LVTfan

You wrote, "the amount of revenue from property tax is only intended to act like collateral damage." You might take a look at these two articles: https://taxfoundation.org/research/all/state/property-tax-re... (https://taxfoundation.org/wp-content/uploads/2025/10/FF868.p...) and https://taxfoundation.org/research/all/state/property-tax-re... (https://taxfoundation.org/wp-content/uploads/2024/11/FF852.p...)

"Property taxes currently generate 70 percent of all local tax revenue, some or all of which would have to be replaced with other taxes under property tax repeal."

And if you DO choose to tax commerce, the effects are lousy.

Even Milton Friedman repeatedly called LVT the "least bad" tax. Too bad he didn't life a finger to support it. Not sure who he was working for, or what pressures he must have been under.

and save up a down payment. Easier in some places than in others.

Barrista, I'm guessing, as at Starbucks?

but the upper middle class is relatively small, depending on how you define upper middle class. Nationally, one might say the 15% who are below the 95th percentile (but locally is what matters for the purpose of buying property, and maybe "upper middle" is 60% to 95% of the local ranking).

If one wants children, is planning on children, one wants good public schools for them, and those are generally found in areas with significant population and higher land values. If you can plan around home schooling and one parent staying home to conduct it, rural living may be a great choice. But trips to libraries might be long, and fast internet connections unavailable or unaffordable. Those amenities are available where population is denser.

It might lead one to think that there is one underlying cause of the problem.

Read Henry George's book PROGRESS AND POVERTY to learn what it is, and his remedy for it.

George was only "radical" because he sought out the root of the existence of involuntary poverty in the midst of riches, and then described a simple way of eradicating it.

Economists employed by universities founded by monopolists understood that their route to security - tenure - did not have room for even mentioning George's ideas to their students. (Witness what the Wharton School at Penn did to Scott Nearing, whose ideas up to that point (1915) were largely Georgist.)

As Thoreau said, "There are a thousand hacking at the branches of evil to one who is striking at the root." The evil he was referring to is poverty.

George was pointing out the root, and provided the tool for removing it. It's too bad that it hasn't yet been implemented.

Also important is that the supply of money, of houses and of hotels is fixed.

It isn't the size of their geographical footprint. Rather, it is the location. Actually, locations, for the individual practitioner: their business and their home. They want to be in a good school district that educates all its students well and sends them to good colleges? They pay for the privilege.

But instead of paying the previous owner, who didn't create the land value, they pay the community, year in and year out, for those services.

Makes sense to me.

As housing fads change, some styles will go out of favor. Great rooms replace lots of small rooms.

Technology changes, too, will make some houses obsolete; older roof technology, plumbing, HVAC, inefficient systems, too little insulation and no space for more.

Houses that are obsolete for their location will sell as teardowns. In that situation, the land value is measured by the selling price plus the cost of removing the old house from the site. Assessors can work with those figures very well. Connect the dots from one to the next to the next, and the land value map shapes up.

Those owners may still be living in the homes in which they raised a number of children, near schools they no longer need, near jobs they long ago retired from, with more house than they can afford to heat, cool, clean, maintain, and steps that no longer suit them.

The increase in land value over 30 or 40 years has gifted them with lots of home equity (far more than their principle payments on their mortgage). That's enough funds to downsize from 3 or 4 bedrooms on a 10,000 or 20,000 sf lot to a very fine single-level apartment or condo in a building close to the center of things, a home they can take care of, feel safe in, and perhaps even have services to cater to their current needs, just as the nearness to schools and jobs catered to their needs 30 or 40 years ago.

Meanwhile, young families, particularly those with only one earner, must drive further and further to qualify for a mortgage. They drive not just on their home-hunting trip, but twice a day to commute to jobs close to those family-size homes and well established schools.

And if they do manage to afford a home in those older more central locations, they are paying (in California) multiples of what their neighbors are paying in property tax. Those neighbors raised their kids in a time when people of all ages were contributing to the costs of the schools. Today, the young families pay lots, while the comfortable older ones play little.

And from an environmental POV, having those workers commuting 30 or 40 miles each way each days isn't such a great deal for the environment, or for their quality of life, or for the time they can spend with their children.

