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Re:Total land rent?

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  • roy_langston
    ... Only if it reduces the economic advantage the user of that site enjoys over a user of inferior sites. That will almost always be the case, but it is worth
    Message 1 of 23 , Nov 11, 2012
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      --- In LandCafe@yahoogroups.com, Dave Wetzel <davewetzel42@...> wrote:

      > Surely all taxation on a productive enterprise occupying a site reduces the
      > rent that an entrepreneur will be able to pay for a site?

      Only if it reduces the economic advantage the user of that site enjoys over a user of inferior sites. That will almost always be the case, but it is worth being clear on it. As an example, a gas tax may burden enterprises using distant (thus less advantageous) sites more than those using the closest (most advantageous) sites. So the rent of the more advantageous sites could rise as a result of the gas tax.

      > Hence all current taxation REDUCES land rent.

      Untrue, as demonstrated above.

      > Therefore total LVT receipts (at 100% LVT) = total current govt taxation
      > plus any increases in land rent arising from increased productivity etc
      > (not increases in land price due to land speculation).

      Huge non sequitur. There is no reason to expect LVT revenue to track current government tax revenue.

      > Or am I up the wrong tree?

      Yep. That cat won't hunt.

      -- Roy Langston
    • dspain@spains.com.au
      All taxation is at the expense of rent. In rough terms, total site revenue would be quantum of taxation + site rental (as distinct from return on improvements)
      Message 2 of 23 , Nov 12, 2012
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        All taxation is at the expense of rent. In rough terms, total site revenue would be quantum of
        taxation + site rental (as distinct from return on improvements) going to landlords + value of
        various sites (eg minerals & wavelengths) largely being pocketed by entrepreneurs.

        DS


        > Surely all taxation on a productive enterprise occupying a site reduces the
        > rent that an entrepreneur will be able to pay for a site?
        > Hence all current taxation REDUCES land rent.
        > Therefore total LVT receipts (at 100% LVT) = total current govt taxation
        > plus any increases in land rent arising from increased productivity etc
        > (not increases in land price due to land speculation).
        > Or am I up the wrong tree?
        >
        >
        > Dave Wetzel
        >
        > www.LabourLand.org <http://www.labourland.org/>
        > www.TheIU.org <http://www.theiu.org/>
        > www.course.earthrights.net
        >
      • roy_langston
        ... No, that s a misapprehension by classical economists who didn t understand tax incidence. If it were true, landowners would have no reason to object to
        Message 3 of 23 , Nov 12, 2012
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          --- In LandCafe@yahoogroups.com, dspain@... wrote:

          > All taxation is at the expense of rent.

          No, that's a misapprehension by classical economists who didn't understand tax incidence. If it were true, landowners would have no reason to object to LVT. But they do.

          > In rough terms, total site revenue would be quantum of
          > taxation + site rental (as distinct from return on improvements) going to landlords + value of
          > various sites (eg minerals & wavelengths) largely being pocketed by entrepreneurs.

          Not so. Increasing the portion of GDP taken in other taxes does not increase the portion of GDP that could be recovered by taxing land rent. There is a relationship, but it is not simple arithmetic equivalence.

          -- Roy Langston
        • John David Kromkowski
          By the Henry George Theorem: Total Aggregate Rent for a particular domain = Total Governmental (at all levels) Expeditures for the particular domain. I
          Message 4 of 23 , Nov 12, 2012
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            By the Henry George Theorem:
             
            Total Aggregate Rent for a particular domain = Total Governmental (at all levels) Expeditures for the particular domain.
             
            I personally believe it should be
             
            Total Aggregate Rent for a particular domain = Total Aggregate Governmental (at all levels) Expeditures for the particular domain PLUS aggregate charitible expenditures for the particular domain.
             
            I don't get where the whole question about where a CD might come from even makes sense.  First, I don't think a CD is necessary, nor wise, nor even a sellable proposition. (The Alaska CD is not really a rent funded CD. Royalties get paid into a trust and the trust invests in the securities market and pays out of interest.  And that is quite a different mechanism than collecting rent from home-owners and then paying it back to them - which I suppose why I'm in agreement with concept of UIE or UPE.  If you think about it George W. Bush gave out a CDs with his 2001 surplus rebate checks and his 2008 stimulus checks, those were funded by rent collection.)    
             
            But if a CD happens then it is a governmental expenditure and therefore by HGT it could be "collected rent".
             
            For the record, in 2011,  the total governmental spending in US at all levels (local, state, federal) was about 6.4 trillion.  That's what the "rent" of the US give or take was.  I rather think that Ed's estimate of US total land value of 12 trillion.  (I'm still not sure I understand how he get's the number.)  According to Fed Reserve, for Q2 2012 there was 13,216,356  in mortgage debt.  Most of which was residential.  http://www.federalreserve.gov/econresdata/releases/mortoutstand/current.htm   (There is a good amount of land value that is owned without mortgage.) Obviously some of that reflects land value and some reflects improvement value.  If your Roy, you believe that generally specially 60%+ is land.  If your me, maybe at most 30-40% is land.   This paper says 38%.  http://www.federalreserve.gov/Pubs/FEDS/2004/200437/200437pap.pdf  between 1970 and 2000 and is, in essence, predicting the coming bubble. "In the third, quarter  of 2003, we estimate land's share to be 46%, its highest recorded value."    The conclusions are pretty interesting, among them:  "For 2003:Q3, we estimate that the nominal value of the entire stock of residential land is approximately the same as nominal annual GDP."
             
            But the aggregate value of non-residential land and goverment land is substantial. (I'd say way more than the aggregate value of residential land). 
             
            According to MD 2004 data (1.9 mill parcels), there was 117,744,944,474  (117 billion) in taxable LAND value. (note that this excludes governmental land and other non-profit owned and thus non-taxable land value, and that 1/3 of the data is 3 years old and 1/3 is two years old and 1/3 is a year old.)
             
            But,  this paper suggest a figure even lower than Ed's    "At the end of 2009:Q3, this estimate of land value in the United States was roughly $4½ trillion." http://www.federalreserve.gov/pubs/feds/2010/201016/201016pap.pdf   See footnote 2.
             
