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RE: [LandCafe] LVT tax money or tax land?

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  • Paul Metz
    ... Labor is the means to feed ourselves. Land rent is a pure surplus; if it goes to the title holder, and it feeds him, this just relieves him of engaging in
    Message 1 of 20 , Sep 12, 2004
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      --- Tony Gosling <tony@...> wrote:
      > For me LVT is a non-starter as it involves taxing the only means we have
      > to feed ourselves

      Labor is the means to feed ourselves.
      Land rent is a pure surplus; if it goes to the title holder, and it feeds
      him, this just relieves him of engaging in labor.
      If rent be not taxed, then labor is, and that truly taxes the means to feed
      ourselves.

      Fred Foldvary

      Paul Metz - www.integerconsult.org - adds:

      This takes us back to the production factors and how they can/should be
      taxed.
      Rent/land and labour are just two, the other factors can also be taxed.

      And back to the principles of taxation: it should as little as possible
      punish
      desired behaviour (of individuals, companies and public organisations) and
      as
      much as possible reward (societally) desired behaviour, i.e. stimulate more
      efficient use of the scarcest factors.

      Land rent tax can be extended to broader ecological taxation and in
      countries
      where labour is not a scarce factor its taxation has probably gone too high.


      The factor financial capital goes most untaxed of all factors. Is that
      optimal ?


      Please think twice before posting to the group as a whole
      (It might be that your note is best sent to one person?)
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    • Fred Foldvary
      ... The other factor is capital goods, but these are in turn produced from land, labour, and capital goods, so land and labour are the ultimate factors. When
      Message 2 of 20 , Sep 12, 2004
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        > Paul Metz - www.integerconsult.org - adds:
        > Rent/land and labour are just two, the other factors can also be taxed.

        The other factor is capital goods, but these are in turn produced from
        land, labour, and capital goods, so land and labour are the ultimate
        factors. When capital goods are taxed, ultimately it falls on land and
        labour.

        > The factor financial capital goes most untaxed of all factors. Is that
        > optimal ?

        Financial assets, such as money and bonds, are not factors of production,
        but they either are means to purchase them or loans that are paid from the
        factors. In the U.S., interest is indeed taxed, and at ordinary tax rates,
        hence at the highest marginal tax rates. Even worse, the tax is on the
        nominal interest, which includes the inflation component, so interest gets
        overtaxed. Inflation itself is also a tax on financial capital.

        Fred Foldvary
      • e15lineman
        Fred, I have a question regarding your formula for calculating the portion of land rent collected. It seems to me that there would be a linear relationship
        Message 3 of 20 , Sep 12, 2004
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          Fred, I have a question regarding your formula for calculating the
          portion of land rent collected. It seems to me that there would be a
          linear relationship between fraction of rent collected and the tax
          rate on land value? If this is not so, is it because of decreased
          land prices at higher rates of collection? All else being equal,
          could we expect 80% collection of land rent to collect twice as much
          revenue as a 40% rate?

          Is it possible to calculate the highest rate of taxation that would
          not depreciate landvalues, if given a rate of appreciation?

          Is it possible to calculate the depreciating affect on LVT?

          Wouldn't it be easier to assess rental values directly, once
          conventional land-value property taxes reach a certain point?

          I ask, because while I recognize that it may be done, I have an
          ethical aversion to taking value that was purchased in good faith,
          even if we consider the rightness of taxing land rent. Am I correct
          in thinking that the maximum non-depreciating LVT rate would increase
          over time to approach 100% collection?


          Fred Folvary wrote:

          This would also enable a finite rate based on the price of land:
          f = t/(i+t) where f is the fraction of rent taxed, i the real
          interest rate, and t the tax rate based on the price of land. If
          i=.05 and t=.45, then f=.45/.50=.9 A tax rate of 45% of land value
          with interest at 5% takes 90% of the land rent. If we set f at 1,
          then t has to be infinite.
        • Wetzel Dave
          Sean writes: I have an ethical aversion to taking value that was purchased in good faith, So if steal your bike Sean, and then sell it to Fred, you ll pay
          Message 4 of 20 , Sep 14, 2004
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            Sean writes:
            " I have an ethical aversion to taking value that was purchased in good
            faith, "

            So if steal your bike Sean, and then sell it to Fred, you'll pay him for
            its return to you - the rightful owner.

            Somebody has stolen our planet - why should we pay for its return to the
            community?

            Land Value Tax will share the rent of land between landowners and the
            community.
            Introduced gradually, (maybe 10% of annual rental value and rising over
            years) it will gradually make a major impact on the economy - benefiting
            everybody, including recent purchasers.


            Dave
            Dave Wetzel


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          • Paul Metz
            Sean writes: I have an ethical aversion to taking value that was purchased in good faith, Dave Wetzel replies: So if steal your bike Sean, and then sell
            Message 5 of 20 , Sep 14, 2004
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              Sean writes:
              " I have an ethical aversion to taking value that was purchased in good
              faith, "

              Dave Wetzel replies:

              So if steal your bike Sean, and then sell it to Fred, you'll pay him for
              its return to you - the rightful owner.

              Somebody has stolen our planet - why should we pay for its return to the
              community?

              Land Value Tax will share the rent of land between landowners and the
              community.
              Introduced gradually, (maybe 10% of annual rental value and rising over
              years) it will gradually make a major impact on the economy - benefiting
              everybody, including recent purchasers.


              Paul Metz adds:

              We should be aware here that the planet has not completely been 'stolen',
              and that it has to a large extent 'been given away' or sold by competent
              governments. It does not matter if land was given away by a king to a
              citizen or sold by a government 'in good faith' or not.
              The interesting aspect for our discussion is that LVT is NOT RELATED
              with the question of property rights.

              Anything can be taxed: it ban be a free good, public or private property.
              Land can fall in each category and be subjected to taxation in all cases.




              Please think twice before posting to the group as a whole
              (It might be that your note is best sent to one person?)
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            • Dan Sullivan
              ... That is not a valid analogy, for the person who stole the bike violated law and custom, and the person purchasing the bike did not purchase a socially
              Message 6 of 20 , Sep 15, 2004
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                On 14 Sep 2004 at 16:00, Paul Metz wrote:

                > Sean writes:
                > " I have an ethical aversion to taking value that was purchased in
                > good faith, "
                >
                > Dave Wetzel replies:
                >
                > So if steal your bike Sean, and then sell it to Fred, you'll pay him
                > for its return to you - the rightful owner.

                That is not a valid analogy, for the person who stole the bike violated law
                and custom, and the person purchasing the bike did not purchase a socially
                sanctioned title.

                Although land titles originated in either conquest or usurpation, they have
                been so incorporated into social custom that society is generally complicit in
                having sanctioned the transfer of land for fee-simple payment. George gets
                around this by making the return to a rent-sharing system quite gradual, but
                he righteously overstates the case against the landowners, especially in
                P&P, his most righteous book.

                He makes an analogy to the abolition of chattel slavery in the United States,
                noting that slave owners were not compensated. Yet slavery was abolished
                in many countries, and most of those countries did compensate slave
                owners. The United States is unique in that it abolished slavery in the
                aftermath of a horrendously violent upheaval, in which the people of the
                vanquished states were not only stripped of their slaves, but saw their crops
                and some of their cities destroyed and their money declared illegal, and
                were made to contribute to the war debts of their conquerors, from whom
                they had purchased the slaves in the first place. (The primary centers for the
                sale of imported slaves had been Boston, New York and Philadelphia.)

