I'm a huge proponent of land tax. Here's why I think it's worth considering:
1. Economic Efficiency: Unlike income or consumption taxes, an LVT is non-distortionary. It doesn't discourage productive activities like work, saving, or investment. Land is a fixed resource; its supply doesn't change with price or tax fluctuations. Therefore, an LVT wouldn't distort market incentives, unlike other taxes. By shifting the tax burden onto land, we could potentially reduce the distortionary effects of other taxes and promote economic growth.
2. Wealth Inequality Reduction: Land ownership in the U.S. is highly concentrated. A significant portion of the country's land is owned by a small percentage of the population. An LVT would primarily affect these large landowners, redistributing wealth more evenly across society. Plus, land can't be hidden or moved offshore, making an LVT difficult to evade and an effective tool for wealth redistribution.
3. Sustainable Land Use: Many landowners hold onto vacant or underutilized land as a speculative investment, waiting for its value to increase. This leads to urban sprawl, inefficient land use, and higher housing costs. An LVT would make this kind of speculation less attractive, encouraging landowners to develop or sell their land. This could lead to more efficient land use, less urban sprawl, and potentially more affordable housing.
Re non-distorionary: It distorts along a completely new axis - whether or not economic activity uses land.
It's unclear (at least to me) why Google, say, whose business activity is very non-land-intensive, should be in a favorable tax position compared to, say, farming. You say "because the farmers use more land!" And it's true; they do. But if you don't already believe that land should be the determinant of tax, that explanation doesn't give you any reason to start believing.
Re wealth inequality: No, this tax will make the wealthy hold less of their wealth in the form of land. They'll just hold it in some other form, and that other form will be taxed less or none. That might redistribute land more evenly across society, and that might be a net win, but it won't redistribute wealth very much.
Sure, the LVT is not designed to be a wealth tax, but rather a tax on the unimproved value of land. Its primary purpose is to encourage efficient use of land and discourage speculative land holding, which can lead to artificial scarcity and inflated property prices.
If the wealthy do decide to hold their wealth in other forms, this could potentially free up land for more productive uses or for those who might not have had access to land ownership before. This could lead to a more equitable distribution of land, which is a form of wealth in itself.
The argument that the wealthy will simply shift their wealth to other less-taxed or non-taxed forms is not necessarily a critique of the LVT, but rather a critique of the overall tax system. If other forms of wealth are undertaxed, the solution would be to reform these areas of the tax system, rather than reject the LVT.
As best as I recall, every time I've heard people argue for LVT, they have wanted to replace other taxes, not supplement them. If you're going to keep the other taxes, well, land is usually already taxed in most places, and the tax is usually somewhat proportional to the value of the land. If you keep other taxes, what does an LTV do that we aren't already doing?
And your original claim was:
> Therefore, an LVT wouldn't distort market incentives, unlike other taxes. By shifting the tax burden onto land, we could potentially reduce the distortionary effects of other taxes and promote economic growth.
If you keep the other taxes, that benefit is reduced, compared to if other taxes were eliminating. (Though, on re-reading, I do see several bits of language that indicate you were thinking about not eliminating other taxes.)
Land ownership currently also encourages making the most money from the land, but an LVT makes speculative holding more expensive encouraging landowners and developers to actually utilize the land effectively in urban spaces.
What do you propose is the best measure to guide land use and what policies can be put in place to align those principles?
Presumably farmland would be worth much less, and be thus taxed much less, than land in San Francisco, NYC, etc where Google's offices would typically lie.
> It distorts along a completely new axis - whether or not economic activity uses land.
It actually doesn't, because if you hold unused land it's already fully rational for you to sell or lease it, so that some other activity can take place on it instead - any land that's taxed by LVT must by definition have some economic value. LVT may discourage pointless speculation in land values, but that's a benefit and far from a 'distortion'.
The difference is opportunity costs versus real costs.
Say I've got a few acres of forest that I want to keep as forest for carbon capture and as a place for birds to rest during the annual migration, and say there are logging, mining, and oil companies that want to log, mine, or drill on that land.
Under the present system keeping it as a forest doesn't make my position worse. It just means I don't reap the profits that I could reap by selling or leasing. Its an opportunity cost, not a real cost.
Under LVT my taxes go up because of those valuable potential uses. That's a real cost to me for keeping the forest.
If you're really dead set on the land never being developed, you could always donate it to the government with the proviso that it remain parkland, or donate it to a non-profit land trust.
You could even add a life tenancy for yourself to the deal -- you'd probably get out of paying any taxes at all.
As an aside, i'd be curious how this strategy would work for long term farming. Ie 40+ year tree farms, where they own thousands (millions?) of acres which sit for 40 years, harvest, and then go back to being idle.
You could say that they can set the land to being a special tax code for tree farming or w/e. Which is something that already exists. I've been looking for a 10 acre plot (being picky on location, shape, etcetc) for a couple years now and most plots are already taxed at a lower rate due to this sort of tax code.
