The Instigator
Darris
Pro (for)
Tied
0 Points
The Contender
RobDeSenelstun
Con (against)
Tied
0 Points

The Best Tax is a Tax on Land and Some of that Revenue should be Divided Equally to all Citizens

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Voting Style: Open Point System: 7 Point
Started: 10/11/2013 Category: Economics
Updated: 3 years ago Status: Post Voting Period
Viewed: 1,450 times Debate No: 38378
Debate Rounds (3)
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Darris

Pro

The land value tax (LVT) is a tax on the value of economic land.
Some definitions:
Land: for the purpose of this debate, 'land' will mean economic land which is any resource used to create wealth that exists regardless of whether labor or capital are applied to it. It is in fixed supply.
Site: To differentiate between economic land and the earth under a building, I will refer to the earth under a building as a 'site'.
Capital: Wealth gained from applying labor to land.

Labor: Actions to produce wealth from land or capital.
Citizen's Dividend: Compensation paid to a citizen for his/her lack of access to the commons.
From these definitions, it can be seen that land is that which exists prior to and without human input. While that includes the layman definition of land (the space of earth on which your house sits), it also includes portions of the electromagnetic spectrum (Verizon owns a piece of invisible light), and natural resources like unrefined oil.


Note: the land under your house would be taxed, but not your house itself. One argument against this taxation at first glance is that it may be difficult to separate the value of the home from the site on which it sits; however, upon further research, one will learn that real estate agencies already separate those values quite easily- it is also done in places where site location is taxed at a different rate than the building on the site.

I will be focusing mainly on the site value tax over other types of land just because there are a whole lot more sites than other types of land.

A. Land Value Tax
There are several benefits to taxing land over other things that are commonly taxed:

1. First and foremost, taxation on income and/or sales is backwards. Income and sales are both generated by the private sector and with those tax systems, their work is harvested by the public sector. Site taxation is more logical. A site's value goes up not because of a building put on it, but because of the community growing up around it. If in 1796 one purchased a site in the middle of what is today known as Times Square for $100 and did nothing to improve that land, but just slept and ate, the site would have increased to $10M dollars today without one having done ANYTHING to contribute to that increased price. That is to say, site values are created publicly. Under the common system of taxing labor (income) and sales (voluntary exchange) while allowing some landowner to harvest the increased value of the site, the public harvests the work of the private and the private harvests the work of the public. With LVT, the site's publicly created value would be harvested by the public while labor and exchange would remain in private.

2. LVT doesn't distort the economy. Sales, income, and general property taxes change the decision making processes of the people in a given economy.

Sales tax is particularly bad because it raises the cost of goods. In a given percentage of sales tax, it is likely that the producer will pay less than half of the total cost of the tax by passing the tax on to the consumer.

The income tax is also detrimental because it means that, similar to the sales tax, the supplier (the worker) and the demander (the employer) won't meet at their normal equilibrium point. Where a worker might have accepted X per year to be happy at a job, the employer (as a consumer in this case) would have to raise the amount he/she is willing to pay to X+1 in order to get that worker.

Property tax is perhaps the worst of all. The property tax encourages run-down neighborhoods and subsidizes unimproved sites. Under normal economic conditions, a landlord/landlady might decide to improve the building which they rent out to tenants, however these are not normal economic conditions and the property tax exists. Every dollar he/she puts toward improving the property will increase the amount he/she pays in taxes when the collector comes around. The obvious incentive, then, is not to improve property. The lower the value of the property, the lower the taxes. For the same reason, it subsidizes unimproved sites and encourages the use of sites as a store of value. Since the site has no improvements, the property tax taxes that site at a lower rate than it does even the landlord/landlady who doesn't improve the property. With our current system, we are telling people not to build. Because of this, a site tax would also decrease urban sprawl. The incentive of the site tax is to put one's land to the highest economic use or to sell it. So, one would choose to buy a site in the city instead of in the suburb. Unlike other taxes which raise the cost of goods, site tax actually lowers the cost of sites because it would cause entities hoarding sites to sell them or pay high taxes, thereby increasing the number of sites in the market.

3. At present, big real estate companies have a huge monopoly on sites. Because land is in fixed supply (as is stated in the definition), the incentive to real estate companies is to NOT sell land. I recommend a movie called "Real Estate for Ransom" (the sound quality isn't great) The US mortgage crisis was really just a land crisis. The big real estate companies will hold 200 sites. Their incentive is not to sell sites, but to make profit, so it follows that the most profit would be had by selling 100 sites while holding 100 off the market to artificially create scarcity. This drove up the prices of homes and the number and amount of mortgages along with them. Banks couldn't see the unsustainability of that system any more than the common buyer could.

4. Philosophically, the land value tax checks out better than other taxes, also. Land is in the commons. Since no one created it, if it weren't for governments allowing it, no one could own it. Absent the government, owning land is tantamount to stealing from everyone who could have gained use from that land. So, while some feel that all taxation is theft, LVT is actually the opposite. NOT taxing land is theft. This brings me to

5. Site values increase with the addition of public infrastructure nearby. A site value tax would make public infrastructure self-financing. At present, the private landowner captures totally the increase in value that comes from taxes. People who labor to improve their life are taxed to pay for improvements that a landowner receives the benefits of without having had to work a single hour.

