Real Estate Boom-Bust Cycles...

Nothing confers respectability like property ownership.

Closing line from the 2015 movie, The Big Short:
"Paulson and Bernanke just left the Whitehouse. There's going to be a bail-out.
They knew. They knew the taxpayers would bail them out. They weren't being stupid. They just didn't care.

scar on landscape
Avoid the pit-falls of real estate boom-bust cycles by
gaining an understanding of the history of land speculation practices.
Begin here:

1. Land Matters
2. Short history of economic

A study of US history reveals a very clear (average) eighteen-year cycle in US real estate prices, measured from trough to trough or peak to peak.
Phillip J. Anderson, The Secret Life of Real Estate and Banking.

Land Banking: This is how it works
Apartment developer billionaire Harry Triguboff, Australia's wealthiest man,
was surprisingly
candid at a lunch held by the American Chamber of Commerce in Oct 2011.

He told the audience he was able to pay “very little tax.”
“I keep a lot of my properties. And if you keep them and there’s capital gain it’s beautiful,” he said. “You don’t pay tax. I don’t lease them so I don’t pay tax on the rent, but I get depreciation.” He paid tax on apartment sales but that’s where the land banking came in. “You have to buy lots of empty land,” he said. “You keep the land and it brings you no income, so you claim it against your tax.” Source:
Financial Review, 07 July, 2012.
(That article has disappeared from FR as of mid-2016, but Leith van Onselen at Macrobusiness has shared another review here.)

Buying a house should be as easy as waking up in the morning and making a cup of tea.
– John Tippett, A Philosophers Take on Economics

Housing is a cost of living to wage earners. All outgoings associated with housing, including land taxes, are an attack on their cost of living.Raymond Makewell, The Science of Economics

...governments use the tax system to milk the poor. Why do they do it?
To enrich people who own land.
Fred Harrison, Ricardo's Law

Real estate price turnover leads and directs the economy
according to Australian Treasury Official Dr Ken Henry’s report Australia's Future Tax System.

ATO Land Valuer Bryan Kavanagh
had this to say:
Although the facts are quite clear, economists sidestep this analysis, claiming that real estate bubbles are a factor of the under supply of land. Inadequate suitably zoned land explains these bubbles, they say, but they have no explanation for what caused land price bubbles before town planning and zoning came into existence, not all that long ago.
Could it be that economists are ignorant of the Theory of Real Estate Valuation? i.e. that the phenomenon of land price is simply the capitalisation of its net annual rent? And, therefore, greater public capture of land rent via municipal rates and state land tax would keep the lid on recurrent land price bubbles? [...] The utter economic stupidity, hidden not only by neo-classical economists but also by the crass diversions in Australian political life, could of course be rectified by putting into place the recommendations of Ken Henry’s inquiry into the Australian tax system. See full report, including illlustrative graphs here.

The wealthy have state-help. The poor have self-help.
#GlobalPOV Project: University of California, Berkeley


Who is Dependent on Welfare?

In 1999 the U.S. government spent $48 billion more on homeownership subsidies for the middle classes and the wealthy, than on public housing and rental subsidies for the poor.

Yet, there is no stigma attached to this dependency. In fact, it is seen as an entitlement.

Poverty is not only the lack of income and wealth but also the poverty of power. A key part of the poverty of power is to be defined as dependent: dependent on charity, handouts, welfare. Yet, it is the wealthy, not the poor, who are dependent on government subsidies.

