Day: January 2, 2009

Ever Hear Of Land Value Taxation?

A New Year and a new beginning—so why not do something new?  Nothing that governments are doing sdeem to help gain the revenue they need for much needed programs.  And at the same time heap a pile of stuff onto the taxpayer.  Why not look for a better answer?

I recently posted this on my Mississippi blog, Gulf South Free Press, as a possible answer to the shortfall in tax revenues.  It would also be something to consider for the nation.  The news in at least 43 states is dire, they are scrambling for funds for projects, to the point of asking the Feds to get involved.  LVT would save the states and their programs.

LVT?  What is that, Professor?  I am glad you asked.

In the strict public policy application, Land Value Taxation (also known as split-rate real property taxation, and two-tiered real property taxation) is a type of real property taxation.  Whereas the typical real property tax taxes both land and the improvements on the land at the same rate, land value taxation taxes land at a higher rate while simultaneously reducing, or even eliminating, the tax on improvements.

The major points of a LVT:

•           A shift to LVT, even when structured in a revenue-neutral manner, usually results in net tax reductions for the vast majority of residents.

•           The problem of inaccurate or radically higher assessments is reduced because of the reduction in reliance on the building portion of the property tax.

•           The damage that taxes like sales and income taxes do to working families and local commerce can be lessened.

•           By reducing or eliminating the tax on improvements, there is a greater incentive to build, to build with higher quality materials, to maintain, to avoid blight, and to redevelop economically depressed areas.

•           Cities are almost always on the “short end of the stick” when economic development dollars are handed out.  This program helps achieve the same goals with no public investment.

•           When cities DO get permission to give out tax abatements, they lead to a revenue loss to the community with no assured payoff later.  LVT is purely revenue neutral to the city.  There is no tax shifting to citizens and property owners who have already done their bit.

•           A tax on land also has the advantage of being a “value capture tax.”  A new public works project may make adjacent land go up considerably in value, and thus, with a tax on land values, the tax on adjacent land goes up.  Thus, the new public improvements would be paid for by those most benefited by the new public improvements — i.e., those whose land value went up most.

•           A tax on land has been shown to result in better land use patterns and more in-fill development.  This has the benefit of reducing sprawl.

•           Several Nobel Prize winners in economics have stated their approval of government revenue being raised from taxes on land.

•           Support for LVT cuts across political lines.  Free-market economists like how it reduces distortions in economic decision-making.  Environmentalists like how it reduces sprawl and helps fund public transportation.  Developers appreciate how it makes new homes more affordable for their customers.  Citizens like the reduction in taxes.

Ad valorem taxes are increasing nationally.  The assessments were made when the market value of real estate was hugh and now that it has lost almost 40% of its value, people will be paying a higher rate until the next assessment.

These days of uncertain times, it is a new thinking that is needed….and LVT is that new thinking.

I would like to thank Henry George and urbantools.org for the ideas in this post.  For years I have advocated the LVT and now it seems that it is time for action, not begging.

Ron Paul Speaks

This is a piece written by Rep. Ron Paul of Texas

Economic Freedom or Socialist Intervention?

by Ron Paul

The freedom to fail is an essential part of freedom. Government- provided financial security necessitates relinquishing the very essence of freedom. Last week, the big 3 American automakers came back to Capitol Hill with their hands out to the government. Congress spent this past week debating how much money to give them and what strings should be attached. Though the bailout plan for the auto industry has suffered what I would call a temporary setback in the Senate, other avenues for public funding are being explored through the Federal Reserve and the Treasury Department. I am afraid the American auto industry will soon learn that having billions rain down from Washington will not be the blessing one might expect.

The government, after it subsidizes an industry, tends to become a very demanding benefactor. Politicians may not have any real idea about how to build a car, run a bank, educate a child, heal the sick or build a road, but they are quite adept at using carrots and sticks to manipulate and threaten those who do. Most of the federal control over education, roads, healthcare, and now banking and soon auto manufacturing, is done through money, mandates and conditions. The bailout proposal we were considering would force automobile manufacturers to submit their business plans for the approval of a new federal “car czar.” This bureaucrat would have the authority to approve the automakers’ restructuring plan, monitor implementation of the plan, and even stop certain transactions he determines are inconsistent with the companies’ long-term viability.

One could argue that if billions of taxpayer dollars are going to flow into a failing industry, then representatives of those taxpayers have “bought” a say in how that industry is run – which is precisely why bailouts are such a bad idea for both the industry and the taxpayers. The federal government has neither the competence nor the Constitutional authority to tell private companies, such as automakers, how to run their businesses. I would have thought that failed experiments with central planning and government control of business that caused so much harm in the last century would have taught my colleagues the folly of making businesses obey politicians and bureaucrats instead of heeding the wishes of consumers, employees, and stockholders. But the auto industry is in danger of learning for themselves one of the oldest lessons in politics: he who pays the fiddler calls the tune.

