Rent is not a tax. It is payment for the use of a location, determined by the higgling and haggling of the market, and it makes no difference to the land user whether he pays rent to the city fathers or to a private owner.
Rent is not a tax. It is payment for the use of a location, determined by the higgling and haggling of the market, and it makes no difference to the land user whether he pays rent to the city fathers or to a private owner.
It appears that someone in Congress -- probably multiple someones -- feels that we're not giving away the Commons fast enough, and that the federal government ought to rely on other kinds of income rather than collecting the fair market rent on the land on which individually owned cottages sit within Forest Service lands, those rents ought to be reduced! They've asked the CBO to estimate the costs of this gifting.
A bit of calculating reveals that the owners of the 14,000 cottages are paying, on average, $2,142 in land rent annually, at 5% on older valuations of the land, suggesting that the average lot is currently valued at about $43,000 for land rent purposes. Interestingly, these are apparently longtime owners; average turnover is 400 per year, or 2.9%.
When we-the-people lower the rent below market value, what happens to the selling price of the homes? The selling prices go up. In other words, the leaseholders who want to sell can charge buyers more for the house. Aren't we nice to provide those homesellers such a gift?
Not only that, our gift is to be retroactive to the beginning of 2014, it appears!
They propose to cap the fees at $5,600, no matter what the updated valuation of the land might be. That is, no matter what the real value of the cabin's site might be, for land rent purposes, the impolite fiction would be that it is worth no more than $112,000. No matter what the view is, what the location is, how good the infrastructure is, what services the federal employees provide to keep the lot accessible. This sounds a bit like California's Proposition 13, which detaches property taxes from current valuations.
More typically, if a tenant gives up a lease, they are expected to remove their cottage from the lot and leave it clean for the next tenant. The landlord -- we the people -- shouldn't have to deal with abandoned cottages.
Below is a copy-and-paste of the PDF at http://www.cbo.gov/sites/default/files/cbofiles/attachments/hr4873.pdf; I've not bothered with the formatting of the tables.
Posted on September 12, 2014 at 09:43 PM in assessment, buildings depreciate, capital gains are land gains, common good, commons, cui bono?, economic rent, land appreciates buildings depreciate, land rent, location, location, location, Natural Public Revenue, pay for what you take, special interests, user fees | Permalink | Comments (0)
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I posted this comment elsewhere, and thought it worth sharing here:
I've not read far into the book yet -- and it is available online as a PDF file -- but by the time I was into the first chapter, it was clear that Dr. Piketty's economic education, extensive as it might be, entirely omitted the ideas of the classical economists who described a 3-factor economy: land, labor and capital. Piketty, like nearly everyone educated in economics in the past 40 to 80 years, writes as if there were only two factors -- labor and capital -- treating land as if it were a mere subset of capital, with no reason to recognize it as differentiated.
Land -- not only urban sites, but also the other things the classical economists would recognize as Land, such as water rights, oil, electromagnetic spectrum (our airwaves which we all say belong to the American people, but which are in reality owned by corporations), landing rights at busy landlocked airports, geosynchronous orbits, urban street parking, the value of dozens of other non-renewable natural resources -- is completely different in character from that which is created by labor. To fail to recognize that difference lies at the bottom of our inequality problem.
That which individuals and corporations produce is rightly individual property. That which the community and nature produce is rightly common property, belonging to all of us. Conflating Capital and Land leads us to permit the privatization of that which is rightly our common treasure.
You might be interested to know that the Landlord Game, invented by 1902, was intended to teach this concept. You have probably played Monopoly, which was based on this game, played with very different rules.
Explore the ideas of Henry George. Between 1885 and 1900 or so, everyone knew the name and many well understood his ideas. You might start with "Social Problems" or the more analytical "Progress and Poverty," or his speeches, "The Crime of Poverty," "Thou Shalt Not Steal," among others, online at http://www.wealthandwant.com. See also http://lvtfan.typepad.com.
Dr. Piketty and others whose education in economics has omitted George's ideas should not be treated as experts; they've mixed apples and oranges and not noticed that what they've created impoverishes the vast majority of us -- and enriches a few. (Parenthetically, consider who donates heavily to our universities.)
Posted on August 08, 2014 at 10:31 PM in a wedge driven through society, capital gains are land gains, classical economists, Earth for All, ecosystem services, fixing the economy, Henry George, income concentration, inherited wealth, land different from capital, land value created by community, land, labor and capital, location, location, location, make land common property, Monopoly and The Landlord's Game, Monopoly and The Landlord's Game , one solution for many problems, Piketty, privatization, Progress and Poverty, reaping what others sow, rich people's useful idiots, socializing risk and privatizing profit, special interests, trickle-down economics, urban land value, wealth distribution or concentration | Permalink | Comments (1)
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By Catherine Cashmore | Monday, 25 November 2013
There’s been a lot of debate around property taxation in Australia - significantly negative gearing, which allows an investor to use the short fall between interest repayments and other relevant expenditure, to lower their income tax.
The policy promotes speculative gain meaning the strategy is only profitable if the acquisition rise in value rather than holding or falling - therefore, in Australia, investor preference is slanted toward the established sector – the sector that attracts robust demand from all demographics and as such, in premium locations, has historically gained the greatest windfall from capital gains.
Aside from the impact this creates in terms of affordability (pushing up the price of second-hand stock, burdening new buyers with the need to raise a higher and higher deposit just to enter ownership), it also negatively affects the the new home market, which traditionally struggles to attract consistent activity outside of targeted first home buyer incentive; albeit, the headwinds resulting from planning constraints and supply side policy should also not be dismissed.
Additionally, capital gains tax and stamp duty have also received much debate. Both are transaction taxes, and therefore have a tendency to stagnate activity, acting as a deterrent to either buying and selling.
Stamp duty, as modelled by economist Andrew Leigh, is shown to produce a meaningful impact on housing turnover, leading to a potential mismatch between property size and household type – a deterrent to downsizing and therefore selling.
Additionally, it burdens first time buyers by increasing the amount they need to save in order to enter the market and frequent changes of employment concurrent with a modern day lifestyle, are hampered as owners, unwilling to move any meaningful distance outside their local neighbourhood, search for work in local areas alone.
But, outside of academia and intermittent articles, there is scant debate in Australian mainstream media regarding land value tax and it’s practical impact.
The theory is taken to its extreme and best advocated by American political economist and author, Henry George, who wrote his publication Progress and Poverty - an enlightened and impassioned read - and subsequently inspired the economic philosophy that came to be known as ‘Georgism.’
The ideals of Henry George reside in the concept that land is in fixed supply, therefore we can’t all benefit from economic advantage gained from ‘ownership’ of the ‘best’ sites available without effective taxation of the resource.
George advocated a single tax on the unimproved value of land to replace all other taxes – something that would be unlikely to hold water in current political circles. However, his ideals won favour amongst many, including the great economist and author of Capitalism and Freedom, Milton Friedman, and other influential capitalists such as Winston Churchill, who gave a powerful speech on land monopoly stressing:
“Unearned increments in land are not the only form of unearned or undeserved profit, but they are the principal form of unearned increment, and they are derived from processes which are not merely not beneficial, but positively detrimental to the general public.”
In essence, raising the percentage of tax that falls on the unimproved value of land has few distortionary or adverse affects. It creates a steady source of revenue whilst the landowner can make their own assessment regarding the timing and type of property they wish to construct in order to make profit without being penalised for doing so.
However, when the larger percentage of tax payable is assessed against the value of buildings and their improvements – through renovation, extension or higher density development for example – not only can those costs be transferred to a tenant, there is less motivation to make effective use of the site. This has a flow on effect which can not only exacerbate urban ‘sprawl’, but also increase the propensity to ‘land bank.’
The Henry tax review commissioned by the government under Kevin Rudd in 2008 concluded that “economic growth would be higher if governments raised more revenue from land and less revenue from other tax bases,” proposing that stamp duty (which is an inconsistent and unequitable source of revenue) be replaced by a broad based land tax, levied on a per square metre and per land holding basis, rather than retaining present land tax arrangements.
The Australian Housing and Urban Research Group attempted to mimic the proposed changes using their AHURI-3M micro-simulation model in a report entitled The spatial and distributional impacts of the Henry Review recommendations on stamp duty and land tax .
And whilst it’s difficult to qualify how purchasers may factor an abolition of stamp duty into their price analysis, perhaps adding the additional saving into their borrowing capacity, and therefore not lowering prices enough to initially assist first homebuyers. It does demonstrate how over the longer-term falls in house prices have the potential to exceed the value of land tax payments, assisting both owner-occupier and rental tenant as the effects flow through.
Additionally, increasing the tax base would provide developers with an incentive to speed up the process and utilise their holding for more effective purposes.
And importantly for Australia, it can provide a reliable provision of revenue to channel into the development of much-needed infrastructure.
The rational for this is coined in the old real estate term ‘location, location, location.’ Everyone understands that in areas where amenities are plentiful – containing good schools, roads, public transport, bustling shopping strips, parks, theatres, bars, street cafes and so forth – increases demand and therefore land values, invoking a vibrant sense of community which attracts business and benefits the economy.
The idea behind spruiking a ‘hotspot’, such a common industry obsession, is based on purchasing in an area of limited supply, on the cusp of an infrastructure boom such as the provision of a new road or train line for example, enabling existing landowners to reap a windfall from capital gains and rental demand for little more effort than the advantage of getting in early and holding tight whilst tax payer dollars across the spectrum fund the work.
Should a higher LVT be implemented, the cost and maintenance of community facilities could in part, be captured from the wealth effect advantaging current owners, compensating over time for the initial outlay. Imagine the advantage this would offer residents in fringe locations who sit and wait for the failed ‘promises’ offered, when they migrated to the outer suburbs initially.
