Seeing like a state, progress and poverty, and owning land(loukidelis.com) |
Seeing like a state, progress and poverty, and owning land(loukidelis.com) |
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.
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.
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
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.
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.
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.
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).
That's a big, gigantic, huge, gnarly, completely unjustified assumption that is responsible in entirety for your conclusion. It's like saying "provided these people did good, they did good." Well, yeah. Duh. What if they didn't?
> This is a fundamental cognitive divide
Oh, I agree. It's difficult to get a man to understand something when his salary (or should I say rent / land value) depends on not understanding it.
In cities with multi-tenant buildings it's typically not so. Renters are the community, or a large part thereof.
Or literally all of Los Angeles 30+ years ago. Or basically everywhere desirable today 30+ years ago.
If you want to invest, go solve a problem that isn't creating a predatory pressure on the real estate market. Homes and property should be affordable. Not investment vehicles, or somewhere to hide cash from that nasty inflation.
>Not investment vehicles, or somewhere to hide cash from that nasty inflation.
Exactly, which is the point of disincentivizing people of treating it as an investment...
Oops.
The standard federal tax deduction is $12.5k and average US income is about $30k and US GDP is around $20 trillion and GDP per capita is about $60k. So you have about 50% of the economic output to work with. And you're right, average income tax per capita is $10k. Maybe $100k or even $10k is a better ball park starting point for a "universal tax credit". I just like the idea of setting the number higher than average earnings. I did hand wave around the assumption that in a scheme like this tax credits wouldn't be worth $1 on the open market but $1M is totally ludicrous I know. It was late and I didn't think anybody would notice haha. Got your attention though!
The general idea is that money could be more productive being added into the economy from the bottom rather than the top. The interesting idea is the marketplace and granting people some intrinsic value and some reason to participate in the economy other than just through labor output. Also not sure how to pay for healthcare, the military, infrastructure and social services if you mostly eliminate the federal budget. If the federal government took a cut of the transaction fees that could be another way to fund it. It's hard to define what "excess" profits are as well, $1B was also a totally arbitrary limit and most businesses don't create that much profit and you could game that system in a lot of ways. It's also difficult for small business to compete with large business in a marketplace for tax credits but I assumed that if you work for a company and also donate your tax credits to your employer that would convert to a cash bonus at some beneficial exchange rate for both. I imagine that's what the think tank would work on. Maybe I'll call it the "Institute for Science Fiction Economics".
Corporate tax rates are around 12% after deductions and constitute less than 20% of current taxation. If you raise those corporate tax rates to 96% above a certain threshold you collect less than 8-times the current revenue. Even 8 times current revenue would get you less than $6 trillion in revenue from corporate tax which would let you improve your tax deduction from $10,000 to $20,000 if you wanted all the tax credits to get purchased and government to collect no tax revenue. You've now completely reformulated all of how corporations work and obliterated a large portion of shareholder revenue and you need eight more equally large changes to get to $100k. I don't think you have them.
I do still think it's kind of a neat idea but at lower amounts, as you've pointed out, it also doesn't move the needle much because corporations don't actually pay that much tax in the first place compared to the size of the population of the US. Allocating a chunk of any real money to a 330+ M population really adds up quick too. I think the motivation (as one of the parent comments suggested) was to try and provide some kind of basic income but also to boost the "value" of a worker in some way so we don't all get replaced by robots and GPT3000. The bigger problem right now isn't employment though, it's wages and inflation, and this doesn't really help that much.
I did finally look at some tax revenue numbers instead of just wildly guessing. :) The bottom 50% of taxpayers (75M people) pay on average $650 in taxes and their total contribution is 48 billion, around 3% of the total taxes paid [0]. In 2019 revenue from corporate income tax was $230B, but that looks to be closer to 10% of the total federal revenue from income tax for that year on this other chart [1]. Interestingly those two sources don't match but whatever, it's close enough for government work.
