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Re: [LandCafe] Income Tax vs. LVT

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  • Jock Coats
    ... This did get me thinking a little. I m not sure the same figures hold true for the UK, but even here the top quintile of the income distribution do pay
    Message 1 of 29 , Apr 22, 2007
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      On 17 Apr 2007, at 16:09, steven cord wrote:

      >
      > Dear Fellow Georgists,
      >
      > The top 1% of earners pay 37% of the income tax bill, even though
      > they only earn about 16% of the income of all individuals in the
      > country. The top 40% pay 99.1% of the income tax (Wall Street
      > Journal editorial page, 4/16/07).
      >
      > A land value tax is very ability-to-pay, but surely it cannot
      > duplicate these figures. It is much less based on ability-to-pay
      > than the current U.S. federal income tax. Neverthess, I want a
      > land value tax, not an income tax.
      >
      > What say
      > you?...................................................Steven Cord

      This did get me thinking a little. I'm not sure the same figures
      hold true for the UK, but even here the top quintile of the income
      distribution do pay more in *direct* taxes.

      So, are we wanting to replace the wrong tax at first - direct taxes
      do seem somewhat redistributive.

      Indirects are a complete nightmare, however. Here, the bottom
      quintile pays up to a third of their household income in indirect
      taxes where the top quintile pays only 15%.

      However, income is not a great measure of wealth, as we are often
      told. And whilst ability to pay tends to talk about incomes, out of
      which you have to pay your taxes of course, LVT is about the
      proportion of the value of natural wealth people have accumulated.
      There is not a fixed pool of income or economic activity from which
      everyone must feed, but there is of "real wealth".

      I've often wondered, and been asked, "yes but what if Bill Gates
      decided to live in Blackbird Leys (our most ddeprived council estate
      in Oxford) and pay next to no tax - would that be fair?" I'd say
      that was his decision. But in doing so, I cannot imagine someone
      with his wealth not wanting to spend to improve his area. LVT is not
      just a mechanism for raising money for the government to spend, but a
      change in the way that is raised so that people are encouraged to use
      their earned wealth generating more economic activity that benefits
      the new workers, the kids with better schools, the better transport
      links and so on by a more natural process than the sort of rent-
      seeking that currently obtains.

      Jock

      --
      Jock Coats - Secretary, Lib Dems ALTER
      (Action for Land-value Taxation and Economic Reform)
      c/o Warden's Flat 1e, J Block Morrell Hall, OXFORD, OX3 0FF
      m: +44 (0)7769 695767 e: jock.coats@...
      www: http://www.libdemsalter.org.uk - http://jockcoats.blogspot.com/
    • Edward Dodson
      Jock Coats wrote: ... income is not a great measure of wealth, as we are often told. And whilst ability to pay tends to talk about incomes, out of which you
      Message 2 of 29 , May 4 8:17 AM
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        Jock Coats wrote:

        ... income is not a great measure of wealth, as we are often
        told. And whilst ability to pay tends to talk about incomes, out of
        which you have to pay your taxes of course, LVT is about the
        proportion of the value of natural wealth people have accumulated.
        There is not a fixed pool of income or economic activity from which
        everyone must feed, but there is of "real wealth".

        Ed Dodson here:
        Despite over a century of activism, of writing, of working with elected
        representatives and even gaining political office, only a small percentage
        of the total rent fund is being collected for public goods and services.
        Others who call for change in how government raises its revenue are calling
        for others "solutions" (e.g., a national sales tax, a flat tax).

        We need to offer other reformers a comprehensive set of changes to support
        that will bring us incrementally to a dramatic reduction in taxes on earned
        income flows as well as on material goods and assets. The approach I favor
        is that existing income tax systems be replaced by one that combines
        simplicity while lifting the tax burden from labor: a graduated, flat tax.

        The structure would be simple: exempt all individual incomes up to the
        national median income (which, in effect, exempts the income of more than
        half of population from taxation). Above this level of income, increasing
        rates of taxation are applied to increasing ranges of income, with the rates
        and ranges adjusted as required to balance government budgets.

