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tcpipMost regular readers will know I'm an advocate of land tax as a replace for inefficient and unproductive taxes on labour and capital. On a whim, I entered this discussion on a property investment website. Enjoy the results. What I find particularly remarkable is their ignorance of basic economics (like the Law of Rent or the distinction between land and capital) on matters they claim expertise in. Actually I must confess I find this a lot; often people with a strong opinion on a topic like to think they're an expert on a topic. Personally, I prefer to form a strong opinion by reaching "deeply considered convictions", based on reason and evidence, rather than having "deeply ingrained prejudices" from emotions and assumptions.
Julia Gillard became the first ever female Prime Minister of Australia yesterday (that's only taken over one hundred years, *grumble*). It's an acting position whilst Rudd is in Bali (finally a PM who's acting on climate change!) , and one which seems to attract a share of odd events. I've sent her a congratulatory email (the last email conversation we had was a little terse; I was writing on behalf of Labor for Refugees and she was shadow minister for immigration).
Speaking of which, for the second year in a row, I'm desparately trying to organise tickets to Bali again over the break. I've contacted Flight Centre, and they've sent an email confirmation saying their processing the request, but no confirmation yet. Meh. It's been years since I've been to the archipelago, and I really want to see it again. New Zealand is not an option this summer (I think I'll go south for winter). If this doesn't work out for whatever reason maybe a visit to Tasmania is in order; it's been a while since I've seen Murdoch's former Vice-Chancellor, Professor Peter Boyce and we remain in irregular correspondence.
This week I finally managed to finish my review of Earthdawn: Gamemaster's Compendium; it's a huge, stunning book and quite good on the substance level as well. Not so good is the old AD&D module D1: Descent into the Depths of the Earth, which is seriously lacking in style, substance and a purpose for existence. Played another session of Legend of the Five Rings last Sunday with a refitted AD&D Oriental Adventures module. It's going very well, if only I can hack out some overall narrative to the various instances of character development and plot leads.
Julia Gillard became the first ever female Prime Minister of Australia yesterday (that's only taken over one hundred years, *grumble*). It's an acting position whilst Rudd is in Bali (finally a PM who's acting on climate change!) , and one which seems to attract a share of odd events. I've sent her a congratulatory email (the last email conversation we had was a little terse; I was writing on behalf of Labor for Refugees and she was shadow minister for immigration).
Speaking of which, for the second year in a row, I'm desparately trying to organise tickets to Bali again over the break. I've contacted Flight Centre, and they've sent an email confirmation saying their processing the request, but no confirmation yet. Meh. It's been years since I've been to the archipelago, and I really want to see it again. New Zealand is not an option this summer (I think I'll go south for winter). If this doesn't work out for whatever reason maybe a visit to Tasmania is in order; it's been a while since I've seen Murdoch's former Vice-Chancellor, Professor Peter Boyce and we remain in irregular correspondence.
This week I finally managed to finish my review of Earthdawn: Gamemaster's Compendium; it's a huge, stunning book and quite good on the substance level as well. Not so good is the old AD&D module D1: Descent into the Depths of the Earth, which is seriously lacking in style, substance and a purpose for existence. Played another session of Legend of the Five Rings last Sunday with a refitted AD&D Oriental Adventures module. It's going very well, if only I can hack out some overall narrative to the various instances of character development and plot leads.
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Some guy named Smith
Date: 2007-12-11 11:39 pm (UTC)Yeah, that was pretty classic :-)
Sure, any increase in land tax is contingent with reduced taxes in other areas. Interesting this was precisely the recommendation of the State Government Review on Business Taxes (2001 iirc) which suggested getting rid of stamp duties, various property duties etc. Even the real estate industry supported it!
If we were to appropriately tax just the unimproved value of the land, this would seem to be good for me, as I own a small piece of land, and bad for the owners of homes on larger parcels... or would it?
Depending on the location; which does lead to that zoning discussion. In the Australian experience the strongest advocates of land tax have been country people, who actually have larger plots - but because the land is "improved" by their work, they invariably see the benefit of reducing taxes on their labour.
