Free State Project Forum

Please login or register.

Login with username, password and session length
Pages: 1 2 [3] 4 5 6 ... 10   Go Down

Author Topic: Economics According To George (Henry George, that is...)  (Read 30362 times)

RhythmStar

  • FSP Participant
  • *****
  • Offline Offline
  • Posts: 1886
  • Imagine there's no Heaven.
    • RhythmStar Records
Re:Economics According To George (Henry George, that is...)
« Reply #30 on: August 19, 2003, 12:42:59 pm »

BTW, here is a great Henry George quote:

"No theory is too false, no fable too absurd, no superstition too degrading for acceptance when it has become imbedded in common belief. Men will submit themselves to torture and to death, mothers will immolate their children, at the bidding of beliefs they thus accept."

Henry George, Social Problems


:)

RS

Logged
Irony is the innate perversity of circumstance. -- William House

BillG

  • Guest
Re:Economics According To George (Henry George, that is...)
« Reply #31 on: August 19, 2003, 10:05:31 pm »

Quote
I am not certain of the best way to make the transition.  Some states, such as New Hampshire, are close already -- abolish the Sales and Capital Gains taxes and you're practically there!  Of course, the Feds would still be taxing you, but maybe a Georgist system in NH would (if successful) spark a rethink there too.

The way to make the transition is with a simple "tax shift" concept...an individual's total amount of "property" tax remains the same but the amount of tax on buildings is "shifted" onto land!

http://www.progress.org/geonomy/rppaper.html

Read a Georgists from NH (Rep. Dick Noyes) tax shift bill infront of the NH Legislature in 2003:

http://www.gencourt.state.nh.us/legislation/2003/hb0439.html

This is happening in Philadelphia as we speak!

From the City Controller Jonathan Seidel (7th paragraph down):

"As one way to reduce Real Estate Tax burdens for Philadelphia homeowners we can change how we tax property. As I recommended in my November 2002 Tax Structure Analysis          Report, I advocate for a system that will tax buildings less and tax land more to encourage individuals to maintain and improve their properties while discouraging speculation and blight by decreasing incentives to allow buildings to decay. Based on my analysis, such a system would reduce Real Estate Taxes on nearly 80 percent of residential property owners. Similar systems in Harrisburg and Allentown have reduced abandonment, encouraged development, and generated popular approval."


http://www.philadelphiacontroller.org/testimony_bill020490.htm

NH would be an easy place to build a minarchist gov't (as stated by Jason et al 2/3 reduction) structure on top of the already existing "property tax" structure. This is a way to unite everybody from the Greens to the Libertarians behind a philosophically consistent policy...no taxes on the fruit's of ones labor (what we make) and onto things that we take from the commonwealth (user fees on land values as they relate to location), other pollution into our commons & government granted priviledge (currency, ballot access, corp. charters, public education, etc). with the fees being directly rebated to the citizens (in the form of a dividend) on a pro-rata basis never touching a beaurocrats grubby little hands. Now there would be no longer need for social welfare and no whining from the "progressives" about hurting the disadvantaged!
Logged

JasonPSorens

  • Administrator
  • *****
  • Offline Offline
  • Posts: 5725
  • Neohantonum liberissimum erit.
    • My Homepage
Critiques of Georgism
« Reply #32 on: August 23, 2003, 06:18:48 pm »

In my view, Georgism has some fundamental flaws that are responsible for relegating it to crank status in economics for more than a century.

The first flaw is the idea that the value of unimproved land can be separated from the value of improved land.  A piece of land with improvements on it has a certain market value: for the land and the improvements.  It has no market value for the land itself, because the land and the improvements are inseparable.  David Nolan's suggestion that the land owner put a selling price on his land, and have that selling price taxed, is self-evidently ridiculous: you can't sell land by itself without the improvements on it.  You can guess at what the value of the "unimproved portion" of the land is by looking at nearby unimproved plots, but this isn't possible in many places (Manhattan), and is very imperfect everywhere.

The second flaw is that the Single Land Tax (SLT), even if implemented, can have deleterious economic effects.  The intuition behind the SLT is that land has perfectly inelastic supply, so that a tax on land doesn't reduce its supply, the way taxes on consumption, income, and land improvements can reduce productive effort.  But in reality, there are many ways you can "consume" the value of your land so that it is worth less and is taxed at a lower rate.  You can eliminate possible agricultural uses by carting off the soil or by treating it so that nothing grows there.  The SLT encourages sprawl because it taxes at a higher level land that is in or close to metropolitan areas, thus providing incentives to use lower-value rural land for habitation (incentives beyond the market incentive of price).  Thus, it is curious that environmentalists would support the SLT, because the SLT has some of the same harmful consequences for the environment that property taxes do.

Third, the SLT probably does discourage land speculation, forcing original landholders unlucky enough to own land assessed at high value to sit on their property because no one wants to buy it from them - but this is a bad thing.  Land speculation is a positive because it helps the market arbitrage land values and allocate land to its most productive uses.  There are temporary overvaluations and undervaluations, just as there are undervaluations and overvaluations of company equities in stock markets, but the markets do tend toward equilibrium, and allowing people to make profits off land sales helps the market move faster.  For example, land speculation can be important in revitalizing old neighborhoods, especially when you consider that people holding land for profit are likely to support measures, such as crime reduction, that increase the sale value of their land.

All of the above reasons combine when one considers the disturbing possibility that government could arbitrary set land value assessments, as RhythmStar suggests could be done in time of war.  If gov't arbitrarily reassesses land at higher values when it wants, then market distortions are bound to result.  An extreme case is the assessment of 1 ha of swampland at the same value of 1 ha of prime pastureland (BTW, does clearing forestland to make pasture count as an "improvement" for SLT purposes?  If so, how do you assess the value of a given piece of land "as if it had never been cleared, centuries ago"?  If not, aren't you providing incentives against productive use?  Maybe that's where an environmentalist might hop on board the SLT program).  In that event, the swampland owner is expropriated for the benefit of the pastureland owner, and the value of swampland falls well below its market value, which might be low anyway but include the possibility of finding rare wildlife or flora - in which case the SLT again promotes the destruction of wild habitat.

