Welcome to Joe's homepage.
Since we are somewhere in a recession, maybe the beginning
maybe the middle, maybe the end, it's important that we try to find out
what is going wrong. Most people say it's the lack of regulation of the
banking and financial markets that have allowed a few to profit at the
expense of the many.
I believe that the problem is that we don't
differentiate between the wealth that we've earned (the fruits of our
work) and the wealth that God/Nature has given us as a society.
Some others have done a lot of work in this regard and you can find their efforts online at:http://www.progress.orghttp://www.whatwouldjesustax.com/http://www.wealthandwant.com
know that if something is taxed, it will be reduced: if we tax beer,
beer sales will go down. In the same way if we tax work, wages and
employment will go down.
If we tax land, the amount of land
does not go down, but the demand for it will go down, because only
those who want to use it will buy it, land speculators will not want
it. If that happens, the purchase price of land will go down, by the
law of supply and demand. The purchase price goes down because
speculators (those who believe they can profit from the ride up the
bubble) don't bid up the price so high.
This makes housing more affordable.
Untaxing work means that workers' wages are higher and that employers are motivated to create more jobs.
One of the concepts that we need to understand is that of social cost,
that is the cost of certain activities that is born not born by the
person doing the activity, but by the public in general, particularly
the public in the area where the activity take place. An example of
this would be the cost of pollution, which is often not born by the
polluter, but by those who live in the area, especially people who are
most exposed to the pollution.
way to discourage this is by shifting taxes from being based on what
people earn, spend, or have, to being based on what we pollute.
Sometimes these are called green taxes
; an example would be a carbon
A land tax
is an example of a green tax. It discourages buying land only for
speculative purposes, since those who don't use it by building on it,
or employing people one it, would have to pay more tax that what they
do now. That means that taxes could be lowered on those who do
use the land by building and/or employing. Land tax is also green
because it encourages frugal use of land, resulting in compact growth,
which means that more trips are walkable, bike-able, or would require
shorter driving or transit trips.
Some other sites which advocate for Land Value Tax rather than Tax on Work are:http://www.savingcommunities.org/http://www.henrygeorge.org/http://www.landreform.org/
The purpose of shifting taxes from taxes on buildings, wages, sales, to
a tax on land, is to give all people an equal share of the earth's land
or the rental income from that.
One way to think of it is that there are two pies.
pie consists of all the land in the world, in the sense of all natural
opportunities, including land, air, water, radio spectrum. The land has
a rental value. This rental value for land, for example, can be found
out by seeing what someone is willing to pay for a given parcel of
land. This is often done with long-term leases. Air has a social cost
which is the cost to battle the effects of pollution of that air. This
"pie" is a gift of God/Nature which belongs to everyone in the world.
If someone uses more than their share, they are indebted to the rest of
humankind for that use. If we collected all the rent in an area
(precinct, city, county, country) and divided and distributed it to all
the permanent residents of that area, that would satisfy that debt. One
effect of this tax or land rent collection would be to encourage frugal
use of land, leaving more for others and for Nature to rejuvenate
itself and protect our environment. It also allows communities to set
up parks and beaches for the recreation of all.
The other pie
represents what humans produce. Examples would be a worker's labor, a
doctor's services, the production and showing of a movie, food. This
"pie" is due to the individual's or organization's efforts and should
not be taxed or divided. It takes nothing away from the common good. It
does not need to be taxed. This encourages all people to work
The folly of Socialism and Communism is that they
try to divide both pies, taking away incentive to work. To the extent
that democratic governments tax wages, buildings, and other work, they
also destroy incentive to work. To the extent that governments leave
land untaxed, they encourage land speculation and they encourage
attempts to acquire more land than we need, leaving less for those who
This does not have to be done in the whole world or
entire country at once. Many cities in this country and others have
instituted a two-tier real estate tax, whereby land is taxed at a
higher rate than buildings. Examples are Pittsburgh, Pennsylvania, and
Sydney, Australia. The result has been an increase in economic activity
and the presence of more affordable housing. See: http://www.progress.org/geonomy/geono05.php
One of the most interesting concepts of the Bible is that of the
Jubilee. It's an event that happens every fifty years, and is found in
the book of Leviticus Chapter 25
The chapter expresses a concern, not about "Law", but about People,
especially those who are apt to be taken advantage of. Two main points
are Freedom for Slaves, and return of Land to its original owners.
These two concepts are related. The person who has control over the
land that another person works, or lives on, has partial control over
that person; a partial slavery. The idea is that Land is very different
from selling the work of our labor for several reasons: Land is a Gift
from God, and Land is Forever. The Jubilee is, in effect, a kind of
continual land reform. Land is not a commodity that can be bought and
sold. It is an inherent right of all people. Interesting that this
concept is several thousand years old, yet has been mostly ignored in
the living out of religious values.
