The Henry George Program Ep. 5 – Corey Smith of SFHAC

In this May 9, 2017 episode, Corey Smith of the San Francisco Housing Action Coalition talks about the policies and the politics to get the housing supply up to 5,000 units a year. All your favorites are here: CEQA and Prop 13. Some talk about the limits of empathy: are our land-use policies making us meaner?

Starting in 2017, EarthSharing.org has been collaborating with KZSU Stanford 90.1 FM to create a weekly hour-long radio show. The Henry George Program is a platform for interviews, roundtable discussions, and debates on economic justice and policy.

Tune in for challenging content on the housing crisis in the Bay Area and beyond, economic stagnation, widening wealth inequality, and environmental degradation ― can Henry George’s ideas offer a path forward that unfettered capitalism and incremental socialism lack?

An archive of the Henry George Program can be found here.

Featured photo: San Francisco Housing Action Coalition

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Oregon And The Self-Sabotage Of Civic Cutbacks

At the beginning of April, 10 public libraries shut their doors all at once across Douglas County, Oregon. The mass closure of these critical civic institutions is the result of a democratic process in communities where every extra dollar on a tax bill is seen as an affront to personal liberty. The only hope for the future of these libraries rests on volunteers.

Oregon’s public purse has historically been filled by the spoils of logging the timber-rich regions of southern and western Oregon. Douglas County and its neighbors experienced a surge in demand for timber during and after World War II, and a flood of federal cash allowed small communities to provide all kinds of public infrastructure and services. For Douglas County, this included a public library system that would grow to encompass 11 branches.

Photo: courthouselover via Flickr.

Logging began to decline in the 1980s, and environmental protections on public land in 1990 sealed the fate of many communities reliant on timber. In Douglas County, federal timber revenues fell from $50 million a year to just several million. Once-free public services began to charge locals for use.

With library services firmly in the sights of further budget cuts, library supporters put together a proposal last fall that would have added about $6 per month to an average tax bill and saved the libraries from closure. This in a county where property taxes are subject to a cap set in 1990 that cannot be exceeded without a public vote, and specific county services like libraries must be funded out of special tax districts.

The taxpayers rejected the proposal, in the process generating a lot of negativity around the purpose of libraries in general and their perceived obsolescence. County authorities are seemingly ambivalent, caught between families and community groups on one hand and a complete lack of revenue on the other.

Thousands of small communities around the world are struggling due to a lost industry, and the only two options seem to usually be hoping for that industry to return, or tightening the purse strings exponentially as the community evaporates. There is a need for creative thinking in places like Douglas County, where an untold number of people have now lost access to essential services.

The many factors playing into this shameful development are summed up by Shane Dixon Kavanaugh, writing for Vocativ:

Just three hours south of Portland, where residents enjoy the fruits afforded by a tech and real estate boom, this rural community of loggers and agricultural workers is preparing to do without a publicly-funded institution considered by many to be as fundamental to American life as schools, paved roads, and the local police. In some ways, the demise of the public library system in Douglas County, which is roughly the size of Connecticut, is the outcome of a perfect storm of factors confronting towns and cities across the U.S. — the slow death of an industry; an exodus of young people and influx of retirees; an explosion of anti-tax fervor; and shifting perceptions on what government and people are willing to pay for today.

Featured photo: ConanTheLibrarian Spine Reflections via photopin (license)

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The Henry George Program Ep. 4 – James Hughes: Technoprogressivism

We featured the libertarian transhumanist perspective of Zoltan Istvan a few weeks ago. In this May 2, 2017 episode, we speak with James Hughes, who couples a concern for transhumanism with a progressive attitude and a focus on economic justice.

Hughes is an American sociologist and bioethicist who falls on the progressive side of the political spectrum. He is the Executive Director of the Institute for Ethics and Emerging Technologies, which he founded with Nick Bostrom. He serves as Associate Provost for Institutional Research, Assessment and Planning for the University of Massachusetts Boston.

Starting in 2017, EarthSharing.org has been collaborating with KZSU Stanford 90.1 FM to create a weekly hour-long radio show. The Henry George Program is a platform for interviews, roundtable discussions, and debates on economic justice and policy.

