By THE ASSOCIATED PRESS AUG. 20, 2014
By THE ASSOCIATED PRESS AUG. 20, 2014
Posted on August 23, 2014 at 02:27 PM in common good, commons, cui bono?, Earth for All, economic rent, financing services, government's role, land includes, land monopoly capitalism, Natural Public Revenue, natural resource revenues, natural resources, privatization, windfalls | Permalink | Comments (0)
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DCJ doesn't say it explicitly, but in general, it is mostly people in and near the major coastal cities (mostly the blue congressional districts) which reap the benefits. But he -- rightly -- comes close to pointing out that the benefits flow not to buyers of such homes, but to the sellers.
Imagine you make $50,000 to $75,000. Statistically you would save $75 a month in federal income taxes if you bought a house, the congressional study shows. Now which option would you prefer?
• Pay $300,000 for your house, the median for Sacramento in late 2013, and save $900 annually on your federal income tax by deducting the mortgage interest?
• Pay $200,000 for your house, but without being able to deduct your mortgage interest?
Assuming you borrowed the entire purchase price at 4 percent interest the initial mortgage interest savings would be $4,000 per year. Not only would you have more than $250 more cash in your pocket each month, you would have a much smaller debt to pay off. Of course, if you own that home, this is not such a good deal, which is why Camp proposes to phase in his modest change over several years, a change that would only affect new mortgages of more than $500,000.
Which brings me to a larger point. Suppose that, instead of paying $300,000 for your home, of which $150,000 is for the site, and $150,000 is for the home itself, under the tax design this blog proposes, you would pay the seller the $150,000 for the depreciated home and then pay your community approximately 5% of the $150,000 selling price of the site each year -- and that would be INSTEAD of paying income or sales taxes, and there would be no tax on the value of the building.
The downside? None of us would be treating our home as an "investment" or a "savings account" or an ATM machine. Offset that with the many benefits, including the reduction or elimination of the land-based ~17 year boom-bust cycle we are currently stuck with.
(In Bermuda, as I understand it, when young couples buy a home, both work two jobs for a few years to pay off the mortgage, and then live mortgage-free thereafter.)
Posted on March 16, 2014 at 03:39 PM in boom-bust cycles, bubble, buildings depreciate, capital gains are land gains, cost of living, economic rent, financing services, FIRE sector, free land, home equity, income tax, land appreciates buildings depreciate, land share of real estate value, land value created by community, land value taxation, make land common property, Natural Public Revenue, one solution for many problems, paycheck to paycheck, savings rate, untaxing buildings, untaxing production | Permalink | Comments (0)
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By Edgar A. Guest
When they become due I don't like them at all.
Taxes look large be they ever so small
Taxes are debts which I venture to say,
No man or no woman is happy to pay.
I grumble about them, as most of us do.
For it seems that with taxes I never am through.
But when I reflect on the city I love,
With its sewers below and its pavements above,
And its schools and its parks where children may play,
I can see what I get for the money I pay,
And I say to myself: "Little joy would we know
If we kept all our money and spent it alone".
I couldn't build streets and I couldn't fight fire.
Policemen to guard us I never could hire.
A water department I couldn't maintain.
Instead of a city we'd still have a plain.
Then I look at the bill for the taxes they charge,
And I say to myself: "Well, that isn't so large".
I walk through a hospital thronged with the ill
And I find that it shrivels the size of my bill.
As in beauty and splendor my home city grows,
It is easy to see where my tax money goes.
And I say to myself: "If we lived hit and miss
And gave up our taxes, we couldn't do this".
PUBLISHED: JANUARY 7, 2013
A lease is a lease is a lease – or so you may think. Yes, real property leases grant an estate in land to a tenant for a period of time. And yes, the tenant pays for that right of possession. But the action in a lease isn’t in the conveyance provisions; it’s in the contract provisions. Multiply out the rent and other annual monetary obligations by the length of the lease term (in years), and you’ll see that it might be (and often is) a big dollar contract. Even more important, unlike the vast majority of contracts whose obligations are satisfied in days or weeks, a lease contract goes unfulfilled for 50, 75, “99,” and even 500 years. That takes it beyond the life of the parties involved in its creation, and the future brings surprises. Neither Nostradamus nor Jules Verne got everything right.
Why a Ground Lease?
If a tenant has to build its own building (as is often the case), and has all of the burdens of ownership, why would it lease a property knowing that at the end of the lease term it has nothing left to show for its money and efforts? There are a number of common reasons, principal among them is that the owner won’t sell the land and the tenant has no alternative.
Real property often carries a long term unrealized gain, waiting to be taxed upon its sale.
Not every landowner is interested in making further active real property investments. This makes a like kind exchange unappealing.
Ground leasing the same land keeps ownership in the family. At the owner’s death, because of the current estate tax “stepped up basis” arrangement, the built in gain may never be taxed.
Posted on January 13, 2013 at 11:30 AM in a Manhattan acre, a wedge driven through society, absentee ownership, all benefits go to landholder , capital gains are land gains, common good, cui bono?, economic rent, estate taxes, facilitating commerce, financing education, financing infrastructure, financing services, FIRE sector, fixing the economy, fruits of one's labors, income concentration, inherited wealth, land appreciates buildings depreciate, land monopoly capitalism, land rent, land speculation, land value created by community, land value taxation, Landlord's Prayer, landlordism, leased land, location, location, location, monopoly -- not the game, Natural Public Revenue, Occupy Wall Street's values, popular ignorance of land economics, private property in land, reaping what others sow, rent-seeking, sharecropping, slavery, special interests, toll-takers, triple net leases, unburdening the economy, unearned income, unearned increment, untaxing buildings, untaxing production, urban land value, wealth distribution or concentration | Permalink | Comments (0)
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We worked through spring and winter, through summer and through fall.
But the mortgage worked the hardest
and steadiest of them all;
It worked on nights and Sundays, it worked each holiday;
It settled down among us and it never went away.
Whatever we kept from it seemed almost as bad as theft;
It watched us every minute and it ruled us right and left.
The rust and blight were with us sometimes, and sometimes not;
The dark-browed, scowling mortgage was forever on the spot.
The weevil and the cutworm they went as well as came;
The mortgage stayed forever, eating heartily all the same.
It nailed up every window, stood guard at every door,
And happiness and sunshine, made their home with us no more;
Till with falling crops and sickness we got stalled upon the grade.
And there came a dark day on us when the interest wasn't paid.
And there came a sharp foreclosure, and I kind o' lost my hold.
And grew weary and discouraged and the farm was cheaply sold.
The children left and scattered, when they hardly yet were grown;
My wife she pined and perished, and I found myself alone.
What she died of was a mystery, and the doctors never knew;
But I knew she died of mortgage — Just as well as I wanted to.
If to trace a hidden sorrow were within the doctors art.
They'd ha' found a mortgage lying on that woman's broken heart.
Worm or beetle, drought or tempest, on a farmer's land may fall.
But for a first-class ruination, trust a mortgage 'gainst them all.
How much of a farmer's mortgage is for the value of the land itself, and how much for the present value of the improvements which previous owners have made, such as clearing, draining, fencing, irrigating, building structures, plus, perhaps, equipment purchased with the land and buildings?
For that matter, how much of a homeowner's mortgage is for the value of the land itself --including its access to community-provided services such as city water and sewer, fire hydrants, and the like -- and how much for the purchase price of the landscaping and structures on the property, built by any of the previous owners?
To what degree is the modern buyer including in his formal calculations or his underlying assumptions the notion that the land will increase in value during his tenure? (See Case & Schiller, 2003.)
Posted on December 30, 2012 at 09:42 PM in buildings depreciate, capital gains are land gains, cost of living, economic rent, ecosystem services, ending poverty, facilitating commerce, financing education, financing infrastructure, financing services, FIRE sector, fixing the economy, free land, free trade, income concentration, infrastructure, land appreciates buildings depreciate, land includes, land rent, land value created by community, location, location, location, make land common property, Monopoly and The Landlord's Game, Monopoly and The Landlord's Game , natural resource revenues, Occupy Wall Street's values, one solution for many problems, urban land value, wealth distribution or concentration | Permalink | Comments (0)
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If, then, successive generations of men cannot have their fractional share of the actual soil (including mines, etc.) how can the division of the advantages of the natural earth be effected? By the division of its annual value or rent; that is, by making the rent of the soil the common property of the nation. That is (as the taxation is the common property of the State), by taking the whole of the taxes out of the rents of the soil, and thereby abolishing all other kinds of taxation whatever. And thus all industry would be absolutely emancipated from every burden.
— PATRICK EDWARD DOVE, Theory of Human Progression (1850), Chap. III., Sec. 3.
Posted on December 30, 2012 at 12:33 AM in Christian ethics, commons, commonwealth, Earth for All, equal opportunity, financing education, financing infrastructure, financing services, fixing the economy, free land, government's role, justice of the single tax, land rent, land value taxation, make land common property, Natural Public Revenue, natural resource revenues, rent, defined, untaxing production | Permalink | Comments (0)
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It is not proposed to confiscate any value that has been created by human industry. This would be robbery. But when the community creates wealth it is entitled to it as much as the individual is to the wealth he creates.
-- from the first issue of The Standard, 1/8/1887.
Among no class of reformers do we find more clear thinking or a sounder political economy than among the "single-taxers." Following the writings of the late Henry George there is a considerable and important literature upon this subject. Land monopoly and speculation should be stopped. Labor should not be taxed. The resources of nature should be made to minister equitably to the whole people. Now the weakest pay the most tax. It should be the strongest and they whom the government most benefits.
A Baltimore Instance
A single tax man of Baltimore, Mr John Salmon, expresses no little surprise that Senator Hanna's candidate for governor of Ohio supposes that the single tax has been a disastrous failure wherever tried. Of Mr Herrick and his notion Mr Salmon writes: This stamps him as being a twisted thinker and a loose observer. The single tax is in operation all over the United States, flowing into the pockets of private individuals, which is what single taxers object to. Here in Baltimore more than in any other section of the country, it is strongly apparent. We have the ground rent system in operation, 90 percent of the real estate being held on leaseholds. The custom is an old English one grafted on the Maryland colonies by Lord Baltimore and his English compeers, and it has grown and flourished like a green bay tree. When one buys a home here it is in nine cases out of ten subject to a ground rent. These ground rents are dealt in as a form of investment the same as a mortgage or any other form of investment; but the point to observe is that they are a single tax, pure and simple, the price paid for the use of the ground per se and for ground only.
Our last assessment separated the value of the land from the value of improvements, and it is done every day in our community. Baltimore has more houses per capita than any city in the country, due to the ground rent system; and a house costing $1,200 to build is very often sold for $800 or $900 in order to create a ground rent ranging from three dollars a front foot to $20 and $40 a front foot. To explain more fully: Bonus buildings are run up on plats of ground split up into lots of 15x90, and a ground rent say of $6 per front foot is put on the lot, making $90 a year ground rent, which the buyer agrees to pay, and in his ground rent is a clause that he will also pay all taxes. This $90 is essentially a single tax. The agreement to pay it is exactly the same kind of a contract that is in vogue in Fairhope, Ala. With this extremely important exception, that whereas we in Baltimore bind ourselves to pay all the taxes, in Fairhope the company or lessor, agrees to pay all taxes. Talk of its being a disastrous failure! Not on your life. Ground rents are as scarce as hen's teeth, and can only be bought on a three percent basis. They command as good a price as government bonds, and it is estimated that $14,000,000 at least is raised in Baltimore alone from this source — nearly twice as much as the city and state taxes amount to. And what is this tax of $14,000,000 paid for? Why, merely for the privilege of living in the city of Baltimore. That's all the payers get for it. And the only kick we've got coming is that the private individuals get that money instead of the city and state.
An article in the NYT a few weeks ago described some proposed changes in the zoning for midtown Manhattan.
The accompanying map says, "Around Grand Central Terminal, towers could be up to twice the size now permitted. Development could also take place along the Park Avenue corridor, where towers could be more than 40% larger. Elsewhere in the district, towers could be 20% larger."
But New York’s premier district, the 70-block area around Grand Central Terminal, has lagged, Bloomberg officials say, hampered by zoning rules, decades old, that have limited the height of buildings.
Mayor Michael R. Bloomberg wants to overhaul these rules so that buildings in Midtown Manhattan can soar as high as those elsewhere. New towers could eventually cast shadows over landmarks across the area, including St. Patrick’s Cathedral and the Waldorf-Astoria Hotel. They could rise above the 59-story MetLife Building and even the 77-story Chrysler Building.
Mr. Bloomberg’s proposal reflects his effort to put his stamp on the city well after his tenure ends in December 2013. Moving swiftly, he wants the City Council to adopt the new zoning, for what is being called Midtown East, by October 2013, with the first permits for new buildings granted four years later.
His administration says that without the changes, the neighborhood around Grand Central will not retain its reputation as “the best business address in the world” because 300 of its roughly 400 buildings are more than 50 years old. These structures also lack the large column-free spaces, tall ceilings and environmental features now sought by corporate tenants.
The rezoning — from 39th Street to 57th Street on the East Side — would make it easier to demolish aging buildings in order to make way for state of-the-art towers.
Without it, “the top Class A tenants who have been attracted to the area in the past would begin to look elsewhere for space,” the administration says in its proposal.
The plan has stirred criticism from some urban planners, community boards and City Council members, who have contended that the mayor has acted hastily. They said they were concerned about the impact of taller towers in an already dense district where buildings, public spaces, streets, sidewalks and subways have long remained unchanged.
Mr. Bloomberg has encouraged high-rise development in industrial neighborhoods, including the Far West Side of Manhattan, the waterfront in Williamsburg, Brooklyn, and in Long Island City, Queens. But with the proposal for Midtown, which is working its way through environmental and public reviews, he is tackling the city’s commercial heart.
“Unlocking the development potential in this area will generate historic opportunities for investment in New York City,” Deputy Mayor Robert K. Steel said.
The initiative would, in some cases, allow developers to build towers twice the size now permitted in the Grand Central area. The owner of the 19-story Roosevelt Hotel at Madison and 45th Street could replace it with a 58-story tower under the proposed rules. Current regulations permit no more than 30 floors.
See also http://lvtfan.typepad.com/lvtfans_blog/2008/03/hotel-roosevelt.html , which discusses this in terms of value of land per buildable square foot.
When zoning changes increase the value of land, who should reap the benefit? The current landholder, or the community? What did the landholder do to earn that windfall? Do you think it comes out of thin air? Do you think it is paid him by other rich people?
Or do you recognize that it is part of the structure which enriches a few and impoverishes the many?
It is easy to fix this one. One just has to recognize the structure, and value the land correctly, and start collecting the lion's share of the land rent for the community. If it is more than NYC can put to use -- and it will be -- then apply the excess to reducing our federal taxes on productive effort. Use it to fund Social Security, or Medicare, or universal health insurance, or something else that will benefit the vast majority of us instead of an undeserving tiny privileged minority. Don't throw it in the ocean, and don't leave it in private pockets, be they American or not.
Collect the land rent. Repeat next year, and the next, and the next. Natural Public Revenue.
Posted on October 21, 2012 at 05:36 PM in a Manhattan acre, all benefits go to landholder , better cities, classical economists, commons, corporations, cui bono?, economic rent, financing education, financing health care, financing infrastructure, financing services, financing Social Security, fixing the economy, free lunch, government's role, income concentration, justice of the single tax, land appreciates buildings depreciate, land rent, land value created by community, land value taxation, location, location, location, make land common property, monopoly -- not the game, Natural Public Revenue, Occupy Wall Street's values, one solution for many problems, pay for what you take, payroll tax, popular ignorance of land economics, privilege, special interests, time making wrongs into rights, toll-takers, unburdening the economy, underused land, unearned increment, untaxing production, urban land value, wealth distribution or concentration, windfalls | Permalink | Comments (0) | TrackBack (0)
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Henry George is the most famous American popular economist you've never heard of, a 19th century cross between Michael Lewis, Howard Dean and Ron Paul. Progress and Poverty, George's most important book, sold three million copies and was translated into German, French, Dutch, Swedish, Danish, Spanish, Russian, Hungarian, Hebrew and Mandarin. During his lifetime, George was probably the third best-known American, eclipsed only by Thomas Edison and Mark Twain. He was admired by the foreign luminaries of the age, too -- Leo Tolstoy, Sun-Yat Sen and Albert Einstein, who wrote that "men like Henry George are unfortunately rare. One cannot image a more beautiful combination of intellectual keenness, artistic form and fervent love of justice." George Bernard Shaw described his own thinking about the political economy as a continuation of the ideas of George, whom he had once heard deliver a speech.