Take New York for example – between the years 1921 and 1931 under Governor Al Smith, New York financed what is arguably the world’s best mass transit system, colleges, parks, libraries, schools and social services shifting taxes off buildings and onto land values and channelling those dollars effectively.
The policy influenced by Henry George ended soon after Al Smith’s administration, and eventually lead to todays landscape - a city built on a series of islands, with limited room to ‘build out’ facing a chronic affordable housing shortage with the population projected to reach 9.1 million by 2030.
More than a third of New Yorkers spend half their pay cheque on rent alone yet like London, there is little motivation for developers to build housing to accommodate low-wage workers concentrating instead on the luxury end of market, broadening the gap between rich and poor as land values rise and those priced out, find little option but to re-locate.
New York’s Central Park is the highest generator of real estate wealth. The most expensive homes in the world surround the park with apartments selling in excess of $20 million, and newer developments marketed in excess of $100+ million.
Like London it’s a pure speculators paradise – in the 10 year period to 2007, values increased by 73% - owners sit on a pot of growing gold and there’s little to indicate America’s richest are about to bail out of their New York ‘addiction’ with an expansive list of A-list celebrities, high net worth individuals, and foreign magnates, owning apartments in the locality.
New mayor-elect, Bill de Blasio, who won his seat, based on a promise to narrow the widening inequality gap - preserve 200,000 low and middle income units, and ensure 50,000 affordable homes are constructed over the next decade, will struggle to subsidize plans whist facing a deficit reputed to be as much as $2 billion in the next fiscal year.
Yet economist Michael Hudson has recently assessed land values in New York City alone to exceed that of all of the plant and equipment in the entire country, combined.
Currently more than 30 countries around the world have implemented land value taxation - including Australia - with varying degrees of success not only based on the percentage split between land and property, but how those funds are channelled back into the community and the quality of land assessments in regularly updating and estimating value.
Pennsylvania is one such state in the USA to use a system which taxes land at a greater rate than improvements on property – I think I’m correct in saying 19 cities in Pennsylvania use land value tax with Altoona being the first municipality in the country to rely on land value tax alone.
Reportedly, 85% of home owners pay less with the policy than they do with the traditional flat-rate approach. When mayor of Washington county, Anthony Spossey, who also served as treasurer from 2002 to 2006 and under his watch enacted an LVT, was interviewed on the changes in 2007, he commented:
“LVT ..helps reduce taxes for our most vulnerable citizens. We have an aging demographic, like the county, region and the state. Taxpayers everywhere are less able to keep up with taxes, and that hurts revenue. LVT helps us mitigate the impact both to them and the city. It’s a win/win.”
Until fairly recent times, another good example to cite is Pittsburgh. Early in the 1900s the state changed its tax system to fall greater on the unimproved value of land than its construction and improvements.
Pittsburgh’s economic history is a study in itself, and has not been without challenges. For those wanting to research further, I strongly advocate some of the writings of Dan Sullivan - (former chair of the Libertarian Party of Allegheny County, (Pittsburgh) Pennsylvania) - who is an expert on the economic benefits of LVT and has written extensively on the subject.
Sullivan demonstrates that Pittsburgh not only enjoyed a construction boom whilst avoiding a real estate boom under a broad based LVT system, but also effectively weathered the great depression whilst maintaining affordable and steady land values along the way.
In comparing it to other states struggling to recover from the recent sub-prime crisis he points out:
“In 2008, just after the housing bubble broke, Cleveland led the nation in mortgage foreclosures per capita while Pittsburgh's foreclosure rate remained exceptionally low. Since then, the foreclosure rates in Las Vegas and many Californian cities, none of which collect significant real estate taxes, have passed Cleveland's foreclosure rate. However, on September 15, 2010, The Pittsburgh Post-Gazette reported that while at the end of the second quarter of 2010, 21.5% of America's single-family homes had underwater mortgages (the American term for negative equity), only 5.6% did in Pittsburgh. As a result Pittsburgh was top of a list of the 10 marketswith the lowest underwater mortgage figures.”
When land value tax is implemented - with the burden taken of buildings and their improvements, ensuring good quality assessments and sensible zoning laws – it not only assists affordability keeping land values stable, but also benefits local business through infrastructure funding, discourages urban sprawl, incites smart effective development of sites, reduces land banking, and as examples in the USA have demonstrated – assists in weathering the unwanted impacts of real estate booms and busts.
Despite the numerous examples across the world where a broad based land value tax has been deployed successfully, changing policy and bringing about reform is never easy and rarely without complication.
Additionally, the implications of a yearly tax on fixed low-income retirees must be handled with care and understanding, as there are ways to buffer unwanted effects whilst changes are implemented.
Therefore, the process adopted in the ACT which is abolishing stamp duties over a slow transitional 20 year period to phase in higher taxation of land is not altogether unwise.
With any change to the tax system, the headwinds come convincing the public that it’s a good idea. In this respect balanced debate and conversation is necessary, as questions and concerns are brought to the fore.
The increased tax burden also falls on those who have significant influence across the political spectrum; therefore strong leadership to avoid lobbying from wealthy owners with vested interests is essential.
Albeit, as I said last week, we have a new and growing generation of enlightened voters who are well and truly fed up with battling high real estate prices, inflated rents, and care not whether it’s labelled as a ‘bubble’ – but certainly care about their future and that of their children.
Therefore – I do see a time when all the chatter around affordability, will finally evolve into real action – and a broad based LVT should form an important part of that debate.
"If you wish to test the merits in point of certainty of land value taxation as compared with other taxes, go to a real estate agent in your community and, showing him a building lot upon the map, ask him its value. If he inquires about the improvements, instruct him to ignore them. He will be able at once to tell you what the lot is worth. And if you go to twenty other agents their estimates will not materially vary from his. Yet none of the agents will have left his office. Each will have inferred the value from the size and location of the lot.
But suppose when you show the map to the first agent you ask him the value of the land and its improvements. He will tell you that he cannot give an estimate until he examines the improvements. And if it is the highly improved property of a rich man he will engage building experts to assist him. Should you ask him to include the value of the contents of the buildings he would need a corps of selected experts, including artists and liverymen, dealers in furniture and bric-a-brac, librarians and jewelers.
Should you propose that he also include the value of the occupant's income, the agent would throw up his hands in despair. If without the aid of an army of experts the agent should make an estimate of these miscellaneous values, and twenty others should do the same, their several estimates would be as wide apart as ignorant guesses usually are. And the richer the owner of the property the lower as a proportion would the guesses probably be.
Now turn the real estate agent into an assessor, and is it not plain that he could appraise land values with much greater certainty and cheapness than he could appraise the values of all kinds of property? With a plot map before him he might fairly make almost all the appraisements without leaving his desk at the town hall.
And there would be no material difference if the property in question were a farm instead of a building lot. A competent farmer or business man in a farming community can, without leaving his own dooryard, appraise the value of the land of any farm there; whereas it would be impossible for him to value the improvements, stock, produce, etc., without at least inspecting them."
-- "The Taxation of Land Values," (pp. 107, 108) Bobbs-Merrill, Indianapolis.
This appeared in the Freeport News, and I thought it worth sharing:
Why is it so hard to understand the justice and benefits of capturing
the community created value of land for the community?
Classical economists such as Adam Smith and Henry George, defined
land as all free gifts of nature (urban land, harbors, etc.).
These get value because people, both local and foreign, want them
for personal or commercial use.
So, no matter who 'owns' the gift of nature (land) there is a location
value called economic rent which is exclusive of any production on or
from that location.
When economic rent goes into private hands (i.e., beaches are given away
to corporations, land values are uncollected) legitimate government
revenue is lost and taxes like the proposed VAT are applied to the
Not only is land speculation rewarded but building houses, trading goods
and services, etc. are punished by taxes.
Naturally people try to avoid these taxes by smuggling and other forms
When economic rent goes to honest government it encourages better
use of locations as there is no tax penalty to build or work.
It reduces pollution and pays for infrastructure that helped create the
economic rent in the first place.
Why is this so difficult to understand? Why is there so much ignorance
of it and opposition to it?
– John Fisher
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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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.
Me voici, owner of some four hundred well developed pines, a few thousand tons of granite scattered in blocks at the roots of the pines, and a sprinkling of earth. That's a town lot in Vancouver. You or your agent hold to it till property rises, then sell out and buy more land further out of town and repeat the process. I do not quite see how this sort of thing helps the growth of a town, but the English Boy says that it is the "essence of speculation," so it must be all right.
— RUDYARD KIPLING, From Sea to Sea, Chap. XXVIII
The use of a certain area of the earth's surface is a primary condition of anything that man can do; it gives him room for his own actions, with the enjoyment of the heat and the light, the air and the rain which nature assigns to the area; and it determines his distance from, and in a great measure his relations to, other things and other persons. We shall find that it is this property of "land" which, though as yet insufficient prominence has been given to it, is the ultimate cause of the distinction which all writers on economics are compelled to make between land and other things.
— PROF. ALFRED MARSHALL, of the University of Cambridge,
Principles of Economics, Vol. I., Book 4, Chap. 2, Sec. I.
It isn't just urban land that is the subject of speculation. Rural farmland can also be speculated upon, to the private benefit of individuals, and the loss of ... the rest of us, the community!
StarWatch investigation: State paid twice what some I-69 land was worth
To secure path for I-69, INDOT offered $7M for property appraised at $3.34M
Written by Ryan Sabalow and Tim Evans | 7:47 PM, Nov 10, 2012
BLOOMINGTON, Ind. -- In 2006, Barry Elkins paid $850,000 for about 200 acres in Monroe County owned by former Indiana University basketball coach Bob Knight.
|$4,250 per acre
Elkins told a local newspaper he had no plans to develop the land. He said he also was quite aware state officials planned to acquire at least some of the property for the new I-69 freeway project.