So, even a 3k floating tax credit just for that bottom 50% segment instead of everyone would "cost" the system about $225B for those 75M people which is pretty close to the corporate tax revenue. So let's see what that would look like. If you doubled the corporate tax rate to pay for all this then you'd have $460B from corporate tax to start, then $225B credits are redeemed, leaving $235B. Of course, nobody is going to pay $3k for $3k of credits, so the exchange rate would probably converge to closer to the tax rate something like 10:1, and now you're talking about 300 bucks per person and another $25B in "cost" to the corporations to buy their tax credits back. So then you've effectively increased corporate taxes to $260B which is like +13% after all the credits are redeemed and you've only given half the population 300 bucks.
I think the amounts are definitely too low for anyone to care. Even at 10x it isn't that interesting and as you point out, you could 100x it and tax corporations at a 1000% rate just to get into poverty level universal basic income territory.
It would be a lot easier to just eliminate taxes on that demographic and maybe bump the corporate tax rate by 20% to cover it without all this credit reassignment nonsense.
Maybe the current system isn't the worst after all? Maybe I'll try to come up with a plan to fix the health insurance system in this country instead, it's probably easier. :)
[0] https://taxfoundation.org/publications/latest-federal-income... [1] https://www.taxpolicycenter.org/statistics/amount-revenue-so...
If you create something without using any natural resources, then you shouldn't have to pay any taxes on it — it all belongs to you. Well done! If a large company does it then same — it's good to use less resources, and taxing their use encourages people to use less. But you will still probably want to live somewhere (and eat food grown somewhere, and drink water that fell somewhere), and you pay tax on what you use, instead of the income you generate.
Georgism is about taxing resource consumption, not income.
If the employer leaves, the town will be unable to sustain itself, everyone will leave, and the land will return to the wild.
Given this setup, under Georgism, what is the amount of property tax the major employer should pay? The correct amount of tax would appear to be negative.
https://www.gameofrent.com/content/is-land-a-big-deal
and the vast majority of that real estate's value is in land
Is that true? Most of the value derives from the location - if you doubled the floor space over the land, the value of the land+improvements would double. The land isn't contributing value.
Some of the local illegal road repair crews are well-organized. They descend like a flash mob with heavy equipment when the odds of getting caught are near zero. The Feds are incurious about who is maintaining the roads illegally because it is kind of doing them a favor.
I first learned about this when I naively started jumping through the hoops to get permission to repair a remote road. One of the local ranchers heard about it, pulled me aside, and explained how things worked while admonishing me for ruining my plausible deniability. The whole thing was wild.
The further you get from the lawmakers the more reasonable actuality gets, even if it is done plausibly deniable.
They lost their homes which is not just a house. There's a much more emotional aspect to a home that can't be expressed in merely dollars.
They were also forced to sell in the story, it wasn't a choice.
You want me to feel sorry for someone who gets a Million dollar windfall when:
1) they got a million dollar windfall
2) they now have a ridiculous amount of options (because money = options)
3) if they're really determined to stay in their house, they can cash-out refinance continuously and use some of the unrealized gains to pay property taxes (and past cash-outs)
4) they could also build an ADU on their property and rent out the ADU to cover property tax + have extra money
5) If they actually do move and leave, it's because they preferred $1M do the other options
No, sorry.
This is like feeling sorry for people who win the lottery because they have to pay taxes and then everyone calls them for a favor.
Most things in life aren't ALL good.
It might be easier to fix zoning first?
(Property that's zoned to allow more development is more valuable, but property owners are often against lifting zoning restrictions anyway.)
taxes = mill-rate * property-value
If you're paying more in taxes it's either because the taxing authority decided to raise more money or your property has increased relative to your neighbours.
It all comes down to the mill rate.
If your whole neighborhood's valuations go up you all get taxed more.
But as tax money is raised, the local government has a choice
1. They can use the tax money to fund services.
2. They can return the tax money collected as a Citizen's Dividend.
If they don't have any need for any more services, everyone would still be able to live there. Your concern that people will lose their community are unfounded. They might decide, as the tax goes up, that they don't need a 1 mile by 1 mile plot of land, in which case they can sub-divide it and live in the area they care about. Anyone who uses less than the average amount of land ends up net positive through this process. Since land ownership tends to be skewed by wealthy land-owners, this means the majority of people receive net proceeds.
