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naraburns  nihil supernum  1yr ago (text post)   32866 thread views

Culture War Roundup for the week of October 10, 2022

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The recent Georgist uprising in the rat-sphere seems to be spreading outward, and gathering steam if anything. Lars Doucet, who wrote the original ACX post that blew up, is now releasing a book called Land is a Big Deal which summarizes his writings thus far.

There was also a major takedown of Detroit land assessment practices by a major land parcel data collector, ReGrid that dropped a few days ago. Major takeaways:

  • Property tax assessment is widely variable - some houses have *double* the tax burden of identical houses literally across the street.
  • Landowners tend to have far better valuations (i.e. pay less taxes) than homeowners, probably because they have more time/incentive to protest valuations.
  • Poor taxing and tax foreclosure in Detroit are likely a large part of why the city has fallen on such hard times in recent years.

In addition, some fairly mainstream political candidates such as Chloe Brown who's running for Mayor of Toronto, seem to be gaining steam. Land value tax is a large plank in her platform.

I got interested in land reform through the original series of ACX posts, and frankly I'm surprised how interesting the problem is and how overall neglected the topic seems to be. Even extremely intelligent and well read folks I talk to about it are surprised when they learn that land value is usually just pulled out of thin air - the industry standard is to just take 25% of the purchase price and not give a shit about location or any other factors, which seems bizarre upon a critical review.

I've seen some discussion about Georgism/LVT here, but curious if anyone else has been following this?

Also, what are the arguments against LVT, besides low-effort "taxes are always bad and raising them is evil?" Genuinely curious for well thought out reasons why an LVT would be a bad idea.

Edit: For those new to this idea, a Land Value Tax in it's most basic form simply says we should tax away the value of the land, and only let people who sell land profit off of the 'improvements' they make, such as buildings, restorations, etc. For instance if you bought a piece of land and tried to sell it 1 year later off pure speculation, doing nothing to the land, you would not receive any profit.

Also, what are the arguments against LVT, besides low-effort "taxes are always bad and raising them is evil?" Genuinely curious for well thought out reasons why an LVT would be a bad idea.

My understanding is that this is effectively an opportunity cost tax. I.e., if you are sitting on a valuable plat which could generate 10 M$ in rents with 1 M$ of improvements, the market value of the plat should be about 9M$, and you would be taxed on that value, even if you were only generating 100K$ of rents (including imputed rents).

This is economically very efficient, as it encourages land to be used for its most economically efficient purpose. However, this butts directly up against peoples' real-world desires to "settle" - to establish a home in a place and be able to stay there indefinitely. If, for reasons beyond their control, the price of their property increases, they can be financially forced from their homes, which is about as soulcrushing as being foreclosed upon, while also seeming much more unfair. It destroys a person's ability to make stable long-term plans regarding a very fundamental fact of life. It also destroys residential community, by creating a disincentive to make a community that people want to live in, which has the natural effect of increasing property value. These are already problems with existing property taxes, that would be greatly amplified by taxing away all of the land value (leaving only rents).

After all, most people recoil about applying the same logic in other contexts: should a person's income tax be based on the amount of money they theoretically could be earning, if they worked as much as possible in the most valuable field they are qualified for, in the location with the highest salary? Hard-core utilitarians have seriously proposed this, but the concept of being treated as an economic ends with no function other than to produce social benefit, rather than a sapient being with noneconomic needs and desires makes most people reject this with prejudice.

If, for reasons beyond their control, the price of their property increases, they can be financially forced from their homes,

Is the windfall from selling a house + expensive land gone under Georgism? If my land goes from being worth 200K to being worth $5M, I still get to pocket that $4.8M, right? I think so because the check from the buy er has to so somewhere, but maybe LVT breaks this in a way I cannot understand.

You still do, the big difference is you pay taxes on the 5 mil value until you sell.

It's also likely that land values would be somewhat lower especially in places where some of the current value comes from the disconnect between potential and actual value and being taxed on the current use.

If the land value is kept down by prospects of high taxes then the owner will pay tax on the low value, which will be managable.

You will be forced out of your home long before that, and all the gains will accrue to the condo developer whose political allies pushed you out (like Dag just explained below).

It's been happing where I live for years, and if "rationalists" want to join in it will mark the point where they became just another parasite class that rationalizes entirely in its self-interest.

Frankly advocating "georgism" is the "break out the guillotines" limit for me, because the victims are my people and the preparators are /r/neoliberal vampires. I know too many retired Microsoft types with two-digit employee numbers who do "land use advocacy" in rural areas to have any illusions about their goals for land ownership, and I'm not going to die a landless serf while they relax in their 2-acre billion-dollar mansions surrounded by a hundred acres of untaxed "nature reserves" that used to be our farms.

/r/neoliberal vampires

If I have to become a neoliberal in order to become a vampire, I may accept.

In all seriousness, yes losing your home to developers sounds terrible but it does promote valuable use of land. At the end of the day it depends on how you fundamentally view land and how it should be used.

