patrick.net

@Troy

Then there is the situation where the lot was so uneven that it was utterly un-buildable. Then some "pioneer" came along and leveled the lot. How do you differentiate "land" in the Georgist sense vs. improvement? Does every home owner have to document all land scape changes from when the lot was created/recognized?

After the house was built, if the builder then had to fire-sale at a loss below the construction cost of the house/improvement itself. Does that then allow the buyer/next-owner hold the land free-and-clear (instead of fee-hold land from the town)? As he paid zero for the land.

It goes to show that the whole drive behind Georgism is the same as every other excuse for taxation: envy, and the ruling class' pretense to to put a lid on it and protect the middle class from it.

Reality says

f you levy a 5% tax on commercial land value, most of the land value would simply collapse and give you no tax at all.

Dunno. Landlords don't have a problem extracting that 5%+ out as a cap rate.

http://www.loopnet.com/Listing/17067200/848-Evelyn-Ave-W-Sunnyvale-CA/

Price: $1,600,000
Cap Rate:6.50%
Lot Size:15,000 SF

Clearly the site value here is around $4M/acre. If 5% of that goes to the state each year, will these tenants no longer desire to pay that cap rate? This was addressed above, here: http://www.nolanchart.com/article6921.html

5% tax on $4M/acre valuation would probably kill most big-box retail stores

One of the beauties of the LVT regime is that it makes people really pay for parking lots and the density cost they impose on communities.

LVT encourages big-box retail to build UP, to put some more capital investment in the improvements to economize on the acreage footprint. Kinda like Tokyo in that regard. In Tokyo you'll have a hard time finding a convenience store without 3-8 floors of office, retail, or housing space above it. American-style fatass parking lots are rare birds, too.

But if people really want big-box stores we can subsidize their big footprints with a lower tax burden. No biggie.

But site value is pretty high here in the bay area, here's another example:

http://www.loopnet.com/Listing/17061651/724-N-Mathilda-Ave-Sunnyvale-CA/

"One of the best locations you can have, approximately 1 block south of Highway 101 on Mathilda Ave in Sunnyvale, CA. Traffic counts are tremendous."

Gee, seems like a pretty high site value for that $2.4M, no? Why should the owner be pocketing all this, did he create the 101 or pave Mathilda as a boulevard?

Let's assign $1.5M as the site value, yielding a $75,000/yr tax burden. Seems like the $258,633 net operating income can handle that fine.

You can check what towns with 5% property tax is like; in fact, as soon as property tax level reach over about 2.5%, the town finances collapse altogether as the property value collapse and people abandon the town.

The whole point of LVT is to shift taxation away from incomes and onto land use. See my icon : )

Who is to decide which plot is to be used for what?

Existing public zoning mechanisms, obviously.

Do you honestly believe the town or state government is really well suited for managing such minutia?

No. The state's job would be collecting the ground rent, instead of the landlord. What the user does with the property is pretty much up to them.

Then there is the situation where the lot was so uneven that it was utterly un-buildable. Then some “pioneer” came along and leveled the lot. How do you differentiate “land” in the Georgist sense vs. improvement?

Save your invoices! What you don't have an invoice for, The Great Creator made. Plus over the decades applied labor is depreciated into land anyway.

if the builder then had to fire-sale at a loss below the construction cost of the house/improvement itself. Does that then allow the buyer/next-owner hold the land free-and-clear (instead of fee-hold land from the town)? As he paid zero for the land.

No, contrary to your above assertions, land value is a relatively smooth function in space, and contrary to this feeble what-if, time. The art of assessing property is a well understood practice at this point.

It goes to show that the whole drive behind Georgism is the same as every other excuse for taxation: envy, and the ruling class’ pretense to to put a lid on it and protect the middle class from it.

LOL. All defenders of the status-quo soon go into the ad-hom argumentation. Without. Fail.

(my internet hero, some guy called royls up in Canada, has an awesome record left on usenet engaging all comers on the LVT issue. Hundreds and hundreds of arguments on dozens of threads, both on usenet and on old message boards. I really learned a lot following his arguments, and ALL of his interlocutors soon wheeled out the envy line and other BS like it. Here's an example of his argumentation style:

>Consider a typical city. If there were no buildings or factories, then all
>you have is farmland in the middle of nowhere.

Wrong. Flat, outright wrong. We have MANY historical examples of
cities where almost all the buildings, factories, etc. were removed --
London in 1666, Lisbon in 1755, Chicago in 1871, etc., etc. -- and the
land retained most of its value because the government and people, and
thus the economic advantage to the land user, still remained. We also
have the proof in the opposite direction: the Black Death of 1347-50
left all the buildings and factories of Europe intact, but removed
just 1/3 of the people, and land values crashed by 70%-80%.

So you are just flat wrong. Now, you can choose to learn from that,
or you can continue to keep yourself ignorant. Your choice.

. . . great stuff)

@Troy,

Look at the example you provided: if the current value is $1.6mil because it can collect $104k in rent in a year, how much is the land worth when $80k of that is taken away in taxes? Back-of-evnvelope calculation seems to indicate the land would be worth $369k, a 76% reduction in value. That's for a prime location. The vast majority of other locations simply would not have that kind of income numbers, so such a high tax rate would simply lead to abandonment and dilapidation . . . just like in almost every town foolish enough to have imposed property tax rate above about 2.5%. There is no beauty in raising property tax rate to those levels; it would simply raise rent and collapse property value at the same time, destroying both tenants and landlords at the same time for the wished for benefit of the government, which would also be ruined as its "tenants" (both landlords and renters) are ruined.

