A Boring Dystopia

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Get rid of landlords... (lemmy.world)

submitted 7 months ago by [email protected] to c/[email protected]

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[–] [email protected] -5 points 7 months ago (2 children)

it's really not tho, i'm sorry but all Georgism/ and value tax is/was a form of pre-marxist capital taxation.

or do you think that Property tax is stopping BlackRock as we speak?

[–] [email protected] 9 points 7 months ago (1 children)

Property taxes != Land value taxes

Further, it's not a tax on capital; it's a tax on land. It's very explicitly designed to target land, as land has distinct economic properties that make it a prime target for taxation.

And yes, it does target speculative investments like those of Blackrock:

It reveals that much of the anticipated future tax obligations appear to have been already capitalised into lower land prices. Additionally, the tax transition may have also deterred speculative buyers from the housing market, adding even further to the recent pattern of low and stable property prices in the Territory. Because of the price effect of the land tax, a typical new home buyer in the Territory will save between $1,000 and $2,200 per year on mortgage repayments.

https://osf.io/preprints/osf/54q68

[–] [email protected] 0 points 7 months ago (1 children)

A tax on land is a tax on capital. Land has been capital longer than the concept of capital has existed.

[–] [email protected] 1 points 7 months ago (1 children)

It's not, though. The classical factors of production, whence we get the concept of "capital" as a factor of production, has land and capital as clearly separate:

Land or natural resource — naturally occurring goods like water, air, soil, minerals, flora, fauna and climate that are used in the creation of products. The payment given to a landowner is rent, loyalties, commission and goodwill.

Labor — human effort used in production which also includes technical and marketing expertise. The payment for someone else's labor and all income received from one's own labor is wages. Labor can also be classified as the physical and mental contribution of an employee to the production of the good(s).

Capital stock — human-made goods which are used in the production of other goods. These include machinery, tools, and buildings. They are of two types, fixed and working. Fixed are one time investments like machines, tools and working consists of liquid cash or money in hand and raw material.

https://en.m.wikipedia.org/wiki/Factors_of_production

And it's an important distinction. The fact that land is not made and inherently finite makes it zero-sum. Meanwhile, the fact that capital such as education, tools, factories, infrastructure, etc. are man-made and not inherently finite makes them not zero-sum. This distinction has truly massive implications when it comes to economics and policymaking. It's the whole reason LVT is so effective, so efficient, and so fair: it exploits the unique zero-sum nature of land.

[–] [email protected] -1 points 7 months ago

It seems you're using a more technical definition than I was. I was thinking something along the lines of definition 1a(3) in this dictionary entry. I agree there are important differences between land and other money-making assets.

[–] [email protected] 5 points 7 months ago* (last edited 7 months ago)

The difference is scale. If a house is a safe investment that makes a reliable 10% return on investment before tax and then you pay 1% in property tax, the remaining 9% is still an extremely attractive return so the investor appetite for housing remains unchanged by this small tax. Change the tax to 9% and you're only left with 1% return, suddenly other investment options become much more attractive. Once the investors have left, prices can normalize around the price tolerances of people actually intending to live in the space.

This is a simplification using made up numbers, but the overall point is that the mere fact that property taxes as they currently exist (with very low rates) allow investors to run amok, that doesn't mean that a more substantial LVT couldn't change that.

Obviously taxing in a way that makes rentals completely non viable is probably not a perfect solution, and raising the tax dramatically all at once before prices have a chance to react could be catastrophic, but with a careful incremental approach gradually raising LVT and displacing other taxes (starting with regressive ones like sales tax) with those revenues based on observed outcomes, progress can be made to a better equilibrium where people who want to own a home to live in have better opportunities to do so, people who want to rent still have some options, people aren't getting rich by ransoming housing at extortionate prices, and more investment capital is funneled toward productive enterprise over plots of dirt, strengthening the actual economy.

I think it's probable that the Georgist dream of displacing all taxation with LVT may not be achievable due to diminishing returns on raising the tax as property values react, but I think moving in the direction of Georgist policy could absolutely usher in some better social outcomes