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A Single Tax On Land


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2008 Feb 12, 12:47am   13,191 views  130 comments

by Patrick   ➕follow (59)   💰tip   ignore  

Henry George

A while ago a reader told me about Henry George and his idea of a single tax on land. I've now read an abridged version of Henry George's book "Progress and Poverty" and it makes a lot of sense to me.

The basic idea: there should be no income tax, no sales tax, no tax of any kind except a tax on the value of land (not on the buildings or improvements). You want to encourage earning incomes, and encourage commerce. You want to discourage lazy rent-seeking.

No one makes land, so why should some people profit forever from getting rent on something they did not produce? It's also very easy to enforce. There is no way to hide land, and land tax records are public.

Henry George makes a good argument that increasing inequality is caused mainly by the consolidation of land ownership, and that taxing land is the way to keep societies from getting too stratified and corrupt, and to encourage innovation and hard work. His description of watching San Francisco develop seems to support the idea.

Could it work? Would it just cause incredible urban sprawl? Would rich people just own gold rather than land? But then we'd all benefit from cheap land, and by extension, cheap housing...

#housing

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91   northernvirginiarenter   2008 Feb 12, 10:01am  

@Ed

Yup this is the nasty beast, the Dulles Greenway. 10 miles sounds about right, it's $3.50 each way 2 axel during prime commute hours, plus another $0.75 each way if you pass through the toll extension at Tysons in Mclean to Arlington/DC. So roughly $8.50 per day x 20 commute days per month = $170.00 per month. It is privately owned by the "Toll Road Investors Partnership II (TRIP II)". This is in turned owned by an Australian private company, Macquarie Infrastructure Group. I believe our friends at KBR (Kellogg Brown and Root) also own a big stake.

And the lovely exburb of Ashburn (aka as*burn) is obviously the locale of which I speak. I live in Middleburg area (horse country, my ex loved the horses. I don't recommend the horse women,btw and OT).

The Va State Corp Commission, which is the regulating body over the road, just approved annual increases to $4.80 each way on the greenway portion by 2012.

A little known fact is it was built to some degree to divert the sheeple and sprawl away from the hamlet of Middleburg by the rich old money around. Better to point that thing towards Leesburg than be subject to development which would have resulted otherwise. This area is home to the Mars families, Mellons, Duponts, you name it. Even Sandy Lerner, co founder of Cisco, has big place here. Shelia Johnson is another Billionaire who is making waves around town with a new resort.

92   SP   2008 Feb 12, 10:17am  

justme said:
Personal wealth should decay exponentially with time through wealth and inheritance taxes, so that unproductive wealth (aka. sitting on ones fat ass) is penalized. The time constant should be such that amassed wealth is mostly gone within 3 generations.

Whenever some jackass starts talking about what should happen to other people's property, I generally tend to stop paying attention. Nothing personal.

93   justme   2008 Feb 12, 10:21am  

Ed S and NVR,

Goes to show exactly what happens when roads get privatized.

I have an idea: Let's privatize our FREEDOM(tm). Then you can pay for your freedom anytime you need some. Obviously, freedom is much too valuable to be squandered by the gubbermint. They are always so wasteful and stupid. Privatize the constitution, too, while we are at it. In fact, why don't we privatize Congress while we are at it. Clearly, everything will be much better if Congress is run for profit(*). We'll get the laws that we pay for, what could be better than that,

(*) Yes, I'm turning up the sarcasm to the max here. But you get the idea.

94   Peter P   2008 Feb 12, 10:24am  

Goes to show exactly what happens when roads get privatized.

I still don't see the issue. What is so bad there?

95   justme   2008 Feb 12, 10:32am  

SP,

Did we not all talk about what SHOULD happen to other people's wealth and income when we discussed property tax and income tax? I don't think it was just me (ahem). Or was the sin the explicit use of the word "should" (your emphasis)? I don't think that deserves being called a jackass. Chill, dude. Peace out.

96   HelloKitty   2008 Feb 12, 10:41am  

I for one am sick and tired of having to consult the tax code before I buy stuff, sell stuff, earn money, sell stock, buy stock, buy a bond(tax free muni bond?!), or quit a job, or take a job, or get a loan, or pay a loan off.