I have already read Gene's article that you have referenced so many times. His so-called critique of Rothbard's writing is really quite silly. He was making the same mistake as you did: assuming that value is objective and unaffected by the drastic policy proposal itself. In reality, land value would be drastically affected by the proposal, resulting in widespread bankruptcy (most commercial land carry mortgages) and little tax collected (due to value collapse)

Have you ever lived in places like Tokyo or Shanghai? These are horrendous places to live compared to much of the US. The multi-story malls are not easy to access by the handicapped or elderly. The jam-packed land use is also called "concrete jungle." Niceties like green zones maintained by most American malls and companies surrounding their buildings are usually absent in Tokyo and Shanghai (except for way out in the outer suburbia, 20 miles or further out from the city centers). Do we really want pack Americans into pigeon boxes like they do? Incidentally, even in a place like Shanghai, where the government actually does own all the land (the ultimate wet dream of socio-Georgists, unlike Henry himself), there are still mutliple tiers of "landlording" arbitraging long term leases vs. short-term subleases.

The "save your invoices" argument is silly on two accounts:

(1) The owner wielding a shovel or running a Bobcat put in far more of his labor value than the invoice on the shovel or the Bobcat rental cost would indicate. As any good Georgist would understand, his labor should not be taxed.

(2) Inflation. A new Bobcat would cost $2k only in 1970, but that 1970 $2k is worth more than $20k today. While one may argue that land value increase due to inflation is liable to tax, but the Bobcat use is not land value but the guy's labor input (or labor input of someone else that he bought and paid for with the fruits of his own labor).

The market value of land is not smooth at all. Property assessing is indeed an art, not a science. It's a matter of creating a smooth income stream to pay for the town's obligations without the property owners burning down the assessor's office. The drastic ups and downs in the real estate market is mostly due to change in market land value. The cost of material and illegal immigrant labor do not change nearly as much (union labor cost fluctuate even less, if at all).

London, Lisbon, Chicago and San Francisco did not retain their land value during the fires and in the immediate aftermaths any more than Tokyo is fully retaining its land value in the nuclear fallout or LA retained land value during the 1992 riot or New Orleans retained land value during the aftermath of Katrina. Property and land value fell drastically during those disasters. Some of them were able to recover because commerce and low taxation business environment returned. If you want to see drastic land value change in a city over time due to high property tax, look to Detroit. As far as I know, it didn't even experience any natural disaster or massive fire. The high property tax alone is quite sufficient to destroy a city. BTW, the 70-80% decline in land value during Black Death is far better explained by the decline in commerce than the population decline per se. People were afraid of meeting other people, so in the pre-internet age, that meant stoppage of commerce; many towns even banned traveling vendors, the engine of "inter-state commerce" back then. So as you can see, land value is not constant at all, but drastically affected by economic conditions . . . i.e. something that the government would be illl-equipped to evaluate and adjust vs. the individual landlords cutting rents and digging into their savings. Governments are nortorious for not having reserve funds. Any additional tax in boom time would simply be leveraged out for more debt to build more boondongles.

Henry George proposed the Single-Tax idea as a way of reducing the overall tax burden on the economy. However, nowadays, many of his alleged followers seem to be looking for ways for the government to take a bigger bite out of the economy by monopolizing land management. Detroit is a good example of what happens when the government dominates land use management through high property tax.

Ownership of land is already an illusion in modern western society predominated by "fee-hold." With property tax rates typically 1-2%, the math works out to be the equivalent of a 99-yr or 50-yr lease. "Landlord" is in effect arbitraging between long term lease vs. short-term leases. So why shouldn't the town take the entire rent income? Because the economy is not constantly smooth rotating. Rents are much lower and vacancy rates are much higher during down turns. The government can only collect so much "rent"/tax from the "owner" as to allow the owner still be able to afford the up-keep of the building and paying his creditors during a down turn (often out of his reserve funds if necessary), before the buildings would be abandoned. Based on past performance with projects, the government would be a terrible agent for managing abandoned properties. Even as we type now, many properties can be purchased at prices lower than building replacement cost alone; i.e. the land portion is valued at zero in the market place, despite what the assessor's office says on paper.

Unless you've read "Progress & Poverty", you won't realize that it's not only the best way, but the ONLY way forward for society. All other paths lead to ruin (and history has proven this).

Personally I hope to be cremated. But cemetery land will never really be a problem. In Europe they just stack bodies in the same grave. And all bodies disappear into the earth eventually, especially with traditional burials. Formaldehyde and steel caskets just delay the process in a nightmarish way.

I don't like Prop 13, but I see that it has enormous political power, since it gives the majority of people a feeling of security. And people vote for that feeling of security. So if we can harness that feeling to the good economic sense of Georgism, maybe we'll have a viable political platform.

Reality says

The idea that there can be an objective land use value is quite absurd.

There does not need to be an objective land value for Georgism to work. You could simply let buyers bid on the amount of land-tax they will pay. The market can determine property taxes. The bidding has to be very public and open because cockroaches hide in the dark. But it could work.