        I have put this idea out for discussion before but with little comment
        returned pro or con. It seems to me that not only simplicity is achieved but
        so are progressivity and ability to pay. Would some "earned" income be
        taxed? Yes, but far less than is the case today. And, IF an increasing
        percentage of the rent fund is collected over time by direct methods, the
        highest marginal individual incomes should begin to come down (i.e., to
        disappear as privatized rent is publicly collected).
      • Roy Langston
        ... While this approach would certainly make the income tax fairer and less economically damaging; the problem is that to raise revenue comparable to current
        Message 3 of 29 , May 5 8:26 AM
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          Ed Dodson wrote:
           
          >The structure would be simple: exempt all individual incomes up to the
          >national median income (which, in effect, exempts the income of more than
          >half of population from taxation). Above this level of income, increasing
          >rates of taxation are applied to increasing ranges of income, with the rates
          >and ranges adjusted as required to balance government budgets.
          While this approach would certainly make the income tax fairer and less economically damaging; the problem is that to raise revenue comparable to current income tax revenue, the rate must quickly increase to the point where people will either find ways to hide their income, make it untaxable, or forego it altogether, such as by choosing not to crystallize capital gains.

          >It seems to me that not only simplicity is achieved but
          >so are progressivity and ability to pay. Would some "earned" income
          be
          >taxed? Yes, but far less than is the case today. And, IF an increasing
          >percentage of the rent fund is collected over time by direct methods, the
          >highest marginal individual incomes should begin to come down (i.e., to
          >disappear as privatized rent is publicly collected).
           
          The larger problem with such reforms is that they are just Band-Aid solutions, and distract public attention from the real issue: shifting the tax burden off production and onto unproductive collection of economic rent.
           
          Income is ever and always the Wrong Thing to Tax.
           
          -- Roy Langston


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        • Edward Dodson
          Roy Langston wrote (5 May): ... rates and ranges adjusted as required to balance government budgets. Roy: While this approach would certainly make the income
          Message 4 of 29 , May 19 8:28 AM
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            Roy Langston wrote (5 May):

            Ed Dodson wrote:
            >The structure would be simple: exempt all individual incomes up to the
            >national median income (which, in effect, exempts the income of more than
            >half of population from taxation). Above this level of income, increasing
            >rates of taxation are applied to increasing ranges of income, with the
            rates and ranges adjusted as required to balance government budgets.

            Roy:
            While this approach would certainly make the income tax fairer and less
            economically damaging; the problem is that to raise revenue comparable to
            current income tax revenue, the rate must quickly increase to the point
            where people will either find ways to hide their income, make it untaxable,
            or forego it altogether, such as by choosing not to crystallize capital
            gains.

            Ed here:
            You may be right about this. The answer requires some extensive analysis
            using real individual income and income distribution figures. Elimination of
            all exemptions and deductions other than the basic exemption of incomes
            below a certain level of income is an important component of this approach.
            Here in the U.S. the concentration of income is very high.

            ***

            Ed Dodson wrote:
            >It seems to me that not only simplicity is achieved but
            >so are progressivity and ability to pay. Would some "earned" income be
            >taxed? Yes, but far less than is the case today. And, IF an increasing
            >percentage of the rent fund is collected over time by direct methods, the
            >highest marginal individual incomes should begin to come down (i.e., to
            >disappear as privatized rent is publicly collected).

            Roy:
            The larger problem with such reforms is that they are just Band-Aid
            solutions, and distract public attention from the real issue: shifting the
            tax burden off production and onto unproductive collection of economic rent.

            Income is ever and always the Wrong Thing to Tax.

            Ed here:
            I prefer the terms "transitional" or "interim" to describe these changes as
            part of a broader process of moving to the Georgist proposal of raising
            nearly all public revenue from the collection of rents. Here in the U.S.
            there is a very serious attack on property taxes in favor of income taxes or
            taxes on commerce. Despite the strongly supportive data showing the benefits
            of land value taxation, the momentum even in Pennsylvania is to move away
            from property taxation because there are huge and vocal constituencies
            calling for reductions in property taxes, generally. Thus, we need to be
            able to respond with measures that deal with this opposition.
          • Roy Langston
            ... The first thing that must be done to counter the attack on property taxation is to loudly and publicly identify and make common knowledge the facts that:
            Message 5 of 29 , May 21 11:00 AM
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              Ed Dodson wrote:
               
              >Here in the U.S.
              >there is a very serious attack on property taxes in favor of >income taxes or
              >taxes on commerce. Despite the strongly supportive data >showing the benefits
              >of land value taxation, the momentum even in Pennsylvania is >to move away
              >from property taxation because there are huge and vocal >constituencies
              >calling for reductions in property taxes, generally. Thus, we >need to be
              >able to respond with measures that deal with this opposition.
              The first thing that must be done to counter the attack on property taxation is to loudly and publicly identify and make common knowledge the facts that:
               
              1. Property taxes consist of two opposite taxes: the tax on improvements (what their owner contributes to the wealth of the community), and the tax on land value (what the community contributes to the wealth of the landowner).
               
