nonpayment of taxes. This is because landlords offloaded the responsibility of enforcement and security back to the peasants in exchange for having rule of law.
> The value of land is only what people make of it.
This entire paragraph is meaningless. More valuable land is more valuable because it's more productive. It is more productive not because of the actions of the owner of that land, but because of either 1) nature's productive power, or 2) the surroundings of that land (nearby amenities, infrastructure, employers, etc). In either case, the owner of the plot of land did not produce the value of the raw land. They are not entitled to upside they did not produce.
"No, people should own property that they created or that someone else created and willingly sold to them. Land values are by definition neither of those things."
Seems irrelevant as real property needs land to exist on and is just a vehicle for use. In the vast majority of the cases, the property is sold with the land and is preserved, meaning the land value is mostly inconsequential when already built on except in a small number of cases.
"Physical coercion is much more common to enforce evictions than nonpayment of taxes."
We were talking about seizing property. Renters do not own the property, the landlord does. That's an important distinction when talking about seizing property.
"2) the surroundings of that land (nearby amenities, infrastructure, employers, etc)"
Based on what people made it, just like I said.
"They are not entitled to upside they did not produce."
We live in a world with other people. Their tax dollars produced that infrastructure. They maintained their property. It's so odd to think that someone's else did your work for you, as if you never maintained property or paid taxes.
> meaning the land value is mostly inconsequential when already built on except in a small number of cases.
Literally false. In high-cost areas the land value is the bulk of the value of a property. Properties that would have a high LVT burden are almost definitionally those where the structure on top of the land is of little or negative value. Negative-value buildings are extremely common in high-cost areas today.
I struggle to believe you’re actually having a hard time understanding this point, but “the people” who produce high land values are not the people who capture those land values. That’s the point. Just because they’re both “people” doesn’t mean they’re fungible in the question of who earned what.
> Taxing something based on hypothetical value is an extremely dangerous proposition.
You don't need to impute anything. There are ways to get the valuation of land without imputing.
> Land value taxes are fundamentally opposed to freedom and liberty by implicitly forcing an owner to do use the land for use that others want based on hypothetical uses.
Not at all. The land value tax is the same no matter what you do with the land. Land value taxes don't care what you use the land for.
"You don't need to impute anything. There are ways to get the valuation of land without imputing."
It's based on market value now. The LVT schemes usually talk about deriving it from the potential usage. This specific LVT talks about differentiating between "good" and "bad" uses even further. So it does seems to be imputing value based on potential usage.
"The land value tax is the same no matter what you do with the land. Land value taxes don't care what you use the land for."
Their whole point is to force higher density usage because the tax is high.
> Their whole point is to force higher density usage because the tax is high.
Yeah, that's stupid and it's not how LVT works. The opportunity costs are the same.
> It's based on market value now. The LVT schemes usually talk about deriving it from the potential usage. This specific LVT talks about differentiating between "good" and "bad" uses even further. So it does seems to be imputing value based on potential usage.
Formulated like that, it sounds pretty silly.
Singapore has a system that works fairly well in practice and is pretty close to some form of theoretical optimal for this. Let me describe a cleaned up version:
Basically, the government owns all the land and leases it out for something like 30 years at a time to the highest bidder. No imputing, the auction sets the price. The winner pays up front in cash, so the government doesn't have to be in the business of judging creditworthiness. Leases are freely tradable while they run.
(The main way to optimise this further would be to held the auctions 10 years before the lease starts, so that the old leaseholder has enough time to make plans, and some other nice theoretical properties.)
And Ironically across the sea in UK, to a smaller extent Ireland (and I'm not sure perhaps may be elsewhere too). There's been a concerted social media push by some folks to reduce inheritance taxes and portray them as bad. One visible proponent was Jeremy Clarkson, you know the large farm owner, it's quite easy to see why he would benefit.
A land value tax is a lot more efficient. (But that's pretty unrelated.)