Tune in for challenging content on the housing crisis in the Bay Area and beyond, economic stagnation, widening wealth inequality, and environmental degradation ― can Henry George’s ideas offer a path forward that unfettered capitalism and incremental socialism lack?

An archive of the Henry George Program can be found here.

Featured photo: KnightCap via Wikimedia.

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Will Robots Take Our Jobs?

This year at BIL San Francisco 2017, talks such as “When the Robots Don’t Work”, “Are Robots Trying to Kill Us?”, and “Why AI Works – The Epistemology of Deep Learning” take on a subject similar to presentations given at BIL Oakland 2016, for example, the “Will Robots Take Our Jobs? panel”

Julia Bossman argued that, given an explosion in robots and AI, there will be massive unemployment, with Timothy Roscoe Carter arguing that we need a basic income to protect people from such unemployment. Edward Miller questioned the assumption that AI will permanently replace human labor, instead arguing that AI will cause disruptions that temporarily displace workers as they attempt to provide their ‘comparative advantage’, referencing the classical economist David Ricardo.

Miller goes on to state that Ricardo’s Law of Comparative Advantage, demonstrating that even parties who are worse at producing everything (e.g. futuristic humans) will still be involved in the productive economy. This is true even if the other parties, in this case robots, are vastly better at producing everything.

Bolstering his point with an example, he said that there are even cases of de-automation especially in poor nations where labor is much cheaper. Miller went on to say that basic income will tend to increase people’s rent, such that the benefit provided by a basic income will be siphoned off by people who own high-value land in places like the San Francisco Bay Area. He cites a similar dynamic in the Bay Area where an increase in many people’s wages have simply driven up rent.

It was mentioned in the panel that humans in the future will likely not be separate from AI, leveraging it to augment their own intelligence as cyborgs, as opposed to a disembodied super-computer. Perhaps AI will not “take” our jobs because we will merge with them.

Andrés Gómez Emilsson questioned the panel’s assumption about what humans would even desire in a world with advanced AI, saying that such advancement would enable humans to fundamentally alter their own motivational systems, indeed human nature, not to mention our economic systems. This tied in with Miller’s statement about barring fantastical futuristic scenarios like in The Terminator, ones where robots literally try to exterminate humans, and in effect do a lot more than merely take our jobs. A more sober view is one in which land, natural resources, and other fundamental aspects of political economy persist, regardless of technological advancement. In such a scenario, It was argued that a land value tax would be the best way to fund a basic income because, as the basic income bids up rent, these higher land values would be continuously recollected via the tax to fund increasingly higher levels of basic income.

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UK Election A Light On Land Value Tax

The U.K. snap election ended with the confusion and dissatisfaction of a hung parliament today, as the Conservative Party lost its majority and the Labour Party made significant gains. Results aside, this 51-day election campaign has been a huge test for public perceptions of Land Value Taxation.

Labour’s manifesto proved hugely popular and was a major talking point of the campaign. The replacement of council tax with a Land Value Tax was one of its planks, and this presented the media and the public with an opportunity to give LVT its due diligence. Evidently, tens of thousands of U.K. voters were not dissuaded from voting Labour by the idea.

By the end of the campaign, LVT was making regular appearances in newspaper columns and generating productive public debate. Last week, a letter to the editor from Rev. Paul Nicholson in The Guardian read:

Rents must stop taking the money needed for food, fuel, water and other necessities. Several parties’ manifestos gave land value tax a nod. The advantages are that land cannot be placed tax-free in an overseas bank, taxing land forces into use the 600,000 plots of unused land owned by the big builders, it is progressive, it relieves the incomes of hardworking people and companies by enabling the abolition of inefficient taxes such as council tax, business rates and stamp duty.

Predictably, there were also waves of misinformation delivered by the Conservative Party and infamous U.K. tabloid publications, quick to label LVT a “garden tax” that would potentially triple the tax bills of regular working families and force farmers to raise their prices.

Photo: The Labour Party.

