People often object to land value tax because they think it will increase their taxes. However, for most working class folks, your taxes would actually go down. In reality, you probably already pay land value tax. Most of us pay a land value tax to a landlord in the form of rent or to a bank in the form of mortgage payments. This "tax" in the form of rent allows landlords and capitalists (mortgage holders) to survive and thrive without having to actually work for a living like the rest of us. The revenue from rent/mortgage payments allows landlords and capitalists to live off of unearned income, while the rest of us slave away for petty wages and live paycheck-to-paycheck. They make money, not by doing any productive labor, but by monopolizing land and resources and charging other people to use said resources.
In our society, we already have a land value tax: it's just that the revenue all goes to private land-owners rather than to the people as a whole. In our society, we already have basic income, but it's not universal. The wealthy, the landlords and capitalists, actually receive income from rent, interest, and dividends; and that money serves as an income independent of any actual productive labor.
Land and natural resources were not produced by man. The land-speculator, the landlord, and the capitalist didn't produce the resources that they monopolize through productive labor. The accumulation of capital was rooted in monopolization of land and charging rent. The land, which the landlords did not produce through labor, and the capital, which accumulated through charging rent for access to land, should really be regarded more as social wealth than as something that private individuals are inherently entitled to exploit for personal gain. A man is entitled exclusively to the product of his own labor, not to value produced by monopolizing resources nor to value produced by society as a whole. There's no reason that landlords and capitalists ought to be viewed as, in any way, entitled to their unearned income. The poor and middle class work for their wages―that's earned income! The landlord and the capitalist don't earn their income by performing any productive or useful labor―that's unearned income! As long as we have government, somebody has to pay for it. Wouldn't it be more fair to have government paid for out of taxes on unearned income rather than out of earned income?
Instead of the rent going entirely to private landlords and banks, a portion of that money ought to go to funding government and creating a citizens dividend. This rent revenue from land value tax replaces income tax. The average person gets a net benefit. Your income taxes go away (more money in your pocket) and the land value tax basically comes out of the rent/mortgage payments you were already making (you're not paying any more than before). The bankers, capitalists, and landlords merely get smaller profits. And, who gives a fuck?! I mean, let's be honest: these people are largely parasites. The banks make billions in profits and their CEOs get multi-million-dollar yearly salaries, yet tax-payers still had to bail them out. Parasites like Robert Mercer and Donald Trump have multi-billions and haven't ever done an honest day's labor. Don't tax the soldier, the firefighter, the ditch-digger, the garbage man, the plumber, or the HVAC guy. Tax the speculative investors, crooks, oil companies, and landlords. And take a little bit of that unearned income that currently serves as a basic income, apart from labor, exclusively for the wealthy, and give it back to the people as a citizen's dividend. The land of a nation is the territory of the nation, and it belongs to the people of the nation. Tax people for private use of that land (charge the damned landlord rent) and distribute the revenue therefrom to all citizens as a dividend for their share of ownership of the nation's land/territory. In a democracy, the people is the nation, and the nation's territory is the land; so land ought to belong to the people altogether, not to private individuals.
We don't live sitting in the middle of a field though, we live in a house or apartment generally. That dwelling is what we rent, we do not rent the land, not for living anyway. So we are paying for the facility that that dwelling provides per unit time of use.
It's true that the people who own the land and / or the dwelling on it often pay for it by shuffling around money which they have access to on credit based on their originally better starting position than the average person, I won't deny that. They do not fully own the dwelling, and the vast majority of the money comes from renters. The landlord in this case is effectively getting paid hugely in the form of a property at the end of the debt repayment, all for the risk of guaranteeing that debt, with or without the renter, which the will however inevitably have.
I think this is the more common case. In light of this would it not seem to be better for the renter to have some share in the property which they are financing?
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Yes, basically...if I understand you correctly...but I think that's exactly what LVT+UBI does. Every person, including the tenant, is a partial owner of all land and receives part of the sum total of all rent.
Plus, something to consider, a rental agreement usually has rent higher than just the value of the land itself. I rented a place one time that had 800 dollar rent. A mortgage payment on the place would have been 400 dollars. (In most cases the landlord has a mortgage on it and uses part of the rent to pay the mortgage.) You're renting the land and the structure, as well as paying for maintenance (at least, landlords have obligations to make certain repairs in my country). The land value tax isn't taking all of that rent away, just part. The portion of cost that stems from land value is what is taxed, not the portion that stems from actual services (repairs) and products (structures) provided.
I think the proposal that you're suggesting seems somewhat like what Proudhon actually recommended, but I think LVT-UBI is a better approach insofar as land and natural resources ought to belong to everyone in my opinion. Your solution would only benefit the tenant and the landlord, not the neighbors or the community per se. ..and my land value is driven up when my neighbors make improvements on their property and when the municipality puts in schools and the state maintains the roads, etc. The value of the land, largely, results from other people's labor rather than from the efforts of the tenant or landlord exclusively.
