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Economics According To George (Henry George, that is...)

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Matt Nellans:
I owe no debt to society at all, ever.

The rights of the individual supercede any communal interest, always.

Only in a handful of matters do individuals cede some control...defense, courts etc.

Norris:
Rythmstar,
That doesn't clarify it much.
First of all, land without improvements doesn't generate much rent, mine generates none. That said, the other potential source of revenue for "society" whould be the profit made on the appreciation when I sell.
If the state siezed that profit  from landowners, the value of land would drop to a fraction of what it is today since nobody would want to hold it.
 This might be solved by a massive, one time compensation to landowners, which seems unrealistic. Also the potential revenue would be diminished considerably by the lack of buyers.

With the profit on appreciation going to the state, a distinction would have to be made regarding the exact value of the improvements, timber, crops etc. which whould make transactions expensive and necesitate a bureaucracy to document it.

Has George estimated how much revenue this would bring in and what percentage of current revenues that would amount to?  I think it would be way down in the single digits.  It would be mighty hard to sell such a transition, especially if current landholders are compensated for the loss of appreciation rights.

Johnny Liberty:
My understanding is that the "landholder" is taxed yearly on the value of the land, not any capital improvements built on the land. The trade off on this single tax on raw land is the elimination of income taxes taken from wages or capital (stocks, bonds, businesses).

As to the revenue calculated to be generated from such a scheme in one of free states, ?

RhythmStar:
BTW, here is another link that goes into more detail on the tax issue:

Taxes -- What Are They Good For?

George proposed a 5% royalty to the landholder in order to capitalize the price of land and bring market forces to bear therein.  Put another way, the tax on land rents would be 95%. Wouldn't that high a land tax impoverish the landowners?  Not at all!

Firstly, the Single Tax would only apply to the LAND rent, not the portion of the tenant's rent that applied to the improvements thereof.  Also, there would be no other taxes.  Let's run the numbers on a scenario to see how it all works.

Current Situation:

Land Value = $100
Improvements = $100
Tenant Rent = Land Value + Improvements = $200
Income+Other Taxes = 50%

Landholder Net Income ($200 rents less taxes) = $100

On the Tenant's side, they have to gross $400 to pay their 50% taxes and still have $200 for the rent.  How they eat is anyone's guess.

The Government has a gross revenue of $300 out of the deal!  

Does that seem equitable to anyone?

Now, let's use the George formula:

Land value = $100
Improvement value = $100
Tenant Rent = Land Value + Improvements = $200
Land Tax = 95%

Landholder net income (rents less taxes)  = $105, so they just got a raise in real income.  How is this punishment?

On the tenant's side, life is good, as they own no land, they pay no taxes!  They went from nothing to eat after making $400 and paying half to taxes and half to rent, to having $200 left over after rent.

The government's share in this is just the $95 from the land tax.  

We can see here that the original Georgist proposal increases real income for the landholder slightly, while providing a windfall for the tenant.  Government makes slightly less than the landholder.  So, Labor is rewarded greatly, while Landholders do better than today and the Government is restricted to 23.75% of the pie.  Labor's fruits are not even on the taxation table.

Is this more equitable, or not?  If not, then why?

RS



RhythmStar:
BTW, say the government needed to increase revenue by 20% to pay off a war or something else we voted it to do.  How do they do it?  They increase the tax value of land by 20%.  How does that result:

Land value = $120
Improvement value = $100
Tenant rent = $220
Land tax = 95%

Landholder net income = $106 (yes, they get a raise)
Tenant net income = $180 (they voted for it, let them pay for it)
Government income = $114 (20% more than they had)

Note that the Single Tax does not penalize the minority (the landholders) for the democratic programs voted in by the majority (the tenants).  Thus, the majority will think twice before they vote themselves a fat benefit package, as they pay for it!

Still sound socialistic?

RS

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