These kinds of arguments have only given more coverage to the policy, and given experts the opportunity to clarify exactly what LVT does and does not achieve. Land Value Tax is now on its way to being a mainstream policy idea across the U.K., where for years disillusionment has been spreading regarding the ownership, under-use, and monopolization of land. Responding to a prominent criticism of LVT as a “Marxist tax grab”, senior lecturer at the Institute of Local Government Studies Chris Game had this to say:

There’s a minor irony here. The principle of land value taxation – the recognition that land’s true ‘location’ value derives less from the actions of the individual owner than from the wider efforts of the community in creating transport links, schools, hospitals and other infrastructure, and the community should benefit from this ‘unearned betterment’ part of the value accordingly – does indeed have history. Far from an invention of Corbyn’s Labour Party, it dates back well beyond Marx to at least the 18th Century classical economists, Adam Smith and David Ricardo: hardly proto-Marxists. Indeed, the bearded one himself dismissed it as a distraction from the historically inevitable transition from capitalism to communism.

While the millions who voted for progressive policy and economic justice in the U.K. this week will be left disappointed by the familiar government taking shape before them, this unexpected election cycle has propelled an otherwise unknown idea into the public consciousness. Land Value Tax will be a familiar proposal the next time it is put before voters, and debates on its efficacy will hopefully continue in the public and private domains.

Featured photo: Andy Miah via Flickr.

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The Henry George Program Ep. 3 – Introduction to Georgism with Kedar

In this April 25, 2017 episode, Kedar and Mark have a conversation about Georgism, Prop 13, and why this all matters.

 

Starting in 2017, EarthSharing.org has been collaborating with KZSU Stanford 90.1 FM to create a weekly hour-long radio show. The Henry George Program is a platform for interviews, roundtable discussions, and debates on economic justice and policy.

Tune in for challenging content on the housing crisis in the Bay Area and beyond, economic stagnation, widening wealth inequality, and environmental degradation ― can Henry George’s ideas offer a path forward that unfettered capitalism and incremental socialism lack?

An archive of the Henry George Program can be found here.

Featured photo: curtis.kennington Studio Microphone via photopin (license)

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Watch & Listen: Sacred Water, Profane Markets

On May 19, the Robert Schalkenbach Foundation co-sponsored an event in New York with the International Union for Land Value Taxation, a United Nations ECOSOC NGO, the Center for the Study of Economics and The American Journal of Economics and Sociology.

The event was intended to foster an ongoing public dialogue on Mason Gaffney’s Sacred Water, Profane Markets, which appears in the November 2016 edition of American Journal of Economics and Sociology and challenges the fundamental assumptions of even the most liberal economic dogmas of the past century. According to the journal’s editor, Gaffney has produced “principles of universal relevance” by recognizing the tendencies toward capital accumulation inherent in laissez-faire capitalism and enshrining the sanctity of nature at the forefront of any policy discussion. Gaffney writes:

“Treating nature as a sacred gift requires our full capacity to imagine ways to heal the split between humans and the earth. A comprehensive plan to protect nature while securing the human right to water means changing the rules that govern the current ‘operating system’ for planet Earth.”

Two of the event’s speakers, David Triggs and Mary Cleveland, address the economics and management of water. They describe how a just system of charging for nature’s services can not only protect nature from excessive use but also make the market for produced goods and services healthier by preventing the development of monopolies that impede economic efficiency and destroy social harmony.

Drawing upon many years of practical experience in both developed and developing countries and extensive academic research, they show how a healthy balance of demand management and market forces may be used to ensure both safe drinking water for all in water scarce cities and the optimum sharing of water between agricultural, industrial and commercial users of water.

David Michel has researched and written about transboundary water governance, maritime resources management, and water conflict and cooperation. He is co-author of Toward Global Water Security: US Strategy for a Twenty-First-Century Challenge. He shares his views about the water ethics and policy presented by the first two speakers and how these might make a valuable contribution to a global water grand strategy formulation. The intention of Michel’s current work on global water security is to maximize the potential for civil society and the private sector to speak with a cohesive voice on water ethics and policy.

Following the three main speakers several designated respondents draw on their own insights and experiences in water ethics and management in giving their input to the proposed reconciliation of Sacred Water and Profane Markets. The main speakers and the respondents will then participate in a plenary round table discussion on a number of key points and questions raised by forum attendees.

Watch the full event below:

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Reversing Sprawl: Part II

Read Reversing Sprawl: Part I here.

