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naraburns  nihil supernum  1yr ago (text post)   36197 thread views

Culture War Roundup for the week of October 24, 2022

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Apparently the UK's entire net worth was £10.7 trillions in 2020 according to the ONS, their chief statistic agency. What's remarkable is that a whopping 60% of that is "non-produced, non-financial assets".

That's a fancy way of saying land. Why isn't this fact more well known? Should we expect it to be different for other countries? And why aren't more people talking about Georgism?

I don't have a strong opinion about Georgism, but my one area of confusion is that there are ways to live a decadent life without owning a lot of land. In the extreme, a very wealthy person could buy a nine-figure yacht and basically live on it, enjoying a life of luxury beyond avarice without owning a single square foot of land, and hence I suppose without paying any tax. Short of that, an upper middle class person could live in a small but luxurious house and spend lavishly on staff, deliveries, elaborate vacations, etc., and be taxed like his middle class neighbors. Is it a goal of Georgism to encourage that sort of land-lean lifestyle? If so -- why? And if not, how much dead weight loss does it cause to distort people's consumption in that manner?

Is it a goal of Georgism to encourage that sort of land-lean lifestyle?

The explicit goal of Georgism is to encourage productive use of land, and prevent idle land speculation (I.e. someone owning a second property they live in 10% of the year, or holding a vacant lot because they think the price will go up.)

In the extreme, a very wealthy person could buy a nine-figure yacht and basically live on it, enjoying a life of luxury beyond avarice without owning a single square foot of land, and hence I suppose without paying any tax.

I think this is highly unlikely, unless you go for the idea of 100% LVT and getting rid of all other taxes, which some Georgists believe but to me seems an extreme position.

Both Georgism and the graduated/progressive income tax are methods of taxing proxies for economic activity; both introduce artifacts and market distortions, and both have unwanted ancillary effects on freedom.

I would much rather directly tax economic activity, dimes on the dollar, and give everyone a universal dividend on that activity in place of a tax refund to cover the necessities of life.

The FairTax proposal would eliminate all federal income taxes (including the alternative minimum tax, corporate income taxes, and capital gains taxes), payroll taxes (including Social Security and Medicare taxes), gift taxes, and estate taxes, replacing them with a single consumption tax on retail sales. -Wikipedia

In the process:

  • It would decouple revenue from labor, protecting government funding from the coming automationpocalypse.

  • It protects freedom because only new goods are taxed, only the first time something goes from being an object of commerce to private property; it can never be taxed again, even if refurbished, rebuilt, and resold. Thrift stores and secondhand stores would be tax free.

  • It cleans up the various market distortions all the subsidies and loopholes of the income tax have introduced over the years.

  • Even used homes become immune from being taxed, taking the government out of the speculation game.

I think this is highly unlikely, unless you go for the idea of 100% LVT and getting rid of all other taxes, which some Georgists believe but to me seems an extreme position.

Wikipedia makes it sound like that is the definition of Georgism: "Georgism, also called in modern times Geoism,[2] and known historically as the single tax movement, is an economic ideology holding that, although people should own the value they produce themselves, the economic rent derived from land—including from all natural resources, the commons, and urban locations—should belong equally to all members of society."

But agree that these discussions are best on the margins, i.e. would we be better off shifting some of our tax incidence from income to land.

The explicit goal of Georgism is to encourage productive use of land, and prevent idle land speculation (I.e. someone owning a second property they live in 10% of the year, or holding a vacant lot because they think the price will go up.)

Isn't that already the incentive? If you own a giant lot of land that you plan to hold for 50 years for speculative purposes, you already have an incentive to lease it to developers to build houses or commercial real estate and rent it out for those fifty years. On what basis do we believe that those incentives are too low? Will we be made better off as a society if the rich guy who currently lives on 5 acres in Atherton with one housekeeper moves into a 1-acre lot in Redwood City but has a staff of ten people? Is there a reason we should want to encourage people to divert consumption from residential lot size to goods and services?

I acknowledge, by the way, that income tax is also distortive. I think the argument needs to be in the form that a tax on acreage is less distortive than income tax, on the margin. I don't think it's totally implausible, but I'm not familiar with an argument along those lines.

As with any ideologically label, there will be changes and dissent within the ranks. Wikipedia is also not the most accurate source when it comes to these social movements.

I would say most self-proclaimed Georgists I have talked to seem to think that:

  1. LVT is a great way to tax things and is hard to avoid - we should have a relatively large one

  2. Housing/Land markets are fundamentally broken and unfair, something should be done to change that

I don't speak for Georgism as a whole of course, but similar to any -ism there is a large umbrella that it covers.

Isn't that already the incentive? If you own a giant lot of land that you plan to hold for 50 years for speculative purposes, you already have an incentive to lease it to developers to build houses or commercial real estate and rent it out for those fifty years.

If you are in a market where the land value is going up, you do not have an incentive to build on it, you have an incentive to hold it. What if you build something on the land and can't recoup your investment? Also, which is easier - holding land to sell it for a profit later, or trying to make use of the land?

I believe those incentives are too low by the fact that land speculation exists in the first place, I think it should be extremely rare and/or nonexistant for someone to sit on a vacant lot. I also think that people owning property they almost never use or rent out is a huge waste of resources and opportunities. (I.e. the lakehouse that gets used twice a year.)

Will we be made better off as a society if the rich guy who currently lives on 5 acres in Atherton with one housekeeper moves into a 1-acre lot in Redwood City but has a staff of ten people? Is there a reason we should want to encourage people to divert consumption from residential lot size to goods and services?

