LVTFan's Blog

A Property Tax Cut Could Help Save Buffalo - WSJ.com

A Property Tax Cut Could Help Save Buffalo - WSJ.com.

Here's what I tried to post on the WSJ website; the topic, not surprisingly, was "locked."

Cutting property taxes is not the answer.  Rather, the answer is reforming property taxes so that we stop taxing, or at least severely limit, the tax on buildings, and place most -- or better, all -- of the property tax on land value.  Not only Buffalo, but also Schenectady, Albany and a number of other hurting cities and towns would benefit from this reform.

When we tax buildings, what we get are (a) fewer buildings; (b) poorer maintenance; (c) slower redevelopment of blighted neighborhoods; (d) less investment.

When we tax land value, what we get are (a) redevelopment of underused properties; (b) vacant lots and parking lots blossom with buildings that will help pay the land value tax; (c) better maintenance of existing buildings because the landlords suddenly realize that they need tenants to help pay their property taxes.   All these contribute to a healthy local and national economy.

Time to Tackle US Poverty?

I'm going to take the liberty of sharing a blog post I came across at a blog called "View From Outside."  It is written in fine English, and from the structural blog stuff and the title, I suspect the author lives overseas.  Here's what he has to say:

It is being suggested that President-Elect Obama should appoint a "Poverty Czar". But the root cause of poverty is lack of access to land. Those who do not have it are forced to pay rent and work for wages. Rents rise to the maximum that people can afford and it is only the exceptional individuals who can get out of that trap. If everyone is educated or works harder, the effect is merely to raise the levels of rent. It is as simple as that. The Law of Rent is an iron law of economics. It was described by, amongst others, David Ricardo, whose name it bears. Unfortunately, modern economic theory ignores the role of land and rent, with the result that the cause of poverty is nearly always thought to be something else, and the problem is never solved.

Where land has been freely available, there is no poverty, since people have the option of working their own land. This was the situation on the western side of the USA in the mid nineteenth century. This was noted by a San Francisco man, Henry George, who developed a new theory of economics to account for it. But when he had finished his work he found that he had only re-stated the ideas formulated a century before by the French Physiocrats, though in an updated form. George also gave the most convincing explanation to date of the land-based cyclic boombusts such as the one we are currently experiencing. You can read his book online here.

Although a poverty czar (or perhaps czarina!) in itself will achieve nothing, the situation is not hopeless. The solution is to read George's book and apply the proposed remedy. But since it will take political courage to face-down vested interests, the czar(ina) will need to be strong.

I have nothing to add, except perhaps some links to some additional pages which expand on a few of the ideas it contains.

• poverty's cause
• rents
• Ricardo
• law of rent
• free land
• Henry George
• Physiocrats
• boom-bust cycles
• Progress and Poverty
• the remedy
• special interests
• privilege
• wealth from land appreciation
• wealth concentration
• land concentration
• land includes
• natural resources
• poverty
• abolishing poverty

And  two other posts from the same blogger also intrigue me ...

Should we tax action, or tax inaction?

Joshua Vincent, of the Henry George Foundation in Philadelphia, is a keen observer of the scene, particularly of Philadelphia's scene.  This week he had an article in The Bulletin in that city, and he comes up with what I think is an interesting observation:

... on the revenue side we still depend too much on the taxation of action.

He continues,

The fact is Philadelphia relies on tax revenue from two things - labor and capital - that can be hidden, can vanish or can flee. Both are being whipsawed by forces beyond Philadelphia's control. There are few places to hide, especially from high tax rates on those two things.

Change Needed to End Boom-Bust Cycles

John Fisher wrote an excellent Letter to the Editor, published in the Chatham Daily News, which I think worth sharing:

Sir:
Re: Boom and Bust Cycles.

No matter how many billion-dollar crutches (bailouts, stimulus) are thrown at the current economic downturn, up-and-down cycles will continue until the "experts" get back to Economics 101.

Adam Smith, David Ricardo, Henry George and other classical economists correctly defined land (free gift of nature), labour and capital as the three factors of production. Land or nature, not being created by labour, is not capital. Unlike privately created wealth, nature only gets value from the presence and activity of the community as a whole.

The economy is often compared to a house or a ship, but usually without reference to the lot or water upon which they absolutely depend. All the good things the experts now suggest to improve the house or ship will ultimately determine the value of the underlying natural base, depending of course on human pollution, over and restricted use, etc.

Giving nature a value like we do now for land and then capturing it for the social good would reduce urban sprawl and waste of resources, while rewarding quality and quantity in the production process.

Many classical economists, including Henry George, would shift taxes from private wealth (the house) to public wealth (the land). In other words, pay for what you take from nature and not what you make privately. With little cost to government, this simple tax shift would remove unearned income from resource speculation and enable tax reductions on wages and business.

Until economic justice and reason prevail with a major tax shift from production (jobs, houses, trade) to resource values (raw land, water, oil) the world will continue to suffer from monopolies of nature and economic turmoil.

If you'd like to know more about these subjects, from a Georgist point of view, you might explore these pages:

boom-bust cycles  | Adam Smith |  David Ricardo  |  Henry George | classical economists  | land  | labor |  capital | factors of production | well-provisioned ship  |  all benefits go to the landholder | growing rich in one's sleep  | technological progress | population growth  |  he who produces | pollution  |  pay for what you take |  unearned increment | land speculation  | privatization  | commons  |  enclosure  | sprawl

John packed a lot into a single letter, and I'm glad the editor had the sense to print it.  Now, if only more of us understood what John does.

On a well-provisioned ship, how is it that 6% of us consume ~25% of the resources?

As we, perhaps, become somewhat more appealing to the other 94% of the globe's residents as a result of the choice the voters made on Tuesday, we still need to consider the question of the rightness and the sustainability of a country which has 6% of the world's people consuming about 25% of the world's resources.

There is the theory of American exceptionalism. A Google search provides the Wikipedia definition of American exceptionalism; The second thing Google brings up is a recent book review from The American magazine:

Understanding American Exceptionalism

By Karlyn Bowman Monday, April 28, 2008

An ambitious new book explains how and why the U.S. is so different from other countries around the world.

“America is indeed exceptional by any plausible definition of the term and actually has grown increasingly exceptional [over] time.” This is the conclusion of the editors of a new volume, Understanding America: The Anatomy of an Exceptional Nation (PublicAffairs, $35). At an American Enterprise Institute conference on April 22, Peter H. Schuck and James Q. Wilson introduced the collection of essays, which is designed to probe Alexis de Tocqueville’s observation that America is “exceptional,” or qualitatively different from other countries. The book, which examines 19 different areas, marshals the best and most current social science evidence to examine America’s unique institutions, culture, and public policies.

During his introductory remarks, AEI president Christopher DeMuth said that no effort to understand the meaning of American exceptionalism had been “more ambitious and far-reaching” than this book. Not only does it describe the ways — both good and bad — in which Americans differ from people in other nations, DeMuth said, it also considers whether American exceptionalism is likely to continue, and how it matters to the world. DeMuth noted that Americans are more individualistic, self-reliant, anti-state, and pro-immigration than people in many other countries. They work harder, are more philanthropic, and participate more in civic activities. On the negative side, America also has a higher murder rate than some other countries. 

Wilson noted that one of the best ways to understand American exceptionalism is to look at polls. Three-quarters of Americans say they are proud to be Americans; only one-third of the people in France, Italy, Germany, and Japan give that response about their own countries. Two-thirds of Americans believe that success in life depends on one’s own efforts; only one-third of Europeans say that. Half of Americans, compared to one-third of Europeans, say belief in God is essential to living a moral life. 

Three-quarters of Americans say they are proud to be Americans; only one-third of the people in France, Italy, Germany, and Japan say that about their own countries.

Negative views of America in polls today have been shaped by the Iraq war and by the response to President Bush, Wilson noted, but criticism of America has a long history, particularly among elites. He quoted Sigmund Freud as saying, “America is a great mistake.” “Anti-Americanism was an elite view,” Wilson continued, “but it has spread deeper to publics here and abroad.” 

Schuck said that Understanding America casts a new light on American exceptionalism by examining it at a micro level. He identified seven overarching themes that connect the essays. 

(1). American culture is different. Its patriotism, individualism, religiosity, and spirit of enterprise make it different. The United States, Schuck said, “is more different from other democracies than they are from one another.” 

(2). American constitutionalism is unique in its emphasis on individual rights, decentralization, and suspicion of government authority. 

(3). Our uniquely competitive, flexible, and decentralized economy has produced a high standard of living for a long time, even though it now generates greater inequality. 

(4). America has been diverse throughout its history. Schuck cited research by historian Jill Lepore, who found that the percentage of non-native English speakers in the United States was actually greater in 1790 than it was in 1990. The thirst for immigration, he said, has transcended economic booms and busts. 

