Watchi've been reading about Georgism since hearing about it on this site. strange that i'd never heard of it elsewhere, nary a peep in damn near two decades of education. Why does no one ever speak his name, or speak of his ideas? It has me miffed, that somehow his work has fallen into silence. Thanks to patrick and the poster troy for turning me on to him
i enjoy much of what i read, am halfway thru progress and poverty, and have corruption of economics on deck. as nice as the single tax/LVT sounds in theory, i cannot fully wrap my head around how it could be implemented in the modern day. maybe there's been discussion here before that i missed, but if anyone has some more insight to Georgism or modern moldings of his ideas, i'd enjoy learning about them.
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No one tax is gonna fix the system, our government relies on a mix of different type of tax, tax disguised as fees and tax tied to certain entitlment to fund our government at all the federal, state and city/county level.
2+T in federal revenue and another 1.5T or so at the state and local level. That's the entire GDP of all but 3 countries. A single tax system is not gonna do it.
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nary a peep in damn near two decades of education
my reaction too, when I discovered the idea in late 2002. I think Corruption of Economics lays out why clear enough. We live in system that got Prop 13 passed, after all. Plus so many of the great fortunes of the 20th century were built on resource rents and real estate, and these people have a vested interested in bamboozling everyone with bull--- economics. Palin has the temerity to throw out the "that's socialism!" charge left and right while her state sequesters much of the revenue it gets from oil into a very socialist permanent fund.
Anyhoo, to answer the question the way I see it is the LVT would have to work very closely with zoning.
If you've got a SFH in a duplex or greater area, the LVT will quickly incent you to sell out and redevelop to match the zoned density. Similarly if you're squatting on a parking lot in a commercial area.
One problem is that the LVT is simply too good about raising money. Once built, it's very hard to move a house!
I'd like to see the Mello Roos model expanded for SFH and condos, with phase-outs for owner-occupied housing based on age and amount of taxes already paid. Also 55+ zoning should be exempt from local taxes that go to schools and crime; 55+ nabes do not demand much in the way of government services. This would be designed to keep the necessary protections of Prop 13 without its total idiocies.
As for implementation, you just raise the tax on land value and lower the tax on improvements, so the "single tax" would be a split tax during the transition. Site value is very smoothly continuous and is pretty easy to determine, and as mentioned above it is capped by zoning limitations.
Under a pure Georgist system, some ideas propose that people who live in apartments and condos would actually see a negative tax rate.
The single tax also of course posits that we can reduce sales and income taxes, but I'm not too sure how this will work since I do think reducing income taxes across the board will result in higher rents and land values.
Georgism is something good in theory but we are a million years of political development from seeing it implemented. Even the recent Australian effort to implement a form of severance tax on profitable mining met a real firestorm of opposition. Checking now, I see the gov't had to back down and reduce the tax on iron and coal from 40% to 30% of profits. Norway gets a 50-70% cut from its natural resource wealth.
Georgism can scale at any level, like just taxing improvements less, to the full Hong Kong approach of leasehold land tenancy and not fee simple. I'm not a big fan of LH, I think security in tenancy is a primary human need.
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I agree with Troy. I think Georgism really is suppressed by all the landowners who would start having to pay their fair share. Prop 13 is an excellent example of their mindset and huge step backwards for economic efficiency and fairness.
I also agree that the right way to implement it is to smoothly raise the tax on land and lower the tax on improvements, along with lower sales and income taxes. No new laws necessary!
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looking forward to this week off to dive into 'Corruption'. I put down P&P before i finished, it was very hard for me to stay focused. Makes you think a lot, and i have to reread paragraphs at a time because of it being written in 19th century English, which reads more of a foreign language to me then Spanish.
I think about this a lot, and have some questions. What would happen with all the government land and buildings? Lord knows there's plenty of those. Would they be tax exempt?
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There's also a modern version of P&P
http://henrygeorge.org/pcontents.htm
but to be honest I haven't dug through all of it either. Not much of a point, the core of the LVT idea has been argued by many others and for all I know George is off base with much of his 19th century foo-faw.
The problem -- people profiting from landlordism and resource rents -- is obvious and so is the solution. For the latter we have the examples of Alaska and Norway, who both have put aside tens of thousands of dollars per capita (Alaska: $50,000, Norway: $100,000) as social savings, which is a damn sight better having that money end up in some billionaire's offshore account.
What would happen with all the government land and buildings?
If this were my utopia, land taxes would be as local as possible (with certain redistributions upwards to avoid ghettoization and unnecessarily uneven social development). I haven't though much about this, but it wouldn't make any sense for the local taxation place to tax itself, but I could see the local taxation place taxing the site value of land used by larger governments, but if the local community is receiving benefits from having these government sites then it would make sense not to tax them so.
One of the common criticisms of LVT is that it encourages overdevelopment since theoretically every plot of land is used in its most economical role, and parklands have a vague economic value. But I think the key to a LVT regime is zoning, and zoned parkland would basically be removed from the land market. (So we could still have local, state, and national parks).
But ideally there shouldn't be that much government land and buildings anyway! The original Georgism wasn't about raising taxes for government expenditure, it was solely about breaking the land monopoly and returning ground rents to the community. One way of doing this is to provide "vouchers" for childcare, education, health care, housing, local transportation. Geolibertarians would argue that that's just about all the government that would be necessary, the free market would take it from there.
I'd like to believe that. LVT would completely reverse the money flows in many areas. Eg. Orange Country, where plenty of rentiers are ensconced in their ritzy coastal communities while cashing the rents checks of hundreds of thousands of renters from all over the nation (cough, Irvine Company). LVT would just turn that dynamic on its head -- coastal land rents would be rather high and that money would be sent right back into the sketchy neighboring communities that need those funds the most (hopefully for better social service alternatives and not just more crack).
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errc says
It's dangerous to become enamored with an ideology in it's entirety. Once someone becomes an ideologist, they subordinate reality to notions preconceived; there are several such people who post regularly on these forums.
In other words, there might be some great ideas in Georgism but there will also be some that are less than good. Leave those behind and don't become mentally enslaved to the ideas of others.
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shrekgrinch says
Land out in the sticks would pay a very low LVT. I think LVT in this marginal land would be entirely Mello Roos-style amortized infrastructure costs and no more since the location and scarcity premiums do not really apply.
All these remote locations are for people looking for a cheap place to retire. A true LVT, without protections for existing homeowners, would in fact push retirees out of in-demand housing stock like Silicon Valley out to the remote wilds, since yuppies desire these established suburban nabes more than the retired folks do, and would outbid the retired people if fee simple tenure with Prop 13 protections moved to more of a leasehold model with zero Prop 13-style protection.
Not that I think we should allow LVT to push out retired people from their suburban homes. Security of life tenure in one's homestead is something of a human right that our government should protect, not threaten.