And the 'december rush' to buy crap I can write off is redonkulous. Athough I must say, being self employed is awsome for taxes compared to W2. But you pay for it in tax hassles.

The only way to 'win' is to be super well off then youd dont gotta worry. But I STILL see these people with a 1m mortgage and a 100k heloc since that is currently the most you can write off.....so even the very wealthy are running circles around the tax code...the savings/costs are just to high to ignore the #*$(@ tax code.

97   justme   2008 Feb 12, 10:44am  

Every few months I start feeling stupid when I realize that Peter P actually agrees with me and is just being the devil's advocate or the court jester, whatever you want to call it. Right??

(This one ought to be good for a "Huh?"")

:-)
:-)

98   northernvirginiarenter   2008 Feb 12, 10:48am  

@Peter P

Its like the Rhine in Germany, all you needed was some swords, some wenches to keep the swords smiling, build yourself a defendable castle and set up a gate on the river and extract a bounty from everyone passing through. What's wrong with that, anything? Its just exacting your tax from the sheeple, no? You've got to eat and you were the one that was smart enough to get the wenches for the henchmen, right? Or title from some ancestor long ago who accumulated some wealth and favor from someone.

Justme has it, where do you draw the line Peter? Just what is and should be a community function and what a governmental one? Should we outsource the entire US military industrial complex?

Now these ozzies guys talk "Reasonable return on Investment". They make arguments like, "think about the tradeoffs, how much time is saved by users, auto maintenance, gas...we offer huge value. We are saving people money and the environment while we are at it. We are green!"

That road is permanent, and I for one was not given any choice in the matter. It will be here for a very, very long time.

Its the tragedy of the commons also.

The unfortunate thing is, from my readings there is an enormous trend to deploy private equity on public infrastructure. Lots of this money chasing these deals. For instance, the Carlyle Group is chasing after a rail project here with Arab oil money. Its starts to sound almost a little tin hat, but we could end up like the Rhine in Germany, peasants paying tolls to private concerns just to move around the country. And these private concerns just happen to be owned by foreign sovereigns.

China seems awful freewheeling with all that foreign reserve, maybe we could talk them into building bridges and infrastructure for us?

99   empty houses   2008 Feb 12, 11:19am  

ESR
I'm math challenged. Can you explain how $3 per day equals $1700 a year.
All due respect my brotha, luv your stuff.

100   B.A.C.A.H.   2008 Feb 12, 11:27am  

Really I wish we had a toll booth at the County Line of highway 237.

There was a referendum in the 1990's to impose a regressive sales tax on residence for improving public transit and expressways in the county, and it included 237. It passed and so 237 got widened along with the other improvements.

But almost all the benefit of 237 comes for nonresident wave slaves (and so, their employers) who commute from the East Bay and beyond, many of them from their MacMansions in places like Antioch or Tracy or Mountain House or whatever, congesting the roads, polluting the air,creating more demand for petrol that over 2000 Americans have died for in a war to secure, and now making a groundswell for further debasement of our currency.

The least they could do is pay a toll.

101   anonymous   2008 Feb 12, 12:09pm  

I got the math wrong somewhere, it's $1095 a year. And of course the avg. american is spending more than $3 a day on food. So, just figure the amount represented by 10% tax (it's actually a bit more than that here in Arizona) and go from there.

This is one example of how regressive taxes are in the US. So, when people say a 15% flat-tax is regressive, well, sure it is, but the taxes in place now are much, much more so.

102   B.A.C.A.H.   2008 Feb 12, 12:09pm  

Peter P Says:
February 12th, 2008 at 10:48 am
"We do need strong military though. The world is a dangerous place. Who knows, perhaps Europe will become hostile in a few decades."

Hostile, Europe?

There's another demography genocide going on there, too. But different from China, instead of just unborn femaies, it's unborn white babies. Politically correct "real" modern Europeans truly do honor their modern values of equality and egalitarianism when they practice infanticide.

If you saw the news from France a year or two ago, it doesn't take much imagination to figure out that there's a lot of nonwhites in Europe who evidently don't feel like they're being treated like they're "real Europeans".

And why should they feel so? - they haven't adopted the infanticide ethic of their adopted countries. So it may not be too many decades before the "European Union" demographic-morphes into the "European Islamic Republic"

103   anonymous   2008 Feb 12, 12:14pm  

Sybrib - the BA is one area where a person can live without a car and avoid one HELL of a lot of expense.

