Why a land-value tax is inevitable

https://medium.com/@phila_31297/why-a-land-value-tax-is-inevitable-44e7e4571d33

104 298 6 years ago

cleansy• 6 years ago

Maybe add a (2018) to the title

At the top of an economic cycle, governments are collecting their peak tax revenues — yet even so, many are still running large fiscal deficits and have large existing public debts.

They’re also spending more than they ever have before in history.

The LVT is not the same as a property tax, as it does not punish those who put the land to use; it taxes only the land, not the structure built on top of it.

I’m not convinced this is that different than what’s happening now. For a $1m house in the Bay Area, only a quarter or a third of that value is the structure.

However, most of all, it is one of the rare taxes that does not diminish economic activity, and in fact stimulates it.

How do they arrive at this conclusion? A bakery that’s been around for 100 years finds itself in a hip part of town (which maybe it helped foster), and then has to move out because the only type of business that can support the LVT in the area is luxury apartments. The higher the LVT, the more risk of a monoculture in land usage, not the other way around.

solidsnack90003• 6 years ago

Governments do, indeed, spend significantly more than they used to.

The problem in the Bay Area is simply that taxable value assessed only at sale.

dragonwriter3• 6 years ago

The problem in the Bay Area is simply that tax is not reassessed regularly.

No, tax-basis value is assessed annually. However, increases in assessed value are limited to a maximum of 2% per year outside of certain events qualifying for full-value assessment of the property or particular improvements. (And this is statewide, not Bay Area specific).

fortran772• 6 years ago

That's not true. Every year it can be raised 2%.

Ericson231427• 6 years ago

For a $1m house in the Bay Area, only a quarter or a third of that value is the structure.

So the first problem is zoning, but imagine if zoning is fixed. Now the taller the building is, the smaller the portion of the taxable value derives from the land itself.

The fact of the matter is single family suburbia is a scourge, and we need redevelopment not more development. We can subsidize affordable housing, or we can structure the taxes such that the only economical thing to do is massively denser buildings immediately. The latter is better because it is simpler and less subject to regulatory capture.

AnthonyMouse5• 6 years ago

So the first problem is zoning, but imagine if zoning is fixed. Now the taller the building is, the smaller the portion of the taxable value derives from the land itself.

Which is sort of the problem, right? You have an area which is, say, two story buildings, in an area where you really need an average of three story buildings to satisfy local demand.

Implement LVT and everyone gets the bright idea to build twelve story buildings, because why wouldn't they? Three story buildings would have four times the tax per unit.

But then you get the opposite problem. Real estate prices crash, because there are suddenly twelve story buildings going up everywhere and the prices need to fall to the level that building more of them isn't viable even against the tax advantage. Which is well before you're saturated with tall buildings.

But now you have a thousand plots of land and 10% of them have new tall buildings while 90% have existing single family homes. Now the owners of the single family homes are paying a disproportionate amount of the taxes. They abandon their properties, which have already declined in value, because the tax is more than the newly lowered cost of buying space in one of the tall buildings.

The government is now receiving no tax from 90% of the lots because they've been abandoned, so the land tax amount has to increase by ten fold per plot. But that makes it profitable to build 25 story buildings instead of twelve story ones, to amortize the tax over more units, and the cycle repeats.

It seems obvious that this only works if the amount of the land tax isn't large enough to cause these behavioral changes.

kevinpet3• 6 years ago

A charming bakery in a now expensive part of town is in fact an economic inefficiency. You can argue against it on non-economic grounds, but living in a luxury apartment is a good that people consume, just like madeleines.

paconbork9• 6 years ago

Charming bakery with five stories of apartments above it > charming bakery by itself

paconbork9• 6 years ago

It's not too different to what's happening now in low density neighborhoods because single-family houses are not an efficient use of million-dollar lots. In the current system, an empty lot is taxed less than a house, which is taxed less than say a small apartment building. IMO this is completely backwards: the tax code should reward productive usage of limited resources.

seanalltogether2• 6 years ago

LVT has to be mixed with an occupancy tax however. If I own a large field capable of supporting 10 homes right in the middle of the suburbs, I shouldn't be paying the equivalent taxes that 10 households should be paying. You have to separate out the taxes used to pay for services like trash from the taxes meant for ownership of the land. (although you could argue that large parts of the government are needed to service, protect, and legislate ownership of land)

kevinpet3• 6 years ago

That's the whole point. If you want to sit on an acre of land in a dense area, you should be taxed at the highest and best value of that land.

You make a valid point about services that can be measured, but the point of a Georgist land value tax is that land is the thing that is least distortionary to tax.

I'm not fully bought in and think a transition would be very difficult, but this is one of the reasons I don't like California's Prop 13 (even if I think all the proposed reforms would leave us in a worse state).

mmglr• 6 years ago

If you want to sit on an acre of land in a dense area, you should be taxed at the highest and best value of that land.

Isn't that what property tax already codifies?

Also aren't market forces already essentially doing this? If I sit on an acre of land in a dense area I will have developers knocking at my door and everyone has a price.

jvvlimme3• 6 years ago

You most certainly should be paying the equivalent of 10 households. You deny 9 others the ability to use the land.

If you have real use for the land, paying the lvt won’t be an issue. If you can’t use it efficiently, an lvt will incentivise you to sell what you don’t use.

seanalltogether2• 6 years ago

I disagree, if a town with 1000 households are interspersed with 100 farms, those 100 farms should not be paying an equal amount of money to the town finances as the 1000 households. It just doesn't make sense. They should certainly be paying for the right to have exclusive access to that land, but those 100 farmers do not put as much of a financial strain on the town budget as those 1000 households

Analemma_• 6 years ago

If I own a large field capable of supporting 10 homes right in the middle of the suburbs, I shouldn't be paying the equivalent taxes that 10 households should be paying.

Yes you should, that's literally the entire point of an LVT. If you can generate enough productive economic activity on the land to equal/surpass that of ten households, then the tax is no problem, otherwise you should sell it so the houses can use it better.

singhrac• 6 years ago

Not to endorse a particular point of view, but I believe land value taxes are based on assessed land value. If you're saying that your hypothetical land shouldn't pay the tax the neighboring 10 homes are paying, I think the economist would say something like that clearly isn't the most productive use of the land and you should build on it, I guess. Again, not an endorsement, just my view of the argument.

Also I think "occupancy taxes" as referred to by policy people means a tax on unoccupied land/homes (e.g. pied a terre laws). But I could be mistaken.

gigaftp• 6 years ago

I shouldn't be paying the equivalent taxes that 10 households should be paying

Why not? You may not be making use of the services because of your inefficient use of land, but you do benefit from those services being available in the form of higher land value.

Ericson231427• 6 years ago

The idea is that once the denser buildings, the value of land from the city centers will also decrease far more rapidly.

