patrick.net

Which variant do you propose?

Replacing all taxes with a tax on land assessed at the unimproved value.

or

The state owns all the land and charges rent for use of each parcel.

The first, though it's essentially the same as the second.

I also think the land value tax should be set by the market and not the government. That is, whenever land is for sale, the land gets sold to whomever agrees to pay the highest annual land value tax for it.

Patrick says

Only if he took the lump sum payment.

Patrick says

That is, whenever land is for sale, the land gets sold to whomever agrees to pay the highest annual land value tax for it.

So if a quarter acre lot in Campbell is worth $1.2 million but I bid 50 cents plus the highest amount willing to pay the LTV, the seller has to take that offer?

For the land, yes.

Patrick says

For the land, yes.

So nobody has any incentive to build improvements on the land that can't be sold?

You always have incentive to build improvements on land under Georgism because improvements never raise your taxes, unlike under the current "property tax" system which does penalize you for improvements.

There is a big gap between theory vs. reality under Georgism: the total land tax for the piece of land that is DC today obviously can not be the same as when it was a swamp before the city was built. So improvements absolutely would have to raise land value and therefore tax under Georgism. How exactly would the evolution of Georgist land tax on that piece of land have evolved in the last 200 years if it had been under Georgism? If all the value of using a piece of land is taxed away (or 85% of it), why would any private person want to pay any price to buy a piece of land? What happens when disaster happens and the land becomes unusable? or having its use value significantly reduced? How would bureaucrats be able to tell the changing use value when there isn't an active market buying and selling land? When central bank changes interest rate, land value fluctuates dramatically, due to the change in discounted present value of future stream of cash using different interest rate; in that case, would bureaucrats' salaries fluctuate drastically too?

BTW, I agree on the sin of income tax, which was unconstitutional (and may still be). The only logical federal tax is import tax: making the importers pay for the social cost of removing domestic jobs. Property tax only makes sense when it is local and tied to the right of voting: making sure voters are vested in the continued prosperity of the location.

To me it comes back to this: Small flat tax on any type of income. Done.

mell says

To me it comes back to this: Small flat tax on any type of income. Done.

How about an even smaller tax of lets say 2% based on net wealth????

It's just anti-american...

Framers wanted to say we have the right to Life, Liberty and Property but people were property back in that day and there was a squabble so they settled on Life, Liberty and Pursuit of Happiness. Property rights were still the foundation though.

The first draft was "Life, Liberty, and Property" I believe.

Misc says

mell says

To me it comes back to this: Small flat tax on any type of income. Done.

How about an even smaller tax of lets say 2% based on net wealth????

Once it has been taxed as income it should never be taxed again. Wealth tax also incentivizes people to move their wealth abroad and then the money will be propelling other countries/governments. I can see a temporary wealth tax to balance budget in a crisis, but only with enough guardrails that it doesn't become permanent (e.g. max limit and can only be impose once every x years and needs legit fiscal emegency etc.)

$2.00 flat or 2% on financial transactions, whichever is higher, the Tobin Tax. Looking at broker fees, people could hardly bitch about this. Applies to everybody, including quants and millisecond trading - no exceptions.

Also a federal rule banning states or localities from paying Federal Taxes of any kind - income, SSI withholds, tariffs, etc. on behalf of corporations.

mell says

I can see a temporary wealth tax to balance budget in a crisis, but only with enough guardrails that it doesn't become permanent (e.g. max limit and can only be impose once every x years and needs legit fiscal emegency etc.)

Yes, like for war. No use of American troops to fight overseas without a congressional Declaration of War and a wealth tax to pay for it.

Misc says

How about an even smaller tax of lets say 2% based on net wealth????

I'm opposed.

Wealth that anyone worked to create should always be taxed at 0%.

Land value is the only appropriate object of taxation, penalizing neither work nor commerce.

mell says

Once it has been taxed as income it should never be taxed again.

I'd say income should never be taxed even once.

AmericanKulak says

The first draft was "Life, Liberty, and Property" I believe.

That makes sense, because the founding fathers based the US Constitution heavily on Locke's work, and "life, liberty, and property" is a phrase Locke commonly used.