                > Paul Metz adds:
                >
                > We should be aware here that the planet has not completely been
                > 'stolen', and that it has to a large extent 'been given away' or sold
                > by competent governments. It does not matter if land was given away by
                > a king to a citizen or sold by a government 'in good faith' or not.
                > The interesting aspect for our discussion is that LVT is NOT RELATED
                > with the question of property rights.
                >
                > Anything can be taxed: it ban be a free good, public or private
                > property. Land can fall in each category and be subjected to taxation
                > in all cases.

                I think there is valid ground between the righteous argument and the amoral
                argument. That is, I think the relationship between tax policy and property
                rights is a legitimate one, and that it argues for an expeditions move toward
                land value taxation.

                My concern with Henry George's righteous overstatement of the moral case
                against compensation is that it closes the door to more pragmatic questions.
                Suppose some landlords were willing to sell their land into a system that
                would collect 100% of the rent, but would shield tenants of that land from
                productivity taxation?

                Such a system would attract the most dynamic people, and land rent within
                that system would be dramatically increased. Henry George likened it to
                "removing a huge weight from a powerful spring." However, if it is done in
                one particular locality, it would be more like removing the weight from a
                pressure-cooker.

                Consider Hong Kong, which gets more of its revenue from charges against
                land than any other country in the world. The residual rent returns to title
                holders are much higher there than in other countries, because productivity
                itself is much higher.

                Whether government or a consortium of investors were to purchase
                underused land and create communities based on displacing productivity
                taxes with rent charges, those communities would prosper, and so would
                title holders to those communities. The landholders who would suffer would
                be those whose communities *failed* to make the change, for migration into
                rent-funded communities is necessarily migration out of tax-funded
                communities.

                Who, then, ultimately compensates the landowners who have sold out to an
                LVT system? The landowners who haven't. I see no injustice in that.
              • Paul Metz
                Reply from Paul Metz below: ... The other factor is capital goods, but these are in turn produced from land, labour, and capital goods, so land and labour are
                Message 7 of 20 , Sep 19, 2004
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                  Reply from Paul Metz below:
                  _____________________________________________

                  > Paul Metz - www.integerconsult.org - adds:
                  > Rent/land and labour are just two, the other factors can also be taxed.

                  The other factor is capital goods, but these are in turn produced from
                  land, labour, and capital goods, so land and labour are the ultimate
                  factors. When capital goods are taxed, ultimately it falls on land and
                  labour.

                  Fred Foldvary

                  I prefer the textbook, which names the 3 production factors:
                  nature, humans and financial capital. Clearly, humans are a product of
                  nature and financial capital a product of nature and humans, but it is
                  simply very practical to use the 3P. (Intellectual property, like books
                  and patents, and capital goods are intermediates and indeed produced
                  from the 3 as well. ) Many economists and the UN have adopted Planet,
                  People and Profits as "the 3P".

                  Other misunderstanding is that taxes 'fall on land and labour'. Taxes can
                  be designed to fall on anything, and thus indirectly fall on those humans
                  who use them. When land is taxed, its owner is considered the user and
                  taxed. He can or cannot charge another user of his land for this cost.

                  Ultimately all taxes fall on human endusers, and along the chain of
                  production and consumption all taxes change prices and influence choices
                  of producers and consumers.
                  Therefore we should tax our sins, not our virtues.

                  Paul Metz
                • Mason Gaffney
                  Fred is totally right about the overtaxation of interest, and the effects of inflation - w.r.t. the income tax. Of all kinds of property income, the income
                  Message 8 of 20 , Sep 20, 2004
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                    Fred is totally right about the overtaxation of interest, and the effects of
                    inflation - w.r.t. the income tax. Of all kinds of property income, the
                    income tax is hardest on interest, and easiest on land rents and unearned
                    increments.

                    OTOH, the property tax exempts interest. This may be one reason why the
                    public has been attracted to substitute income taxes for property taxes over
                    the last 80 years or so. So there may be a big political advantage in
                    including mortgages in the land tax base. Much of the tax would be shifted
                    to landowner-borrowers in the form of higher interest rates. Some marginal
                    borrowing would be aborted, but there are many reasons (not discussed here)
                    why that would be a good thing.

                    Fred is also right that financial assets are not factors of production, but
                    that point can be overstated. Land titles are not factors of production
                    either, but just pieces of paper, like bonds and notes. It's what the paper
                    does that is important. What a mortgage (or "deed of trust" in many
                    jurisdictions) does is to make the lender the legal landowner until the note
                    is paid off.

                    Mason Gaffney

                    ----- Original Message -----
                    From: "Tish Gaffney" <tish@...>
                    To: "Mase" <m.gaffney@...>
                    Sent: Sunday, September 19, 2004 11:07 AM
                    Subject: Fw: *****SPAM***** RE: [LandCafe] LVT tax money or tax land?


                    >
                    > ----- Original Message -----
                    > From: "Fred Foldvary" <ffoldvary@...>
                    > To: <landcafe@yahoogroups.com>
                    > Sent: Sunday, September 12, 2004 9:30 AM
                    > Subject: *****SPAM***** RE: [LandCafe] LVT tax money or tax land?
                    >
                    >
                    > > > Paul Metz - www.integerconsult.org - adds:
                    > > > Rent/land and labour are just two, the other factors can also be
                    taxed.
                    > >
                    > > The other factor is capital goods, but these are in turn produced from
                    > > land, labour, and capital goods, so land and labour are the ultimate
                    > > factors. When capital goods are taxed, ultimately it falls on land and
                    > > labour.
                    > >
                    > > > The factor financial capital goes most untaxed of all factors. Is that
                    > > > optimal ?
                    > >
                    > > Financial assets, such as money and bonds, are not factors of
                    production,
                    > > but they either are means to purchase them or loans that are paid from
                    the
                    > > factors. In the U.S., interest is indeed taxed, and at ordinary tax
                    > rates,
                    > > hence at the highest marginal tax rates. Even worse, the tax is on the
                    > > nominal interest, which includes the inflation component, so interest
                    gets
                    > > overtaxed. Inflation itself is also a tax on financial capital.
                    > >
                    > > Fred Foldvary
                    > >
                    > >
                    > >
                    > >
                    > >
                    > > Please think twice before posting to the group as a whole
                    > > (It might be that your note is best sent to one person?)
                    > > To post message to group: LandCafe@yahoogroups.com
                    > > To unsubscribe: LandCafe-unsubscribe@yahoogroups.com
                    > > Consult Value Capture Initiative at: http://ecoplan.org
                    > > Yahoo! Groups Links
                    > >
                    > >
                    > >
                    > >
                    > >
                    >
                    >
                  • Harry Pollard
                    John, A land-value tax is not so much a tax as a charge. The location gives you (say) $100 a week advantage - you pay $100. The $100 a week that attaches to a
                    Message 9 of 20 , Sep 26, 2004
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                      John,

                      A land-value tax is not so much a tax as a charge. The
                      location gives you (say) $100 a week advantage - you pay
                      $100. The $100 a week that attaches to a location measures
                      community access to it.

                      Vic Blundell used to manage a chain of shoe stores before he
                      became HGS Director in London. To determine whether the Rent
                      asked for a new store location was worthwhile, they would
                      send a couple of people down to count how many people passed
                      by each hour. They knew from experience, that a certain
                      percentage would stop, look, and perhaps buy shoes.

