Letter from a Young Distributist: Georgism and Distributism
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progressandpoverty.substack.com
Such a concept practically does away with the very basis of the ancient differentiation of people into classes according to the kind of work done. This does not mean that, from the objective point of view, human work cannot and must not be rated and qualified in any way. It only means that the primary basis of tbe value of work is man himself, who is its subject.
This leads immediately to a very important conclusion of an ethical nature: however true it may be that man is destined for work and called to it, in the first place work is "for man" and not man "for work". Through this conclusion one rightly comes to recognize the pre-eminence of the subjective meaning of work over the objective one. Given this way of understanding things, and presupposing that different sorts of work that people do can have greater or lesser objective value, let us try nevertheless to show that each sort is judged above all by the measure of the dignity of the subject of work, that is to say the person, the individual who carries it out.
Laborem Execrens, 1981
I'd argue that transitioning is an extremely hard problem. The Georgist system taxes property at extreme rates. In particular, the taxes on property ownership are supposed to capture the entire value of renting the property. This means that people owning property with a mortgage would suddenly be forced to sell their property at the near zero prices that Georgism is designed to foster. This is likely to lead to many unhappy homeowners as well as significant loss of capital for all the entities banks sell mortgages to. I think this problem is severe enough that in order to transition to a Georgist society a government might need to absorb every mortgage in the country.
Mortgage debt in the US is currently estimated at 17.6 trillion dollars, slightly more than half of the 30.5 trillion US national debt. Such an expense would be vaguely possible, but extremely sizeable.
I don't see a good way to get to Georgism without government absorbing the mortgages as the fallout to the economy of all that debt suddenly having little in the way of assets underlying it is a huge problem. I do agree I exaggerated with my claims of $0 since the improvements on the property would have some non-zero value, but land represents the majority value of most houses and the land value would be effectively reduced to zero by the change in value from the taxation. That would be enough to put most mortgages underwater and the asset would no longer sell for the cost of the mortgage. I don't see government doing this and just saying "too bad, investors absorb the loss".
"Another basis on which it is argued that greatly increased taxes on land are infeasible is that if land values were to fall precipitously, the financial system would collapse. It is true that many properties have mortgages that would exceed the value of the property if land taxes were increased significantly. This makes it necessary to think carefully about who should absorb the decline in aggregate asset value that would accompany a significant shift toward taxing land. Nevertheless, it is possible to plan for a restructured financial system that would have shed its dependence on land as collateral." http://www.wealthandwant.com/docs/Tideman_CTL.html#I._Taxing...
"Furthermore, as we discuss in more detail in our paper, the number of net winners from this reform would far exceed the number of net losers, who, if necessary, could be exempted or compensated at little budgetary cost. The winners would even include almost all of the very rich, who not only hold the vast majority of US land but who as a rule are also very well diversified, with land only accounting for a small share of their portfolios. They would benefit greatly from the countervailing cuts in labour and capital income taxes." https://voxeu.org/article/post-corona-balanced-budget-fiscal...
"It came as a quite natural development that also the question of incorporating these ideas into Danish Law was raised. From the very beginning, Jakob E. Lange was convinced that the problem of indebtedness, especially the mortgage debts, must be solved when the full Land Rent, or Ground Duty (in Danish "Grundskyld") were to be collected for a public revenue.
When in 1889 Henry George was on a speaking tour in England, Jakob E. Lange made use of the opportunity and went to England to meet him and to discuss the problem with him. The memoirs of Jakob E. Lange relate that Henry George completely accepted his standpoint; an eventual full Ground Rent which were to exceed the present property taxes ought to be proportioned between the title owner and the mortgage holder. This agreement between Henry George and Jacob E. Lange is also found expressed in the later correspondance between the two." https://cooperative-individualism.org/bille-frank_danish-ame...
As a first approximation, people would continue to hold title to the land to which they now hold title, and would continue to owe whatever money they now owe. But compensation could be sought on a case-by-case basis, by individuals who stood to bear the costs of the moral accident disproportionately and did not have substantial assets. Any financial institutional whose continued existence was threatened by the transition would be bailed out in exchange for a significant fraction of its equity. The costs of the compensation would be paid by a capital levy.
I don't think this proposal is feasible. Many people owe more than their entire net worth on their primary residence. The plan is to tax land to the point that the value of land for that residence goes to zero leaving only the value of the structure on that land. The structure value is often a small fraction of the total current value of the home. This puts people sizeably underwater and would result in a fair number of people forcibly vacated from their homes as banks sold the structures to pay the mortgages.
The bailouts of various financial institutions would be expensive, as would the system shocks from the various losers on the mortgage debt. Lastly, many people in old age sell their homes to pay for living in a nursing home until they die. This option would become infeasible if we drastically reduce the value of their homes and given their old age they would have no viable alternative to generate alternate capital.
His proposed solution to this is a vague and nebulous "case-by-case" compensation for disproportionate costs without adequate assets. Depending on your definition of inadequate assets and disproportionate costs the total cost of this compensation can range from nearly $0 to the vast majority of all current property values. Keep in mind that a sizeable percentage of the population owns a single family residence that is a disproportionate portion of their net worth and generally factors into their retirement plans. I'd argue that every such individual is disproportionately impacted and does not have adequate assets.
