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


"RogerDodger" <none@xxxxxxxxxxxx> wrote in message
news:f6vms31pcqblq5lou0ua6cp8bsvogei7oc@xxxxxxxxxx
On Fri, 29 Feb 2008 01:04:32 -0000, "Andy F." <never.mind@xxxxxxxxx>
wrote:


"RogerDodger" <none@xxxxxxxxxxxx> wrote in message
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On Thu, 28 Feb 2008 08:24:39 -0800 (PST), Lysander
<lysander@xxxxxxxxxxx> wrote:

On Feb 28, 3:37 am, ro...@xxxxxxxxx wrote:
On Wed, 27 Feb 2008 15:39:05 -0800 (PST), Lysander

<lysan...@xxxxxxxxxxx> wrote:
On Feb 27, 1:42=A0am, "J.H.Boersema" <jo...@xxxxxxxxx> wrote:

Ownership (property tax) can be taxed, as that wouldn't impede
trade.

It can impede trade in land markets, however the impediment is less
than other markets given the tax burden is relieved by selling. You
need very restrictive assumptions that are unlikely to hold to get an
efficient land tax.

Wrong. The "restrictive assumptions" are true by definition.


Roy refuses to understand the definition of supply. Instead he spouts
religious dogma that the evidence is apparent for anyone who believes.
I believe this is what supply is therefore it is according to Roy. The
proof is obvious to all that believe.

The data on elasticity of labor supply seems to
indicate payroll are as likely to be as close to efficient as land
taxes.

Wrong. As I have already proved to you, none of the data you claim
show elasticity of land supply in fact show any such thing.

Quite the contrary. There are few studies of the elasticity of land
raw land supply. The few that exist suggest it is not 0.


Labor supply is very inelastic like land supply is.

Wrong. The supply of land is fixed. The supply of labor is not.


Even if Roy was right about land and he is not there is never a fixed
supply of anything, he is still being awfully dense here. If the
elasticity of supply of raw land is 0 and the elasticity of supply of
labor is .00001 then they are pretty close. The labor supply curve is
very close to perfectly inelastic. When one understands that a supply
curve is the pairing of prices and the corresponding amount that
PEOPLE ARE WILLING TO SELL AT THAT PRICE, it is obvious the amount of
land in existence has nothing to do with whether or not the supply
curve is perfectly inelastic.

Of course, supply is the amount of something *brought to market*, not
the amount of something existing in the physical universe.

Friedman himself made this point in a friendly letter to a Georgist
web site, in respose to a question from it about why he wasn't a
Georgist or single-taxer in light of a quote from him that Georgists
always throw about on the potential virtues of a land tax.

The Georgist claim is that land tax is superior to taxes on labor,
improvements, etc. because land supply is inelastic and their supply
is not.

Friedman pointed out that labor supply certainly *is* inelastic in the
"physical existence" sense in the near to intermediate term --
dropping a big tax on labor doesn't reduce the population or number
ofr workers at all at the time -- and buildings and other
improvements to land are even more inelastic in supply,dropping a big
rent tax on them doesn't eliminate them from existence at all (and
they can't sell their homes and move away in the long run).

That's clearly wrong..

It's clearly entirely correct.

A high tax on labor would cause some people to stop
working, thus reducing the number of workers.

Careful here: If you insist that workers pushed into part-time work,
under-the-table work, and the ranks of the unemployed are no longer
workers, not only will the BLS disagree with you but liberals will not
like you.

By definition, people who don't work aren't workers.

<irrelevant nonsense snipped>


..... And this is (one of the) fundamental problem(s) of
Georgism.

Georgists insist as the foundation rock of their church that if an
item is in elastic supply a tax on it doesn't reduce the supply of it
-- defining as "supply" the amount that physically exists in the
universe.

But the supply that actually matters for human welfare and productive
economic activity is the amount that is *brought to the market*

That's nonsense. My houe hasn't been brought to the market for years. But
it's clearly good for my welfare to have a house to live in.

-- and
a tax on the supplier that reduces the price he receives for doing so
absolutely reduces the amount supplied to the market, to be available
to buyers, users.

A land value tax doesn't do that.

It thus reduces potential mutually beneficial exchanges betwen buyers
and sellers, and thus the welfare of both biuyers and sellers.

E.g.: The amount of copper that physically exists on earth is totally
inelastic. Putting a confiscatory tax on all copper sales will not
change the "supply" of copper on earth by even one atom.

Of course it will destroy the supply of copper *brought to market*,
and thus deeply harm the welfare of both copper sellers and copper
buyers/users.

It is the supply of an item that is *brought to the market* that
counts for welfare. And this is the same with land as with copper and
every other item in inelastic physical supply in the universe.

A tax that reduces the return to suppliers of supplying an item to the
market reduces the supply of it *on the market*. Duh. It's called
"the law of supply and demand". And that reduces welfare.

Land value tax doesn't do that.

It's the same with land as with everything else.

Hey, I said Georgists have no answer to this problem but to deny it.

I've read all the answers to my original statement and none of them
answered it, they all just denied it.

Thank you all for making my point for me! ;-)

A high tax on buildings would reduce the amount of new buildings...

Nice attempt to change the subject.

I didn't change the subject.

You said that "dropping a big rent tax on (improvements) doesn't eliminate
them from existence ."

I pointed out that that isn't true.

So now you're going to pretend you never said that, and say something else
that isn't true instead.

