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This 2014 excerpt of the UK’s Financial Times, Spt 24, is by Robin Harding.
For almost two centuries, economists on the left and right have regarded the levy on land value as the best of all possible taxes, with almost magical powers of equity and efficiency. It was conservative hero Milton Friedman’s favorite tax, yet promoted just as often by socialists, with the latest echo in this week’s Labour party proposals for a “mansion tax” in the UK.
During the past decade, Altoona Pennsylvania has become the only city in the US to fully adopt LVT. In Altoona, only land – not the buildings standing on it or the people inside them – attracts a tax bill. You can put $175k into making an apartment building nice and you’re not going to see a rise in tax.
As site prices soar in big cities, they create much of the wealth documented by French economist Thomas Piketty. The tax on land creates a powerful incentive to use land to the full. That boosts the supply of houses.
Efficiency is not the only argument for LVT. In 1879, the American journalist and campaigner Henry George wrote Poverty and Progress, . George explained that nobody made the land; land becomes valuable only when a community turns it to productive use, so its earnings should go to society in place of all other taxes.
The great classical economists Adam Smith and David Ricardo also focused on land. Ricardo not only made a fortune by holding British government bonds when Napoleon lost at Waterloo but also invented chunks of economic theory.
Yet LVT is still little used after 200 years. And land taxes rarely last. Altoona began phasing in its tax in 2002, but is already debating whether to repeal or roll it back, like other jurisdictions – from New Zealand to Pittsburgh – where the idea has been tried.
The big political problem is that households do not notice they pay less under the LVT than they otherwise would, but commercial landowners, such as car dealers, feel the tax acutely.
Ed. Notes: Because a tax on your land can make you landless and thus houseless, it is rational for people to not exactly warm up to it. So how to make land taxes or land dues more palatable to land owners? A couple of things.
One, repeal stupid taxes on our efforts so owners have more wherewithal to pay the tax or dues.
And two, disburse the raised revenue back to citizens as a dividend.
Most people — not owning any downtown blocks or oil fields — will come out way ahead.
Not only that, but any good that making people pay rent to their community can do, sharing those recovered rents with everyone can do better. It’s fairer; government does not create land value, community does. And it’s more efficient, enabling people to leave pristine sites alone and to live in small towns if so inclined.
So put the horse before the cart and promote land dividends; land dues will come along automatically.
This 2014 excerpt of Foreign Affairs, Spt/Oct, is by Michael Kazin.
“Work is the producer of all wealth. How does it happen that the working class is always the poorer class? Because some men have devised schemes by which they thrive on the work others do for them.” — Henry George, 1886
George — the Piketty of his day — was the author of Progress and Poverty, a lengthy critique of absentee landownership that sold more copies worldwide than any other economic treatise in the nineteenth century. In 1886, as the candidate of a local labor party, he was nearly elected mayor of New York City. (A 28-year-old Republican named Theodore Roosevelt finished a distant third.) The huge acclaim for his work lasted generations.
What holds Americans back? They tend to believe that every individual has a chance to succeed in the market. The strong socialist and communist movements in other countries made it easy to condemn homegrown leftists as anti-American.
Contrast that to society’s current sensitivity to gay rights — news that a prominent figure has used a slur will flash across the Internet in seconds.
Many entertainers are gay. Many entertainers put forth messages such as equal opportunity for women, racial minorities, and homosexuals; the celebration of sexual pleasure unconnected to reproduction; and celebration of multiculturalism.
Message entertainment is a tradition:
Harriet Beecher Stowe’s fictional exposé of slavery’s horrors, Uncle Tom’s Cabin, published in 1852, outsold every other novel in nineteenth-century America.
Edward Bellamy, author of the 1888 utopian novel Looking Backward, sketched out a future nation run according to Christian socialist principles, nudging countless readers to support labor rights and curbs on private wealth.
Woody Guthrie, the bard of Dust Bowl migrants, influenced songwriters from Bob Dylan to Bruce Springsteen.
It is more pleasurable to see, read, hear, or sing a radical message than it is to join a radical party or movement. Oscar Wilde reportedly once quipped that, despite his sympathy for the left, he wouldn’t like socialism because it would take too many evenings.
Ed. Notes: The biggest factor to explain the success of gays and the failure of unions may be self-esteem. The gays demand total and absolute equality in all spheres of life while the left instead merely goes around begging for jobs and minimum wages and protection from competition. The gays show pride, blatantly, which forces others to accord them a measure of respect. The left shows self-deprecation — we can’t start a business, we can’t get a college degree, we’re willing to do told what we’re told, please just pay us enough to live — which leads others to hold them in low esteem.
Contrast that pleading with the demands of the rich who point blank told the governments of the world to bail them out (over $17 trillion so far) or they’d take down the world’s economies. It was an empty threat; Iceland put their bankers in jail. But the point is, the rich have the chutzpah, they feel no shame about taking more than their share, while the do-gooder reformers can’t even demand what’s already ours, the common wealth, the worth of Earth, a fair share for everyone. What’s the equivalent of the gays insisting upon official recognition of their marriages? It’d be for the left to insist upon an extra income for everyone, an income apart from one’s wages or savings, an income from society’s surplus. The sooner the better.
Meanwhile, a successful strategy is to entertain and enlighten at the same time. Sound like fun? To read Perfect Timing, a sci-fi comedy set in Geotopia, contact us here.
This 2014 excerpt of the New York Times, Spt 23, is by Jon Mooallem.
Larry Ellison, a founder of the Silicon Valley giant Oracle and the fifth-richest man in the world, bought 97 percent of the Hawaiian island of Lanai — not a 97 percent stake in some kind of company, but 97 percent of the physical place.
