I think you have a mistaken view of who is actually making money in this equation. Developers do not make all that much money from building housing, which is actually a productive contribution to society. Homeowners, on the other hand, make hand over fist by simply sitting on land absorbing rents: https://pbs.twimg.com/media/EyJN_g3UUAIW0f0?format=jpg&name=...

https://www.wsj.com/articles/homes-earned-more-for-owners-th...

Yeah, I think I misunderstood both the above point and who owns the property in a mortgage. Essentially I think that the land value of the property, which is used in calculation of the property, would go to zero no matter who is paying the tax, reducing mortgages by an equivalent amount if the individual is in charge of paying it, or raising mortgage rates by an equivalent amount if the bank is responsible. Either way it does come out of the individual’s pocket, but mortgages don’t necessarily raise their prices.

> If the bank pays the tax, why wouldn't they pass it on to the mortgage holder in the form of higher interest rates or other fees?

Because land has an inelastic supply, and therefore its value is driven entirely by demand. Banks already charge as high an interest rate as they can get away with (i.e. one commensurate with the buyer's credit rating and the value of the land); trying to raise it to account for LVT would immediately backfire due to the resulting profit loss (in this case, from people being less willing to take out such mortgages).

Sorry for the late reply.

> Most of the people you're taxing in a land value tax are residential uses.

You're forgetting the sheer quantities of land (and land value) consumed by commercial and industrial use; this land, too, would be taxed. Such land is arguably far greater (in terms of value) than most residential land; consider every office building, every factory, every warehouse, every store, every parking lot/garage, every mine, every farm, and you'd see how that 1.362 trillion (and then some!) would be possible.

Another factor here is ATCOR (All Taxes Come Out of Rent), the idea that since non-LVT taxes suppress economic activity (because they tax things with elastic supply, artificially raising their prices), replacing all taxes with LVT would remove that suppression, spurring greater demand for land and therefore higher land values (and therefore higher LVT revenues). Basically: we're already taxing land indirectly and less efficiently, so we might as well just tax land directly.

Further:

> The point is the funds leave very little left for the citizen's dividend unless we want to vastly reduce existing government programs.

Which is very possible. A citizens' dividend, like any other sort of UBI, makes a lot of existing welfare programs redundant. Most Georgists/geolibertarians (myself included) frown upon the insane amounts of "defense" spending here in the US, so that'd be another thing we'd push to cut.

I do understand that mortgages are on both the land and the buildings. We were talking about land only though. It is irrelevant to the question of who pays the land value tax that the mortgage also includes the buildings.

You are ignoring that income taxes and other taxes reduce land rents. You can't tax the same dollar twice after all. The entire reasoning behind a single tax system is that every dollar is taxed through land value taxes in this case.

Yes this does mean that renting/owning low density housing will be more expensive but your income will be much higher to begin with as it isn't taxed.

For example 20% VAT and 30% income tax mean 56% of your money can be spent on housing. Without those taxes you will have almost twice as much money to spend which means you can afford higher land value taxes and if you decrease the amount of land you use, your effective tax burden will go down but so do the costs to maintain infrastructure and other public services.

To be clear I'm not saying that Georgist taxes are based on the mortgage value I know they are not. I'm comparing the two quantities to establish a rough estimation of how expensive property in a Georgist society that provided a similar level of services would be. If government needed to generate a certain amount of tax revenue comparable to current tax revenue they likely need to charge homeowners an average tax on their unimproved land value that would roughly amount to 15+% of the value of the mortgage, across all levels of government.

You're saying that land taxes should supply 100% of federal tax revenue, but 0% of state/local revenue?

Currently most property taxes are local, not federal. You're also missing the bit about a citizen's dividend which seeks to offset some of this.

So you say you have $1000/month out of $1800 that are unrelated to providing rent in the unit being rented and you feel there is no possibility that you're capturing some sort of economic rent when you have more than 50% profit margin on the rent you charge. I think something is bullshit but it's not the economic theory.