"Progress and Poverty" did not impress me because I had already read "Das Kapital," where not only land but all "means of production" are owned by the monopolistic government bureaucracy. Government being the only rent collector necessarily means that government becoming the only developer. We already learned from real life experience in the 20th century that what's worse than oligopolistic big corporations running people's lives is a monopolistic government that doesn't allow any choice at all. More precisely, both "government" and "corporation" are artificial mental constructs designed to allow a small elite to screw the rest of the population without getting too personal. Displacing multiple competing corporations with "the government" would mean the same bunch of feudalistic elites putting themselves in government official robes instead of corporate suits running your life . . . and your choices are reduced from "a few"/"too few" to 1 or zero. Both books read to me like advocating jumping out of the frying pan and into the burning flame itself (and many nations in the 20th century did precisely that).

Since most buildings are fixed, not on trailer platforms, and any land improvement like leveling the lot and laying pipes and fences is non-transferable sunken cost, land valuation in a market where properties are bought and sold with land is guaranteed to invite fraud and corruption. Arbitrary allocations are tolerated now mostly because tax rates on both land and improvement are the same and remain relatively low; if one is raised way high and the other is reduced to zero, it doesn't take a genius to figure out what will happen in the byzantine government halls, where even the lawmakers are bought and sold routinely.

If land tax is a matter of bidding, what happens then if someone else wins the bidding for the land under your house? Does he get to pay for your tax or does he get to kick you off the land? Does everyone have to live in trailers and cars? Would the town then go bankrupt the moment the economy slows down, because every home owner simply gas up their cars and trailers and leave? the same reason why trailer park owners have cash flow problems every 8-10 years?

More importantly, nobody would make any permanent improvement to the land, just like in the trailer parks. There is a reason why not even rental apartments are put on the block for auction every year or every month to maximize rent.

Incidentally, there is already an auction market for property tax liens; i.e. on houses where the owner is late on property tax payment. Reports seem to indicate that it's a very corrupt process, where families down on their luck are hit with exorbitant interest rate and have their houses seized by predatory tax-lien lenders.

how much is the land worth when $80k of that is taken away in taxes? Back-of-evnvelope calculation seems to indicate the land would be worth $369k, a 76% reduction in value. That’s for a prime location.

Reducing the up-front acquisition cost of land on the market is a very important attribute of the LVT tax regime.

You are confusing valuation for wealth. The wealth of that plot of land has not changed the least under a 5% LVT regime; it still is close to the 101 and has great traffic by it. By imposing a high LVT on it, what happens most of the rent is redirected from the LANDOWNER to the STATE.

Which is as it should be, since the STATE created ALL of that value, not the LANDOWNER.

The capital cost of land going to ZERO would be a FEATURE not a BUG. Removing specuvestors who parasitically draw from the actual productive people in our economy would be a great improvement.

If land tax is a matter of bidding, what happens then if someone else wins the bidding for the land under your house?

I solve that important issue by not even having LVT on below-median owner-occupied housing, and on above-median housing the LVT would be deferable into a lien for people.

More importantly, nobody would make any permanent improvement to the land, just like in the trailer parks. There is a reason why not even rental apartments are put on the block for auction every year or every month to maximize rent.

Singapore, Hong Kong, and China itself operate under a leasehold system and do not have this problem. If you want to talk disinducements to land improvement, Prop 13 would have to be example #1 by the way.

@Troy
Then you are being oblivious to a HUGE BUG, a bug so big that it's "sucking out the life flood of humanity," to paraphrase Matt Taiibbi from RollingStone and put "bug" in place of his more graphical phrase "vampire squid stuck on the face of humanity."

There is a crucial difference between the "LANDOWNER" and the "STATE": the former is usually an individual held to account for his/her own actions whereas the latter is a case of Identity Theft (some privileged individuals doing things in the name of the STATE). When the LANDOWNER borrows too much based on that cash stream during boom time, he and his banker will suffer for their mistakes. The "STATE" however is too big to fail, and will put you and me under gun point to pay back whatever boondongle some bribed government officials took out loans to build.

The "LANDOWNER" will use the cash stream to make improvements based on what will create economic value (despite occasional mistakes), whereas the STATE will spend improvement funds based on political patronage, nowadays for the sake of creating public debt so the banks can be paid out of tax money for decades to come. More importantly, when a LANDOWNER doesn't allocate his resources efficiently, you and I can shop somewhere else . . . with the STATE we have no such luxury. The STATE is by definition coercive.

That neo-Marxian disdain for "speculative parasite" is badly misplaced, IMHO. Private investors that face the risk of failure/bankruptcy actually adds value to the economy: profitability is nothing more than the society deeming their output being more valuable than their input. It is the "too big to fails," including the STATE itself, that are the economic parasites.

I think that in a free society to have a “fair” tax system those that gain the most from living in our system also throw in the most to help maintain that system. Sort of like the way our graduated income tax brackets are supposed to work now.

I think that Georgism would have worked much better when it was conceived 100+ years ago. Back then productivity and profit was linked much closer to land. Today you can put a factory on 1 acre that generates 1 billion in income next to a 1000 acre farm that makes only 1 million. Would it be fair to tax the farm 1000 times more than the factory?

It just seems to me that working out the issues of a Georgism type land tax would end up with a tax system at least as complicated as our current system.

