patrick.net

The desire to shrink or get rid of IRS is admirable, but turning all IRS agents into land assessors and then 10x that to have "timely and frequent value assessment" is not going to work.

Georgism relies on the assumption that land value can be assessed objectively, and a further assumption that the cost of assessment is minimal. These two assumptions are both false. The entire real estate industry exists precisely because land value (and house value) are not objective: if there were an objective value, there wouldn't be money to pay for the 6% or the tens of thousands of dollars for paying county registration fees and closing lawyer's fees. What happens during a real estate transaction is that: the buyer thinks the value of the property is higher than the contract price plus the closing cost (and mortgage initiation cost if any), whereas the seller thinks the value of the property is lower than the agreed price minus the 6%. Only then a transaction can take place. An even more striking feature about real estate price assessment is that: usually auction price is considered market price in almost all other types of commodities, yet in real estate, auction prices at the court house steps are explicitly excluded from assessors offices in their data sampling because they claim the auction prices are unusually low!

Formulaic and/or computerized valuation wouldn't work either, just look at the iBuyer fiasco. Even the private entreprenuers' algorithms lose money due to their errors, can we really expect the IRS, which has a long history of not being able to maintain their computers and software (a blessing to Americans really), to come up with an accurate assessment model? The best outcome would be them not being able to come up with any algorithm and no tax is collected . . . which would indeed be a blessing for most Americans, but not necessarily for people who depend on government checks to live!

We can also use another part of the recent history to test the main part of Georgist proposal: if we had been on a Georgist tax system in 2019, what would have happened during the pandemic. Since most Georgists agree that in places like SFBA and NYC, property value is almost entirely "land value," a Georgist property tax would collect almost 100% of the total rent on those properties; let's say 85% (a number that the many Georgist websites seem to like), what would have happened? Of course the properties would have been confiscated by the governments due to tax non-payment. Even if the cities had 90% of the total population hired as assessors (yes, 7.2 million assessors in NYC), they wouldn't be able to adjust assessed value down to zero fast enough to reflect the value of property with no rent coming in: A. because all 7.2 million assessors would be home not at work due to the lockdowns (because bureaucrats are sinecures not entrepreneurs; unlike restaurant owners fighting to reopen, bureaucrats usually fought to keep closed down so they can stay home not working!; B. because they wouldn't want to adjust down because their paychecks depend on the money.

In the current system, banks would only lend based on 75% occupancy, and lend up to about 40% of income; i.e. 0.75x0.4=0.3 of total ideal potential market rent to cover PITI (principle, interest, tax and insurance); i.e. only 30% of total ideal potential rent income stream as monthly nut, leaving the other upto 70% (if no repairs) as profit headroom-space for the operator-borrower. So that leaves the owner-operator-borrower the incentive to keep servicing the debt (being shackled to the mortgage) even when there is what most people assume to be temporary cash flow difficulties.

In a system where tax is nearly 100% of rent income (a corollary of the observation that property value being almost entirely land value), the "owner" would have no money to pay for insurance, and no incentive to hold onto any property when there is a recession (never mind a lock-down). The property under such condition would indeed be cheap (near-zero, i.e. another way of saying the property value being almost entirely land value, which is 100% taxed away), but monthly rent to the renter would be even more expensive than it is now! because they have to cover the land tax even if the house is worth zero, and because the tax assessors are not in competition with other tax assessors they would just raise land tax every year without the fear of losing market share to neighboring landlords. The assessors become landlords, monopolistic landlords . . . as we all know what happened in similar situations when Soviet Union had bureaucrats deciding who gets to live in which house (government owned all houses): the housing was cheap but the people had to hand up their daughters' and wives' bodies to the bureaucrats to get better housing (or any housing that is not sharing a kitchen and bathroom with 3+ other families, not 3 other family members but 3+ other different families! because bureaucrats had little incentive to build new houses; the shortage kept up the supply of punanies).

IMHO, the path to reducing tax on income and domestic commerce is going back to taxing external commerce (i.e. international trade) and reducing the size of bureaucracy, because global trade does not currently carry its own cost of negative impact on domestic producers and consequent social instabilities . . . or even the full cost of foreign workers. Much of the job export in the last 3 decades was in effect propping up slave labor operations and financial fraud overseas: almost none of the factories set up in those low labor cost countries paid the workers enough to allow them to retire after working 30-50 years, so in effect was a scam to scam Americans out of jobs using foreign slave/scam labor. That in turn caused the massive dollar backflow that drove down interest rate to ridiculous levels, leading to asset price bubble. Taxing at bubble price levels would result in an even more massive bureaucracy that Americans won't be able to afford after the bubble bursts.

The IRS, like the (non) Fed, isn't American. It is run by the Vatican, who take a cut and channels the money into the BIS and IMF, from whence the City of London takes its cut before returning the remains to the foreign occupied foreign city state of Washington DC. We have been vampirized by these institutions spun off from the unconstitutional establishment of the US Corporation of 1871.

The paychecks of all civil servants in the foreign occupied foreign city state of Washington DC are managed by the Vatican.

Income tax is an immoral way to burden "the people" and should be shunned by everyone who is not a beneficiary of the tax. The complete elimination of the IRS would be one benefit of the Georgian land tax, but the most important reason to support Henry George's land tax is egalitarianism. Let King Charles III pay for the world by taxing his 6+ billion acres of land. Large land owners pay the largest tax.

Once again, Georgist tax at the federal level would run afoul of the Apportionment Clause.

Oh, you could have one. But it would be politically impossible to enact let alone administer. Wyoming would pay a lot less per acre of same value of land than California would.

Increase the number of dependents and get a much bigger tax break! I should have thought of this years ago ...

Ray Stevens - "Juanita And The Kids" (Music Video)

https://www.youtube.com/watch?v=_aV8L9kX4xg

Reality says

almost none of the factories set up in those low labor cost countries paid the workers enough to allow them to retire after working 30-50 years, so in effect was a scam to scam Americans out of jobs using foreign slave/scam labor.

So? What they pay or not pay is not our problem.

And AI's eventual boost to automation is going take away a shitload more jobs than imports ever did. Esp since it is going to hit sectors previously immune, like back office work.

Makes it look like blacks and Hispanics get audited more.

How switching taxation from income to land eliminates the tax agency? It doesn't. The whole premise is false.