But this is a risky and protracted venture. I think we need to consider the time involved. Idle land always has a hefty opportunity cost, especially in a rising market.
It is true that it has an opportunity cost, but it is most certainly not risky as land prices will always increase in an environment of positive economic growth and positive population. As for being protracted that demands on the rate of economic or population growth.
you're still using the same amount of government services / protections to maintain your exclusivity as you were before.
Actually, you would have to be using more; either excluding a greater number of people or excluding services to greater value. Otherwise land price wouldn't increase.
I don't see how the taxes would encourage more effecient use or increase market liquidity
It most certainly increases more efficient use on the assumption (and empirically confirmed) that people want to pay less taxes. So if land is what attracts taxation, owners engage in minimising their use of land and maximising investments in other places.
Vickery's point is further confirmed by yet another Nobel Memorial Prize winner Paul Sameulson..
"The striking result is that a tax on rent will lead to no distortions or economic inefficiencies. Why not? Because a tax on pure economic rent does not change anyone's economic behavior. Demanders are unaffected because their price is unchanged. The behavior of suppliers is unaffected because the supply of land is fixed and cannot react. Hence, the economy operates after the tax exactly as it did before the tax--with no distortions or inefficiencies arising as a result of the land tax."
"Because we're now raising money with Tax A, we can now eliminate/reduce Tax B".
There's plenty of evidence of this. Pittsburgh (and twenty other cities in Penn.) for example was faced with the problem of whether they tax land or tax buildings for their city council. Most ended up choosing a split-rate system; say 5% for land and 1% for buildings.
Further, in Victoria, Australia there were plenty of referenda among councils over whether to have capital improved value or site value as the basis for Council rates. Most chose site value.
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Date: 2006-07-27 10:31 pm (UTC)It is true that it has an opportunity cost, but it is most certainly not risky as land prices will always increase in an environment of positive economic growth and positive population. As for being protracted that demands on the rate of economic or population growth.
you're still using the same amount of government services / protections to maintain your exclusivity as you were before.
Actually, you would have to be using more; either excluding a greater number of people or excluding services to greater value. Otherwise land price wouldn't increase.
I don't see how the taxes would encourage more effecient use or increase market liquidity
It most certainly increases more efficient use on the assumption (and empirically confirmed) that people want to pay less taxes. So if land is what attracts taxation, owners engage in minimising their use of land and maximising investments in other places.
Vickery's point is further confirmed by yet another Nobel Memorial Prize winner Paul Sameulson..
"The striking result is that a tax on rent will lead to no distortions or economic inefficiencies. Why not? Because a tax on pure economic rent does not change anyone's economic behavior. Demanders are unaffected because their price is unchanged. The behavior of suppliers is unaffected because the supply of land is fixed and cannot react. Hence, the economy operates after the tax exactly as it did before the tax--with no distortions or inefficiencies arising as a result of the land tax."
"Because we're now raising money with Tax A, we can now eliminate/reduce Tax B".
There's plenty of evidence of this. Pittsburgh (and twenty other cities in Penn.) for example was faced with the problem of whether they tax land or tax buildings for their city council. Most ended up choosing a split-rate system; say 5% for land and 1% for buildings.
Further, in Victoria, Australia there were plenty of referenda among councils over whether to have capital improved value or site value as the basis for Council rates. Most chose site value.