So why shouldn’t the town take the entire rent income? Because the economy is not constantly smooth rotating.

This business cycle is driven by the land credit cycle. Seriously. 1930s in the US came off a land speculation boom. 1990s, same thing, both here and in Japan. And of course the current recession.

We can even go back to the 18th and 19th century, where famous Americans like Robert Morris ("financier of the Revolution") lost his ass in land speculation, along with many others in the Panic of 1797. Congress passed the 1800 Bankruptcy Act to bail him out of debtor's prison.

Daniel Boone became a frontiersman largely due to being a failed land specuvestor.

The Panics of 1819, 1837, 1857, and were worsened if not largely driven by failed land speculation.

"The American people with one consent gave themselves to an amazing extravagance of land speculation." -- http://en.wikipedia.org/wiki/Panic_of_1837

"With the large influx of people moving, the railroads became a profitable industry and the banks seized the opportunity and began to provide railroad companies with large loans. However, by late summer, the value of western land fell and migration drastically slowed causing railroad securities to fall in value." -- http://en.wikipedia.org/wiki/Panic_of_1857

By keeping our capital investment OUT of land and INTO the actual productive economy, we buffer ourselves from the land boom/bust cycle. This is the secret of the economies of Hong Kong, Singapore, and others.

The parasites among us defend the status quo of landlording to the death, of course. Often literally, either at the end in some communist killing field of the bloody past or perhaps in the trunk of some kidnapper's car today in some unjust banana republic.

@Troy,

How do you define "median" in an ever changing market? In a typically Gaussian distribution, you'd have thousands of people in the "fat middle" not knowing if they are liable to a huge tax or not depending on what the cut-off that year is and how their particular home is evaluated. Can you say invitation to massive briberies?

What do you mean by "deferred into a lien"? Would the town then auction property tax liens to predatory tax lien lenders? Like many towns already do nowadays, much to the detriment of many families?

Singapore, HK and China have leaseholds that last 99 years or 50 years. That's practically the same as our "ownership" with 1-2% property tax. Land parcels sitting under their buildings are not coming up for auction every year. Otherwise, there wouldn't be fixed building.

I think that Georgism would have worked much better when it was conceived 100+ years ago. Back then productivity and profit was linked much closer to land. Today you can put a factory on 1 acre that generates 1 billion in income next to a 1000 acre farm that makes only 1 million. Would it be fair to tax the farm 1000 times more than the factory?

Yes. I'd rather have a billion-dollar wealth-creating enterprise than a turnip field in my neighborhood.

Maybe you haven't been keeping up on current events, but land and land value is still an immensely critical part of our modern economy.

TOO critical. Aside from redirecting flows from specuvestors and the financiers behind them TO the state, LVT also encourages more economical use of land. LVT works great to fund civic improvements like mass transit and even bus lines.

This is not to say we shouldn't have ag land. But 40% of this country is ag land, industry isn't going to displace much of it.

Landowners collect immense amounts of rent in the current economy. This is a large part of what is wrong with the economy today, people getting something (rent) for nothing (site value they did nothing to create).

Whenever an economic agent gets something for nothing, that's theft. You can identify the thieves in any economy by removing them from the picture and seeing if anything changes in terms of wealth creation.

Landlords qua landlords fail this Thief Test spectacularly. They are liquidatable, though of course they say they are not, but to do so they have to argue with fallacies and lies.

How do you define “median” in an ever changing market?

Uh, is this a trick question?

In a typically Gaussian distribution, you’d have thousands of people in the “fat middle” not knowing if they are liable to a huge tax or not depending on what the cut-off that year is and how their particular home is evaluated.

Land values are not redistributed every year, and they are certainly not random in this distribution anyway. They are very continuous and smooth in time and place. Plus the tax would/could be proportional to how far away from the median one is, so the impact of any yearly changes (if they even exist, I'm actually having a hard time imagining how land value would become so differential since the extrinsic value of property -- the value of everything outside the lot lines -- changes so slowly in real life) would not be significant.

Plus if I were king I would not subject owner-occupied residential to significant LVT anyway. Just enough to keep the specuvestors focused on actual wealth-creating enterprises and not fastening their fangs on their fellow man via purchase of landholdings.

Can you say invitation to massive briberies?

Anti-LVT people always wheel out their anti-govenment schtick. If we can't run a government here we have larger problems than the tax regime.

@Troy

HK and Singapore also have their economic cycles. Property speculations were and are rampant in both places despite leaseholds. "Landlording" are widespread in both places. "Landlording" is simply the arbitrage of long-term lease (including from the State, as in our current property tax system) vs. short-term leases. You can do that without even owning land or owning any property. You can go lease an entire commercial building for long term, and subdivide to smaller units and shorter terms now. Commercial Mall operators and hotel operators do precisely that on a routine basis.

The idea that the state should be the only landlord and no other intermediate landlords can exist is about as absurd as trying to make the state into the only food producer and no other food producers and distributors are allowed, because they are all allegedly "parasitic." If the state is the only legit owner of all land, then should it also be the only legit owner of all sunlight shining down on the crop plants on the land? and all the flour mills and all the bread baking facilities and all the grocery stores that either sit on the land or burn mineral out of the land to stay warm? The rub against such thinking is of course that:

1. all future planning is speculative;
2. if such speculative decision making is not individually held accountable through private ownership (and no bailouts), the result is "too big to fail" and throwing good resources after bad bets, as in all the failed socialist schemes.

