Georgism isn’t taxation, it’s public property ownership.
It finally clicked in my mind why I’ve reacted negatively to the discussion about Georgist land taxes. It’s the same reaction I have to ANY 100% tax rate on anything. That’s not what “ownership” means.
Honestly, I’d probably be OK with (or at least I’d be able to discuss it more reasonably) the idea that land is not privately owned, ever. Only rented/leased from the government, revocable for failure to pay the current rate (equivalent in all ways to the Georgist tax amount, and penalties for failure to pay). I suspect it’s unworkable for the same reasons—the public won’t stand for evicting sympathetic tenants just because they moved in when the rent/tax was lower.
Further, taxation of economic movement or realized profit is pretty easy to justify, and ALWAYS exists. Taxation of durable-ownership valuation is tricky, as there is disagreement over whether it’s “real”, and there’s no guarantee that the investment value, even if correctly assessed, is liquid enough to actually pay the tax.
Edit: this had occurred to me before, but I forgot to put it here. It also suffers from the socialist calculation problem. When self-interested humans aren’t making decisions to maximize value (to themselves) about a thing, the actual most valuable use is very difficult to determine. Holding someone responsible for the theoretical value of something when they don’t actually think it’s the best is really difficult to envision.
Further edit: thanks for the comments—it’s helped me understand my true objection, in addition to the auxiliary problems that often come to mind. I think there are two insurmountable problems, not necessarily in this order:
Taxing anything at 100% is disingenuous about the word “ownership”. It should be called “rent” or something else that is clear that it’s not owned, but merely usable for some purposes until you decline to pay a future arbitrary amount. It would also make clear that you’re also undertaking all of the political-economy influences that make government setting of rent amounts problematic.
Taxing non-realized value is always going to be problematic, both for calculation reasons (valuation is theoretical and debatable), and for the fragility of the value. I think this generalizes to “only collect taxes in-kind (or on liquid enough things that it can be easily converted at tax-collection time)”. Taxing a pile of wheat is easy—take some percentage of it. Taxing a monetary transaction likewise—the price increases and the tax is paid out of that. Taxing a future value is not (generally) feasible—either you’ve just taken someone’s seeds so they can’t plant the crop you’re trying to tax, or you’re demanding cash from someone whose investments will suffer from early liquidation. Deferral of payment can help with this, but if you’re doing that, you should just tax the realized gains at time of liquidity.
the public won’t stand for evicting sympathetic tenants just because they moved in when the rent/tax was lower.
We would really need the technology where you can take a house and move it to a different place. That would also make Georgism easier—when people don’t pay, you simply move them to a cheaper location.
While I think that would be extremely valuable technology, exiling Grandma to Outer Nowhereville, hours away from the rest of the family, is probably not a lot more feasible.
Alternatively, what if the LVT only increased when the property was sold? Buy land, and you lock in the LVT at the point in time when your deal went through.
I guess people would never sell the real estate at good location, only lease it? Thus capturing the increased value of the land without ever paying the tax.
Maybe leases are subject to increased LVT, just not owning it for personal use? I suspect there’s a way to enact something like this, but this isn’t in my wheelhouse.
Rich people and businesses are more strongly motivated and able to find loopholes than government administrators are to design robust mechanisms. Modern fractional ownership and lease arrangements are complicated enough that most any scheme based on a change in contract participants is going to be arbitraged away very quickly.
Right, but I thought the point was to avoid people balking at a law that makes it easier to evict ordinary folks who’ve lived somewhere a long time and don’t want to move? Let the rich people find their loopholes—as long as people support the system and the LVT delivers most of its promise, that’s good enough.
My point is that whatever exclusions are in place to keep poor people in their newly-valuable homes will be used by rich people to avoid taxation. There is no way to avoid this without making the tax variable based on other factors than the land value (like the “owner’s” perceived financial situation).
Either the law is the same for all “pay or GTFO”, or it’s differentially enforced, so the rich and the politically-sympathetic pay less than the middle-class.
It sounds like you think there’s no practical way to introduce exceptions to make an LVT politically palatable without also breaking its ability to motivate efficient land use and generate tax revenue.
My first thought is sure, we have a lot of tax evasion now. But we also do generate lots of tax revenue, most tax revenue comes from the very rich. Why would an LVT be so much more prone to tax evasion than the current system?
Correct, I think there’s no practical or realpolitik-theoretical way to make it work. To the extent that you make exceptions in implementation, it’s no longer a land-value tax, it’s a land-value fig leaf over a “what we can get away with” tax.
to the extent that you make exceptions in implementation, it’s no longer a land-value tax
This is true the same way that to the extent you dilute your cocoa with water, it’s no longer hot chocolate, it’s water :) I don’t know of almost any “pure” real world policies or taxes. I’d need some good evidence to believe that the LVT is that fragile.
