Funny thing: Henry George is complaining about poverty and homelessness in California in 1895.
Funny thing 2: Land Value Tax is recognized as a great tax both by right/left win economists (Kruger, Milton Friedman, etc).
http://buildengineer.com/www.paulbirch.net/CritiqueOfGeorgis...
Key points are in section 7-8. Key paragraphs:
>The form of land-use towards which the single tax pushes us is one in which the countryside is randomly dotted with perpendicular towers (tapering wastes land), 200 metre or so on a side, 2000 metre or so high, each tower a complete small town of 50,000 or so, inclusive of apartments, shops, offices, services and factories, but paying no more tax than a single suburban house. The internal economy of those towers will have some similarities to Type III market Georgism, but with the crucial distinction that no one who wishes to cease renting a unit when the current lease expires has any further liability; finding a new tenant is the responsibility of the tower owner. Most of the surrounding countryside will be abandoned or common land and thus effectively exempt from taxation.
>That doesn't mean that existing towns would just disappear — there is too much already invested in them — though dereliction would tend to set in over much of the urban area over the course of a century or so as abandoned properties reverted to common ownership. ...
>The problem here is that although buildings and other on-site improvements are supposed to remain purely private property, there is no easy way a landholder can remove his property without destroying it if he is outbid in the annual auction. A competing bidder might therefore risk paying considerably over the odds in the reasonable expectation of getting free use of the buildings until the following year, when the original owner may end up paying the market rental on the full property value, not merely the site value, in order to guarantee access to his own property. A sufficiently cheeky tenant could even demand rent from the property owner for allowing the property to remain on the tenant's rented land!
[1] of the British Interplanetary society; found just now that he passed in 2012.
The indifference vote thing is a fantastic idea, so now I know I'm a Geo-Libertarian.
A fatal flaw in this essay is that it mentions LVT as a single tax. It is a bit unfair because originally, when Henry george proposed it, total public spending was very low (under 10%), not the 35% of GDP that it is today. LVT can account for 5-10% of GDP, and thus in our modern times it is only applicable as a local tax.
The second issue is that it talks about the disadvantages of taxing this way, or the consequences, of which there always are some, but he does not weigh it with property taxes (which exist today), or sales taxes. There are no perfect taxes, its just the "least bad tax".
Granted that a state like california already has an issue with property taxes themselves as they are not collected how they should be.
Nevertheless, its the best piece I found yet against LVT.
1) "LVT is a positive good and governments should try to collect the entire site value of every property."
vs the more moderate one that:
2) "LVT is the least bad tax and much preferable to taxing positive economic activity like labor, investment, and exchanges."
I think Birch makes a good point that LVT, like all other taxes, will cause horrible distortions once it's high enough. I agree that it's hard to dispute 2), but that's a long way from the 1) promoted in Progress and Poverty.
His other good point, I think, was that you don't actually want to tax the site value, but the site value's net contribution from the other sites (i.e. subtract off the positive externalities the site throws onto others), which in practice is hard to calculate, since you only observe O(n) values (land and structure prices) but need to observe a data point for every pair of properties, O(n^2), to calculate the net improvement.
I disagree intuitively with his "Rebuttals".
1- he claims its hard to know the value of land. It is not: there is a big market for land and you can absolutely appraise it.
2- He claims they are regressive, and puts two examples: a young man in a mcmansion vs an old man in a bungalow. Well, the old man is taking more space than the young man. It is most obvious in a place like the bay area where 6 figure salary people live with 2+ roomates while old timers have a single family home and pay reduced prop taxes. His second argument is that old people that have homes would be hit most by this tax, and that is bad. I say hell no: they have a house they can sell. Why does a 19 year-old minimumn wage worker pay taxes to subsidize an old person that has a home?
3- Ideologically he introduced also the issue with the capacity to pay. Of course taxes have to be payable and counter-cyclical, but that is not fixed by a sales tax or VAT which is super cyclical. Second, the payable part implies that taxes have to be levied based on capacity, not on value. So its ok to not tax a poor robber, but it is ok to tax a rich productive person. This ideology seeps into the previous argument of "old people dont produce, so they shouldnt pay taxes, while young renters do produce and should pay taxes".
1) The article repeatedly leans on the concept that the municipal tax itself is insignificant and unimportant, that it's ability to grow or shrink is bounded, and that implementing an LVT will raise taxes overall.
An LVT is supposed to supplant other forms of tax - you aren't supposed to be paying income tax, school tax, etc. in addition to it. The increased property tax should be a wash at the individual level unless you're making poor use of land.
His own priors indicate that municipal taxation is not LVT-like, but he claims that it is.
2) He claims that the rich won't care about the tax increase (so why not increase revenue there?) but that seniors that are land-rich but wealth poor will get liquidated.
He doesn't bother to think about what this means - land values decrease as non-productive land is returned to the market. He claims renters will get squeezed stating that there's only housing supply where there are profits. Sure, but how would it look? Would we be out popping medium size detached dwellings in suburbs that create net-negative income for cities in the long term (but are profitable for developers and speculators), or would it favour densification in areas already served by infrastructure? No argument is provided.
Basically the key point made that is decently supported is "there will be pain during a transition between the two systems", but I don't think anyone believes otherwise.