              2. It is better to tax what people GET FROM the community for doing nothing, and NOT tax what they PROVIDE TO the community through their investments of labor and capital.
               
              3. 2/3 -3/4 of all property value is land value.
               
              4. The US states with the highest property tax rates -- like New Hampshire, New Jersey, Wisconsin, Oregon, Texas -- tend to have better economies, lower total housing costs, lower unemployment, better services and infrastructure, higher quality of life, and LOWER TOTAL TAX BURDENS AS A FRACTION OF GDP than the states with low property tax rates.
               
              It is particularly notable that New Hampshire, with the highest property tax rates in the country, has the lowest total tax burden as a fraction of GDP, while states with the highest total tax burdens, like Hawaii and Wyoming, have among the lowest property tax rates. If people who oppose property taxes were really interested in reducing total tax burdens, property taxes are the very last tax they would be trying to reduce.
               
              -- Roy Langston


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            • Fred Foldvary
              ... Government chiefs deliberately make the real estate tax hateful by sending bills for payment twice a year, making these large, visible, painful payments.
              Message 6 of 29 , May 22 7:56 AM
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                Ed Dodson wrote:
                >Here in the U.S.
                >there is a very serious attack on property taxes in
                > favor of income taxes

                Government chiefs deliberately make the real estate
                tax hateful by sending bills for payment twice a year,
                making these large, visible, painful payments.
                The big landlords like it that way, so that the small
                land holders will resists higher land taxes.

                The property tax should be paid monthly, and
                automatically deducted from salaries as is the current
                income tax.

                Better yet, make it a daily payment automatically
                deducted from bank accounts. Index it to inflation.
                That way it's predictable and smoothly applied.

                Rent flows every day. Why not also the payment?

                Fred Foldvary
              • Wetzel Dave
                Fred rights: Better yet, make it a daily payment automatically deducted from bank accounts. I wouldn t want my bank statements cluttered up with 28+ payments
                Message 7 of 29 , May 23 7:39 AM
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                  Fred rights: “Better yet, make it a daily payment automatically
                  deducted from bank accounts.”

                   

                  I wouldn’t want my bank statements cluttered up with 28+ payments each month!

                   

                  Dave

                  Dave Wetzel

                  President, the Labour Land Campaign
                  Tel: 020 7126 4200

                  www.Labour Land.org



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                • Edward Dodson
                  Fred Foldvary wrote: Government chiefs deliberately make the real estate tax hateful by sending bills for payment twice a year, making these large, visible,
                  Message 8 of 29 , May 23 7:50 AM
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                    Fred Foldvary wrote:

                    Government chiefs deliberately make the real estate
                    tax hateful by sending bills for payment twice a year,
                    making these large, visible, painful payments.
                    The big landlords like it that way, so that the small
                    land holders will resists higher land taxes.

                    The property tax should be paid monthly, and
                    automatically deducted from salaries as is the current
                    income tax.

                    Better yet, make it a daily payment automatically
                    deducted from bank accounts. Index it to inflation.
                    That way it's predictable and smoothly applied.

                    Rent flows every day. Why not also the payment?

                    Ed here:
                    These ideas are far to simple and practical for our political systems to
                    allow to be adopted. Still, they appeal to me as measures our activist arms
                    ought to embrace as part of a comprehensive tax reform program.
                  • Sean Brooks
                    As part of the daytime news cycle here in Washington, DC, the local news channel has been airing a story on property taxes in the nearby resort town of Ocean
                    Message 9 of 29 , May 23 10:15 AM
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                      As part of the daytime news cycle here in Washington, DC, the local news
                      channel has been airing a story on property taxes in the nearby resort town
                      of Ocean City, MD.

                      The operator of the amusement park on the boardwalk in that town was hit by
                      a property tax that more than doubled, due to the increase in valuation of
                      his land from $21M to $64M.

                      The mayor & town are appealing to the state government for some form of tax
                      relief.

                      The bit of fear the story throws out: the amusement park, opened in 1881,
                      could be replaced by condos. The amusement park has no intention of
                      building condos, but 'could be forced to sell' to someone who would; they
                      further note that the property assessment is based on highest and best use,
                      not current use.