You appear to be arguing that if you spend income in a productive way then the income was productive income.

That's simply incorrect, it's not how economics works. For example, if I stole $2000 from you and used it to fix houses/invest it would not magically become productive income.

The comment above you is pointing out that excess income a landlord makes because people are willing to pay a premium to lease a scarce or rare good they own doesn't contribute to the rest of the economy in the same way selling a hotdog does. Ergo, unproductive income.

Really? Care to tell that to the various Nobel laureate economists who have endorsed land value taxation? Do you really think you understand economics better than Paul Samuelson, Milton Friedman, Joseph Stiglitz, William Vickrey?

LVT has nothing to do with improved vs. unimproved land. both improved and unimproved land have productive and unproductive aspects.

LVT is solely targeted at economic rents. this is the key to understanding LVT. otherwise, the idea that it's the most economically efficient tax will not make sense, and the tax itself will not seem to make sense.

on the other hand, what the government will do tax-wise is political, not economic. constitutionally, the tax cat is out of the budget bag, so we have little hope of restraint there. politicians will always try to expand government because it benefits them, no matter what rhetoric they spout.

(i.e., taxes are high because politics, not LVT.)

Perhaps I'm explaining it poorly, that's entirely possible. The frontier is where land value is zero, at the margin of production. It is possible to get value out of the land, but only with hard work. Currently this land may be held without using it for production, but it largely doesn't exist. This is because the lack of a land value tax incentivizes landholders to own all land for the purpose of speculation rather than production, even if it's economic rent value is low. With a land value tax, people who hold land purely for speculative sales prices would sell it because the sales price would drop to zero, therefore freeing up those pieces of land for families to move to and work upon. The frontier, the margin of production, where only hard work would make the land valuable, reopens and other land also becomes more mobile because there is a disincentive to holding land for speculative purposes, reducing the price of housing in general and contributing to housing liquidity.

Taxing people for doing good things disincentivizes people from doing good things. Taxes shouldn't be a punishment for being successful. Georgists think real estate should be taxes based off the unimproved value of the land, what the owners do with the land is up to them, but if they don't use it well their taxes will put them underwater and someone else will make better use of it.

You mean Georgists think that taxes on all of those should be $0? Yes, that is the entire point of Georgism, only the land is taxed because land can be used for anything and if the land value is higher than the shopping center can afford, then it means people want something more valuable than a shopping center there.

The government already backstops most residential mortgages through freddie/fannie. Absorbing the losses and taking in LVT instead of mortgage payments will be nothing more than an accounting difference for many mortgages (e.g. say, some pension funds).

Some land owners should have to eat losses. Thats the whole point. If you live on a portfolio of land inherited through your 15th century duke great grand uncle you should be getting a job at McDonalds rather than living off the labor of others.

The problem is less technical and more political. Try to deprive large scale land holders of their property and they will bankroll a fascist uprising and launch a coup while foreign leaders in hock to property owners elsewhere will back the coup and enact punishing sanctions to prevent it from being seen to work.

It'll happen one day probably but the transition will be bloody and violent as it always has been when land is redistributed.

These are not show-stoppers, nor are they something that Georgists have failed to consider.

"Another basis on which it is argued that greatly increased taxes on land are infeasible is that if land values were to fall precipitously, the financial system would collapse. It is true that many properties have mortgages that would exceed the value of the property if land taxes were increased significantly. This makes it necessary to think carefully about who should absorb the decline in aggregate asset value that would accompany a significant shift toward taxing land. Nevertheless, it is possible to plan for a restructured financial system that would have shed its dependence on land as collateral." http://www.wealthandwant.com/docs/Tideman_CTL.html#I._Taxing...

"Furthermore, as we discuss in more detail in our paper, the number of net winners from this reform would far exceed the number of net losers, who, if necessary, could be exempted or compensated at little budgetary cost. The winners would even include almost all of the very rich, who not only hold the vast majority of US land but who as a rule are also very well diversified, with land only accounting for a small share of their portfolios. They would benefit greatly from the countervailing cuts in labour and capital income taxes." https://voxeu.org/article/post-corona-balanced-budget-fiscal...