Zillow estimates the total residential property market in the US at $33.6 trillion dollars. I can't find good statistics for single family owners vs landlords but it's easy to assume that close to 50% of the market will be situations I described. This makes it quite possible for the homeowner compensation to be in the area of $16.8 trillion dollars.
Similarly, mortgage debt is often held by pension funds that would struggle to pay their pensions out if that wealth suddenly evaporated or was vastly reduced due to people abandoning their homes. The current US residential mortgage market is $17.6 trillion dollars. Assuming half of this qualified for hardship we'd have $8.8 trillion dollars of subsidies.
There are other institutions and individuals adversely effected and a program to adequately compensate them all may well cost as much as the current US debt which is currently $30.5 trillion dollars.
I think Tideman vastly understates the problem. The introduction of LVT would arguably be the largest wealth transfer within a nation in human history and by his own admission mostly transfers wealth from the old to the young. It has sizeable risk of transferring wealth people can't spare, particularly transferring wealth away from those no longer work and cannot easily generate new wealth.
Fred Foldvary also discusses the transition and who would ultimately need compensation in https://www.progress.org/articles/the-transition-to-land-val...
I see no evidence that it would be difficult in the slightest to disentangle such things but I’m willing to be convinced otherwise by those who have done an actual analysis of the issue.
Of course, as Foldvary notes, “First of all, compensation for the loss of land value is not morally required. The typical landowner has been receiving an implicit subsidy from the government, as public goods generate higher rent and land value. One could argue that justice requires the title holder to pay back the past subsidies.”
What you see as a problem is not an ethical or economic problem merely a potentially political problem.
The current real estate system on the other hand is a fundamentally different beast. Everyone who doesn’t want to be homeless has to participate as either a renter or purchaser. Years and years of government policy have made the former decision ill advised as the financial benefits to ownership are quite large. Despite this I’d agree with the proposal if all that was being done was the removal of a subsidy.
The government is not merely removing a subsidy in this case though. They are intentionally cratering the housing market. Years of government policy has encouraged over-participation in that market. For those who want to change things to argue the government is 0% morally culpable and the individuals are 100% morally culpable is disingenuous. His argument seems to be that the financial culpability follows from the moral culpability.
He even argues that individuals participating in a system owe backwards subsidies because the government did the morally wrong thing. This amounts to intentionally bankrupting most home owners, including depriving them of funds needed for retirement. This is done in a single sentence hand waving fashion without any sort of impact analysis.
I’d argue there is a substantial problem here that spans the ethical, economic and political categories. But you seem to believe the government is 0% culpable and the individuals responding to incentives are 100% culpable. I’d argue it seems more likely you don’t actually believe that just don’t want to pay for the costs of a fair transition.
This is an absurd standpoint. You're going to ask 64.8% of the population that own homes, a quarter of who are nearing retirement age, to pay back what for all intents and purposes is their retirement fund? If you want to talk about morals and ethics this is clearly an immoral position. Even if we consider the assumption that the increase in value of their property is some form of subsidy, they entered into this contract in good faith as a way to provide for themselves and their families as they age and eventually retire or are no longer able to do productive work from which they can earn a living. To strip them of this and say with a hand wave that they were in the wrong for thinking that a system of ownership, that has existed for hundreds of years and was generally agreed upon by the vast majority of society, would continue to exist and that they would benefit from by lawfully participating in it... I honestly can't imagine you or anyone saying this to someones face, it's just baffling. It's on par with demanding collectivization at the expense of landowners and it would probably have the same consequences.
Perhaps we should just convert all inherited land into 20 year leases with a land value tax being introduced after the lease expires?
Some land owners should have to eat losses. Thats the whole point. If you live on a portfolio of land inherited through your 15th century duke great grand uncle you should be getting a job at McDonalds rather than living off the labor of others.
The problem is less technical and more political. Try to deprive large scale land holders of their property and they will bankroll a fascist uprising and launch a coup while foreign leaders in hock to property owners elsewhere will back the coup and enact punishing sanctions to prevent it from being seen to work.
It'll happen one day probably but the transition will be bloody and violent as it always has been when land is redistributed.
It’s all well and good to say some land owners will have to eat losses. Which land owners? How severe losses? The fact of the matter is that expensive housing in major cities has forced a substantial portion of the middle class to misallocate their portfolios and put far too large a percentage of their funds into real estate in order to have a primary residence. If you feel this group should eat losses without compensation you’re basically saying the government should financially doom them. More broadly it’s not uncommon to see a house in many neighborhoods become 50+% of a retirement plan. Cratering the value of homes without compensation dooms many people to less than half the standard of living they were expecting in retirement.
I agree with you that the transition you want would have to be bloody and violent. It would also have to be authoritarian. Simply put the groups you want to impose huge financial penalties on will oppose you and without them you lack the votes to pass this democratically.
Once you add the taxes for other jurisdictions of government I can see taxes reaching 30% of total mortgage value. It's fairly clear to me that owning land is extremely expensive in a Georgist society that needs to generate the levels of taxation that fund current government. If land value tax replaces income tax it needs to be fairly large, taking over 20% of mortgage value for just federal costs.