Reality says

There is a big gap between theory vs. reality under Georgism: the total land tax for the piece of land that is DC today obviously can not be the same as when it was a swamp before the city was built. So improvements absolutely would have to raise land value and therefore tax under Georgism.

@Reality Under Georgism the assessor is forbidden from considering anything you have done to the land when he sends you the tax bill.

The only thing the land is taxed on is what others are willing to pay for the land, and that depends mostly on how many other people live nearby.

I don't understand all the details yet, but these are on my reading list:

https://www.strongtowns.org/journal/2019/3/8/if-the-land-tax-is-such-a-good-idea-why-isnt-it-being-implemented
https://astralcodexten.substack.com/p/does-georgism-work-part-3-can-unimproved

Reality says

How exactly would the evolution of Georgist land tax on that piece of land have evolved in the last 200 years if it had been under Georgism?

The tax would have risen exactly as the value of the land rose, that unearned value increase being primarily a result of increased population density.

Reality says

If all the value of using a piece of land is taxed away (or 85% of it), why would any private person want to pay any price to buy a piece of land?

You'd buy it because you can make money doing something with it.

Reality says

What happens when disaster happens and the land becomes unusable? or having its use value significantly reduced?

The tax would go down.

Reality says

How would bureaucrats be able to tell the changing use value when there isn't an active market buying and selling land?

I don't think that ever happens.

Reality says

When central bank changes interest rate, land value fluctuates dramatically, due to the change in discounted present value of future stream of cash using different interest rate; in that case, would bureaucrats' salaries fluctuate drastically too?

There should be no central bank. Interest rates should be set by the market alone.

Bureaucrats' salaries and number of bureaucrats should indeed be limited by the tax revenue available from the land value tax.

Let's take the DC swamp example. When it is a swamp, the land value is negligible, so almost no property tax. Every piece of land's title derives from the title of a larger piece of land before division, tracing all the way back to initial conquest. So let's assume someone owns that swamp, he builds some road on it; i.e. entirely improvement on his own land, so he and his helpers can move around and more people can live on it. However, because that's entirely improvement on his own land, there should not be any tax increase. Someone might be willing to pay more for the land but that's because of his improvement. Then he divides the parcel into two pieces, each with a road connecting to its border due to existing road that he built. Now the each of the two pieces of land is worth more than half of the original because there is road next to it? But that road was improvement built on the land before division! What I'm getting at is that, Henry George's concept of "land" is similar to the concept of "Unicorn," a figment of human imagination. Just because a concept exists in people's head doesn't mean it has a corresponding existence in reality. There is no such thing in reality as a piece of land without improvement. "Land" and "improvement" are always inter-related, and only "land with improvement" can be transacted; the very first improvement on a piece of land is actually "land survey," which was the professional occupation of George Washington, who became the richest man in America doing that job.

Patrick says

You always have incentive to build improvements on land under Georgism because improvements never raise your taxes, unlike under the current "property tax" system which does penalize you for improvements.

Yes, but what you are proposing is sales should be bases on land value only. They can't sell the house on it. Or at least, can't be compensated for the house.

This is why Georgist taxation formulas are calculated by the difference between improved land and unimproved land on the lot.

Reality says

So let's assume someone owns that swamp, he builds some road on it; i.e. entirely improvement on his own land

The normal situation is that the government builds the road with tax dollars, and the owners of land near the road reap the increase in land value caused by the road without any increase in taxes.

"Unimproved land" doesn't usually exist within 100 miles of any metropolitan center. Almost all land where the overwhelming majority of people live are heavily improved even if an empty lot: lot leveling, swamp-/river-/lake-filling etc.. Can't even have the land described in deed records to record the original transaction deed "creating" the particular piece of land without surveying, which is a very expensive process.

Reality says

Let's take the DC swamp example. When it is a swamp, the land value is negligible, so almost no property tax. Every piece of land's title derives from the title of a larger piece of land before division, tracing all the way back to initial conquest. So let's assume someone owns that swamp, he builds some road on it; i.e. entirely improvement on his own land, so he and his helpers can move around and more people can live on it. However, because that's entirely improvement on his own land, there should not be any tax increase. Someone might be willing to pay more for the land but that's because of his improvement. Then he divides the parcel into two pieces, each with a road connecting to its border due to existing road that he built. Now the each of the two pieces of land is worth more than half of the original because there is road next to it? But that road was improvement built on the land before division! What I'm getting at is that, Henry George's concept of "land" is like the concept of "Unicorn," a figment of human imagination. There is no such thing in reality as a piece of land without improvement. "Land" and "improvement" are always inter-related, and only "land with improvement" can be transacted; the very first improvement on a piece of land is actually "land survey," which was the professional occupation of George Washington, who became the richest man in America doing that job.