So my question/point is, people who are selling land (presumably as part of an investment) would be muddled in with people who are holding thousands of acres for tree farming. At least, in my experience.
What's the solution in this area? Be more restrictive on who gets the relaxed tax incentive? Perhaps not care, and assume wood prices will go up dramatically since tree farming is now much more expensive? Just curious on your thoughts
If I'm not mistaken, the Georgist model taxes the unimproved land value.
Your hypothetical tree farm would be taxed at the same rate as a neighboring parcel that didn't have a tree farm on it.
But you don't have to wait 40 years to realize a return on your investment if you don't want to... the sale price of the land would be going up every year, because the trees would be growing (a tree farm with 20 year old trees on it would be worth a lot more than a tree farm with 1 year old trees on it, yes?).
I myself am not fully persuaded by Georgism, but as far as I can see, there's no disincentive to things like tree farms under a Georgist model.
It's rare that demand is so high to live so close to such big tree farms, no? The value of that land is likely lower than you are picturing, and thus the tax as well. That said, implementations of LVT vary. Some have lower rates or exemptions for ag.
Depends on the area, i imagine. In Washington, literally 100% of the lots i looked at were within a mile of hundred+ acres of tree land. A few big companies own a _ton_ of land in WA.
Also, i'm picturing the value of the land literally by what i'm trying to buy it as. Not sure how much more accurate it can get than that (at least, it's as practical as it can get. Since it's literally the sell price). These are pretty rural, fwiw. 5-10 acres, ranging from 150-250k. Heavily depends on distance to towns, interstates, etc.
Fun fact, a couple of the companies that own these lands i refer to also have a few (very limited) special gated communities. Lots that are ~20 acres, with a ton of HOA-like (CCRs) restrictions on preserving the trees. It looks a lot like living _in_ a park. Trails everywhere, etc. I was really close to getting one of those, but wetlands make a lot of purchases difficult here in WA.
Hmmm, I don't get this point. If the incentive is to sell of develop your land what happens to "fallow" land that serves as a habitat for plants or animals? Seems like this would encourage developing land even if it's in a suboptimal location and would otherwise remain fallow, which seems less sustainable than the status quo.
The market will help to a certain extent, because land in the countryside is not going to be assessed (and therefore taxed) nearly as highly as land in the city center. "Vacant lots" out in the countryside are great, but in the city they are a scourge.
That said, the government will need to step in to protect urban and semiurban greenspaces/greenways, because LVT would indeed encourage development of those. (Extreme example, Central Park would be assessed as worth billions of dollars and taxed many millions a year).
I think, ideally, local and state gov'ts would either buy or grant tax easements on urban green areas. If done right, LVT could then incentivize developers to either use the land for buildings, or turn it into a greenspace, avoiding the gross middle-ground of parking lots and other low-value and use.
Farms are nothing but death and misery. You're lucky you got to be on the owner side of that. Lots of kids work their entire lives on other peoples farms, often for $0 or any upside, and end up having nothing. I think the right call was made.
Any good LVT in my mind would robustly employ "conservation easements", which lower/waive taxes on land that is preserved for environmental protection. These are a common tool of land trusts today, and IMO they would fit great alongside LVT.
It's taxed now as well (in almost all jurisdictions). It's just also taxed on any buildings that sit on top of it (that latter portion of which provides a disincentive to development).
Understood, although not much of a disincentive. I think I have an aversion to just taxing what people own. When it's a building, at least that is related to services they're likely to consume; it's not just "we want a cut".
I think that's the jib though - in a lot of countries you don't really "own" the land. You and the government(s) get to just agree that it's your responsibility for a while.
LVT cleans up this incentive some by putting taxes in place in areas where the land is more valuable. I think Georgists would argue for doing that _and_ removing property taxes, specifically so you aren't taxed for the things you own.
I'd prefer to have more direct spending on services than we have, so the money isn't proxied off a building, or how many windows you have, or whatever harebrained scheme local bureacrats might invent. So you just pay X a month to have trash taken; X for sewage, etc etc. But I'd say that moving to just taking money in a way entirely unrelated to service consumption is going in the wrong direction.
Land in a suboptimal location would have a much lower value and lower taxes presumably.
This is targeted at that parking lot in San Francisco that really should be an underground parking lot with 1 story of retail at the ground floor and 4 stories of housing above it.
I'm not sure that matters. If you're holding your land to cash out on it in the future, it's going to get developed regardless. Whether the land remains undeveloped for an extra few decades seems like it makes little difference either way. Plus, not every property will be paved over edge to edge. Suboptimal locations will probably get developed into something which doesn't turn the land into something that completely destroys its ecological value.
I think you'll find very few buyers who don't plan to build anything substantive who are willing to pay multiples of what you purchased the undeveloped land for. If you bought a plot of land for $100K and sell it for $250K thirty years later...you've barely beaten inflation.
Is there much of that in private hands? You can't develop land in a vacuum, you still have to do something profitable with it and transport the result to some market.
In the EU there are "set-aside" payments to encourage farmers to do this, and national parks and other restrictions to protect the more valuable habitats.