There is only one town, Lanai City, where virtually all of the island’s 3,200 residents live. Ellison now owned a third of all their houses and apartments; the island’s two Four Seasons-run hotels; the central commons at the heart of Lanai City, called Dole Park, and all the buildings around it; the town swimming pool; the community center; the theater; a grocery store; two golf courses; a wastewater treatment plant; the water company; and a cemetery. In a single sweeping real estate deal, reported to cost $300 million, he had acquired 87,000 of the island’s 90,000 acres. And he would subsequently buy an airline that connects Lanai to Honolulu as well. On all of Lanai, only a handful of businesses — the gas station, the rental-car company, two banks, a credit union and a cafe called Coffee Works — that are neither owned by Ellison nor pay him rent.
Ninety seven percent of Lanai may be a lot of Lanai, but it’s a tiny part of Ellison’s overall empire. Ellison, who stepped down as C.E.O. of Oracle on Sept. 18, is estimated to be worth $46 billion. He made an estimated $78.4 million last year, or about $38,000 an hour. He owns a tremendous amount of stuff — cars, boats, real estate, Japanese antiquities, the BNP Paribas Open tennis tournament, an America’s Cup sailing team, one of Bono’s guitars — and has a reputation for intensity and excess. When Ellison played basketball on the courts on his yachts, he ordered a powerboat to follow the yacht to retrieve balls that go overboard.
Ellison wants to transform it into a premier tourist destination and what he has called “the first economically viable, 100 percent green community”: an innovative, self-sufficient dreamscape of renewable energy, electric cars, and sustainable agriculture. “He is renewing, refreshing, rejuvenating every part of the island,” said a woman named Mimi Evangelista, echoing many locals. “I feel blessed, blessed beyond my wildest dreams.”
After several years of unemployment, people on Lanai were back to work. Roughly half of the adults on the island are employed by Ellison’s company Pulama Lanai or its hotels, and nearly everyone else, it seems, has a sister or uncle who is — or else relies on the company indirectly for a livelihood or lives in a house that Pulama Lanai owns. Lots of people told me that they were instructed not to talk to reporters or that they just didn’t want to risk upsetting the company. One young man delivered a long, seemingly rehearsed preamble, insisting that he absolutely had to remain anonymous and that any opinions he expressed were his alone and did not reflect the views of either Pulama Lanai or his employer, which did business with Pulama and which I also shouldn’t name. I expected something inflammatory, but his opinion was this: “There’s a lot of complainers — some people aren’t happy — but they don’t realize how much they have. It’s just awesome!”
Pulama had intensified a housing shortage on Lanai. Contractors had to be shuttled in from other islands or relocated. A few off-island construction companies bought up housing in Lanai City in anticipation of winning contracts from Pulama, and the island’s independent landlords found they could demand higher rents from the remaining workers. Though the company was busily fixing up cottages to rent out, many displaced locals wound up on Pulama’s indeterminably long waiting list for housing, which they believed Pulama employees were bypassing.
Lanai had been settled by disparate immigrants who had to figure out how to get along, and that history, locals told me, keeps people from dwelling on divisions and differences. (“That’s what makes the place so special,” one woman explained. “We still have aloha together.”) When you live on an island, you can’t afford to make enemies. A compassion grows from that. Now it feels like everything’s being driven from outside by some force that is not part of that tradition.
Everything on the island other water use gets decided by the county government, on Maui, or the state, in Honolulu. While Ellison has declined to meet with Lanai residents, he hosted Alan Arakawa — the mayor of Maui County, which includes Lanai — for lunch on his yacht and held two big-ticket fund-raisers for Gov. Neil Abercrombie before Abercrombie lost his primary in August.) The Planning Commission rejected Pulama’s request for a 30 year permit and issued one for 15 years instead. Without a guarantee of 30 years of operation, the company probably wouldn’t build the plant.
It’s possible that, internally, Ellison’s management team had reasonable explanations for what was being experienced as aloofness and disarray. But down here, on Lanai, locals worried that the inscrutable engineer remaking their island was either turning away from his creation or incapable of manning all those knobs and switches competently. People’s lives were entangled in each decision; all the instability was upsetting their sense of the future.
Ed. Notes: When you let wealth get concentrated, you get one-company towns. You get embarrassingly servile people. Whether the landlord dictator is benign or not, is absentee ownership moral? Is it ethical for one to own the home of another? If local people were not poor, could they not realize sustainable vision by themselves? Well, if the locals don’t like what their new landlord does, hopefully they know what they can do: tax the land or institute land dues with the revenue paid back to residents. That’ll at least turn them into stakeholders with real benefits.
Ed. Notes: Getting yourself educated is no panacea. It’s like when literacy became widespread. Before then, if you could read and write, you had a marketable skill. Afterwards, you had to know how to read and write but that did not distinguish you from millions of others. The skill kept you from the bottom but it no longer helped you to the top.
So get yourself educated to enjoy knowledge. But for income, geonomize society.
Get rid of taxes on labor. Get rid of corporate welfare. Charge dues for holding land so owners keep it at highest use, which in cities opens up tons of opportunities for investors and job-seekers. And from the recovered ground rents, pay citizens a dividend so they need not compete for employment and wages can rise their naturally high level.
These two 2014 excerpts of Spt 21 are from The New York Times by John Schwartz and the Los Angeles Times by Neela Banerjee.
Rockefellers, Heirs to an Oil Fortune, Will Divest Charity of Fossil Fuels
John D. Rockefeller built a vast fortune on oil. Now his heirs are directing their $860 million philanthropic organization, the Rockefeller Brothers Fund, to divest.
In recent years, 180 institutions — including philanthropies, religious organizations, pension funds, and local governments — as well as hundreds of wealthy individual investors have pledged to sell assets tied to fossil fuel companies from their portfolios and to invest in cleaner alternatives. In all, the groups have pledged to divest assets worth more than $50 billion from portfolios, and the individuals more than $1 billion.
