1. Economic Efficiency: Unlike income or consumption taxes, an LVT is non-distortionary. It doesn't discourage productive activities like work, saving, or investment. Land is a fixed resource; its supply doesn't change with price or tax fluctuations. Therefore, an LVT wouldn't distort market incentives, unlike other taxes. By shifting the tax burden onto land, we could potentially reduce the distortionary effects of other taxes and promote economic growth.
2. Wealth Inequality Reduction: Land ownership in the U.S. is highly concentrated. A significant portion of the country's land is owned by a small percentage of the population. An LVT would primarily affect these large landowners, redistributing wealth more evenly across society. Plus, land can't be hidden or moved offshore, making an LVT difficult to evade and an effective tool for wealth redistribution.
3. Sustainable Land Use: Many landowners hold onto vacant or underutilized land as a speculative investment, waiting for its value to increase. This leads to urban sprawl, inefficient land use, and higher housing costs. An LVT would make this kind of speculation less attractive, encouraging landowners to develop or sell their land. This could lead to more efficient land use, less urban sprawl, and potentially more affordable housing.
It's unclear (at least to me) why Google, say, whose business activity is very non-land-intensive, should be in a favorable tax position compared to, say, farming. You say "because the farmers use more land!" And it's true; they do. But if you don't already believe that land should be the determinant of tax, that explanation doesn't give you any reason to start believing.
Re wealth inequality: No, this tax will make the wealthy hold less of their wealth in the form of land. They'll just hold it in some other form, and that other form will be taxed less or none. That might redistribute land more evenly across society, and that might be a net win, but it won't redistribute wealth very much.
If the wealthy do decide to hold their wealth in other forms, this could potentially free up land for more productive uses or for those who might not have had access to land ownership before. This could lead to a more equitable distribution of land, which is a form of wealth in itself.
The argument that the wealthy will simply shift their wealth to other less-taxed or non-taxed forms is not necessarily a critique of the LVT, but rather a critique of the overall tax system. If other forms of wealth are undertaxed, the solution would be to reform these areas of the tax system, rather than reject the LVT.
It actually doesn't, because if you hold unused land it's already fully rational for you to sell or lease it, so that some other activity can take place on it instead - any land that's taxed by LVT must by definition have some economic value. LVT may discourage pointless speculation in land values, but that's a benefit and far from a 'distortion'.
You could say that they can set the land to being a special tax code for tree farming or w/e. Which is something that already exists. I've been looking for a 10 acre plot (being picky on location, shape, etcetc) for a couple years now and most plots are already taxed at a lower rate due to this sort of tax code.
So my question/point is, people who are selling land (presumably as part of an investment) would be muddled in with people who are holding thousands of acres for tree farming. At least, in my experience.
What's the solution in this area? Be more restrictive on who gets the relaxed tax incentive? Perhaps not care, and assume wood prices will go up dramatically since tree farming is now much more expensive? Just curious on your thoughts
Your hypothetical tree farm would be taxed at the same rate as a neighboring parcel that didn't have a tree farm on it.
But you don't have to wait 40 years to realize a return on your investment if you don't want to... the sale price of the land would be going up every year, because the trees would be growing (a tree farm with 20 year old trees on it would be worth a lot more than a tree farm with 1 year old trees on it, yes?).
I myself am not fully persuaded by Georgism, but as far as I can see, there's no disincentive to things like tree farms under a Georgist model.
An average value for farmland might be something like $5000 / acre.
The average value for land in even a low cost of living city can be $2.5m / acre.
Hmmm, I don't get this point. If the incentive is to sell of develop your land what happens to "fallow" land that serves as a habitat for plants or animals? Seems like this would encourage developing land even if it's in a suboptimal location and would otherwise remain fallow, which seems less sustainable than the status quo.
The market will help to a certain extent, because land in the countryside is not going to be assessed (and therefore taxed) nearly as highly as land in the city center. "Vacant lots" out in the countryside are great, but in the city they are a scourge.
That said, the government will need to step in to protect urban and semiurban greenspaces/greenways, because LVT would indeed encourage development of those. (Extreme example, Central Park would be assessed as worth billions of dollars and taxed many millions a year).
I think, ideally, local and state gov'ts would either buy or grant tax easements on urban green areas. If done right, LVT could then incentivize developers to either use the land for buildings, or turn it into a greenspace, avoiding the gross middle-ground of parking lots and other low-value and use.