To transform dependency into self-determination is the work of poor people's movements. To demonstrate the dependency of the wealthy on welfare as well as on the labor of the poor must be our collective work. >>> more

The cost to construct a given house is roughly the same in any region or metropolitan area of the United States. Yet, in the places were economic activity is robust and population dense, the land component of a residential property can equal 50 percent or more of the purchase price of a property. This occurs because the rent of land is lightly taxed and is therefore capitalized by market forces into a selling price, a selling price driven upward by speculation, hoarding and liberal access to credit. Henry George rightly observed that the rent of land should be fully collected by society to pay for public goods and services, leaving capital goods (e.g., buildings, homes, machinery) unburdened by taxation. If this was done, he felt confident there would be no need to tax income or commerce. – Edward Dodson, economist and political scientist

The Land Value Research Group
Founded in 1943, the LVRG published world-leading empirical studies demonstrating that site-value rating — that is, the imposition of municipal Rates on land values alone, exempting the values of buildings — is more conducive to economic growth than alternative systems that include buildings in the tax base. Expressed in qualitative terms, that conclusion should be obvious: taxing buildings deters construction and consequently impedes the industries that lie upstream or downstream of construction or require accommodation for workplaces and workers — in other words, it impedes the whole local economy — whereas taxing the value of land cannot reduce the supply of land, because neither the land nor its value is produced by the owner. >>> more


There are dozens of variations on this argument, the most common ones are...

– Mark Wadsworth, UK Young People's Party

The "Poor Widow" is often invoked as an argument against land taxes.
Here is what Winston Churchill had to say about her, when he campaigned to get Parliament to introduce Land Value Tax.
But when we seek to rectify this system, to break down this unnatural and vicious circle, to interrupt this sequence of unsatisfactory reactions, what happens? We are not confronted with any great argument on behalf of the owner. Something else is put forward, and it is always put forward in these cases to shield the actual landowner or the actual capitalist from the logic of the argument or from the force of a Parliamentary movement. Winston Churchill's Speech in the House of Commons, 4 May 1909

The "Elderly Poor Property Owner" Scam

Property vs. People
Critics of property tax say it burdens "elderly poor property owners," and that replacing property tax with other taxes would provide relief for them. It would indeed provide relief for owners of elderly poor properties, even though the owners themselves are not necessarily elderly and are almost never poor.

Failure to adequately tax land speculators and monopolists is a big reason why taxes are so high on the rest of us. It is not just that we pay more because they pay so little; idle landholding is one of the main reasons why government is so expensive in the first place. It contributes to sprawl, blight, spiralling housing costs, loss of business and general economic decline. Residential speculation can be even worse, as it can destroy struggling neighborhoods.

Shifting Away from Property Tax
Hurts Elderly People

In the long run, all broad-based taxes other than land value tax cost ordinary people people more than property tax. Any savings retired people get from real estate tax cuts will have been offset by increased taxes during their working years, unless they happen to retire when the change takes effect. Even then, proposals to shift away from property tax often cost elderly people with modest incomes more than property tax would cost them.

Most elderly people with modest homes in poor neighborhoods pay little property tax, and would pay more if sales tax replaced property tax. Some elderly people keep working, not because they like to work or want to have high incomes, but because they cannot afford to retire. Many of these people also pay more in income taxes.

Elderly people also depend on stable housing prices. Shifting away from real estate taxes leads to boom-bust cycles in real estate, and these cycles can destroy the value of retired person's real estate assets. >>> more

Housing is a cost of living for wage earners
According to Raymond Makewell, author of The Science of Economics (2013)
(Quoted from a private email exchange, with permission):
Land only has a value (price) because the full economic rent is not being collected. The more economic rent (or land tax) that is collected the lower the price of the land. If the whole economic rent is collected the price of the land would be zero.  The price (value) of improvements though could be negative. - e.g. a site with a house on it that is approved for a block of flats - the existence of the house is a cost to any potential investor, not a benefit (i.e. the cost of removing the house). ...In a fully enclosed system, where wages are forced to the bottom, all taxation revenue comes from the economic rent. There is nowhere else for it to come from. If workers are taxed they demand higher wages or more government subsidies. 

Housing is a cost of living to wage earners. All outgoings associated with housing, including land taxes, are an attack on their cost of living. In the medium to long term collecting more economic rent on housing sites would reduce the price of land, but the immediate effect will be to increase wage demands, or government subsidies. The most effective action would be to concentrate on collecting taxation based on the economic rent from commercial sites, and reducing the overheads associated with employing people (income tax e.g.). The latter is intended to be provocative, but helpful.