                      This is the sort of news that plays into the hands of those who would like
                      to see property taxes reduced or eliminated (at the expense of wage &
                      commerce taxes). However, I can't see a solution, other than to recognize
                      that the type of current use tends to increase the value of surrounding
                      properties, and that the public tends to like the amusement park. However,
                      it's certainly a slippery slope if we encourage the government to determine
                      the best use of property, and have it zoned accordingly, with an
                      appropriately limited valuation. How would "we" address this problem?

                      Without a widespread and deep understanding of rent, I can't imagine the
                      amusement operator convincing local landowners to voluntarily pay a portion
                      of his tax bill. Would it be inappropriate for the locality to pay a
                      portion of the owner's tax bill, in recognition of his park's contribution
                      to local rent values?

                      _________________________________________________________________
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                    • Jeffery J. Smith
                      ... Not for a sales tax? ... Hear, hear! SMITH, Jeffery J. President, Forum on Geonomics jjs@geonomics.org; www.geonomics.org Share Earth s worth to prosper
                      Message 10 of 29 , May 23 11:18 AM
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                        On May 22, 2007, at 7:56 AM, Fred Foldvary wrote:

                        > Ed Dodson wrote:
                        > >Here in the U.S.
                        > >there is a very serious attack on property taxes in
                        > > favor of income taxes

                        Not for a sales tax?

                        > The property tax should be paid monthly, and
                        > automatically deducted from salaries as is the current
                        > income tax.
                        >
                        > Better yet, make it a daily payment automatically
                        > deducted from bank accounts. Index it to inflation.
                        > That way it's predictable and smoothly applied.
                        >
                        > Rent flows every day. Why not also the payment?

                        Hear, hear!

                        SMITH, Jeffery J.
                        President, Forum on Geonomics
                        jjs@...; www.geonomics.org
                        Share Earth's worth to prosper and conserve.
                      • Roy Langston
                        ... Right. Can you imagine trying to collect income tax that way, rather than by withholding it at source? ... That doesn t quite make sense, as unlike income
                        Message 11 of 29 , May 23 1:16 PM
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                          Fred Foldvary wrote:

                          >Government chiefs deliberately make the real estate
                          >tax hateful by sending bills for payment twice a year,
                          >making these large, visible, painful payments.
                          >The big landlords like it that way, so that the small
                          >land holders will resists higher land taxes.

                          Right.  Can you imagine trying to collect income tax that way, rather than by withholding it at source?

                          >The property tax should be paid monthly, and
                          >automatically deducted from salaries as is the current
                          >income tax.

                          That doesn't quite make sense, as unlike income tax, the property tax is not _based_ on the salary.

                          >Better yet, make it a daily payment automatically
                          >deducted from bank accounts.

                          Property taxes should be collected monthly at a minimum (this also facilitates the needed universal personal exemption), and the full range of payment methods should be available, from automatic monthly credit card or bank account debit to check and cash. When I lived in Tokyo, the rent on my apartment was automatically deducted from my bank account.each month. Why not use the same method for property taxes?

                          >Index it to inflation.
                          >That way it's predictable and smoothly applied.

                          Land taxes must be indexed to GDP, not inflation, as government spending should be a consistent fraction of GDP, not a consistent amount of purchasing power.  Those who have owned land for a long time would be overjoyed to have had their property taxes indexed to inflation (and that's leaving aside the difficulties of measuring inflation). 

                          -- Roy Langston


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                        • Wetzel Dave
                          Fred wrote: The property tax should be paid monthly, and automatically deducted from salaries as is the current income tax. Roy replied: That doesn t quite
                          Message 12 of 29 , May 24 4:49 AM
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                            Fred wrote: “The property tax should be paid monthly, and automatically deducted from salaries as is the current income tax.”

                            Roy replied: “That doesn't quite make sense, as unlike income tax, the property tax is not based on the salary.”

                             

                            In the UK, income tax (under Schedule A) was charged on owner-occupiers based on their imputed rent. (i.e. the rent they did not have to pay because they owned their home). This charge was paid through the “PAYE – Pay As You Earn” system until the early 1960s when it was abolished.

                             

                            This means that under our UK income tax system we could in fact identify the total rental value of all land owned by a taxpayer, apply the tax rate to calculate the annual tax due and then collect this amount from her weekly or monthly salary.