(5). The strengths of civil society here make America qualitatively different. No other country, he said, allocates as much responsibility for social policy to the nonprofit sector. 

(6). The characterizations of the United States as a welfare-state laggard compared to Europe miss an element of American distinctiveness: its reliance on private entities to provide certain benefits. 

(7). We are exceptional demographically with our relatively high fertility rate. 

... The editors of Understanding America, Schuck and Wilson, believe that the “stakes in understanding America could hardly be higher. For better or worse, America is the 800-pound gorilla in every room in the world.” 

Karlyn Bowman is a senior fellow at the American Enterprise Institute and a contributing editor to THE AMERICAN.

Americans are consuming roughly 25% of the world's natural resources, despite representing only 6% of the world's people.  As others  see themselves as our equals -- equally entitled to the world's resources, including the carrying capacity of the environment to handle the pollution we spew out, how are we going to reconcile the notion that all men are created equal with their very reasonable expectation that they are equally entitled -- and further, that future generations are entitled to inherit a world that works and a planet with resources available to meet their needs, too -- not to mention, within the US, the younger generation's very reasonable right to not be paying for our generation's wars and mistakes?

And then remember that within the US, the top 1% of wage-earners are getting 12% of wages; the top 10% are getting nearly 36% of wages.  When we look at all income excluding capital gains, the top 1% of income recipients are receiving nearly 20% of income and the top 10% are receiving 47% of income.  When we look at income including capital gains -- the most inclusive measure -- the top 1% are receiving nearly 23% and the top 10% nearly 50% of income.   [Source: Piketty & Saez, 2006 data]

And when we look at the accumulated net worth of Americans, in 2004 the top 1% of wealthholders had over 33% of the net worth; the top 10% of wealthholders held nearly 70% of America's household wealth. [Source: FRB Survey of Consumer Finances, 2004.]

How much of that wealth is created out of thin air, without the use of natural resources?   We've learned a bit about assets created from thin air, and we may have reason to worry greatly in coming months about the moods and portfolios of those who invested heavily in hedge funds.  But I'm willing to bet that were we to get a new snapshot of the same statistics for, say, October 31, 2008, the wealth concentration would be little a bit higher than 2004's.  (The 2007 data will likely be available in January, if previous publication patterns hold.) 

Natural resources and resources which are rightly common property -- the economic value of land, of broadcast spectrum, of water rights, of landing rights, of many other like things, which the neoclassical economists would recognize as "land," as opposed to "capital"  -- have been privatized -- quite legally -- to produce the wealth and income concentration which America lives with.  They've played by the rules -- but the rules aren't just or right.  It is time to revise the rules and the structures. 

By doing so, we can do something about our excessive use of the world's scarce resources; reduce urban sprawl; shorten commutes; increase urban density; encourage job creation, raise wages, reduce wealth concentration, improve the economy's efficiency, remove much of the deadweight loss, motivate the private sector to provide, at a profit, affordable housing for all.   And reduce our overuse of the world's natural resources significantly, making us an example to the rest of the world of what to do and how to do it, rather than the opposite.

Too much to ask of one reform?  Too much to ask for?  NO!

 

Americans and Mass Transit

An article in Salon last week, entitled Who says Americans won't ride mass transit? contained some interesting factoids:

• Like mass transit systems across the country, BART has experienced record ridership this year. In 2007, Americans took 10.3 billion trips on public transportation, the highest number since the Model T and its progeny took over the nation.
• Back in 1926, Americans each year took 147 transit rides per capita.
• By 1950, Americans took just 113 transit rides per capita, and by 1956 that number had plummeted to just 66. By 2006, Americans took just 33 transit trips a year per capita. In the decades since World War II, it has been only in the dense financial centers, like New York, Chicago and San Francisco, where transit has been able to stubbornly resist the rise of the car, remaining a major way for many residents to get around.
• In 1960, some 12 percent of all U.S. workers used transit to get to work. By 2000, that number was down to 4.7 percent, and in the past couple of years it has just barely ticked up to 4.9 percent.
• Since the early '80s, 15 major American cities, including San Diego, Portland, Ore., Denver, Houston, St. Louis, Salt Lake City and Los Angeles, have built new light-rail systems from the ground up. Dozens of other cities are considering proposals for similar systems, or have them in development, such as Phoenix and Seattle.

So how do we go about making our cities and towns mass-transit-friendly?  Seems to me that measures that lead to increased density will help support mass transit ... and that mass transit will support increased population density.

The best measure I know is shifting taxes onto land value.  Sites well-served by infrastructure (e.g., roads, bridges, highways, airports, public transportation systems, ports, city water and sewer, stormwater runoff and, where needed, levees or hurricane protection, etc.) -- and services (e.g., schools, emergency response for small- and large-scale emergencies, public health, courts, etc.) -- and in places made desirable by nature (e.g., good views, waterfront, access to recreation, an appealing climate, a reliable supply of clean water, etc.) and good laws (e.g., limiting pollution, unpleasant smells, noise, etc.), efficient and uncorrupted government, and a healthy economy (with smart incentives and few disincentives to productivity, good infrastructure, logical and efficient services provided by the government, particularly in natural monopolies) have tremendous value.  For a good example of this, see this post.

When we tax land value lightly, those who own choice sites can choose whether to sit and wait -- without lifting a finger -- for the rise in land value they can reasonably expect to occur, or put the land to good use now.  Putting the land to good use now creates jobs, housing, offices, retail spaces, density.  Sitting and waiting produces nothing on that site, and leads to sprawl at the fringes.  Should our landholders have that choice, or is putting such sites to something approaching their highest and best use sufficiently important to the community as a whole that we ought to have incentives to good land use?  I'd say that reducing and reversing sprawl is sufficiently important that we ought to be taxing land value heavily. 

And there are many other good reasons to do so beyond this one.

Bob Herbert: A Fool’s Paradise

A Fool’s Paradise - NYTimes.com.

The article describes the fact that wages have stagnated for most of us, and that a series of events, including the entrance of wives and mothers into the workplace, and the increasing tolerance for debt, have been what has kept the bottom three quarters of the income spectrum afloat.  It ends,

The economy won’t be saved by bailing out Wall Street and waiting for that day that never comes when the benefits trickle down to ordinary Americans. It won’t be saved until we get serious about putting vast numbers of Americans back to work in jobs that are reasonably secure and pay a sustaining wage.

And that won’t begin to happen until we roll up our sleeves and begin the immensely hard and expensive work of rebuilding a nation that unconscionably was allowed to slip into a precipitous state of decline. We’ll end up spending trillions for the wars in Iraq and Afghanistan and another trillion, at least, to clean up after the madmen on Wall Street.

Now we need to find the money and the will to put Americans to work rebuilding the nation’s deteriorating infrastructure, revitalizing its public school system, creating a new dawn of energy self-sufficiency and rethinking our approach to an economy that remains tilted wildly in favor of the rich.

So how do we do that?   Herbert's answer is "That's what the presidential campaign should be about."

But I'll submit that neither of the major party candidates, and, likely, none of the third party candidates, have the answer.   That isn't to say there isn't an answer.  We just haven't heard anything about it yet from any of these candidates.

I think the answer lies in the observations of Henry George, and that the Remedy he laid out in his landmark book, Progress and Poverty (1879).  The subtitle to that book, An inquiry into the cause of industrial depressions and of increase of want with increase of wealth ... The Remedy," seems pretty timely.

Rich in Natural Resources

But what if our natural resources are in private hands?  Are we rich in natural resources if the Jed Clampetts own the land under which our natural resources reside?

Or are we rich in privileged people, whose trickling down the rest of us must be content with?

A significant share of Alaska's oil revenue flows to the state and to the Alaska Permanent Fund because the oil sits under state-owned land.  But in the lower 48, our oil is on privately owned property, or under corporate property, and the revenues flow not to the American people, or to the people of one of our states, but to private portfolios.

Is this consistent with the notion that we hold it to be self-evident that all men are created equal?   Discuss.

Assessing Land Values

A friend in California, Harry Pollard, a longtime teacher of Georgist ideas, tells a story I'd like to share about assessing land value.  It predates the advent of computers, of computer assisted mass assessment (CAMA), which is a very effective and efficient tool.  Talking to a contemporary audience, he clarifies that the assessments should be made on a square foot or square yard basis, rather than by lot, so that people can readily compare their own assessment with those of others.  Harry points out that publishing the assessment is a good way to make both corruption and mistakes clearly evident.  (My own town puts all assessments online, though not with tools for easy analysis.)

Here's the story:

Those Shareholders who are being wiped out ... who are they? - or, "How's it trickling?"

Some will try to tell you that stock ownership in America is very broad, and that the middle class is going to be suffering -- as shareholders -- if we don't bail out ... whoever.  The oil companies, the banks, etc.