The moral assumptions of Georgism are also flawed.  Georgism confounds its empirical and normative aspects: supposedly, the SLT not only solves all economic ills and helps the market function, but accords with the correct metaphysical view of the earth.  The basic flaw is the assumption that land is collectively owned.  Land is not collectively owned.  In its natural state, land is unowned, or you might even say commonly owned.  But because something is unowned or commonly owned at one point does not mean it cannot be appropriated.  Land can only be collectively owned if the people living on it and having a right to it agree by contract to pool their land together and hold it collectively in perpetuity.  Then private appropriation from the collective would be wrong.

The assertion that land cannot be owned by humans because it is created by God proves too much.  After all, everything is created by God or by nature.  Not just land, air, and water - but human genes, individual personalities, the strength and weakness of human bodies, and so on.  One's talents, abilities, interests, personality traits, and perhaps even behavioral tendencies are determined by nature, and we are not responsible for them.  So does that mean that we cannot own our own bodies and minds?  The problem with Georgism is that it takes the workmanship ideal too seriously - the idea that whatever "you" create, you own, and whatever you don't create, you don't own.  But what do "we" create?  We don't really know, because we don't really know what aspects of "us" we are ultimately responsible for.
Logged
"Educate your children, educate yourselves, in the love for the freedom of others, for only in this way will your own freedom not be a gratuitous gift from fate. You will be aware of its worth and will have the courage to defend it." --Joaquim Nabuco (1883), Abolitionism

RhythmStar

  • FSP Participant
  • *****
  • Offline Offline
  • Posts: 1886
  • Imagine there's no Heaven.
    • RhythmStar Records
Re:Economics According To George (Henry George, that is...)
« Reply #33 on: August 23, 2003, 08:19:53 pm »

Finally, a post with some meat on its bones!  :)

I'm in the midst of rolling out a new application this weekend, so I don't have time for a complete response, but allow me to address one of the more fundamental challenges on the nature of property.

Jason said:
Quote
The assertion that land cannot be owned by humans because it is created by God proves too much.  After all, everything is created by God or by nature.  Not just land, air, and water - but human genes, individual personalities, the strength and weakness of human bodies, and so on.  One's talents, abilities, interests, personality traits, and perhaps even behavioral tendencies are determined by nature, and we are not responsible for them.  So does that mean that we cannot own our own bodies and minds?

Not at all.  One simply has to acknowlege the difference between sentient beings, who are creators themselves, and dirt.  

The one who created the dirt owns the dirt, but has left this creation (and much else) in the care of His other creations (us).  He did not leave it to me, or Zack Bass, or Jason Sorens exclusively, but to all of us.  How do we know this?  Because we are capable of such knowledge.  In fact, according to my particular belief set, the very reason we have Reason is to make such observations.

Yes, it is therefore "unowned", but only in the sense that all of us share equal common rights to access said unowned property.

On the unquoted point about unownedness not precluding appropriation, while it is true, is it moral?  If you own an object, that also does not preclude its appropriation by someone who has greater Force to apply.  We would both call that immoral.   If one accepts the notion that we all share equal rights of access to unowned property, then does not the individual who unilaterally appropriates unowned land, to the exclusion of the access rights of others, practice Force against them?  How is it that the usurper claims a just title?

In agrarian times, if a person planted a crop, then that land was theirs to use until the harvest.  The principle was the investment of labor, which was thought to confer at least temporary use rights.  After the harvest, even Thomas Jefferson wrote that no permanent right to the land survived.  Next season, all should have the same right to plant that land (first come, first serve).  In Jefferson's view, while rights to self and the fruits of one's labor were held to pre-exist government, enduring titles to land could not exist until after the establishment of government.  

I think Jefferson held this view because of the consent of the governed to be bound by the laws of said government.  Thus, the government could issue and enforce the deeds that would provide landholders with enduring rights to a given plot of land.   One could say that this is the most basic function of government beyond the protection of humans from violence -- the establishment and enforcement of land deeds.  Out of this, all else grows -- all industry and labor require a place to be conducted.  If we simply view the SLT as a user fee for the establishment and enforcement of land deeds, what's the complaint?

Quote
The problem with Georgism is that it takes the workmanship ideal too seriously - the idea that whatever "you" create, you own, and whatever you don't create, you don't own.  But what do "we" create?  We don't really know, because we don't really know what aspects of "us" we are ultimately responsible for.

We create that which is the result of our willful actions.  Some of those creations are tangible objects, others are merely ideas.  Others are less lofty and comprise our various bodily effluvia.  All of these things are our property, because it is through our actions that they come to be.

On the 'ultimately responsible for' point, I think it is important not to delve too deeply into cosmological enigmas.  It is common sense that we are responsible for our actions.  If we are not, then all discourse is as pointless as it is inevitable, for our words and reactions were then ordained since the beginning of time.  

Our works are only possible because of the natural resources that sustain us.  Those resources are there for all of us to benefit from, but for the sake of practicality, we must establish some rules.  This we do by governments, which are the grantors and enforcers of land deeds.  The consent of the governed is what makes this moral, rather than rule by force.  Since some government is desireable to foster a prosperous community, and such government must be funded, and since taxing labor and the fruits of labor is taxing something that is definitely owned by the creator (little 'c'), as opposed to something owned by the Creator, the SLT seems to be the most metaphysically satisfying, least coercive and least economically-damaging tax available.

BTW, rather than simply send words back and forth on the issue of what taxes are more or less onerous from an economic standpoint, I think we should use comparative numerical analysis.  It really is more illustrative.   If you'd like, I'll share a simple spreadsheet that could serve as a sort of tax-model scratch pad.  Perhaps by adding a few more variables, if could become a useful tool outside the limited context of the STL vs broad-based tax issue.

:)

Later,  

RS
Logged
Irony is the innate perversity of circumstance. -- William House

JasonPSorens

  • Administrator
  • *****
  • Offline Offline
  • Posts: 5725
  • Neohantonum liberissimum erit.
    • My Homepage
Re:Economics According To George (Henry George, that is...)
« Reply #34 on: August 24, 2003, 10:37:10 am »

Is it moral or immoral to appropriate unowned land?  Sometimes it might be immoral, but surely in some cases it is moral.  John Locke thought unowned land could be appropriated by the first comer so long as its productive capabilities were not wasted, and so long as everyone else who could not appropriate the land was better off for it - because of the productive use of the land made by the appropriator.  This seems pretty reasonable.  It's clear that private property in land promotes overall economic well-being, providing incentives to take care of the land and make it produce.  Allowing landowners to pass land to their descendants provides an even longer time horizon and promotes good stewardship.  Perhaps you could say that Georgism allows for this, but that this is really just "holding land in trust for society" rather than "owning land," but the differences seem negligible if the property rights really are secure.  In some circumstances, extreme inequalities in land ownership, usually resulting from historical conquest, as in Latin America and parts of Asia and Africa, can be harmful - but the proper solution here is a comprehensive redistribution of private land rights, rather than the SLT.

