Comment by Nevermark
2 days ago
Land, as apposed to the property on it, is raw nature. If we view raw nature as a common inheritance of mankind, then paying a tax on land is how the exclusionary use of it, balances with the common interest in it.
Economist Henry George in the 1800's, pointed out that taxing land, but not the property on it, incentivizes efficient use of land, because holding land for its passive (parasitic) return even when underused, becomes unprofitable when the land is taxed in proportion to the value it can enable.
And in turn, only taxing land, not property, incentivizes increased development, as higher property investment amortizes land tax against higher returns.
Greater investment in housing being just one way land tax, without property tax, incentives greater productive use.
So many things align for higher growth in ways that more evenly benefit everyone. But our relationship with land is over-complicated, and that is both the reason for change, but the reason change is so hard.
Small attempts have failed, but then, for the rich who can hold land and reap growth in value that outpaces the taxes they pay on it, that remains another inefficient/negative-externality, that pays off for them.
The hard part is that we've structured life such that you are on a fixed income at the end of your life in no position really to deal with inflation. At least when you are still working, in theory at least your wages will go up with inflation. This is really why prop 13 happened to pass at all: the idea of being displaced at the end of your life out of the home you already paid off due to market forces you aren't even a participant in is actually widely unpopular even if it makes better economic sense.
> the idea of being displaced at the end of your life out of the home
I would argue that this is unpopular not only amongst retirees but everyone. And it would have tons of negative side effects.
Why would I fix up my house to look nice, if I’ll be displaced? Why would I invest in my child’s local school system, if we could be displaced? Why would I do any community outreach or support, or get involved in local politics? How can banks underwrite loans if the affordability can fluctuate wildly? Look at the life of people who live in mobile homes and trailer parks - they essentially rent the land, and it’s oppressive because they can’t afford to move (actually moving or repurposing land is hard) but their cost to stay is unpredictable.
The only people this is appealing for are people who fancy themselves analytically minded economists with no interest in the practical humanity of the people living there and renters hoping to finally do the displacing for their own affordability.
> The only people this is appealing for are people who fancy themselves analytically minded economists with no interest in the practical humanity
Most states in the US do not have Prop-13-like laws and get by just fine. For the few states that do, they are less restrictive taxation-wise than California's.
Prop 13 has completely distorted the housing market; it is, perhaps unintuitively, a co-cause of CA's housing unaffordability issues. (Prop 13 discourages new development, and is an enabler of housing NIMBYism.)
We of course shouldn't just abolish Prop 13 overnight, or lots of people will get displaced, also overnight. But we should absolutely reform it and phase it out over time, while building more housing, as fast as we can (something that will be a little bit easier to do as all the NIMBYs realize that if they keep shooting down housing projects, their property taxes are gonna go up a ton).
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You shouldn't strawman the other side. Us "people who fancy" actually understand that there are real negative side effects. But the money has to come from somewhere.
If not from land taxes, where? Would you like to double sales tax? Or increase income taxes? Every solution costs something, what does yours cost?
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HOA are forclosing more than banks in some regions, it's not just trailer parks these days getting hard lessons in being the "fake owner" of your property
Some things to keep in mind:
1. There are many states such as New Jersey or Texas that do not have Prop 13 style laws and their seniors are not suffering excessively. However housing is much more affordable for younger people in those states.
2. States that freeze property taxes have more volatility and boom/bust cycles. You are trading being shielded from tax volatility for increasing economy-wide volatilty and asset price volatility, so the gains are not as high as you think, and seniors are exposed to this volatility indirectly.
3. There are more targeted relief mechanisms available, such as deferring the tax liability until the owner dies for senior owners.
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Existential nihilism is always possible to have regardless of how taxes are setup.
> I would argue that this is unpopular not only amongst retirees but everyone. And it would have tons of negative side effects.
Every tax is unpopular and undesireable.
Why would I work if government is taxing my income? Why would I invest? Why would I drive the car, blah blah.
Land tax is easy to collect, fast to pay, hard to avoid or game, and encourages productivity and efficiency.
And this cuddling of boomers who've benefited by piling up gigantic government debts and expect to be paid back (typically holding gov bond) is literally going to destroy the financial system. Part of the benefit of this tax is that if you can't pay for fair value of the land you're preventing others from using, you have to sell and get out, so e.g. a productive family can pay your for it, and use it instead of your now unproductive self. If you don't want that, you have to pay the same tax they would pay. Just because you're retired doesn't mean "your done with your duties to the rest of society and you can just expect free shit and do nothing" _especially_ that your "wealth" is just rent seeking on younger generations.