Nonetheless, Elkins told a reporter: "It's a heck of a piece of ground."
Turns out, it produced a heck of a profit, too.
In July, state highway officials paid Elkins $2.41 million for an easement covering 140 of the 200 acres. That's almost four times the $658,800 that state appraisers said the easement was worth.
|$17,214 per acre for the 140 acres.
$658,800 is $4,705 per acre.
The $2.41 million represents a profit of $1.56 million since 2006, still leaves the owner with 60 acres with no easement and 140 acres with an easement. The $1.56 million profit in 6 years on an $850,000 investment is 84%! Quite a return! For what effort?
What did society get in return?
According to I-69 cost estimates INDOT provided this summer, $162.6 million in state and federal funds were spent on right-of-way purchases along the new stretch of freeway.
He said the property payments also haven't caused the project to go over budget. He said the I-69 project is 25 percent under budget estimates. Officials this summer pegged the cost of the Evansville-to-Bloomington project at $1.5 billion.
The land Elkins bought from Knight wasn't the only Monroe County
property along I-69's path that he sold to the state for far more than
its fair market value. He and two co-owners also got $348,600 for a
27-acre property appraised at $194,625; and $795,956 for 58 acres
appraised at $278,295.
As for the former Knight property, the state purchased the easement to create an "environmental mitigation site" to make up for damage to forests, wetlands, wildlife habitat and other natural resources caused by the new freeway.
After the $2.41 million payday -- which was nearly three times the amount Elkins paid Knight for the entire 200 acres -- Elkins still owns the picturesque expanse of undeveloped pasture and woods about eight miles southwest of Bloomington.
The easement forbids any development on 140 acres of the land but allows Elkins to use it for "low-impact" recreational activities such as hiking, photography and hunting.
And he doesn't have to pay property taxes.
One might reasonably ask what valuation Elkins was paying property taxes on before the transactions.
One might reasonably ask how much the labor costs on this project were -- what men and women got paid for their hours of labor put into building the highway, and then compare that to Mr. Elkins' and others' receipts as passive landholders!! Quite amazing that we treat the "rights" of landholders as more sacred than we make the rights of the community or of those who work.
One might reasonably wonder how soon the communities along the route of this new highway will revalue their land, and whether the communities will collect more from those whose land benefited from the presence of this highway (and less from those whose properties were in reality negatively impacted, should that be the case). In general, the aggregate benefits will far exceed the aggregate negative impacts, and would likely be enough to pay all the costs of the construction.
Mr. Elkins' free lunch did not come out of thin air. And likely, his heirs will continue to enjoy the benefit of it.
THIS is how wealth concentrates. This is why we are forced into taxing wages, and sales, and other things we have no business taxing!
Posted on November 15, 2012 at 06:46 PM in absentee ownership, capital gains are land gains, common good, cui bono?, ecosystem services, financing infrastructure, free lunch, inherited wealth, land appreciates buildings depreciate, land speculation, land value created by community, location, location, location, popular ignorance of land economics, pork spending, private property in land, privatization, public spending, reaping what others sow, special interests, toll-takers, transportation, unearned income, unearned increment | Permalink | Comments (0)
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The game’s true origins, however, go unmentioned in the official literature. Three decades before Darrow’s patent, in 1903, a Maryland actress named Lizzie Magie created a proto-Monopoly as a tool for teaching the philosophy of Henry George, a nineteenth-century writer who had popularized the notion that no single person could claim to “own” land. In his book Progress and Poverty (1879), George called private land ownership an “erroneous and destructive principle” and argued that land should be held in common, with members of society acting collectively as “the general landlord.”
Magie called her invention The Landlord’s Game, and when it was released in 1906 it looked remarkably similar to what we know today as Monopoly. It featured a continuous track along each side of a square board; the track was divided into blocks, each marked with the name of a property, its purchase price, and its rental value. The game was played with dice and scrip cash, and players moved pawns around the track. It had railroads and public utilities — the Soakum Lighting System, the Slambang Trolley — and a “luxury tax” of $75. It also had Chance cards with quotes attributed to Thomas Jefferson (“The earth belongs in usufruct to the living”), John Ruskin (“It begins to be asked on many sides how the possessors of the land became possessed of it”), and Andrew Carnegie (“The greatest astonishment of my life was the discovery that the man who does the work is not the man who gets rich”). The game’s most expensive properties to buy, and those most remunerative to own, were New York City’s Broadway, Fifth Avenue, and Wall Street. In place of Monopoly’s “Go!” was a box marked “Labor Upon Mother Earth Produces Wages.” The Landlord Game’s chief entertainment was the same as in Monopoly: competitors were to be saddled with debt and ultimately reduced to financial ruin, and only one person, the supermonopolist, would stand tall in the end. The players could, however, vote to do something not officially allowed in Monopoly: cooperate. Under this alternative rule set, they would pay land rent not to a property’s title holder but into a common pot—the rent effectively socialized so that, as Magie later wrote, “Prosperity is achieved.”
Readers of this blog know that Lizzie Magie had created her game and started to promote it by the Fall of 1902.
“Monopoly players around the kitchen table”—which is to say, most people—“think the game is all about accumulation,” he said. “You know, making a lot of money. But the real object is to bankrupt your opponents as quickly as possible. To have just enough so that everybody else has nothing.” In this view, Monopoly is not about unleashing creativity and innovation among many competing parties, nor is it about opening markets and expanding trade or creating wealth through hard work and enlightened self-interest, the virtues Adam Smith thought of as the invisible hands that would produce a dynamic and prosperous society. It’s about shutting down the marketplace. All the players have to do is sit on their land and wait for the suckers to roll the dice.Smith described such monopolist rent-seekers, who in his day were typified by the landed gentry of England, as the great parasites in the capitalist order. They avoided productive labor, innovated nothing, created nothing—the land was already there—and made a great deal of money while bleeding those who had to pay rent. The initial phase of competition in Monopoly, the free-trade phase that happens to be the most exciting part of the game to watch, is really about ending free trade and nixing competition in order to replace it with rent-seeking.
Posted on October 25, 2012 at 03:25 PM in cui bono?, Henry George, income concentration, Jefferson, land monopoly capitalism, landed gentry, landlordism, location, location, location, Monopoly and The Landlord's Game, Monopoly and The Landlord's Game , municipal ownership of utilities, poverty machine, poverty's cause, private property in land, privatization, privilege, rent-seeking, toll-takers, wealth distribution or concentration | Permalink | Comments (0)
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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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There has been a lot of political rhetoric lately centered around the "Job Creators," and what we can do to encourage them to create jobs (in America). Most of it seems to be centered around (1) creating some sort of "certainty" for them regarding what sorts of taxes they might be expected to pay if the jobs they deign to create are successful in increasing their profits; and (2) lifting the supposedly onerous regulations we put on them regarding product safety, environmental protection, and perhaps royalties on what they withdraw from the earth's supply of non-renewable natural resources and other services they receive from our common ecosystem.
I contend that those who frame it this way are leading us astray.
First, the jobs that the so-called Job Creators actually create occur when (a) they want more personal services -- haircuts, manicures, acupuncture, botox, dry cleaning, catering; (b) they want more goods -- dinners out, boats, cars, swimming pools, airplanes, motorcycles, jewelry, wardrobe, fancy foods, alcohol, tobacco, etc.; (c) when they decide to build or rebuild a home, and furnish it.
The real job creators are those whose demand for products and services create jobs. A few percent of us have sufficient current income -- or sufficient wealth to draw on -- that it is fair to say that virtually all of their needs and many of their wants are being met. But the vast majority of us have unmet needs and certainly more wants. And I think it is fair to say that while it is human nature to want something for nothing, and that all of us want to meet our needs and wants with the least possible effort, it is also true that virtually all of us are willing to work, to serve others with products and services, in return for wages, be they from a single employer or a collection of customers.
So what's the problem? Why can't this supply of labor get together with this demand for labor, to the general benefit of our entire society?
I can point to several problems.
First, much of the nation's capital is in the portfolios of a very small proportion of our society, and that process of concentration shows no signs of slowing down, much less reversing. (Not surprising, since we've done nothing to correct the structural causes which produce it!) Joe Stiglitz has said that the FIRE sector is harvesting something like 40% of the profits of the productive sectors of the economy. This cannot be permitted to continue if we seek to create prosperity for all.
Second, ownership of America's choicest sites -- mostly in the central business districts of our biggest cities, but also in some of the scenic coastal areas and the suburbs surrounding those cities -- is in the portfolios of a very small proportion of our society (as well as in portfolios of foreign landlords). This may not appear to some to be a problem, but I assert that it is -- and a big one. (The good news is that it is readily fixable.) An acre of Manhattan land can be worth $250 million or more, while an acre of good farm land might be worth $5,000 -- a difference of 50,000 times! That is, 50,000 acres of farmland might be worth the same amount as a single acre of Manhattan land!!) A single 25x100 residential building lot in Manhattan -- 0.058 acre -- can be worth $10 million ... that works out to $172 million per acre.