There is a temporary transition period when shit is weird because we don't have the density/land value gradient to make farming not suffer. The best thing to do is re-plan where the density ought to be to come up with

pre_plan(x, y) * current_value(x, y)

But I'm not sure how to do this in a way that isn't a political clusterfuck.

Ericson231427• 6 years ago

1. UBI

2. LVT

3. Environmental externality taxes

That's all we need to fix the 21st century. Simple as hell so basically immune to regulatory capture, and will usher in a rate of progress we haven't seen in 100 years, if ever.

DeonPenny4• 6 years ago

We went from riding horses to computer and space ship so I don't know if those will have the same impact capitalism has especially if we have less money for innovation

tomp• 6 years ago

Which of these would result in “less money for innovation”?

Carbon tax can be made revenue neutral and will net benefit innovative companies and/or customers buying their products.

LVT is literally taxing non-productive, limited, legally hereditary but actually “common heritage” capital. No damage there.

I’m quite opposed to UBI myself but I think there’s plenty of other ways to improve the social safety net with less opportunity of abuse, the net benefit being that people are less concerned with staying alive (low Maslow need) and free to be creative (high Maslow need).

Ericson231427• 6 years ago

As the other responder says, LVT is good no matter what the basis of the economy is. But also, we absolutely have problems specific to today around automobile use and suburbia that ultimately go back to inefficient land use.

Trying to keep society progressing without improving land use and suburbia is like trying to improve CPUs while not improving upon 1980s processes/chip density.

kashkhan• 6 years ago

Add MMT to the list.

LVT is good for state governments that don't have their own currency.

Ericson231427• 6 years ago

Modern Monetary theory is theory not policy.

The jobs guarantee that goes with it I really don't like. It's stupid in 2020 to not be trying to reduce the total labor per person.

Sure, some infrastructure projects are really important, not profitable, and might even require the training of new labor to get it done. They should definitely still happen. But I see no good reason to hitch that to jobs guarantee.

lend000• 6 years ago

Change Carbon tax to "Pollution tax" -- even on the topic of global warming, methane and nitrous oxide are potentially more harmful, and a pollution tax is far more future proof for capturing externalities.

fastball• 6 years ago

*pollution tax that can be reduced to zero if you are capturing (not necessarily at production) the pollutant you're emitting.

e.g. SpaceX shouldn't be taxed on CO2 release from their Raptor engines if they are getting all their methane via the Sabatier process.

Ericson231427• 6 years ago

Fair, I did an edit.

spenczar5• 6 years ago

Carbon taxes don't seem simple, to me. Measuring the carbon cost of many things seems really hard. What's the carbon tax rate of income from a downtown parking lot? How do you even reason about that?

(the others, sure, much simpler)

Ericson231427• 6 years ago

Yes, Carbon tax is the least simple, but at least the others free up the carbon tax alone from being at all equitable. That helps.

chiefofgxbxl• 6 years ago

You don't need to measure the carbon cost of everything. You tax carbon at the source, like power generation and oil drilling. The costs will naturally balance upwards.

The downtown parking lot, for example, probably doesn't have recurring carbon costs. The gasoline people use to drive there will be more expensive from the carbon tax on oil and gasoline production, and the cement or asphalt that takes electricity to produce will be covered by the source-charge on power plants.

darawk2• 6 years ago

I totally agree, although I would expand the LVT to tax on all non-commodity property (e.g. intellectual property, like patents, copyrights, domain names, etc.). I think LVT is the biggest and most important of these types of taxes, but taxing all non-commodity property in the style recommended by Glen Weyl is even better.

chills• 6 years ago

I think you'd need to widen point 3 to be a Pigovian tax[1], and add a fourth point for a severance tax[2].

[1] https://en.wikipedia.org/wiki/Pigovian_tax

[2] https://en.wikipedia.org/wiki/Severance_tax

quotemstr3• 6 years ago

UBI

I'm skeptical of UBI. The idea doesn't include any kind of automatic stabilization system to set the UBI at a sustainable level. Because UBI is not market-based, there's little information that flows into the process that sets of level of UBI and other redistribution systems. In a market system, a distributed consensus algorithm governs both wages and prices and adjusts both continuously to account for changes in scarcity and utility.

Who decides how much UBI is enough? What procedure will that person or body use? What is the algorithm that prevents UBI increasing without bound? After all, the public voting itself unsustainable transfers from the state is one of the classic failure modes of democracy.

No matter the initial level of UBI, there will be someone who's able to gain political advantage by claiming that the UBI is insufficient for a dignified existence and that human rights demand an increase. Proposing a decrease in UBI will be political suicide. What prevents UBI increasing to the point that it captures all excess value production from all of society and redistributes it evenly? Wouldn't that system be tantamount to the planned economies of the 20th century?

meatspaceping• 6 years ago

“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years. These nations have progressed through this sequence: From bondage to spiritual faith; From spiritual faith to great courage; From courage to liberty; From liberty to abundance; From abundance to selfishness; From selfishness to apathy; From apathy to dependence; From dependence back into bondage.” ― Alexander Fraser Tytler

yellowapple12• 6 years ago

The idea doesn't include any kind of automatic stabilization system to set the UBI at a sustainable level.

Except it does: land value.

This right here is the basis of geolibertarianism, which calls for a minimal government that exists solely to collect LVT and redistribute it directly as UBI. The UBI distributed should be equal to the opportunity cost externalized by private/exclusive land use. The cap would be a 100% LVT, where all land is leased from society as a whole (or more precisely, this minimal government representing said society).

So:

Who decides how much UBI is enough?

The land market.

What procedure will that person or body use?

The appraisal of the market value of land (sans the improvements upon it, like buildings).

What is the algorithm that prevents UBI increasing without bound?

Supply and demand of land.

exabrial• 6 years ago

No we don't. I will never participate in a scheme where we rob someone at gunpoint to "help" another person. The end doesn't justify the means.

chillacy5• 6 years ago

That does contain the huge and unprovable assumption that there is such a thing as natural property in the absence of the state.

See https://www.currentaffairs.org/2019/01/why-taxation-is-neith...

ropman76• 6 years ago

"Explanations exist; they have existed for all time; there is always a well-known solution to every human problem—neat, plausible, and wrong." -- H. L. Mencken I am not saying that the ideas you have listed are not without merit, however to say they will fix the 21 Century is a bit over reaching.

Ericson231427• 6 years ago

It's sounds wise and cynical, but is there actually evidence for this?

I'm not saying any of this is easy to do, but that's because politics and reform is hard. Not enough people can agree what to do != no one can know what to do.

With fields like "mechanism design" we've blurred the distinction between central planned and distributed economics too; never have we had a better menu of options.

apta4• 6 years ago

The fix that no one seems to talk about is to abolish usury/interest. Islam, Judaism, and Christianity outlawed lending money with interest many centuries ago, and for good reason. Once the core is fixed, we will see benefits across the board almost by definition. Ban parasitic and immoral practices (interest/usury, stock shorting, selling debt for debt, short and long option positions [aka gambling], etc.) and things will get fixed very quickly. Don't forget to return to a properly backed currency, not today's fake currency that allows the government to print money at will.