They are telling the truth, sort of.  Not the whole truth, of course, but the sort of truth that leads you to the conclusions they need for you to reach.  The sort of truth, too, that most of us would like to believe is true.

Much depends on how we define the "middle class."  I'm going to pick a definition that I don't think is ideal, but for which the data is readily available.  It comes out of the Survey of Consumer Finances, as reported in a Federal Reserve Board Study called Currents and Undercurrents: Changes in the Distribution of Wealth, 1989-2004.  I'm going to define the middle class here as the 40% of us whose net worth places us above the median in net worth, but below the top 10% of the wealth spectrum.   By that measure, half of us are below middle class, and 10% of us above it. Here is how aggregate net worth is divided among the three groups:

We all contribute to rent. Some of us get to live off it. How does this fit with the notion that we are created equal?

Rent is something most of us give little thought to, and most of those who think about it are not thinking about the sort of rent to which I refer.  The rent I'm talking about is not the payment which goes from tenant to landlord each month.

Rather, the rent to which I refer is the return to land, just as wages are the return to labor and interest is the return to capital.  And, just to expand it a bit further, "land" in this usage refers not just to the sites under our feet, but equally to the remainder of the natural creation and to that which our common investment in infrastructure and services has added to the natural creation: the access created by bridges, highways, railroads, subways, airports, river locks, etc, the value created by schools, parks, public health, courts, systems set up to respond to individual and widescale emergencies, etc.  Land includes natural resources, such as oil, water and air, the electromagnetic spectrum (those airwaves that belong to the American people); airport landing slots (where demand exceeds supply), etc.  

Rent happens.  It happens whenever more than one party wants to use a specific piece of land.  Who should benefit from it?  A small group of us? the first to arrive? Or all of us? 

How Much Oil Do We Use?

Research for a blog post below led me to an interesting page at http://politicalcalculations.blogspot.com/2008/06/how-much-oil-do-individual-americans.html which provided the statistic that on average, Americans use 2.58 gallons of oil per day per capita  This has remained remarkably consistent over the past 25 or so years. (The graph is quite interesting.)

Some thoughts about paying taxes...

I saw a comment, deep in a long thread at Daily Kos, whose topic had varied a bit from the original post:

Daily Kos: Is Palin also a tax cheat?. I don't hate taxes ... anymore than I hate paying for my food or housing. Taxes pay for services, and they are a reasonable way to provide an economy of scale we could not otherwise afford.

Continue reading "Some thoughts about paying taxes..." »

(With a nod to Mark Twain!) The OT lesson in my church today was from Exodus, about God raining bread from heaven for Moses and his people. 

In the evening quails came up and covered the camp; and in the morning there was a layer of dew around the camp. When the layer of dew lifted, there on the surface of the wilderness was a fine flaky substance, as fine as frost on the ground. When the Israelites saw it, they said to one another, "What is it?"  For they did not know what it was.  Moses said to them, "It is the bread that the LORD has given you to eat."

Can you imagine if some of us claimed the land onto which that bread had fallen as our own, and told those who wished to collect their share of that bread that they must first pay us rent for the privilege?  Can you imagine if some of us gathered it, and sold it to our fellow human beings at high prices?  Can you imagine if we permitted the landholders to charge their fellow human beings for access, and then turned around and imposed an income tax on the general community, pretty much ignoring land value in the process?

The LA Times ran an article entitled Can California survive 'no new taxes'?, and I thought it merited a comment.  However, it turns out that they only accept comments of 650 CHARACTERS or less.  Here's what I tried to post...

link: 120TN0887.pdf

A few lifts:

• While median income rose year-over-year in 2007, it was still smaller than way back in 1999 by $408 or nearly 1 percent. Eight years and no gain is not good news. My analysis of the latest reports from the IRS Statistics of Income Division showed that in 2006, taxpayers reported higher average income for the first time since 2000. But the gain was just $740, from $57,289 in 2000 to $58,029 in 2006.
• Looking deeper, the data show that the gains are almost all at the top. Among people making less than $75,000 — roughly 8 of every 10 taxpayers — 2006 average incomes remained below those of 2000 levels. And of the gains of the top fifth, an astonishing 42 percent went to the 1 in 400 taxpayers who reported seven figures or more of adjusted gross income on their Form 1040.
• The dominant and often only form of income for most Americans is slowly eroding, while the capital incomes earned by those at the top are soaring.
• And while it is true that the top 10 percent pay the lion’s share of income taxes, this levy explains only about a sixth of the dollars that governments at all levels collect.   When you look at all federal taxes that fall directly on individuals, the data show that schoolteachers, cops, and office workers pay marginal tax rates of more than 40 percent on wages that have been mostly stagnant over the past three decades. But at the very top, where the marginal tax rate is just 15 percent, incomes soar.
• We need policies that focus on wages if we want broad prosperity. We need to look at the world the way employers do, who see the payroll tax as a good reason to shed workers and hire people on contract and, when they can, shift jobs overseas.

"Capital incomes."   Hmm.  Capital tends to depreciate.  What appreciates is what the classical economists classified as LAND.  Neo-classical economists have managed to tuck land into capital as a subset, and thus appear to justify a lot of things which simply have no justification.  Oil revenues are somehow treated as if corporations had created that oil.  (The governor of Alaska declared recently that that resource rightly belonged to all Alaskans, and raised the tax rate a bit.)

The classical economists saw three non-overlapping factors of production: land, labor and capital. The returns to each are rent, wages and interest.  If those who would open a business need a bit of land on which to operate, and that bit must be very choice in order for their business to succeed, they must pay a very high rent to the current owner of that site, leaving them less for employing workers and buying the things which will make that business a success and which, by the way, will enhance the economy.  The land rent can go either of two places.  As we conduct things now, a tiny share of it goes to the commons, as part of the local property tax; the remainder is permitted to collect in private pockets, lining those pockets more each year.  As we should do things, the lion's share of that land rent should be collected by the commons, and used to fund our common spending -- leaving wages untaxed, sales untouched, buildings unpenalized.  We can

(1) recycle the land rent, over and over and over, for public purposes, or we can

(2) gift it to the landholders, and tax our wages and our sales and our buildings in order to get the revenue we need to help make rent higher next year. 

Which of these options seems wise?  Which seems sustainable? Which seems just?  Which seems efficient?  Which seems administrable? 

Gold-based lease could cause million-dollar rent hike for Forest City Enterprises - Cleveland.com.

It seems that there is a 12-story building, the Halle Building in downtown Cleveland, which is owned by Forest City, on a site of approximately an acre, which was bought a couple of years ago by a New York investor.  The terms of the 99-year lease created in 1912 call for the land rent to be equal to the value of 1,693.28 ounces of gold.  In 1912, that was $10,000, and over time it increased to $35,000, where it froze when FDR threw out the gold standard in 1933. The original landlord is not named in the article, but it appears that Forest City has owned the building since 1982, when the Halle department store went bankrupt.  In 2006, the NY investor, Stuart Venner, bought the land for $845,000, and sued to enforce the original 1912 land rent contract.  Today, that much gold is worth about $1.4 million.

Forest City appears to have renovated the building, and likely receives a very fine income from renting the office suites within it. Their revenue comes from several sources, all rolled up into a single payment from each tenant:

• a return that relates to the building itself and the manmade amenities it offers (capital);
• a return on the services which the buildinglord provides: building maintenance, perhaps a doorman, cleaning, trash handling, etc (labor); and
• a return which relates to the location itself (land). 

The same tenants would be willing to pay far less for identical space and amenities, if the building were 2 or 5 or 10 miles away.

Who is entitled to what? I'm not talking about contracts, or the way we've got things set up right now.  Rather, I'm talking about what's right and rational; what establishes good incentives, rewards productive effort, encourages redevelopment of prime sites, creates vibrant cities and economic justice and opportunity for all, and widely shared prosperity.

If we are going to claim to value every life, and encourage every pregnant woman to bring every fetus to term, we need to acknowledge that every child born is the equal of every person already born.  Interestingly, Alaska has been doing something important in this regard, for more than 20 years.

Every man, woman and child who lives in Alaska receives an annual income from the Alaska Permanent Fund, which represents dividends from the invested proceeds of Alaska oil revenue, and which, if properly managed, will continue to provide an annual income for every Alaska long after the oil has all been tapped. And Alaska's governor has had the fortitude to increase the share of the public in Alaska's oil revenue due to the high price of oil. (See another post on the subject from a few days ago.)

(And much of Alaska's state government spending comes from oil revenues, too.)

Our oil is not the only resource that needs to be treated this way.  Urban land values can be hundreds of thousands of times the value of an acre of agricultural land.  There is an acre in Manhattan said to be worth $400,000,000 to $1,100,000,000 -- as a teardown.  If we were to tax that land value at, say, 5% per year, at $400,000,000 it would produce $20 million in income for we-the-people, relieving the need for $20 million in sales taxes, or $20 million in payroll taxes, or $20 million in income taxes.  Talk about fiscal stimulus!  Talk about a permanent tax holiday! Talk about getting the incentives right!  

