Land value tax was a Pittsburgh thing until the 90s or so. Old people started bitching because they didn't want to pay for schools for young people. Anyway, they say it is why Pittsburgh is so dense. I'd be happy to put it back. I have a very small lot with a relatively large house on it.
I don't want housing to be a great investment. I want it to be an ok store of value.
I think we need to admit that Pittsburgh isn't actually dense.
Did they vote to secede from Pennsylvania too?
The only land to successfully leave Pennsylvania in the last one hundred years is The Wedge and I haven't given up on that yet.
By the usual standards of comparison (rural Nebraska, Columbus Ohio), Pittsburgh is really dense.
Pittsburgh is twice as dense as notorious-not-dense Palo Alto, but less than one third as dense as really-should-be-denser San Francisco. Nearer by, we're about as dense as Cleveland and population-hemorrhaging Detroit but less than half as dense as Chicago and Philly. Hell, Staten Island, by far the least dense borough, is denser than the city of Pittsburgh.
I'll be the first to reference Henry George's Progress and Poverty, 1879.
https://en.wikipedia.org/wiki/Progress_and_Poverty
Sorry, idp, Peter Orszag beat you -- in the linked article.
Sometimes old ideas are good ideas. Henry George advocated forcefully for a land tax in his 1879 book, "Progress and Poverty." More than 135 years later, perhaps its time is ripe.
If you exclude land and housing, capital has not risen as a share of the U.S. economy.
If you exclude land and housing you're kind of missing the point, no?
Thanks, I was responding to the idea as set forth in the OP w/o reading the article.
I'm guessing it bears repeating though.
Georgism makes a lot of sense. I would actually favor a broad wealth tax, not just a land tax. If the point of allowing people to accumulate wealth is to make it serve the public good by being productive, then taxing it will require you to put it to use instead of hoarding it. Spend it, invest it, or lose it. It makes more sense than an income tax.
A wealth tax has practical problems (how do you accurately calculate everyone's net worth?) but a land tax is easier.
Land owners intuitively hate it though (everyone already bitches about being "land poor" when they have to pay property taxes on land they've paid off).
9: Right, but when you say "Capital" people's first through is usually industrial robots, not a backyard.
9: I think the goal is to differentiate productive capital (factories, technology), from more expensive houses. If factories, etc. are getting more expensive, people are creating jobs (or automating them away), etc. If they're just paying more for the same land... it's just paying more but not getting anyone ahead--scarcity instead of increased production.
(Which, thinking further, I'm sure you get, but I missed your point I bet.)
11: Well, any tax is going to be hated by the people who bear the brunt of it. This one at least targets people who are malevolent (thought the same could be said of a carbon tax).
Plenty of people who did absolutely nothing out of the ordinary have seen huge increases in property taxes here. And these would have been greater if it was a land tax.
13 makes me think of the gold standard. Wealth flees to an arbitrarily designated totally unproductive store of value, driving up its price relative to everything else and so bleeding everyone else. Land is less arbitrary than gold, but investing in it (as opposed to living on it) reflects the same search for permanence. In conclusion, analogies are banned for a reason.
For example, people in certain areas around here could have seen their property taxes go up by a factor of 4 or more all at once because of the combination of increasing property values plus extreme reluctance to raise those values until required to do so. This isn't just hitting gentrifiers. Everybody who only could afford a $50,000 house got hit like that if they bought the house in the right place.
I mean, it's a good thing that happened for them. They hit a 400% profit. But old people get pissed if you try to explain that to them. Unless you shovel their walk for them. Then they're happy with you.
Why is a land tax drastically different than property taxes?
So get snow-shovellers with "Your Land Tax at Work!" emblazoned on their parkas. Do I need to think of everything myself?
Because old people in these neighborhoods often have really shitty houses relative to the price of the land.
20 to 18.
19: I was thinking of trying to sell them reverse mortgages on commission.
Further to 20: If you think about the total amount of tax that must be raised, if you divide that amount just by the amount of taxable land in the city, anybody with more than average value in the buildings on the lot gets a tax break compared to if you tax all the property (building + land).
Ah, so there's an incentive to squeeze more out of the land.
But in the first paragraph I quoted, "a significant fact has been obscured: If you exclude land and housing, capital has not risen as a share of the U.S. economy" they're lumping these together. But then the solution splits them apart, and we already have a solution that lumps them together. So which is it??
Nobody actually wants to come out and say that the solution is squeezing mostly middle class, disproportionately elderly people out of their current houses so that denser construction can replace them.