Public Good Funding Public Good

Properties near Central Park are vastly more valuable than those even a few blocks away. Parks are among many publicly funded amenities that can raise the value of land because people want to be near to them. Since a Land Value Tax is designed so that governments obtain most or all of their revenue from it, any increase in tax revenue must come from increases in land value. This is why LVT is often thought of as a “single tax” or “central tax”.

To increase annual revenue, governments must construct parks, public spaces, and infrastructure to raise land values. This spurs the ‘Up & In’ private development discussed in Part I, but it also creates an incentive for government to develop and maintain such spaces and amenities.

Figure 1. Parks raise the value of land and are thus encouraged under Land Value Taxation.

People have to actually like the spaces in order for government to be able to increase revenue. Therefore, the nature of government intervention in urban planning and infrastructure will likely better reflect people’s needs under LVT, since government revenue will depend directly on the quality of public spaces. This concept applies to roads, utilities, amenities, and many other public works.

Using land value as the central or sole source of revenue aligns the government’s interest with that of the general public in many ways. Though it would improve government incentives in many ways, Land Value Tax would not render zoning completely unnecessary. There are many legitimate and illegitimate zoning restrictions, and these do not disappear ipso facto a land value tax.

If government spends money efficiently, in line with people’s needs, tax revenue will also increase vis a vis land value. For more information on this, see the Henry George Theorem. The theorem, supported by Nobelists Joseph Stiglitz, Willam Vickery, and others describes how governments can sustainably fund all activities, solely using a land value tax, through the creation and maintenance of public works. For an example, watch the video above.

Skyscrapers Everywhere? No.

Some people become confused when thinking about a Land Value Tax, believing it would cause tall buildings to be constructed in the middle of the Amazon rain forest or the Sahara desert. This mischaracterization stems from thinking that the incentive to use land intensively applies to areas with low land values.

If the land value is high, a landowner must generate more income to cover their high tax bill. This is often accomplished by constructing taller buildings, offering more units on which to collect rent. However, if the land value is low, the incentive to build is low as well. This will be reflected in the height of the building, or the lack of a building altogether in areas further from city centers.

Incidentally, even if the Land Value Tax paid by a particular owner is low, there is still an incentive to not own enormous tracts of land for mere speculation. Speculative gain becomes less attractive when any increase in land value will be accompanied by a heftier tax bill. This means that it is easier for small-scale farmers to get started, whereas the current tax system favors large monoculture agribusiness.

Who Pays And Where?

A progressive income tax is said to be pro-poor because those with more income pay more than those with little. In theory, this is a proxy for taxing all wealth progressively, but it is not so in practice. Land value taxation is progressive in a spatial sense. Those who own the best locations pay much more than those who own less valuable locations, and renters do not pay taxes at all. The Land Value Tax curve is very steep as you can see in Figures 2 and 3. This means that wealthy landowners pay a vastly higher tax than owners of outlying parcels.

Figure 2. Moving from the center of the city to the periphery, land value drops exponentially.

Of course, in practice land values do not make a perfectly smooth curve. Below is a land value map of Chicago, looking south toward the loop along Lake Michigan.

Figure 3. Chicago’s central land values depicted as proportional to the height of the colored blocks. Notice the similarity to Von Thunen’s land value curve. The land values in central Chicago are so high that the image cannot capture their full height. Credit: Lincoln Institute of Land Policy

Tax The Rich

A square meter of land in New York City will buy an acre of land in upstate New York. An acre of land in some parts of the Saharan desert are the price of a hamburger. Yet, $120,000 will only buy you a square meter of land in Pollock’s Path, Hong Kong. Who owns the most valuable land in Chicago, in the City of London financial district, or in New York’s Times Square and on Wall Street? There are not your average Joes. By shifting to a land value tax, the vast majority of revenue would come from the super-rich, not from regular working people. However, unlike taxes on income and abstract financial instruments, land can not be hidden in Swiss bank accounts and the Cayman Islands.

Some worry that multinational corporations will leave high-value areas for this reason. However, if a few decide to leave, it will be those that take up lots of space and hire few employees. Land values and taxes will drop until an equilibrium is reached. What remains are the productive businesses who use space for employees rather than cars, companies who pay their fair share of taxes and contribute to the economic vitality of their communities.