We were under utilizing it and now its a hospital among other things.
Land out in the countryside would not be hugely taxed under this system.
This is targeted at that parking lot in San Francisco that really should be an underground parking lot with 1 story of retail at the ground floor and 4 stories of housing above it.
In the EU there are "set-aside" payments to encourage farmers to do this, and national parks and other restrictions to protect the more valuable habitats.
> Unlike income or consumption taxes, an LVT is non-distortionary. It doesn't discourage productive activities like work, saving, or investment
It's not great for anyone who chose to invest in land based on the current rules, and then the rules change.
> Many landowners hold onto vacant or underutilized land as a speculative investment, waiting for its value to increase
This is a symptom, not a root problem.
> encouraging landowners to develop or sell their land
The land may now be worth less than it was, as it has an instant and recurring negative sign attached to it.
>It's not great for anyone who chose to invest in land based on the current rules, and then the rules change.
Taxing land is intended to change current land investment behavior.
speculation... wasteful monopolization and other rotten externalities ARE the problem.
and since when are prices of land decreasing suddenly a terrible thing?
2) How do you account for the difference in land value (seaside versus downtown versus suburban, views versus no views, etc)?
First off it did: the standard of living of anyone in a Western/industrialized society is ridiculously higher than 100 years ago. And even for less well-developed countries reduced absolute poverty and the diffusion of technology (Germ Theory, vaccines, mobile phones) has done wonders.
One interesting metric is that the cost/effort of being about to produce one hour of light has absolutely plummeted over time:
* https://www.vox.com/2015/6/9/8749751/historic-cost-of-lighti...
As Terry Pratchett observed:
> You can't make people happy by law. If you said to a bunch of average people two hundred years ago "Would you be happy in a world where medical care is widely available, houses are clean, the world's music and sights and foods can be brought into your home at small cost, travelling even 100 miles is easy, childbirth is generally not fatal to mother or child, you don't have to die of dental abcesses and you don't have to do what the squire tells you" they'd think you were talking about the New Jerusalem and say 'yes'.
* http://groups.google.com/group/alt.fan.pratchett/msg/ee9e9fb...
If you're talking about working hours:
> Now it is true that the needs of human beings may seem to be insatiable. But they fall into two classes --those needs which are absolute in the sense that we feel them whatever the situation of our fellow human beings may be, and those which are relative in the sense that we feel them only if their satisfaction lifts us above, makes us feel superior to, our fellows. Needs of the second class, those which satisfy the desire for superiority, may indeed be insatiable; for the higher the general level, the higher still are they. But this is not so true of the absolute needs-a point may soon be reached, much sooner perhaps than we are all of us aware of, when these needs are satisfied in the sense that we prefer to devote our further energies to non-economic purposes.
[…]
> For many ages to come the old Adam will be so strong in us that everybody will need to do some work if he is to be contented. We shall do more things for ourselves than is usual with the rich to-day, only too glad to have small duties and tasks and routines. But beyond this, we shall endeavour to spread the bread thin on the butter-to make what work there is still to be done to be as widely shared as possible. Three-hour shifts or a fifteen-hour week may put off the problem for a great while. For three hours a day is quite enough to satisfy the old Adam in most of us!
* John Maynard Keynes, "Economic Possibilities for our Grandchildren" (1930)
* http://www.econ.yale.edu/smith/econ116a/keynes1.pdf
An essay putting forward / hypothesizing four reasons on why the above did not happen (We haven't spread the wealth around enough; People actually love working; There's no limit to human desires; Leisure is expensive):
* https://www.vox.com/2014/11/20/7254877/keynes-work-leisure
It did. Domestic labor went from walking down to the creek and using a wash tub to throwing it into a washing machine, coal fired stoves were replaced with gas and electric, garments made by hand are now made an ocean away, television and the internet made homes more fun to be in and gave a break to parents minding children, beating the rugs was replaced with a vacuum, the freezer and microwave made quick meals trivial to prepare..
And then, suddenly and totally organically, with no help from a media that is owned by a few large corporations that would benefit from doubling the workforce, it was decided that working in the home is slavery, now two incomes chase the same home that costs now twice as much and the population pyramid is inverting beacuse nobody had kids.
May I suggest a more accurate tax....Capital Value Added Tax...we have extremely large warping of the tax systems and political systems by uncontrolled capitalism run amok.