As per AAA figures, a few years old, the avg. McConsumer is paying about $8k a year to own and operate a car. That's about $13k a year they have to earn, since it's after-tax money.

Cars are a huge huge money sink. You can really come out ahead going car-free and just renting one when needed for a trip, or taking a cab once in a while, etc. It is not as "convenient" as having a car or three, and people see YOU not a huge penis-extension, so it can be quite a hit to the ego, but hey, for roughly $1000 a month per car eliminated? You can do it!

And most McConsumers are not going to start crowding up the bike lanes and bus stops with you, they'll keep right on driving and spending, so don't worry about that.

104   anonymous   2008 Feb 12, 12:15pm  

So, if you go car-free, who cares if 237 becomes a toll road? So you pay a little toll once in a great while when traveling by car, big whoop. Let the wage slaves driving to/from Antioch pay it lol.

105   anonymous   2008 Feb 12, 12:15pm  

See? Just talk about going car-free and end up in moderation.

It's Un-American!

106   anonymous   2008 Feb 12, 12:16pm  

LOL hostile Europe, I'll give ya hostile Europe....

Read dis: http://www.guardian.co.uk/world/2008/feb/11/usa.theairlineindustry?gusrc=rss&feed=networkfront

107   B.A.C.A.H.   2008 Feb 12, 12:23pm  

esr--

So many of the beautiful cool and hipsters just love complaining about the inconveniences they endure jetting setting all over the place. So talking heads who dominate the news media are even cooler and hipster-er so they elevate their relative importance of air travel and themselves and their air travel even more.

Just about all the flights were grounded for a couple or so days after 9/11. The world didn't stop turning (though, the rate of greenhouse emission might've abated a little bit).

I think if Europe wanted to be hostile they'd do better than that. But it will take awhile before the establishment of a European Islamic Union. Won't happen overnight.

108   empty houses   2008 Feb 12, 12:49pm  

yes, I was in Stockholm last year and there were some african guys hanging out and seeing who was the most aggressive towards the passing females. They were just like american blacks. I'm not sure why I was surprized or had different expectations. They were basically like a bunch of east Oakland thugs.
Swedes seem very calm and passive. It seems that if you want to get away from the barbarians, you move to colder climates. I wonder how those african dudes hold up in the winter time with the short days.

I think Europe needs to wake up and get control over their borders, if it's not too late.

109   Peter P   2008 Feb 12, 1:03pm  

Every few months I start feeling stupid when I realize that Peter P actually agrees with me and is just being the devil’s advocate or the court jester, whatever you want to call it. Right??

I am more agreeable in person. :)

110   Peter P   2008 Feb 12, 1:04pm  

I think Europe needs to wake up and get control over their borders, if it’s not too late.

It is not a border issue. It is a welfare-state issue.

Dismantle the welfare state and we need no borders.

111   Peter P   2008 Feb 12, 1:09pm  

It seems that if you want to get away from the barbarians, you move to colder climates.

I have a theory: in "colder" places, there are four distinct seasons, which allows a variety of food. I believe the development of a culture has much to do with its cuisine.

112   anonymous   2008 Feb 12, 1:12pm  

No, it's not the welfare state, it's that Folkishness has been made just about illegal by the You-Know-Whos who control so much over there, just like over here.

Germany in the 30s and 40s had a wonderful welfare state, as long as you were German. The successful welfare states of the Scandanavian countries work because there are not a hell of a lot of non-Aryans there.

Political Correctness is going to kill Europe and kill off a lot of whites. I hope we wake up in time.

Birthrate is negative in white European countries, as it should be to be in balance with Earth, all fine and good. The problem is the 3rd-worlders, the nonwhites, need to have their birthrate decreased MORE.

113   northernvirginiarenter   2008 Feb 12, 1:20pm  

Interesting times in which we live. I've tried to ignore the immigration issues as much as possible, as I've little patience with the ignorance, intolerance, and racism that often colors the discussion.

