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naraburns  nihil supernum  2yr ago (text post)   33478 thread views

Culture War Roundup for the week of October 10, 2022

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Public choice problems are a good place to start, since (a) Henry George understandably did not consider them and (b) they are a problem even if Georgism is correct.

LVTs are highly contestable - has the land value really increased? - and have strong constituencies against their consistent application - the people at risk of losing their homes. The latter are concentrated interest groups, while the benefits of a LVT are dispersed across society. It's not clear to me that a LVT can be effective as a revenue raiser in the long run, while some of the natural ways to make it politically viable also introduce deadweight losses, e.g. waiving LVTs for people who have lived in a certain area for more than x years. That's a deadweight loss, because it creates an incentive to stay put after x < years, because otherwise you start paying LVT again.

So, even if we accept the Georgist arguments for the superiority of an ideal LVT, it's dubious that an ideal LVT is sustainable, and the deadweight losses from a non-ideal LVT may not be worth it. This may be why 100% LVTs have, AFAIK, never been used, and LVTs tend not to last (or at least not raise much revenue). Wealth taxes have similar problems.

Depends on whether the property tax is a second best solution. There are deadweight losses to property taxes, but also advantages relative to other taxes, e.g. it's easier to hide income than hide a house. Property taxes do persist, but there are often political problems with revaluations.

Property taxes also suck

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