Georgism isn’t taxation, it’s public property ownership.
It finally clicked in my mind why I’ve reacted negatively to the discussion about Georgist land taxes. It’s the same reaction I have to ANY 100% tax rate on anything. That’s not what “ownership” means.
Honestly, I’d probably be OK with (or at least I’d be able to discuss it more reasonably) the idea that land is not privately owned, ever. Only rented/leased from the government, revocable for failure to pay the current rate (equivalent in all ways to the Georgist tax amount, and penalties for failure to pay). I suspect it’s unworkable for the same reasons—the public won’t stand for evicting sympathetic tenants just because they moved in when the rent/tax was lower.
Further, taxation of economic movement or realized profit is pretty easy to justify, and ALWAYS exists. Taxation of durable-ownership valuation is tricky, as there is disagreement over whether it’s “real”, and there’s no guarantee that the investment value, even if correctly assessed, is liquid enough to actually pay the tax.
Edit: this had occurred to me before, but I forgot to put it here. It also suffers from the socialist calculation problem. When self-interested humans aren’t making decisions to maximize value (to themselves) about a thing, the actual most valuable use is very difficult to determine. Holding someone responsible for the theoretical value of something when they don’t actually think it’s the best is really difficult to envision.
Further edit: thanks for the comments—it’s helped me understand my true objection, in addition to the auxiliary problems that often come to mind. I think there are two insurmountable problems, not necessarily in this order:
Taxing anything at 100% is disingenuous about the word “ownership”. It should be called “rent” or something else that is clear that it’s not owned, but merely usable for some purposes until you decline to pay a future arbitrary amount. It would also make clear that you’re also undertaking all of the political-economy influences that make government setting of rent amounts problematic.
Taxing non-realized value is always going to be problematic, both for calculation reasons (valuation is theoretical and debatable), and for the fragility of the value. I think this generalizes to “only collect taxes in-kind (or on liquid enough things that it can be easily converted at tax-collection time)”. Taxing a pile of wheat is easy—take some percentage of it. Taxing a monetary transaction likewise—the price increases and the tax is paid out of that. Taxing a future value is not (generally) feasible—either you’ve just taken someone’s seeds so they can’t plant the crop you’re trying to tax, or you’re demanding cash from someone whose investments will suffer from early liquidation. Deferral of payment can help with this, but if you’re doing that, you should just tax the realized gains at time of liquidity.
We would really need the technology where you can take a house and move it to a different place. That would also make Georgism easier—when people don’t pay, you simply move them to a cheaper location.
While I think that would be extremely valuable technology, exiling Grandma to Outer Nowhereville, hours away from the rest of the family, is probably not a lot more feasible.
Alternatively, what if the LVT only increased when the property was sold? Buy land, and you lock in the LVT at the point in time when your deal went through.
I guess people would never sell the real estate at good location, only lease it? Thus capturing the increased value of the land without ever paying the tax.
Maybe leases are subject to increased LVT, just not owning it for personal use? I suspect there’s a way to enact something like this, but this isn’t in my wheelhouse.
Rich people and businesses are more strongly motivated and able to find loopholes than government administrators are to design robust mechanisms. Modern fractional ownership and lease arrangements are complicated enough that most any scheme based on a change in contract participants is going to be arbitraged away very quickly.
Right, but I thought the point was to avoid people balking at a law that makes it easier to evict ordinary folks who’ve lived somewhere a long time and don’t want to move? Let the rich people find their loopholes—as long as people support the system and the LVT delivers most of its promise, that’s good enough.
My point is that whatever exclusions are in place to keep poor people in their newly-valuable homes will be used by rich people to avoid taxation. There is no way to avoid this without making the tax variable based on other factors than the land value (like the “owner’s” perceived financial situation).
Either the law is the same for all “pay or GTFO”, or it’s differentially enforced, so the rich and the politically-sympathetic pay less than the middle-class.
It sounds like you think there’s no practical way to introduce exceptions to make an LVT politically palatable without also breaking its ability to motivate efficient land use and generate tax revenue.
My first thought is sure, we have a lot of tax evasion now. But we also do generate lots of tax revenue, most tax revenue comes from the very rich. Why would an LVT be so much more prone to tax evasion than the current system?
Correct, I think there’s no practical or realpolitik-theoretical way to make it work. To the extent that you make exceptions in implementation, it’s no longer a land-value tax, it’s a land-value fig leaf over a “what we can get away with” tax.
This is true the same way that to the extent you dilute your cocoa with water, it’s no longer hot chocolate, it’s water :) I don’t know of almost any “pure” real world policies or taxes. I’d need some good evidence to believe that the LVT is that fragile.