The increase in real estate costs is largely driven by land costs, not housing costs.
I would be okay with a hold on land tax increases on the principle residence within a given generation of ownership, possibly restricted to only when the owner is past retirement age (appropriately lawyered to reduce loopholes, of course).
I don't know. Property tax is the only local tax that older people with resources pay. The income tax is only one wages (not investment income) and sales tax isn't on anything they buy much.
I was in NYC this weekend. (Holy smokes, I love NYC. )
But we spent a lot of time discussing the cost/size (softball, unfogged) issues that New Yorkers deal with.
Who are these people buying one bedroom condos for $1,000,000, plus paying $2,000 a month in condo fees!?!
28: Scions of the brush and broom monopoly, I presume.
28 last -- Every time a dollar changes hands anywhere on earth, some portion of the money ends up in NYC. This funds a lot of foolishness of all kinds.
You know, it's probably possible to solve the affordability/investment conundrum by making housing neither affordable nor a good investment.
27: Surely there's a way that this can be formulated that prevents a situation where a widow, whose only property/capital is her principle residence, can't afford the property/land tax and has to sell it off, but still dunks the actively rich and influential.
That exists. It's called a reverse mortgage. People don't like to do that because it means they can't leave their house to their kids.
You know, it's probably possible to solve the affordability/investment conundrum by making housing neither affordable nor a good investment.
Everyone must live in concatenated RVs. The human housing centipede.
I mean, there's already the homestead exemption. It wouldn't hurt to increase that with the inflation rate, but that only goes so far.
37 -- You're not solving the problem. What's looked for here is a way to force middle aged people out of their single family homes so they can be knocked down and replaced with multifamily rental housing.
I even asked for this post, and now I'm too busy to take part in the discussion. Here is the last installment, the one with recommendations, of a multi-part series on affordable housing in Seattle. Land taxes aren't explicitly floated as part of the solution. I did a double take when they mentioned Singapore as a model.
"Millennials seem to have much less interest in home-ownership" -- but everyone has an interest in not being evicted, whether by owner fiat or by rent hikes.
I was deliriously posting about housing last night too.
35 to 31. Thinking of stuff like this.
Beijing is/was trying to control rampant speculation & their ridiculous real estate bubble by actively restricting who can buy there. Last time I talked to people about this (2013 so it could be hopelessly outdated), they had done so by not allowing non-residents to buy property, and by slapping massive taxes on non-primary residence purchases. The problem was that wealthy non-residents found ways around the law (my little princeling friend from another part of China was able to buy an expensive place), and it punished a whole class of white collar non-residents who lived permanently in Beijing but couldn't buy housing. Also, housing was still really expensive. Everyone thought the non-primary residence tax was a good idea.
The only land to successfully leave Pennsylvania in the last one hundred years is The Wedge and I haven't given up on that yet.
The Wedge is rightfully a part of Maryland.
39: We've got plenty of brownfields here for that.
The bastion-of-evil-masquerading-as-a-university that controls my university is trying to drive up rental prices in the neighborhood by building lots of luxury apartments, and selling off their grad student housing. Besides being evil, it feels totally WTF, because we're a university neighborhood pretty far away from anywhere trendy, and AFAICT not otherwise gentrifying. If you can afford $2500/month for a 2 bedroom, you're probably not a grad student and would prefer to live in the South Loop.
42
Of course in China the government owns all the land (technically you're buying the house on the land and a long-term salable land lease).
45
That sounds like par for the course these days and it makes me very sad.
Saw this recently about capital smuggling out of China.
A business from which his company buys millions of dollars of infrastructure equipment approached him with a request: Make a claim that several lots of the machinery we exported to you were defective and demand damages. The company will not contest the claim and will proceed to reimburse you for the "faulty" goods. Once you get the money, transfer it - for a fee you may charge - to an account overseas we'll tell you about.
"The amount sought to be pulled out was US$30 million (S$40.2 million) and the trust level was US$3 million a time," this person told me. "Every US$3 million we transferred faithfully into the account, we'd get a slice. He was requesting 10 such tranches."
I would totally fall for a line claiming that higher average rent on a 2-bedroom apartment near the university raised your US News & World Report ranking.
41 Oh yeah, it's sinking back into the Gulf though a developer has started building these weird half underwater houses on one of the islands. I fly over it whenever I go there and always try to spot it from my window seat.
I always tell Chani that my ambition is to live in Falconcity of Wonders. Worth the google image search, that.