Third, we tax labor income -- wages -- to fund federal and state spending. We tax the first $105,000 or so of wages at 15% or so to fund Social Security and Medicare (that includes both the employee's and the employer's contribution, as economists agree is appropriate). After exempting some amount of income in proportion to family size ($15,200 for a family of 4) and some additional for a standard deduction ($11,900 for married filing jointly) or some combination of itemized deductions (which go mostly to high-end urban/suburban homeowners in northeastern states, with big mortgages and significant property taxes, and California owners, with big mortgages and more modest property taxes), the Federal Income Tax taxes the next dollar of wages at 10%, and the rate rises to 15%, 25% 28%, and, for a tiny but noisy minority of us (adjusted income over $217,450 after exemptions and deductions, for married filing jointly -- which Romney calls the middle class), to 33% and 35% on the marginal dollars (not on all of one's income). But 86% of us pay more in payroll taxes than we do in federal income taxes, when the employer's portion is taken into account. [source: http://www.cbo.gov/publication/43373, table 8.] It is worth noting that 15% [social insurance] plus 10%, the federal tax rate on the first dollar after deductions and exemptions, is 25%, but that for those whose household income is well above the $105,000 cut-cutoff, the 35% bracket is not all that much higher than what comes out of the pockets of the low-income worker.
So 25% to 35% of the portion of our wages beyond that allowance for some basic expenses, are being taken to fund federal spending, and in most states, more for state spending.
The federal spending, and much of the state spending, goes to projects whose effect is to increase local land values in specific places -- infrastructure, public goods of various kinds. Oddly, we fund it via taxes on wages! Wouldn't we be wiser to fund it via taxes which fall on those land values, which are so concentrated into a relative few pockets -- pockets which are currently not asked to contribute much, but receive so much from those who need to occupy those choice urban sites. I do not begrudge the owner of a luxury building the right to keep the portions of the rent he receives which can be attributed to (a) the qualities of the building itself and (b) the services he as landlord provides, but much of that rent is attributable to neither of those factors; rather, it is a function of .... (all together, now) Location, Location, Location, and value which is created by the community, not by that landlord!
Fourth, most of us of working age, and particularly our young people, are paying at least 30% of our income for housing, and many, many people are paying a far larger portion of their income. On top of that, many have student loans, car loans, and perhaps credit card debt, and live paycheck to paycheck. Many young people who bought a home during the 2002 to 2010 period are upside down on their mortgages, owing the lender more than they could sell the property for, and are thus effectively trapped in those homes until prices rise or someone does something to renegotiate their mortgage, or they win big in the Lottery. Thus they cannot move to meet their families' changing needs, or leave the area to accept a job in another part of the country.
So what does this have to do with Job Creation? Well, if those of us who don't live on the really choice bits of urban or coastal land were relieved of some portion of their tax burden, including the 15% that goes for social insurance, we'd have more to spend on satisfying our other needs and wants, and virtually all of that would create jobs. Here, in the U. S.
Posted on October 03, 2012 at 09:11 PM in cost of living, employment, FIRE sector, fixing the economy, income concentration, jobs, land value created by community, location, location, location, Occupy Wall Street's values, one solution for many problems, real estate bubble, Stiglitz, toll-takers, trickle-down economics, unburdening the economy, unemployment and underemployment, wages, wealth distribution or concentration | Permalink | Comments (0)
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I can easily imagine a great proprietor of ground rents in the metropolis calling attention to the habitations of the poor, to the evils of overcrowding, and to the scandals which the inquiry reveals, while his own income is greatly increased by the causes which make house-rent dear in London, and decent lodging hardly obtainable by thousands of laborers.
— PROF. THOROLD ROGERS, Work and Wages, Chap. XX., p. 550.
Efforts should be made to prevent the increase of value which is occasioned by the growth of the population of towns enriching private individuals.
— The REV. W. MOORE EDE, Honorary Canon of Durham, The Church and Town Problems, p. 88, note.
Posted on August 07, 2012 at 12:01 AM in a Manhattan acre, a wedge driven through society, absentee ownership, all benefits go to landholder , better cities, buildings depreciate, congestion, cost of living, cui bono?, Earth for All, fixing the economy, housing affordability, human nature, income concentration, land monopoly capitalism, land rent, land value created by community, landed gentry, landlordism, location, location, location, playing by the rules, popular ignorance of land economics, privatization, privilege, reaping what others sow, rich people's useful idiots, toll-takers, urban land value | Permalink | Comments (0)
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Let it be observed that when land is taxed, no man is taxed; for the land produces, according to the law of the Creator, more than the value of the labor expended on it, and on this account men are willing to pay a rent for land.
— PATRICK EDWARD DOVE, Theory of Human Progression (1850), Chap. I., Sec. 2, p. 44
(American Edition of 1895).
Posted on August 05, 2012 at 06:56 PM in direct taxation, Earth for All, economic rent, fixing the economy, free land, justice of the single tax, land rent, land value taxation, location, location, location, Natural Public Revenue, natural resource revenues, no victims, pay for what you take, rent, defined, rent-seeking, unburdening the economy, unearned increment | Permalink | Comments (0)
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It is certain, however, that a large part of the improvement is due to the increasing value of advantageous sites, an unearned increase of value such as Mr. Mill speaks of, and therefore a kind of profit which the State may restrict with least harm.
— ROBERT GIFFEN, Essays in Finance, 1st Series (1871), Chap. X., p. 244.
The rise in value which the industry of others providentially gives to the land of the wise and good.
— W. D. HOWELLS, A Hazard of New Fortunes, Part IV., Chap. 3.
The ordinary progress of a society which increases in wealth is at all times to augment the incomes of landlords — to give them both a greater amount and a greater proportion of the wealth of the community, independently of any trouble or outlay incurred by themselves. They grow richer as it were in their sleep, without working, risking or economizing. What claims have they, on the general principles of social justice, to this accession of riches?
— JOHN STUART MILL, Principles of Political Economy, Book V., Chap. 2, Sec. 5
Posted on July 31, 2012 at 12:07 AM in absentee ownership, all benefits go to landholder , cui bono?, Earth for All, economic rent, FIRE sector, income concentration, justice of the single tax, land appreciates buildings depreciate, land rent, land share of real estate value, land value created by community, landed gentry, landlordism, location, location, location, Natural Public Revenue, Occupy Wall Street's values, poverty machine, private property in land, privatization, privilege, reaping what others sow, rent-seeking, socializing risk and privatizing profit, technological advances, trickle-down economics, urban land value, wages driven down, wealth distribution or concentration | Permalink | Comments (0)
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When I came across this article, 111 years old, I thought of the Ipswich, Massachusetts, trust established in 1650 by the gift of a fine 32-acre piece of land by a forward-thinking resident. His stated intention was that the land be kept by the town, forever, for the benefit of the public schools. Alas, it was poorly managed for a number of years, perhaps decades, and this appears to have been transformed, remarkably, into an excuse for the eager TENANTS to buy the land (and at less than half what I calculate it to be worth -- click on the "Little Neck Feoffees of Ipswich" link at left to see all my posts on the topic).
The tradition of school lands has served many communities very well. Part of Chicago was rented out to tenants and the revenues used to fund the city's schools.
But some fast-talkers appear to have convinced the powers-that-be in Ipswich, Mass., (including, remarkably, some judges and perhaps the state A.G.!) that "forever" is just temporary, and other investments are superior to the revenue from land and natural resources for funding public spending. (Not!) And the land will be there forever; a few decades of poor management is, in the long run, a triviality; the same would not be true of any of the substitute investments the Feoffees and their highly-compensated investment advisors will come up with.
(The first-quoted writer was the president of the Massachusetts Institute of Technology.)
Star, Putanga 7209, 21 July 1901, Page 7
The Land and the People
The Lands Sub-Committee submitted the following report at the last annual meeting of the Progressive Liberal Association: --
General Francis Walker, in "First Lessons in Political Economy," says: -- "It certainly is true that any increase in the rental value or selling value of land is due, not to the exertions and sacrifices of the owners of the land, but to the exertions and sacrifices of the community. It certainly is true that economic rent tends to increase with the growth of wealth and population, and that thus a larger and larger share of the products of industry tends to pass into the hands of the owners of land, not because they have done more for society, but because society has greater need of that which they control."
On the same subject Thorold Rogers has expressed himself thus: -- Every permanent improvement, every railway and road, every bettering of the general condition of society, every facility given for production, every stimulus applied to consumption, raises rent. The land owner sleeps, but thrives."
The observant thinking man must admit that the above opinions are borne out by facts, but the importance to the community of the nationalisation of the land is unfortunately realised by comparatively few. If people would endeavour to understand its importance, there is little doubt that the majority would be forced to the conclusion that the private ownership of land is beyond question decidedly against the best interests of the State.
Cardinal Manning has said: -- "The land question means hunger, thirst, nakedness, notice to quit, labour spent in vain, the toil of years seized upon, the breaking up of homes, the misery, sicknesses, deaths of parents, children, wives, the despair and wildness which spring up in the hearts of the poor, when legal force, like a sharp harrow goes over the most sensitive and vital right of mankind. All this is contained in the land question." The opinion of the late Cardinal, expressed in such a forcible language, should at the very least induce people to study this question thoroughly. As a proof of its importance many object lessons are to be found -- as bearing upon it from a municipal point of view two may be mentioned. Doncaster in Yorkshire has no borough rate. Why? Because it is the owner of certain remunerative land; and Durban, in South Africa, for a rate of 1½d in the £ obtains the usual municipal services such as we possess in Christchurch, and in addition enjoys several others which we much desire to have. The difference is because in Durban its founders made reserve round the town which have not been alienated and have so increased in value that the rentals therefrom very nearly provide for all municipal requirements. The founders of Canterbury made a similar wise provision for Christchurch, but in an evil day the Provincial Council, when it took over the affairs of the Canterbury Association, sold the city's inheritance for a mess of pottage. It will doubtless be interesting to many to lean something of the history of the
CHRISTCHURCH TOWN RESERVES.
