Tag: Land Value Tax

The Rent Is Too Damn High

Land Value Tax

An idea that is coming of age?

About 15 years ago here on IST, I wrote about the idea of Land Value taxation…..not much of an interest in those dark days…..but I still thought it was an excellent idea then as I do now.

But let my post explain what LVT is all about….

Land Value Taxation–An Answer To The Problem

Then there was this post as well….

Ever Hear Of Land Value Taxation?

Rent in my area is out of sight…..a one bedroom apartment can go for as much as $900….a friend of mine lives in a pretty good area and rents his 3 bedroom house for $1000 a month his land lord just dropped a bomb in his lap….his rent next month will go up to $1400 a month….like I said a nice area but not that damn nice.

Is their a cure for these astronomical rising rents?

Why yes there is.

Cities and towns across America are dealing with either an abundance of underused land or a shortage of housing — or both.

Economists and policymakers are increasingly promoting a relatively simple policy that could go a long way to addressing both of these crises, simultaneously bringing housing costs down in the most expensive places and boosting investments in struggling communities.

It all started in 1879 when the American political economist Henry George published a bestselling book: “Progress and Poverty.” The opus, decrying industrial capitalism and the oppression of the working class, made George a popular hero and, eventually, spawned a whole school of thought called Georgism.

The ideology is centered on the idea that natural resources should be shared by everybody, rather than monopolized by the wealthy elite. Fast-forward nearly 150 years, and a Georgist proposal — land-value taxation — is being promoted by urbanists and pro-development advocates as a solution to the housing affordability crisis and much more.

The idea is to tax landowners annually based on the value of their land and reduce or eliminate taxes on any developments made to it, such as apartments, office buildings, or retails stores.

The principle is: “tax what you take out of the natural world, not what you make,” said Stephen Hoskins, research director at Resource Justice and a self-described Georgist.

https://www.businessinsider.com/real-estate-costs-lower-rents-housing-prices-land-value-tax-2023-11

Yes it is a great idea and people like me have been writing that for well over 50 years.  It was a great idea in 1879 and it is an even greater idea today.

I you want answers to the problem of constantly rising rent then LVT is that answer and possibly an answer to other problems as well.

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A Proper Taxation

121 years ago today economist Henry George died of a stroke in NYC….just thought I would help people understand his theories which make more sense than the stupidity of the tax cuts of the political parties these days…..

Taxes is always a hot item during elections…..Repubs promising to lower taxes and improve the quality of life and the Dems are accused at raising taxes and bankrupting the nation…..just how that works is a source of much laughter.

Anyway there is a way to taxation that is good for the econ0my, the nation and the government.

Years ago I studied with the Henry George Foundation……it covers the idea of a Land Value Tax…..LVT is gaining popularity as the theory becomes more accessible…..I have written about the theory before……https://lobotero.com/2009/01/02/ever-hear-of-land-value-taxation/

Or if reading is not your thing…….

As I have said this theory is gaining in popularity…..especially in Europe……the video is a very good one and if my reader would just give it a listen then they might also find the theory to their liking……

As I have mentioned….this theory is gaining more and more support especially in Europe…..

The signature campaign is in place to launch the first [Georgist] political party from The New Physiocratic League, which will create a model for more political parties to come.

The New Physiocratic League (https://newphysiocrats.org), a political-economic project with a mission to create a world where we regain and amplify our earned income and democratize our physical space, launches a campaign for the first Georgist political party in decades and pave the way for more Georgist political parties to be established.

The policies of the New Physiocrats are expected to achieve more money in your pocket, soaring purchasing power, and a return to spaces of great architecture & beauty. To do so, The New Physiocrats are starting to collect signatures in Croatia (Zagreb and Vukovar) for one of the first Georgist political parties in decades, which will be the first of many worldwide (https://www.facebook.com/groups/NoviHrvatskiFiziokrati/). They are currently open to receiving pitches from locals to tailor the platform to their needs, and to receiving volunteers around the world to register local branches of the party.

https://markets.businessinsider.com/news/stocks/meet-the-people-launching-some-of-the-first-georgist-political-parties-in-decades-1027541467

If my reader is truly interested after watching the short vid and would like more on the subject then this is the full audiobook……

Yes it is lengthy….and if you would like a peek at what the book entails then this synopsis will help……

During the 19th century the U.S. witnessed a huge increase in wealth-producing power. People naturally expected labor-saving inventions to lessen toil and improve working conditions for all; that the enormous increase in wealth producing power would wipe out poverty forever.

Instead, however, squalor, misery, vice and crime increased and are still increasing everywhere as our villages, towns and cities grow and as new technologies bring advantages to improve methods of production and exchange.