Ericson231427• 6 years ago

This is nonsense economics. Whether monetary policy or "natural", Capitalism as we know it relies on huge growth to have good outcomes.

If you want a steady-state economy, you're going to need far more reforms than this, and if you want capitalism without interest you're shit out of luck.

neilsense2• 6 years ago

Someone's spending too much time on Twitter

Ericson231427• 6 years ago

Actually, I don't have a twitter account.

JimTheMan• 6 years ago

I'm not sure how UBI wouldn't just trigger massive inflation and knock a lot of wind out of the sails of people who receive the income.

Wouldn't a less punitive system of welfare properly distribute the wealth with none of the requirement to be universal?

dragonwriter3• 6 years ago

I'm not sure how UBI wouldn't just trigger massive inflation and knock a lot of wind out of the sails of people who receive the income.

It wouldn't by being calibrated (preferably by being indexed to a revenue source and not to inflation) to be at a level where that wouldn't occur, which is a factor of productivity and other factors.

Wouldn't a less punitive system of welfare properly distribute the wealth with none of the requirement to be universal?

UBI is a less punitive welfare system; any retreat from universality is restoring the essence of the punitive factor which also is the driver of wasteful administrative overhead by duplicating functions already performed in the progressive income tax system.

mr_cyborg3• 6 years ago

I’m struggling to envision how this would impact homeowners differently than the current property tax paradigm. If I have a house and the value of the property goes up, my property taxes increase. If I were to sell a house at market rate, theoretically it would be reflective of what rate it was being taxed at.

How would this same situation play out with a land-value tax?

bryanrasmussen2• 6 years ago

Perversely, if it was based on what the value of the property would be without any building on it, in lots of popular areas it would be more than the cost of the property tax because people will pay a premium for land where they can build what they want if the area is popular.

So I guess it can't be that way, as it would piss a lot of people off.

thebradbain• 6 years ago

LVT, in its most pure form, isn’t based on any improvements (or lack thereof) to the land — the tax would be based purely based on the land itself, as if the home were NOT there.

Most likely, it would be heavily based on zoning, neighborhood, and proximity to jobs and transit. Take Los Angeles, for example. I would imagine you could actually see taxes in predominantly SFH enclaves like Calabasas or Malibu 1hr+ from job centers go _down_ while taxes on similar single family homes in West Hollywood or Beverly Hills, being much more incorporated into the urban framework of LA, would go up.

Wealthy people can still have their expansive estates elsewhere, but the incentive is to move them off of land that would have a better use serving more people: just as it doesn’t make too much sense for the Empire State Building to be built in Aspen, CO, it doesn’t make much sense for a single-family, detached vacation home with a white picket fence and yard to be built in the financial district of Manhattan.

lokar• 6 years ago

About the same.

AIUI, they see a few benefits:

- it will ensure someone holding onto empty land for future use will have to pay at the same "rate" as you do. They don't get a discount simply because they choose not to use the land. If you aim to collect the same total amount of revenue, this would lower your tax.

- Use of land would be better optimized if there was no disincentive to build an expensive (eg bigger/denser) building. IMO this is flawed in that local land use rules are the bigger issue compared to tax policy.

mr_cyborg3• 6 years ago

Thanks for this response. Disclaimer: I live in a city that is growing constantly and has many growing pains that are being worked through.

To me, it almost sounds like this type of tax puts more power in the hands of big developers, which is a challenge many municipalities deal with right now - striking the right balance with that. If they want to force someone to sell the remaining property in a block they’re trying to develop, wouldn’t they just need to make enough improvements that the city drives that person out with taxes?

I can’t help but think it could incentivize municipal governments seeking revenue to approve big projects without input from people living there, and incentivize people living somewhere to being actively anti-development.

jvvlimme3• 6 years ago

If the value goes up when all else stays the same, it is actually the land value that goes up.

If you completely renovate the house, a property tax would go up but the lvt stays the same.

cool_dude85• 6 years ago

Homeowners whose physical home makes up a lot of the value of their property would probably see a decrease, and those whose home makes up a small amount of the value of their property would probably see an increase. The broad idea is to incentivize actually using land instead of sitting on empty lots waiting to flip them.

throwaway20110316• 6 years ago

So what about specifically a vacant/unoccupied tax as opposed to an LVT? Some places in Canada are doing this to disincentivize ownership of vacant condos/properties.

kevinpet3• 6 years ago

In theory,

Tax should be based on land value, not your improvements. So a really nice house isn't taxed more than a run down house. Fixing up the house, or knocking down a post war box and putting up a nice modern house, should not change your taxes.

Tax needs to vary with the maximum use of the land. A daily farm that is now surrounded by luxury apartments should pay taxes at the same rate per acre as those luxury apartments. This is where people start to flip out and get offended that they might be on the side of things that's disadvantaged by it.

Most property tax systems in the US have features that allow some land to be taxed at much lower rates than other land based just on historical ownership. Most notorious is California's Prop 13. The beneficial incentive system of the LVT is that it encouraging redeveloping now-valuable land. That means grandma can't afford to live there anymore. But, that only happens if grandma owns land that has appreciated, so she's probably okay overall.

I'm not really clear on whether LVT always goes with opposition to zoning or discretionary review, but I have seen some of that as well.

notahacker2• 6 years ago

Theoretically with an LVT, if the value of the property goes up because you restore and extend it or convert it into a dozen flats the tax stays the same (but still increases if the value increases because youre lucky enough get a good school and a light rail station in the area as the result of others' actions). In practice, it's somewhat difficult to separate the two which is why property taxes are more common (also because the multistorey apartment block built on similarly valued land to the house next door has a lot more people with the ability to pay and the expectation of having local services paid for)

The other difference is that proponents of LVT often argue it should replace other taxes like income tax. But regardless of theoretical efficiency criteria, it's a lot easier to persuade people that a large fixed portion of their earnings are the government's share than give them an enormous bill for the valuable land their house sits on and tell them if they're not earning enough to afford it they can always move (as long as they can find a buyer...). Which is why LVT has been 'inevitable' since before the Industrial Revolution without it being very widely experimented with

mr_cyborg3• 6 years ago

Thank you for your response.

I feel like homeowners may become more resistant to city services and improvements in their area if it will impact their bottom line disproportionately. I guess it would come down to the value formulation.

Ericson231427• 6 years ago

If I have a house

After the transition period, far fewer people can afford freestanding single-family buildings.

simonsarris• 6 years ago

Places with high property taxes disincentivize beautiful building. The nicer you build, the more you pay yearly. LVT does not have this bad incentive problem.