I don't really follow the argument you're making here. Also in terms of diverting consumption from residential lot size to goods and services, Georgism is actually widely believed to encourage high density housing, as renting property units is usually one of the most profitable things you can do with land. With regards to goods and services, yes I think we should incentivize there to be less 'empty' parking lots and roads, and more land directly used for exchanging goods and services.

I think the argument needs to be in the form that a tax on acreage is less distortive than income tax, on the margin. I don't think it's totally implausible, but I'm not familiar with an argument along those lines.

Land value tax is largely believed to be the only tax that doesn't suffer from deadweight loss, or in other words it does not reduce economic activity. This is because deadweight cost comes from the difference between production price and sale price, and land has no production price.

Also, another major benefit is that land value taxes are extremely difficult to avoid in practice, unlike income tax.

If you are in a market where the land value is going up, you do not have an incentive to build on it, you have an incentive to hold it. What if you build something on the land and can't recoup your investment? Also, which is easier - holding land to sell it for a profit later, or trying to make use of the land?

Every year that the land sits idle imposes the opportunity cost of the rent you could have charged by leasing it out. If you think the value of land is going to go up, then if anything that reduces your worry that you may not recoup your costs of developing the land, because higher land value implies higher demand, which implies that you'll be able to rent it once it's developed.

I believe those incentives are too low by the fact that land speculation exists in the first place, I think it should be extremely rare and/or nonexistant for someone to sit on a vacant lot.

In areas with high land values, this is pretty rare. Apartments rent quickly, houses sell quickly, and vacancy rates are low. Undeveloped lots get developed quickly, because each month they sit undeveloped carries a high opportunity cost in the form of lost rent.

Also in terms of diverting consumption from residential lot size to goods and services, Georgism is actually widely believed to encourage high density housing, as renting property units is usually one of the most profitable things you can do with land.

Rents will have to rise too, though, since in a competitive housing market all of the incidence of the land tax will fall on the renter in the form of higher rents. I'm not sure why Georgism would result in more renting. The distortion seems to be in the direction of less land usage. I agree that it's likely to result in densification, at least in high demand areas. In low demand areas, it may just result in more abandoned lots.

Land value tax is largely believed to be the only tax that doesn't suffer from deadweight loss, or in other words it does not reduce economic activity. This is because deadweight cost comes from the difference between production price and sale price, and land has no production price.

Deadweight loss comes from any distortion of behavior from its efficient allocation. For example, some companies are well suited to have a remote workforce, and others are well suited to have employees gather in person. Raising taxes on land will encourage those in the latter camp to try to force themselves into the former camp, which will make those companies less effective. We'd probably end up with a lot fewer restaurants, since they are famously low margin businesses where a big proportion of the cost is in their real estate, and raising their menu prices will result in people dining out less. Do we want fewer restaurants? I don't know why we would, but that's a distortion that Georgism would create.

Also, another major benefit is that land value taxes are extremely difficult to avoid in practice, unlike income tax.

They're easy to avoid in practice if you're able to shift your consumption away from land and toward goods and services.

I made a top-level comment here a couple of weeks ago that tried to outline some of the major updates on the Georgism discussion in the ratsphere.

(Editing for less strawmanning.) I think that a lot of the problem is that Georgism strikes at the heart of fundamental value differences for folks. Many people seem to equate Georgism with Communism, or redistribution of wealth, which I don't find convincing.

For instance:

@bnfrmt:

LVT is equivalent to the state seizing all land, and renting it back at market rates; it's expropriation on a massive scale.

@Brannigan:

Georgism at heart is about identifying what is often the most precious possession a person can have, that most of the middle class has spent 30 years of their lives working to pay off, to render to their posterity, and stealing it from them despite the fact that they haven't really done anything wrong.

@laxam

"We know better than you how you should use your land", is roughly analogous to, "We know better than you what you should put in your body".

@Westerly

This strikes me as rationalists rationalizing their own class self-interest. The same way EA just so happens to only support democrat politicians, rationalism coincidentally just so happens to work out extremely well for the types of people that are rationalists. Easy to be YIMBY when you are 25 and living in a rented apartment in San Francisco.

@naraburns

My concern with LVT is that I regard most kinds of property tax (as well as income tax) as fundamentally immoral

@The_Nybbler

Still low-effort is "it's communism, but only with land". But given how bad communism has turned out, I think it's sufficient. The Georgist LVT is equivalent to the government owning all the land and leasing it out to the highest bidder.

@MeinNameistBernd

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.

These are not cherry picked responses - all of these had at least 10 upvotes, and in many cases 25+.

Some of the responses were less charitable, which has led to me getting heated on this topic, such as people literally calling me a vampire (and getting 15+ upvotes) for arguing for a type of land reform.

So this was hashed out a little in the previous comments, but I'll try to make it explicit here. The central issue I find with Georgism is that any transition from the current tax system, to one where many taxes are replaced by a high LVT (let's say 80%), would be appalling.

Many, many people, who'd spent their whole lives investing in their homes, would see most of that value vanished in a puff of smoke. If you don't get just how upset people would be about that, I think you really have missed something here, and it would be worth taking more time to understand it.

This is a separate issue from whether or not LVT is a good idea de novo; if income taxes had never existed, if we'd always had an LVT, would that have been better? My suspicion is no; state evaluation of land values for taxation already exists in various places, and it doesn't tend to value things very accurately.