Selling those shares are unlikely to have an immediate impact on the companies, given their enormous market capitalizations and cash flow.
The activist investors say their actions, like those of the anti-apartheid divestment fights of the 1980s, could increase international debate and develop energy alternatives.
The movement began a couple years ago on college campuses. The university with the biggest endowment ($32.7 billion), Harvard, has declined to divest, despite pressure from many students and outside organizations.
Not everyone will divest completely or right away and some are divesting just from specific sectors of the fossil fuel industry, such as coal.
The family has also engaged in shareholder activism with Exxon Mobil, the largest successor to Standard Oil. Members have met privately with the company over the years in efforts to get it to moderate its stance on issues pertaining to the environment. They have not caused the company to greatly alter its course.
Climate Change Fears Spur Divestment on Fossil Fuels
The Rockefeller Brothers Fund was created by the grandchildren of the oil magnate. “John D. Rockefeller Sr., the founder of Standard Oil, moved America out of whale oil and into petroleum,” said Stephen Heintz, president of the fund. “If he were alive today, as an astute businessman, he would be moving out of fossil fuels and investing in clean, renewable energy.”
Separately, almost 350 global institutional investors representing more than $24 trillion in assets have called on governments to put a price on carbon dioxide emissions and phase out subsidies to fossil-fuel industries.
Investors are owners of large segments of the global economy as well as custodians of citizens’ savings around the world.
Ed. Notes: It’s good to see people who’re living the easy life — thanks to the successful dirty business of their grandparents — try to make some amends for all the previous damage done. If they do succeed at ending subsidies, that will have a huge impact, since oil companies might not be able to profit without them, especially the implicit subsidy of not having to pay for the damage they do to the environment.
Besides quitting giving money to oil companies, governments should start redirecting money away from oil companies and charge them the full annual rental value of the oil in the ground, pretty much like what Norway does. To balance that, governments should quit taxing wages and returns to safe investments. As long as governments recover the rental value of resources and locations, they’ll have plenty of revenue. They should disburse it to citizens, pretty much like what Alaska does.
All these measures would mean the ascendancy of clean energy in short order.
This 2014 excerpt of the Weekly Wastebasket, Spt 19, is by Taxpayers for Common Sense.
Behind closed doors and with little public input, the Federal Emergency Management Agency changed its rules in ways that will put lives, property, and taxpayer dollars at risk.
Instead of building billion dollar levees or massive flood walls to try to keep flood waters out, FEMA has focused on voluntary buyouts, rebuilding dwellings so they’re above flood heights, and making small-scale infrastructure improvements like re-grading ditches away from homes. The point is not to stop flooding — which will come, eventually — but to mitigate its impact. It can’t harm what isn’t there; structures built specifically to withstand the inevitable flood are more likely to survive without major damage.
During the Great Midwest Flood of 1993, Valmeyer Illinois and Arnold Missouri were just two of the many towns decimated. Both decided to use FEMA’s mitigation programs to move to higher ground. When the “once-in-a-lifetime” floods returned again in 1995, residents watched the river roll through the old town, harming nary a person and causing little financial damage.
But now FEMA has decided to fund large-scale, expensive levees and flood walls. Yet the Army Corps of Engineers already does that. Such large structural flood protections will degrade over time which is unlikely for non-structural protections.
The levees lead to more development within the flood plain. When the big one comes again, more people’s lives and properties can be damaged. Perversely, if you have a levee certified as protecting against that 100-year flood, you aren’t required to buy flood insurance.
Ed. Notes: Just like business, bureaucracy must grow or die. So public debt must grow and eventually the public agency or the entire government must die. They do it partly to hire more bureaucrats, partly to enrich local infrastructure contractors, and partly to inflate land values, since the real state is real estate in this country.
Remember, floods are natural and needed to fertilize flood plains. Levees are artificial and starve floodplains and worsen the flooding downriver from the levees. If there is any role for government in flood prone areas, it is not to encourage more folly. If anything, it should be to require insurance, just as the law requires drivers to carry insurance. Maybe pass building codes or guidelines that’d steer builders toward flood-compatible designs.
Such intelligent designs — e.g., building on stilts — could be more expensive … and more expensive still if there’s a property tax levied on built value. Thus that tax punishes intelligent design. It’d make tons of sense to shift the property tax off buildings, onto locations — or replace it altogether with land dues.
This 2014 excerpt of the UK’s Telegraph, Spt 19, is by Richard Dyson.
At one end of the lifespan are older home owners stuck with mortgages, inadequate pensions and looming care bills. They’re not going to be able to pay off their mortgages and they’ll have to sell up, downsize, take out lifetime loans in the form of equity release – or, like their much younger counterparts, rent.
One in five of British 65 to 69-year-olds is still working, a far higher proportion than in Germany, France, Ireland, Italy, or Spain. Why? To pay off their mortgage or scrape a bit more towards a pension, or both.
At the younger end the problem, people can’t afford to get hold of a mortgage in the first place. Trapped between sky-high rents which prevent the saving of a deposit and prohibitive property prices, they buy later in life and have to borrow more in the process.
The price of a first-time home is £209,000 for July 2014, which is 13.5pc higher than July 2013. That rate of increase – the highest recorded since 2005 – is roughly 10 times the rate of wage growth.
Younger earners are forced either to rent perpetually or live on in the childhood bedrooms of their parents’ homes. Two in three first-time buyers now got help from their parents, up from one in three five years ago. Of today’s children, it predicted that only those from the “wealthiest families will be able to buy a home”.
House buying today is as difficult for buyers with two wages as it was 35 years ago for a single borrower on just their own income. Today’s first-time buyer – putting down an average £30,000 – would need to borrow 3.4 times a single wage, compared with a borrower 35 years ago needing 1.4 times his wage, to purchase the equivalent property.