The Big Short (2010)
by Michael Lewis
New York Times #1 Best Seller 2010
Review Excerpt: The global financial crisis of 2008, which economists estimate could result in several trillion dollars of losses and which has already cost American taxpayers billions of dollars in government bailouts, was triggered not by war or recession but by a crazy, man-made money machine, built on flawed mathematical models that most financial executives did not really understand themselves. >>> more

The FILM, The Big Short (2015)
Based on the 2010 book by Michael Lewis

Summary: "Four denizens of the world of high-finance predict the credit and housing bubble collapse of the mid-2000s, and decide to take on the big banks for their greed and lack of foresight."

The GFC was announced on September 8 2008 with news that Bear Stearns and Lehman Bros had collapsed due to market volatility in world economy.
In the USA, 5 Trillion dollars in pension money, real estate value, 401K, savings and bonds had disappeared.
8 million people lost their jobs, 
6 million lost their homes.

Michael Burry, MD, the medical doctor who was the first to 'see' "the hedge fund opportunity", has since been audited 4 times and questioned by the FBI. He now invests in WATER!

Banking on spin:
In 2015, several banks started selling billions in "bespoke tranche opportunities" aka CDO
(Bloomsberg News)

Selected excerpts:

It's possible that we're in a completely fraudulent system. – Mark Baum

Mark Baum's conference lecture presented at the moment the collapse was beginning to unfold: 
We live in an era of fraud in America -- not just in banking, but in government, education, religion, food - even baseball. What bothers me isn't that fraud is not nice or that fraud is mean. It's that for 15,000 years fraud and shortsighted thinking has never ever worked -- not once. Eventually, people get caught. Things go south. When the hell did we forget all that? I thought we were better than this. I really did. And the fact that we're not doesn't make me feel all right and superior. It makes me feel sad. And as fun as it is to watch pompous dumb Wall Streeters be wildly wrong -- and you are wrong, Sir. I just know that at the end of the day average people are going to be the ones that are going to have to pay for all this because they always, always do.

Immediate response from conference co-speaker: ... in the entire history of Wall St. no investment bank has ever failed, unless caught in criminal activities. So, yes, I stand by my Bear Stearns optimism.
Mark Baum: Paulson and Bernanke just left the Whitehouse. There's going to be a bail-out. They knew. They knew the taxpayers would bail them out. They weren't being stupid. They just didn't care.

Australia's property bubble thoroughly investigated
Home Truths

ABC–Four Corners
2 May 2016
See Transcript here

Has a generation been shut out of the Great Australian Dream?
It used to be that Australians would spend 3 or 4 times their annual income on a house. Now it's 10, 20, even 30 times, putting home ownership out of reach for many, and especially for young people. The tax breaks that have helped fuel the unprecedented housing boom will be a big issue in the coming election campaign. Taken together, Negative Gearing and Capital Gains tax breaks cost the public purse 11.7 Billion dollars each year. Labor has promised to wind-back the concessions. But despite criticism of Negative Gearing from some Liberal politicians, including former Treasurer Joe Hockey, PM Malcolm Turnbull has ruled out any changes to the system. In tonight's program, experts say that Australia's housing market is already cooling. Economists are divided over whether we're seeing the start of a soft-landing, a correction, or a crash. For many in the Millennial generation, a crash is what they're waiting and hoping for.

Excerpt: (38:00)
If the banks show the international investment community that they're lending to very, very credible borrowers -- credit-worthy borrowers -- then it's very, very easy for the banks to tap into very cheap debt and to be able to sell-off residential mortgage-backed securities with a triple-A rating.

