I'd argue that transitioning is an extremely hard problem. The Georgist system taxes property at extreme rates. In particular, the taxes on property ownership are supposed to capture the entire value of renting the property. This means that people owning property with a mortgage would suddenly be forced to sell their property at the near zero prices that Georgism is designed to foster. This is likely to lead to many unhappy homeowners as well as significant loss of capital for all the entities banks sell mortgages to. I think this problem is severe enough that in order to transition to a Georgist society a government might need to absorb every mortgage in the country.
Mortgage debt in the US is currently estimated at 17.6 trillion dollars, slightly more than half of the 30.5 trillion US national debt. Such an expense would be vaguely possible, but extremely sizeable.
No. once again, invariably, multiple people make this mistake in every thread about the land value tax.
'economic rents' are not the colloquial 'rent' we pay for housing we don't own. economic rents are UNproductive, meaning simply income produced by ownership itself, rather than in the productive delivery of service (in this case, housing). LVT only seeks to tax away that unproductive part (economic rents). the productive part would include the costs of mortgage(s), insurance, utilities, upkeep, and a small profit (aka risk premium).
Of course, taxes will actually be set in accordance with what the government needs for revenue since this is supposed to be a single tax. Elsewhere in the thread I've tried to estimate Georgist land taxes based on current revenue needs and found them to be quite high.
Except the LVT premise is bullshit.
Lets say I have a house I rent out for 1800 dollars a month. About 500 dollars of that will go to taxes (income, property, etc).
Out of the rest I take 600 dollars and am in the process of fixing up two more houses that I bought from a tax sale that were made unlivable through crackhead squatters.
So that leaves me about 700 dollars more. Out of that I need to save probably about 300 dollars a month to cover costs associated with owning homes. Such as the need to replace roofs or water heaters or hire arborist to take down dying trees before they destroy my neighbor's property, etc.
Then that leaves me with 400 dollars that I reinvest in other companies. So it goes to doing thing like buying bonds, etc.
The only thing that is "unproductive" here is the money being paid to the federal governemnt to go murder brown people half way around the world.
The entire intellectual basis of this "Georgian" stuff is completely bogus. The theories about monopolies are wrong. The theories about how to solve the tragedy of the commons is wrong as well. The economic efficiency theories are wrong, etc etc etc.
Once you have a lease, it's unproductive as it comes, purely getting money for owning something
1) "In particular, the taxes on property ownership are supposed to capture the entire value of renting the property."
Not true. Only the unimproved value of land is meant to be taxed. This amounts to a complete exemption on taxes on buildings.
The current proposal that is often on the table is not to go for classical 100% Georgist LVT, but to simply collect the exact same amount of property taxes we do now, but to shift the burden off of buildings and onto land. This can be done right now with existing property tax regimes. The burden would fall mostly on underutilized land, parking lots, and vacant lots in city centers, where the lion's share of land value is concentrated. Proposals for this sort of reform are in the works right now in various US cities.
If you'd like to see a practical policy paper on the subject see here by Tideman, Kumhof, Hudson, and Goodhart (the Goodhart of Goodhart's Law, by the way): https://voxeu.org/article/post-corona-balanced-budget-fiscal...
2) Georgism is not just about real estate. It's about properly dealing with scarce economic assets that can't be created and which invite speculation
Norway's sovereign wealth fund is an extremely successful example of applying Georgist principles to natural resources, for just one example:
https://progressandpoverty.substack.com/p/norways-sovereign-...
Yet, Georgists think that a shopping center without parking, one with parking, and a parking lot should all be taxed the same.
While you're completely correct, I don't think this is a reason to abandon the enterprise (other extremely hard problems: sending a human safely to the moon; democratic rule of law; the elimination of slavery).
While I ideologically support the so-called "Single Tax" model, it is indeed extremely difficult to imagine how this would be implemented at the federal level (especially in our current gridlock climate). I'd instead advocate going the other direction, and implementing it locally: property taxes already exist at the level of states and municipalities. These local taxes can gradually migrate to being calculated based on unimproved value, rather than including improvements. This can include whatever necessary carve-outs to reduce unintended side effects (grandfathering existing owners, partial exemptions for owner-occupancy and retirees, etc).
Under any model, the real tension is the zero-sum game between existing owners, and aspiring owners: the former want property values to go up, the latter want property values to go down. (We see the same dynamics at play in zoning laws, NIMBYism, etc.) As with any perverse incentive, or institutionalized rent-seeking, reform is extremely difficult, but by no means impossible.
I don't see a good way to get to Georgism without government absorbing the mortgages as the fallout to the economy of all that debt suddenly having little in the way of assets underlying it is a huge problem. I do agree I exaggerated with my claims of $0 since the improvements on the property would have some non-zero value, but land represents the majority value of most houses and the land value would be effectively reduced to zero by the change in value from the taxation. That would be enough to put most mortgages underwater and the asset would no longer sell for the cost of the mortgage. I don't see government doing this and just saying "too bad, investors absorb the loss".