If boomers keep preventing younger generations from being productive and having opportunities, the economy will dwindle, the pile of of debt and other financial assets will collapse, hyperinfation is going to destroy their paper wealth and they will be starving or worse. Just watch, because I doubt at this point is avoidable anyway.
For what it's worth, the way Israel deals with this is that property tax is levied on the property resident, not the property owner. In other words, when you rent a house, the person who is legally responsible for paying the tax is the renter.
This makes it exceedingly easy to ensure that old people are not affected by property taxes: if you are elderly resident, you simply get a discount. If you are an elderly landlord who owns multiple properties, your younger tenants don't get a property tax discount, and you pay income taxes (not discounted for age) on the rental income. If you are elderly and want to downsize, your property tax discount follows you into the smaller apartment.
The system has its challenges, but it is far superior to Prop 13 and achieves the same goal.
> if you are elderly resident, you simply get a discount.
New York does it this way as well. If you are over the age of 65, you get a different rate.
> fixed income at the end of your life in no position really to deal with inflation.
This might be true if you have everything in cash in a safe at your house and plan on taking out fixed amounts for the rest of your life, I guess, but who are those people?
Most people are on social security, which is inflation adjusted.
Others with more wealth have retirement savings, which are likely mostly in bonds and stocks, which weather inflation not too shabbily. Interest rates go up, and banks start actually yielding interest!
Prop 13 passed mostly as a populist revolt against taxes, but in reality it does a lot more for people in their prime of earning and a toooon more for commercial property tax cuts than it does for retirees.
Every other state has better tax deferral mechanisms, and given the tiny fraction of Prop 14 effect that goes to retirees, I don't really buy this back formation of what was going on. If people really voted for such a lie, it wouldn't be the first time with propositions but from the media I've seen from the time I really don't think people were that duped and probably knew the broad effects of Prop 13.
I was alive at the time prop 13 passed. I was a little kid in Ohio. Even I remember the stories that were being circulated on the national news about old people being priced out of their homes in LA. It was a big campaign.
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Inflation does not keep pace with the housing market
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> This might be true if you have everything in cash in a safe at your house and plan on taking out fixed amounts for the rest of your life, I guess, but who are those people?
It seems an astonishingly large number of people, including on here, talk as if that were the case despite their actual living and retirement finances. People really hate inflation.
Something about the lizard brain wants the exchange rate between shiny object and edible object to be fixed and gets extremely upset if it changes.
(Or, as is becoming increasingly relevant, the exchange rate between shiny object and flammable fluids)
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> Most people are on social security, which is inflation adjusted.
Right. Technically. And I have a bridge to sell you!
I was managing all the finances of one of my parents until they passed away. In 2022 inflation peaked at ~9%
That same year, their social security monthly payment went up by..... $10
That for sure covered all the rising costs (/s)
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Retirees are not on fixed income and haven't been for decades. Social Security gets adjusted for inflation. 401ks grow. https://www.slowboring.com/p/seniors-arent-living-on-fixed-i...
So the way we fix it is by pulling more tax from net contributors and pushing it via social security so it can be pulled as property taxes. What a disaster.
> Retirees are not on fixed income and haven't been for decades. Social Security gets adjusted for inflation.
Tell me you're not a retiree on social security (or know any) without telling me...
Social security gets adjusted up a very tiny percentage of actual inflation. Watching my elder parent go through this while managing their finances, I'm very aware.
The key bit is that California is relatively unique here. There are a few other states that have Prop-13-like laws, but California's is the most restrictive and incumbent-homeowner-friendly. All those other states (and the ones with nothing similar) seem to get along just fine.
Of course, the solution to increased demand (driving increases in property market value) is to build more housing. Without Prop 13, a big chunk of the NIMBYs who are currently against more housing would likely change their tune if they had to choose between no new housing or much higher property taxes.
I think it would be reasonable and productive to phase out Prop 13 over time, rather than immediately getting rid of it. We could structure it so a property doesn't lose Prop 13 protection until the next time it's sold (and then it never has that protection again). We could completely remove the inheritance loophole (which was tightened up in 2020 but still exists). We could even set a date, say, 10 or 15 years in the future, when re-assessments at market value will start for everyone, regardless of whether or not they've sold. We could also phase in higher allowed assessment percentage increases over time (right now it's capped at 2% per year, but we could, say, add 0.5% to that figure every year for some number of years).