B. The Citizen's Dividend (CD)
1. I argue that since the thing being taxed doesn't legitimately belong to any one person or exclusive group of people (it wasn't made by anyone), we should view the taxation of land as a rent paid to the community in exchange for using the commons. This is what is done in Alaska where the oil belongs to the State. They allow the extraction of the oil, but only in exchange for money. This money is given to the citizens of Alaska and has paid out everywhere from ~$300 to ~$3000 per person per year. This year's amount is $900: http://pfd.alaska.gov......
You can read more about previous payouts on the wiki page:
https://en.wikipedia.org......
If it works for Alaska, why not every state? Sure, not every state has oil, but every state has land of other types. And we could auction off carbon permits and the electromagnetic spectrum and other things that nobody can own because they're in the commons. "We have it in our power to begin the world over again"
~Thomas Paine (Who first talked about the CD in his pamphlet Agrarian Justice)

2. The replacement of welfare maladies
At present, the welfare system is "means-tested" i.e. the government has made a bureaucracy in order to determine whether or not a person deserves financial assistance. They do this to cut down on fraud. This bureaucracy is made in every program the government sets up. The government even sets up a program to provide phones for the poor in the United States. I sell phones and phone plans on a regular basis. It is silly when I help these people buy their subsidized plans. The plans wouldn't cost more than $35 even without government intervention, but because of means-testing, the government is spending MORE than $35 to give these people a $35 equivalent.
It's nonsense. Surely it is better to just give them $35 and let the market work.
The same can be said of food stamps and subsidized college loans and grants and any other system wherein the government gives $X only after checking whether the person is poor enough to merit it.
People aren't poor because they don't have food. People aren't poor because they don't have phones. People are poor because they don't have MONEY.

Another problem of welfare is the social stigma associated with it. A person who would help out himself/herself (and the economy) by going on these programs might decide not to because they feel like a burden because of how much our society demonizes welfare recipients as parasites.
No such stigma would exist in a system where everyone received a check in the mail.

I look forward to this debate. I'm excited to see Con's response.

RobDeSenelstun

Con

Pro makes a compelling case for LVT, however I will use my time to show that when you scratch a little deeper there are some unpleasant consequences lurking beneath the surface.

The claim that 'Land' should be considered as 'ANY resource used to create wealth that exists regardless of whether labor or capital are applied to it' kind of robs any meaningful distinction from land, labor & capital, but for the sake of this argument I take it Pro meant 'ANY natural resource'.

To avoid any confusion I will refer to LVT tax as 'Site tax' as this seems to be in keeping with Pro's argument. To put the argument in perspective I understand Pro to mean that the purpose for which the specific site is employed will not be factored into the calculation of the value of the site, and thus does not contribute to the tax derived from aforementioned value. The problem is this leaves us with one conclusion, we will need to have a flat tax on all land, so that the single mother will pay the same for her site (per square foot) as the multimillion dollar company would. Pro alludes to the difficulty in separating the value of the site from value of the building, but unfortunately holds that this has been done successfully for some time by estate agencies. While it might be true that an agency might value the site it cannot be anything other than an arbitrary assessment when considered in isolation.

If you disagree with the conclusion drawn above then you must acknowledge, as does Pro, that valuations will be required to determine value. This brings me to the crux of this problem; valuations of the land cannot be done without considering what the sites are most efficiently being used for. Therefore if the single mother has a small holding on a site which contains gold, platinum or some yet to be adequately valued commodity, she will be forced to knock down the swing set and replace it with a mine shaft. This is admittedly a playful bit of tongue in cheek, but I believe it makes the point that labor (to which I include the most important kind of labor, mental labor), must inevitably be brought into consideration when determining the value of the site, by virtue of what it is being used for, or for it's perceived future potential (mental application of labor).

Not only must labor come into the calculation but so must capital. Pro uses the argument that if one had purchased a plot of land in Time Square in 1796 for $100 (of course adjusted for 217 years of inflation) it would be worth over $10M today. Obviously there is nothing special about the soil beneath Time Square, that would otherwise cause us to value the property at that price, except of course it's location to the commercial epicentre of New York. The question is, would this site be valued somewhat more proportionately to its intrinsic potential for being in the said epicentre or for what the community around it is doing on it or to it?

This exemplifies the importance of free market economy in land. In the yin and yang of market interplay, wherever there is an artificial (ie. non-market driven) pressure exerted the consequences will squeeze out where you least expect it. In this case the phenomenon of urban sprawl might be curtailed but it's benefits will also be curtailed. The land in Time Square is worth what it is worth because of the free movement of capital. What would be the situation if Time Squares 'rental' had to be determined by the state? I will explain below why I refer to it as a rental but for now let's consider this question.

With the very best will in the world the state would never be able to value the sites in Time Square for what they are worth, as each site is worth what it gets sold for, each time they get sold. Each site is sold, is sold for the price the seller is happy to receive foe the site and that the buyer is willing to pay it. The buyer pays for the site an amount that it in proportion to the potential or pleasure the buyer sees himself gaining by owning the site. When the state starts deciding what the value of the site is, it effects that transaction like Schr"dinger's cat.

But there is a much more pernicious effect to LVT, and that is the moral one. Pro is quite right when he says all taxes are theft, I argue this tax is not only NOT an exception but seems to reflect the rule. When all sites draw a tax they cannot be said to owned, thus all such sites are effectively rented from the state. When Pro declares that if there is oil on a site it does not belong to anyone, he assumes that the technological process of extraction of the oil is somehow open to us all to intuit. This is the problem, and it is a common Marxian error, to assume that everyone is equal shareholder to everyone else's ideas brings tyranny as personal advantage is thus eliminated. Someone had to come up with the technology for finding and extracting oil first before the site on which it can be found could taxed.

But can one say that the innovation becomes public property simply because the land on which it is employed is in fixed supply? I say No, the fact is that by setting any value to a site whether it has a building constructed on it or not cannot be done without taking into consideration the innovative & creative potential envisaged by the individual through their mental and physical labor. Therefore any payment demanded by the state for holding ransom the resources required for human ingenuity is extortionate and coercive. The state is best left to protecting private property and individual liberties, the only ceteris paribus properties required for a functional society.

