Could you start small? Just a minor LVT to begin with, which could potentially be raised over time. Possibly implemented by a single city instead of nationwide.
A family of four would then have an inherent tax advantage against Blackrock etc. accumulating family housing.
Property tax isn't THAT different, and one component of it is a tax on land.
Are we seeing the LVT effects in locales with high property taxes?
That may not last long if the Texas GOP continues to emulate California housing policies by seeking to repeal property taxes; if they do that they will soon start to also imitate the California-style housing crisis.
Implementing the change more narrowly would allow you to test that assumption.
You’re reframing tax-policy to shape landowner behavior towards your desired outcome on the presumption that this will be an improvement of the land by increasing the cost of owning it by fiat. Sin taxes exist for a similar reason and have similar problems.
Taxes should not be conceded as an instrument of power to reorient society into a form viewed by a subset of society as correct, but recognized as what they are sold as: a levy to provide revenue for an unprofitable but necessary organization (“the government”) to raise revenue in order to service its obligations to society. To the extent that this shapes behavior, it is as an unavoidable side effect. When you treat the side effect as the goal, you lose sight of the fact that regardless of reason, taxation is a taking of assets from its owners, and this is a moral compromise we tolerate in service of having a government at all.
I will read your link this evening.
Why? If taxes are going to have side effects anyway, I think we should try to make those effects positive instead of negative.
> Regardless of reason, taxation is a taking of assets from its owners, and this is a moral compromise we tolerate in service of having a government at all.
I don't think I agree with that.
For example, I also think we should have a (revenue neutral) carbon tax. Part of the tax's purpose would indeed be to fund the government, but the other purpose would be to make people pay for the actual social cost of emitting carbon into the atmosphere, as opposed to passing them on to the broader public. This would allow the free market actually work properly.
Simply put: it’s a moral hazard. When the goal of the tax is in service to something other than the cost of government, then the tax rate can be arbitrary, and manipulated to the benefit of those in political favor. That sort of arbitrariness is intolerable in a free and just society as we should aspire to be.
>> Regardless of reason, taxation is a taking of assets from its owners, and this is a moral compromise we tolerate in service of having a government at all.
> I don't think I agree with that.
> For example, I also think we should have a (revenue neutral) carbon tax. Part of the tax's purpose would indeed be to fund the government, but the other purpose would be to make people pay for the actual social cost of emitting carbon into the atmosphere, as opposed to passing them on to the broader public. This allows the free market to work properly.
You are free to disagree, but what is the purpose of the disagreement here? It is possible to both recognize taxes as both a taking of assets (often cash, but historically could be anything) and a necessity. You can view this on your own paycheck: every single dollar that goes to your government is a dollar that you personally earned and was taken from you (“withheld”) by your employer and paid to your government.
You have some influence over how those dollars are then expensed by your government, by only to the extent allowed by the law through a power-sharing agreement (“the Constitution”, both Federal and your State’s). The larger the government, the less influence you have, and the more likely a higher percentage of the earnings which were taken from you will go to benefit folks you would rather it didn’t (“wasted”).
But you raise a good point about the side effects: we are going to have taxes anyway, and the side effects are going to matter in the discussion. Where they matter though is not in the purpose of the tax—that is and should remain to cover the cost of government—it matters in which taxes are implemented to cover the cost of government. As long as that remains the basis, there is much room for improvement in the way we levy taxes.
Because in the case of a carbon tax, the government isn't taking assets that are rightfully yours; they're taking assets that rightfully belong to the public.
Let's say that I bulldoze your house in order to expand the size of my factory. The factory might generate lots of additional revenue, but that revenue would not be rightfully mine.
Now let's say that instead, I dump refuse from my factory into a river that runs through both of our properties. The refuse flows downstream and ruins your drinking water. I would argue that again, the revenue from my factory is not rightfully mine.
That's still pretty obvious. But now let's say that instead of polluting the river, I pollute the air with greenhouse gases. Long-term, this is also going to be detrimental to your property, such as by increasing the likelihood of extreme weather.
And so some portion of the revenue I generate by releasing greenhouse gasses does not actually belong to me. The government should take that revenue, both to allow the free market to correct for those social costs, and to compensate those affected.
In that same exact way, a land value tax is correcting the capture of the positive externality that is coming from your neighbors for your particular location because of your monopoly over it.
