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Saturday, April 2, 2011

How would Brown/Cohen/Teyssier finance public goods?

Bruce Cohen wrote:

> I can still live here in my wheelchair, but I can't sell or borrow
against the place because of the liens and the net value keeps going
down because City Hall keeps building Schools, Parks, Libraries and
Police Stations.

No, public goods tend to make the property value go up, not down. And if
the property value goes down, the ground rent goes down, and indeed may
disappear altogether. (Remember, ground rent is just the _excess_ value
of the site compared to similarly-productive land that does not benefit
from proximity to public goods.)

But yes, you cannot reap any windfall that might come from public goods
created by the surrounding community while you hold your land. Instead,
you have to be content with the natural productivity it had when you
first acquired it, plus all the improvements and production derived from
the labor you put into it.


Again, quoting from my first message this week:

"LVT retrieves the extra land value created by public services —
streets, pipes, levees, police, parks. This creates pressure to defund
public services that do not actually add value in the free market for land.

LVT turns out to closely model how consensual private communities tend
to govern themselves. Malls, business parks, hotels, condominiums,
homeowners associations — all tend to 'tax' their tenants not according
to profits or revenues or inventory or improvements, but mostly by site
value (for which square footage is often a good proxy).

LVT imposes a built-in ceiling on government revenue. Critics of land
value taxation claim it wouldn't raise enough revenue because ground
rent is allegedly only a small fraction of GDP. That sounds like a good
thing to me. If government revenue is restricted by definition to ground
rent and fees for polluting/congesting/depleting the commons, then
government cannot be nearly as big as when it is allowed to tax labor,
production, exchanges, and all resulting products. Once you have
taxation of people's labor and exchanges and produced assets, there is
no limit to what the government can take from you. "

P.S. You call geolibertarians "commies" because they want to finance
public goods -- courts, police, border defense, streets, flood control,
fire hydrants -- out of the unearned increases in land value that those
goods create. So if you're not an anarchist, please tell us what
non-commie way you propose to pay for such public goods. Do you (like
Pam) favor some kind of tax on one's body or labor or exchanges or
produced assets?