Why a land-value tax is inevitable

1. UBI<p>2. LVT<p>3. Environmental externality taxes<p>That&#x27;s all we need to fix the 21st century. Simple as hell so basically immune to regulatory capture, and will usher in a rate of progress we haven&#x27;t seen in 100 years, if ever.

There was a convincing op-ed in WSJ a few years ago about how in all the states that are facing public sector defaults, the ultimate payer of these debts will be homeowners. Since basically the only place left for most governments to go is property value (unless they have huge businesses they can tax).<p>And it is worse in the poorer states, because they don&#x27;t have high home values to cushion the blow to the individual taxpayer.

The problem with this op-ed is that it&#x27;s based on an entirely false premise, it completely ignores how much revenues governments need.<p>Clinton was able to run a federal government spending less than 20% of GDP, since George Walker Bush federal spending has exploded to the 25 to 30% range. The reality is that 20% is plenty, and can solve all the problems government has the ability to solve.<p>Need to start by NOT<p>1) serving as the worlds policeman<p>2) building double the aircraft carrier tonnage of the rest of the world combined.<p>3) spending a trillion dollars on newest latest fighters not ready for service when we aren&#x27;t at war<p>4) staging US troops and ships in the Middle East or Europe when both are immensely wealthy and able to defend themselves.<p>5) pouring $40B into a launch system design based on obsolete technologies and an overweight deep space capsule that needs a year to replace a single bad power unit.<p>6) subsidizing professional sports leagues paying millions a year per employee. etc, etc.<p>A good start would be requiring senators and congresspeople to recuse themselves from any legislation that specifically allocates funds for any projects in their states&#x2F;districts. Get away from the thousand page earmarked pork funding bills and focus their responsibilities on legitimate national interests.

I think this has been implemented already in Finland. The tax administration evaluates the property&#x27;s value (both land and infrastructure) and taxes it accordingly, eg 0.5%. For unused land the municipality can set an extra tax to coerce the land owner to develop the land, for example 1 to 3 percent. But I wouldn&#x27;t say it is a miracle maker, just a part of an effective taxation system.<p>What I personally would do, if I could, is to target the unscrupulous rich by banning companies located in tax havens from operating in the country, unless they can prove that they have proportionally high enough of employees working full-time in the said tax haven compared to their assets. That, I would say, is very achievable goal that would affect mostly just tax-dodgers and give a strong signal that those practices should come to an end.<p>I think it is just unfair that normal people have pay taxes up to 50% on their earnings (depending on the country of course) while millionaires and billionaires can just bypass the whole system by incorporating a holding company in Cayman Islands. Or mega corporations that can even negotiate special tax privileges.

Land-value tax doesn&#x27;t have huge inefficiencies like some other taxes. But the hard part is assessing &quot;value&quot;. How should land value be decided? The book &quot;Radical Markets&quot; has some good insights on how to find the value of every plot of land by using markets.

Plainly not inevitable. Crises can continue to get worse instead, and surely that&#x27;s much more likely.<p>However, I&#x27;d love to be pleasantly surprised, and occasionally am, e.g., apparently Baden-Wurttemburg (the German state that includes Stuttgart) has recently passed a LVT scheduled to be implemented in 2025 <a href="https:&#x2F;&#x2F;libdemsalter.org.uk&#x2F;en&#x2F;article&#x2F;2020&#x2F;1382897&#x2F;germany-lander-to-introduce-a-land-value-tax" rel="nofollow">https:&#x2F;&#x2F;libdemsalter.org.uk&#x2F;en&#x2F;article&#x2F;2020&#x2F;1382897&#x2F;germany-...</a>

There are so many ways to tax the wealthy that would &quot;work&quot;. But as long as the rich have way more influence on how society is organized than than the poor or middle class, it&#x27;s just very difficult to do anything about it.

The big moral problem I have with a recurrent tax on assets like land or improvements on land (buildings) is that it erodes the fundamental right to private ownership. What does it mean to own anything if policies can retroactively apply taxes to it or continually extract taxes and ultimately take that asset away from you? That’s simply not compatible with a free society and it amounts to theft in my opinion.

The only thing inevitable will be that eventually Land-Value taxes will not be enough (if implemented) and then what? There is no end or limit to the amount of money a Government can squander.

