From here:
Proximity is a two-way relationship but Georgists attempt to use it to justify a one-way transfer of wealth. Real estate prices are, indeed, largely a matter of location — but there’s no way to argue that one’s proximity to the rest of the community creates an obligation to reimburse the community, since the community also derives value from people (such as one’s self) being in proximity to it. Me being close to you necessarily implies that you, likewise, are close to me. There’s no getting around that for Georgists. Sorry.
He's not thought this one through, as he?
The point is that land ownership is a "one-way transfer of wealth" from "the community" to land owners. He says so himself with this: "Real estate prices are, indeed, largely a matter of location — but there’s no way to argue that one’s proximity to the rest of the community creates an obligation to reimburse the community..."
He clearly finds it acceptable for people who want to live in an area to have to reimburse the land owners in that area in higher rents or prices, but why do land owners (as a class) have a greater right to benefit from people's proximity to each other than the people themselves? Land Value Tax would merely cancel out the existing "one-way transfer of wealth" with an equal and opposite cash payment from "land owners" back to "the community".
Where the confusion may arise is that the categories overlap: many members of "the community" are also land owners, and most land owners are also members of "the community" (unless they live abroad, for example). So if the proceeds of a tax on land values is dished out again as a Citizen's Income, people would pay £x and receive £y, for most it would net off to within a couple of thousand pounds either way and the total cash which would actually change hands is only about a sixth of total theoretical revenues.
If by a sheer coincidence, it turned out that the value of the land everybody owned/occupied was exactly proportional to his contribution to "the community" (however measured), then there would be less moral justification for such a tax, but such a state of affairs is unlikely to ever happen, and if it did, it would only be for a few hours.
Sunday, 22 May 2011
Killer Arguments Against LVT, Not (135)
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8 comments:
Brad Spangler's argument is a bit like saying "If I punch someone in the nose, the force on my fist is the same as the force on the other guy's face, so why on earth should I be arrested?" Just because two things are in proximity does not mean that they contribute equally to the community -- something that LVT explicitly takes into account.
To put it another way, if I put a trash dump adjacent to a neighbor's well-tended yard, my contribution to community value is far less than my neighbor's. Fortunately for the community, a tax based on the "community value" of a particular location tends to select for those who will use the land the best, since there is no penalty for improvement, nor subsidy for keeping it out of production.
What I fail understand about anti-LVT-ers is why they never see the other side of the equation, the fact that pretty well all other taxes on income and capital are replaced by LVT. Why they cannot see the impetus to real wealth creation this would precipitate defeats me.
Snarf, I like the punching example!
L, the anti's say that politicians would only ever introduce LVT as an additional tax. We know that's not true in practice, because politicians like introducing stealth taxes (just about anything apart from Council Tax) and are dead scared to increase an in-your-face tax like Council Tax or even to update valuations.
So the only way to make a transition to LVT fly politically is to constantly be able to demonstrate that the tax-to-GDP ratio is falling, and for every £1 LVT increase there is a £1.20 reduction in other taxes.
As to real wealth creation, they claim that everybody would just abandon their homes and businesses and move abroad. There's no foundation for this in fact or logic (or else HK would be deserted and no business would operate from the UK because of Business Rates), but hey.
but there’s no way to argue that one’s proximity to the rest of the community creates an obligation to reimburse the community, since the community also derives value from people (such as one’s self) being in proximity to it.
That assumes uniform benefits, doesn't it?
Uh, what's the benefit to someone in Swindon of a rail line being built from London to Birmingham? I'm sure there's a small benefit, but compared to the amount I'm putting into it, I'm pretty damn sure I won't get much out of it.
It makes me wonder how much land value is the result of the state. I don't mean the "protecting your land from others", but things like throwing millions at a new Eurostar terminal, or stopping anyone building in Sandbanks, or the effect of government being in London.
JT: "It makes me wonder how much land value is the result of the state..."
Where do you draw the line between 'the state' and 'neighbours co-operating'? Or do you just count things which only happened because the state railroaded them through and which would never have happened spontaneously (like water mains, mortoways, er, railroads)?
Where do you draw the line between 'the state' and 'neighbours co-operating'? Or do you just count things which only happened because the state railroaded them through and which would never have happened spontaneously (like water mains, mortoways, er, railroads)?
I think it's along the lines of "if centrally government didn't provide it, would people pay for it locally, or pay for it themselves.
Of course, such things don't actually create land wealth... they really just transfer money. If someone living in Bristol has to pay for a new Eurostar terminal then that takes money out of the Bristol economy and puts it into the London economy.
MW, I found this research about how property prices increase when society invests in green space amenities. Full of good data for how property owners make an unearned gain for access to amenities paid for by society. It's titled, "Does Money Grow on Trees". http://webarchive.nationalarchives.gov.uk/20110118095356/http://www.cabe.org.uk/files/does-money-grow-on-trees.pdf
"...case studies of real places...
showing how expenditure on green space...raised property prices that accompany a valued amenity."
OTOH, yes of course, like most people I'm instinctively a fan of public 'green spaces', parks and playgrounds, boating lakes, bowling greens etc.
It's clear that under LVT, a council would be well advised to set aside up 20% of urban areas for such spaces, because this maximises rental values and hence LVT receipts, i.e. 80 x £X > 100 x £Y.
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