For example, let's say there's a neighborhood of people who are quite poor but charitable toward one another. So they build nice gardens accessible for free, little galleries, drinking fountains and so on. As a result, other people want to move in, land value in the community increases, and eventually the original inhabitants can't pay the Georgist tax anymore and lose the land. And of course none of them can take the improvements they've made and transplant them somewhere else, it's just a total loss. Their own charity and neighborliness spelled their doom, even though they made the area attractive in the first place. What gives?
Play your scenario out.
A bunch of poor people buy 100 acres of land for $1, and they turn it into a paradise.
It becomes cool, so rich hipsters wanna buy up chunks to Instagram it.
The first person sells a patch of land he bought for $0.01 for $1M. Suddenly, property tax on everyone's $0.01 parcels shoots up from $0 to $12,000 per year.
These people have no jobs, so they can't afford $12,000 in taxes per year, so they're all forced to sell their properties to other hipsters on Instagram for $1M, too.
Well guess what?
Now they're millionaires.
I mean, technically, not. They've got some taxes to pay. But you get the idea.
No owners "lose" from property values shooting through the roof. ESPECIALLY not leveraged owners (mortgage holders).
That's not how normal people value those things.
The only people who can be “driven out” are the renters, but if you let owners subdivide and build more, even they should be able to stay in the neighborhood indefinitely. It’s only once you break the chain by not building new homes that the existing community is forced to move. The original neighbors may become a minority compared to the newcomers, but the alternatives to building enough housing for everyone who wants to live in a neighborhood appears to me to be:
- make your neighborhood undesirable for even you to live in.
- make it impossible for new people to buy their way into the community.
- accept that non-owners and not-rich-enough owners will be priced out and forced to move from their homes.
Owners don't lose from property shooting through the roof under current taxation schemes but under a 100% LVT they lose their community and gain next to nothing financially because land value is entirely captured.
In New Zealand, property taxes are relative: the tax you pay depends on how much your property price rises relative to everybody else’s property prices. The local government has a fixed budget, which is apportioned between all the properties proportional to property values.
Example: a city has a budget of $1000. The city has two houses, one worth $100k and another worth $900k. The property taxes are $100 and $900 (ignoring fixed charges). If the houses double in value to $200k and $1800k, the property taxes are still $100 and $900.
It is important to keep this in mind when arguing about property price increases, because price increases don’t always matter.
Yeah but instead it’s people who cannot buy land who rent their homes who make their community better only to be priced out.
> No owners “lose”
Right and for all the people who aren’t wealthy enough to own land who get priced out of their neighborhoods and have to move? Often further from places of employment?
The comment you replied to said “let's say there's a neighborhood of people who are quite poor but charitable toward one another”. Poor people buying 100 acres of land for $1 is not a “neighborhood of people”.
Your scenario is buying cheap land in hopes one day it’s expensive — basically a long shot lottery ticket.
> Now they're millionaires.
The difficulty with this reasoning is that it assumes that homes (and the land they sit on) have only economic value and nothing else matters.
> No owners "lose" from property values shooting through the roof.
In the story you just described they lost their homes they had built up and loved.
For many people, a bunch of cash doesn't replace that.
A bunch of poor people buy some cheap land with very low taxes because its a run down scruffy mess with no facilities.
The land stays a run down scruffy mess with no facilities because the local property owners have strong financial incentives to keep it that way
Incremental increases in the land value tax would make low income landowners hungry long before the land rose in value enough to make anyone millionaires, and land isn't exactly easy to sell quickly, especially not if it's marginally-less-shitty-than-before land with an uncertain future.
But it can be worked around.
It's a law. You can just put in exemptions.
- "Land tax increases shall not exceed X% if it is your primary residence."
- "Land tax shall not increase if you are over the age of 65".
- "You may deduct monies put into the improvement of a property from your land tax."
- "You may not pay more than 5% of your income in land tax".