Land Value Taxation is a
way of accomplishing this continual Land Reform, by making sure that
all people have a share of the land, or its income. The Jubilee also
warns us against thinking that we can abuse our environment: the land
is to rest every seven years.
I just realized that one of my favorite authors, Jane Jacobs, in her book, "The Death and Birth of Great American Cities", stated that the one of the biggest obstacles to affordable, integrated, housing and integrated cities is the combination of zoning laws and neighborhood covenants. I would add to this Socialized Parking supported by Parking Requirement
For a start, check out:
You can also see comments on her book at:
I also have a blog where you can comment at:
There has been a great deal of discussion in our county on whether the Wake County should abandon the program that buses children from their neighborhoods to schools in other neighborhoods in order to maintain balance of children from more well-to-do families and those from less well-to-do families.
I believe that it is possible to work for Integrated Neighborhood schools. That would imply that we have neighborhoods that are integrated economically. So the question is: what is it that keeps neighborhoods segregated economically? One of the factors is zoning and neighborhood covenants. Many of these mandate that only certain lot sizes or certain house sizes and that houses and business be built with parking privileges attached to them.
Things that need to be discussed are:
What is the purpose of zoning?
Why is it necessary?
Who is in favor of it?
Does it shut out the working poor from living in much of the city/county?
Does it, in effect, segregate?
What goes on when you interview for a job? I think the first thing the interviewer has in mind is: "What can this person do for our company?" They size you up and guess that you can contribute avalue to the company that they convert to dollars per hour. Then, assuming that they calculate a positive value, they have to figure out what it will cost them to hire you. Some of the costs will be the furniture you need, the share of the building you will need, and the share of the land that building occupies that you will need, and the additional taxes they will need to pay if you are hired. All of these things can be calculated in term of dollars per hour. They then have to figure: this person is worth, say, $20 per hour to our company; it will cost about $1 per hour for furniture, $3 per hour for building and tool rent and $3 an hour for land rent (including parking) and $3 an hour in extra taxes our company will pay. So that means that the most I can offer this person is ($20 - $1 -$3 - $3 -$3) or $10 per hour, and not lose money on them. See the graphs here and here. Now, what if, the government collected the land rent as tax, rather than taxing work activities. That would mean that the employer would pay the land rent and the tax concurrently. (kind of like serving a two jail sentences concurrently) This is possible because the person who is now collecting land rent is not producing anything, he is just a title-holder, an idle noble. So if the government takes over this function, it can not only give you back more of the benefit of your work, but will reduce the burden on this person who is thinking about hiring you. In that case the employer can offer you $20 - $1 -$3 - $3 or $13 per hour.
Often the person or organization which owns that land is also the one that owns the building and the tools, but the effect is the same as if it were two people: as building owner he is receiving compensation for something he has provided or has traded his labor with someone for, but as land owner he is getting something for producing nothing, since land is a gift of Nature/God/Higher Power, not the result of any human effort.
If you think that the fact that land value is close to building value seems inaccurate, I took the numbers from the relative value of an office building in Cameron Village in Raleigh: the building is valued at $1.7 million, the land at $1.5.
What you produce belongs to you; what no human produces belongs to everyone.
The graph can be downloaded as Powerpoint or Open Office(Simpress) so you can slide the Tax and Land-rent parts together. Open Office is free, available here. When we confront the multitude of problems that our country and our world face: Pollution, Unemployment, Homelessness and Lack of Affordable Housing, and Environmental Disasters, for instance, there are two ways of trying to solve them: I call them Downstream and Upstream.
For instance, do we solve the problem of polluted rivers by trying to rid the rivers of pollutants after they get in the river by trying to cleanse the river downstream after it's polluted? or do we control the pollution of the river upstream by limiting the use of pollutants near that river? It would seem much more sensible to limit to control pollution before it gets to the river.
In the same way, we can tackle unemployment, or a least some of its results, by providing unemployment benefits after a person is unemployed. The would be trying to solve the problemdownstream. Or we could change the tax system so that a person is not penalized with increased taxes when they work, or provide work. This would be an upstream solution.
With homelessness and lack a affordable housing, we can set up a means test, that is, an income or asset criterion, which would decide if a person would be eligible to receive a subsidy for housing, which would be collected from other people who do not meet this criterion. Those who are just on the other side of this criterion would have to contribute to this subsidy through taxes or other government mandates, either direct or indirect. Adownstream solution. Or we could change our tax system so that it increases effective wages and lowers the land portion cost of housing. That would be an upstream solution.
The recent oil spill suggests that this could have been prevented by more controls over those who produce oil (upstream solution). The questions arise:
- Who would appoint the watchers? Probably, whichever government is in office at the moment.
- Would those who appoint the watchers be influenced by those who profit from lack of control? You can answer that one.
