Taxing land would solve America’s biggest problems

Tuesday, December 10th, 2013

Jesse Myerson argues that taxing land would solve America’s biggest problems:

No need to tax labor and industry at all. Just tax the stuff that humans had nothing to do with creating, and therefore have no basis to claim ownership over at all. You’ll find that almost all of it is “owned” by the fabled 1 percent.

And boy are they sucking a lot of money out of it. By far the most valuable asset form in the U.S. is real estate, and the majority of that is the value of the land, as distinct from the value of the human-made buildings. Economist Michael Hudson has assessed that the land value of New York City alone exceeds that of all of the plant and equipment in the entire country, combined. No one put any enterprise or cost into producing the land’s value – they simply bought it when it was cheap, sold it when it was dear, and waited for the check. “They” are the Finance, Insurance and Real Estate (FIRE) sector, and they capture 40 percent of the United States’ profits, despite the complete passivity of their profit-accumulation method.

This is Henry George‘s single tax, which was too confiscatory for the right and not socialist enough for the left.


  1. James James says:

    I find it a very interesting question about why the left isn’t wholeheartedly behind LVT, assuming that most non-landowners are on the left. Monbiot is a recent convert, I think, and the UK Greens support it, but that’s about it.

    Partly it is misunderstanding. LVT makes total sense once you understand it, but is hard to “grok”, even with the example of Hong Kong. Partly this is because of propaganda.

    Partly LVT is opposed by ordinary people who own land. Owner-occupiers are about 60% of the population, and they would all be worse off in the short run. Mark Wadsworth refers to them as foot-soldiers, because most land is concentrated in a few hands.

    But in the long run, anyone who earns an income would be much better off paying LVT instead of income tax. (Owner-occupier pensioners would be worse off.) (I don’t get much out of the moral arguments for LVT. For me, the debate between LVT and income tax is settled by LVT having no deadweight costs.)

    The problem is that the left like income tax for its own sake. It’s not just about redistributing money; it’s about penalising the productive, for being productive.

  2. Isegoria says:

    People seem to especially loathe “direct” taxes not tied to a transaction, where they may not have cash on hand to pay the tax man. Tariffs and income taxes aren’t efficient, but they are effective.

  3. Steve Johnson says:

    James James,

    Your last paragraph is the answer.

    The left is just in favor of whatever gives the professional left more jobs and power.

    Putting it in economic terms the left is a giant program to create dead weight loss. Anything that reduces dead weight loss will be opposed no matter if it fits the stated justifications for their policies or not.

  4. Steve Johnson says:

    Oh, and conservatives are mindless* which is why they don’t champion it.

    * Mindless doesn’t mean that individual conservatives are stupid – just that there are no continuous institutions that teach anti-progressive thought. As a result conservatism just evolves into a list of things that sound kind of good to the portion of voting public that isn’t bought by the left in some way.

  5. James James says:

    “People seem to especially loathe ‘direct’ taxes not tied to a transaction, where they may not have cash on hand to pay the tax man.”

    True. But they also loathe income tax if it’s not deducted from their wages automatically. Before PAYE, I believe, plenty of people used to fail to save enough money to pay their income tax bill at the end of the year, and some high-earning entertainers still do. Collecting it monthly is much more sensible.

    People who currently pay rent don’t seem to have much trouble making sure they save enough to pay rent each month. One can just arrange that the rent is due a day or two after you get paid, so you don’t have much chance to spend it all. LVT is no different from rent, and would be collected monthly. In the UK we already have council tax, which you can pay monthly by direct debit, so the govt would just have to increase that.

  6. The property tax for the small holder means he does not really own his land. He is just renting it from the taxing entity.

  7. James James says:

    “The property tax for the small holder means he does not really own his land. He is just renting it from the taxing entity.”

    Yes, that is correct. There is a non-economic difference, in that the government does not get to choose whether to rent to you or not. That would be truly totalitarian, in Nick Szabo’s sense — a single landlord, no pluralism. Mark Wadsworth, a land-tax advocate, says “I never said people shouldn’t be able to own land. I am very much in favour of people owning land. What I said was that the economy works best when land owners have to pay for the location rent.”

    For me the big questions about LVT are about political formulas.

    We know that it is sustainable if it already exists. All land in Hongkong is leasehold (except the Cathedral). And England had a local welfare system (the Poor Laws) financed by the “rates” from Elizabeth I until it was replaced with a central welfare state after WW1.

    The question is about how to get there. Almost all landowners will be opposed. It’s not too much of a stretch to say that our landowning class is part of our current political formula. And before Elizabeth I, the central state did not own all the land — it relied on large landowners (nobles). But the central state is much more powerful now.

  8. Andrew Cowling says:

    Of course, back in the “Good Old Days” prior to Edward I, the Crown was expected to fund recurrent expenditure from its own resources. For special one-off costs, the King could call a Parliament to request a one-time only tax on moveable goods.

    (Edward, of course, had so many wars going on that by the end of his reign the Parliament was pretty near an annual institution.)

  9. Alrenous says:

    The land is what needs to be defended by a military, the cost of which is insensitive to improvements, and that military always has the option of becoming a state if it wasn’t already.


    Does the de jure owner of the land have de facto ownership? Do actual states interfere with the owner’s decisions?

    There’s fire regs, which are about not endangering the neighbours. There’s creeping totalitarianism. “But no, his little honeymoon cottage — or our retirement shack — had to be a 900-square-foot Taj Mahal.” There’s utility infrastructure, such as water and methane.

    But setting thing like the above aside, can the owner do what they like with the land?

    If so, then they own it by law and custom, which means a formalist restructuring would grant them ownership.

  10. Space Nookie says:

    IIRC, this is how they did taxation in the late Roman empire, and it led more or less directly to the medieval system of large landholders ruling over populations of impoverished serfs. The increased taxes break John smallfarmer and Jane homeowner, while the larger entities have the economic flexibility to pass on the price in higher rents and food costs. Eventually the common folk have to indenture themselves just to be able to eat and have a place to sleep.

  11. Of course that particular dynamic would be greatly modified by the fact that we are not a distributed-agrarian civilization but an industrial one.

Leave a Reply