When constitutional government was established in Canterbury the Provincial Government took over the property of the Canterbury Association, including the town reserves of Christchurch and Hagley Park, the total area of these two being 897 acres, which, five years previoiusly, had been considered of the value of £2700. The Association had got into debt to the extent of nearly £29,000, which the Provincial Government paid with money raised on debentures, and proceeded to sell the reserves situated inside the belts. To prevent any misunderstanding as to the then estimated value of these town reserves, it is desirable to state that for the £29,000 mentioned the Association transferred to the Provincial Government all the property it possessed in Canterbury, which included other reserves than those in Christchurch, also plant, tools, survey maps and field books, which must have been value for a considerable portion of the sum named. By the deed poll of the Association these lands were to be held in trust for the purposes for which they were reserved, but a special Act of the Assembly was obtained to permit of their alienation. It has been truly said that the price of liberty is eternal vigilance. It is equally true with regard to reserves of land made for the benefit of the public; the people (every individual) should be ever on guard and watchful that no tampering with public reserves be allowed.
At the present day it is particularly interesting to consider what would now be the position of Christchurch if the reserves inside the belts had not been sold. What income would now be derivable therefrom?
Excluding twelve acres which were set apart by the Provincial Council as endowments for various religious bodies, the frontages of the reserves on the main streets of the city, as originally laid out in the extensions of these streets to the belts, amount to about 92,400 ft, after deducting 1¼ chains at each corner to avoid reckoning double frontages at corners. At 4s per foot frontage it would be £23,100. Bearing in mind that more than half the frontages have a depth of 5½ chains, it is estimated that if these lands were now let on building leases they would average a return of not less than 4s per foot, possibly more, and it is probably safe to say that the income therefrom would be £20,000 a year.
The statement of accounts of the City Treasurer shows that for the year ending March 31, 1901, the rates assessed amounted to £28,526 --
|General rate (omitting shillings and pence)||13,680
|Special drainage rate
obtained by a total assessment of 2s 7½d in the pound, whereas, had the town reserves not been alienated, all the municipal services rendered would probably have been obtained for a modest rate of less than 9d. in the pound.
This is surely an object lesson which should be laid to heart by every inhabitant of the colony, as well as by the citizens of Christchurch, and should demonstrate how very desirable it is in the interests of the people as a community, that all land should be owned by the community, seeing that increased values of land are derived from the exertions and sacrifices of society. It will serve to show what enormous sums society thus pays to individuals to state that it is estimated that the value of land in London is increasing at the rate of 7½ millions annually; under the system of private ownership of land this large sum is accruing yearly in London alone to private individuals, and the public who must use the land, necessarily pay interest on that sum.
The Progressive Liberal Association earnestly commends these facts to the consideration of the people of New Zealand in the hope that they will insist upon a stoppage being put to the sale of Crown lands; and as regards the granting of leases in perpetuity, which, in parting with the possession for 999 years at a rental based on the present value, hands over to individuals the unearned increment for that unconscionably long period, it is hoped that a mandate will go forth from the electors of the colony insisting upon a periodical revaluation of the unimproved value. When these have been accomplished, there will be the question of the nationalisation of all the lands in the colony to be dealt with.
"That which was created for the use of all, the use of which is absolutely necessary for the existence of every individual, should be owned and controlled for the benefit of all. The private control of land is dead against the common welfare. Justice demands this, and what justice demands must sooner or later be conceded.
Christchurch, July 29, 1901
Posted on July 29, 2012 at 09:35 AM in all benefits go to landholder , cui bono?, economic rent, financing education, land rent, land value created by community, Little Neck Feoffees of Ipswich, location, location, location, Natural Public Revenue, popular ignorance of land economics, privatization, rent-seeking, socializing risk and privatizing profit, special interests, time making wrongs into rights | 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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Dewey Beach, Delaware, prides itself on not having a property tax. This forces it to rely on taxes which are far less just and less logical than a simple tax on land value would be -- including a licensing fee for anyone who works in Dewey Beach!
And if one lets one's license skip a year, and then needs it again, one must pay for the year one didn't have a customer there, as well as the years in which one does.
Why? Well, perhaps the explanation is partially related to the fact that one company owns an amazing amount of the land in Dewey Beach, and it is rented out on ground leases which are currently at a very low level -- say, $550 to $650 per year -- and whose end comes in about 11 to 14 years. Many of these lots sell for $600,000 or more, when one comes on the market; those in the ocean block perhaps significantly more. The County last assessed the land in the late 1960s. County taxes on the cottages (excluding the land), which typically sell for $200,000 or less because they are aging and must be removed at the end of the lease, run from $300 to $900 a year (and the county tax is mostly for the school district). In neighboring Rehoboth Beach, city taxes typically run about 1/4 of county taxes, though the relationship is not constant because one relies on a 1960s assessment, the other on a 1970s one!!
Dewey Beach collects something each year from property owners to restore the beaches, in case there is erosion that the federal government or state government won't pay to correct, but the beaches were renourished this past winter, at no expense to the property owners. According to an article from a week or two ago, the tax is $0.40 per $100 of assessed value. That article says, "A property in Dewey Beach with an assessed value of $200,000 would pay a total of $240 each year in taxes – $80 for beach replenishment and $160 for capital improvements." But it doesn't seem to realize that the only homes with assessed values of $200,000 are valued by their sellers at over $6 million! $80 is trivial to the owner of those $6 million oceanfront homes.
But to the typical worker in Dewey Beach, the $109 annual license to work within the borders is not so trivial.
Does it make sense to tax workers? Or is there a better tax base than productive activity? What taxes work best? Which taxes do the least damage?
Is working a privilege, or a right? I understand licensing doctors, nurses, lawyers and the like; I don't understand licensing singers, painters, waiters, and other workers.
Land value taxation is the way to go.
Posted on June 16, 2012 at 09:11 PM in absentee ownership, better cities, cui bono?, fruits of one's labors, income tax, land value taxation, leased land, location, location, location, payroll tax, privilege, property tax, reaping what others sow, toll-takers, untaxing production | Permalink | Comments (0)
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It is well known that these materials and agencies, as fast as they become available, are in the main appropriated by individuals, through the agency or consent of the government, and are then held as private property. Such is the case with the soil and the minerals beneath it. The owners of this property charge as much for the use of it as if it were their own creation, and not that of nature.
— PROF. SIMON NEWCOMB, The Labor Question, North American Review, July, 1870, p. 151.
a link and a longer except follow ...
Posted on April 23, 2012 at 12:23 AM in all benefits go to landholder , capital gains are land gains, commons, commonwealth, corruption in government, cui bono?, Earth for All, ecosystem services, environment, government's role, income concentration, is this socialism?, land different from capital, land includes, land speculation, landed gentry, landlordism, leased land, location, location, location, make land common property, monopoly -- not the game, natural resource revenues, natural resources, oil, popular ignorance of land economics, poverty's cause, private property in land, privatization, privilege, property rights, rent, defined, socializing risk and privatizing profit, special interests, time making wrongs into rights, toll-takers, unearned income, wealth distribution or concentration | Permalink | Comments (0)
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It was told of a recently deceased Judge of the Supreme Court of the United States, a man who sat in the Senate of the United States, one of the most eminent men of his generation, how he, a poor lawyer, in a comparatively poor western town, had been able to accumulate some two or three millions of dollars worth of property. How? By "sagacity" in investing in lands at some distance from villages and towns, with foresight that in the course of a few years the growth of those communities, the industry, thrift, talent, virtue, patience of large communities would all keep adding to the value of his property, and in course of time cities, towns and villages would grow up on these lands, and he would be able to command an enormous price for land that cost him but a song. Now, while the law tolerated or even sanctioned what he was doing, he was guilty of an iniquity, of reaping where he had not sown, of exacting tribute where he had contributed nothing.
Posted on April 18, 2012 at 08:45 AM in a wedge driven through society, absentee ownership, all benefits go to landholder , capital gains are land gains, corruption in government, cui bono?, FIRE sector, income concentration, land appreciates buildings depreciate, land speculation, land value created by community, landed gentry, landlordism, location, location, location, playing by the rules, political economy, popular ignorance of land economics, population growth, reaping what others sow, rich people's useful idiots, special interests, toll-takers, wealth distribution or concentration | 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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A tax upon ground-rents would not raise the rent of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist and exacts the greatest rent which can be got for the use of the ground.
— ADAM SMITH, Wealth of Nations (1776), Book V., Chap. 2, Art. I.
Posted on March 31, 2012 at 12:52 AM in all benefits go to landholder , classical economists, cost of living, cui bono?, direct taxation, Earth for All, economic justice, economic rent, fixing the economy, government's role, housing affordability, human nature, justice of the single tax, land different from capital, land monopoly capitalism, land rent, land value taxation, landed gentry, landlordism, location, location, location, political economy, popular ignorance of land economics, private property in land, property tax, property tax is two taxes, Proposition 13, reaping what others sow, single tax, tax caps, tax reform, toll-takers, unearned income, urban land value, wealth distribution or concentration | Permalink | Comments (0)
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40. Studies have confirmed the common wisdom that people who live in cities do more walking than those who live in suburban and rural areas, and tend to be in better shape. What economic policies might help promote the kind of density that will encourage the development of affordable housing -- for people all across the income spectrum -- near the centers of activity?