Saying that you have a title deed for a property or site but having never completely paid for it is not owning the property by any means other than name alone, it becomes nothing more than a rental property. When the government gets into the business of land tax it gets into the business of commons and as game theory has made quite clear as has any public facility, the 'Tragedy of the commons' is an inescapable fact. http://en.wikipedia.org...

As for the Citizen Dividend I believe that land cannot be owned falls into disrepair and ruin. Then there is the moral case, where any land that is improved by the labor of the land owner or those that freely trade with her, should be kept by the land owner and thus should not be distributed to anyone, lest we call it what it is...theft.
Debate Round No. 1
Darris

Pro

I thank Con for accepting the debate. I will be responding to Con's rebuttals using quotes from his argument so the reader doesn't have to scroll back up and try to decipher what I'm referring to.

"The claim that 'Land' should be considered as 'ANY resource … kind of robs any meaningful distinction from land, labor & capital"
Perhaps I wasn't clear enough. I don't see how it robs meaningful distinction from land, labor, and capital. It adds distinction in my mind. The definition allows you to see that:
land + labor = capital

And
capital + labor = capital

So my basic argument can be summed up thus: "You are entitled to the fruits of your labor. Capital is the fruit of your labor. You are entitled to your capital. Land is not the fruit of your labor. In fact, land is the fruit of no one's labor, but the value of land is the fruit of the community's labor, so you are not entitled to land and the community is entitled to any increased value of land".
And yes, that means ANY natural resource.
Hopefully that clears it up.

"… the purpose for which the specific site is employed will not be factored into the calculation of the value of the site, and thus does not contribute to the tax derived from aforementioned value..."
That is somewhat correct.

There's not necessarily an authority determining what each piece of land is for in this hypothetical. The site's value is determined by the market. So if a landowner owns a site in some area where businesses have decided to congregate, the value of that site will be priced accordingly regardless of how he/she decides to use that site. Once again, that's not the effect of the land value tax, that's the effect of the market.

So to the next point

"we will need to have a flat tax on all land, so that the single mother will pay the same for her site (per square foot) as the multimillion dollar company would."
That's not correct. A flat tax on land is not 'every square foot will be charged $X', it's 'landowners must pay X% of the value of the sites which they own'.
A landowner is not charged per square foot. They are charged per the value of the site(s) that they own. A single mother who owns $1M of land would surely be able to afford to sell it or pay the tax. The same woman with $100 of land would be able to afford it.

" While it might be true that an agency might value the site it cannot be anything other than an arbitrary assessment when considered in isolation."
It would be no more arbitrary than what the market already determines. It's pretty mathematically consistent.
Consider persons A and B.
A lives near a school and has a two-bedroom, one-bathroom, brick house with a fireplace and no need for repairs.
B lives near a sewage plant and has a two-bedroom, one-bathroom house with a fireplace and no need for repairs.
Their houses are identical, but when A sells her property to move to another town, she will sell her house for $100,000 and when B sells her property to move to another town, she will sell her house for $50,000.
It can be reasonably deduced that the site value of A is at least $50,000 higher than that of B.

The more properties that can be analyzed, the more accurate a reading can be got.
If one looks at similar properties in different areas, one can deduce the value of a site.
There are a number of other ways, also.
Houses depreciate over time, sites do not. One can see the relative difference in the rate of change of the values of properties to determine land values, as well. And an assessor could do all of them to ensure that the value was accurate.

Multiple methods coming to similar results indicate that the results are more likely to be accurate.

"Therefore if the single mother has a small holding on a site which contains gold… she will be forced to…"
She will not be forced to do anything; she will simply have the incentive to do the most economically efficient thing. That's where the citizen's dividend comes in. She would be able to ignore that bit of the taxes except in the most extreme of cases by using her citizen's dividend to pay for the land. LVT encourages the economically efficient use of land- CD protects the right of the individual NOT to have to follow that incentive.

"The question is, would this site be valued … to its intrinsic potential …or for what the community around it is doing…?"
The increased value of the site is attributable to both. A site increases in value because many people want it; supply and demand, however, a new site in the same spot cannot be created. It is the spot that is valuable. So while supply and demand determine the price, they do not determine the supply. Site values operate differently than most of the free market.

That's why Adam Smith said that every landowner acts, in his role as a landowner, as a monopolist. Landownership is monopoly.


"What would be the situation if Time Squares 'rental' had to be determined by the state? … the state would never be able to value the sites in Time Square for what they are worth, as each site is worth what it gets sold for..."

It's interesting that Con brings up rentals. Another possibility of collecting the value of land is to have a "single landlord" in the form of nationalized land. Then landlords would merely be renting from the government. With that system, you could have a society run with no taxes whatsoever. If your land value goes down, you pay less per month, if they go up, you pay more per month. A valuation could be done every-so-often by leasing some piece of land to the highest bidder.

"Each site is sold… for the price the seller is happy to receive foe the site and that the buyer is willing to pay it. "
The problem with this idea is that, in regards to sites, a buyer has no choice. Every being must exist somewhere. One cannot simultaneously believe in the right to exist and not believe in the right to exist in some place because existing requires a place to exist. The buyer may choose to go to some other seller, but ultimately, he/she must accept the offer of someone.

This is tantamount to slavery. In a truly free market, the buyer and the seller can choose to walk away from the offers presented by either side.
The standard assumptions of supply and demand do not apply with landownership because the supply of land doesn't increase with price.
Landownership is government-granted monopoly.