Due to the way you phrase your comments, I'm struggling to pull any neutral points out to respond to. Maybe this one:
> and since when are prices of land decreasing suddenly a terrible thing?
Because if it decreases, then it will discourage people from selling. You think it will increase selling (and for some reason think that's good); I'm saying that this might counteract that.
No, if the price of land decreases, it only discourages people from selling if they think that the price will come back some time in the future. A permanent tax change won't make people think that.
More: If the tax rate has gone up enough that the price has gone down, then if I hold it, I'm also having to pay the higher taxes year after year. That's going to encourage selling, not discourage it.
I don't like Georgism for other reasons, but I think that part will work as advertised.
1. The whole thing has a "one weird trick to fix your economy" vibe to it. On that ground alone, it feels like snake oil. (If you want to argue that "vibe" is not an intellectually rigorous criticism, I will admit the truth of that point.)
2. Why land, specifically? Why land only? It's not the 1800s anymore, and land is not either the primary asset or the primary source of wealth. Why single it out as the thing to tax? It feels like a theory stuck in the past. It needs to explain why, in 2023, land is the one thing that should be taxed. I've seen handwaving, but nothing that feels all that solid. (The one argument that has at least some merit is that no more land can be created, unlike everything else. True, but so what? There's a maximum number of bitcoin, but Georgism doesn't say to tax them. Why is land the one magic thing to get taxed?)
3. It is easy for the rich to have a smaller proportion of their assets in land than it is for the middle class. (Unless they rent - and then they wind up getting charged for the tax without having the benefits of owning the land.) LVT - if it's the only tax - means that the rich can easily wind up paying little or no tax. I'm not of the "confiscate all the rich's assets" crowd, but letting them pay almost nothing doesn't sit right with me, either.
Re:1 - a lot of abstraction here to simply say this is merely your conjecture. Just cuz it sounds like a meme doesn't mean its not totally on the money, so to speak. Sometimes art really does imitate life and vice versa
Also: There's this one annoying trick where "they" (the rich) constantly get whatever they want whenever the thought pops up and thats normal but any small step taken to roll back the trend and that is often popular or at least a cult-fave is radical and insane.
Edit: Family Guy already did this and they did it the best (frivolous difference in belief or opinion -> This man is insane -> custody -> comedy)
Re:2: Why should LABOUR in lieu of land be taxed? What's more Adam-and-Evey than making everyone suffer under the sweat of their brows for the rest of the days or tax the fewer far better resourced landowners and everyone lives happily ever after
How about we don't pick one thing? How about we pick income, including capital gains, and land, and buildings, and IP? And maybe set the rates low enough that nobody gets crushed?
Some would argue you're describing the status quo, which is crushing young people and the disadvantaged. How 'bout making capital gains equivalent to laboearned income?
That won't happen because capital gains and tax-free selling of real estate is the source of the power and inequality. Might as well demand reps sign their own economic death warrant or at least their own demotion to regular plebian socioeconomic class who needs to actually earn and be big boy taxed on their earnings to cover "their share" and attitudes towards how they are able and also required to spend their time
To me the key issue is the Law of Rent. It helps explain issues like Elizabeth Warren's Two-Income Trap. Why does technological progress not seem to result in overall increasing leisure and standard of living? That is why Henry George titled his book "Progress and Poverty". He was explaining that paradox using the law of rent developed by Adam Smith and David Ricardo, and proposing their solution with a megaphone.
> Why does progress not result in increasing leisure and standard of living in many important ways?
First off it did: the standard of living of anyone in a Western/industrialized society is ridiculously higher than 100 years ago. And even for less well-developed countries reduced absolute poverty and the diffusion of technology (Germ Theory, vaccines, mobile phones) has done wonders.
One interesting metric is that the cost/effort of being about to produce one hour of light has absolutely plummeted over time:
> You can't make people happy by law. If you said to a bunch of average people two hundred years ago "Would you be happy in a world where medical care is widely available, houses are clean, the world's music and sights and foods can be brought into your home at small cost, travelling even 100 miles is easy, childbirth is generally not fatal to mother or child, you don't have to die of dental abcesses and you don't have to do what the squire tells you" they'd think you were talking about the New Jerusalem and say 'yes'.
> Now it is true that the needs of human beings may seem to be insatiable. But they fall into two classes --those needs which are absolute in the sense that we feel them whatever the situation of our fellow human beings may be, and those which are relative in the sense that we feel them only if their satisfaction lifts us above, makes us feel superior to, our fellows. Needs of the second class, those which satisfy the desire for superiority, may indeed be insatiable; for the higher the general level, the higher still are they. But this is not so true of the absolute needs-a point may soon be reached, much sooner perhaps than we are all of us aware of, when these needs are satisfied in the sense that we prefer to devote our further energies to non-economic purposes.