Auction-based methods, on the other hand, are clearly designed for robots rather than people. Yes, I know, the system has a certain intellectual elegance, but if you actually tried it for real, people who aren't up on the latest housing-market trends would be getting screwed over constantly.

None of that matters, though, if we can't get there from here.

But isn't it rather distorting and unfortunate that people are "spending their whole lives investing in their homes" in the first place?

Agree LVT as you describe it would be very bad (although wouldn't it still be in a world w/o income tax and with 'investing in homes'?)

Well, as discussed below, I think a high LVT would destroy the economy one way or another, so a low income tax is not really much recompense for that. Even if you're not getting screwed by the transition, and don't care about the people who are.

As to "no investing in homes", an LVT can only supplant income tax if rents stay high, in which case you'll still spend your whole life paying for your home; you'll just pay the money to the state, rather than a landlord or a bank.

The point I was trying to make is - LVT or not - having a significant part of peoples' wealth be "in their homes" just seems strange? Like if you're designing an economy from scratch, nihilist governance or w/e, why would you have that? Whatever part of that isn't construction costs averaged across ownership duration just seems like misdirected economic attention, kinda? Econ 101 will explain how 'markets give efficient outcomes, which is good for all parties, so markets are good and we should have them everywhere'. How are high home prices and 'having value invested in your home' efficient, as a way of organizing the economy, vs having less expensive homes and investing in stocks or savings or smth?

The only thing I can think of is as a sorting mechanism where people use money to prove they're worth being around to other people with that much money, but surely that could be done more efficinetly.

I mean, in Econ 101 terms, houses in expensive places are expensive because there's high demand and low supply. Everyone wants that penthouse overlooking Central Park, but they can't all have it; high rents are the efficient market price.

If you want a different price, you need to either lower demand - increased remote work, better public transportation - or increase supply - more house building, zoning reform. Probably all of these are good ideas? They're not going to drive the land rent to zero, though.

The intuition that says "why can't we just make the price lower" is a classic Econ 101 mistake. If you apply a price cap, there will be too much demand, and not enough supply. Everyone will want to rent or buy, and no-one will want to let or sell.

Many, many people, who'd spent their whole lives investing in their homes, would see most of that value vanished in a puff of smoke.

Agreed, this would be a big violation of the property rights everyone signed up for. The cleanest solution I can think of (which I haven't seen mentioned by Georgists), is to pay everyone out the land value of their properties. Essentially a forced buyout of the LV part of the property.

With every property owner getting a massive tax-free cash windfall, the whole thing starts to look a lot more politically & ethically feasible imo.

Except that's an enormous amount of money; at a rough guess, it would at least double the US national debt.

Sure, it's less bad than just seizing the lot; I think it moves the idea from "destroys the economy as capital flees the country" to "causes massive inflation and insecurity".

I'm not sure "money-printing on an industrial scale handed directly to landlords" is all that politically feasible, though. Never mind all the other things you could do with the cash.

It would be a painful transition, but remember the idea of Georgism is that we are constantly destroying massive amounts of value through the taxation of things we want more of (labor, capital, land improvements etc). If we've accepted this idea, we can expect a permanent boost to the economy once we've paid the ticket price. So there should be some clever financial engineering way of pulling back those expected gains into the initial payout.

I'm not sure "money-printing on an industrial scale handed directly to landlords" is all that politically feasible

It wouldn't just be "handed" to landlords, we would be buying something from them. This is how nationalizing assets generally works, you need to pay out the private owners.

It wouldn't just be "handed" to landlords, we would be buying something from them. This is how nationalizing assets generally works, you need to pay out the private owners.

Yes, I understand that. Do you want to try selling the public on it? Or explaining to them why their gas costs twice as much, because something-something landlords something-something economic efficiency?

More to the point, if we can take on that kind of massive debt, there are a huge number of things we could do with it. Is nationalizing land really the most important one? I know it's a cheap shot, but:

This strikes me as rationalists rationalizing their own class self-interest.

Here in the UK, Liz Truss tried taking on a much smaller amount of debt, for the ostensible aim of boosting growth; personally, if we're going to borrow, targeting growth directly seems a much better bet than just buying land. It went so well, she's now the shortest-serving PM in British history.

Many, many people, who'd spent their whole lives investing in their homes, would see most of that value vanished in a puff of smoke.

Agreed! an instant switch from 0 to 100% LVT would be appallingly dehumanizing and unfair. I would argue for a measured approach of say ratcheting up a LVT 10% every 5 years or so, up until you hit the 60% or 80% benchmark. Hopefully this would lessen some of the burdens of transitioning while also letting us eventually reap the benefits.

My suspicion is no; state evaluation of land values for taxation already exists in various places, and it doesn't tend to value things very accurately.

This is probably the strongest argument against Georgism from a practicality standpoint. I believe that with modern technology, especially machine learning models, we can make land valuation far more accurate though. We simply need the political will to fund appraisers and assessors more, as well as care more about their accuracy. Right now in the U.S. especially their offices are an understaffed, underfunded joke. No wonder they aren't accurate.

Auction-based methods, on the other hand, are clearly designed for robots rather than people. Yes, I know, the system has a certain intellectual elegance, but if you actually tried it for real, people who aren't up on the latest housing-market trends would be getting screwed over constantly.

Ideally a profession of folks who advised people here would crop up, same as in many complex markets. Admittedly this gets a bit hazy, but I'd imagine we could figure it out and the market would eventually correct.