Is the SLT just a fee for recognizing land deeds?  If so, then the above philosophical distinction between common property held in trust and private property vanishes, because land deeds recognize private property in land.  But the rational way to recognize property rights in land and pay for that recognition would be to have a lump-sum fee on transfer or drawing up of land titles and deeds, and then a small annual fee to support the police and court system that protect all life, liberty, and property (not just property in land).  That may look more like a capitation tax or a wealth tax (or a combination of the two) than an SLT.  Certainly, a rate approaching 95% could never be justified as a fee for recognizing the deed and enforcing it.

The problem with comparing the SLT to other tax systems numerically is that on my contention, the SLT is fundamentally incoherent, since land values cannot be determined with any accuracy in most cases.  The problem therefore is not that the SLT is more expropriative than other tax systems (who knows whether it is?), but that any system of "pure land" assessments is bound to be arbitrary and to create distortions in the land market.
Logged
"Educate your children, educate yourselves, in the love for the freedom of others, for only in this way will your own freedom not be a gratuitous gift from fate. You will be aware of its worth and will have the courage to defend it." --Joaquim Nabuco (1883), Abolitionism

LeopardPM

  • FSP Participant
  • *****
  • Offline Offline
  • Posts: 2248
Re:Economics According To George (Henry George, that is...)
« Reply #35 on: August 24, 2003, 12:50:20 pm »

Hi,
I won't be able to contribute much to this thread as I am 'weak' in my knowledge.  But, that never stopped me before... LOL

somewhere in this thread it was said that land is limited and so 'inelastic' (I think this is what was said).  I disagree.  Land on earth is finite, and even in that respect, there is land under the ocean which can be used (maybe not economically with todays technology, but there are inherent obstacles that prevent future generations from developing 'undersea' communities) - also, floating man-made islands are possible.  Obviously, where I was going with the whole 'earth is finite' was that there is land and resources just out of our grasp in the solar system... these will be developed as soon as the population of earth forces the prices of the current land areas to increase above the cost of 'land' off-world.  This fact  was never even an option available to most of the economists and such that you all are referencing which indicates to me that their ideas might tend to be inherently flawed because it is based on the closed system of earth.

I don't mean to get all 'spacey' on you folks, I realize the realities of space travel and colonization, but I have ULTIMATE faith in the free market to overcome these obstacles and costs... all that needs to happen is an appropriate increase in 'demand' for land.

I do hope we all figure out the 'best' way to deal with property rights in respect to homesteading, first comers, etc  BEFORE we start migrating off-world because it will be harder to correct a flawed system if we expand use of that system out into the cosmos...

just a thought, don't mind me,
michael
Logged
nothing to say...

RhythmStar

  • FSP Participant
  • *****
  • Offline Offline
  • Posts: 1886
  • Imagine there's no Heaven.
    • RhythmStar Records
Re:Economics According To George (Henry George, that is...)
« Reply #36 on: August 24, 2003, 02:15:02 pm »

Is it moral or immoral to appropriate unowned land?  Sometimes it might be immoral, but surely in some cases it is moral.  John Locke thought unowned land could be appropriated by the first comer so long as its productive capabilities were not wasted, and so long as everyone else who could not appropriate the land was better off for it - because of the productive use of the land made by the appropriator.  This seems pretty reasonable.  It's clear that private property in land promotes overall economic well-being, providing incentives to take care of the land and make it produce.  Allowing landowners to pass land to their descendants provides an even longer time horizon and promotes good stewardship.  Perhaps you could say that Georgism allows for this, but that this is really just "holding land in trust for society" rather than "owning land," but the differences seem negligible if the property rights really are secure.  In some circumstances, extreme inequalities in land ownership, usually resulting from historical conquest, as in Latin America and parts of Asia and Africa, can be harmful - but the proper solution here is a comprehensive redistribution of private land rights, rather than the SLT.

Is the SLT just a fee for recognizing land deeds?  If so, then the above philosophical distinction between common property held in trust and private property vanishes, because land deeds recognize private property in land.  

FWIW, I see no need to hold that the SLT requires a 'held in trust' status for the land.  Sure, some people do, but some people advocate using the SLT as a means to provide an equally-distributed 'general dividend' to the citizenry.  I do not, as any taxes levied in excess of government expenses would be a source of market distortion, similar to what we currently have. Any excess taxes (save a percentage to account for the natural variability of such aggregate totals... say 5%), should be given back to the taxpayers on a pro-rata basis, perhaps in the form of an assessment rebate subtracted from the next year's taxes.   Anyway, even under SLT, land deeds are held to be durable, saleable and assignable, so any practical difference  between the current system and SLT on that point is in the eyes of the beholder.

Quote
But the rational way to recognize property rights in land and pay for that recognition would be to have a lump-sum fee on transfer or drawing up of land titles and deeds, and then a small annual fee to support the police and court system that protect all life, liberty, and property (not just property in land).  That may look more like a capitation tax or a wealth tax (or a combination of the two) than an SLT.  Certainly, a rate approaching 95% could never be justified as a fee for recognizing the deed and enforcing it.

I also felt that 95% was too high a rate.  Then, I built a spreadsheet to compare the results of an SLT with the current system.   The variables I used were these:

Variables:

1. Aggregate Tax Rate as a Percentage of Income (subsuming all taxes)
2. Land Value
3. Improvement Value
4. Tenant Rent (Land Value + Improvement Value)
5. Tenant Gross Income
6. Tenant After-Tax Income (Tenant Income - Aggregate Tax)
7. Tenant Disposable Income (Tentant After-Tax Income - Tenant Rent)
8. Landholder Net Income (Tenant Rent - Aggregate Tax)
9. Government Revenue (Tenant Gross Income + Tenant Rent * Aggregate Tax Rate)

Under the SLT, the Aggregate Tax is 0%, but a Land Tax Rate is added. Result

1. Aggregate Tax Rate = 0
2. Land Tax Rate
3. Land Value
4. Improvement Value
5. Tenant Rent (Land Value + Improvement Value)
6. Tenant Gross Income
7. Tenant After-Tax Income (Tenant Income - Aggregate Tax)
8. Tenant Disposable Income (Tentant After-Tax Income - Tenant Rent)
9. Landholder Net Income (Tenant Rent - Land Tax)
10. Government Revenue (Land Value * Land Tax Rate)

When plugging different numbers into this, I discovered first that the current system is enormously inequitable.  The combined government makes way more money from the 2 taxpayers than they get to keep for themselves, if the aggregate tax rate is 50%.  This is due to the double-taxation of income -- triple taxation in the case of corporate income!  I realize that income tax really ought to be broken out from sales and other taxes, but the income tax is the greatest portion and the multiple taxation of incomes has to be most distortive tax possible!