                            Dave

                             

                            Dave Wetzel,

                            Vice-Chair, TfL

                            020 7126 4200

                             

                             

                            -----Original Message-----
                            From: LandCafe@yahoogroups.com [mailto:LandCafe@yahoogroups.com] On Behalf Of Roy Langston
                            Sent: Wednesday, May 23, 2007 9:16 PM
                            To: LandCafe@yahoogroups.com
                            Subject: [LandCafe] Re: Income Tax vs. LVT

                             

                            Fred Foldvary wrote:

                            >Government chiefs deliberately make the real estate
                            >tax hateful by sending bills for payment twice a year,
                            >making these large, visible, painful payments.
                            >The big landlords like it that way, so that the small
                            >land holders will resists higher land taxes.

                            Right.  Can you imagine trying to collect income tax that way, rather than by withholding it at source?

                            >The property tax should be paid monthly, and
                            >automatically deducted from salaries as is the current
                            >income tax.

                            That doesn't quite make sense, as unlike income tax, the property tax is not _based_ on the salary.

                            >Better yet, make it a daily payment automatically
                            >deducted from bank accounts.

                            Property taxes should be collected monthly at a minimum (this also facilitates the needed universal personal exemption), and the full range of payment methods should be available, from automatic m! onthly credit card or bank account debit to check and cash. When I lived in Tokyo, the rent on my apartment was automatically deducted from my bank account.each month. Why not use the same method for property taxes?

                            >Index it to inflation.
                            >That way it's predictable and smoothly applied.

                            Land taxes must be indexed to GDP, not inflation, as government spending should be a consistent fraction of GDP, not a consistent amount of purchasing power.  Those who have owned land for a long time would be overjoyed to have had their property taxes indexed to inflation (and that's leaving aside the difficulties of measuring inflation). 

                            -- Roy Langston

                             


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                          • Wetzel Dave
                            You raise fundamental questions re the operation of LVT Sean. Surely as well as LVT we need a planning system that controls the use of land and hence its
                            Message 13 of 29 , May 24 6:20 AM
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                              You raise fundamental questions re the operation of LVT Sean.

                              Surely as well as LVT we need a planning system that controls the use of
                              land and hence its rental value.

                              Eg in London since World War 2 we have lost many docks, piers, wharves
                              and other water-related industrial sites (boat repair yards for example)
                              to residential developments.

                              Now, Ken Livingstone our Mayor, has protected most of the remaining
                              sites by using his planning powers - and thus controlling the value of
                              the land. If we had LVT, the valuation should be based on the optimum,
                              PERMITTED use of the site - in which case the Washington amusement park
                              would not face an LVT bill that their current rental value would fail to
                              meet,

                              Dave

                              Dave Wetzel,
                              Vice-Chair, TfL
                              020 7126 4200



                              -----Original Message-----
                              From: LandCafe@yahoogroups.com [mailto:LandCafe@yahoogroups.com] On
                              Behalf Of Sean Brooks
                              Sent: Wednesday, May 23, 2007 6:15 PM
                              To: LandCafe@yahoogroups.com
                              Subject: [LandCafe] property tax in the news

                              As part of the daytime news cycle here in Washington, DC, the local news

                              channel has been airing a story on property taxes in the nearby resort
                              town
                              of Ocean City, MD.

                              The operator of the amusement park on the boardwalk in that town was hit
                              by
                              a property tax that more than doubled, due to the increase in valuation
                              of
                              his land from $21M to $64M.

                              The mayor & town are appealing to the state government for some form of
                              tax
                              relief.

                              The bit of fear the story throws out: the amusement park, opened in
                              1881,
                              could be replaced by condos. The amusement park has no intention of
                              building condos, but 'could be forced to sell' to someone who would;
                              they
                              further note that the property assessment is based on highest and best
                              use,
                              not current use.

                              This is the sort of news that plays into the hands of those who would
                              like
                              to see property taxes reduced or eliminated (at the expense of wage &
                              commerce taxes). However, I can't see a solution, other than to
                              recognize
                              that the type of current use tends to increase the value of surrounding
                              properties, and that the public tends to like the amusement park.
                              However,
                              it's certainly a slippery slope if we encourage the government to
                              determine
                              the best use of property, and have it zoned accordingly, with an
                              appropriately limited valuation. How would "we" address this problem?

                              Without a widespread and deep understanding of rent, I can't imagine the

                              amusement operator convincing local landowners to voluntarily pay a
                              portion
                              of his tax bill. Would it be inappropriate for the locality to pay a
                              portion of the owner's tax bill, in recognition of his park's
                              contribution
                              to local rent values?