Start with hedge fund tax of 3%, ah ah before you complain several large hedge funds have stated they would be in favor of such a tax as it addresses inequality without damaging hedge funds.
The question: > Shifting the burden of municipal property taxes towards land and away from improvements such as buildings - as proposed in the Detroit land value tax plan - will enhance the incentives for owners to develop their land and thereby give a substantial boost to local economic growth over a ten-year horizon.
And responses: 7% Strongly Agree, 46% Agreed, 17% Uncertain, 2% Disagree,2% No opinion, 24% Did Not Answer
https://www.kentclarkcenter.org/surveys/land-value-tax/ (The link also shows the responses weighted by the responder's confidence, and the individual responses).
In a field which has notable problems with predicting the future, adding more samples may not improve matters.
Sometimes they get it right.
UK-focused articles rebutting common arguments against a land value tax, written by an LVT advocate: http://kaalvtn.blogspot.com/p/index.html
Edit: Link: http://www.yppuk.org/2023/03/mark-wadsworth-obituary.html
Does a new tenant always get a new 99 year lease, or is it the remainder of the previous lease? I would not consider a lease expiring next year, for example, to be of equivalent value.
I spend a lot of time in Arden, Delaware which is also a single tax community. Many of the people of Arden love the town and Georgism. So much so that there seems to be several people from Arden that were named either Arden or George.
Does the same naming thing happen in Fairhope?
Recently the home builders on new houses have sold the house and then also been selling the leases to a 3rd party as an investment. These 3rd parties have been radically increasing the annual ground to much higher levels. I’m never going for a lease hold property.
By "good flexibility" I mean options to convert from perpetual ownership without screwing current owners -- our perpetual ownership model involves extremely favorable tax treatment at certain stages (capital gains forgiveness, like kind exchanges, cost basis step up) and you could make these benefits contingent on a conversion to a 99 year lease or something. I believe there is data that shows people have a stated preference for perpetual over 99 year, but they have a revealed preference that is neutral between the two, and this is how you could achieve the conversion without seizing land.
By "bad flexibility" I mean that LVT calculations seem easier to sabotage to blatantly favor the upper crust. If they can do it for income / capital gains tax, they can do it for LVT. Rolling leases, however, have a pretty transparent periodic price finding mechanism. Nothing is perfect, the treatment of improvements at renewal/auction time is a likely vector for skullduggery, but to my intuition it still seems better than LVT due to having more eyes and competing interests focused on the process.
Anyway, this is a "butterfly idea" where I haven't put enough thought into it to have a strongly informed opinion one way or the other and I want to know if someone knows of scholarly work on the subject.
people own more than that The property should be taxed
also corporation-owned properties should be taxed
edit: i mean annual property taxes
The goal of these policies, IMH(umble)O, should be to help poorer renters become richer homeowners.
I feel like you do that by reducing the total cost of walking that path. Not by increasing their tax obligation every step up the socio-economic ladder they climb on their way out of the lower class.
Taxes would still happen on renter investment property.
Just not someones personal home.
So no subsiding at all.
The concept of imputed income also helps homeowners. If you own a house that you rent out to people, the money you get is counted as income. If you are an owner-occupier and paid off your mortgage, then you effectively pay rent to yourself... money that you otherwise would've needed to pay to others, but don't need to pay tax on it.
So essentially you get a deduction even besides the mortgage interest deduction. All of this is also factored into home values, and thus the purchase decision for new buyers won't ever be dramatically better than renting.
The solution of a land value tax is necessary. It is most necessary in the residential space, including for first homes, because that is the most important place where we need to ensure high and quality supply, and affordability.
Helping homeowners, specifically, but not others is arbitrary and unfair.
Providing a citizen's dividend out of the revenue of a land value tax, to help all, would be fair, and would help enable people to acquire homes if they want them.
This is how it works in Canada: principle residence has no capital gains on sale.
If you move to a new place, and don't sell the old one, then you have to change its status and the clock starts ticking on any price appreciation after the status change. Further if you rent out part of the structure (e.g., basement), then you have to pro-rate a status change of the property (generally proportional to surface area) and declare rental income.
No capital gains isn't necessarily a great system either. It leads to people treating their primary home as a retirement savings vehicle.
Taxing inflation-adjusted capital gains on home sales is a sensible compromise. And maybe also allowing the gain to be divided over years of ownership.
Eliminating those and increasing corporate/second property taxes instead would be insane. That means that renters would be responsible for most of the taxes required to maintain the streets in front of my house.