It is not the job of government to sustain business. The government should get out of the way, and instead examine excessive regulations, tax policy and red tape that have been hostile to manufacturing in this country. We should get back on a sustainable economic course in this country, or we are doomed to collapse, as the Soviets did, under the crushing burden of big government and a strangled economy that can no longer pay for it.

War Comes To Gaza–Day 5 & 6

An Israeli warplane dropped a 2,000-pound bomb on the home of one of Hamas‘ top five decision-makers Thursday, instantly killing him and 18 others, while the Israeli army said troops massed on the Gaza border were ready for any order to invade.

The airstrike on Nizar Rayan was the first that succeeded in killing a member of Hamas’ highest echelon since Israel began its offensive Saturday. The 49-year-old professor of Islamic law was known for personally participating in clashes with Israeli forces and for sending one of his sons on a 2001 suicide mission that killed two Israelis.

Even as it pursued its bombing campaign, Israel kept the way open for intense efforts by leaders in the Middle East and Europe to arrange a cease-fire. Israel said it would consider a halt to fighting if international monitors were brought in to track compliance with any truce.

Adding to the urgency of the diplomatic maneuvering, the Israeli military said its preparations for a possible ground assault were complete and that troops stood ready to cross the border if the air operation to stamp out Hamas rocket fire needed to be expanded

The hit on Rayan’s home obliterated the four-story apartment building and peeled off the walls of others around it, creating a field of rubble in the crowded town of Jebaliya in the northern Gaza Strip. Mounds of debris thrown up by the blast swallowed up cars.

Eighteen other people, including all four of Rayan’s wives and nine of his 12 children, also were killed, Palestinian health officials said. A man cradled the burned, limp body of a child he pulled from the rubble.

The house was one of five bombed Thursday, among more than 20 targets altogether. Warplanes shredded the houses, taking off walls and roofs and leaving behind eerie, dollhouse-like views into rooms that still contained furniture.

Israel’s military, which has said the homes of Hamas leaders are being used to store missiles and other weapons, said the attack on Rayan’s house triggered secondary explosions from the arms stockpiled there.

Afghanistan’s New Plan

Well, it worked in Iraq…..but will be meet with the same success in Afghanistan?

The United States backs a proposed Afghan government plan to engage tribal elders in the war against the resurgent Taliban, a move seen by critics as reviving militias, its top envoy said on Tuesday.

Although, seven years on from the Taliban’s ouster, there are nearly 70,000 NATO-led troops in Afghanistan — to be boosted by up to 30,000 extra U.S. soldiers by the summer — alongside tens of thousands of Afghan forces, William Wood said this was not enough to protect all Afghan villages from the militants.

Called the “Community Guard Programme,” the pilot project will cover southern and eastern areas where the al Qaeda-backed Taliban are most active, said Wood.

“The … programme … is meant to strengthen local communities and local tribes in their ability to protect what they consider to be their traditional homes,” Wood told a news conference at the U.S. embassy in Kabul.

In Iraq, the recruitment of Sunni Arab tribesmen to help fight al Qaeda is widely seen as one of the factors behind a decline in the level of violence.

Community Shuras, or councils, will choose volunteers for defending their villages against the Taliban under the plan, proposed by Afghan President Hamid Karzai, Wood said.

Wood said successive governments in Afghanistan had relied for centuries on tribal chiefs and community leaders for protecting their villages.

He refused to say who would provide arms to the groups, but emphasized that the United States was not doing so.

Many ordinary Afghans and some politicians have spoken against the plan, which comes amid an escalation in violence this year in Afghanistan, the bloodiest period since Taliban’s ouster.

What stopped this plan from happening 7 years ago?

Repubs Try To Pee On Recovery Stimulus Plan

Top Republican lawmakers are positioning themselves for battle over President-elect Barack Obama’s economic recovery plan, signaling Monday that they will cast themselves as guardians against excessive spending rather than outright opponents of the Democrats’ stimulus package.

Senate Minority Leader Mitch McConnell (R., Ky.) in a statement Monday supported the idea of using federal spending to boost the economy. But he warned that the price tag, which could approach $800 billion over two years, shouldn’t become an excuse for funding undeserving projects.

Just as the Democrats face a political balancing act in crafting a package that the public sees as an honest attempt to boost the economy, and not a grab bag of politically motivated spending, the Republicans face a challenge of their own.

Congressional aides and the Obama team have said they want a package ready when Congress returns on Jan. 6, so legislation can reach the House and Senate floors before Mr. Obama’s inauguration on Jan. 20.