Land parcels sitting under their buildings are not coming up for auction every year. Otherwise, there wouldn’t be fixed building.

Obviously security of tenancy is important. But so is redirection of the ground rent from landowner to the community that creates it.

LVT doesn't take anything that isn't already on the table. Allowing the LLs to rake it all is a primary driver of the increasing wealth inequality in this country.

For every bad thing you can imagine about LVT, I will just say "then let's not do that".

Remember, LVT is competing with our current Prop 13-protected regime, something that is failing spectacularly here in California. LVT would have to be pretty bad to be worse than the status quo.

The idea that the state should be the only landlord and no other intermediate landlords can exist is about as absurd as trying to make the state into the only food producer and no other food producers and distributors are allowed, because they are all allegedly “parasitic.” If the state is the only legit owner of all land, then should it also be the only legit owner of all sunlight shining down on the crop plants on the land?

The state should not be the "only" landlord, just the basal, the primary collector of site value ie ground rent, since the State is the primary creator of site value ie ground rent.

Thomas Paine and Jefferson said as much in their writings. So did Adam Smith, and John Locke implied it with his Proviso.

Land titles are created and issued by the state. They give away too much, which is why they are so expensive.

Not a trick question at all. Two different appraisers can have two entirely different sets of "comparables." It's not much of a problem now, but would be a huge problem if there is some kind of drastic cut-off line for tax payment running through the fattest part of the Gaussian distribution of home values in town. You can easily have neighbors fighting each other physically over $5-10k tax liabilities.

Land values do change drastically from year to year. We are looking at some neighborhoods with 50% or more in price reduction over 3 years . . . the buildings have not changed at all in those 3 years (most are far more than 17 or 30 years old, so fully depreciated in the accounting sense). So the entire change is due to land value.

"If I were king . . ." well, that just shows your fangs as a wannabe feudal aristocrat. The only legitimate thing to do if one finds himself to be a king (with real power) is to resign and make sure that nobody else can acquire that kind of monopolistic power afterward over his fellow men.

Reality says

The “STATE” however is too big to fail, and will put you and me under gun point to pay back whatever boondongle some bribed government officials took out loans to build.

Always with the anti-government stuff. Don't you see this as Anti-American? Do we not have the world-class government and aren't we the pioneer of democracy?

The history of state investment of public goods has been immensely beneficial to the public weal. Where are the boondoggles you speak of?

On the positive side of the ledger, we have the Wright Act Irrigation Districts of the previous century, something created entirely from Georgist philosophy of collection of ground rents.

"Governor Haight, in his inaugural address, and in his final address in 1871 stressed the land problem. "Our land system," he said, "seems to be mainly framed to facilitate the acquisition of large bodies of land by capitalists or corporations, either as donations, or at nominal prices. Barker claims that the inaugural address of Height's successor, Governor Boothe, could easily have been written by George. Boothe called for a tax on land values to cut down speculation, and for the land to be more generally cultivated by farmer-owners."

. . .

"The irrigation districts brought prosperity and local development to the valleys of California which were once recorded on the map as "deserts." Many officials, writers, and professors have since recognized the power of this one act. In 1915, the former California legislator from Modesto, L.L. Dennett told the Los Angeles Times, "I doubt if any law ever enacted by our legislature has even approached the beneficial results of this law. It puts a premium upon development and improvement... it has perpetuated to the people and to their children a great heritage... [a] birthright has been preserved not to be administered by a remote national or even state organization, but by the very people whose birthright it is.""

http://www.henrygeorge.org/caldes.htm

your fears "marxist boondoggles" are just bullshit. You really need to review http://geolib.com/essays/sullivan.dan/royallib.html to get your head realigned to reality and not the propagandistic fear-mongering your thoughts are dominated with.

Reality says

“If I were king . . .” well, that just shows your fangs as a wannabe feudal aristocrat. The only legitimate thing to do if one finds himself to be a king (with real power) is to resign and make sure that nobody else can acquire that kind of monopolistic power afterward over his fellow men.

Now you're declining into stupidity. I've said all I need to say here. Good day good sir, and enjoy cashing those rent checks.

@Troy,

Redirecting financiers from private landlords to the State would be a huge curse on the rest of the population. The State can force you to pay back whatever it borrowed from the financiers.

Buying a property, improve upon it and rent it out actually involves far more labor than buying a stock and collect dividends. Do you also call all stockholders thieves? Do you call bond-holders thieves? A case might be made that holders of government bonds are indeed engaged in supporting theft as government tax collection is theft as it is coercive. Rent on the other hand is something that both the renter and the owner enter into without coercion from either side.

BTW, I'm speaking as a renter. Having numerous owners offering to rent is the reason why I have low rent on a decent place to live. Can you imagine what it would be like if government effectively owned all housing and have to use over-paid bureaucrats and union labor to do the maintenance and review applications? You can look to the projects, the DMV and the city hospitals for an answer. A stay at the government-run hospital room is like over $1000 per day, not including any of the medical services.

@troy

The government is already the "basal landlord." That's what the 1-2% property tax / 90-yr / 50-yr leases are. Real life experience seems to indicate that anything much over 2.5% leads to rapid deterioration in the community due to property value collapse.