But maybe the city does want to spend these new funds on roads and infrastructure for the new people. They have correctly identified that land values will raise by more than they spend, so it is in the interests of the community for them to build. Since these services are profitable to the community, the collected dividends will now be even higher. This represents even more gains for our original garden tenders, but everyone who joined after the initial process shares in these gains.
Now that they have built more awesome stuff, the original citizens are now much better off. This city is now filled with companies moving in, providing jobs for the citizens, it's a magical process. Land values are all much higher. This means that the tax is higher, but it means that the dividend is higher. They can now either go for #1 or #2 again...
In a non-LVT world, it wouldn't make sense for the infrastructure to be built for the sole profit of the original land owners, so it wouldn't be built. Everyone is better off with the land value tax.
You are responsible for the improvements on your land, and you pay for the unimproved value of that land that comes from all higher levels. The local government on the other hand is responsible for local infrastructure, and pay for the city+ based unimproved value.
A landlocked country would pay less tax, a city at the mouth of a river pays higher tax, a locality with a beach pays higher tax, etc... this ensures that each level has some accountability and is incentivized to improve.
At each level is money left over after paying the tax(I hope!), and can either be invested or can be returned as a dividend.
One of the main unresolved issues with Georgism is the Disney World problem, and I believe that if you structure the tax in this way that problem goes away. Disney would simply be labeled not as a household actor, but as a city level actor.
I am very curious to hear your examples of improvements/activities on land that become part of the unimproved value of land at a fast enough rate to matter?
Of course some portion of the taxes go to Disney. Who do you think pays for the air travel system that brings people to Orlando or LA? Who pays for the freeway system that brings in the food?
Re your last argument, the word “mostly” is doing an obscene amount of legwork. Obviously the unimproved land has a market price $X and then the land + structures on it have a different price $Y. So no, obviously the separation is not a fiction, but any particular dollar value is certainly a bit subjective and fuzzy, just like all appraisals are. For what it’s worth, appraising unimproved land is much less subjective than appraising the land + improvements, which we use as a tax basis today.
Ah yes, "let's define away the problem."
> Of course some portion of the taxes go to Disney. Who do you think pays for the air travel system that brings people to Orlando or LA? Who pays for the freeway system that brings in the food?
The typical argument is that Disney doesn't pay enough for those things. No one thinks that such things are "money going to Disney", which just goes to show the absurdities that you have to accept when trying to paper-over the problems with Georgism.
> I am very curious to hear your examples of improvements/activities on land that become part of the unimproved value of land at a fast enough rate to matter?
Who said that "improvements/activities" are the only way for the unimproved value to change rapidly? The land around Disneyland is a counter-example.
As to your suggestion that there aren't examples that fit your absurd restriction, I'll point you to the super-fund sites where SV fabs used to be.
As I hinted earlier, having a cute equation is no substitute for critical thinking.
> Obviously the unimproved land has a market price $X and then the land + structures on it have a different price $Y.
The question is not whether they have prices, it's whether they can be determined.
It's reasonably easy to determine the market price for their sum. How, exactly, do you separate them?
BTW, you're probably assuming that improvements necessarily have non-negative value. That's actually wrong.
1) I don’t know what “typical argument” that Disney pays too little you’re referring to. I find it completely believable that Disney pays too much, but haven’t run the numbers to figure that out. More important than how much they pay is why they pay it, as the latter controls the nature of their incentives.
2) Of course it’s not true that “no one” thinks public services that benefit private entities should be considered tax dollars doled back out to those entities. You’re talking to at least one such person right now, and I strongly suspect there are others.
3) No, I do not believe that all improvements have positive value, which is why I said no such thing and is also why your superfund example is not that tricky. If an improvement incurs negative value and cannot be easily separated from the land (such as pollution), then it becomes, effectively for all purposes (not just taxation) a feature of the land itself. In this case that would, as is reasonable, yield a reduced land value and thus a reduced tax basis. In cases where the negative improvement is easy to remove, the reduction would be less or nonexistent — as would be reflected automatically in the market price for that plot.