The Billionaire and the Bookstore - The Boston Globe

Wendy Schmidt, wife of Google CEO Eric Schmidt, is spending a fortune to preserve Nantucket's small-town character. But is the island helped -- or hurt -- by having its very own sugar mama

It seems that, in order to keep a fully functioning downtown in the town of Nantucket on the island of Nantucket, one of the seasonal residents has bought up some land (and buildings) downtown and is offering them, at token rents, to successful local merchants whose businesses meet the needs of year-round residents of this high-end resort island.

Link: http://taxprof.typepad.com/taxprof_blog/files/120TN0683.pdf
David Cay Johnston, the peerless reporter and commentator on US income tax policy, formerly with the NYTimes, and the author of two excellent books (Perfectly Legal and Free Lunch), now a columnist for Tax Notes, has written a column on the incentives involved in the income tax deduction for interest.

Though I think he sees through a glass darkly on this one, he does make some important points:

He starts out with this:

What we make of life’s opportunities depends on how well we have prepared to take advantage of them. But first we must recognize opportunity when it comes knocking, or the chance is lost. And lost opportunity costs can be huge not just for individuals, but nations as well.

As a Georgist, I am led to wonder about this.  What I think of when I read this is that one of life's biggest opportunities, as we structure our economy right now, is the privilege of claiming for oneself a choice bit of the natural creation or the community creation -- without being required to compensate the community for what one has taken.  The former includes natural resources, such as ports, water, the electromagnetic spectrum, and the oceans -- not to mention breathable air.  The latter includes that which the community has created, through both public spending and private spending: land value, created by the presence of concentrations of population due to favorable climate, attractive views, cultural amenities, and through public spending on such public goods as infrastucture (airports, highway systems, bridges, water delivery, sanitary sewer and stormwater runoff systems, public transportation, schools, emergency services, libraries, public health, parks, etc.), and what might be either public sector or private sector spending, on electricity, cable TV, WiFi, railroads.

All these things conspire to make some land more valuable than other land.  Those who have title to valuable land get to collect rent from their fellow human beings, just as if they, personally, could take credit for all those natural, public and private amenities.  What an opportunity!  Shouldn't the smartest among us be permitted to privatize all that economic value?  Isn't that what opportunity is all about?

NO!   

Link: Renters deserve a better shake by Nicholas Retsinas, director of Harvard's Joint Center for Housing Studies

The op-ed begins:

NOT EVERYBODY in the family tree makes it into the family portrait. Most families have ne'er-do-wells; many families crop them out.

Housing USA is like a family portrait. We see ourselves as a nation of homeowners or wannabe homeowners; and our policies, programs, and rhetoric support that image. The news focuses on the homeownership crisis: foreclosures, toxic loans, mortgage fraud, the "jingle mail" when homeowners, facing foreclosure, send keys to the lender. The major federal housing initiatives (including the Federal Housing Administration, Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System) have helped more than two-thirds of us buy into the American dream. Indeed, a few years ago policy-makers were lauding the nifty subprime mortgages marketed even to buyers with poor credit, enabling even them to own.

What about renters? One-third of all households rent - surely they are part of the American family; but policies, as well as rhetoric, have overlooked them. While the federal government has subsidized some renters (25 percent of eligible households) and the production of some "affordable" units, those subsidies pale beside the forgone tax revenues from the mortgage interest deduction, property tax deduction, and capital gains exclusion.

Link: Low Rent, East Side Location - See Landlord, if You’re Famous

A fascinating article which demonstrates how powerful the urban landed gentry are.  They can pick and choose their tenants, offering particularly well-connected people well-located luxury housing at a discount.

Which tenant is going to say no, on anything that matters to such a benefactor?   Moving is so inconvenient, and finding a similar location, particularly subsidized, difficult.

A rent-stabilized apartment in New York is a precious find. Which could explain the indignation that greeted the disclosure that Representative Charles B. Rangel was occupying four of them in the luxurious Lenox Terrace towers in Harlem, where Gov. David A. Paterson also has one.

Throughout the city, the well-connected (or just plain lucky) have been able to snare such prizes and retain them over the years.

But few rental buildings in the city have been as hospitable to public officials, past and present, as the Rudin Management Company’s high rise at 215 East 68th Street, where a shouted, “Good morning, your honor!” could turn every head in the lobby.

Link: Leona Helmsley’s Fortune May Go to Benefit Dogs

The living and the dead, the human and the canine.

Leona Helmsley and her husband Harry individually and together accumulated billions of dollars worth of New York City real estate.  Who is entitled to that fortune?

Bill Gates has moved on to his second career, using a large share of his -- and Warren Buffett's -- accumulated funds -- $30 to $40 billion -- to make a difference in the world.  I've got some thoughts about the options he has chosen, and some alternatives. 

He seeks to cure malaria.  A worthy goal. Nothing wrong with that. Success would remove a cause of human suffering.  But we ought to be conscious of the side effects of such measures.   And if the goal is to reduce human suffering, then something more needs to be done, above and beyond the things Bill Gates proposes, the things the Millenium Development Goals propose, the things Jeffrey Sachs proposes. 

Link: David S. Broder - Perot, Back On the Charts

Ross Perot has started a new website, www.perotcharts.com, featuring graphic representations of what he sees as the most serious problems facing the US.  I share some of his concerns, but think that several additional charts would be equally relevant.

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 ... 

Several articles on the topic of assessing golf courses have come to my attention in the past few days.  I've posted previously on the topic, but will start fresh here.

The first article had to do with assessments in Greenwich, Connecticut, where eight private golf clubs were seeking assessments of just $60,000 per acre.  Now that might seem like a high value to people who live in the heartland of America, but Greenwich is a place where a single-acre building lot (with or without an existing house on it) can sell for well over $1 million, and where roughly 1 in 4 residential transactions results in a teardown, often of a home which would be considered a super-luxury home nearly anywhere else.   The assessor had sought to value the land at a still-very-generous-to-the-clubbers $200,000 per acre.  (By law -- a peculiar law whose justification I don't follow, CT's assessments are to be 70% of actual value, so the $200,000 valuation would be about $285,000 -- still a very generous valuation in a town with high property values.)

I've been thinking about who the "natural constituencies" for land value taxation are, and there are a lot of them.  But it seems to me that firefighters and their families are a prime ally for those who think that Land Value Taxation is an important contribution to making our country a better place to live for all of us.

Link: Stranded in Suburbia - New York Times.

If Europe’s example is any guide, here are the two secrets of coping with expensive oil: own fuel-efficient cars, and don’t drive them too much.

Notice that I said that cars should be fuel-efficient — not that people should do without cars altogether. In Germany, as in the United States, the vast majority of families own cars (although German households are less likely than their U.S. counterparts to be multiple-car owners).

But the average German car uses about a quarter less gas per mile than the average American car. By and large, the Germans don’t drive itsy-bitsy toy cars, but they do drive modest-sized passenger vehicles rather than S.U.V.’s and pickup trucks.  ...

Can we also drive less? Yes  —  but getting there will be a lot harder.

There have been many news stories in recent weeks about Americans who are changing their behavior in response to expensive gasoline — they’re trying to shop locally, they’re canceling vacations that involve a lot of driving, and they’re switching to public transit.

But none of it amounts to much. For example, some major public transit systems are excited about ridership gains of 5 or 10 percent. But fewer than 5 percent of Americans take public transit to work, so this surge of riders takes only a relative handful of drivers off the road.

Any serious reduction in American driving will require more than this  —  it will mean changing how and where many of us live.

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!)

This was the headline of an email that came into my inbox today.   And it dawned on me that it is a fine angle from which to view the benefits of land value taxation. 

I'm pleased to share (with permission of the author) something that appeared on a mailing list I subscribe to. The conversation was along the lines of "how do we share the idea of land value taxation [a reform of the property tax] with people who are used to hating the property tax?"

Roy Langston wrote,

When I encounter the usual unreasoning hatred of property taxes, I just point out a few inconvenient truths, along these lines:

I came across a piece entitled "Why Democrats should love the FairTax," written by Laurence J. Kotlikoff, a professor of economics at Boston University, an economic adviser to Mike Gravel and a consultant to FairTax.org.

I continue to be amazed how even economists, who should know better -- far better -- than to even think about a sales tax as a solution to anything, can be in favor of such an alternative.

I'm talking about its dollar valuations; "priceless" is not one of the options here  (And think about the trouble that the MasterCard ad series has gotten us into: that using credit to afford a "priceless" family experience is a wise thing to do.)

We get a lot of different valuations on the same piece of property, and it is worth looking at all of them, and understanding the differences among them and the significance of the various figures.  I'll list all the valuations I can think of, and hope you'll add others in the comments.

