I have found over the past 50 years of membership to the Georgists IU that little progress has been made in the Single Tax proposal. I there choose to introduce an alternative way of doing the same thing WHICH WILL NOT CAUSE OPPOSITION FROM LAND OWNERS.
A MORE STEALTHY GEORGIST CAT
The Georgist cat is small and lean
And often doesn’t get to be seen.
It hides in the branches of an economic’s-tree
So it takes a long while for you or for me,
To appreciate its cute and original form
That the landlords are so ready to scorn.
The economic’s-tree has many fine branches
(On which we contend, there are no free-lunches).
Whilst the land-owning rich in the city all claim
As bloated capitalists, that they’re not to blame
For the gap that lays ‘twixt the poor and the wealthy,
But oppose any tax to make our nation healthy.
Have you heard the tale of a committee, that
Thought to bell and get warning of a fat cat?
But could not find a soul to apply this device,
Because typically all were a council of mice!
Our Georgist cat has a bell ready-fitted,
(Which makes this analogy more to be pitted).
This warning sound makes our ideals unwanted,
For a new tax is how politicians get doubted.
So the Georgist cat fails to catch any mice
That pose as landlords, along with their vice.
But how shall we silence the bell’s warning sound
And quieten the news that our pussy’s around?
Our Georgist feline is in serious error,
‘Cause its bell draws attention not only to whether
Valuable sites can be ethically shared,
But also the rent from a site is declared
As the means to replace other kinds of taxation,
Which obviously causes the landlords vexation.
In the economic’s tree many other beasts lurk
But are missed, after learning of Henry G’s quirk
Through the cat-finder’s recently brilliant discovery.
This writer seeks a new means for recovery
From our politi-unacceptable claim,
And stealthily project LVT once again.
If we would but examine some more of the tree
Alternatives are waiting there for us to see.
Among them is hiding a far better way
For an equivalent LVT effect, to stay
In essence, without causing such evil offences
To the landlords and their partitioning fences.
When a property-owner decides to sell--quick
The gov’ment buys its land, and not the public!
Its occupant then leases it for a similar fee
To the One-Tax of Henry George’s decree.
Any buildings on-site should be sold as previously
But without the land, on which the price grievously
Had risen, with huge speculation in its advance
That stopped entrepreneurs from having a chance.
The cost of this land must be raised through new bonds
Which the government sells and the public responds,
‘Though their interest-rate’s a bit lower than rent,
Their returns are more stable than the average tenant!
This process will take many years to complete--
So its financial support is no great money feat.
After the lease-fees begin to collect,
Gov’ments can tax less, and firmly expect
To pursue this policy without change, until
All the lease-fees are site-rents in the Gov’ment’s till.
With the land properly shared, the government sees
That site development stays with the current leasees.
Other taxes that cause so much trouble and hate
Are scrapped, with great pleasure to all in the state,
Except for some bankers and the tax collectors
Whose actions no longer apply in these sectors.
Land-rights will be shared through this simple device,
How do you feel about adding an exemption for primary residences? This is typically the little detail that gets my disinterested relatives onboard, because it shifts them away from thinking about themselves (taxes are scary!) to thinking about commercial real estate. But I don't have a good sense on the impact such an exemption would have. For example, is that a 10% ding to tax revenue? 90%? Does it create perverse incentives I haven't thought of?
I'm in the process of doing some assessments in Texas, so I can't say for sure just yet, but a revenue neutral property tax shift to land might already have the effect of taking an overall tax burden off of homesteads and pushing it onto underutilized downtown commerical lots.
Now, a full Georgist 100% land value tax would certainly ding low rise residences in very high value areas quite a bit (and thus encourage a lot more building in those areas), but a more modest revenue neutral property tax shift to land, by contrast, would probably draw most of its value from the CBD. We'll have to see how much the recent effects from post-pandemic work from home culture have depressed commercial real estate prices, tho.