I think an LVT only works if property tax is removed. And getting every state to have less taxes will be rough.<p><a href="http:&#x2F;&#x2F;savingcommunities.org&#x2F;issues&#x2F;taxes&#x2F;landvalue&#x2F;" rel="nofollow">http:&#x2F;&#x2F;savingcommunities.org&#x2F;issues&#x2F;taxes&#x2F;landvalue&#x2F;</a>

Maybe add a (2018) to the title

I think the problem with land-value taxes is that objective valuation of raw land value is actually difficult and even arbitrary. If you say a parcel of land is valuable because there&#x27;s a building on it, you wind-up with just a real estate tax. If you value all land the same, people will just abandon ownership of large parcels, probably with paradoxical results.<p>Almost automatically, the assessment of just land has to be harder than the assessment of land plus the property that&#x27;s there. And assessing land for taxes tends to be politically hard. For example, the overall process of real estate taxation in California was politicized into a disastrous mess years ago with proposition 13. Just undo prop 13 would be a simpler matter and even that likely isn&#x27;t going to happen.<p>Further consider, the objective land value of a parcel in Mountain View is probably less than the assessed value a lot of homeowners pay their taxes based on. I&#x27;d be in favor of measures that force more intensives use of that land but taking on home-owners with vast political influence is going to be a challenge.

&gt; <i>At the top of an economic cycle, governments are collecting their peak tax revenues — yet even so, many are still running large fiscal deficits and have large existing public debts.</i><p>They’re also spending more than they ever have before in history.<p>&gt; <i>The LVT is not the same as a property tax, as it does not punish those who put the land to use; it taxes only the land, not the structure built on top of it.</i><p>I’m not convinced this is <i>that</i> different than what’s happening now. For a $1m house in the Bay Area, only a quarter or a third of that value is the structure.<p>&gt; <i>However, most of all, it is one of the rare taxes that does not diminish economic activity, and in fact stimulates it.</i><p>How do they arrive at this conclusion? A bakery that’s been around for 100 years finds itself in a hip part of town (which maybe it helped foster), and then has to move out because the only type of business that can support the LVT in the area is luxury apartments. The higher the LVT, the <i>more</i> risk of a monoculture in land usage, not the other way around.

The idea of land-value tax strongly reminds me of the often cited, and much maligned, so-called fiduciary duty to shareholders which CEOs and&#x2F;or board members reportedly have. This duty creates, it is said, an incentive towards naked short-term greed, which is often described as a bad thing. Now, even though this duty is also usually derided as fictional, the argument, if this duty did exist, is reasonable. But does not a LVT create the same incentives in landowners – in essence forcing landowners to always use the land in a way which extracts the maximum amount of money from it? Why then is a LVT a good thing while the duty thing would be bad?

This makes a lot of unsubstantiated claims. Like the bond market is saturated that seems the opposite of true. This also claims theres been a high inflation but that doesn&#x27;t seem to be true either based on any metric.<p>I think the one thing is clear and I agree with is taxes increases capital outflow. But my biggest issue is with the central premise that is taken at face value. That the government needs more money. I don&#x27;t think it does. The US government especially has far to much money and waste most of it.<p>So I&#x27;d say instead of trying to find sneaky ways of taking more of the citizen money maybe incentive it to be use to create more opportunities. Instead of taking from some to give to other incentive opportunities so those who have will willingly give opportunities to those who don&#x27;t

I’m struggling to envision how this would impact homeowners differently than the current property tax paradigm. If I have a house and the value of the property goes up, my property taxes increase. If I were to sell a house at market rate, theoretically it would be reflective of what rate it was being taxed at.<p>How would this same situation play out with a land-value tax?

Anecdotally, I’ve been surprised by how Washington DC’s aggressive, punitive taxing of vacant properties has done little (in my observation) to free up these plots. $MM properties that just sit there.

LVT is a great idea.<p>I&#x27;d also like to see more general resource use taxes (i.e taxes on raw materials like water, oil, aluminum etc.). They could be adjusted based on economic conditions (instead of playing shell games with interest rates) and adjusted for external effects. Make it formulaic. Open source, everyone can see how it works and who adjusted and how and it&#x27;s not a closed door XX party with input from lobbyists.<p>Among other good effects I see this encouraging efficient use and recycling.

&gt; The LVT is not the same as a property tax, as it does not punish those who put the land to use; it taxes only the land, not the structure built on top of it.<p>This sounds regressive. So someone with a bungalow on their property pays the same tax as someone with a 40 story apartment building?

I detest property taxes. What ends up happening is that people who are on the brink of poverty keep losing their (inherited) land because the government deems it an income generating asset, even though it is not (it&#x27;s either their home or some dilapidated piece of land without much actual income generation prospects). Often they also get screwed on the selling because they are under pressure and because they are not experienced in selling property, and end up losing money in the process. So it&#x27;s like crabs on the brim of the bucket being kicked back to the bottom.

2018

(2018)

LVT has to be mixed with an occupancy tax however. If I own a large field capable of supporting 10 homes right in the middle of the suburbs, I shouldn&#x27;t be paying the equivalent taxes that 10 households should be paying. You have to separate out the taxes used to pay for services like trash from the taxes meant for ownership of the land. (although you could argue that large parts of the government are needed to service, protect, and legislate ownership of land)