Leave Ma & Pa Alone

Productive businesses will get a boost. With zero taxes on wages and sales, hiring people and selling things will be less expensive. Such businesses will also benefit from lower rent, especially for the average ma and pa shop.

How Is A Land Value Tax Levied?

The Land Value Tax is not the same as a property tax, which is levied on both land and buildings. The Land Value Tax is levied on land only, not buildings. All land is taxed at the same rate, but landowners near the city center naturally pay more than those further away. Let’s imagine for example that the Land Value Tax is set at 10 percent of the market value for all land.

The amount of tax paid by each owner varies as a function of the land value only. The tax rate does not vary from plot to plot, and the value of the building on a given plot will not change the amount of tax paid by the owner.

Hypothetically, land in the city center assessed at $1,000/sq ft will pay $100/sq ft in Land Value Tax per year. Land relatively further from the city center assessed at $100/sq ft will pay $10/sq ft in Land Value Tax per year. Breaking the tax into monthly payments is ideal.

In order to have the effects described in this article, value assessments need to be accurate and the Land Value Tax needs to be high enough to generate the right incentives. LVT is not an additional tax, but a replacement for most other taxes like those on wages and sales. Pollution taxes and a few other good taxes should remain, but the Land Value Tax would be the primary source of revenue.

No Taxes, Just Rent.

So, what does all this mean for the average person? People who do not own land do not pay any taxes under Land Value Taxation, including wage or sales taxes. Public transportation could be made free because such services increase land values and thus revenue.

Many landowners would actually pay far less than they currently do in property taxes, since they own land at the periphery and beyond. Add to that the savings from other types of tax being eliminated, and their total tax burden would be drastically lower as a group. Almost all revenue would come from ultra-wealthy central landowners. If a rural area did gentrify quickly, landowners could protect themselves by purchasing insurance in advance. Those wishing to become landowners pay a lower purchase price, since buyers and sellers know that the Land Value Tax must continuously be paid.

Apartment Rent Decreases

We know that if the supply of something rises, the price falls. If more space is available in and near urban centers, ceteris paribus, the rent decreases, facilitating more urbanization and reversing sprawl over time.  Increasing the supply of residential and commercial units will likely become a much faster and cheaper process as advances continue to be made in modular construction and 3D printingBuildings can be stacked upon one another like legos as demand for particular locations rise or even fall. With the removal of taxes on buildings, labor, demolition, and other construction inputs, developers will be able to streamline the process. The seven-storey apartment building below was built in 11 days, even in the absence of Land Value Tax incentives.

High Rises, Not Just For The Rich

Fancy high-rises currently cause displacement and are often built with speculative returns in mind. Land values are going up, but these values are not being taxed away, as they would under Land Value Taxation. Rather than build for the people who need housing now, property owners build for the rich elite that will occupy the units later, perhaps years after.

Thus, whole buildings sit vacant in the United States, while entire cities sit vacant in China! Under Land Value Taxation, an urban landowner would have to run at an exorbitant loss to accomplish this, and would instead opt to provide relatively less extravagant units in the short term.

Under Land Value Taxation, new luxury developments or an influx of rich people to an area would spur the creation of more housing units nearby. The first thing to be pushed higher is land values, then tax, followed by development incentives, and the area’s housing supply.

This greater supply of housing units, in turn, lowers apartment rent relative to its high just before additional construction.

Protecting Tenants

The Land Value Tax in no way terminates or precludes existing safeguards protecting existing tenants from gentrification, safeguards like rent control. If rent control were still in place under Land Value Tax, developers would simply have to find ways to create more units at a fixed rent in order to generate the required income to pay the tax.

The land value tax would make rent control unnecessary, but that is a decision financially liberated renters can make for themselves after land value tax has been in place for a long while. Remove economic chains before crutches. Let people decide for themselves what protections they want to pare back after they have the luxury of thinking in terms of economic efficiency and utilitarianism rather than their day to day survival.

Tenants would benefit from land value tax for three reasons:

  • First, it would make cities more compact overall, so affordable housing units will tend to be closer to the city center than they are now;
  • Second, a city would have a stable and ample source of funding for public transportation, services, a citizen’s dividend, public renters insurance, etc.
  • Third, it would reduce the pervasiveness of land speculation, which causes the belief that housing markets don’t work and must be interfered with. The reason for this market failure is speculation, not new construction per se. Speculation, holds down supply, creating a sense of scarcity and desperation, like a few people hogging all the seats on the metro train -while pregnant women and the elderly are forced to stand, cramming together near the doors.

