Commons sense!

This overview on Property vs Land Tax follows key insights on historical debates shaping our understanding of "The Commons" in order to show why "The Law of Rent Theorem" emerged to curtail "rent seeking" across Finance, Insurance, Real Estate -the F.I.R.E sector (Michael Hudson, 2015), in order to encourage efficient and sustainable economic development: Tax the value of land and resources instead of taxing productivity, and provide a social safety net for everyone, aka "Citizen Dividend" or Universal Basic Income (UBI), replacing pensions, via annual distribution of 'consolidated revenue' surpluses.

“Wages & earned profits rise & fall together, in the opposite direction to land prices. That's why land rent should be taxed away instead of incomes.” – Bryan Kavanagh, Land Valuer at the Australian Taxation Office (over 30 years),

The Australian National University Tax and Transfer Policy Institute provides links to a range of institutions with an active interest in tax and transfer policy.

Tax and Transfer:
- The Law of Rent Theorem refers to a self-supporting system 'flow' via 'user-fee' revenues cycling back into the community.
- A "social wage" or "Citizen Dividend" represents an equal distribution of annual Consolidated Revenue surpluses - those funds remaining after all public services and infrastructure have been funded - which will enhance and maintain rather than degrade and destroy society.

In short, there is a need for forensic oversight on the F.I.R.E. sector's methods in achieving monopolistic exploitation of property mortgages, public services, infrastructure supply, and natural resource extraction.

"Once you've gained an understanding of basic Land Value Tax theory, you realize the mistake most people make in thinking a 'Single Tax' will hurt businesses, when it will do the opposite. It can eliminate the causes of financial insecurity on all fronts as easily as it can remove the causes of corruption. ... Hayek failed to see that the so-called real estate 'market' isn’t a real market until its land rent is captured for public purposes. With Hayek’s principles in full force, absent the collection of land rent, we’d still have property bubbles (and recessions when they burst)."
– Bryan Kavanagh, Land Valuer (Ret.) Australian Taxation Office.

In the all-time economics best-seller, Progress and Poverty,1879 (pdf), Henry George argued:
"The ownership of land is the great fundamental fact which ultimately determines the social, the political and consequently the intellectual and moral condition of a people."

According to American Economist Dr. Fred Foldvary, in The Tyranny of Billionaire Monopolists (2015), "Critics of markets lack an understanding of truly free markets" because they have failed to "think things through"
Excerpt:

"When the land rent is distributed equally among the people, and when there is no legal restriction or imposed cost on peaceful and honest enterprise, nor on the consumption of goods, then a basic income from rent, plus the easy ability to become self-employed, prevents firm owners from exploiting workers, and prevents landlords from becoming housing tyrants. The case for landlord and company tyranny by billionaires collapses when closely examined. But the critics cannot do such analysis, as they keep confusing capitalism as a free market with capitalism as today’s mixed economies. And when they do use the term “free,” they don’t delve into the natural-law ethic that gives freedom and liberty their meaning. The welfare-statist critique of markets is a failure to think things through." – Dr. Fred Foldvary, Progress, Aug. 23, 2015

The Resources of Nature Belong to Everybody
Nov 11, 2018
Progress Journal
Co-authored, together: "Public Voice"
Why It Matters: To maximize freedom, share the natural resources and immense profits made with the public. The Earth sustains all life. At its root, our economic crisis is a crises in consciousness because we see ourselves as separate from our environment, when, in reality, we’re inextricably connected to all that is. As a result, we’ve deluded ourselves into thinking that land and natural resources should be owned and then profited from by some at the expense of others. >>> more

Selected comments -
Responding to the above British proposal, former Australian Tax Office Land Valuer Bryan Kavanagh stated, via private discussion.

Oh, for a Georgist system that had people wanting to rush headlong into it! You can opt into the proposed system whereby, if you accept a covenant to pay rent on your title--on the locational value of your site (i.e. the rent), and pay less taxation--the payment stays with you, and succeeding purchasers of the title who will pay less for the property and less tax because of the covenant on title.

Being able to avoid other taxes if you opt in is likely to be so popular--except with the banks, of course--that many people would be keen to opt in. This would act to assist most people and tend to isolate the extremely big rent-seekers. It has two main benefits: it is optional--therefore, those who complain about it don't have to join the system--and it concomitantly reduces the taxes of those who opt in (and the land price payments of future purchasers of the property).

... if there are a number of ways of implementing significant land value capture, Land Value Covenants (LVC) being optional, but clearly beneficial to the vast majority of people, must surely rank near the top and be worthy of investigation? I'm no expert on LVC, but can't find any holes in it as an implementation alternative. For a while, there'd be two markets, but pretty early down the track when young people are looking for a home, they'd surely be seeking one with an LVC on its title, because of the relatively insignificant land value. Would that not eventually leave those who didn't wish to opt into the system out on a limb?