Posted on March 22, 2012 at 08:10 AM in better cities, capital gains are land gains, cost of living, government's role, infrastructure, location, location, location, one solution for many problems, popular ignorance of land economics, sprawl, tax reform, the land questions, transportation, underused land, urban land value | Permalink | Comments (0)
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BY HENRY WARE ALLEN
from Land and Freedom, 1938
As our time honored political maxims become hackneyed they are very apt to pass into what Grover Cleveland would call innocuous desuetude. We subscribe to the sentiment that "eternal vigilance is the price of liberty" and yet little is done to counteract those aggressive forces which nullify that freedom which we profess to prize so highly. Even the prayer, "Thy Kingdom Come," is repeated as a mere wish that something good would happen rather than with a determination to bring about those righteous conditions which make for a heaven on earth. Possibly the most neglected of all of our national ideals is our professed adherence to that most democratic of all maxims, "Equal rights for all and special privileges for none." For at the present time our country is honeycombed with special privilege that has become so entirely entrenched as to be regarded on all sides as vested right. Special privilege is condoned by force of its familiarity. Like vice it is endured, then pitied, then embraced.
There lived in a Colorado city years ago a housewife who made convenient use of coal cars on the side track across the street from her dwelling with which to replenish her stock of fuel. This she did without any qualm of conscience but as a special privilege which, by the sanctifying touch of time had grown into a vested right. This woman doubtless was punctilious in the ordinary obligations of life and would have hotly resented any statement to the effect that she was stealing coal. She was guided by that all too common kind of honesty which is based upon expediency rather than principle. Not on any account would she have withheld what was due from her to a neighbor who would have suffered by her delinquency, but the advantage to her of getting this coal was so great and the loss to some impersonal owner of same, mine, railroad, or smelter, was relatively so negligible that the argument was all in favor of her acting in her own interest without question. No personal equation was involved and if at first there had been any hesitation on her part of this practice, that was long ago a thing of the past. But the railroad company put a watchman on guard and her supply of fuel was thereby stopped. She then turned to the local charity organization with request for a continuation of the supply which had thus been rudely taken from her and the very righteous indignation with which she told her story was ample proof of entire absence of comprehension on her part that she had been stealing.
This incident, which is a true story, illustrates very nicely the evolution and the nature of that special privilege which eventually becomes a vested right. And if the searchlight of analysis is turned upon our social system we may be surprised to find the presence of special privilege in unexpected places and of a volume that is, in the aggregate, enormous.
As a basis for this inquiry it may be well to state the fundamental truth that property may be secured in three ways only; first, by labor; second, by gift; and third, by theft. If this test is repeatedly kept in mind, the task will become easier. One of the commonest forms of special privilege is that which is provided under ninety-nine year leases on valuable business property sites. These leases convey to the owner of the land a stipulated income after the tenant has paid all taxes and expenses. In the parlance of political economy this revenue consists of what John Stuart Mill defined as unearned increment, a value which is produced by no individual but which is purely the result of population reflected upon desirable locations. For this revenue to be turned over to individuals as is now the unquestioned custom in all of our large cities and to an amount of billions of dollars annually is a procedure which is precisely in the same class as the stealing of coal from the railroad car by the Colorado housewife.
A much larger source of public revenue which is diverted to individuals is that of the rent of valuable property in excess of a fair interest return upon the intrinsic value of improvements on the property. This applies to practically all property located at the center of our large cities and involves enormous revenues. There is a mixture here of legitimate return on capital invested with the unearned increment which belongs absolutely to society but the case is not less clear on that account.
Another prolific source of public revenue which is diverted to individuals is that which comes from the lucky possession of oil wells. This possession frequently gives incomes of thousands of dollars daily to those who have no more claim on such revenue than is involved in the possession of the land upon which the wells were developed. The wealth that has by this means been given to certain sections of the country and certain groups of people has run into the billions of dollars. The Osage tribe of Indians in Oklahoma are said to have been made the richest people in the world due to this special privilege. Such beneficiaries are no more justly entitled to the revenue which they receive than was the Colorado woman justified in stealing coal from the railroad car. It will be said that the oil industry involves a great deal of capital and that many dry wells are paid for before a single producing well is developed. This is true and therefore makes the proposition somewhat more complicated but does not alter the conclusion.
Another source of revenue which diverts public funds into private hands is speculation in land. Purchase of inside property sure to increase in value is the one investment that has been invariably recommended by shrewd financiers. This speculation is far greater than has been generally realized. More than one-half the area of New York City consists in vacant lots which are held out of use for speculative purposes, and the same is true of all our larger cities. Incidentally, this speculation has the effect of enhancing the selling price of desirable land to artificially high figures. When land which is purchased with a hope of subsequent rise in value, the investor practically lays a trap by which he may secure values that rightfully belong to the community. And this process makes an artificial scarcity of land with consequent artificially high cost to those who must use it. This process of securing a profit, of getting something for nothing, is persistently the same in character as that by which the Colorado housewife secured her supply of coal. Here again objection may be interposed to the effect that land frequently has to be sold for less than it cost. This is an objection that was raised by no less an economist than Francis A. Walker, the foremost critic of Henry George during his lifetime. General Walker exclaimed, "Mr. George has much to say about unearned increment: He says nothing, however, about unrequited decrement." Mr. George's rejoinder to this was an expression on his part of his inability to discuss the problem with one who spoke of unrequited decrement in something which originally had no value. In other words, so far as society is concerned its interest is only in the rental value which is produced from year to year and which rises or fall accordingly as population grows or wanes. The important fact is that this increment, whether large or small, belongs to the community which produced it.
The most spectacular form of special privilege which we have to deal with today is that provided by the protective tariff. This protection enables the America manufacturer to secure an artificially high price for his product. The common argument in support of the protective system is that the American standard of living must be maintained by this artificial means, but this argument falls to the ground, if at the same time, we permit any improvement in labor-saving machinery which naturally has far greater effect upon the labor market than is produced by the competition of merchandise imported from abroad. The enormity of special privilege due to the tariff is perhaps more conspicuous in the State of Pennsylvania than elsewhere, a single family in Pittsburgh, the direct beneficiaries of the tariff on aluminum, being reputed to be worth in excess of $2 billion. There will be found that, with a few rare exceptions, the great fortunes of America are based upon special privilege of one kind or another.
Although there are many minor sources of special privilege which are embedded in our political and social institutions, those above enumerated are the principal ones.
The special privileges provided by legislative action at Washington are in a different class from those which have become a regular part of our system of taxation but are none the less to be condemned. The most flagrant of these in recent times was the appropriation by Congress and approved by President Hoover, of $500,000,000 of tax payers' money for the specific purpose of stabilizing or artificially enhancing the price of wheat, cotton, and other farm products. It was presumed by the makers of this law that it would have the effect of giving artificial advantage to the farming class, which would offset in a measure the special privileges which had been given so generously to Eastern interests by means of the protective tariff. The plea for this farm legislation was repeatedly based upon that consideration. It so happened that even the immense waste of money involved by the farm marketing act was negligible as an influence in the world wide markets and that it did not affect in any considerable degree the law of supply and demand upon the prices of the agricultural products which were supposed to be favored. But the very fact that this legislation was put through with little opposition furnished a very good illustration of the fact that special privilege legislation is regarded as perfectly legitimate. And this has been further illustrated in monstrous degree by the New Deal legislation under President Roosevelt.
There is everywhere consciousness of a mysterious force which is responsible for easily acquired fortunes on one hand together with an increase of unemployment and consequent lower incomes on the other hand. Each succeeding census report makes more appalling this undemocratic and unjust condition in our social fabric.
If prosperity is to be secure, there must be an end to special privilege of every kind, and a system of taxation inaugurated in place thereof which shall be based upon justice to all. Henry George has demonstrated how this should be done.
Posted on March 19, 2012 at 11:44 AM in absentee ownership, all benefits go to landholder , land speculation, landed gentry, leased land, location, location, location, Natural Public Revenue, natural resource revenues, natural resources, oil, popular ignorance of land economics, population, privilege, protection or free trade, subsidies, tariffs, time making wrongs into rights, triple net leases, underused land, unearned income, unearned increment, urban land value, wealth distribution or concentration | Permalink | Comments (0)
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a bit out of sequence ...
35. 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 lease prices for generations. Is it right to exact an estate tax of 50% or so on the true market value of that estate?
A. No! Widows and orphans must be protected! We wouldn't want them to have to depend on the social safety net.
B. No! The dollars he spent to buy that land decades ago were already subject to an income tax -- maybe two (federal and state) -- and the heirs are entitled to keep all the increase from the purchase price, even if that is a 20% increase, or a 200% increase, or a 2000% increase, over the purchase price.
C. No! The man had foresight, and we ought to honor, reward and encourage that!
D. No! The interstate highway could have been re-routed, and the man and his widow and children could have been left high and dry. They took a risk, and we ought to reward them for their brilliance!
E. An estate tax is a good way to capture this socially-created windfall once per generation. After all, he can't take it with him. Half for the heirs, half for the community that created the value. Seems fair, and keeps them out of the social safety net.
F. An estate tax is better than nothing, but it is a poor alternative to collecting some significant portion of the rental value of the land, month in and month out, whether that rental value be low (before the interstate highway's route is determined) or high (after it is announced and built, and the community grows up around that highway).
G. Your suggestions?
Posted on March 07, 2012 at 10:16 PM in absentee ownership, all benefits go to landholder , capital gains are land gains, cui bono?, economic rent, estate taxes, FIRE sector, fruits of one's labors, income tax, infrastructure, justice of the single tax, land appreciates buildings depreciate, land rent, land speculation, land value created by community, land value taxation, location, location, location, Natural Public Revenue, pork spending, private property in land, public spending, reaping what others sow, the land questions, unearned increment, widow's skirts, windfalls | Permalink | Comments (1)
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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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29. The states need money. Should they sell their toll roads to private companies?
A. Sure! That would provide a nice pot of money that would help with this year's budget and next year's, and after that, we can leave the problem to a future group of legislators and a new governor!