Hell, we could even leave Prop 13 in place as it is today, and just bump up the assessment increase cap to 5% or 10% or something like that. (Texas, for reference, has their own 10% yearly cap on assessment increases.)
There are so many ways to solve this, but all of them are politically unpopular. (Hell, we couldn't even reform Prop 13 as it applies to commercial properties.) As a homeowner in California, I get it, but I still support Prop 13 reform and eventual Prop 13 abolishment.
Most of the other states have not seen the rise in population growth and real estate values seen in CA. There are still places where homes are like 250k or less. There is also way more value drop off outside the metros in most other states with high cost cities such as MA or NY. You could be 30 mins drive from boston in a great 400k home. Try and find that 30 mins out from SF or LA. There just isn't really that fall off in california that you might expect from real estate markets elsewhere. It is like the rising tide has lifted all boats.
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> Without Prop 13, a big chunk of the NIMBYs who are currently against more housing would likely change their tune if they had to choose between no new housing or much higher property taxe
I mean, the way you make housing units more affordable is to make more of them, but for existing homeowners of SFH, building condo buildings in their neighborhood will increase their property value because the competition for the remaining lots increase. Given we build close to zero family friendly multi family in this country (ie, appartments buildings have zero family oriented amnenities), there isn’t much in there for nimbys. It’s the right thing to do but you can’t except nimbys to join in on a purely monetary basis.
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This is a solved problem in other jurisdictions. Effectively you can just allow seniors to defer their property taxes at low interest rates and it becomes a liability on the house when it is transferred on death.
This is how the government countered the people demanding the end of debtor’s prison. And it’s not “transferred on death” it’s whenever the house is sold whether the owner is alive or not. Property tax is just rent paid to the government and the taxman always gets their dues one way or the other.
Just allow natural persons to defer these taxes until after death. Then when the house goes for sale you just subtract the taxes from the inheritance.
> the idea of being displaced at the end of your life out of the home you already paid off due to market forces you aren't even a participant in is actually widely unpopular even if it makes better economic sense.
Once you are old enough it makes a whole lot more sense to move to places designed to care for the elderly. Living alone in a huge house isn't good for your mental health and it isn't for your physical health, either, once you no longer have the energy to maintain it.
I could use a much smaller house than I have now and a much larger garage for tools, workshops, art studio, etc. But for me, the value of a larger property is that I get to go out of the house and spend time in the garden. Sometimes something as simple as pulling up weeds is a considerable boost to my mental health. Kneeling on a garden bench in the sun in the weather and pulling weeds is not something that's “enjoyable," but it is rejuvenating.
My 92-year-old mom has been the same way. Until one of her daughters moved in, she lived by herself in her house and garden. Just being able to go outside and experience the green space she planned and planted has kept her alive and healthy. If she were in some senior living place, she'd be dead by now. She would have withdrawn into her room and waited for her time.
> Once you are old enough it makes a whole lot more sense to move to places designed to care for the elderly. Living alone in a huge house isn't good for your mental health and it isn't for your physical health, either, once you no longer have the energy to maintain it.
This betrays some things. Not everyone is in a "huge house", and having this bias is going to lead you to bad conclusion. Most people don't have a huge house.
And, more importantly, tax should not be used to force people into one way of living in their latter years. They might be self-sufficient into their early 90s, and the last people who should be determining where they live are people who want to do it.
Empirically, according to Doucet, a land value tax would only raise average tax rates if you're living on a parking lot, or vacant lot. Aging homeowners would mostly see a slight decline in their property taxes ( California excluded ).
The single biggest problem is that Prop-13 applies to commercial properties too.
Yes, this is the actual issue with Prop-13. That makes no sense at all.
Protecting retirees from getting kicked out of their lifelong homes is a wonderful thing.
But then allowing corporations to take advantage of that is insane.
You handle that the same way income taxes do: the first X amount is exempt, like a standard deduction, applied to the land under someone's primary residence. Pair it with a rolling multi-year average for assessment so value spikes phase in gradually instead of hitting all at once. Keeps the incentive against passive land-holding everywhere else intact, without the blanket caps that also protect speculators. Instead of using one tool to fix it all, you use multiple tools that work together to make efficient systems
I think the marketing of prop 13 was old people getting kicked out of their houses.