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.

I received in an email recently a quote from Albert Einstein:

A clever person solves a problem; a wise person avoids it.

Link: Abolish All 'Taxes' - NYT 4/15/08  There was an op-ed in Tuesday's NYT about changing the word "tax" to something else.  It drew 150 comments before they stopped accepting comments around 6pm.

I propose we stop saying “taxes” and start calling them “dues.”

and

Consider that “tax” comes from the Latin for “appraise” with punitive overtones of “censure” or “fault,” as if wage-earners have done something wrong by their labors. “Dues,” in contrast, is rooted in social obligation and duty.

Link: SignOnSanDiego.com > Parcel tax to bolster schools is proposed.

Readers of this blog are probably aware that 30 years ago California capped its property tax at 1% of a property's assessed value, and capped the increase in assessments on individual properties at 2% per year, until they changed hands, at which point the transaction price would become the new assessed value.  This means that two families in identical neighboring homes on similar lots could be paying very different property taxes: the people who have lived there for 30 years are paying about 90% more than what they paid in 1978 (2% compounded), while land values (and therefore house prices) have risen by hundreds -- often many hundreds -- of percent since 1978.  And yes, the Supreme Court in 1992 managed to say this this was acceptable -- though it is difficult to believe that with another 16 years of data ANYONE could have looked at the results and reached the same conclusion.

This measure has starved local government and made them hungry for sales tax revenue.  It has starved the school systems, taking it from among the most respected in the country to quite far down the list.  Towns have considered closing their libraries for lack of funding.  Parks suffer, as documented by David Cay Johnston in his recent book Free Lunch.

Now there is a proposal to add insult to injury:

Friday night's PBS NOW and Bill Moyers Journal were a powerful combination.   My local station shows NOW first, followed immediately by BMJ.  NOW showed three families in Alabama, including a hard working couple whose income places them at roughly the poverty level.  They pay sales taxes of 10% on their purchases, even on food.  They only recently got indoor plumbing.

The footage also showed one of my heroes, Susan Pace Hamill, law professor at the University of Alabama, who has written several important papers, all available online [and highly recommended], about the inconsistency of Alabama's tax code [2002] and of the federal tax code [2006] with the ideals we say we hold dear.  I applaud her efforts and her scholarship and her good heart ---  and I don't think she sees the half of it, or the solution.

Recently, four city mayors in Connecticut proposed that cities ought to  be permitted to impose a 1% sales tax if they chose.  Those who spend much time thinking about incentives recognize this as a poor idea.  I particularly liked this pair of letters to the editor in the New London Day:

An article in today's Philadelphia Daily News caught my eye.  Philadelphia is home to several fine universities, some excellent medical schools and teaching hospitals, fine museums, Constitution Center and the birthplace of two of my favorite people, one in the mid 20th century, the other in the mid 19th century.  I visit its suburbs every week, and  have a sense of knowing the territory from having grown up in those suburbs.

The article, entitled Philadelphia targets one of its toughest problems, says, in part, 

Only 14 percent of city residents hold a bachelor's degree, according to the 2005 study "Graduate! Philadelphia: The Challenge to Complete," by the Philadelphia Workforce Investment Board and the Economy League of Greater Philadelphia.

In Boston, that rate is 25 percent; in Seattle, it's 36 percent.

Philadelphia's college attainment rate puts it at 92nd among the 100 largest cities in the country --€” scraping the bottom.

In fact, in Philadelphia --€” unlike Boston, Chicago or Washington, D.C. --€” there are more people who have started college and dropped out than there are residents who actually hold a four-year bachelor's degree.

What could be behind those statistics? 

Newspapers in New London ("Urban Mayors Push For Local Sales-tax Option") and Stamford ("Malloy: Cities should have sales tax option") had articles today describing 4 Connecticut cities' mayors' aversion to increasing the property tax.

Four urban mayors, including Kevin Cavanagh of New London, urged the legislature Monday to give municipalities the ability to levy a local sales tax of up to 1 percentage point to raise revenue without resorting to property-tax increases.

The articles quote Dannell Malloy of Stamford, Kevin Cavanagh of New London, Bill Finch of Bridgeport, and Dan DeStefano of New Haven as endorsing the idea.

Malloy, along with mayors Bill Finch of Bridgeport, John DeStefano of New Haven and Kevin Cavanagh of New London, said cities need other options for raising revenue besides burdening constituents with more property taxes.

By this, I mean fixing the problem of low wages -- wages insufficient to support an individual or a family in conditions we consider acceptable on a reasonable number of hours of labor per week.  I don't mean minimum wage legislation, or living wage legislation, both of which I regard as well-intentioned but ultimately destructive for the community they intend to help.  I don't mean measures like the Earned Income Tax Credit, either.  It appears that people must jump through high hoops to get those dollars (which often seems to require professional advice, at a price), and then a significant portion of the money goes not to the wage earner but to his tax preparer/advisor, in the form of fees and interest.

Link: FCC Raises Record $19.6 Billion In Auction of Wireless Airwaves - washingtonpost.com.

Why do we sell off assets that rightly belong to "we the people," and which could earn us a growing income?  When will we claim the economic value of these assets as belonging to the American people, not subject to permanent privatization by anyone?

I've heard this point made a couple of times recently, but particularly liked the way Gail Collins expressed it in her recent column, George Speaks, Badly:

Besides being incoherent, this is a perfect sign of an utterly phony speech. Earmarks are one of those easy-to-attack Congressional weaknesses, and in a perfect world, they would not exist. But they cost approximately two cents in the grand budgetary scheme of things. Saying you’re going to fix the economy or balance the budget by cutting out earmarks is like saying you’re going to end global warming by banning bathroom nightlights.

The relative magnitude of earmarks relative to total federal spending or total discretionary federal spending may be rather small.  But earmarks do have tremendous potential to do good locally. They can fund projects that may not be feasible for local government to fund, which can contribute mightily to local economic activity and economic rent.

The question, I think, is what happens AFTER the earmark project.  Will the local community that benefits from that federal spending collect the benefit from the local residents who are benefited, or will that benefit keep accruing to particular individuals, and continue to be just a nice permanent federal gift to them? 

Bob Herbert wrote, in his 3/11/08 column entitled "Sharing the Pain", in part,

The American dream is on life support because men and women by the millions who want very much to work — who still have in their heads the ideal of a thriving family in a nice home with maybe a picket fence — are unable to find a decent job.

For years, families have been fighting weakness on the employment front with every other option imaginable.

• Wives and mothers have gone to work.   
  
• People have been putting in more hours and working additional jobs.
• And Americans have plunged like Olympic diving champions into every form of debt they could find.

Who has gotten the benefits of women spending many more years and many more hours per year in the workplace?  Who has benefited from Americans carrying more and more debt?  How does this relate to the run-up in the price of housing?  I said I'd write about these issues in another post.   This is 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.

Link: Jay Nordlinger on Impromptus on National Review Online.

Since Bill Buckley died a few weeks ago, I've read numerous tributes, and a few have mentioned Buckley's abiding interest in the ideas of Henry George.  The newest reference comes from the opening paragraphs of a National Review article today:

Friends, a week ago I put some notes on WFB in Impromptus. (That column is here.) Want a few more notes? Just a few more?

You know that he loved peanut butter. Ate it every morning of his life. Took it everywhere he went (because sometimes you couldn’t get it). But did you also know he had a thing for coffee ice cream? Yes — a real jones for it. I introduced him to Ben & Jerry’s Coffee Heath Bar Crunch — one of the best things on the planet.

(Yes, I know that they are communists or whatever. Just eat the ice cream.)

Note 2: Years ago, I had a spot of trouble finding housing in Manhattan. And he said to me, “Do you know I’m a closet George-ite?” He meant the 19th-century American economist and social thinker Henry George (author of Progress and Poverty).

How I wish that Bill Buckley, and others whose education was good enough to include exposure to the ideas of Henry George, had left/would leave their closets.  (Perhaps the reason has something to do with something related to pluralistic ignorance; perhaps it is something more nefarious.)

Bill Buckley did mention Henry George repeatedly in his writings and on the air, but in passing, as if to run it up the flag pole, rather than as a confident advocate of an idea that might not be popular with his constituency. 

Link: ROOSEVELT'S UP FOR SALE AT COOL $1B - New York Post.  This article is actually 8 months old, but popped up on a standing google alert in my mailbox, and it contained some factoids I'd not previously seen.  I'm not going to get into the background story (which some might find quite interesting, based on my bit of research).  Rather, I'm going to focus on the land values involved, because they might surprise the ordinary mortal, and provide some food for thought.

The property is just under 1 acre, and currently has a 1,013 room 20-story luxury hotel, built in 1924, on it.  The $1 billion valuation is as a teardown, as a site for a higher and better use, given current markets.   