Later, she writes,
What George found most mysterious about the economic consequences of the industrial revolution was that its failure to deliver economic prosperity was not uniform -- instead it had created a winner-take-all society: "Some get an infinitely better and easier living, but others find it hard to get a living at all. The 'tramp' comes with the locomotives, and almshouses and prisons are as surely the marks of 'material progress' as are costly dwellings, rich warehouses and magnificent churches. Upon streets lighted with gas and patrolled by uniformed policeman, beggars wait for the passer-by, and in the shadow of college, and library, and museum, are gathering the more hideous Huns and fiercer Vandals of whom Macaulay prophesied."
George's diagnosis was beguilingly simple -- the fruits of innovation weren't widely shared because they were going to the landlords. This was a very American indictment of industrial capitalism: at a time when Marx was responding to Europe's version of progress and poverty with a wholesale denunciation of private property, George was an enthusiastic supporter of industry, free trade and a limited role for government. His culprits were the rentier rich, the landowners who profited hugely from industrialization and urbanization, but did not contribute to it.
George had such tremendous popular appeal because he addressed the obvious inequity of 19th century American capitalism without disavowing capitalism itself. George wasn't trying to build a communist utopia. His campaign promise was to rescue America from the clutches of the robber barons and to return it to "the democracy of Thomas Jefferson." That ideal -- as much Tea Party as Occupy Wall Street -- won support not only among working class voters and their leaders, like Samuel Gompers, but also resonated with many small businessmen. Robert Ingersoll, a Republican orator, attorney and intellectual, was a George supporter. He urged his fellow Republicans to back his man and thereby "show that their sympathies are not given to bankers, corporations and millionaires."
I commend the entire post, adapted from Freeland's new book, Plutocrats. It ends with these paragraphs:
"America today urgently needs a 21st century Henry George -- a thinker who embraces the wealth-creating power of capitalism, but squarely faces the inequity of its current manifestation. That kind of thinking is missing on the right, which is still relying on Reagan-era trickle-down economics and hopes complaints about income inequality can be silenced with accusations of class war. But the left isn't doing much better either, preferring nostalgia for the high-wage, medium-skill manufacturing jobs of the post-war era and China-bashing to a serious and original effort to figure out how to make 21st century capitalism work for the middle class.
Globalization and the technology revolution aren't going away -- and thank goodness for that. Industrialization didn't go away either. But between 1886, when George lost the mayoral race, and the presidency of FDR, American progressives invented, fought for and implemented a broad range of new social and political institutions to make capitalism serve the whole of society -- ranging from trust-busting, to the income tax, to the welfare state.
We are living in an era of comparably tumultuous economic change. The great challenge of our time is to devise the new social and political institutions we need to make the new economy work for everyone. So far, that is a historic task neither party is taking on with enough energy, honesty or originality."
Those looking for a starting point might look for Walt Rybeck's book, Re-Solving the Economic Puzzle.
Posted on October 21, 2012 at 04:38 PM in a wedge driven through society, all benefits go to landholder , capital gains are land gains, connect the dots, corruption in government, cui bono?, equal opportunity, financing infrastructure, financing services, fixing the economy, government's role, Henry George, individualism, Jefferson, land monopoly capitalism, land value created by community, land value taxation, landlordism, natural monopolies, Occupy Wall Street's values, one solution for many problems, popular ignorance of land economics, poverty, poverty's cause, private property in land, Progress and Poverty, reaping what others sow, rent-seeking, small government, socializing risk and privatizing profit, special interests, toll-takers, Tolstoy, unearned income, wealth distribution or concentration | Permalink | Comments (0) | TrackBack (0)
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A major theme of the underlying political debate in the United States is the role of the state and the need for collective action. The private sector, while central in a modern economy, cannot ensure its success alone. For example, the financial crisis that began in 2008 demonstrated the need for adequate regulation.
Moreover, beyond effective regulation (including ensuring a level playing field for competition), modern economies are founded on technological innovation, which in turn presupposes basic research funded by government. This is an example of a public good – things from which we all benefit, but that would be undersupplied (or not supplied at all) were we to rely on the private sector.
Conservative politicians in the US underestimate the importance of publicly provided education, technology, and infrastructure. Economies in which government provides these public goods perform far better than those in which it does not.
But public goods must be paid for, and it is imperative that everyone pays their fair share. While there may be disagreement about what that entails, those at the top of the income distribution who pay 15% of their reported income (money accruing in tax shelters in the Cayman Islands and other tax havens may not be reported to US authorities) clearly are not paying their fair share. ...
I have to disagree with the second sentence of this next paragraph. And I think Stiglitz knows better, if he stops to think about it:
Democracies rely on a spirit of trust and cooperation in paying taxes. If every individual devoted as much energy and resources as the rich do to avoiding their fair share of taxes, the tax system either would collapse, or would have to be replaced by a far more intrusive and coercive scheme. Both alternatives are unacceptable.
The billionaire investor Warren Buffett argues that he should pay only the taxes that he must, but that there is something fundamentally wrong with a system that taxes his income at a lower rate than his secretary is required to pay. He is right. Romney might be forgiven were he to take a similar position. Indeed, it might be a Nixon-in-China moment: a wealthy politician at the pinnacle of power advocating higher taxes for the rich could change the course of history.
But Romney has not chosen to do so. He evidently does not recognize that a system that taxes speculation at a lower rate than hard work distorts the economy. Indeed, much of the money that accrues to those at the top is what economists call rents, which arise not from increasing the size of the economic pie, but from grabbing a larger slice of the existing pie.
Those at the top include a disproportionate number of monopolists who increase their income by restricting production and engaging in anti-competitive practices; CEOs who exploit deficiencies in corporate-governance laws to grab a larger share of corporate revenues for themselves (leaving less for workers); and bankers who have engaged in predatory lending and abusive credit-card practices (often targeting poor and middle-class households). It is perhaps no accident that rent-seeking and inequality have increased as top tax rates have fallen, regulations have been eviscerated, and enforcement of existing rules has been weakened: the opportunity and returns from rent-seeking have increased.
Today, a deficiency of aggregate demand afflicts almost all advanced countries, leading to high unemployment, lower wages, greater inequality, and – coming full, vicious circle – constrained consumption. There is now a growing recognition of the link between inequality and economic instability and weakness.
There is another vicious circle: Economic inequality translates into political inequality, which in turn reinforces the former, including through a tax system that allows people like Romney – who insists that he has been subject to an income-tax rate of “at least 13%” for the last ten years – not to pay their fair share. The resulting economic inequality – a result of politics as much as market forces – contributes to today’s overall economic weakness.
Posted on September 04, 2012 at 09:58 AM in common good, commons, cui bono?, economic rent, ecosystem services, financing education, financing health care, financing infrastructure, financing services, financing Social Security, FIRE sector, fixing the economy, government's role, highest salaries, income concentration, infrastructure, land includes, land rent, land value created by community, money in elections, Natural Public Revenue, natural resource revenues, natural resources, political economy, popular ignorance of land economics, privatization, privilege, public spending, reaping what others sow, rent, defined, rent-seeking, socializing risk and privatizing profit, special interests, Stiglitz, tax reform, time making wrongs into rights, toll-takers, unearned income, urban land value, wealth distribution or concentration | Permalink | Comments (0)
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"High rent is the best manure ever land got."
This quote is attributed to the Irish landlords, in an 1835 piece by Thomas Ainge Devyr entitled "Natural Rights: A Pamphlet for the People."
The statement bears thinking about: when private landlords collect high rents, they force their tenants to work quite hard -- keep in mind that they still have to pay taxes on various things in order to support local spending -- while the landlord has provided them NOTHING that he has made (and nothing he has bought from the fellow who made it, either).
But at the same time, it is worth considering what happens when the community collects reasonably high rents on the land, particularly urban land. When the community collects high rent, there are no vacant lots. There are relatively few underused lots. There is housing for all who want it. All this economic activity creates jobs -- for those who would design, those who would build, those who would maintain, those who would improve, those who would expand, those who would protect. All those workers' needs and spending create more jobs. Wages rise, as jobs chase workers.
So the phrase is not simply an 18th century rural one, but highly relevant in 21st century U.S. cities, towns and rural areas. When the community collects the land rent and recycles it to serve local needs -- schools, parks, well-maintained roads, public transportation systems, police, ambulance, fire protection, courts -- communities become good places to live. When we permit private landlords (be they individual or corporate, universities or trusts) to pocket those funds -- and perhaps "invest" the excess in acquiring more land on which to pocket the rent, those good things, if they happen at all, must be financed by high taxes on productive activity.
One is a virtuous circle; the other a vicious one. Which one is consistent with our ideals? If Life, Liberty and the Pursuit of Happiness are for ALL of us, then I think we have to opt for the virtuous circle.
Posted on July 04, 2012 at 12:34 PM in a Manhattan acre, all benefits go to landholder , better cities, cui bono?, direct taxation, economic rent, equal freedom, equal opportunity, equality, facilitating commerce, financing education, financing infrastructure, financing services, fixing the economy, free land, infrastructure, is this socialism?, land value created by community, land value taxation, location, location, location, make land common property, Natural Public Revenue, paying twice, popular ignorance of land economics, population growth, private property in land, public spending, rent, defined, rent-seeking, sharecropping, slavery, sprawl, underused land, unemployment and underemployment, untaxing buildings, untaxing production, urban land value | Permalink | Comments (0)
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"The rent of land and government expenses are both caused by population. Let one pay the other."
--Henry Chase, M. D.
Posted on June 28, 2012 at 06:45 PM in better cities, direct taxation, economic rent, financing education, financing infrastructure, financing services, fixing the economy, government's role, immigration, justice of the single tax, land rent, land value created by community, land value taxation, location, location, location, Natural Public Revenue, one solution for many problems, population, population growth, public spending, rent, defined, socializing risk and privatizing profit, tax reform, taxation, teach your children well, urban land value | Permalink | Comments (0)
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Petitions asking for a referendum vote upon the question of reducing gradually the tax rate upon buildings in New York to one-half the tax rate upon land, through five consecutive reductions in as many years, were signed yesterday by several thousand persons at a mass-meeting held in Union Square under the auspices of the New York Congestion Committee. The meeting was announced as a public protest for lower rents.
Benjamin Clark Marsh, Executive Secretary of the Committee on Congestion of Population in New York, was Chairman. Dr. John Haynes Holmes of the Church of the Messiah said that the Legislature "in the wisdom of the Big Sachem at Fourteenth Street has decreed that the people are not fit to register their judgment as to this bill. I, for one, desire to protest against the boss or set of bosses who presume to forbid the people to express their will on any question."
Frederick Leubuscher, representing the New York State League of Savings and Loan Association, said:
The purpose of the law was explained in a letter from Assemblyman Michael Schaap, who introduced the Salant-Schaap bill in the lower House of the State Legislature.
The Rev. Alexander Irvine said that one family out of every 150 in New York City was evicted for non-payment of rent, because of the unjust taxation of improved property as contrasted with vacant land. Only 3% of the residents of the city own land, the speaker asserted.
John J. Hopper, Chairman of the New York State Independence League, said:
Frederick C. Howe, Director of the People's Institute, said:
C. N. Sheehan of the Twenty-eighth Assembly District Board of Trade, Brooklyn, and J. P. Coughlin of the Central Labor Union of Brooklyn also spoke.
Posted on June 27, 2012 at 01:10 PM in a Manhattan acre, all benefits go to landholder , capital gains are land gains, capitalization, commonwealth, cost of living, cui bono?, economic rent, financing education, financing infrastructure, financing services, fixing the economy, housing affordability, incentive taxation, land appreciates buildings depreciate, land monopoly capitalism, land rent, land speculation, land value created by community, land value taxation, landlordism, Natural Public Revenue, NYS Property Tax Reform, population growth, property tax, property tax reform, reaping what others sow, special interests, supply and demand, tax reform, taxation, toll-takers, underused land | Permalink | Comments (0)
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I came across an excellent site at http://www.resourcerentalsrevenue.org, and thought their FAQ page particularly worth sharing. The links will take you to answers.
We don't HAVE to burden ourselves and our economy with taxes which throw a wet blanket on jobs, on production, on homes. There is a better way to finance our common spending!
The following list comprises the most commonly asked questions about the concept of making land and resource rentals the source of revenue for government. As you continue this study, you will see the value from giving resources the respect they deserve and the benefits resulting from the freeing of labour, production and exchange from taxation. If you have any questions which are not covered here, or observations you would like to put to our panel, please feel free to do so by sending your question as an e-mail query and we will attempt to respond.
The inclusion of land and resources in the economic equation is central to any solution for revenue raising. A taxation solution which does not consider the nature of taxation itself and allows the continuing private monopolisation of community land and resources fails to recognise the essential role land plays in the economic equation and will not work. Land is the only element in the economic equation which is both fixed and finite. It can be monopolised. It is a unique class of asset which must be treated accordingly. If we were to wrest not the land itself, but its unimproved value from private monopolies and return the value to the community — whose very presence creates it — then we would have reduced many problems in one stroke with great benefit to production, to the environment and to the cause of individual freedom and justice.
On the subject of land and resource rents, Henry George said this:
Posted on June 13, 2012 at 02:44 PM in a Manhattan acre, better cities, capital gains are land gains, common good, commonwealth, connect the dots, Earth for All, equal freedom, equal opportunity, equality, facilitating commerce, financing education, financing health care, financing infrastructure, financing services, fixing the economy, government's role, Henry George, housing affordability, justice of the single tax, land speculation, land value created by community, land value taxation, make land common property, monopoly -- not the game, natural monopolies, Natural Public Revenue, natural resource revenues, natural resources, one solution for many problems, opportunity, pay for what you take, popular ignorance of land economics, private property in land, privatization, privilege, property rights, public spending, sales taxes are wrong, special interests, sufficiency of land rent, tax reform, taxation, toll-takers, unearned income, unearned increment, unemployment and underemployment, untaxing buildings, untaxing production, user fees | Permalink | Comments (0)
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In the ocean-front Delaware town of Rehoboth Beach, seasonal parking fees provide a major revenue source:
In Rehoboth Beach, parking meters -- at $1.50 per hour -- are big business. They bring in $2.58 million for the city's $14.75 million operating budget.
Fines on expired meters add another $667,000, bringing the total to more than $3.2 million. More comes from parking permit fees, fines for parking without a permit and collections from a lot the city operates at the north end of the community. All told, parking is the largest single segment of the city budget.
Meters, some say, are one way the city can capture a revenue stream from the thousands of summer visitors who don't rent a cottage or stay in a hotel room, or who rent accommodations outside the city limits.
City Manager Gregory J. Ferrese said he believes meter and parking permits eliminate the need for beach fees, which are routinely charged in New Jersey resorts.
This is not to say that one can't use the beaches without paying for parking; Resort Transit brings people in by bus from the Coastal Highway, and the Jolly Trolley has been transporting tourists and others from nearby Dewey Beach for many decades.
But parking revenue is a great example of a user fee. One pays for what one takes, and if one doesn't need, one doesn't pay.
A few years ago, the price of parking varied according to location; more recently, they seem to have returned to a one-price-at-all-meters system, which puzzles me a bit. But after late September, the parking meters disappear until late spring, because there usually is plenty of parking to meet the demand.
I seem to recall reading that on-street parking is properly priced if about 15% of spots are available at any particular time. I suspect that that rule of thumb may not hold in RB in season, though I suspect that RB could charge more for ocean-block parking. (I suspect that nearly 100% of RB's parking spots will be occupied during most hours of peak season, at any reasonable price.)
Rehoboth is from the Hebrew for "space for all." One source says "City of Room" "Big City" "Broad Places, Streets" "Streets, Wide Spaces." Interestingly, when Rehoboth Beach was first laid out, by the Methodist diocese of Wilmington, as a camp meeting ground, the streets were designed to be wide and become wider as they approached the ocean, so all could have some view and access.