Empty homes:
The economic reasons behind investors keeping properties vacant
Cameron Murray Ph.D.
April 4, 2017
Domain Media
Excerpt:
Prosper Australia has for years been conducting research into how many of Australia’s 9.8 million homes are left vacant. Its major finding is that of the 1.7 million homes in greater Melbourne alone, about 82,000 are vacant, or 4.8 per cent. That research has been cited by a recent United Nations study on the pernicious effects of the financialisation of the housing sector, and has likely been a key reason for the adoption of a vacant housing tax, and probably in Canada as well. It is timely, therefore, to consider some of the economic and practical realities of vacant housing.

Why keep property vacant?

What gets lost in the hype is this important question. Very few people understand the economic rationality behind leaving homes vacant, as the common sense view is that a vacant home is always costly since it is forgoing rental income for its owner. >>> more

While we are distracted by mythical battles in the Game of Thrones, we are being robbed in the real world “Game of Mates” where the well-connected clip the wages and profits of the hard working. Murray and Frijters provide an entertaining and well researched expose of how privilege and rent-seeking dominates the Australian economy, enriching the Mates in the Game while robbing the rest. And they propose how to end the Game. And they name real names too. This is an explosive and essential book for all Australians. Except the Mates." – Professor Steve Keen

Is zoning good?
The principle of zoning and land use regulation is very good and something I support. In practice, a lot of zoning and planning controls generally are designed poorly. I'm a big fan of simple rules.... It was my job to help councils follow the required procedure and approve these modelled fees. ... This system has been in place now for a decade, and it functions well enough. Its simplicity is a huge advantage, and across the planning system, there are similar gains from simplicity. (This surprise policy change also allowed me to demonstrate that these charges do not add to the price of housing)

- I am a fan of the following process for managing land use controls.
- Periodic reviews (each decade) of local planning schemes.
- Extensive community input into these schemes, perhaps with a citizen jury having the final say.
- Reviews to require some minimum zoned capacity unless there are strong reasons not to (not every area needs to accommodate housing growth).
- Strict adherence to the scheme between reviews.
- Few zones with simple controls (e.g. height, floor area ratio, setbacks, and use types).
- A simple, fast and cheap paths for applications that meet the code.
- A longer path for applications that do not meet the code, which allows for community input into the decision.
- A mechanism for capturing value from changes of use (adopt the ACT betterment tax).
- Across most of Australia, planning schemes generally follow this basic structure, though with limited value capture. >>>more

Game of Mates:
How Favours Bleed the Nation (2017)
by Cameron K. Murray and Paul Frijters

Description
James is our most mundane villain. His victim is Bruce, our typical Aussie, who bleeds from the hip pocket because of James’ actions. Game of Mates tells a tale of economic theft across major sectors of Australia’s economy, showing how James and his group of well-connected Mates siphon off billions from the economy to line their own pockets. In property, mining, transport, banking, superannuation, and many more sectors, James and his Mates cooperate to steal huge chunks of the economic pie for themselves. If you want to know how much this costs the nation, how it is done, and what we can do about it, Game of Mates is the book for you.

Review: Game of Mates
Want to stop land corruption? Take away the honeypot
Reviewed by Michael Pascoe
28 April 2017
Sydney Morning Herald

Excerpt: One of the great mismatches in our economy is how little property developers are accused of giving to politicians from time to time, and the massive amounts politicians gift to the developers – some $11 billion a year, according to a new book by two Queensland economists. ...

At its heart, Game of Mates attempts to nail the nation's growing inequality, seeing the well-off as using the law, politics and their connections to further their interests at everyone else's expense.
Some of that is complicated, some is not. The solution to the rorting of land rezoning and planning is in the latter category. >>> more

3 FACTS FOR POLITICIANS & ECONOMISTS
By Bryan Kavanagh, Land Valuer (Ret.) Australian Tax Office (ATO)

1. Extractive incomes are literally counter-productive.  

What are ‘extractive’ incomes? They’re what economists call ‘economic rents’ or unearned incomes, sometimes called ‘super-profits’, viz, over and above normal profits. They need to be taxed away.  
Examples: Land prices represent the private capitalisation of land rent, and banks use volatile land prices as part of their ‘security’ for mortgages. To the extent that bank have an interest in inflating land prices, they are rent-seekers. People investing in real estate for capital gain are also rent-seeking speculators, as are corporate miners who fail to pay half their net profits before tax, depreciation and amortisation to the Australian people for the right to remove our national resources. It’s a partnership with the Australian people, Gina and others!

2.  Taxing wages and profits are literally counter-productive.

Unlike extractive incomes, in generating real wealth, people and companies have worked for their wages and profits: they’ve been earned. They’re thereforethe genuine ‘private property’ and shouldn’t be taxed.

3.  Governments don’t require ‘revenue’ (or to borrow) in order to spend on productive national investment.  

Government spending comes before taxation. The currency of the nation is protected from inflation when governments tax away rent-seeking incomes.

The Unplumbed Revenue Potential of Land,
Part 3: ATCOR (All Taxes Come Out of Rents)
by Professor Mason Gaffney (1923-2020)
Georgist Journal, Issue #103, Autumn 2005
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.

Familiar Micro Cases >>> more

On the history of land as private property ...

"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.

"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