Beyond Left and Right

How should we divide the fruits of labor between individuals and government? The left and right want to cut all forms of income, they only disagreement is on how large the slices should be. Below is a link which will explain a different method ... a more logical method. It is only one page, a short read, and has pictures, so I encourage you to take a look and learn about a completely different approach to how government should be funded.

http://www.henrygeorge.org/isms.htm

I will be happy to answer any questions as I have time.

 

I don't quite get what you're trying to say with this. It seems too overly simplified.

 

For those who do not understand the economic meaning of "rent" (which is different than the everyday meaning of the word) they can follow this short tutorial to learn what rent means when used in the context of economics:

http://www.henrygeorge.org/rent1.htm

 

The proposed system is different because it examines how the income was attained. Was the income earned by the individual, or was the income earned by society and simply captured by the individual? Wages and interest are earned forms of income, while rent is always a unearned form of income to individuals.

The system advocated is that only rent income is taxed, but because rent is not earned by the individual, it is taxed in full, and society receives all rent income. Also, because wages and interest are earned forms of income, they are not taxed at all.

Basically, you do not pay taxes on any income you earn by work, or by saving, but you pay a heavy tax on all incomes you receive that are captured through what are essentially monopolies which you hold.

 

I've never heard of this "Georgism" before, but it sounds like just another utopian pipe dream that leads to a tyrranical ruling elite.

Anytime a philosophy says something like or was the income earned by society and simply captured by the individual, that means it starts from the premise that the govt owns everything and it divies out what it thinks you should have. That translates to a small select group of people making decisions over what is "rent", what is "earned income", determining who owns the roads, what taxes are to be paid, etc. To each according to his need, etc.

 

I have a long day of work ahead of me tomorrow, and I have to get some sleep. Perhaps in the meantime, you may have a deeper look into the philosophy by reading the following link (you might be surprised by some of the names of the advocates of this basic system for funding government).

http://geolib.com/essays/sullivan.dan/royallib.html

 

Geofree is one of the few Georgists that will actually take his time and attempt to explain the philosophy he believes in without being rude or petulant and for that he has my respect.. There are a couple of other Georgists on this board that were just plain idiots when someone would actually ask them questions and confront flaws in their philosophies- it was like they were purists and could not see how anyone could question it.

That said, it is the same flaw I have discovered that you pointed out. While most see Georgism as in the family of libertarianism (and it holds a few similarities) it parts ways as its land ownership philosophies are strangely Marxist in nature. Once you cede power to government to tax, you have ceded power, and the land taxation Georgians propose is no different. It has the same fatal flaw as many other form of government- an inherent trust for the government to do what is right by the people.

 

Geoism is interesting but it doesn't eliminate the state so the ills of representative nonsense will always be there to haunt us .

By all means no .

 

I agree with that assessment, as well as mutmekep's below you.

There seem to be two minds when it comes to land ownership: either individuals own it when they put it into production, or nobody owns it (or rather, the entity enforcing this owns it). Georgists seem to opt for the latter.

 

It does sound vaguely Marxist.

 

Well, it is not Marxist, it actually started with Adam Smith, who advocated that all taxation be place on land rent. Our Founding Fathers wrote it into the original Constitution of the U.S.

Kinda can't be Marxist 'cause Karl Marx wasn't even born when the original U.S. Constitution was written.

"In my opinion the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago."— Milton Friedman, Nobel laureate in Economics (1976)

Was Milton Friedman a Marxist economist … or are you just a very ignorant individual? One of these is true … which is it?

"We ought to tax all idle land the way Henry George said — tax it heavily so that its owners have to make it productive." — Henry Ford (1863 – 1947)

Was Henry Ford a follow of Marxism?

"Men like Henry George are rare, unfortunately. One cannot imagine a more beautiful combination of intellectual keenness, artistic form, and fervent love of justice. Every line is written as if for our generation." — Albert Einstein (1879 - 1955)

 

Under the geoist system nobody owns the land, you simply pay a fee to the community to exclude them … if you don't want to exclude others you can use the land for free, but the land remains unowned (in the practical sense) either way. Although “legally” land remains under individual ownership, just as under the current system, the taxes are just much heavier.