Some number of homes are owned outright and no longer have mortgages so the mortgage number may be a bit misleading. If we account for this we might get to a level that suggests 10% of mortgage value in taxes federally, raising to 15% of mortgage value when accounting for other levels of government. Such numbers suggest you'd need to be able to pay for your current property with an 8-year mortgage in order to pay the Georgist taxes on it.
I think a modern society that kept existing levels of government spending would see widespread downgrades in housing quality in a Georgist society.
In any case, there is lots of room for experimentation at the margins and any Georgist reform won't be complete or overnight. Any shift from taxing labor and capital will result in a better and more efficient economy, so don't get too caught up in the abstract end state.
That fixes my biggest complaint about Georgism.
Take Google, for instance. What is the basis of their income? It's not the land they own or occupy. It's that they own google.com.
Where does IBM's money come from? Not from the land they own in upstate New York. It comes from their patent portfolio.
Natural resources are consumed inputs and don't generate rents (extraction rights, which are a subset of property rights in land, do); intellectual property isn't land in the usual economic sense (it is not naturally occuring, so not land; it is durable and created, and therefore capital in the classic division.) It does generate rents, but that's typical of capital goods generally.
(In modern use it's more typical to expand the use of “capital” to include land and thereby encompass durable, rent-generating subjects of property rights than to expand “land”.)
And yes, neoclassical economics classes land under capital and that is a fundamental disagreement of Georgist economists with neoclassical economists.
Perhaps, but your proposed construction (I’m not familiar enough with Georgism to know if it is the standard there) seems to be equivalent to that in equating classical categories of land and capital, but simply reversing the terminology, making durable (and thereby serving as rent-producing property) non-human factors of production, whether natural (and thus classically “land”) or created (and thus classically “capital”) all “economic land”.
As for levies on externalities, these should be more accurately seen as correcting a market failure, the social cost that society must pay that the consumer/producer do not pay.
Notably, Frank Ramsey and A.C. Pigou can be considered crypto-Georgists -http://blog.lvrg.org.au/2013/09/ramsey-and-pigou-crypto-geor...
"As we shall see, Ramsey not only formulated a rule that leads directly to a “single tax” on land, but also anticipated the so-called Laffer curve in cases where the “single tax” is not employed. Moreover, Ramsey's rule was to be applied after any externalities had been internalized by means of appropriate taxes and bounties."
Georgists are a bit like libertarians when it comes to income taxes. It's very difficult for government to demonstrate a moral basis for interfering in work markets to generate taxation. Libertarians argue that if you are forced to pay 57% income tax you're 57% a slave. I'm not sure Georgists would go that far, but it seems unlikely you'd see implementation of taxes that are both economically less efficient and ethically more dubious than taxation of economic rents.
I agree there are some other things you can tax. I presume those are also taxed at precisely the economic rents they create? My point is that government needs some sort of tax with a knob that they have the ability to tweak upwards or downwards based on shifting revenue needs. It seems to me the only things in a Georgist system are taxed at precise values and fail to give government that knob. Do all Georgist societies have some sort of services cap because their tax revenues are capped?
In any case, Georgism produces a very different financialization of governance than the current tax system, because public goods pay for themselves via increases in land value- see the Henry George Theorem by Nobel laureate Joseph Stiglitz: https://en.wikipedia.org/wiki/Henry_George_theorem. This means that rather than adjusting taxation to meet desired investment, desired investment is adjusted to produce optimum public returns- which has the beneficial side effect of incentivizing good and proper governance.
You already see this in areas that don’t prop 13 tax rates - as land values rise the land gets redeveloped.
I'd be very concerned about governments undertaking the necessary actions to drive land value taxes up by 22% over a four-year window. I think such policies would lead to many people being forced to vacate their land.
Even things like health care, which arguably keeps me healthy enough to work isn't distributed in any sort of uniform way so the productivity increase from it isn't likely to match the land value tax increase.
I think there are a lot of things that can increase land value 22%. I think some of them might even raise average wages 22%. I think almost none of them will raise each individual wage by 22%.
You have a thousand acres of farm farmed by your family and another say - ten workers in total.
The government builds a rail line and highway along one side of your farm and suddenly a portion of the thousand acres is better used as a small town - which now houses tens of families and perhaps a hundred workers.
Even if your personal income didn’t raise, the income of the area did.
Have we accounted for the fact that with LVT it's possible to get less tax revenue from land becoming vacant because the taxes become too high for users?
As for the tax being too high, if people started to vacate land that would mean the tax rate is over 100% of the land value (if it's at 100% people won't vacate, they won't be able to extract rents from it but it won't be an economic loss). Governments have every incentive not to tax land over 100% value because they actually lose money from doing so, so that's a pretty good security that it won't happen.
I worry that the overtaxation causing vacation mechanism isn't very efficient because if the tax takes a small part of the land value improvement it seems that the government gets additional unearned revenue while only land with little to no improvement would be vacated. I think people only vacate if the taxes cut into their additional revenues too steeply. I'm not sure exactly where the too steep point is, but I think governments would have an incentive to overestimate the value of land.