The average price of a London home creeping above £500,000 for the first time. That would buy at most a two-bedroom flat in any central zone – not even a tiny studio in some inner postcodes – and at most a three-bedroom terrace or semi in an outlying area.
Ed. Notes: Get used to either spending your entire adult life leasing your home or paying a mortgage. Either one is like old-fashioned feudalism. Or, get your sense of righteousness up and demand that the value of land — the part in the cost of housing that goes up — be shared. Land is something nobody made and everybody needs. Land’s value is something the members of society in general generate and deserve a share of. One’s wages and savings are not society’s common wealth — de-tax them — but the worth of Earth is. Once we share it, we’ll no longer see rising location values as a curse but as a blessing.
This 2014 excerpt of Sightline Daily, Spt 17, is by Eric de Place and Nick Abraham.
Communities across Oregon and Washington question the grave safety risks associated with oil — a cargo prone to explode. Yet at the same time, the state governments of both Oregon and Washington are bankrolling coal, oil, and gas infrastructure. Large quantities of public money fund the very same facilities so bitterly opposed by taxpayers.
The governors of each state have voiced strong concern about fossil fuel infrastructure projects while another wing of the executive branch is quietly spending public money on them.
Since 2010, Washington State Investment Board has invested billions in private equity funds focused on fossil fuel which can be directly linked to energy projects in the Northwest.
In 2012, Oregon invested alongside Washington. Oregon Investment Council helped bankroll the Port Westward project, despite site operators bringing in five times more oil than they were legally allowed. Rather than pare back operations at the site, Oregon authorities issued a permit allowing Global Partners to ship nearly 120,000 barrels per day, making it by far the largest operating oil-by-rail facility in the Northwest.
One of the players in shipping oil is Kinder Morgan, responsible for the deadliest fish kill in a decade on the Willamette River and for bribing a Portland ship captain to dump contaminated potash in the Pacific Ocean.
Ed. Notes: Funny that this is treated as news while it’s actually business as usual for government. Sure, it does pay for some programs you may approve of such as parks and schooling, but it also makes possible harmful projects (above) that could not exist without its help.
The programs that many people approve of — parks and schools — could easily exist with private funding if we had economic justice, so that hikers could afford parks and parents could afford teachers. That’s why it’s a good idea to end the discretionary power of politicians and bureaucrats over public revenue and just disburse the money directly to citizens as a dividend.
Where would the surplus revenue come from? From our spending for land and resources and government-granted privileges. Government could use its power to levy fees and institute dues to recover the socially-generated value of nature while at the same time repealing its counterproductive taxes on wages, purchases, and buildings.
Getting this dividend, recipients would care even more about its source — the earth. And no longer getting subsidies or natural rents, the wannabe exploiters would lack both the motive and the means to exploit.
Of course, at the same time, demand for energy must be reduced, but that’s another story, about apt-tech and limited liability, a story with a happy ending.
This 2014 excerpt of the Los Angeles Times, Spt 16, is by Laura J. Nelson and Matt Stevens.
Statewide regulations that take effect Tuesday require drivers to stay at least three feet away from cyclists while passing or face a $35 fine.
If a vehicle is in the buffer zone and a collision occurs that injures the cyclist, the driver could face a $220 fee.
More than 150 cyclists were killed in car collisions in California in 2012. In Los Angeles County, nearly 5,000 cyclists were killed or injured in traffic accidents that year.
Patrol officers are taught to gauge distances and speeds by sight during their training at the CHP academy.
Under the new law, if traffic is too heavy to change lanes — or if other conditions make a three-foot buffer impossible — drivers must slow to a “reasonable and prudent” speed and wait to pass until the cyclist is safe.
Drivers who aren’t sure whether they are more than three feet away should err on the side of caution and give more space than they think is necessary.
California is the 24th state to enact a three-foot passing law. Pennsylvania gives cyclists the biggest buffer, requiring at least four feet between cars and bikes at all times. Cyclists can legally use a full traffic lane on California roads.
Ed. Notes: Long ago, roads were for bikes, horses, and pedestrians, not cars, but cars gradually edged everyone else out. Now, rather than try to reclaim a sliver of road territory, it’d be safer and far more pleasant to make bike lanes at least as separate as sidewalks.
How to pay for it? Well, if drivers paid all the costs of driving on roads — construction, maintenance, police patrol, traffic court, emergency response, long-term collision costs, smog, runoff, etc — then cyclists could certainly pay all the costs of riding on bike lanes.
How would cyclists pay? Have localities recover the value of locations where cyclists congregate. Where you see tons of bikes locked up, there cyclists patronize the closest shops. The owners of the land under those stores would pay a bit higher “land dues” (usually land taxes) to the community. Those socially-generated site values should easily be more than enough.
This 2014 of a U.S. Public Interest Research Group press release, Spt 15, is by Michelle Surka.
Friday’s $550 million settlement between the Federal Housing Finance Agency (FHFA) and HSBC North American Holdings Inc. can be treated as a tax write-off by the bank, shifting $192.5 million onto taxpayers.
Because the FHFA did not specify that the settlement payment cannot be treated as a regular business expense, HSBC will be able to deduct the entirety of the $550 million payment.
The settlement resolves claims of HSBC violating federal and state securities laws in connection with false representation of mortgage-backed securities that contributed to the financial crisis in 2008.
By law, fines and penalties cannot be treated as regular business expenses, and therefore are not tax deductible. However, the FHFA does not designate the settlement payment as a “penalty”, instead calling it merely a “lump sum payment”. Even specified penalties sometimes get deducted as business expenses if corporations deem them to be “compensatory” or “restitutive” rather than punitive.
The FHFA signed a similar settlement with Goldman Sachs last month, granting Sachs a similar tax windfall of $420 million.