I'm pretty sure 48 means I should be answering more of my spam email.
49 was not covered in PUA classes.
48 I get emails like that all the time.
There's no pwnage like the Moby pwnage.
50.2: Wow. My first thought was "Those look like maps for a particularly over-the-top Dungeons & Dragons campaign."
56 made me laugh. Fortunately, my phone call was over.
Barry, you disappoint me. I was expecting some kind of supertall aviary/penthouse complex, in which one lolls upon fine couches, feasting on the bounty gathered by your fearless far-soaring falcons. But no. Just Las Vegas without the good taste.
New Jersey cleverly designed a "reverse land value" tax system, where property used for farming is taxed at is value for farming, even if it's on a highway, in commuting distance of Philadelphia, and was bought a decade ago by a company in the shopping mall construction business. They're keeping a few hundred acres of corn growing to harvest the tax free aspect until they get around to construction. Fucks up the tax base in my township.
We also have a thousand acre or so family-owned, 250 year old cemetery that is pretty much untaxed. As far as I understand, the family isn't planning to build a shopping mall on the site.
18 & 20 & 23. Hence "mansionization." Still, in the case of the old folks living in a shitty house, their lot is more desirable if you are a developer because buying lot+shitty house is cheaper than buying lot+mansion, and there's more profit from it too.
37. Unless governments do it, which probably would be the case under Carpism, the single family homes would be converted into bigger single family homes. Are you volunteering to be first, or do you already live in a multi-family home or apartment?
40. I think millennials have less interest in home ownership for the same reason I have less interest in a private jet: there aren't many scenarios in which I can imagine affording it.
Hence "mansionization." Still, in the case of the old folks living in a shitty house, their lot is more desirable if you are a developer because buying lot+shitty house is cheaper than buying lot+mansion, and there's more profit from it too.
So why would a land tax lead to denser housing and not McMansionization?
From Lurid's link:
What if we had been investing in expanding social housing for decades? What if our government, right now, started prioritizing social investment in housing over pumping money into the banking industry?What if the government had repossessed those underwater mortgages it bought out in 2008 and just let the people living there keep renting?
34: Oh, duh, of course. Then fuck 'em. If you want the family house to be a primary form of intergenerational transfer of wealth, you're part of the problem. If you want it to stay in the family for sentimental reasons, that's admirable, but it's a luxury that needs to be paid for by the next generation.
Because a given lot with one McMansion owes the same tax as a given lot with 20 units on it. So the multifamily housing gets a huge tax break.
OK, "Falcon City of Wonders" is the best. Fuck yeah the name. Fuck yeah putting the wonders of the world into your subdivision. Say what you will about Dubai, but that one lives up to Dubai's potential.
61.2 I'm not volunteering to be taxed out of my single family home, and think a political movement with this as a goal isn't going to get very far at all.
I thought the recommendations in the Seattle article were pretty good, although I don't think private philanthropy as a significant part of the solution is particularly viable in much of the country. But yes, more public housing on Moby's brownfields, and tax the crap out of BCup's luxury apartment conversions.
59 -- People have been planting cherry orchards on their Flathead Lake properties for decades, to get taxed as ag rather than as vacation property. The cherries are delicious, so this is obviously good public policy.
My characterization is confirmed by the Generalissimo himself.
65: But does that influence what gets built on it? The developer just wants to flip it for as much as possible. Why does a tax incentive get the developer to build multifamily if the profit would otherwise be for McMansions?
People have been planting cherry orchards on their Flathead Lake properties for decades, to get taxed as ag rather than as vacation property. The cherries are delicious, so this is obviously good public policy.
I never knew that's what was going on. But man, are they tasty.
Or how about you buy up the wreckage of Detroit the next time the city goes bankrupt and built your superdense utopia in some place with neither chronic droughts not sea-level problems? America, land of opportunities!
The owners of the land are either McMansion owners or landlords. The McMansion owners have to pay tax on their property, and the landlords pass on their tax to their renters. For a given chunk of land, the McMansion owner is paying more tax than the multi-family renter.
The developer feels all this because the prices of McMansions will drop relative to multi-family housing as a consequence of the difference in "rents".
It is kind of quaint that the Seattle article writers seem to think they can structure things so NYC doesn't get a piece of every dollar that changes hands. They should call the first development where this is attempted Canute Mews.
69 - I haven't read the linked article, but IIRC the original Henry George idea was to either have actually confiscatory land tax or collective ownership of land (but not improvements or buildings). So while you could plop down a McMansion on your property, its only value would come from its inherent McMansion-ness, not the value of occupying a scarce bit of land.
