"Most cities tax property, which taxes both land and the improvement’s value on top of the land. This causes lower levels of investment, something the left shouldn’t support."
I don't think this is a useful statement. Any tax that lowers demand will lower investment: but this does not make the tax bad. It just means there are tradeoffs.
I don’t. I think governments should do a lot more than a single LVT can provide. However, there are other pretty good taxes available to us (see the rest of this series haha).
Georgists (such as yours truly) also believe in Pigouvian taxes. These are taxes on things that we wish to see less of; pollution, resource depletion, waste, soil depletion, liquor & drugs (arguably), etc.
However, given that LVT causes no deadweight loss, using the revenue raised from it to cut income taxes, capital gain taxes, and sales taxes would juice the economy dramatically. This, in turn would raise land values, thus raising more revenue. It would also make a lot of social welfare spending and (perhaps) law enforcement unnecessary.
I agree an LVT might relieve the government from using other forms of taxation. However, I'm very skeptical of (1) whether or not a holistic set of Pigouvian taxes could sustainably raise enough revenue to do what I'd like, and (2) whether or not those taxes could practically be enacted. I have some ideas for how to politically enact Pigouvian taxes, but I have to do more research.
An economy with no taxes that hold back production or burden labor seems like it would be so productive that it would solve a lot of problems. It would also lower rents and raise wages. I can't guarantee anything of course. But if you read Progress and Poverty cover to cover, George makes a very convincing case that many of our problems are due almost entirely to land speculation and NIMBYism
I'm familiar with this line of thought, and I'm open to it being correct. However, when George wrote, the government did substantially less in general, making a single tax a lot more feasible.
Regarding today, I'm sure we could see downstream effects of an LVT-dominant tax code that render a lot of other taxes we collect pointless. However, I would expect that with my welfare state ideal (40/50% of GDP), the LVT/Pigouvian combo would fall short.
I would suggest that your welfare state ideal is absolutely far too high in a world where recessions almost never happen, the economy is basically always at or near full employment, and rents don't rise linearly with wages. (Granted, the latter would require almost the complete abolition of density restrictions on housing). Furthermore, in a Georgist state the size of the USA would have tons of remote land available for free for anyone who wanted to make a go of it homesteading. The closest thing to a Georgist state today is Singapore (and they certainly don't have free land to give out). They've managed to have lower welfare spending than other places in the developed world without sacrificing general social welfare (though they've recently opened the door to a bit of land speculation and have seen increasing poverty because of it). Once you get the parasitic burden off of labor's back, you make it very easy for most people to provide for themselves without too much struggle. A welfare state is a subsidy to landlords in many ways.
I don't think this is true at all. Welfare spending is necessary for 2 main reasons: to reduce poverty, and as social insurance. With a full LVT, it's still true that about half the population doesn't work, and will need income.
Social insurance is largely about spreading out income more evenly over the course of your life. Even with a full LVT, you'd still want to spread income more evenly through social insurance programs offset with income and payroll taxes (at least).
If you're talking about things like Social Security, it's more of a forced savings scheme than welfare (which I have no problem with in principle). If you're talking about providing income, a Citizen's Dividend program (similar to Alaska) is a far better idea than a bureaucratic means-tested program.
Yeah I would say most welfare is social insurance (Social Security and Medicare are the big ones in the US). And I agree that we should get rid of means-testing!
If my math is right, taxing all private land at an average of 15 cents per square foot would raise revenue equal to the combined budget of the federal government and all state and local governments.
Well, remember that the 15 cents is an average. Land values in Manhattan, Kansas are a lot less than Manhattan, NYC. (Sorry if this is duplicate post, I think I first put this in the wrong spot on the thread)
The way LVT would work, if you assessed them at all accurately 75-85% of the burden would fall on urban and suburban real estate. Some land in remote areas would be nearly free. If you used LVT revenue to replace income taxes and sales taxes, most farmers would actually be much better off then they ever have been. I know jack shit about farming, but what does the average farmer pay in income taxes if the are farming 465 acres?
I think there is room to argue for an LVT being Constitutional at the federal level, if we read between the lines of Calvin Johnson’s argument for a wealth tax being Constitutional, Erik Jensen’s weak rebuttal, and Johnson’s subsequent sur-rebuttal. These can be found on the ABA website and a few other places.