As a society, how do we create "space for all?" By structures and policies which encourage all of us to take only what we'll use. No land speculation, for example. (Rehoboth Beach fails on this count; its low property tax and use of 30+ year old assessments encourage people to hold onto empty land and unaltered cottages as a low-cost nest-egg; a new home far from the beach may pay far more in taxes than an older one close to it which sells for twice the price). And a 3% tax on transfers -- half to the city, half to the county -- discourages transactions.)
Some of RB's revenue comes from a 3% tax on rental income. I'm intrigued to know that parking brings in more than the tax on rentals.
Delaware, wisely, does not use a sales tax. Rehoboth Beach has 3 large outlet malls just beyond its borders, which attract shoppers from nearby Ocean City, Maryland, and even from southern New Jersey; the latter arrive by ferry for a day of tax-free shopping.
And of course the Federal government is generous with paying for beach replenishment, which helps keep the renters and beachgoers coming, at little or no cost to the property owners in RB.
In any case, parking fees are Natural Public Revenue
Posted on April 16, 2012 at 11:40 AM in all benefits go to landholder , better cities, capital gains are land gains, congestion, cui bono?, direct taxation, financing infrastructure, financing services, free land, land appreciates buildings depreciate, land speculation, land value created by community, location, location, location, Natural Public Revenue, parking, population, property tax, property tax is two taxes, sales taxes are wrong, small government, taxation, underused land, urban land value | Permalink | Comments (0)
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Here's a piece from a 90 year old journal. There are acres in Manhattan whose value is far higher today -- and the landlords are still reaping what the working people and visitors to New York are sowing.
APPROPRIATING THE GIFTS OF NATURE
By Walter Thomas Mills.
There are portions of New York City in which the land is valued at $40,000,000 an acre. That means $8000 each day from each acre for the landlord, and that entirely unearned by him, before there is a penny for any other purpose. Probably not less than two and one-half million dollars a day, or almost a billion dollars a year, must be earned by the people of New York City and turned over to landlords for permission to use the island, which is a gift of nature, and for the advantages that are protected and maintained by the industry and enterprise of all of the people.
In The Great Adventure, April, 1921
Think what NYC -- and America -- would be like if that "permission to use the island" money was treated as our logical public revenue source, instead of as individuals', corporations' and trusts' private revenue source.
Recall the wisdom of Leona Helmsley: "WE don't pay taxes. The little people pay taxes."
Posted on April 13, 2012 at 11:13 AM in a Manhattan acre, a wedge driven through society, absentee ownership, all benefits go to landholder , better cities, capital gains are land gains, corporations, corruption of economics, cui bono?, Earth for All, economic rent, enclosure, financing infrastructure, financing services, income concentration, land appreciates buildings depreciate, land different from capital, land monopoly capitalism, land value created by community, land value taxation, little people pay taxes, location, location, location, popular ignorance of land economics, population, public spending, reaping what others sow, socializing risk and privatizing profit, special interests, toll-takers, unburdening the economy, unearned income, urban land value, wealth distribution or concentration | Permalink | Comments (0)
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Every proprietor, therefore, of cultivated land owes to the community a ground rent (for I know of no better term to express the idea) for the land which he holds.
— THOMAS PAINE, Agrarian Justice, Paine's Writings, Vol. III., p. 329 (1795-6).
If all men were so far tenants to the public that the superfluities of gain and expense were applied to the exigencies thereof, it would put an end to taxes, leave never a beggar and make the greatest bank for national trade in Europe.
— WILLIAM PENN, Reflections and Maxims, Sec. 222, Works V., pp. 190-1.
Posted on March 27, 2012 at 12:26 AM in common good, commons, commonwealth, cost of living, Earth for All, economic justice, economic rent, employment, enclosure, ending poverty, equal opportunity, equality, facilitating commerce, financing education, financing infrastructure, financing services, FIRE sector, fixing the economy, free trade, government's role, land rent, land value created by community, leased land, make land common property, Natural Public Revenue, no victims, pay for what you take, Philadelphia, poverty's cause, private property in land, privatization, public spending, socialize, sufficiency of land rent, The End of Poverty?, unburdening the economy, user fees | Permalink | Comments (0)
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Let the fields and all the soil, and, if possible, even the houses, belong to the state, that is, to him which is the depositary of the right of the state, so that he may let them out for an annual rent to the inhabitants of the cities and the cultivators. This will exempt all citizens from extraordinary taxes in time of peace.
— SPINOZA, Tractatus Politicus, Chap. VI., On Monarchy, Sec. 12.
Posted on March 26, 2012 at 12:19 AM in commons, commonwealth, Earth for All, economic rent, financing services, fixing the economy, land rent, land value taxation, make land common property, Natural Public Revenue, public spending, sales taxes are wrong, socialize, sufficiency of land rent, unburdening the economy, untaxing buildings, untaxing production | Permalink | Comments (0)
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The remarkable thing about this story, to my eye, is that the size of the lot isn't even mentioned! It is worth $1 million land rent per year, and one might infer from the information provided that the lot is about 10,000 square feet, or less than 1/4 acre.
Capitalized at 5% (also known as "20 years' purchase") the lot would sell for about $20 million.
I assume that in addition to the land rent, the tenant pays the property tax on the land. So the entire $1 million annual land rent flows out of NYC, to the property's owner, in Marshall, Virginia.
What, pray tell, has the land owner done to earn that land rent?
Consider how many people's wage taxes and sales taxes could be lifted, and what that additional spending power could do for the local economy. Consider what would happen if there were no taxes to be paid on the apartments or on people's condo structures.
Or NYC can just keep letting the land rent leave the city, and even leave the country, continuing to flow into private pockets, just as if they'd rendered someone some service and earned it!
Land rent is natural public revenue, and we permit landlords to privatize it. Aren't we generous with our patrimony? (Leona told us the truth!)
The developer of a nine-story Karl Fischer rental apartment building planned for a corner site in the East Village signed a 99-year ground lease that requires payments each year of about $1 million.
The development company, YYY Third Avenue, signed the long-term lease for the vacant site at 74-84 Third Avenue, at 12th Street, April 27, 2011, however, a memorandum of the lease was not recorded in public records until last Wednesday, city property documents show.
A source citing city property records said the lease payment, which is not specifically recorded, could be inferred to be about $1 million per year. Prior to the document’s release, the annual lease cost was not known.
The prolific and controversial architect Fischer filed plans to build an 82,000-square-foot, nine-story residential building with 94 units, city Department of Buildings online records show. The permit has not been approved and is pending, DOB data indicate, and is to include nearly 9,511 square feet of retail, as well.
You might also be intrigued by the URL for the story ... I'm not sure what to make of it.
Posted on March 23, 2012 at 06:55 PM in all benefits go to landholder , better cities, capital gains are land gains, capitalization, cui bono?, economic rent, financing infrastructure, financing services, FIRE sector, fixing the economy, government's role, housing affordability, income tax, land rent, land value created by community, land value taxation, leased land, little people pay taxes, middle class, Natural Public Revenue, pay for what you take, payroll tax, popular ignorance of land economics, privatization, property tax, property tax is two taxes, public spending, reaping what others sow, special interests, time making wrongs into rights, toll-takers, unearned income, untaxing buildings, untaxing production, urban land value, wage taxes | Permalink | Comments (0)
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38. Mining companies which mine on public lands pay far less to the Federal government than they pay on privately held lands.
A. That's fair, because the private landholders are better negotiators
B. That's fair, because the 1872 Mining Act set the price, and it wouldn't be fair to change the business environment after setting the rules.
C. That's fair. Corporations need subsidies to create jobs.
D. That's unfair, and the federal government should be getting just as much from the miners as the private landholders are getting
E. That's unfair, and not only should the federal government be getting more from the mining companies, but the federal government should be collecting a significant portion of the royalties now privatized by private and corporate landholders, since we're all equally entitled to nature's bounty. This would permit us to reduce other taxes on wages and production, and perhaps lead to a citizen's dividend, similar to the Alaska Permanent Fund
F. That's unfair, because the 1872 Mining Act was based on old prices and old mining technology.
G. Your reactions?
Posted on March 08, 2012 at 02:15 AM in all benefits go to landholder , as much and as good, common good, commons, commonwealth, conservatism, corporations, corruption in government, cui bono?, Earth for All, economic rent, enclosure, financing education, financing health care, financing infrastructure, financing services, financing Social Security, financing war, government's role, justice of the single tax, land includes, land rent, make land common property, Natural Public Revenue, natural resource revenues, natural resources, oil, pay for what you take, privatization, privilege, special interests, subsidies, the land questions, wealth distribution or concentration | Permalink | Comments (1)
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37. Our ancestors bought or stole the land which the ancestors of some of those now identified as "Native Americans" relied on. How should we and our children pay back them and their children?
A. By giving them the privilege of selling cigarettes without taxes, forgoing revenue that could help meet the health costs associated with smoking, both for smokers and for those who live with them.
B. By giving them the privilege of running casinos, even if a percentage of that revenue must be contributed to the state, and even if gambling is creates tremendous problems for some individuals in society, beyond those who actually gamble.
C. By collecting from everyone who owns land and natural resources the annual economic value, and giving everyone a per-capita share of those resources, every year, forever. (Similar to the Alaska Permanent Fund)
D. By collecting from everyone who owns land and natural resources the annual economic value, and giving everyone a per-capita share of those resources, every year, forever, and providing a double share to those who are starting from a disadvantaged position for some fixed number of years
E. By collecting from everyone who owns land and natural resources the annual economic value, paying the costs of government and common spending from that source, producing equal opportunity for all.
F. Your suggestions?
Posted on March 07, 2012 at 02:50 AM in Alaska Permanent Fund, common good, cui bono?, Earth for All, economic justice, economic rent, ending poverty, equal freedom, equal opportunity, equality, facilitating commerce, financing education, financing health care, financing infrastructure, financing services, financing Social Security, franchises, government's role, inter-generational equity, is this socialism?, justice of the single tax, land rent, make land common property, Natural Public Revenue, natural resource revenues, natural resources, one solution for many problems, private property in land, privilege, Social Problems, special interests, the land questions | Permalink | Comments (0)
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36. He worked hard. He played by the rules. He bought up land before the interstate highway was announced, and his widow and orphans now have a very valuable land portfolio, for which others will pay a high purchase price or high -- and rising -- lease prices, for generations. Is it right to change our tax code to tax -- heavily -- year in and year out, the economic value of that land?
Posted on March 06, 2012 at 09:47 PM in a wedge driven through society, all benefits go to landholder , economic rent, financing education, financing infrastructure, financing services, financing Social Security, free lunch, fruits of one's labors, land speculation, land value created by community, land value taxation, landed gentry, location, location, location, playing by the rules, popular ignorance of land economics, population growth, reaping what others sow, the land questions, time making wrongs into rights, unearned increment, wealth distribution or concentration, widow's skirts | Permalink | Comments (0)
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This is from Joseph Dana Miller, the editor of the Single Tax Year Book (1917), and it is a concise statement which might help make clear why I think this such an important reform in the 21st century.
Men have a right to land because they cannot live without it and because no man made it. It is a free gift of nature, like air, like sunshine. Men ought not to be compelled to pay other men for its use. It is, if you please, a natural right, because arising out of the nature of man, or if you do not like the term, an equal right, equal in that it should be shared alike. This is no new discovery, for it is lamely and imperfectly recognized by primitive man (in the rude forms of early land communism) and lamely and imperfectly by all civilized communities (in laws of "eminent domain", and similar powers exercised by the State over land). It is recognized by such widely differing minds as Gregory the Great and Thomas Paine (the religious and the rationalistic), Blackstone and Carlyle (the legal and the imaginative). All points of view include more or less dimly this conception of the peculiar nature of land as the inheritance of the human race, and not a proper subject for barter and sale.
This is the philosophy, the principle. The end to be sought is the establishment of the principle -- equal right to land in practice. We cannot divide the land -- that is impossible. We do not need to nationalize it that is, to take it over and rent it out, since this would entail needless difficulty. We could do this, but there is a better method.
The principle, which no man can successfully refute or deny even to himself, having been stated, we come now to the method, the Single Tax, the taking of the annual rent of land -- what it is worth each year for use -- by governmental agency, and the payment out of this fund for those functions which are supported and carried on in common -- maintenance of highways, police and fire protection, public lighting, schools, etc. Now if the value of land were like other values this would not be a good method for the end in view. That is, if a man could take a plot of land as he takes a piece of wood, and fashioning it for use as a commodity give it a value by his labor, there would be no special reason for taxing it at a higher rate than other things, or singling it out from other taxable objects. But land, without the effort of the individual, grows in value with the community's growth, and by what the community does in the way of public improvements. This value of land is a value of community advantage, and the price asked for a piece of land by the owner is the price of community advantage. This advantage may be an excess of production over other and poorer land determined by natural fertility (farm land) or nearness to market or more populous avenues for shopping, or proximity to financial mart, shipping or railroad point (business centers), or because of superior fashionable attractiveness, (residential centers). But all these advantages are social, community-made, not a product of labor, and in the price asked for its sale or use, a manifestation of community-made value. Now in a sense the value of everything may be ascribed to the presence of a community, with an important difference. Land differs in this, that neither in itself nor in its value is it the product of labor, for labor cannot produce more land in answer to demand, but can produce more houses and food and clothing, whence it arises that these things cost less where population is great or increasing, and land is the only thing that costs more.
To tax this land at its true value is to equalize all people-made advantages (which in their manifestation as value attach only to land), and thus secure to every man that equal right to land which has been contended for at the outset of this definition.
From this reform flow many incidental benefits -- greater simplicity of government, greater certainty and economy in taxation, and increased revenues.
But its greatest benefit will be in the abolition of involuntary poverty and the rise of a new civilization. It is not fair to the reader of a definition to urge this larger conclusion, the knowledge of which can come only from a fuller investigation and the dawning upon his apprehension of the light of the new vision. But this conclusion follows as certainly as do the various steps of reasoning which we have endeavored to keep before the reader in this purely elementary definition.
Posted on February 26, 2012 at 04:05 PM in civilization, commons, commonwealth, Earth for All, economic justice, economic rent, ending poverty, equal opportunity, equality, financing education, financing health care, financing infrastructure, financing services, income concentration, land appreciates buildings depreciate, land different from capital, land rent, land value created by community, location, location, location, Natural Public Revenue, Occupy Wall Street's values, population, population growth, poverty, rent, defined, small government, wealth distribution or concentration | Permalink | Comments (0)
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Save the rent for Society.
That's short and sweet. I came across it in The Single Tax Year Book for 1917, in a chapter about the Single Tax in Germany.
Posted on February 26, 2012 at 02:53 PM in all benefits go to landholder , ecosystem services, equality, financing education, financing infrastructure, financing services, land rent, land value created by community, landed gentry, landlordism, make land common property, natural resource revenues, pay for what you take, popular ignorance of land economics, private property in land, privatization, privilege, reaping what others sow, rich people's useful idiots, sharecropping, single tax, socialize, special interests, toll-takers, unearned income, user fees, windfalls | Permalink | Comments (0)
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The taxation of all property at a uniform rate is made necessary by the constitutions of about three-fourths of the States of the Union. The taxes on chattels, tools, implements, money, credits, etc., find their condemnation from the Single Taxer's point of view in those ethical considerations which differentiate private from public property. Where there arises a fund known as "land values," growing with the growth of the community and the need of public improvements, it is not only impolitic, it is a violation of the rights of property to tax individual earnings for public expenses.
The value of land is the day-to-day product of the presence and communal activity of the people. It is not a creation of the title-holder and should not be placed in the category of property. If population deserts a town or portions of a town, the value of land will fall; the land may become unsalable. When treated as private property the owner of land receives from day-to-day in ground rent a gift from the community; and justice requires that he should pay taxes to the community proportionate to that gift.
