Re: Land, Labour and Capital Taxation....
royls_at_telus.net
Date: 01/05/05
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Date: Wed, 05 Jan 2005 05:48:55 GMT
On 3 Jan 2005 22:20:38 -0800, imouttahere@mac.com wrote:
>royls@telus.net wrote:
>> On 2 Jan 2005 14:15:53 -0800, imouttahere@mac.com wrote:
>>
>> >royls@telus.net wrote:
>> >> On 1 Jan 2005 18:33:43 -0800, imouttahere@mac.com wrote:
>> >>
>> >> >I can see the LVT work wonderfully well for lease, commercial,
>and
>> >> >unimproved properties, but much less well for non-income
>properties
>> >> >since people understandably don't want to lose the current
>stability
>> >of
>> >> >proprerty ownership.
>> >>
>> >> Tenants of private landlords do just fine (net of the extravagant
>> >> subsidy to landownership, of course). Why not tenants of a public
>> >> landlord?
>> >
>> >I'm coming from my personal experiences in Califonia, where in
>mid-2000
>> >there was simply not enough housing stock in the silicon valley,
>> >causing rents to move up $100 or more a month.
>>
>> You can thank Proposition 13 for that. Lack of housing stock is
>> rarely an issue where significant land rent is being recovered, but
>is
>> almost always an issue where it isn't.
>
>yes, taxing improvements does make people not want to replace fully
>amortized buildings.
Likewise not taxing land value, which is Prop 13's effect.
>> >> tenant of a private landlord, who is _already_ in a _worse_
>situation
>> >> than Old Widow Jones would be in after a shift to LVT??
>> >
>> >Those who can't or won't buy are seen as listless, profligate, and
>> >unsuccessful.
>>
>> IOW, only landowners are real human beings who have rights and
>deserve
>> our regard and compassion, while non-landowners are vermin, or at
>best
>> untermenschen, who deserve no better than oppression, injustice and
>> enslavement. OK. I kinda figured it'd be something like that.
>
>No, it's just people judging others by their own experiences. 1/5 of
>the population has no problem moving into a livable home, 1/5 can do it
>with some saving, 1/5 wins the lottery or something and gets in,
>leaving 2/5s still outside. This is to be expected, as we are all
>bidding up prices on a relatively scarce commodity (at least in CA).
>Winners and losers. Human nature does not hold much sympathy for the
>losers, alas, and by the way the voting process works the winners
>generally outvote the losers on local matters.
So, _you_ don't really think non-landowners are congenital losers,
natural-born slaves who fully deserve to be robbed of the fruits of
their labor for the unearned profit of landowners, but you're pretty
sure _other_ people think so; is that about it?
>> >People are /supposed/ to sacrifice everything for a
>> >house. It's the centerpiece of the American Dream.
>>
>> It shouldn't take a genius -- but apparently does -- to figure out
>> whose dream that really is: the folks all those home buyers are
>> sacrificing everything _to_.
>
>Well, for the most part the theft has been made a LONG time ago and the
>middle-class is dealing with itself.
The net effect is that new buyers are sacrificing everything to the
owners of the recently densified land where new housing is being
built.
>Exceptions exist were landholders
>are holding land off the market like in Irvine and Valencia, but even
>in growing enclaves new development can only be supported so fast.
It can be supported very fast, as many historical examples prove.
>The
>other major exception is buy-to-let of SFH. This is a great evil that
>is almost akin to monopolizing the air supply.
It's just normal landowner privilege.
>> >Though if the affordability gap remains (median price vs median
>income)
>> >we will probably see new morgage products from the banking industry.
>>
>> Right. 20% of GDP in land rent is not enough unearned income to
>> appease all the soulless, amoral greed robots who want to profit from
>> the violation of others rights, so more and more unproductive debt
>> must be created.
>
>I think 40 years ago the 15 year mortgage was common. Makes sense,
>again, as we are bidding up the land prices among ourselves, and once
>the 40 or 50 year mortgage comes online home prices will rise some
>more.
Well, in Japan, they've even got 100-year mortgages. Heritable
indentured servitude, anyone? IMO the idea of private individuals
undertaking obligations with terms as long as the longest-term
government bonds is ridiculous, and should not be enforceable in law.
20-year amortizations are ample, and anyone who wants to lend on a
longer term than that is looking to exploit the foolish and ignorant.
>> >> >Zoning protections for residential areas should remain, which
>> >lessens
>> >> >the rationale for free-marketism on owner-occupied residential
>> >> >properties.
>> >>
>> >> Not really.
>> >
>> >People don't want the 'progress' of redevelopment in their
>> >neighborhoods.
>>
>> Unless they get to pocket the land rent increases themselves, of
>> course...
>
>No, they'd rather put development in someone else's neighborhood,
Very, very few would rather put development elsewhere if they get to
keep the increased land value themselves.
>or
>leverage their existing property by renting it out and moving on up the
>ladder to a better neighborhood.
I.e., pocketing some land rent.