[…]
> For many ages to come the old Adam will be so strong in us that everybody will need to do some work if he is to be contented. We shall do more things for ourselves than is usual with the rich to-day, only too glad to have small duties and tasks and routines. But beyond this, we shall endeavour to spread the bread thin on the butter-to make what work there is still to be done to be as widely shared as possible. Three-hour shifts or a fifteen-hour week may put off the problem for a great while. For three hours a day is quite enough to satisfy the old Adam in most of us!
* John Maynard Keynes, "Economic Possibilities for our Grandchildren" (1930)
An essay putting forward / hypothesizing four reasons on why the above did not happen (We haven't spread the wealth around enough; People actually love working; There's no limit to human desires; Leisure is expensive):
> Why does progress not result in increasing leisure and standard of living in many important ways?
It did. Domestic labor went from walking down to the creek and using a wash tub to throwing it into a washing machine, coal fired stoves were replaced with gas and electric, garments made by hand are now made an ocean away, television and the internet made homes more fun to be in and gave a break to parents minding children, beating the rugs was replaced with a vacuum, the freezer and microwave made quick meals trivial to prepare..
And then, suddenly and totally organically, with no help from a media that is owned by a few large corporations that would benefit from doubling the workforce, it was decided that working in the home is slavery, now two incomes chase the same home that costs now twice as much and the population pyramid is inverting beacuse nobody had kids.
At least here in California, I'd be worried that it could get instituted with token or no reduction in other taxes. Otherwise it seems to make a lot of sense, particularly with regard to removing disincentives for development.
Maybe. But maybe California's government has given more reason than other governments to think that they would treat this as an additional form of income, rather than a replacement.
That's an interesting claim that calls out for more evidence. Just a year ago, when CA had a large budget surplus, it refunded billions of dollars to many of its taxpaying residents in the form of inflation relief payments. That doesn't seem like the behavior of a government that only wants to collect more and more tax.
Is there any objective and reasonable discussion on the state of CA's finances? Its like the 8th largest economy in the world or something and all I ever hear is right-wing invective about how its a "Failing State" and bankrupt etc. Come to think of it, it seems to mirror the discussion at the Federal level where all I hear the right bitch about is "deficits and interest", which never seems to come up come tax discussion time where they are all too happy to widen said concerning gulf...
I can tell you have never talked to any family farmers.
May I suggest a more accurate tax....Capital Value Added Tax...we have extremely large warping of the tax systems and political systems by uncontrolled capitalism run amok.
Start with hedge fund tax of 3%, ah ah before you complain several large hedge funds have stated they would be in favor of such a tax as it addresses inequality without damaging hedge funds.
Relatedly, University of Chicago has a popular survey where they ask Economists their views on policy proposals (along with their confidence in their answers), and their most recent survey was on LVT:
The question:
> Shifting the burden of municipal property taxes towards land and away from improvements such as buildings - as proposed in the Detroit land value tax plan - will enhance the incentives for owners to develop their land and thereby give a substantial boost to local economic growth over a ten-year horizon.
And responses:
7% Strongly Agree, 46% Agreed, 17% Uncertain, 2% Disagree,2% No opinion, 24% Did Not Answer
Good point, yes - if I'm surprised to see this turn of phrase in the NYT, and yet I implicitly assume everybody knows what it means, then maybe I shouldn't have been surprised in the first place.
I see what you mean, but in a lot of ways many mainstream memes have had their origin on 4chan (not only pol/b btw) and memes influence speech and everything else.
Would be interesting to see a detailed analysis of this IMO
I grew up in Fairhope, Alabama which was established as a single tax colony inspired by the theories of Henry George. One of the most interesting things to me is that on the bay, you can have two houses next to each other, both for sale and both equivalent in terms of house quality. One house happens to be on colony land and the other is not, so when you buy one house you own the land, but the other you get the 99 year lease. What I find interesting is that there is little to no difference in price between the two. The market prices the 99 year lease the same as owning the land. Just an interesting tidbit about this in practice that I have always found counter-intuitive.
A new 99 year lease is probably about the same value as buying the land.
Does a new tenant always get a new 99 year lease, or is it the remainder of the previous lease? I would not consider a lease expiring next year, for example, to be of equivalent value.
The leases are transferable and renewable. Other than the odd legal arrangement it's functionally not that different than owning land and paying property tax on it.
My family has a "99 year lease" on a property from the federal government in the US, and even though it's called that, it really just renews something like every 20 years. Not sure if in the UK they literally count 99 years. (Edit: To be clear, it's been in the family since the 1930s, so it's gone through several renewals already.)
I spend a lot of time in Arden, Delaware which is also a single tax community. Many of the people of Arden love the town and Georgism. So much so that there seems to be several people from Arden that were named either Arden or George.
In the UK, you see homes in England marked as either freehold ( you own the land) or leasehold (someone else owns the land and you had a long term lease and traditionally paid a small fee each year called ground rent). The issue was if the lease didn’t have long left then selling or getting a mortgage on it was more difficult.
Recently the home builders on new houses have sold the house and then also been selling the leases to a 3rd party as an investment. These 3rd parties have been radically increasing the annual ground to much higher levels. I’m never going for a lease hold property.
