Re: Murray Rothbard on Georgist fallacies


"Dan in Philly" <djr8@xxxxxxx> wrote in message
news:AAK%h.207347$RF.203492@xxxxxxxxxxxxxxxxxxxxxxxxx
<w_b_ryan@xxxxxxxxx> wrote in message ...
Murray Rothbard
Man, Economy and State:

I'm not a big fan of the LVT, but the proponents make good arguments.
OTOH, Rothbard's came up short.

<snip Rent vs. Capitalized value stuff>
Example: there are emply plots of land in New York City. Why are they
empty? Because they're next door to crack houses. But the land is still
expensive to buy. Why? Because the owners are hoping that someday the
crack houses will be cleared out, the neighborhood will improve, and the
land's value will skyrocket.

This is not in conflict with the LVT. If the owner rents the land to
someone now, he'll earn $0 per year, hence pay $0 in tax. Then someday,
when things improve, he'll rent the land for $100,000 and pay tax on that.

That's not true. If the land really is somewhat valuable---somewhere
between $0/acre and the amount it would be worth if there were no crack
houses---then the tax will fall on that value, even if he can't get much
income from renting it out as is.




The landowner earns the highest ground rents by
allocating land sites to their most value-productive
uses, i.e., to those uses most desired by consumers.

This 'allocating land sites to their most productive value' requires no
effort: just sell to the highest bidder.


But since all ground rent is siphoned off to the
government, there is no reason for owners to charge
any rent.

Wrong. If the government is taxing the landowner $100,000 per year, that
landowner will _definitely_ rent out that land for $100,000 (not zero as
Rothbard implied).


The only valid criticism was regarding the government's measurement of
land value. Yes, that would be difficult. But right now, measuring
'income' for our income tax is also difficult. Besides, the LVT could be
applied at 90% or 80% or whatever, rather than 100%, to allow for some
mis-measurement.


Dan in Philly






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