See full transcript here

Cities need Goldilocks housing density
– not too high or low, but just right
Lloyd Alter 17 April 2014
The trend for elite towers that reach ever skywards isn't healthy for a sustainable community or for a balanced quality of life

Building tall does not necessarily even increase residential density; in fact, it can do the opposite. In New York's tall, slender towers, the elevators and stairs take up a huge proportion of the floor space, and there is lot of expensive exterior wall for each unit. The construction costs for this kind of building are ridiculous, and only the very, very rich can afford to pay the price, so apartments are therefore often huge as well; consequently the population density can actually go down.

There is less street life too, as ground floors are taken up with lobbies and exits and ramps instead of stores and restaurants.

Harlem-brownstoneThe great majority of the new projects that are busting through height limits, view corridors and historic districts do nothing to ease the housing crisis and nothing to improve the urban fabric.At the Goldilocks density, construction is a lot cheaper and the buildings a lot more efficient; in Montreal's Plateau district, the buildings are mostly just three storeys high, with exterior stairs. Every inch of interior space is used for living, making them almost 100% efficient, and accommodating over 11,000 people per square kilometre.

New, greener forms of construction can be used, as Thistleton Waugh did with their 12-storey timber tower in London's Hackney. In Toronto, architects such as Roland Rom Coltoff of RAW are rebuilding and revitalising neighbourhood high streets with very attractive, modern low-rise buildings, putting the housing where you want it, near transit and schools. >>> more
If you don't tax that value that attaches to land, arising from
the general wealth of the economy, the banks get it.
Professor Michael Hudson


Plans to re-regulate banks (like the Volker Rule in the US) will not prevent money-makers in the financial sector from fuelling the next land-led boom/bust. Professor Margrit Kennedy explains why a holistic fiscal-monetary reform is needed. Bankers must lose their power of credit-creation to capture wealth created by others. >>> more

"Nations are governed by a culture that was incubated in Europe in the 16th century. England played the leading role in enabling that culture of greed to mutate into a statecraft that propagated chaos through its laws of the land. The statecraft manages the anarchy that was embedded in traditional communities as a result of the violent transformation of people’s rights of access to the commons. Understanding that history is the pre-condition for addressing what the CIA calls the mega-trends that threaten all our futures." Fred Harrison >>> more

How to calculate land value with the land tax as a component valuecycles
Estimating Land Values
by Ted Gwartney, MAI
Land Value Assessor (retired), Greenwich, Connecticut, USA
The Nature of Land and Natural Resources

Characteristics of Land
Land, in an economic sense, is defined as the entire material universe outside of people themselves and the products of people. It includes all natural resources, materials, airwaves, as well as the ground. All air, soil, minerals and water is included in the definition of land. Everything that is freely supplied by nature, and not made by man, is categorized as land.

Land holds a unique and pivotal position in social, political, environmental and economic theory. Land supports all life and stands at the center of human culture and institutions. All people, at all times, must make use of land. Land has no cost of production. It is nature's gift to mankind, which enables life to continue and prosper.

Land's uniqueness stems from its fixed supply and immobility. Land cannot be manufactured or reproduced. Land is required directly or indirectly in the production of all goods and services. Land is our most basic resource and the source of all wealth.

Land rent is the price paid annually for the exclusive right (a monopoly) to use a certain location, piece of land or other natural resource. People receive wages for work, capital receives interest for investment, and land receives rent for the exclusive use of a location. Equity and efficiency require that the local general public, who created land value, should be paid for the exclusive use of a land site. That Payment is in the form of a land tax.

When considering world-wide economics, most people think that land rent contributes only a small insignificant portion of value. But as societies progress, land has become the predominant force in determining the progress or poverty of all people within a community. Land in major or cities is so costly that people are forced to move further away and travel great distances in order to get to work and social attractions. In the more developed countries of the world, land rent represents more than 40% of gross annual production. >>> more

Emer O’Siochru, Irish Architect and Valuer: See background statement here.
The following is a partial transcript of Emer O’Siochru's presentation at The IU Conference
(The International Union of Land Value Taxation), London, 24 July 2013
Read the full transcript here >>> more
View the full IU lecture here:

Yes, regulation was important, but it wasn't sufficient reason. If you look in other EU countries where they had broadly the same regulatory system, they didn't get the same kind of 'boom and bust'. So, what else did they have is the question. What was the real cause? I have to talk about home ownership incentives.