I attempted to post this response to a blog, and ran into a technical error.  But even without the post to which it was responding -- which praised the so-called FairTax -- I though it worth sharing here. 

I'm still in Henry George's camp. Why tax the results of individual human effort -- stealing from the individual, or for that matter the corporation that which he/it created -- BEFORE collecting the economic value of that which the community created?

A 21st Century Georgist in the Revised Common Lectionary

(With a nod to Mark Twain!) The OT lesson in my church today was from Exodus, about God raining bread from heaven for Moses and his people. 

In the evening quails came up and covered the camp; and in the morning there was a layer of dew around the camp. When the layer of dew lifted, there on the surface of the wilderness was a fine flaky substance, as fine as frost on the ground. When the Israelites saw it, they said to one another, "What is it?"  For they did not know what it was.  Moses said to them, "It is the bread that the LORD has given you to eat."

Can you imagine if some of us claimed the land onto which that bread had fallen as our own, and told those who wished to collect their share of that bread that they must first pay us rent for the privilege?  Can you imagine if some of us gathered it, and sold it to our fellow human beings at high prices?  Can you imagine if we permitted the landholders to charge their fellow human beings for access, and then turned around and imposed an income tax on the general community, pretty much ignoring land value in the process?

LA Times: Can California survive 'no new taxes'?

The LA Times ran an article entitled Can California survive 'no new taxes'?, and I thought it merited a comment.  However, it turns out that they only accept comments of 650 CHARACTERS or less.  Here's what I tried to post...

David Cay Johnston: Income Data and the Future of the Nation

link: 120TN0887.pdf

A few lifts:

• While median income rose year-over-year in 2007, it was still smaller than way back in 1999 by $408 or nearly 1 percent. Eight years and no gain is not good news. My analysis of the latest reports from the IRS Statistics of Income Division showed that in 2006, taxpayers reported higher average income for the first time since 2000. But the gain was just $740, from $57,289 in 2000 to $58,029 in 2006.
• Looking deeper, the data show that the gains are almost all at the top. Among people making less than $75,000 — roughly 8 of every 10 taxpayers — 2006 average incomes remained below those of 2000 levels. And of the gains of the top fifth, an astonishing 42 percent went to the 1 in 400 taxpayers who reported seven figures or more of adjusted gross income on their Form 1040.
• The dominant and often only form of income for most Americans is slowly eroding, while the capital incomes earned by those at the top are soaring.
• And while it is true that the top 10 percent pay the lion’s share of income taxes, this levy explains only about a sixth of the dollars that governments at all levels collect.   When you look at all federal taxes that fall directly on individuals, the data show that schoolteachers, cops, and office workers pay marginal tax rates of more than 40 percent on wages that have been mostly stagnant over the past three decades. But at the very top, where the marginal tax rate is just 15 percent, incomes soar.
• We need policies that focus on wages if we want broad prosperity. We need to look at the world the way employers do, who see the payroll tax as a good reason to shed workers and hire people on contract and, when they can, shift jobs overseas.

"Capital incomes."   Hmm.  Capital tends to depreciate.  What appreciates is what the classical economists classified as LAND.  Neo-classical economists have managed to tuck land into capital as a subset, and thus appear to justify a lot of things which simply have no justification.  Oil revenues are somehow treated as if corporations had created that oil.  (The governor of Alaska declared recently that that resource rightly belonged to all Alaskans, and raised the tax rate a bit.)

The classical economists saw three non-overlapping factors of production: land, labor and capital. The returns to each are rent, wages and interest.  If those who would open a business need a bit of land on which to operate, and that bit must be very choice in order for their business to succeed, they must pay a very high rent to the current owner of that site, leaving them less for employing workers and buying the things which will make that business a success and which, by the way, will enhance the economy.  The land rent can go either of two places.  As we conduct things now, a tiny share of it goes to the commons, as part of the local property tax; the remainder is permitted to collect in private pockets, lining those pockets more each year.  As we should do things, the lion's share of that land rent should be collected by the commons, and used to fund our common spending -- leaving wages untaxed, sales untouched, buildings unpenalized.  We can

(1) recycle the land rent, over and over and over, for public purposes, or we can

(2) gift it to the landholders, and tax our wages and our sales and our buildings in order to get the revenue we need to help make rent higher next year. 

Which of these options seems wise?  Which seems sustainable? Which seems just?  Which seems efficient?  Which seems administrable? 

Gold-based lease could cause million-dollar rent hike for Forest City Enterprises

Gold-based lease could cause million-dollar rent hike for Forest City Enterprises - Cleveland.com.

It seems that there is a 12-story building, the Halle Building in downtown Cleveland, which is owned by Forest City, on a site of approximately an acre, which was bought a couple of years ago by a New York investor.  The terms of the 99-year lease created in 1912 call for the land rent to be equal to the value of 1,693.28 ounces of gold.  In 1912, that was $10,000, and over time it increased to $35,000, where it froze when FDR threw out the gold standard in 1933. The original landlord is not named in the article, but it appears that Forest City has owned the building since 1982, when the Halle department store went bankrupt.  In 2006, the NY investor, Stuart Venner, bought the land for $845,000, and sued to enforce the original 1912 land rent contract.  Today, that much gold is worth about $1.4 million.

Forest City appears to have renovated the building, and likely receives a very fine income from renting the office suites within it. Their revenue comes from several sources, all rolled up into a single payment from each tenant:

• a return that relates to the building itself and the manmade amenities it offers (capital);
• a return on the services which the buildinglord provides: building maintenance, perhaps a doorman, cleaning, trash handling, etc (labor); and
• a return which relates to the location itself (land). 

The same tenants would be willing to pay far less for identical space and amenities, if the building were 2 or 5 or 10 miles away.

Who is entitled to what? I'm not talking about contracts, or the way we've got things set up right now.  Rather, I'm talking about what's right and rational; what establishes good incentives, rewards productive effort, encourages redevelopment of prime sites, creates vibrant cities and economic justice and opportunity for all, and widely shared prosperity.

Valuing life, and applying fiscal stimulus, and setting us all equal

If we are going to claim to value every life, and encourage every pregnant woman to bring every fetus to term, we need to acknowledge that every child born is the equal of every person already born.  Interestingly, Alaska has been doing something important in this regard, for more than 20 years.

Every man, woman and child who lives in Alaska receives an annual income from the Alaska Permanent Fund, which represents dividends from the invested proceeds of Alaska oil revenue, and which, if properly managed, will continue to provide an annual income for every Alaska long after the oil has all been tapped. And Alaska's governor has had the fortitude to increase the share of the public in Alaska's oil revenue due to the high price of oil. (See another post on the subject from a few days ago.)

(And much of Alaska's state government spending comes from oil revenues, too.)

Our oil is not the only resource that needs to be treated this way.  Urban land values can be hundreds of thousands of times the value of an acre of agricultural land.  There is an acre in Manhattan said to be worth $400,000,000 to $1,100,000,000 -- as a teardown.  If we were to tax that land value at, say, 5% per year, at $400,000,000 it would produce $20 million in income for we-the-people, relieving the need for $20 million in sales taxes, or $20 million in payroll taxes, or $20 million in income taxes.  Talk about fiscal stimulus!  Talk about a permanent tax holiday! Talk about getting the incentives right!  

Downtown Nantucket: Who Should Get the Rent?

The Billionaire and the Bookstore - The Boston Globe

Wendy Schmidt, wife of Google CEO Eric Schmidt, is spending a fortune to preserve Nantucket's small-town character. But is the island helped -- or hurt -- by having its very own sugar mama

It seems that, in order to keep a fully functioning downtown in the town of Nantucket on the island of Nantucket, one of the seasonal residents has bought up some land (and buildings) downtown and is offering them, at token rents, to successful local merchants whose businesses meet the needs of year-round residents of this high-end resort island.

David Cay Johnston: Can You Hear Opportunity Knocking?

Link: http://taxprof.typepad.com/taxprof_blog/files/120TN0683.pdf
David Cay Johnston, the peerless reporter and commentator on US income tax policy, formerly with the NYTimes, and the author of two excellent books (Perfectly Legal and Free Lunch), now a columnist for Tax Notes, has written a column on the incentives involved in the income tax deduction for interest.

Though I think he sees through a glass darkly on this one, he does make some important points:

He starts out with this:

What we make of life’s opportunities depends on how well we have prepared to take advantage of them. But first we must recognize opportunity when it comes knocking, or the chance is lost. And lost opportunity costs can be huge not just for individuals, but nations as well.

