I have previously discussed Hong Kong’s land tenure system, under which the land is publicly owned, but improvement owners have security of tenure in exchange for paying significant land rent. One result is that most working people don’t have to pay any sales or income taxes. Another is that land is efficiently used.
But there are a couple of concerns:
- Since Hong Kong doesn’t collect all the economic rent, speculation can still drive up the cost of housing as well as any activity which uses land (and they all do).
- Wealthy mainland residents are moving to Hong Kong to take advantage of the increased liberties which HK residents get, further driving up costs for local people.
Now we read that every HK has declared a sort of citizens’ dividend, every permanent resident will get HK$6,000 (US$773, currently). Bloomberg calls it a “handout,” but I think “share of economic rent” might be more appropriate. Opponents of the move say it will be inflationary, and certainly it could lead to higher economic rent, with speculation driving land costs even higher. Of course, if people expected the government to collect all the economic rent, speculation would not occur. While the cost of living might still increase, giving an equal dividend to every resident would tend to flatten the income distribution, helping the poor much more than the wealthy.
Former banker Rudolf Elmer, opposed to use of Swiss bank secrecy to aid evasion of taxes by non-Swiss, has provided Wikileaks with two CD’s of (apparently incriminating) data. Who is right here? Customers were assured the data would remain secret, now it will be revealed. But aren’t governments entitled to collect taxes which they impose on their citizens? If not, why should anyone pay? If so, how can anyone’s financial affairs be private?
The answer is, none of this would be an issue under Land Value Taxation. When revenue comes from the land, government does not even need to know who the owner is. Government need only know sales prices and a few readily-observable characteristics. The tax has been paid or it has not been paid, and in the latter case a process starts which eventually will result either in the tax (plus late fees) being paid, or the land being taken by the government. (And remember, the government is necessarily the ultimate custodian of land records, a natural monopoly.)
Only land value taxation permits financial privacy.
That’s how Yves Smith describes the probable outcome of the latest bunch of mortgage finance scandals. We already know that lenders lied, brokers lied, consumers were instructed to lie, and the whole house of cards was built on perpetually-rising land prices. In recent weeks, and especially the past couple of days, we are learning that the back office lied too, nobody bothered to process much of the paperwork, it was easier to just forge documents as needed, and for many parcels it will be difficult or impossible for tell who really owns the mortgage (which likely will never be repaid anyway as it far exceeds what the property could be sold for).
The solution? Smith (and others) expect the federal authorities to move in, Continue reading We Institutionalize Kleptocracy
Bloomberg’s report on land taken for the new Shanghai Disneyland tells us something about how people may fare under government ownership of land. One retailer, whose land was taken last year for an unspecified project, still hasn’t gotten compensation:
“All I care now is how much compensation we will end up getting after layers and layers of government officials get their share,”
I don’t see why Disney should get government help in assembling land for their project– it’s not infrastructure–, tho such assistance is routinely provided in the US too. Under a geoist system, where the community collects the land rent and uses it to fund governmental services, landowners would have strong incentive to sell and little incentive to hold out. Disney could buy land cheaply but would pay substantial rent (in the form of land tax) to retain it. Those relocating could buy land cheaply elsewhere, and if in a less desirable location would find their land tax reduced. Folks would also, of course, have no other taxes to pay and would receive a share of the rent collected in excess of governmental needs.
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.
Last fall I mentioned a deal between Korean conglomerate Daewoo and the gov’t of Madascar, for the former to get half a Belgium’s worth of farmland at basically no charge. Turns out it was more controversial than I thought, caused a revolution, and the new government has revoked the deal. But, as the linked article explains, similar deals are proceeding in several other countries.
This information comes from farmlandgrab.org (“Governments and corporations are buying up farmland in other countries to grow their own food – or simply to make money”), via Alanna Hartzok.
If your hunting dog wanders onto private property, can you go there to retrieve her? That would seem to be the simplest solution, but some Virginia landowners disagree. Just what they want hunters to do is unclear. Maybe to stop hunting. Of course landownership cannot be absolute, all landlords have obligations to the community, and letting owners retrieve their dogs seems to be one of them.