The question is to whom should this payment go, and "fee simple" is an entirely inappropriate mechanism for payment.
Everyone has an equal right to the use of land, limited only by the equal rights of others to use land. What the state does not need for the provision of public goods & services should still be collected and returned to the people on a per capita basis, as a simple matter of social & economic justice.
Yes this does mean that renting/owning low density housing will be more expensive but your income will be much higher to begin with as it isn't taxed.
For example 20% VAT and 30% income tax mean 56% of your money can be spent on housing. Without those taxes you will have almost twice as much money to spend which means you can afford higher land value taxes and if you decrease the amount of land you use, your effective tax burden will go down but so do the costs to maintain infrastructure and other public services.
Currently most property taxes are local, not federal. You're also missing the bit about a citizen's dividend which seeks to offset some of this.
If the bank pays the tax, why wouldn't they pass it on to the mortgage holder in the form of higher interest rates or other fees?
There are exceptions when businesses are investing for growth and expenses are paid by investors, but normally no business is going to agree to a contract where they lose money. The money to pay expenses comes from customers.
Because land has an inelastic supply, and therefore its value is driven entirely by demand. Banks already charge as high an interest rate as they can get away with (i.e. one commensurate with the buyer's credit rating and the value of the land); trying to raise it to account for LVT would immediately backfire due to the resulting profit loss (in this case, from people being less willing to take out such mortgages).
The bigger issue is what happens to current mortgages. If I paid 25% down on a 1.5 million property and have paid my mortgage down further so that it's now sitting at $1 million and the value of my land is $1.25 million and the value of my house is $250,000 when the government adopts Georgist policies the value of my land goes to $0 which means my property is now worth $250,000 and I owe $1 million on it. I'm obviously going to walk away from the loan so the debt holder for my mortgage gets an asset worth $250,000 instead of the $1 million of money they were owed, a loss of $750,000. I also lose the $500,000 I had build up in my home since I walked away entirely.
I think that would be true for any reform that's actually effective in driving property values down.
You're comparing a roughly 80% reduction in house prices with a promise that taxation will absorb further rises in the asset price of land to a 30% reduction in house prices with a promise that the market will eventually recover and grow to new heights. The first effect is nearly triple the second one, the change in future conditions makes it even more extreme.
In the US at least, mortgages are on both the land and the buildings.
Getting easy details like this wrong suggest that you don't actually understand how property works.
I get that you have a theory with properties that you and some equations, but that doesn't imply that your equations accurately reflect reality.
As the saying goes, reality has a surprising amount of detail.
Let's review: "if the bank owns the land as in a mortgage, they are the ones paying the tax, not the people taking out the mortgages."
You don't understand mortgages in a way that is essential to your argument. Banks holding mortgages don't own the property. At most, they own the right to grab the property if they're not paid, which is a very different thing.
But the point still stands. If the land value tax is paid by the homeowner, the sales price of the land is zero (under a 100% LVT), so the mortgage rates are lowered by an equivalent amount. So there is no additional burden upon the homeowner. If we flip the model and say the bank owns the land, they will pay the land value tax until it is paid off. In this case also, the sales price also drops to zero so the mortgage just incorporates the land value tax and the building payment. In all possible arrangements, there is no additional burden on the homeowner until the mortgage is paid off.
In this system, the homeowner loses any value they had accumulated in their house and the mortgage holder loses a large portion of the mortgage. This is what I'm saying the problem is.
I let that bit of bogosity slip by me.
The sales price of valuable land will never be 0.
Govt may not see the price, but it will be paid.
You've convinced me that Georgists don't have any experience with actual people or economies. They just have a theory unmoored to reality.
Suppose that I own a building. I may, or may not, pay for the land it sits on.
In the "land value is taxed 100%" regime, it doesn't make sense for land owners to charge rent because govt takes the "land rent".
%100% of 0 is 0.
I'm pretty sure that they'll figure out some way to get compensated. If they can't, no one will bother to own land.
No. once again, invariably, multiple people make this mistake in every thread about the land value tax.
'economic rents' are not the colloquial 'rent' we pay for housing we don't own. economic rents are UNproductive, meaning simply income produced by ownership itself, rather than in the productive delivery of service (in this case, housing). LVT only seeks to tax away that unproductive part (economic rents). the productive part would include the costs of mortgage(s), insurance, utilities, upkeep, and a small profit (aka risk premium).
Of course, taxes will actually be set in accordance with what the government needs for revenue since this is supposed to be a single tax. Elsewhere in the thread I've tried to estimate Georgist land taxes based on current revenue needs and found them to be quite high.
LVT is solely targeted at economic rents. this is the key to understanding LVT. otherwise, the idea that it's the most economically efficient tax will not make sense, and the tax itself will not seem to make sense.
on the other hand, what the government will do tax-wise is political, not economic. constitutionally, the tax cat is out of the budget bag, so we have little hope of restraint there. politicians will always try to expand government because it benefits them, no matter what rhetoric they spout.
(i.e., taxes are high because politics, not LVT.)
but to be fair, that's not unique to georgism. we need to solve for that problem generally.