Taxes are a cost from a business accounting perspective. Costs are not borne by the business but paid for by their customers in a manner which is usually obscured to them. A “carbon” tax would effectively be a tax on all goods and services that use energy (all of them).
Now my understanding (when I’ve raised this cost of governance issue with advocates prior anyway) of a lot of carbon tax proposals is that the taxes paid would be remitted back to taxpayers or citizens in some way in a kind of Robin Hood-like manner rather than actually used to cover the cost of government, but this doesn’t actually accomplish anything and I disagree with that kind of scheme on prudential grounds (inappropriate use of tax authority). In any case it would be cash seized from someone who earned it first. A power plant doesn’t emit hydro-carbons needlessly, it emits them as a function of a customer downstream paying for it: to power your refrigerator or to pay for the manufacture of the phone you purchased.
Whether you are levying the tax against the business operating the plant, the customer at the point of sale or any and all of the intermediaries, what you are effectively doing is raising business costs no matter how you phrase it or rhetorically justify it. This informs the final product and service price, so if costs go up including taxes, you should also expect prices to go up.
Unless one company could find a way to produce goods with less energy than their competitors, or obtain its energy from cleaner sources, perhaps by investing in solar power. This would of course incentivize competitors to do the same.
Yes, it would cause prices to go up, but those prices would reflect the actual cost of the good. As you noted, you could offset the price increases by redistributing the tax revenue to the public. This redistribution doesn't make the tax pointless: you're giving a discount to individuals who make greener choices. People who pollute more (whether directly or indirectly via the products they buy) will pay more of the tax but not receive more back.
(This reasoning can apply to a LVT as well, but I prefer the carbon example because I think it's more clear-cut. Clearly, no one person owns the air. People do own land, so I'm more conflicted.)
Sure. Let’s take that solar power investment: under your proposed regime, the cost of the supplies and materials and electronics of the R&D employees would be bear a carbon tax. The electricity to power the lightning and electronics would beat a carbon tax. Any transport they use will bear a carbon tax. The food they eat will bear a carbon tax. The mines the materials for the panels will bear a carbon tax. The transport of the materials will bear a carbon tax. The equipment for extraction will bear a carbon tax. The factories which produce the panels will bear a carbon tax. The intermediaries that ship and handle the panels will bear a carbon tax. The infrastructure to connect it to the grid will bear a carbon tax. And I’m sure I’m leaving out several thousand items, but that’s probably why the serious proposals say to just do it at the plants and refineries, I.e. increase the cost of energy directly.
Taxes are not a cost in the way supplies and materials are and a carbon tax doesn’t make the “cost of the good” more real, just higher. They are a fiat cost, hence the need to tie to something real: the cost of governance. Consumers do not accept lightly increases in their cost of living, as you can see in the present moment with the current price of fuel in the US and the likely parties to suffer in upcoming elections.
Let me ask: do you think it's possible in a literal sense for society to emit greenhouse gases?
If it's not possible, your argument makes sense to me. But if it is possible, we should financially reward people who make greener choices.
Every single thing you just listed would take energy to produce and would bear a carbon tax because a carbon tax is really just an energy tax. The electric vehicles need batteries, the batteries need lithium, and the lithium has to come out of the ground. This results in a product with much more mass than your typical ICE, thus has more energy put into its production, but to offset this the electricity can theoretically come from some solar farm in the Mojave desert. In practice it probably comes from a gas fired plant, but that is still a lot better than if it were to come from a coal powered plant (and sometimes it does).
Everything we do by living has an impact on the planet. Actually to be more exact anything any living creature does has an impact on the planet, but we’re the only species that thinks on a planetary scale (except maybe birds, I’m sure there’s a fun philosophical discussion there but we’ll have to table it) and therefore care about this ecosystem we have conceptualized as a planet.
So when I eat some beans or drink milk and or a cow eats some grass or “feed”, we both emit a GHG with a global warming potential of 27-30 over 100 years. You should be happy to note that as a responsible citizen of this planet, I have omitted both beans and milk from my diet. Unfortunately my hypothetical methane account is probably overdrawn on account of my love of steak as my primary source of protein.
