Apparently the very subject coming up led to me writing a few paragraphs about the problems of a land value tax before I even started reading it. (A fraction of the things in parenthesis were put in later to elaborate a point.)
There’s nothing wrong with replacing current property taxes with equivalent (dollar value) taxes that only apply to the value of the land itself (this would be good to avoid penalizing improving your own land), but the land value tax (aka Georgeism) is awful because of what its proponents want to do with it. Effectively, they want to confiscate literally all of the value of people’s land. This is hugely distortionary versus other forms of property, but that isn’t even the real problem.
The real problem is that people don’t want to live lives where they literally can’t own their own home, can’t plan for where they will live in the future, and can be kicked out at any time easily just because someone likes the idea of claiming their land became valuable. This turns all homeowners into renters. There are in many places (such as California) very distortionary laws on property tax because people hate the idea of their land being confiscated through taxes. There are also very many laws on making it hard to kick out renters because renters hate being being kicked out too. Stability is important and many people currently pay massive premiums to not rent (including taking out massive 30 year loans on a place where they often don’t even plan to live for half that long). Also, being forced to move at an inconvenient time is very expensive and has a hell of a lot of deadweight loss both economically and personally. (People also hate eminent domain.)
Of lesser but not no importance is fact that their taxes can go up to ridiculously high levels just because someone else built something valuable nearby will cause present day nimbyism to look very nice and kind (though it is kind of funny that people will likely switch what kind of nimbyism they support as well).
So, does your post bring up what I think are the problems with an land value tax? Yes, though I somewhat disagree with some of the emphasis.
Searching for new uses of land is pretty important especially over time, but we don’t need new uses for things to work right now whereas the disruptions to people’s lives would make things unworkable right now, and a lot of searching for new uses of land is done by people who do not currently own said land.
Implicitly taxing improvements to nearby land is obviously related to my point on nimbyism so we agree there, though it is interesting to note that seem to prefer talking about the internal version why I mostly reference the political version. The internal issue could obviously be ‘fixed’ by simply consolidating lots, but the political cannot without completely destroying the idea of individual ownership.
Your statements about the tax base narrowing issue is largely correct, but I would like to emphasize a different point of agreement that supporters seem to see it as simple, elegant, and easy but each patch makes it more complicated, kludgy, and difficult. I think that the very idea of evaluating the value of the land itself as separate from improvements actually starts out pretty difficult, so the increase in difficulty is a huge problem. Any incorrect overvaluation makes land worse than useless under this system! A system where a lot of land is useless very obviously leads to a lot of unused valuable land… which is exactly why people are currently complaining about speculation in land, but worse! (This is also deadweight loss.)
You don’t go far enough when decrying the effect on people’s confidence in the government, because it isn’t just a confidence thing. Confiscating people’s property without extremely good cause is one of the primary signs of living in a country that’s either dirt poor, or right about to be, and will definitely stay that way (except in some rare cases where it only leads to massive famines, death, and stagnation rather than becoming poorer monetarily at first). It is also massively immoral.
The problem with your section on disrupting long-term plans is that you emphasize only the immediate problem of the transition, but don’t mention that it also prevents the creation of new long term plans for a stable life unless you are willing to live a very bad life compared to how you could otherwise live. A full land value tax is therefore extremely dystopian.
Luckily, the proponents aren’t currently finding much luck in their desired tax actually happening, and I hope it stays that way.
Apparently the very subject coming up led to me writing a few paragraphs about the problems of a land value tax before I even started reading it. (A fraction of the things in parenthesis were put in later to elaborate a point.)
There’s nothing wrong with replacing current property taxes with equivalent (dollar value) taxes that only apply to the value of the land itself (this would be good to avoid penalizing improving your own land), but the land value tax (aka Georgeism) is awful because of what its proponents want to do with it. Effectively, they want to confiscate literally all of the value of people’s land. This is hugely distortionary versus other forms of property, but that isn’t even the real problem.
The real problem is that people don’t want to live lives where they literally can’t own their own home, can’t plan for where they will live in the future, and can be kicked out at any time easily just because someone likes the idea of claiming their land became valuable. This turns all homeowners into renters. There are in many places (such as California) very distortionary laws on property tax because people hate the idea of their land being confiscated through taxes. There are also very many laws on making it hard to kick out renters because renters hate being being kicked out too. Stability is important and many people currently pay massive premiums to not rent (including taking out massive 30 year loans on a place where they often don’t even plan to live for half that long). Also, being forced to move at an inconvenient time is very expensive and has a hell of a lot of deadweight loss both economically and personally. (People also hate eminent domain.)
Of lesser but not no importance is fact that their taxes can go up to ridiculously high levels just because someone else built something valuable nearby will cause present day nimbyism to look very nice and kind (though it is kind of funny that people will likely switch what kind of nimbyism they support as well).
So, does your post bring up what I think are the problems with an land value tax? Yes, though I somewhat disagree with some of the emphasis.
Searching for new uses of land is pretty important especially over time, but we don’t need new uses for things to work right now whereas the disruptions to people’s lives would make things unworkable right now, and a lot of searching for new uses of land is done by people who do not currently own said land.
Implicitly taxing improvements to nearby land is obviously related to my point on nimbyism so we agree there, though it is interesting to note that seem to prefer talking about the internal version why I mostly reference the political version. The internal issue could obviously be ‘fixed’ by simply consolidating lots, but the political cannot without completely destroying the idea of individual ownership.
Your statements about the tax base narrowing issue is largely correct, but I would like to emphasize a different point of agreement that supporters seem to see it as simple, elegant, and easy but each patch makes it more complicated, kludgy, and difficult. I think that the very idea of evaluating the value of the land itself as separate from improvements actually starts out pretty difficult, so the increase in difficulty is a huge problem. Any incorrect overvaluation makes land worse than useless under this system! A system where a lot of land is useless very obviously leads to a lot of unused valuable land… which is exactly why people are currently complaining about speculation in land, but worse! (This is also deadweight loss.)
You don’t go far enough when decrying the effect on people’s confidence in the government, because it isn’t just a confidence thing. Confiscating people’s property without extremely good cause is one of the primary signs of living in a country that’s either dirt poor, or right about to be, and will definitely stay that way (except in some rare cases where it only leads to massive famines, death, and stagnation rather than becoming poorer monetarily at first). It is also massively immoral.
The problem with your section on disrupting long-term plans is that you emphasize only the immediate problem of the transition, but don’t mention that it also prevents the creation of new long term plans for a stable life unless you are willing to live a very bad life compared to how you could otherwise live. A full land value tax is therefore extremely dystopian.
Luckily, the proponents aren’t currently finding much luck in their desired tax actually happening, and I hope it stays that way.