But I think the majority of the tax avoidance goes to not-old-people, like immortal corporations that can own the land forever.
EDIT: random link - it seems like residential owners don't benefit anywhere NEAR as much as commercial, rental and industrial entitites.
https://youngamericans.berkeley.edu/wp-content/uploads/2023/...
The linked study in OP shows that the single biggest beneficiary of Prop 13 on a category basis was vacant land.
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> being displaced at the end of your life out of the home you already paid off due to market forces you aren't even a participant in is actually widely unpopular even if it makes better economic sense
Whether it makes economic sense or not, it is extremely inhumane and that matters (or should matter) far more.
This idea that it is ok to kick out (via taxes) someone who spent 40 or 50 years contributing to society just so someone else can make more profit on their home is very sad.
Washington has a much lower property tax rate for a primary residence owned by a person over 65 years old.
61 years old. Also your household disposable income must be below a certain threshold that is based off county median household income.
Total Boomer Luxury Communism
Elderly retired people living in large houses close to where the work is has caused massive social, economic, political, and cultural harm. Young people can no longer afford to buy homes close to work, so they're forced to commute long distances. Their taxes then go in part to pay for the elderly person who lives in a million dollar house with multiple rooms, who receives many tax breaks. The young person cannot afford to start a family, cannot afford to buy a home, loses a lot of time each day on commuting, spends a fortune on commuting, has less time for family, and causes enormous inefficiencies in the job market. This is nothing short of a concerted redistribution of wealth from the young to the old. It's a travesty which the elderly today would not have accepted.
I do not feel sorry for the elderly person sitting on a large and expensive property who demands to spend their final decades squatting on land which could house a family and allow parents to get to work within a reasonable amount of time. They have options the young person does not. They can get a reverse mortgage, for example. They get social security, and draw down on whatever pensions and investments they've accrued over their lives. Their costs are much lower - they don't have children to support. Or they can move, and I'm sorry, but it's not impossible for a retired person to move. Millions of them do it every year all over the country. Often to really nice elderly communities full of activities and specialised care.
I say all of this as someone who leans more libertarian than collectivist. Society is interconnected and interdependent. We cannot function if he keep young people under our boots. Asking the elderly to move is a *very* small price to pay if we expect the young to shoulder the enormous tax and debt burdens said elderly have imposed upon them.
Exactly. And I am appalled by the level of injustice and stupidity (I will explain both) demonstrated by so many comments here.
Injustice, because they refuse to see the other side of the coin, or the full picture, and a decision ignoring the full picture can be just only by accident (at least in common moral systems).
Stupidity, because it betrays a lack of touch with reality. In this regard I am reminded of a recent thread here, where an article about artificial meat was being discussed. An author of the article expressed their uncomfortable feeling when eating the artificial meat, caused by their thought about the unnatural, "lab" origin of that substance. If that article was sincere, that person have probably never visited a slaughterhouse, or killed an animal by their own hands in order to eat it. This kind of cessation of contact with underlying reality behind our everyday experience is quite common in our modern societies.
In order to be succinct, let me just say that historically it was common for elderly people to live in multigenerational households, sharing their space with a younger family and helping (as long as they could) with chores and taking care of children. While that is not the only viable way, and I am in no way against the modern pension system in general (although its current implementations in most if not all western societies have their problems; and also make many people to lose "touch with reality" in the way I alluded to above), it was quite a natural way of handling the issue of old age that reflected constraints under which a human society existed (and still continues to exist today).
Since I feel that the dominant sentiment of the commenters here is based on emotions and "morality" in a way that I believe is inherently evil, I will close this comment with a refrain from emotions and morality, and state a cold-hearted truth: A society that discards its old people might be a bad one to live in but might be able to survive. A society that discards its young people is destined to die. [To avoid misunderstanding: I do not argue that we should discard old people.]
“Beat it, grandma!” “But I’ve lived here all my life, my husband has passed, and all my friends live here!” “Not for long; we’re kicking them out, too!”
That line of thinking sounds insanely unpopular to me and while it might be more efficient in some ways, I think its unpopularity makes it unlikely in a democracy.
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tl;dr: retirement benefits and children
Why should the typical old person or couple have a large home all to themselves?
