Maybe Georgists need more pretense

From Felix Salmon:

it wasn’t an excess of greed and speculation which led to the financial crisis, but rather an excess of overcaution, with an attendant surge in demand for triple-A-rated bonds. Investors didn’t want risk, and investment banks made billions of dollars, during the boom, by waving their magic securitization wands and seemingly making that risk disappear.

And that might be the biggest obstacle to effective reform.  Folks want to pretend that there is a system of public finance under which no one (except a few disliked rich or profligate people) will ever risk losing anything. Everyone’s savings will always be protected.  No one will ever be unable to afford to stay in her home. All needed medical care will always be provided at a reasonable (or no) charge. Successful politicians pretend that this can be achieved, with just a few new laws and/or taxes.

Then here come the Georgists, or other rational reformers, saying “we have a system that will work really well, people will be rewarded for doing productive work and won’t be able to live off others.”  What? I won’t be able to count on using equity in my land to fund my retirement? Of course, I never could count on it anyway, but everybody pretended that I could. Successful politicians pretend that something pretty close to absolute security can be achieved, if only we elect them and they pass a few laws.  Georgists aren’t so good at pretending.

Review of Lincoln’s new “LVT” book

LAND VALUE TAXATION: THEORY, EVIDENCE, AND PRACTICE
edited by Richard F. Dye and Richard W. England
Lincoln Institute of Land Policy, 2009

“[E]conomists agree on a great many things, but tend only to discuss the things about which they disagree,” writes Lincoln Institute (of Land Policy) chief Gregory K. Ingram in the Foreword to this new book.  And if one is disinclined to conspiracy theory, that might be the reason that the Single Tax and its various derivations don’t get much attention in the academic world.

A book about experience with the Single Tax would, of course, be a short one, since we don’t have any  experience of a modern economy in which the only tax is one that collects virtually all the land rent. Rather, this work examines some cases in which land has been taxed at a higher percentage of value than buildings and other improvements.

Continue reading Review of Lincoln’s new “LVT” book

Fisheries, too

I’ve mentioned previously that poor countries are selling or long-term-leasing arable land to more prosperous and densely-populated ones, a phenomenon monitored here. No surprise, it’s not just solid-earth-type land that’s being sold:

“Most counties in Africa are selling fishing rights to industrialised nations which catch large amounts of seafood, effectively out-competing local fisherman,”

according to New Scientist. It’s not stated, but presumably the revenue received for the rights goes to elites, not to the working fishermen displaced. Well, they can become pirates.

Another endorsement for the Single Tax

From Reihan Salam in The Atlantic.

There’s a certain compelling logic to the Single Tax that stands the test of time. When you tax income, aren’t you punishing people for working hard? But when you tax an asset like land, you’re simply encouraging the most valuable use of that land. In the years since George faded from the scene, a number of economists, from Milton Friedman to Paul Romer, have found virtue in the Single Tax, not least because it creates the right incentives for government.

Thanks to Vince Tolve for the tip.

Why are Danes happy?

Danish Georgist Ole Lefmann recently circulated a paper looking at this question from, of course, a Georgist viewpoint.  There’s a lot about Georgist theory (I guess Georgists can skip that part) and a lot about Danish history (likewise for Danes, I suppose).  Lefmann notes the Danish traditions of political and legal equality, absence of an empire and no “resource curse.”  Historically Denmark had a considerable land tax, but in more recent times this has declined to, he says, less than 2% of value.  (Not trivial, I say, even 1% is a significant cost to the speculator.)

But Danes pay high taxes, and these are largely taxes on labor, so how can the Danes be happy? The answer, he says, is all taxes reduce rent, so part of any tax on labor is really a tax on rent. And the proceeds are used to provide social services, so Danes are happy.

It would of course be less complicated and much cheaper for the Government and the taxpayers to collect the rent of land directly from the landowners than by collecting the same amount indirectly via many other sources. The major problem in that matter is that so many of the Danish voters have got the idea that they don’t like land-value taxation and prefer many other taxes

I claim no knowledge of the Danish tax system, but I would guess that higher-income folks do pay a somewhat greater percentage of their incomes than lower-income ones, and the former are more likely collecting rent than the latter.  If so, then on that basis I would conclude that Denmark is collecting some of the rent.  Then we might also assume that, in Denmark, public expenditures are primarily for the benefit of the public.  Under those circumstances, I could see high taxes primarily on labor income as an awkward but not entirely ineffective way to aid happiness.  It would only look stupid if compared to a more intelligent tax regime elsewhere.  Where might that be?

Writing notes on pdf’s

Now I can do it.  I can read a pdf document on the screen, highlight or underline parts of it, write notes in the margins, and save it.  I can change or erase my marks without changing the document.  I’ve been looking for a way to do this for a while, and I can do it with Xournal. (It is said that some other programs can also provide this capability, but I haven’t tried them.)

Cook County changes classified assessment rates

Who knew? Not me, but I don’t pay as much attention as I should.  Effective with the “2009 tax year” Cook County is moving toward just two assessment classes: 10% and 25%.  That means that residential and vacant are now supposed to be assessed the same, which is probably good since Assessor Houlihan just couldn’t seem to accept that, under the old system, vacant was supposed to be assessed at a higher percentage of value than owner occupied 1-6 unit residential.  This change will reduce some tax bills and raise others, but total revenue is likely unaffected due to the multiplier which the Illinois Department of Revenue will calculate.

I can’t find any mention of this in the daily newspapers, although separately there seems to be a project to reassess all parcels in the county, instead of just the 1/3 done in a normal year.  (Is this legal? Probably it doesn’t matter.) See Break for suburban homes? – ‘This is not a gimmick,’ Houlihan says, but taxes could still increase Chicago Sun Times May 12 ’09.

Just  in case anybody thinks they understand how assessments work.

Minnesota looks at funding transport from land tax

A new report from the University of Minnesota looks at ways of financing transportation projects by capturing part of the benefit they provide.  Land value tax is only one of the eight options  (Land Value Tax,  Tax Increment Financing, Special Assessments, Transportation Utility Fees, Development Impact Fees,  Negotiated Exactions, Joint Development,  Air Rights) considered.

A quick skim indicates that on the whole it’s pretty good, though it seems to overestimate the difficulty of assessing land value, and repeats the error of some previous studies which conflates owners of land occupied by low income people with the low income people themselves. (More likely, low income people are renters living on land owned by someone else, and when taxes on such land increase the owners can’t pass the cost on to their tenants.)

There is also mention of a study, new to me, that seems to document an anti-sprawl benefit from a land tax. The study unfortunately is secured by ssrn; I shall have to try to find it elsewhere.

This study was requested and funded by the Minnesota legislature.

Hat tip to lvtfan.

Where Chicago posts medallion sales prices

I have been relying on the estimable Chicago Dispatcher monthly newspaper for Chicago medallion sales prices, because I could never find them on the City’s web site.  Now, while trying to figure out something else, I have found the site.   The same page with a different url seems to be here.  It’s not clear whether this link is permanent, but one can navigate to it from  egov.cityofchicago.org using  Your GovernmentCity DepartmentsBusiness Affairs and LicensingPublic Vehicles > Taxi and Limo Industry >  Medallion Owners. The latest list posted, thru June 8, is this pdf, showing that on the last date reported, June 9, ten sales closed at prices ranging from $165,000 to $178,000.

Other medallion-related items: Here’s a post indicating that New York, too, is seeing continuing rise in medallion prices.   And Taxi Medallion Systems do not Benefit Drivers.