Even a bad old property tax is better than an inheritance tax. A property tax is probably a second best tax around for raising revenue with minimal damage to the economy, with land value taxes being the best.
not a land value tax but an empty/vacant/unused property tax for areas where that is undesirable. if you own a property that has a dedicated use but you are not using it for that, then that should be taxed/punished/force sold, ...
The elites will go full throttle on "bullshit jobs" — after all, if unemployment hits 50%, who’s going to consume their crappy products? Give people a UBI? Hah! So they can start taking an active interest in politics? AIN'T GONNA HAPPEN.
The only interest people will have in politics would be be around their UBI and other benefits. The old saying of once they know they hold the keys to the treasury they vote to direct it to themselves thing.
I don't think UBI is going to lead to significantly more interest in political involvement in an age where people are socializing less and spending hours a day scrolling algorithmic feeds.
I don't think soldiers on the state's payroll are going to take much interest in political involvement in an age where they spend hours a day drilling and playing cards. — Petrograd, 1917.
People change what they do when they go from full-time work to UBI teaters. You could either argue that they will go further into the feeds or something else, but to assume statis is suspect. So you actively have to argue that.
Joe Beergut sits in front of the television (scene from 1995). Is it relevant that he worked hard from eight to five prior to that? Probably.
If you look at, for example, post-industrial regions of the Nordic countries where a good amount of people have been terminally on state benefits, they didn't start using all that free time for political involvement.
Good point, and I see where you are coming from. The difference compared to UBI would be that UBI is unconditional while “terminal state benefits” can require means testing.
Where they might intersect or not is that they are poor. Having time is one precondition for political engagement but having money also helps.
Overall I’m not a fan of UBI. Especially if it would create people who you indirectly describe in the way you do. I don’t want a society of the haves and the merely can-survivs.
But this feels disconnected. The “terminal state benefits” group have been viewed that way long before algorithmic feeds and before the socializing less part got really obvious. So which is it? Both, all of the above?
I wouldn't agree that having money is necessarily for grassroots political involvement. Perhaps the opposite: since the mid 20th century, skint students have been among the most active political forces in many countries. True, deep-pocketed figures often then step in and try to use their money to coopt those young people's political energy, but this is often a negative thing.
The elite won't need to sell anything to anyone. With lands, mines, solar energy what would they need people for?
I'm positive that the elite will soon only need a really really small number of people (especially in their vicinity) for their happiness. Robots will be able to provide food, safety, entertainment, health, in a self-sustaining manner.
I predict that if we let the elite do whatever they want, they would eliminate common people (actively or passively) because they wouldn't need them.
In my opinion the only thing that can stop this scenario unfolding is the government which currently has the power over the elite, and currently is governed by the people (more or less). I frankly don't think any other scenario is realistic (e.g. a number of Robin Hood terrorists appear, or the elite just wouldn't let people die because of their activities).
Currently I strongly support the idea of disempowering the elite: making it a law that a single person can have at most X amount of wealth. (For organizations and funds that would be wealth/member.) Also there need to be more guarantees that the government (the only holder of power) is controlled by the people and is working for the people.
As a country, I host a somewhat large and educated group of humans. Some of them are economists like you. They most certainly have heard about georgism before.
The current issue is not so much that they don’t have enough ideas, but that they can’t agree on which ones to apply.
I too once presumed that those people knew better than me and others. I can not stress how wrong I was.
I was so often flabbergasted at the incompetence and ignorance of those "in the know" that I now believe that their positions have nothing to do with being the best at what they do.
Some of it is Hanlon's razor read forward, but the rest is Hanlon's razor read backwards. Either way, it's terrifying for someone like me who doesn't think themselves as particularly intelligent.
rjbwork 1 day ago
A great example near me is in midtown Atlanta. For decades there have been empty lots that just sat empty and empty and empty until enough economic growth happened around them that their owners finally sold it for development. Even today, there are empty lots and vacant decrepit buildings in some of the most valuable locations for hundreds of miles because we are not taxing the value of the land these people are accruing.
eru 1 day ago
With or without a land value tax, if you don't use your land you lose the difference between leaving your land fallow and leasing it out to the highest bidder. The opportunity costs are exactly the same.
giantg2 1 day ago
Taxing something based on hypothetical value is an extremely dangerous proposition. Why not tax people an imputed income tax based on what we thing a person's labor is worth? It makes more sense to tax money when money is actually made.