"When Pro declares … he assumes that the technological process of extraction of the oil is … open..."
That is not the case. The oil in the earth does not belong to anyone. The value an oil tycoon adds by extracting that oil belongs to the oil tycoon. The original value, however, does not. This is not a Marxian error. This is capitalist.
"Someone had to come up with the technology for finding and extracting oil ..."
Yes and that person would be wholly entitled to sell that oil at whatever price. The oil before it is removed from the commons though, is still in the commons- he/she did not create the oil; therefore he/she is not entitled to the whole value of the oil. He/she is only entitled to the value he/she adds to the oil. The removal of the oil from the commons comes at a price. That price could be determined any number of ways and would be arbitrary. However, the person who wants to extract the oil would be the buyer and the State would be the seller. If the State sets the price too high, it will be lowering revenue.

The State doing it would no more distort the economy than a private entity selling his/her oil rights.
This system restricts government to earn money the same way as everyone else: buying and selling.

"But can one say that the innovation becomes public property simply because the land on which it is employed is in fixed supply? I say No"
I also say no. I believe Con has accidentally created a straw man to argue against.


"…any payment demanded by the state for … the resources required for human ingenuity is extortionate and coercive."
If we follow that logic to its natural conclusion, a private entity holding resources required for human ingenuity is also extortionate and coercive. What difference does it make who the extorter is?

"Saying that you have a title deed for … site but having never …paid for it is not owning the property … it becomes nothing more than a rental property.”
Yes. That's the goal. I want land not to be owned. I want it to be rented from the community.


"When the government gets into the business of land tax it gets into … the 'Tragedy of the commons' … an inescapable fact. http://en.wikipedia.org...;
Further study into the so-called 'Tragedy of the Commons' will show that the man who wrote it, Garrett Hardin lamented not calling it "the Tragedy of the Unmanaged Commons" because managed commons actually work. Therefore the tragedy of the commons is TOTALLY escapable.

The reader can see the 'Unmanaged' bit by the same author in the references of the Wikipedia entry Con linked.

Here is the link to the author: https://en.wikipedia.org...

{See the comments for a somewhat irrelevant post about game theory- I didn't think it was relevant enough for it to be a part of my main argument, so I'll post it there.}


"As for the Citizen Dividend I believe that land cannot be owned falls into disrepair and ruin."
One can't repair land. One's HOUSE can fall into disrepair, but land can't... it's land.

The CD has nothing to do with the effects of the tax. It is the distribution of the tax. The distribution of the tax doesn’t create the non-ownership of land, so I don't see how Con thinks that a CD would lead to land disrepair and ruin.


It appears that Con has let the CD go through uncontested. Con has made no argument against the distribution of the revenue, which is half of my argument.

I urge voters to remember that.

In conclusion, to not collect the value of land for the public is to allow private entities to gain value they didn't create. THAT is theft.
RobDeSenelstun

Con

I thank Pro for his latest contribution. For the sake of consistency I will continue to employ Pro's method of rebuttal using quotes from his arguments and mine where a trail is necessary.

Pro:"Perhaps I wasn't clear enough."
It's not so much that Pro was not clear enough, it's just that I needed clarification before I set off down a rabbit hole. 'ANY resource' could just as easily be construed as labor or capital. This was not a criticism, just clarification.

Pro:"land + labor = capital And capital + labor = capital"
The above seems like an arbitrary formulation, as it cannot be meant to be as formulaic as it is presented, it also leaves off an often ignored factor of production; entrepreneurship. Without this labor + land = land + labor. Entrepreneurship is the dynamic which drives the process as together with the concept of ownership regulates the relation between risk and reward. Entrepreneurship provides the impetus and ownership the incentive for thinking beings to apply themselves to the resources. This is what the 'Tragedy of Commons' deals with. I will explore this phenomenon in more detail later as I believe Pro has too quickly dismissed it as being a 'manageable' and thus irrelevant complication.

Pro: "land is the fruit of no one's labor, but the value of land is the fruit of the community's labor"
Pro arrives at my conclusion here, but in my view uses the wrong word in applying 'community' to his formulation. Land is given commodity and thus I agree it is the fruit of no one's labor, but the value of land is the fruit of the stored up labor (capital) applied by the investor who thus imbues in the land with the potential that his mental labor intended for it. I might be able to move onto a plot of land that is vacant and pay a tax for it at $100 per sq ft, but the moment I convert the property to a sewage farm, I reduce the value of the land to $10 per sq ft for residential purposes, and while I applaud the would-be homeowner for having smelling a rat, it only limits the value of the land for residential purposes. I know of a few heavy industrial plants that have sewage farms on them, are they to get a tax break for sniffing a bargain?

Pro:"That's not correct. A flat tax on land is not 'every square foot will be charged $X', it's 'landowners must pay X% of the value of the sites which they own'."
This is meant to point to the fact that if there is no contribution to the value of site to be drawn from it's utility potential, it has no basis for being valued differently to any other piece of land. That is to say that a piece of land must necessarily be valued based on what potential it is estimated to have by it's purchaser, whomever that might be, sewage tycoon or homeowner.

As regards the valuation per square foot vs %, I'm not sure Pro and I disagree as a site valued at $100,000 will draw a tax at 10% of $10,000, which if it was 100 square foot would equate to $100 per sq ft. A proportionately smaller holding of say 10 sq ft, valued at the same level would also draw a tax of $100 per sq ft as $100,000 / 100 x 10 = $10,000 in value draws $1,000 in tax which equates to $100 per sq ft. Therefore if gold or platinum is discovered on the lot worth $100,000 and raises the value of the land to $10,000,000 (tax = 1,000,000 = $10,000 per sq ft), the small holder would not have the choice to keep her 10 sq ft holding (say a small farm"very small it seems) to do with as she pleased as she would not be able to afford the $100,000 tax bill. In reality she might decide to sell it to make a profit and engage in some other venture, but in reality due to ownership and no LVT she would still have that choice".and this is truly freedom.