The countless times a government has cut important services and investments to get a short term cash influx have always lead to misery. Greece ended its public healthcare for the sake of austerity and now they are further in debt. Operating a hospital should be something that is a revenue stream for the government (through land value taxes), not a burden to be distributed across people through taxes.
Except the LVT premise is bullshit.
Lets say I have a house I rent out for 1800 dollars a month. About 500 dollars of that will go to taxes (income, property, etc).
Out of the rest I take 600 dollars and am in the process of fixing up two more houses that I bought from a tax sale that were made unlivable through crackhead squatters.
So that leaves me about 700 dollars more. Out of that I need to save probably about 300 dollars a month to cover costs associated with owning homes. Such as the need to replace roofs or water heaters or hire arborist to take down dying trees before they destroy my neighbor's property, etc.
Then that leaves me with 400 dollars that I reinvest in other companies. So it goes to doing thing like buying bonds, etc.
The only thing that is "unproductive" here is the money being paid to the federal governemnt to go murder brown people half way around the world.
The entire intellectual basis of this "Georgian" stuff is completely bogus. The theories about monopolies are wrong. The theories about how to solve the tragedy of the commons is wrong as well. The economic efficiency theories are wrong, etc etc etc.
And that those supposed authorities have been teaching absolute nonsense like loanable funds.
If you want to learn about the economy, the only useful option is to look to working market participants. Some rando at the fixed income desk has forgotten more about how the economy works than those pompous frauds.
That's simply incorrect, it's not how economics works. For example, if I stole $2000 from you and used it to fix houses/invest it would not magically become productive income.
The comment above you is pointing out that excess income a landlord makes because people are willing to pay a premium to lease a scarce or rare good they own doesn't contribute to the rest of the economy in the same way selling a hotdog does. Ergo, unproductive income.
The reason why this is not "productive", is pretty straight forward. It's unproductive because nothing is being produced. We are selling what's already there long before humans existed.
Once you have a lease, it's unproductive as it comes, purely getting money for owning something
While you're completely correct, I don't think this is a reason to abandon the enterprise (other extremely hard problems: sending a human safely to the moon; democratic rule of law; the elimination of slavery).
While I ideologically support the so-called "Single Tax" model, it is indeed extremely difficult to imagine how this would be implemented at the federal level (especially in our current gridlock climate). I'd instead advocate going the other direction, and implementing it locally: property taxes already exist at the level of states and municipalities. These local taxes can gradually migrate to being calculated based on unimproved value, rather than including improvements. This can include whatever necessary carve-outs to reduce unintended side effects (grandfathering existing owners, partial exemptions for owner-occupancy and retirees, etc).
Under any model, the real tension is the zero-sum game between existing owners, and aspiring owners: the former want property values to go up, the latter want property values to go down. (We see the same dynamics at play in zoning laws, NIMBYism, etc.) As with any perverse incentive, or institutionalized rent-seeking, reform is extremely difficult, but by no means impossible.
https://www.wsj.com/articles/homes-earned-more-for-owners-th...
https://www.wsj.com/articles/homes-earned-more-for-owners-th...
The key would be people agreeing in principle and then boiling the frog over a hundred years.
The tax on land+improvements is fundamentally different from the tax on land when different users are considered. Large condo buildings are high value improvements so taxing only land value represents a huge savings for them. Single family houses are generally structures worth only a small fraction of the land they are on, often less than 20% so the savings are marginal. If you adjust the land value tax to generate current property tax revenues the buildings will pay less than they do currently and the homeowners will pay more.
I agree you need the whole system, perhaps implemented gradually. If you change just the property tax portion you offer homeowners increased expenses without any benefit.
1) "In particular, the taxes on property ownership are supposed to capture the entire value of renting the property."
Not true. Only the unimproved value of land is meant to be taxed. This amounts to a complete exemption on taxes on buildings.
The current proposal that is often on the table is not to go for classical 100% Georgist LVT, but to simply collect the exact same amount of property taxes we do now, but to shift the burden off of buildings and onto land. This can be done right now with existing property tax regimes. The burden would fall mostly on underutilized land, parking lots, and vacant lots in city centers, where the lion's share of land value is concentrated. Proposals for this sort of reform are in the works right now in various US cities.
If you'd like to see a practical policy paper on the subject see here by Tideman, Kumhof, Hudson, and Goodhart (the Goodhart of Goodhart's Law, by the way): https://voxeu.org/article/post-corona-balanced-budget-fiscal...
2) Georgism is not just about real estate. It's about properly dealing with scarce economic assets that can't be created and which invite speculation
Norway's sovereign wealth fund is an extremely successful example of applying Georgist principles to natural resources, for just one example:
https://progressandpoverty.substack.com/p/norways-sovereign-...
https://www.wsj.com/articles/homes-earned-more-for-owners-th...
Secondly, suburbs are drastically subsidized by denser development. They resist densification because they don't want to pay their fair share. https://www.strongtowns.org/journal/2020/4/16/when-apartment...
At the city level it's tricky because the breakdown my city provides in the budget separates into capital and operating rather than other categories. From what I can tell from the 50 page report, water pipes cost approximately 25% of budget and transport costs approximately 5%. Wires aren't listed in enough details to get an estimate.
