In support of land taxes

Thanks to Alex Fletcher who submitted this as a comment:

From a purist point of view I believe Geolibertarianism is the moral philosophy that should guide taxation:-

“Geolibertarians are advocates of geoism, which is the position that all natural resources – most importantly land – are common assets to which all individuals have an equal right to access; therefore, individuals must pay rent to the community if they claim land as their private property. Rent need not be paid for the mere use of land, but only for the right to exclude others from that land, and for the protection of one’s title by government. They simultaneously agree with the libertarian position that each individual has an exclusive right to the fruits of his or her labor as their private property, as opposed to this product being owned collectively by society or the community, and that ‘one’s labor, wages, and the products of labor’ should not be taxed.”

In reality though it is about what is practically possible. The Henry review [in Australia] aimed for four bases – personal income, business income, consumption and economic rents of natural resources and land. At present land tax has a much smaller role than the other three.

Any change to increase the proportion of total taxation from LVT can only be achieved slowly and with much opposition. The ACT proposal to change existing property taxes and stamp duty to an annual LVT is the best start one can hope for. The plan is such that if a landowner really wants to keep stamp duty instead of an annual fee they can virtually do so. There was an article in The Drum about it.

I believe GST is more efficient than income tax and in that context may be better. However if, as geonomics asserts, the main contributor to unemployment is that land is priced out of reach, increasing the GST and broadening the base without a broad-based LVT as well, would not abolish unemployment and so would increase hardship for the very poor.

4 Replies to “In support of land taxes”

  1. Great idea if we could make some income from our land but we can’t or don’t and so the very proposal is inaccurate. Capital gains tax is a much better way to go.

  2. Re capital gains tax versus land value tax.

    Capital gains tax, like stamp duty, would deter turnover. Both allow property to be withheld from the market in order to manufacture scarcity and amplify easy profits. Capital gains tax would also include a tax on the building component. Why tax buildings when that leads to less building and less improvement?

    A yearly land value tax (annual revaluation essential) is a holding tax encouraging owners to use the land or sell it, not hold it vacant or poorly used. This stimulates employment opportunities for all including the landowner.

    How would that apply to land where values have been affected by a natural disaster or by the unemployment following the GFC? The lower land values would lead to proportionately lower LVT or even no LVT.
    The GFC was made much worse by easy credit and the global dissemination of financial products but it was still the to be expected in the 18 year boom bust business cycle which is driven by speculation in the land market. Adequate LVT prevents speculation and the GFC would not have occurred.

    Are investors or speculators the ones now buying up cheap real estate in affected American cities? Once those who lost their homes due to unemployment recover enough to try to buy a home will speculative buying have put prices beyond them?

    This link

    is to a brief graphic presentation of the business (land) cycle.

    This link

    is to a prescient essay written in 2002 by Hobart alderman Leo Foley on land and other speculation.

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