             
             This paper suggest 10.8 trillion in land value for 2005.  Roy might want to note the land as perctange figures for owner occupied housing from 1975-2005, Table 6.5.http://www.wellesley.edu/Economics/case/PDFs/Land%20Value%20in%20US.pdf  
             
             
            JDK
             
             
             
             
             
             
             
             
             
             
          • roy_langston
            ... Only expenditures on desired services and infrastructure, and only to the extent that the spending is efficient: i.e., not wasted through incompetence or
            Message 5 of 23 , Nov 12, 2012
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              --- In LandCafe@yahoogroups.com, John David Kromkowski <jdkromkowski@...> wrote:

              > By the Henry George Theorem:
              >
              > Total Aggregate Rent for a particular domain = Total Governmental (at all levels) Expeditures for the particular domain.

              Only expenditures on desired services and infrastructure, and only to the extent that the spending is efficient: i.e., not wasted through incompetence or stolen through corruption. The HGT is a useful guide to policy and economic analysis, not an empirical fact.

              > I personally believe it should be
              >
              > Total Aggregate Rent for a particular domain = Total Aggregate
              > Governmental (at all levels) Expeditures for the particular domain PLUS
              > aggregate charitible expenditures for the particular domain.

              See above. While charitable spending does usually go straight through to land rent, even there you can have charities that, e.g., devote most of their revenue to fundraising and executive remuneration, neither of which does anything for land rent.

              > I don't get where the whole question about where a CD might come from even makes sense.

              There's been lots of discussion about "BIG" (Basic Income Guarantee), which is not even supposed to be funded by LVT, so the question certainly makes sense.

              > First, I don't think a CD is necessary, nor wise, nor even a
              > sellable proposition.

              I agree. But a UIE IS necessary, wise, and sellable. In fact, it is a selling POINT for LVT. I have invoked it to answer objections on many occasions.

              > But if a CD happens then it is a governmental expenditure and therefore by HGT it could be "collected rent".

              I agree that a CD would largely be recycled through to rent.

              > For the record, in 2011, the total governmental spending in US at all
              > levels (local, state, federal) was about 6.4 trillion. That's what the "rent" of the US give or take was.

              Unlikely, as explained above. Much was not spent on desired services and infrastructure, and much that WAS spent on desired services and infrastructure was wasted through incompetence or stolen through corruption.

              > I rather think that Ed's estimate of US
              > total land value of 12 trillion. (I'm still not sure I understand how he get's the number.)

              That's less than $40K per capita, a ridiculously low number. It's low even for residential land value alone.

              > According to Fed Reserve, for Q2 2012 there was
              > 13,216,356 in mortgage debt. Most of which was residential.
              > http://www.federalreserve.gov/econresdata/releases/mortoutstand/current.htm
              > (There is a good amount of land value that is owned without mortgage.)
              > Obviously some of that reflects land value and some reflects improvement
              > value. If your Roy, you believe that generally specially 60%+ is land. If
              > your me, maybe at most 30-40% is land.

              Even the Case article you cite below, which is at some pains to low-ball land value, states that it was nearly 60% in 2005.

              > This paper says 38%.
              > http://www.federalreserve.gov/Pubs/FEDS/2004/200437/200437pap.pdf between
              > 1970 and 2000 and is, in essence, predicting the coming bubble. "In the
              > third, quarter of 2003, we estimate land's share to be 46%, its highest
              > recorded value." The conclusions are pretty interesting, among them:
              > "For 2003:Q3, we estimate that the nominal value of the entire stock of
              > residential land is approximately the same as nominal annual GDP."

              That's probably still low.

              > But the aggregate value of non-residential land and goverment land is
              > substantial. (I'd say way more than the aggregate value of residential land).

              Unlikely. Most government land is almost worthless, and property tax assessment rolls generally show residential property accounting for a clear majority of all property value.

              > According to MD 2004 data (1.9 mill parcels), there was 117,744,944,474
              > (117 billion) in taxable LAND value. (note that this excludes governmental
              > land and other non-profit owned and thus non-taxable land value, and that
              > 1/3 of the data is 3 years old and 1/3 is two years old and 1/3 is a year
              > old.)

              Problematic data, as land value was rising rapidly over those three years.

              > But, this paper suggest a figure even lower than Ed's "At the end of
              > 2009:Q3, this estimate of land value in the United States was roughly $4½
              > trillion." http://www.federalreserve.gov/pubs/feds/2010/201016/201016pap.pdf See footnote 2.

              The Fed, remember, was the genius that totalled up the value of all corporate-owned land in the USA and found it was NEGATIVE.

              > This paper suggest 10.8 trillion in land value for 2005. Roy might want
              > to note the land as perctange figures for owner occupied housing from
              > 1975-2005, Table 6.5.
              > http://www.wellesley.edu/Economics/case/PDFs/Land%20Value%20in%20US.pdf

              That article is full of garbage. It uses the absurd land residual method of valuing land, and states that changes in construction costs
              cause land value to gyrate wildly. It claims that a typical depreciation rate for new one- to four-unit residences is 1.1%, an absurd rate of depreciation that would see the dwelling's value decline to less than 1% of its original value, triggering demolition.... after about 450 years.

              -- Roy Langston
            • John David Kromkowski
              RL: The Fed, remember, was the genius that totalled up the value of all corporate-owned land in the USA and found it was NEGATIVE. JDK I don t recall seeing
              Message 6 of 23 , Nov 12, 2012
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                RL: "The Fed, remember, was the genius that totalled up the value of all corporate-owned land in the USA and found it was NEGATIVE."  

                JDK I don't recall seeing that.  the one paper only said that some land could have negative value. And it simply was suggesting that theoretical models should not have constraints that the value of any particular parcel must be positive. But maybe we are referring to different papers.  give cite.

                I thought Ed estimate of land value (not land rent value) might be low. So I tried to provide a survey of literature.  All you did was say it's a low estimate and do a critique of what's out there but provided no actual data nor brought anything useful to the table.
                Land value tax skeptics (even open minded ones are going to want to see some data and analysis - so any serious land tax promoter has got to know what is out there and provided support for some alternative analysis of what the "base" for taxation is.)