Has someone written up a comparison of LVT vs Rolling Leases (i.e. perpetual land ownership is replaced by 30-40 year leases)? Rolling leases just seem to have more good flexibility and less bad flexibility.
By "good flexibility" I mean options to convert from perpetual ownership without screwing current owners -- our perpetual ownership model involves extremely favorable tax treatment at certain stages (capital gains forgiveness, like kind exchanges, cost basis step up) and you could make these benefits contingent on a conversion to a 99 year lease or something. I believe there is data that shows people have a stated preference for perpetual over 99 year, but they have a revealed preference that is neutral between the two, and this is how you could achieve the conversion without seizing land.
By "bad flexibility" I mean that LVT calculations seem easier to sabotage to blatantly favor the upper crust. If they can do it for income / capital gains tax, they can do it for LVT. Rolling leases, however, have a pretty transparent periodic price finding mechanism. Nothing is perfect, the treatment of improvements at renewal/auction time is a likely vector for skullduggery, but to my intuition it still seems better than LVT due to having more eyes and competing interests focused on the process.
Anyway, this is a "butterfly idea" where I haven't put enough thought into it to have a strongly informed opinion one way or the other and I want to know if someone knows of scholarly work on the subject.
The problem with rolling leases is that policymakers have a big incentive to break the leasing arrangement and sell the land outright/give it away to their corrupt cronies, because this lets them capture value for themselves that would properly belong to future generations. Leases may work if they have strong, quasi-constitutional protections though.
I'm just saying that rolling leases have a very real incentive problem compared to other approaches. So ongoing taxation (i.e. LVT) may be a better all-around solution. Policymakers can also monetize future tax revenues, by taking on more government debt; but this tends to be a lot more visible and make bond investors more upset compared to the obscurity of land sales.
Do you have more info explaining a "rolling lease"? I assume you're leasing the land from the state... On the face of it, what happens to/who owns the improvements on the land after the lease is up or you have to move? What happens with the lease if you have to move?
You sell the lease if you want to move. As for imprevements, we already deal with pricing and depreciating them for tax reasons. The new leaseholder would have to compensate the old leaseholder. This process will be imperfect, but the imperfections seem mundane compared to the imperfections caused by tying a financial asset to shelter and especially mundane in places where land value trumps improvement value or where depreciation schedule matches lease duration (both of which are common). We are trading big problems for small problems.
Rolling leases seems to be superior, and more logical than a land tax. You'll have to be able to factor in lease reduction (for primary homes, non-market housing, farming and strategic industry), but it seems easier to set up.
I’m not sure this is the right lens. Poorer renter isn’t a static label, we need to build paths that allow the lower and middle class to build equity.
The goal of these policies, IMH(umble)O, should be to help poorer renters become richer homeowners.
I feel like you do that by reducing the total cost of walking that path. Not by increasing their tax obligation every step up the socio-economic ladder they climb on their way out of the lower class.
Equally, you don't help people by taxing the poorer more than the richer. So maybe we should just tax land as land, and leave it at that? Being a renter is part of that path after all.
Renters are not building equity. They are spending their wealth every month and accumulating no equity in return.
I don't agree with calling a "homeowner" rich. Owning the ground beneath your feet is a big part of having equity. With a mortgage, unlike rent, every month an increasing amount of your wealth accumulates as equity as you pay off your principal. Once you pay off your mortgage, you've significantly reduced your monthly burn rate and can start moving your accumulating equity into retirement accounts.
Reducing the total cost of primary home ownership, reducing the cost of financing a primary residence to help build equity, etc. are all important parts of giving upward class mobility.
These are not things you want to disincentivize. You want your renters to become owners. You want your workers to become small business owners. You want your communities to build equity in themselves.
If you tell me that being a homeowner today makes you rich, I'll tell you that is part of the problem.
> Taxes would still happen on renter investment property.
Exactly. It makes renter investment property more expensive to maintain, hence making rental properties a less desirable asset, reducing the numbers built and increasing the cost of renting.
Whereas a homeowner doesn't pay that tax at all, meaning the entire residential property burden is put onto renter.
> hence making rental properties a less desirable asset, reducing the numbers built and increasing the cost of renting.
On the flip side it would increase the number of single family homes and make them cheaper so people could afford them and stop renting.
Sounds like a huge win for single familys and huge hit to giant private equity funds buying up homes and land to turn the middle class into an eternal population of renting serfs.
It would also keep communities intact as people would never be priced out of their own home.
Net win for everyone but the
private equity landlords and bloated government.
Also anyone who rents, which is most people at some point but especially students, immigrants (even richer ones), new grads, divorcees, basically anyone who can't dedicate a minimum of 5 years to an area.
I've been a victim to people thinking like that - which is why I'm currently paying £1600/month for a 500sqft 1-bed flat, shared with my girlfriend.
The mortgage interest tax deduction is one of the least popular policies among economists because it fails in its objectives. It made homes less affordable and raises prices, and enriches banks, without helping new homeowners.
