“As I explained, renting is different from buying. If the government increases the rate on a parking meter, you can just walk away. You’re “renting” it. But if you BUY it, and government LATER tacks on an additional rent, then you’re effectively charged a one-time Net Present Value cost. You CANNOT walk away like with a rental, because it’s not like the government will just buy back the spot at the original price. You have to find someone to sell to, and because that person has to keep up that payment, he’ll discount the payment by the NPV of that perpetuity.”
Bad analogy. How about renters who make dramatic improvements to the property they rent, or even buildings on leased land? Don’t they have the same problem?
I say it’s a perfectly correct analogy. What are you claiming is “bad” about it?
Yes, renters can choose to create a similar problem for themselves, by spending money they can’t get back when they leave. What’s your point?
Nobody proposes a one-time abrupt shift to land value tax, so you are straw-manning a proposal that was never made. Not only would the tax change gradually, but the assessment on your land value would go down if your neighborhood declined and go up if your neighborhood improved.
If we incrementally introduce the LVT, then the Bob-Alice scenario I described just happens exactly the same, but in smaller increments. It doesn’t change anything fundamental.
That the assessment goes up or down is also irrelevant. Net Present Values are speculated. The market may believe the unimproved value of your property is going to increase by an amount equal to 20k in NPV. If the LVT goes into effect, the market instantly values it by 20k less. It doesn’t matter if that’s accurate. Somebody wins and somebody loses, randomly. The point is simply that you want to tax people based on their wealth, not based on randomness, like whether the land transfer happened before or after the LVT went into effect.
“ First, people want to be able to build permanent structures on their property, like houses.”
LVT advocates would abolish the tax on houses.
So what? I’m talking about reasons ownership is useful vs. renting.
“ Even when I rent an apartment, I generally won’t pay to do significant remodeling or building of new structures on the land (even the landlord will let me) because if I leave for any reason, I can’t force the landlord to pay me the cost of those improvements.”
You can sell an improved property just as easily under land value tax as under any other tax, and you are selling untaxed improvements in the process.
I find this statement confusing on multiple levels. First, again, I’m talking about reasons ownership is a useful paradigm vs. renting. And if we’re talking about selling (i.e. you own the land; you’re not just renting it) then any LVT that goes into effect while you’re the owner is effectively a one-time assessed Net Present Value tax that you pay 100%. No future owner pays it, because they are going to discount their purchase price by the assessed future LVT cost as an NPV.
Under land value tax, higher land values lead to either lower tax rates or to a per capita dividend.
Giving people a “dividend” a la Universal Basic Income is a great idea. But the taxes that fund it should be on negative externalities and wealth. Not on people who just happened to be owning an asset when an arbitrary tax on that asset went into effect. You want to tax purposefully not randomly.
More importantly, land prices are far more stable in places with higher taxes on land value. It is no coincidence that the most foreclosures in the wake of the 2008 crash were in California and Nevada, which had very low real estate taxes, and Pittsburgh, which had a land value tax during the preceding housing bubble, had the fewest underwater mortgages.
I have no idea how you’d hope to establish a causal connection here.
“Governments own military bases for instance. And planes. And computers.”
And slaves, at one time. Your problem is that you are treating a moral question as a legal question. If government has no moral right to own slaves, it has no moral right to sell them. This applies to land as well.
Comparing the ownership of land to the ownership of human beings is a little beyond the pale, but either way, this is begging the question. My entire point was that there’s no reason it’s preferable (more moral) for government to own non-land assets than land assets. You haven’t made any argument that, for instance, government pension funds are somehow okay owning stocks in Google but not REITs.
This entire discussion is not a legal question but a moral question—because we’re talking about what the law should be not what it is.
You can’t seem to make up your mind on whether government should sell land outright, or own it and rent it out.
Dogma is dogma. There. Is. Nothing. Special. About. Yours. Full stop.
That is not an argument. You have yet to make an argument for why it is immoral to own land.
that all classical liberals treated land as different from labor-produced wealth. The title to produced wealth originates with the producer, and the title to land originates with the state.
That distinction is in no way relevant to this discussion of LVT. Your challenge is to explain why it’s rational to tax someone who happens to own land at the time an LVT goes into effect, which is effectively a random one-time NPV tax, not a selective wealth-based tax. This is like drawing names out of a hat to tax people, rather than having a progressive tax based on wealth. Clearly not utilitarian.