                As to 6.4 trillion, the rent suggested by HGT for the US; yes HGT is a theory for the ideal, but it is a useful starting place.  That you can show (or assert) that the 6.4 trillion spent by government at all levels annually in US last year is wasteful and corrupt spending does not mean that 6.4 trillion could not be spent usefully and non-corruptly.  So it seems to me that it is still a good starting figure. And is certainly a way to test any proposed figure like Ed's or anybody else;s figure.  

                If we use Ed's figure for land value (which I agree seems low but who knows)  then all government (in aggregate would have to levy a lvt of 53% of value.  That's the kind of number that makes people do a spit take with whatever they are drinking.  We(my two wage earner family of 3) couldn't afford to pay that much of our assessed land value (which you say is too low) per year.  We just wouldn't have the income to cover it.  I'm not sure even a UIE is going to help me on that one.

                As to assertion that most of the Total VALUE of land is in residential land, I am skeptical about that on a national basis.  It isn't true in Baltimore City.

                JDK
              • k_r_johansen
                ... Basing estimates on capital values and current spending (which includes labour made more expensive by current tax policy) will do that. Rental values will
                Message 7 of 23 , Nov 12, 2012
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                  --- In LandCafe@yahoogroups.com, John David Kromkowski <jdkromkowski@...> wrote:
                  >
                  > If we use Ed's figure for land value (which I agree seems low but who knows) then all government (in aggregate would have to levy a lvt of 53% of value. That's the kind of number that makes people do a spit take with whatever they are drinking. We(my two wage earner family of 3) couldn't afford to pay that much of our assessed land value (which you say is too low) per year. We just wouldn't have the income to cover it. I'm not sure even a UIE is going to help me on that one.<

                  Basing estimates on capital values and current spending (which includes labour made more expensive by current tax policy) will do that. Rental values will by definition be what people are able and willing to pay. That may not be what the current level of govt spending is however, as I agree with Roy that it's unlikely that all taxes come out of rent.
                  But back to Ed's figures: First of all, if taxes come out of rents, subsidies must go to rents. The federal deficit, and other govt. deficits, will have to be deducted from that figure.
                  Also when estimating how much one would pay, you'll have to take into account all the taxes you are currently subject to; income taxes, sales taxes/VAT, payroll taxes (which is largely taken from wages even if technically paid by employers), corporate taxes (which also affects wages), etc. etc.

                  Kj



                  >
                  > As to assertion that most of the Total VALUE of land is in residential
                  > land, I am skeptical about that on a national basis. It isn't true in
                  > Baltimore City.
                  >
                  > JDK
                  >
                • k_r_johansen
                  ... This is a very important point IMO. Lots of govt spending does not return a land value premium. OTOH, there may be private spending that has positive
                  Message 8 of 23 , Nov 13, 2012
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                    --- In LandCafe@yahoogroups.com, "roy_langston" <roy_langston@...> wrote:
                    >
                    > Only expenditures on desired services and infrastructure, and only to the extent that the spending is efficient: i.e., not wasted through incompetence or stolen through corruption. The HGT is a useful guide to policy and economic analysis, not an empirical fact.<

                    This is a very important point IMO. Lots of govt spending does not return a land value premium. OTOH, there may be private spending that has positive externalities, and that will yield higher rents.

                    > See above. While charitable spending does usually go straight through to land rent, even there you can have charities that, e.g., devote most of their revenue to fundraising and executive remuneration, neither of which does anything for land rent.<

                    Like govt. spending, it may not go to rent, but things like executive renumeration etc., will also go to rent again, but it won't increase the aggregate rents.

                    Kj
                  • k_r_johansen
                    ... I agree that there are political issues with a cash dividend. All over the western world, both a large portion of the right and left will oppose this. From
                    Message 9 of 23 , Nov 13, 2012
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                      --- In LandCafe@yahoogroups.com, John David Kromkowski <jdkromkowski@...> wrote:
                      >
                      >First, I don't think a CD is necessary, nor wise, nor even a
                      > sellable proposition.<

                      I agree that there are political issues with a cash dividend. All over the western world, both a large portion of the right and left will oppose this. From the right you'll hear that everyone should work, and noone receive any "entitlements" (said very negatively), on the left, you'll hear that entitlements are fine, but that they must be conditional on either work, or being part of a certain group believed to be downtrodden, or not being part of the group labelled "the rich". As it happens, both groups will agree that there has to be a programme for ensuring that there's liquidity to pay for essentials in addition to the use of land for those who are in a rut. The right will either require bureacratic means-testing, and/or slightly demeaning make-work, and the left will also require means-testing (to avoid anyone "rich" getting any), and a "jobs programme", which usually is also slightly demeaning make-work.
                      So instead of giving out a CD, where individuals on the lower margins can adjust between land use and essentials, we'll have a slightly more expensive apparatus to dole out cash or vouchers in addition to a UIE. If that's what it takes to satisfy the Righteous and Envious, that's fine as long as we have a sensible tax-system.

                      Kj
                    • roy_langston
                      ... The UIE erases that objection: What, are you now calling having an equal right to liberty an entitlement ? ... Again, the UIE erases it: What, you
                      Message 10 of 23 , Nov 13, 2012
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                        --- In LandCafe@yahoogroups.com, "k_r_johansen" <kjetil.r.johansen@...> wrote:

                        > I agree that there are political issues with a cash dividend. All over the western world, both a large portion of the right and left will oppose this. From the right you'll hear that everyone should work, and noone receive any "entitlements" (said very negatively),

                        The UIE erases that objection: "What, are you now calling having an equal right to liberty an 'entitlement'?"

                        > on the left, you'll hear that entitlements are fine, but that they must be conditional on either work, or being part of a certain group believed to be downtrodden, or not being part of the group labelled "the rich".

                        Again, the UIE erases it: "What, you don't think everyone should have equal rights to life and liberty?"

                        > As it happens, both groups will agree that there has to be a programme for ensuring that there's liquidity to pay for essentials in addition to the use of land for those who are in a rut.