None of that matters, though, if we can't get there from here.

Do you still think this is true if we do a slow, decades based move to LVT?

This is probably the strongest argument against Georgism from a practicality standpoint. I believe that with modern technology, especially machine learning models, we can make land valuation far more accurate though.

I mean, sure, if government became a technocratic utopia, they could probably do a better job. Actual government doesn't have a great track record with cutting-edge computer projects, though, and that's before we worry about the assessors getting politically captured, something that seems to happen fairly often even with much smaller sums of money.

Ideally a profession of folks who advised people here would crop up, same as in many complex markets. Admittedly this gets a bit hazy, but I'd imagine we could figure it out and the market would eventually correct.

Yeah, there's definitely room here for some kind of industry help; maybe you get an advisor to help you with the pricing, maybe you take out some kind of insurance policy against getting evicted, who knows. It's still going to be imperfect, though, and when the system fails, you stand to lose both your home, and a large sum of money trying to replace it.

We're both the kind of person who posts here, so we're probably better-prepared than most to handle this kind of thing. Nonetheless, even with professional help, this sounds pretty stressful to me; never mind worrying if my elderly relatives are doing it properly.

Do you still think this is true if we do a slow, decades based move to LVT?

It's a good question. I'll start by saying that I don't think we can do this; Western democratic states aren't really capable of committing to tax policy decades in advance. But sure, let's assume again that the technocrats have taken over.

To make this specific, we'll need some numbers. I'll take the discount rate at 3%, from the current Fed funds rate, and hold rents constant. If we raise the LVT by 10% every 5 years until it hits 80%, some quick math says this is equivalent to about a 50% instantaneous wealth tax. Which is still huge!

So it's certainly possible, but if you want the transfer effects to be small, we're talking centuries rather than decades. Maybe that's a good idea? Either way, we'd both be dead long before it arrived.

I believe that with modern technology, especially machine learning models, we can make land valuation far more accurate though.

I feel like there would also be political resistance to "Well, the magic black box that no-one really understands says you need to pay twice as much rent this year due to circumstances outside your control." (and rightly so!)

If we raise the LVT by 10% every 5 years until it hits 80%, some quick math says this is equivalent to about a 50% instantaneous wealth tax. Which is still huge!

Specifically land wealth tax, but yeah I won't pretend that an LVT is not a tax on landowners. That is one of the main arguments for it.

So it's certainly possible, but if you want the transfer effects to be small, we're talking centuries rather than decades. Maybe that's a good idea?

It is definitely possible, I refuse to believe that this is such a hard problem. The government can do big projects and overhauls that work well, see Manhattan project, moon landing, etc. but only if there is strong political will. For transfer effects, I am fine with them being large. I'm convinced the current setup for the land market is directly disincentivizing improving land, and that has gigantic knock-on effects throughout the economy.

In the OP, you said:

Many people seem to equate Georgism with Communism, or redistribution of wealth, which I don't find convincing.

And yet:

For transfer effects, I am fine with them being large.

If you want to know why everyone seems so upset, that's why.

Thanks for pointing that out, I could definitely make my stance more clear. What I mean to say is that it is not total redistribution of wealth purely to make people equal.

Land value tax is not about getting rid of capitalism and replacing it with some totally egalitarian society, as is the goal in communism. The core point of Georgism is instead to make the land market function more efficiently, in a way Georgism is less communist than the current system, in which landowners are granted special privileges and can operate in a distorted market thanks to the State. Another way to put this is that the way we trade land is a form of crony capitalism, and Georgism aims to return a true capitalist framework to land, by using capital as a forcing function to use land efficiently.

That’s why when people equate it to Communism I find it facile and not giving Georgism a fair shake. Are you saying that any redistribution of wealth period, even if it makes markets function better, is equated with full blown Communism?

Well, "you don't get to own your home" isn't my idea of a better-functioning market, but yes, if the state takes 50% of my stuff, that I've already paid tax on once, that seems pretty bad to me. Even if it claims to have really good ideas for how to use it!

More comments

If the principle is that taxing a thing implies granting government ownership over the thing, then why is it better to tax income than land? Frankly if I had to live in a quasi-communist state, I'd prefer the government owned all the land than all of the exchanges of value.

Putting it that way ... would you rather be a slave or a serf? I guess I'd choose serf. Though I'd prefer going back to an era when the government was small enough to be funded by alcohol taxes and tariffs. That way I'm just paying some protection money to the mafia.

So your argument against Georgism is premised on the assumption that the alternative is to abolish income tax and drastically shrink the government to a Lochner era libertarian ideal? It feels like a pretty big assumption.

What if we take that off the table, and consider the alternatives as between the actual status quo that we have today and a tax policy where tax incidence is weighted less toward income and more toward land? I think it's usually more productive to debate policy on the margins.

would you rather be a slave or a serf?

Definitely a serf. Are you suggesting that we're slaves right now?

I mentioned elsewhere I'm not really against Georgism.

I do think the OP gathered a bunch of angry responses because they didn't treat the policy change with the appropriate gravity.

I'd have preferred to start with Georgism. I'm not sure I'd like to "switch" to it, because I think in practical terms the government won't get rid of the income tax. So instead of switching we will just end up with another form of taxation.