The alternative would be to reduce the demand for oil by eliminating the subsidies on driving, such as socialized parking(provided by the local governments, and mandated by local governments on those who want to provide jobs or housing. Also eliminating the exemption that motor vehicles and motor fuel have from paying sales tax here in North Carolina, and I presume in other states. Also, zoning which mandates that a certain size lot or house is the only one allowed in certain areas could be struck down. (Upstream solutions) For all the aforementioned issues the solution of Land Value Taxation needs to be examined, especially in its long-term effects. References are available on this blog.
With all the talk about lack of jobs, the proposed shift to land value tax needs to be talked about. If we lower the tax on milk and raise the tax on beer, the result will be that the demand for beer will go down and the demand for milk will go up. Likewise if we lower the tax on work, starting with the building portion of the real estate tax and raise it on land portion of the real estate tax, we increase the number of jobs (and their wages) per acre. Who doesn't want more jobs per acre?
What is the measure of a "Good" Economy?
I find it ironic when I hear that the economy is improving, but the unemployment situation is not getting better. I think we need a new measure of "Good Economy". I'm going to propose two measures: How many hours does it take a person of average skills (High School education) to earn money to buy a piece of land of a given size in a given area? The lower the number of hours, the better the economy. The second measure: How many hours of work does it take for that same person to earn money to pay for an hour's work of a person similarly skilled, but in a different area. It seems that the if the government taxes work, via sales tax or wage tax, that the hours of work necessary to do either of these two things will go up; if the government taxes land value, and reduces the tax on work, that the hours of work necessary will decrease. What do you think?
Whenever we need to think about a program, especially a public program, these three questions (Who Benefits? Who Pays? Who Decides?) can be very helpful. It will help us discover if there are any social costs, or any unintended consequences to our actions or proposals. An example would be a city mandating that house lots be of a certain minimum size, as is often the case with zoning. The people who would benefit form such legislation would be the ones who think that they need to preserve a certain lifestyle that existed when there were fewer people on this planet. The people that would pay would be young people who have limited incomes and could not afford to buy or to pay rent on the larger houses that would be built on the larger lots that are mandated by such zoning. And, the decision would be taken out of the hands of the younger or poorer people and placed in the hands of the more influential and wealthier people.
Another example would be activities that pollute. If I perform an activity that pollutes, even though I may not want it, I will cause expense or difficulty to another person. My driving a vehicle which consumes petroleum releases noxious fumes into the atmosphere. This has a detrimental effect especially on people whose bodies are sensitive to pollutants. Also my driving a larger vehicle at higher speeds means that people who walk, who bike, who are or even others who drive need to pay a cost for my driving. Certainly driving a car is convenient, and fast, but it is not efficient with respect to energy, land use or pollution. This needs be remembered when there is talk of limiting the gas tax. If we limit or reduce the gas tax, we will need to do at least one of three things: we will need to cut government programs, we will need to increase other taxes, and/or we will need to increase the debt.
One activity that does not have negative effects on anyone is the exchange of labor. If I can wire a house for someone and that person can fix the plumbing for me, an exchange of labor is beneficial for both parties. That is one reason that the so-called fair tax has so many negative consequences. It is a tax on new goods and services, including food, clothing, medical services, and building materials which are needed for shelter. On the other hand, Land Value Tax, the land portion of property tax excluding improvements, encourages frugal use of land, which leave more land available for others.
An example of what a shift to Land Value Tax could do would be to compare two properties, one of which is has only a destroyed building on it and another next to it that has an active shopping center on it. Since the destroyed building has zero value on the tax roles, the unused lot pays less tax than the active, job-producing shopping center. This discourages job creation, which is should be a priority of any public policy. If the unused property were to pay the same tax per acre as the well-used property, you can be sure that the holder of the unused property would either build a job-producing facility on that property or sell it to someone who would. This would certainly reduce unemployment.
The movie "Inside Job" won the Oscar for best documentary feature in 2011. The winner of the Oscar made the comment that no bank executives have been arrested for their role in the recent economic collapse. A question we need to ask is "How do we prevent such a tragedy in the future?" One response is that we have more surveillance over the banking industry. But then we have to ask "Who is going to appoint a commission to do this surveillance?" The effectiveness of such a commission would depend, among other things, on who was appointed. Presumably, at a national level, the commission would be appointed by the current or future US president. Obviously this would be influenced by the appointing president's emphases and politics. Also such a commission would be looking for anomalies in books, for illegal actions, and could only act after the crime had been committed.
It seems to me that a better approach would be to see what bait we leave for those seeking to profit at some else's expense. The biggest bait is the expectation of profit on land, either by extracting from the renters a fee for the use of the land, or in the expected increase in value of the land. Most of the shenanigans in the recent economic implosion has to do with mortgages on land. By shifting our tax basis from work to land, we shorten the time that a person has to work to gain access to a given piece of land, since the person who really needs it is already paying a previous landowner, who really hasn't done anything to increase the value of the land (the building, yes, but not the land. The community increases the value of the land with infrastructure improvements.
Leaving bait for land profiteers makes about as much sense as leaving a bike unlocked where thieves are known to operate.