                        Private charities like food banks, soup kitchens, thrift stores, etc. seem to be able to handle this type of need fairly well. The US food stamps program is publicly funded (though not very well designed), and something similar could be made to work much better. The left seems especially eager to put large amounts of unrestricted purchasing power into the hands of the poor, but that would have to be classed as a case of hope triumphing over experience.

                        > The right will either require bureacratic means-testing, and/or slightly demeaning make-work, and the left will also require means-testing (to avoid anyone "rich" getting any), and a "jobs programme", which usually is also slightly demeaning make-work.

                        All of which are additional reasons to make it a matter of equal individual human rights via the UIE.

                        > So instead of giving out a CD, where individuals on the lower margins can adjust between land use and essentials,

                        They'll be the first to show you just how false that dichotomy is, and how much more you will consequently end up having to spend on them to keep them out of destitution.

                        > we'll have a slightly more expensive apparatus to dole out cash or vouchers in addition to a UIE.

                        No cash. Period. Ever. If the free, secure access to opportunity afforded by the UIE is not enough for someone make a decent life for themselves even with a social worker's help, then they are probably not mentally competent to be handling their own affairs, and should be under some kind of legal supervision or conservatorship.

                        > If that's what it takes to satisfy the Righteous and Envious, that's fine as long as we have a sensible tax-system.

                        I think you might be surprised just how much better things work once you stop giving out cash.

                        -- Roy Langston
                      • roy_langston
                        ... It happened in 1993, and the Fed, instead of getting a clue and revising their land value calculation to bring it out of Cloud-Cuckoo-Land, stopped
                        Message 11 of 23 , Nov 14, 2012
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                          --- In LandCafe@yahoogroups.com, John David Kromkowski <jdkromkowski@...> wrote:

                          > RL: "The Fed, remember, was the genius that totalled up the value of all corporate-owned land in the USA and found it was NEGATIVE."
                          >
                          > JDK I don't recall seeing that.

                          It happened in 1993, and the Fed, instead of getting a clue and revising their land value calculation to bring it out of Cloud-Cuckoo-Land, stopped publishing it (as they more recently stopped publishing M3). Prof. Michael Hudson has discussed this incident.

                          > the one paper only said that some land
                          > could have negative value. And it simply was suggesting
                          > that theoretical models should not have constraints that the value of any
                          > particular parcel must be positive. But maybe we are referring to different
                          > papers. give cite.

                          "For many years Federal Reserve Board in its Flow-of-Funds, Balance Sheet of the U.S. Economy, broke down its estimates of economy-wide real estate values between land and buildings. The problem arose when the Fed discovered that its methodology produced nonsensical results -- a negative value of $4 billion for all land owned by non-financial corporations in 1993."

                          http://www.wealthandwant.com/docs/Hudson_Lies.html

                          > I thought Ed estimate of land value (not land rent value) might be low. So I tried to provide a survey of literature.

                          All of which Prof. Hudson refutes.

                          > All you did was say it's a low
                          > estimate and do a critique of what's out there but provided no actual data nor brought anything useful to the table.

                          OTC, I have brought something much more useful to the table than your literature survey: a capacity for critical thinking.

                          > Land value tax skeptics (even open minded ones are going to want to see
                          > some data and analysis - so any serious land tax promoter has got to know
                          > what is out there and provided support for some alternative analysis of what the "base" for taxation is.)

                          See Hudson, above, Gaffney 2008, etc.

                          > As to 6.4 trillion, the rent suggested by HGT for the US; yes HGT is a
                          > theory for the ideal, but it is a useful starting place. That you can show
                          > (or assert) that the 6.4 trillion spent by government at all levels
                          > annually in US last year is wasteful and corrupt spending does not mean
                          > that 6.4 trillion could not be spent usefully and non-corruptly.

                          True. I suspect a great deal of potential government spending that is currently not feasible would become feasible -- and economically efficient -- if the land value it created could be recovered to pay for it.

                          > So it seems to me that it is still a good starting figure. And is certainly a way
                          > to test any proposed figure like Ed's or anybody else;s figure.

                          IMO it's more an indication just how much waste and corruption there is in American government.

                          > If we use Ed's figure for land value (which I agree seems low but who
                          > knows) then all government (in aggregate would have to levy a lvt of 53%
                          > of value. That's the kind of number that makes people do a spit take with
                          > whatever they are drinking. We(my two wage earner family of 3) couldn't
                          > afford to pay that much of our assessed land value (which you say is too
                          > low) per year. We just wouldn't have the income to cover it. I'm not sure even a UIE is going to help me on that one.

                          But surely the point is that however much LVT turns out to be, it is affordable by definition: SOMEONE is WILLING to pay the full market rent for the land, because that's how market rent is DEFINED. LVT CAN'T be more than that. Just imagine what someone would pay to rent your place (assuming it is not in a location that has much more productive potential uses), then deduct the relevant portion for maintenance, interest, depreciation, insurance, etc. on the improvements. That's your LVT bill.

                          > As to assertion that most of the Total VALUE of land is in residential
                          > land, I am skeptical about that on a national basis. It isn't true in Baltimore City.

                          How do you know? The same sort of official figures that showed NEGATIVE aggregate value for all the land owned by non-financial corporations in the USA?

                          -- Roy Langston
                        • JDKromkowski
                          I respect prof. Gaffney; we had dinner together once and we ve corresponded over the years. (Even where we might have nuance disagreements or different takes
                          Message 12 of 23 , Nov 14, 2012
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                            I respect prof. Gaffney; we had dinner together once and we've corresponded over the years. (Even where we might have nuance disagreements or different takes but that is temporal thing which leads to evolution of our mutual thinking and is probably useful to both of us)

                            On the other hand, I don't know Hudson but everything I've read by him and heard about makes me think that he is just a retread commie trying to Coopt land taxation. So basically I'm skeptical on most of his assertions/ propaganda. 

                            Whatever happened in 1993 is so long ago that it is hardly worth thinking about.

                            Data is important, so is critical thinking.  They are not mutually exclusive.  And literature review is important too because some point you have to preach to some one other than choir.