I don't see the issue. We don't tax income at 20% with no deductions. We don't place a sales tax on all goods equally. We don't tax corporations the same way we do individuals.
in the case where Georgist tax is used to fund public works, things look identical before outsiders move in. the inhabitants are taxed into some fund, and now receive payment from that fund for their charitable improvements. it’s a closed economy. however, once a non-charitable neighbor moves in, they too are taxed but do not receive anything from this communal fund (since they aren’t working to make communal improvements). now, the 10 original inhabitants continue to make those original public improvements they enjoyed making, and as a bonus, they all receive a little extra for their work.
depending on who you are, maybe you don’t like the idea of having “freeloaders” as neighbors, even if you’re materially better off for it. there are a few knobs you can tweak to shape the kind of neighbors you attract more explicitly (e.g. the $/hourly rate the community fund pays for labor, the rates associated with property taxes, etc). the key is that this tax is levied as part of a closed labor economy. you’re effectively monetizing the labor each neighbor was already investing into public spaces. the average neighbor sees no difference in their $ balance as before: no threat of not being able to afford to stay. UBI does better at protecting the elderly, community improvement fund better at protecting the hard-working/able-bodied.
Which is pretty terrible if the folks are little old ladies settling down to avoid the cruel harsh world, and now need to find somewhere else to live when they are least capable of doing so (being on a fixed income and all).
The 'can't put old widows out of their homes' scenario is why California's Prop 13 came to be, btw. Even without Georgist taxation, property taxes got too high to pay. I imagine a lot of folks in Texas and other less dense areas are going through this right now due to the rapidly increasing property values and less controlled changes in taxation.
It does cause change and turnover instead of stagnation in an area though.
There’s a better way to handle this, though, than the Prop 13 approach of limiting taxes. You just allow a certain amount of property taxes to optionally go unpaid and accrue as a lien against the property that must be settled when the property changes hands. Old widows never get forced out of their houses, but they don’t get to leave them to their kids without paying the tax.
That's the Prop 13 lobbyist's excuse. In reality, these old widows are never at risk of being kicked out of their house at all. I'm sure plenty of investors would be willing to pay off the widow's taxes in exchange for ownership of the property after they pass.
I think the ideal outcome would be to just build additional housing for the people who want to move there, i.e. split the tax per unit land across more units of housing, since that's what the market is indicating that it "wants".
Of course most of the Anglophone world is doing a terrible job of adding housing in high-demand areas, and I'm not clear whether and how that would change under a Georgist regime.
Nowadays, the income inequality gap has grown drastically in each state, so I think this problem just falls under that umbrella. A good source: https://www.cbpp.org/blog/a-state-by-state-look-at-income-in...
When you are measuring income inequality within states, all you are seeing is that the largest metro areas are in almost all cases getting richer, while rural areas poorer. It's not a matter of rich states and poor states at all. For almost anything that matters, those state lines are just confounding your statistics.
If they voluntarily improved somebody else's land under no contractual agreement with the owner, why do they think they're entitled to a share of the new value?
If they voluntarily improved "public" land, good luck extracting gratitude from the state after the fact. The bureaucrats are more likely to issue fines and send in bulldozers.
> If they voluntarily improved "public" land, good luck extracting gratitude from the state after the fact. The bureaucrats are more likely to issue fines and send in bulldozers.
I wonder if this is a fringe example as I imagine few people are radically improving public land, esp. to such extent that it's causing a real estate rush. We might then go across not only the country but to other nations like Canada and ask what proportion of real estate booms are due to this scenario.
Because property rights are garbage? If they improved it, they should gain ownership
If it's your only residence then you get to cap the tax on one unit of housing worth of land at max(x% of income, y% of net wealth excluding that particular unit of land).
In your scenario the poor locals must subdivide and sell or commercialise some of their land, but get to continue benefiting from the commons they have built even if they have 0 income and survive purely off of that commons.
Again: No system is perfect. It seems to me that the Georgist approach would tend to lay the tax burden more evenly on people of all levels of wealth, even if it does force some people to sell and buy.
> Their own charity and neighborliness spelled their doom
is allowing more homes not possible? If not, then where’s that “neighborliness” now?
If they do, because they exist, then who pays for providing those things?
In the modern day, the improvements may contribute more than 100% of the value of the land. In most cases the sole benefit of having land in a desirable city is that it is near other desirable things. This is unlike the agricultural model motivating Georgism, where the primary benefit of owning land is that you can grow crops on it.
But taking the proposal literally that we can tax land based on the improvements existing on other nearby land, but not based on the improvements made to the same land being taxed... there is a very obvious implication. Land will end up being owned in such massive chunks that the land value tax goes back down to zero, because we subtract away the entire value of the area when calculating the tax.
Consider a small plot of land in Los Angeles. It's relatively close to Hollywood, and a lot of other nearby amenities. In its unimproved state, it's a swamp unfit for human habitation, but it is so advantageously located that we can attribute a lot of value to it anyway.