                      They were measuring Rent.

                      Now, if the Rent was recaptured by the community, it would
                      make no difference to the user. Some locations would be
                      worth $100 a week and he would pay $100, other locations
                      would be worth perhaps $1,000 a week, and he would pay
                      $1,000.

                      From the user's point of view it makes no difference whether
                      the Rent is paid to the landholder, or to the community.
                      (Actually, he would pay less to the community, for the
                      landholder would certainly be demanding rack-rent - which is
                      another discussion).

                      As the landholder would get nothing from the land, it is
                      likely he would simply sell, or transfer (for a price) the
                      land to the user - or use it himself.

                      This extra "price" above Rent comes from the efficiencies of
                      the user. If a particular site offers him a special
                      advantage he will pay for it. I would expect a brisk market
                      in land even with a 100% Rent recapture.

                      This is why I don't agree with using the market to determine
                      Rent. A market price includes the abilities of the user of
                      the land - not the business of the community. Rent is a
                      creation of the community. They have a right to recapture
                      it. What the user earns is no-one's business.

                      In fact, the appraisal of Rent requires no knowledge about
                      what is built on the site.

                      I would say that land nationalization is not a good idea.
                      Mainly because it isn't necessary. I don't want the
                      Government to be in charge of our basic resource,
                      particularly as collecting Rent does everything that's
                      needed.

                      Harry

                      ****************************************
                      The Henry George School of Social Science
                      of Los Angeles
                      Box 655 Tujunga CA 91042
                      Tel: 818 352-4141 *** Fax: 818 353-2242
                      ****************************************



                      _____

                      From: John Havercroft [mailto:john.havercroft@...]

                      Sent: Thursday, September 09, 2004 4:13 AM
                      To: Wetzel Dave; 'Land Café ( lc1) '
                      Cc: 'Joseph Casey'
                      Subject: RE: [LandCafe] [diggers350] LVT - universally
                      applied nonsen se


                      Well I agree with all this. My difficulty is that if LVT is
                      set at 100% of
                      current rental value and is updated every year there ceases
                      to be any market
                      for land at all as ownership confers no financial benefit
                      and ownership will
                      incur considerable risks as even a short void will give rise
                      to loss.

                      Having removed any market for land there ceases to be any
                      competitive
                      pricing mechanism as there will be a monopoly supplier – the
                      valuation
                      office who will determine the rent.

                      How would this be different in effect from land
                      nationalisation; or is this where you came in Dave?

                      John
                      such as bonds, money,
                      and derivatives. In a perfect market, land speculation
                      would be not be
                      practiced, because all rent would be paid as LVT. Because
                      land markets are
                      not perfect there will always be speculative winners and
                      losers, let them
                      pay LVT, otherwise speculative gains go untaxed as long as
                      they are held,
                      thus encouraging longer holdings.

                      Joe Casey




                      [Non-text portions of this message have been removed]
                    • Terence Bendixson
                      Harry Thank you for a clear exposition on the distinction between what the community and the individual contributes to the value of land. But as you must know,
                      Message 10 of 20 , Sep 27, 2004
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                        Harry

                        Thank you for a clear exposition on the distinction between what the
                        community and the individual contributes to the value of land.

                        But as you must know, what the Atlee Labour government nationalised in the
                        1940s was the use of land. They enabled government to determine whether or
                        not, for instance, a house could be converted into a shop or vice versa.
                        Would LVT make such control obsolete? What if, under LVT, I wanted to build
                        a fifty story block of flats next to a row of Georgian houses in Chelsea?
                        Could I just get on with it?

                        Regards

                        Terence Bendixson, Secretary
                        Independent Transport Commission
                        University of Southampton
                        c/o 39 Elm Park Gardens, London SW10 9QF
                        Tel 020 7352 3885

                        ----- Original Message -----
                        From: "Harry Pollard" <henrygeorgeschool@...>
                        To: "'Land Café ( lc1) '" <LandCafe@yahoogroups.com>
                        Sent: Monday, September 27, 2004 4:17 AM
                        Subject: RE: [LandCafe] [diggers350] LVT - universally applied nonsen se


                        John,

                        A land-value tax is not so much a tax as a charge. The
                        location gives you (say) $100 a week advantage - you pay
                        $100. The $100 a week that attaches to a location measures
                        community access to it.

                        Vic Blundell used to manage a chain of shoe stores before he
                        became HGS Director in London. To determine whether the Rent
                        asked for a new store location was worthwhile, they would
                        send a couple of people down to count how many people passed
                        by each hour. They knew from experience, that a certain
                        percentage would stop, look, and perhaps buy shoes.

                        They were measuring Rent.

                        Now, if the Rent was recaptured by the community, it would
                        make no difference to the user. Some locations would be
                        worth $100 a week and he would pay $100, other locations
                        would be worth perhaps $1,000 a week, and he would pay
                        $1,000.

                        From the user's point of view it makes no difference whether
                        the Rent is paid to the landholder, or to the community.
                        (Actually, he would pay less to the community, for the
                        landholder would certainly be demanding rack-rent - which is
                        another discussion).

                        As the landholder would get nothing from the land, it is
                        likely he would simply sell, or transfer (for a price) the
                        land to the user - or use it himself.

                        This extra "price" above Rent comes from the efficiencies of
                        the user. If a particular site offers him a special
                        advantage he will pay for it. I would expect a brisk market
                        in land even with a 100% Rent recapture.

                        This is why I don't agree with using the market to determine
                        Rent. A market price includes the abilities of the user of
                        the land - not the business of the community. Rent is a
                        creation of the community. They have a right to recapture
                        it. What the user earns is no-one's business.

                        In fact, the appraisal of Rent requires no knowledge about
                        what is built on the site.

                        I would say that land nationalization is not a good idea.
                        Mainly because it isn't necessary. I don't want the
                        Government to be in charge of our basic resource,
                        particularly as collecting Rent does everything that's
                        needed.

                        Harry

                        ****************************************
                        The Henry George School of Social Science
                        of Los Angeles
                        Box 655 Tujunga CA 91042
                        Tel: 818 352-4141 *** Fax: 818 353-2242
                        ****************************************



                        _____

                        From: John Havercroft [mailto:john.havercroft@...]

                        Sent: Thursday, September 09, 2004 4:13 AM
                        To: Wetzel Dave; 'Land Café ( lc1) '
                        Cc: 'Joseph Casey'
                        Subject: RE: [LandCafe] [diggers350] LVT - universally
                        applied nonsen se


                        Well I agree with all this. My difficulty is that if LVT is
                        set at 100% of
                        current rental value and is updated every year there ceases
                        to be any market
                        for land at all as ownership confers no financial benefit
                        and ownership will
                        incur considerable risks as even a short void will give rise
                        to loss.

                        Having removed any market for land there ceases to be any
                        competitive
                        pricing mechanism as there will be a monopoly supplier - the
                        valuation
                        office who will determine the rent.

                        How would this be different in effect from land
                        nationalisation; or is this where you came in Dave?

                        John
                        such as bonds, money,
                        and derivatives. In a perfect market, land speculation
                        would be not be
                        practiced, because all rent would be paid as LVT. Because
                        land markets are
                        not perfect there will always be speculative winners and
                        losers, let them
                        pay LVT, otherwise speculative gains go untaxed as long as
                        they are held,
                        thus encouraging longer holdings.