Definitely a serf. Are you suggesting that we're slaves right now?

https://fee.org/articles/the-tale-of-the-slave/

Yes I'm suggesting that we're slaves right now. We are all owned by the state. Our labor is theirs, for a time when I was younger I owed them my life if I was drafted. I'd also rather be a serf. But as I said above I don't believe income taxes are going away. So I'd rather be a slave with some additional land owning privileges than a slave with fewer land owning privileges.

would you rather be a slave or a serf?

And of course being a employee who rents on a month-to-month basis is even better. If you assume we can't all be lords (and we can't, because useful land is scarce), everyone a free tenant is the next best thing from a pro-freedom-and-equality perspective. This is roughly the relationship between citizen and state under pure Georgism.

When you try to discuss a serious economic initiative and get met with mostly value based responses, or have people literally calling you a vampire (and getting 15+ upvotes), it's hard to feel like folks are willing to discuss Georgism rationally.

It sounds like you believe that discussing a proposal rationally must involve decoupling values from policy?

As I understand it, Georgism is a particular type of tax policy. As such, it is trying to achieve a particular end (funding government) via a particular method (land value taxation). There are many possible approaches to evaluating policy; because of the particular field, I'll start with what a professor of mine called "tax logic." It states that the overarching goal of a scheme of taxation is to maximize revenue while minimizing nth-order disruptive effects. (This is why you get so-called "tax loopholes;" it's an attempt to achieve a better fit between revenue-extraction and tolerance for revenue-extraction.)

However, the "nth-order disruptive effects" that we're trying to minimize covers a ridiculously broad field of types--we're looking at everything related to tax-tolerance, from the direct and mechanically obvious (taxing everyone at 100% of wealth crashes the system pretty immediately) to the squishy, intuitive, values-laden metrics of "taxing [activity A] at triple the rate of [activity B] seems unfair; double the rate might be justifiable, but triple is excessive." The whole point of measuring against tolerance is the insight that tax systems operate most efficiently with a high rate of buy-in; unless a high percentage of people find the overall system generally acceptable (with low-level grumbling), you're going to lose more from enforcement costs than you gain via enforced compliance.

Values-based evaluations of tax policy are essential, because if a policy does not adequately map to the values of those taxed, you don't get that buy-in, enforcement costs skyrocket for less and less return, and your shiny theoretically-perfect tax policy collapses in ruin. Tax logic is exceedingly pragmatic, and one of its cornerstones is recognizing that optimized tax policy evaluates for the society you have, not the one you want.

Interesting point, I hadn't heard of tax logic laid out in this manner before. It's not something I have thought much about, I am attracted to Georgism more on the economic basis. The idea of a tax without deadweight loss etc.

That being said I think if you take a look at the political will of the people in the U.S., with regards to land ownership, there is a growing clamor and need for housing reform. I don't know if Georgism will fix the problems we have, but it certainly seems useful enough to try. Landowners are a powerful political bloc though, so your point makes sense.

That being said I think if you take a look at the political will of the people in the U.S., with regards to land ownership, there is a growing clamor and need for housing reform. I don't know if Georgism will fix the problems we have, but it certainly seems useful enough to try. Landowners are a powerful political bloc though, so your point makes sense.

So much of that is a problem of zoning and environmental laws. Which don't seem directly related to a Land Value Tax.

Environmental laws are one thing, which leads to a whole different rabbit whole.

I'd argue that restrictive zoning laws are often the result of strong blocs of landowners, aka NIMBYs, lobbying against changes to zoning that would lower their property value. Thus creation a vicious circle.

Upzoning single-family-residential land would radically increase the price of individual lots. Under restrictive zoning a developer could only build a 0.60 FAR single-family-home with a white picket fence and a back yard for a golden retriever on that lot. Upzoned, that lot can now hold a much larger apartment building, with each unit renting for less than the house would have, but exceeding the value of the house in total.

What upzoning does is drastically increase the pressure on single-family-home owners to sell, and subject those who want to stay in the area to increased density, traffic, sight-lines into their yards and homes, loss of green space, strain on existing schools and other public services, and, to be blunt, the presence of people not rich enough to be able to afford a single-family-home in that neighborhood. Some of these worries are more morally-acceptable than others, but all of them are real, and unrelated to greed.

I think there has been a philosophy in urban planning, and a desire by urban planners to control things that has led to zoning. Land owners might sometimes perpetuate it, but mostly bureaucrats control zoning in cities.

I’d say that bureaucrats introduced it but landowners are the ones that perpetuate it. Anecdotally I’ve spoken with many bureaucrats in municipalities, many of them hate zoning laws but can’t change anything due to local politics, which are typically dominated by home owners.

Responses like "LVT is equivalent to the state seizing all land, and renting it back at market rates; it's expropriation on a massive scale." are not knee-jerk emotional responses, and they are light, not heat. That when this light is shed on Georgism, it becomes obviously (to most) a bad thing is a problem with Georgism, not the comments.

they are light, not heat

I disagree.

Here are some actual arguments against a LVT:

  • A LVT will force people to sell their homes, because people are cash-constrained

  • A LVT will force people to sell who have lived somewhere for decades, and the anxiety this creates among everyone (whether or not they are forced to sell) is a huge cost that outweighs the benefits

Arguments like "LVT is equivalent to the state seizing all land, and renting it back at market rates; it's expropriation on a massive scale" are just examples of the worst argument in the world. They're not careful analysis of values or cause-and-effect. They are simply trying to get you to associate the connotations of one idea (the government seizing property) with another (the government taxing property) with no critical analysis of the connection.