"Land value" or "ground rent" as the older economists termed it, is a tribute which economic law levies upon every occupant of land, however fleeting his stay, as the market price of all the advantages, natural and social, appertaining to that land, including necessarily his just share of the cost of government.
excerpt from The Single Tax Year Book (1917)
Posted on February 22, 2012 at 10:22 PM in all benefits go to landholder , better cities, capital gains are land gains, capitalization, civilization, commonwealth, corruption in government, corruption of economics, cui bono?, economic rent, financing education, financing health care, financing infrastructure, financing services, government's role, immigration, income tax, justice of the single tax, land appreciates buildings depreciate, land rent, land value created by community, land value taxation, landlordism, little people pay taxes, location, location, location, make land common property, Natural Public Revenue, popular ignorance of land economics, population, population growth, private property in land, privatization, privilege, property rights, property tax, property tax "relief", property tax is two taxes, property tax reform, reaping what others sow, rent, defined, socializing risk and privatizing profit, special interests, sufficiency of land rent, tax reform, toll-takers, trickle-down economics, unearned increment, urban land value, windfalls | Permalink | Comments (0)
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19. Storms continue to erode the resort beaches up and down our coasts. Who should pay for beach restoration every few years?
A. The federal government, from income tax revenues. (why?)
B. Taxes on pollution should be used to pay for this, on the basis that pollution produces the climatic conditions that make storms slower moving and more destructive.
C. State governments along the coasts.
D. Local governments, town by town, paid for by sales taxes.
E. County governments along the coasts.
F. Local governments, town by town, paid for by taxing wages.
G. Local governments, town by town, paid for by summer parking revenue, hotel bill taxes and taxes on rental properties' revenue;
H. Local governments, town by town, paid for by property taxes, taxing both buildings and land, in proportion to current market value
I. Local governments, town by town, paid for by land value taxation. Land values close to the beaches rise and fall with the sand, and properties further from the beaches are far less effected by the presence/absence of beach sand than those near the beaches.
J. Local governments, town by town, paid for by transfer taxes on sold properties, so as not to burden long-time owners who aren't selling.
K. Estate taxes
L. Your suggestions?
Posted on February 19, 2012 at 04:12 AM in all benefits go to landholder , capital gains are land gains, cui bono?, employment, environment, facilitating commerce, financing services, free lunch, land value created by community, land value taxation, landed gentry, little people pay taxes, location, location, location, Natural Public Revenue, parking, pork spending, privilege, property tax, public spending, reaping what others sow, socializing risk and privatizing profit, special interests, subsidies, taxation, the land questions, user fees, wealth distribution or concentration, windfalls | Permalink | Comments (0)
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18. Why do we give special privileges to certified Native American tribes: e.g., the right to run casinos, sell cigarettes without collecting taxes, etc.
A. Because some Native American communities are poor, or have good lobbyists. Gambling creates jobs for some and great riches for some, while preying on others.
B. Because "our" ancestors took away something absolutely vital from their ancestors (even if many of our ancestors arrived well after the event): land.
C. Because a significant minority of Americans realize they can't get rich through honest labor and think they have better chances at the gambling table.
D. Because states collect some portion of the casino revenue (in Connecticut, 25%).
D. Your suggestions
Posted on February 18, 2012 at 08:41 AM in commons, cui bono?, employment, ending poverty, financing services, income concentration, jobs, monopoly -- not the game, poverty machine, privilege, prosperity, socializing risk and privatizing profit, special interests, the land questions, trickle-down economics, unburdening the economy, wealth distribution or concentration | Permalink | Comments (0)
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I came across this rather good letter to the editor, from 1938. (Trinity Church Corporation, a major landlord in downtown Manhattan, was the subject of a NYT article this past week, as well as the subject of a major series in the NYT in December, 1894):
1938-09-03 Letters to The Times
Collecting Ground Rent
Single-Tax System Regarded as No Detriment to Building
TO THE EDITOR OF THE NEW YORK TIMES:
Fabian Franklin, in his letter to THE TIMES discussing the demolition of John D. Rockefeller's Harlem tenements in order to save taxes, writes:
"That objection is simply that virtual abolition of land ownership, which the single-tax plan is designed to effect, would make the building of houses in a city an extra-hazardous business, because, under the single-tax regime, in the great majority of cases the investment would result in a disastrous loss to the owner of the building. I was neither blaming nor praising Mr. Rockefeller for the demolition of Harlem tenements."
What is the so-called single-tax system? It is the collection by the government, through the taxing officials, of the entire economic or ground rent of land and the repeal of all taxes on buildings and other products of labor and capital. That ground rent is estimated to be 9% of the capital value of the land. New York City is now collecting one-third of this ground rent. The market value of the lots is the remaining two-thirds, capitalized. Dr. Franklin's thesis is that if the entire ground rent is collected no one would erect buildings, because "in the great majority of cases the investment would result in a disastrous loss to the owner of the building."
Some of the finest buildings in New York City are erected on leased land and the lessee pays the ground rent 100% besides a tax on the building. There are hundreds of buildings erected by lessees of lots owned by Trinity Church, Astor estate, Rhinelander estate, Sailors Snug Harbor and others. The lessees must pay all the taxes, both on land and building, amounting to 3% of the assessed value of both, and to the landlord 6% of the market value of the land.
Thus the entire ground rent is paid by the lessee, but only one-third to the government representing the people who made that value by their presence and activities, the remaining two-thirds to the landlord. Notwithstanding that they are thus obliged to pay 100% of the economic rent, bankers and business men erect buildings costing millions. Under the Henry George plan they would have to pay less, for the taxes on these costly structures will have been repealed.
Perhaps if Mr. Rockefeller had not been obliged to pay taxes on the buildings he might not have pulled them down; or, if he had, would have erected better buildings in their place in order to get a return on his investment in buildings. The ones who will benefit most from the adoption of the Georgian philosophy are the owners of humble homes. The average small homeowner's house is assessed for at least twice the assessed value of the lot. If the house is relieved from taxation and the lot taxed the entire ground rent, his tax will be less than it is now. The difference will be made up from vacant lots and lots that are worth more than the improvements.
After all, the building of houses is like any other business. The builder takes the risk of lessened demand because of changes in fashion, obsolescence, competition. It is estimated that 95% of new businesses ultimately fail. With the adoption, however, of the philosophy of Henry George, commonly called the single tax, failures in the housing and other businesses will be much fewer. This is because neither houses nor goods nor anything else will be taxed. The collection of the entire ground rent will not lessen the area of the surface of the earth one inch. On the contrary, it will open to occupation and use land that is now held for speculation purposes.
The taxation of any product of labor and capital will add the amount of the tax to the price, lessen demand and thus curtail production. The result is unemployment and misery.
Frederic Cyrus Leubuscher
Essex Fells, N. J., Aug. 31, 1938
Posted on February 16, 2012 at 05:51 PM in a Manhattan acre, absentee ownership, all benefits go to landholder , assessment, better cities, buildings depreciate, capital gains are land gains, capitalization, connect the dots, cui bono?, direct taxation, economic rent, financing education, financing infrastructure, financing services, FIRE sector, government's role, Henry George, housing affordability, indirect taxation, justice of the single tax, land appreciates buildings depreciate, land different from capital, land share of real estate value, land speculation, land value created by community, land value taxation, landed gentry, landlordism, leased land, location, location, location, make land common property, monopoly -- not the game, Monopoly and The Landlord's Game , Natural Public Revenue, one solution for many problems, popular ignorance of land economics, population growth, private property in land, privatization, privilege, property tax, property tax is two taxes, property tax reform, reaping what others sow, the land questions, underused land, untaxing production, urban land value, windfalls | Permalink | Comments (0)
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Invitation to a Dialogue - A National Service Program - NYTimes.com Published: February 14, 2012
LVTfan's observation: Every investment in improved infrastructure creates land value. Most projects that have value -- education, law enforcement, social work, improved public health -- will also increase land value.
A project is, by definition, worthwhile if it creates more in land value than it costs to do,* and, it could be argued that, when comparing two infrastructure projects that cost the same amount, say, $100 million, if one creates $200 million in land value and the other creates merely $150 million in incremental land value, the $200 million project should probably take priority, all other things being equal.
These projects, some will say, fall into the category of "pork" spending.
Pork barrel is the appropriation of government spending for localized projects secured solely or primarily to bring money to a representative's district. The usage originated in American English. In election campaigns, the term is used in derogatory fashion to attack opponents. Scholars, however, use it as a technical term regarding legislative control of local appropriations.
The term pork barrel politics usually refers to spending that is intended to benefit constituents of a politician in return for their political support, either in the form of campaign contributions or votes. In the popular 1863 story "The Children of the Public", Edward Everett Hale used the term pork barrel as a homely metaphor for any form of public spending to the citizenry. After the American Civil War, however, the term came to be used in a derogatory sense. The Oxford English Dictionary dates the modern sense of the term from 1873. By the 1870s, references to "pork" were common in Congress, and the term was further popularized by a 1919 article by Chester Collins Maxey in the National Municipal Review, which reported on certain legislative acts known to members of Congress as "pork barrel bills". He claimed that the phrase originated in a pre-Civil War practice of giving slaves a barrel of salt pork as a reward and requiring them to compete among themselves to get their share of the handout. More generally, a barrel of salt pork was a common larder item in 19th century households, and could be used as a measure of the family's financial well-being. For example, in his 1845 novel The Chainbearer, James Fenimore Cooper wrote, "I hold a family to be in a desperate way, when the mother can see the bottom of the pork barrel."
Typically, "pork" involves funding for government programs whose economic or service benefits are concentrated in a particular area but whose costs are spread among all taxpayers. Public works projects, certain national defense spending projects, and agricultural subsidies are the most commonly cited examples.
The last of these seems as if it might be the most important one.
So here's the question: How should we finance these projects, if they are to be done? How would we pay for a modern CCC? (Ah -- this sounds like The Land Questions ...)
A. By a local tax on land value. This would necessitate regular reassessment of the land value in every community in America, say, every 3 years, which could be done for well under $40 per parcel. It would probably also require some state and/or federal oversight, checking values against transactions to verify that all municipalities or assessing units are doing high-quality market-based assessments. [In Maryland, they're already doing assessments every 3 years. In Connecticut, assessments every 4 years are required. In southern Delaware, the assessments are 30+ years old. In California, the assessments are meaningless, due to Proposition 13. It would take a few years for some of these entities to update their assessments.]
B. By a state tax on land value. [same issues apply]
C. By a national tax on land value.
D. Let's just use the federal income tax. It's there. It's easy.
E. Let's use a national sales tax.
F. Let's use a tax on imports.
G. Let's tax buildings.
H. Let's tax services.
It seems to me that a national service corps of some sort has a lot of merit. It could promote a lot of highly desirable goals. It could provide a lot of home-front protection in the event of natural disasters. It could get some important projects done, including the maintenance of existing infrastructure currently under-maintained,and the provision of services we believe are important (particularly when we are the beneficiaries).
But the financial benefits ought not to fall into private or corporate pockets; they ought to accrue to all of us, and ease the burdens of financing other kinds of federal spending. Land value taxation strikes me as the answer to so many of our supposedly intractible problems.
Posted on February 15, 2012 at 09:47 PM in absentee ownership, all benefits go to landholder , assessment, cui bono?, Earth for All, economic rent, employment, equality, financing infrastructure, financing services, free lunch, government's role, infrastructure, land appreciates buildings depreciate, land value created by community, land value taxation, Natural Public Revenue, popular ignorance of land economics, pork spending, privatization, privilege, Proposition 13, public spending, reaping what others sow, special interests, subsidies, the land questions, transportation, unearned increment | Permalink | Comments (0)
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In the files I've been digging through, from the late 50s to the early 80s, I found an early draft of a fine paper by Mason Gaffney about California's Proposition 13, for presentation at an August, 1978 conference. I dug around and found a published copy of that paper, and think it worth sharing here. Original title, "Tax Limitation: Proposition 13 and Its Alternatives"
I see that there continue to be people who see the stupidity of Proposition 13 -- see http://www.dailyrepublic.com/opinion/letters-editor/time-for-a-petition-against-proposition-13/ Perhaps they will find this of use. Georgists recognize Prop 13 as the antithesis of logical and just taxation.
First, a few of my favorite paragraphs, which I hope will whet your appetite for the whole paper. I won't attempt to provide the context (you can pick that up when you continue to the paper, below).
You can read more about the Poor Widow by clicking on the "widow's skirts" link at left, in the tag cloud, and by reading Bill Batt's Property Tax Relief Measures: Answers to the "Poor Widow " Argument (or the pdf version)
Here is, perhaps, my favorite:
The land tax does that because it cuts only the fat, not the muscle. It takes from the taxpayer only "economic rent," only the income he gets for doing nothing. If people could grasp this one overriding idea, then the whole sterile, counterproductive, endless impasse between conservatives who favor incentives and liberals who favor welfare would be resolved in a trice, and we could get on to higher things.
The final paragraphs speak directly to us in 2012. 34 years have passed since this was written.
If your appetite is whetted by these excerpts, you can read the entire article below:
Posted on January 22, 2012 at 04:50 PM in absentee ownership, all benefits go to landholder , assessment, buildings depreciate, capital gains are land gains, capitalization, classical economists, common good, corruption of economics, cui bono?, democracy, equality, financing education, financing services, free lunch, government's role, home equity, incentive taxation, incentives, land appreciates buildings depreciate, land different from capital, land rent, land share of real estate value, land speculation, land value created by community, little people pay taxes, location, location, location, Natural Public Revenue, natural resources, popular ignorance of land economics, population growth, privatization, privilege, property tax, property tax is two taxes, property tax reform, Proposition 13, public spending, real estate bubble, reaping what others sow, small government, tax reform, taxation, transportation, unburdening the economy, underused land, unearned income, unemployment and underemployment, user fees, widow's skirts | Permalink | Comments (0)
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Our argument for justice and liberty -- the doctrines of Henry George -- depends upon successfully synthesizing the social sciences and philosophy. Our scientific work in this area builds us a rostrum from which we can teach the fundamental principles of ethical democracy. ...
As Georgists we are interested
In a word, we seek to make it possible for each individual to become a free person developing his faculties to the highest in an ethical democratic free society.
Posted on January 21, 2012 at 02:55 PM in cui bono?, democracy, economic justice, economic rent, efficiency , equal freedom, equality, financing education, financing infrastructure, financing services, government's role, Henry George, immigration, individualism, justice of the single tax, land speculation, land value taxation, liberty, monopoly -- not the game, natural resource revenues, privilege, small government, tax reform, unburdening the economy, unearned income, untaxing buildings, untaxing production | Permalink | Comments (0)
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"One sure way to determine the social conscience of a government is to examine the way taxes are collected and how they are spent. And one sure way to determine the social conscience of an individual is to get his tax-reaction. Taxes, after all, are the dues we pay for the privileges of membership in an organized society."
-- Citation: Franklin D. Roosevelt: "Address at Worcester, Mass.," October 21, 1936.
Online by Gerhard Peters and John T. Woolley, The American Presidency Project. http://www.presidency.ucsb.edu/ws/?pid=15201
Here are some more extended quotes; the full speech will follow.
In 1776 the fight was for democracy in taxation. In 1936 that is still the fight. Mr. Justice Oliver Wendell Holmes once said: "Taxes are the price we pay for civilized society." One sure way to determine the social conscience of a Government is to examine the way taxes are collected and how they are spent. And one sure way to determine the social conscience of an individual is to get his tax-reaction.
Taxes, after all, are the dues that we pay for the privileges of membership in an organized society.
As society becomes more civilized, Government—national, State and local government—is called on to assume more obligations to its citizens. The privileges of membership in a civilized society have vastly increased in modern times. But I am afraid we have many who still do not recognize their advantages and want to avoid paying their dues.
It is only in the past two generations that most local communities have paved and lighted their streets, put in town sewers, provided town water supplies, organized fire departments, established high schools and public libraries, created parks and playgrounds—undertaken, in short, all kinds of necessary new activities which, perforce, had to be paid for out of local taxes. ...
New obligations to their citizens have also been assumed by the several States and by the Federal Government, obligations unknown a century and a half ago, but made necessary by new inventions and by a constantly growing social conscience.
The easiest way to summarize the reason for this extension of Government functions, local, State and national, is to use the words of Abraham Lincoln: "The legitimate object of Government is to do for the people what needs to be done but which they cannot by individual effort do at all, or do so well, for themselves."
Taxes are the price we all pay collectively to get those things done.
To divide fairly among the people the obligation to pay for these benefits has been a major part of our struggle to maintain democracy in America. ...
(Readers new to this website might be surprised that Georgists will take issue with "ability to pay," as the phrase is commonly used, as a good criterion on which to judge taxation, and those same readers may have a visceral negative reaction. If you're among that group, you might take a look at this page.)
