LVTFan's Blog

Luke Russert's tribute to his father: a new political party?

link: http://www.washingtonpost.com/wp-dyn/content/article/2008/06/18/AR2008061801173.html
These paragraphs caught my eye ...

Luke Russert said that whenever he did well on a school assignment, his father would yell, "Yahoo! You smoked 'em, buddy!"

He asked the crowd to imagine a special edition of "Meet the Press" this Sunday in heaven, perhaps with a debate between Alexander Hamilton and Aaron Burr, or John F. Kennedy and Barry Goldwater. He even suggested a talk on the need for a new political party involving Teddy Roosevelt, the former president who later ran unsuccessfully for president as a member of the Bull Moose party.

What was the platform of that party?  You might be surprised, both by its timeliness and by its similarity to the ideas of Henry George, who came in #2 in the 1886 NYC mayoral election in which TR was #3. (Tammany Hall won, and the circumstances would not surprise most people troubled by some of our recent national elections.)   

Why did Big Russ have to work two full-time jobs?

The tributes to Tim Russert are moving, and I'm sure many of us who follow news and politics will feel his loss, too young, for quite some time.  But as I listen, I am led to wonder whether he ever questioned why it should be that a man needed to work two full-time jobs  to support his family.

McCain, Obama stake out divergent paths on taxes - Yahoo! News

Link: McCain, Obama stake out divergent paths on taxes

And neither of them gets it right.  They are proposing different arrangements of the deck chairs, and while one may provide a slightly better view of the orchestra, and the other better accoustics for enjoying the music, neither of them understand either what needs to be done or why.

Oil, Land, Water -- who among us is entitled to privatize their value?

Land, water, oil, air ... none of it is of our creation, and all of us depend on access to them.  If dollars are involved, to whom should they flow, and why?  If royalties are due, who is entitled to them? If rent happens, as it does in any place where there is a scarcity, who is entitled to it?

Is it the fellow whose land is in high demand?  Is it the fellow whose land has valuable minerals in it? Is it the fellow whose property is on a great aquifer?  Is it the great-great-grandchild of the Duke of Westminster, or of the first Caucasian settlers on a particular piece of land, or of someone to whom they sold title?   LVTfan says not. 

One Solution for Many Problems?

That was the title I chose for a short talk I gave at the "Building a New World Conference" at Radford, VA, a few weeks ago.  Here it is ... 

Is LVT the answer to all our problems?

My local newspaper has set up a facility to permit comments on articles and opinion pieces, and I frequently respond to what I read.  Yesterday, I posted a comment to an article entitled Office owners strive to retain tenants whose thumbnail description says "In tough times, office building owners often look for other sources of tenants besides relocations to their properties."  Today I went back and someone had posted the comment, " Your sole issue is land value tax. Am I right?"

 

The Price of Land in the New York Metropolitan Area

The Price of Land in the New York Metropolitan Area
by Andrew Haughwout, James Orr, and David Bedoll
at http://www.newyorkfed.org/research/current_issues/ci14-3.pdf

An interesting study was published recently by the Federal Reserve Bank of New York about the price of vacant land in the NY metro area.

It starts by citing a transaction in 2000: a 3.4 acre parcel on the southwest corner of Central Park which sold for $345 million, and whose buildings were demolished to make way for the Time Warner Center.  That's $100 million per acre.  But it certainly isn't a record, even in Manhattan.

And, yes, land value matters.  It matters quite a lot, in ways that most of us don't understand.  (As my mother would have put it, "Our educations have been neglected" -- but in this case, even those who should be teaching us can't, because their educations were lacking!)

a tax reformer does the family 1040's

I've heard it said that voting and paying taxes are two of the major sacraments of citizenship. Having spent a significant part of the past week working on the machinations of the latter for several different family members, I am weary of the sacramental qualities of income taxes.  It isn't that I think taxes are a bad thing.  But our current system of taxation is both fundamentally wrong and, having said that, unbelievably convoluted.

Most of the commentators I read and hear are only interested in simplifying the income tax. A few propose getting rid of the income tax and replacing it with a sales tax, which I regard as simpler, but nearly as evil as an income tax from a number of points of view.   And that puts aside the question of whether the necessary rate for the so-called "FairTax" is 23% (or 30% in the way we're used to thinking of sales taxes) or closer to 60%, as I understand is more realistically the case.

Still on the mountaintop: Economically rational racism

Link: Still on the mountaintop: Economically rational racism, by Gavin Putland

... So the key to the Promised Land is to reduce the natural rate of unemployment without creating a new class of working losers. To see how to do that, we must revisit some basic economic principles.

For a century and a half, capitalists and socialists argued about ownership of the means of production as if the assets that make up the "means of production" were all of the same kind. But they're not; they fall into two distinct categories.

• In one category are the assets can be produced by private, competitive effort. For convenience I'll call these house-like assets, although they include not only houses but also other buildings, as well as movable plant and equipment.
• In the other category are those assets that cannot be produced by human effort, or at least cannot be produced by private, competitive effort. For convenience I'll call them land-like assets, although they include not only land but also other natural resources, building rights attached to land, and monopolies and privileges of all kinds.

The returns on house-like assets include

• interest, which is the price of time-preference,
• insurance, which is the reward for bearing (quantifiable) risk, and
• economic profit, which is the reward for bearing (unquantifiable) uncertainty.

Those returns are an incentive to produce house-like assets. Any tax on those returns, or on the assets themselves, reduces the incentive. Conservatives repeat this argument ad nauseam but never acknowledge that it's valid only for house-like assets.