For instance, it is plainly obvious that a sales tax on cigarettes is dramatically different than a state seizing all cigarettes. Like, do I even need to state the differences? It is equally obvious that a LVT on a house is different than the government seizing the house - we already impose LVT on houses, we just bundle them with an additional tax on improvements and call it a "property tax".

Argument by analogy is, imo, usually a bad and lazy way to think and write. At best its value is as a brain-storming idea generator; definitely not as a finished thought. Alas, it is also one of the most common ways to "argue" on this very forum.

Arguments like "LVT is equivalent to the state seizing all land, and renting it back at market rates; it's expropriation on a massive scale" are just examples of the worst argument in the world. They're not careful analysis of values or cause-and-effect. They are simply trying to get you to associate the connotations of one idea (the government seizing property) with another (the government taxing property) with no critical analysis of the connection.

No. The 100% tax on imputed land rents that Henry George advocated is equivalent to the state seizing all land and renting it back at market rates. It is not similar in some contorted way, it is not an analogy; it is economically the same thing.

Really, this is just another way the quoted post is terrible.

A LVT is not equivalent to the 100% tax advocated for by George. Equivocating between the two is yet another shortcoming of the critique.

My guess is the majority of people who self-define as Georgists favour a land tax close to 100% (80% of the rent attributable to land and normal income tax rates on the part of the rent attributable to improvements is what I would favour in dath ilan, but in the real world I am not a full-on Georgist and favour incremental moves towards higher land taxes and lower other taxes).

If you accept the basic libertarian arguments that unavoidable taxes are confiscatory, and that non-sovereigns can "own" land the same way they own chattels, then full-on Georgism is indeed a confiscation of land (but not improvements), and a Georgist-inspired shift towards higher land taxes and lower income taxes is a partial confiscation of land. In fact, of course, you only ever "owned" the land at the pleasure of the State* and Georgism is a change in the terms under which the State allows you to continue "owning" it. Land taxes no more violate the property rights of landowners than Uber violates the property rights of taxi medallion owners.

  • At this point I am only making this as a factual argument, although I think it is more right than wrong as a moral argument.

How is changing the way land is taxed equivalent to the government seizing all land? None of the anti-Georgists have been able to explain this to me.

An LVT does not have to be 100%, and besides even if it is people still own the improvements aka buildings on the land. What's really being taxed is the 'locational' aspect.

To me this argument is the equivalent of saying "income tax is the state seizing all work" which I just don't find reasonable.

Income tax is the state claiming ownership over work.

Think of it this way ... for any given tax, what would it take for a private non-government actor to implement that "tax". If I was a private actor and I wanted to charge someone rent for getting to use a parcel of land ... then I would need to own that land.

If I was a private actor and I wanted to take a cut out of all the money that someone gained, then I would have to own that person like a slave.

The power to regulate is also a form of ownership.

An alternative interpretation, is that the state doesn't own the things it taxes, it is instead just stealing. The libertarian refrain "taxation is theft" is along these lines. But that is what it boils down to, either the state has ownership, and thus the right to determine how the thing they own is used, or they don't have ownership and they are just constantly stealing.

Thank you for explaining the libertarian view - I understand where those folks are coming from. I suppose I find it disingenuous because it seems that people who aren't full libertarians and are on-board with other taxes seem to have knee-jerk responses when it's a tax on land rather than something else.

Maybe I'm incorrect, and everyone saying the government is stealing our land really is a full out libertarian that doesn't support any taxes. I will ask next time, but it doesn't seem likely.

There are also people who realize that what the government is doing through taxation is basically theft, and their response is something like "Ok yeah taxation is theft, but the theft is for a good cause. Plus its not like a lot of other theft, and the word theft has some negative baggage, so you are just using the association to say that taxation is bad". That is sort of Scott Alexander's response if I remember him correctly.

It can be both a massive theft and the correct thing to do. But if it is a massive theft and you are treating it as just a minor adjustment in policy then that might lead to you misunderstanding the anger coming your way.

If I was going to justify a land value tax I would start with requiring the income tax to be abolished. And that the land tax would explicitly exist as a way of funding defense of that territory. There is a massive amount of tyranny and injustice around the income tax, and the idea that the value of people's work is literally being stolen from them on a nation wide scale. Returning people's freedom over the money they earn through work seems like a worthwhile tradeoff for taking away the ability to meaningfully own land. But thats not how this discussion started out.

I can get behind that framing, and I know many other Georgists argue for that. My issue with that promise though is I think an LVT should be phased in gradually. If you do that it becomes much harder to immediately wipe out income tax.

You could set them to ratchet down over time as an LVT increased which I think makes sense, but is far less appealing to the masses than “I’ll wipe out income tax and replace it with something else!”

All that said, interesting framing on the taxation is theft. I think we have common ground in that the main draw of the LVT is that it’s more fair and less game-able in theory.

Based on the implementation of previous tax schemes it would be highly unlikely for the income tax to be ever fully phased out. Its not like the US really got rid of any other taxes once it had income taxes. For a while they got rid of alcohol taxes by banning all alcohol, but thats about it.

Having income taxes and LVTs seems terrible.

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Would you call yourself a minarchist?

If any government is to do anything, it generally needs to pay for it. If it's going to have the money to pay out, it needs to have some method of collecting money. What would you define as the valid parameters around "government collecting money"?

Anarcho-capitalist. Though I get along well with minarchists and try to avoid arguing with them.

I think even for people who are not minarchists/anarcho-capitalists that it is useful to recognize what government is doing. Governments collect money either by owning everything and charging rent, or they are stealing stuff from people. The government can own everything or steal things, because they have a monopoly on the use of force.