This is a quote from Colm McCarthy. He is an economist operating in Ireland who likes to speak his own mind. I don't agree with him in every respect, but I respect the fact that he always writes independently and is not politically beholden to anyone.

Colm McCarthy said:

Imputed tax on housing is not taxed in Ireland. We've had mortgage interest relief on mortgages for a long time. They were there consistently. There is no local tax; there are no rates or property taxes on domestic dwellings in Ireland, at all. And if your sold your house, and it is your prime residence, there is no capital gains tax.

So as he's explained, most of the developed countries may have one or two of these goodies for property owners, but only Ireland had all of them. And not only that, but they were further tax reliefs if you build in certain locations. So if you were to build, say, along the Shannon [river], which is an undeveloped region of the [west] coast, and so on, you could offset the capital cost of the construction against your income tax. Not just the rental income, but your income tax. So we had no real taxes on your own home. And further, we had incentives, basically, to put your money into property. And I'm quoting here Michael Hudson. He says: If you don't tax that value that attaches to land, arising from the general wealth of the economy, the banks get it.

That's what happened. The banks got it. They turned it into a kind of money backed by debt, essentially phoney money that wasn't backed by real productivity. That essentially led to the boom and that subsequently led to the bust.

Read the full transcript here >>> more

"I think the banks just want to speculate and feel thwarted. They need to start looking at home loans like car loans. Do they speculate on the cost of roads? No, because it doesn't effect the value of the car, and is none of their business. It ought to be the same for land. If they can't stand that, maybe they should get into something more predictable, like becoming a professional gambler." Scott Baker

"As speculative demand for land drops, demand for the use-value of land more than makes up. This is not just theory; empirical studies show that the medium-run boost to land value due to increased productivity outweighs the short-run decline from increased land efficiency. Therefore, when we say that land values will decrease, what we mean, to be precise, is that land values would decline relative to GDP (to wages and interest). Nominal values would actually increase in the long-run due to lower taxes on labor/production and due to productivity on communities using land efficiently. However, if high LVT were implemented all of a sudden, land values would probably decrease, but nobody has ever tried that, as far as I know. There is good reason to believe that there is much more land value than needed anyway. That comes partly from logic, partly from Stiglitz's "Henry George Theorem", and partly from a theory that all (or most) taxes come out of rent (ATCOR). LVT does not exactly cause people to use less land; it causes people to own less land that they aren't using. That means there would be in-fill, higher density in valuable locations, more economic activity and higher wages. Where are high land values found?"

Nate Blair
: Comment on Facebook LVT open group, Nov. 5, 2013

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Abomination of Public Finance

By Nate Blair
There are three sources of public revenue: fees, fines, and taxes. Fines are pretty well understood, but the Georgist example would be a Pigovian "tax" on environmental damage. A fee is when the state charges $10 for a licence; charging $100 for the licence would be mostly a tax. Land value "tax" (LVT) is actually a user-fee, not a tax. LVT is the price landowners should pay for the privilege to exclude others from the value of locations in nature that the community is creating.