                              _________________________________________________________________
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                              Hotmail.
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                            • Mark Porthouse
                              Hi Sean, It is always unfortunate when land taxes are levied as a proportion of the transaction price of the land on a speculative market in a land hoarding
                              Message 14 of 29 , May 24 9:42 AM
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                                Hi Sean,

                                It is always unfortunate when land taxes are levied as a proportion of
                                the transaction price of the land on a speculative market in a land
                                hoarding environment. This leads to wild swings in tax bills as the
                                market goes through it's cycles.

                                I note that there is a comparison of current use with a use for
                                providing condos, which currently are one of the best examples of
                                speculative land use! I suspect that over the next two years the market
                                value of that land will drop substantially and if they have built condos
                                then it will have been on false (sentimental) market signals and not
                                necessarily have been the best use of the land.

                                If a taxing authority chooses to allow a speculative land market (by
                                keeping land taxes too low) then perhaps they should base their tax
                                level on rental value (which avoids the speculative excesses - note that
                                condo rents haven't grown much in the last 7 years during which the land
                                value has tripled).

                                Australia has similar situation to this example in Maryland, whereas in
                                the UK the combined land and improvements tax is not based on the market
                                value of the property - so we've had better stability of land taxes and
                                therefore better stability of land use during the land price boom.

                                My response is really a criticism of a system that allows such wild
                                swings in land values and an observation that it is absurd to allow
                                taxes to vary in the same wild manner.

                                Cheers,

                                Mark

                                Sean Brooks said the following on 23/05/2007 18:15:
                                > As part of the daytime news cycle here in Washington, DC, the local news
                                > channel has been airing a story on property taxes in the nearby resort town
                                > of Ocean City, MD.
                                >
                                > The operator of the amusement park on the boardwalk in that town was hit by
                                > a property tax that more than doubled, due to the increase in valuation of
                                > his land from $21M to $64M.
                                >
                                > The mayor & town are appealing to the state government for some form of tax
                                > relief.
                                >
                                > The bit of fear the story throws out: the amusement park, opened in 1881,
                                > could be replaced by condos. The amusement park has no intention of
                                > building condos, but 'could be forced to sell' to someone who would; they
                                > further note that the property assessment is based on highest and best use,
                                > not current use.
                                >
                                > This is the sort of news that plays into the hands of those who would like
                                > to see property taxes reduced or eliminated (at the expense of wage &
                                > commerce taxes). However, I can't see a solution, other than to recognize
                                > that the type of current use tends to increase the value of surrounding
                                > properties, and that the public tends to like the amusement park. However,
                                > it's certainly a slippery slope if we encourage the government to determine
                                > the best use of property, and have it zoned accordingly, with an
                                > appropriately limited valuation. How would "we" address this problem?
                                >
                                > Without a widespread and deep understanding of rent, I can't imagine the
                                > amusement operator convincing local landowners to voluntarily pay a portion
                                > of his tax bill. Would it be inappropriate for the locality to pay a
                                > portion of the owner's tax bill, in recognition of his park's contribution
                                > to local rent values?
                              • Edward Dodson
                                Sean Brooks wrote: ...it s certainly a slippery slope if we encourage the government to determine the best use of property, and have it zoned accordingly, with
                                Message 15 of 29 , May 24 9:59 AM
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                                  Sean Brooks wrote:

                                  ...it's certainly a slippery slope if we encourage the government to
                                  determine
                                  the best use of property, and have it zoned accordingly, with an
                                  appropriately limited valuation. How would "we" address this problem?

                                  Ed Dodson here:
                                  If the community votes to preserve the amusement park because it is viewed
                                  as an important amenity, then the most practical solution is the same as
                                  what I have put forward to allow seniors on fixed incomes to remain in their
                                  residences in the face of rising land values (and property taxes). This is
                                  to calculate how much the owner can afford to pay based on cash flow and
                                  liquid assets. The amount of property tax paid would be capped based on this
                                  determination of affordability. However, the unpaid amount would accrue as a
                                  lien on the property to be paid at time of resale or transfer of ownership.

                                  This approach is far more equitable than using tax revenues to purchase
                                  development rights, which is what is frequently done these days to preserve
                                  open space or agriculturally valuable land that sits in the path of
                                  sprawling development.
                                • Edward Dodson
                                  Jeff Smith wrote: ... Not for a sales tax? Ed here: We already have a 7% sales tax. Raising it higher would create a storm of protest from both merchants and
                                  Message 16 of 29 , May 24 10:01 AM
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                                    Jeff Smith wrote:

                                    Ed Dodson wrote:
                                    >Here in the U.S.
                                    >there is a very serious attack on property taxes in
                                    > favor of income taxes

                                    Not for a sales tax?

