Income Inequality in America

It seems like it would be possible to setup a county using the land rent ideas if someone really wanted to. Folks could move to a low population county and purchase property there. Then enter into a contract with the city or county that gives that entity ownership of the land, in exchange for it paying their income tax (while they remain residents of the county). Remaining private land could be bought out at a premium or, if necessary, zoned in such a way that it doesn't effect the experiment.

I'm not advocating the idea, just saying if enough folks really believe in this model it seems they can have it.​

 

Tom Dunne
British Economist
While the theoretical case for Land Value Taxation is regarded as being very persuasive, most people looking closely at the idea form the view that the practical difficulties of introducing it into an established modern economy are compelling.

 

Someone on this tread advanced the information that there was a community, I think in New Jersey, which used LVT. The problem with that is, there were state taxes and federal taxes and sales taxes in addition to LVT which placed in that town at least an undue burden on landowners who through their investments in land contribute so much to the prosperity of the community, the state and the federal government.

The concept which requires the community to pay all other taxes for the land owner making his LVT effectively a single tax, would be reasonable, but highly improbable from a practical standpoint.

 

There is a reason that Marxists refer to "class" warfare; they look at the divisions between the priviliged few and the unprivileged many and decide that the difference is usually based on a conscious economic and social decision (the capitalist class tries to maintain and expand its advantage). To rise from one class to the other (prior to a successful proletarian revolution) is extremely difficult.

The American Dream, on the other hand, implies a world where a hard-working and intelligent person, regardless of their origins, has a reasonable chance to get ahead and make something of themselves. It also implies a world
where the lot of their children can potentially be quite a bit better than that of their parents.

Since 1979, economic and social developments in the USA has seen a drop in social and economic mobility, the very rich (the capitalists) getting a larger share of the real wealth (wealth adjusted for inflation so that it is comparable over time) and greater political influence. The large majority of the middle class is economically stalled (in terms of real wealth, which considers assets minus debts) and the class itself is slowly shrinking in size.

So let me ask the Forum members who have a justifiable belief in the American capitalist system: do we want a future USA that resembles that of a Marxist revolutionary propaganda capitalist system or do we want a future USA that resembles that of The American Dream? I know which one I would prefer.

 

If you want to limit your line of reasoning to special pleading, be my guest; but, it can only result in fallacy due to any false analogy. I can claim that if there is no market friendly social transaction and a profit motive, it cannot be any form of capitalism, and must fall into the socialism sphere of influence.

I only agree that solving simple poverty in our republic using existing legal and physical infrastructure can lower our tax burden by improving the efficiency of our economy by increasing the circulation of money in our Institution of money based markets.

And, engendering a moral of, it must be an Individual problem if you can't claim to be in (official) poverty.

 

In my opinion, the American Dream can only be accomplished through capitalism. That said, I recognize that there have been cycles of up and down for the American citizen just as it has been for the over all economy. When we choose (I think reasonably) to expand the relative size of the workforce by including women who wanted to remain in the work force after WWII it became obvious that the one worker household was passe'. Considering that we spend a great deal of money in social programs which have virtually eliminated most of true poverty, I think we have done a good job in retaining the American Dream.

 

How so? Can you run centrally run a medical system "properly"? Who makes the decisions about what treatments are available or not etc....?

 

Daniel, I have no special pleading.

The fallacy does not fall into my line of reasoning.

You may claim anything you wish, but I don't believe socialism can or ever will be a useful economic system because it reduces motivation and personal ambition, both of which are necessary in a prosperous economy.

We have eliminated the very bases form of poverty in the US with but few exceptions. As discussed earlier, relative poverty will always exist and by definition cannot be eliminated. Thus, when I give to most charities I give to uplift the more dire poverty possible, not the relative poor in the US.

The morality of the issue is helping those in greater need, which does not mean the relative poor in the US.

 

The individuals doctors make the decisions. When doing my internship as a psychologist and counselor, I became aware of how medicaid is actually applied. Next to the VA medical system I believe medicaid is one of the better systems around. Of course there will always by some inequities, some mismanagement, but that applies to private systems as well. Don't forget John, I am a moderate DEMOCRAT and I do advocate many of the things my left wing nut brethren believe in, just not all of it.

 

Socialism is a simple requirement for States and statism to exist; it is that simple.

We have only solved for most forms of absolute poverty in the US, through socialism, not capitalism.

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According to the right, only CEOs on corporate welfare are worth it, under our form of capitalism.

 

Look at the statistics of the past three decades. That's more than a temporary change (one boom or bust in the economic cycle). At this point the yellow warning lights have started flashing.