In the present day, this is nothing but an edge case. This argument is however highly pertinent to, say, cities under the sea, or Mars colonization, where "land" is created ex nihilo.

Every piece of land is fundamentally "created" ex-nihilo if we trace back in time far enough (not in terms of earth formation, but in terms of human work done to survey and divide up existing plots of land into smaller plots). The Georgist idea seems to assign zero value to parcel creation. If a government hires contractors to build roads, the money usually comes from taxing the property owners along the roads and from gasoline tax. Nowadays however, most new roads are built by developers, who not only have to build the road using money from home buyers in the development (or borrowed from bank to be paid back by the home buyers) but also have to form HOA's for road maintenance so that the town/city governments don't have to pay for the road maintenance.

Once again we can see here land being transacted would be land+improvement if anyone buys a building lot in that development, and the landowner ends up being taxed for improvement.

I admit I need to read more about Georgism. I'm certain all these issues have been discussed to death, but I don't yet know the details.

The fundamentals are clear to me though.

- Land value is primarily driven by the density of people living nearby.
- No one created land, so no one has the right to profit from merely owning land.
- Taxing work and commerce discourage work and commerce. We want the opposite of that.
- Taxing land does not discourage land production, because there isn't any. (Barring edge cases.)
- Land cannot be moved or hidden like other forms of wealth can, so a land tax is efficient that way.
- Eliminating income tax and sales tax also eliminates a massive paperwork burden, benefitting the economy.
- Land records are public, so everyone should be able to see all taxes paid under a Georgist system.
- Hong Kong has a partial land value tax, and it works well there.

Hongkong was/is a disaster as far as housing is concerned: the average housing unit floor area is 430sqft, and the average price is 23x median income.

IMHO, Georgism is a tool for extracting maximum rent from inhabitants of an area for merely existing to subsidize globalist traders/bankers. Under the government land auctions at extremely high prices (as a way of funding government through land sales, i.e. Georgism), the oligopolistic developers were used as a conduit for sucking home-buyers and renters dry and send the money out to the global banking system. Even then, eventually they had to introduce income tax, welfare, subsidized housing, etc. before handing it back to the communists to let them kill bank account holders (and prevent too many people cashing out of the housing value bubble). It's not at all a sustainable system.

Reality says

Hongkong was/is a disaster as far as housing is concerned: the average housing unit floor area is 430sqft, and the average price is 23x median income.

IMHO, Georgism is a tool for extracting maximum rent from inhabitants of an area for merely existing to subsidize globalist traders/bankers. Under the government land auctions at extremely high prices, the oligopolistic developers are used as a conduit for sucking home-buyers and renters dry and send the money out to the global banking system.

Then communism came, and well we all see where that's headed.

Misc says

Then communism came, and well we all see where that's headed.

Exactly. Those are unsustainable systems that eventually have to be handed over to Communists / Nazis to kill bank account holders and prevent the people trapped in the bubbles from cashing out.

Reality says

Georgism is a tool for extracting maximum rent from inhabitants of an area for merely existing to subsidize globalist traders/bankers.

That's about as wrong as it is possible to be, imho.

The globalist traders and bankers hate Georgism with a white-hot passion, because it directly threatens their unjustified extraction of rents from the rest of us.

They have spent literally more than 100 years suppressing Georgism for this very reason.

Patrick says

- No one created land, so no one has the right to profit from merely owning land.

This is not true in the case where, as been pointed out, swampland has been drained, or in the case of San Francisco, where the bay was dredged and new land created ex nihilo. This, as I pointed out, is an edge case, and is not applicable to 99+% of land. For that 99+% of viable land that always existed, Georgism is completely appropriate AFAIC.

- Land value is primarily driven by the density of people living nearby.