Rickvst• 6 years ago

Land-value tax doesn't have huge inefficiencies like some other taxes. But the hard part is assessing "value". How should land value be decided? The book "Radical Markets" has some good insights on how to find the value of every plot of land by using markets.

yenwodyah• 6 years ago

Most societies already levy property taxes on real estate, including on unimproved land. I don't know how they assess the value of that land, but they must have a working method for it.

throwaway20110316• 6 years ago

Typically it's assessed value inferred from market sales data from similar properties.

Ericson231427• 6 years ago

The properties on adjacent lots affect the land value of your lot.

It's only in trying to resist the above that the difficulties arise.

mullingitover11• 6 years ago

But the hard part is assessing "value"

Insurers have no problems assessing land value and have been doing it for centuries.

throwaway20110316• 6 years ago

Insurers assess improvement value. Land is not insured, because it really can't be destroyed. If you house burns down, the land is still there. The only thing you lost is the house.

dbcurtis2• 6 years ago

Not so much. Insurers don't insure land. The insure property built on land, crops grown on land, and they insure against various kinds of liability. None of my dirt is insured.

scarmig3• 6 years ago

I'm curious what mechanisms it proposes.

One of the funner ones I've heard of is that the owner and payer of the property tax performs the valuation of the land: it makes implementation pretty much free and uncontroversial! The only caveat is that whatever value the owner lists as the value is an amount they must accept for the land in a sale (plus some meaningful fee to drive off trolls).

So, sure, you can list the value of the land of your Pac Heights mansion as $1 and pay a commensurate tax on that. If you do, though, someone can purchase it for $1 and start charging you a hefty use fee.

willcipriano2• 6 years ago

I would not sell my home at the assessed value. As I would have to move my family, get a new mortgage, and change jobs and schools potentially. I live in a fairly expensive area and a home that meets my requirements (no hoa, not a townhouse) is hard to find. I may have to fork out twice as much to get something that meets those requirements. I don't see that as a great reason why I should pay taxes more than my neighbors.

paul_f3• 6 years ago

This is a land value tax, not a tax on the improvements. If you have a lot worth $50,000 and a house worth $250,000, and place a value of $50,000 on it for tax purposes, do you propose people can buy your house for $50,000?

pyuser5832• 6 years ago

For a LVT, the value is whatever it was purchased for.

CincinnatiMan3• 6 years ago

Typically land is bundled with the improvements to said land though.

nine_k• 6 years ago

British customs used to have a simple mechanism to bind declared value to market value.

A captain could declare the value of the cargo whatever he sees fit, and pay the tax on that amount.

The customs reserved the right to buy the entire cargo at the declared price, at their discretion.

It's a bit harder to implement with large parcels of land, but should work well with home-sized lots.

andreareina• 6 years ago

This works for cargo because much of the point of cargo is to sell it. The point of a house is to reduce the buyer's risk against e.g. rent going up. Except now there's the risk of my house being bought out from under me unless I'm willing to pay above-market tax. Money is fungible, housing really isn't.

kart23• 6 years ago

I think an LVT only works if property tax is removed. And getting every state to have less taxes will be rough.

http://savingcommunities.org/issues/taxes/landvalue/

Ericson231427• 6 years ago

That is a needless dichotomy. For a variety of reasons we want a smooth transition.

Today:

c(land value) + c(building value) = tax

eventually:

big(land value) + small(building value) = tax

Just interpolate between those the obvious way.

wmf3• 6 years ago

An LVT at a high enough rate could generate the same revenue as current property taxes.

ip262• 6 years ago

LVT can levy the same amount of net revenue. It's just a different way of determining valuation. Large buildings in the desert come to pay less. Empty lots in the middle of downtown come to pay more.

dragonwriter3• 6 years ago

LVT isn't a way of determining valuation, it's a restriction of what things you need to determine the value of.

pydry8• 6 years ago

LVT essentially is a property tax, except it's designed to be fairer, harder to evade and more economically efficient (doesnt tax productive activity) than other forms of property tax.

It would make little sense to have two kinds of property tax.

nathanvanfleet• 6 years ago

The LVT is not the same as a property tax, as it does not punish those who put the land to use; it taxes only the land, not the structure built on top of it.

This sounds regressive. So someone with a bungalow on their property pays the same tax as someone with a 40 story apartment building?

lostapathy• 6 years ago

If they're next to each other, yes.

If the bungalow is out in the suburbs and the apartment building is downtown next to the transit station, the apartment will pay MUCH more tax as that land is much more valuable.

cortesoft• 6 years ago

It isn’t regressive, because poor people don’t typically own valuable property.

paconbork9• 6 years ago

If someone is hoarding land on which a 40 story apartment building would be profitable, yes, they should be taxed for it

Ericson231427• 6 years ago

It's only sounds that we because there is so much yeoman farmer -> suburban everyman stuff in our heads.

The land is our collective inheritence, so someone with 1 story bungalow on highly desireable land is actually extremely selfish and decedent in their misuse of the commons.

To get less moral and more mathematical, developers can lessen their tax only to the extent that the flood the market with floors pace, devaluing the good they are selling (floor space, not land space). This forces and equilibrium where the vast majority of people do better than today.

jelliclesfarm9• 6 years ago

Are people who have more than one child (or 2.1, if you’d like for monogamous couples) selfish too?

jonathanyc• 6 years ago

The idea is to tax the opportunity cost of the land. If Jeff Bezos decides he wants to build a bungalow in the middle of Manhattan that is his prerogative, but he shouldn’t get to pay less taxes than someone who put the land to more economical use as a 40 story apartment building.

madsbuch• 6 years ago

land value tax. Yes, If you decide to buy a plot in downtown San Fransisco you are taxed the same as the neighboring plot with the Salesforce tower.

This is exactly the point he is making: One should put the land to good use. Move the bungalows where land is cheap and tax is low.

pixl97• 6 years ago

And generate more carbon and traffic by forcing suburban lifestyles?

m463• 6 years ago

I would imagine each apartment dweller would have 1/40th (ish) of the tax burden.

stickyricky• 6 years ago

This sounds regressive.

We can't make that determination without knowing how much profit a rented bungalow can receive versus the apartment building. A bungalow in midtown Manhattan might very well house one of the world's richest families.

Fundamentally, LVT is a wealth tax. If you hold a large amount of wealth (land) but have no income then the tax would seem regressive from an income-based perspective. But from a wealth-based perspective, its a perfectly reasonable thing to expect those that own to pay taxes not just those who labor.

throwaway20110316• 6 years ago

The argument against it is that a vacant property imposes very little cost upon society. It doesn't require fire protection, it doesnt add children to the education system, it doesn't use any municipal resources. If it's an eyesore or presents a hazard in some way, sure, but simply being vacant or "underutilized" doesn't do that. Why should it pay to simply exist?

chongli• 6 years ago

Another way to put it: the person who owns a vacant lot in Manhattan (worth many millions) pays the same tax as the person who owns an equivalent lot in Manhattan with an apartment building built on it. They would also pay the same tax as the person who owns that same lot with a bungalow sitting on it.