Pro:"...by using her citizen's dividend to pay for the land. LVT encourages the economically efficient use of land- CD protects the right of the individual NOT to have to follow that incentive."
This is of course assuming the CD, which over a large population will smooth out all regional fluctuations, will be enough to cover disproportionately large local value increases, potentially driving low income citizens to live off the CDs while having to migrate to slums where the value will be consistently low, drawing consistently low taxes.

Pro:"That's why Adam Smith said that every landowner acts, in his role as a landowner, as a monopolist. Landownership is monopoly."
Pro seems to have misunderstood the context in which Adam Smith speaks of a landowner. Here Smith is dealing with the prickly issue of Land rental as it was applied during the times of stifling regulations regarding such peculiarities as primogeniture and the like, where aristocrats were the only legal landlords. He is referring to land rental: "The rent of land, therefore, considered as the price paid for the use of the land, is naturally a monopoly price."

Smith seems to be making the point here that when land is not free on the market is becomes a burden to progress as emphasised by "In Europe, the law of primogeniture, and perpetuities of different kinds, prevent the division of great estates, and thereby hinder the multiplication of small proprietors. A small proprietor, however, who knows every part of his little territory, views it with all the affection which property, especially small property, naturally in- spires, and who upon that account takes pleasure, not only in cultivating, but in adorning it, is generally of all improvers the most industrious, the most intelligent, and the most successful."" http://www2.hn.psu.edu...

Pro:The problem with this idea is that, in regards to sites, a buyer has no choice. Every being must exist somewhere. One cannot simultaneously believe in the right to exist and not believe in the right to exist in some place because existing requires a place to exist. The buyer may choose to go to some other seller, but ultimately, he/she must accept the offer ofsomeone.
I'm not sure what Pro means by having a right to exist, and more particularly that one should have a right to exist somewhere. In a rationally functional society the only right I should expect is the right to the product of my labor, if that is not sufficient to sustain my existence I have no right to demand the surplus required to survive from my neighbour. If he is willing to donate such surplus, all the better for me, but to force my neighbour to surrender any product of his labor to me is forced labor or slavery.

We are thinking beings that must be made to shoulder the responsibility for our own actions, that includes finding, acquiring ang holding onto the resources required to survive. Further to this, Pro assumes that the cash used to purchase a piece of land also belongs to the community and was not derived by means of labor.

Pro:"Yes and that person would be wholly entitled to sell that oil at whatever price."
Let me provide another example to demonstrate the point a bit better"
In the example used above if I 'own' a piece of land subject to LVT and through my own inductive ingenuity I discover that the land I live on can by mined for a new metal I have synthesised. When the world finds out about this once I start taking the metal to the market, the value of the land on which I discovered the metal will increase from $100,000 to $10,000,000, with concomitant increase in tax from $10,000 to $100,000. The increase in the value of the land is solely attributable to my mental labor (in having provided the cause for the revaluation). Thus my mental labor is worth $9,900,000, but the state in its infinite wisdom sees my discovery as having been owned by the community when it confiscates $100,000 from me due to my site having increased in value.

Pro:"Yes. That's the goal. I want land not to be owned. I want it to be rented from the community."

This experiment has been tried and has been shown to be a dismal failure. Apart from the example of Russia and North Korea, here is a study that more broadly fits the mould specified above - Land Policy in Vietnam...http://jmk.sagepub.com...

Pro:"Further study into the so-called 'Tragedy of the Commons' will show that the man who wrote it, Garrett Hardin lamented not calling it "the Tragedy of the Unmanaged Commons" because managed commons actually work. Therefore the tragedy of the commons is TOTALLY escapable."

Garrett Hardin does in fact state that he laments not calling it the "Tragedy of the Unmanaged Commons" as this is the interpretation which arises out of the formulation of the problem. I argue, as does he, that there is no one who is capable of managing vast resources to the extent to which it will be required to counter the effects of the natural inclination described by the problem. I can only use examples closer to home to make a better case. In the UK, where I live, the abuse of council houses (government owned and rented housing) by those that live in them is rife and costs local governments hundreds of millions in repairs each year. Yet the moment a council estate is provisioned for the resale of the land to the occupant, the land is automatically observed to improve in upkeep and appearance. This should not be a surprise as it makes perfect sense that I will take care of what is my own property much better than that owned by no one.

Pro:"It appears that Con has let the CD go through uncontested. Con has made no argument against the distribution of the revenue, which is half of my argument.

Pro:"I urge voters to remember that."

I do apologise for not making my position obvious; since I do not believe LVT to be effective in addressing the concerns it is designed to address, and that it is grossly immoral any redistribution of taxes from such a venture would be equally detrimental and probably more immoral.

I look forward to Pro's closing remarks"it's been enjoyable!
Debate Round No. 2
Darris

Pro

I’m glad to have a well-informed contender to test the mettle of my ideology. I’m fond of many of the central tenants of Con’s objections in this debate, but I have just come to a different conclusion.

I’ll just respond to the last round and wrap it up after that.

“… like an arbitrary formulation… an often ignored factor of production; entrepreneurship”

Even if it were its own factor of production, that doesn’t mean land+labor is not what creates capital. The equation might be more accurate as land + labor + (coefficient of entrepreneurialism) = capital, but that coefficient could easily be zero. Land must be there, labor must be there.


“…the value of land is the fruit of the stored…”

Con is ignoring the fact that it would reduce EVERYONE’S site values. Not just that of the builder. If a landowner builds a tourist attraction that brings in lots of money, his/her own land value will go up, but so will everyone’s. Anything they do will also affect his/her site value.