Ultimately, land itself is like air and water, it is a birth-right.
Owning land is not a birth right.
Absurd.
I find it absurd that rich people can move to an area they like and displace all the families that have been there generations by virtue of property tax increases effectively conquering the land.
I find it absurd that the government can take your home AT ALL after you have spent your whole life paying for it.
It could so easily go badly though, and be worse than the existing system. The arguments in favor though, are very compelling.
There are established means through which tax assessors appraise the value of properties. They are held accountable by means of appeals in the judicial system. Tax rates themselves are democratically determined by the electorate for whom they are applied.
It is true that a LVT will have a larger percentage impact on the market value of undeveloped land who bought land for speculation without any investments in making the land more valuable. This will especially affect people who bought up lots of land speculating on the value going up. This includes people who bought up lots of land for farm/lumber/mining, but also people who buy up urban plots and keep them as a flat land parking lot while waiting for the value to go up.
Any change in taxes will have some winners and some losers. For example an increase in traditional property taxes hurts anyone who bought expensive houses. An sales tax/consumption taxes hurts anyone who saved up financial assets. An increase in income taxes hurts people who invested in education to increase their labor value.
The question is which is the least unfair way to tax to meet the needs of society. Most of those other taxes will actively discourage valuable investments that make society as a whole more prosperous. Property taxes discourage building. Wealth taxes discourage saving. Income taxes discourage earning and investment towards future earning. In contrast a tax on land value, doesn't cause there to be any less land. It does discourage speculation in future increases in land value, but that speculation is mostly zero sum (it might make the individual speculator richer, but doesn't increase the wealth of society as a whole).
Yes, but you could also say:
"They key is that it is a tax on the relationships between specific landowners and the local representatives and lobby dollars spent"
Now, if you're a farmer on the edge of Austin, and the city's growth means your land is getting increasingly valuable due to high housing demand, then your tax will go up, potentially until you're forced to give up farming and sell to developers. That's intentional, it means the land will be used for something more valuable than it's current use.
It's a fair concern, but also because property tax already includes some land tax it's not dramatically different. Those activities are already mostly done in areas where land is extremely cheap.
The long answer requires a discussion about what you define as "fair" & the exact implementation of the tax governing the land you're talking about. This would be true of any tax though. The answer would still likely be no, though.
Many places have implemented an LVT. I suggest you look into some of them to see how the tax usually plays out in practice. In NSW, Australia, for example, farmland is exempt.
If you are sitting on land that is more valuable than the use you put it to, maybe you should have an incentive to put it to more valuable use?
1. which I only sorta agree with depending on the context
2. 75%? To be figured out by someone more informed than I, and not declarable.
I own a chunk of acreage in farmland adjacent to my metropolitan area. The township won't allow it to be developed further due to density restrictions, I have my one house on it but that's all I get and I'm happy with that, but his tax would be implemented at the state level. The state would say "You have a lot of valuable land here right next to the city. We're going to tax you wildly on land you can't develop.
Furthermore, this tax would just serve to increase speculative churn and encourage chunks of land that would eventually go on to become parks and public lands to be broken down by landowners into small chunks for the densest and most valuable uses.
The whole problem is that what is valuable is not necessarily what is good for society and this does nothing to address that. I'm always struck by how weirdly free-market / Laissez faire land value taxes are given who typically pushes them.
https://news.ycombinator.com/item?id=38240940 Nov 2023 (3 comments)
What's missed is the general idea. It's not land per se but any ownership that can be/is used for "rent seeking" (i.e. getting money without contributing any work). Nowadays things like intellectual property, natural resources and major infrastructure are the major things that should be taxed in this spirit.
Expanding this idea to that all means of production falls in the rent seeking category, one arrives at socialism.
But yes, expand this to IP. Tax Microsoft and Disney for the full value of their copyrights. If they don't want to pay the tax, they can let the copyright lapse early. Tax google for the full value of google.com. And so on.
The socialist terminology around the different forms of property is really bad and causes a lot of confusion.
It's better to focus one-by-one on comparatively small reforms that each close off a single avenue of rent-seeking and can each be justified on sturdy economic footing by economists with minimal direct relation to he-who-must-not-be-named. This approach is less revolutionary (we know how those go), more propaganda resistant, and generally better.
Isn't class conflict a direct and inevitable result of private ownership of capital? What kind of arrangement makes companies pay more for labor than they have to?