Currently, society donates the value of locational privilege to landowners mostly free of charge---in fact, we even pay them with *negative* LVT for agricultural land and with public investment projects that enhance land value.  Government donates all that to landowners, mostly the wealthy, and pays for it with real tax on our labor and productive enterprise.  Then, even though it sounds like the system could not get any worse, we are taxed again, this time by the very landowners we just donated to!  When land/ground-rents are captured by private location monopolists, that is technically a private tax/toll.  We are obliged to pay that private toll to access the very same benefits our hard work and taxes just created.
LVT simply reclaims our donations by charging owners of location for the annual market value of the privilege they are renting from the community.  We would use that revenue to remove taxes on good things like labor and to provide more of the social services that enhance locational value.  
This is exactly the same method a mall uses to finance restrooms and security.  Malls do not tax vendors a percentage of sales or for each employee hired---but what if they did?  Imagine that the malls also allowed speculators to hoard perpetual, rent/fee-free titles to vendor-locations, preventing actual businesses from using the locations... making the mall look and work like shit, with location monopolists capturing the value of improvements for themselves, so that each time businesses worked harder, the economy improved, or the mall enhanced its services, the rent-seekers would increase the private tax to access mall locations.  THAT WOULD BE CRAZY!  
The tragic truth is that what we are doing is much crazier.  This has *deadly* consequences.  Every time you read about the need for austerity or that there is not enough money for nice things, it is a lie: nice things increase land value in proportion to their niceness.  What we are actually saying is that the power of parking lot owners is so great that we willingly condemn vast numbers of people to poverty, death of the mind, body, and spirit.

We can [save our communities], but not like this. Ricardo's "Law of Rent" makes that impossible in the long-run. >>> Source

So who pays for the public services that the rich people use?
"The people on the lowest incomes.
Fred Harrison

Fred Harrison explains his views in this short video, based on his book:
Ricardo's Law - The Great Tax Clawback Scam
Running Time: 7:36

Visit Fred Harrison's website to view more of his highly informative short videos

"If we cancel taxes on people’s wages, how do we pay for public services? By levying a charge on the value of land. People who live in valuable locations, like the families who live at the back of Buckingham Palace, will pay much more than those who live in less expensive properties. That’s fair. And it also happens to be the best way to fund the services we share in common." Fred Harrison


Ricardo's Law ~ House Prices and the Great Tax Clawback Scam
Written and Narrated by Fred Harrison

I accuse governments of running a scam against the people who elect them. I know this is a serious charge. But governments use the tax system to milk the poor. Why do they do it? To enrich people who own land.

The scam began centuries ago here in the Palace of Westminster. It is operated by all democratic governments around the world. The biggest winners are those who own the best locations, such as homes overlooking Hyde Park, here in London, or with a view of Central Park in New York or across the harbour in Sydney.

Fred Harrison

The taxmen operating out of the Treasury – this building behind me – work with a doctrine called “progressive taxation”. This is supposed to transfer income from the rich to the poor.

That sounds fair, doesn’t it? But I have discovered that progressive taxes are a cover up for a cruel hoax played on people with low incomes.

This is how the scam works. The people who live in these apartments are tenants. Britain has 4m of them in the public sector. They pay rent to their landlord, and they pay taxes to the government.

The homes in this street in Knightsbridge, near the famous Harrods store, are worth millions of pounds. The people who live here are in the top 20% income bracket. On average, they pay about £1.25m in taxes over their working lives. That’s about $2.5m American or nearly $3m Australian.

The people who rent their homes tend to be in the lowest 20% of incomes. Over their working lives, they pay – on average – about £250,000 in taxes. That’s fair, isn’t it? The rich pay five times more than the poor in taxes.

I explain in my book, Ricardo’s Law, that progressive taxes have the opposite effect.

People who rent their homes pay taxes to fund schools, hospitals and police protection. They pay for what they receive. But what happens down the road in Knightsbridge? Let’s go and find out.

(Long shot of FH walking away from camera, towards Knightsbridge)
The rich who live here pay a lot in taxes, but the government gives the money back to them. How do they do this?

Government spends our taxes on infrastructure such as highways and railways. That increases the productivity of the economy. Now, because of the way the market economy works, those gains in productivity are transformed into land values. That value appears as ‘windfalls’ or ‘capital gains’.

Those capital gains are not shared out equally, among all of us. Taxpayers who rent their homes are excluded. The windfalls are pocketed by people who own land. The rise in property values more than offsets the taxes they pay into the public purse.

So who pays for the public services that the rich people use?
The people on the lowest incomes.