The association of poverty with progress is the great enigma of our times. It is the source of our industrial, social and political difficulties. Our statesmen, philanthropists, and educators grapple with it in vain. This riddle, if not answered, will eventually topple our entire civilization. To solve the riddle, we must research the immutable laws governing the science of economics.

http://www.wealthandwant.com/HG/PP/Katzenberger_synopsis.html

Help more people understand the economics of Henry George…the country will be better off.

Closing Thought–28Dec16

Games People Play…..

Recently I was surprised to see that one of my followers, w1nt3l, knew of Henry George and the land value tax……it is an economic theory that I think would solve a lot of problems…..but few know of his theory these days of runaway greed….

When you were a kid or maybe just yesterday…did you ever play Monopoly?  Did you get a monopoly game for Christmas?

Did you know that Henry George was the inspiration for the original Monopoly……..BAM!  Drop the history bomb!

This is a little something to explain the game and its origins…..

A brief history of America’s favorite board game……(you just knew there would be a historic perspective in there somewhere, right?)

Source: Monopoly’s Radical, Anticapitalist, Feminist Origins – by Andy Warner

Back in the 80’s I studied at the Henry George Institute…..and to this day I firmly believe that his land value tax would be an excellent policy for this country to follow.

An Equal Rights Economy

Inkwell Institute

Budget Deficit Series #4

Everyone in Washington is scrambling around trying to find the best way to lessen the deficit and work on a balanced budget…..I have been pointing out that there are a wealth of choices that NO one wants to talk about as a solution.

For years now I have tried to get more people interested in the concept of Land Value Taxation (LVT) and found an interesting article on the website,  http://www.ied.info:

By paying land (resource) rents to ourselves (socially collected) a citizenry is quintuply repaid through those continually circulating social-credits building roads, railroads, water systems, sewer systems, and electric grids (any natural monopoly) as well as fund governments, provide education, health care and retirement.

  • Infrastructure and populations, not capitalists, establish the use-value of land and resources and their rental values provide the social credits to fund all essential social services (the community social-credit-process).
  • Restructure to the just described honest capitalism and taxes disappear as your employed working hours and resource consumption drops by half as all enjoy a quality, secure, life.
  • This requires sharing the “productive” remaining jobs and equal pay for equally-productive labor.
  • Each region of the world, each nation, each region of a nation, each state, each county, each community, and each entrepreneur must have equal rights to their share of both created and saved finance capital (created money and savings). With those rights, entrepreneurs (private industry) will fill every niche within the production-distribution process.

You can follow those flows of money and commerce within this efficient economy in your head. Both the community process operating those natural monopolies and efficient private industry producing consumer products and services are fully visible.

There are answers to the money problems that we are facing as far as a country….the problem is NO one is willing to offer hard answers to hard questions….eventually, Americans will have to do the tough things if the country is to survive…..right now the country is settling for feel good slogans that accomplish absolutely nothing….but as we are witnessing those things are not working….the “real” solutions are lacking and the Congress keeps talking……

There are other ways to lessen the budget deficit without totally screwing the American people………as I have said before it would take hard choices that few politicians are willing to make….

What About A Flat Tax?

For years I have argued that there needs to be a flat tax in the US….of say 10-15% with NO deductions or loopholes for the wealthy to take advantage of in the year end accounting…..well it has been a long uphill climb to say the least.  I also like a land value tax, first put forth by economist Henry George, yet another uphill stumble….that is for another day though…(if one wants more info in the LVT go to my page on the subject)

For now let us talk about the flat tax, the Conservative Party candidate for the state of New York, Hoffman has thrown it into the campaign in the state election:

The U.S. currently uses a progressive tax system, under which people who earn more money pay a greater percentage of their total income in taxes. A flat tax would have every wage earner pay the same percentage of their income in taxes – no matter how much or how little they earn. The flat tax would also eliminate deductions that are allowed under the current laws.

Supporters of a flat tax argue that such a tax is fairer to everyone and would result in many people actually paying less in taxes than they do now. Because a flat tax is simple, more people would pay their taxes and the cost of overseeing the income tax system would decrease, they claim.

Opponents argue that a flat tax places a disproportionate burden on lower- and middle-income wage earners.

Flat tax plans have been brought forth periodically in recent years, with little success. Democrat Jerry Brown included a flat tax proposal in his platform during his 1992 presidential bid. Republican Steve Forbes proposed a similar plan during his presidential bid four years later. Republican Richard Armey, who served as majority leader in the House of Representatives from 1995 to 2003, championed the idea in the House and has continued to press the proposal since leaving office.