"It came as a quite natural development that also the question of incorporating these ideas into Danish Law was raised. From the very beginning, Jakob E. Lange was convinced that the problem of indebtedness, especially the mortgage debts, must be solved when the full Land Rent, or Ground Duty (in Danish "Grundskyld") were to be collected for a public revenue.

When in 1889 Henry George was on a speaking tour in England, Jakob E. Lange made use of the opportunity and went to England to meet him and to discuss the problem with him. The memoirs of Jakob E. Lange relate that Henry George completely accepted his standpoint; an eventual full Ground Rent which were to exceed the present property taxes ought to be proportioned between the title owner and the mortgage holder. This agreement between Henry George and Jacob E. Lange is also found expressed in the later correspondance between the two." https://cooperative-individualism.org/bille-frank_danish-ame...

Yes, the transition would be pretty horrific both for property owners and banks, and therefore for the entire economy (see 2008).

I think that would be true for any reform that's actually effective in driving property values down.

When politicians want more money they often raise taxes because passing good policies is difficult and the relationship between their policy and tax revenue is not obvious. With a land value tax politicians have a very easy way of increasing tax revenue, do something productive.

The countless times a government has cut important services and investments to get a short term cash influx have always lead to misery. Greece ended its public healthcare for the sake of austerity and now they are further in debt. Operating a hospital should be something that is a revenue stream for the government (through land value taxes), not a burden to be distributed across people through taxes.

I think it would be at least partially solved by reorganizing government to be based upon subsidiarity :) but yes, this isn’t necessarily a question which political economy can or should solve

Hey, I like loanable funds in a 100% reserve system with demurrage but that is not the world we live in

This is a good point but it's not a problem with georgism per se so much as the transition to get there. There are a multitude of policies that can be used to ameliorate the change from a system based on taxation of labor and capital to that of land; a common one is giving tax credits equivalent to mortgages so that lendees are not underwater. But any shift to land value taxation will be gradual anyways, so it would be less dramatic than people imagine.

Can you make a strong case for transitioning just property taxes to land value taxes without transitioning other forms of taxation? I'd argue that this would result in a fairly sizeable wealth transfer from homeowners to condo developers. To me it feels like the decrease in sales and income taxes underpins the whole structure to make it feasible for the average American.

I think you have a mistaken view of who is actually making money in this equation. Developers do not make all that much money from building housing, which is actually a productive contribution to society. Homeowners, on the other hand, make hand over fist by simply sitting on land absorbing rents: https://pbs.twimg.com/media/EyJN_g3UUAIW0f0?format=jpg&name=...

https://www.wsj.com/articles/homes-earned-more-for-owners-th...

Secondly, suburbs are drastically subsidized by denser development. They resist densification because they don't want to pay their fair share. https://www.strongtowns.org/journal/2020/4/16/when-apartment...

Georgism isn't different. It relies on an implicit threat of force, too, since it's all about property taxes. Not paying your property tax (which some people might not be able to afford in places where it goes up a lot) would likely have similar effects as eviction or foreclosure. Otherwise, why pay the tax?

> compensation for the loss of land value is not morally required. The typical landowner has been receiving an implicit subsidy from the government, as public goods generate higher rent and land value. One could argue that justice requires the title holder to pay back the past subsidies

This is an absurd standpoint. You're going to ask 64.8% of the population that own homes, a quarter of who are nearing retirement age, to pay back what for all intents and purposes is their retirement fund? If you want to talk about morals and ethics this is clearly an immoral position. Even if we consider the assumption that the increase in value of their property is some form of subsidy, they entered into this contract in good faith as a way to provide for themselves and their families as they age and eventually retire or are no longer able to do productive work from which they can earn a living. To strip them of this and say with a hand wave that they were in the wrong for thinking that a system of ownership, that has existed for hundreds of years and was generally agreed upon by the vast majority of society, would continue to exist and that they would benefit from by lawfully participating in it... I honestly can't imagine you or anyone saying this to someones face, it's just baffling. It's on par with demanding collectivization at the expense of landowners and it would probably have the same consequences.