I think that an exemption for primary residences could absolutely be considered as part of the panoply of ideas we employ in order to get LVT off the starting block in Texas. The perverse incentives that this kind of exemption creates I imagine would be similar to the kinds of incentives created by any sort of reduction in tax liability for the value of the land. With the potential caveat that perhaps some would try to abuse the system by declaring businesses as residences or something. Though this isn’t a problem unique to LVT.
Additionally, you’re right that such an exemption would be a ding to tax revenue. In this case, I would think it would be relatively easy to just shift the tax burden to non-homesteads. This is similar to what we do already in Texas with homestead exemptions, so people would be somewhat used to it.
Thanks for your question and for checking out the article!
The "ding" to taxes is not the important effect. More importantly, an exemption would incentivise and in fact subsidize primary residences, which would put things like apartment and condo buildings at a disadvantage. It would perpetuate urban sprawl. It would mean that people would buy a home in order to evade taxes. I would say a hard no to exemptions like that.
I think the concept has merit and is worth exploring, but there is another component you did not mention that significantly impacts property taxes, and that is the per pupil spending by the state on public education.
Even though public education is a State responsibility, State funding of public education in Texas is well below 50% of the total public education cost, while local property taxes continue to take on a higher and higher percentage of the funding burden each year. Texas ranks 36th in per pupil education funding, yet we are 2nd in GDP. Education cuts made by the Legislature in 2009 have not been rescinded. Instead, more and more state spending is going to other political priorities, while the two main things a State should spend money on (roads and education) are being left behind.
School property taxes make up 65-75% of all property taxes in many parts of Texas. So even if you fix property taxes with a land value tax, the tax rate will be obscene unless the state elected officials start prioritizing funding of public education.
So Ryan, presumably as an active Georgist you might do more than just like this idea, but spread it about a bit! It was written as a kind of reply to a question from David Tiggs (contributing editor of the British Journal "Land and Liberty") at a past Georgist conference about how can we make the Georgist claims acceptable to landowners?
I have found over the past 50 years of membership to the Georgists IU that little progress has been made in the Single Tax proposal. I there choose to introduce an alternative way of doing the same thing WHICH WILL NOT CAUSE OPPOSITION FROM LAND OWNERS.
A MORE STEALTHY GEORGIST CAT
The Georgist cat is small and lean
And often doesn’t get to be seen.
It hides in the branches of an economic’s-tree
So it takes a long while for you or for me,
To appreciate its cute and original form
That the landlords are so ready to scorn.
The economic’s-tree has many fine branches
(On which we contend, there are no free-lunches).
Whilst the land-owning rich in the city all claim
As bloated capitalists, that they’re not to blame
For the gap that lays ‘twixt the poor and the wealthy,
But oppose any tax to make our nation healthy.
Have you heard the tale of a committee, that
Thought to bell and get warning of a fat cat?
But could not find a soul to apply this device,
Because typically all were a council of mice!
Our Georgist cat has a bell ready-fitted,
(Which makes this analogy more to be pitted).
This warning sound makes our ideals unwanted,
For a new tax is how politicians get doubted.
So the Georgist cat fails to catch any mice
That pose as landlords, along with their vice.
But how shall we silence the bell’s warning sound
And quieten the news that our pussy’s around?
Our Georgist feline is in serious error,
‘Cause its bell draws attention not only to whether
Valuable sites can be ethically shared,
But also the rent from a site is declared
As the means to replace other kinds of taxation,
Which obviously causes the landlords vexation.
In the economic’s tree many other beasts lurk
But are missed, after learning of Henry G’s quirk
Through the cat-finder’s recently brilliant discovery.
This writer seeks a new means for recovery
From our politi-unacceptable claim,
And stealthily project LVT once again.
If we would but examine some more of the tree
Alternatives are waiting there for us to see.
Among them is hiding a far better way
For an equivalent LVT effect, to stay
In essence, without causing such evil offences
To the landlords and their partitioning fences.