See the first page of lvtfan.typepad.com for the story! It goes back to November, 1887, and a speech from a then-judge, later congressman, from California.

As I understand it, what prompted Prop 13, aside from the desire to serve the owners of the best land, was that while land values were rising astronomically, municipalities and elected representatives were eager to serve their constituents, who naturally wanted all the amenities that their governments cared to offer.

And the municipalities -- their local elected representatives -- complied. They didn't reduce the millage rate each year to stay revenue neutral. No, they used those funds to supply those desired public goods.

And as land values rose, taxes rose. And eventually, people whose homes were appreciating by half (or 100% or more) of their annual incomes, increasing their home equity at an awesome rate, started objecting to the taxes that were paying for all those public goods.

Remember that in those days, California's colleges and universities were regarded as among the very best. And they changed a lot of lives, particularly of those in the school districts so well funded by those taxes that were ever-rising because the local officials didn't lower the tax rate to remain revenue neutral.

I don't see any sign that California, under Prop 13, has any resemblance to Georgism.

Take a look at a listing at realtor.com for a home in any California city or suburb, and focus on the "Property History" section, on (1) asking and selling prices; and, under that (2) assessment and tax history. (Choose the "see more" option in each section.) Then look at the assessments vs the current asking price. The land and "additions" figures rise by no more than 2% per year, while the asking and selling prices are far above the assessment on which taxes are based.

"The land value component is re-accessed frequently and changes based on comparables (presumably but its mostly black box)." No, they rise by 2% per year, until a sale takes place, at which point their sum is adjusted to the selling price.

But the house next door, of similar age and condition, but not sold in 20 or 40 years, is receiving a huge subsidy, paying a tiny fraction of what the newly sold neighboring buyers are paying.

Where is the equity in that?

The answer, for other states, is not assessment caps or capping taxes at a certain percentage of assessed value, but reducing the millage rate to remain revenue neutral, unless the local property owners approve a millage rate that is higher than revenue neutral because they actively desire more services, better schools, etc.

As the community grows in population, it behooves people to establish businesses to serve their various needs. This creates prosperity for all those business owners and employees who provide services to maintain and improve their homes, provide them with groceries and entertainment and restaurants and pharmacies. The provision of good transit increases the land value close to its stations; the provision of a highway to higher paying jobs increases the land value close to its exits.

The provision of good emergency services and hospitals and libraries and other amenities raises the land values within their service areas. (They don't raise the value of the buildings.)

Likely true of most taxes, but not true of a tax on land value. Taxing land value heavily causes underused land to either be put to good use or sold, at a reasonable price, to someone who will build on it.

Taxing land value -- that is, collecting the lion's share of the annual rental value of the land for public purposes -- removes the speculative element, and makes it worth only what it is worth FOR USE.

That almost always creates jobs, first for construction, and then to utilize the space. It may create housing, and goodness knows, much of California is in desperate need of housing. And housing creates jobs -- houses and highrises don't maintain themselves.

Virtuous circle --- the opposite of the vicious one that Proposition has created (and which was easy to predict before it was enacted).

If you want jobs and housing, tax land value.

Otherwise, keep California doing what it does now.

If instead of taxing wages, we collect the rental value of the land on which their residences and businesses are located, it is highly unlikely that the land will leave town.

HG was born in Philadelphia (1839); arrived in San Francisco by 1860 or so, and lived in California until early 1880. He wrote "Our Land and Land Policy" and "Progress and Poverty" during that period, as well as owning and editing the SF Daily Evening Post for 4 years between those books. He then moved to NYC, where he lived until his death in 1897.

For an introduction to his ideas, see wealthandwant.com. For more contemporary references, see https://schalkenbach.org/introductionto-the-ideas-ofhenry-ge... and that entire site.

Dr. Mason Gaffney, the remarkable economics professor at UC Riverside whose work was inspired by the insights of Henry George, has died, at 96. A tribute at https://schalkenbach.org/file-12/wp-content/uploads/2020/07/... provides a sense of the scope of his writings over the course of 75 years. It has links and commentary on many of his writings.

This ties to a discussion a few months ago at https://news.ycombinator.com/item?p=2&id=23210804 on Georgism.