Anyway, I also found that reducing the Land Tax rate was not really needed, so long as you kept at least 5% of the value for the landholder.  The reason is that so much money is freed up in the market.  The tenant pays no direct taxes at all.  Of course, the landholder passes on the expense of the land tax to the tenant, but that still leaves the tenant with a windfall.  The natural result of that in a free market would be for the landholder to increase the amount of the improvement rent.  The unintuitive result was that, with a 95% land rent tax, there is an equilibrium where both the landholder and the tenant have about twice the money left over that they do today (effectively doubling real wealth), while the government still gets a bit over 1/3 of it's current revenue.   Isn't one of the goals of the FSP to reduce government size (and thus spending) by 2/3?

Quote
The problem with comparing the SLT to other tax systems numerically is that on my contention, the SLT is fundamentally incoherent, since land values cannot be determined with any accuracy in most cases.

What is 'accurate' in terms of value?  In running a business, you set your prices to the maximum that the market can bear, but never less than cost (unless you are willing to buy marketshare by losing money on each sale).  In the SLT economy, there is great liquidity, as there are no taxes on Labor or Capital.  Thus, the real value of land improvements is able to emerge.  Furthermore, the incentive to develop is not reduced.... it is instead spurred!

On the value of the land itself, this could be a simple, utilitarian calculation -- the value of the land is proportional to the cost of the government services provided to the landholder and their tenants.  Personally, I like that method, as it corrals the cost of government into one formula, where everyone can see.  

If government is to be limited and expenses thus reduced, then there may be no pressing reason for a large land tax.  Perhaps a Uniform SLT, with all deeded lands paying the same rate, based on the simple division of taxable acres to the annual budget, is best.  So long as landholders pass this cost onto tenants, then the cost of government is plain to all and the illusion of governmental free lunches is gone.

However, maybe this is not the only acceptable method.  Perhaps we could take a que from Nolan and simply say that the landholder sets land rent.  Maybe not directly, as this would be too open to abuse, but indirectly by calculating an appraisal of land value vs improvement value.  The real estate business already has empirical methods for determining the value of unimproved land.  Why not let their methods be used and then allow the market price of the properties in the area set the land tax?  While I still think the USLT is a better idea, based on simplicity and honesty of purpose, this other approach would allow all the chaos of the free market into the mix, if this is really more preferred.  :)

Quote
The problem therefore is not that the SLT is more expropriative than other tax systems (who knows whether it is?), but that any system of "pure land" assessments is bound to be arbitrary and to create distortions in the land market.

Compared to the distortions of the current income-centric system, the distortion of land values brought by the SLT would be as pond ripples to tsunamis.  In return for that interference, you would free Labor and Capital from any further distortions at all.  All taxation is distortive to markets.  The broad-based tax philosophy wants to distort all markets by taxing everything, presumably thinking that if every market bears a portion of the burden, no market is unduly disturbed.  The apparent outcome of this is that hugely distortive taxes, like the 'progressive' income tax, are tolerated, primarily because the nickel-and-dime collection methods and chaotic disturbances of markets taxed and regulated into free-market parodies, keep people from understanding the real costs of government.  

At least the SLT, like the New Hampshire property tax, would keep the taxpayers vigilant, as any government excess would have clear and personal financial consequences to all.

RS
Logged
Irony is the innate perversity of circumstance. -- William House

BillG

  • Guest
Re:Economics According To George (Henry George, that is...)
« Reply #37 on: August 24, 2003, 03:12:42 pm »

Quote
In my view, Georgism has some fundamental flaws that are responsible for relegating it to crank status in economics for more than a century.

BillG: E. F. Schumacher, author of "Small is Beautiful: Economics as if  People Mattered", challenged modern economic orthodoxy, questioned our blind  allegiance to technology, and suggested that spiritual and human values  were more important than profit and deserved greater respect than the  "material world". For his courage and originality, he was often called a crank. To  that he would reply that a crank is "small, safe, cheap, comprehensible,  non-violent and efficient, a perfect tool of intermediate technology and  very good for starting revolutions".

Leo Tolstoy's appreciation stressed the logic of George's postulate: "The chief weapon against the teaching of Henry George was that which is always used against irrefutable and self-evident truths. This method, which is still being applied in relation to George, was that of hushing up .... People do not argue with the teaching of George, they simply do not know it."

Of course one makes themselves a prime target of both the left & the right when you try to synthesizes the eternal truths of both - other libertarian should know this well in reference to civil liberties issues. A reference for future reading of how neo-classical economist deliberately tried to marginalize the teachings of George - proving the power of his ideas...btw - he was almost elected mayor of NYC.

http://www.taxreform.com.au/essays/corrupt.htm

Please keep in mind Georgism (Land Value Taxation) never claims to solve all the problems of the world but the belief is that it is ESSENTIAL for human liberty, dignity, & fairness.

Also...modern-day Georgism is now called Geo-libertarianism (some also call it Geoism or the study of Geonomics) which embraces a far more comprehensive critique than just land value taxation and includes other natural resources (air, water, land), as well as, other government granted priviledges (electromagnetic spectrum, intellectual property, currencies, etc). This idea is starting to take a more prominent place in our civil discourse (especially amongst the more thoughtfully pragmatic, radical decentralistic wing of the Greens - of which I am a proud member) under a broader conversation around the enclosure of the "new" commons which you seem to have made reference to: "commonly owned"

see SkyTrust:
http://www.skyowners.org/

see "Silent Theft - The Private Plunder of Our Commonwealth"":
http://www.silenttheft.com/

see Tomales Bay Institute:
http://www.earthisland.org/tbi/commons_state.html

here is a Geo-libertarian Green proposal in front of the PA Greens:
http://www.pagreenparty.org/platform/proposals.html

Quote
The first flaw is the idea that the value of unimproved land can be separated from the value of improved land.  A piece of land with improvements on it has a certain market value: for the land and the improvements.  It has no market value for the land itself, because the land and the improvements are inseparable.