I think (in a semi ideal world) individuals and couples should be entitled to small apartments or tiny houses, which would be cheap enough for an old person on retirement benefits. An average American home is for a family: as the parents age, some of their kids start financing the home, while other kids may move living spaces, or everyone splits up and the house goes to a new family (presumably a couple moving from a small apartment).
displaced because the land has become so valuable you can no longer pay the tax on it and have to sell for a massive profit?
boo hoo? My generation has never even had access to affordable housing. Sorry you have to take your millions and live on a smaller property for your last few years.
A land tax means that you don't own property but rent it.
This is bringing us back to the dark ages in terms of land rights.
>A land tax means that you don't own property but rent it.
A few comments:
1) we already have property taxes so I don't understand the objection; a land value tax is just a property tax with a different way of assessing value.
2) I don't think this idea of "not owning property, only renting it" is actually that crazy if you take a long term view over it. Land is a finite, shared resource. We already acknowledge that you don't have absolute rights over land that you own in the same way you do over, say, a toaster. We place all kinds of restrictions on what you can do with it, we tax its ownership, we have eminent domain laws, etc.
The idea of treating land as a pure asset has had a lot of negative social effects and ultimately will lead to a kind of neo-feudalism where the megarich own everything and the underclasses are perpetual renters.
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You are mistaken on several grounds, but the most glaring issue is that you do not properly understand the concept of property/ownership.
For all practical purposes property/ownership is a service provided by society, not a static "attribute" of stuff (the only exception is when you live entirely without any sort of contact with other people, in which case, however, the concept of property becomes void, at least practically). And any service carries a cost with it.
For instance, in our kind of societies, the institution of property requires, at the very least: (1) legislature that defines what property is and all the related rules, (2) the administrative part that handles property transfers and other issues, and keeps the record of who own what, (3) the judiciary system that interprets the legislation and resolves disagreements and other issues related to property, (4) the police or some other body that enforces and protects the whole system within the society, (5) the army that protect the property of the society against the claims of external groups. In our societies many of these institutions carry also other functions, but enabling the system of ownership is an important part of their job. And this service is very expensive --- so not paying any taxes on property means that those costs must be covered by some other sources (e.g. selling natural resources, income taxes, ...) and, usually, lead to a transfer of wealth within the society.
So the idea that you just "own" something (your house for instance) and any kind costs of that imposed on you by the society/government are unjust is completely and patently misguided. If anything, the opposite it true.
(That does not mean that the tax system must be necessarily constructed to reflect that, as there is no single and obvious correct way to design a tax system, and other important considerations enter that issue.)
> A land tax means that you don't own property but rent it.
how is this any different from the statement "a property tax means that you don't own the property but rent it"
If you can own land, what happens when all the land is owned but newly born people need some?
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We never left the dark ages in this respect. The government grants you title to deed and then you must pay your share to the lord (gov).
every tax can be expaned to a infinite series of rent.
The first time I heard about a Land Value Tax it sounded great. You can then go read where it's been tried and find that it's extremely hard to implement.
As just one example, if I place becomes popular then suddenly the taxes rise and people have to move out. Lots of people hate that idea and so vote it away. And then LVT no longer works.
This is what already happens. While not via taxes, the COL already rises with how nice a place becomes.
Do the taxes rise because an increase in rate or the underlying value. If it is the value then cry me a river.
I am a friendly guy and good neighbour. People want to be near me. The value of land in my area rises.
Now I have to pay for my own kindness.
lmao economists, really
> Economist Henry George in the 1800's, pointed out that taxing land, but not the property on it, incentivizes efficient use of land, because holding land for its passive (parasitic) return even when underused, becomes unprofitable when the land is taxed in proportion to the value it can enable.
That sounds like a terrible idea to me. Efficiency isn't everything. Small stripes owned by many people or by many smaller companies it's less efficient than one hedgefond owning everything and yet it has disadvantages.
A forest is much less efficient than a mall and yet, the forest might still be more important.
There's also no way for a government to effectively determine the potential value of land. Asking them to do it means inviting disaster and corruption.
This is a good example of a very common problem: data isn't objective, it needs to be interpreted. Metrics will give you information, but they aren't the full story. That's why Goodhart's Law is so prolific. You can't just look at data and act on it without context. It depends what your actual goals are. And a huge part of that is that we have to consider how much we value things, especially things that haven't already been assigned monetary value. Sure, we can assign monetary value to things like a forest (economists do this), but it would also be wildly inappropriate to just accept those estimates as cold hard facts void of interpretation too. What's the saying? Reality has a surprising amount of resolution.