Once you add the taxes for other jurisdictions of government I can see taxes reaching 30% of total mortgage value. It's fairly clear to me that owning land is extremely expensive in a Georgist society that needs to generate the levels of taxation that fund current government. If land value tax replaces income tax it needs to be fairly large, taking over 20% of mortgage value for just federal costs.
Some number of homes are owned outright and no longer have mortgages so the mortgage number may be a bit misleading. If we account for this we might get to a level that suggests 10% of mortgage value in taxes federally, raising to 15% of mortgage value when accounting for other levels of government. Such numbers suggest you'd need to be able to pay for your current property with an 8-year mortgage in order to pay the Georgist taxes on it.
I think a modern society that kept existing levels of government spending would see widespread downgrades in housing quality in a Georgist society.
If the bank pays the tax, why wouldn't they pass it on to the mortgage holder in the form of higher interest rates or other fees?
There are exceptions when businesses are investing for growth and expenses are paid by investors, but normally no business is going to agree to a contract where they lose money. The money to pay expenses comes from customers.
In the US at least, mortgages are on both the land and the buildings.
Getting easy details like this wrong suggest that you don't actually understand how property works.
I get that you have a theory with properties that you and some equations, but that doesn't imply that your equations accurately reflect reality.
As the saying goes, reality has a surprising amount of detail.
Forgive the naive suggestion, but tax rates on property can be be introduced progressively - few percentage points per year - for many decades.
Not necessarily. Relatively few homeowners occupy all that much land value; it's probable that most homeowners' dividends would entirely offset their tax burdens, in which case they stand to benefit if anything.
Most of the people you're taxing in a land value tax are residential uses. Taxing the money doesn't magically multiply it and it's impossible to return nearly all of the tax money to constituents since governments have substantial other expenses.
My estimate is that a current home worth $1.5 million in a suburb of Toronto has land value of roughly $1.25 million and is likely to be taxed at 10% of land value. This suggests an LVT of $125,000. If the general trend of all residential real estate follows this government raises only 2.688 trillion dollars from residential property. To fund federal government we'd have to raise another 1.362 trillion and then we'd have additional amounts to raise for each other level of government. I'm not certain whether we can do this from the additional amounts on commercial and industrial property but it seems to be a close approximation.
The point is the funds leave very little left for the citizen's dividend unless we want to vastly reduce existing government programs.
The German property tax is very low, well under $1k for the vast majority of the country so the switch isn't that big of a deal but it also won't have much of an effect on anything other than abandoned buildings/land in city centers.
You gotta start small.
In the cities, converting apartment buildings to condos is another form of this. Of course, many people believe this is inadequate and we need to go further, with low-income housing and the like. But it's been a long time since redistributing agricultural land made sense. Do you really want a hobby farm?
You might say that an apartment isn't productive property, but with increased working from home it seems like it's blurred a bit? You can run an Internet business out of your home.
Meanwhile we have widespread ownership of public companies via the stock market. Again, not widespread enough.
But another issue is that being a stockholder doesn't feel like ownership. It's just an investment; you don't get meaningful control.
It's not all that clear what meaningful control looks like, for large firms. Maybe this is an argument for smaller firms? Company breakups might be the modern equivalent of land redistribution.
Companies are arguably not very widely distributed. The stock market is ownership of companies by those who do not work for it, so the distance between the worker and the owner is still greater than in small businesses, family businesses, worker cooperatives, or even traditional corporations with Employee Stock Ownership Plans. Trust-busting is one way to decrease that distance, although true anti-monopoly policies like a land-value tax or a tax on intellectual property enforcement would truly remove the privileges these big companies have and allow smaller ones to truly compete.
Changing property tax rates doesn't change cities or suburbs into something else, at least not at first. All the property is still owned by the same people. People still live in the same houses.
One early way in which this could be easily done - and which tech companies are leading the way in - is to normalise the idea of workers in a company being given company equity. While it is still a long way off from actually owning the means of production, it should become normal and expected for full time salaried employees to be given a share of ownership in the company. Otherwise, full time employees are simply contractors with extra perks. Having a stake in the company you work for means that companies are actually controlled and owned by the workers, not controlled and owned by the highest bidding investors.
Employees get more influence (not control) over what happens by working at the company and contributing to internal discussions. That's mostly gone when you leave.
Perhaps more employee co-ops would further that goal. Mondragón in Spain is often cited as an example of Distributism in action.
Such a concept practically does away with the very basis of the ancient differentiation of people into classes according to the kind of work done. This does not mean that, from the objective point of view, human work cannot and must not be rated and qualified in any way. It only means that the primary basis of tbe value of work is man himself, who is its subject.