4) Yes we agree that determining the exact $ value separation between land and improvements is nontrivial.
>To first approximation, no one provides any essential service for free.
That's pay.
Profit is proportional to capital, not effort (even if it requires effort to materialise). Wage or earnings don't prodce the same pathological effects as profit, even if one person earns $500/hr and another earns $5/hr, the inequity and power imbalance is a constant and relatively quite small compared to exponential inequity entailed by making earnings proportional to wealth.
The assertion that a factory, or a 1000 hectare farm, or a house that you don't live in can be owned is a positive statement, not a brute fact of the world, or a necessary consequency of commerce and trade. As soon as you maoe that statement you are saying that owning these things entitles the owner or shareholder to an exponentially increasing share of control over the world and other people while your farmer and garbage man slowly go bankrupt.
If there's an exponential at work here, it has a vanishingly small exponent.
People who don't get paid for access to their capital don't make said capital available to others.
Note that all capital starts as "I made x but I'm going to spend less."
This is the definition of an exponential and the definition of profit. If under your system you can profit in terms of proportion of a real, finite commodity which is essential for life (ie. control more land in proportion to how much land you control on average with a known strategy available to anyone) then your system definitionally has runaway wealth inequality and will necessarily end in violent collapse or totalitarianism.
The inclusion of the constant prevents entry to the system by people with less than a threshold level of wealth and skews the benefits towards wealth levels where the constant is small. The result also holds as long as the term on the right is polynomial or larger.
How, exactly, do you get from improved land value to unimproved land value?
It's arguably possible to approximate the value of a hotel+land across the street from Disneyland. How, exactly, do you determine what fraction is hotel (improvements) and what fraction is land?
Looking at other hotels in the area just tells you (an approximation of) the difference between the hotel values. That's not enough to determine the absolute value of any hotel.
Logically, this doesn't even work. Lets say everyone in LA wants to live there with their children and their children's children and so on forever. Extrapolate this a few generations and eventually you will have a solid mass of humans 1000 ft tall. (This is a hyperbolic joke, you get the point)
The only way it doesn’t work is if the community makes it impossible for more new people to get in, or if there isn’t enough economic opportunity to support all the people living there. But people don’t generally want to move into communities where they can’t find work, and I see no good reason we should enforce minimum lot and zoning laws to prevent people from moving to where opportunity lives.
People hate to hear this but noone has a right to live somewhere indefinitely
I ask you this, why do the people living in LA have more of a right to be there than the native Indians that were there 500 years ago?
Same would not hold for commercial or nonresidential property ownership. Presumably not by trust (e.g., shielded / non-person) ownership.
You. Don't. Lose. By. Winning. $1M.
You get options.
Lets say you live long enough for the cycle to repeat multiple times. I assume proponents would say, "well, hooray, everyone but you is way better off, I guess it sucks that you weren't better at managing money", when all anyone ever wanted to do was live together and be left alone.
It's a great ideal, but the problem is that land is a finite resource, so eventually you'll run out of space that is necessary for the next group of people who want to live together and be left alone to actually do so. At which point, you either have a stark divide between those who got in their claim and those who don't, or you come up with some redistributive system that gives newcomers a chance.
It's not either/or. The old lady (old guys don't like to be kicked to the street either) argument was very real and causing a lot of pain for real regular people.
It's also true that the special corporate interest saw an opportunity and sneaked in to a law that never should've applied to them.
It emphasizes putting things in the hands of someone that wants to do something with it rather than just maintaining ownership as an option until a voluntary sale is desirable for the occupant.
Gee. I wonder who could ever be behind a push to make it easier for developers and real estate investment firms to utilize artificially created economic pressure to rearrange the ownership landscape, while also pushing all incentives in the direction of urbanization above all else.
That really has nothing to do with my issue.
My issue is that, under the proposed system, two people who each own half of Los Angeles will pay a lot of property taxes, because the other half of Los Angeles adds taxable value to their half, even if their half is unimproved.