Land value taxes are fundamentally opposed to freedom and liberty by implicitly forcing an owner to do use the land for use that others want based on hypothetical uses.
orson2077 1 day ago
freehorse 1 day ago
It also sounds like a mechanism to induce appropriation of property of small landowners to big corporations and interests, and not sure this furthering of concentration of land and wealth is great for local communities either. It basically gives more power to those who already have more power.
orson2077 1 day ago
If you had such a theory, you would have a much easier time using taxes to reward things that society benefits from, and dissuade things that society suffers from. It's a complicated subject.
Your concern is absolutely spot-on.
card_zero 1 day ago
Nor should we! That would be like a formal theory for deriving all truth. It would be awful absolutism (and wouldn't actually be real).
Well, all moral truth, anyway. Wouldn't tell you much about physics.
orson2077 17 hours ago
giantg2 1 day ago
forgotusername6 1 day ago
orson2077 1 day ago
A transfer tax is decent, but it can be sidestepped by just holding land and selling when the tax changes. Land holding is a long game.
estearum 1 day ago
giantg2 1 day ago
The value of land is only what people make of it. It's mostly hypothetical as to what you could use it for. The driving factor in land "value" is location, which is an artificial factor created by humans. That same empty lot in a city that everyone complains about needing to have a land value tax assessed against it is pennies on the dollar our in the county. Perhaps we should look at efficient use of resources and population distribution policies rather than focusing on the symptoms rather than the problem.
estearum 1 day ago
> The government is much more likely to be the one using threat of force to take your property for lack of tax payment than anyone else is for any other reason.
Physical coercion is much more common to enforce evictions than nonpayment of taxes. This is because landlords offloaded the responsibility of enforcement and security back to the peasants in exchange for having rule of law.
> The value of land is only what people make of it.
This entire paragraph is meaningless. More valuable land is more valuable because it's more productive. It is more productive not because of the actions of the owner of that land, but because of either 1) nature's productive power, or 2) the surroundings of that land (nearby amenities, infrastructure, employers, etc). In either case, the owner of the plot of land did not produce the value of the raw land. They are not entitled to upside they did not produce.
giantg2 1 day ago
Seems irrelevant as real property needs land to exist on and is just a vehicle for use. In the vast majority of the cases, the property is sold with the land and is preserved, meaning the land value is mostly inconsequential when already built on except in a small number of cases.
"Physical coercion is much more common to enforce evictions than nonpayment of taxes."
We were talking about seizing property. Renters do not own the property, the landlord does. That's an important distinction when talking about seizing property.
"2) the surroundings of that land (nearby amenities, infrastructure, employers, etc)"
Based on what people made it, just like I said.
"They are not entitled to upside they did not produce."
We live in a world with other people. Their tax dollars produced that infrastructure. They maintained their property. It's so odd to think that someone's else did your work for you, as if you never maintained property or paid taxes.
estearum 1 day ago
Literally false. In high-cost areas the land value is the bulk of the value of a property. Properties that would have a high LVT burden are almost definitionally those where the structure on top of the land is of little or negative value. Negative-value buildings are extremely common in high-cost areas today.
I struggle to believe you’re actually having a hard time understanding this point, but “the people” who produce high land values are not the people who capture those land values. That’s the point. Just because they’re both “people” doesn’t mean they’re fungible in the question of who earned what.
giantg2 1 day ago
estearum 1 day ago
> "It seems you have already made up your mind. Good luck in life."
have a good one amigo
eru 1 day ago
You don't need to impute anything. There are ways to get the valuation of land without imputing.