It's not regressive at all. You pay tax based on the value of the land. If you're not utilizing the full value of the land (by leaving it vacant or otherwise under built compared to the demand) then you're going to pay more in taxes than you get out of it. The whole purpose of LVT is to nudge you toward either improving the land so you can utilize its value or sell it to someone who will.

DeonPenny4• 6 years ago

This makes a lot of unsubstantiated claims. Like the bond market is saturated that seems the opposite of true. This also claims theres been a high inflation but that doesn't seem to be true either based on any metric.

I think the one thing is clear and I agree with is taxes increases capital outflow. But my biggest issue is with the central premise that is taken at face value. That the government needs more money. I don't think it does. The US government especially has far to much money and waste most of it.

So I'd say instead of trying to find sneaky ways of taking more of the citizen money maybe incentive it to be use to create more opportunities. Instead of taking from some to give to other incentive opportunities so those who have will willingly give opportunities to those who don't

CyberDildonics4• 6 years ago

I think you mean unsubstantiated. True or not, the claims you are making are also unsubstantiated.

DeonPenny4• 6 years ago

Which is why I presented the solution as a opinion.

mullingitover11• 6 years ago

Instead of taking from some to give to other incentive opportunities so those who have will willingly give opportunities to those who don't

What does this even mean? This is not a sentence :)

dang• 6 years ago

It's great to ask what someone means but please don't do it in a nasty way, such as by cross-examining them. That costs more than it benefits.

https://news.ycombinator.com/newsguidelines.html

supernova87a• 6 years ago

There was a convincing op-ed in WSJ a few years ago about how in all the states that are facing public sector defaults, the ultimate payer of these debts will be homeowners. Since basically the only place left for most governments to go is property value (unless they have huge businesses they can tax).

And it is worse in the poorer states, because they don't have high home values to cushion the blow to the individual taxpayer.

ocdtrekkie• 6 years ago

There are big huge businesses we aren't adequately taxing: Big tech.

When your sector makes up like three of the five most valuable companies on the planet, we probably should be taxing it more.

And Jeff Bezos does not need more money.

dehrmann2• 6 years ago

Which jurisdiction to tax large companies in, even without doing the double Irish trick, is complicated. The question was talking about state income, and taxing all of Amazon's profits in Washington doesn't really make sense. Amazon also doesn't make that much money; its profit margin is 5%; Apple's is more like 21%.

It's also not like the money is never taxed. If Jeff Bezos wants to turn his AMZN shares into dollars, he'll federal capital gains on the appreciation. He pays nothing in Washington state because it has no income or capital gains tax, and that's Washington's choice. Corporate taxes are also a form of double taxation for this reason; the profits are taxed when the company makes the money, and taxed when investors realize gains.

Amazon also indirectly pays taxes in ways you're not thinking about. There's sales tax on sales, taxes on all the supplies it buys, property tax on all the land it owns, payroll tax for employees, and its employees also pay income tax (except in Washington), property tax, etc.

Taxes are actually getting collected pretty much everywhere along that chain. The usual criticism is with tax inversions, and even those mostly defer taxes, and because dividends and capital gains are taxed, I'm not convinced it makes sense to tax corporation.

mullingitover11• 6 years ago

When your sector makes up like three of the five most valuable companies on the planet, we probably should be taxing it more.

Agreed. We should be ruthlessly taxing capital gains, and in general should look upon money earned without laboring for it with scorn.

pdonis3• 6 years ago

When your sector makes up like three of the five most valuable companies on the planet, we probably should be taxing it more.

The problem is that increasing the corporate income tax rate just doesn't provide enough revenue. Corporate income taxes are only 7% of the US government's annual tax revenue, for example. Even if we doubled the corporate income tax rate, that's still only another 7% of the total tax revenue, which is way too small to make up for the annual US budget deficit.

Jeff Bezos does not need more money.

While I don't disagree with this, taxing the wealth of the rich also just doesn't provide enough revenue. Suppose we set a hard cap on personal wealth of $1 billion--everything over that, the government takes in tax at a rate of 100%. The net worth of the 400 richest people in the world is around $3 trillion, so we'd be taking $2.6 trillion of it. And that would fund...the US government for about 6 months. Or all 50 US states for...a little more than a year. And then the wealth is gone, and what do you do next?

In other words, all the complaining about low corporate tax rates and wealth inequality is complaining about something that, even if it were "fixed" (and fixed without depressing wealth creation, which is highly implausible), would not do much of anything about the real problem: that we expect governments to do far too much and give them far too much power. And that translates into chronic overspending and deficits, which end up being paid by the middle class, because that's the only source of revenue large enough to pay it.

asah• 6 years ago

wrong! Bezos wouldn't have founded Amazon if he could only make $50 billion. /s

Ericson231427• 6 years ago

I wish, but household owners are so politically powerful I doubt it will happen.

dantheman• 6 years ago

Maybe those to whom the debt is owned won't get paid or won't get paid completely -- these debts aren't valid. Taking debt in someone elses name is immoral - especially when most of it public sector unions voting in those across the negotiating table.

hourislate• 6 years ago

The only thing inevitable will be that eventually Land-Value taxes will not be enough (if implemented) and then what? There is no end or limit to the amount of money a Government can squander.

lilgreenland• 6 years ago

This is a really good example of the slippery slope logical fallacy. https://en.wikipedia.org/wiki/Slippery_slope

syrrim• 6 years ago

It's a slippery slope argument. Logicians demand perfect rigour, and label reasoning that fails to attain that a "fallacy". Humans are satisfied with heuristical arguments, which the slippery slope is an example of. Pointing out that it fails to achieve perfect rigour is meaningless; no argument reaches that bar, and demands to pursue it will only result in obfuscation. Instead, try to explain why the heuristic doesn't apply in this case - if you can. The general response to a slippery slope argument is to explain why one step, once achieved, won't lead to any further steps. You will have great difficulty demonstrating that in this case, since government expenditures regularly rise to the level of their budgets (and indeed beyond).

Ericson231427• 6 years ago

While I don't agree with your premise that private sector is magically more efficient, let's just accept it.

The government can also hand out cash raised from the LVT as a UBI.

Problem solved.

AnimalMuppet2• 6 years ago

If you think that solves the problem, I don't think you understood the problem...

chillacy5• 6 years ago

If the definition of squander is defined such that any government spending on anything OP don’t benefit from counts as squandering, then it’s not so easily solved. A bit tongue in cheek but not an uncommon opinion.

pydry8• 6 years ago

There's no end or limit to the amount of money any person or institution can squander.

It's a flow of income (land rent) that can accrue either to everybody and be shared or to individuals. One way or another some party has to be the beneficiary. The question is who deserves this unearned income?

mlinksva2• 6 years ago

Squandering taxes seems like a separate problem. In the case taxes are squandered, and in the case they are not, it makes sense to use the most efficient taxes first.