“…it only limits the value of the land for residential purposes…”

If it doesn’t limit the value of the land for non-residential purposes, then the point is moot. If it’s built in a residential area, everyone gets a tax break. If it’s built in a factory district, no one is sacrificing, and no one pays less.

“…a piece of land must necessarily…”

A site is valued based on its purchase price and/or on an assessment done in a general area based on changes in property value. If it is done by general area, then it is NOT based on whatever the purchaser wants- it’s based on what the area around it is worth. So, if a sewage tycoon decides to build a plant in the middle of a residential district *assuming there are no zoning laws (which would be weird)* then the cost of the residential land is paid.

“…if gold or platinum is discovered…”

  1. With a 95% site tax, she would still be able to sell it and $500K. If a site would increase that rapidly because of the material benefit it would produce for the economy, she SHOULD sell the land. And that’s why the LVT is not charged at 100%. If there’s ever a massive increase in site value, the landowner could sell it. The difference is that she won’t be able to sell it at $10M because she didn’t create that value. We allow her to take 5% because
    1. With a massive increase in property value, she deserves compensation for being economically forced into doing something. The larger the incentive for her to leave that land, the greater her reward. It’s self-correcting.
    2. That’s how sites are valued- the market price.
    3. It appears Con is self-contradicting. In a previous post, the argument was that if someone finds oil under their land, the value of the oil belongs to him/her (whereas my argument was that only added value does). Now Con’s argument appears to be that if someone finds gold underneath a property, the owner of the property is entitled to that gold’s value.

“…and this is truly freedom.”

It appears Con’s definition of freedom is being able to ignore economic incentives. If that’s the case, communism is freedom. Whether or not land values are collected to fund the government, her land will still rise to $10M and her marginal benefit to sell/build a mine will be greater.


“...driving low income citizens… to migrate to slums…”

  1. The incentive of landlords would be to build up and increase the number of tenants because the number of tenants on one property would not increase the tax paid by the landlord. That would decrease rent by increasing rentable area (supply and demand)
  2. Slums=absentee landlords. Slums are discouraged by LVT because it encourages the most efficient use of land.
  3. This is the example of the society without LVT and CD. When a local boom in values happens, the poor would normally be relegated to the slums, but the CD allows them to stay. And when a boom happens, it will increase the tax and the CD. A poor person might still migrate, but that’s the case with or without the CD. The CD just makes it less likely.

“Pro seems to have misunderstood ...”

It is my opinion that the lack of LVT leads to that set of problems Smith referred to with landed aristocracy.

“He is referring to land rental”

As am I. We know that rent of land is charged at the highest possible gain that can be got from the land. Earth provides, workers create- landlords take. That is Ricardo’s Law of Rent:

“The Law of Rent states that the rent of a land site is equal to the economic advantage obtained by using the site in its most productive use, relative to the advantage obtained by using marginal (i.e., the best rent-free) land for the same purpose, given the same inputs of labor and capital”

Source: https://en.wikipedia.org......

“I'm not sure … having a right to exist…”

If one has the right to the product of one’s labor, one must have a place to labor.

If one is not allowed a place to labor, one is not allowed to labor.

If one is not allowed to labor, one does not have the right to the products of one’s labor.

Also, one cannot labor without first existing. Since existing is a prerequisite to labor, existing is a right. One may not have the right to continued existence, but one certainly has the right to begin to exist.

A rationally functional society, therefore, would be one in which everyone either has access to a place to exist or compensation for the lack of that place being provided.


“Pro assumes that the cash used to purchase…”

I assume no such thing. Cash earned through labor is cash to which the laborer is entitled.

“…the value of the land is solely attributable …”

Providing cause for revaluation is not the same as creating the valuation. A person who finds metal under his/her land may sell that metal at whatever price with the cost of finding it included. If the price of the land goes up afterwards he/she was getting a break. Before the metals were found, they were still there, if it was known that they were there, the land value would have been higher in the first place.

“Thus my mental labor is worth $9,900,000…”

No, the value of the land was simply found to be higher because of that labor. If a supermarket finds out that tomatoes are actually worth $50 instead of $0.50, it hasn’t been cheated. The increased value is not attributable to the worker who found out. It is attributable to the market.


“This experiment … has been shown to be a dismal failure …Land Policy in Vietnam”

That was never tried in Russia or North Korea and the second paragraph of the study linked by Con states “distortions result from too much central control over the use of agricultural land (rice land in particular), too little public investment in support of agriculture”

A little further down we find “Chapter II, Article 17 asserts that land is subject to ‘‘ownership by the entire people’’ while Chapter II, Article 18 affirms that the ‘‘State manages all the land...’”

I encourage the voters to actually read through the link that Con posted because it has nothing to do with the ideas I have been presenting.

That is not even close to the same thing as renting out the land. I have never made an argument for central control over the use of agricultural land. No one is managing the land. It’s just rent being paid for the use of land.

Russia and North Korea did not lease the land out. they just said “the land is everyone’s” it was never rented.

That’s the opposite of true.



“I argue, as does he, that there is no one who is capable of managing vast resources…”

I’m not arguing for a central management of the commons. I’m essentially arguing for a charge for the use of the commons. If you take something out of the commons, you must pay the fee. In the example given in Hardin’s essay, there’s a pasture with multiple cows. If we said it costs $10/per head per week to graze cattle here, then the farmer would be less likely to exploit the pasture past its ability to recoup.

“…costs… hundreds of millions in repairs each year.”

I am not arguing for the government owning and operating rental homes. I’m arguing that the use of land should be charged. This will encourage the efficient use of land.