The concept of imputed income also helps homeowners. If you own a house that you rent out to people, the money you get is counted as income. If you are an owner-occupier and paid off your mortgage, then you effectively pay rent to yourself... money that you otherwise would've needed to pay to others, but don't need to pay tax on it.
So essentially you get a deduction even besides the mortgage interest deduction. All of this is also factored into home values, and thus the purchase decision for new buyers won't ever be dramatically better than renting.
The solution of a land value tax is necessary. It is most necessary in the residential space, including for first homes, because that is the most important place where we need to ensure high and quality supply, and affordability.
Helping homeowners, specifically, but not others is arbitrary and unfair.
Providing a citizen's dividend out of the revenue of a land value tax, to help all, would be fair, and would help enable people to acquire homes if they want them.
>The concept of imputed income also helps homeowners. If you own a house that you rent out to people, the money you get is counted as income. If you are an owner-occupier and paid off your mortgage, then you effectively pay rent to yourself... money that you otherwise would've needed to pay to others, but don't need to pay tax on it.
Imputed income is everywhere, are you suggesting it should all be taxed? When you prepare a meal in your kitchen instead of paying for it in a restaurant, you effectively pay chef's wages to yourself, "money that you otherwise would've needed to pay to others, but don't need to pay tax on it." Another reason why singling out homeowners on imputed rent is fallacious is that if the imputed rent were to be taxable, then the cost of maintaining and improving the home would be deductible, just like it is for landlords, and there would be no caps on mortgage or real estate tax deductions related to acquiring or improving the property, just like for landlords.
You get an income tax deduction for real property taxes paid on all the property you own, whether for business or personal use. (Although there is a temporary cap on the total amount of state and local taxes on personal-use property one can deduct on their federal tax return, along with a workaround for wealthy business owners, the so-called pass-through entity elective tax that many states have enacted.)
> I personally think people's first property should be tax-free. their actual home.
This is how it works in Canada: principle residence has no capital gains on sale.
If you move to a new place, and don't sell the old one, then you have to change its status and the clock starts ticking on any price appreciation after the status change. Further if you rent out part of the structure (e.g., basement), then you have to pro-rate a status change of the property (generally proportional to surface area) and declare rental income.
I think GP was talking about property taxes. Even the US has tax free capital gains up to a limit.
No capital gains isn't necessarily a great system either. It leads to people treating their primary home as a retirement savings vehicle.
Taxing inflation-adjusted capital gains on home sales is a sensible compromise. And maybe also allowing the gain to be divided over years of ownership.
It's capital gains tax free, but it's far from tax-free. Myself, I pay about $7000 a year in property taxes on mine.
Eliminating those and increasing corporate/second property taxes instead would be insane. That means that renters would be responsible for most of the taxes required to maintain the streets in front of my house.
What you seem to not understand is that the government has enough money to maintain the roads with out property tax entirely. It would force the government to be more efficient with their money and shrink the governement to just the essentials.
You think any for of US government operates on a shoestring budget? They are the most bloated entities on the earth. And its based off the backs of the poor and middle class.
This would be great but try and find out where a homeless person can go and get help for their pet...thats no where to be found. The money just went ...somewhere.
People that can't afford things tend to pay little tax, if any. They are net receivers. And how are people that bought something with their own money subsidized?
Indeed, actually owning land rather than leasing perhaps should not be a right of private entities at all.
But a place to live is obviously a requirement of existence, and therefore must be a right.
As for 'own money' etc, it isn't god-given out of thin air, but results from our current system of organizing work and distributing rewards. Some would say that system is unfair, even rigged.
Capitalist societies across the world are in complete demographic collapse because young people can’t afford homes to raise families, and yet progressive land taxation remains an unpopular idea.
I find it absurd that the government can come take the house of a 70-year-old whose retired and cant keep up with the property tax skyrocketing around them.
I find it absurd that rich people can move to an area they like and displace all the families that have been there generations by virtue of property tax increases effectively conquering the land.
I find it absurd that the government can take your home AT ALL after you have spent your whole life paying for it.
> I find it absurd that the government can take your home AT ALL after you have spent your whole life paying for it.
They can, but IIRC the Supreme Court just ruled that they have to give you the proceeds from the sale minus whatever lien value they had on the property.
Not that I necessarily disagree with your sentiment, but the situation isn't quite as dire as the statement makes it appear to be.
For what it's worth: I'm from the Netherlands, generally considered a very high tax country. I've only recently learned about US property taxes and I'm shocked.
We too have such a thing, in a much more complicated way, but it's a mere fraction of what you pay.
On average, a dutch household that owns a home pays 851€ per year in municipality taxes, which includes property tax, waste/garbage services and sewage rights. Pure property tax may be as low as 50€ per month.
The idea behind it is very simple: you can't eat a home. A home you occupy does not generate any immediate income. Further, a home owner has little influence on the value of its property. When it rises in value that might be great, but your income, whichever it is, does not rise along with it. Finally, one can effectively never retire in their own bloody home with such a scheme.
Property tax is deeply unethical and cruel. Astonishing how the ultimate capitalist country allows for it.