But one person who owns the entirety of Los Angeles will pay no property taxes, because the unimproved land is worthless. This system guarantees that there will be a small number of people who own vast quantities of land, because that ownership structure minimizes the total tax burden. Sale of land would vanish to nearly nothing, because not only would the land have a very low cost of ownership - selling some of your land would raise the taxes you have to pay on the rest of it, the part that you keep!
The total amount of tax owed is different depending on the structure of who owns the land. Why does that make sense?
That is the goal, isn't it. To remove speculation from land ownership. Under this model the owner of the unimproved part of LA has no right to the increase in his land value since he did nothing to improve it. He either continues paying increasing taxes, sells it, or starts improving it. I see no bad side to it.
> But one person who owns the entirety of Los Angeles will pay no property taxes, because the unimproved land is worthless. This system guarantees that there will be a small number of people who own vast quantities of land, because that ownership structure minimizes the total tax burden.
What would be this persons incentive to own all this land under this model? Besides, somebody on the edges of this property starts some development and suddenly LA owners taxes raise.
> Sale of land would vanish to nearly nothing, because not only would the land have a very low cost of ownership - selling some of your land would raise the taxes you have to pay on the rest of it, the part that you keep!
This doesn't follow from anything. Land would have very low costs only if it is land that nobody wants, just like today. And selling your land will not lead to higher taxes on your remaining land unless the land that you sold gets improved in such a way that it increases the value of your land. Why do you think that landlords are entitled to value created by somebody else?
>The total amount of tax owed is different depending on the structure of who owns the land. Why does that make sense?
I agree, it doesn't make any sense. Luckily, your conclusion doesn't follow from anything that you wrote. The total amount of tax owed is different depending on the value of the land. Do you think that that also makes no sense?
It would lower their taxes.
> This doesn't follow from anything. Land would have very low costs only if it is land that nobody wants, just like today. And selling your land will not lead to higher taxes on your remaining land unless the land that you sold gets improved in such a way that it increases the value of your land.
Please don't bother responding if you have no idea what you're responding to.
How massive depends on how long they stay into the boom.
Again, no one ever loses (financially) from prices going up.
All you get are options (financially).
If your home is direly important to you, and being close to family is important, too - you still have options.
1) Sell and move in with family and use your gains to help offset their property tax
2) build an ADU in your backyard / convert your garage to an apartment - and use the rental income to pay your fair share of property tax - plus have the majority left over for spending
3) continuously cash-out refinance to pay your property tax + your previous cash-out
No owner loses (financially) from property prices exploding.
And in the case of the Georgist system being discussed, a typical poor person who is living on a typically tight budget and typically doesn't own very much of their home equity has very strong financial incentives to avoid unaffordable tax rises. Sure, they still have "options" to pay that bill, just like unemployed people also have "options" to sell and move in with family, take on lodgers or refinance, but if the consequence of house price rises from are that you have to choose between sharing, moving or paying refinancing costs on your house it's definitely not a windfall. And they're not finally priced out of an area when it's a million pound plot attractive to developers who want to build condos, they're priced out of their still-very-undesirable area as soon as the LVT bumps up 20%, perhaps because some well meaning citizen planted flowers instead of syringes in the local park.
The other option, of course, is to try to keep your house in line with your cost of living by attempting to thwart all attempts to generally improve the area. I think it's pretty obvious a lot of people will choose that...
You're looking at it stricly as if housing was a investment to be cashed out, as opposed to a place to settle down and live life.
There is no windfall. They got kicked out of their home by being forced to sell it.
Is the $1M a lot? Well, they are now homeless. If the property values rose so much that they got the million, all other properties rose as well and being now homeless they still need to buy a new home. It'll have to be much smaller or maybe there's nothing affordable available anymore so they have to uproot life (jobs, schools, friends, family, doctors) and move to a much cheaper city.
Very cruel, and all because some richer people want to move in and take over? That's the kind of abuse that leads to things like Prop13.