Also https://en.wikipedia.org/wiki/Henry_George_theorem shows "that under certain conditions [presumably including limited squandering, though I didn't check], beneficial investments in public goods will increase aggregate land rents by at least as much as the investments cost"

throwaway20110316• 6 years ago

That might be true to the extent government spending is actually in public goods, such as infrastructure, transit, parks, schools, what have you. In reality most government fiscal problems are from things like underfunded pensions and debt service.

bjarneh• 6 years ago

There are so many ways to tax the wealthy that would "work". But as long as the rich have way more influence on how society is organized than than the poor or middle class, it's just very difficult to do anything about it.

Ericson231427• 6 years ago

Absolutely, but their best defense is complexity and regularity capture, so the masses don't even know they're getting fucked.

If one can, by some miracle, pass simple policies like LVT and UBI, the resulting fronts and battlegrounds are a hell of a lot clearer.

ichbinwiederda4• 6 years ago

I detest property taxes. What ends up happening is that people who are on the brink of poverty keep losing their (inherited) land because the government deems it an income generating asset, even though it is not (it's either their home or some dilapidated piece of land without much actual income generation prospects). Often they also get screwed on the selling because they are under pressure and because they are not experienced in selling property, and end up losing money in the process. So it's like crabs on the brim of the bucket being kicked back to the bottom.

civilized• 6 years ago

The solution is clear: an, ummm, income-based land value tax

jvvlimme3• 6 years ago

Only that doesn’t happen in real life. People on the brink of poverty don’t inherit property. And if they do, they can always sell it and put that money to better use.

ichbinwiederda4• 6 years ago

I am talking from experience. You are wrong on both counts.

What makes you think that poor people don't inherit property? There are lots of people with very low incomes but who own a house. And no they don't just sell it. Why sell the only house you have? Or maybe it is not their house but it is a piece of property that they have always owned and which they use as a garden or a yard or storage.

They don't sell it because they'd rather have a piece of land to enjoy then some money in the bank. It might be their only luxury in an otherwise frugal life.

wyre• 6 years ago

Source?

What is a better use than property? I though property was the best investment one could make. The government taking property because of a lack of income to pay taxes is heinous.

ghayes• 6 years ago

Do you have a viable alternative to property taxes for raising municipal revenues? Additionally, certain acts like California Prop 13 of 1978 attempt to solve the problem you’re addressing but, in my opinion, ended up causing much more harm than good.

https://en.m.wikipedia.org/wiki/1978_California_Proposition_...

inetknght• 6 years ago

Do you have a viable alternative to property taxes for raising municipal revenues?

Income and/or sales tax.

ichbinwiederda4• 6 years ago

Yes but it is like a complete rewrite of the tax code if you are American. In my country we just don't have municipal taxes. Municipalities have reduced responsibility. All the important services are funded directly from central governments. So you don't get problems like underfunded schools and such. Municipalities get pocket money also from the central government and are only in charge of less important infrastructure and service.

There is no property tax, but we have capital gains taxes based on transfers of assets.

Ericson231427• 6 years ago

Sorry, they should sell. Truely cash-poor land-rich people are an insignificant class that's been held up as the boogieman for 100+ years.

You're not a "temporarily embarrassed billionaire", and if owning land one can no longer afford seems commonplace, it is entirely because the current real estate speculation scheme we prop up (CA especially).

Any realistic LVT would be phases in slowly, and give the prop 13 petit gentry plenty of time to sell and live a fine remainder of their life in a very fashionable condo.

Spooky235• 6 years ago

I just don’t see this happening. Maybe I live in a different place.

Who are these people inheriting land who are too poor to use it, too dumb to sell it and losing it to the county?

I live in a high tax state and have served on nonprofit boards that have exposure to housing issues. This didn’t happen.

The common problems of this ilk were usually frauds where caregivers, relatives, powers of attorney or others squander or steal proceeds of reverse mortgages or borrow money against property without telling the family. The other issue that would come up is Medicaid recapture when money is given away.

Usually if there is a tax sale there is some bigger story why the property is worthless. You can borrow against the equity of anything.

ichbinwiederda4• 6 years ago

It happens outside of your bubble. It's not about being dumb. It's about having a certain way of life that values frugality and simple living. But you need land to live on. Go tell the Amish to sell their land and move into a condo because it makes more financial sense.

adwf2• 6 years ago

Indeed, the biggest problem with LVT is who exactly gets to value the land and how. It's an extraordinarily difficult issue which would require a very precise implementation.

Once you start assessing peoples property in such a wholesale fashion, you almost end up in a classic "managed economy" situation. "From each according to his ability, to each according to his needs" failed due to the combined difficulty of assessment + corruption of the assessors. LVT is the same principle applied to land.

I think that LVT will end up as one of those ideas that is great in theory but doesn't work in practice.

amanaplanacanal• 6 years ago

Except that it appears to have already been implemented in many places and it seems to work just fine. See the Wikipedia article on it.

chillacy5• 6 years ago

There have been some interesting market driven pricing schemes mentioned in this thread where your property tax is set based on an auction model, though that seems to have the opposite problem where the person with the largest bank can steamroll everyone else. High capital efficiency though.

ip262• 6 years ago

Under LVT, if this house is on useless land in the middle of nowhere they wouldn't owe hardly anything. If they inherited empty land downtown they'd have to sell, but no one is well served by someone destitute hanging on to such land and doing nothing with it.

mlinksva2• 6 years ago

Plainly not inevitable. Crises can continue to get worse instead, and surely that's much more likely.

However, I'd love to be pleasantly surprised, and occasionally am, e.g., apparently Baden-Wurttemburg (the German state that includes Stuttgart) has recently passed a LVT scheduled to be implemented in 2025 https://libdemsalter.org.uk/en/article/2020/1382897/germany-...

teddyh4• 6 years ago

The idea of land-value tax strongly reminds me of the often cited, and much maligned, so-called fiduciary duty to shareholders which CEOs and/or board members reportedly have. This duty creates, it is said, an incentive towards naked short-term greed, which is often described as a bad thing. Now, even though this duty is also usually derided as fictional, the argument, if this duty did exist, is reasonable. But does not a LVT create the same incentives in landowners – in essence forcing landowners to always use the land in a way which extracts the maximum amount of money from it? Why then is a LVT a good thing while the duty thing would be bad?

roenxi2• 6 years ago

... in essence forcing landowners to always use the land in a way which extracts the maximum amount of money from it ...