My best sense from the numbers in the breakdown is the expenses for my suburb breakdown into roughly 60% per capita items, and 40% per area items. So 60% of our budget gets more expensive as you add people with low per capita taxation and 40% gets cheaper as you add more density.
It’s more reasonable to measure where taxes are coming from by some combination of where people live and where they work. If you do this then suburbs are not tax sinks. This isn’t saying you change how you distribute tax revenue it’s only saying you change how you measure where it comes from.
Yet, Georgists think that a shopping center without parking, one with parking, and a parking lot should all be taxed the same.
In what universe is "fewer parking lots" the solution to "not enough parking lots"?
As Orwell wrote, “There are some ideas so absurd that only an intellectual could believe them.”
You may like a life where you're dependent on delivery services for anything you can't carry to where it needs to go but the rest of us aren't willing to wear that hair shirt.
You've already stated that an essential part of your plan is eliminating parking lots.
You think that a world without parking lots, a world where people mostly carry stuff and otherwise rely on delivery services, is best. Aren't you going to at least followup with "people buy too much stuff anyway, so shopping centers that sell less are better."?
Surely you can defend your vision instead of just giving up when someone summarizes it.
Why should I agree with something that is so clearly false?
Speculation is betting on a better tomorrow. That's clearly a social good.
> People should not make money for owning empty land that they do nothing with, it's really that simple.
Is it?
Suppose that I like looking at trees. (When a govt does that, it's called greenspace, parkland, etc, and everyone says how great it is. Feel free to argue that Central Park should be covered with high rises.)
Or, I'm waiting for Disneyland to be finished so I can put up a hotel if it pans out.
There are lots of great reasons to "do nothing" with land.
Note that Disneyland is an interesting case that disproves one of your core assumptions, namely that "the public" is responsible for the value of land, therefore it should get all of the "rent". "The public" in all of the nearby cities did just as much as "the public" in Anaheim, yet somehow the area around Disneyland is worth far more than pretty much any place in those cities. The public was, as is often the case, irrelevant.
Disneyland isn't an exception in this respect - I picked it because it's so blatant.
Let's come back to an essential point - why should your preferences regarding other people's property matter? Especially since pretty much every detail that you've used to support your position is wrong.
And it's not just the little details.
For example, you seem to think that efficiency is a goal. It's not. It's a tool. (Of course, your definition of "efficiency" is flawed.)
I get that you want to live in a cramped dysfunctional monoculture, but the rest of us don't. (I brought back monoculture because that's what your policies encourage.) Moreover, such a system is actually less valuable, which is a curious result given your repeated rants about maximizing value.
However, you are demonstrating that Georgist "efficient land use" is not particularly desirable. (Moreover, "efficient" land use is rarely that important.)
Georgism does push towards a monoculture and a particularly horrible one at that.
For example, Georgism punishes someone who puts some open space between buildings, even though open-space is clearly a good thing.
As I wrote previous, Georgists confuse having an equation that they can "optimize" with having a useful idea on how to allocate resources in the real world.
Yes, Georgism lets you do some calculations, but that doesn't imply that doing those calculations is worthwhile. (This is a problem with economics as a field.)
And, no, the "witticisms" don't make your case. They actually argue that Georgists are dangerous fools.
I think this is the key issue that gets glossed over. Who decides the land value? How is that decision arrived at? Is it a purely bureaucratic process where the community has no say? Is it set at a federal level where it will likely be completely disconnected from the reality of a particular municipality?
A lot would hinge on the answers to these questions and I'd take a bet that if this were ever implemented it would be done wrong and would result in many unforeseen negative outcomes.
I think we should stop trying to revive outdated 19th century economic theory and actually put in some work to create a modern one that accounts for the age we live in.
Not necessarily. Relatively few homeowners occupy all that much land value; it's probable that most homeowners' dividends would entirely offset their tax burdens, in which case they stand to benefit if anything.
Most of the people you're taxing in a land value tax are residential uses. Taxing the money doesn't magically multiply it and it's impossible to return nearly all of the tax money to constituents since governments have substantial other expenses.
My estimate is that a current home worth $1.5 million in a suburb of Toronto has land value of roughly $1.25 million and is likely to be taxed at 10% of land value. This suggests an LVT of $125,000. If the general trend of all residential real estate follows this government raises only 2.688 trillion dollars from residential property. To fund federal government we'd have to raise another 1.362 trillion and then we'd have additional amounts to raise for each other level of government. I'm not certain whether we can do this from the additional amounts on commercial and industrial property but it seems to be a close approximation.
The point is the funds leave very little left for the citizen's dividend unless we want to vastly reduce existing government programs.
> Most of the people you're taxing in a land value tax are residential uses.
You're forgetting the sheer quantities of land (and land value) consumed by commercial and industrial use; this land, too, would be taxed. Such land is arguably far greater (in terms of value) than most residential land; consider every office building, every factory, every warehouse, every store, every parking lot/garage, every mine, every farm, and you'd see how that 1.362 trillion (and then some!) would be possible.