Zoning is an interesting one because in part it is justified as land use has to be negotiated with neighbours (I can't imagine people being terribly happy with a nuclear waste facility next door to a kindergarten), but in part they act like a land monopoly by excluding areas from use. It's less of a land tax than a labour/capital tax because it limits the type of production that can occur.
Re: Some guy named Smith
Date: 2007-12-12 02:06 am (UTC)Not withstanding, I do agree with your arguments and analysis of the systems involved - it makes sense on the macro scale. As a multiple property owner however I don't give a rats arse - I'de rather not have the tax at all.
I think all the intelligent discussion had left by page 3 - so thats where I stopped - but did you consider that the last 10-14 years of economics has resulted in most property owners now coming from the lower/mid income groups - who use them as a taxation minimization scheme and revenue generation?
Consequently I believe that in the current environment it's not the rich that pay these taxes - it's everyone else - and all the economists are flawed in the belief that the tax is a good thing - here and now. I'm speculating that raising that tax would have the opposite desired effect on growth - even with other offsets. The Banks would end up owning more.
I could be just talking out of my nether regions with this, but I wonder if anyone has done any studies using the last 10 years data from Australia.
Re: Some guy named Smith
Date: 2007-12-12 04:59 am (UTC)Yeah, but the imposition of a land tax reduces the price of land. For property investors who want a return on housing capital, surely that would be welcome?
Re: Some guy named Smith
Date: 2007-12-12 08:09 am (UTC)Those sorts of figures are not sustainable. The bubble will burst on it's own shortly. I give it less than 12 months (which is why I'm getting out.)
In real terms I think the only benefit of such a tax would be to force the price of land in populated areas to drop, and the price in regional areas to rise as people move out. I don't think you would see a net drop in land value because you are dealing with humans and they will just adapt to the new system.
Re: Some guy named Smith
Date: 2007-12-12 08:18 am (UTC)Why do you think the price of land in regional areas would rise?
Re: Some guy named Smith
Date: 2007-12-12 08:10 pm (UTC)This, I think, is the core of the forum denizens' argument, really -- the academic theory won't always translate perfectly into the 'real world' because you can't usually control the existing externalities.
But I still find the idea of investors ignorant of basic economic principles to be amazing -- do they realize that money is essentially a fiction?
Re: Some guy named Smith
Date: 2007-12-12 10:44 pm (UTC)No, land tax is based on the unimproved value only. Zoning, if you like, is an absolute tax on certain types of capital and labour investment on that land.
But I still find the idea of investors ignorant of basic economic principles to be amazing -- do they realize that money is essentially a fiction?
Well I did try to alert them to that with the reference to the Asian Financial Crisis. All the monetary increases in the world doesn't mean squat if there isn't the increases in productivity to back it up.
Maybe they think they'll be richer if they just printed more money :-)
Re: Some guy named Smith
Date: 2007-12-12 10:59 pm (UTC)I guess that's true, but isn't the 'unimproved' value based in part on the potential uses to which the land can be put? (i.e. not all land is created equal-- some of it is on navigable rivers, some of it is arid and unfarmable, some of it is on top of a mountain.)
so even absent the externality represented by zoning or other land use related structures, not all land has equal absolute value (i.e. not all land can be put to all uses), right? And the unimproved value must take this into account somehow, right? Isn't zoning merely an artificial extension of the reality that land isn't really 100% fungible?
Obviously the alternative is that all land is taxed at an equal rate per unit area, which would seem somewhat far-fetched, as it ignores the real scarcity issue. I certainly didn't understand the Land Tax issue this way -- it appeared to take into account the potential that the land had, without actually taxing any improvements constructed on the property. This would seem to go along with your argument -- that keeping otherwise valuable land vacant is expensive, while improving said land makes it effectively cheaper (as it would be taxed at the same rate, regardless of whether it actually produces anything -- thus giving incentive to use it for its highest and best use, right?)
But I guess you're right -- the zoning acts to make the relative cost of converting the land to a 'non-conforming use' more expensive... not the land itself :-)
This is an interesting topic. Thanks!