AHC: Widely Implemented Land Value Tax

[kernals12]

In 1879, Economist Henry George recommended a tax on unimproved land in his magnum opus, Progress and Poverty. The idea behind it was that because land simply exists with no human intervention, taxing it would have no economic downsides since it wouldn't reduce production of land, that is, it has a vertical supply curve. Since then, it has been trotted around as a good idea on both sides of the debate from leftists like Joseph Stiglitz to free-marketers like Milton Friedman. So how can we have it that by today, the land value tax is as common as the income tax is IOTL?

 

[Windows95]

How do you quantify land and qualify from one another?

 

[kernals12]

How do you quantify land and qualify from one another?

Local governments do it all the time.

 

[Windows95]

Local governments do it all the time.

Yeah, that's property tax.

How about central governments and the devolution of powers. Don't get me wrong, I like it a lot, but I'm not sure how it would replace all taxes.

 

[Workable Goblin]

Yeah, that's property tax.

How about central governments and the devolution of powers. Don't get me wrong, I like it a lot, but I'm not sure how it would replace all taxes.

Well, it's a good thing the actual challenge doesn't require that, does it? If, say, the land value tax was to replace property tax, it would surely qualify as being "as common as the income tax," if not more so, yet would not have replaced all other taxes.

As for how, I would suggest that George could be less...totalizing. On the one hand, this brought followers, on the other it gave the land value tax itself baggage associated with a wider social and political movement that probably hindered its adoption in the end. If instead someone (not necessarily George) presented land value tax as a technical adjustment to the property tax, perhaps sold as being more effective in incentivizing private development (e.g., to remove slums), then it might get picked up as part of the progressive reforms to city governance at the beginning of the twentieth century and spread from there like other progressive initiatives.

 

[Windows95]

How can LVT work in the modern world?

 

[Workable Goblin]

How can LVT work in the modern world?

Very easily? It's just a version of the property tax, which is extremely widespread. You only have to adjust it so that the cost basis is the value of the land regardless of any improvements and, boom, land value tax.

 

[Carl Schwamberger]

... You only have to adjust it so that the cost basis is the value of the land regardless of any improvements ...

You are referring to market value, as the value of the land?

 

[kernals12]

Yeah, that's property tax.

How about central governments and the devolution of powers. Don't get me wrong, I like it a lot, but I'm not sure how it would replace all taxes.

Given the size of government today, it probably wouldn't replace all taxes, but it could replace a significant portion of them. The BEA found that all land in America was worth $23 trillion in 2009. So a 5% tax would've raised $1.15 trillion, that would've been 40% of federal revenues.

 

[Driftless]

So all land? Desert, marshland, wilderness areas? Land only has value if it can be monetized?

 

[Windows95]

Paging @Petros >Peter Fergus<...

 

[Windows95]

So all land? Desert, marshland, wilderness areas? Land only has value if it can be monetized?

I guess it's only for cities and urban areas only. The more deeper you go in the city, the higher the tax is.

 

[Aisha Clan-Clan]

A LVT would be a good way to 1) fund UHC+UBI 2) get money to buy off various sectors with one time payments to end rentseeking(IP law, big pharma, various licensing/credentialist cartels, the "professional" classes). The best part is it'd still be in place once we've bought off the degenerate welfare leeches rent-seekers.

 

[Deleted member 94680]

I read something the other day on Land Tax that mentioned how “a man who owns a thousand acres pays no tax on it, opposed to a man who owns a house worth as little as £60,000 still pays council tax”*

The way I read that, is “the rich would pay way more tax if LVT was introduced”.

That’s probably got something to do with why it hasn’t been introduced.


*this is UK specific

 

[Petros >Peter Fergus<]

Given the size of government today, it probably wouldn't replace all taxes, but it could replace a significant portion of them. The BEA found that all land in America was worth $23 trillion in 2009. So a 5% tax would've raised $1.15 trillion, that would've been 40% of federal revenues.

We run into difficulty here when it comes to how property owners pay the tax. Would they have to sell 5% of their holdings to pay their taxes in years when those properties do not generate at least a 5% profit? How does this work with a business owner who has only one discrete property? Or with a home-owner whose property is not generating any profits? The cost of selling or mortgaging to pay the taxes in a timely fashion is now adding significantly to the bill for small property holders, but not much for larger ones.


I do think it's the logical place to put the main taxes, especially as we move to more basic income and less income tax as the arrangement between the state and the individual, but we need to have a few experiments to see what rules actually work.

 

[Anderman]

I read something the other day on Land Tax that mentioned how “a man who owns a thousand acres pays no tax on it, opposed to a man who owns a house worth as little as £60,000 still pays council tax”*

The way I read that, is “the rich would pay way more tax if LVT was introduced”.

That’s probably got something to do with why it hasn’t been introduced.


*this is UK specific

It is a Land Value Tax if this thousand acres has no value then the owner will no tax on it but the owner of the 60,000 House of course will.
That is not a buck it is souposed to work that way.

 

[Workable Goblin]

We run into difficulty here when it comes to how property owners pay the tax. Would they have to sell 5% of their holdings to pay their taxes in years when those properties do not generate at least a 5% profit? How does this work with a business owner who has only one discrete property? Or with a home-owner whose property is not generating any profits?

It works...exactly the same way that property taxes work. Homeowners and business owners ALREADY have to pay taxes on the properties they own; hardly anyone sells their holdings to pay the tax, they come up with the money from income not related to the properties if they don't get enough from rentals or similar sources to make do. The same would be true here, because the land value tax is merely a type of property tax.

You are referring to market value, as the value of the land?

Yes, that would be the natural way to define it.

 

[BigBlueBox]

It is a Land Value Tax if this thousand acres has no value then the owner will no tax on it but the owner of the 60,000 House of course will.
That is not a buck it is souposed to work that way.

I don’t think you understand LVT. All land has some value, even if it is just an empty plot in the middle of nowhere that value is taxed. The building is not. If you have a house sitting on one acre of land and somebody owns an empty acre of land adjacent to your home then both of you will pay the same amount under LVT.

 

[History Learner]

How can LVT work in the modern world?

The same way property taxes do, I'd imagine. Of note is that most wealth inequality since 1950 appears to be due to real estate/land holdings.

 

[History Learner]

Given the size of government today, it probably wouldn't replace all taxes, but it could replace a significant portion of them. The BEA found that all land in America was worth $23 trillion in 2009. So a 5% tax would've raised $1.15 trillion, that would've been 40% of federal revenues.

For comparison though, 1.19% is the average property tax in the U.S. and I doubt many people would be willing to pay, for example, $5,000 a year on a $100,000 plot of land.