Here is my principle: Taxes shall be levied according to ability to pay. That is the only American principle.
Before this great war against the depression we fought the World War; and it cost us twenty-five billion dollars in three years to win it. We borrowed to fight that war. Then, as now, a Democratic Administration provided sufficient taxes to pay off the entire war debt within ten or fifteen years.
Those taxes had been levied according to ability to pay. But the succeeding Republican Administration did not believe in that principle. There was a reason. They had political debts to those who sat at their elbows. To pay those political debts, they reduced the taxes of their friends in the higher brackets and left the national debt to be paid by later generations. Because they evaded their obligation, because they regarded the political debt as more important than the national debt, the depression in 1929 started with a sixteen-billion-dollar handicap on us and our children. ...
For the average American we have reduced the individual income tax. Any family head who earns an income of less than $26,000 a year pays a smaller income tax in 1936 than he paid for 1932. That means that less than one percent of the heads of American families pay more than they did; and more than 99 percent pay less than they did, for more than 99 percent earn less than $26,000 per year. If you want the answer to this talk about high taxes under this Administration—there it is. Taxes are higher for those who can afford to pay high taxes. They are lower for those who can afford to pay less. That is getting back again to the American principle—taxation according to ability to pay.
You would think, to hear some people talk, that those good people who live at the top of our economic pyramid are being taxed into rags and tatters. What is the fact? The fact is that they are much farther away from the poorhouse than they were in 1932. You and I know that as a matter of personal observation.
A number of my friends who belong in these very high upper brackets have suggested to me, more in sorrow than in anger, that if I am reelected they will have to move to some other Nation because of high taxes here. I shall miss them very much but if they go they will soon come back. For a year or two of paying taxes in almost any other country in the world will make them yearn once more for the good old taxes of the U.S.A.
One more word on recent history. I inherited from the previous Administration a tax structure which not only imposed an unfair income tax burden on the low-income groups of this country, but also imposed an unfair burden upon the average American by a long list of taxes on purchases and consumption- hidden taxes.
In 1933 when we came into office, fifty-eight cents out of every dollar of Federal revenue came from hidden taxes. Leaving out of account the liquor tax—for liquor was illegal in 1933—we have reduced these indirect taxes to thirty-eight cents out of every dollar.
It is worth including the whole speech here.
Posted on January 20, 2012 at 10:13 AM in civilization, debt, financing education, financing infrastructure, financing services, government's role, income concentration, income tax, indirect taxation, infrastructure, Occupy Wall Street's values, special interests, tax history, tax reform, taxation, wealth distribution or concentration | Permalink | Comments (0)
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Continuing through some old files, I came across this eloquent statement in the minutes of an executive committee meeting for the Robert Schalkenbach Foundation:
"Middle income homebuyers, especially, are having to pay a lot more for their homes because of the inflation in land prices. They are having to pay more for their financing, too, because financing also reflects land prices.
What land speculators can get for their land, they can get because of the enormous expenditures of tax money to make that land usable.
I do not think the American conscience is sufficiently sensitive to be aroused because land speculators get rich at the expense of the government, because the public has come to regard the government as a cow to be milked. It would, therefore, be unwise to place the emphasis on how speculators get rich at the government's expense. Rather ... we should emphasize that the homebuyers are the ones who have to pay, have to dig deep into their savings to pay speculators more for the land, not because the speculators did anything to earn a higher price, but because taxpayers spent millions to make it better."
-- Perry Prentice, 3/5/1965
California, with Prop 13, should take note. Anyone who wants a more stable economy should take note. Anyone who would like to see the cost of living for ordinary people be stabilized and reduced should take note.
Posted on January 19, 2012 at 08:34 PM in boom-bust cycles, common good, cost of living, cui bono?, financing education, financing infrastructure, financing services, FIRE sector, government's role, housing affordability, land speculation, land value created by community, privilege, public spending, real estate bubble, socializing risk and privatizing profit, special interests, unearned increment, urban land value | Permalink | Comments (0)
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When the structures that our laws and traditions create provide opportunities for someone to capture a windfall, should we blame the fellow who "takes advantage" of those structures, or should we respond by studying and correcting those structures and laws?
Winston Churchill, in his speeches under the baanner "The People's Rights," in 1909, said this:
I hope you will understand that when I speak of the land monopolist I am dealing more with the process than with the individual landowner. I have no wish to hold any class up to public disapprobation. I do not think that the man who makes money by unearned increment in land is morally a worse man than anyone else who gathers his profit where he finds it in this hard world under the law and according to common usage. It is not the individual I attack, it is the system. It is not the man who is bad, it is the law which is bad. It is not the man who is blameworthy for doing what the law allows and what other men do; it is the State which would be blameworthy were it not to endeavour to reform the law and correct the practice. We do not want to punish the landlord. We want to alter the law.
The 99% need to start identifying the laws and structures that must be adjusted. This is not easy work.
What individuals produce, and corporations produce, should not be "there for the taking" -- be it by corporate management in the form of hugely generous compensation packages and golden parachutes, or by simply saying "these resources are OURS, not everyone's" or by establishing monopolies or duopolies or other such structures. We-the-people need to educate ourselves about how things are done now, who benefits from that, and what alternatives exist. It won't be easy. We'll be challenging special interests who somehow think they're entitled to their advantaged positions, and the rest of us exist to keep them comfortable.
Labor should get its share, and capital should get its share, and we-the-people should get land's share. That last could fund a large portion of our common spending, on infrastructure and services, and permit us to reduce or eliminate the dumb taxes which take which individuals and corporations legitimately create. That "keeping what we create" extends, also, to "externalities," to being responsible for the pollution we create, and setting up incentives so that it is minimized, for the good of all of us now here and the good of future generations.
I think it is quite possible, even likely, that a few years after we've made this shift in who gets what, we'll find that we don't need nearly so robust a social safety net, and that we-the-people may get some of "land's share" back in the form of a Citizen's Dividend, just as all permanent residents of Alaska receive an annual dividend from the Alaska Permanent Fund.
In any case, letting some corporations and some individuals grab that which we all create together is just plain wrong. Letting it be "there for the taking" is insanity and injustice. And don't we pledge "liberty and justice for all?"
Our ancestors may have granted some privileges to some lucky folks for one reason or another. That doesn't mean that we can't, politely and firmly, revoke those privileges. A couple of centuries is plenty. Experience has shown us that those privileges don't serve the greater good, and it is time to revoke them. Will the privileged give up those privileges graciously? Quite possibly not. But the first step is to identify them, and then to seek to change the system so that those rightly-common assets aren't "there for the taking."
Posted on December 18, 2011 at 05:00 PM in a wedge driven through society, Alaska Permanent Fund, all benefits go to landholder , civilization, common good, corporations, cui bono?, economic rent, ecosystem services, environment, financing infrastructure, financing services, free lunch, highest salaries, income concentration, inter-generational equity, land different from capital, land value created by community, land, labor and capital, monopoly -- not the game, natural monopolies, Occupy Wall Street's values, pay for what you take, playing by the rules, privatization, privilege, reaping what others sow, socializing risk and privatizing profit, special interests, sufficiency of land rent, unearned income, unearned increment, untaxing production, user fees, wealth distribution or concentration, wealthandwant | Permalink | Comments (0)
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from The San Jose Letter, August 22, 1896 ... compare it to the piece, Building a Railroad, and Paying for It -- and Who Benefits? (below).
THE GUERNSEY MARKET.
In the parish of St. Peters, Island of Guernsey, marketing was carried on in illy-protected stalls around the church square.
The losses to venders by rain, and the inconveniences to buyers, made the needs of a covered markethouse keenly felt; and some public spirited citizens took the matter in hand to have one built.
An estimate of the size of the house required brought its approximate cost in money to $22,000, and to raise this amount of money became the question with the promoters of the scheme.
It was a question, however, of easy solution, as they had thousands of precedents.
They drew up a petition setting forth the need of a market house, and desiring the Governor to issue interest-bearing bonds, to be negotiated in Paris or London, for the money wherewith to erect the building.
To said petition were offered the signatures of some 300 house-holders in the parish, and a committee was appointed to present the same to Governor De L. Isle Brock.
It happened that, while the people were money worshippers, that is, believed in the omnipotence of money, Governor Brock, on the contrary, was a money infidel, that is, did not believe that money was able to do the least thing.
Consequently, when the committee presented the petition, superstition and science came in conflict.
The Governor set to work with arguments to prevent the citizens from going into debt and becoming tributary to bankers in Paris or London.
"Will you permit me," he asked the committee, "to place before you some very simple questions?"
"Have we the necessary number of mechanics among us to build said house?" he asked.
The committee replied that they had, adding that, owing to dull times, many workmen were out of employment and would be glad of a job. "We have the men." He then asked about the material— rocks, bricks, lumber, lime, and about tools, teams, as well as all the requisites to maintain men and teams while the work was being executed.
"Here you tell me," he said, "we have among ourselves everything needed to build the markethouse, yet you desire me to bond you to bankers for material which is of no manner of use in the construction of the house; strange anomaly."
"It is true," remarked one of the committee, "that we have men and material, but we lack the money to pay the men and buy the material."
"Friends," replied the Governor, "when a man gets paid for work done or material furnished, it means that he has worked for others and sold the material. Is it your intention to build a house for bankers? If so, then you are right in demanding pay from those banks. But, in such a case, you should not place yourselves under bondage besides. If those bankers pay you for the house, and hold you in bondage also, demanding annual tribute, they will soon have both the house and the money they paid you.
"It will be no relief to say that we make the renters of the market house pay that tribute to the bankers.
"The renters will be part of us, and they will demand of their customers that tribute in higher prices for goods.
"Allow me, gentlemen, to propose a better plan for building our market house.
"This can best be done by means of a money which lays no claim to interest. Instead of bonds, I will issue $22,000 Market House Script, of different denominations (as money), and with these pay the men and purchase the material, then make these scripts receivable at par with legal tender money for the rent of the stalls."
The scripts were issued, the material procured, the men put to work, the building erected, and the stalls rented.
The scripts circulated in the Island at par. Every month's rent reduced their quantity, and, in less than 10 years all were back in the public treasury and stamped cancelled, and thus ended the life of the Guernsey Market House scripts.
If every business man, and laborer, in the city of Vallejo would pledge himself to receive such scripts at par, for goods sold, or services rendered, we, too, could build a new City Hall, or improve our water system, or erect electric light plants without the aid of the banker or bond holder. This is the plan proposed by the Labor Exchange, submitted for the consideration of the citizens of Vallejo.
Governor Brock did not let this monetary event pass into obscurity. Accordingly he appointed a special day to celebrate. When the day arrived the market house was festooned with garlands and streamers, with a large flag bearing the inscription: "As good as if built with borrowed gold."—Richard Caverly in S. F. Star.
The single taxers of Delaware are conducting a red hot campaign. The single tax will be the issue in that state this fall, and Justice, the state single tax organ, published the following as their Single Tax Platform:
We assert as our fundamental principle, that all men are equally entitled to the use of the earth;
Therefore, No one should be permitted to hold land without paying to the community the value of the privilege thus accorded; and from the fund so raised all expenses of government should be paid. We would therefore abolish all taxation, except a tax upon the value of land exclusive of improvements. This tax should be collected by the local government and a certain proportion be paid to the state government.
This system of taxation would dispense with a horde of tax-gatherers, simplify government and greatly reduce its cost.
It would do away with the corruption and gross inequality inseparable from our present methods.
It would relieve the farmer, the workman and the manufacturer of those taxes by which they are unjustly burdened, and take for public uses those values due to the presence of population.
It would make it impossible for speculators to hold land idle, and would open unlimited opportunities for the employment of labor and capital, which is essential to the solution of the labor problem.
reprinted in The San Jose Letter, June 13, 1896
Posted on December 03, 2011 at 04:52 PM in common good, connect the dots, efficiency , employment, ending poverty, financing education, financing infrastructure, financing services, fixing the economy, government's role, justice of the single tax, land speculation, land value created by community, land value taxation, make land common property, one solution for many problems, population, population growth, private property in land, privilege, sales taxes are wrong, single tax, small government, special interests, sufficiency of land rent, tax reform, underused land, unemployment and underemployment, untaxing production | Permalink | Comments (0)
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"ARE WE SOCIALISTS?"
Thomas B. Preston, in the Arena, December, 1899
It is socialistic to make the revenues of the government a burden on industry. Revenues there must be, but they should not bear upon industry. In fact, the taxation of any product of labor is simply taking from the laborer part of his earnings. To such an extent we are socialists. Any other form of taxation than that on the value of land is essentially socialistic because any other tax is passed on from the seller to the consumer, and takes part of the latter's earnings without compensation, for use by the community. Any tax on earnings is socialistic, although it may not go so far as to take all a man earns. The substitution for our present system of a single tax amounting to the full rental value of land would sound the death-knell of socialism.
While we sin so deeply in our present bungling, socialistic way by forcing individuals to give up part of the proceeds of their labor, by fining a man who builds a house more than if he were maintaining a public nuisance, by tariffs which hinder trade with foreign countries, and add millions to private fortunes at the expense of the people, and by a thousand indirect taxes which make life harder for men without their being able easily to see the reason, on the other hand we foolishly leave to individuals those great agencies which are the outcome of social growth — the product of the inventive genius of a few men, if you like, but which after a time grow so powerful as to become the very arbiters of life and death. Prominent among such agencies are the railroad and the telegraph. They can crush communities out of existence and enrich the owners at the expense of their fellow men. They have already become the chief source of corruption in government. The ownership of these agencies by the community becomes a necessity for the continuance of social progress. Otherwise these monopolies can go on increasing and concentrating until a few persons are enabled, through them, to appropriate the wealth of a community. In so far as socialism demands the state ownership of agencies of this nature, it is proceeding in the right direction. There are many other agencies besides the railroad and the telegraph, such as the supply of water, gas, light, heat, telephones and means of transit and communication, in which the American idea of free competition is a fallacy. Here we are too individualistic. The right to make war and peace was long ago taken from individuals and vested in the community. So at a later stage was the carriage of letters. National quarantines, boards of health, public schools, are all examples of applied socialism in its legitimate sense. But why should we stop here? The existence of such great monopolies as the railroad and the telegraph is a standing menace to the life of the Republic. Let us munificently reward the inventors or appliances which shall add to the comfort and convenience of the community, but allow these agencies to be owned perpetually by individuals never!
We are socialistic where we should respect the rights of the individual, and we are individualistic when individualism is a crime against the Commonwealth. And so we go blundering on. When our stupid and oppressive system leads men to cry out against it, and riot and murder follow, we hang a few anarchists. When monopolists, grown bold through long years of immunity, attempt to rob a little more openly, by pools and combinations or by direct bribery, we create interstate commissions to watch them, or we send a few to prison, allowing others to escape to Canada; repressing a little here those who complain too loudly, where we should rather rectify their grievances, and lopping off a little there the enormous unearned profits, which we should abolish altogether. Meanwhile our two classes of tramps are increasing — those who travel around the world in flowing palaces, living upon the toil of others, without using their capital in any legitimate enterprise and those who go afoot, pilfering from cornfields and hen roosts — both classes an unjust burden on a hard working, long suffering community. We have arrived at a critical period of our history, where we must meet the demands of social progress, or our civilization will perish as surely as did the fallen empires of former ages. Already the mutterings of revolt are growing louder and louder, while upstart monopoly was never so insolent and imperious as it is today. Let us be warned in time, and, discarding all half measures, face the issue like men, and not go on trusting to luck, foolishly dreaming that somehow, at some time, existing wrongs will right themselves.
Posted on November 21, 2011 at 03:01 PM in a wedge driven through society, all benefits go to landholder , common good, corruption in government, cost of living, cui bono?, direct taxation, financing infrastructure, financing services, fixing the economy, franchises, government's role, income tax, indirect taxation, individualism, land value created by community, little people pay taxes, make land common property, monopoly -- not the game, municipal ownership of utilities, paying twice, public ownership of utilities, socialize, socializing risk and privatizing profit, tax reform, unburdening the economy, untaxing production, wage taxes | Permalink | Comments (0)
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I am including this because I find it timely and timeless; because it provides a good simple mathematical look at the perversity of our current tax system, and because it illustrates my notion that when Leona Helmsley said "WE don't pay taxes; the little people pay taxes," she was not describing tax evasion but actual tax structures.
