I had never heard of it, but recognised the name once the history was given. This is a land value tax arrangement that seems to work well in theory. It looks like it would "work" in terms of raising revenue in a fairer way than we do now, which is always the first question. But I have not considered how the system might be gamed - always the second question. As I am apparently late to the party on this, it is likely that wiser others have thought about this, so I won't shoot from the hip. Does Georgism Work? Five Year Later. There are enormously cool graphics.
The focus is on legislation whereby states allow communities to institute LVT's. This seems both clever and cautious. It puts the idea out there, where it hasn't been on the radar, doesn't make anyone do anything, and removes a barrier that communities trying to get the idea off the ground would undoubtedly have in selling the idea: How are we ever going to get the state to approve this? Discouragement and loss on inertia ensues.
Under this arrangement, city property pays more, rural pays less, suburbs in between depending on density. But in the city, this is an example from one place, in this case Spokane
In Part 1, Is Land A Big Deal?, I ran the “land isn’t a big deal” theory against several testable hypotheses. Among the findings was the fact that sky-high urban real estate prices were primarily driven by land appreciation, and that land was a large and steadily increasing share of bank loans.4 The article’s centerpiece was an original estimate of the total land value of the United States, which was much larger than many had expected. Although this estimate fell short of what a “single tax” would require, it was still large enough to convince many that LVT had been unfairly dismissed as a serious policy proposal.
Followed shortly thereafter by this
South Korea has the highest land value-to-GDP ratio in the entire OECD, in excess of 500%. To put that in perspective, the figures from my own estimates of the USA’s total land values—which surpassed many readers’ expectations—were a mere 200% of GDP. My first instinct was that Korean land values must reflect a temporary, anomalous bubble and would soon revert. However, long-run land value-to-GDP ratios over the last 50+ years have ranged from 400%, and current values aren’t even the all-time peak, which clocks in at around 600%. Prime land is just that valuable and scarce in South Korea.
I read through a bit of that, and I guess I'm really not interested in Georgism "working" because it's an answer to a question that should come far down on list of things to look for in tax policy.
ReplyDeleteGiven that to a rough approximation government is a universal benefit and taxes paid are fungible, the two primary attributes I would look for in tax policy are transparency and efficiency of collection, with 'skin the game' (universal applicability) coming a close third. It should be easy for a taxpayer to calculate the amount owed as this supports self-declaration as well as simplifying tax planning and preparation, which aids in efficiency of collection. Transparency, as well as universality, makes the cost of government apparent to all citizens.
Theoretical economic efficiency should be among the last consideration when determining taxes (all taxes are adjacent to legalized theft and dead weight on the economy) and that goes double for a tax that is based on a subjective value like 'maximum rent' where there is significant information asymmetry between the taxing authority and individual taxpayers. Taxable property valuation is opaque enough without introducing variables that are based on compiling and estimating non-public information and esoteric calculations.