Re: Land tax (Re: better tax code: no income tax, head tax (&| ppty t)

On Sun, 02 Mar 2008 23:34:48 -0500, the less-than-artful Dodger
<none@xxxxxxxxxxxx> wrote:

On Sat, 1 Mar 2008 01:41:25 +0100, ask@xxxxxx (PeterBP) wrote:

RogerDodger <none@xxxxxxxxxxxx> wrote:

Rent for
improvements to real estate goes under the table, or is sharply
reduced in back-room deals (I slash your rent, you hire my wife for a
no-show job, etc.)

your post has some good points, but here you confuse the common-parlance
rent (such as that for monthly tenure in a flat) with economic rent, and
specifically the land rent.

Land rent is not easy to hide.

Sure it is. It's quite easy to hide.

No, it isn't. You are at least one of: fool, ignoramus and liar.
Probably all three.

Land is difficult to hide. Buildings are even more difficult to hide.

Actually, you are wrong again, as usual. Buildings can be hidden
underground. That's one reason the USA is stymied in its efforts to
stop other countries' nuclear weapons programs. The buildings can be
hidden. The land they are hidden under can't.

But building rent is easy to hide. If high taxes or rent controls are
imposed on it, building owners just take rent another way -- under-
the-table payments, traded favors, contractual arrangments under which
rent received is reduced but income received for other services
provided is increased, etc., etc.

We all know this.

ROTFL!! The problem here is that YOU DON'T KNOW WHAT LAND RENT IS.

Here:

'The word "rent" in economics differs from the ordinary usage in
another way. In ordinary language, we say someone rents something only
when a payment changes hands. You rent a house from someone when you
pay the landlord a check every month. But in economics, "rent" exists
regardless of whether there are explicit payments.'

http://homepage.ntlworld.com/janusg/scieco/ch03.htm

So because you are so completely ignorant of the subject that you are
totally unaware even of what the most basic terms mean, you come up
with silly, juvenile twaddle such as this:

Land rent is even *easier* to hide. All the same options exist as with
building rent *plus* the extra option of allocating the bulk of the
value of real estate to the buildings on it and away from the land.
This is easily done with purchase contracts that allocate purchase
price to the building, leases that allocate rental income to the
building, etc. The result is the reported price of and rent to the
land plunges, so its tax value plunges.

Any competent appraiser can accurately determine land rent by just
ignoring such shenanigans, and looking at what bare land rents for.

An irony of the Georgists is that they are the *first* to say this is
true! -- when they are arguing that "real" rental income to land is
much larger than the smallish 5% or so given in national accounts and
by economists ... *because*, they say, land owners hide the reported
value of their land by shifting it into buildings and elsewhere.

No, it is not possible for landowners to do that. It is crooked tax
assessors and data fabricators who do that.

E.g., Georgists love to cite Michael Hudson saying land value is
under-reported by more than 50% because property owners have a tax
incentive to shift property values into depreciable buildings and away
from undepreciable land -- which indeed they do!

Oh, but *then* the same Georgists say land rent and value can't be
hidden! That's the virtue of the land tax!

<sigh> It can't be hidden FROM SOMEONE WHO WANTS TO FIND IT.

Hudson's point is precisely that those assigned the task of finding
and measuring it DON'T want to find it -- and indeed conspire in the
effort to hide it.

They *are* hidden ... but they *can't be*. ;-)

You are stupid. Anything can be hidden from someone who cooperatively
closes his eyes. That is Hudson's point.

Of the many Georgists I've seen make both claims, none have ever noted
that there's a circle to square there.

See above, stupid. The square [] represents the land, the circle (O)
represents your knowledge of it.

Rents to buildings are easy to hide.

Equivocation. Buildings yield no economic rent.

We all know this, so why would anyone believe rents to land aren't
equally easy to hide?

Because unlike you, they know what land rent is.

Stupid.

That is one of the strengths of the land taxation idea.