                        Joe Casey




                        [Non-text portions of this message have been removed]





                        Please think twice before posting to the group as a whole
                        (It might be that your note is best sent to one person?)
                        To post message to group: LandCafe@yahoogroups.com
                        To unsubscribe: LandCafe-unsubscribe@yahoogroups.com
                        Consult Value Capture Initiative at: http://ecoplan.org
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                      • John H Pipex
                        Harry, My problem remains one of arriving at the correct figure for the “Community Charge” by whatever name or definition. Too high and the land remains
                        Message 11 of 20 , Sep 27, 2004
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                          Harry,

                          My problem remains one of arriving at the correct figure for the “Community
                          Charge” by whatever name or definition. Too high and the land remains
                          unused – too low and the community loses out on its revenue. I know of no
                          mechanism that is likely to get this right other than a competitive market
                          in which the user able to extract the most value from the site is able to
                          bid a price he can afford to pay. I accept that in a busy high street there
                          is, from time to time a distorted market in which shoe shops or others are
                          willing to pay a premium for the right to pay a “market rental” as agreed by
                          rent review with a landlord. These cases are relatively rare and cases of
                          negative premiums replace them when the market turns down when substantial
                          premiums or rent subsidies are paid by companies to hand back or re-let
                          unwanted properties on which they have a forward commitment.

                          I am of course looking at this from a UK standpoint where most industrial
                          and commercial primary (investment grade) property is institutionally held
                          and property leases are long (typically 21year) with upward only rental
                          reviews which are adjusted at 3 or 5 year intervals to “market value”.
                          Perhaps in more free markets……………..

                          Sometimes I wonder if we are all talking about different things.

                          What I see a proposed LVT as trying to capture is a sensible proportion of
                          the annual rental value of land in recognition of the fact that almost all
                          of the value exists because the community has provided the amenities,
                          services and infrastructure which gives it any value over and above the
                          value of a plot on which subsistence farming could take place. The
                          community decides which particular plots have the greatest value (Compare
                          the value of your shoe shop with the adjacent public park which makes
                          shopping there so pleasant) and should reap the consequent rewards. I see
                          considerable merits in the owner retaining some privileges and a share in
                          the plot rental. I want him to care about his land and to have a stake in
                          its future and the future of the community that made it valuable. Does
                          anyone agree and if so how do we get it adopted as law without revolutionary
                          disruption to existing systems?

                          John



                          -----Original Message-----
                          From: Harry Pollard [mailto:henrygeorgeschool@...]
                          Sent: 27 September 2004 04:18
                          To: 'Land Café ( lc1) '
                          Subject: RE: [LandCafe] [diggers350] LVT - universally applied nonsen se

                          John,

                          A land-value tax is not so much a tax as a charge. The
                          location gives you (say) $100 a week advantage - you pay
                          $100. The $100 a week that attaches to a location measures
                          community access to it.

                          Vic Blundell used to manage a chain of shoe stores before he
                          became HGS Director in London. To determine whether the Rent
                          asked for a new store location was worthwhile, they would
                          send a couple of people down to count how many people passed
                          by each hour. They knew from experience, that a certain
                          percentage would stop, look, and perhaps buy shoes.

                          They were measuring Rent.

                          Now, if the Rent was recaptured by the community, it would
                          make no difference to the user. Some locations would be
                          worth $100 a week and he would pay $100, other locations
                          would be worth perhaps $1,000 a week, and he would pay
                          $1,000.

                          From the user's point of view it makes no difference whether
                          the Rent is paid to the landholder, or to the community.
                          (Actually, he would pay less to the community, for the
                          landholder would certainly be demanding rack-rent - which is
                          another discussion).

                          As the landholder would get nothing from the land, it is
                          likely he would simply sell, or transfer (for a price) the
                          land to the user - or use it himself.

                          This extra "price" above Rent comes from the efficiencies of
                          the user. If a particular site offers him a special
                          advantage he will pay for it. I would expect a brisk market
                          in land even with a 100% Rent recapture.

                          This is why I don't agree with using the market to determine
                          Rent. A market price includes the abilities of the user of
                          the land - not the business of the community. Rent is a
                          creation of the community. They have a right to recapture
                          it. What the user earns is no-one's business.

                          In fact, the appraisal of Rent requires no knowledge about
                          what is built on the site.

                          I would say that land nationalization is not a good idea.
                          Mainly because it isn't necessary. I don't want the
                          Government to be in charge of our basic resource,
                          particularly as collecting Rent does everything that's
                          needed.

                          Harry

                          ****************************************
                          The Henry George School of Social Science
                          of Los Angeles
                          Box 655 Tujunga CA 91042
                          Tel: 818 352-4141 *** Fax: 818 353-2242
                          ****************************************



                          _____

                          From: John Havercroft [mailto:john.havercroft@...]

                          Sent: Thursday, September 09, 2004 4:13 AM
                          To: Wetzel Dave; 'Land Café ( lc1) '
                          Cc: 'Joseph Casey'
                          Subject: RE: [LandCafe] [diggers350] LVT - universally
                          applied nonsen se


                          Well I agree with all this. My difficulty is that if LVT is
                          set at 100% of
                          current rental value and is updated every year there ceases
                          to be any market
                          for land at all as ownership confers no financial benefit
                          and ownership will
                          incur considerable risks as even a short void will give rise
                          to loss.

                          Having removed any market for land there ceases to be any
                          competitive
                          pricing mechanism as there will be a monopoly supplier – the
                          valuation
                          office who will determine the rent.

                          How would this be different in effect from land
                          nationalisation; or is this where you came in Dave?

                          John
                          such as bonds, money,
                          and derivatives. In a perfect market, land speculation
                          would be not be
                          practiced, because all rent would be paid as LVT. Because
                          land markets are
                          not perfect there will always be speculative winners and
                          losers, let them
                          pay LVT, otherwise speculative gains go untaxed as long as
                          they are held,
                          thus encouraging longer holdings.

                          Joe Casey




                          [Non-text portions of this message have been removed]




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                          [Non-text portions of this message have been removed]
                        • Harry Pollard
                          John, A number of good questions. I ll answer in blue below. But, first a couple of definitions. My description of Economic Rent is: Rent is the community
                          Message 12 of 20 , Sep 27, 2004
                          • 0 Attachment
                            John,

                            A number of good questions. I'll answer in blue below.

                            But, first a couple of definitions. My description of
                            Economic Rent is:

                            "Rent is the community created value that attaches to a
                            location."

                            However, when all land is taken up, the normal market price
                            mechanism doesn't work for it requires that when demand
                            raises the price of goods, more goods are produced and rush
                            to market - reducing the price.

                            When demand for land raises prices, more land cannot be
                            produced, nor can it rush to market. So, without the
                            discipline of the price mechanism, land prices rise until
                            they reach a natural limit.

                            The only source from which this extra payment can come is
                            from wages. The natural limit is reached when Labor can pay
                            no more - his remaining wages are enough to allow him a bare
                            living.

                            Ricardo introduced this concept and it became the Iron Laws
                            of Rent and Wages.

                            The "natural limit" I referred to above is called rack-rent
                            - and has been collected throughout history by monopolistic
                            landholders.

                            It is not Rent for it is partly the wages of labor.