I really like the idea of a Land Value Tax. However, the devil is in the details. How will it be calculated? Who will calculate it? How can they be held accountable?
It could so easily go badly though, and be worse than the existing system. The arguments in favor though, are very compelling.
How is a land value tax any different from the status quo in this regards?
There are established means through which tax assessors appraise the value of properties. They are held accountable by means of appeals in the judicial system. Tax rates themselves are democratically determined by the electorate for whom they are applied.
They key is that it is a tax on the value of the land not the size, so large plots of land would face a much smaller tax per acre compared to prime real estate in a city.
It is true that a LVT will have a larger percentage impact on the market value of undeveloped land who bought land for speculation without any investments in making the land more valuable. This will especially affect people who bought up lots of land speculating on the value going up. This includes people who bought up lots of land for farm/lumber/mining, but also people who buy up urban plots and keep them as a flat land parking lot while waiting for the value to go up.
Any change in taxes will have some winners and some losers. For example an increase in traditional property taxes hurts anyone who bought expensive houses. An sales tax/consumption taxes hurts anyone who saved up financial assets. An increase in income taxes hurts people who invested in education to increase their labor value.
The question is which is the least unfair way to tax to meet the needs of society. Most of those other taxes will actively discourage valuable investments that make society as a whole more prosperous. Property taxes discourage building. Wealth taxes discourage saving. Income taxes discourage earning and investment towards future earning. In contrast a tax on land value, doesn't cause there to be any less land. It does discourage speculation in future increases in land value, but that speculation is mostly zero sum (it might make the individual speculator richer, but doesn't increase the wealth of society as a whole).
If the land is only really useful for farming or logging, then no. You'll still get taxed on it, but because the land is relatively low-value it won't be much.
Now, if you're a farmer on the edge of Austin, and the city's growth means your land is getting increasingly valuable due to high housing demand, then your tax will go up, potentially until you're forced to give up farming and sell to developers. That's intentional, it means the land will be used for something more valuable than it's current use.
I think it's worth pointing out that if there's an LVT, whether you own a farm, a parking lot or an empty lot on the edge of Austin, your taxes would go up in any case. There's nothing inherent in an LVT that unfairly penalizes farms.
It would "penalize" those people if they owned farmland in areas where there is high demand for housing (and the land itself is valuable). The whole point is to tax all land at the value people would pay just for the land - and as a result would shift activities like farming and logging into less populated areas.
It's a fair concern, but also because property tax already includes some land tax it's not dramatically different. Those activities are already mostly done in areas where land is extremely cheap.
The long answer requires a discussion about what you define as "fair" & the exact implementation of the tax governing the land you're talking about. This would be true of any tax though. The answer would still likely be no, though.
Many places have implemented an LVT. I suggest you look into some of them to see how the tax usually plays out in practice. In NSW, Australia, for example, farmland is exempt.
What is a more valuable use than feeding people? Farmers are already incentivized to abuse their land with monocropping and industrialization in order to stay afloat even with the subsidies they already have. A land value tax would make things even worse and would probably result in outsourcing all food production to other countries.
Out in Nebraska, there's very little demand for land for building houses, and the land is not bad for growing corn, soy, wheat and cattle.
Land right next to Lincoln is likely to be valued like other residential and industrial spaces; land out in McPherson County is likely to continue to be valued like other farmland.
If you own a farm in a city or area with high housing demand, yes, I think it would. (edit: and I'm not meaning this to be a sarcastic response -- there are urban farms).
What makes you think this is unfair specifically to an urban farm? What about an LVT treats this urban farm differently from a parking lot or totally undeveloped lot?
Oh my brain edited out the "unfair" part in the original question, I assumed it was just asking about higher value/tax. I think that an urban farm, baring some very extenuating circumstance, is an enormous waste of space. And I'm a part-time (non-urban) farmer.
The article is nuanced, while the title is eye-catching and uncharitable. If you react to the title without reading the article, you'll get the wrong idea.
Are there any areas that try and tax more directly based on services used (electric, water, fire, police, roads, etc.) rather than how large your property is or how fancy your house is? The idea of assessors trying to make judgements about the quality of a building seems a pretty silly way to pay for city services.
In the spirit of private property[1], no tax on primary residence (i.e., must actually live there most[2] of the time). No one should lose their only residence because they cannot afford to pay the tax.
1. which I only sorta agree with depending on the context
2. 75%? To be figured out by someone more informed than I, and not declarable.
The problem with this is that it's fundamentally incompatible with zoning.
I own a chunk of acreage in farmland adjacent to my metropolitan area. The township won't allow it to be developed further due to density restrictions, I have my one house on it but that's all I get and I'm happy with that, but his tax would be implemented at the state level. The state would say "You have a lot of valuable land here right next to the city. We're going to tax you wildly on land you can't develop.
Furthermore, this tax would just serve to increase speculative churn and encourage chunks of land that would eventually go on to become parks and public lands to be broken down by landowners into small chunks for the densest and most valuable uses.