Also, just because government is the one that collects the land rent for the community does not constitute ownership, the government cannot keep the land rent collected, but must spend it to the satisfaction of the community/public.

Finally, land rent is only about 20% of GDP, so there is no way the government can grow to the size it is today under a land value tax system. Government would have to shrink from current levels … and you guys call me a Marxist … if you want to see a real Marxist, just look in a mirror.

 

Here is what Nobel prize winning economists say about the geoist (land value tax) system:

 

I read your link and several other sites. There is a lot of parsing of words and definitions, and a lot of division based on what is land, labor, rent, capital, state owned, common owned, and on and on. Its not clear and reminds me of the EU debates with the VAT but on a much broader level and subject to much more confusion. When a philosophy has to make so many distinctions in ownership status, its too complicated to implement in the real world. In practice, it will devolve into the usual arrangement of govt appointed elites arbitrating and deciding the details, and those elites will be subject to lobbying, bribery, cronyism.

 

Very interesting site. Reading it now, and I will look up what other economists have to say about geoism.

 

I'm talking about this:

You are horrified at our intending to do away with private property. But in your existing society, private property is already done away with for nine-tenths of the population; its existence for the few is solely due to its non-existence in the hands of those nine-tenths. You reproach us, therefore, with intending to do away with a form of property, the necessary condition for whose existence is the non-existence of any property for the immense majority of society.​

http://www.notable-quotes.com/m/marx_karl.html#WztFBhAFtslgPaQQ.99

Are you Marxist?

 

Below is a link to a Geoist proposal written in open letter to Mikhail Gorbachev, by Nick Tideman. This letter was signed by over two dozen of the worlds most accomplished economists, four of whom are winners of the Nobel Prize in economics.

https://en.wikisource.org/wiki/Open_letter_to_Mikhail_Gorbachev_%281990%29

While the letter does not mention geoism, the letter is advocating a switch in taxation from income and trade to be placed on land rents instead, which is the central idea behind geoism.

Having read many of your posts, here is a link to another paper I believe you will enjoy:

http://www.progress.org/davidso4.htm

 

Let me put it this way, of the ten Planks of the communist manifesto, I only partially agree with one, and disagree with the other nine. Does that make me a Marxist?

Now a question for you. Government spends $20 million to build a new asphalt roadway, complete with curb and gutter, sidewalks and shelter trees. After the road is completed, the guy working at McDonald's restaurant still earns the same wage, the road has not made him any richer. However, the new roadway has made the land all along its length vastly more productive and desirable, and under capitalism the landowners would become rich off of that government spending. Now I ask you, who should pay for that road? Should the guy working at McDonald's, and his coworkers, have to pitch in and pay for the road even though it didn't make them any richer? Or should the guy who owns the land along the road, and who is immensely benefitted by the new road -- to the tune of millions of $$$ – pay for the roads construction?

Every time government taxes a wage or a trade, and spends that money in an economically efficient way, money is being transferred from producers and consumers and is being placed into some landowners pocket in the form of higher land values. Do you think that landowners should be subsidized through taxation of wages and trade?

 

I don't think so.

Let's say a new road does increase the value of said land. As the value of land increases, so do taxes on that land.

 

Thank you for being honest.

This is true, but current land value taxes are levied arbitrarily low. They are in fact levied so low that the improvements to public infrastructure that make the landowner rich under the current system must be subsidized by taxing wages and trade to pay for the bulk of the improvements. Suppose that instead of government officials setting a arbitrarily low rate of land taxation, the government simply let the market set the rate of taxation by taking bids, and awarding secure tenure to the highest bidder (the one willing to pay the greatest tax). A couple of questions I hope you will answer because I would like to learn from your response:

1) If government allowed the market to set land taxes in this way(open bidding), do you think government would collect more or less revenue from land?

2) What do you think would happen to land prices if government allowed the market to set the rate of taxation, do you think land prices would go up or down?