In truth, the Land Value Tax would be an enormously powerful tool for fostering inclusive communities that benefit everyone.

Featured photo: mrlins My rainbow view [HDR] via photopin (license)

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The Henry George Program Ep. 2 – Zoltan Istvan: Funding a UBI

In this April 18, 2017 episode, we speak with Zoltan Istvan, who ran for President through the Transhumanist Party, and is now running for California Governor as a Libertarian. He proposes a Universal Basic Income, funded by the leasing of federal lands. How does this compare to the Georgist ideal of a citizen’s dividend funded by land rents?

 

Starting in 2017, EarthSharing.org has been collaborating with KZSU Stanford 90.1 FM to create a weekly hour-long radio show. The Henry George Program is a platform for interviews, roundtable discussions, and debates on economic justice and policy.

Tune in for challenging content on the housing crisis in the Bay Area and beyond, economic stagnation, widening wealth inequality, and environmental degradation ― can Henry George’s ideas offer a path forward that unfettered capitalism and incremental socialism lack?

An archive of the Henry George Program can be found here.

Featured photo: Zoltan Istvan.

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Reversing Sprawl: Part I

The Secret

Why is it that, every year, the average American spends almost an entire work week stuck in traffic? We are wasting so much time, money, and resources making our daily rounds, but when exploring better ways of doing things, conversations tend to be dominated by improvements to public transportation and more fuel-efficient cars. But to focus solely on transport is to ignore the elephant in the room: the problem is not getting from A to B, but that we live in cities where the long commute is necessary in the first place.

How can we create walkable cities with affordable housing, a strong sense of community, more parks, the means to innovate, explore, create art, enjoy nature, and all of the other things that make communities thrive? What’s the secret?

Posted at http://isNSFW.blogspot.com
Figure 1. Cities currently develop down and out, away from city centers, destroying nature and increasing time spent in traffic.

Underused And Over Capacity

Spaces can feel like they’re at capacity when in reality they are just poorly organized. This can be said of a single room in a house where clothes are strewn across the floor or of an entire city where vacant lots and short buildings are scattered across the landscape. It is possible to make better use of space on a macro scale so that everybody can have affordable housing near job opportunities, public transportation, and nature. Right now, vacant and underused sites make this very difficult, dividing neighborhoods, forcing sprawl to outlying areas, increasing demand for oil, and causing a great deal of ecological damage in the process. Car culture ensues; walkability and the social nature of space decays.

Remix Everything

Taxing land value, not buildings and improvements, encourages the development of city centers, allowing more people to be accommodated. This is because landowners require a higher return to cover the Land Value Tax and still make a profit. Centrally-located land in urban centers will attract the highest Land Value Tax, and this will create the strongest incentives to develop vacant and underused sites. Done properly, as the main or only tax, the Land Value Tax increases the housing supply and lowers rent in and near city centers. In the long term, urban sprawl can be reversed.

Up & In vs Down & Out

Our cities have taken a long time to get this bad, and it stands to reason that the remedy would be gradual as well. A high Land Value Tax, uniformly applied, can gradually reverse sprawl, putting vacant and underused land to its best use. There are many other positive social, environmental, and economic effects of Land Value Taxation, but many of these can only be understood by first understanding the spatial effects. Under such conditions, cities develop up and in toward the city center, instead of down and out, away from the city center (see Figure 2 below). Many will notice the fully intended pun here, as the shape of a city has a lot to do with human welfare. Under Land Value Tax, up and in produces good results, down and out produces bad results.

Image 2. Under land value taxation, cities develop up and in, not down and out. The top image represents how most cities develop. The bottom image represents how cities would develop over the long term with a strong land value tax. Owners to the left would pay a high tax, while those to the right would pay exponentially less tax. © Haskellot Illustrations

Land Value Tax And Sprawl

When there is no incentive for vacant lots to be developed into productive community spaces, there will obviously be fewer buildings. There will also be fewer parks since the surface area is wasted on vacant and underused sites. In a city with a Land Value Tax, not only is the vacant land filled, but buildings are consistently higher closer to the central business district. In the end, more people have the opportunity to live and work closer to the urban core. Starved of taxes on labor and other economic activity, a government must raise revenue by investing in beautiful and inspiring public spaces where people are willing to pay more for the privilege, thus bidding up the land value and in turn government revenue from the land value tax.