No. We cannot live without waste as a necessary product of living, and since there’s a lot of us, we waste a lot of energy. What we can do is get a lot more efficient with our energy usage and reduce the total amount of waste, but we will continue to be GHG emitters for as long as we have civilization. Either we find some way to get the planet to absorb more of our emissions or we naturally die off until we reach an equilibrium with the planet. That could be billions of us or it could be zero of us. I’m unconvinced tax policy will be our silver bullet, nor will cronyism.
> we should financially reward people who make greener choices.
Which brings me to my final point. If you mean this in a private market sense, that’s fine. If you mean this as an extension of tax policy and the course of government business, this is called cronyism—the government picking winners and losers and is a fine example of why our tax code is already so complex. We have plenty of that already, and I would like to see less to the point that it approaches or eventually achieves zero but I’m not holding my breath.
Only if the supply of the thing being taxed is elastic. The supply of land is inelastic, so (returning to the original topic) there is no way to price LVT into downstream rents; attempting to do so would mean pricing the thing above the value set by its demand, which would mean even less profit.
Property taxes do go into the cost of business by the way; and that would be true for an LVT as well. The land itself may be inelastic but that isn’t necessarily true of the products and services that are produced on it.
Yes but that requires a majority to want to abolish said LVT, whereas the majority would stand to benefit from an LVT as close to 100% (of economic rent) as possible.
> Property taxes do go into the cost of business by the way; and that would be true for an LVT as well.
Most businesses (last I checked) lease from commercial landlords, which means property taxes and LVT would both be part of rent - which, again, can't be raised to account for LVT without violating supply v. demand constraints and hurting profits as a result.
Even for those businesses which do own land outright, land prices are also currently a factor in the cost of business; they're no worse off by replacing a giant lump sum with LVT.
I mean as close to 100% is probably like maybe 4-5% at most, if the LVT on the land and the property tax on the structure were added up to that going by this Strongtown article someone linked me somewhere in this comment chain about how some PA towns have done it.
I think you’re reading me and getting the wrong idea about what it is I’m arguing against. LVT’s as a tax are okay in lieu of other taxes, provided they’re in lieu of other taxes and also the rate is not set arbitrarily high to accomplish nebulous other social goals. That last part is requirement for every sort of tax, and excessive government revenue should dollar for dollar be returned to the people it was levied from.
I don't think I am. Rather, I think our disconnect is that I disagree with your implication that fully internalizing the negative externalities produced by the ownership of land as property is a "nebulous other social goal".
The endgoal - i.e. the full internalization of those opportunity costs externalized onto every other member of society - is 100% LVT with all surpluses disbursed evenly as a citizens' dividend (a.k.a. "UBI" in more modern parlance). Anything short of that is theft by landowners from everyone else (including other landowners, but especially those without land at all); the question is how much theft the general public will continue to tolerate, and for how much longer.
We are fundamentally at odds then with irreconcilable differences of opinion on private property. The protection of private property is a core justification for the State, because as I replied to you elsewhere, private property doesn’t cease without the State but the situation around it becomes more volatile. I do not seek to re-base the State on the socialization of land value and you probably couldn’t with an extreme amount of State violence.
You're ignoring the reductions/eliminations of other taxes. For example, replacing property taxes with LVT is the usual "first step", and would reduce costs for most homeowners (whose land is typically less valuable than the house sitting on it). Same with sales tax, or income tax, or any other non-LVT tax; non-LVT taxes are less efficient than LVT, so replacing them with LVT would maximize tax revenue while reducing individual tax burdens for all but the largest landowners (namely: landlords, be they residential or commercial/industrial).
> taxation is a taking of assets from its owners
The private ownership of land is itself theft from the commons, and is itself the product of state power and authority. A tax on the value of that land is therefore compensation for that theft, and is more than fair.
Modern society has gone on long enough letting land owners have their cake and eat it too. If land owners expect society to respect their exclusive claims over land, then it's on them to compensate society accordingly.
I’m not against replacing other taxes with LVT. I’m against the misapplication of tax authority for purposes which are not subordinate to covering the cost of governance.
> The private ownership of land is itself theft from the commons, and is itself the product of state power and authority.
No.
Yes. Or do you believe land titles to be magical artifacts that the rest of society obeys for the hell of it? Land ownership would not exist (and therefore wouldn't need taxed) if not for the state using its monopoly on violence to enforce your piece of paper; given that state-issued privilege, it should be entirely unsurprising that you might be called upon to pay accordingly.