It starts with Henry George's central philosophical principle:

"The equal right of all men to the use of land is as clear as their equal right to breathe the air—it is a right proclaimed by the fact of their existence. For we cannot suppose that some men have a right to be in this world and others no right.

If we are all here by the equal permission of the Creator, we are all here with an equal title to the enjoyment of his bounty— with an equal right to the use of all that nature so impartially offers. This is a right which is natural and inalienable; it is a right which vests in every human being as he enters the world, and which during his continuance in the world can be limited only by the equal rights of others." source: http://progressandpoverty.org/files/george.henry/pp071.html#...

The corresponding economic principle is that we ought to recognize our equal rights to the earth by collecting all the rental value of land and other natural opportunities as shared public revenue.

Gaffney's work, like Henry George's thought, shows that economics is not a dismal science.

His writing is erudite, witty and hopeful, and provides a perspective most economics majors never get exposed to.

Rural land values will remain low until there is significant economic activity and particular demand for land IN THAT PLACE. To the extent that land, say, 10 or 20 miles away is just as suited for the user's purposes, the next piece of land that comes on the market is quite adequate, and the rural business can locate wherever, not pay a premium.

I am reminded of a famous passage from Henry George's book "Progress and Poverty" (whose subtitle is "An inquiry into the cause of industrial depressions and of increase of want with increase of wealth ... The Remedy") known as The Savannah. http://progressandpoverty.org/files/george.henry/pp042.html, starting at the 10th paragraph (the paragraphs are numbered in this particular file).

Incidentally, George dedicated P&P as follows:

"To those who, seeing the vice and misery that spring from the unequal distribution of wealth and privilege, feel the possibility of a higher social state and would strive for its attainment."

Many people who were first influenced by Henry George's ideas became impatient with the "organicness" of them, and moved to promoting socialism because they thought it would achieve their objectives more quickly. But George was convinced that it had to grow organically.

George Bernard Shaw was perhaps the most famous of them.

Henry George had public debates with several socialists (Serge Shevitch was one - 1887; Henry Hyndman another). They're great reading.

Many people who were first influenced by Henry George's ideas became impatient with the "organicness" of them, and moved to promoting socialism because they thought it would achieve their objectives more quickly. But George was convinced that it had to grow organically.

George's simple reform would provide the level playing field, and not involve "command and control." George was very much the small-d democrat and very much the capitalist -- but a purer capitalism, not land monopoly capitalism. And he could accurately be called a mensch!

George Bernard Shaw was perhaps the most famous of them.

Henry George had public debates with several socialists (Serge Shevitch was one - 1887; Henry Hyndman another). They're great reading.

Rural areas don't need the kinds of infrastructure that urban areas need, but they need some. They need schools, they need roads and maintenance. They'd love to have broadband. They may need drainage or water systems that serve undense communities. They need emergency services, courts, and a variety of other things that civilized people who live in communities find valuable. (My use of "civilized" is in no way a criticism.) We are social beings, and there are things that are more efficiently done by the community as a whole.

Earlier, someone referred to the Henry George Theorem. I think it holds in rural places, too. And unimproved land value seems to me to be the reasonable "tax base."

When HG was writing, there were taxes on land, on buildings, on personal property such as watches, horses, carriages, umbrellas ... the poor paid the personal property taxes -- and widows and orphans paid them, because their trustee wouldn't swear off on less than the real amount. But on his own holdings, well, they were quite meager. Some interesting news articles compared the personal property of rich decedents to the personal property on which they paid annual taxes.

There were also significant tariffs on imported goods. Sugar and tea, which the poor liked as well as the rich. One of HG's books was "Protection or Free Trade" which Milton Friedman called his favorite book on the topic. (Then again, Friedman repeatedly called land value taxation the "least bad" tax, but never found the motivation to promote its application.) I had occasion to dip into POFT last week, and found it pleasurable and interesting reading. Its at Schalkenbach's website, among other places.

Yes, a shift could be quite gradual, though I suspect that once it was begun, and people began to see the beauty of untaxing buildings, wages, sales, it would likely be sped up.