It is worth noting that under anarcho-capitalism, you can't own except to the extent that you can defend it. Much like feudalism really - in fact feudalism evolves from the anarcho-capitalism that existed briefly after the fall of Rome as the competing protection agencies (Knights, a word which derived from the old Saxon word for bandits) established local monopolies (Lords), set up the hierarchical system of arbitration between neighbouring protection agencies that David Friedman advocates (Kings), and cut a deal with the local influencers to propagandise for maintaining the system (the Church).

Under feudalism, the effective tax rate on non-warriors who wish to occupy land was also close to 100%.

Would you say that some level of tax collection is a necessary evil, rather than both unnecessary and evil?

I assume that various tax schemes would fall on a gradient of more-to-less offensive, depending on the details; what type of taxation (if any) would generally be on the less offensive end of the spectrum?

If you want to have a government, yeah taxation in some form is probably necessary.

And yeah the badness of taxation is on a gradient, and not all forms of taxation are evil. The problem is that the less offensive forms of taxation are often not as good at raising massive amounts of revenue.

I think certain use taxes are often ok-ish. Like docking taxes that pay for dredging of waterways. Other use taxes seem pretty messed up, especially when the government has an enforced monopoly on the service. The more necessary the service and the more those taxes are used to pay for random other things the more messed up it is.

Sin taxes are annoying and paternalistic, but I wouldn't call them evil.

Import tariffs that are applied universally on all goods (and not used for protectionist schemes) seem ok as well.

Head taxes feel a little less evil than income taxes, simply because they don't require a massive administrative state to look into everyone's incomes.

If poll taxes were the only tax I would consider them fully reasonable.

How is changing the way land is taxed equivalent to the government seizing all land?

The value of land is the future present value of the cash flows it generates. Those cash flows are what Georgism seizes.

As one site puts it "Land Market Value is the land rental value, minus land taxes, divided by a capitalization rate." If land taxes are equal to land rental value, the land market value is zero, and the entire value of the land has been seized.

Yes, an LVT does not have to be 100%. But the Georgist land tax is, and the relatively small reductions from 100% modern Georgists accept to try to get around practical problems don't really change much. If you're talking about a much smaller LVT, you're not talking about Georgism.

In my experience most Georgists I’ve talked to prefer a 60-80% land tax, to make up for practical problems in the implementation. Maybe those aren’t the ones that write books etc.

I guess the fundamental difference for me is that I find the land market to be inherently flawed due to the fact that nobody creates land and it cannot be created, only improved.

I find the land market to be inherently flawed due to the fact that nobody creates land and it cannot be created, only improved.

The Netherlands would like a word with you.

Land on the seabed is still land - they are simply improving it. Making land on the seabed usable and able to be built on is an improvement, this argument has been tossed at Georgism for over a century.

Under the Georgist framework all of the ocean is still 'land,' if that makes sense.

this argument has been tossed at Georgism for over a century

Why do you suppose that is? The colloquial meaning of "land"--let's say, "the patches of dirt that are not submerged beneath rivers, lakes, or seas"--makes claims like "nobody creates land and it cannot be created, only improved" clearly false. So when Georgists say "land," they apparently have a technical definition in mind that goes beyond what people think when they hear Georgists say "land."

That sets the whole discussion up for failure straight out of the gate, because you're either being deliberately or inadvertently obtuse about the central subject of discussion. In the United States today, the physical coordinates over which people claim ownership are often the least of what their "real property" (as we call owned land) entails. On the prevailing "bundle of rights" view, in addition to the physical coordinates you own, your "property" also includes things like a right of quiet enjoyment, a right of access, a right against trespass, and so forth. Those are real rights, and often they are not the kind of right that you can really put a fair dollar value on.

There is a school of legal thought, "Law and Economics," which holds roughly that the purpose of law is to facilitate efficient economic exchange. Its founder, Richard Posner, has broadly disclaimed its universal applicability. Much of the law is concerned with economic exchange, yes--but not all of it. Individuals have important interests that should not be violated, not even if the majority says so, not even if the majority would benefit. Just as "land" on your view can also mean "the sea," "real property" means much more than spatial coordinates over which you happen to have dominion. Whatever its effects on markets, Georgism fails to appropriately account for its effects on people.

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Didn't seem like people even tried to charitably understand what Georgism is.

Generally, "I want to take something from you" should not be understood charitably.

And you're not even saying that those are wrong; you're just objecting to the spin.

Generally, "I want to take something from you" should not be understood charitably.

So do you think we should never try to understand taxation charitably?

"Generally" isn't "always", but I'd say "not in most situations where it comes up in live politics".

It also depends on what you mean by "charitably"--charitable in the sense of "do they really mean it sincerely" is different from charitable in the sense of "are they well-intentioned towards, and not engaged in motivated reasoning about, the people they are taking things from".

In the linked thread you said many valid objections were raised and you will think more deeply about LVT:

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.

But now you return and instead of refuting arguments, you sneer at them.

I did think more deeply about the raised critiques, after realizing that my own understanding of Georgism was flawed. After addressing those issues and discussing some of the objections, looking back I do not think they are very strong.

That's a good point though - at the time I felt differently. This issue is near and dear to my heart so I'll edit the post to be less inflammatory.

Because Georgism remains a bad idea with a weird appeal to a small subset of smart people? Essentially, there's no difference between Georgism and the government owning all the land outright.