That incentive already exists, landholders typically use their land in a high-value way. If you cast your eye on Europe there are a large contingent of undeserving people who have generations of wealth that they secure through owning land, which does not degrade over time. The big win of a land tax is about breaking ultra-low-risk inter-generational wealth transfer. If wealth is transferred between generations there at least has to be some level of competent management demonstrated by each new layer of the family tree.

teddyh4• 6 years ago

The general incentive to make money always exists, yes, but if LVT is implemented, there would, I assume, be an almost insurmountable force compelling landowners to do so. I compared LVT with the idea of “fiduciary duty” with intentional precision; CEOs are also, in general, incentivized to make money, but the idea behind decrying the alleged fiduciary duty is that a CEO is supposedly more or less forced to do whatever makes the most money, regardless if they feel it would be bad in the long run, inhumane, or even unethical.

The same principle seem to apply to LVT: A landowner would, it seems, be forced, by the taxes extracted from them, to generate a matching (or larger) income by the land, regardless if they might feel that the community would be better served by using the land for something which would, incidentally, make less money for them personally.

If the object of LVT is to prevent inter-generational wealth transfer, I would assume that there would be vastly more effective ways to accomplish this more directly. Or there could at least be some carve-out which limits the effect of a LVT to those instances.

joe_the_user3• 6 years ago

The idea of a LVT is that valuable land should an efficient use - the obvious example of inefficiency are the upper middle class neighborhoods on the SF Peninsula - Silicon Valley. The aggressive zoning and relatively low tax situation mean that it's impossible for people who get job in Silicon Valley to live there, causing crazy spill over to the rest of the SF Bay Area. Theoretically, forcing up taxes would force more efficient uses of land - allow the building of apartment high rises and so generally increase the affordability of housing.

But that's theoretically. Whether you could actually impose this regime is a different matter. What the "real" value of land isn't a clear thing thing imo. A town might that since it's zoning prevents building much, it's land isn't worth much.

throwaway20110316• 6 years ago

It's interesting and I need to do some more thinking and research. On the one hand I don't think that one should be forced off one's land because others could be using it in a more valuable way. However the whole idea of property rights is founded in improvement or creation of value. Abandonment is a thing, and if you do nothing to improve or derive value from land you can lose your property rights in it.

teddyh4• 6 years ago

But a city needs different buildings with different uses, no? However, IIUC, a LVT would tax a plot of land by what use it could theoretically be put to in order to make the most money. And this is evaluated individually for each plot of land, with no regard for what would actually happen in reality if every single plot of land would actually be put to use in the most money-making way. Would a LVT not force a monoculture of, say, only lofts, where previously each landowner might have opted to allow things like nightclubs or the occasional park or other forms of variation and whimsy? If you tax every land owner as if they have the maximum possible income, do you not essentially force every landowner to implement that way in order to acquire it?

joe_the_user3• 6 years ago

I think the problem with land-value taxes is that objective valuation of raw land value is actually difficult and even arbitrary. If you say a parcel of land is valuable because there's a building on it, you wind-up with just a real estate tax. If you value all land the same, people will just abandon ownership of large parcels, probably with paradoxical results.

Almost automatically, the assessment of just land has to be harder than the assessment of land plus the property that's there. And assessing land for taxes tends to be politically hard. For example, the overall process of real estate taxation in California was politicized into a disastrous mess years ago with proposition 13. Just undo prop 13 would be a simpler matter and even that likely isn't going to happen.

Further consider, the objective land value of a parcel in Mountain View is probably less than the assessed value a lot of homeowners pay their taxes based on. I'd be in favor of measures that force more intensives use of that land but taking on home-owners with vast political influence is going to be a challenge.

Retric• 6 years ago

You don’t need a great deal of precision with a land value tax. If the closest properties where sold at X$/ acre that’s a solid suggestion of the actual value of that land.

The goal is essentially to separate the value of land based on local infrastructure like subway systems from the amount of effort put into improving the property. An empty lot that’s worth 10,000$ per acre may physically look the same as an empty lot worth 10,000,000$ per acre, but it’s clear society not the property owner generated that value is.

That said, there are a lot of edge cases like beach front property vs having another house in front.

joe_the_user3• 6 years ago

You don’t need a great deal of precision with a land value tax.

You need a ball park figure for land value to work and even that is going to depend on the philosophy used for valuation. If Walmart buys the cheapest land it can find and builds a distribution center on that land, how much is that land worth? What they paid for it? What someone else would pay for it now? How bought all the parcels around it that now would be useful for housing?

Either paradigm is real estate valuation (at which point it become real estate tax) or the paradigm is something else with that something else up for grabs.

yellowapple12• 6 years ago

people will just abandon ownership of large parcels

Good. That's the whole point. That abandonment of ownership gives other people the opportunity to make use of it for their own benefit.

That is: the very act of land ownership externalizes opportunity costs on the rest of society, and this is what underpins wealth inequality. LVT forces landowners to internalize those costs.

mythrwy• 6 years ago

LVT is a great idea.

I'd also like to see more general resource use taxes (i.e taxes on raw materials like water, oil, aluminum etc.). They could be adjusted based on economic conditions (instead of playing shell games with interest rates) and adjusted for external effects. Make it formulaic. Open source, everyone can see how it works and who adjusted and how and it's not a closed door XX party with input from lobbyists.

Among other good effects I see this encouraging efficient use and recycling.

AnimalMuppet2• 6 years ago

I'm not sure that LTV is a great idea. But if it is, why stop at land?

Take Google, for instance. Google owns some buildings on some land. But, in proportion to how valuable Google is, they don't own much land. What they own is a mountain of code, and multiple mountains of data. The single most valuable thing they own is the google.com domain. And out of all of that, we're going to tax... the land? Huh?

If all money came from land, then LTV would make sense. When it was devised, that was more or less true. But it's not the 1800s any more, and that is a long way from true today.

throwawaysea• 6 years ago

The big moral problem I have with a recurrent tax on assets like land or improvements on land (buildings) is that it erodes the fundamental right to private ownership. What does it mean to own anything if policies can retroactively apply taxes to it or continually extract taxes and ultimately take that asset away from you? That’s simply not compatible with a free society and it amounts to theft in my opinion.

dbcurtis2• 6 years ago

Exactly. It's the feudal system implemented with different accounting methods. Landowners are turned into sharecroppers working for the government.

arrosenberg2• 6 years ago

Seeing as land is limited, it's logical for governments to charge a rent on the most productive plots in order to maintain itself. I don't see how that erodes the fundamental right to private ownership. You can certainly find land with very low or no property or land taxes on it. You won't be anywhere near infrastructure, culture, food, or higher education, but your taxes will be very, very low. You are paying to participate in all the value-adding parts of society. It would only follow that improvements to the public common increases the value of your privately owned asset, and you should continue to pay your share of the upkeep based on the productive value of the land.

tekkk3• 6 years ago

I think this has been implemented already in Finland. The tax administration evaluates the property's value (both land and infrastructure) and taxes it accordingly, eg 0.5%. For unused land the municipality can set an extra tax to coerce the land owner to develop the land, for example 1 to 3 percent. But I wouldn't say it is a miracle maker, just a part of an effective taxation system.