                            There is a simple yet complex question at hand.  What is the lv of the us? Provide your estimate and the data and the methodologies. Ed made a good start, but lets be scientific about this and come up with a better figure that will survive scrutiny.  Many legislators have said to me, great idea but there isn't enough base. We have to be able to answer that in a reasonable way.

                            Both Roy and Krj couched the market value as what someone was willing to pay. But that is not right there also must be a willing seller.  A with a home sometimes you just don't want to sell because you like your neighbors or the kid(s) are still in school. The residential market is more complex to be reduced to math because those homeowners are voters. There is an emotional component to it to which attention must be paid. (I also know how to add up all the taxes,53 % of current  assessed value land under our house is not a doable annual payment.  Even with a good uie. i live in average value home with an above average household income.) and with an uie, commercial business land would have to pay what like 75 % a year. That don't seem right or sellable.

                            As to the Baltimore figures I used the assessment data.  Don't tell me it's a bunch of crap, because despite flaws it's not that bad and it's is we're things start.  If you want to get Ted in on this go ahead.  Get him to write in person about md assessments.

                            Jdk

                            Sent from my iPad usual disclaimers

                            On Nov 14, 2012, at 3:25 AM, "roy_langston" <roy_langston@...> wrote:

                             

                            --- In LandCafe@yahoogroups.com, John David Kromkowski <jdkromkowski@...> wrote:

                            > RL: "The Fed, remember, was the genius that totalled up the value of all corporate-owned land in the USA and found it was NEGATIVE."
                            >
                            > JDK I don't recall seeing that.

                            It happened in 1993, and the Fed, instead of getting a clue and revising their land value calculation to bring it out of Cloud-Cuckoo-Land, stopped publishing it (as they more recently stopped publishing M3). Prof. Michael Hudson has discussed this incident.

                            > the one paper only said that some land
                            > could have negative value. And it simply was suggesting
                            > that theoretical models should not have constraints that the value of any
                            > particular parcel must be positive. But maybe we are referring to different
                            > papers. give cite.

                            "For many years Federal Reserve Board in its Flow-of-Funds, Balance Sheet of the U.S. Economy, broke down its estimates of economy-wide real estate values between land and buildings. The problem arose when the Fed discovered that its methodology produced nonsensical results -- a negative value of $4 billion for all land owned by non-financial corporations in 1993."

                            http://www.wealthandwant.com/docs/Hudson_Lies.html

                            > I thought Ed estimate of land value (not land rent value) might be low. So I tried to provide a survey of literature.

                            All of which Prof. Hudson refutes.

                            > All you did was say it's a low
                            > estimate and do a critique of what's out there but provided no actual data nor brought anything useful to the table.

                            OTC, I have brought something much more useful to the table than your literature survey: a capacity for critical thinking.

                            > Land value tax skeptics (even open minded ones are going to want to see
                            > some data and analysis - so any serious land tax promoter has got to know
                            > what is out there and provided support for some alternative analysis of what the "base" for taxation is.)

                            See Hudson, above, Gaffney 2008, etc.

                            > As to 6.4 trillion, the rent suggested by HGT for the US; yes HGT is a
                            > theory for the ideal, but it is a useful starting place. That you can show
                            > (or assert) that the 6.4 trillion spent by government at all levels
                            > annually in US last year is wasteful and corrupt spending does not mean
                            > that 6.4 trillion could not be spent usefully and non-corruptly.

                            True. I suspect a great deal of potential government spending that is currently not feasible would become feasible -- and economically efficient -- if the land value it created could be recovered to pay for it.

                            > So it seems to me that it is still a good starting figure. And is certainly a way
                            > to test any proposed figure like Ed's or anybody else;s figure.

                            IMO it's more an indication just how much waste and corruption there is in American government.

                            > If we use Ed's figure for land value (which I agree seems low but who
                            > knows) then all government (in aggregate would have to levy a lvt of 53%
                            > of value. That's the kind of number that makes people do a spit take with
                            > whatever they are drinking. We(my two wage earner family of 3) couldn't
                            > afford to pay that much of our assessed land value (which you say is too
                            > low) per year. We just wouldn't have the income to cover it. I'm not sure even a UIE is going to help me on that one.

                            But surely the point is that however much LVT turns out to be, it is affordable by definition: SOMEONE is WILLING to pay the full market rent for the land, because that's how market rent is DEFINED. LVT CAN'T be more than that. Just imagine what someone would pay to rent your place (assuming it is not in a location that has much more productive potential uses), then deduct the relevant portion for maintenance, interest, depreciation, insurance, etc. on the improvements. That's your LVT bill.

                            > As to assertion that most of the Total VALUE of land is in residential
                            > land, I am skeptical about that on a national basis. It isn't true in Baltimore City.

                            How do you know? The same sort of official figures that showed NEGATIVE aggregate value for all the land owned by non-financial corporations in the USA?

                            -- Roy Langston 

                          • k_r_johansen
                            ... Rental value is always whatever someone is willing to pay (in rent). There are smarter people than me that have explained why rental values are more of a
                            Message 13 of 23 , Nov 14, 2012
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                              --- In LandCafe@yahoogroups.com, JDKromkowski <jdkromkowski@...> wrote:
                              >
                              > Both Roy and Krj couched the market value as what someone was willing to pay. But that is not right there also must be a willing seller. A with a home sometimes you just don't want to sell because you like your neighbors or the kid(s) are still in school.<

                              Rental value is always whatever someone is willing to pay (in rent). There are smarter people than me that have explained why rental values are more of a sure thing in assessment, especially in the "ability to pay" department.
                              If we are basing assessment on capital values, you will still have to base assessments on whatever market evidence there is for actual sales. If someone is not willing to sell, that means they value the property more than what the property is going for at the current market, whatever their reason.
                              OTOH I do think there is enough uncertainty in assessments to warrant not taxing full assessed value (for other reasons as well).

                              >The residential market is more complex to be reduced to math because those homeowners are voters. There is an emotional component to it to which attention must be paid.<

                              Ofcourse there are matters that are beyond maths, but they are all about economics.
                              I used to work in a place that I really liked. I could probably up and move and earn more somewhere else, but I enjoyed it too much. But my landlord didn't care much when he charged me full market rent did he?