As a Georgist, I am led to wonder about this.  What I think of when I read this is that one of life's biggest opportunities, as we structure our economy right now, is the privilege of claiming for oneself a choice bit of the natural creation or the community creation -- without being required to compensate the community for what one has taken.  The former includes natural resources, such as ports, water, the electromagnetic spectrum, and the oceans -- not to mention breathable air.  The latter includes that which the community has created, through both public spending and private spending: land value, created by the presence of concentrations of population due to favorable climate, attractive views, cultural amenities, and through public spending on such public goods as infrastucture (airports, highway systems, bridges, water delivery, sanitary sewer and stormwater runoff systems, public transportation, schools, emergency services, libraries, public health, parks, etc.), and what might be either public sector or private sector spending, on electricity, cable TV, WiFi, railroads.

All these things conspire to make some land more valuable than other land.  Those who have title to valuable land get to collect rent from their fellow human beings, just as if they, personally, could take credit for all those natural, public and private amenities.  What an opportunity!  Shouldn't the smartest among us be permitted to privatize all that economic value?  Isn't that what opportunity is all about?

NO!   

Renters deserve a better shake - Boston Globe

Link: Renters deserve a better shake by Nicholas Retsinas, director of Harvard's Joint Center for Housing Studies

The op-ed begins:

NOT EVERYBODY in the family tree makes it into the family portrait. Most families have ne'er-do-wells; many families crop them out.

Housing USA is like a family portrait. We see ourselves as a nation of homeowners or wannabe homeowners; and our policies, programs, and rhetoric support that image. The news focuses on the homeownership crisis: foreclosures, toxic loans, mortgage fraud, the "jingle mail" when homeowners, facing foreclosure, send keys to the lender. The major federal housing initiatives (including the Federal Housing Administration, Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System) have helped more than two-thirds of us buy into the American dream. Indeed, a few years ago policy-makers were lauding the nifty subprime mortgages marketed even to buyers with poor credit, enabling even them to own.

What about renters? One-third of all households rent - surely they are part of the American family; but policies, as well as rhetoric, have overlooked them. While the federal government has subsidized some renters (25 percent of eligible households) and the production of some "affordable" units, those subsidies pale beside the forgone tax revenues from the mortgage interest deduction, property tax deduction, and capital gains exclusion.

Low Rent, East Side Location - See Landlord, if You’re Famous

Link: Low Rent, East Side Location - See Landlord, if You’re Famous

A fascinating article which demonstrates how powerful the urban landed gentry are.  They can pick and choose their tenants, offering particularly well-connected people well-located luxury housing at a discount.

Which tenant is going to say no, on anything that matters to such a benefactor?   Moving is so inconvenient, and finding a similar location, particularly subsidized, difficult.

A rent-stabilized apartment in New York is a precious find. Which could explain the indignation that greeted the disclosure that Representative Charles B. Rangel was occupying four of them in the luxurious Lenox Terrace towers in Harlem, where Gov. David A. Paterson also has one.

Throughout the city, the well-connected (or just plain lucky) have been able to snare such prizes and retain them over the years.

But few rental buildings in the city have been as hospitable to public officials, past and present, as the Rudin Management Company’s high rise at 215 East 68th Street, where a shouted, “Good morning, your honor!” could turn every head in the lobby.

Leona Helmsley’s Fortune May Go to Benefit Dogs

Link: Leona Helmsley’s Fortune May Go to Benefit Dogs

The living and the dead, the human and the canine.

Leona Helmsley and her husband Harry individually and together accumulated billions of dollars worth of New York City real estate.  Who is entitled to that fortune?

Bill Gates: How Can He Best Use His Wealth and Influence to Help the World?

Bill Gates has moved on to his second career, using a large share of his -- and Warren Buffett's -- accumulated funds -- $30 to $40 billion -- to make a difference in the world.  I've got some thoughts about the options he has chosen, and some alternatives. 

He seeks to cure malaria.  A worthy goal. Nothing wrong with that. Success would remove a cause of human suffering.  But we ought to be conscious of the side effects of such measures.   And if the goal is to reduce human suffering, then something more needs to be done, above and beyond the things Bill Gates proposes, the things the Millenium Development Goals propose, the things Jeffrey Sachs proposes. 

Ross Perot, Back On the Charts

Link: David S. Broder - Perot, Back On the Charts

Ross Perot has started a new website, www.perotcharts.com, featuring graphic representations of what he sees as the most serious problems facing the US.  I share some of his concerns, but think that several additional charts would be equally relevant.

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 ... 

Golf Courses, Assessments, Property Taxes, and Nonmembers

Several articles on the topic of assessing golf courses have come to my attention in the past few days.  I've posted previously on the topic, but will start fresh here.

The first article had to do with assessments in Greenwich, Connecticut, where eight private golf clubs were seeking assessments of just $60,000 per acre.  Now that might seem like a high value to people who live in the heartland of America, but Greenwich is a place where a single-acre building lot (with or without an existing house on it) can sell for well over $1 million, and where roughly 1 in 4 residential transactions results in a teardown, often of a home which would be considered a super-luxury home nearly anywhere else.   The assessor had sought to value the land at a still-very-generous-to-the-clubbers $200,000 per acre.  (By law -- a peculiar law whose justification I don't follow, CT's assessments are to be 70% of actual value, so the $200,000 valuation would be about $285,000 -- still a very generous valuation in a town with high property values.)

Taxes that protect our firefighters

I've been thinking about who the "natural constituencies" for land value taxation are, and there are a lot of them.  But it seems to me that firefighters and their families are a prime ally for those who think that Land Value Taxation is an important contribution to making our country a better place to live for all of us.

Krugman: Stranded in Suburbia - New York Times

Link: Stranded in Suburbia - New York Times.

If Europe’s example is any guide, here are the two secrets of coping with expensive oil: own fuel-efficient cars, and don’t drive them too much.

Notice that I said that cars should be fuel-efficient — not that people should do without cars altogether. In Germany, as in the United States, the vast majority of families own cars (although German households are less likely than their U.S. counterparts to be multiple-car owners).

But the average German car uses about a quarter less gas per mile than the average American car. By and large, the Germans don’t drive itsy-bitsy toy cars, but they do drive modest-sized passenger vehicles rather than S.U.V.’s and pickup trucks.  ...

Can we also drive less? Yes  —  but getting there will be a lot harder.

There have been many news stories in recent weeks about Americans who are changing their behavior in response to expensive gasoline — they’re trying to shop locally, they’re canceling vacations that involve a lot of driving, and they’re switching to public transit.

But none of it amounts to much. For example, some major public transit systems are excited about ridership gains of 5 or 10 percent. But fewer than 5 percent of Americans take public transit to work, so this surge of riders takes only a relative handful of drivers off the road.

Any serious reduction in American driving will require more than this  —  it will mean changing how and where many of us live.

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!)

Are you going to be part of the problem, or part of the solution?

This was the headline of an email that came into my inbox today.   And it dawned on me that it is a fine angle from which to view the benefits of land value taxation. 

A Few Inconvenient Truths about the Property Tax

I'm pleased to share (with permission of the author) something that appeared on a mailing list I subscribe to. The conversation was along the lines of "how do we share the idea of land value taxation [a reform of the property tax] with people who are used to hating the property tax?"

Roy Langston wrote,

When I encounter the usual unreasoning hatred of property taxes, I just point out a few inconvenient truths, along these lines:

Why Smart People should shun the "FairTax" concept

I came across a piece entitled "Why Democrats should love the FairTax," written by Laurence J. Kotlikoff, a professor of economics at Boston University, an economic adviser to Mike Gravel and a consultant to FairTax.org.

I continue to be amazed how even economists, who should know better -- far better -- than to even think about a sales tax as a solution to anything, can be in favor of such an alternative.

How much is your home worth?

I'm talking about its dollar valuations; "priceless" is not one of the options here  (And think about the trouble that the MasterCard ad series has gotten us into: that using credit to afford a "priceless" family experience is a wise thing to do.)

We get a lot of different valuations on the same piece of property, and it is worth looking at all of them, and understanding the differences among them and the significance of the various figures.  I'll list all the valuations I can think of, and hope you'll add others in the comments.

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.

The Purpose of Government

I received in an email recently a quote from Albert Einstein:

A clever person solves a problem; a wise person avoids it.

Abolish All 'Taxes' - NYT

Link: Abolish All 'Taxes' - NYT 4/15/08  There was an op-ed in Tuesday's NYT about changing the word "tax" to something else.  It drew 150 comments before they stopped accepting comments around 6pm.

I propose we stop saying “taxes” and start calling them “dues.”

and

Consider that “tax” comes from the Latin for “appraise” with punitive overtones of “censure” or “fault,” as if wage-earners have done something wrong by their labors. “Dues,” in contrast, is rooted in social obligation and duty.

California's Proposition 13 and Parcel Taxes: Adding insult to injury for new property owners

Link: SignOnSanDiego.com > Parcel tax to bolster schools is proposed.