                                    Ed here:
                                    We already have a 7% sales tax. Raising it higher would create a storm of
                                    protest from both merchants and consumers. Those who live close enough to
                                    Delaware can drive an hour (from where I live in suburban Philadelphia) to
                                    Delaware and pay no sales tax at all.
                                  • Jeffery J. Smith
                                    ... Yet that s what the Fair Tax people propose to do, up to what, 17%? SMITH, Jeffery J. President, Forum on Geonomics jjs@geonomics.org; www.geonomics.org
                                    Message 17 of 29 , May 24 10:17 AM
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                                      On May 24, 2007, at 10:01 AM, Edward Dodson wrote:
                                      >
                                      > We already have a 7% sales tax. Raising it higher would create a storm
                                      > of
                                      > protest from both merchants and consumers.

                                      Yet that's what the "Fair" Tax people propose to do, up to what, 17%?

                                      SMITH, Jeffery J.
                                      President, Forum on Geonomics
                                      jjs@...; www.geonomics.org
                                      Share Earth's worth to prosper and conserve.
                                    • Paul Metz
                                      Is a park dating back to 1881 not considered a monument, qualifying for a zoning privilege, then I wonder indeed what deserves to be named civilization. Paul
                                      Message 18 of 29 , May 24 6:48 PM
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                                        Is a park dating back to 1881 not considered a monument, qualifying for a
                                        zoning privilege, then I wonder indeed what deserves to be named
                                        civilization.

                                        Paul Metz
                                        From Columbus Ohio

                                        > As part of the daytime news cycle here in Washington, DC, the local news
                                        > channel has been airing a story on property taxes in the nearby resort
                                        > town
                                        > of Ocean City, MD.
                                        >
                                        > The operator of the amusement park on the boardwalk in that town was hit
                                        > by
                                        > a property tax that more than doubled, due to the increase in valuation of
                                        > his land from $21M to $64M.
                                        >
                                        > The mayor & town are appealing to the state government for some form of
                                        > tax
                                        > relief.
                                        >
                                        > The bit of fear the story throws out: the amusement park, opened in 1881,
                                        > could be replaced by condos. The amusement park has no intention of
                                        > building condos, but 'could be forced to sell' to someone who would; they
                                        > further note that the property assessment is based on highest and best
                                        > use,
                                        > not current use.
                                        >
                                        > This is the sort of news that plays into the hands of those who would like
                                        > to see property taxes reduced or eliminated (at the expense of wage &
                                        > commerce taxes). However, I can't see a solution, other than to recognize
                                        > that the type of current use tends to increase the value of surrounding
                                        > properties, and that the public tends to like the amusement park.
                                        > However,
                                        > it's certainly a slippery slope if we encourage the government to
                                        > determine
                                        > the best use of property, and have it zoned accordingly, with an
                                        > appropriately limited valuation. How would "we" address this problem?
                                        >
                                        > Without a widespread and deep understanding of rent, I can't imagine the
                                        > amusement operator convincing local landowners to voluntarily pay a
                                        > portion
                                        > of his tax bill. Would it be inappropriate for the locality to pay a
                                        > portion of the owner's tax bill, in recognition of his park's contribution
                                        > to local rent values?
                                        >
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                                        >
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                                      • Dan Sullivan
                                        ... Nonetheless, Pennsylvania s Governor Ed Rendell has called for a higher sales tax to replace property taxes. -ds
                                        Message 19 of 29 , May 25 3:58 AM
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                                          On 24 May 2007 at 13:01, Edward Dodson wrote:

                                          > Jeff Smith wrote:
                                          >
                                          > Ed Dodson wrote:
                                          > >Here in the U.S.
                                          > >there is a very serious attack on property taxes in
                                          > > favor of income taxes
                                          >
                                          > Not for a sales tax?
                                          >
                                          > Ed here:

                                          > We already have a 7% sales tax. Raising it higher would
                                          > create a storm of protest from both merchants and consumers.
                                          > Those who live close enough to Delaware can drive an hour
                                          > (from where I live in suburban Philadelphia) to Delaware and
                                          > pay no sales tax at all.

                                          Nonetheless, Pennsylvania's Governor Ed Rendell has called for a
                                          higher sales tax to replace property taxes.