But if the same person owns the entire region of California around Los Angeles, its unimproved state is still an uninhabitable swamp... and because he owns the entire area, there are no improvements nearby to raise the value of the land to the point where he'd have to pay taxes on it. The film industry is an improvement to the land, which we don't want to tax. The port of Long Beach is an improvement to the land, which we don't want to tax. (There is not any fundamentals-based reason to locate a port there - it was constructed as a union-busting exercise, not because of geography.) The fact that millions of people live there is an improvement that we don't want to tax.
It makes no sense to base our tax assessments on how concentrated landownership is, but that is the Georgist proposal.
Examples like these ignore that the reason the land around them is vaulable is by virtue of the people living there making it a better and more prosperous place. They earn the windfall for the time they spend there without making it worse. Someone who has lived in a house for 55 years didn't watch its value appreciate, their lives made the area around them appreciate. The reason neighbourhoods get gentrified is because the residents made them attracitve. The reason neighbourhoods decay is because people don't invest themselves in them long enough, or because they don't invest in them at all because they want to get out.
The ostensible justice of taking this investment from people via high taxes is dispicably cynical. Only a bandit looks at what you have and tells you it's theirs. It makes common ground impossible.
Gentrification isn’t an art project. It’s people with more wealth or income-opportunity coming in and buying up cheap stuff at the prices they can afford. That a prettier coffee shop with gourmet pastries opens up, or that the restaurants have cutesy little parklets, is a second order effect.
In most cases, what makes the neighborhood “more attractive” and starts this in motion is either a growing industry within commute distance or that some other neighborhood got too pricey.
It has very little to do with the prior or new people in the neighborhood, except that the new people have access to more money than the old people and so price them out. Care for community or other forms of moral character have absolutely zero to do with it.
I may even have a proof that people mostly migrate to where they can find stability, and away from where there is uncertainty and volatility. Long term residents are the stability.
When there is an imbalance between the sides, it needs correction, and advocating for the people who actually build these desirable streets and neighbourhoods that are so attractive for others to come to seems like the braver cause these days.
You are ignoring that the new arrivals increase the land value of existing residents. You are ignoring that the government uses income taxes etc to invest into the community, not private land owners, effectively punishing the government and renters for good investments as their income taxes improve the value of the land which then results in them paying more rent. Doing the right thing ends up making a lot of people poorer and land owners richer. So now your government is heavily encouraged to do corrupt projects that benefit the politicians rather than the public. Lots of public transportation projects could pay for themselves through an LVT but without an LVT they drain the renter's and governments pockets.
Honestly, the idea that when a town grows from 10k to 100k that it's only the 10k original residents that create the value and those other 90k are just useless deadweights living off the hard work of older residents is ridiculous when land ownership is just about fencing off something that was already there. When you think about it, the real deadweight is someone demanding to get paid for something they didn't create. It is the community as a whole that makes land valuable, not the owners of the land.
In a world of increasing inequality and specialization, the latter scenario is going to be increasingly common. For many people, it is already here: the absentee slumlord who charges a king's ransom and can't be bothered to keep the toilets flushing is a staple of high-value locations. This person clearly isn't creating the value that drives people to put up with these circumstances, but by virtue of owning the correct deed they get to capture the value even as they do their best to unravel it.
It's a lot like founder and startup equity in a way. Is it more fair for people who arrived with money and grew something to reap more benefits, or the people with time and sweat equity who took way more relative individual risk?
Also what if he was a real asshole, rude to everyone, kicking in fences, and his dogs barking 24/7, and the neighbourhood was doing well despite him?
Renting a single place for decades is less common in north america, as homeowner friendly policies were designed to prevent the society from sliding into the serfdom that is more traditional in europe and elsewhere. If a homeowner was a problem, neighbours have police. There's a dynamic that works pretty well when there isn't a thumb on the scale.
And almost all land currently owned is the result of banditry. Pretty much every bit of habitable land has been fought over, both in the Old World and the New. It's all stolen goods.
Countries that lack this mechanism never really get anywhere.
Politicians can't seem to resist tampering with this successful mechanism, though. They mistake cause for effect, and do things like push financial institutions to offer subprime mortgages, since "everyone knows if you buy a house you'll be successful". I get the impression that they have no clue they could actually kill the goose laying the golden eggs.
Between the financial firms like Blackrock and their pet politicians, it will be interesting to see, after they break things, if anyone will be able to de-humpty-dumpty the mess they create.