Yes it is. Any attempt to enforce private property ownership itself entails the attempted creation of a monopoly of violence in respect to that land - also known as "a state".
> try something more akin to a cross between Europe in the Middle Ages and drug cartels
Both feudal lordships and drug cartels (well, the ones that are actually worth fearing, at least) entail the creation and enforcement of a monopoly of violence over a given geographic area (a.k.a. "land"). That would make them states. They collect(ed) taxes, they raise(d) armies, and they generally control(led) the local populace under threat of violence. The latter case is only exceptional due to it competing with another state over control of a given geographic area; that hardly precludes a cartel from being a state, for the same reason that two states at war continue to be states even when they're being invaded by each other.
> private property rights are recognized by the State by custom (or “common law” if you prefer), not derived from the State, even though they can be deprived from you by the State by due process per the compromises we made in our Constitutional order.
If the State can deprive you of your "private" property, then how does that not in and of itself demonstrate rather plainly that the State is the thing from which said property derives? By what authority do you get to claim a piece of land as your own except with the State giving you a piece of paper saying it's yours?
So in that case would a drug cartel that excludes the government from enforcing its sovereignty over a piece of land be recognizable as a state? I won’t argue, but I’m going to go out on a limb and suggest to you that maybe while a fiefdom could in modern parlance be considered a “state” if it were large enough or managed to make it into the present day with internationally recognized borders (like Liechtenstein), not all fiefdoms were states. I’ve made that mistake too so I won’t knock you for it, but a State as you and I know it is a very very recent invention that entails a bit more than Capitol Hill in lieu of a lord. France prior to their revolution and France post-Napoleon provide the starkest contrast between a feudal Kingdom and a State (in both Kingdom and Republic flavors because they’re restless like that).
> If the State can deprive you of your "private" property, then how does that not in and of itself demonstrate rather plainly that the State is the thing from which said property derives? By what authority do you get to claim a piece of land as your own except with the State giving you a piece of paper saying it's yours?
Well you dropped the due process provision I put in there. Did you know for example that Bills of Attainder are illegal under the Constitution? This would be a legislative instrument where a parliamentary body can simply vote to declare someone guilty of a crime, and simply take their property and even life by majority vote. Those have existed at various points in time, but they are off-limits to Congress (and the States too).
But also a title is not just a piece of paper from the State. Think of a title as a record or evidence of the transaction. It is the agreement between buyer and seller that transfers property rights over a piece of land between two parties, but there isn’t a step where the State steps in and says “I approve this transfer”. The contract is between two parties, not two parties plus the State (unless the State is actually one of the parties to the transaction). Where did the buyer get the rights from? There’s a record of that too, and the State’s role is to keep a record. Maybe it was originally a State grant, but the State forfeited it’s rights with the transfer.
That said, yes, there are ways for the state to take property, so long as due process is followed. This might follow a criminal conviction, or maybe someone died without next of kin and it was determined there was no one to inherit the land, or it was debt collateral, or it was compensated for after an eminent domain action. It isn’t arbitrary.
It ain't a matter of recognizability. It's a matter of function and action - and in both of those senses, a drug cartel is a state.
> not all fiefdoms were states
All landed fiefdoms entailed a monopoly on violence over their geographic territories a.k.a. land, be it directly (by raising their own armies) or indirectly (by relying on a superior lord to whom they swore fealty). All such fiefdoms were either states outright or parts of larger states. You're literally the first person I've encountered who claims otherwise - and I've met a lot of people with very diverse perspectives on European medieval history.
> Well you dropped the due process provision I put in there.
Because it's irrelevant. That the State has constrained its own powers to revoke land deeds does not change the rather basic fact that private ownership of land is fundamentally derived from and dependent upon the state and its monopoly on violence.
You still haven't answered my question: in the absence of the state, who enforces your piece of paper claiming some portion of land to be yours? By what obligation do I have to respect it?
> there isn’t a step where the State steps in and says “I approve this transfer”.
There are actually many such steps. At the bare minimum, the local courthouse usually needs to sign and notarize the new deed. There's also typically a rather hefty stack of documents for (among other things) various state and local requirements.
> Maybe it was originally a State grant, but the State forfeited it’s rights with the transfer.
No, the State pinky-promised that it wouldn't revoke the privilege of land "ownership" except under certain conditions. Laws can and do change.