                              You are right about voters. Move assessors as far away from voters as possible. Make the assessments as cold, hard, and based on evidence and formulas as possible. That's the only way they can be fair.

                              >(I also know how to add up all the taxes,53 % of current assessed value land under our house is not a doable annual payment. Even with a good uie. i live in average value home with an above average household income.) and with an uie, commercial business land would have to pay what like 75 % a year. That don't seem right or sellable.<

                              With enough work, one can find current land rental values, and what amount can be moved from other taxes to that base. That has to be the start, and I agree, you can't base a total tax-shift on current assessments, as it would be lying. We don't know future land rental values.
                              Using the same maths, from what I know about land values in my country, would mean I'd pay a larger percentage than 53 on my property, to replace all taxes. We are currently at 43% of GDP in taxes. I don't believe we can ever get to that point with LVT only (excluding oil rents), and I don't think we should either.

                              Kj
                            • jdk_maryland_atty
                              ... JDK: My point was more esoteric. Market value is what a reasonable and willing buyer and a reasonable and willing seller would agree to. It is a kind of
                              Message 14 of 23 , Nov 14, 2012
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                                --- In LandCafe@yahoogroups.com, "k_r_johansen" <kjetil.r.johansen@...> wrote:
                                >
                                > --- In LandCafe@yahoogroups.com, JDKromkowski <jdkromkowski@> wrote:
                                > >
                                > > Both Roy and Krj couched the market value as what someone was willing to pay. But that is not right there also must be a willing seller. A with a home sometimes you just don't want to sell because you like your neighbors or the kid(s) are still in school.<
                                >
                                > Rental value is always whatever someone is willing to pay (in rent). There are smarter people than me that have explained why rental values are more of a sure thing in assessment, especially in the "ability to pay" department.

                                JDK: My point was more esoteric. Market value is what a reasonable and willing buyer and a reasonable and willing seller would agree to. It is a kind of myth which we use because there is no actual true value. So we all have to understand that there is a process of estimation going on.

                                What is the true value for an Apple stock share? Who knows? We can tell the last close. We can tell last sale (actual willing buyer and willing seller) at some particular second or microsecond in time. But neither are guarantees of the value will be 2 secs later or 2 days later. But we cannot know the true market value.

                                If there are no sales in a neighborhood, but there is one and only one guy putting in a $1 bids on the houses in the neighbor. The homes are not just worth $1. And by the same token if this same $1 nut, tomorrow puts a $1M bid on a random home, but the owner say that guy is just a nut I'm not selling to him for the sake of my neighbors who I like, that does not mean that that house is worth $1M or more than $1M. (Even though maybe he should sell if he were a robot.)

                                The point is that the home market is not as rational as the business market. There is no price finding mechanism, like there is for stocks. We can make some reasonable estimations but I don't want us to think that this is really some true "market thing" like has development for agricultural products or other commodities or equities.

                                But back to the true question:

                                What is an estimate of the total land rent (or land value) for the US and by what method and with what data?
                              • k_r_johansen
                                ... I ve seen some Austrians make that argument against LVT. That someone is only willing to buy a house for 1$ and someone is only willing to sell it for 1bn$
                                Message 15 of 23 , Nov 14, 2012
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                                  --- In LandCafe@yahoogroups.com, "jdk_maryland_atty" <jdkromkowski@...> wrote:
                                  >
                                  > JDK: My point was more esoteric. Market value is what a reasonable and willing buyer and a reasonable and willing seller would agree to. It is a kind of myth which we use because there is no actual true value. So we all have to understand that there is a process of estimation going on.<

                                  I've seen some Austrians make that argument against LVT. That someone is only willing to buy a house for 1$ and someone is only willing to sell it for 1bn$ are outliers that are usually easy to correct for, and real life shows us that there is such a thing as an estimated market value we can approach. Sure, it gets harder and harder the less market evidence there is, and this has to be priced into the assessments with conservative figures.

                                  > What is the true value for an Apple stock share? Who knows? We can tell the last close. We can tell last sale (actual willing buyer and willing seller) at some particular second or microsecond in time. But neither are guarantees of the value will be 2 secs later or 2 days later. But we cannot know the true market value.<

                                  True, there is no such thing as "true market value" in the esoteric sense, but it's predictable enough to make that a commonsense approach to it, analysts and amateurs do this every day.

                                  > The point is that the home market is not as rational as the business market. There is no price finding mechanism, like there is for stocks. We can make some reasonable estimations but I don't want us to think that this is really some true "market thing" like has development for agricultural products or other commodities or equities.<

                                  I disagree. I find that the private real estate market is quite predictable. The difference between commodities trading and the residential real estate market is one of volume and speed.
                                  You've referred to listing sites all the time, don't they give out logical signals about market values according to locations and improvements?
                                  I currently live on a development where a large group of houses are exactly the same in the exterior (coop), but different in interior quality. There are usually some sales every year, which makes this a good ceterus paribus example. When I bought it, I reviewed the previous sales in the development, figured that the house I bought diverged from the previous sales in improvements, corrected for that, and I got the house for a price slightly above the difference in cost of improvement. I just sold the house, and voila, this assessment of mine proved true again. I sold for approximately the difference in improvements as a recent sale, while the value of both houses had increased. There are usually enough actors, buyers, sellers, banks, real estate agents, to make a residental real estate market relatively predictable, even in a small town.

                                  Kj
                                • roy_langston
                                  ... Such McCarthyite character assassination is grotesque and absurd. ... Yet what _didn t_ happen a hundred times longer ago is somehow worthy to govern your
                                  Message 16 of 23 , Nov 14, 2012
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                                    --- In LandCafe@yahoogroups.com, JDKromkowski <jdkromkowski@...> wrote:

                                    > On the other hand, I don't know Hudson but everything I've read by him and heard about makes me think that he is just a retread commie trying to Coopt land taxation. So basically I'm skeptical on most of his assertions/ propaganda.

                                    Such McCarthyite character assassination is grotesque and absurd.

                                    > Whatever happened in 1993 is so long ago that it is hardly worth thinking about.