BillG: Well, you obviously have never had to pay a property tax bill here in NH (I mean not yet of course!). It clearly states on your bill what your building is assessed for and what your land is assessed for...

The Simple Tax Shift (STS) concept would allow the taxing body to shift a higher percentage of your property tax onto land from buildings but the amount paid out of pocket would be the same.

Quote
The second flaw is that the Single Land Tax (SLT), even if implemented, can have deleterious economic effects.

Quote
The SLT encourages sprawl because it taxes at a higher level land that is in or close to metropolitan areas, thus providing incentives to use lower-value rural land for habitation (incentives beyond the market incentive of price).  Thus, it is curious that environmentalists would support the SLT, because the SLT has some of the same harmful consequences for the environment that property taxes do.

BillG: Sorry Jason but the exact OPPOSITE effect takes place. Anyone who is holding onto land nearest the city will pay a large burden for speculating thus will have to sell their land to someone who will optomize it's use. Speculators force developers out to marginal lands. Optomizing land use as it relates to it's location means that a huge number of housing will infill downtown (remember no tax on buildings) lowering the costs for rents (supply vs. demand) taking pressure off of the marginal lands. Greens are starting to come around to the fact that you can't have open space if your are not willing to optomize the urban core...This in addition to the ideas put forth by the Sky Trust advocates will encourage people out of their cars and back into vibrant & healthy urban areas...

http://www.progress.org/sprawl/jeffkris.htm

Quote
Third, the SLT probably does discourage land speculation, forcing original landholders unlucky enough to own land assessed at high value to sit on their property because no one wants to buy it from them - but this is a bad thing.

BillG: Wrong again - Take two side-by-side plots of land - exactly the same size - in Atlantic City...one has the Trump Casino on it the other nothing. They would pay exactly the same land value tax! Call Donald and see if he would like to buy the empty lot!

Quote
he moral assumptions of Georgism are also flawed.  Georgism confounds its empirical and normative aspects: supposedly, the SLT not only solves all economic ills and helps the market function, but accords with the correct metaphysical view of the earth.  The basic flaw is the assumption that land is collectively owned.  Land is not collectively owned.  In its natural state, land is unowned, or you might even say commonly owned.  But because something is unowned or commonly owned at one point does not mean it cannot be appropriated.  Land can only be collectively owned if the people living on it and having a right to it agree by contract to pool their land together and hold it collectively in perpetuity.  Then private appropriation from the collective would be wrong.

The assertion that land cannot be owned by humans because it is created by God proves too much.  After all, everything is created by God or by nature.  Not just land, air, and water - but human genes, individual personalities, the strength and weakness of human bodies, and so on.  One's talents, abilities, interests, personality traits, and perhaps even behavioral tendencies are determined by nature, and we are not responsible for them.  So does that mean that we cannot own our own bodies and minds?  The problem with Georgism is that it takes the workmanship ideal too seriously - the idea that whatever "you" create, you own, and whatever you don't create, you don't own.  But what do "we" create?  We don't really know, because we don't really know what aspects of "us" we are ultimately responsible for.                                                                

BillG: Geo-libertarianism is based on these three principles:

1. the right to life - since we are land animals the right to life can have no meaning without a right to land on which to live and to make a living

2. equal freedom of all - the right to use our faculties, move around as long as we don't interfere with others rights to do the same. From this a corollary right to the equal access to the earth.

3. self-ownership - you own yourself and the fruits of your intellectual and manual labor.

Jefferson talked about this as the right to the usufruct of the earth - the right to both use the earth and to the fruits of one's labors thereon. The rights of self-ownership and liberty lead to the principle of labor-based property. The Geo-libertarian corollary of this principle is that you cannot monopolize that which no one created. One has no more right than one's equal share of the earth (though one may rent this priviledge), especially those aspect of it that are scarce and/or capable of being monopolized, such as land surfaces. This would deny others their equal right to life and the use of the earth.

The best analogy that I can think of is if we were able to "appropriate" our sky (air/oxygen) and individual owners were able to charge you for it's use - no one would see this as just - right?

For a more detailed explanation see "Libertarian Party at Sea on Land"

http://members.aol.com/_ht_a/tma68/kyriazi.htm
« Last Edit: August 24, 2003, 03:19:53 pm by BillG (not Gates) »
Logged

JasonPSorens

  • Administrator
  • *****
  • Offline Offline
  • Posts: 5725
  • Neohantonum liberissimum erit.
    • My Homepage
Re:Economics According To George (Henry George, that is...)
« Reply #38 on: August 24, 2003, 03:52:14 pm »

FWIW, I see no need to hold that the SLT requires a 'held in trust' status for the land.  Sure, some people do, but some people advocate using the SLT as a means to provide an equally-distributed 'general dividend' to the citizenry.

Why would you want to distribute a general dividend to the citizenry?  I don't see any argument for expropriating people beyond what's necessary to maintain basic institutions of law and perhaps also a safety net to prevent people from falling  below the utility level they'd enjoy in a hunter-gatherer society with no property (i.e., to satisfy the Lockean proviso).  But anyway, I see that we agree here:

Quote
I do not, as any taxes levied in excess of government expenses would be a source of market distortion, similar to what we currently have.

But I think BillG does believe in the "general dividend" idea, so the above is for his benefit. ;)

Quote
Anyway, even under SLT, land deeds are held to be durable, saleable and assignable, so any practical difference  between the current system and SLT on that point is in the eyes of the beholder.

Good!  So now the issue is whether the SLT distorts markets more or less than other types of taxes.  More on that below.

Quote
The unintuitive result was that, with a 95% land rent tax, there is an equilibrium where both the landholder and the tenant have about twice the money left over that they do today (effectively doubling real wealth), while the government still gets a bit over 1/3 of it's current revenue.   Isn't one of the goals of the FSP to reduce government size (and thus spending) by 2/3?