>> >NIMBYism is a 'market failure' of democracy itself.
>>
>> No, just of poorly designed institutions. NIMBYism comes from
>private
>> capture and retention of publicly created land rents. If people own
>> only the depreciating improvements, they have much less reason to
>care
>> about future local land use decisions than if they own the
>> appreciating land.
>
>OK, very true as far as it goes, but Prop 13 and zoning is all
>democratic stuff.
How democratic is it when voters are systematically lied to by the
"free press" that is supposed to inform them -- but actually serves
only the interests of the landowners who also own the media?
>> >> >Watered-down split-rate regimes might be all we can or should do.
>> >>
>> >> Nonsense.
>> >
>> >It's not nonsense to the voting public who are quite happy with
>> >long-term security of their homestead.
>>
>> They wouldn't be so happy if they understood the actual costs they
>are
>> bearing as a result.
>
>I'd like to see a simulation of the LVT regime. What sort of recoveries
>would actual neighborhoods be paying? I used to live in Santa Cruz,
>where the median home price is over $500,000, and maybe half the
>population is long-term sitting on $400,000 or so in equity.
While the other half is sitting on an equivalent future tax
liability...
>For every $100,000 in land valuation, what's the tax per year?
The land rent is probably in the neighborhood of $3K-$5K, but it
depends on conditions like local speculative premiums, etc.
>Currently it's just over 1%.
_Of_the_last_sale_price_, which could be decades old, and thus an
order of magnitude below current market value. As a fraction of
actual value, average CA property tax rates are now among the lowest
in the country, and the state's economy and quality of life are
accordingly becoming more like those of other chronically stagnant
low-property-tax states like Alabama, Arkansas and Wyoming.
>Now, Santa Cruz could use some more medium-density building no doubt,
>but the present residents like the current density fine thank you,
So did the previous residents, before those residents moved in....
>and
>really the existing transportation infrastructure can't support more
>density anyway...
If the land rent wasn't being given away, much better transportation
infrastructure would be easily affordable.
>Basically every city within 15 miles of the ocean or 50 miles from a
>major center is like this. Perhaps CCR should be tried on a /county/
>basis first, though Prop-13 stands in the way of that I guess.
Right, at least in CA.
>> >I don't see the problem of going after the low-hanging fruit of
>leased
>> >properties and unimproved land.
>>
>> Distortion. You'll just eliminate leases, further tightening supply,
>> and stimulate wasteful "improvements" for tax purposes.
>
>but what's the difference just excluding owner-occupied residential
>property from the LVT?
Every property would then become "owner-occupied residential."
>> >Let following generations figure out
>> >how to transition the rest.
>>
>> It's already been figured out.
>
>How to have your cake (low,fixed property tax rates) and eat it too (no
>capital gains taxes on home sales)?
Right. But of course, that means the ones who are actually baking the
cake -- the productive -- don't get to have it _or_ eat it.
>Granted, the state is $10B/yr in the red, and its bond rating is
>falling like a rock, so maybe some day people will begin waking up.
There are lots of landowners with lots of money who fully understand
the importance of preventing the people from ever waking up.
>> >> >Plus coming from the ethical side there are more cans of worms
>wrt
>> >the
>> >> >right to live in a given community. I don't think we're going to
>be
>> >> >able to convince anyone that the entire state or nation has an
>equal
>> >> >right to live in one's given community as the current residents.
>> >>
>> >> ?? Don't they _now_?? All they have to do is outbid the current
>> >> landholders, exactly as under LVT.
>> >
>> >No, only if they can find a motivated seller in the current system.
>>
>> Garbage. "Motivated seller" is just real-estate-agent-speak. Even
>> with private landowners, an owner who doesn't want to sell can often
>> be motivated to move out of the place and rent to a tenant for the
>> right price.
>
>yes but this is voluntary. LVT will bring the free market to people's
>very door repeatedly, if not 24/7.
Nonsense. After an initial period of transition, things would settle
down, and there would actually probably be fewer distuptions to land
use patterns than there are now, because there would no longer be
multi-million-dollar carrots dangling in front of the noses of anyone
who might be able to get a densification.
>> And under LVT, you'd most likely still have to find
>> someone willing to sell the improvements, unlike the current
>> situation.
>
>That's an interesting point. In pure libertarian land, does the right
>to ownership of housing capital weakly imply a right to keep one's
>capital where it is?
Or to compensation for its loss, if it comes to that.
>The redistributive version of the LVT solves half
>of the problem by making those under the median valuation cash-positive
>on the deal.
It's not actually that simple, but never mind.
>> >One
>> >ad on TV of a family getting pushed out of their home onto the
>street
>> >by a fatcat speculator would kill the LVT initiative dead in
>> >California.
>>
>> Well, if people are just automatically going to believe whichever
>lies
>> are the most evil and implausible, there's not much hope for
>> democracy, is there?
>
>Not when there's an element of truth in them.