Ed. Notes: “Subsidizing Bad Behavior: How Corporate Legal Settlements for Harming the Public Become Lucrative Tax Write-Offs” is another US PIRG booklet. They also created a fact sheet on Wall Street settlement tax deductions. The info reinforces the fact that government is not the servant of the people but the servant of some people — the very rich who get that way by capturing our payments for land and resources, revenue streams that ought to flow into everyone’s pockets.
Big picture, those tax write-offs would not be a problem if those corporate taxes did not exist. What would we replace those taxes with? With charges up front. We’d charge full market value for their corporate charters, their banking charters which let them issue new money, their patents and copyrights, their monopoly franchises granted to utilities, their licenses for exclusive use of the EM spectrum, their permits to emit pollutants, their leases for extracting resources, their titles to the most prime locations in every city, etc.
All those little pieces of paper — from charters to titles — are worth trillions each year, vastly much more than what corporate taxes raise … enough to fund a welcome dividend to citizens.
These three 2014 excerpts are from: (1) Australia’s MacroBusiness, Spt 23, by Leith van Onselen; (2) Australia’s Herald Sun, Spt 10, by Nathan Mawby, and (3) the US state of Virginia’s RVA, Spt 17, by Aaron Williams.
IMF Shows Australia How to Tax For Growth
The International Monetary Fund (IMF) provided a useful blueprint for tax reform to the G20 finance ministers and central bankers meeting in Cairns, which hopefully should assist the Abbott Government in framing its upcoming tax reform white paper. Central to the IMF’s reform blueprint is shifting tax bases away from less efficient sources, such as personal income and company taxes, to more efficient sources, such as consumption, resources and land/property: The focus of growth-friendly tax policies depends on the tax structure and taxation levels of a country.
Land Not Houses Should be Taxed to Improve Affordability
Australia’s Senate Inquiry into Affordable Housing was given a proposal at its public hearing by research group Prosper Australia. David Collyer, Prosper Australia policy director, said land tax could improve affordability and replace stamp duty.
Why tax productive behavior when taxing humanity’s land has so many benefits?
Favor taxing land instead of improvements for real property taxes in Richmond.
Virginia has authorized municipalities to use two-rate property taxes, but legislating and executing significant tax changes is difficult.
In 2007, Matthew Freeman wrote a great post on his blog Urban Richmond called “Good Idea #2: Tax land, not buildings.”
Taxes increase the cost of productive behavior. This is not true of the land value tax [no one produces land].
By taxing improvements, the government is encouraging land speculation while creating disincentives to development. By taxing land at a higher rate and not taxing improvements, the city could generate identical revenue while encouraging owners holding on to property for speculative reasons or for parking lots to improve or sell. This shift decreases urban sprawl.
It’s surprising how little is known about land value taxes despite incessant calls for tax reform and code simplification from both sides of the aisle at all levels of government.
Ed. Notes: Even though the IMF fudges a bit by bundling land and property, at least a powerful player gave voice to sanity. Does this mean they have reached a point of desperation where they’ll tell the truth, albeit veiled? Does it mean governments will have to take this rational reform seriously?
People do keep calling for such tax reform. It’s a good one. It makes much more sense to pay for land to your community than to a seller or speculator or lender. Yet most people don’t know or don’t support this constructive policy.
What might make these land taxes or land dues or land use fees popular would be to return the revenue as equitable dividends to residents. Aspen CO and Singapore do something along those lines. And Alaska passed a tax on oil and British Columbia a tax on carbon by including a dividend in the legislation. Could the strategy work for land?
This 2014 excerpt of DeSmogBlog, Spt 4, is by Sharon Kelly.
While shale wells extract oil, natural gas also rises from the wells alongside that oil. That gas could be sold, but it is harder to transport from the well to customers than oil. Oil can be shipped via truck, rail or pipe, but the only practical way to ship gas is by pipeline, and new pipelines are expensive, often costing more to construct than the gas itself can be sold for.
So oil drillers burn the gas from their wells off, a process known in the industry as “flaring.” At times, the gas is simply released unburned directly to the atmosphere – a practice labeled “venting” by the industry.
Owners who lease their land to oil companies have filed class action suits to recoup the millions of dollars lost due to flaring. Some of the emissions from flared wells are toxic or carcinogenic. Natural gas is made primarily of methane, and when it burns, it produces more than half as much CO2 as burning coal.
Satellite images of the largely rural North Dakota at night are dotted with what appear to be major metropolises but are instead the flares burning round-the-clock in the Bakken shale drilling patch.
Texas law forbids drillers to flare past 10 days without a permit – but out of the twenty wells that had flared the most gas in the state, 7 had never obtained required permits. State law calls for fines of up to $10,000 a day for flaring violations, but regulators have issued a total of less than $132,000 in fines despite over 150 “possible flaring or venting violations” found by state inspectors.
Texas operates just seven air monitoring stations in the shale region. It can take regulators up to 10 days to arrive to take samples when citizens complain about potentially hazardous fumes.
Texas’s environmental agency, the Railroad Commission, is run by a 3-member panel of elected officials. The three Railroad Commissioners have raised $11 million from campaign donors since 2010. At least half that money came from employees, lobbyists and lawyers connected to the oil and gas industry.
The Railroad Commission is statutorily required ‘to prevent waste of Texas’s natural resources’. The Railroad Commission is breaking the law by allowing drillers to waste natural gas by flaring it off rather than capturing it.
Even though the Texas wells collectively pollute more than multiple oil refineries, the flaring escapes federal oversight.
More than 1 million Texans live near the Eagle Ford shale site, some of whom say they have suffered a litany of health effects that they suspect are tied to flaring.
“We went from nice, easy country living to living in a Petri dish,” Mike Cerny, who lives within a mile of 17 oil wells, told the Center for Public Integrity. “This crap is killing me and my family.”