"Land value" is primarily driven by cash flow the difference between what the owner can generate vs. what the tax is, discounted by current/expected interest rate into a "present value." Population density in Oakland is likely higher than posh parts of SFBA, but the land value is lower; if rent collection is stopped altogether either due to regulation or crime, local land value may well fall to Detroit level regardless population density.

- No one created land, so no one has the right to profit from merely owning land.

No one created atoms either, then how can anyone have the right to profit from owning anything? The answer is that everything we own (or worth owning) is an amalgamation of what is available from nature and what is the result of human labor. Georgist entirely natural "land" doesn't exist as a transactable item. Every piece of land that can be transacted has at least been surveyed, and in 90+% cases have been improved through leveling, filling, draining, fenced, etc.. Denying those improvements in land transactions (even with no house sitting on it) is like saying every word in a novel is from a public domain dictionary of common vocabulary therefore the person arranging the words into a presentable form should have no right to sell copyright; or the person selling an apple has no right to collect money because apple just grows on trees and both the atoms in the apple and the water making the apple grow come from the sky. Beyond surveying (or paying for the survey by previous owner), owners of even empty land plot serve a very important function of maintaining land (e.g. thinning over-growth, flood prevention, keeping vagrants off land, keeping dumping away from land, etc..; on top of paying property tax for years and mortgage too if borrowing money)

- Taxing work and commerce discourage work and commerce. We want the opposite of that.

I agree that taxing work should be avoided. Some of the tax on work however is couched in terms of insurance (e.g. social security tax). Regarding taxing commerce, that is quite a different issue when the topic is international commerce: there seems to be a trend pushing the world towards non-local economy, making every region dependent on imports from far places in order to survive. The official reason cited used to be preventing wars . . . however, recent experience seems to indicate the real game is round-robin starvation / freezing of different regions so the banksters can kill bank account holders easily and keep their money or promised pension / annuity etc.. That's why I think federal tax on imports to compensate the social impact of destroying local producers is quite fair.

- Taxing land does not discourage land production, because there isn't any. (Barring edge cases.)

Transactable land is created by human effort, and even most new roads are built by developers (who expect to be paid by home buyers). A Georgist tax system would make housing much much more expensive, literally sucking dry the middle class and working class . . . all for what? to subsidize the globalists and banksters in the name of "free trade"? Look at that century-old cartoon (early in this thread) of Henry George riding on the horse named "Free Trade," it's quite clear by now that George was promoted by the globalists and international bankers, whose game is a locust-like operation sucking each region dry and moving on. That is not justice by any stretch of imagination. Today it's the hapless citizens of Hong Kong, Ukraine and Israel; tomorrow can be us!

- Land cannot be moved or hidden like other forms of wealth can, so a land tax is efficient that way.

Land can not be moved, but assessing value of Georgist "land" (as opposed to transactable land with human improvement already included) is not only difficult but impossible.

- Eliminating income tax and sales tax also eliminates a massive paperwork burden, benefitting the economy.

The impossible task of deriving Georgist "land" value (different from transactable land with human improvement already included) can be extremely labor intensive, politically driven and highly corrupt.

- Land records are public, so everyone should be able to see all taxes paid under a Georgist system.

The amount of property tax disputes are already mushrooming when the rates are 1-2%; if it's raised to near full use value (i.e. somewhere 5-10% current land price, but will change to nearly 100% of land value if a Georgist tax is introduced as land value drops towards zero; see my answer to the first line above, and see the miles of abandoned Detroit homes for real life example what it's like when annual tax due approaches rent), it will be chaos and very little tax will be collected.

The globalist traders and bankers hate Georgism with a white-hot passion,

The outposts they build all over the world seem to embrace Georgist tax systems: HK and Dubai through a land auction system (i.e. eventually the outpost will be handed over to barbarians, in order to remove the liabilities/account-holders after the international banking cartel operation leaves), Singapore through a 10% property tax system, etc..

Then in that 19th century cartoon of Henry George as St. George slaying the dragon (also posted early in this thread), the horse he rides on is named "Free Trade."

The globalists were pushing Georgism as a way for replacing tariffs.

That Georgism sounds familiar:

A Duke owns a whole county in England.
Each person who has a home or a shop on the Duke's land pays rent to the Duke. Every shopkeeper, thatched hut owner, farmer, or blacksmith, et al, pays rent based on the size and value of the plot under the house or business.