The fundamental problem is that if you tax income, the person cannot be unable to pay the tax (except by the size of the tax being so large that he hasn’t enough money to live on). If you tax land, the person can be unable to pay the tax. Furthermore, they can be unable to pay the tax out of no fault of their own—they need not be real estate speculators for the value of their land to suddenly go up, or for them to lose their job. And the land may also have some value to them which it would not have to other people who buy the land when they are forced to sell it, resulting in a deadweight loss when they are forced to sell. How is this good public policy? You’re describing it as beneficial to public policy in generalities; if you said outright “someone who has a mall open up near his house, should be forced to travel 30 extrta minutes a day to get to his job, and live too far from his sister who takes care of his kids,” nobody would call that good public policy.
If you tax land, the person can be unable to pay the tax. Furthermore, they can be unable to pay the tax out of no fault of their own—they need not be real estate speculators for the value of their land to suddenly go up, or for them to lose their job.
This is a feature, not a bug.
if you said outright “someone who has a mall open up near his house, should be forced to travel 30 extrta minutes a day to get to his job, and live too far from his sister who takes care of his kids,” nobody would call that good public policy.
I call scope insensitivity: why is that bad public policy? Someone already deemed the mall worthy of being built and opened, so why should the comfort and convenience of the mall’s hundreds or thousands of visitors be impeded for the sake of one guy who happens to live near there or own land near there.
Besides which, in real life, malls are usually not opened in residential areas at all, thanks to zoning and planning laws. And yet, those same zoning and planning laws get perverted to serve landowners’ class interests over those of the general population who need a place to live, as do building-value real-estate tax laws.
I’ll counter with my own scenario, this one being considerably less fantastical: why should hundreds of thousands of working people across the Bay Area in California or New York City be kept without affordable housing, sometimes even homeless, just so that landowners in the center-city areas can make massive amounts of money off pure location-value? A land-value tax would be the most egalitarian way to force the land rentiers to themselves support, rather than oppose, an increase in urban density, which would let a freer, more efficient market allocate space in desirable locations.
Remember as you contemplate this scenario, that oftentimes the working-class/salaried-class citizens competing so hard for affordable housing are the very people who made the location desirable in the first place, as with artists in Brooklyn or technology workers in California.
Someone already deemed the mall worthy of being built and opened, so why should the comfort and convenience of the mall’s hundreds or thousands of visitors be impeded for the sake of one guy who happens to live near there or own land near there.
The fact that the person living near the mall benefits from being near his job and family has value only to him. If he is forced to move, that value is simply lost, not gained by the next person who moves in.
Besides which, in real life, malls are usually not opened in residential areas at all.
That’s fighting the hypothetical. If you don’t think malls are a good example of something out of the property owner’s control that can raise the value of the property, pick something else that is.
why should hundreds of thousands of working people across the Bay Area in California or New York City be kept without affordable housing, sometimes even homeless, just so that landowners in the center-city areas can make massive amounts of money off pure location-value?
My point is that this screws people who are not landowners making money from location value.
Remember as you contemplate this scenario, that oftentimes the working-class/salaried-class citizens competing so hard for affordable housing are the very people who made the location desirable in the first place
Oh, I haven’t forgotten that, but that favors my side. Those people are, in your comparison above, the “hundreds of thousands of working people” screwed over by the land tax, not the landowners making “massive amounts of money off pure location-value”.
If you tax land, the person can be unable to pay the tax.
In the US it works with an interesting twist. Most land is taxed (you pay property taxes), though not by the federal government. However if that’s the land you live on, it usually cannot be taken away from you in bankruptcy. So if you are unable to pay property taxes, you may be forced into the bankruptcy, but not off your land. It’s not a universal rule and depends on your state laws and circumstances of your case, but I think that the house you live in and the land it stands on are protected from the creditors under most states’ bankruptcy laws.
The fundamental problem is that if you tax income, the person cannot be unable to pay the tax (except by the size of the tax being so large that he hasn’t enough money to live on). If you tax land, the person can be unable to pay the tax. Furthermore, they can be unable to pay the tax out of no fault of their own—they need not be real estate speculators for the value of their land to suddenly go up, or for them to lose their job. And the land may also have some value to them which it would not have to other people who buy the land when they are forced to sell it, resulting in a deadweight loss when they are forced to sell. How is this good public policy? You’re describing it as beneficial to public policy in generalities; if you said outright “someone who has a mall open up near his house, should be forced to travel 30 extrta minutes a day to get to his job, and live too far from his sister who takes care of his kids,” nobody would call that good public policy.
This is a feature, not a bug.
I call scope insensitivity: why is that bad public policy? Someone already deemed the mall worthy of being built and opened, so why should the comfort and convenience of the mall’s hundreds or thousands of visitors be impeded for the sake of one guy who happens to live near there or own land near there.
Besides which, in real life, malls are usually not opened in residential areas at all, thanks to zoning and planning laws. And yet, those same zoning and planning laws get perverted to serve landowners’ class interests over those of the general population who need a place to live, as do building-value real-estate tax laws.
I’ll counter with my own scenario, this one being considerably less fantastical: why should hundreds of thousands of working people across the Bay Area in California or New York City be kept without affordable housing, sometimes even homeless, just so that landowners in the center-city areas can make massive amounts of money off pure location-value? A land-value tax would be the most egalitarian way to force the land rentiers to themselves support, rather than oppose, an increase in urban density, which would let a freer, more efficient market allocate space in desirable locations.
Remember as you contemplate this scenario, that oftentimes the working-class/salaried-class citizens competing so hard for affordable housing are the very people who made the location desirable in the first place, as with artists in Brooklyn or technology workers in California.
The fact that the person living near the mall benefits from being near his job and family has value only to him. If he is forced to move, that value is simply lost, not gained by the next person who moves in.
That’s fighting the hypothetical. If you don’t think malls are a good example of something out of the property owner’s control that can raise the value of the property, pick something else that is.
My point is that this screws people who are not landowners making money from location value.
Oh, I haven’t forgotten that, but that favors my side. Those people are, in your comparison above, the “hundreds of thousands of working people” screwed over by the land tax, not the landowners making “massive amounts of money off pure location-value”.
In the US it works with an interesting twist. Most land is taxed (you pay property taxes), though not by the federal government. However if that’s the land you live on, it usually cannot be taken away from you in bankruptcy. So if you are unable to pay property taxes, you may be forced into the bankruptcy, but not off your land. It’s not a universal rule and depends on your state laws and circumstances of your case, but I think that the house you live in and the land it stands on are protected from the creditors under most states’ bankruptcy laws.