Henry George, Jr., was a U. S. Congressman. His most famous writing is "The Menace of Privilege."
WHO ARE THE CRIMINALS?
BY HENRY GEORGE , JR.
Copyright, 1901, by The Abbey Press, 114 Fifth Avenue, New York
I. Who are the Criminals? 5
II. French Aristocracy of Privilege 6
III. New York Aristocracy of Privilege 10
IV. Robbery of Masses by Classes 12
V. Nature and Extent of Robberies 13
VI. How to Stop the Robberies 18
VII. The Criminals 23
I. WHO ARE THE CRIMINALS?
In considering the problem of how to check or control vice and crime in New York the question at once raised is: Who are the criminals? Who are they who cause these dreadful evils in the community? For unless we know exactly where the disease lies how can we attempt a remedy?
II. FRENCH ARISTOCRACY OF PRIVILEGE.
When the French Revolution broke loose the people followed the lead of men who seemed no better than a pack of devils, for they maimed, they brutally tortured and they slew. Women, whose only offense was that they were members of an arrogant and grinding aristocracy, were stripped naked, treated with every indignity and killed with every mark of ferocity. Old men and young children belonging to the upper classes were butchered, and persons of blameless life and humane intention were trampled under foot when they attempted to stay the carnival of blood.
Who will dare say that these revolutionary leaders, these butchers, were not criminals — criminals whose bloody hands must shine down through history? They were men turned to monsters; brutes with human intelligence, striving for new ways to torture and kill.
But whence came they? Not from without. They sprang up within. They represented the spirit of retaliation — of fiendish retaliation for the centuries of wrong done them and theirs. They were the progeny of poverty made by robbery. Their deeds were the deeds of monstrous criminals, but they themselves were the spawn of hideous injustice — an injustice that gave to the few riotous feasting and gorgeous raiment and to the many rags and black bread filled with maggots.
The aristocrats during centuries of power had appropriated the soil of France, and all other Frenchmen had to purchase the privilege of living in their native country. Not content with this, the upper classes had thrown upon the masses all those heavy taxes which it was the plain intent only the landowners should bear. They shifted upon the common people all the expenses of an extravagant, aristocratic government, and through ground rents sucked away all the people's remaining substance, save just enough to keep them alive and at work. Who were making the masses so poor and wretched was as plain as day. The masses themselves could see, and when they raised the sword against the aristocracy all hell seemed to break loose.
Who were the criminals? Why, of course they were criminals — horrible, revolting criminals — who did this guillotining, who committed these butcheries.
But who made these criminals? Clearly those who bore so heavily upon the people — the aristocrats, who kept the people in fearful poverty and ignorance which bred the spirit of bloodthirsty tigers.
The aristocracy, therefore, were the primary, the real criminals.
III. NEW YORK ARISTOCRACY OF PRIVILEGE.
I wish to proceed with greatest caution, with utmost conservatism. Yet candor compels me to ask: Have we not in our community an aristocracy of privilege — an aristocracy far more rich, far more powerful than was the aristocracy of old France? And have we not a corresponding poor class? Is it not true that half the population of Manhattan Island is living in what Ex-Mayor Hewitt rightly calls "those terrible tenements?"
That Prince of the Church, Bishop Potter, has proposed in the emergency that we have noonday prayer meetings. By all means, we all say. Let us bow ourselves before Almighty God and ask for relief from this social scourge. Yet what if, while we pray, we abate not the power of our aristocracy of privilege; what if we do nothing to mitigate the poverty of the million tenement dwellers?
The distinguished divine has also proposed a military police. If that were good, would not a local standing army be better? It would keep order, at least for a time. But would it cure the general poverty among the masses? Would it not rather act like a lid fastened down on a volcano — work well, until fire and molten stone and destruction belched forth? What then?
IV. ROBBERY OF MASSES BY CLASSES.
Assuming that we are sincerely trying to make civic conditions better, that we are seeking a cure (if there be a cure) for the general vice and crime in the community, should we not ask ourselves some plain questions? Is it not the truth that we have an aristocracy? Is it not the truth that we have a poor class? Is it not certain that the rich are growing richer and the poor poorer and more numerous?
I believe that there can be but one answer — yes.
Yet I can see no reason for this state of things unless it be that the classes are robbing the masses.
V. NATURE AND EXTENT OF ROBBERIES.
LET us consider how the classes may be robbing the masses into poverty.
It is said that when the first Dutchmen came sailing into New York Bay they bought Manhattan Island for $24. That was for the land alone, no houses or other improvements being here. Today the selling value of the bare land of this same Manhattan Island is at least $3,000,000,000. Those who possess the land of this island, now get what is equivalent to a ground rental of $150,000,000 a year, with this sum steadily swelling. The ground rental of Greater New York cannot be less than $225,000,000 yearly.
This vast sum is paid over to the landlord aristocracy — for what? For doing nothing. The people multiplied from a ship's crew to several millions in and about the island and behold! the vast value of land which in the beginning sold for but $24. The increment of value obviously has not been produced by individuals; it is entirely aside from and in addition to the value of improvements, which spring from human labor, which are produced by individuals. This increase in land value is a publicly-made value. It of right belongs to all the people. Do all the people get it? No, the few whom we recognize as the owners of this land claim that value and get it. The people at large in the community get nothing. Do not these landed aristocrats — of which the old French nobility were in many respects prototypes — rob the community? Do they not go far toward robbing a large part of the people into poverty?
Take another instance of robbery of the many by the few. Observe what we are doing about public franchises. A public franchise is a public right of way, a public highway. Modern civilization, with its intense centralization, its condensed population, and its interdependence of individuals, makes these highways of vital importance to the community. They are the arteries of the body-social, the channels of intercommunication and transportation, of heat, and water, and light, and power, and sewage. Were they suddenly destroyed, a large part of the population would die as quickly as a member of the human organism withers up and dies when the flow of blood is cut off from it.
Then if these public franchises, these public rights of way, these public highways, are so vital to the body-social, so necessary to the well-being of the people, what should be our policy toward them? What is our policy toward them? Why, in the case of water and sewage we treat them as public property, operating them publicly through public officials. But what do we do in respect to the other franchises? What do we do regarding street railroads, telephones and telegraphs, electric lighting and heating and gas, and steam supply? All these public franchises are treated as if they were private franchises. Upon all these public highways we allow private individuals to set the claim of ownership; to make charge upon the people; make charge upon the body-social for its blood, as it were. And a conservative estimate of the annual value of these public franchises in Greater New York at this time is $30,000,000.
Here, then, we have two forms of grand, constant, continuous robbery of the people — an aristocracy of privilege appropriating public ground rents and public franchise values, so that a few of the population are enabled to live in palaces while a million crowd into tenements.
VI. HOW TO STOP THE ROBBERIES.
Now the masses of the people of Greater New York lose annually by the appropriations of the landed and franchise aristocracy —
|In ground rents||$225,000,000|
|In franchise values||30,000,000|
|While they are compelled to pay in various taxes for the support of local government||98,000,000|
|Which makes in all||$353,000,000|
What shorter way is there to relieve poverty and to do social justice than to abolish the $98,000,000 of general taxes, which fall mainly upon industry or the fruits of industry and terribly hamper the masses of the people; and then what more simple than to appropriate for local governmental expenses that sum out of the $225,000,000 of publicly-made land values? Why not further lighten the load of the masses by taking over into public ownership and management all public municipal franchises, just as are water and sewage now; and then why not cut down their cost of service to the public that $30,000,000 which now represents purely franchise value in the charges of the private corporations that possess and manage them?
For a third step, why not make these municipal utilities free to the public, meeting the expense of their operation by another appropriation of the publicly-made land values?
And for a fourth step, why not appropriate for an old-age pension to every citizen, rich and poor alike, for public parks, for public lectures and concerts, or for any other or for all such purposes — all that still remains of the publicly-made land values?
What would be the result of such a policy? It would be that all the people in Greater New York would be relieved of the burden of $98,000,000 of various taxes; that the great charge of the many branches of the public franchise service on the people would be entirely wiped out and abolished; and that the whole of land values, that is, of ground rents, would be enjoyed by all the people equally, being appropriated for public uses.
Would this make any difference in the community? The welkin is made to ring by the most influential of the tax-payers when, under present conditions, the taxation authorities raise or lower the tax rate even 1%. What, then, would happen if all taxation were lifted from the fruits of toil, if public utilities were made free, and if land values were to benefit, not a class, but the whole people?
Such a tax would be just, because it would fall on this publicly-made value; it would be certain, because land cannot be hidden or lessened in amount; it would force all unused or inadequately used valuable land into its highest use, for no one could afford to hold such land vacant for a speculation, as very many do now.
Land in Greater New York would therefore be cheaper — how much cheaper may be judged by the fact that two-thirds of the land within the city limits, though extremely valuable, is not now used. This unused land would compete with the used land for users, so that land values in the community generally would fall. At the same time all building materials, being relieved of present taxation, would be far cheaper, making two of the chief elements for house building would be greatly less in cost, and consequently, larger, lighter, better dwelling accommodations in every way could and would be supplied to the masses of the people, and especially to the million now living in tenements.
What would help the poorest would be of direct and indirect benefit to all others in the community; and this would be but one of a large harvest of good results that the people would reap from such a policy.
The privileged classes, the aristocrats, would lose their privileges, but they would have no less rights than any and all other citizens of Greater New York.
VII. THE CRIMINALS.
That able and public-spirited citizen, Mr. President Baldwin, of the Long Island Railroad, and Chairman of the Chamber of Commerce Anti-Vice Committee of Fifteen, has said that this is not the time for "idealist scheme of reform." But we are trying to put down vice and crime in the community; and the question is: Who are the criminals?
Let us be frank with ourselves: Who are the criminals? Are they the housebreakers, the unfortunate women who walk the streets and the police officials who take blood-money? Or are they those who rob the masses of the people into poverty — deep, biting, degrading poverty?
Are not the aristocrats of privilege, knowingly or unknowingly, the criminals we should first consider in an examination of civic disease in New York?
Posted on November 04, 2011 at 12:10 PM in a Manhattan acre, a wedge driven through society, absentee ownership, all benefits go to landholder , better cities, corporations, cost of living, cui bono?, economic rent, financing education, financing infrastructure, financing services, franchises, government's role, Henry George, income concentration, justice of the single tax, land appreciates buildings depreciate, land rent, land speculation, land value created by community, land value taxation, landed gentry, landlordism, little people pay taxes, location, location, location, monopoly -- not the game, municipal ownership of utilities, Natural Public Revenue, Occupy Wall Street's values, paying twice, popular ignorance of land economics, population growth, poverty machine, poverty's cause, private property in land, privilege, public ownership of utilities, reaping what others sow, rich people's useful idiots, sharecropping, socializing risk and privatizing profit, sufficiency of land rent, urban land value, wealth distribution or concentration | Permalink | Comments (1)
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I have a family member who, when Herman Cain says "9-9-9," plays a sound bite of another voice shouting "nein! nein! nein!"
Georgists have a better proposal for how we ought to fund our common spending.
This probably raises several questions in your mind:
Our commonwealth includes the value of land -- not the improvements made by the present or previous owner, but the value of the site itself, which is created by the gifts of nature; by the investment of the local, state and national communities in public goods and services (including most "pork"); by the presence of the community and its economic activity. While good farmland may be worth $5,000 or $10,000 per acre, depending on climate and proximity to markets, suburban residential lots might be $35,000 to $1,000,000 -- or far more! -- per acre, and an acre in midtown Manhattan can be worth $250,000,000 or more. The landholder doesn't create that locational value.
Our commonwealth includes the value of ecosystem services. It includes the value of electromagnetic spectrum (the airwaves which most people would agree rightly belong to the American people, not to corporations). It includes the value of water, particularly fresh water for drinking and water for irrigating crops and for corporate use. It includes the value of government-granted privileges. It includes the value of geosynchronous orbits -- those parking spots in space for satellites whose owners and customers would not want to see crashing into each other. It includes the value of landing rights at busy congested constrained airports, such as LaGuardia or JFK, particularly at their rush hours. It includes the value of scarce on-street parking in congested cities. It includes the value of nonrenewable natural resources extracted from below the earth and the oceans, for 200 miles beyond our land borders. It includes a whole range of other similar things.
As you look at that paragraph, compare it to the 0-0-0-0 list above, and notice that it collects upfront certain values, and leaves the rest to those who produce. It is direct taxation rather than indirect, and one could reasonably argue that it isn't even really taxation; rather it is more in the nature of a user-fee.
It is Natural Public Revenue.
Once one has sat with this idea for a while, it seems quite unnatural to permit the value to continue to accrue to private individuals, or to corporations publicly or privately owned, or to entities other than the community as a whole!
Recall how concentrated wealth is in the US: The 2007 SCF [the Federal Reserve Board's Survey of Consumer Finances] reported that aggregate net worth is "distributed" as follows:
- Top 1% of us have 33.8%
- Next 4% of us 26.6% [cumulative: 60.4%]
- Next 5% of us 11.1% [cumulative: 71.5%]
- Next 40% of us 26.0% [cumulative 97.5%]
- Bottom 50% of us 2.5%
Recall also that the Forbes 400 families are specifically and intentionally omitted from the SCF, and that Forbes estimates that they represent 2.5% of aggregate net worth. So add that 2.5% to the numerator and denominator. And note, as Michael Moore did, that it is very similar to the value of the Net Worth of the bottom 50% of us.
And it seems quite unnatural to tax wages, and sales, and corporate profits, and buildings at all before we've fully collected Natural Public Revenue.
Will Natural Public Revenue be sufficient to meet all the needs of all levels of government?
Quite possibly not, at least today when we are so reliant on a social safety net because current conditions have kept a significant share of our people from providing well for themselves. But I regard it as altogether possible that within a generation or two, it could be quite sufficient, in part because it would have the effect of redistributing some of the wealth which today is pouring into the pockets of a relative few of us.
How much of corporate profits are coming from (quite legal) privatization of the value of natural resources, the value of being able to get away with polluting air, water and soil, and the value of other privileges which corporations -- public and private -- are used to enjoying? One of the interesting findings in the SCF is that the value of privately held businesses [BUS] actually exceeds the value of publicly held ones [EQUITY] in household wealth -- and the value of both is highly concentrated:
[value, billions, 2007] $13,694.3 $14,893.7
Consider, too, how much more of this value the Forbes 400 have! These two categories represent 21.2% and 23.1% of aggregate net worth held by the rest of us -- a total of 44.3%. Most of the 2.5% is likely in these two categories. I'll leave the math to you.
Posted on October 15, 2011 at 06:37 PM in a Manhattan acre, broadcast spectrum, commons, direct taxation, economic rent, ecosystem services, FairTax, financing education, financing infrastructure, financing services, fixing the economy, income concentration, income tax, indirect taxation, infrastructure, land value created by community, land value taxation, location, location, location, make land common property, natural resource revenues, natural resources, Occupy Wall Street's values, oil, one solution for many problems, parking, population, population growth, pork spending, poverty machine, poverty's cause, privatization, privilege, public spending, sales taxes are wrong, SCF data, single tax, socializing risk and privatizing profit, sufficiency of land rent, Survey of Consumer Finances data, urban land value, wealth distribution or concentration | Permalink | Comments (0)
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.... this time because perhaps his targets are the well-situated, those in a position to contribute the funds which political campaigns need. Keep in mind that NYS's former governor, though previously an attorney general, is also the scion of a real estate fortune.
Urban real estate investors live off the fruit of the land, the fruits of the community's sowing, and we praise them as philanthropists when they toss us a few tulips in the median strips or parks.
And notice that the refusal continued even Harry Markopolis testified before a congressional committee about his repeated and data-filled attempts to bring Bernard Madoff's obvious Ponzi scheme to the attention of the SEC (January, 2009). Talk about tone-deafness on the part of those we pay to monitor things for us. As someone else recently wrote, small government or weak government? And government of, for and by WHICH people??
I hope some upstate legislators will push at this issue. Their constituents ought to expect it of them.
Tue Sep 27, 2011 7:12am EDT
The writer is a Reuters columnist. The opinions expressed are his own.
By David Cay Johnston
(Reuters) - Each year New York State lets real estate investors evade at least $200 million of taxes. In peak years the figure likely rises to $700 million, if known tax cheating in another state is any indication. Some of the investors who cheat New York State also cheat New York City out of at least $40 million annually.