Now there is an idea, but the is one thing that immediately turned me off the plan……and that thing is Richard Armey (Dick)…..one of the sponsors of the Tea Party theater….and a lobbyist that is too far right for the common good….

Dick Armey and I have had little consensus on the subject of governance and now that he thinks it is a good idea…makes me re-think my acceptance of the idea…..

What Are The Advantages Of LVT?

Now that I have people’s attention on the Land Value Tax….I bet you are  asking if it is so good what are the benefits?   Glad you asked.

Since the early 90’s when I took the courses at the Henry George Institute, I have been a supporter of Land Value Taxation (LVT) because it more since than all the tap dancing politicians do with the tax issue.  LVT is a logical and effective way to eliminate all other forms of taxation and still produce the revenue to fund all domestic programs.

  • A NATURAL SOURCE OF PUBLIC REVENUE. All land makes its full contribution to the Exchequer, allowing reductions in existing taxes on labour and enterprise.
  • A STRONGER ECONOMY. If we tax labour, buildings or machinery and plant, we discourage people from constructive and beneficial activities and penalise enterprise and efficiency. The reverse is the case with a tax on land values, which is payable regardless of whether or how well the land is actually used. It is a payment, based on current market value, for the exclusive occupation of a piece of land. In the longer term, this fundamentally new and different approach to revenue raising will stimulate new business and new employment, reducing the need for costly government welfare.
  • MARGINAL AREAS REVITALISED. Economic actitivities are handicapped by distance from the major centres of population. Conventional taxes such as VAT and those on transport fuels cause particular damage to the remoter areas of the country. Land Value Tax, by definition, bears lightly or not at all where land has little or no value, thereby stimulating economic activity away from the centre – it creates what are in effect tax havens exactly where they are most needed.
  • A MORE EFFICIENT LAND MARKET. The necessity to pay the tax obliges landowners to develop vacant and under-used land properly or to make way for others who will.
  • LESS URBAN SPRAWL. Land Value Taxation deters speculative land holding. Thus dilapidated inner-city areas are returned to good use, reducing the pressure for building on green-field sites.
  • LESS BUREAUCRACY. The complexities of Income Tax, Inheritance Tax, Capital Gains Tax and VAT are well known. By contrast, Land Value Tax is straightforward. Once the system has settled down, landholders will not be faced with complicated forms and demands for information. Revaluation will become relatively simple.
  • NO AVOIDANCE OR EVASION. Land cannot be hidden, removed to a tax haven or concealed in an electronic data system.
  • AN END TO BOOM-SLUMP CYCLES. Speculation in land value – frequently misrepresented and disguised as “property” or “asset” speculation – is the root cause of unsustainable booms which result periodically in damaging corrective slumps. Land Value Taxation, fully and properly applied, knocks the speculative element out of land pricing.
  • IMPOSSIBLE TO PASS ON IN HIGHER PRICES, LOWER WAGES OR HIGHER RENTS. Competition makes it impossible for a business producing goods on a valuable site to charge more per item than one producing similar goods on less valuable land – after all, producers and traders at different locations are paying different rents to landlords now, yet like goods generally sell for much the same price and employers pay their workers comparable wages. The tax cannot be passed on to a tenant who is already paying the full market rent.

Politicians are always trying to find solutions to the problem of generating revenue for the needed programs of the community, state or country.  The answer is so simple, but still ignored, Land Value Taxation.

Taxes….Taxes….Who Gets The Taxes?

Taxes are always the answer to everything with the Washington elite.

U.S. drivers need to pay more gas taxes and new user fees to fix crumbling roads and bridges and ease congested highways, a transportation commission is set to recommend to Congress later this month.

U.S. gasoline taxes should be raised 10 cents a gallon to help fund improvements, at least until new systems are created to charge drivers for how much they use roads, according to a draft copy of recommendations from the National Surface Transportation Infrastructure Financing Commission.

Which is a good idea, but then in the same breath this idea emerges.

President-elect Barack Obama and congressional Democrats are crafting a plan to offer about $300 billion in tax cuts to individuals and businesses, a move aimed at attracting Republican support for an economic-stimulus package and prodding companies to create jobs.

The size of the proposed tax cuts — which would account for about 40% of a stimulus package that could reach $775 billion over two years — is greater than many on both sides of the aisle in Congress had anticipated. It may make it easier to win over Republicans who have stressed that any initiative should rely more heavily on tax cuts rather than spending.