The developer is selling McMansions to out-of-state or foreign folks with buckets of money from a different economy, or renting to working people struggling to get by on what they can make in the local economy. How taxes play into he economics of the developer's choices are likely tail, not dog.
Public services for a multi-family development are way different from a McMansion. So even if the locality collects more, they may not end up better off.
But it's not primarily a way to increase density, though that might be a side effect. It's a way to increase equality by not letting the rich profit from nothing more than having a scarce piece of land.
Oh right. I actually lost track of which conversation we were having.
78.1: Maybe in Vancover or whatever, but here property taxes are high. They're about 1/3rd of my total monthly housing payment.
74: 73 to 71, 2nd 78, 80 for mouseover.
Anyhow, a Henry George tax might favor monumental architecture because improvements, not land, would be the repository of capital value. I like that part of it. "Oh, this building site is worth nothing to me because I'll be taxed for 100% of the land value at resale, but this ivory-encrusted bathing chamber and 100 foot tall bronze colossus of Vin Diesel are unique and will be worth millions."
You know property taxes have to be paid every year, right? The idea isn't that the sight is worth nothing. It's making the cost of holding land expensive so people use it as much as possible.
Sure. Tigre will make his money back charging entrance for the privilege of seeing Vin's brazen abs.
Falconcity looks pretty cool.
OT: It occurred to me today that it is going to be pretty unpleasant to read, in twenty or thirty years, the books social media memes and Buzzfeed listicles defending the legacies of Trump and the Trump campaign as National Review, the Weekly Standard, First Things et al. continue to attempt to relitigate the Goldwater campaign.* I hope that I will be able to take it with the Flip-Pater's mildness: when one of those twerps shows up on PBS, he usually just sighs and changes the channel to watch the Red Sox or something.
* And other stuff: I will swear on Mozart's unmarked grave that I have seen at least three long (!) essays in right-wing publications attempting to make the case for the moral superiority of Johnny Unitas over Joe Namath. Why?! Why on earth?
81: Wow, yes. In Vancouver with everything combined, the rate is 0.32%, down from 0.35% and 0.36% the previous two years. In Pittsburgh with the homestead exemption, it's 2.24%. Are we really that unusually high?
Right, on the margin a rich person would be less likely to buy a large plot of land and more likely to put the money toward better quality on a smaller portion of land.
Inthought the George idea was that you paid all the land value at resale, or only recovered for the value of your improvements. An extremely high land tax paid yearly is just a way to make people turn their property into subdivided rental units (and, effectively, to make land ownership valueless for profit-maximizing rental developers) and seems weird.
Hell, county tax alone--which also hits most white flighters--is more than Vancouver's total bill. Maybe I'm missing something or screwing up the decimal point.
Houses also cost like 10x as much in Vancouver. So in an absolute value sense, the taxes are more equal.
The tax was never that high here. It was enough to make middle class people mostly forgo a yard or look at semi-detached housing.
I think I know, slightly, a guy who belongs to the Henry George Foundation or Society or whatnot. I've never engaged him on the issue because even my self-destructiveness has limits.
86: So your vision of yourself 20 or 30 years in the future does not involve being too busy with falconry to read right-wing media? I have trouble envisioning the future too, but I'd let the condors fight over my corpse if it looked like Buzzfeed listicles (or First Things) were going to be part of it.
And more to the point of this thread, if people's property tax bill were over half their annual income, they would have a much stronger incentive to sell to a developer who wants to build a 5 story condo building.
92: And that's why we should bring back poll taxes.
This past year, two neighbors died and one has voluntarily sought out the functional equivalent of death (moving to Boca). In a few years, there will be no more old people for me to mock. Then I'll be the old people.
96: " 'First Things' Listicles" would make a good, if recondite, Shouts & Murmurs column for the New Yorker.
99: Carousel! Carousel! Carousel!
86, 96 That's why it's important to seed the archives now with as many Harambe memes as we can think of. Something to lighten the darkness. A candle in the wind.
Falconcity of Wonders doesn't seem to be doing all that well; there isn't enough demand and the subcontractors (who are building the "wonders") aren't doing anything. On the other hand, they got $2bn more money, so at least the con project is proceeding.
What's weird is that you'd build the Falcon City of Wonders without putting in a Colossus of Rhodes. I'm maybe unusually pro-Colossus but wouldn't that be one of your first go-to wonders?