Back in the 1990s Jerry Curnutt figured out how to finger such cheats when he was the top partnership specialist at the Internal Revenue Service. Curnutt's computer sifted through tax returns until he learned how to separate thieves from honest taxpayers. The tax-evasion estimates of $200 million and $40 million are his.
Six New York state tax auditors took classes Curnutt taught in June 2000 and gave stellar evaluations. California's top tax auditor praised Curnutt's course as "effective, relevant and most importantly, appreciated and understood by our auditors."
For a graphic, click link.reuters.com/cer93s
Why has nothing been done for more than 11 years to make the cheats in New York pay what the law requires?
New York state and city are strapped for cash, slashing services for the poor, disabled and elderly. With penalties of up to 50 percent plus interest at penalty rates, the state is easily due more than $5 billion from years still open to collection, I calculate.
Every state has similar issues, but New York matters most as the epicenter of highly leveraged real estate investment pools.
Curnutt found that real estate investment partnerships with depreciated properties often misreport gains when they sell. That such cheating is widespread screams about tax law enforcement looking the other way when those at the top steal. In contrast, New York State has a well-deserved reputation for going after people whose mistakes cost the state as little as three dollars.
GO AWAY, THEY SAY
Yet in letter after letter since 2001, New York state tax officials told Curnutt to go away, smugly insisting there were no untaxed millions.
As head of audits for New York State, Thomas Heinz wrote Curnutt in 2003 that the state was "not interested in pursuing you or any other consultant on the matter" of systematic cheating by real estate partnership investors. Months later Heinz wrote a second letter that made it clear he had not understood what Curnutt was proposing, while reiterating that there were no untaxed millions to be found.
A year ago Curnutt again was told to go away because there was no money going untaxed.
And yet in Pennsylvania, Curnutt's research "resulted in the taxation of over $700 million in unreported income," the Pennsylvania Revenue Department wrote in a letter to tax administrators across the country in reference to a single instance.
"Without his assistance, our staff would have spent numerous hours getting to the crux of the issues, in that especially complex case," Pennsylvania tax authorities said.
Pennsylvania has relied on Curnutt since 2002, calculating that every dollar spent on his research and subsequent audits was worth $10 of tax.
So why are sightless sheriffs ignoring massive cheating by the most affluent among us?
The likely reason became clear nearly a decade ago when one Kentucky tax official told Curnutt that the governor's office did not want his services because it would uncover tax cheating by influential citizens, meaning campaign donors.
It is time for New York's three top state officials, all Democrats with higher ambitions, to do their duty, especially since the thieves are virtually certain to include some of their campaign contributors.
LAWMEN AND THEIR DUTY
Governor Andrew Cuomo, who harbors ambitions to be president, made his name as a state attorney general who appeared to get tough with Wall Street. Lieutenant Governor Bob Duffy rose from Rochester street cop to chief and would love to be governor. So would Attorney General Eric T. Schneiderman, elected in 2010 on a promise to be tough on white-collar crime.
Mayor Michael Bloomberg, an independent, has a similar duty to go after tax cheats even if these should turn out to include some of his friends.
New York law gives authorities leverage aplenty. The mere threat of public exposure through civil lawsuits would prompt many to write checks. For repeat offenders, the threat of indictment for tax evasion would produce checks even faster. Faced with the prospect of civil or criminal charges, many in positions of public trust would be ruined if their names got out.
The general partners -- those in charge in the partnerships Curnutt investigated -- took calculated steps to cheat and the most serious offenders should face indictment and, upon conviction, years of prison time. But many limited partners may have assumed their K-1 tax statements were reliable. Innocent victims owe taxes and interest, but not penalties. Those with multiple untaxed gains are not innocents.
As lawmen Cuomo, Duffy and Schneiderman all understand leverage. They have enough to lift billions into the state treasury where it belongs just by indicating in letters that failure to pay will result in disclosure of names. Will they?
Until Cuomo, Duffy, Schneiderman and Bloomberg enforce the law, their official inaction lends credence to billionaire Leona Helmsley's remark, quoted by her housekeeper, that "we don't pay taxes; only the little people pay taxes."
This column will keep you posted on whether these officials act or not. (Editing by Howard Goller)
I'm glad to see DCJ quoting Leona Helmsley -- but I don't think he yet fully "sees the cat" or realizes that Leona Helmsley's reference could just as accurately have been to tax STRUCTURES, not to tax evasion.
Buildings do not appreciate. Even with the best of care and occasional renovations, they depreciate, as technologies advance, efficiencies improve. What rises in value is land -- the location -- and it rises for reasons which have nothing to do with the individual or corporate landholder (resident or absentee), and everything to do with the community and with public investment in infrastructure and services. These owners are evading taxes which support that spending. In multiple ways, they are reaping what they do not -- cannot! -- sow. These companies are in it for the so-called "capital" gains, which aren't "capital" at all, but land gains.
Another example of the FIRE sector gobbling up the profits of the productive portions of our economy. Their "free lunch" is at the expense of the rest of us. And the phrase "rich people's useful idiots" comes to mind.
The goal is a fair field and no favor. But I don't think that's what this crowd is looking for.
Posted on October 09, 2011 at 05:14 PM in a Manhattan acre, absentee ownership, all benefits go to landholder , better cities, buildings depreciate, capital gains are land gains, corruption of economics, cui bono?, financing education, financing infrastructure, financing services, FIRE sector, fixing the economy, free lunch, government's role, land appreciates buildings depreciate, land share of real estate value, land speculation, land value created by community, little people pay taxes, location, location, location, popular ignorance of land economics, privatization, privilege, rich people's useful idiots, tax reform, unearned income | Permalink | Comments (0)
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Teardown of the Day - WestportNow.com
This blog-like page contains an interesting economic indicator: despite a tepid economic environment for most home construction, the pace of teardowns in Westport, Fairfield County, Connecticut, seems to be steady to rising.
Westport sits on Long Island Sound, and has a reputation for excellent public schools and good express trains to midtown Manhattan. ($308 for a monthly pass -- 44 miles, about 67 minutes; $5 per day for day parking -- 300 spots -- but a 4 to 5 year wait for one of 1800 parking stickers -- $325/year.)
Many of the entries show recent transaction prices, which readers of this site will know are clearly simply for land value.
It would be interesting to know what the bank appraisals on these properties would show, in terms of the value of the houses and the value of the land itself -- assuming that the buyers needed to take out mortgages.
And it would also be interesting to know how Westport's assessor values these properties, and what adjustments take place in neighborhood land values as the evidence of most of the value being in the land accumulates.
Some years ago -- 2003 -- the assessor's worksheet was published. It is still online, at http://www.westportnow.com/Revalmodel022704.pdf.
And it turns out that Westport's assessments are online. So let's look at the newest teardown, posted 10/1/2011:
The assessor's database shows an "appraised" value of $249,800 for the buildings, and $696,400 for the land, or a total of $946,200. (This is the supposed "market value" of the land at the date the valuation was done, October 1, 2010. By Connecticut law, assessed value is 70% of that market value. Peculiar law; one wonders whose interests it was designed to serve.)
The record also shows that the property sold in August 2010 for $1,000,000. The previous transaction was in 1973, which suggests that it might have been an estate situation. But 14% appreciation in 12 months is pretty sweet these days.
So that 1.11 acres sold for $1,136,174 in August, 2011, and then the buyer paid an additional amount for the removal of the 1700 square foot building -- say, $10 psf? That's $17,000, for a total of about $1,150,000. And the assessor says the land is worth $$696,400.
And that $250,000 square foot house? Over valued by quite a bit.
The 2010 tax rate for Westport was $14.85 per $1000 of value. (I couldn't find the 2011 figure, but it was expected to be 15% higher.) That's based on the 70% value, which for this property was $662,400. So the 2010 property tax was $10,300.
$10,300 as a percentage of the transaction price, $1,136,174, is 0.91%.
Clearly the town is well run, and people want to live there. They're willing to pay $1.1 million for a lot. And even in these times, financially difficult for many people, there are people who can afford to pay $1.1 million and more for a bit of land on which to live.
How much of the value of these lots comes from excellent schools and good municipal services, and how much from the existence of Metro North, of I-95 and the Merritt Parkway, the presence of Long Island Sound, and the presence of NYC? And how much comes from the presence of hedge funds and other high-paying employers which are skimming the cream from the productive economy and pocketing that value, because we let them do so?
Posted on October 02, 2011 at 05:57 PM in a wedge driven through society, buildings depreciate, capital gains are land gains, connect the dots, cost of living, cui bono?, financing education, financing infrastructure, financing services, FIRE sector, fixing the economy, free lunch, government's role, highest salaries, income concentration, infrastructure, jobs, land appreciates buildings depreciate, land share of real estate value, land value created by community, landed gentry, location, location, location, popular ignorance of land economics, privilege, property tax, property tax is two taxes, property tax reform, teardowns, transportation, urban land value | Permalink | Comments (0)
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And consider what would happen: the infrastructure projects would increase the value of the land served by them, and make things work better in those communities, as reliable streets and bridges and other worthwhile projects do.
Who owns that land? Is it local folks, who one might hope would spend their infrastructure-created windfall locally (but who might simply use it to buy additional land, benefiting the seller, be he absentee, local, corporate, whatever)? Is it REITs? Sovereign wealth funds?
Now suppose that instead of leaving all that infrastructure-created wealth in the pockets of the landowners, local communities wised up and collected some significant fraction of it (without raising taxes on buildings in the process: the really wise communities would take this opportunity to reduce or eliminate the taxes on the buildings!) for public purposes. What do you think would happen?
I suspect that the vacant lots in town would soon start to disappear. They wouldn't leave town. They'd get built on, when their carrying costs as vacant lots rose and the disincentive to build was decreased or eliminated. That would create jobs.
Depending on what the market wanted, it would also create housing, and creating housing also leads to creating jobs to service those homes -- plumbers, electricians, painters, home improvement of various kinds.
But it might not be the high-end housing we're used to seeing; not McMansions, but more modest homes. Not luxury condos but housing for people of all ages and stages, and not just for the highest-income people but for people of more modest means.
Sounds like a virtuous circle to me. Natural Public Revenue.
But if you like the current approach, by all means tell us why we should stick with it. (California's Prop 13 is an extreme case of suppressing this wise form of taxation. Look where it has gotten them!)
Posted on September 26, 2011 at 06:18 PM in absentee ownership, all benefits go to landholder , better cities, common good, cui bono?, financing education, financing infrastructure, financing services, government's role, housing affordability, incentive taxation, incentives, infrastructure, location, location, location, Natural Public Revenue, poverty, property tax, property tax is two taxes, property tax reform, Proposition 13, reaping what others sow, tax reform, transportation, underused land | Permalink | Comments (0)
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Are public sector jobs by definition a drain on the economy?
Some would say that they are. But I think there might be a false assumption in there -- one which comes from an unexamined assumption.
When a public sector job is funded via a tax on wages, or a tax on sales, or a tax on buildings -- things which are produced by human effort -- there is a burden to the economy.
All these taxes reduce the demand for what is taxed: work, goods (and, in some places, services), buildings. Fewer jobs are created, fewer goods produced, fewer buildings built and maintained well, less expensive technologies are favored over more expensive ones.
And these are the taxes most of us think about when we think about how to finance public goods.
But suppose we got ourselves outside the smallish box of taxes we're used to thinking about -- those advocated by the neo-classical economists -- and looked more closely at the wisdom of the classical economists -- Adam Smith, David Ricardo, John Stuart Mill, Henry George.
Suppose we thought about the effect of our public spending: effective public spending on goods and services that people value increases land value.
Good schools. Paved streets. Well-maintained streets. Lit streets. Plowed and cleaned streets. City water. Sanitary sewers. Stormwater runoff. Police, with well-equipped cars. Fire departments, with trained professionals and the best of equipment. Ambulances (ditto). Hospitals with life-saving equipment and professionals. Other public-health services. Courts and jails. Libraries. Public health services. Social services. Parks. Playgrounds. Highways (ideally with maintenance taking place at night or at least not during rush hour). Bridges, well-maintained. Buses, subways, railroads (passenger and freight). Airports. Beaches. Utilities (more commonly owned by shareholders, but quite realistically municipally provided). Preschools. Community colleges. Colleges and universities. Perhaps after-school activities for children. A social safety net. This list is incomplete, but each item on it is a fair example of what makes communities good places to live and worth paying to live in and conduct business in.
The presence of each of these things increases land values within the area served. It increases what landlords can charge tenants; it increases what houses and commercial buildings will sell for, without the building owner improving the building or providing additional services.
So does it make any sense to finance these things via taxes on wages? On sales? On buildings? On imports? On personal possessions? On cars? On trucks and business equipment? On business inventory? None of these things are increased in value by the provision of public services and goods.
What increases in value is land -- as everyone can chant, the three most important things in real estate are location, location and location! Much of that is the availability of publicly-funded services. (The rest can be attributed to the presence of the community -- drawn in large part by those services, but also by the beauties of nature, the harbors and rivers, the climate, other favorable conditions; to opportunities seen by entrepreneurs and nonprofits to provide commercial ventures and cultural amenities; to advances in technology and science such as air conditioning, mosquito control, fiberglass pleasure boats, etc.)
A few weeks ago (8/30/11), David Cay Johnston's blogpost at Reuters, entitled "Budget Costs That Raise Costs," ended with this example:
How can raising taxes put more money in your pocket? By increasing efficiency.
This year we paid $210 in higher property taxes to finance trash collection and sidewalk snowplowing. Purchased retail, those services would cost about $600. So we spent $210 to save $390. That translates into a savings of $1.86 for every dollar of increased tax. As an added bonus we have just one garbage truck a week down our street, not a different company’s truck everyday, and garbage cans on the street only on Thursday mornings.
What matters in public finance is not how much government spends, so much as what it buys with our tax dollars. But don’t count on the new “Super Congress 12″ committee to undertake serious cost-benefit analysis because cutting spending has become dogma and reality-based policies would be economic heresy.
I don't think DCJ has yet seen the cat, but he's certainly recognizing whiskers.
Would you be willing to pay $210 more in property taxes each year to have these services delivered to you by your community? I'd guess that you might be very willing to pay $210 more in property taxes AND be willing to pay the seller -- and for 30 or 15 years, a mortgage lender -- more for the privilege of living in a place where these things are provided by the community, rather than just outside of town. (If we paid for this via a tax on land value, the selling price wouldn't rise; and the cost of living would be held down. If we pay for it by taxing wages, or sales, or buildings, we do burden the economy, just as the "small government" people tell us. But they don't seem to consider the possibility of taxes which don't burden the economy.)
There are some who would complain that private trash collectors and the people who specialize in shoveling the sidewalks ought not to have competition from the public sector. They should all live in communities which feel this way. And they might concede that others might choose to live in communities which provide these amenities efficiently, with people paid from the public treasury.
Posted on September 24, 2011 at 11:13 PM in common good, connect the dots, cost of living, financing education, financing infrastructure, financing services, fixing the economy, government's role, housing affordability, infrastructure, land rent, land value created by community, location, location, location, Natural Public Revenue, one solution for many problems, population, population growth, property tax, property tax reform, public ownership of utilities, public spending, sales taxes are wrong, small government, tax reform, teach your children well, transportation, unburdening the economy, urban land value, wage taxes | Permalink | Comments (0)
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Inspired by the energy, rhythm and tune of Kristin Andreassen’s Crayola Doesn’t Make the Color of your Eyes or another version from Prairie Home Companion, my friend Joe Johnston wrote this song. Watch one of the videos first! The tune is infectious, and Joe's words communicate the message clearly.
Taxing work does not create....
I went to see the wise one
our town was such a mess
the longest lines to get in
were at the DSS
He said, I cannot cure your town
But here’s something you can do
write a list and flesh it out
Of why your town is in a stew
Well, we build roads; we run the bus,
We try to control crooks.
We build the parks and sidewalks
We give our streets good looks
To do these things, we need some wealth
And so we tax the things we see
We tax the buildings and what you earn
We tax merchants and sellers with a fee.
I guess I realized,
shoulda come as no surprise
that Taxes on work don’t create
a good environment.
What we tax, that we reduce
let’s not kill our jobs,
Taxes on work do not create
a good environment.