B. Sure! The private sector will take better care of them and turn a profit to boot!
C. No. The taxpayers paid for those roads to be built, and have a right to more control over them than would exist after privatization.
D. No. The taxpayers own that land, a unique right of way, and selling it off forever is irresponsible and wrong!
E. No. Our society -- any society -- is highly dependent on our infrastructure, and control over it must remain in the public sector.
F. No. Those highways are built on land that was bought or taken from individual property owners for the public good. To turn them over to the private sector, for profit, would be wrong.
G. No. Those highways will increase in value over the coming decades and centuries, and should not become anyone's private property, at any price. Both their economic value and the control over them belongs in the common sector.
H. No. Even if it looks as if it might make sense for our generation, what of future generations? Should we permit the privatization of a common asset they will likely be dependent on?
I. No. Future taxpayers will build more highways intersecting with these current tollroads, and increase their value; were these to be privatized, it would be the private corporation who would reap the benefit of that future public investment.
J. Your suggestions?
Posted on February 29, 2012 at 09:26 AM in absentee ownership, common good, commons, cui bono?, facilitating commerce, financing infrastructure, FIRE sector, franchises, government's role, infrastructure, inter-generational equity, land includes, land speculation, location, location, location, municipal ownership of utilities, Natural Public Revenue, pork spending, privatization, privilege, public ownership of utilities, public spending, reaping what others sow, socializing risk and privatizing profit, special interests, stock ownership, the land questions, toll-takers, transportation, wealth distribution or concentration | Permalink | Comments (0)
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28. Private-sector insurance companies are raising their rates for waterfront or near-waterfront property, or refusing to renew policies in hurricane-prone areas. States are stepping in to provide insurance of last resort. How should this be financed?
A. It should be self-financing, with rates designed to cover 100% of the risks. This might drive down the selling prices of the properties, but that is appropriate given the increased risks involved.
B. Taxpayers all over the state should subsidize the insurance rates, from taxes on wages
C. Taxpayers all over the state should subsidize the insurance rates, from taxes on sales
D. Taxpayers all over the state should subsidize the insurance rates, from taxes on their land values
E. Inland taxpayers should be taxed to pay for the subsidies to coastal propertyowners
F. Hotel and rental-car taxes should be used to pay for the subsidies to coastal homeowners and commercial property owners
G. Collect taxes in proportion to pollution which is producing slower-moving storms, which will have the effect of incentivizing reductions in that pollution
H. Your suggestions?
Posted on February 28, 2012 at 09:26 AM in capital gains are land gains, environment, FIRE sector, greenhouse gases, income tax, location, location, location, pollution, privilege, sales taxes are wrong, socializing risk and privatizing profit, special interests, subsidies, wage taxes, wages, water, windfalls | Permalink | Comments (0)
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27. A new subway line costs $2 billion. Suppose that its construction increases the surrounding land values by $2 billion. (Assume 5 miles long, 10 stations, 0.5 mile radius, average lot size of 0.10 acre. How should the new subway line be financed?
A. Taxes on sales of groceries, clothing, etc. within those 1/2 mile radius areas
B. Taxes on sales of groceries, clothing, etc., all over the city the subway line connects to
C. Taxes on sales of services within those 1/2 mile radius areas
D. Taxes on sales of services of all kinds, all over the city the subway line connects to
E. Taxes on wages of those working in those 1/2 mile radius areas
F. Taxes on wages all over the city the subway line connects to
G. Taxes on wages of those living within the 1/2 mile radius areas
H. Taxes on capital gains and dividends of those living within the 1/2 mile radius areas
I. Taxes on capital gains and dividends of those with residence anywhere in the city
J. Taxes on all real estate within those 1/2 mile radius areas
K. Taxes on all real estate, all over the city the subway line connects to
L. Taxes on just the buildings within those 1/2 mile radius areas
M. Taxes on all the buildings, all over the city the subway line connects to
N. Taxes on the land value within those 1/2 mile radius areas
O. Taxes on the land value, all over the city the subway line connects to
P. Transfer taxes on either or both of buyers and sellers whenever a property within the 1/2 mile radius is sold
Q. Transfer taxes on either or both of buyers and sellers whenever a property anywhere within the city is sold
R. An inheritance tax when a house or commercial property is transferred from a decedent to a survivor.
S. Your suggestions?
Posted on February 27, 2012 at 09:26 AM in all benefits go to landholder , assessment, better cities, buildings depreciate, capital gains are land gains, cui bono?, direct taxation, economic rent, facilitating commerce, financing infrastructure, fixing the economy, free lunch, fruits of one's labors, government's role, income tax, infrastructure, land appreciates buildings depreciate, land speculation, land value created by community, land value taxation, little people pay taxes, location, location, location, Natural Public Revenue, payroll tax, popular ignorance of land economics, population growth, privatization, property tax, property tax is two taxes, Proposition 13, public ownership of utilities, reaping what others sow, sales taxes are wrong, socializing risk and privatizing profit, special interests, sufficiency of land rent, the land questions, unburdening the economy, unearned increment, untaxing buildings, untaxing production, urban land value, user fees, wage taxes, wealth distribution or concentration, windfalls | 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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23. Fares on local public transportation may not be high enough to finance all the costs of providing the transportation. Does that mean that it is a poor investment, or are there other logical and just ways of funding it?
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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22. The creation of a new subway line raises the land values near each of the stations. Who should reap the benefit?
A. People who own homes there
B. People who own businesses there
C. People who own land there, whether or not there is a highest-and-best-use building on it
D. Corporations who own land there
E. Universities and other private landholders who own land there
F. Foreign corporations and private equity funds who own land there
G. Pension funds and sovereign wealth funds who own land there
H. The community as a whole, since the community paid for it
Download Fred Harrison's book, "Wheels of Fortune"
Posted on February 22, 2012 at 04:51 AM in absentee ownership, all benefits go to landholder , better cities, buildings depreciate, capital gains are land gains, corporations, cui bono?, direct taxation, economic rent, facilitating commerce, financing infrastructure, free lunch, infrastructure, land appreciates buildings depreciate, land different from capital, land speculation, land value created by community, land value taxation, landed gentry, landlordism, location, location, location, popular ignorance of land economics, pork spending, property rights, Proposition 13, public spending, reaping what others sow, special interests, subsidies, tax reform, taxation, the land questions, time making wrongs into rights, transportation, unearned income, unearned increment, urban land value, windfalls | Permalink | Comments (0)
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21. The creation of a new subway line raises the land values near each of the stations. Who should pay for the building of the subway line?
A. Riders of the new subway line
B. Riders of all subways in the system.
C. Riders of all mass transit in the metro area.
D. Drivers of cars and trucks, all over the metro area, via taxes on their fuel purchases (that is, in proportion to miles driven and the fuel efficiency of their vehicles)
E. Drivers of cars and trucks, all over the metro area, via an annual surcharge on their registration
F. Drivers of cars and trucks, all over the metro area, in proportion to the value of their cars, owned or leased
G. Drivers of cars and trucks, via tolls when they use bridges and tunnels, or HOV lanes, or certain highways
G. The taxpayers, via increased sales taxes on their purchases
H. The tourists and business travelers, via hotel occupancy taxes and taxes on rental cars.
I. Passengers in taxis, via a surcharge on their fares.
J. The homeowners, via taxes on their homes
K. Drivers, commercial and individual, via taxes on fuel purchased within the city
L. Employees all over the metro area, via a payroll tax
M. The tenants of commercial buildings in the heart of the central business district
N. All landholders, paying equally (a parcel tax)
O. All landholders, in proportion to the size of their lots
P. Landholders, in proportion to the value of the land they hold, without regard to the buildings or their contents. Those whose land values are raised by their proximity to the new line will see a proportional increase in their share of the tax burden; those far from the new line will not.
Q. Your suggestions?
Posted on February 21, 2012 at 04:35 AM in a Manhattan acre, absentee ownership, all benefits go to landholder , better cities, capital gains are land gains, congestion, corporations, cui bono?, direct taxation, economic rent, facilitating commerce, financing infrastructure, fruits of one's labors, income tax, indirect taxation, infrastructure, land appreciates buildings depreciate, land rent, land value created by community, land value taxation, landed gentry, landlordism, little people pay taxes, location, location, location, middle class, one solution for many problems, paying twice, popular ignorance of land economics, population growth, property tax, Proposition 13, public spending, reaping what others sow, sales taxes are wrong, socializing risk and privatizing profit, special interests, subsidies, tax reform, taxation, the land questions, transportation, triple net leases, unburdening the economy, unearned increment, untaxing buildings, untaxing production, urban land value, windfalls | Permalink | Comments (0)
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20. What is the best way to insure that affordable housing -- for people of all ages and stages, all income levels -- is available, both for ownership and for rental, both near the center of activities and, if needed after the desire for housing near the center of activities is satisfied, on the fringes?
B. Community Land Trusts
C. Affordable Housing Regulations that require that for every 10 new condos built, 1 must be affordable to people earning less than the local median household income
D. Rent control
G. Habitat for Humanity
H. Relaxed mortgage lending rules and more private mortgage insurance
I. Land value taxation, to encourage the redevelopment of underused sites near the center of things
J. Your suggestions?
Posted on February 20, 2012 at 04:25 AM in better cities, buildings depreciate, common good, cost of living, free land, government's role, home equity, housing affordability, incentive taxation, incentives, infrastructure, land speculation, land value created by community, location, location, location, middle class, one solution for many problems, pay for what you take, popular ignorance of land economics, population, population growth, property tax, property tax reform, Proposition 13, real estate bubble, sprawl, tax reform, the land questions, unemployment and underemployment, untaxing buildings, untaxing production, urban land value | 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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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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16. How should we pay for the war in Afghanistan?
