Category: Georgist/geoist

Korea mortgages conservatively

From “South Korea’s High Household Debt Adds Financial Woes” WSJ Nov 29-30 ’08

South Koreans are forbidden by law to engage in high levels of borrowing for real estate…loan-to-value ratio of South Korean real estate is 47%, well below the 90% and higher ratios seen in parts of Europe and the U.S.

Apparently this doesn’t prevent heavy borrowing, which is “rooted in high housing and education costs.”

One would think that, if in fact Korean real estate is less leveraged than elsewhere, they’d be less affected by economic instability.  It would be nice to know more.

Philadelphia needs land tax, too

Henry George Foundation’s Josh Vincent had a nice op-ed in Thursday’s Philadelphia Bulletin, noting that there is a good case for cutting taxes on work and investment, and a good case for increasing the budget to pay for needed services.  His point is that this doesn’t have to be an either/or choice.  By taxing land adequately, taxes can be cut and service maintained or improved. No great revelation to Georgists, but it’s good to see it in a major newspaper.

Free fertile farmland!

I’ve said for quite a while that if you want to build a factory, unless it’s particularly noxious, you can probably get free land, or equivalent in benefits, from any number of economic development organizations.  Turns out that the same can be true for farmland.

You, or I, couldn’t do it, but Korean conglomerate Daewoo can, 1.3 million hectares (that’s half the size of Belgium, says FT), in Madagascar.  Apparently this is an above-board legitimate deal, and Madagascar “will simply gain employment opportunities.” Daewoo doesn’t get fee title, but a 99-year lease.  The produce will for the most part be shipped to Korea.

Location still matters

We still hear sometimes that, in the Internet age, one can do business from anywhere.  Simply not true, for a lot of reasons, and here’s another: Big server farms are best located where electric power is cheap, which in the U. S. can mean the Columbia River basin. Amazon is building a $100 million facility in Boardman, OR.  Another source says that’s just for the computer equipment, the building is an additional $35 million. Google already is in the general area at The Dalles, where its facility employ 200.

Henry George on election reform

Henry George was “the most zealous American champion of the Australian [secret] ballot,”  writes Jill Lepore in the  Oct. 13 issue of the New Yorker.  Rock, Paper, Scissors: How we used to vote, reminds us that vote fraud is nothing new and there are two (or more) sides to every public issue, including voting rights.

Thanks for Howard Rutiezer for the link.

Maybe the rich do work harder…

…but part of what they work at seems to be under-reporting their taxable incomes.  A paper (pdf) from economists Andrew Johns and Joel Slemrod estimates that folks with “adjusted gross income” below $50,000 understate their incomes by less than 7%, whereas those “earning” $200,000 to $1,000,000 understate by 21% or 22%.  One reason is that the government monitors some types of income very strictly, whereas others are virtually unrecorded.  So they estimate that 99% of the “tax liability” on wage and salary income actually shows up on the tax forms, compared to only 88% for capital gains, 48% for rent and royalty income and 28% for farm income. The research is based on 2001 tax year data.

It’s a bizarre subject to study. Researchers cannot know what “true income” actually is, but can only estimate it by looking at what IRS agents found in a sample of returns selected for intense audit.  One intriguing assumption they make is that the IRS examiner’s ability to find hidden income is correlated with her pay grade.

Very high income taxpayers, over $2,000,000, are estimated to have a much lower propensity to underreport than their $200K to $1 million brethren.  Do they hide less?  Perhaps, but there remains “the plausible possibility that the misreporting of upper-income taxpayers is more sophisticated and thus harder to detect.”

All the estimates of under-reporting are looking at the tax laws as they actually exist, and do not consider the various special-interest loopholes to be anything other than part of the rules (pretending, of course, that someone actually understands the income tax code).

A surprising result follows from the “progressive” nature of the income tax:  Even tho low income taxpayers hide relatively little income, their underreporting actually reduces their taxes by a much greater percentage than does that of the high income folks. [This is because, if your income is low, only a small part of it is actually subject to income tax.]

How to thaw credit

That’s the title of the newest work from Mason Gaffney(pdf), who doesn’t like all the credit-creating and deficit-expanding by which our rulers pretend the economy will be healed.

New money without real goods behind it means inflation, more imports with fewer exports, devaluation, and a real risk that our foreign creditors will rebel.

So how to free up credit? Continue reading How to thaw credit

Can you measure what doesn't happen?

If global warming is a problem, and if it can be restrained by reducing emissions of greenhouse gases, then Georgists suggest a tax on emissions would be the way to go.  Proceeds of this tax can be used to reduce taxes on productive activity, benefitting everyone who works.

The alternative “cap and trade” approach gives existing polluters a tradeable right to pollute, tho not quite so much as they have been doing.  These emitters can either clean up their operations, or buy credits from others who have reduced net emissions.

And that’s where the problem comes up, how do you measure emissions which didn’t occur?  Today’s WSJ describes how some landfill operators can get credit for capturing methane emissions from their facilities.  The fact that they might already be harvesting the methane and selling it is irrelevant, so WSJ considers that a “double-dip.”  The article notes that not all landfills are eligible, only those small enough that they aren’t legally required to capture methane.

Describing the experience of one Pennsylvania landfill operator, WSJ notes “its first carbon-credit sale, netting $26,600 after paying $11,900 in fees and commissions…”  31% of the revenue goes to the traders.  There’s the free market in action.