NYT review: <https://www.nytimes.com/2021/01/22/books/review/land-simon-w...>
Note that Georgists don't tell us HOW the value of this "land value tax" is determined. It certainly isn't uniform across the US, but where does it change and why?
In addition, Georgists insist that "public infrastructure" drives value. Ask the folks who own motels near Disneyland whether they'd have a business if Disney left.
Note also their assumption that "maximizing value" (as they define it) is the only important goal. It isn't.
That's why they go for insults for anyone who doesn't behave as they'd like.
For example, a "speculator", who Georgists hate and want to punish, is someone who says "hmm. There's more value in the future if I preserve things now." In other words, it's more reasonable to point out that Georgists are (at best) short-term maximizers.
Then there's the small detail that Georgists fundamentally believe that everything should be at the average/the same. If one apartment house is the highest value near a given location, they want to punish anyone who doesn't have apartment houses near that location.
You'd think that they'd get called on that by the "everything should be walkable/bikeable" folks, but I suppose there's some sort of tribal loyalty at play here.
Re the valuation of land separately from the improvements, these are already separated on the vast majority of appraisals. Granted the need to get this right goes up if all taxation was derivative of this, but let’s not act like this is some impossible problem that no municipality would take a stab at. The vast majority already do.
You do know that that is not true, that the value of land often depends ON things that happen on that land, right? (It's not hard to come up with examples.)
But, I do appreciate an example of something that I didn't mention, namely the propensity of Georgists to make claims that they find self-evident and profound but are actually are false.
> Why should someone who happened to own a random piece of land and did nothing with it for 4 generations get a multi-million dollar windfall because Disney accomplished something nearby?
The taxes aren't going to Disney....
> Re the valuation of land separately from the improvements, these are already separated on the vast majority of appraisals.
And that separation is mostly a fiction, as anyone who owns real estate knows.
Claim whatever value you please for tax purposes.
Anyone can put your land into the commons by giving you your claimed value multiplied by a small safety factor. The current owner then gets priority on public housing or continued stewardship of the asset.
Anyone can purchase your land in a forced sale by offering your claimed value x a larger safety factor (+ max(the median home value within a half hour walk/train/etc, median home value country-wide) if it's your only residence).
The goal is to counteract the agglomerative nature of wealth. Profitability (no matter whether your abstraction for ownership is property or political favour) as a fundamental concept is a tax on the poor to the benefit of the wealthy. You must fix this for your system to be stable and not excessively punishing to the poor.
Georgists, which are the subject of this thread, explicitly say that taxes should not be NOT based on improvements, just the "land value". So if the improvements have significant value, buy sell doesn't work.
I'll let you fight that with them.
> Profitability (no matter whether your abstraction for ownership is property or political favour) as a fundamental concept is a tax on the poor to the benefit of the wealthy.
Twaddle. The garbage man doesn't show up unless he's paid. Farmers don't grow enough food for others unless they're paid.
To first approximation, no one provides any essential service for free.
Individuals shouldn't pay tax on regular income up to some limit, just pick $1M for now. Corporate tax could also be set at 95% (chosen only because of the beatles tax man song) above some limit, just pick $1B for now. Every individual, whether they work or not could be allocated a $1M tax credit. So every person has $1M of monopoly game "tax credit" money. Anything an individual earns up to that point would be free of tax. Most people don't earn that much, GDP in the US is about 70k. But if you aren't working, or if you make less, you can lend your tax credit to a corporation at some exchange rate on a market. It would work like carbon credits. If the exchange rate was 1% then your individual $1M credit would be worth $10k. That's your basic income problem solved and the corporate sector gets to keep $990k of extra profit from your donated tax credit. Even if you made 500k, you'd still have 500k to play around with on the tax credit market. Maybe you'd donate it to charity, maybe you'd sell it. If you work for a company you could allocate your tax credits to them at a higher than market rate as your salary. Then a raise wouldn't even be cash, it might be a +1% to your exchange rate. Money is a human invention but I feel like since we're pretty much choosing capitalism on this planet, everyone could at least have table stakes in the game.
It also has the benefit of appealing more to libertarian thinking (tax reduction and market-determined value!) than traditional UBI government handouts and by tying income to tax breaks looks less inflationary to critics.
I think that this post points out an example of where “second order thinking” may be necessary or applicable.
Instead of a working state with minimal powers that affords us the liberty to thrive, we are dreaming that a mythical and benevolent Leviathan will come and make order. Well, guess what, that benevolent Leviathan does not exist in practice, the state is made up and run by private individuals who are profit maximizing just like the grubby property owners gouging their tenants.