Figure 3. Vertical garden in Bangkok. Such use of all available building space in cities would be incentivized under Land Value Taxation. Photo: Roberto Trombetta via photopin (license)

Under this system, much of the wild areas destroyed by current sprawl (Figure 2) are reoccupied by trees and other natural features. Farms can also be closer to cities, reducing transportation costs. The Land Value Taxation city also has a great deal of green on buildings, as the need to maximize the land value incentivizes ecological architecture in the form of vertical, rooftop, and green wall farming.

How Land Value Taxation Improves Good-Density

 

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Figure 4. This image represents how 21 blocks of sprawling land use could be accommodated within 60% of one block in a central business district. A Land Value Tax incentivizes such land use. Credit: Ascher, Kate, and Rob Vroman. 2011. The heights: anatomy of a skyscraper. New York: Penguin Press.

Use It Or Lose It

Vacant lots, ground level parking, and paved or barren areas left unused are commonplace in our cities. In many cases, this is extremely valuable land in central business districts. If a Land  Value Tax is applied here, the total tax paid will be drastically higher relative to vacant land further from the city.

Imagine that you are the owner of that vacant lot. Will you continue to leave it unused if the tax bill is much higher? Without Land Value Taxation, you may have left the land vacant because you did not want to take a financial risk to build anything. You were simply waiting for the land value to rise. However, that rising value is taxed away under Land Value Taxation. Thus, you start to view owning the land as less of a passive investment and more as something that can only be beneficial when it is used well.

You must either start generating income from the land to pay the tax, or sell it to someone who will. Similarly, if you own a small building among centrally-located skyscrapers, you will be incentivized to build higher, to generate more income in order to pay the tax and keep what is left over. Use it or lose it, as the saying goes. While there would be no law that said the land must be used for a particular purpose, financial self-interest would drive landowners toward the most efficient use. They would inadvertently be doing what is in the best interest of everyone.

 

Figure 6. Under Land Value Taxation, the landowner of this McDonald’s in Manhattan would be incentivized to add residential and commercial units above it in order to pay the tax.

 

Cumulative Spatial Effect

Under Land Value Taxation, all landlords are faced with the same incentive: meet the market demand for space in the area or sell to someone who will. Cumulatively, more of the demand to use central locations is satisfied and there is less demand to use outlying areas.

The areas with the highest land values pay the highest Land Value Tax. Thus, these high-value areas also have the strongest incentive to build high, while those areas that are lower in value have increasingly less incentive to develop as the need for space was fulfilled in the city center. The incentive to build high exponentially decreases moving away from the city center.

Boost to Urban Farming

Farming can use very little land and still produce a lot of food. The video below shows a man who produced a million pounds of food in one year on only three acres. His permaculture farming techniques could be stacked in buildings closer to the urban core and/or near the city on community farms. Necessity is the mother of invention and such practices could become widespread with the proper economic incentives in place, i.e. a Land Value Tax. Such an operation requires a lot of labor but little land. Therefore, if taxes are shifted off wages and onto land, these activities become more practical and profitable.

 

More Idyllic Farming Communities Nearby

Environmentally destructive farming practices, such as widespread use of pesticides, only make financial sense when land is cheap relative to labor. The equation is reversed when taxes are moved off labor and onto land. Though cities would welcome more people, it would also make living and working in outlying areas much more affordable too. This is because the cost to buy or rent rural land would decrease and wages for rural workers would increase.

Ultimately, this would give people greater freedom with respect to where and how they lived. Today’s huge monoculture plantations would be broken up, and the resulting farms would employ more labor. An increased demand for such labor would further increase wages.

“No one would want more land than he could profitably use. Instead of scraggy, half-cultivated farms, separated by great tracts lying idle, homesteads would come close to each other. Emigrants would not toil through unused acres, nor grain be hauled for thousands of miles past half-tilled land.” – Henry George, Social Problems

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