                                          -ds
                                        • Jeffery J. Smith
                                          ... What about the public purchasing the site and leasing it back? The public s mortgage payments and rent receipts would pretty much cancel each other but at
                                          Message 20 of 29 , May 25 10:51 AM
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                                            On May 24, 2007, at 9:59 AM, Edward Dodson wrote:
                                            >
                                            > This approach is far more equitable than using tax revenues to
                                            > purchase development rights

                                            What about the public purchasing the site and leasing it back? The
                                            public's mortgage payments and rent receipts would pretty much cancel
                                            each other but at the end of the term, it'd own the site and have the
                                            power to decide its fate as the legitimate owner. Who knows? Instead of
                                            developing, people could go the other way and make it a park or plaza -
                                            or just leave it as it was.

                                            SMITH, Jeffery J.
                                            President, Forum on Geonomics
                                            jjs@...; www.geonomics.org
                                            Share Earth's worth to prosper and conserve.
                                          • Jeffery J. Smith
                                            ... Thing is, before that it was a fishing village. Before that, an Indian settlement. Before that, nature. Every change violates the previous condition. Is
                                            Message 21 of 29 , May 25 10:59 AM
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                                              On May 24, 2007, at 6:48 PM, Paul Metz wrote:

                                              > Is a park dating back to 1881 not considered a monument, qualifying
                                              > for a
                                              > zoning privilege, then I wonder indeed what deserves to be named
                                              > civilization.

                                              Thing is, before that it was a fishing village. Before that, an Indian
                                              settlement. Before that, nature. Every change violates the previous
                                              condition. Is one condition more moral than the next or previous? Hard
                                              to say. But if we have rough economic parity, than I bet how much
                                              people want to spend for a site - whether to develop it, preserve it,
                                              return it to nature - would be a sound indicator of highest and best
                                              use - and fairest, most civilized use - and other good reason to
                                              recover and share rents.

                                              SMITH, Jeffery J.
                                              President, Forum on Geonomics
                                              jjs@...; www.geonomics.org
                                              Share Earth's worth to prosper and conserve.
                                            • Edward Dodson
                                              Responding to Jeff Smith... I wrote: This approach is far more equitable than using tax revenues to purchase development rights Jeff: What about the public
                                              Message 22 of 29 , May 25 11:06 AM
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                                                Responding to Jeff Smith...

                                                I wrote:
                                                This approach is far more equitable than using tax revenues to purchase
                                                development rights

                                                Jeff:
                                                What about the public purchasing the site and leasing it back? The public's
                                                mortgage payments and rent receipts would pretty much cancel each other but
                                                at the end of the term, it'd own the site and have the power to decide its
                                                fate as the legitimate owner. Who knows? Instead of developing, people could
                                                go the other way and make it a park or plaza - or just leave it as it was.

                                                Ed here:
                                                This is one means by which the community can control future development and
                                                capture future increases in land values (provided the terms of the ground
                                                lease are structured appropriately).

                                                Purchasing development rights is, as you know Jeff, done to keep land used
                                                for agricultural purposes. The farmer gets the benefit of capitalization
                                                without having to sell out to a developer. Is this a good deal for the
                                                community? Well, it could be if location rents were more fully collected for
                                                a citizens' dividend and to fund public goods and services. Purchasing
                                                development rights effectively reduces the supply of land available for
                                                development, tending to drive up location rental values of land that is
                                                still available.
                                              • Roy Langston
                                                ... The problem is that the land value is speculative, based not on the rent of the current permitted use but the rent of an expected future use. One way to
                                                Message 23 of 29 , May 25 10:57 PM
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                                                  Sean Brooks wrote:

                                                  >The bit of fear the story throws out: the amusement park, opened in 1881,
                                                  >could be replaced by condos. The amusement park has no intention of
                                                  >building condos, but 'could be forced to sell' to someone who would; they
                                                  >further note that the property assessment is based on highest and best use,
                                                  >not current use.
                                                  ...
                                                  >How would "we" address this problem?

                                                  The problem is that the land value is speculative, based not on the rent of the current permitted use but the rent of an expected future use. One way to address this problem, short of a high rate of LVT, is to abolish all rezoning of privately owned land.  If land is to be rezoned, the city should purchase it at market, change the zoning, and then sell it back into the market, recovering for the public the land value increment created by the zoning change. This policy would make land values reflect currently permitted uses, and also eliminate the major source of corruption in local government: bribes for land-use favors.

                                                  -- Roy Langston


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