                                    Yet what _didn't_ happen a hundred times longer ago is somehow worthy to govern your moral reasoning....

                                    > There is a simple yet complex question at hand. What is the lv of the us?

                                    Capital value or rental value? The former is easily estimated by comparing recent sale prices with assessments in each assessment jurisdiction, then multiplying the total assessed land value of each jurisdiction by its calculated conversion factor. Rental value is more relevant, but much more difficult to measure. Lacking the resources to undertake such a project myself, I'll defer to profs Gaffney and Hudson.

                                    > Provide your estimate and the data and the methodologies.

                                    See Gaffney 2008.

                                    > Ed made a good start, but lets be scientific about this and come up with a better figure that will survive scrutiny.

                                    Gaffney 2008 has survived peer review.

                                    > Many legislators have said to me, great idea but there isn't enough base.

                                    ?? Land value is the base. It measures the expected future subsidy to the landowner. As long as it exists at all, land value isn't being taxed enough, let alone too much.

                                    > Both Roy and Krj couched the market value as what someone was willing to pay.

                                    No, the most it could be sold for in the market, which by definition is also an amount someone would be willing to pay.

                                    > But that is not right there also must be a willing seller.

                                    Wrong. Market value is what the person who wants the item most would have to pay to buy it from the one who wants it second most, not the amount God or some other hypothetical entity would have to pay to buy it from the one who wants it most.

                                    > A with a home sometimes you just don't want to sell because you like your neighbors or the kid(s) are still in school.

                                    If there is anyone who agrees with you, that attitude is reflected in market value.

                                    > The residential market is more complex to be reduced to math because those homeowners are voters. There is an emotional component to it to which attention must be paid.

                                    Oh, I know all about the emotional component. Whenever anyone has the temerity to suggest reducing the welfare subsidy giveaway to landowners in a public forum, there are guaranteed to be enraged cries of, "Stop going after the property owner!"

                                    > (I also know how to add up all the taxes,53 % of current assessed value land under our house is not a doable annual payment. Even with a good uie. i live in average value home with an above average household income.)

                                    Aren't you the one who claims land is only about 30% of residential property value? 53% of 30% is looking like about 1/6 of assessed value. Subtract about $2K/yr/person in UIE (assume no RPE), and compare the result with your current taxes.

                                    > and with an uie, commercial business land would have to pay what like 75 % a year. That don't seem right or sellable.

                                    That's because you are starting with a revenue requirement rather than the recoverable tax base.

                                    > As to the Baltimore figures I used the assessment data. Don't tell me it's a bunch of crap, because despite flaws it's not that bad and it's is we're things start.

                                    Have you compared the assessments with recent transaction prices? They do that in the local papers here, and they're pretty accurate, though the assessed values are almost always low.

                                    -- Roy Langston
                                  • walto
                                    ... No no, it s an example of John s style of Christian charity. ... 1993 was the era of Clintonian lies. Bronze age myths are the shizzzz! W
                                    Message 17 of 23 , Nov 14, 2012
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                                      --- In LandCafe@yahoogroups.com, "roy_langston" <roy_langston@...> wrote:
                                      >
                                      > --- In LandCafe@yahoogroups.com, JDKromkowski <jdkromkowski@> wrote:
                                      >
                                      > > On the other hand, I don't know Hudson but everything I've read by him and heard about makes me think that he is just a retread commie trying to Coopt land taxation. So basically I'm skeptical on most of his assertions/ propaganda.
                                      >
                                      > Such McCarthyite character assassination is grotesque and absurd.
                                      >

                                      No no, it's an example of John's style of Christian charity.



                                      > > Whatever happened in 1993 is so long ago that it is hardly worth thinking about.
                                      >
                                      > Yet what _didn't_ happen a hundred times longer ago is somehow worthy to govern your moral reasoning....
                                      >


                                      1993 was the era of Clintonian lies. Bronze age myths are the shizzzz!

                                      W
                                    • roy_langston
                                      ... More accurately, metaphysical. ... No, it s what the buyer who wants it most would have to pay to secure it from whoever wants it second most. ...
                                      Message 18 of 23 , Nov 15, 2012
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                                        --- In LandCafe@yahoogroups.com, "jdk_maryland_atty" <jdkromkowski@...> wrote:

                                        > JDK: My point was more esoteric.

                                        More accurately, metaphysical.

                                        > Market value is what a reasonable and willing buyer and a reasonable and willing seller would agree to.

                                        No, it's what the buyer who wants it most would have to pay to secure it from whoever wants it second most.

                                        > It is a kind of myth which we use because there is no actual true value. So we all have to understand that there is a process of estimation going on.

                                        Irrelevant. People have height and weight even though measuring them precisely, moment to moment, would find differences, and no one -- other than a nut, maybe -- would claim on that account that people have no actual true height or weight.

                                        > What is the true value for an Apple stock share? Who knows?

                                        "Value" for what purpose? The most recent transaction price is a close enough measure, just as stepping on a scale provides a close enough measure of one's weight.

                                        > We can tell the last close. We can tell last sale (actual willing buyer and willing seller) at some particular second or microsecond in time. But neither are guarantees of the value will be 2 secs later or 2 days later. But we cannot know the true market value.

                                        Can we know someone's "true" weight? Does it depend on what they had for lunch? On whether they are holding their breath?

                                        Such straining at gnats is just silly.

                                        > If there are no sales in a neighborhood, but there is one and only one guy putting in a $1 bids on the houses in the neighbor. The homes are not just worth $1. And by the same token if this same $1 nut, tomorrow puts a $1M bid on a random home, but the owner say that guy is just a nut I'm not selling to him for the sake of my neighbors who I like, that does not mean that that house is worth $1M or more than $1M. (Even though maybe he should sell if he were a robot.)

                                        True: even if the owner DID sell for the $1M, one nut's eccentric behavior is not an indication of what the house would sell for in the market.

                                        > The point is that the home market is not as rational as the business market. There is no price finding mechanism, like there is for stocks.

                                        ?? Of course there is. Real estate appraisers make their living from that price finding mechanism.

                                        > We can make some reasonable estimations but I don't want us to think that this is really some true "market thing" like has development for agricultural products or other commodities or equities.