A high tax on rentals of buildings *immediately* moves rentals on
*currently existing* buildings into tax-avoiding "off-market" and
black-market arrangements -- under-the-table payments ... collecting
favors instead of rent ... non-cash swaps .... business deals that
move income into lower-tax forms of income ... hoarding by owners
since the property is now worth more for their own use than they can
get after-tax by renting it ... etc. etc. -- that reduce the supply of
real properties available on the open market to prospective renters.

It does so before the supply of buildings changes one iota.

Be honest, you know this. It doesn't help the credibility of the
Georgist case to deny reality.

A tax on rental income is called income tax. You're quite right to point out
that income taxes can have bad effects.
Property taxes work differently. All the tricks you describe can help to
reduce income tax liability. But they won't reduce your property taxes by
one cent.

You'd know this if you were honest. But it does help your case if you deny
reality.

And, you know, buildings are even more visible to the naked eye than
the land under them.

So if a high tax on building rentals drives their rental arrangements
off the free open market and into off-market and black-market
arrangements, why wouldn't a high tax on land rental arrangements do
the same thing?

Certainly. That's why Georgists don't advocate a tax on land rental
arrangements.

and
increase the number of old buildings becoming derelict.


Yet dropping a big tax on labor or on rent for improvements to real
estate *immediately* drive supply of these items *out of the market*,
harming the economy. Workers immediately start working under the
table, off the books, or cease working altogether. 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.)

All this is entirely well known and extremely well documented.

Thus, the Georgist claim that because the physically existing supply
of an item (such as land) is inelastic a tax on it won't disrupt
markets for it by reducing the amount brought to market, is seen to be
very naive nonsense -- contradicted by their own examples.


What the Georgist needs is some explanation, some mechanism, that will
keep rental arrangments for land from fleeing offmarket and into
backroom deals just exactly like rental arrangements for improvements
to land do when steep taxes are imposed on the rents.


When the tax is on the value of the property, there's nothing to gain by
hiding the rental arrangements.

This is very amusing. (How did I know you were going to say it? I
anticipate the Georgist sense of humor. <g> )

Let's see: The entire Georgist agenda is to tax away the rent of land
through taxing its value.

But land owners who pay this tax won't realize they are paying tax on
their rents, and thus won't react correspondingly.

Droll. ;-)

OK, but seriously now....

The only reason for 'backroom deals' is when
the landlord is trying to avoid income tax.

You mean to avoid "tax", not merely income tax, right? They want to
avoid all taxes, right?

You can't be saying that they wouldn't -- and don't today -- act to
reduce the taxable *value* of their land when it reduces their total
tax bills. No?

If you think so, here's a challenge, something in today's world for
you to explain:

Every true Georgist is fond of Michael Hudson's claim that "official"
estimates of land value (such as the Fed's '94 estimate) understate
it by fully 50% in very large part because owners of buidlings inflate
the value of their improvements to land while reducing the value of
their land itself, since this gives them greater tax deductions for
depreciation of the improvements (land isn't depreciable).

This is entirely sensible. You give people an incentive to shift
reported value from land to buildings, pay them to do it, and they
will do it. Who could argue with that?

Of course the "depreciation deduction" tax incentive is rather mild --
depreciation deductions for the cost of a building are spread out over
39 years, and if the building doesn't actually lose value they are
taxed back in the end, so they only amount to a tax deferral.

In contrast, the incentive to shift reported value off of land and
onto buildings and into other arrangements under a Georgist/Single Tax
system would be *hugely larger*, being that land rent tax would be
confiscatory and other income would be tax free. Incentives don't get
much bigger than that!

Property tax assessments aren't based on reported values.So no such
incentive would exist.

But let's just stick with the status quo.

Today's slashing of land value by half is obviously greatly hurting
the tax collector right now. Consider: half or more of the land value
of Manhattan, NYC, is being used to inflate building values to reduce
income tax and other business taxes! Today!

As you pointed out above, it doesn't greatly hurt the tax collector.It only
amoumts to a mild tax deferral.

Now, here's your challenge -- since you claim such shifting of value
away from land and onto improvements and into other "back room"
arrangements won't happen under a Georgist system.

Please explain:

1) How is it possible today, if it isn't possible under Georgism?

It's possibe because the IRS allows it. Under the current system, the
government has little incentive to insist on accurate appraisals.


2) What tax appraisal system would you use under Georgism that we
should be using *today* to stop all this current tax avoidance by
undervaluing land?
What techniques should the property assessors in Manhattan be
using today to fairly, accurately and equitably perhaps double their
valuation of land in NYC, to eliminte this current tax avoidance?

Note:
You can't say "comparable sales", because all actual comparable
sales of buildings are at these inflated prices -- so comparable sales
give you exactly the result you don't want.


Nonsense. Properties are sold at market prices.It's only the split between
land and improvements which is misreported.

You can't say "discounted rents" either because rents really
are reported through binding leases to improvements, not the land.
They give you the result you don't want.
And you can't include income shifted from land rent to other
sources of tax-favored business income though complex multiparty
(backroom) arrangments because you have no knowledge of them or what
they amount to.

OK -- so, not using comparable sales or discounted value of actual
rents, how do you determine by how much to increase the value of each
separate and unique plot of land in Manhattan, NYC?

What is the low-cost and accurate value assessment method of the
Georgists that today's NYC property tax assessors are missing?

Comparable sales.



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