A. Don't worry about that. Our children should pay for it, and their children if necessary, with interest accumulating. The economy will grow sufficiently that it will not unduly burden them.
B. We should pay for it via federal taxes on wages.
C. We should pay for it via a federal tax on sales (or consumption).
D. We should pay for it via a federal tax on land value; people and corporations (domestic or foreign) who own land in midtown Manhattan or downtown Los Angeles would pay a lot; those who own rural property would pay little or nothing. Tenants' rents -- residential, commercial, agricultural -- would cover their share, and be collected from landlords.
E. We should pay for it via royalties on non-renewable natural resources. (Whose natural resources? from U.S. soil? from Afghanistan soil? other?)
F. Your suggestions?
Posted on February 16, 2012 at 05:15 AM in financing war, income tax, inter-generational equity, land value taxation, location, location, location, natural resource revenues, natural resources, oil, pay for what you take, payroll tax, public spending, sales taxes are wrong, the disenchanted, the land questions | Permalink | Comments (0)
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13. Electric utilities have long been regarded as "widows' and orphans'" stocks. Safe, if not high income. A few years ago, they were deregulated. A recent study has shown that retail electricity prices have increased faster in states that adopted competitive pricing than in those where rates continue to be set by government agencies. We all need reliable electricity. Should we permit the licenses to generate and distribute electricity to be an opportunity to make a windfall profit? (Or should we encourage municipal ownership of vital utilities?)
D. No. Electricity is vital to the economy, and we ought to do what we can to keep it affordable to ordinary people, and not a source of corporate windfalls.
E. No. Natural monopolies ought to be publicly owned, the prices kept low, and any excess revenue accrue to the public treasury, not to the benefit of private investors.
F. your suggestions?
Posted on February 13, 2012 at 10:49 AM in absentee ownership, common good, corporations, cost of living, cui bono?, democracy, facilitating commerce, franchises, government's role, immigration, infrastructure, land includes, location, location, location, monopoly -- not the game, municipal ownership of utilities, natural monopolies, privatization, privilege, public ownership of utilities, special interests, stock ownership, the land questions, time making wrongs into rights, unburdening the economy, windfalls | Permalink | Comments (0)
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11. Foreign corporations and governments are seeking to buy some of our ports from the American corporations that own them. Large shares of the goods we consume come through these ports, and the ports set the price that the shippers pay for access to the ports. The possibility of weapons, invasive species, etc., entering the US through these ports is frightening. Ports are unique locations, on sheltered waterfronts, served by elaborate rail and highway systems. Is foreign ownership acceptable?
A. Sure! No problem! The costs to shippers are the same whether the owners are American or foreign!
B. Sure! No problem! These corporations have long term contracts with the local Port Authorities, and the PAs are smart bargainers who make sure that they collect the economic value of these unique sites from whoever has the contracts or owns the ports, for the entire term of the contract.
C. It is acceptable for foreign corporations to "own" the ports, but they must pay into the US treasury the economic value of the site. They must not be permitted to privatize what is rightly common property.
D. It is not acceptable for foreign corporations to own the ports, but okay for US companies to privatize that value.
E. We ought to be collecting the annual rental value of the site itself, month in and month out, as our common treasure. It shouldn't be privatized by anyone.
F. your suggestions?
We all know the old saw -- the three most important things about choosing real estate are ... location, location and location! We're so used to hearing it that we don't stop to think about its larger implications -- and particularly its implications for public revenue.
Those who are thinking about buying a home as an investment may hear a related piece of advice: buy the worst house in the best neighborhood. You can't change the neighborhood, much (the infrastructure and schools which serve it are relatively fixed, in the short-term at least), but you can improve or replace that old house, at your leisure, or sell the land to someone who will, at a profit.
This article, from a California residential real estate agent, summarizes "location cubed":
By Elizabeth Weintraub, About.com Guide
Location, Location, Location is an adage you will hear over and over.
It's like the real estate agents' mantra: location, location, location. You've certainly heard the phrase enough and may wonder what possesses agents to say it three times. Or you might think it pertains to three different types of locations -- perhaps an excellent location, a mediocre location and a lousy location.
I'll put your mind at ease. It means identical homes can increase or decrease in value due to location. It's repeated three times for emphasis, and so you will remember the phrase. It's the number one rule in real estate, and it's often the most overlooked rule.
The Epitome of Location, Location, Location
You can buy the right home in the wrong location. You can change the structure, remodel it or alter the home's layout but, ordinarily, you cannot move it. It's attached to the land. The best locations are those in prime spots such as:
It's almost easier to talk about what constitutes a bad location than to discuss good locations. That's because the qualities that make a good location desirable can vary, depending on whether you're looking in the city, the country or the mountains. Bad locations, by their general nature, are easier to pinpoint:
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.
"Identical homes can increase or decrease in value due to location." While construction costs vary remarkably little from city to city (explore the geographical variance chart at saylor.com, on which, if memory serves, costs range from 74% to 106% of the Los Angeles metro costs on which the rest of their costs are based), while the price of a building lot can vary from $20,000 to $1,000,000 or more, depending on its location. (And the $20,000 one is probably a good deal larger than the $1,000,000 one, and with fewer constraints imposed by the local community.) A well-maintained 30-year-old 4BR, 2.5bath builder's colonial of, say, 2500 square feet can sell for $125,000 to $1,300,000 or more depending on the local land values.
Harvard Law School professor Elizabeth Warren, some years ago, co-authored a wise book entitled "The Two-Income Trap: Why Middle Class Mothers and Fathers Are Going Broke." She recognized that a part of it related to chasing houses in school districts where they felt their children could receive a solid education. I don't think she saw the larger implications of this truth.
Posted on February 07, 2012 at 08:52 PM in buildings depreciate, capital gains are land gains, infrastructure, land appreciates buildings depreciate, land value created by community, location, location, location, popular ignorance of land economics, real estate bubble, reaping what others sow | Permalink | Comments (0)
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2. Some of our busiest airports do not have sufficient runways, landing slots at preferred times, gates, tarmac, etc., to meet demand. Flights end up circling and arriving late, producing cascading delays for passengers across the country. Many airports are constrained by surrounding communities not to expand their acreage. It takes time to build a new airport further from the city, and is expensive to add the transportation infrastructure to serve it. How should scarce resources at existing busy airports be allocated?
a. The airlines who currently own a gate ought to be able to sell it off to the highest bidder, or rent it for whatever they can charge their competitor.
b. Landing rights ought to be sold once and for all to the highest bidder. When they no longer want them, or can no longer use them profitably, those rights should be theirs to auction off at whatever price they can get, even if it is double or triple -- or more -- what they initially paid.
c. Leases for landing rights at peak hours should be auctioned off, with a term of a few years, and the revenue should first support airport costs and air-traffic control expenses. Should there be an excess, it should not be returned to the leaseholders: it belongs to the community at large and should go into general revenue.
d. Your suggestion?
see a related post, below.
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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It is frequently pointed out by Georgists that there are no really good rebuttals to land value taxation.
This excerpt from a 1971 letter to my grandfather from a colleague describes where the opposition comes from:
There may be be no "arguments that actually oppose LVT" as Bill says, but there are plenty of people who not only actually but actively oppose it. These are the people who are making hundreds of millions of dollars a year on the unearned increments land speculation gets as a result of land being so undertaxed that the landowner puts up only a trifling share of the enormous community investment needed to make his land reachable, livable and readily saleable. Of 7 million-odd New Yorkers I would guess that perhaps 70,000 people profit by today's misapplication of the property tax while 7 million lose by it, but the problem is that the 7 million have no idea of what they are losing while the 70,000 jolly well know that they have a good thing going for them and fight to keep it.
I've been trying for a year to get my friend, J___ C___, past president of the Realtors and Chairman of the Realtors Economic Research Committee to stop fighting LVT, but he keeps coming back to how his father bought some land near San Diego for $20 an acre before 1900 and sold it for $4,000 an acre around 1950 and his father could not have held it all that time if he had had to pay more than a nominal tax.
I don't think anyone should take the equity argument seriously. Just because the ownership of underused land has been subsidized for years does not entitle its owners to expect the subsidy to be continued forever, and likewise, for those who bought land in the expectation that the subsidy would be permanent. The equity objection to increasing the tax on land would apply almost equally to any other tax increase.
A week later, another letter includes this:
Just because landowners have had a wonderful subsidy racket going for them in the past should not give them any claim on having that subsidy continue ad infinitum. I do agree with Lowell that the transition to LVT would raise problems, and in any area with a high tax rat on property I can see that the transition would have to be staggered over a period of years, probably not less than five or more than ten, dpending on how big a tax rate was to be shifted off improvement values onto location values.
In the same file, a copy of a 1969 letter from the same person to Lowell (Harriss):
I don't see how tripling the tax on land could fail to force almost all owners of underused land to get busy and put it to better use. Conversely, I don't see how taking the equivalent of a 51% sales tax off improvements could fail to be a tremendous stimulant to improvements. If a 7% Federal tax credit on improvements was so effective, what would wiping out a 50% tax do!
Posted on January 22, 2012 at 11:11 AM in a wedge driven through society, all benefits go to landholder , better cities, capital gains are land gains, common good, corruption of economics, cost of living, cui bono?, justice of the single tax, land speculation, land value created by community, land value taxation, little people pay taxes, location, location, location, popular ignorance of land economics, property tax, property tax is two taxes, property tax reform, Proposition 13, public spending, reaping what others sow, socializing risk and privatizing profit, special interests, subsidies, tax reform, taxation, transportation, unearned income, unearned increment, untaxing buildings | Permalink | Comments (0)
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