Essentially, there's no difference between Georgism and the government owning all the land outright.

This is so obviously wrong, it's hard for me to think you're serious.

That's like saying

Essentially, there's no difference between income taxes and you being the government's slave.

or

Essentially, there's no difference between capital gains taxes and communism

Like, yes there are. There are enormous, dramatic, obvious differences in all three cases.

In each of the three cases, the government has a duty to seize all you own or earn if you do not pay them part of its value in perpetuity. Any infinite debt is equivalent to non-ownership.

Are you indifferent between paying property taxes (as happens today) and the government literally seizing control of all lane?

If not, they are not equivalent, so stop saying they are equivalent.

You’re zooming out to a ridiculous extent. You may as well say “the government has a monopoly on the legitimate use of force, so they own everything, and we live under communism”

That level of abstraction is so useless as to not even be false.

What indicia of ownership does Georgism grant to the government beyond taxing it? Surely there's a lot more to ownership than the right to tax something -- such as the right to take possession of it.

And if you don't pay taxes in a Georgist system ... what happens?

In the current tax system they often take possession of the things they claim to be owed.

Taxation of a thing is ownership of that thing, including the right/ability to take possession of that thing if the taxed person doesn't pay up.

Ownership also implies the right to take possession of the thing regardless of whether the person pays up. If I own a home and rent it to you, then I can choose not to renew your lease and repossess the house, even if you've never missed a payment.

Sounds like eminent domain.

But I'm not dead set on whether the government owns everything and rents to people, or the people own things and the government just constantly steals from them.

I am not more strongly against a land tax then I am against income tax. I consider them both a bit abhorrent in their implications.

The government has to pay you for the property in order to exercise eminent domain.

It has to pay you at "fair market value" and not what you are willing to sell it at. So it is setting rules for itself on how it uses its own property, but its still their property.

Nonetheless -- if you own property, you don't have to pay its fair market value to take possession of it.

I get that you prefer a more libertarian oriented government (or so I'm inferring), but it feels like you're just trying to catastrophize non-libertarianism with your word choice. Income tax is what it is; insisting that "taxation is theft" or "the power to tax is the power to destroy" doesn't persuade anyone, and doesn't accurately carve reality at its joints. We don't live in a communist society, private property does exist, the state doesn't own everything, we aren't slaves or serfs, taxation is a meaningful burden but not analogous to ownership, there are constraints on the exercise of state power, we have a right of exit, etc.

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There is a vast difference - the government already owns all the land, it is just taxed in a different way. Georgism isn't changing ownership of the land, it's changing the way the government taxes the land.

Georgism isn't changing ownership of the land, it's changing the way the government taxes the land.

I think this strikes at the root of the issue, and it's something many seemingly misunderstand. I have respect for people who want a low-tax regime as possible, but even there you can replace a lot of taxes with a LVT, so in some instances the cumulative tax burden could even be lower than before. High taxes are not in themselves a goal worthy of striving to, but tax efficiency is, even if it happens to land a lower level than before.

The fact that most of the wealth in the UK is in housing is relatively well-known. We are a country that is notoriously obsessed with house prices, to the point where they get used as an economic barometer the way the US uses the stock market. "Pension or property?" (i.e. should you invest your long-term savings in the stock market via a tax-advantaged wrapper similar to 401ks in the US, or in buying residential property and renting it out as a small-scale landlord) is a sufficiently common rich-person financial question that random celebrities get asked it in newspaper interviews. The fact that most of the value of housing in the UK is land and not buildings is admittedly less well known.

I would expect it to be slightly different in other countries (although Piketty's graphs in Capital in the 21st century show the situation as just as bad in France), because in most countries are open-access by default (policy-induced housing scarcity is a feature of a small number of rich cities), whereas in the UK is closed-access by default (it is a problem everywhere except declining industrial towns).

The fact that most of the value of housing in the UK is land and not buildings is admittedly less well known.

Can drill it down narrower. The value of housing comes not from the land, but from land you are permitted to build on. The value of land goes up a lot when it acquires planning permission. Typical residential land value, post-permission, is £1-2m per hectare.. Agricultural land is instead closer to £25k per hectare.

Janet, 72, retired, extracts massive rents not because she owns a house, and doesn't pay tax on the land upon which the house is sat. Rather, they come from her dutiful efforts to elect local councillors who will prevent housebuilding at all costs (every single major party stands on Build Absolutely Nothing Anywhere Near Anyone at local elections), and persistent formal complaints against any effort to build anything at all. I don't see how Georgism is meant to be a fix for this. The issue isn't that there isn't enough land. The issue is existing legal restrictions on what you can use land for. The "unimproved" value of residential land is also low, if you regard "legal permission to build" as an improvement.

In 2011, Discovery Network, aired an episode of "Curiosity", "America: What Is It Worth?" which performed the same calculation, but for the US. The presenter may be familiar to those that follow US politics.

I don't remember the number, but the most valuable asset of the US was claimed to be the people.

Labor income has been consistently been higher than capital income for at least as long as the industrial revolution if not earlier in western countries and has been remarkably stable. They teach you this is in intermediate macroeconomics as part of the Solow model. So, the discounted present value of that labor income is going to be greater than the discounted value of all capital and land income assuming no difference in average risk.

Interesting in the abstract, but it's also not really very interesting for someone deep in debt to learn that the discounted value of their future labor income is more than their debt, sure they can pay it off, but what kind of living standards are they gonna have.

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