America's success came from the liberty enjoyed by the American people . . . a people that have enjoy the freedom to compete with each other and bring better value to the table for fellow Americans. Government undertakings are by definition monopolistic. Many other countries have governments undertaking far greater projects than ours have (especially proportionally speaking to the economy size), and usually end up as white elephants.

Never assume that private sector would not undertake on better terms what the government monopoly has brought forth, and never discount the time-cost of pre-mature investment. Every single transcontinental railroad sponsored by the US government went bankrupt, whereas the privately funded Great Northern did very well. After about 1913, the accounting became fishy for government projects because of the imposition of the fiat money regime. Almost all the "great projects" undertaken in the 1930's that the statist-worshippers would like to boast so much can only be termed "success" when assuming zero interest cost . . . just like all the bailouts of the financial industry and GM in the last couple years. When measured against real economic opportunity cost (reflected by gold price), they are resounding failures. Those "great undertakings" are usually nothing more than exploiting destitute Americans as slave labor, a condition of poverty that was created by the government to begin with.

Being skeptical about the government is very American, and a defining character of libertarianism. I was quite correct in suspecting your "libertarian" credentials in your use of "geo-libertarianism." While Henry George came up with Single-Tax as a way of reducing taxes, many of today's Georgists are not libertarians at all, but socialists/communists looking for a new home after the failure of the former soviet union. Your repeated allusion to violence against what you consider "parasites" is quite indicative of your communist inclinations.

The idea that landowners are taking a huge bite of the economy doesn't jive with current reality at all . . . especially given how many times Patrick has re-emphasized (correctly) that it is still cheaper to rent than to buy in many places. The bulk of the rent that we renters pay actually end up as mortgage payment to banks. The landlords are in effect passing along some of the savings that they got when they bought the house before the bubble . . . either that, or they are digging into their own savings to make up the mortgage cash flow shortfall, or using the rent as a way of getting a relatively secure return that is lower than our own mortgage interest rate would be but higher than they can get in a savings account, if they put a big down payment on the house. These are the only three possibilities (assuming they are not defaulting to their creditors). In any case, the landlords have to make sure that they are solvent by themselves, unlike a STATE as "landlord" that can dig into our (taxpayers') wallets when it runs out of money. When was the last time any landlord could coerce us renters to cough up more money just because they partied too hard themselves? but the STATE as the "landlord" can do precisely that.

Raising land taxes would raise rent and reduce maintenance . . . and more importantly, make everything we buy much much more expensive if homeowners are exempt from it but commercial land users have to carry the entire tax burden. Businesses do not actually pay taxes (because they do not have to exist); they are just conduits for collecting money from their customers to pay the government; their profit comes on top of that: if a business has market power (like a convenience store), it may even take tax expense as one of the costs of doing business and apply the same profit margin to it before arriving at the prices. Individual consumers can not avoid paying the taxes / raised price without killing themselves or drastically cut back on standards of living.

@Troy:

You wrote "Whenever an economic agent gets something for nothing, that’s theft. You can identify the thieves in any economy by removing them from the picture and seeing if anything changes in terms of wealth creation.

Landlords qua landlords fail this Thief Test spectacularly. They are liquidatable, though of course they say they are not, but to do so they have to argue with fallacies and lies."

With intimations of violence like this, and you call yourself a libertarian (a philosophy based on non-initiation of violence)? By your test, wouldn't the old and the infirm be liquidatable too? What kind of fascist monster are you?

Without landlords, from whom would I be renting from? More precisely,

Who would have kept the house that I'm in now pristine and available before I moved here?
Who would have paid for the leveling of the lot?
Who would have paid for the landscaping?
Who would have paid for paving the driveway?
Who would have paid for the construction of the house?
Who would have paid for the expansion of the house?
Who would have kept the pipes from freezing in winter before moved in?
Who would have paid for the broker who showed me the house?
Who would have paid for and tracked the warranty repairs for the appliances that make the house livable?

and from the town's perspective, who would have paid for the property taxes when the house was vacant and being renovated?

I'm not trying to kiss up to my landlord here, but it's preposterous to suggest that he is not rendering a service when I know I'm getting a better deal than I would have to pay if I took out a mortgage to buy the same house that I'm living in. To suggest that somehow his hold on the land is illigitimate is tantamount to saying that my use of the land is illigitimate! My paying the rent (at much lower price than a mortgage would be on the same house) is the reason why I have the use right, and nobody else can trespass. Unlike the property tax levy, the rent amount is something that we arrived at by mutual consent, a consent that is renewed each year! I even talked him into lowering rent by a couple hundred bucks a month when the recession hit, while the town raised tax on him! Talk about rapid market response vs. slow-motion bureaucratic response to changing reality on the ground.

"Not sure how the two bids would work together though. Greatest sum of land tax and purchase price wins?"

That's essentially what the current price system with land included means. With 1-2% total property tax rates, the town is getting a free house plus the entire land value from the "owner" every 36-72 years. Not bad at all. This approach actually smooth out the town's income from year to year, instead of a higher tax on land value alone, which is far more economy-dependent and far more volatile than the cost of improvements. I wouldn't trust the town officials to handle a binge and purge cash flow.

Reality says

Raising land taxes would raise rent

I don't think so, because rents are determined by salaries. It doesn't matter what the landlord wants. People can pay only so much in rent. They cannot borrow to pay rent.