Everybody wants to teabag an entire ocean liner.
The problem is that we need those aliens to come back and give us a refresher course in building pyramids.
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NMM2 Toots Thielemans, or Jean-Baptiste Frédéric Isidor, Baron Thielemans to give him his full name. Keep it up, 2016: only four months to go!
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In the afternoons the programme was: Mondays and Fridays, tilting and horsemanship; Tuesdays, hawking; Wednesdays, fencing; Thursdays, atlatls; Saturdays, the theory of ekranoplans, with the proper measures to be blown on all occasions, terminology of the chase and commenting etiquette.
I can see why Unitas/Namath would be important to them, although no serious person would write other than facetiously about it. It's a form of inadvertently outing yourself as a fool.
On a similar note, have any Canadians noticed someone tying the fall of Harper to the portrait and interpretation of the fall of Diefenbaker in George Grant's Lament for a Nation?
I would think it absurd, and think Grant would agree, but that's just the sort of thing wingnuts do. I'm relieved not to have seen it yet.
Summers in Rangoon. Luge lessons.
BTW, there's a case to be made for higher inflation that exactly mirrors the case for a George tax.
109: This could be the start of a post-modern pentathlon.
And where better to hold it than the colossal unfinished walls of Falconcity of Wonders, the desert wind moaning in the rusting cranes?
A Land Value Tax is merely the way by which we equally share the value nature supplies for free.
Who other than economic parasites and Fascists wouldn't want to do that?
Who other than economic parasites and Fascists wouldn't want to do that?
Given the practical response to Margaret Thatcher's sell-off of municipal housing, I guess most people?
104: "billed to include outsized replicas of The Pyramids and the Taj Mahal" - outsized??? Because the problem with the actual Taj Mahal is that it isn't big enough?
(worth noting too that if the Taj Mahal were in Saudi Arabia, the government would have dynamited it.)
To the point, the thing about real estate is a standard critique of Piketty.
That said I've never understood what the point of excluding real estate from the definition of capital would be, or why it would be OK if the wealth was piling up in terms of real estate but not in terms of machine tools (the implicit conclusion).
I mean, we don't exclude investment in buildings from the definition of CAPEX; stock-flow consistency requires that if we include investment in buildings in the flow of capital expenditure we must also include the buildings in the stock of capital.
It's certainly interesting that real estate seems to be the means by which the wealthy got r ahead of g, but I have no idea why it should invalidate the notion that r>g = big trouble.
108 is well put. Also, it's the case that if you attempt the kind of very long run analysis that Piketty does, in the early years the wealth of the super rich was far more concentrated in land than it is now, to the extent that I don't see how you could come up with meaningful numbers if you excluded it.
Not necessarily entertaining, but here's my refutation of Piketty: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2716709
I explicitly distinguish between capital used in producing more commodities and wealth. My non-capital component of wealth is more like money than land, though.
48: Interesting article, but it doesn't quite manage to tie all the threads together.
Visiting China, the signs of an economy that's run into some sort of a wall are plain to see. The buzz has faded. ... Large blocks of apartments are visibly empty - you can make out from the unlit homes.
Vs
In Dongguan, a key spot in its manufacturing map, many factories are dark by day and night - robotisation has made lighting, important for workers to move around the factory floor safely, unnecessary.
The author has clearly missed the implication that homeowners are being replaced by robots - another sign of China's unstoppable forward progress
As a point of anecdata possibly in support of the author's thesis, I was recently offered a percentage on moving money back into China via my bank account, for what I assume were sketchy tax related reasons, or maybe a desire to not reveal where the capital had flown to in the first place. (The dodgy business proposal didn't surprise me, but the direction that the cash was moving did.)
The land value critique strengthens the case for Piketty's main point, or at least what should be his main point.
If capital accumulation is largely productive, then we are eating from the seed corn by taxing capital accumulation. But if it's just an artifact of artificial scarcity, then capital "accumulation" is more obviously a machine for concentrating power and nothing else.
I think the truth is somewhere in the middle but have been leaning closer to the latter extreme as I learn more & think more carefully.
Still, Piketty's solution looks absurd to me - leave the underlying mechanisms of artificial scarcity designed to concentrate capital intact, with the concomitant reduction in human well-being (e.g. longer work hours, longer commutes), but tax the beneficiaries so that the machine no longer works.
This seems broadly consistent with Piketty's claim that "returns on capital" have been eerily consistent over time.
Ownership of capital is not productive.