Readers of this blog are probably aware that 30 years ago California capped its property tax at 1% of a property's assessed value, and capped the increase in assessments on individual properties at 2% per year, until they changed hands, at which point the transaction price would become the new assessed value.  This means that two families in identical neighboring homes on similar lots could be paying very different property taxes: the people who have lived there for 30 years are paying about 90% more than what they paid in 1978 (2% compounded), while land values (and therefore house prices) have risen by hundreds -- often many hundreds -- of percent since 1978.  And yes, the Supreme Court in 1992 managed to say this this was acceptable -- though it is difficult to believe that with another 16 years of data ANYONE could have looked at the results and reached the same conclusion.

This measure has starved local government and made them hungry for sales tax revenue.  It has starved the school systems, taking it from among the most respected in the country to quite far down the list.  Towns have considered closing their libraries for lack of funding.  Parks suffer, as documented by David Cay Johnston in his recent book Free Lunch.

Now there is a proposal to add insult to injury:

Taxes as oppression, taxes as incentives: Alabama

Friday night's PBS NOW and Bill Moyers Journal were a powerful combination.   My local station shows NOW first, followed immediately by BMJ.  NOW showed three families in Alabama, including a hard working couple whose income places them at roughly the poverty level.  They pay sales taxes of 10% on their purchases, even on food.  They only recently got indoor plumbing.

The footage also showed one of my heroes, Susan Pace Hamill, law professor at the University of Alabama, who has written several important papers, all available online [and highly recommended], about the inconsistency of Alabama's tax code [2002] and of the federal tax code [2006] with the ideals we say we hold dear.  I applaud her efforts and her scholarship and her good heart ---  and I don't think she sees the half of it, or the solution.

Revitalizing older cities

Recently, four city mayors in Connecticut proposed that cities ought to  be permitted to impose a 1% sales tax if they chose.  Those who spend much time thinking about incentives recognize this as a poor idea.  I particularly liked this pair of letters to the editor in the New London Day:

Philadelphia, its Wage Tax and its Residents

An article in today's Philadelphia Daily News caught my eye.  Philadelphia is home to several fine universities, some excellent medical schools and teaching hospitals, fine museums, Constitution Center and the birthplace of two of my favorite people, one in the mid 20th century, the other in the mid 19th century.  I visit its suburbs every week, and  have a sense of knowing the territory from having grown up in those suburbs.

The article, entitled Philadelphia targets one of its toughest problems, says, in part, 

Only 14 percent of city residents hold a bachelor's degree, according to the 2005 study "Graduate! Philadelphia: The Challenge to Complete," by the Philadelphia Workforce Investment Board and the Economy League of Greater Philadelphia.

In Boston, that rate is 25 percent; in Seattle, it's 36 percent.

Philadelphia's college attainment rate puts it at 92nd among the 100 largest cities in the country --€” scraping the bottom.

In fact, in Philadelphia --€” unlike Boston, Chicago or Washington, D.C. --€” there are more people who have started college and dropped out than there are residents who actually hold a four-year bachelor's degree.

What could be behind those statistics? 

Connecticut: Should Cities Use a Sales Tax?

Newspapers in New London ("Urban Mayors Push For Local Sales-tax Option") and Stamford ("Malloy: Cities should have sales tax option") had articles today describing 4 Connecticut cities' mayors' aversion to increasing the property tax.

Four urban mayors, including Kevin Cavanagh of New London, urged the legislature Monday to give municipalities the ability to levy a local sales tax of up to 1 percentage point to raise revenue without resorting to property-tax increases.

The articles quote Dannell Malloy of Stamford, Kevin Cavanagh of New London, Bill Finch of Bridgeport, and Dan DeStefano of New Haven as endorsing the idea.

Malloy, along with mayors Bill Finch of Bridgeport, John DeStefano of New Haven and Kevin Cavanagh of New London, said cities need other options for raising revenue besides burdening constituents with more property taxes.

Fixing Wages, and Fixing Housing Affordability -- for All of Us

By this, I mean fixing the problem of low wages -- wages insufficient to support an individual or a family in conditions we consider acceptable on a reasonable number of hours of labor per week.  I don't mean minimum wage legislation, or living wage legislation, both of which I regard as well-intentioned but ultimately destructive for the community they intend to help.  I don't mean measures like the Earned Income Tax Credit, either.  It appears that people must jump through high hoops to get those dollars (which often seems to require professional advice, at a price), and then a significant portion of the money goes not to the wage earner but to his tax preparer/advisor, in the form of fees and interest.

FCC Raises Record $19.6 Billion In Auction of Wireless Airwaves - washingtonpost.com

Link: FCC Raises Record $19.6 Billion In Auction of Wireless Airwaves - washingtonpost.com.

Why do we sell off assets that rightly belong to "we the people," and which could earn us a growing income?  When will we claim the economic value of these assets as belonging to the American people, not subject to permanent privatization by anyone?

Earmarks, nightlights and windfalls - Individual, or Community?

I've heard this point made a couple of times recently, but particularly liked the way Gail Collins expressed it in her recent column, George Speaks, Badly:

Besides being incoherent, this is a perfect sign of an utterly phony speech. Earmarks are one of those easy-to-attack Congressional weaknesses, and in a perfect world, they would not exist. But they cost approximately two cents in the grand budgetary scheme of things. Saying you’re going to fix the economy or balance the budget by cutting out earmarks is like saying you’re going to end global warming by banning bathroom nightlights.

The relative magnitude of earmarks relative to total federal spending or total discretionary federal spending may be rather small.  But earmarks do have tremendous potential to do good locally. They can fund projects that may not be feasible for local government to fund, which can contribute mightily to local economic activity and economic rent.

The question, I think, is what happens AFTER the earmark project.  Will the local community that benefits from that federal spending collect the benefit from the local residents who are benefited, or will that benefit keep accruing to particular individuals, and continue to be just a nice permanent federal gift to them? 

Working harder, making others richer

Bob Herbert wrote, in his 3/11/08 column entitled "Sharing the Pain", in part,

The American dream is on life support because men and women by the millions who want very much to work — who still have in their heads the ideal of a thriving family in a nice home with maybe a picket fence — are unable to find a decent job.

For years, families have been fighting weakness on the employment front with every other option imaginable.

• Wives and mothers have gone to work.   
  
• People have been putting in more hours and working additional jobs.
• And Americans have plunged like Olympic diving champions into every form of debt they could find.

Who has gotten the benefits of women spending many more years and many more hours per year in the workplace?  Who has benefited from Americans carrying more and more debt?  How does this relate to the run-up in the price of housing?  I said I'd write about these issues in another post.   This is it.

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.

Closet Georgists and Georgites: Bill Buckley, and others

Link: Jay Nordlinger on Impromptus on National Review Online.

Since Bill Buckley died a few weeks ago, I've read numerous tributes, and a few have mentioned Buckley's abiding interest in the ideas of Henry George.  The newest reference comes from the opening paragraphs of a National Review article today:

Friends, a week ago I put some notes on WFB in Impromptus. (That column is here.) Want a few more notes? Just a few more?

You know that he loved peanut butter. Ate it every morning of his life. Took it everywhere he went (because sometimes you couldn’t get it). But did you also know he had a thing for coffee ice cream? Yes — a real jones for it. I introduced him to Ben & Jerry’s Coffee Heath Bar Crunch — one of the best things on the planet.

(Yes, I know that they are communists or whatever. Just eat the ice cream.)

Note 2: Years ago, I had a spot of trouble finding housing in Manhattan. And he said to me, “Do you know I’m a closet George-ite?” He meant the 19th-century American economist and social thinker Henry George (author of Progress and Poverty).

How I wish that Bill Buckley, and others whose education was good enough to include exposure to the ideas of Henry George, had left/would leave their closets.  (Perhaps the reason has something to do with something related to pluralistic ignorance; perhaps it is something more nefarious.)

Bill Buckley did mention Henry George repeatedly in his writings and on the air, but in passing, as if to run it up the flag pole, rather than as a confident advocate of an idea that might not be popular with his constituency. 

Hotel Roosevelt For Sale at $1 Billion

Link: ROOSEVELT'S UP FOR SALE AT COOL $1B - New York Post.  This article is actually 8 months old, but popped up on a standing google alert in my mailbox, and it contained some factoids I'd not previously seen.  I'm not going to get into the background story (which some might find quite interesting, based on my bit of research).  Rather, I'm going to focus on the land values involved, because they might surprise the ordinary mortal, and provide some food for thought.

The property is just under 1 acre, and currently has a 1,013 room 20-story luxury hotel, built in 1924, on it.  The $1 billion valuation is as a teardown, as a site for a higher and better use, given current markets.   

Landholders, windfalls, productive effort and community revenue

I attempted to post this response to a blog, and ran into a technical error.  But even without the post to which it was responding -- which praised the so-called FairTax -- I though it worth sharing here. 

I'm still in Henry George's camp. Why tax the results of individual human effort -- stealing from the individual, or for that matter the corporation that which he/it created -- BEFORE collecting the economic value of that which the community created?