What I personally would do, if I could, is to target the unscrupulous rich by banning companies located in tax havens from operating in the country, unless they can prove that they have proportionally high enough of employees working full-time in the said tax haven compared to their assets. That, I would say, is very achievable goal that would affect mostly just tax-dodgers and give a strong signal that those practices should come to an end.

I think it is just unfair that normal people have pay taxes up to 50% on their earnings (depending on the country of course) while millionaires and billionaires can just bypass the whole system by incorporating a holding company in Cayman Islands. Or mega corporations that can even negotiate special tax privileges.

pdonis3• 6 years ago

The tax administration evaluates the property's value (both land and infrastructure)

That's not what the article is proposing; it specifies a tax only on the land, not on whatever is built on the land. The point is to incentivize transferring ownership of the land to whoever can get the highest value use out of it; that only works if the tax itself is only on the land, so it makes sense to build higher value infrastructure on it since that raises the income from the land without raising the tax.

tekkk3• 6 years ago

Sure, but would that be the case either way? I am quite suspicious how it would work better than the property + undeveloped land tax. And I would say LVT would disproportionally affect the poorer folk who live in the country side with a lot of land without anything to build on it. But I guess these points have already been discussed in this thread.

technotarek• 6 years ago

Anecdotally, I’ve been surprised by how Washington DC’s aggressive, punitive taxing of vacant properties has done little (in my observation) to free up these plots. $MM properties that just sit there.

valuearb9• 6 years ago

The problem with this op-ed is that it's based on an entirely false premise, it completely ignores how much revenues governments need.

Clinton was able to run a federal government spending less than 20% of GDP, since George Walker Bush federal spending has exploded to the 25 to 30% range. The reality is that 20% is plenty, and can solve all the problems government has the ability to solve.

Need to start by NOT

1) serving as the worlds policeman

2) building double the aircraft carrier tonnage of the rest of the world combined.

3) spending a trillion dollars on newest latest fighters not ready for service when we aren't at war

4) staging US troops and ships in the Middle East or Europe when both are immensely wealthy and able to defend themselves.

5) pouring $40B into a launch system design based on obsolete technologies and an overweight deep space capsule that needs a year to replace a single bad power unit.

6) subsidizing professional sports leagues paying millions a year per employee. etc, etc.

A good start would be requiring senators and congresspeople to recuse themselves from any legislation that specifically allocates funds for any projects in their states/districts. Get away from the thousand page earmarked pork funding bills and focus their responsibilities on legitimate national interests.

quotemstr3• 6 years ago

Need to start by not 1) serving as the worlds policeman 2) building double the aircraft carrier tonnage of the rest of the world combined. 3) spending a trillion dollars on newest latest fighters not ready for service when we aren't at war, 4) staging US troops and ships in the Middle East or Europe when both are immensely wealthy and able to defend themselves. 5) pouring $40B into a launch system design based on obsolete technologies and an overweight deep space capsule that needs a year to replace a single bad power unit. 6) Not subsidizing professional sports leagues paying millions a year per employee. etc, etc.

Have you looked at the federal budget? The expenditures you mention are insignificant. Social security and medical assistance programs make up 48% [1] of the federal budget. Defense only makes up 16%, and of that, only 27% goes to the navy. Another 8% is various assistance programs. 8% is interest on debt. 0.5% is all of NASA.

You can't really reduce the government's expenditure levels by cutting a few high-profile programs that some consider wasteful. The majority of the budget goes to supporting the most vulnerable in society. Cutting these programs is politically impossible.

thousand page earmarked pork funding bills and focus their responsibilities on legitimate national interests.

Earmarks are dead already. But they shouldn't be: earmarks let lawmakers swap favors in a way that promotes the smooth operation of government and compromise in lawmaking. Yes, there's some corruption, but that corruption was a small price to pay for decreasing the overall level of hostility in the legislature and promoting compromise.

[1] https://www.cbpp.org/research/federal-budget/policy-basics-w...

snicker72• 6 years ago

Earmarks and pork funding is not even corruption. It is a representative's duty to advocate on behalf of their constituents. And constituents want spending programs in their communities.

valuearb9• 6 years ago

LOL Earmarks clearly still exist, just under different names, and have always been used solely for corrupt purposes. Pork barrel spending is a huge price to pay for enabling national legislators to agree to legislation that's clearly bad for the country as a whole, in order to fund projects for their political supports.

And most social security payments go to people with living standards at or above the US median.

snicker72• 6 years ago

Defence is 12% of federal spending -- or around ~2.5% of GDP, or a whopping 0.5% more than the NATO threshold.

valuearb9• 6 years ago

It's actually over 3% of GDP.

NATO is an organization of countries near the Russian border. The US could easily get by with 2% or less to defend it's own borders. If Russia invades Germany we can ship and airlift troops and meet them in France (given that Germany won't spend enough to defend itself).

Context_free• 6 years ago

It takes some tricky math to get where military spending is only 12% of federal spending.

First, a soldier wounded in Afghanistan and being treated in a VA hospital would have to have that cost excluded from the budget.

The department of energy dealing with nuclear weapon waste is excluded from that budget.

The office of a foreign US embassy serving as cover for a CIA case officer is excluded from that budget.

Interest on military deficit spending from last year is excluded from that budget.

In fact, add all these things up which don't fall within this theoretical 12% and it comes to hundreds of billions of dollars.

BMSmnqXAE4yfe1• 6 years ago

Military spending is $934 billion in the 2021 budget. It's spread out among different agencies and budget categories, so you must add it all together. It includes:

    Defense Department base budget: $636 billion.
    DoD Overseas Contingency Operations: $69 billion.
    Departments that support defense: $228 billion. They include the Department of Veterans Affairs ($93 billion), State Department ($48 billion), Homeland Security ($48 billion), FBI and Cybersecurity ($10 billion), and the National Nuclear Security Administration ($17 billion).

This is 63% of all the discretionary spending in the budget, i.e. the budget outside of mandatory payments such as Social Security.

bobthepanda2• 6 years ago

Pork barrel spending has not been a thing since 2011 when the House banned earmarks.

This info is woefully out of date, and at least some attribute the sharp increase in partisanship and gridlock to the ban on earmarks preventing horse trading.

valuearb9• 6 years ago

LOL. No longer not using the term "earmarks" in financing legislation is not the same as ending pork barrel spending.

If it is, please explain the SLS. It's entire design was dictated by Congress to use specific components from specific contractors.

spollo• 6 years ago

It seems US Government spending is less than 20% and has been since the 1970s? [1]. Curious if I am mis-understanding you here. 2013-2018 is also roughly in line with the spending % of the Clinton presidency according to that source as well.

[1] https://www.theglobaleconomy.com/usa/government_size/

kristianp• 6 years ago

(2018)

throwawgler87• 6 years ago

2018

Why a land-value tax is inevitable

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