Reality says

I’m not trying to kiss up to my landlord here, but it’s preposterous to suggest that he is not rendering a service when I know I’m getting a better deal than I would have to pay if I took out a mortgage to buy the same house that I’m living in.

In my own case, my landlord bought a very long time ago, so she pays essentially zero property tax on her rental properties because of Prop 13. Almost all the rent goes to her as profit, minus a bit for maintenance.

I still cannot buy a house and get a better deal than I have as a renter. But Prop 13 guarantees that she can make a good profit off of me anyway.

I like my landlord, but she's not really rendering any service to me. She's exploiting the Prop 13 gift to landlords and businesses.

Reality says

Never assume that private sector would not undertake on better terms what the government monopoly has brought forth

The private sector fails completely in essential functions like providing an army, police forces, fire departments, elementary schools, and essential health care.

Never assume that the private sector would undertake anything for the public good, ever.

The private sector is great for non-essential services, but for essential services, they will rape and kill you with glee and provide nothing.

A raised LVT would function as a cartel price setting mechanism, and raise rent amount. It's just like a raised sales tax would raise the total price of everything that is subject to sales tax; the vendors would not absorb it because all other vendors face that charge too. Not having to pay other taxes in a Single-Tax scheme would also make more money available for paying rent. Giving owner-occupied homes exemption like Troy suggested would disproportionally burden us the renters. Although you and I may not be in the low-income group, many renters and their families are. Such a lopsided taxation would severely disadvantage families that have to rent because that's all they can afford.

I'd be very surprised if your landlord doesn't have a mortgage to pay. My landlord took out a sizable mortgage to renovate the house after the previous tenant moved out and before I moved in. In any case, you are benefiting significantly from lower cost of housing over the past 7years than would have been the case if you bought (counting interest payment, tax payment and massive capital depreciation), that's a huge service to you. In my case, the difference is nearly $400k over half a decade: $570k potential losses/expenses ($300k drop in house value, $210k interest payment at 6% fixed half a decade ago and $60k in taxes and repairs; not fulling counting the depreciation of his new renovation just before I moved in and now could use some after half a decade of use) vs. $180k rental expense over the same half decade. My landlord's service practically saved me the bulk of my next house's likely purchase price. The house I'm in had a market value around $700k when I moved in, and now is probably around $400k if I bargain hard enough. I don't think I have ever received any service/benfit of that magnitude from any other single individual (besides my parents' raising me and teaching me when I was young, which was not quantifiable).

The "public" monopoly, once established, would just kill, rape and pillage even harder. What do you think is going on with the multiple wars? and Trump's contention that he would just keep Libyan oil? All the warmongering around the world leads to is easier for American corporations to operate overseas with impunity; the lack of risk from foreign tinpot dictatorships makes it possible for shipping jobs overseas, especially since jobs here actually have to pay for the "public army" that is subsidizing shipped out jobs overseas. The standing army shouldn't even be there at all; remember from the Constitution?

Americans used to be the most literate and well-read people in the world in the 18th and 19th century, before public school monopolies came along.

Without a government enforced medicine monopoly, there used to be charity hospitals . . . now those charity hospitals are bankrupt and bought up by for-profit hospitals because medical equipment and medical school graduates are so loaded up with huge government-guaranteed non-dischargeable (student) debts that they can not afford to work for charity hospitals. Why is the same MRI or CT scan costing 10-100 times as much in the US compared to India? Why is a surgical knife costing $900 when a kitchen knife made of the same material costs $2? Price is determined by supply and demand. When the demand/purchasing power is forcibly pillaged from the off-springs and neighbors of the patients, the sky is the limit for price. The wrong crowd has been attracted to the government enforced medical oligopoly. Medicine has become a massive machine for raping and pillaging patients, their families and other taxpayers alike to pay off debts to banks at gun point (that's what taxation and fiat money is, at gun point). In every technology field that does not involve government enforced monopoly and subsidy, goods and services get better and cheaper very rapidly: a $10,000 computer 20 years ago would cost only $1000 10 years ago and 10 times faster, and now costing $100 and fits in your hand! The same thing refuses to happen in the publicly funded and monopolized medical field, nor the publicly funded and monopolized education field. I have great respect for private citizens who are part time volunteer fire fighters; I'm fearful about what will happen when the six-figure salaried firefighters and policemen find out their pensions are not secure and their wages are to be cut.

Speaking of essential services, what can be more essential to human existence than food? Yet every time a government tried to monopolize food production and distribution, it led to starvation and famine. Every single time that's been tried in human history! All the other "essential services and goods" are just less essential, not needed by everyone three times a day, so the inefficiencies of a monopoly vs. free market alternatives just takes longer to become obvious.

Reality says

Americans used to be the most literate and well-read people in the world in the 18th and 19th century, before public school monopolies came along.

But public schools are not monopolies at all, except for the poor, who cannot pay for private schools.

Reality says

The standing army shouldn’t even be there at all; remember from the Constitution?

I agree with you there.

Reality says

Price is determined by supply and demand.

Not for essential medical care! There is no price list presented, no opportunity to shop, and no time to do it anyway. Under purely private health care, your costs are guaranteed to be all the money you have. You pay or die.