Families on the lowest incomes subsidise the lives of the rich. Is that fair? There’s only one way to make the tax system fair. Parliament has to tell the taxman to stop collecting taxes from people’s earned incomes. We need the kind of tax reform that Winston Churchill and the Liberal government nearly achieved 100 years ago. But the landlords blocked them.

If we cancel taxes on people’s wages, how do we pay for public services? By levying a charge on the value of land. People who live in valuable locations, like the families who live at the back of Buckingham Palace, will pay much more than those who live in less expensive properties. That’s fair. And it also happens to be the best way to fund the services we share in common.
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UK House of Commons seminar on land value
April 2009: Organised by The Coalition for Economic Justice
The seminar was aimed at parliamentarians and policymakers and examined the advantages of land value taxation,
how it might be introduced and how transitional problems could be dealt with.
Hosted by Vince Cable MP
Panel of Speakers:
Prof Iain McLean, Professor of Politics, Oxford University
Ashley Seager, The Guardian
Molly Scott Cato, Green Party Economics speaker
David Triggs, Henry George Foundation
Sir Sam Brittan, Financial Times
Fred Harrison, Land Research Trust
Read the full report here

As Sir Sam Brittan saw it, the case for LVT was clear and simple. But perversely, people find this difficult to grasp; they expect complexity in taxes. Being a tax on unearned value increment, LVT was no disincentive to Labour or Capital. As a temporary expedient, pending the full introduction of LVT, he advocated the auctioning of planning permissions.

Ashley Seager of The Guardian cited instances where public expenditure had led to massive increases in property (i.e., land) prices. In one case, the building of a school had led to such a big increase in local property prices that teachers in the school could not afford to live in the area. As the land of this country is provided free of charge by nature, “rising property prices do not raise national wealth one single penny”. They serve no useful economic purpose and are an obvious target for taxation.

Professor Iain McLean explained how, as a member of the independent expert group set up by the Calman Commission, he was looking at LVT as a way of financing public services in Scotland and Wales. LVT would replace council tax, business rates and stamp duty.

From a Green perspective (Molly Scott Cato), land is a trust for the people, its life-giving properties to be preserved from one generation to the next. LVT, which aims to curb private profiteering from the nation’s patrimony, was seen as a valuable tool in this connection.

The groundwork for the panel discussions was set out by David Triggs in his opening address. “The challenge that confronts those interested in establishing a just and equitable division of the fruits of production lies essentially in recognising that land values impound that part of the value created which is attributable to factors external to the individual, e.g., the country’s infrastructure, the system of governance, law and order and the density of population. It is manifestly unfair to tax the individual on what he produces while those community-created values are provided tax-free to the benefit of the landowner. These land values, arising essentially from location, should be the primary source of taxation.”

Fred Harrison reinforced this message. He showed how failure to collect location value led to diminished opportunity and life expectancy at the marginal location.

James Black (a sixth-former) said LVT made common sense to the young and the opportunity should not be missed. >>> more

"Marxism is dead; long live Georgism!"

According to Colby Cosh, whose lively commentary went on to explain the trouble with the current system of land speculation:

In 1984, I bought my London house. I estimate that the land on which it sits was worth £100,000 in today’s prices. Today, the value is perhaps ten times as great. All of that vast increment is the fruit of no effort of mine. …This appropriation of the rise in the value of land is not just unfair: what have I done to deserve this increase in my wealth? It has obviously dire consequences.

First, it makes it necessary for the state to fund itself by taxing effort, ingenuity and foresight. Taxation of labour and capital must lower their supply. Taxation of resources will not have the same result, because supply is given. Such taxes reduce the unearned rewards to owners.

Second, this system creates calamitous political incentives. In a world in which people have borrowed heavily to own a location, they are desperate to enjoy land price rises and, still more, to prevent price falls. Thus we see a bizarre spectacle: newspapers hail upward moves in the price of a place to live—the most basic of all amenities.