There is no element of truth in that one. But I agree that lack of
any element of truth typically makes no difference to the voter's
willingness to believe.
>What /would/ happen to
>Californians under the LVT, where 1/3 of the population is sitting on
>hundreds of thousands of dollars in equity but only paying a 1% tax on
>valuations not far from when they bought in, and probably most people
>are land rich but cash poor and/or leveraged to the eyeballs.
They'd be poorer in land but richer in cash. Many working people
would move into more valuable areas nearer their work, while some
retirees would move into quieter, less valuable areas farther away
from commercial and industrial centers. Everyone but the largest and
least productive few percent of landowners would be better off
financially, and unemployment would be microscopic.
>These are real-world issues that need to be addressed.
One very powerful effect of introducing LVT is that it makes the area
so attractive that it results in an in-flow of population that is not
balanced by any out-flow: productive people are attracted to areas
where they will be allowed to keep the fruits of their labor, and
current resident-owners would find that they suddenly could not afford
to start again elsewhere as slaves, needing to buy their freedom all
over again.
>> >> >Human brains just don't work like that.
>> >>
>> >> Some don't, anyway....
>> >
>> >You agree that there's enough homeowners bought into the system to
>> >totally block any move to a floating tax regime on their residences?
>>
>> Certainly. The task is to show them how their own greed and
>ignorance
>> is shoveling their own money into the pockets of idle landowners.
>
>I only see this shovelling occuring on leased properties, and
>owner-occupied commercial properties to some great extent too.
You don't see it because the process is too subtle and indirect for
you to understand.
Almost everything people pay in taxes ends up as increased land rent.
Think about that. I'll repeat it, because it is the key to
understanding this whole issue:
_Almost_everything_people_pay_in_taxes_ends_up_as_increased_land_rent_.
The productive must pay for government once in taxes, and then must
pay for it again when they pay landowners for access to the services
and infrastructure their taxes just paid for. If you can understand
how that transfer of wealth from producers to landowners via the
mechanism of taxation and government spending works, you will have
"seen the cat," as the Georgists say, and nothing will ever look the
same to you again.
>> >> >Everybody always wants to be 'the
>> >> >last person in'. I think a lot more work has to be done outlining
>> >what
>> >> >exactly LVT wants to do with residential housing.
>> >>
>> >> Like what?
>> >
>> >Do we want the free market to forceably raise the density of
>existing
>> >neighborhoods?
>>
>> Yes, we most certainly do in _some_ neighborhoods, as it would
>improve
>> efficiency of land use and permit enormous savings on infrastructure,
>> and because ultimately, the alternative is something like China's
>> one-child policy.
>
>No, the alternative is the free market deciding there's enough people
>in California and it's time to build elsewhere.
That "forceably" raises the density of _those_ "existing
neighborhoods."
>There's plenty of open
>land in this country,
And plenty of under-densified land in CA.
>For the most part in California, everyone likes the density as and
>where it is,
People always like things the way they are, and oppose change. It's
human nature. But funny thing: after things have changed, they
usually end up liking the new way just as much as they did the old, or
even more.
>and most built-up areas can't handle any more traffic anyway.
Only because the density is not high enough to support rapid transit.
>Starting from scratch out in the sticks, LVT can maybe function as a
>regulator on growth, but I think it's too late for California ... can't
>get there from here.
Especially as Prop 13 cannot be repealed or amended under any
circumstances whatsoever, even if the state of California secedes from
the Union and declares itself the reincarnation of the
Austro-Hungarian Empire, or is invaded and conquered by space aliens.
The shadowy real estate interests behind Prop 13 made sure that no
matter hw destructive Prop 13 is ever proved to be to the interests of
the people of CA -- and it will inevitably be _very_ destructive to
them -- it would be easier to repeal the law against murder than to
repeal Prop 13.
>> >This will be a strong dynamic of a totally laissez faire
>> >application of the LVT, since obviously residential housing is very
>> >inefficient ground-rent wise.
>>
>> No, it usually isn't, which is why private landlords usually _prefer_
>> to own housing rather than commercial or industrial land.
>
>By residential housing I meant single-family.
Even SFR is not necessarily inefficient in yielding ground rent. It's
just a particular use that is suited to particular areas.
>I don't think
>single-family can bring more ground-rent than condo or medium-density
>apartment in areas with a housing shortage, since people are willing to
>pay more for an extra bedroom than a garden or front lawn.
Of course. But that just means current SFR land is being held for
speculative gain, not because SFR is its best use.
>Though now that the job bubble crashed in the bay area single-family
>does probably bring more rent than apartments, due to the relative
>scarcities.
Unlikely on a per-acre basis.
>> >Will there be an exclusion for the below-median housing stock?
>>
>> I've suggested a uniform per-capita land rent rebate. Policy
>measures
>> should be based on assumptions of equality, not picking who gets the
>> benefits.
>
>What does this look like?
It's just a land rent abatement for each person, equal to some modest
fixed fraction -- 10%, say -- of the average per capita land rent.
-- Roy L
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