“… the land is …observed to improve in upkeep and appearance...”

Land does not fall into disuse. It’s just land. If I am charged based on how much land I use, I will use as little as possible for as much gain as possible. That means I will build and rent out as many rooms as possible in as small a plot as possible.

“I will take care of …better...”

  1. That’s why we implement it in the form of a tax and not in the form of the nationalization followed by leases.
  2. One can’t fail to take care of land. It takes care of itself. One can damage it, but it won’t be damaged by lack of attending to it.


“…since I do not believe LVT to be effective …”

It may be immoral, but it won’t necessarily be equally detrimental. If I kill a man and steal his money to give that money to a starving man, the money will still buy food regardless of how bad my means of getting it are.

Con has made no argument against the CD. The argument from morality was merely carried over from Con’s opinion that the source of revenue for the CD is immoral, so the CD itself must be immoral.

I leave it to the voters to determine if that’s sufficient.

I also would like to remind voters that I didn’t say LVT is a cure-all for every economic woe, I merely stated that it’s the best form of taxation.

In closing, LVT doesn’t punish businesses, landlords, or homeowners for fixing up, expanding, renovating or repurposing. It makes city infrastructure self-financing. It decreases urban sprawl and site prices and therefore rent. It encourages affordable housing because multi-unit construction uses less land. It raises the carrying-cost of holding land off the market which lowers site prices and rent, again. And finally, if your site’s value goes down, you pay a lower tax for your sacrifice.

I sincerely appreciate Con agreeing to engage me on this subject.

Thank you for reading. ­­­­­­­­­­

Vote Pro!

RobDeSenelstun

Con

It has likewise been an absolute pleasure debating with an opponent who takes his subject matter so seriously, and given that it is in fact such an important matter, I have found Pro's style to be adroit, responsible, and heartfelt. Be that as it may I continue to submit that despite this he has failed to convince me that his proposition is either functional or moral.

"The equation might be more accurate as land + labor + (coefficient of entrepreneurialism) = capital, but that coefficient could easily be zero"

I agree with Pro that entrepreneurship should be treated as a coefficient but not according to his definition of a coefficient. A coefficient is properly defined as “a number by which another number or symbol is multiplied” www.merriam-webster.com/dictionary/coefficient

According to my formulation where C is capital, l is labor, r is natural resource and e is entrepreneurship, we might better get C as follows:

C = e(l + r); or C = el + er

Now if e = 0 then C = 0 irrespective of the values of land or labor, capital will remain 0. Let me illustrate this a bit better with an example from history, concerning the American Indians prior to the arrival of the pestilential Europeans.

They had all the r and buckets more in the form of oil as you have in the US today, and they had teepees crammed with l, and yet without the e supplied by the Europeans, C in form of extracted value or oil (or as Locke would say augmented value) remained where it would without this coefficient e, beneath the ground and undiscovered. This land or r becomes worth more as a direct result of the entrance onto the scene of e.

Thus e as supplied by a certain individual or group is directly responsible for the increase in value of a site (or potential for C) due to the recognition of the existence of r on that site.

In addition to this Pro has not demonstrated why r cannot be owned by an individual while simultaneously being able to be owned by many individuals. Surely anything that is ‘owned’ by the community is in fact ‘owned’ by no one, since the word itself denotes possession as apart from others.

“If a landowner builds a tourist attraction that brings in lots of money, his/her own land value will go up…”

Surely Pro doesn’t mean to say that the tourist attraction (in the form of property) will increase the value of the land, since this is tantamount to property tax….and according to Pro…

“Property tax is perhaps the worst of all [taxes]”

He therefore makes my point that, in the form of a syllogism:

P1 - The value of a property is determined by the value of the construction on the land or the special use to which the land is put. (eg. tourist attraction)

P2 - It is impossible to accurately distinguish the value of a site without taking it’s property or use into account. (as argued by Con and confirmed by Pro)

C1 - Therefore LVT is a form property tax (P1 & P2)

Then it follows that…since

P1’ - Property tax is perhaps the worst of all taxes (agreed by Pro & Con)

P2’ - LVT is a form of property tax (per C1 above)

C2 - LVT is one of the worst of all taxes. (P1’ & P2’)

This was what I set out to demonstrate during this debate.

“With a 95% site tax, she would still be able to sell it and $500K.”

This should be…“With a 95% site tax, she would have NO option but to sell it and less than market price to avoid paying her next tax bill” I will give you reader two guesses as to who will be waiting with baited breath for tax induced bargain. If it’s not the corporate mining speculator it’s someone else who specializes in such snappy tax induced opportunities.

“That’s how sites are valued- the market”

Pro does not see that his LVT will destroy the very market it is dependant on, thus sawing the branch on which perches.

“It appears Con is self-contradicting. In a previous post , the argument was that if someone finds oil under their land, the value of the oil belongs to him/her”

I believe this is what Pro would like me to be saying, but in fact I say that, the increase in the value of the land is due to the action of discovery and as such is a consequence of the action of mixing ones mental labour (augmentation) with the land, and thereby according to Locke’s formulation, making the entire land a part of me (possessing it/owning it outright). I say no such thing as Pro will have me say…that only the surplus value redounds to my efforts.

“Now Con’s argument appears to be that if someone finds gold underneath a property, the owner is entitled to the value of the gold’s value”

Again this is not (entirely) what I have been saying, as clarified above. I have been thoroughly consistent with my argument that while I agree the value of the gold I ‘found’ (as if one simply trips over such fortune) belongs to me, so does the land I ‘augmented’ by extracting it.

So on making discovery that uses some natural resource, such as the synthesis of two chemicals to cure some disease, I should wait in anticipation for some government bureaucrat to hand me a bill for my efforts?