 

I disagree Daniel. Social programs may need to exist, but no socialism.

That is not true Daniel. It is only through the prosperity that Capitalism has brought us have social programs been financed well enough to virtually eliminate true poverty in the US.

I don't agree with corporate welfare, so you are preaching to the choir.

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I disagree with you.

 

Your special pleading is telling, and why you arrive at so many false analogies and that form of misunderstanding of the issues.

Social programs only exist due to socialism, not capitalism.

We have a mixed-market political-economy for a reason.

 

What special pleading are you talking about?

What false analogy?

No Daniel that is not correct. Capitalism has helped our prosperity such that we can use social programs withing the capitalist system to help the needy.

Socialism is by definition:

Definition of 'Socialism'
An economic and political system based on public or collective ownership of the means of production. Socialism emphasizes equality rather than achievement, and values workers by the amount of time they put in rather than by the amount of value they produce. It also makes individuals dependent on the state for everything from food to health care. China, Vietnam and Cuba are examples of modern-day socialist societies. Twentieth-century socialist governments were overthrown in Czechoslovakia, East Germany and the U.S.S.R.​

 

OMG. The LVT would drop the EXCHANGE value of land to near zero. The landowner can't get anything in exchange for it any more because future rent income flows are non existent to him or any potential buyer. They can't keep them. It would still have value, it would just be paid to a different entity. The tax would be on an annual basis meaning it would become a tax on the annual RENTAL VALUE of land.

Just a rough example, let's say there was no tax on land rent:

Annual tax on land rent: 0
Land value (what the seller can get in exchange on the market): 100,000

Now, let's say we raise the tax rate on land rent to 50%:

Annual tax on land rent: 2,500
Land value (what the seller can get in exchange on the market): 50,000

Raise it to 100%:

Annual tax on land rent: 5,000
Land value (what the seller can get on the market): 0.00

Exchange value ceases to exist. He can't get anything for it on the market. The landholder pays the annual rental value as a tax.

This is actually some BASIC STUFF. When you subtract future cash outflows from future cash inflows exchange value drops. Rothbard and you are just demonstrating ignorance.

Yup, what the landholder can get in exchange for the land on the market would fall to near zero.

Nope, the landholder would simply pay the annual rental value as a tax.

[/QUOTE]No more than your claims.

 

If the exchange value was nearly zero the LVT would be near 0.

The land would then have very little value to an owner so why bother? I would certainly never use land for which the rent value would be 100% taxable.

Stop right there. If no net rent after taxes is insufficient to justify the exchange value it will not be exchanged.

50% of 0 is = 0

With no one there to pay the taxes. Only a fool would pay the exchange value for a piece of land which did not yield income of 10% to 12% of the land price AFTER TAXES.

Still too expensive to pay to occupy the land.

Land value 0, exchange value 0, no one will pay the price for the ability to pay an exorbitant tax like that.

O value, 0 tax. Just like Rothbard said.

I would suggest it is not Rothbard who is demonstrating ignorance. People will not pay "exchange prices" for land if the rental income from that land is equal to 100% of the rental income. It would become a losing investment.

As would the tax.

There wouldn't be a landlord to pay the tax.

Yep, I think your opinion is funny too.

Why should I try to substantiate anything when your entire argument is a waste of time? But I did quote several renowned economists opinions against LVT.

I do concede, that LVT is unworkable in a mature economy.

You can capisci what ever you wish. You have not put forward an argument with which I have to rebut more than I have done over the last 100 or so posts. I concede you are wrong.

So you accept that Donald Trump has put millions into the economy with the contractors who built his tower.

 

ARE YOU KIDDING ME?????

You'd STILL get rent for the land. You just CAN'T KEEP IT. You pay it as a tax.

Thus you can't get anything in exchange for it on the market AT SALE. Because the future cash outflows eliminate the future cash inflows for the land.

This is indisputable. It happens with the property tax too. Any land rent the property tax falls on reduces the exchange value of land, the price you can generally get on the market if you SOLD it.

This is not even controversial. It's a well known FACT. How can you be so ignorant of a basic thing like that???

And just because the landowner would no longer be able to keep the land rent doesn't mean that TENANTS or any potential LANDHOLDERS would no longer be willing to pay anything for it. In fact, since they no longer have to pay upfront extortion fees to the landowners AT PURCHASE, they'd be more than willing to pay a lower amount on an annual basis as a tax in return for exclusion rights on that piece of land.

