brightly-salty

I read through it and didn't see any refutation, just a description of the historical movement. At least to my understanding, mutualists like Benjamin Tucker have historically agreed with Georgist philosophy to a great extent, including breaking the monopoly on land.

How much would you pay for land that has 100% of its rental value taxed away every year?

Common solutions include appraisal (like property taxes are today) or a Vickrey auction, where we auction off the land, and the first place bidder gets it at the price of the second bid.

Land prices decrease proportionally with the level of LVT implemented: 0% of today gives a 100% sales price; 25% LVT gives a 75% sales price; etc; 100% LVT as I propose gives a 0% sales price. Of course the prices increase in a particular transaction more than the exact amount if the buyer wants to live on the land for a long time, though.

I will admit that I misunderstand TimPC’s point about people having to pay the land value tax in addition to the mortgage; I misunderstood mortgages in terms of who really owns the land.

But the point still stands. If the land value tax is paid by the homeowner, the sales price of the land is zero (under a 100% LVT), so the mortgage rates are lowered by an equivalent amount. So there is no additional burden upon the homeowner. If we flip the model and say the bank owns the land, they will pay the land value tax until it is paid off. In this case also, the sales price also drops to zero so the mortgage just incorporates the land value tax and the building payment. In all possible arrangements, there is no additional burden on the homeowner until the mortgage is paid off.

I do understand that mortgages are on both the land and the buildings. We were talking about land only though. It is irrelevant to the question of who pays the land value tax that the mortgage also includes the buildings.

Yes, I agree with you on what will happen in big cities where the land value is already high. The idea is more that in the Montana's and the Kansas's - where they already give land away free to people who promise to build improvements - there will be even more of an economic incentive to move to underdeveloped states, giving more families economic opportunities, which will then cause network effects as more families move out, causing housing prices to fall in the big cities. Housing prices will become more equal across the nation, and vertical development will be incentivized over urban sprawl.

Perhaps I'm explaining it poorly, that's entirely possible. The frontier is where land value is zero, at the margin of production. It is possible to get value out of the land, but only with hard work. Currently this land may be held without using it for production, but it largely doesn't exist. This is because the lack of a land value tax incentivizes landholders to own all land for the purpose of speculation rather than production, even if it's economic rent value is low. With a land value tax, people who hold land purely for speculative sales prices would sell it because the sales price would drop to zero, therefore freeing up those pieces of land for families to move to and work upon. The frontier, the margin of production, where only hard work would make the land valuable, reopens and other land also becomes more mobile because there is a disincentive to holding land for speculative purposes, reducing the price of housing in general and contributing to housing liquidity.

I agree that land has to some extent been widely redistributed in the United States because of the frontier, which continued to exist and distribute land ownership up until the 1880s. However, since the frontier died, land ownership distribution has stayed more or less the same. Compare the coasts to England, where land mobility is even more limited because the frontier died even longer ago. What Georgism and a Land Value Tax would do is to re-create the frontier at the margin of production, where land is free and there is no tax to be paid, but the land itself is still workable without profit. Recreating the frontier would re-introduce land mobility and make land more liquid, while also countering NIMBY desires to keep their land and neighborhoods the way they were fifty or a hundred years ago.

Companies are arguably not very widely distributed. The stock market is ownership of companies by those who do not work for it, so the distance between the worker and the owner is still greater than in small businesses, family businesses, worker cooperatives, or even traditional corporations with Employee Stock Ownership Plans. Trust-busting is one way to decrease that distance, although true anti-monopoly policies like a land-value tax or a tax on intellectual property enforcement would truly remove the privileges these big companies have and allow smaller ones to truly compete.

I think it would be at least partially solved by reorganizing government to be based upon subsidiarity :) but yes, this isn’t necessarily a question which political economy can or should solve