The Obama tax-cut proposals, if enacted, could pack more punch in two years than either of President George W. Bush’s tax cuts did in their first two years. Mr. Bush’s 10-year, $1.35 trillion tax cut of 2001, considered the largest in history, contained $174 billion of cuts during its first two full years, according to Congress’s Joint Committee on Taxation. The second-largest tax cut — the 10-year, $350 billion package engineered by Mr. Bush in 2003 — contained $231 billion in 2004 and 2005.

None of this will give the middle class the relief and help that they need to survive.  There is only one answer to this dilemna–Land Value Taxation (LVT).  Read more.

Is Raising Taxes Always The Answer?

Oh God, NO, it is not.  But that is all that these socalled capitalist can think of to raise much needed revenues to fund projects.  This is the newest one being proposed or at least considered.

A 50 percent increase in gasoline and diesel fuel taxes is being urged by the commission to finance highway construction and repair until the government devises another way for motorists to pay for using public roads.

The National Commission on Surface Transportation Infrastructure Financing, a 15-member panel created by Congress, is the second group in a year to call for increasing the current 18.4 cents a gallon federal tax on gasoline and the 24.4 cents a gallon tax on diesel. State fuel taxes vary from state to state.

And states like California are coinsidering other moves to help fund programs,

Gov. Arnold Schwarzenegger’s staff Wednesday released his most detailed plan yet to tackle the state’s staggering budget deficit, calling for deep cuts to state services, hefty tax increases and a large new round of borrowing to close a projected $41.6 billion shortfall through mid-2010.

While little of the proposal was new, it included some striking elements, such as cutting billions of dollars from public school funding and slashing the deduction state taxpayers can claim for their dependents. The plan also arrived a day after the state controller warned tax refunds might have to be paid with IOUs in the spring because California is so short of cash.

The above are just examples of what ALL states and communities will be looking at in the coming year or so, if they are to keep their areas functioning as an entity.  All the plans involve a complete screwing of the people.  I want to know why?  There is an easier way.  It is not popular with the big shots that call all the shots in state capitals, but nonetheless, it is easier and does not totally drop the burden on the middle class’ shoulders.

The solution is called Land Value Taxation.  It is explained on my pages here.  Read, understand and  fight for fairness.  You as a taxpayer have the power to make a difference.  Use that power and in turn make this a better country.

copyright:  CHUQ/Info Ink

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.

There Is Another Cause Of The Economic Crisis

All is quiet on the economic front, at least until 2 Jan 09…..Kuwait craps on Dow, GM/Chrysler get their minimum amount of cash, Wall Street biggies are rolling in dough and foreclosures continue to rise.  By now everyone is tired of bad news, especially economic bad news and stick their heads into the wide screen TV and prey all will get better.  The spoiled, pampered nation ignores the obvious hoping it will go away.  No one wants to admit that the situation will get worse.

Few will admit to the causes of the problems and the biggest has been ignored for long enough.  Credit is the culprit, at least that is what they want us to believe.  Personally, I see another way.

THERE IS ANOTHER CAUSE, not yet mentioned, that must be considered before we can fully explain the impact of progress on the distribution of wealth. It is the confident expectation that land values will increase in the future. The steady increase of rent in all growing countries leads to speculation — holding onto land for a higher price than it would otherwise bring at that time.

The result of land being withheld is that the margin of the city is pushed away so much farther from the center. The actual margin of building is at the limits of the city. This corresponds to the margin of production in agriculture. But we will not find land available at its value for agricultural purposes, as we would if rent were determined simply by present requirements. Instead, we find — for a long distance beyond the city — that land bears a speculative value. This is based upon the belief that it will be required for urban purposes in the future. To reach the point at which land can be purchased at a price not based upon urban rent, we must go very far beyond the actual margin of urban use.

We may conceive of speculation as extending the margin of production. Or, we can look at it as carrying the rent line past the margin of production. However we view it, the influence of speculation on increasing rent is an important fact. It cannot be ignored in any complete theory of the distribution of wealth in progressive countries. Speculation is the force, arising from material progress, that constantly tends to increase rent in a greater ratio than progress increases production. As material progress goes on and productive power increases, speculation thus constantly tends to reduce wages — not merely relatively, but absolutely.

Speculation–It leads to land being withheld from use, as higher prices are expected. Thus, the margin of production is forced out farther than required by the necessities of production. As landowners confidently expect rents to increase further, they demand more rent than the land would provide under current conditions.

The price of land has been a major contributor to just about all our recessions and such.  When one acquires land to hold for higher prices–then that is speculation.  There is a way to control speculation, but the question is, does anyone really want to stop the cycle of boom or bust?  Thanks to American economist Henry George that answer is Land Value Taxation.