Around here, eyes are on some of the most aggressive anti-illegal immigrant measures nationwide. Local LE can ask for papers now and execute some deportation process without getting INS or Feds involved. Its had an interesting economic effect. Two large latino communities are up in arms and are being decimated. Folks are fleeing. All the business infrastructure supporting these communities is crashing. Of course, and big suprise, housing values are also crashing in these areas. Local tax base is crashing. Massive looming government budget shortfalls.

You get what you ask for. Its all so unfortunate, on many counts.

I've been reading about the coming "boomer" bust, its interesting that we could see a massive exflux of older americans to "retire" in sunny Mexico, as they cannot afford to do so here, while at the same time realizing an significant influx of younger production workers. A fine trade for us in my opinion.

The only valid reason we might not want more immigrants within the US is that our lifestyles are so environmentally unfriendly, the planet cannot take any additional americans.

114   Peter P   2008 Feb 12, 1:23pm  

The successful welfare states of the Scandanavian countries work because there are not a hell of a lot of non-Aryans there.

They kind-of work because they have natural resources.

Canada is quite diverse yet they have fewer issues. This is because they have gold, oil, water, timber, etc.

The negative birthrate in Europe is partially caused by the welfare state with high tax rate and small homes. There is no reason to have children.

115   Peter P   2008 Feb 12, 1:27pm  

The only valid reason we might not want more immigrants within the US is that our lifestyles are so environmentally unfriendly, the planet cannot take any additional americans.

How so? Pollution is much more than carbon emission.

The concept of "global warming" is man-made.

The concept of "global warming is man-made" is make-believe.

116   northernvirginiarenter   2008 Feb 12, 1:39pm  

@Peter

Respectfully, I strongly disagree. I think you stand alone at this point, with maybe Mobil's paid pseudo-scientists, as the last remaining voices against man made climate change. The evidence is so strong, wide, and compelling I can't even begin to address it here with you.

We are radically changing our environment, with unknown causes and effects. And consequences.

117   Peter P   2008 Feb 12, 1:45pm  

I do not disagree that the climate is changing. However, I am not convinced that such change is caused by human activities.

Here is a brief history of global warming:

http://www.john-daly.com/history.htm

The world faces much greater threats nowadays. Don't get me wrong. I love the environment as much as anyone. However, to me, it is more important to have clean drinking water aka blue gold.

118   justme   2008 Feb 12, 2:22pm  

Believing in man-made global warming (or not) is simply a matter of whether one believes in the "greenhouse effect". I have no scientific doubt about the greenhouse effect.

http://en.wikipedia.org/wiki/Image:Greenhouse_Effect.svg

119   northernvirginiarenter   2008 Feb 12, 2:30pm  

Man is certainly dumping enormous amounts of carbon dioxide into the atmosphere. And through ice core studies and sound science, it has been proven that there is a direct relationship between global co2 content and temperature.

It's interesting that a seemingly small man made activity can have a huge effect on climate. Researchers have been studying the contrails left by jets since we first started flying, with much debate on their effects on our climate. These are the white trails that look like long clouds you see high in the sky which are of course the results of exhaust particles, from the burning of jet fuel, creating water condensation thus forming man made exhaust "clouds" (apologies as I'm sure most are already well aware). The grounding after 9.11 for the first time offered researchers the opportunity to have a solid look at the debate. Know what they found? The average temperature over the US increased a full 2 degrees during the daytime, as the contrails were not there reflecting sunlight. At night, without the contrails trapping heat through a greenhouse effect, we were a full 2 degrees cooler.

At once amazing, and to me frightening. Man's activities absolutely can have an effect on our environment.

120   SP   2008 Feb 12, 2:34pm  

justme Says:
Or was the sin the explicit use of the word “should” (your emphasis)? I don’t think that deserves being called a jackass.

Sorry, no personal affront intended. I just have very little patience for income-redistribution schemes masquerading as "progressive" ideas about what should be done at the expense of other people.

121   SP   2008 Feb 12, 2:41pm  

justme Says:
Did we not all talk about what SHOULD happen to other people’s wealth and income when we discussed property tax and income tax?

There is a difference between asking for the government leaving people's earnings the hell alone for the most part, and advocating forced confiscation of their wealth so that it can be squandered inevitably on some bureaucrat's social1st wet-dream.

122   Peter P   2008 Feb 12, 2:45pm  

At once amazing, and to me frightening. Man’s activities absolutely can have an effect on our environment.