Ed. Notes: If drillers were not allowed to pollute, I bet somebody could come up with a cost-effective way to store and transport natural gas, perhaps liquify it first. It would not surprise me if somebody has already worked out a method but gets stonewalled as often happens when dealing with big business (the theme of the movie, “Flash of Genius”, a true story).
That said, we could get over burning either gas or oil and move on to not burning anything but rather convert sunlight and natural motion like wind and waves and many other natural sources (even soil organisms!) to electricity, good for both heating and lighting buildings. Let’s leave our poor atmosphere alone!
But to bring about such progress, we really do need geonomics and need it now.
This 2014 excerpt of Thailand’s The Nation, Spt 13, is by Kris Bhromsuthi.
The new government of Thailand plans to introduce new taxes before the beginning of the new fiscal year, which starts next month.
Prime Minister General Prayuth Chan-ocha said, “Tax collection in this new fiscal year will be broadened to boost state revenue and promote fairness. This will include inheritance and land taxes. This would have a limited impact on low-income earners, while tax benefits that favour the rich will be eliminated.”
Prayuth, who also heads the National Council for Peace and Order (NCPO), also noted that only some 20 million of Thailand’s 68 million people paid taxes.
“It’s no use having grand-sounding policies unless you put them into action,” Prayuth said.
The National Legislative Assembly (NLA) members praised Prayuth’s policies, and other than offering a couple of proposals, they came up with no points that need to be debated by Cabinet. Most NLA members who stood up to make remarks were former bureaucrats, academics, businessmen, and ex-senators. Military officers, meanwhile, remained quiet.
The air of fierce exchanges, the raising of hands in protest and the generally tense atmosphere that usually marks debates in the Thai parliament were conspicuously missing yesterday.
Politicians have voiced concern on whether the NLA, which was handpicked by the NCPO, could effectively perform the task of policy regulation by engaging in critical debate.
Ed. Notes: If the new tax law passes, and if the land rent does get collected, Thailand would become the next Asian Tiger — all of which taxed land to some degree — and soon the first geonomic capitol of the world!
At the same time that Thailand recovers all its socially-generated value of locations, it should also delete its taxes on earnings, sales, and buildings. That’s not only fair to everyone who must now pay land taxes or land dues. It is also good economics, clearing the way for much more commerce.
Then society will prosper more than any other ever has throughout history. With its surplus, it should pay its citizens a dividend, as does Singapore. But that city state — since it still levies some counter-productive taxes — and all the other Tigers will seem like weak sisters compared to successful Thailand!
This 2014 excerpt of the Wall Street Journal, Spt 12, is by Peter Thiel, co-founder of PayPal and Palantir and who made the first outside investment in Facebook.
Capitalism and competition are opposites. Capitalism is premised on the accumulation of capital, but under perfect competition, all profits get competed away.
Google brought in $50 billion in 2012 versus $160 billion for the airlines, but it kept 21% of those revenues as profits —- more than 100 times the airline industry’s profit margin that year. Google makes so much money that it is now worth three times more than every U.S. airline combined. The airlines compete with each other, but Google stands alone.
As of May 2014, it owns about 68% of the search market. Its closest competitors, Microsoft and Yahoo!, YHOO +0.38% have about 19% and 10%, respectively. The word “google” is now an official entry in the Oxford English Dictionary —- as a verb.
If you run a restaurant and offer affordable food with low margins, you can probably pay employees only minimum wage. But a monopoly like Google has wider latitude to care about its workers, its products, and its impact on the wider world. Google’s motto —- “Don’t be evil” —- is in part a branding ploy, but it is also characteristic of a business successful enough to take ethics seriously.
Do outsize profits come at the expense of the rest of society? Actually, yes; monopolies deserve their bad reputation. In a static field, a monopolist is just a rent collector. If you corner the market for something, you can jack up the price; others will have no choice but to buy from you.
But in a dynamic field where people invent new and better things, creative monopolists add entirely new categories of abundance to the world and shrink old monopolists.
With Apple’s iOS at the forefront, the rise of mobile computing has dramatically reduced Microsoft’s decadeslong operating system dominance.
Before that, IBM’s IBM +0.60% hardware monopoly of the 1960s and ’70s was overtaken by Microsoft’s software monopoly.
AT&T T +0.75% had a monopoly on telephone service for most of the 20th century, but now anyone can get a cheap cellphone plan from any number of providers.
Monopoly profits provide a powerful incentive to innovate.
Ed. Notes: Monopoly profits might drive some innovators but not all. Sufficient profit is sufficient motive for many. Many are driven by the need to see their idea be born and carve a niche in reality.
And while there might not be competition between firms, there is still competition within firms. Employees do compete to get their proposals accepted, to rise up the corporate ladder. So competition is for winners, too.
While some monopolies and dominant companies do some good after they’ve creamed the competition — just as some rich families and individuals do — many don’t.
Car companies colluded to destroy trolleys and to shelve fuel-efficient devices, such as Honda’s CVC.
Wall Street colluded to destroy smaller banks and now charges fees for every simple thing.
Oil companies stymie anti-pollution efforts.
Utilities push nuclear power, not de-centralized power sources like solar which would cost little and put the utilities out of business.
Even in the high tech field, the giants like Intel patent so many ideas (for just peanuts) that they box out fresh thinkers.
Thiel’s former PayPal partner, Elon Musk, demands and wins subsidies from politicians, costing the public both tax dollars and a level playing field for other new entrepreneurs.
Would giantism even be an issue if businesses received no such largesse? That is, enjoyed no subsidy nor rules that hamper their competitors. And if they had to pay for what they take, not what they make? That is, pay a tax or fee or fine for imposing harm or costs on others, but keep all income fairly earned without being taxed. Then we would have progress without giantism and the myth of business superheroes would be laid to rest.
This 2014 excerpt of Max Keiser’s Financial War Reports, Spt 9, by Ellen Brown.