> #3 cash-out refinance continuously
This is completely unrealistic. You can't pay a recurring cost by going farther into debt every year if you can never pay it back.
You can be poor, even with a million in such a market, and all that happens if you move somewhere cheaper to start again, is you perpetuate the cycle.
The question is whether the Georgist solution is more equitable than what we have today. But no system can magically solve the problem of supply and demand.
So the incentive to holding unimproved land from which you derive no profit would be so that you would pay less tax then if you would made improvements and profit from those improvements.
> Please don't bother responding if you have no idea what you're responding to.
You should follow your own advice.
The problems you mention stem from various "kick out" policies that are essentially forced assets transfer and artificial scarcity policies to inflate prices (difficulty for new housing, one family houses, height of buildings, devaluation of residential areas by bad policing etc)
Housing prices are results of specific policies, and people's ownership rights are protected in western societies.
In practice - aren't tax rates changed based on politics?
That is, are most rates not “mill rates” (where relative house values matter, not absolute values).
This is the first I've heard of a city adjusting taxes down.
Ahhhh, brutalism . . . “The Soviets decided to pass: the plan was too extreme and destructive of existing institutions even for Stalin. Undeterred, Le Corbusier changed the word “Moscow” on the diagram to “Paris”, then presented it to the French government (who also passed). Some aspects of his design eventually ended up as Chandigarh, India.”
https://slatestarcodex.com/2017/03/16/book-review-seeing-lik...
In either case, the land-usage intensity rises by multiple factors.
The option is not between 1-story quarter-acre development and a forest of Burj Khalifas. There is in fact considerable intermediate ground.
In developed countries, high density housing will either make the city unbearably expensive(NYC) or bring down quality of life.(SF)
High density is a sign that resources are scarce but demand for them has increased. The sign of a well functioning and professional state is one that has a healthy middle class and enjoys low density sustainable standard of life.
Often the case for high density housing is married to sustainability goals. But sustainability goals exist in the first place because resources are scarce and it is becoming difficult to live in a sustainable manner.
The rational solution is to place a moratorium upon expansion of the city and the population. Only in Bizarro World would the logic of cramming more people even more densely in the name of sustainable design would make sense.
The true scarcity mentality is with governing bodies and elected officials who do not have the vision, integrity or collective access to more than one brain cell. They fail to create networked sustainable communities and manipulate their vote banks.
One might choose to be fair and honest to admit that calls for high density housing is often where successful immigrants congregate due to their employment. Often said immigrants are on work visas and often are not eligible to vote in local/national elections.
Is it a coincidence that elected officials impose high taxes only in certain cities/counties and extract every dollar they can squeeze from a work force who are cuffed to their visa sponsored high paying jobs? The golden goose is slaughtered and well done. Stick a fork in it and let the taxes drip.
There are no high density initiatives in Visalia, CA. Only in Bay Area. Because why build infrastructure and public transport when you can keep taxing those who can’t even vote in the first place. At least in CA, it’s win-win over and over.
Every city that has a highly paid immigrant work force is on the chopping block and will start passing high density housing initiatives. Success must be penalized..it seems. Affordable housing is subsidized housing. And who subsidizes it? The developers will tack that cost to the market value homes. Which would..surprise!..create more unaffordable cities. It’s a vicious cycle that should obvious to most who pay mortgages for all of their working lives.
We don’t need high density. It’s funny. Hong Kong, Singapore, Mumbai, London maybe..but we have literally brainwashed ourselves into thinking we need to be high density and by creating unnecessary economic activity/jobs/dense zones, we have created an unsustainable situation.
Case in point: Growing 1/4 of America’s food and 80% of almonds in a desert during a drought and in a state with the highest cost of living? Daft! And for what? A fraction of our GDP. While investment in education and tech and automation would create prosperity all over the world and we could export what we do best. Tech.
Are almonds a basic human right? I don’t think so. Water is…and Californians have to sacrifice water during a drought so the world can have its almonds and alfafa for their non native dairy cows. So we will soon be 10 billion. And we came from 3.5 million in 1975. When will this euphoria over expansion and ‘growth’ stop? It’s a fool’s dream and a dangerous one.