“Con is ignoring the fact that it would reduce EVERYONE’s site value”

In world of LVT you would praise the sewage tycoon for moving to your area and curse the ‘owner’ of a tourist attraction. Again I will leave it the reader to see how low valued sites will develop into ‘zones’ for unfortunate poor…slums.

Pro has unfortunately built his argument on a strategy where the most productive amongst us, those who are most efficient at utilizing resources are penalized at the epicenter, while sending penalty shockwaves to all his/her less fortunate neighbors. This in addition to rewarding those who had no part to play in the benefits drawn from the aforementioned’s efforts.

“It appears Con’s definition of freedom is being able to ignore economic incentives. If that’s the case, communism is freedom.“

My concept of freedom involves leaving people to act on or ignore economic forces as they see fit as rational individuals. Pro calls LVT an economic incentive, but this seems to be a kind of newspeak for an economic constraint. LVT is an artificially contrived economic force and as anyone involved in economics knows it has its own version of entropy or thermodynamic equilibrium.

The distinguishing features of a free market economy is that it is an economy due to there being a market, and that the market is as free as possible from artificially imposed forces or central planning. Read the opposite as communism, where it cannot really be said constitute an economy as markets are controlled and freedom is non-existent. Central planning is central planning even when it dresses up in market garb.

“Slums=absentee landlords.”

No, Slums = maximise profit with minimal improvement to land.

“If one has the right to the product of one’s labor, one must have a place to labor.“

No one is disputing this, but surely to ‘have’ implies ownership? As stated above one cannot be said to own something and pay rent on it at the same time. The state is certain not the ideal candidate for providing this place, as opposed to say…McDonald’s.

North Korea supplies many ‘places’ for people to ‘labor’, and if ‘labor’ is ever to have an extreme meaning it applies to the description of what North Koreans do.

“If one is not allowed a place to labor, one is not allowed to labor.”

The free market ‘allows’ everyone such a place, provided it is NOT ‘gained’ by thievery or coercion. This is in contrast to North Korea where the whole expanse of the country is ‘owned’ by everyone and represents a great range of places to labor.

“If one is not allowed to labor, one does not have the right to the products of one’s labor.”

No one prevents North Koreans from laboring, and since their labor is not augmented to land as ownership they get to be equal shareholders in the whole of their country. I can’t say this is an economic incentive I’d go for.

“…existing is a right.”

Arguing for a right to exist seems to me to be a claim about metaphysics, so I won’t pursue this any further.

Here is how I sum up the main arguments

Pro’s contention that land value can be separated from property value independent of property is simply erroneous as the assumptions made to achieve this in as far as it is done today, rely on a functioning market, accumulated property on the land area in question and no LVT effects.

Should LVT be implemented I believe it would directly and materially distort this market to such an extent that the proper operation of this market would cease.

Pro maintains that he is not arguing for government owned or controlled land, just rental. I submit that this is an erroneous and naïve contention. Land that requires constant payment, which is prone to fluctuations is no different to having a lifelong mortgage and is therefore not ownership.

This opens are new can of worms when you consider that the state then has the ability to pass legislation surrounding rates and in my view would soon become prone to being used for vote buying.

Pro’s contention that land cannot be owned by an individual but can be owned by the collective is an unjustified and meaningless assertion and thus holds no position as the grounds for his further argument.

I have not spent any time discussing the morality of redistribution as it pertains to CD as I believe that redistribution of ill-gotten gains is immoral even if applied to the best possible cause.

I’d like to thank Pro for the challenge and I urge you consider that while you decide which way to vote, you still have a choice…let's keep it that way.

Debate Round No. 3
9 comments have been posted on this debate. Showing 1 through 9 records.
Posted by Darris 3 years ago
Darris
You are easily the best informed person with whom I've disagreed on this issue. Thank you for laying this out with me.
Posted by Darris 3 years ago
Darris
On a side note, game theory provides for cooperative action every time cooperative action is available. Very basic game theory has commons. In Risk, players will have the incentive to keep one territory under low defense for the purpose of card-farming. That"s just one example. Working together causes an individual player"s influence to rise. I don"t see how Con has come to the conclusion that game theory argues against the commons.
Posted by RobDeSenelstun 3 years ago
RobDeSenelstun
You make a compelling case for site tax. I accept the challenge of defending the Con position on the basis that site tax is qualitatively indistinguishable from any other property tax. I will go on to 'prove' how setting up any form of commons is detrimental to all 'commoners', especially when applied to land, as defined by you.

I will go on to contend that it is not only the worst form of tax but the most 'immoral'.

I look forward to a rewarding experience.
Posted by brant.merrell 3 years ago
brant.merrell
This looks promising. I don't know who I agree with, but I'm sure I'll learn a lot.
Posted by Darris 3 years ago
Darris
That is completely acceptable. I am just glad to flesh out my arguments to have them criticized and I'm happy to have you here to debate them.
Posted by tryanmax 3 years ago
tryanmax
Hello Darris,

Please give me about a day to formulate my first argument. You've put a lot of thought into your opening statement so I necessarily cannot immediately reply if I hope the debate to still be available after formulating it. As a courtesy, I am letting you know now that I do not intend to argue in favor of the status quo in taking the Con position.

Cheers,
tryanmax
Posted by Darris 3 years ago
Darris
I have edited and added a few things since my last opponent forfeited.
Posted by Darris 3 years ago
Darris
I have edited and added a few things since my last opponent forfeited.
Posted by Darris 3 years ago
Darris
Just a reminder: you only have one more day, Beginner. I hope you post your argument in time. I am looking forward to this debate.
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