This leads immediately to a very important conclusion of an ethical nature: however true it may be that man is destined for work and called to it, in the first place work is "for man" and not man "for work". Through this conclusion one rightly comes to recognize the pre-eminence of the subjective meaning of work over the objective one. Given this way of understanding things, and presupposing that different sorts of work that people do can have greater or lesser objective value, let us try nevertheless to show that each sort is judged above all by the measure of the dignity of the subject of work, that is to say the person, the individual who carries it out.
Laborem Execrens, 1981
>"While Georgism does not have a philosophy of governance, it can easily be harmonized with distributist ideals. In many governments today, especially the United States, there is a substantial bureaucracy which creates red tape rather than solving problems"
Georgism and similar economic ideas that favor localism have no theory of governance or of power. You can imagine a G.K. Chesterton style economy where we all live in a sort of Catholic Hobbingen of family owned businesses or Le Guin's Anarres, but there's a reason we're not living in it now.
Without having a theory of administration, that is to say bureaucracy and governance and how to beat all those big companies and actors that ruin your distributist dreams into submission, you have a considerable problem. There is no such thing as 'naturally limited government'. That these systems do not magically sustain themselves is visible in Europe with the decline of Christian- and Social-Democracy respectively whose economic and cultural foundations (largely Catholic/neo-Calvinist social teaching) started to break apart.
This is probably the weakest part of the article. The frontier is not a safety net. You do not go to the frontier because you are in the poorhouse, you leave the frontier for the poorhouse after you have failed at a nearly insurmountable task. Even today this plays out again and again, people imagine that they can start their life over on a farm and earn a living with their hands, very few succeed. The biggest cost of starting a homestead is not the land but the sheer amount of labour and money that goes into improving that land to the point where it can provide for you. Even the basics of clean water, sanitation, power/heat and shelter would be beyond anyone in need of a failsafe. Add to this the insult of the available land being that which is so marginal that already established businesses cannot make it productive and you have a complete non-starter.
If you think that the marginal periphery will consist of abandoned homes instead and that all one would have to do is move in then I'd invite you to visit a few of the existing abandoned homes in your area. Mind you, not unoccupied homes which generally still have an owner that does at least the basic upkeep necessary to avoid fines. Visit a truly abandoned home where the owner has simply walked away. Unless you're coming in hot on their heals, it's going to be a disaster. Cold weather alone will ruin an unheated structure built to modern standards not to mention the toll that wildlife, plants, and vandals can take. Modern, draft free buildings will also develop a significant mold problem if their power is disconnected since no heat and no air circulation mean that temperature changes will produce condensation.
Few purposed vague elements, that if detailed reveal their incoherence:
- subsidiarity :: how a large community/entity can help but not interfere? Let's take a simple example: in India there are various cohort of population, let's focus on Indus and Muslims. Indus consider cows sacred animals, they can be milked but not confined nor slaughtered fro their meat. Muslims eat cows, so slaughter them for that purpose BUT do not eat pigs, a religious crime for them, while Indus have no issues in eating pigs. Suppose you are the bigger entity: how can you help them without interfere?
- family policy :: a family designed by mother, father and children miss a part: the two parents have also their parents, who happen to get elderly, for instance. Their children at a certain point in time will leave family. Making a family an atom who form molecules, means the society can't exists. Original family ideas came from a more practical élites needs: people to live need to be a bit together and reproduce, they need to be balanced in sex terms for that and for social stability BUT "we" (élite) need also something for them. Let's define them a family, saying any family have to give something to the élite: food, young sane people for war etc. Locking peoples in such mindset it's easy to say: you parents need to reproduce, more than one child because he/she can die, some are needed to work to live, some are tribute for war etc do not care much about you, your duty is the family. You child you have a family, you need to represent it, so go to war and work hard, do not care much about your duty it the family. That's the simplest and easiest subdivision of humans to direct them as a flock. As single families they need someone who handle their disputes, they have a simple duty they believe etc. The rest of the society is designed with the same scenario: authorities/élites are "parents", families their children who need to obey.
Autarchy is a dream, sci-fi movies prove it regularly design autonomous starship with a small set of humans traveling the galaxy, in the past that was Conestoga wagon, equally nomadic life and so one. All depict the dream but omit how anything is built. Who built the starship, for instance. That's left aside because it's the core of the gamble: we need something organized differently, often some people forced to live bad life to makes others happy etc.
Taxes is equally used here in psychological terms instead of in economical terms: they are weaponized instead being clearly described as a way to avoid some earn too much respect of others. A social leveling mechanism. Again they aren't cited like that because if so we have to say that money is not a value no-one-really-know who control it but just a symbol we agree to use as a unit of measure for a substrate NOT as the substrate of anything like we do today.
It's a classic way to use emotions for stopping people think and demand clarity, making them blindly trust something.