                            Harry
                            ****************************************
                            The Henry George School of Social Science
                            of Los Angeles
                            Box 655 Tujunga CA 91042
                            Tel: 818 352-4141 *** Fax: 818 353-2242
                            ****************************************



                            _____

                            From: John H Pipex [mailto:john.havercroft@...]
                            Sent: Monday, September 27, 2004 5:16 AM
                            To: henrygeorgeschool@...; 'Land Café ( lc1) '
                            Subject: RE: [LandCafe] [diggers350] LVT - universally
                            applied nonsen se


                            Harry,

                            My problem remains one of arriving at the correct figure for
                            the “Community Charge” by whatever name or definition. Too
                            high and the land remains unused – too low and the community
                            loses out on its revenue. I know of no mechanism that is
                            likely to get this right other than a competitive market in
                            which the user able to extract the most value from the site
                            is able to bid a price he can afford to pay.

                            Rent is determined by the surrounding community. The user
                            doesn't alter the Rent. The problem with using the market is
                            that it not only collects Rent but also Wages. Georgists
                            don't believe wages should be taxed.

                            I accept that in a busy high street there is, from time to
                            time a distorted market in which shoe shops or others are
                            willing to pay a premium for the right to pay a “market
                            rental” as agreed by rent review with a landlord. These
                            cases are relatively rare and cases of negative premiums
                            replace them when the market turns down when substantial
                            premiums or rent subsidies are paid by companies to hand
                            back or re-let unwanted properties on which they have a
                            forward commitment.

                            Now we've moved further along, we can say that Vic
                            Blundell's people were not really measuring Rent but
                            rack-rent. Certainly good economic conditions will allow a
                            higher rack-rent to be collected.

                            Of course, they often go to far in their demands, hence
                            empty shops and even in American central cities large empty
                            office buildings.

                            I am of course looking at this from a UK standpoint where
                            most industrial and commercial primary (investment grade)
                            property is institutionally held and property leases are
                            long (typically 21year) with upward only rental reviews
                            which are adjusted at 3 or 5 year intervals to “market
                            value”. Perhaps in more free markets……………..

                            Sometimes I wonder if we are all talking about different
                            things.

                            What I see a proposed LVT as trying to capture is a sensible
                            proportion of the annual rental value of land in recognition
                            of the fact that almost all of the value exists because the
                            community has provided the amenities, services and
                            infrastructure which gives it any value over and above the
                            value of a plot on which subsistence farming could take
                            place. The community decides which particular plots have
                            the greatest value (Compare the value of your shoe shop with
                            the adjacent public park which makes shopping there so
                            pleasant) and should reap the consequent rewards. I see
                            considerable merits in the owner retaining some privileges
                            and a share in the plot rental. I want him to care about
                            his land and to have a stake in its future and the future of
                            the community that made it valuable. Does anyone agree and
                            if so how do we get it adopted as law without revolutionary
                            disruption to existing systems?

                            If 100% of the Rent is created by the community, then 100%
                            of the Rent must justly be collected by the community.

                            I'm not sure how Brits assess property. About 100 years ago
                            when I lived in London, I seem to recall they based their
                            property assessments on the rental income of property. In
                            the US they assess the values of land and buildings -
                            usually separately. On the other hand, I'm not sure how your
                            Council Tax is calculated.

                            The bottom line is that land is easy to value. Assessor Ted
                            Gwartney tells us that there is one land appraiser to every
                            9 improvement appraisers. If the old Danish system is used,
                            all assessments are easily comparable and are published for
                            everyone to see - and argue with. True democracy!

                            John



                            -----Original Message-----
                            From: Harry Pollard [mailto:henrygeorgeschool@...]
                            Sent: 27 September 2004 04:18
                            To: 'Land Café ( lc1) '
                            Subject: RE: [LandCafe] [diggers350] LVT - universally
                            applied nonsen se

                            John,

                            A land-value tax is not so much a tax as a charge. The
                            location gives you (say) $100 a week advantage - you pay
                            $100. The $100 a week that attaches to a location measures
                            community access to it.

                            Vic Blundell used to manage a chain of shoe stores before he
                            became HGS Director in London. To determine whether the Rent
                            asked for a new store location was worthwhile, they would
                            send a couple of people down to count how many people passed
                            by each hour. They knew from experience, that a certain
                            percentage would stop, look, and perhaps buy shoes.

                            They were measuring Rent.

                            Now, if the Rent was recaptured by the community, it would
                            make no difference to the user. Some locations would be
                            worth $100 a week and he would pay $100, other locations
                            would be worth perhaps $1,000 a week, and he would pay
                            $1,000.

                            From the user's point of view it makes no difference whether
                            the Rent is paid to the landholder, or to the community.
                            (Actually, he would pay less to the community, for the
                            landholder would certainly be demanding rack-rent - which is
                            another discussion).

                            As the landholder would get nothing from the land, it is
                            likely he would simply sell, or transfer (for a price) the
                            land to the user - or use it himself.

                            This extra "price" above Rent comes from the efficiencies of
                            the user. If a particular site offers him a special
                            advantage he will pay for it. I would expect a brisk market
                            in land even with a 100% Rent recapture.

                            This is why I don't agree with using the market to determine
                            Rent. A market price includes the abilities of the user of
                            the land - not the business of the community. Rent is a
                            creation of the community. They have a right to recapture
                            it. What the user earns is no-one's business.

                            In fact, the appraisal of Rent requires no knowledge about
                            what is built on the site.

                            I would say that land nationalization is not a good idea.
                            Mainly because it isn't necessary. I don't want the
                            Government to be in charge of our basic resource,
                            particularly as collecting Rent does everything that's
                            needed.

                            Harry




                            [Non-text portions of this message have been removed]
                          • John H Pipex
                            Harry, It all seems a bit cut and dried this – sounds like an economics text book. I think I accept that for a city property there is a value (though without
                            Message 13 of 20 , Sep 28, 2004
                            • 0 Attachment
                              Harry,

                              It all seems a bit cut and dried this – sounds like an economics text book.
                              I think I accept that for a city property there is a value (though without
                              any market I don’t see how you ever arrive at it) and that there is good
                              theoretical reason to claim 100% of the rent for the community. I am much
                              less sure about farm land on which the encouragement of good husbandry is
                              vital to the community; and we all know what a success collective farming
                              was. As an observer of behaviour I believe that, in general, owners who
                              have a financial stake in the value of their property take better care of
                              it. Speaking for the community I, and I think a majority, would be happy to
                              share ownership and rent with someone who cares for our farm land.

                              I am also troubled by these simple definitions of rent, land, wages and
                              capital in a modern society. They don’t seem to me to take account of
                              pensions (deferred earnings), brands, vested interests, labour cartels, (of
                              stevedores or lawyers) goodwill or internet sites to name but a few of the
                              complicating factors which also command rents in different ways. Should we
                              the community perhaps be charging Amazon a substantial rent for the
                              ephemeral property from which they trade, which was community created?

                              You didn’t, and so far others haven’t, responded to how to achieve this LVT
                              charge without unacceptable revolutionary change out here in the real world
                              of England in 2004. My interest is a practical one of achieving a fairer
                              tax system not a search for the academic perfection of long dead
                              theoreticians of the dismal science.

                              John
                              -----Original Message-----
                              From: Harry Pollard [mailto:henrygeorgeschool@...]
                              Sent: 28 September 2004 07:41
                              To: john.havercroft@...; 'Land Café ( lc1) '
                              Subject: RE: [LandCafe] [diggers350] LVT - universally applied nonsen se

                              John,

                              A number of good questions. I'll answer in blue below.