In a weird twist of irony our efforts to be lazy end up costing us a lot of work. But that's also because there's two types of lazy: short term and overall work. We used to say we want to hire programmers that are lazy because they'll find the most efficient way to do something. But now we don't revere that kind of lazy, we like the kind of lazy that procrastinates. Do the quick cheap thing now, telling ourselves that we'll make it better in the future, knowing that's a lie. That pattern isn't unique to programming, it's just marshmallows.
In WA state (maybe others too?), the county assess my land value and the building value separately on my property taxes.
Point being: the government has been assessing land value for a long long time
https://en.wikipedia.org/wiki/Land_value_tax_in_the_United_S...
The main problem with this view is that land value is laggard to the economy. You will end up taxing people more than what the land is actually worth during downturns, instigating a vicious feedback loop to cause further problems. The logical path is to tax money where there is money - income.
What gives the taxman a right to the fruits of a persons labor? There is of course no other argument for this than "or we kill you". Tax on income is another form of slavery and serfdom. Especially when you consider that a large proportion of slaves through history were free to roam and had to find their own source of income to pay a weekly or monthly fee to their owner.
All other forms of taxation at least have arguments to ethically justify them, including land taxation.
The cooperative will of people?
The argument is not "pay taxes or we kill you", it's "pay taxes or get out of our town". No one is a slave, if the government asks for too much and provides too little, people will move.
I live in a town with non-trivial taxes. It was my personal decision to move there, no one said "move there or we kill you". When choosing a place to live, I could have moved to some other city/state/country with lower taxes, but I've decided not to. I like that we have working utilities, parks, roads, schools, law enforcement, stores. The town had a vote to increase town tax to raise money for schools and libraries, more than 70% approved.
I don't care about your ethical reasoning about tax types, if you want to live in my town, you contribute to the town's well-being. If you refuse to, on any grounds... well, maybe some other place will be a better fit for you.
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I'd like to hear how you think land tax is ethically better. You mention serfdom, which is most similarly linked to land tax as the serfs would have to pay the lord for existing on that place. Likewise, your mention of roaming slaves forgets that they had to pay some value every period and were not allowed to simply not work, which is more similar to property tax where you must pay regardless of income or ability or pay.
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Georgists think that my taxes should go up if someone builds Disneyland near my land.
Yeah, because the value of your land just went up and you didn't do anything to make that happen. Only right that excess value goes back to society and reduces the tax burden of the working class.
If you're a professional landowner and investor, and the taxes on one parcel of land in your portfolio went up because someone built Disneyland near it, this is fine. You might want to sell that parcel out of your portfolio now; or you might want to do something like build a hotel on it catering to Disneyland-visitors, which will earn you enough in profits to more than make up for the higher land tax.
If you're an ordinary person who owns the home you live in, and they build Disneyland next to it, most of the ways that the value of the land your home is on increases are useless or actively harmful to you. It's actively bad for you if you have to sell your family home and move somewhere else because you can no longer afford the taxes on it. You're probably not a professional real estate developer who knows how to effectively use the land as an investment, after all, you just wanted to live somewhere stable.
In fact, the increase of value of your land and the consequent tax increase under Georgist land value schemes, would be so bad for you, that you might decide to protestthe construction of that Disneyland to begin with. This is typically called "NIMBYism", and it happens all the time even under current property-tax schemes because the negative externalities of many different types of construction are bad for the quality of life of existing homeowners.
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Why is it assumed true that individuals do not contribute to the increasing appeal of their neighborhood?
What if I voted for pro-theme park politicians? Or what if I volunteered my time to clean up the community parks and shared space? What if I helped improve the reputation of my child’s school by volunteering and donating to the music department?
My taxes fund the maintenance of public infrastructure and services, and my actions support the civic good. If I vote to be cheap or generous with taxes, or choose to be lazy or ambitious in community support, that all contributes to the desirability of the land around me.
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Liquidity is a value of its own. 10% equity in a $1M non-fungible residentially-zoned lot is much less valuable than $100K in cash, ready to wire at a moment's notice.
"the value of your land just went up and you didn't do anything to make that happen"
Ben, with that argument, when someone wants to pay you $1M for "bengarcia.dev", you would not take it because you didn't do anything other than pay $12 to the registrar.
