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Minor "Legitimate LVT criticism"

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  • Harry Pollard
    Matt, The old widow story is another non-argument. (Note Churchill s wonderful reply to this criticism.) In California (and other states) if present property
    Message 1 of 1 , Feb 27, 2013
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      The “old widow” story is another non-argument. (Note Churchill’s wonderful reply to this criticism.)


      In California (and other states) if present property tax becomes too onerous for seniors, they are given an exemption. The property tax is not collected until the senior dies, or sells the property. A similar exemption can be made with the introduction of a full collection of economic rent. It’s a one-time exemption that would occur only with the introduction of full collection. From thereon, it can be forgotten.


      If that’s the most “glaring problem” we are home safe!




      From: LandCafe@yahoogroups.com [mailto:LandCafe@yahoogroups.com] On Behalf Of roy_langston
      Sent: Sunday, February 24, 2013 9:41 PM
      To: LandCafe@yahoogroups.com
      Subject: [LandCafe] Re: Legitimate LVT criticism



      --- In LandCafe@yahoogroups.com, "mattbieker" wrote:

      > It's somewhat alarming, IMO, that we haven't had a discussion related to legitimate criticisms of the LVT.

      Good point. Some of us have tried to promote discussion of problems like the removal of the major occasion for commercial banks' money creation, but too few LVT advocates seem to understand the monetary system and how intimately it is tied into landowner privilege.

      > The most glaring problem is a form of the old widow problem. Yes, we all know that it's largely a canard. But there still is genuinely some truth to it. There's tons of people who have no ambition whatsoever to profit off land rent, that nevertheless would be put in a bad position by the LVT. This is a genuine problem. Several methods are commonly employed to address it, I think phasing the tax in gradually is the most common. I'm with Roy, though, that something like his RPE is necessary.

      The problem is, the RPE doesn't really address the old widows' issue, because they've typically owned the house so long they wouldn't be eligible for the RPE anyway. There's no getting away from the fact that they're overdue to pay for what they've been taking, but how do you implement that without committing political seppuku? I've suggested a combination of UIE, RPE, paid government land use consultants to help the widows find ways to use their land productively enough to pay the LVT, and as a last resort, compassionate deferrals (which could also apply to people with disabilities, etc.). Deferrals may be more benign than many people would believe: there have been numerous property tax deferral programs, and as long as they aren't overly generous, very few people seem to want to take advantage of them.

      > Politically, you're just not going to pass a tax that will utterly destroy the value of a major asset for millions of regular citizens. There has to be some relief.

      One problem is that in the USA at least, LVT is almost certain to be a local or at best state initiative, and those levels of government lack the jurisdiction to coordinate LVT implementation with appropriate compensatory measures like monetary policy. Otherwise, it would be possible to inflate away a lot of land value without crashing the land market in nominal terms. It's too bad we weren't ready to step in with fully developed solutions when the recent crash happened, but that's the nature of the beast.

      > George didn't propose an individual exemption, and he painted a picture where, freed from our existing policy, evereyone would be so much better off, it'd hardly be worthwhile to do so. But there's several problems with that. The first thing is that, when one tries to make the moral argument in favor of the LVT, skeptics will say "well, you're saying that landowners are charging everyone for use of the land now, but all you're doing is replacing them with the state."

      The difference, of course, is that the state -- government, and the society it represents and serves -- is the source of the value landowners are charging others for.

      > We'll never make any headway until we come up with better responses than "too bad you bought that land then" and "move to cheaper land."

      IMO we have to tread very carefully, and embrace many kinds of measures that ease the harm to "innocent" landowners without resubsidizing their racket. One way I've suggested is to push land values lower BEFORE implementing LVT by prohibiting cities from rezoning privately owned land. That will knock out a big speculative premium right away, and the "blame" (for housing becoming more affordable) can't be put on LVT.

      -- Roy Langston

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