Sure, but other kinds of taxes could probably accomplish this just as well, depending on administration costs, how assessments are made, and other factors that will vary over time and space.  I can see a capitation tax, a wealth tax, a flat income tax, a property tax, a single land tax, a general tariff, and a general sales tax being the "least bad" tax under different circumstances.  I don't see any particular advantages of the SLT that are universally applicable, unless you compare it to the current system, which is worse than a lot of alternatives!

Quote
What is 'accurate' in terms of value?  In running a business, you set your prices to the maximum that the market can bear, but never less than cost (unless you are willing to buy marketshare by losing money on each sale).  In the SLT economy, there is great liquidity, as there are no taxes on Labor or Capital.  Thus, the real value of land improvements is able to emerge.  Furthermore, the incentive to develop is not reduced.... it is instead spurred!

But you're assuming here that "pure land," net of improvements, can be accurately assessed.  Once the probability that land assessments will be inaccurate is factored in, then one sees that the real value of land improvements does not necessarily emerge in this system.  An extreme case would be that in which land assessments are basically randomly assigned, so that taxpayers are effectively drawing their tax liabilities out of a hat.  This system of random taxation doesn't tax capital or labor either, but it might still have deleterious consequences compared to taxes that do fall upon labor and capital!

Quote
On the value of the land itself, this could be a simple, utilitarian calculation -- the value of the land is proportional to the cost of the government services provided to the landholder and their tenants.  Personally, I like that method, as it corrals the cost of government into one formula, where everyone can see.  

I think that might be a very plausible system of taxation under a wide range of circumstances, but I don't see what it has do with a land tax. ;)  You might consume a lot of government services but own little land of value.  The value of gov't services might have to do with its protection of your improvements that you've made on the land you own, or maybe even intangible assets like equity, insurance, etc.  (Does a flat income tax better approximate a user fee on gov't services?  I don't know; as far as I know, no one has ever tried to calculate this.)


Quote
If government is to be limited and expenses thus reduced, then there may be no pressing reason for a large land tax.  Perhaps a Uniform SLT, with all deeded lands paying the same rate, based on the simple division of taxable acres to the annual budget, is best.  So long as landholders pass this cost onto tenants, then the cost of government is plain to all and the illusion of governmental free lunches is gone.

True, but here the advantage of the SLT is not in the L - land - but in the S - single.  Any single tax is likely to be transparent and simple: a flat income tax, a flat wealth tax, a flat property tax, a capitation tax, a flat general sales tax.  Any of these taxes would keep taxpayers vigilant and the cost of government apparent, so long as there was only one tax, applied evenly to all.
Logged
"Educate your children, educate yourselves, in the love for the freedom of others, for only in this way will your own freedom not be a gratuitous gift from fate. You will be aware of its worth and will have the courage to defend it." --Joaquim Nabuco (1883), Abolitionism

JasonPSorens

  • Administrator
  • *****
  • Offline Offline
  • Posts: 5725
  • Neohantonum liberissimum erit.
    • My Homepage
Re:Economics According To George (Henry George, that is...)
« Reply #39 on: August 24, 2003, 04:21:00 pm »

Quote
The first flaw is the idea that the value of unimproved land can be separated from the value of improved land.  A piece of land with improvements on it has a certain market value: for the land and the improvements.  It has no market value for the land itself, because the land and the improvements are inseparable.

BillG: Well, you obviously have never had to pay a property tax bill here in NH (I mean not yet of course!). It clearly states on your bill what your building is assessed for and what your land is assessed for...

Well, of course the government can send you a bill with a number on it; the question is whether that number can generally be accurate. ;)  (In the same way, governments use eminent domain to force people off their property & pay them what those governments think it's worth.)

Quote
BillG: Sorry Jason but the exact OPPOSITE effect takes place. Anyone who is holding onto land nearest the city will pay a large burden for speculating thus will have to sell their land to someone who will optomize it's use. Speculators force developers out to marginal lands.

That doesn't make sense: speculators hold land simply to sell.  If land were valuable enough for development purposes, a speculator would sell it and a developer would buy it.  You're assuming that somehow the market doesn't clear.

Quote
Optomizing land use as it relates to it's location means that a huge number of housing will infill downtown (remember no tax on buildings) lowering the costs for rents (supply vs. demand) taking pressure off of the marginal lands.

Downtown buildings won't be taxed, but downtown land will be, and since downtown land is worth a great deal more than out-of-town land, taxes on downtown land will be higher, helping (like property taxes) to push people out of town.

Quote
Quote
Third, the SLT probably does discourage land speculation, forcing original landholders unlucky enough to own land assessed at high value to sit on their property because no one wants to buy it from them - but this is a bad thing.

BillG: Wrong again - Take two side-by-side plots of land - exactly the same size - in Atlantic City...one has the Trump Casino on it the other nothing. They would pay exactly the same land value tax! Call Donald and see if he would like to buy the empty lot!

What about a plot the same size that's two miles down the road?  Will it be assessed at the same value as these two plots?  Or will it be assessed at lower value because it's out of town?  Let's assume all these plots have improvements on them, so that there is no market value for the unimproved land.  Not only will the plot next to the casino have a higher market value than the plot down the road because of its proximity to the casino, it will have a higher tax liability.  So demand for that plot would be lower than it would be were there no taxes on land whatsoever.  This will cause the market value to decline to bring demand back up, ultimately simply shifting the cost of the land tax from the eventual buyer onto the unlucky first owner when the tax was imposed.

Quote
1. the right to life - since we are land animals the right to life can have no meaning without a right to land on which to live and to make a living

That wouldn't be an argument for taxing land, but for redistributing it to everyone.  But I disagree with the premise anyway, because in an advanced market society you don't need to own land to make a living (I've never owned land).

Quote
2. equal freedom of all - the right to use our faculties, move around as long as we don't interfere with others rights to do the same. From this a corollary right to the equal access to the earth.

That last sentence is not a corollary but a deduction from a hidden premiss, that "accessing earth" previously appropriated by someone else does not violate that person's equal freedom.  So it assumes that land is different from other things, like bodies.

Quote
3. self-ownership - you own yourself and the fruits of your intellectual and manual labor.

If you own your own body, which you did not create, then why is it impossible for you to own land that you also did not create?

Quote
Jefferson talked about this as the right to the usufruct of the earth - the right to both use the earth and to the fruits of one's labors thereon. The rights of self-ownership and liberty lead to the principle of labor-based property. The Geo-libertarian corollary of this principle is that you cannot monopolize that which no one created.