From my point of view, having land simply reward whoever squatted there first with no view to their effort on the land is both unfair and a huge waste of potential value. If anything I would say the landowners who get a massive benefit from simply being lucky enough to live in a desirable area are the vampires, as they are sucking away monetary value from the surrounding area by doing essentially nothing.

House Vampire is the best house, and no, you don't have to be a neoliberal to join.

Pretty amazing how we went from "there's nothing coercive about land use reform" the other day to "the state will seize your land and give it to developers, die in a pod you filthy undeserving squatter"

Merited impossibility happens so fast these days (or is that the wrong name for it?).

I never claimed there was nothing coercive about it, all taxes are inherently coercive. Also, nobody is seizing anyone's land under a Georgist model.

The government is seizing everyone's land under a Georgist model. The present value of the ground rent (the part the government is taxing away) is the entire value of the land.

I think we're getting confused on terminology. In my view the government already owns all the land in a nation and they essentially rent it even to landowners. This is pretty confusing to talk about though.

Idk, I'll have to go back to the drawing board on some of the Georgist stuff. Getting a lot of good objections from this post.

I kind of like the LVT on economic grounds but every time I listen to the people who want it I feel a great need to go learn how to use a gun.

No, you wouldn't get to keep that 4.8M unless you improved the land yourself, for instance built out a house/new wing or something similar. And then you'd only keep the portion which you improved.

The whole idea is that the 'land value' which drives most real estate speculation is taxed away.

Okay, so where does the money go?

At the start of 1990 I pay $100K+$100K for land+house by writing a check for $200K to the current owner of land+house.

Land value goes up kind of slowly for the first 15 years (say it goes from $100K to $400K, around 10% a year). I pay LVT of $5000 at the start and $20,000 at the end.

Then it really takes off, going up 50% per year. By 2010 the land is just over $3,000,000, and I decide "fuck this" at the $150K tax bill and sell.

So I sell for $3000K+$250K at the start of 2010 and get a check for $3,250,000 from the guy I sold the land to.

I still get that check. Even retroactively applied against all the back taxes, I come out ahead.

... Unless I decide to keep on living on the the $3 million land for 20 years. But I am choosing to leave nearly $3 million on the table for doing that. Being able to keep on living in one place is nice but not $3 million nice.

Under LVT theoretically all property is basically worthless because its value is taxed away. It would be impossible for its value to grow that large, because the associated taxes would grow at the same rate, making its net value 0.

Even under the "government owns it and just leases it to you" model, land still is not worthless, the same way a landlord's building is not worthless to the people who live there.

It is basically worthless to them, if you assume the landlord is charging the maximum possible rent they are willing to pay.

IIRC, implementations of Georgism also include Land Transfer taxes to mitigate people earning that windfall.

So I sell for $3000K+$250K at the start of 2010 and get a check for $3,250,000 from the guy I sold the land to.

No, in with an LVT you would get that check, and everything but the $200K purchase price (adjusted for inflation) and the value of your improvements, would be taxed away. This number would be adjusted based on how much you've already paid in yearly taxes, depending on the system.

Does that make more sense?

That sounds like double-dipping and is very frightening.

EDIT How do you establish land value without private sales? This is always a big problem in pure global communism where you lose access to price signals.

Honestly I may not understand the LVT that well, don't take my argument as the LVT position. I'll have to read more about the nitty-gritty.

There would be private sales, they would simply be heavily taxed based on land value. The numbers would be public (or at least accessible to assessors.)

The Georgist LVT is 100%. Whatever the value is of that land, you're paying it to the government. So you should buy the $100K house + $100K land in 1990 from the previous owner for $100K. Over the course of the first year you pay whatever the value of holding a piece of $100K land is for a year in taxes. Same for each of the years after that, with the new value of the land. When you sell, you get the $250K for the appreciation of the house, but nothing for the land. Of course, most likely no one else wants a $250K house on land they can't afford to pay the taxes on, so in fact a developer takes it from you for a song or you abandon it to the government, and someone else who is going to fill the land with 400 square foot apartments develops it instead.

If the LVT was done honestly, in this scenario you should be paying $0 taxes on the land because its market value is $0. If the land isn't worth $0, a land value tax makes it worth $0 according to the market--nobody would want to buy land that's priced higher than $0, because they have to pay the sale price plus 100% of the value in taxes, which is a net loss.

(And actually, all land would have negative value. The land is valueless because all the value gets taken away in taxes, plus you have transaction costs.)

The usual way the Georgists put it is taxing 100% of the land rent. The market value of the land is indeed zero under this system, but the land rent is not zero.

I have a hard time, even after Googling it, figuring out what land rent could mean here that's not also zero. The land rent is supposed to be the amount of rent the property would generate. Since all the land rent is taxed away, the land owner should be indifferent to how much land rent anyone would actually pay, which would drive the land rent down to zero as well.

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Of course, most likely no one else wants a $250K house on land they can't afford to pay the taxes on,

The hypothetical was that the land value was going way up. If no one wants to buy it then the value is not there.

They want the land, not the house.

I would think that in a lot of cases, the house would have negative value, since it would have to be demolished and cleared away in order to improve the land.

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