If you’re a renter who reads the newspapers, you have spent the last few years in a constant state of low-level anger at this “bizarre spectacle”—the unexamined assumption that perpetually escalating housing prices are the natural state of human affairs, and certainly a good enough proxy for economic health that the two quantities are freely interchangeable. How much more bizarre must it look in England? >>> more

Stupid Property Owners
By Gavin Putland, Director Land Value Research Group
The “taxes” that property owners hate most are the ones that hurt them least and are most likely to be spent for their benefit.

Land and taxes
In any tax jurisdiction, the supply of land is fixed. From the viewpoint of the taxpayer, the supply of land zoned for any particular purpose is also fixed, as is the supply of land within acceptable distance of any particular services, infrastructure, or markets. Yet access to suitably located land is essential to economic participation. Therefore land values, expressed as rent or as interest on purchase prices, are competed upward until they absorb the economy's capacity to pay. As that capacity increases — as it usually does — so do land values [1]. That's why economic growth doesn't make housing more affordable. That's why we load ourselves with debt in order to “own” our homes as soon as possible. This much is obvious even to the unschooled; they may not know anything about economics, but they know where their money goes.

Most taxes target transactions (or the results thereof), causing otherwise viable transactions, hence otherwise viable enterprises and industries, to become unviable. In this way, most taxes take far more money out of the private sector than they deliver to the Treasury (and thence back to the private sector through public spending). The margin by which the cost to the private sector exceeds the benefit to the Treasury is what economists call the excess burden or deadweight cost of taxation. In simple terms, most taxes take more than they give. >>> more

The Unplumbed Revenue Potential of Land
Part 3:
ATCOR (All Taxes Come Out of Rents)
by Professor Mason Gaffney
When we lower taxes, the revenue base is not lost, but shifted to land rents and values, which can then yield more taxes.
This is most obvious with taxes on buildings. When we exempt buildings, and raise tax rates on the land under them, we are still taxing the same real estate; we are just taxing it in a different way. We will show that this “different way” actually raises the revenue capacity of real estate by a large factor. There is much recent historical experience with exempting buildings from the property tax, in whole or part. It has shown that builders offer more for land, and sellers demand more, when the new buildings are to be untaxed. The effect on revenue is the same as taxing prospective new buildings before they are even built, even though the new buildings are not to be taxed at all.

Land value is what the bare land would sell for. It is specifically and immediately most sensitive to taxes on new buildings, and on land sales, as well as to new and more stringent building code requirements or zoning that often discriminate against new buildings. Where new buildings are “coded” more severely than old, it enhances the value of the old land/building packages. This premium should be considered part of land value, and taxable as such.

We have numerous historical experiences with exempting buildings leading to land booms: New York City 1922-33, Western Canada, Hong Kong, Taiwan, Australia, South Africa, San Francisco after the fire, Chicago after the fire, California Irrigation Districts, Cleveland 1903-20, Toledo, Detroit, Portland, Seattle, Houston, San Diego.

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On the history of land as private property ...
The equal right of all men to the use of land is as clear as their equal right to breath the air - it is a right proclaimed by the fact of their existence. – Henry George

The assumption that land had always been treated as private property is not true. On the contrary, the common right to land has always been recognized as the primary right. Private ownership has appeared only as the result of usurpation — that is, being seized by force. The primary and persistent perception of mankind is that everyone has an equal right to land. The opinion that private property in land is necessary to society is a comparatively modern idea, as artificial and as baseless as the divine right of kings. ... Wherever we can trace the early history of society — in Europe, Asia, Africa, America, and Polynesia — land was once considered common property. All members of the community had equal rights to the use and enjoyment of the land of the community. This recognition of the common right to land did not prevent the full recognition of the exclusive right to the products of labor. Nor was it abandoned when the development of agriculture imposed the necessity of recognizing exclusive possession of land — to secure the results of labor expended in cultivating it.
– Henry George,
Progress and Poverty (1879), Ch. 29.
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