Another factor here is ATCOR (All Taxes Come Out of Rent), the idea that since non-LVT taxes suppress economic activity (because they tax things with elastic supply, artificially raising their prices), replacing all taxes with LVT would remove that suppression, spurring greater demand for land and therefore higher land values (and therefore higher LVT revenues). Basically: we're already taxing land indirectly and less efficiently, so we might as well just tax land directly.
Further:
> The point is the funds leave very little left for the citizen's dividend unless we want to vastly reduce existing government programs.
Which is very possible. A citizens' dividend, like any other sort of UBI, makes a lot of existing welfare programs redundant. Most Georgists/geolibertarians (myself included) frown upon the insane amounts of "defense" spending here in the US, so that'd be another thing we'd push to cut.
Forgive the naive suggestion, but tax rates on property can be be introduced progressively - few percentage points per year - for many decades.
The German property tax is very low, well under $1k for the vast majority of the country so the switch isn't that big of a deal but it also won't have much of an effect on anything other than abandoned buildings/land in city centers.
You gotta start small.
>"While Georgism does not have a philosophy of governance, it can easily be harmonized with distributist ideals. In many governments today, especially the United States, there is a substantial bureaucracy which creates red tape rather than solving problems"
Georgism and similar economic ideas that favor localism have no theory of governance or of power. You can imagine a G.K. Chesterton style economy where we all live in a sort of Catholic Hobbingen of family owned businesses or Le Guin's Anarres, but there's a reason we're not living in it now.
Without having a theory of administration, that is to say bureaucracy and governance and how to beat all those big companies and actors that ruin your distributist dreams into submission, you have a considerable problem. There is no such thing as 'naturally limited government'. That these systems do not magically sustain themselves is visible in Europe with the decline of Christian- and Social-Democracy respectively whose economic and cultural foundations (largely Catholic/neo-Calvinist social teaching) started to break apart.
In the cities, converting apartment buildings to condos is another form of this. Of course, many people believe this is inadequate and we need to go further, with low-income housing and the like. But it's been a long time since redistributing agricultural land made sense. Do you really want a hobby farm?
You might say that an apartment isn't productive property, but with increased working from home it seems like it's blurred a bit? You can run an Internet business out of your home.
Meanwhile we have widespread ownership of public companies via the stock market. Again, not widespread enough.
But another issue is that being a stockholder doesn't feel like ownership. It's just an investment; you don't get meaningful control.
It's not all that clear what meaningful control looks like, for large firms. Maybe this is an argument for smaller firms? Company breakups might be the modern equivalent of land redistribution.
Perhaps more employee co-ops would further that goal. Mondragón in Spain is often cited as an example of Distributism in action.
Companies are arguably not very widely distributed. The stock market is ownership of companies by those who do not work for it, so the distance between the worker and the owner is still greater than in small businesses, family businesses, worker cooperatives, or even traditional corporations with Employee Stock Ownership Plans. Trust-busting is one way to decrease that distance, although true anti-monopoly policies like a land-value tax or a tax on intellectual property enforcement would truly remove the privileges these big companies have and allow smaller ones to truly compete.
Changing property tax rates doesn't change cities or suburbs into something else, at least not at first. All the property is still owned by the same people. People still live in the same houses.
A Manhattan where the property owners pay huge taxes to the government (because that's what it would take the drive the land value to zero) would still be an extremely expensive place to own property. This might be a good way for the government to raise revenue, but it's not really a "cheap land" situation. It's one where the government is effectively the landlord and everyone pays high "rents" to the government.
It's plausible that such a scheme would lower the cost of living in some places when it's due to speculation, by popping the bubble. But it doesn't lower the cost of living when it's due to the fundamental value of owning property there.
To some extent this already happening. Many people moved out of the city during the pandemic. The people in desirable rural areas aren't necessarily happy about it. They are often upset about all the outsiders with more money moving in.
They probably wouldn't be very happy with their property taxes going up either? When there's increased demand for land in a certain town from newcomers, there should be higher land taxes for everyone according to Georgist theory, to keep the price of land zero.
We see this historically in frontier towns that had absolutely no limits on sprawl (as land on the outskirts was available to anyone willing to stead it) but still had city centers develop and usually to the construction limits of the time.
How does this mechanism work in concrete terms? My understanding is that Georgism advocates raising taxes on people with property in desirable locations. They decide they can't afford the taxes, so they sell to a developer, who tears down the house and builds a bigger building.
Another name for this process is "gentrification."
The difference is that with the way gentrification works currently, the developer pays the previous property owner lots of money, which isn't so bad. With Georgism, the previous property owner doesn't get anything, because the property tax is so high that the land isn't worth anything. It's similar to being a tenant in a rapidly gentrifying area where rents go up but there's no upside for you.
I guess if you're pro-density and don't own property, that might seem appealing, but this mechanism seems likely to be very unappealing to home owners.
Gentrification is primarily a problem with the current system. I can easily imagine an economic system that decentralizes economic activity akin to Distributism which will make it easier to rebuild and improve run down communities without having to move somewhere else.
You have a 500m^2 plot of land. This plot pays $50k land value taxes. If one person lives on the land that person pays the full tax. If 10 people live on the property they each pay $5k taxes per year. If 50 live there then the tax is $1k.
Property taxes scale with the building so housing more people means higher taxes. That is being avoided by only taxing the land.