 

I kid you not. Then there is no point in occupying the land. A net lease giving one 10% t0 12% AFTER tax is the least an investor will want.

Then the land would be useless and a drag on the economy.

The amount of any tax, is always something to consider. Only a fool would pay to occupy land for which he got no net return.

Your well know "fact" is nothing but conjecture on your part.

No intelligent potential land holder would ever pay to occupy land which did not produce a net profit after tax.

I have spent years investing in real estate and acting as a realtor and I can tell you for an absolute fact, that few if any landlord ever is able to up front extort fees, period. Your entire thought here is baloney. I think between you, langston and geofree, you guys have presented every positive thing about an LVT there is, and I still don't buy even a little of it, and apparently neither do the people who have run our country/states/cities since 1776 or there would have been at least one experience with the LVT single tax, which is far superior to any LVT which is not a single tax.

I had a very nice bar b q dinner, so now it is nap time.

 

Sounds good, but when private insurance people are no longer subsidizing Medicaid costs which don't cover everything where do we go from there? Can't we just focus on efficiency and expanding supply?

 

The land value tax is never “exorbitant” as it is (and can only ever be) what people are willing to offer in exchange for secure tenure to the land. Somehow you are making the same mistake that Rothbard made. Just because people will no longer buy land as an “investment”, doesn't mean that potential land users will not pay a tax for secure tenure.

Hypothetically, suppose you own land and your tenants pay you $10,000 per year to use the land. Now suppose that the government raises your tax on the land that you own to $10,000 per year. Now you can't make any rent income because the taxes take all the rent. So, what do you do? Well, you put your land up for sale to whoever will buy it, and because the taxes are so high nobody is willing to pay very much for it. Like you said, the high taxes would make buying the land a horrible investment.

But there still is someone who is willing to pay $10,000 per year to use the land, and that someone is your tenant. So, you go to your tenant and tell him that you can't afford the taxes on the land and that you would like to sell the land to him. Your tenant asks “just how high are the taxes?” and you tell him that the taxes are $10,000 per year. Your tenant agrees that the taxes seem high, but that he can afford them, because he is already used to paying you that much to use the land. So your tenant offers you $10 for your land title, and agrees to take over the tax payments. Seeing as you can't afford to pay the tax and make any profit, you agree to your tenants terms.

Now in this scenario, you can see that the exchange value of your land dropped to $10, far less than what it was when the taxes were much lower. You can also see that the government has secured a $10,000 annual income stream based on land value taxation for revenue. Also, because the government used the land value tax to replace other taxes, it removes all the other taxes on your tenant that he used to have to pay. Your tenant (the productive one in this scenario) is still paying $10,000 per year to use the land, same as before, but now he doesn't have to pay all the other taxes, and is therefore far better off.

Furthermore, as far as the economy is concerned, it doesn't matter who “owns” the land, just that the land is being used productively, and the fact that your former tenant now owns the land, instead of you, has no effect on his ability to use the land productively.

 

I don't accept your hypothetical in the least. Whether the land is being used productively or not does not change the fact that the value of land which is taxed at or near the amount of the rent that can be collected is not a good investment and land investment is one of the prosperity builders in a capitalist society.

 

I'd say if you want to overcome income inequality, education is the primary tool. Something which the Progressives have destroyed in American. If you can't read, write or do simple arithmetic who is willing to hire you, unless it's digging ditches or cleaning up muck? Everyone wants a "livable wage". What have they done to be equal to the income they seek?

Education, income inequality, and mortality: a multiple regression ...

www.ncbi.nlm.nih.gov › NCBI › Literature

Lack of high school education accounts for the income inequality ... inequality and age adjusted mortality is due ... Lack of high school education ...

 

EXCELLENT! They'll just have rely on making money off of improvements. ACTUAL production, you know.

Maybe for the landowner at the expense of others. For everyone else: Bah Humbug! (As you like to say.)

 

What do you call "responsible wages" ? And for that matter, have you thought about what might be seen as "responsible PROFITS" ?

Hypothetical case >> If a company is owned by 5 individuals who each profit $ 10 million/year, and has 5 workers who each make $50/hour, what would you say about how "responsible" the wages are ?

 

But comfort is freedom.

Seriously if companies took cradle to grave care of workers, the government supported the people so they would surrender what they see as some "freedom" for never having to worry and some level of personal choice society would stabilize even if the elite were more powerful. Mao and Stalinist Communism would never have failed if they focused on creature comforts and made work a duty leading to comforts and then fear would not have been needed. In fact the government would likely have had happy and very loyal citizens that would be a society that would make the West look bad.