But if all land in Olympia went up that much on average, your share of the tax burden would be unchanged.
What’s the relevance of this comment?
More importantly, you are describing a bubble that will wreck your economy when the bubble breaks.
You have no way of knowing that. Or, if you do, you should become a billionaire by being better than other people at assessing net present value.
And finally, you would not be taxed on the stuff you’ve done internally or externally, whether others know about it or not.
What does this have to do with anything? I specifically said I’m talking about the unimproved value.
You have yet to explain why it’s better to take that 24k from me as opposed to someone wealthier, like Jeff Bezos. This is the thing you simply have no explanation for.
your own arguments revealed that you paid too much for the house because land value wasn’t taxed
No. My point is that if a LVT goes into effect, I will effectively be charged the NPV of that LVT. That doesn’t mean I paid “too much”. Saying I paid too much is tantamount to saying the LVT should have gone to the previous owner and been his problem to deal with. I’m saying it’s neither. You want to tax based on total wealth, not whether your wealth happens to be in housing, or stocks, or whatever.
also that land value tax could fund health care if that’s what the public wanted to do.
The health care fund would be paid from the general pool of money available to the government, not by any specific tax. You want to avoid the fallacy of hypothecation (linking specific taxes to specific expenditures).
In any case, you seem to be all wrapped up in how we should have sympathy for your health problems as a home owner and ignore the health problems of renters.
Sigh, no. The point is, there are lots of wealthier people you could be taxing, who would be harmed less by it, because of the decreasing marginal utility of wealth.
It sounds more like Marxist economics and a rationale for theft. You want to tax people who created value so you can go on usurping value that you did not create.
No, Marx focused on socializing the “means of production”, which is unrelated to anything I’m talking about. I’m just stating objective fact—wealth has diminishing marginal utility.
You are in an obvious state of denial. Earned vs. unearned income is universally accepted by economists from the time of John Locke to the eleven Nobel economists who have explicitly endorsed land value tax, yet you presume to dismiss them all by empty assertion.
Of course there is a difference between winning the lottery vs. shoveling snow for 10 dollars an hour. But from a policy perspective, that difference is of very little significance. The amount of negative utility you cause by taking away money from someone has nothing to do with whether that dollar was earned or the product of luck. The relationship between utility and wealth is a fairly straightforward logarithmic curve. The issue is the decreasing marginal utility of wealth, not “earned-ness”.
And as I saw working in tech in Silicon Valley, a huge amount of what we call “earned” wealth is the product of luck. Go watch the Theranos documentary if you think it’s all merit. And again, even “merit” is largely the product of randomly acquired good genes and parenting.
I do not care one iota what credentials these Nobel economists have. If they can make good arguments for LVT, then cite those arguments. So far you’ve not cited a single cogent argument for LVT.
You seem to be under the misapprehension that land ownership is less concentrated than wealth generally
I said nothing of the sort, nor are you making an argument for why this matters to the argument.
Never mind that Gates has people buying up land all over the country, that Ted Turner is one of the ten biggest landowners in America, that the second-biggest landowner in Appalacia is a British Corporation, or that 3% of the landowners hold 97% of the land.
Yes, rich people have more land, more cars, more stocks, more everything. You could generalize this and say they have more wealth. Hence we should tax… wealth. And get over the obsession with the specific asset.
Do you imagine that the Rockefellers, the Vanderbilts, the Scaifes, the Hillmans and all the other rich landholders suddenly became poor when Jeff Bezos came along?
What point are you trying to make with this question?
You are showing your woeful ignorance of British history. Government never sold the land at all.
You might find this passage interesting:
Signed into law by President Abraham Lincoln on May 20, 1862, the Homestead Act encouraged Western migration by providing settlers 160 acres of public land. … After six months of residency, homesteaders also had the option of purchasing the land from the government for $1.25 per acre.
In cases where people got the land without paying anything for it, then that’s just a more severe example: a sale price of zero.
land values change, and land speculators make a science of buying in the path of progress and then demanding tribute for allowing progress to move forward.
Speculators can speculate on any asset, from land to stocks. Why your obsession with land?
Well, if you say so, then the eleven Nobel economists must be wrong.
Nice argument from authority. If you think their arguments are convincing, then why not try citing their best arguments?