More like it is quicksand upon which the Gerogists' church is built
... unless they can explain how land values can be successfully hidden
today when they can't be in their scheme.

In the Georgist "scheme," the tax authorities want to measure land
value because that is what they are taxing. Land value (merely the
capitalization of land rent) cannot be hidden FROM SOMEONE WHO IS
TRYING TO FIND IT.

This even though their own sources like their "Geolibertarian FAQ"
claim property assessment is *easy* and will be done under a Single
Tax scheme just exactly like it's done now!

You are evil, lying garbage. No Georgist has ever said that a land
value tax can be implemented while leaving current assessment systems
unaltered. The fact they identify is that currently available
_methods_ are entirely adequate to the task. They just aren't
currently being used.

OK ... Hudson critiqued a Fed report that put total land value in the
US at 62% of GDP,

I.e., less than $30K/capita, a self-evidently absurd under-estimate
even for residential land alone.

and if you figure rent as 7% of land value (which is
generously above market rates for "safest" investments, as Georgists
insist land rent is) then you get rent to land equal to 4.3% of GDP.

It is quite dodgy to use such a return, as land value's relation to
rent is highly variable. A more reasonable methodology is to compare
median SFD house rent with median SFD house price less the difference
between median SFD house price and median SFD lot price, then scale up
from SFD residential land to all land.

Comparing median SFD house price with median SFD lot price shows that
house values are about 65%-70% land value, a fact that can be verified
by examining real estate listings in any major market, and is
confirmed by the inescapable mathematics of building depreciation,
land appreciation, initial land value fraction, and typical age of
improvements at the time of demolition and replacement. House rents
are therefore about 60%-65% land rent (there is typically a small
non-capital maintenance component in rental payments). A typical SFD
house rents for about $1500/month or $18K/yr. So call it $10K/yr land
rent per SFD household. About a third of households are in condos,
apartments, etc. which have somewhat lower rents, but land rent is
still about 60% of their housing costs. So the average residential
land rent per household might be as little as $9k/yr. Multiply that
by 115M households, and you get just over $1T in residential land
rent, or about 7% of GDP. Residential land is about 60% of all site
value, so total land rent is about 13% of GDP, or more than 2/3 of
total federal tax revenue. Add in the rents of other natural
resources such as broadcast spectrum, oil and other minerals, water
rights, etc. and it is easily seen that total natural resource rents
are quite comparable to total federal tax revenue.

Well, 4.3% of GDP is a non-starter for a "single tax". Nobody's going
to join a revolution over that.

The deliberate underestimation of land rent as a fraction of GDP has
been a major theme in efforts to thwart implementation of LVT. There
are even soi-disant Georgists who do it.

Hudson objected that that valuation of land was too small, the real
value was *double* that, as land owners are so very successful at
shifting land value into buildings and elsewhere. That gave total rent
to land of about 8.6% (again very generously). That's not anywhere
near a "single tax" level either, of course.

It was definitely at single-tax level when the single tax was
proposed, because governments were much smaller then. Since WW I,
governments have grown enormously, mostly via programs intended to
mitigate the effects of the economic damage done by taxing production
instead of idle landownership. Tax land instead, and the need for all
those poverty-mitigation programs disappears.

So, as per the Fed and Hudson, we have the choice of either:

A) Land rent can't be hidden, and is around of 4% of GDP.

That is a lie about what the Fed says. But because you are lying
garbage, you pretend that "isn't being looked for" is the same as "has
successfully been hidden."

B) Land rent can be easily hidden, is almost 9% of GDP, but is fully
half-hidden now -- and those who are now succesfully hiding so much of
it will of course have a *huge* incentive to hide even more of it as
it becomes subject to a confiscatory tax.

Or C) You are wrong, stupid, ignorant and a liar.

Make your choice, which do you prefer?

I prefer not to fall for blatant false dichotomy fallacies.

-- Roy L
.

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