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What if the person who owns the land is working class? That’s who property taxes hit the hardest, working class people with a mortgage.
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Makes sense to me.
If you don't want to pay the taxes, thanks to Disneyland you can now sell your land for a nice fat gain, buy cheaper land elsewhere, and pocket the difference. And whoever bought your land will likely use it for the social good (maybe build a hotel or something).
So through no plan of my own, I get to uproot my family. That is indeed great
/s
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Obviously. If you live in a single family home next door to Disneyland you’re ducking over all the people who want to stay in a hotel there. You should have to pay for that privilege.
>If we view raw nature as a common inheritance of mankind, then paying a tax on land is how the exclusionary use of it
This will have some of the unfortunate effect of collectivism. We don't want the govt to tax you into poverty.
A simpler overall approach (I've left out the nuances) would be to have an equal amount of land per person completely tax free. Individuals can then rent out their land for others to use as needed. Forests/rivers/conservation lands etc. can be seen as truly a common inheritance of mankind and should generally have the least of commercial activity.
p.s - a govt will never agree to such an arrangement because it will not favor them.
I'm curious as to how you think we should divide up who gets what plots, can you explain how that works?
>I'm curious as to how you think we should divide up who gets what plots, can you explain how that works?
This is not going to be easy. But it can be done even if it's done imperfectly. For example all the fertile land can be divided equally and the infertile ones equally - so an individual will have multiple plots. There are other issues also - for example what happens if someone decides to have 10 + children. In certain locations around the world people have essentially out bred the land resources that they have.
Of course one might ask why should one bother with all of this complexity I stated above? One has to compare it with the current situation which I think is the greater of the evils:
1) government decides the property tax. In many situations people are edged out of their own properties because they cannot afford the property tax.
2) it goes against the very principle that citizens own their land and not the government. The current state of affairs is the other way around.
3) People do not have ways to live off their own land like they used to in the past, now they have to have jobs. If they do not have jobs then they have to have a social security, which leads to a whole bunch of other issues.
4) tax complications.
Let me phrase the overall problem in another way - how do we prevent government from excessively controlling our lives, and have the citizens truly owning their own land without having to 'rent' it from the government?
I read it like “of the land you own, up to x amount is tax exempt”. Which makes perfect sense, and encourages ownership transfer and de-aggregation. Where aggregation of land plots actively increases land use efficiency, that efficiency gain is expected to be large enough to offset the added tax.
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Raise X in land tax and then you spend it evenly amongst the population. Anyone using less than their fair share gets a bonus, anyone uses more has to pay.
If you just allow using X value, but tax free, then those who use less don’t get rewarded.
Effectively one non transferable share, one per citizen, with proceeds as a dividend.
> p.s - a govt will never agree to such an arrangement because it will not favor them.
IDK, governments tend to align with what results in the most economic activity being created / moved into their country ("growth"). If you were able to convince that overall economic growth would be multiple times higher over a few decades with the system, it might just become appealing.
A problem I see with implementation in the US, though, is that local municipalities are who tax land and property value, so entire rural counties and cities would have their funding stunted. And asking the government to buy into that while subsidizing low-growth areas for a long time (decades / forever, if a rural area never develops) is a really hard sell.
>governments tend to align with what results in the most economic activity being created / moved into their country ("growth").
So explain the last ~50yr of state and local regulation of land development?
> A simpler overall approach (I've left out the nuances) would be to have an equal amount of land per person completely tax free
I like the thought, but the challenge in most places is that the poor are already paying massive "negative tax" in the form of various social subsidies.
So if you add tax exemptions on top of it, it becomes increasingly impractical to raise enough taxes.
And no, it can't be done simply by taxing the rich more. That should be done too, in my view! But the math is simply such that we need a pretty broad tax base to support our spending.
You forget that every willing person would easily find work that pays more when income taxes have been removed, and thus not need government benefits.
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> This will have some of the unfortunate effect of collectivism. We don't want the govt to tax you into poverty.
Weird framing. In any case, this would lead to less taxes for most folks, at least compared to property taxes.
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So a data center pays the same taxes as a homeowner, foot for foot? It seems unfair at first, but then it occurs to me that data centers would not be so desirable if they were not paying higher taxes. If land value tax helped to pop the data center bubble it would make the more off-putting aspects (organic farming is a less efficient use of land than factory farms) more palatable. Why not have a hybrid approach, where the local community can decide to apply different types of tax systems to different types of land and land uses?