                              But, first a couple of definitions. My description of Economic Rent is:

                              "Rent is the community created value that attaches to a location."

                              However, when all land is taken up, the normal market price mechanism
                              doesn't work for it requires that when demand raises the price of goods,
                              more goods are produced and rush to market - reducing the price.

                              When demand for land raises prices, more land cannot be produced, nor can it
                              rush to market. So, without the discipline of the price mechanism, land
                              prices rise until they reach a natural limit.

                              The only source from which this extra payment can come is from wages. The
                              natural limit is reached when Labor can pay no more - his remaining wages
                              are enough to allow him a bare living.

                              Ricardo introduced this concept and it became the Iron Laws of Rent and
                              Wages.

                              The "natural limit" I referred to above is called rack-rent - and has been
                              collected throughout history by monopolistic landholders.

                              It is not Rent for it is partly the wages of labor.

                              Harry
                              ****************************************
                              The Henry George School of Social Science
                              of Los Angeles
                              Box 655 Tujunga CA 91042
                              Tel: 818 352-4141 *** Fax: 818 353-2242
                              ****************************************


                              _____

                              From: John H Pipex [mailto:john.havercroft@...]
                              Sent: Monday, September 27, 2004 5:16 AM
                              To: henrygeorgeschool@...; 'Land Café ( lc1) '
                              Subject: RE: [LandCafe] [diggers350] LVT - universally applied nonsen se
                              Harry,

                              My problem remains one of arriving at the correct figure for the “Community
                              Charge” by whatever name or definition. Too high and the land remains
                              unused – too low and the community loses out on its revenue. I know of no
                              mechanism that is likely to get this right other than a competitive market
                              in which the user able to extract the most value from the site is able to
                              bid a price he can afford to pay.

                              Rent is determined by the surrounding community. The user doesn't alter the
                              Rent. The problem with using the market is that it not only collects Rent
                              but also Wages. Georgists don't believe wages should be taxed.

                              I accept that in a busy high street there is, from time to time a distorted
                              market in which shoe shops or others are willing to pay a premium for the
                              right to pay a “market rental” as agreed by rent review with a landlord.
                              These cases are relatively rare and cases of negative premiums replace them
                              when the market turns down when substantial premiums or rent subsidies are
                              paid by companies to hand back or re-let unwanted properties on which they
                              have a forward commitment.

                              Now we've moved further along, we can say that Vic Blundell's people were
                              not really measuring Rent but rack-rent. Certainly good economic conditions
                              will allow a higher rack-rent to be collected.

                              Of course, they often go to far in their demands, hence empty shops and even
                              in American central cities large empty office buildings.

                              I am of course looking at this from a UK standpoint where most industrial
                              and commercial primary (investment grade) property is institutionally held
                              and property leases are long (typically 21year) with upward only rental
                              reviews which are adjusted at 3 or 5 year intervals to “market value”.
                              Perhaps in more free markets……………..

                              Sometimes I wonder if we are all talking about different things.

                              What I see a proposed LVT as trying to capture is a sensible proportion of
                              the annual rental value of land in recognition of the fact that almost all
                              of the value exists because the community has provided the amenities,
                              services and infrastructure which gives it any value over and above the
                              value of a plot on which subsistence farming could take place. The
                              community decides which particular plots have the greatest value (Compare
                              the value of your shoe shop with the adjacent public park which makes
                              shopping there so pleasant) and should reap the consequent rewards. I see
                              considerable merits in the owner retaining some privileges and a share in
                              the plot rental. I want him to care about his land and to have a stake in
                              its future and the future of the community that made it valuable. Does
                              anyone agree and if so how do we get it adopted as law without revolutionary
                              disruption to existing systems?

                              If 100% of the Rent is created by the community, then 100% of the Rent must
                              justly be collected by the community.

                              I'm not sure how Brits assess property. About 100 years ago when I lived in
                              London, I seem to recall they based their property assessments on the rental
                              income of property. In the US they assess the values of land and buildings -
                              usually separately. On the other hand, I'm not sure how your Council Tax is
                              calculated.

                              The bottom line is that land is easy to value. Assessor Ted Gwartney tells
                              us that there is one land appraiser to every 9 improvement appraisers. If
                              the old Danish system is used, all assessments are easily comparable and are
                              published for everyone to see - and argue with. True democracy!

                              John



                              -----Original Message-----
                              From: Harry Pollard [mailto:henrygeorgeschool@...]
                              Sent: 27 September 2004 04:18
                              To: 'Land Café ( lc1) '
                              Subject: RE: [LandCafe] [diggers350] LVT - universally applied nonsen se

                              John,

                              A land-value tax is not so much a tax as a charge. The
                              location gives you (say) $100 a week advantage - you pay
                              $100. The $100 a week that attaches to a location measures
                              community access to it.

                              Vic Blundell used to manage a chain of shoe stores before he
                              became HGS Director in London. To determine whether the Rent
                              asked for a new store location was worthwhile, they would
                              send a couple of people down to count how many people passed
                              by each hour. They knew from experience, that a certain
                              percentage would stop, look, and perhaps buy shoes.

                              They were measuring Rent.

                              Now, if the Rent was recaptured by the community, it would
                              make no difference to the user. Some locations would be
                              worth $100 a week and he would pay $100, other locations
                              would be worth perhaps $1,000 a week, and he would pay
                              $1,000.

                              From the user's point of view it makes no difference whether
                              the Rent is paid to the landholder, or to the community.
                              (Actually, he would pay less to the community, for the
                              landholder would certainly be demanding rack-rent - which is
                              another discussion).

                              As the landholder would get nothing from the land, it is
                              likely he would simply sell, or transfer (for a price) the
                              land to the user - or use it himself.

                              This extra "price" above Rent comes from the efficiencies of
                              the user. If a particular site offers him a special
                              advantage he will pay for it. I would expect a brisk market
                              in land even with a 100% Rent recapture.

                              This is why I don't agree with using the market to determine
                              Rent. A market price includes the abilities of the user of
                              the land - not the business of the community. Rent is a
                              creation of the community. They have a right to recapture
                              it. What the user earns is no-one's business.

                              In fact, the appraisal of Rent requires no knowledge about
                              what is built on the site.

                              I would say that land nationalization is not a good idea.
                              Mainly because it isn't necessary. I don't want the
                              Government to be in charge of our basic resource,
                              particularly as collecting Rent does everything that's
                              needed.

                              Harry




                              [Non-text portions of this message have been removed]
                            • Harry Pollard
                              Thanks, Terry, I wrote of the Town and Country Planning Act to Paul. The item about it that has remained in my mind was that you could tear out all the floors,
                              Message 14 of 20 , Sep 28, 2004
                              • 0 Attachment
                                Thanks, Terry,

                                I wrote of the Town and Country Planning Act to Paul. The
                                item about it that has remained in my mind was that you
                                could tear out all the floors, knock down the walls inside a
                                building without infringement. However, if you wanted to
                                change the nameplate by your bell on the front door,
                                permission was required.

                                It was surely not that bad - but that's what I remember,
                                probably because it's funny.

                                Without land-value taxation, towns and cities grow
                                higgledy-piggledy. A tall building is next to a two story
                                walk-up, which is next to some black-top used for cars,
                                which is next to a house, which is . . . . but you have
                                seen the picture.

                                Planners try to solve this problem (the latest US planning
                                buzz-word is "infilling"). This means filling in the unused
                                and underused holes in the city landscape that sprawls
                                people towards the boondocks.