Are you basically saying that the US is not a candidate for Georgist policies because of how it’s currently structured or what would you suggest as an alternative?
I'm saying a Constitutional Amendment is the bare minimum to get it done. I'm also not convinced the Constitution will matter for too much longer in any case.
Probably not necessary with land value taxes. They also don't seem to have a very strong effect on housing supply (though they do seem marginally positive from what i've read).
Georgism is based as hell, thanks for writing this, Econoboi.
Here are my scattered responses to the post:
1) It's worth explicitly highlighting that a 100% LVT stands out among taxes for its simple fairness: those who produce the value get to keep it. It's similar to pigouvian taxes in this way. Other taxes have complex interactions with each other, and make questions of fairness much more complicated.
2) "...all while punishing land speculation". Oof, I think you've chosen the wrong word here. Would LVT also "punish" innocent people like Carl Fredricksen, the old man in Pixar's "Up"? We can be honest about his preferences being socially costly, but I think using the word "punish" risks causing unnecessary controversy.
3) Off topic but, what do you mean when you say that deadweight loss is "overblown" and "marginal"? I worked a job with a high overtime rate and my enthusiasm for taking OT hours dropped a lot after I remembered tax.
4) LVT has a privacy benefit over income tax, which I think is underrated.
Overall, this post is great, glad to see you increasing awareness.
A land value tax only taxes economic rents. Landlords still make money from their productive activity with an LVT, just not from the economic rent itself.
Economic rent and rent from renting are two different things.
"Most cities tax property, which taxes both land and the improvement’s value on top of the land. This causes lower levels of investment, something the left shouldn’t support."
I don't think this is a useful statement. Any tax that lowers demand will lower investment: but this does not make the tax bad. It just means there are tradeoffs.
Henry George advocated LVT as the "Single Tax", the only tax, no income or sales taxes. Do you agree?
I don’t. I think governments should do a lot more than a single LVT can provide. However, there are other pretty good taxes available to us (see the rest of this series haha).
Georgists (such as yours truly) also believe in Pigouvian taxes. These are taxes on things that we wish to see less of; pollution, resource depletion, waste, soil depletion, liquor & drugs (arguably), etc.
However, given that LVT causes no deadweight loss, using the revenue raised from it to cut income taxes, capital gain taxes, and sales taxes would juice the economy dramatically. This, in turn would raise land values, thus raising more revenue. It would also make a lot of social welfare spending and (perhaps) law enforcement unnecessary.
I agree an LVT might relieve the government from using other forms of taxation. However, I'm very skeptical of (1) whether or not a holistic set of Pigouvian taxes could sustainably raise enough revenue to do what I'd like, and (2) whether or not those taxes could practically be enacted. I have some ideas for how to politically enact Pigouvian taxes, but I have to do more research.
An economy with no taxes that hold back production or burden labor seems like it would be so productive that it would solve a lot of problems. It would also lower rents and raise wages. I can't guarantee anything of course. But if you read Progress and Poverty cover to cover, George makes a very convincing case that many of our problems are due almost entirely to land speculation and NIMBYism
I'm familiar with this line of thought, and I'm open to it being correct. However, when George wrote, the government did substantially less in general, making a single tax a lot more feasible.
Regarding today, I'm sure we could see downstream effects of an LVT-dominant tax code that render a lot of other taxes we collect pointless. However, I would expect that with my welfare state ideal (40/50% of GDP), the LVT/Pigouvian combo would fall short.
Nonetheless, we should try an LVT and see! haha
I would suggest that your welfare state ideal is absolutely far too high in a world where recessions almost never happen, the economy is basically always at or near full employment, and rents don't rise linearly with wages. (Granted, the latter would require almost the complete abolition of density restrictions on housing). Furthermore, in a Georgist state the size of the USA would have tons of remote land available for free for anyone who wanted to make a go of it homesteading. The closest thing to a Georgist state today is Singapore (and they certainly don't have free land to give out). They've managed to have lower welfare spending than other places in the developed world without sacrificing general social welfare (though they've recently opened the door to a bit of land speculation and have seen increasing poverty because of it). Once you get the parasitic burden off of labor's back, you make it very easy for most people to provide for themselves without too much struggle. A welfare state is a subsidy to landlords in many ways.