Seems backward, especially for California.
A hedge fund or a lawyer office with with a huge income but a a small office pays some tax. A sandwich shop close to them which barely had ends meet pays the same amount of tax.
I believe we should tax hedge funds much more than sandwich shops.
Is this a collective push right now for LVT ? I got an e-mail this morning from Astral Codex Ten on the same topic - seems like a campaign is a foot.
Twice in one day for a topic as not specific as this seems intentional.
I wouldn't say it's coordinated. This is an old article, published in June. A lot of people came to the land economics blog from the ACX article that ran today, someone likely saw this one and then posted it to HN.
ACX has been on the Georgist tip for awhile.
Got it - thanks!
wonderful -- now take the modern case where the most fertile land, covered with farming, is converted to cement and home sales due to 100x immediate cash returns. The price? pavement is forever
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I would challenge you to point out exactly where in OP's comment that he advocates abolishing all taxes except land taxes. I see only a comparison to taxing land vs property.
That's what Georgeism is?
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Why care about wealth disparity at all as long as everyone is better off? If I offered you to double your real wealth but also Bezo's real wealth, would you reject that offer just because wealth disparity went up?
Because obscene levels of wealth disparity makes everyone worse off. Power is a zero sum game.
If I were offered to double your real wealth but also double Bezos's real wealth, of course I would take that deal! I would benefit from it. But if you offered to double the real wealth of everyone, what would that even mean?
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I like Georgism, but I don't think it should be limited to just LVT. I think ownership of all natural resources (especially scarce ones) should be taxed at an aggressively progressive rate. Own one oil well? Cool. Own enough oil wells to supply the entirety of the Allied Forces throughout the duration of the European Theater in World War 2? Meh.
What if your only relationship with land is that you rent an apartment, but from that apartment you build a $10M/year revenue social network? How should that be taxed? Should it at all?
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GP doesn't appear to be advocating for abolishing all tax. The thrust of it seems to be to abolish property tax and replace with a land value tax. There's no mention of abolishing income, capital gains, sales, use, etc. taxes.
Maybe don't attack a straw man you've stood up yourself?
I'm pretty certain Henry George would be very happy with pigovian taxes like a carbon tax as well.
Income tax it's definitely something he'd not prefer because it reduces incentive to do something we want you to do. Better to tax windfalls and undesirable things
My understanding is that Georgism opposes the kinds of tax you mention.
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I think land value tax is good.
That doesn't mean LVT is a panacea.
I think that's a bit of a strawman and a false dichotomy.
I don't mind land value tax! Like you, I think it's one of many valid kinds of tax that a government can put on its citizens to achieve various social goals. Hence, I am not a Georgeist.
why not?
The onus is on you to describe some mechanism by which abolishing almost all taxation will magically fix wealth discrepancy.
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Using up land is an externality, and thus should be taxed accordingly.
I don't understand your use of externality here. How is it imposing costs on others?
If you exclude others from a rectangle of land, you are imposing that exclusion on others and the others are due consideration. The rest of the property stack is good -- improvements require investment, investment requires returns, so binding the returns to the investment is important and creates incentives for good stewardship and skin-in-the-game decision making etc -- it's "just" the foundation that is problematic.
Georgists want to tackle this with a Land Value Tax, I tend to think it would be difficult to make this robust against highly motivated attack and the better approach is long-term leases with similar duration to building depreciation schedules. In either case, the idea is that capital appreciation of the dirt (which is really capital appreciation of the right to exclude others from the dirt) goes to public coffers, improvement value goes to the people who made the improvements. That's fair.
Of course, there's also the question of how to get there from here, and one way to do it without guillotines would be to tie the extraordinary tax treatment of property to conversion into a 99 year lease (and then, after 99 years, new issuance could target the ~30 year range). "Sure, you can have your 1031 capital gains tax exemption and pay no tax on the money you obtained by holding on to the right to exclude others from an increasingly popular rectangle of land, but only if you sign up to eventually be part of the solution rather than part of the problem."
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They can't use the same land anymore.
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We’re all on this world for a little while and then we die and leave behind the detritus of our lives.
For some people that’s a house full of crap that their kids need to clean out after the funeral and for others that’s a dilapidated apartment building that’s soon to be condemned and will require asbestos abatement and demolition.