                                It will fail - the money isn't available to buy the land. In
                                any case, when deep-pockets hovers around - prices rise out
                                of sight.

                                Strangely enough, the land market is a collectible market.
                                When demand causes prices to rise in a market controlled by
                                the price mechanism, more goods are produced and rushed to
                                market.

                                When demand causes land prices to rise, no more can be
                                produced and rushed to market, so prices continue to rise.
                                When landholders see land prices rising, they are likely to
                                keep it off the market - which further pushes prices up.
                                From the engineering point of view this is positive
                                feedback. (The free market is a case of negative feedback.)

                                Hence the odd skylines of so many cities - a mixture of
                                collectors refusing to put their locations to better use,
                                and developers who must take second best - and cheaper -
                                sites in a less appropriate area.

                                If a hefty land-value tax is applied, collectors will be
                                holding on to an expensive site rather than a piece of
                                speculative land. They are likely to use it properly - or
                                turn it over to someone who will. The landscape will change,
                                as builders fill vacant lots and replace blighted
                                properties.

                                In such a situation, there will be plenty of opportunities
                                for building away from the Georgians. There is a "Principle
                                of Conformity" in assessment, where like uses group together
                                and raise Rent. I think you'll probably build your 50
                                stories near other 50 storied buildings. I call it
                                "clustering".

                                It's why TV shops, and suchlike, tend to cluster together.
                                Business is better.

                                The neighborhood around the 50 story buildings would develop
                                to service people who live in 50 story flats. Your rentals
                                will be easier to collect from your tenants if you build
                                there.

                                Currently, with market choices restricted, you build where
                                you can - even if you tower over a row of Georgian houses.

                                So, I think such problems are less likely to occur with LVT.


                                I am in favor of general zoning, which means that planning
                                experts generally suggest the best places for industry, or
                                residential - based on the topography of an area.

                                I am horrified when local zoning reaches down to the front
                                door and forbids you to paint your doorstep red.

                                Let's hear it for red, green, blue and puce doorsteps.

                                Harry

                                ****************************************
                                The Henry George School of Social Science
                                of Los Angeles
                                Box 655 Tujunga CA 91042
                                Tel: 818 352-4141 *** Fax: 818 353-2242
                                ****************************************

                                -----Original Message-----
                                From: Terence Bendixson [mailto:t.bendixson@...]
                                Sent: Monday, September 27, 2004 4:23 AM
                                To: henrygeorgeschool@...; 'Land Caf� ( lc1) '
                                Subject: Re: [LandCafe] [diggers350] LVT - universally
                                applied nonsen se

                                Harry

                                Thank you for a clear exposition on the distinction between
                                what the community and the individual contributes to the
                                value of land.

                                But as you must know, what the Atlee Labour government
                                nationalised in the 1940s was the use of land. They enabled
                                government to determine whether or not, for instance, a
                                house could be converted into a shop or vice versa.
                                Would LVT make such control obsolete? What if, under LVT, I
                                wanted to build a fifty story block of flats next to a row
                                of Georgian houses in Chelsea?
                                Could I just get on with it?

                                Regards

                                Terence Bendixson, Secretary
                                Independent Transport Commission
                                University of Southampton
                                c/o 39 Elm Park Gardens, London SW10 9QF Tel 020 7352
                                3885attaches to a location measures community access to it.

                                Vic Blundell used to manage a chain of shoe stores before he
                                became HGS Director in London. To determine whether the Rent
                                asked for a new store location was worthwhile, they would
                                send a couple of people down to count how many people passed
                                by each hour. They knew from experience, that a certain
                                percentage would stop, look, and perhaps buy shoes.

                                They were measuring Rent.

                                Now, if the Rent was recaptured by the community, it would
                                make no difference to the user. Some locations would be
                                worth $100 a week and he would pay $100, other locations
                                would be worth perhaps $1,000 a week, and he would pay
                                $1,000.

                                From the user's point of view it makes no difference whether
                                the Rent is paid to the landholder, or to the community.
                                (Actually, he would pay less to the community, for the
                                landholder would certainly be demanding rack-rent - which is
                                another discussion).

                                As the landholder would get nothing from the land, it is
                                likely he would simply sell, or transfer (for a price) the
                                land to the user - or use it himself.

                                This extra "price" above Rent comes from the efficiencies of
                                the user. If a particular site offers him a special
                                advantage he will pay for it. I would expect a brisk market
                                in land even with a 100% Rent recapture.

                                This is why I don't agree with using the market to determine
                                Rent. A market price includes the abilities of the user of
                                the land - not the business of the community. Rent is a
                                creation of the community. They have a right to recapture
                                it. What the user earns is no-one's business.

                                In fact, the appraisal of Rent requires no knowledge about
                                what is built on the site.

                                I would say that land nationalization is not a good idea.
                                Mainly because it isn't necessary. I don't want the
                                Government to be in charge of our basic resource,
                                particularly as collecting Rent does everything that's
                                needed.

                                Harry

                                ****************************************
                                The Henry George School of Social Science of Los Angeles Box
                                655 Tujunga CA 91042
                                Tel: 818 352-4141 *** Fax: 818 353-2242
                                ****************************************



                                _____

                                From: John Havercroft [mailto:john.havercroft@...]

                                Sent: Thursday, September 09, 2004 4:13 AM
                                To: Wetzel Dave; 'Land Caf� ( lc1) '
                                Cc: 'Joseph Casey'
                                Subject: RE: [LandCafe] [diggers350] LVT - universally
                                applied nonsen se


                                Well I agree with all this. My difficulty is that if LVT is
                                set at 100% of current rental value and is updated every
                                year there ceases to be any market for land at all as
                                ownership confers no financial benefit and ownership will
                                incur considerable risks as even a short void will give rise
                                to loss.

                                Having removed any market for land there ceases to be any
                                competitive pricing mechanism as there will be a monopoly
                                supplier - the valuation office who will determine the rent.

                                How would this be different in effect from land
                                nationalisation; or is this where you came in Dave?

                                John
                                such as bonds, money,
                                and derivatives. In a perfect market, land speculation
                                would be not be practiced, because all rent would be paid as
                                LVT. Because land markets are not perfect there will always
                                be speculative winners and losers, let them pay LVT,
                                otherwise speculative gains go untaxed as long as they are
                                held, thus encouraging longer holdings.

                                Joe Casey




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                              • Harry Pollard
                                John, Sorry to inflict an economics textbook on you but I can t think of any other way to let you know how I think. I must also apologize for a double
                                Message 15 of 20 , Sep 29, 2004
                                • 0 Attachment
                                  John,

                                  Sorry to inflict an 'economics textbook' on you but I can't
                                  think of any other way to let you know how I think. I must
                                  also apologize for a double infliction - writing in blue
                                  when blue didn't show. I must thank Scott for telling me
                                  about that. Yet, your note is in red on my machine.

                                  It's a puzzlement.

                                  Anyway, you know that Rent is a community created value that
                                  attaches to your location. If you have a good location, your
                                  final production will be greater than the fellow down the
                                  road on a poor location - even though you both use the same
                                  exertion, have the same capital, are equally able and
                                  industrious.

                                  The difference in your final result is Rent - the
                                  contribution of the community. That's why I like Georgism.
                                  Public revenue doesn't really come from a tax. The holder of
                                  a location just pays back what he gets. It's a user charge.
                                  (Obviously, politically one talks of a tax - something
                                  people know about.)