Monopolization isn't the issue, though; the solution for monopolization might be (depending on what caused the monopolization) a general redistribution of private land rights, but not their abolition.

Quote
One has no more right than one's equal share of the earth (though one may rent this priviledge), especially those aspect of it that are scarce and/or capable of being monopolized, such as land surfaces. This would deny others their equal right to life and the use of the earth.

This departs very substantially from Locke's and Jefferson's view.  Let's say that all the available land was appropriated by our ancestors 400 years ago, and let's assume it was appropriated justly and used well.  Let's assume also that all land titles were passed down through the generations justly, through voluntary trade and gift.  Today, we enjoy a much higher standard of living as a result.  Now, just because one of my ancestors sold land, and therefore I don't own any, what gives me the right to demand land from someone else who did receive it justly?  Nothing.  Unequal shares in land will develop over time, and we shouldn't be concerned about that, because our standard of living today is much higher than it would be had no one appropriated land 400 years ago (in the hypothetical).

Quote
The best analogy that I can think of is if we were able to "appropriate" our sky (air/oxygen) and individual owners were able to charge you for it's use - no one would see this as just - right?

Well, air can't be appropriated; it's literally impossible (at this stage in time).  But the electromagnetic spectrum might be another example: there's nothing wrong with letting people appropriate all of it, so long as the right of appropriation was open to everyone when the spectrum was discovered.  It benefits us to have the spectrum divided up into private shares and developed.
« Last Edit: August 24, 2003, 04:22:03 pm by JasonPSorens »
Logged
"Educate your children, educate yourselves, in the love for the freedom of others, for only in this way will your own freedom not be a gratuitous gift from fate. You will be aware of its worth and will have the courage to defend it." --Joaquim Nabuco (1883), Abolitionism

LeopardPM

  • FSP Participant
  • *****
  • Offline Offline
  • Posts: 2248
Re:Economics According To George (Henry George, that is...)
« Reply #40 on: August 24, 2003, 04:39:49 pm »

lovely debate on both sides!  Keep it up boys!  you are helping me understand my own dogmatic view...


the cheering section,
michael
Logged
nothing to say...

RhythmStar

  • FSP Participant
  • *****
  • Offline Offline
  • Posts: 1886
  • Imagine there's no Heaven.
    • RhythmStar Records
Re:Economics According To George (Henry George, that is...)
« Reply #41 on: August 24, 2003, 06:46:23 pm »

Quote
The first flaw is the idea that the value of unimproved land can be separated from the value of improved land.  A piece of land with improvements on it has a certain market value: for the land and the improvements.  It has no market value for the land itself, because the land and the improvements are inseparable.

BillG: Well, you obviously have never had to pay a property tax bill here in NH (I mean not yet of course!). It clearly states on your bill what your building is assessed for and what your land is assessed for...

Well, of course the government can send you a bill with a number on it; the question is whether that number can generally be accurate. ;)  (In the same way, governments use eminent domain to force people off their property & pay them what those governments think it's worth.)

Under the USLT notion, land value is reserved for funding government.  Each dollar of the annual buget is divided equally over each acre of taxable land.   Thus, the 'value' of land is irrelevant.  In fact, land is no longer an asset at all, but a liability!  This has a number of salutory effects on society.  Instead of speculating on land per se, economic interest is focused on the economic potential of the uses of the land -- particularly for those activities that generate revenue, such as rental property and manufacturing.

Quote
Quote
BillG: Sorry Jason but the exact OPPOSITE effect takes place. Anyone who is holding onto land nearest the city will pay a large burden for speculating thus will have to sell their land to someone who will optomize it's use. Speculators force developers out to marginal lands.

That doesn't make sense: speculators hold land simply to sell.  If land were valuable enough for development purposes, a speculator would sell it and a developer would buy it.  You're assuming that somehow the market doesn't clear.

Actually, speculators simply look for investments that make money.  If buying and holding land is no longer where the money is, then speculators will shift their investment strategies to match.  So, market clearing dynamics taken into account, the focus of speculators will shift from land speculation to construction speculation, or short-term land speculation where the immediacy of impending development combines with excellent location to inflate the selling price far above the LTV.  It is the position of SLT advocates (and especially USLT) that such conditions will be more likely to occur in-town than out.  

Quote
Quote
Optomizing land use as it relates to it's location means that a huge number of housing will infill downtown (remember no tax on buildings) lowering the costs for rents (supply vs. demand) taking pressure off of the marginal lands.

Downtown buildings won't be taxed, but downtown land will be, and since downtown land is worth a great deal more than out-of-town land, taxes on downtown land will be higher, helping (like property taxes) to push people out of town.

Which is why I am leaning more and more to the USLT.  By totally removing the LTV differential between in-town and out-of-town lands, the desired attraction of urban development will be most facilitated, even super-charged.  Likewise, as the LTV of remote areas will be the same as downtown lots, the desireability of buying up huge tracts of undeveloped land in outlying areas will be lessened.  

In the absence of a ready plan to make economically productive use of such lands, they would likely be allowed to remain fallow, which is precisely what enviros would prefer.  Conversely, considering the LTV, the Sierra Club would be unlikely to be able to buy up such lands and take them off the market forever.  Instead, they would remain under State control until such time as someone wanted to assume the LTV liability.   The Sierra Club might be able to operate a wildlife park or hunting range, which would be good for the enviros and good for the hunters, as long as they were able to meet each other half way. :)

BTW, on Flat Income Taxes and other even tax schemes, I am confident they can all be shown to be less positive in their results than USLT.  Even a flat income tax gives the government more as I make more.  To what end?  The government does not need more revenue just because I make more income!  And let us not forget that a flat income tax, like consumption-based taxes, is regressive, falling more heavily on the backs of the poor than on the wealthy.  This only facilitates more inequities in society, while at the same time introducing impossible-to-predict fluctuations in government revenue.  

Why not free Labor and Capital?  Why not limit taxation to the annual budget of government?  Why not spread the burden in an equal manner, yet still allow free market dynamics to play, while not directly imposing a regressive burden on the poor?  USLT does all these things. Does any other system deliver them as efficiently, with as little complication?