To your first problem: In the simple agricultural example, clearing the land has a reasonably predictable cost, whether it is taking down centuries-old trees and removing stumps and roots, or removing the boulders, or removing the spring harvest of rocks that surface due to winter freezes and placing them onto walls. Often the soil must be drained, and fenced, and possibly irrigated. But not all the land will be improved at once; uncleared land will be close to cleared, fenced, drained land, and obviously a tenant or buyer will pay more for partially improved farmland than for unimproved.

To your second problem: Where in the US is there unowned land? The settlers went west across thousands of miles of unoccupied land. Why didn't they stop and settle? It was owned. Early and ultimate sprawl. Others had pre-empted it for the benefit of their heirs. Think how the development of the US would have been had development proceeded west in some orderly way.

To your third problem: the land is forever. If well taken care of, it will remain fertile. But its fertility may not be important for all that long, depending on its location; its highest and best use will stop being agriculture. Buildings built for one purpose gradually deteriorate, and as the community changes, are no longer suitable to the current highest and best use of that land. At one time in NYC - say, 1880 - 21 year leases were common, and huge department stores and other edifices were built on them. It was understood that another building would likely follow. And it did. And the landlord got his "share." How did he earn that share? And look at the teardowns in your part of the country. Homes that seem perfectly serviceable to some of us are bought to be torn down to build something else on that well-located land. It doesn't happen on the edge of town; it happens in the center of things. The price one is willing to pay to get that land is pretty clear: the transaction plus the cost of removing the old improvement.

To your fourth problem: the land owner who doesn't improve his land can still sell it for a higher price due to the activity of the community around him. The value of the improvements never exceeds their replacement value, but could be quite a bit less. A huge spa resort built 15 or 20 miles from Disney World is likely an over-development of the land it is built on, while closer to DW, it might be quite appropriate and profitable. One who is building with consideration to others' preferences -- as customers or as tenants -- will build differently from one who simply wants what they want, without regard to resale value. We don't increase the unimproved value of our own sites, but we can contribute to the value of the surrounding sites -- or we might decrease the value. Increasing it doesn't exempt us from any portion of the value of our own site. Our neighbors' actions can increase or decrease the value of our own site. Regular reassessments take that into account.

Land is finite. Capital can be created infinitely, by thriftiness of Labor.

Land wasn't created by any individual or any corporation. (Minor, and not eternal, exception: Made Land, such as by filling in a swamp or dumping fill alongside a river. After a century or so, it stops being special, and is simply land, whose value comes from its location and the services that are provided to it.

When the companies that issue stock are paying LVT on the land they occupy, and on the finite natural resources they claim for themselves and process to sell to consumers, the value of their stock will be reduced somewhat by that "pre-distribution."

In the US, the profitability of being a "land" lord is highly dependent on the income tax deductibility of depreciation on the building.

Yes, tenants will be better able to afford to purchase a home -- and will be able to sell it more easily should they choose to, either to upgrade to a fancier house or a better location within the community, or to move to another part of the country.

Yes, they will be responsible for replacing the refrigerator and other appliance, and doing the maintenance (said to be estimated at 1% of the cost of the property, but of course that would vary a lot according to whether land value is 20% of the total, or 80% of the total value of the house-plus-land or condo-plus-share-of-the-land.

And for first-time homeowners, there are always some rude shocks.

Those landlords will have to find productive uses for their money, perhaps investing in young entrepreneurs, or developing land to meet the needs of their community for housing.

and likely we won't need the huge safety net that is absolutely necessary now.

And tax revenues reach the government without middlemen collecting their share, so the cost will be lower to those who pay.

most of that population was still well south of the Central Park area. Streets had been laid out, and the occasional building erected in the area. But the population density was downtown, in the tenements.

Astor and others benefited as population expanded north.

or have good reason to think that if you hold onto it for another year, it will be worth a lot more.

There were years, under Prop 13, when many people's houses -- that is, their land -- rose in value by more than their gross salary. Not their savings, but their gross wages!

And Prop 13 keeps taxes artificially low, driving the prices up. Normal turnover doesn't happen, so retirees stay in family-sized homes close to jobs they no longer fill, and young families are forced to "drive until they qualify" for a mortgage, and every workday thereafter.