 

Now you're just going to have to explain how people like Thomas Paine, Thomas Jefferson, Adam Smith, and so on proposed ideas which were "strangely Marxist" in nature.

Or how about Winston Churchill? He also had opinions along those lines.

"A portion, in some cases the whole, of every benefit which is laboriously acquired by the community increases the land value and finds its way automatically into the landlord's pocket. If there is a rise in wages, rents are able to move forward, because the workers can afford to pay a little more. If the opening of a new railway or new tramway, or the institution of improved services of a lowering of fares, or of a new invention, or any other public convenience affords a benefit to workers in any particular district, it becomes easier for them to live, and therefore the ground landlord is able to charge them more for the privilege of living there." - Winston Churchill, famous Marxist politician

I would say it's more based on distrust. If you don't tax the rental value of land enough, you'll have all kinds corruption because the privilege called the land title is such an enormous source of unearned wealth. It causes a lot of corruption.

Increasing the tax rate on government issued privileges would certainly be better and less corrupt than taxing people's hard earned money and end up giving it to the wealthy via increased land rents when those taxes are spend on infrastructure and services.

 

To be clear, I never said geofree was Marxist, just that Georgism has Marxist tenancies. The most obvious is the concentration of power to government, as granting the ability for government to tax anything cedes power and control over to government. The end result to Georgism is that government could centrally control and plan land, which is the most valuable resource. This is its common blood with Marxism (and the fact that it predates Marxism is hardly relevant to the point that it has these Marxist tendencies) Few times in history has ceding such power ever resulted in anything else. I am sure our Georgist friends will be quick to point out Tokyo but such a small city-state hardly is a proper petry dish from which to draw conclusions of success.

And then you have the resource argument.- pretty much that resources (such as oil) should fall under the same curtain. Now, to draw the most logical conclusion from that, this means government would not only control all natural resources, but food sources as well (and yes, I have seen Georgist argue this point as well, although not geofree). tell me, is that not Marxist in nature as well?

No, the answer is to decentralize power.

 

The thing is, the market does set the value of the land, and taxes are taken from that. In California, for example, county tax is 1% of appraised value of the property when last sold. It's a state law I believe--the infamous Prop 13.

As to your question, it is hard to tell, at least in California. I guess it would be much as it is now. What do you think?

 

Did Churchill say that before or after he became Conservative?

Before no doubt. He changed his mind quite a bit when he changed parties.

 

And since we already have the machinery in place to collect that land tax, why don't we just levy that tax much higher and forget about collecting all the other taxes? The amount of resources we spend calculating, collecting and enforcing those other taxes is staggering. The costs of compliance to those taxes is no doubt enough to keep some individuals from entering the market in fields which they would otherwise excel at.

Here are some facts about land value taxation:

1) There are no dead-weight losses associated with land value taxation. In fact, because the supply of land is fixed and cannot be altered by taxation, the land value tax is the only tax to which the Laffer Curve does not apply; revenue under land value taxation increases as the tax rate increases, all the way to 100% of the rental value of land.

2) While other taxes retard production, land value taxation stimulates more production by removing speculation from the land market.

3) Land value tax revenue is maximized when all the land is in private hands, with the private owners paying the tax – which ensures that government will keep land taxes affordable, because if levied higher than the lands rent the amount of revenue generated by the tax will fall.

4) Modern land value tax proposals require government agencies which use land also pay the land tax, this ensures that those government agencies do not use better land than is necessary, which keeps the best land in the hands of private owners.

I know that it would be completely different than it is now. If local government allowed the market to set the rate of taxation on land parcels the rate of taxation would quickly rise to the full rental value of the land. Land taxes are offset by lower exchange values of land; as land taxes increase the exchange prices decrease. Nobody would buy a land parcel for millions of dollars if they knew that they could bring that price down by going to the taxing authority and offering to pay a higher rate of taxation than the current owner is paying. Therefore land value taxation would see the exchange prices of land fall to near zero, making land more affordable for those who wish to put the land to greater use.