If you create something without using any natural resources, then you shouldn't have to pay any taxes on it — it all belongs to you. Well done! If a large company does it then same — it's good to use less resources, and taxing their use encourages people to use less. But you will still probably want to live somewhere (and eat food grown somewhere, and drink water that fell somewhere), and you pay tax on what you use, instead of the income you generate.
Georgism is about taxing resource consumption, not income.
If the employer leaves, the town will be unable to sustain itself, everyone will leave, and the land will return to the wild.
Given this setup, under Georgism, what is the amount of property tax the major employer should pay? The correct amount of tax would appear to be negative.
https://www.gameofrent.com/content/is-land-a-big-deal
and the vast majority of that real estate's value is in land
Is that true? Most of the value derives from the location - if you doubled the floor space over the land, the value of the land+improvements would double. The land isn't contributing value.
It emphasizes putting things in the hands of someone that wants to do something with it rather than just maintaining ownership as an option until a voluntary sale is desirable for the occupant.
Gee. I wonder who could ever be behind a push to make it easier for developers and real estate investment firms to utilize artificially created economic pressure to rearrange the ownership landscape, while also pushing all incentives in the direction of urbanization above all else.
That really has nothing to do with my issue.
My issue is that, under the proposed system, two people who each own half of Los Angeles will pay a lot of property taxes, because the other half of Los Angeles adds taxable value to their half, even if their half is unimproved.
But one person who owns the entirety of Los Angeles will pay no property taxes, because the unimproved land is worthless. This system guarantees that there will be a small number of people who own vast quantities of land, because that ownership structure minimizes the total tax burden. Sale of land would vanish to nearly nothing, because not only would the land have a very low cost of ownership - selling some of your land would raise the taxes you have to pay on the rest of it, the part that you keep!
The total amount of tax owed is different depending on the structure of who owns the land. Why does that make sense?
That is the goal, isn't it. To remove speculation from land ownership. Under this model the owner of the unimproved part of LA has no right to the increase in his land value since he did nothing to improve it. He either continues paying increasing taxes, sells it, or starts improving it. I see no bad side to it.
> But one person who owns the entirety of Los Angeles will pay no property taxes, because the unimproved land is worthless. This system guarantees that there will be a small number of people who own vast quantities of land, because that ownership structure minimizes the total tax burden.
What would be this persons incentive to own all this land under this model? Besides, somebody on the edges of this property starts some development and suddenly LA owners taxes raise.
> Sale of land would vanish to nearly nothing, because not only would the land have a very low cost of ownership - selling some of your land would raise the taxes you have to pay on the rest of it, the part that you keep!
This doesn't follow from anything. Land would have very low costs only if it is land that nobody wants, just like today. And selling your land will not lead to higher taxes on your remaining land unless the land that you sold gets improved in such a way that it increases the value of your land. Why do you think that landlords are entitled to value created by somebody else?
>The total amount of tax owed is different depending on the structure of who owns the land. Why does that make sense?
I agree, it doesn't make any sense. Luckily, your conclusion doesn't follow from anything that you wrote. The total amount of tax owed is different depending on the value of the land. Do you think that that also makes no sense?
It would lower their taxes.
> This doesn't follow from anything. Land would have very low costs only if it is land that nobody wants, just like today. And selling your land will not lead to higher taxes on your remaining land unless the land that you sold gets improved in such a way that it increases the value of your land.
Please don't bother responding if you have no idea what you're responding to.
So the incentive to holding unimproved land from which you derive no profit would be so that you would pay less tax then if you would made improvements and profit from those improvements.
> Please don't bother responding if you have no idea what you're responding to.
You should follow your own advice.
In the modern day, the improvements may contribute more than 100% of the value of the land. In most cases the sole benefit of having land in a desirable city is that it is near other desirable things. This is unlike the agricultural model motivating Georgism, where the primary benefit of owning land is that you can grow crops on it.
But taking the proposal literally that we can tax land based on the improvements existing on other nearby land, but not based on the improvements made to the same land being taxed... there is a very obvious implication. Land will end up being owned in such massive chunks that the land value tax goes back down to zero, because we subtract away the entire value of the area when calculating the tax.
Consider a small plot of land in Los Angeles. It's relatively close to Hollywood, and a lot of other nearby amenities. In its unimproved state, it's a swamp unfit for human habitation, but it is so advantageously located that we can attribute a lot of value to it anyway.
But if the same person owns the entire region of California around Los Angeles, its unimproved state is still an uninhabitable swamp... and because he owns the entire area, there are no improvements nearby to raise the value of the land to the point where he'd have to pay taxes on it. The film industry is an improvement to the land, which we don't want to tax. The port of Long Beach is an improvement to the land, which we don't want to tax. (There is not any fundamentals-based reason to locate a port there - it was constructed as a union-busting exercise, not because of geography.) The fact that millions of people live there is an improvement that we don't want to tax.
It makes no sense to base our tax assessments on how concentrated landownership is, but that is the Georgist proposal.