[TimPC]

Total Federal US Tax Revenues in 2021: $4.05 trillion Total US Mortgages in 2021: $17.1 trillion

Once you add the taxes for other jurisdictions of government I can see taxes reaching 30% of total mortgage value. It's fairly clear to me that owning land is extremely expensive in a Georgist society that needs to generate the levels of taxation that fund current government. If land value tax replaces income tax it needs to be fairly large, taking over 20% of mortgage value for just federal costs.

Some number of homes are owned outright and no longer have mortgages so the mortgage number may be a bit misleading. If we account for this we might get to a level that suggests 10% of mortgage value in taxes federally, raising to 15% of mortgage value when accounting for other levels of government. Such numbers suggest you'd need to be able to pay for your current property with an 8-year mortgage in order to pay the Georgist taxes on it.

I think a modern society that kept existing levels of government spending would see widespread downgrades in housing quality in a Georgist society.

[imtringued]

You are ignoring that income taxes and other taxes reduce land rents. You can't tax the same dollar twice after all. The entire reasoning behind a single tax system is that every dollar is taxed through land value taxes in this case.

Yes this does mean that renting/owning low density housing will be more expensive but your income will be much higher to begin with as it isn't taxed.

For example 20% VAT and 30% income tax mean 56% of your money can be spent on housing. Without those taxes you will have almost twice as much money to spend which means you can afford higher land value taxes and if you decrease the amount of land you use, your effective tax burden will go down but so do the costs to maintain infrastructure and other public services.

[TimPC]

To be clear I'm not saying that Georgist taxes are based on the mortgage value I know they are not. I'm comparing the two quantities to establish a rough estimation of how expensive property in a Georgist society that provided a similar level of services would be. If government needed to generate a certain amount of tax revenue comparable to current tax revenue they likely need to charge homeowners an average tax on their unimproved land value that would roughly amount to 15+% of the value of the mortgage, across all levels of government.

[geocon]

Except that's not how Georgist tax structure is decided, it is 100% of the land's rental value. If you want a good overview I recommend this exhaustive and data-heavy series of articles: https://gameofrent.com/content/progress-and-poverty-review

[TimPC]

Okay some things don't add up. You can't have a Georgist tax as a single revenue source for the government and calculate it off something other than what the government needs for revenue. Either you calculate the Georgist tax rate on the unimproved land value, you add other taxes to government or you slash and burn through government spending to deal with the capped revenue. It's living in fantasy land to say Georgist land value taxes, calculated in precise accordance with this metric and not adjusted upward or downward by revenue needs will be a single source of revenue for all levels of government.

[geocon]

Well, while Georgism is most famous for advocating for land value taxation the LVT itself is not the only Georgist tax. All forms of economic land, including such things as natural resources and intellectual property, also generate economic rents and are candidates for taxation. Furthermore, cutting taxes on labor and capital increases the value of land significantly, so much of the revenue "lost" by cutting income taxes, sales taxes, corporate taxes etc would flow directly back into land values and return via the LVT.

In any case, there is lots of room for experimentation at the margins and any Georgist reform won't be complete or overnight. Any shift from taxing labor and capital will result in a better and more efficient economy, so don't get too caught up in the abstract end state.

[AnimalMuppet]

> All forms of economic land, including such things as natural resources and intellectual property, also generate economic rents and are candidates for taxation.

That fixes my biggest complaint about Georgism.

Take Google, for instance. What is the basis of their income? It's not the land they own or occupy. It's that they own google.com.

Where does IBM's money come from? Not from the land they own in upstate New York. It comes from their patent portfolio.

[dragonwriter]

> All forms of economic land, including such things as natural resources and intellectual property, also generate economic rents

Natural resources are consumed inputs and don't generate rents (extraction rights, which are a subset of property rights in land, do); intellectual property isn't land in the usual economic sense (it is not naturally occuring, so not land; it is durable and created, and therefore capital in the classic division.) It does generate rents, but that's typical of capital goods generally.

(In modern use it's more typical to expand the use of “capital” to include land and thereby encompass durable, rent-generating subjects of property rights than to expand “land”.)

[geocon]

Well yes, natural resources are dealt with under severance taxes on extraction. By intellectual property rents I mean monopoly rents from government enforced IP law.

And yes, neoclassical economics classes land under capital and that is a fundamental disagreement of Georgist economists with neoclassical economists.

[TimPC]

I think it's extremely important to undertake a cost benefit analysis of the end state to decide if we want to transform society in that direction. So I disagree strongly with any comment of the form "don't get too caught up in the end state".

I agree there are some other things you can tax. I presume those are also taxed at precisely the economic rents they create? My point is that government needs some sort of tax with a knob that they have the ability to tweak upwards or downwards based on shifting revenue needs. It seems to me the only things in a Georgist system are taxed at precise values and fail to give government that knob. Do all Georgist societies have some sort of services cap because their tax revenues are capped?