I disagree strongly with his fundamental premise. Even if you acknowledge and accept the full moral premise of Georgism you have to assess the degree to which people are morally culpable. Slavery was a heinous violation of human rights and choosing to participate in it justified heavy financial penalties from its abolishment. Participation in slavery was far from mandatory as evidenced by businesses in the north that competed with those in the south despite not having slaves.

The current real estate system on the other hand is a fundamentally different beast. Everyone who doesn’t want to be homeless has to participate as either a renter or purchaser. Years and years of government policy have made the former decision ill advised as the financial benefits to ownership are quite large. Despite this I’d agree with the proposal if all that was being done was the removal of a subsidy.

The government is not merely removing a subsidy in this case though. They are intentionally cratering the housing market. Years of government policy has encouraged over-participation in that market. For those who want to change things to argue the government is 0% morally culpable and the individuals are 100% morally culpable is disingenuous. His argument seems to be that the financial culpability follows from the moral culpability.

He even argues that individuals participating in a system owe backwards subsidies because the government did the morally wrong thing. This amounts to intentionally bankrupting most home owners, including depriving them of funds needed for retirement. This is done in a single sentence hand waving fashion without any sort of impact analysis.

I’d argue there is a substantial problem here that spans the ethical, economic and political categories. But you seem to believe the government is 0% culpable and the individuals responding to incentives are 100% culpable. I’d argue it seems more likely you don’t actually believe that just don’t want to pay for the costs of a fair transition.

You do know that you're substituting expensive parking for cheap, right?

However, you are demonstrating that Georgist "efficient land use" is not particularly desirable. (Moreover, "efficient" land use is rarely that important.)

Georgism does push towards a monoculture and a particularly horrible one at that.

For example, Georgism punishes someone who puts some open space between buildings, even though open-space is clearly a good thing.

As I wrote previous, Georgists confuse having an equation that they can "optimize" with having a useful idea on how to allocate resources in the real world.

Yes, Georgism lets you do some calculations, but that doesn't imply that doing those calculations is worthwhile. (This is a problem with economics as a field.)

And, no, the "witticisms" don't make your case. They actually argue that Georgists are dangerous fools.

Ok, but my question was for more detail on how such an appraisal would work and then what the second order effects would be. For something this big we need to think through several generations worth of downstream consequences. We already have many examples of how such revolutionary economic changes can lead to disaster and mass death when people get caught up with the spirit of the idea and don't sit down and do the hard math to work out all of the details ahead of time.

Existing contracts don't magically change just because the government changes how the system of taxation works. I'm not saying it's impossible to have a fair system of mortgages with LVT. I'm saying there are a lot of existing mortgages with specific terms already outlined and no legal basis for changing them. Those mortgages will suddenly be far larger than the new value of the property underlying them. Chances are the homeowners will mostly vacate the property instead of paying those mortgages off and the mortgage holder will then sell the property for a small fraction of the mortgage.

In this system, the homeowner loses any value they had accumulated in their house and the mortgage holder loses a large portion of the mortgage. This is what I'm saying the problem is.

> If the land value tax is paid by the homeowner, the sales price of the land is zero (under a 100% LVT)

I let that bit of bogosity slip by me.

The sales price of valuable land will never be 0.

Govt may not see the price, but it will be paid.

You've convinced me that Georgists don't have any experience with actual people or economies. They just have a theory unmoored to reality.

I think the argument is to switch it so things remain the same at first - 10% tax on 100k land is the same as 1% tax on 1m land+improvements. Coincide with an appropriate drop in income taxes and you could get something.

The key would be people agreeing in principle and then boiling the frog over a hundred years.