The Federal Reserve and its regulatory cohorts claim they’ve found a means of avoiding another massive bailout of Wall Street in a crisis.
The Fed, along with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, have eliminated municipal bonds from the list of high-quality liquid assets (HQLA) to accept as collateral. Now banks that are the largest holders of muni bonds are liable to start dumping them in favor of Treasuries and corporate bonds, despite the lower credit ratings of such bonds.
If demand for munis drops, cities would have to raise their interest rates to attract buyers. Sky-high interest rates are the fast track to insolvency. Localities might sell their assets at fire sale prices — as bankrupt Detroit is doing — in a futile attempt to keep up with the bills.
If demand for corporate bonds rise, corporations could lower the interest rates they pay to bondholders. Corporations would gain at governments’ expense. The rule change would further shift power and finances from the public sector to the private sector.
Globally, IMF regulators have discussed establishing an international bankruptcy court that could strip a country such as Argentina of its assets, including prime sections of real estate, to pay off the nation’s creditors.
Ed. Notes: Since the pension funds of unions and government workers and the savings of leftists in general are so huge, why wouldn’t they step up to the plate and buy all new munis coming out to spare localities from having to pay higher interest rates?
And if the bond is for some project that is truly needed — e.g., a new train tunnel — that project will raise nearby land values plenty high. If government recovers those values, it can pay off the bond, no problem. Such surety will make the bond attractive to buyers and easy to sell by localities.
If the bonds are for unneeded projects or wasteful government, localities should not be selling them in the first place.
While munis lose one advantage — acting as collateral — they retain another — their interest is tax-exempt for recipients. Interest from corporate bonds is taxed normally. That’s not the only way taxes tilt the playing field.
If not for tax law, corporations would not offer so many bonds for sale. Currently, governments tax corporate earnings and dividends but exempt corporate debt. So to expand, corporations sell bonds rather than reinvest their earnings. Government should close its loopholes. Or better yet, just get rid of all its counterproductive taxes.
Then how would government fund itself? Fees for certain services like driver’s licenses. Dues for citizenship. Auctions of permits to emit pollutants. Fines upon violators of rules to protect worker, consumer, and nature. Etc.
While these sources of revenue would not fund the size of government today, is such giantism necessary? Not at all, not if we also share the economic values of land, resources, the EM spectrum, etc, a la Alaska’s oil dividend. Then, getting this extra income, we won’t have to rely on top-heavy government “services” … and can say bye-bye to excess government and unneeded munis.
an economic policy based on the earth’s natural patterns. Eco-systems self-regulate by using feedback loops to keep balance. Can economies do likewise? Why don’t they now produce efficiently and distribute fairly? The answers lie in the money we spend on the earth we use. To attain people/planet harmony, that financial flow from sites and resources must visit each of us. Our agent, government, must collect this natural rent via fees and disburse the collected revenue via dividends. And, it must forgo taxes on homes and earnings, and quit subsidies of either the needy or the greedy. As our steward, government must also collect Ecology Security Deposits, require Restoration Insurance, and auction off the occasional Emissions Permit. And that’s about it – were nature our model.
a POV that Spain’s president might try. A few blocks from my room in Madrid at a book fair to promote literacy, Sr Zapatero, while giving autographs and high fives to kids, said books are very expensive and he’d see about getting the value added tax on them cut down to zero. (El Pais, June 4; see, politicians can grasp geo-logic.) But why do we raise the cost of any useful product? Why not tax useless products? Even more basic: is being better than a costly tax good enough? Our favorite replacement for any tax is no tax: instead, run government like a business and charge full market value for the permits it issues, such as everything from corporate charters to emission allowances to resource leases. These pieces of paper are immensely valuable, yet now our steward, the state, gives them away for nearly free, absolutely free in some cases. Government is sitting on its own assets and needs merely to cash in by doing what any rational entity in the economy does – negotiate the best deal. Then with this profit, rather than fund more waste, pay the stakeholders, we citizenry, a dividend. Thereby geonomics gets rid of two huge problems. It replaces taxes with full-value fees and replaces subsidies for special interests with a Citizens Dividend for people in general. Neither left nor right, this reform is what both nature lovers and liberty lovers need to promote, right now.
a study of Earth’s economic worth, of the money we spend on the nature we use, trillions of dollars each year. We spend most to be with our own kind; land value follows population density. Besides nearness to downtowns, we also pay for proximity to good schools, lovely views, soil fertility, etc. These advantages, sellers did not create. So we pay the wrong people for land. Instead, we should pay our neighbors. They generate land’s value and deserve compensation for keeping off ours, as they’d pay us for keeping off theirs. It’s mutual compensation: we’d replace taxes with land dues – a bit like Hong Kong does – and replace subsidies with “rent” dividends to area residents – a bit like Alaska does with oil revenue. Both taxes and subsidies – however fair or not – are costly and distort the prices of the goods taxed and the services subsidized. By replacing them and letting prices become precise, we reveal the real costs of output, the real values of consumers. Then, just by following the bottom line, people can choose to conserve and prosper automatically. A community could start by shifting its property tax off buildings, onto land – a bit like a score of towns in Pennsylvania do; every place that has done it has benefited.
a way to connect the dots. Making the cyber rounds is “The Cavernous Divide” by Scott Klinger, from AlterNet (posted March 21): “As the number of billionaires in the world expands, so does the number of those in poverty.” Duh. The yawning income gap is not news. Nearly every issue of our quarterly digest carries a similar quote. Yet the connection was worked out long ago by one of America’s greatest thinkers, Henry George, who labeled his masterpiece, Progress and Poverty. Techno- and socio-advances always enrich few and impoverish many. Yet progress also pushes up location values – the geonomic insight (is Silicon Valley cheaper now or more expensive?). Instead of taxing income, sales, or buildings, society could collect those values of sites, resources, EM spectrum, and ecosystem services via fees and dues, which would lower the income ceiling, and instead of lavishing corporate welfare, pay out the recovered revenue via dividends, which would jack up the income floor. Dots connected.