When a property-owner decides to sell--quick
The gov’ment buys its land, and not the public!
Its occupant then leases it for a similar fee
To the One-Tax of Henry George’s decree.
Any buildings on-site should be sold as previously
But without the land, on which the price grievously
Had risen, with huge speculation in its advance
That stopped entrepreneurs from having a chance.
The cost of this land must be raised through new bonds
Which the government sells and the public responds,
‘Though their interest-rate’s a bit lower than rent,
Their returns are more stable than the average tenant!
This process will take many years to complete--
So its financial support is no great money feat.
After the lease-fees begin to collect,
Gov’ments can tax less, and firmly expect
To pursue this policy without change, until
All the lease-fees are site-rents in the Gov’ment’s till.
With the land properly shared, the government sees
That site development stays with the current leasees.
Other taxes that cause so much trouble and hate
Are scrapped, with great pleasure to all in the state,
Except for some bankers and the tax collectors
Whose actions no longer apply in these sectors.
Land-rights will be shared through this simple device,
By a fast-growing country that takes our advice.
How do you feel about adding an exemption for primary residences? This is typically the little detail that gets my disinterested relatives onboard, because it shifts them away from thinking about themselves (taxes are scary!) to thinking about commercial real estate. But I don't have a good sense on the impact such an exemption would have. For example, is that a 10% ding to tax revenue? 90%? Does it create perverse incentives I haven't thought of?
I'm in the process of doing some assessments in Texas, so I can't say for sure just yet, but a revenue neutral property tax shift to land might already have the effect of taking an overall tax burden off of homesteads and pushing it onto underutilized downtown commerical lots.
Now, a full Georgist 100% land value tax would certainly ding low rise residences in very high value areas quite a bit (and thus encourage a lot more building in those areas), but a more modest revenue neutral property tax shift to land, by contrast, would probably draw most of its value from the CBD. We'll have to see how much the recent effects from post-pandemic work from home culture have depressed commercial real estate prices, tho.
I think that an exemption for primary residences could absolutely be considered as part of the panoply of ideas we employ in order to get LVT off the starting block in Texas. The perverse incentives that this kind of exemption creates I imagine would be similar to the kinds of incentives created by any sort of reduction in tax liability for the value of the land. With the potential caveat that perhaps some would try to abuse the system by declaring businesses as residences or something. Though this isn’t a problem unique to LVT.
Additionally, you’re right that such an exemption would be a ding to tax revenue. In this case, I would think it would be relatively easy to just shift the tax burden to non-homesteads. This is similar to what we do already in Texas with homestead exemptions, so people would be somewhat used to it.
Thanks for your question and for checking out the article!
The "ding" to taxes is not the important effect. More importantly, an exemption would incentivise and in fact subsidize primary residences, which would put things like apartment and condo buildings at a disadvantage. It would perpetuate urban sprawl. It would mean that people would buy a home in order to evade taxes. I would say a hard no to exemptions like that.
I think the concept has merit and is worth exploring, but there is another component you did not mention that significantly impacts property taxes, and that is the per pupil spending by the state on public education.
Even though public education is a State responsibility, State funding of public education in Texas is well below 50% of the total public education cost, while local property taxes continue to take on a higher and higher percentage of the funding burden each year. Texas ranks 36th in per pupil education funding, yet we are 2nd in GDP. Education cuts made by the Legislature in 2009 have not been rescinded. Instead, more and more state spending is going to other political priorities, while the two main things a State should spend money on (roads and education) are being left behind.
School property taxes make up 65-75% of all property taxes in many parts of Texas. So even if you fix property taxes with a land value tax, the tax rate will be obscene unless the state elected officials start prioritizing funding of public education.
So Ryan, presumably as an active Georgist you might do more than just like this idea, but spread it about a bit! It was written as a kind of reply to a question from David Tiggs (contributing editor of the British Journal "Land and Liberty") at a past Georgist conference about how can we make the Georgist claims acceptable to landowners?