These examples are fair. At the provincial level Transport, Pipes and Wires all are small enough expenditures to not warrant their own category breakdown in the budget and are lumped into a 14.6% of budget other category.

At the city level it's tricky because the breakdown my city provides in the budget separates into capital and operating rather than other categories. From what I can tell from the 50 page report, water pipes cost approximately 25% of budget and transport costs approximately 5%. Wires aren't listed in enough details to get an estimate.

My best sense from the numbers in the breakdown is the expenses for my suburb breakdown into roughly 60% per capita items, and 40% per area items. So 60% of our budget gets more expensive as you add people with low per capita taxation and 40% gets cheaper as you add more density.

Alas there is no relationship between an income tax and personal consumption of spatial services. There is absolutely no coherent reason to do as you suggest, and every reason for the land to pay the cost of delivering those services, along with the rest of the rental value of land.

That's a recipe for corruption. If a politician receives no strings attached income taxes even if those are intended to be spent to improve location and pay for infrastructure, he is sure to spend them as if they have none of those strings attached.

> If the LVT is causing the owner to not be able to afford parking lots the area needs more buildings and less parking lots, even if that's just a parking structure.

In what universe is "fewer parking lots" the solution to "not enough parking lots"?

As Orwell wrote, “There are some ideas so absurd that only an intellectual could believe them.”

If people move out of bigger cities to rural areas, why isn't that increasing sprawl? (That is, there is more low-density development in those places.)

To some extent this already happening. Many people moved out of the city during the pandemic. The people in desirable rural areas aren't necessarily happy about it. They are often upset about all the outsiders with more money moving in.

They probably wouldn't be very happy with their property taxes going up either? When there's increased demand for land in a certain town from newcomers, there should be higher land taxes for everyone according to Georgist theory, to keep the price of land zero.

Yeah, should be, if it was pretty fully built out as of 50 years ago.

Land prices decrease proportionally with the level of LVT implemented: 0% of today gives a 100% sales price; 25% LVT gives a 75% sales price; etc; 100% LVT as I propose gives a 0% sales price. Of course the prices increase in a particular transaction more than the exact amount if the buyer wants to live on the land for a long time, though.

Gentrification is a boogeyman- all gentrification means is that land has become more desirable to live on (that's why its value increases). That's good. We want to improve quality of life. If you follow the logic of gentrification to its end, we should be destroying improvements in vulnerable locations in order to keep them affordable. It is the rationality of the slumlord.

>How does this mechanism work in concrete terms? My understanding is that Georgism advocates raising taxes on people with property in desirable locations. They decide they can't afford the taxes, so they sell to a developer, who tears down the house and builds a bigger building.

You have a 500m^2 plot of land. This plot pays $50k land value taxes. If one person lives on the land that person pays the full tax. If 10 people live on the property they each pay $5k taxes per year. If 50 live there then the tax is $1k.

Property taxes scale with the building so housing more people means higher taxes. That is being avoided by only taxing the land.

Alternatively, people hate taxes, they want to avoid paying taxes. If you want to avoid land value taxes, the only way to do that is to use less land more efficiently.

If a shopping center needs more parking and doesn't want to pay more LVT they can build a parking garage. That way the land next door can be used more productively. If building the garage is too expensive then the land was never that valuable to begin with and they can afford the lvt.

> If you can agree that land speculation is bad you can agree that LVT is good.

Why should I agree with something that is so clearly false?

Speculation is betting on a better tomorrow. That's clearly a social good.

> People should not make money for owning empty land that they do nothing with, it's really that simple.

Is it?

Suppose that I like looking at trees. (When a govt does that, it's called greenspace, parkland, etc, and everyone says how great it is. Feel free to argue that Central Park should be covered with high rises.)

Or, I'm waiting for Disneyland to be finished so I can put up a hotel if it pans out.

There are lots of great reasons to "do nothing" with land.