Alternatively, people hate taxes, they want to avoid paying taxes. If you want to avoid land value taxes, the only way to do that is to use less land more efficiently.
Under a georgist system there is no such thing as real estate speculation. Real estate there doesn't cost multiples of peoples' net worth and increase of land tax rate is hardly noticed because the base value of land is a number hovering close to zero. Price for land and tax rate in that system is just an allocation mechanism of geographical area to the most productive use, preventing hoarding. In other assets where hoarding is risky, since inventory can expire (groceries) or go bust (stocks, bonds), speculation by holding inventory is valuable because it provides liquidity to other market participants. Speculation in land is pointless The land is always there and will not run away. The speculators are just pocketing private taxes that otherwise government could've collected and reallocated elsewhere.
A tradition that arbitrarily prints free money for some and arbitrarily imbues economic burden on others.
The electromagnetic spectrum is sort of like land from an economic perspective except it "appeared" only recently. Nobody owns that or puts a price on it. Everybody purchases a limited lease from the government via auction. This was, in a sense, a frontier.
The Duke of Westminster didnt inherit electromagnetic spectrum from his ancestors coz they won a war in 1066.
One early way in which this could be easily done - and which tech companies are leading the way in - is to normalise the idea of workers in a company being given company equity. While it is still a long way off from actually owning the means of production, it should become normal and expected for full time salaried employees to be given a share of ownership in the company. Otherwise, full time employees are simply contractors with extra perks. Having a stake in the company you work for means that companies are actually controlled and owned by the workers, not controlled and owned by the highest bidding investors.
Employees get more influence (not control) over what happens by working at the company and contributing to internal discussions. That's mostly gone when you leave.
This is probably the weakest part of the article. The frontier is not a safety net. You do not go to the frontier because you are in the poorhouse, you leave the frontier for the poorhouse after you have failed at a nearly insurmountable task. Even today this plays out again and again, people imagine that they can start their life over on a farm and earn a living with their hands, very few succeed. The biggest cost of starting a homestead is not the land but the sheer amount of labour and money that goes into improving that land to the point where it can provide for you. Even the basics of clean water, sanitation, power/heat and shelter would be beyond anyone in need of a failsafe. Add to this the insult of the available land being that which is so marginal that already established businesses cannot make it productive and you have a complete non-starter.
If you think that the marginal periphery will consist of abandoned homes instead and that all one would have to do is move in then I'd invite you to visit a few of the existing abandoned homes in your area. Mind you, not unoccupied homes which generally still have an owner that does at least the basic upkeep necessary to avoid fines. Visit a truly abandoned home where the owner has simply walked away. Unless you're coming in hot on their heals, it's going to be a disaster. Cold weather alone will ruin an unheated structure built to modern standards not to mention the toll that wildlife, plants, and vandals can take. Modern, draft free buildings will also develop a significant mold problem if their power is disconnected since no heat and no air circulation mean that temperature changes will produce condensation.
Few purposed vague elements, that if detailed reveal their incoherence:
- subsidiarity :: how a large community/entity can help but not interfere? Let's take a simple example: in India there are various cohort of population, let's focus on Indus and Muslims. Indus consider cows sacred animals, they can be milked but not confined nor slaughtered fro their meat. Muslims eat cows, so slaughter them for that purpose BUT do not eat pigs, a religious crime for them, while Indus have no issues in eating pigs. Suppose you are the bigger entity: how can you help them without interfere?
- family policy :: a family designed by mother, father and children miss a part: the two parents have also their parents, who happen to get elderly, for instance. Their children at a certain point in time will leave family. Making a family an atom who form molecules, means the society can't exists. Original family ideas came from a more practical élites needs: people to live need to be a bit together and reproduce, they need to be balanced in sex terms for that and for social stability BUT "we" (élite) need also something for them. Let's define them a family, saying any family have to give something to the élite: food, young sane people for war etc. Locking peoples in such mindset it's easy to say: you parents need to reproduce, more than one child because he/she can die, some are needed to work to live, some are tribute for war etc do not care much about you, your duty is the family. You child you have a family, you need to represent it, so go to war and work hard, do not care much about your duty it the family. That's the simplest and easiest subdivision of humans to direct them as a flock. As single families they need someone who handle their disputes, they have a simple duty they believe etc. The rest of the society is designed with the same scenario: authorities/élites are "parents", families their children who need to obey.
Autarchy is a dream, sci-fi movies prove it regularly design autonomous starship with a small set of humans traveling the galaxy, in the past that was Conestoga wagon, equally nomadic life and so one. All depict the dream but omit how anything is built. Who built the starship, for instance. That's left aside because it's the core of the gamble: we need something organized differently, often some people forced to live bad life to makes others happy etc.
Taxes is equally used here in psychological terms instead of in economical terms: they are weaponized instead being clearly described as a way to avoid some earn too much respect of others. A social leveling mechanism. Again they aren't cited like that because if so we have to say that money is not a value no-one-really-know who control it but just a symbol we agree to use as a unit of measure for a substrate NOT as the substrate of anything like we do today.
It's a classic way to use emotions for stopping people think and demand clarity, making them blindly trust something.