Were the effects "global" in scope and "climate" in nature?

123   Joshua911   2008 Feb 13, 12:18am  

The Bay Area in particular is susceptible to the problems caused by bad land use policy coupled with bad tax policy. There is so little land available in the cities as its been locked out by anti-growth laws, that its hard for workplaces to open that can hire poor or working people to even pay taxes like sales or income taxes.

A tax on land helps pry land into use where it SHOULD be used rather than forcing land into use that requires a two-hour commute each way.

Most cities (with some exceptions like Philadelphia, New York, Scranton, or Detroit or SF) rely to a great degree on the property tax. As a source of revenue, it is stable, predictable and easy to administer. Unlike wage, business or sales taxes, it is hard to avoid.

Yet, one part of the property tax has problems equal to other taxes on labor and capital: the property tax on buildings. Countless studies and economists have proved that high tax rates on buildings have a corrosive effect on investment, construction and rehabilitation of existing structures.

Old but classic industrial and commercial properties that might have been warehoused or mothballed while waiting for a new use were knocked down by the dozen, so that the (often absentee) owner could avoid taxes. A prospective homeowner deciding where to live would logically choose a site in the lower-taxed exurbs.

The Good
The other part of the property tax is a tax on land values. The effects of a tax on land values are very different.

First, a homeowner or a business does not create land values. The community, most often through government investment and services, creates land values. If the community creates those values, the justification for the community recouping those values is clear.

Second, the current system of a low tax on land values leads to land speculation and private land banking. The holding cost of land under our current tax system assures that the landowner can hold out for a very high price for a very long time.

Third, a higher tax on land values (coupled with reduction in building taxes) creates an incentive to sell that land, or do something with it rather than waiting. In other cities that use land value taxes, real estate markets start to work again. Neighborhoods recover. SF's case is very particular, however.

There are enough subsidy, abatement and giveback programs to make construction in SF a bonanza for the private market. Yet, many authorities have identified the high cost of land and assembling land parcels of the greatest obstacles to writing rental housing. When land is freed for development or sale on the open market, the cost of that land forces the builder/developer to make sure high-end properties are constructed. The high cost of land can be correlated into high costs for working and poor residents.

The land tax tax works where used, and when used strongly, like Singapore or Sydney, it provides a great city for all.

124   justme   2008 Feb 13, 12:42am  

NVR,

Loved the Rhine analogy. Also made the point about creeping feudalism quite nicely.

125   empty houses   2008 Feb 13, 12:47am  

Methane gas is worse than CO2 because no ones aware of it being a greenhouse gas. Rice fields around the world and decaying natural materials create more greenhouse gases than man creates. Yes, there's global warming but the idea that man has created it and can somehow control it is a farce. It's another false economy like Y2K. It's something for liberal hippie dipshits to latch on to and be self righteous about.

126   justme   2008 Feb 13, 12:48am  

Joshua911.

I agree land hoarding can be bad, and proper land taxation can do something about it.

But what do you think about incentives to make land use more effective, meaning building up rather than out (sprawl). All the people who commute far and wide to get to silicon valley could easily live here if we built high-rises, shopping and office buildings next to light rail and caltrain only.

That problem seems to be more along the lines of zoning and NIMBY-ism than taxation, I would think.

127   empty houses   2008 Feb 13, 12:53am  

Predicting the world is going to end will always be very profitable. Convince the masses that something bad is going to happen and then sell them something. It's another way to fleece those with some spending money, it always will be.

128   justme   2008 Feb 13, 12:59am  

Empty houses,

The CO2 emissions from decaying fields and forests is in balance with CO2 absorption in growing fields and forests (minus deforestation, of course, which is another problem).

Burning oil and coal excavated from the earth is what created the imbalance. The concentration of CO2 in the atmosphere has increased from 280ppm (part per million, or 0.000280%) to 380ppm in the last 150 years or so. See

http://en.wikipedia.org/wiki/Carbon_dioxide_in_the_Earth%27s_atmosphere

129   Joshua911   2008 Feb 13, 4:47am  

Dear Just Me:
The way a land value tax works in the US (and elsewhere) is not just to up-tax land where we want land used, but to down-tax the actual labor and capital that goes into building structures.

