Comments on: Budget cuts that raise costs Sat, 23 Mar 2013 13:49:31 +0000 hourly 1 By: coyotle Sun, 04 Sep 2011 19:06:27 +0000 CarlOmunificent, economists and political leaders found the same job growth outcomes during WWII after everything else failed previously to lift the nation out of the Great Depression. Why we don’t teach this stuff in junior high or highshchool is beyond me.

By: LVTfan Sun, 04 Sep 2011 14:27:43 +0000 Much of what we buy with our public dollars goes into maintaining or increasing land values in the places where those dollars are spent.

Shouldn’t much, even most or all, of that spending be financed via collecting back some significant share of the annual value of the benefited land?

The conventional property tax falls on buildings as well as land, and thus has some undesirable effects that could be easily avoided by omitting buildings and other improvements to land from the tax base.

But the question is a larger one: shouldn’t we be financing public goods by collecting natural public revenue before we tax sales or wages or other evidences of individual production?

By: LVTfan Tue, 30 Aug 2011 23:17:53 +0000 When a community provides a service that people value, land value rises within the community. Reliable electricity, clean water, sewage removal and processing, schools, trash pickup, well-maintained streets, sidewalks, stormwater runoff, libraries, emergency services to handle small- and large-scale emergencies — many services many of us on the east coast have had reason to be particularly conscious of this week — all these things make a community a good place to live. People who can afford to live in these places generally prefer to live in them.

So how should we finance these things? Through taxes on wages, sales (goods and, in some places, services) and buildings? Or through taxes on land value?

When we tax wages, sales and buildings, we put a burden on productive activity. We get less of it.

When we tax land value, some good things happen (though some of us are not conditioned to think it good):

1. While the use-value of land does not drop, the selling price does. In the places where most people live, land represents the larger share of the price of housing.

2. Well located land — land close to the services people value — gets used more intensively.

3. Land speculation becomes less and less profitable.

4. Sprawl is slowed, even reversed, as the incentives funnel development into infill. Empty lots disappear; boarded up buildings get rehabbed; businesses can afford the locations and space they need. And without the annual burden of taxes on improvements, maintenance is improved.

Taxing land value is efficient. It is also wise, just, administrable, and generally fits Adam Smith’s criteria for a good tax. Even Milton Friedman, the Mikey of taxation, called it the “least bad” tax — arguably after Lowell Harriss pointed it out.

It also tends to decrease wealth concentration and income concentration. Maybe that’s why it is passed over so quickly in most economics courses.

Every worthwhile investment in infrastructure raises land values by more than the cost of the project. Why on earth should we finance such projects through something other than a tax on land value?

I pay less to maintain my car if I drive it in places where the potholes are promptly and properly filled. I am willing to pay more to live in such places. How should those services be financed? Through taxes on land value. My landlord pays it, or I as homeowner pay it. Either way, we get what we pay for.

You might appreciate Fred Foldvary’s “The Ultimate Tax Reform,” which comes in two versions; read the short one first.

By: StuartLevine Tue, 30 Aug 2011 19:40:34 +0000 We often hear about negative externalities (e.g., since I do not pay for the pollution caused by my car exhaust, I have no economic incentive to reduce the level of those exhausts). Here, we have a positive externality (the trivial cost of Statistical Abstract results in significant savings to others who don’t have search around for necessary information).