> Land value taxes are fundamentally opposed to freedom and liberty by implicitly forcing an owner to do use the land for use that others want based on hypothetical uses.
Not at all. The land value tax is the same no matter what you do with the land. Land value taxes don't care what you use the land for.
giantg2 1 day ago
It's based on market value now. The LVT schemes usually talk about deriving it from the potential usage. This specific LVT talks about differentiating between "good" and "bad" uses even further. So it does seems to be imputing value based on potential usage.
"The land value tax is the same no matter what you do with the land. Land value taxes don't care what you use the land for."
Their whole point is to force higher density usage because the tax is high.
eru 1 day ago
Yeah, that's stupid and it's not how LVT works. The opportunity costs are the same.
> It's based on market value now. The LVT schemes usually talk about deriving it from the potential usage. This specific LVT talks about differentiating between "good" and "bad" uses even further. So it does seems to be imputing value based on potential usage.
Formulated like that, it sounds pretty silly.
Singapore has a system that works fairly well in practice and is pretty close to some form of theoretical optimal for this. Let me describe a cleaned up version:
Basically, the government owns all the land and leases it out for something like 30 years at a time to the highest bidder. No imputing, the auction sets the price. The winner pays up front in cash, so the government doesn't have to be in the business of judging creditworthiness. Leases are freely tradable while they run.
(The main way to optimise this further would be to held the auctions 10 years before the lease starts, so that the old leaseholder has enough time to make plans, and some other nice theoretical properties.)
CarVac 1 day ago
giantg2 1 day ago
CarVac 1 day ago
KoolKat23 1 day ago
eru 1 day ago
A land value tax is a lot more efficient. (But that's pretty unrelated.)
Even a bad old property tax is better than an inheritance tax. A property tax is probably a second best tax around for raising revenue with minimal damage to the economy, with land value taxes being the best.
em-bee 1 day ago
more on this issue in this discussion: https://news.ycombinator.com/item?id=48566791
lukasm 1 day ago
giantg2 1 day ago
TFNA 1 day ago
lukasm 1 day ago
keybored 1 day ago
Joe Beergut sits in front of the television (scene from 1995). Is it relevant that he worked hard from eight to five prior to that? Probably.
TFNA 1 day ago
keybored 1 day ago
Overall I’m not a fan of UBI. Especially if it would create people who you indirectly describe in the way you do. I don’t want a society of the haves and the merely can-survivs.
But this feels disconnected. The “terminal state benefits” group have been viewed that way long before algorithmic feeds and before the socializing less part got really obvious. So which is it? Both, all of the above?
reply
TFNA 1 day ago
bmacho 1 day ago
I'm positive that the elite will soon only need a really really small number of people (especially in their vicinity) for their happiness. Robots will be able to provide food, safety, entertainment, health, in a self-sustaining manner.
I predict that if we let the elite do whatever they want, they would eliminate common people (actively or passively) because they wouldn't need them.
In my opinion the only thing that can stop this scenario unfolding is the government which currently has the power over the elite, and currently is governed by the people (more or less). I frankly don't think any other scenario is realistic (e.g. a number of Robin Hood terrorists appear, or the elite just wouldn't let people die because of their activities).
Currently I strongly support the idea of disempowering the elite: making it a law that a single person can have at most X amount of wealth. (For organizations and funds that would be wealth/member.) Also there need to be more guarantees that the government (the only holder of power) is controlled by the people and is working for the people.
pyrale 1 day ago
As a country, I host a somewhat large and educated group of humans. Some of them are economists like you. They most certainly have heard about georgism before.
The current issue is not so much that they don’t have enough ideas, but that they can’t agree on which ones to apply.
Sincerely, France.
ghusto 1 day ago
I was so often flabbergasted at the incompetence and ignorance of those "in the know" that I now believe that their positions have nothing to do with being the best at what they do.
Some of it is Hanlon's razor read forward, but the rest is Hanlon's razor read backwards. Either way, it's terrifying for someone like me who doesn't think themselves as particularly intelligent.