as unfamiliar as geo-economics. The latter is a course some universities offer that combines geography and economics. A UN newsletter, Go Between (57, Apr/May ’96; thanks, Pat Aller), cited an Asian conference on geopolitics and “geoeconomics”. The abbreviated term ‘geonomics” is the name of an institute on Middlebury College campus and of a show on CNBC. Both entities use the neologism to mean “global economics”, in particular world trade. We use geonomics entirely differently, to refer to the money people spend on the nature they use, how letting this flow collect in a few pockets creates class and poverty and assaults upon the environment, and how, on the other hand, sharing this rental flow creates equality, prosperity, and a people/planet harmony. This flow of natural rent, several trillions dollars in the US each year, shapes society and belongs to society.
what you do when you see economies as part of the ecosystem, following feedback loops and storing up energy. Surplus energy – fat or profit – enables us to produce and reproduce. To recycle society’s surplus, the commonwealth, geonomics would replace taxes with land dues (charged to users of sites and resources, including the EM spectrum, and extra to polluters), and replace subsidies with rent dividends to citizens (a la Alaska’s oil dividend). Without taxes and subsidies to distort them, prices become precise, reflect accurately our costs and values; then, motivated by no more than the bottom line, both producers and consumers make sustainable choices. While no place uses geonomics in its entirety, some places use parts of it, most notably a shift of the property tax off buildings, onto locations. Shifting the property tax drives efficient use of land, in-fills cities, improves the housing stock, makes homes affordable, engenders jobs and investment opportunities, lowers crime, raises civic participation, etc – overall it makes cities more livable. Geonomics – a way to share the bounty of nature and society – is something we can work for locally, globally, and in between.
the Great Green Tax Shift maxed out”
Economically, taxing pollution and depletion does reduce pollutants and extracts – and thus the tax base; plus such taxes are regressive, requiring a safety net. On the other hand, collecting site rent is progressive and generates a revenue surplus payable as a dividend to residents, which can serve as the safety net.
Environmentally, taxes on waste and extraction do not drive efficient use of land, as does getting site rent. Better settlement patterns do reduce extraction upstream and pollution downstream.
Politically, green fees have less impact if applied locally; local is where grassroots movements have more impact. Yet getting rent usually entails shifting the property tax (or charging user fees), the province of local jurisdictions; both mayors and city voters have been known to adopt a site-value tax.
Ethically, putting into practice “tax bads, not goods” skirts the issue of sharing Mother Earth which collecting rent confronts head on. Since nothing is fixed until it’s fixed right, ultimately, greens must lead humanity into geotopia where we all share the worth of Mother Earth.
a neologism for sharing “rent” or “social surplus” – the money we spend on the nature we use. When we buy land, such as the land beneath a home, we typically pay the wrong person – the homeowner. Instead, since land cost us nothing to make and is the common heri-tage of us all, rather than pay the owner, we should pay ourselves, our neighbors, our community. That is, we should all pay land dues to the public treasury, then our government would pay us land dividends from this collected revenue. It’s similar to the Alaska oil dividend, almost $2,000 last year. Indeed, the annual rental value of land, oil, all other natural resources, including the broadcast spectrum and other government-granted permits such as corporate charters, totals several trillion dollars each year. It’s so much that some could be spent on basic social services, the rest parceled out as a divi-dend, as Tom Paine suggested, and taxes (except any on natural rents) could be abolished, as Thomas Jeffer-son suggested. Were we sharing Earth by sharing her worth, territorial disputes would be fewer, less intense, and more resolvable.
a scientific look at how we divvy up the work and the wealth, how some of us end up with too much or too little effort or reward. That’s partly due to Ricardo’s Law of Rent, showing how wasteful use of Earth cuts wages. And it’s partly due to how a society’s elite runs government around like water boys, dishing out subsidies and tax breaks. While geonomists look political reality right in the eye, without blinking, conventional economists flinch. When Paul Volcker, ex-chief of the Federal Reserve, moved on to a cushy professorship at Princeton cum book contract, the crush of deadlines bore down. So Volcker asked a junior associate to help with the book. The guy refused, explaining that giving serious consideration to policy would ruin his academic career. The ex-Fed chief couldn’t believe it and asked the department chair if truly that were the case. That head honcho pondered the question then replied no, not if he only does it once. And economics was AKA political economy!
a discipline that, compared to economics, is as obscure as Warren Buffett’s investment strategy, compared to conventional investment theory, about which Buffett said, “You couldn’t advance in a finance department in this country unless you taught that the world was flat.” (The New York Times, Oct 29). The writer wondered, “But why? If it works, why don’t more investors use it?”
Good question. Geonomics works, too. Every place that has used it has prospered while conserving resources. Yet it remains off the radar of many wanna-be reformers. Gradually, tho’, that’s changing. More are becoming aware of what geonomics studies – all the money we spend on the nature we use. Geonomics (1) as an alternative worldview to the anthropocentric, sees human economies as part of the embracing ecosystem with natural feedback loops seeking balance in both systems. (2) As an alternative to worker vs. investor, it sees our need for sites and resources making those who own land into landlords. (3)As an alternative to economics, it tracks the trillions of “rent” as it drives the “housing” bubble and all other indicators. And (4) as an alternative to left or right, it suggests we not tax ourselves then subsidize our favorites but recover and share society’s surplus, paying in land dues and getting back “rent” dividends, a la Alaska’s oil dividend. Letting rent go to the wrong pockets wreaks havoc, while redirecting it to everyone would solve our economic ills and the ills downstream from them.
People must learn to stop whining so much and feel enough self-esteem to demand a fair share of rent, society’s surplus, the commonwealth.