Land Value Tax Gains Unprecedented Momentum as Two U.S. States Pass Enabling Laws

> we illustrate how conventional property taxes punish those who improve properties and invest in the city by providing housing and business, while those who own vacant lots or surface parking lots are rewarded for holding land out of use.

This was made dramatically obvious in Christchurch, New Zealand, after the 2011 earthquake.

Land that previously housed people or businesses in the central city became unsealed carparks run by an overseas company that dominates parking businesses here, for years, and many still are, 15 years on.

Likewise, the owners of buildings rendered unusable by earthquake damage had no compelling reason to demolish and rebuild, as their local taxes dropped significantly, as they're based on land value and improvement (i.e., building) value, and the building was now worth nothing.

So long as the increase in the value of the land outweighed the now minimal local taxes they paid, they'd still come out ahead when they finally sold.

Hence the local government resorted to naming and shaming the so-called "Dirty Thirty", because they had no other levers to pull.

https://ccc.govt.nz/the-council/future-projects/barrier-site...

But this still doesn't address the previously utilized land that is now just a muddy carpark operating for the benefit of a company in Singapore - they have no economic incentive to invest in a parking building when they can just run their business on several hectares of unsealed and frequently muddy and pot-holed sections in the central […]

> I’ve since learned that overly online keyboard warriors are the least important people to convince. The most important people are on your local city council or state legislature. Furthermore, instead of wasting time with hard cases or elected officials who are dead-set against your ideas, you’re much better off finding and working with people who are already interested in your principles. This often means giving up on your own city or state, at least for the time being, and pursuing a “succeed anywhere” strategy instead.

It's best to avoid people who will challenge your ideas and instead create a large group of loud people who believe your promises. What could go wrong?

I’ve always been Georgism curious, but didn’t know how to handle some of the more obvious challenges so I really want to thank the author for the work here!

I’m curious about how to think about the dynamics of a LVT:

- I can imagine urbanism creating a flocking behavior that ruins neighborhoods in 5-10 year cycles. Coffee shop draws more commence drawing more affluent people pushing up LVT driving out residents faster than even the spectre of “gentrification”, only to collapse when a nearby area is cheaper for a cool coffee shop to start. (The problem specifically is that you’ve both driven out people and caused an inefficient overbuild in each area)

- Similarly how do you think about new uses for land emerging? If I lease desert land for a data center because it’s so perfect for it, instead of buying it … how (and when) does it show up in LTV increases? What if I trade you some other benefit to keep it out of LVT impacting records?

- Are you just costing the world coordination surplus by forcing high value enterprises to distribute themselves (inefficiently) just far enough apart that they don’t drive up each other’s LVT? That’s a deadweight loss.

I’m a fan of the idea - these are just some of the tricky challenges I don’t have a good answer to yet.

I learned a little bit about georgism as the idea started crossing my feed.. 5-ish years ago.

What I've noticed, especially in online spaces is that advocates have quite disperate notions of what it's supposed to do and how it's supposed to work.

Relatively contentious and complex arguments about 2nd and 3rd order effects seem to dominate. EG rent will decrease because of incentives and political economies.

I think this comes from defensive arguments.

Here, he defends against the argument thelat taxes will be passed on to tenents. I agree that the answer is no, but how that is established is important. It's core to understanding the whole framework.

The premise of georgism is that land is scarce. Hi demand, and low supply yields a price. That price does not change because the landlord owes taxes. Supply and demand remain the same, and yields the same price/rent.

LVT is the maximum, non distorting tax rate. The rate at which land itself is worth zero. If tax exceeds LVT building becomes unprofitable and land has negative value.

When tax equals lvt... Tax revenue is maximized and land value is zero.... in the theoretical chalkboard economy.

This is the whole core reasoning underlying Georgism. It is about capturing the value of land, in taxes. All of it, ideally.

Price, scarcity, abundance, affordability... These are peripheral. Also the same rules, more or less apply.

Skipping onto YIMBY, supply constraints and whatnot tends to obfuscate the key parts.

Georgism wants to crash […]

I think LVT does have a history in US, e.g Pittsburgh.

Also Georgism is 100% LVT -> A land tax alone has been the recommendation of many economists before and after George - From Smith, Riccardo, Mill to Friedman. Across classical, neoclassical, Keynesian, Austrian schools. If there's one thing economists can agree on, it's that land tax is better than income tax.

A compelling review of the authors work, but I think there would be benefit from dropping the early references to UBI: LVT is an interesting approach and line of reasoning. UBI is a political hotbed with deeply acrimonious feelings on all sides.

When you align one idea with an external one, you are adopting all that external baggage - it's a cheap way to get a few additional people to agree, but at the cost of a bunch of other people seeing what they perceive as warning signs of a class of ideas they are suspicious of.

It's important to have confidence in your idea, on its own merits.

There's a lot here to absorb, but one thing I've always wondered about Georgism and Land Value Tax is whether land supply is actually inelastic:

> Land, however, is not built. Land is inelastic in supply, and landowners don’t “provide” land the way laborers provide labor and investors provide capital; they un-provide land by excluding others from using it. Building supply can change in response to a tax change, but land supply cannot.

But many cities actually can increase their land supply via land reclamation. This can be done by filling in waterways or otherwise altering the landscape to make it suitable to build on. Chicago, for example, built the land under the Adler Planetarium by filling in rubble along the shore of Lake Michigan. Boston is an even more impressive example; Back Bay used to be a bay of the Atlantic Ocean, not an entire neighborhood of a city with very high cost of living.

Cities can also lose land. Sometimes this is due to natural causes like erosion, sea level rise, or disasters like earthquakes and volcanic eruptions. Other times a lack of regulation might permit pollution to make land unlivable or infeasible to build on. Land owners can't create natural disasters, but they can advocate for policies that strongly influence effective land supply, such as whether building codes allow building on certain kinds or soil or require resistance to earthquakes.

Does this change the calculus from a Georgist economic perspective? If not, why?

LVT and things like market value based taxes are all far more complicated than is what already works, and what Singapore does (and a couple other countries like China): all land owned by the state, sold to private individuals with [99] year leases.

So the revenue comes through in resales once leases end.

Super simple: no valuation (only market sales); no annual expenses to consider (all upfront); development issues are simply a matter for leases to expire; speculation is capped given the capped lease length (although it can still get to stupid valuations).

Implementation is also extremely simple if you’re already onboard with taxation as expropriation: the state just legislates that all property is now a 99 year lease and they own it at that point (alternatively they compensate you 2-5% of market value, and retain existing annual taxes, or cut existing annual taxes to compensate, or they just do it without compensation!)