We tax the land, that helps ensure
that land is not a wager
It lowers the cost to those who use it
to create more jobs per acre
Collecting land rents means
That the things we as community do
are benefiting everyone and
go to all, not to the few.
And if a person wants to work
she reaps the results of her labor
The benefits of what she does,
Not the out-of-town land speculator
I guess I realized,
shoulda come as no surprise
that Taxes on work don’t create
a good environment.
What we tax, that we reduce
let’s not kill our jobs,
Taxes on work do not create
a good environment.
So maybe we’ll shift the taxes off
The labor you and I do, you see
And put it on the land so none
can squeeze the blood from you and me.
That way they’ll be more jobs for those
who put their backs and brains to work
We wouldn’t have to work so long,
To put a roof and walls on God’s good dirt.
We wouldn’t need two jobs to feed
The mouths that we beget,
To house and clothe them and ourselves
And where we need to go, we’d get.
I guess I realized,
shoulda come as no surprise
that Taxes on work don’t create
a good environment.
What we tax, that we reduce
let’s not kill our jobs,
Taxes on work do not create
a good environment.
A compact town means we could walk around
to get, to shops, to meet, to work for gain
And even walk to parks nearby
where quiet, joy, and beauty reign.
We wouldn’t need a big back yard,
or front ones with their lawns to mow.
We’d have a share in common land,
Where our souls, spirits, and bodies grow.
I think we’ve solved the problem of unemployment lines
of barely earning what we need.
We may not have the harvest yet,
But we have sown the seed.
I guess I realized,
shoulda come as no surprise
that Taxes on work don’t create
a good environment.
What we tax, that we reduce
let’s not kill our jobs,
Taxes on work do not create
a good environment.
Posted on September 04, 2011 at 11:00 PM in a wedge driven through society, absentee ownership, better cities, common good, commons, financing education, financing infrastructure, financing services, jobs, land rent, land speculation, land value created by community, make land common property, Natural Public Revenue, popular ignorance of land economics, property tax reform, prosperity, reaping what others sow, sales taxes are wrong, tax reform, taxation, teach your children well, unemployment and underemployment, wage taxes, wages, wages driven down, wobegon | Permalink | Comments (0)
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One of my standing google alerts took me to an editorial in a northern California newspaper endorsing the call for a 1/8 cent sales tax on all goods sold within the county to support the town's library, which, because of Proposition 13, receives no funding from the county. They have exhausted their ability to do fundraisers, have no acquisition budget, and if the library goes from its current 3 or 4 days a week to none, the existing collection will be divided up and people will have to drive to one of the other 2 libraries in the county.
I tried to post a comment, but they seem only to accept comments through Facebook, and I'm not a FB subscriber. So I'll share my comment here:
Amenities like libraries and good schools and well-maintained streets, among many others, are what make a community a good place to live. They support and increase land values; they don't change the value of the structures that sit on that land.
The sensible way to finance them is through taxes proportionate to land value. Those who own a large, well-located lot pay the most; those who own a small share of a large, well-located lot pay their share of that lot's value; those who own a small, well-located lot, close to the amenities people find desirable, pay in proportion to the value of their location, not to what they paid for their property, be it last year, 5, 10, 20, 30 years ago. Those who own an off-on-the-edge postage stamp pay little or nothing (whether they've put a cottage or castle on that little lot.).
I understand that you're trying to solve a local problem, but the underlying mess created by Prop 13 needs to be corrected.
Taxing sales drives sales out of town. That burdens hardworking people who own and work in the shops that sell taxed goods in your community. (It probably won't hurt the landlords much.) Wage taxes are no better. Building taxes ditto. We shouldn't use them!
In the 1870s, a Tennessee businessman wrote to his governor,
Never tax anythingYour town needs to make it clear to your state that Proposition 13 forces you to do stupid things. Jon Coupal and his fellow Prop 13 supporters are not working to make California better for ordinary people. They have something else in mind.
That would be of value to your State,
That could and would run away, or
That could and would come to you.
There are a thousand hacking at the leaves. Go to the root of the problem and eradicate it. Prop 13 is the root of this one (and many others). It has forced California's towns into dishonest assessments and put a low cap on what is arguably the wisest, most just tax ever proposed (land value taxation).
It was a California newspaperman, Henry George, who saw most clearly and wrote most eloquently on this topic. Look for his 1879 book, "Progress and Poverty," written in San Francisco. You can find a modern abridgment online at http://www.progressandpoverty.org/ and more about him and his ideas at http://henrygeorge.org/ or the URL's below. (For example, the board game Monopoly is based on The Landlord's Game, which someone developed circa 1902 to teach the wisdom of George's ideas. It came with 2 sets of rules, one similar to the game we play today, and another called the "prosperity rules." Dull game, but sustainable society!) Prop 13 is the antithesis of what George's analysis showed was the way to a good life for ordinary people.
Posted on September 04, 2011 at 10:17 PM in better cities, financing education, financing services, government's role, Henry George, land value created by community, location, location, location, Monopoly and The Landlord's Game , property tax reform, Proposition 13, public spending, rich people's useful idiots | Permalink | Comments (0)
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This was a comment to a recent Paul Krugman blog post, and I thought it worth sharing. (Multiple Google searches did not bring me to any version of it. I'd welcome any further information!)
Here is ancient wisdom about the rich from China...
"When flies attach themselves to the tail of a galloping horse, they move at high speed. But it is difficult for them to efface the shame of being an appendage. When vines entwine themselves around a tall pine, they reach an awesome height. But they cannot erase the disgrace of being a dependent."
The problem seems to be that the rich see themselves as the horse, when in fact they are the flies.
The problem seems to be that the rich see themselves as the pine, when in fact they are the vine.
The People of a country are the horse and pine.
Tax the rich... they think their wealth was earned by them... when in fact it was earned by the work of people.
LVTfan here: This doesn't suggest any understanding of the mechanisms by which the rich become rich illegitimately (though legally) through privilege. I invite the curious to explore this blog, and its sibling website wealthandwant.
None of this is to say that bright people who come up with ways to meet human needs and wants should not be able to become wealthy. But to the extent that our rich owe their position to privileges, specialness, we naively grant to some, we need to be examining and eliminating those privileges, or collect from those granted them the value of those privileges, month in and month out. Doing this would level our playing field AND provide a healthy and growing revenue to fund our common spending without depressing our economy.
Posted on May 03, 2011 at 05:00 PM in absentee ownership, all benefits go to landholder , cui bono?, economic justice, ecosystem services, enclosure, equality, externalities, financing education, financing infrastructure, financing services, FIRE sector, fixing the economy, government's role, land speculation, land value created by community, landlordism, Natural Public Revenue, natural resource revenues, political economy, privilege, reaping what others sow, rich people's useful idiots, trickle-down economics, unburdening the economy, wealth distribution or concentration | Permalink | Comments (0)
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The UK Guardian had an article of this title today.
Amid all the talk of rebalancing the economy, there is little mention of the most powerful lever the government could pull to generate growth, which involves a switch from taxing income to taxing wealth.
It is a subject that tends to get little coverage, mainly because its supporters are considered on the fringes of the political spectrum. Ultra-lefties support wealth taxes for obvious reasons. Ultra-capitalists support them because they understand that allowing the rich to ring-fence much of the nation's assets and protect the mechanisms that allow values to increase without any serious government interference robs their children, and everyone else's, of any incentive to work harder.
What they are all talking about is the adoption of a land value tax. Purists would abolish all current taxes and replace them with an LVT that asked for a payment in line with the value of land under ownership.
Someone earning £40,000 a year would stop paying around £7,000 in income tax, £1,000 to £2,000 in VAT, £1,600 council tax and any of the transaction charges that fill the exchequer's coffers. No more capital gains tax or stamp duty on property sales or the sale of shares. Instead they would pay a fixed annual sum, to be paid monthly, on the value of their land, which could have a wide range, depending on how much the land is worth.
Move out of town and work locally, and your overall tax bill could be a fraction of its current total. Buy an expensive piece of real estate in the city centre and you would probably pay more.
Under the proper working of the council tax, increases in property values, as opposed to land values, lead to higher taxes, which is a disincentive to carry out those improvements in the first place.
Mark Wadsworth is an economist, blogger, sometime Tory Bow Group adviser and campaigner for land value taxes. He recently told Economic Voice website: "I'm an economist not a politician, and I can only repeat what all the great economists have said down the centuries: taxes on land values are the least bad taxes because they do not depress or distort economic activity, ie wealth creation. Land value tax is easy to assess, cheap to collect and impossible to evade.
"Not only that, LVT is an entirely voluntary tax: you decide how much you are willing to pay and you choose a house or a flat within that price range. Only, instead of handing over all the rent or purchase price to the current owner, the location value would go to the government."
What he means by this last sentence is that property prices would necessarily settle at a lower level because a buyer will deduct the location value, knowing they must send it to the exchequer in the form of a tax.
Yes! Think about the ramifications of this: as a buyer, you'd be paying the seller only for the value of the house itself, not the site on which it sits, which he did not create. A, say, 10% downpayment would be affordable to many more people, and, because one would not need to borrow from a mortgage lender to pay off the seller, that credit would be available for other purposes --- entrepreneurs could invest in the goods that would make their business work better.
The article goes on to report that the OECD wants to keep the VAT too, apparently in an attempt to influence consumer behavior -- I assume by discouraging it.
What we tax, we get less of. What do we want less of? Land speculation, or jobs?
Who chooses? Whose interests do they have at heart?
Posted on May 02, 2011 at 09:57 PM in boom-bust cycles, capital gains are land gains, common good, conservatism, cost of living, financing services, fixing the economy, housing affordability, incentive taxation, incentives, land value taxation, location, location, location, one solution for many problems, unburdening the economy | Permalink | Comments (0)
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Although a few neighborhoods shine, Washington area condo market still struggles - The Washington Post.
This article describes how difficult it is for condo owners to sell, since most buyers need mortgages with high loan-to-value (LTV) ratios, and FHA, Fannie and Freddie aren't lending because of rule-making on building approvals. And many buildings prohibit renting one's condo, a particular problem in a city where people rotate from one assignment to another, often in other countries.
It suggests that people with cash offers can get good deals.
Let's consider a different approach to housing. Suppose that, instead of paying taxes on one's wages, sales and building, taxes were shifted over to the value of the land one occupies. Were we to collect the full rental value of the land, in the form of a tax, reducing the selling price of the site to $0 or a token amount, a home, be it a high-rise condo unit or a single-family house, would sell for the depreciated value of the structure. A 2-bedroom, 2 bath condo of 1200 square feet would sell for pretty much the same amount wherever it is, with the buyer taking over the land value tax just as buyers now pick up the responsibility for the conventional property tax.
Buyers would need to borrow a great deal less. A 1200 square foot condo, at a generous $100 per square foot, would sell for $120,000. A 10% down payment on that would be a manageable $12,000. And the $108,000 mortgage could probably be paid off in far less than 30 years, incurring much less interest.
Relieved of taxation on wages and other income, one could afford to pay for the location one chooses, in the form of a monthly or quarterly payment to one's community. One wouldn't expect appreciation of one's housing -- after all, it is a depreciating asset. But assuming one's local government is providing services which others consider worth the price of the rental value of the land, one could expect to sell an attractive house or condo unit fairly quickly, and be able to relocated locally or cross-country in fairly short order.
Housing would no longer be regarded as an investment expected to appreciate. Buyers would enter clear-eyed and realistic, and seek to find the housing that best fits their needs without trying to make an investment.
Perhaps best of all, it would free up capital. We'd no longer be borrowing anything to buy land, so those funds would be available for investment in buildings, equipment and other things that create jobs. And many more of us, I think, would become investors, and would be accumulating resources to see ourselves through our retirement years.
Post Script: It occurs to me that among the first people to benefit from this measure, were it to be enacted in Washington, DC, would be our incoming congressmen, senators and their aides, who could afford housing, whether they were coming from a rich district or a poor one, whether they had tremendous fortune, or barely enough for a down payment. They could afford their own home, without living with roommates on C Street, or sleeping on their congressional couch and showering down the hall, as some impecunious or loudly frugal members of Congress choose to. And they would become conscious of how much of the cost of living in a city is payment for the location itself -- which should benefit all of their constituents, be they in blue counties or red ones. (And it might be interesting to look at how many blue cities there are.)
Posted on April 11, 2011 at 06:57 PM in a Manhattan acre, better cities, buildings depreciate, capital gains are land gains, cost of living, economic rent, financing infrastructure, financing services, FIRE sector, fixing the economy, housing affordability, land appreciates buildings depreciate, land rent, land value created by community, location, location, location, one solution for many problems, popular ignorance of land economics, property tax is two taxes, sales taxes are wrong, the land questions, unburdening the economy, urban land value, wage taxes | Permalink | Comments (0)
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As you read this one, think about the effect of California's Proposition 13, which caps the annual property tax at 1% of the assessed value (rising by no more than 2% peryear, even when land values are rising much faster), and requires the state and cities and counties to rely on sales and wage taxes.
Think, too, about what the effects of so-called "property tax relief" really are.
This comes from Tax Facts in November, 1926 --- fifty years before Prop 13, and eightly years before the crash it produced..
BUY REAL ESTATE
The real estate editor of the Los Angeles Times does his bit in boosting the city in this way:
Fact and Comment solicits your indulgence and again advises you to buy real estate. Your attention Ib called to the sale of the northeast corner of Wilshire and Hauser boulevards last week. Bought scarcely two years ago for $36,000, it turned last week for $100,000.
"No plans were made public for the improvement of the property," says the report of the deal. "We contemplate no immediate development," the buyers of the corner assert, "we consider the deal a bargain and we thought this time excellent for buying."
To add to its impressiveness, the real estate editor continues:
There is food for a little serious thinking, Mr. Wise Investor. When the professional crepehanger and the wet-blanket artist cry "Business is bad," that is a signal to — buy some real estate.
There you have it, the quick and simple way of building up the community: buy real estate. Never mind about putting it to productive use. Let someone else attend to that. Just buy it and hold it. It will enrich you. And if it enriches you, a citizen, it enriches the community.
Ah, but does it? The second man who sold the corner mentioned by the real estate editor is nearly three times as rich as he was two years ago, it is true; but how about the man who wishes to use that corner?
Two years ago the man who wishes to use that corner would have had to pay $6.00 a day just for the site upon which to set his building. Today he would have to pay $16.00 for the same privilege. The owner of the land might be enriched to the extent of sixteen dollars a day, but what of the public?
When the cobbler makes a pair of shoes, and the tailor a coat, each has bettered himself, and the community has been enriched to the extent of a coat and a pair of shoes. But when the speculator buys a corner for $36,000 and sells it in two years for $100,000, he may have trippled his own wealth, but what of his fellow citizens? The corner is still the same vacant lot.
Holding land idle may or may not enrich the holder. It does not enrich the community. Only the user of the land adds to the wealth of the community. One man invests $36,000 in a lot; another puts $36,000 in a building on the lot; a third stocks the building with a $36,000 consignment of furniture.In two years the lot is worth $100,000; the building is worth $36,000, less depreciation; and the furniture is the same. Yet the community taxes all this property alike.
The speculator with his $100,000 can now buy another $36,000 lot, erect a $36,000 building, and stock it with a $36,000 consignment of furniture. But will he? Experience has taught him that only land grows in value. A building adds to the value of land, but not to itself. A stock of furniture adds to the value of land, but not to itself or to the building.
"No," the speculator will say, "the community lays the same tax burden upon property that does not increase in value, as upon property that does. I'll buy three $36,000 lots, and in two years I'll have $300,000."
Is it any wonder that the speculators among the California Realtors in their state convention at Del Monte condemned the "tax relief plan'' that would equalize in some degree the burden on industry by shifting some of the taxes on business and homes and farms to the land speculator?
It remains to be seen what the farmers, home owners and business men will say.
Posted on February 10, 2011 at 04:38 PM in all benefits go to landholder , better cities, buildings depreciate, capital gains are land gains, connect the dots, cost of living, cui bono?, financing education, financing infrastructure, financing services, free lunch, land appreciates buildings depreciate, land speculation, land value taxation, landlordism, location, location, location, privilege, property tax "relief", Proposition 13, tax reform, underused land | Permalink | Comments (0)
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