RS

« Last Edit: August 24, 2003, 06:49:54 pm by RhythmStar »
Logged
Irony is the innate perversity of circumstance. -- William House

Duodecimal

  • FSP Participant
  • **
  • Offline Offline
  • Posts: 56
Re:Economics According To George (Henry George, that is...)
« Reply #42 on: August 24, 2003, 09:37:57 pm »

But the electromagnetic spectrum might be another example: there's nothing wrong with letting people appropriate all of it, so long as the right of appropriation was open to everyone when the spectrum was discovered.  It benefits us to have the spectrum divided up into private shares and developed.

The EM spectrum can't be appropriated either; I find the very concept absurd. It's like claiming ownership on middle-C or the letter Q. I posted about this in some other thread, but I likened the appropriation of an electromagnetic frequency with claiming that you own the volume of air that others can hear you screaming in. We found ways of dealing with people who interfere with our speaking (called civility). There's nothing special about the frequencies our natural voices can't hit but technology can.

How do you improve the EM spectrum? How do you, like land or cars or your CDs, prevent others from utilizing a resource that has no physical form (like Ideas. Indidentally, the concept of IP and patents strikes me as equally false for the same reasons).
« Last Edit: August 24, 2003, 09:40:21 pm by Duodecimal »
Logged

JasonPSorens

  • Administrator
  • *****
  • Offline Offline
  • Posts: 5725
  • Neohantonum liberissimum erit.
    • My Homepage
Re:Economics According To George (Henry George, that is...)
« Reply #43 on: August 24, 2003, 09:46:14 pm »

But the electromagnetic spectrum might be another example: there's nothing wrong with letting people appropriate all of it, so long as the right of appropriation was open to everyone when the spectrum was discovered.  It benefits us to have the spectrum divided up into private shares and developed.

The EM spectrum can't be appropriated either; I find the very concept absurd. It's like claiming ownership on middle-C or the letter Q. I posted about this in some other thread, but I likened the appropriation of an electromagnetic frequency with claiming that you own the volume of air that others can hear you screaming in. We found ways of dealing with people who interfere with our speaking (called civility). There's nothing special about the frequencies our natural voices can't hit but technology can.

Well, yeah, there is something special about those frequencies: namely, we can't hear them without special devices designed to tune into them. ;)  You can effectively "appropriate" the sound space of a room by yelling at maximum volume, crowding out all other voices.  (Civility - the practice of speaking in turns - solves this.)  You can effectively "appropriate" a piece of the electromagnetic spectrum by running an extremely powerful broadcast tower that crowds out all weaker signals at a given frequency.  But that's inefficient, so a better solution is to allow "homesteading" of the sections of the spectrum.  This is pretty analogous to what happens when land titles come to be recognized.  It's more efficient to recognize private property than to let people fight over it - that's true of both land and the electromagnetic spectrum.
Logged
"Educate your children, educate yourselves, in the love for the freedom of others, for only in this way will your own freedom not be a gratuitous gift from fate. You will be aware of its worth and will have the courage to defend it." --Joaquim Nabuco (1883), Abolitionism

BillG

  • Guest
Re:Economics According To George (Henry George, that is...)
« Reply #44 on: August 25, 2003, 08:52:46 pm »

Quote
Is it moral or immoral to appropriate unowned land?  Sometimes it might be immoral, but surely in some cases it is moral. 

BillG: If we regard human beings as having equal moral worth, then it is morally wrong for some to be masters and others slaves...All land is monopolized, since new land cannot be created or imported. The landlords give you choice: which plot of land do you wish to be located in? You the tenant have no choice as to having to live on some land. Your only choice is which monopolist will take the rent that naturally and properly belongs to you in the first place as a member of the community. Similiarly - suppose someone put you in prison and there were several empty cells you could be put into. The guard says, choose one of the cells. Is this choice voluntary? Relative to the cells, yes, you choose one. But the greater context of being in prison is involuntary, so the choice of cells is also involuntary

Quote
John Locke thought unowned land could be appropriated by the first comer so long as its productive capabilities were not wasted, and so long as everyone else who could not appropriate the land was better off for it - because of the productive use of the land made by the appropriator.

BillG: John Locke said (quote) "God gave the world to men in common....He that leaves as much [land] for another to make use of does as good as take nothing at all."

Hence John Locke's proviso that one has "property" in land only to the extent that there is "enough, and as good left in common for others."  When there is not, land begins to have rental value. Thus, the rental value of land reflects the extent to which Locke's proviso has been violated, thereby making community-collection of rent, through Land Value Taxation (LVT), a just and necessary means of upholding the Lockean principle of private property.

Quote
In some circumstances, extreme inequalities in land ownership, usually resulting from historical conquest, as in Latin America and parts of Asia and Africa, can be harmful - but the proper solution here is a comprehensive redistribution of private land rights, rather than the SLT.

BillG: What do you consider extreme? Does "usually resulting from historical conquest" apply to Britain?  

In Britain 70% of land is still owned by less than 1% of the population. So of the 60 million acres available - 40 million acres are owned by 6,000 families. To contrast this with Ireland, which people should remember went thru the potato famine during the 1850's (can anyone say "landownership") in 2001 52,000 new homes were built in a population of 3.4 million whereas Britain, managed a mere 170,000 in a population of 60 million!.

The failure to re-distribute land in the Britain is one of the prime factors why they have under-performed during most of the 20th century. Of all the political philosophers who have come along in history there was no greater friend to Ireland than Henry George!

http://www.schalkenbach.org/library/george.henry/landforthepeople.html

So to answer your "proper solution" - "SLT" is a comprehensive redistribution of private land rights !!!!

Quote
Certainly, a rate approaching 95% could never be justified as a fee for recognizing the deed and enforcing it.

BillG: It is not necessary for efficiency for the pure land rent to belong to the individual title holder. Economists use the term "economic rent" for payments beyond what is needed to put a factor of production to efficient use. Land rent is economic rent, since the land is already there, and for real estate, the amount of land within some boundary line is fixed. So when rent is used for the public finances, it does not reduce the quantity of land. The rent will not be passed on to the tenant, since the payment of the rent to a community does not change the supply or demand for land.

The use of rent for public revenues therefore has no excess burden, no burden on society or the economy. Taxes on income, goods, and transactions do have an excess burden, since by raising the price and reducing the quantity of goods, resources do not get allocated to where the people most want them. Taxes on labor and goods raise prices, while rent-based payments do not affect the rent, and they lower the price of land rather than raise it.
« Last Edit: August 25, 2003, 09:03:15 pm by BillG (not Gates) »
Logged
Pages: 1 2 [3] 4 5 6 ... 10   Go Up