The net returns on land-like assets are usually called economic rent. Some people prefer to call them usury. But whatever you call them, they can't be an incentive to produce anything, because no private person or corporation can produce land-like assets, while the rental values of those assets are produced not by the owners, but by the demand from prospective users.

It follows that any fraction of the rental value of a land-like asset can be diverted into the public treasury without discouraging any productive activity, and therefore without raising prices. In other words, taxes on the values of land-like assets are not inflationary.

Is LVT the answer? It depends what the question is.

The title for this post was prompted by an article in the NYT about people not raised on farms deciding to become farmers, particularly in places near large cities.  It seems that local food was said to be the answer to a number of questions.  I'm generally in favor of it, but I'm not sure it is the answer to as many questions as its supporters claim.  That doesn't make "local food" a bad thing; just not the answer to as many questions as it might seem.

But the title for this post sprang to mind.  It seems to me that Land Value Taxation is the answer to a lot of very important questions.

Did someone yell "FIRE" sector? Bailouts for whose benefit??

Link: The Way Out of the Financial Ditch - New York Times.

To the Editor:

Re “The B Word,” by Paul Krugman (column, March 17):

The national mortgage calamity, often dubbed the subprime crisis, will continue for several years as various iterations of adjustable rate mortgages come of age.

Instead of a bailout as outlined in the column, a solution is required that stabilizes home values involving participation from homeowners, lenders and government.

For the last several months I have discussed such a plan with elected officials, government agencies and investment firms that own mortgages at risk.

“Appreciating America” is a plan I put forward that will help homeowners who need to be refinanced to prevent foreclosure.

This plan involves using a shared appreciation second mortgage to finance the shortfall between the amount owed and the current value of the home.

This is a financial instrument commonly used in commercial real estate transactions, and was recently supported in a speech by Ben S. Bernanke, the Federal Reserve chairman.

After five years, the homeowner and the lender will share in any appreciation of the home, giving all involved a stake in preventing foreclosure and rebuilding property values.

The plan can be adopted by all mortgage servicers, promoted to ailing homeowners and supported by the Federal Housing Administration. It can be carried out immediately.

Let’s not talk about bailouts until we provide bootstraps and solutions.

Nicholas Bratsafolis, Chairman and Chief Executive Refinance.com
New York, March 18, 2008

Homeowner equity is lowest since 1945

Link: http://www.boston.com/business/articles/2008/03/06/homeowner_equity_is_lowest_since_1945/

The article begins,

Americans' percentage of equity in their homes fell below 50 percent for the first time on record since 1945, the Federal Reserve said Thursday.

Homeowners' portion of equity slipped to downwardly revised 49.6 percent in the second quarter of 2007, the central bank reported in its quarterly U.S. Flow of Funds Accounts, and declined further to 47.9 percent in the fourth quarter -- the third straight quarter it was under 50 percent.

That marks the first time homeowners' debt on their houses exceeds their equity since the Fed started tracking the data in 1945.

The Boom-Bust Cycle

In 1933, a University of Chicago contemporary of Milton Friedman's named Homer Hoyt published his doctoral dissertation, entitled "100 Years of Land Values in Chicago."  It detailed 5 cycles during those 100 years.  Those cycles displayed a series of events which consistently occurred in the same order.

What might we learn from Homer Hoyt, 75 years later?  More important, is there something we can do to prevent this cyclical activity from destroying prosperity for the many, and creating it for the few?

Here are the 30 events ... Which ones are you observing in your community now?

Affordable housing -- for all of us. What policies promote it?

Link: http://www.sun-herald.com/Newsstory.cfm?pubdate=030808&story=tp1ch5.htm&folder=NewsArchive2

A front-page article in the 3/8/08 Charlotte (County, FL) Sun entitled "Not Affordable Enough" speaks to some interesting and important issues regarding Florida's housing.  A few excerpts:

The current downturn in residential real estate sales has created the closest thing to a buyer's market Florida has seen since the 1990s.

While that might be great news for a Northern couple looking to retire in Punta Gorda or Port Charlotte with their life savings, Charlotte County's median home price -- about $175,000 according to recent Florida Association of Realtors figures -- is still a barrier for many local wage earners ...

Despite North Port's reputation as a haven for working families, the median sale price in the Sarasota-Bradenton market remains about $260,000

Referring to recent problems in the housing market,

"It's a blip on the screen really, and in a year, we're going to be thankful that we did some investing in affordable housing," said Ron Thomas, executive director of Enterprise Punta Gorda, the city's economic development bureau. "When everybody says that there's plenty of affordable housing, we have to qualify that by saying that there is plenty of affordable housing for people who are in the 80 percent or above the median income. This doesn't have any positive effect for anybody in the 30 to 80 percent median income bracket."

"Even as low as (housing) has come down, it still might not suit firefighters, police, and school teachers. They're still struggling," said Bill Albers, Punta Gorda city councilman. Albers is the council's liaison to the Punta Gorda Housing Authority.

Ricardo's Law: The Great Tax Clawback Scam

A friend alerted me to a new video on YouTube.  It features Fred Harrison, who has written a book of the same title. It describes the mechanism by which those who own choice sites frequently receive more as beneficiaries of government spending than they pay in taxes, while those who own no land, or own land in places less served by government spending, pay out of pocket.

Who Benefits From This Mortgage Mess -- and From the Proposed Solutions? Is there an alternative?

No one seems to be talking about "cui bono?" in this situation.    But there were some big beneficiaries, and I think we need to acknowledge that; and the awareness of the dynamics might just lead us in some productive directions.