I'm not suggesting government doctors, just a little restraint on the raping and pillaging. How about mandatory price lists, for example? Wait, that would be socialism, right?

Reality says

In every technology field that does not involve government enforced monopoly and subsidy, goods and services get better and cheaper very rapidly:

Not true at all. In fact, that's about as wrong as you can get with respect to the internet. The internet exists only because of government funding for ARPANET and the imposition of government-created communication standards.

Reality says

I’m fearful about what will happen when the six-figure salaried firefighters and policemen find out their pensions are not secure and their wages are to be cut.

But you're not afraid of what private firemen would charge you when you house is already on fire? What do you think that price would be?

dude, you're arguing with a libertarian on the internet.

@Patrick

Glad we agree on the distaste for warfare-state.

Public schools are a monopoly because one has to pay for them even if placing kids in private schools. That's the ultimate form of charging and not providing service. When it's a badly run gym, you can cancel membership the next month, but not with public schools. The kids from poor families have been educated by charitable organizations for hundreds of years. People used to go into teaching (and medicine) for charitable causes, not to get rich or get tenure and cushy pensions; not having a non-dischargeable student debt also helped freedom in career choices.

I certainly agree with you that medicine prices have to be listed. Can you imagine what it would be like if restaurants did not list prices and all restaurant bills are paid for by the government? There would be free-for-all food fights using lobsters inside the restaurant while long lines outside waiting to be seated. The cost of medicine would be much less if there is no licensing requirement to artificially restrain supply of service providers. . . and if there is no FDA limiting the supply of drugs. Many elderly may well choose legalized pot or even legalized opioids at much lower prices instead of the ridiculously expensive patent drugs that the big pharma come up every few years like the Cox-2 painkillers that ended up killing the patients. The net effect of life extension for old adults from modern medicine is only a few months for the entire population on average. Many of the so-called cancer cures in the past couple decades have been the result of over-diagonosis: if 1% of women die of breast cancer and 1% of men die of prostate cancer in a general population before cancer medicine, then after the tests came along, suddenly 10% of the population are diagonosed with them and the cure rate is 90% . . . what exactly has been the net benefit of those tests and cures? Big Zero! No net improvement at all, still 1% of the population dying of these cancers. Only now that zillions of dollars are spent on cutting off breasts and making old men impotent, all paid for courtesy of taxpayers, who also have to foot more bills for healing side effects and mood enhancers after the dismemberment.

The ARPANET reached only a few hundred govoernment and educational institutions (and I was on it). It was the free market forces that made internet accessible to billions of people around the world. It's also a mistake to assume that had government not taken away the resources from the private sector, something like ARPANET would not have evolved in the private sector. AT&T network was built by the private sector before WWI and WWII enabled government take-over of the high tech sector of the economy (and much of the rest). Perhaps that's the reason why big-government types love wars.

The incident where the firemen let someone's house burn down a few months ago for lack of membership was actually a publicly established monopoly, trying to make the victim into an example of the perils of not subscribing to their service, even after the homeowner offered and begged to pay several times over the annual membership fee. Competing private service providers would have had enormous incentives to accept his offer; can you imagine the reputational damage if it's not a mafia-like monopoly?

@troy,

and you pretended to be a libertarian only a few posts ago.

Just because something is called "government" doesn't mean it's not be subject to the laws of economics. Government is intrinsically just as efficient as the private sector. Also, Cost is not just measured by dollar value. If something is cheaper it might mean they provided a better service, but it might mean they paid their workers less, destroyed the environment or didn't perform adequate safety inspections. That's why I'm generally skeptical of the term "wealth creation", because it is usually just taken out of something else rather than anything being tangibly "created".

@pdh

The same laws of economics indeed apply to both the government and the private sector. When people had the freedom to buy well made Toyota's and Hondas instead of poorly made Chevy's and Ford's, more resources were allocated away from the underperforming carmakers to the better carmakers. If there were two DMV's, one were run more efficiently than the other, and the DMV workers got paid based on the customers that they serve, then yes, more resources would get allocated from the poorly run DMV to the better run DMV. In reality however, DMV workers are paid the same regardless their performance, so good workers leave and the slackers stay. Likewise, when the government keep bailing out poorly performing "private" companies at the expense of better run companies, the economy grinds to a halt, just like the DMV.

Economic exchange and "wealth creation" takes place when division of labor takes place: someone else renders a service for you that is of greater value to you than what you have to pay them in return (from your perspective). . . . and conversely, they deem what they receive in return is of greater value than what they are giving you (otherwise, they would not voluntarily consent to the exchange). Both sides are made better off as a result of the exchange. Hence "wealth creation." Robbery at gun point is certainly not wealth creation.

MRI and CT scans used in the US and those in India are roughly comparable in medical value because:
(1) the same models of machines are used;
(2) the same Indian doctors read and interpret those images.

Reality says

Americans used to be the most literate and well-read people in the world in the 18th and 19th century, before public school monopolies came along.

That's a strange statement. Back then most people didn't go to school beyond the elementary, and we had child labor, and slavery. Education was for the elite then. Jefferson advocated public education in part for very pragmatic reasons: the talent and intelligence among the poor needed to be found and nurtured for the benefit of all.

There were far more truly illiterate people then than now.

marcus says

There were far more truly illiterate people then than now.

Marcus--let's not allow the truth to get in the way of a good story. Especially a nostalgic one..