                                  Does ownership of locations change with Georgism. Not at all
                                  - the title deed remains, ownership remains - with the
                                  normal caveats that we have now. (There are four in the US:
                                  escheat, taxation, police power, and eminent domain - it is
                                  probably the same in Britain).

                                  So, to answer your final question first - although the
                                  concept is revolutionary in its change for the better, the
                                  application means that revenue is collected from a
                                  difference source.

                                  However, the people who have control of that different
                                  source are among the most powerful in the country. They will
                                  fight to keep taxation on the back of the workers - and they
                                  have always fought hard.

                                  The last major battle was won by the land-value taxers but
                                  the veto power of the House of Lords had to be destroyed
                                  first. It was.

                                  For most people they would get an immediate drop in their
                                  local taxes - a measurable drop. Those who would pay more
                                  are owners of vacant lots, slum properties, and those who
                                  use a lot of land unnecessarily. Smallholders and farmers
                                  would be better off. Large landholders who do a bit of a
                                  farming would be pressured to use their land more
                                  efficiently - or they would suffer.

                                  Britain would be completely changed, yet it could be a
                                  peaceful change, as taxation is shifted away from production
                                  on to land.

                                  Now to your specific comments. You said:

                                  " I am much less sure about farm land on which the
                                  encouragement of good husbandry is vital to the community;
                                  and we all know what a success collective farming was. As
                                  an observer of behaviour I believe that, in general, owners
                                  who have a financial stake in the value of their property
                                  take better care of it."

                                  Based on the philosophy of Sun Yat Sun, The Chinese generals
                                  ordered a land-value tax land reform. They distributed land
                                  to the peasants. Each farmer received 5 hectares (12.5 acres
                                  for US readers). They paid the land-value tax, but paid no
                                  taxes on their production. The land-value tax was based on
                                  "the expected yield of the main crop".

                                  Thus, a second or third crop meant no additional tax.
                                  Further, if you got a higher yield than "expected" no
                                  additional taxes were imposed.

                                  Taiwanese farmers produced as many as five crops from their
                                  5 hectares.

                                  A mushroom crop erupted from their basements, but my
                                  favorite extra crop was fish. They imported fish from
                                  Indonesia and bred them in the water filled paddy fields
                                  while waiting for the rice harvest.

                                  For any Malthusians on the list, it should be noted that at
                                  one point they were producing a net export of food with a
                                  population density greater than 1,300 to the square mile.

                                  As the Economist noted, the 'Miracle of Taiwan' was "based
                                  on a successful land reform". (That's now past. A Taiwanese
                                  farmer is likely to make his money in a factory while
                                  operating a farm part-time - a result, perhaps, of
                                  comparative advantage.)

                                  We agree, ownership is the path to best usage.

                                  Now to your trouble with simple definitions.

                                  There are three stages in definition. First comes a concept,
                                  a notion that seems to stand on its own. It may be fairly
                                  amorphous, so first it must be 'defined'. That means putting
                                  a fence around it so that everything to do with the concept
                                  is inside the fence - but not outside. Everything not part
                                  of the concept is outside the fence - but not inside.

                                  Defining is the difficult part of definition.

                                  Then comes the label you mean to put on the defined concept.
                                  Although some labels are better than others, you could use
                                  any name. The name is the least important part of the
                                  exercise, yet that gets the most attention.

                                  As C.E.M. Joad used to say "It all depends on what you mean
                                  by . . . . "

                                  Properly defined and named concepts are vital to reasoning.
                                  Perhaps a major reason for failed discussions is that all
                                  participants use the same words, but those words mean
                                  different things to each one.

                                  Don't knock simplicity. It's the best way to understanding.
                                  The way you get to straightforwardness and
                                  antidisestablishmentarianism is by using 26 simple letters.
                                  First learn and understand the letters and the dictionary is
                                  open to you. You ahrdly dismiss the letters as too simple to
                                  bother with.

                                  So, your examples, pensions (deferred earnings), brands,
                                  vested interests, labour cartels, (of stevedores or lawyers)
                                  goodwill or internet sites can be looked at:

                                  - pensions, I suppose, are your "wages" that are saved by
                                  you, by an employer, or by the government.

                                  - brands I'm not sure about. Do you mean the signature on a
                                  can or package that tells you what is inside?

                                  - vested interests, as I understand your meaning, are
                                  covered by the defined concept "privilege" that I have dealt
                                  with elsewhere. (I'm sure you don't mean tailors who make
                                  robes for churchmen.)

                                  - I assume by labour cartels, (of stevedores or lawyers),
                                  you mean coercive groups who by privilege get a better slice
                                  of the action. The free market would take care of that.
                                  However, the market can't be properly free until the land
                                  problem is dealt with. Modern unions are not to be compared
                                  with the early unions, where members fought desperately and
                                  sometimes died trying to get a better livelihood.

                                  - goodwill is wages.

                                  - internet sites seem to be free land without Rent. I am
                                  prepared to be convinced otherwise.

                                  Land valuation while not a sure thing, is pretty easy. It's
                                  done all the time. In a land-value taxation community, it is
                                  even easier if the Danish land value map system is used.

                                  I'll do something on Danish valuation methods if you like.
                                  Also on the "Peanut Sales" valuation carried out in Weston,
                                  Canada, by the local citizens. That one I particularly like.

                                  Harry

                                  ****************************************
                                  The Henry George School of Social Science
                                  of Los Angeles
                                  Box 655 Tujunga CA 91042
                                  Tel: 818 352-4141 *** Fax: 818 353-2242
                                  ****************************************

                                  _____

                                  From: John H Pipex [mailto:john.havercroft@...]
                                  Sent: Tuesday, September 28, 2004 10:53 AM
                                  To: henrygeorgeschool@...;
                                  john.havercroft@...; 'Land Café ( lc1) '
                                  Subject: RE: [LandCafe] [diggers350] LVT - universally
                                  applied nonsen se


                                  Harry,

                                  It all seems a bit cut and dried this – sounds like an
                                  economics text book. I think I accept that for a city
                                  property there is a value (though without any market I don’t
                                  see how you ever arrive at it) and that there is good
                                  theoretical reason to claim 100% of the rent for the
                                  community. I am much less sure about farm land on which the
                                  encouragement of good husbandry is vital to the community;
                                  and we all know what a success collective farming was. As
                                  an observer of behaviour I believe that, in general, owners
                                  who have a financial stake in the value of their property
                                  take better care of it. Speaking for the community I, and I
                                  think a majority, would be happy to share ownership and rent
                                  with someone who cares for our farm land.

                                  I am also troubled by these simple definitions of rent,
                                  land, wages and capital in a modern society. They don’t
                                  seem to me to take account of pensions (deferred earnings),
                                  brands, vested interests, labour cartels, (of stevedores or
                                  lawyers) goodwill or internet sites to name but a few of the
                                  complicating factors which also command rents in different
                                  ways. Should we the community perhaps be charging Amazon a
                                  substantial rent for the ephemeral property from which they
                                  trade, which was community created?

                                  You didn’t, and so far others haven’t, responded to how to
                                  achieve this LVT charge without unacceptable revolutionary
                                  change out here in the real world of England in 2004. My
                                  interest is a practical one of achieving a fairer tax system
                                  not a search for the academic perfection of long dead
                                  theoreticians of the dismal science.

                                  John




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