Taxes hold back production, and government spending does the opposite. The trick is to just balance this correctly.
LVT doesn't hold back production.
I don't think this is true at all. Welfare spending is necessary for 2 main reasons: to reduce poverty, and as social insurance. With a full LVT, it's still true that about half the population doesn't work, and will need income.
https://www.peoplespolicyproject.org/2018/09/18/the-best-way-to-eradicate-poverty-welfare-not-jobs/
Social insurance is largely about spreading out income more evenly over the course of your life. Even with a full LVT, you'd still want to spread income more evenly through social insurance programs offset with income and payroll taxes (at least).
If you're talking about things like Social Security, it's more of a forced savings scheme than welfare (which I have no problem with in principle). If you're talking about providing income, a Citizen's Dividend program (similar to Alaska) is a far better idea than a bureaucratic means-tested program.
Yeah I would say most welfare is social insurance (Social Security and Medicare are the big ones in the US). And I agree that we should get rid of means-testing!
If my math is right, taxing all private land at an average of 15 cents per square foot would raise revenue equal to the combined budget of the federal government and all state and local governments.
Well, remember that the 15 cents is an average. Land values in Manhattan, Kansas are a lot less than Manhattan, NYC. (Sorry if this is duplicate post, I think I first put this in the wrong spot on the thread)
The way LVT would work, if you assessed them at all accurately 75-85% of the burden would fall on urban and suburban real estate. Some land in remote areas would be nearly free. If you used LVT revenue to replace income taxes and sales taxes, most farmers would actually be much better off then they ever have been. I know jack shit about farming, but what does the average farmer pay in income taxes if the are farming 465 acres?
Well, remember that the 15 cents is an average. Land values in Manhattan, Kansas are a lot less than Manhattan, NYC.
I think there is room to argue for an LVT being Constitutional at the federal level, if we read between the lines of Calvin Johnson’s argument for a wealth tax being Constitutional, Erik Jensen’s weak rebuttal, and Johnson’s subsequent sur-rebuttal. These can be found on the ABA website and a few other places.
I don’t disagree there’s an avenue for a federal LVT, but with this current court, I’d be surprised.
Honestly, we wouldn't want the foundation of a Georgist state to be something that could be overturned by 5 judges.
Are you basically saying that the US is not a candidate for Georgist policies because of how it’s currently structured or what would you suggest as an alternative?
I'm saying a Constitutional Amendment is the bare minimum to get it done. I'm also not convinced the Constitution will matter for too much longer in any case.
do you have any strong opinions on vacancy taxes
Probably not necessary with land value taxes. They also don't seem to have a very strong effect on housing supply (though they do seem marginally positive from what i've read).
Georgism is based as hell, thanks for writing this, Econoboi.
Here are my scattered responses to the post:
1) It's worth explicitly highlighting that a 100% LVT stands out among taxes for its simple fairness: those who produce the value get to keep it. It's similar to pigouvian taxes in this way. Other taxes have complex interactions with each other, and make questions of fairness much more complicated.
2) "...all while punishing land speculation". Oof, I think you've chosen the wrong word here. Would LVT also "punish" innocent people like Carl Fredricksen, the old man in Pixar's "Up"? We can be honest about his preferences being socially costly, but I think using the word "punish" risks causing unnecessary controversy.
3) Off topic but, what do you mean when you say that deadweight loss is "overblown" and "marginal"? I worked a job with a high overtime rate and my enthusiasm for taking OT hours dropped a lot after I remembered tax.
4) LVT has a privacy benefit over income tax, which I think is underrated.
Overall, this post is great, glad to see you increasing awareness.
I think making a house and maintaining it are productive. In addition, doing that for a whole neighborhood is as well.
Aside from this, land lords are providing a service. The renter doesn't need a down payment, doesn't do the maintenance, etc.
And rent income generates taxes too (aka profits for the land lord), that don't exist otherwise.
A land value tax only taxes economic rents. Landlords still make money from their productive activity with an LVT, just not from the economic rent itself.
Economic rent and rent from renting are two different things.
You're conflating two roles!
1. Is the role of the property manager! They labor to fix and improve things where you live. Remember to tip your supers around the holidays!
2. Is the role of the landlord. They hold the legal title to the land. You don't need to give them Christmas cards.
Sometimes they're the same person!
Thanks