[geocon]

I say "don't get caught up in the end state" not because I don't think the end state is important but because the intermediate effects are hard to predict without more data. But, more to the point, if LVT is the most efficient kind of tax, why would we not want to over time, shift as much of the tax base to it as possible?

In any case, Georgism produces a very different financialization of governance than the current tax system, because public goods pay for themselves via increases in land value- see the Henry George Theorem by Nobel laureate Joseph Stiglitz: https://en.wikipedia.org/wiki/Henry_George_theorem. This means that rather than adjusting taxation to meet desired investment, desired investment is adjusted to produce optimum public returns- which has the beneficial side effect of incentivizing good and proper governance.

[TimPC]

I think it's fair to say efficiency and fairness are sometimes competing concerns. For instance, I disagree on shifting only property taxes to LVTs because I think they benefit condo developers at the expense of homeowners. Any tax shift has winners and losers and while there might be a slight overall benefit to the shift itself the individual outcomes can vary dramatically. I'd argue that we do have to have some degree of consideration for individual outcomes as well.

[TimPC]

I worry that the Henry George Theorem suggests a government can spend money in order to tax more of it. It potentially solves the issue of governments not having enough revenue, since arguably they can tune unimproved land values upwards to the levels they need. Of course it also introduces the problem of governments tuning unimproved land values to the level they need. Tax revenues have grown from $3.32 trillion in 2017 to $4.05 trillion in 2021. That's nearly 22% growth in a four year window.

I'd be very concerned about governments undertaking the necessary actions to drive land value taxes up by 22% over a four-year window. I think such policies would lead to many people being forced to vacate their land.

[geocon]

Most increases in land value are for the construction of infrastructure and other investments which make people more productive and increase wages, so while land values increase that investment increases wages also, meaning that it shouldn't have much of an effect on people's ability-to-pay.

[TimPC]

Can you explain in what sense LVT is the most efficient form of tax? I do understand that normally when you tax something malleable you get less of it so it's often best to tax things that aren't malleable. But what precisely is LVT more efficient at? Does it generate the fewest negative externalities per unit of tax revenue? If so, how do we evaluate between different types of externality?

Have we accounted for the fact that with LVT it's possible to get less tax revenue from land becoming vacant because the taxes become too high for users?

[geocon]

Because land has fixed supply, as you've said, the tax is perfectly efficient: it causes zero deadweight loss. But LVT actually has positive externalities as well- namely, it makes it nearly impossible to speculate, which with land consists of buying land and holding it off the market unused or underused in order to sell it later. Speculation is very inefficient and also quite common, so removing it actually makes the economy better than it was before an LVT.

As for the tax being too high, if people started to vacate land that would mean the tax rate is over 100% of the land value (if it's at 100% people won't vacate, they won't be able to extract rents from it but it won't be an economic loss). Governments have every incentive not to tax land over 100% value because they actually lose money from doing so, so that's a pretty good security that it won't happen.

[brightly-salty]

Well other taxes are not precluded by Georgism. See for instance Piguovian taxes and IP taxes. But additionally, I don’t think it can be assumed that the government will continue to need its current amount of revenue. Under subsidiary, the size of the federal government would drastically be reduced as power moves downward to local governments.

[pyradius]

Well, many Georgists believe that All Taxes Come out of Rents, so under that belief there is no reason to keep inferior taxes in existence as opposed to collecting the higher rental value that would occur with the removal of those current taxes.

As for levies on externalities, these should be more accurately seen as correcting a market failure, the social cost that society must pay that the consumer/producer do not pay.

Notably, Frank Ramsey and A.C. Pigou can be considered crypto-Georgists -http://blog.lvrg.org.au/2013/09/ramsey-and-pigou-crypto-geor...

"As we shall see, Ramsey not only formulated a rule that leads directly to a “single tax” on land, but also anticipated the so-called Laffer curve in cases where the “single tax” is not employed. Moreover, Ramsey's rule was to be applied after any externalities had been internalized by means of appropriate taxes and bounties."

[TimPC]

Ethically, under Georgism there is a strong moral basis for taxing economic rents and particularly so for taxing land and natural resources. The argument is that we all have equal entitlements to the land and the resources on it. That equal entitlement is forced by taxing adequately for the land value or natural resource value so that it doesn't unfairly benefit the person who holds it at the expense of everyone else.

Georgists are a bit like libertarians when it comes to income taxes. It's very difficult for government to demonstrate a moral basis for interfering in work markets to generate taxation. Libertarians argue that if you are forced to pay 57% income tax you're 57% a slave. I'm not sure Georgists would go that far, but it seems unlikely you'd see implementation of taxes that are both economically less efficient and ethically more dubious than taxation of economic rents.

[pwinnski]

You're saying that land taxes should supply 100% of federal tax revenue, but 0% of state/local revenue?

Currently most property taxes are local, not federal. You're also missing the bit about a citizen's dividend which seeks to offset some of this.