Note that Disneyland is an interesting case that disproves one of your core assumptions, namely that "the public" is responsible for the value of land, therefore it should get all of the "rent". "The public" in all of the nearby cities did just as much as "the public" in Anaheim, yet somehow the area around Disneyland is worth far more than pretty much any place in those cities. The public was, as is often the case, irrelevant.

Disneyland isn't an exception in this respect - I picked it because it's so blatant.

Let's come back to an essential point - why should your preferences regarding other people's property matter? Especially since pretty much every detail that you've used to support your position is wrong.

And it's not just the little details.

For example, you seem to think that efficiency is a goal. It's not. It's a tool. (Of course, your definition of "efficiency" is flawed.)

I get that you want to live in a cramped dysfunctional monoculture, but the rest of us don't. (I brought back monoculture because that's what your policies encourage.) Moreover, such a system is actually less valuable, which is a curious result given your repeated rants about maximizing value.

Well, while Georgism is most famous for advocating for land value taxation the LVT itself is not the only Georgist tax. All forms of economic land, including such things as natural resources and intellectual property, also generate economic rents and are candidates for taxation. Furthermore, cutting taxes on labor and capital increases the value of land significantly, so much of the revenue "lost" by cutting income taxes, sales taxes, corporate taxes etc would flow directly back into land values and return via the LVT.

In any case, there is lots of room for experimentation at the margins and any Georgist reform won't be complete or overnight. Any shift from taxing labor and capital will result in a better and more efficient economy, so don't get too caught up in the abstract end state.

I think it's extremely important to undertake a cost benefit analysis of the end state to decide if we want to transform society in that direction. So I disagree strongly with any comment of the form "don't get too caught up in the end state".

I agree there are some other things you can tax. I presume those are also taxed at precisely the economic rents they create? My point is that government needs some sort of tax with a knob that they have the ability to tweak upwards or downwards based on shifting revenue needs. It seems to me the only things in a Georgist system are taxed at precise values and fail to give government that knob. Do all Georgist societies have some sort of services cap because their tax revenues are capped?

Well other taxes are not precluded by Georgism. See for instance Piguovian taxes and IP taxes. But additionally, I don’t think it can be assumed that the government will continue to need its current amount of revenue. Under subsidiary, the size of the federal government would drastically be reduced as power moves downward to local governments.

> And yes, neoclassical economics classes land under capital and that is a fundamental disagreement of Georgist economists with neoclassical economists.

Perhaps, but your proposed construction (I’m not familiar enough with Georgism to know if it is the standard there) seems to be equivalent to that in equating classical categories of land and capital, but simply reversing the terminology, making durable (and thereby serving as rent-producing property) non-human factors of production, whether natural (and thus classically “land”) or created (and thus classically “capital”) all “economic land”.

Arguably the whole point of the tax is to convince those homeowners who’s land would be better valued as condos to convert to condos.

You already see this in areas that don’t prop 13 tax rates - as land values rise the land gets redeveloped.

Can you give examples of how this is true? I feel like the main government spending that made me more productive was some transit spending before I was born and their education spending. I feel like most government services aren't this.

Even things like health care, which arguably keeps me healthy enough to work isn't distributed in any sort of uniform way so the productivity increase from it isn't likely to match the land value tax increase.

I think there are a lot of things that can increase land value 22%. I think some of them might even raise average wages 22%. I think almost none of them will raise each individual wage by 22%.

I think I need to think about this some more. It seems like the goal of government is to figure out the tax rate that counters the land value perfectly without taxing any more. The fact that it is unimproved land value means we aren't stuck in an efficiency trap since a diverse enough set of uses can improve the land sufficiently to generate a reasonable economic profit in non-rent form. Countering speculation is definitely a strong positive effect.

I worry that the overtaxation causing vacation mechanism isn't very efficient because if the tax takes a small part of the land value improvement it seems that the government gets additional unearned revenue while only land with little to no improvement would be vacated. I think people only vacate if the taxes cut into their additional revenues too steeply. I'm not sure exactly where the too steep point is, but I think governments would have an incentive to overestimate the value of land.