The Dutch solved this. They are a tiny country growing a lot of hydroponic food for Europe. Now they mostly sell tech and know how to grow hydroponic tomatoes. They don’t actually grow hydroponic tomatoes for the whole of the word. Optimization of resources and proper asset management. The asset here isn’t the water and wind and hydroponic tomatoes in Netherlands. It’s their tech and know how.
America doesn’t operate with an understanding of scale, economies of scale and diminishing returns. We could be better and shine better. But the elephant thinks it’s a pussy cat and ends up trampling everyone around it during playtime. A tragedy all around.
I think you're reversing cause and effect.
Or give me an example of an affordable city that is also high density in America. I haven’t seen it.
The single story suburbia looks claustraphobic - instead you have soace for parks, public squares, and services and facilities. There can be large distances between apartment blocks, and can be very green
America is a nation of immigrants. They didn’t leave their home countries and sacrifice so much for a better future to go back into high density apartments and sprint to the park for fresh air.
I know elderly Asian neighbors who hyperventilate at city hall meetings when they hear their adopted country going the way of the homes they fled. And my heart goes out to them. My friends who came here from communist regimes prefer to live in middle America that used to be immune to the coastal political restlessness.
The way a govt can control a citizen’s life is through housing, taxes and trade it for quality of life. It’s borderline blackmail. Current trends and progressive/liberal/greenwashing fads invalidates entire lives and makes a mockery of immigrants’ journeys made towards a prosperous abundant life that is free from govt constraints.
What I'm saying is that they aren't expensive because of the density. They are dense, because they are expensive, because they are very desirable places to live. You wouldn't densify an area where no one wants to live...
High density is imposed upon medium density middle class zipcodes because it is the middle class that is working class.
There are more jobs in this zipcode because the govt has chosen to create infrastructure(often supported by the employers like FAANGs or HP at a time etc in the Bay Area for example). It was meant to benefit the workers.
But as these cities prospered, it became crowded. Instead of creating new cities with good infrastructure to replicate the success of tier 1 cities, corporations and governments are trying to stuff more sardines in a small metal can.
The FAANGs are basically run by the employees who are woke adult children who have never had any real life experience or have travelled beyond the confines of their fantasy world. The Govt is run by the equivalent of a pirate with a wooden peg leg and a green plastic parrot on its shoulder plundering the working middle class for extractive taxes with no returns and punishing the productive.
The ‘desirability’ is the availability of jobs. Corporate America and Big Govt are hand in glove as they keep scratching each other’s back. The immigrant tech work force often has no voice as most of them are denied green cards due to what is racism. An Indian or Chinese passport sends you to way back to the end of the immigration line. There is no DACA for the children of tech workers, mind you.
They are treated like cattle and then squeezed to death by taxes. The visa is the chain that binds them because they don’t even have the mobility to move to another job or city that is more affordable. If this isn’t thuggery and theft by Big Gov+Corporate America, I don’t know what is..
I have looked at the minutes of many city council meetings in the Bay Area. Every high density initiative is always wherever there is a substantial tech immigrant population..often Indian/Asian. And the high density is often affordable housing quotas to bring people from other Bay Area cities which is a redistribution program. In one Bay Area city, high density housing is mandated by Sacramento to bring in the homeless and create affordable housing from other cities in the county. But no new schools or roads. No community spaces and existing green and open spaces are being built. There is BART which is basically transport for people who come to the city to steal Amazon packages and catalytic converters. There is an increase in social spending for the new entrants but no increase in law enforcement even though crime has soared, no new fire stations and retail/shopping options have shrunk. Water, electricity and every utility bill has gone up by 25%. Property taxes increase every year and so does cost of living.
What Corporate America and Big Gov needs to do is create more fantastic cities that are desirable. As an Example: Why this scarcity mentality that there will be only one Bay Area? Bay Area is a modern day labour camp. It’s expensive and crowded not because it is desirable but because people are trapped. Trapped by their jobs and by taxes.