Zoning plays a huge role to be sure, often to prevent development. But if in Area A, if you zone for density, AND tax land values, the community will recapture increases in land value that come from the zoning change as well as rewarding someone who wants to spend their money and work on a building.

The desirability makes Area A the "place to be" as opposed to Area B, which may be far away and require a long drive or even new infrastructure.

In the end, though, zoning to promote Smart Growth may exist, but if the financing is hampered by a bad tax policy, you won't get the growth where you want it.

NIMBY-ism is a tough nut to crack! My feelings run along the lines of "If you want no one in your backyard, then move to a place where it's just you. But, you have to pay a price - in dollars and cents - for the privilege."

Taxation is actually one of the more powerful forces in society. That's why most government taxes are hidden in paycheck deductions, or in a sales transaction. Taxation can be harnessed to help society, not fragment it.
Cheers, josh

justme Says:
February 13th, 2008 at 8:48 am

Joshua911.

I agree land hoarding can be bad, and proper land taxation can do something about it.

But what do you think about incentives to make land use more effective, meaning building up rather than out (sprawl). All the people who commute far and wide to get to silicon valley could easily live here if we built high-rises, shopping and office buildings next to light rail and caltrain only.

That problem seems to be more along the lines of zoning and NIMBY-ism than taxation, I would think.

130   lvtfan   2008 Feb 13, 4:49am  

Justme asks about sprawl and incentives. It seems to me that Proposition 13 creates amazing lock-in effects, keeping single-family homes on property for many decades beyond when under a more responsive system, those SFH's would give way to multi-family homes.

The concept makes some of us itchy. We tend to like things the way they are, the way we remember them. But if you look at a healthy neighborhood other than one to which you're emotionally attached, you're likely to notice that it has changed over the past 20, 40, 60 years, and that the changes generally represent progress. Yes, it may be that some lovely older structures may have been sacrificed in the process. But today, a 1-acre lot that 40 years ago housed a single-family home may now have a mid-rise building that houses a dozen families. That's a very good thing if that site is close to public transportation, existing schools, and all the other kinds of infrastructure that is funded by public investment. Far better than having the other 11 families' workers commuting from the current fringe, alone in their own cars or even via the best of public transportation system.

Prop 13 has resulted in it being rather inexpensive for the current long-time owners of, say, Marin County or Silicon Valley housing (and for that matter, commercial property) to stay put. Where a new owner of a, say, $1 million property is paying about 1.25% of that market value in property taxes, or $12,500 per year (or about $34 per day), the guy who owned the identical neighboring property but bought it in, say, 1975, for $250,000 (I'm guessing -- could be lower, I suspect), would be paying property taxes on an assessed value of about $470,000. So if I've got the 1976 value right, he's paying less than half what his new neighbor pays. Rising property taxes are not going to cause him to consider moving, and in fact that lock-in effect will discourage him from considering moving even if his health declines, even if his ability to care for a house sized for 4 or more people declines, even if he no longer needs to be close to the amenities -- jobs, cultural, etc -- that drew him there in the first place.

And don't forget that that "million dollar property" is likely a fairly modest house -- a home that would sell for $200,000 or $250,000 or less in many other parts of the country. The difference is land value, which has been driven sky-high by the finiteness of land, particularly along the coast. (I have a hypothesis, for which I've not yet seen any definitive proof, that part of why land costs are high on the coasts and in the Chicago metro, aside from the facts of ports and infrastructure that has grown up around those ports, is that instead of population being able to spread out in a 360 degree radius, as is the case where only a river divides a city from the adjoining area, the coasts have only 180 degrees of expansion area.)

A Federal Reserve Board study published in May 2006 suggested that on average for the top 46 metro areas, land represented something like 51% of the value of single family housing stock in 2004. This ranged from a low of about 20% in Oklahoma City to a high of 88% in San Francisco metro. The lowest metro in California was Bakersfield at 62%. Boston and NY were in the high 70s, as I recall. Outside the 46 metros, I think the land share averaged something like 28%.

It seems to me that at some point, single family homes in the close-in neighborhoods will yield to multi-family homes, if we have the incentives right. California's Prop 13 disrupts those incentives, and that has made worse the problem of long commutes (which was already an issue before Prop 13).

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