Re: Murray Rothbard on Georgist fallacies

On Sun, 13 May 2007 23:27:26 GMT, "Dan in Philly" <djr8@xxxxxxx>
wrote:

<royls@xxxxxxxxx> wrote in message ...

So here'a an example:
I buy an empty lot in NY city for $1 million. It's in a lousy
neighborhood.
I try to rent it out on an annual basis. First year, nobody wants it so
rent
is $0. Same thing the following year, and the next year, etc. But after
about ten years, the new mayor is a real law-and-order hardass, he clears
out the crack houses, so now everyone want to rent my piece of land.
Annual
rent is now $100,000 per year.
Please explain the taxes I pay throughout this.

If no one is willing to pay anything to use land, then its rent is $0.
If the most someone will pay is $100K, then the rent is $100K.

Which is what I said in my first post, to which you
replied 'that's not true.' :)

I rather doubt that. Perhaps you misunderstood. Could we have the
quote in context, please?

But
you are confusing annual rent with speculation in rent. If you knew
you had to pay the annual rent of the land in tax, you would never
have paid $1M for it in the first place. Likewise if you thought the
rent was going to stay at $0.

True, I would have paid roughly $0. Assuming the LVT is 100% then you're
right, the market price of land would be close to zero.
But I generally work with a variable tax rate. So a tax rate less than 100%
would leave a positive price for land (the PDV of future post-tax rents).
I guess I'm still hoping that Philadelphia will impose a land tax, even a
small one, which will help get rid of all the vacant lots.

Yes, it certainly would. LVT generally makes land values rise faster
than they did before, because it stimulates such rapid economic
growth. Landowners oppose it _despite_ the fact that it makes them
richer faster, because it makes it easier for the productive to
improve their positions vis-a-vis landowners.

-- Roy L
.

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