                                        But in fact, it is. It's just not as liquid.

                                        > But back to the true question:
                                        >
                                        > What is an estimate of the total land rent (or land value) for the US and by what method and with what data?

                                        And I again refer you to Gaffney 2008.

                                        -- Roy Langston
                                      • roy_langston
                                        ... The Austrians are married to their brain-dead subjective theory of value. Some have actually told me that as the owner of the land clearly values it more
                                        Message 19 of 23 , Nov 15, 2012
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                                          --- In LandCafe@yahoogroups.com, "k_r_johansen" <kjetil.r.johansen@...> wrote:

                                          > --- In LandCafe@yahoogroups.com, "jdk_maryland_atty" <jdkromkowski@> wrote:
                                          > >
                                          > > JDK: My point was more esoteric. Market value is what a reasonable and willing buyer and a reasonable and willing seller would agree to. It is a kind of myth which we use because there is no actual true value. So we all have to understand that there is a process of estimation going on.<
                                          >
                                          > I've seen some Austrians make that argument against LVT.

                                          The Austrians are married to their brain-dead subjective theory of value. Some have actually told me that as the owner of the land clearly values it more than anyone else, it's value comes from HIM, not from nature, government spending, or the community!

                                          -- Roy Langston
                                        • k_r_johansen
                                          ... I thought I d go back to your figures again, since it s not a very mathematically sound way of looking at it. Let s turn it around, and say how much would
                                          Message 20 of 23 , Nov 15, 2012
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                                            --- In LandCafe@yahoogroups.com, John David Kromkowski <jdkromkowski@...> wrote:
                                            >
                                            > As to 6.4 trillion, the rent suggested by HGT for the US; yes HGT is a
                                            > theory for the ideal, but it is a useful starting place. That you can show
                                            > (or assert) that the 6.4 trillion spent by government at all levels
                                            > annually in US last year is wasteful and corrupt spending does not mean
                                            > that 6.4 trillion could not be spent usefully and non-corruptly. So it
                                            > seems to me that it is still a good starting figure. And is certainly a way
                                            > to test any proposed figure like Ed's or anybody else;s figure.
                                            >
                                            > If we use Ed's figure for land value (which I agree seems low but who
                                            > knows) then all government (in aggregate would have to levy a lvt of 53%
                                            > of value. That's the kind of number that makes people do a spit take with
                                            > whatever they are drinking. We(my two wage earner family of 3) couldn't
                                            > afford to pay that much of our assessed land value (which you say is too
                                            > low) per year. We just wouldn't have the income to cover it. I'm not sure
                                            > even a UIE is going to help me on that one.
                                            >
                                            > As to assertion that most of the Total VALUE of land is in residential
                                            > land, I am skeptical about that on a national basis. It isn't true in
                                            > Baltimore City.
                                            >
                                            > JDK


                                            I thought I'd go back to your figures again, since it's not a very mathematically sound way of looking at it. Let's turn it around, and say how much would the average (mean) household pay in taxes if all current taxes were put to land, ignoring the actual assessable land value, but apportioning it to each property's value relative to all other property.
                                            First of all, it's best to do like for like, plugging the deficit is a separate debate from LVT or not. According to www.usgovernmentrevenue.com, estimated total tax take in 2012 is 5 tr. USD.
                                            Divided by 115 m households, that's 43K per household. Now let's say that 20% is payable by businesses. I'm ignoring whether corporations owns residental land or not, it is still embedded in rent paid by tenants. And I don't believe the vast expanses of farmland, forests, prairie etc., are particulary valuable, but there are some resource rents. But anyway, if I'm wrong, the figures would just work in our favour. That brings the figure down to 35K per household. That's the mean, and the median would probably be slightly lower. Now let's say we spend 25% of the total tax take on UIE's on a per capita basis, which isn't that generous IMO. That would come out at 3,3K per capita with 304m people. So a 4 person family living on the average property would pay net 21,8K. And the same family living on a property valued at around 60% of the mean would be in the clear. Add/deduct your excise taxes or other acceptable revenue of choice for more spending/less LVT.

                                            Kj
                                          • John David Kromkowski
                                            JDK: turning it around is an ok way to work at it, too. But getting a good dataset is complicated. It is even more complicated because at the federal level
                                            Message 21 of 23 , Nov 16, 2012
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                                              JDK:  turning it around is an ok way to work at it, too.  But getting a good dataset is complicated.   It is even more complicated because at the federal level you have to apportion the tax.  EG I live in MD, so marylanders pay like 1.9% of the total.

                                              Don't have time, right not to work it.

                                              I think the US is 2.3 billion acres of land.  Does an average price of 2500 per acre sound right?  

                                              But 375 million acres are in Alaska and not useable for much of anything.




                                              KJ:  I thought I'd go back to your figures again, since it's not a very mathematically sound way of looking at it. Let's turn it around, and say how much would the average (mean) household pay in taxes if all current taxes were put to land, ignoring the actual assessable land value, but apportioning it to each property's value relative to all other property.
                                              First of all, it's best to do like for like, plugging the deficit is a separate debate from LVT or not. According to www.usgovernmentrevenue.com, estimated total tax take in 2012 is 5 tr. USD.
                                              Divided by 115 m households, that's 43K per household. Now let's say that 20% is payable by businesses. I'm ignoring whether corporations owns residental land or not, it is still embedded in rent paid by tenants. And I don't believe the vast expanses of farmland, forests, prairie etc., are particulary valuable, but there are some resource rents. But anyway, if I'm wrong, the figures would just work in our favour. That brings the figure down to 35K per household. That's the mean, and the median would probably be slightly lower. Now let's say we spend 25% of the total tax take on UIE's on a per capita basis, which isn't that generous IMO. That would come out at 3,3K per capita with 304m people. So a 4 person family living on the average property would pay net 21,8K. And the same family living on a property valued at around 60% of the mean would be in the clear. Add/deduct your excise taxes or other acceptable revenue of choice for more spending/less LVT.

                                              --
                                              Very truly yours

                                              John D. Kromkowski
                                              6803 York Road -- Suite 207
                                              Baltimore, MD 21212

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