The whole problem is that what is valuable is not necessarily what is good for society and this does nothing to address that. I'm always struck by how weirdly free-market / Laissez faire land value taxes are given who typically pushes them.
You're disregarding the fact that landowners are already incented to devote land to its highest and best use, as measured by how much they can gain for it. The benefit derived from a local amenity, such as a park, is currently reflected in surrounding land values; LVT would harness this value for the community that created it in the first place, rather than leave it entirely to private landowners.
I probably could have been clearer with my point.
A park is never the highest and best use based on gain. A LVT would make it _harder_ to create things that may be valuable in ways not measured by the market.
Especially contemporary Georgists seem to be fixated on land tax. In the 19th century a big focus on land kinda made sense because agriculture was such a huge part of the economy.
What's missed is the general idea. It's not land per se but any ownership that can be/is used for "rent seeking" (i.e. getting money without contributing any work). Nowadays things like intellectual property, natural resources and major infrastructure are the major things that should be taxed in this spirit.
Expanding this idea to that all means of production falls in the rent seeking category, one arrives at socialism.
I don't buy either the premise or the conclusion of your last paragraph. If I own a sewing machine that I use to do piece work, that doesn't make my sewing machine rent-seeking. It makes it a tool that I use to do work.
But yes, expand this to IP. Tax Microsoft and Disney for the full value of their copyrights. If they don't want to pay the tax, they can let the copyright lapse early. Tax google for the full value of google.com. And so on.
In the typical socialist divide of different kinds of property a sewing machine that you use yourself would not be considered privately owned capital (private property). In general "private property" are things that yield profits without the owner doing the work. If you rented out the sewing machine to somebody else to work for, the things get a bit blurrier. If you own a sweatshop with 100 sewing machines, it's clearly "private property".
The socialist terminology around the different forms of property is really bad and causes a lot of confusion.
Ehh, but ownership is important for converting savings into investments and forcing investors to make decisions with skin in the game. Let's not throw those capitalism babies out with the class-conflict bathwater.
It's better to focus one-by-one on comparatively small reforms that each close off a single avenue of rent-seeking and can each be justified on sturdy economic footing by economists with minimal direct relation to he-who-must-not-be-named. This approach is less revolutionary (we know how those go), more propaganda resistant, and generally better.
Is land tax really more propaganda resistent? There are justified concerns that it does disproportionally affect the less well off. And OTOH things like taxing wealth and capital gains are wildly popular.
Isn't class conflict a direct and inevitable result of private ownership of capital? What kind of arrangement makes companies pay more for labor than they have to?
Yes. Capital interests have spent the last 50 years laying minefields around the concepts of socialism. "Socialism is when more taxes," "socialism is when unions stop your employer from paying you more than your lazy coworker," "socialism is when you own nothing (as in property, not just assets)." Focusing on small, concrete reforms allow you to navigate around the mines.
> Isn't class conflict a direct and inevitable result of private ownership of capital?
No, it depends on the terms of ownership. Finite terms and progressive taxation can prevent the exponential runaway that establishes and perpetuates class structures.
> What kind of arrangement makes companies pay more for labor than they have to?
Policy that makes labor less desperate and therefore have higher bargaining power. There are many levers to pull.
I agree that such smaller reforms are needed (and what we have need to be defended) but "clearing the name" of socialism can and should be done simultaneously. Also depends on country and audience how bad or good the socialism label is.
Also at least here in Finland land tax is more a center-right thing, and falls under the general umbrella of "neutral taxation", which in practice is usually a dog whistle for flat or regressive taxes.
> No, it depends on the terms of ownership. Finite terms and progressive taxation can prevent the exponential runaway that establishes and perpetuates class structures.
> Policy that makes labor less desperate and therefore have higher bargaining power. There are many levers to pull.
Pedantically there's class conflict whenever there are classes that have conflicting interests (e.g. workers want more pay but owners want to pay less). But yes, its effects can be reduced with various policies.
1. Economic Efficiency: Unlike income or consumption taxes, an LVT is non-distortionary. It doesn't discourage productive activities like work, saving, or investment. Land is a fixed resource; its supply doesn't change with price or tax fluctuations. Therefore, an LVT wouldn't distort market incentives, unlike other taxes. By shifting the tax burden onto land, we could potentially reduce the distortionary effects of other taxes and promote economic growth.
2. Wealth Inequality Reduction: Land ownership in the U.S. is highly concentrated. A significant portion of the country's land is owned by a small percentage of the population. An LVT would primarily affect these large landowners, redistributing wealth more evenly across society. Plus, land can't be hidden or moved offshore, making an LVT difficult to evade and an effective tool for wealth redistribution.
3. Sustainable Land Use: Many landowners hold onto vacant or underutilized land as a speculative investment, waiting for its value to increase. This leads to urban sprawl, inefficient land use, and higher housing costs. An LVT would make this kind of speculation less attractive, encouraging landowners to develop or sell their land. This could lead to more efficient land use, less urban sprawl, and potentially more affordable housing.