We know private property works, and that it has created a society where people enjoy political and economic freedoms unprecedented in the history of mankind. Yes, land is different, and while it's essentially unlimited (from a housing perspective), due to it's 2D structure there are strong externalities related to its use. There is a whole discipline related to solving those problems - urban planning. We can go even a step higher and force cities, using national/state law, to create the necessary housing supply and transport systems - if they are willing to for whatever reasons, say the illusive property appreciation induced by scarcity.
This is all much more tenable than a "100% tax".
It ends on the thought of "for a common good" which makes me think of that utilitarian ideal, one that I don't think is going to be approached by democratic processes of popular vote and the like*
So what then? if not "democracy" to get us looking after the common good, is the alternative autocracy, totalitarianism? being realised through monarch-ism or dictatorship?
There's a good video [1] about how fascism was able to be so prevalent in the 20th centry when politics became less individualised and more collective will, "Common good for US" etc in both communism and nazism. Fascism itself relies on having an "us vs them" approach - which, while old kingdoms also had, were perhaps less pronounced and pointed? (I don't know, I'm just imagining a kingdom wanting to keep to itself rather than invading europe)
So it leads me to think: is the only way we can get towards this "for the common good" is to fall in step behind a mono-government that we must be selective to ensure that no harm is done to those outside of "our" domain? or is this all just friviolovily and it's up to us to organise and look after those around us (smaller feudal states or such)
Not sure, interesting thoughts, happy for any corrections if I was wrong about something.
* There's an interesting approach to popular vote that I've found however, that might be of interest, being that "everyone gets to vote as many parties that they want" https://youtu.be/yhO6jfHPFQU
I think the zapatista principle whereby the entity that does violence is completely decoupled from any decision making processes that do no involve direct violence and serves only the people and depends directly on the people is an essential ingredient.
Also voting methods are only a minor help without functioning journalism or media, and runoff vs preference etc. matters less than proportional representation
And even the ones they didn't kill, would get a reward only to the degree they contributed to the warlike plundering society they envisaged as their destiny (not one say voted on by the people themselves).
And this is the Germans they were talking about! The Slavs that they allowed to live would be literal slaves for the production of food to export to the Germans (the one's they hadn't killed).
The answer is no one, everyone, trust yourself and all of the above. I am almost certain that no algorithms are needed to do "proof of _" (just look at free software) emergent human behaviour can be codified gradually. Currently I think this is basically a UX problem - we need a way to pay the people who maintain the digital commons.
The game of printing more currency can be decided by a balance of the internal and external factors w.r.t. version control (where you are trying to decide relative value of contributions). You negotiate the best situation for yourself, the problem is symmetric and disputes cost too much attention so people lose interest and this thread of the project goes off-track so the exchange rates get worse or the supply of money dries up with no new versions... Basically, truthful stuff will probably win if we are careful about how we organize information since most people are quite pragmatic about stuff they aren't that interested in and money as a social construct only has meaning if we can reach approximate consensus on its distribution. This external pressure is what gets gradually explored and codified into (semi-)automated strategies for what is essentially investing.
The key idea though is that in a p2p system no one has oversight so everyone is in a situation of not knowing what to trust, my argument is that these social constructs are emergent because humans use them to communicate (to exchange assessments and make decisions on how to behave in the "real world"). Things that are taken seriously are considered legitimate and therefore the currency associated with producing that thing should be worth something but exactly how much is only decided when you find someone to trade with. One motivation for trade is if you depend on something, then you can buy insurance by lending legitimacy to the version you depend on (investing in that stock in some sense), that increases the legitimacy of the space of versions which means there is more to gain from making legitimate improvements to it - since there is someone who values them. Finding a bug in the most legitimate version means that you can print money at a very good exchange rate.
Such a system can be terribly inconsistent and still work good enough to be worth more than cryptocurrencies "secured" with various consensus mechanisms. Consistency is actually not incredibly important in the economic system I think. The more important thing is to avoid people prioritizing the measurement game over the reality and if the rules of the measurement game are too well defined then that is hard to avoid. Of course there is some balance here, I guess I am playing devils advocate by leaning a bit hard into the inconsistent economics. Probably some people would choose to maintain absolute consistency in order to obtain legitimacy.
This is becoming a ramble but was ment to be a compact braindump of what I am working towards with http://datalisp.is.
