An analogy just occurred to me. Imagine an income tax not on what you currently earn, but on what you could earn given your schooling, credentials, experience, etc, and the available jobs within your region. Imagine how utterly unfair people would feel about that, and how quickly such a scheme would fall to widespread political pressure.
I get why an LVT makes sense from an economic perspective, but in practice it feels nearly as unfair as the above. Residents especially, but small and medium sized businesses would very quickly lobby to eviscerate an LVT. Imagine long-time residents getting kicked out not because a developer wants to make buck, but because the tax system requires that to happen.
There's zero chance such a scheme could survive intact politically. In Pittsburg it's an LVT in name only, with a long list of exceptions and curious appraisals. And once it's applied ad hoc, which it must, there's all manner of distortions and incentives for corruption.
There are many ways for land use and tax policy to improve, but you have to come at from the perspective of improving the existing system, not revolutionizing it with an LVT. And you could probably get closer to an LVT by smart incremental reform than you could by trying to nominally pursue an LVT.
>Imagine long-time residents getting kicked out not because a developer wants to make buck, but because the tax system requires that to happen.
Some of us think that would be a good thing. My elderly neighbour has been living on her own in a five bedroom house for twenty five years meanwhile there are people nearby struggling to raise a family in one or two bedroom houses. She doesn't need that house, she is just there out of inertia. Letting the tax system nudge people in the right direction is a good thing.
Georgists would say that if some corporation built Disneyland next door, I no longer deserve to live there. How am I to compete with the vast productivity of a massive corporation?
Where do I deserve to live then? Only where my productivity matches the economic bar of those around me?
I'm getting old and tired. Am I only allowed in a retirement home?
On the contrary, Georgists would say that if some corporation built Disneyland next door, they have to compensate the local community for their use of that valuable land. Local homeowners have to do the exact same thing, but a single home would pay vastly less tax compared to the much more expansive Disneyland. So even the homeowners would marginally benefit in that scenario. Land is always valued according to the potential highest and best use, so the fact that a Disneyland may or may not have been built in any specific location matters less than one might expect.
To an economist, the highest and best use of the land around disneyland is not my home. It's not housing. It's hotels, motels, restaurants. So my land would now be taxed at that rate, until I'm forced out
For devil's advocate's sake, how is this not state sponsored gentrification?
The problem economists would point out is that this is a fully general argument against any development. Which is exactly what leads to the negative side of gentrification - people eventually being forced out of their communities, because there's way too little developed real estate and the rent is too damn high. Georgism lowers rents by pushing towards the highest and best use of land, which is the anti-gentrification move.
In your specific example, you shouldn't assume that the supposed change in the "highest and best use" will be enough to price you out if you're a typical homeowner (not a vulnerable renter in a sharply gentrifying area): the numbers don't really pencil out that way. High land values exist in some places, but they're quite rare and quite concentrated.
The solution to this is to use that LVT revenue to fund UBI, such that the income from all that Disneyland-related land value offsets your own LVT burden.
In a mathematically-perfect setup (100% LVT going entirely to UBI, with zero overhead and zero other government expenditures), the break-even point where your LVT exactly equals your UBI would mean that you own your exact equal share of that tax jurisdiction's total land value; if you own more, then you pay for it, and if you own less, then you get paid for it. Obviously in the real world some of that LVT revenue has to go toward paying people to collect taxes / distribute income checks (not to mention the many other functions of a typical government), but the point is that LVT+UBI produces a self-balancing system that maximizes fairness even for people using their land “non-productively”.
Not sure if you realize this, but most businesses and nearly half of residents pay exactly such a tax. It's called 'rent' and is based on a 'market rate' which is exactly the amount that could be earned. They get kicked out all the time! That's actually what created the political demand for LVT!
You even pay rent when you buy a house. The value of the land is the market expectation of the value of future rents.
You can have a less than 100% LVT to get some of the advantages without upsetting the apple cart. Common in many jurisdictions.
> Imagine an income tax not on what you currently earn, but on what you could earn given your schooling, credentials, experience, etc, and the available jobs within your region. Imagine how utterly unfair people would feel about that, and how quickly such a scheme would fall to widespread political pressure.
Yep, great analogy. LVT is the optimum tax from the point of view of maximising production incentives, but actually practical ways of extracting significant revenues from people tend to skew towards "this person/organization has liquid funds available and wants to do something enough to pay the tax on top". (For related reasons LVT-style approaches to taxation work rather well when the finite resource being taxed is something like broadcast spectrums which the average person doesn't own)
As for Single Taxing, convincing the public theres some ethical principle that PE funds buying tech stocks deserve to keep all of the rewards for risking their money on a particular venture and homeowners who lived through the area's dodgy-reputation years don't is a complete non-starter even though anyone with an economics degree can tell you why such an argument might be made...
I get why an LVT makes sense from an economic perspective, but in practice it feels nearly as unfair as the above. Residents especially, but small and medium sized businesses would very quickly lobby to eviscerate an LVT. Imagine long-time residents getting kicked out not because a developer wants to make buck, but because the tax system requires that to happen. There's zero chance such a scheme could survive intact politically. In Pittsburg it's an LVT in name only, with a long list of exceptions and curious appraisals. And once it's applied ad hoc, which it must, there's all manner of distortions and incentives for corruption.
There are many ways for land use and tax policy to improve, but you have to come at from the perspective of improving the existing system, not revolutionizing it with an LVT. And you could probably get closer to an LVT by smart incremental reform than you could by trying to nominally pursue an LVT.