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Would you eliminate the rest of the taxes and only leave this tax? Is the tax a kind of rent or is it a percentage tax based on the profits obtained from the exploitation of the land? Will banks not be obliged to eliminate mortgage loans and therefore many people would not have anywhere to live?
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For the most part, it should eliminate most other taxes. Most Georgists (land value taxers) are single-taxers. However, I think certain Pigouvian taxes, like taxing pollution (fining companies for polluting on a percentage of profit basis) should accompany LVT. Also, public shares of companies that have been subsidized or bailed out should serve as an analogue to corporate taxes, or taxes ought to be used to confiscate a public share of profits for such parasitic corporations.
Land value tax would be collected as a fixed percentage of land value. It would not totally prohibit rent or profits. Banks would continue to issue mortgages because the tax would only take a portion of their profits, not the whole thing; just like how people keep working when income is taxed since they still get to keep most of their income—the tax is just a percentage of income.
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I like the idea simply because in general it ends up decreasing the general taxes. But I do not understand how you will prevent the banks from ending up with the properties of the people who do not pay the loans.
Will not that increase the cost of interest? That is, tax + interest = the debtor pays more. The tax would end up falling on the worker and not on the banker, failing that, the consumer will end up paying, or the person to whom the debtor sells the fruit of what the land produces.
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The interest rate might go up (I'm not sure), but the debtor would still end up paying less. Currently, the prices of real estate is kept artificially high due to land speculation, etc. A speculator buys land in the country for cheap, holds it for decades, then when land is scarce in the area and more expensive, he sells it at an inflated price. Such speculative investment is actually discouraged by land value taxation. Say the speculator buys a 10,000 dollar property but has to pay a 6% LVT. Each year he holds that property out of use at a 10,000 dollar value, he has to pay 600 dollars. But as the value continues to rise, so does the tax. When the value goes to 30,000 dollars, he has to pay 1,800 dollars. If the value goes to 100,000 dollars, he must pay 6,000 a year. As time goes on, the speculators taxes go up and the yearly cost compounds. Speculative investment and holding land out of use becomes less profitable. So, land would actually decrease in price.
Furthermore, land-owners would be encouraged to use land for the most productive purposes. It encourages land-owners to do something productive with the land sooner, something that generates wealth and creates value (earns money) to offset the taxes. And if the speculator can't think of a productive use, he'll be more eager to sell (lower price) to someone who can. So the debtor may have to pay greater interest, but land will usually be cheaper and easier to come by, so the amount of his loans will be lower. The burden of tax shifts largely to other types of land-owners too, like people who own land that is incredibly valuable because it contains oil or gold. Businesses that own highly valued land in the city would pay more taxes too.
As for foreclosures, they'd happen less often under a system of land value tax linked to a basic income. Let's go to my example of the guy who defaulted on his loan because he lost his job and fell behind on payments. Under LVT+UBI, that would not happen as much. If he loses his job, either UBI covers his mortgage costs during transition to new work or the extra money from UBI already allowed him to save up a "rainy day fund," so now he never falls behind on his mortgage payments and the bank never forecloses.
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It would be interesting to pose a system like that in a region of the world, a considerable space, in a way that allows us to appreciate how well it works in practice, and appreciate if there are indirect effects that we simply are not seeing. In general terms, I support that a reduction of taxes be carried out.
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As for land value tax of the sort I advocate, they already have it in Denmark and Estonia, but there's also lots of municipalities and provinces in other places that have land value tax.
In Alaska, in America, there is the Alaska Permanent Fund, which is a citizen's dividend. The payment isn't quite high enough to be considered a basic income, but in combination with Earned Income Tax Credit and tax refunds, it could be very close to a basic income for many people. There's actually a ton of basic income pilots. Here's a list of some (but not all of them): https://en.wikipedia.org/wiki/Basic_income_pilots
There's many basic income experiments going on, both public and private (some of them are crowdfunded or funded by private billionaires rather than governments). Basic Income Earth Network (http://basicincome.org/) is a good source of info on all things basic income, including pilots and expiriments.
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Yes, my problem with these pilot programs is that I do not think they cover the whole aspect of a complete economy, so as to understand what the real impact would be, and what effects it would generate in the long term.
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This is why paying tax sometime is a good thing to do great article @ekklesiagora
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you summed that very nicely thanks for sharing :)
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Would you say that you agree?
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certainly a matter to debate on
i liked you point of view in this
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Interesting post Nicely written thanks for sharing this resteemed
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until the govt. do work for its citizen i have no problem
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