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Alanna Hartzok's avatar

Dorota - quite strange that you commented on my substack in reply to what I wrote regarding Robert Malone. Good for you, you did make it through hard work. I also know there are many people working hard who cannot find affordable housing. Land and thus housing costs in most areas go up faster than wages - the Law of Rent. Keep learning, read my book here: https://theiu.org/books/

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David Harold Chester's avatar

Socially Just Taxation and Its 17 Effects

Consider how land becomes valuable. New settlers in a region occupy the land for use. The central land is most valuable, due to its convenience and least transport need. This distributed value of land is created by the community and is not simply due to the natural resources. As the village and city expand, speculators in land values deliberately hold potentially useful sites out of use until planning and development have caused their site-values to grow. Meanwhile there is competition for access to the most suitable sites for housing, agriculture and manufacturing industries. The limited availability of the most useful land means that the rents paid by tenants make their residences more costly and the provision of goods and services more expensive. It also creates unemployment when entrepreneurs find the rents or transport costs too high for them to operate. This situation allows wages to be lowered by the monopolists, who are also or control the producers and whose land was obtained when it was cheap. This basic structure of our social system limits opportunity and creates poverty.

The most basic cause of our continuing poverty is the lack of employment and properly paid work due to the lack of opportunity of access rights to the land on which the work is done. The useful land is monopolized by a landlord who either holds it out of use (for speculation in its rising value), or charges the tenant heavily in rent for its access right. Its produce becomes more costly than what an entrepreneur would charge, were he/she able to compete on an equal basis. When the landlord is the producer, he/she has control of the land and price of its produce.

A wise and sensible government would recognize that this problem derives from the lack of opportunity to work and earn. It can be solved by the use of a tax system which encourages the proper use of land and which stops penalizing almost everybody else. Such a tax system was proposed by Henry George, a (North) American economist, but somehow most macroeconomists seem never to have heard of him in common with a whole lot of other administrators. In “Progress and Poverty” 1879, Henry George proposed a single tax on land values without other kinds of tax on produce, services, capital gains, etc. This regime of land value tax (LVT) has 17 features of benefit everyone in the economy, except for landlords, tax collectors and banks, who find that land dominance has its own rewards.

17 Aspects of LVT Affecting Government, Land Owners, Communities and Ethics

Four Aspects for Government:

1. LVT, adds to the national income as do all other taxation systems, but it can and should replace them.

2. Tax avoidance becomes impossible because the sites are visible and the cost of collecting LVT is less than for production-related taxes.

3. Consumers pay less for their purchases due to lower production costs (see below). This creates greater satisfaction with the government’s management of national affairs.

4. The national economy stabilizes—it no longer experiences the 18-year business boom/bust cycle, due to periodic speculation in land values (see below).

Six Aspects Affecting Land Owners:

5. LVT is progressive--owners of the most potentially productive sites pay the most tax.

6. The land owner pays his LVT regardless of how his site is used. When fully developed, a large proportion of the ground-rent from tenants becomes the LVT, with the result that land has less sales-value but a significant rental-value (even when it is not being used).

7. LVT stops speculation in land prices--withholding of land from proper use is not worthwhile.

8. The introduction of LVT initially reduces the sales price of sites, (although their rental value grows over long-term use).

9. With LVT, land owners are unable to pass the tax on to their tenants as rent hikes, due to the reduced competition for access to additional sites that come into use.

10. With LVT, land prices will initially drop. Speculators in land values will want to foreclose on mortgages and withdraw their money for reinvestment. Therefore, LVT should be introduced gradually to allow sufficient time to transfer for re-investment in company-shares etc., and to simultaneously meet the increased demand for produce (see below).

Three Aspects Regarding Communities:

11. With LVT, there is an incentive to use land for production or residence, rather than it being unused. As more sites become available, the competition for them becomes less fierce so entrepreneurs are more active.

12. With LVT, greater working opportunities exist due to cheaper land and a greater number of available sites. Consumer goods become cheaper too, because entrepreneurs have less difficulty in starting-up their businesses and because they pay less ground-rent--demand grows whilst unemployment decreases.

13. Investment money is withdrawn from land and placed in durable capital goods. This means more advances in technology and cheaper produce too.

Four Aspects About Ethics:

14. The collection of taxes from productive effort and commerce is socially unjust. LVT replaces this extortion by gathering the surplus rental income, which comes without any exertion from the landowner or by the banks--LVT is a natural system of national income-gathering.

15. Bribery and corruption on information about developments in land cease. Before, this was due to the leaking of news of municipal plans for housing and industrial growth, causing shock-waves in local land prices (and municipal workers' and lawyers’ bank balances).

16. The improved and proper use of the more central land reduces the environmental damage due to a) unused sites being dumping-grounds, and b) the smaller amount of fossil-fuel use, when traveling between home and workplace.

17. Because the LVT eliminates the advantage that landlords currently hold over our society, LVT provides a greater equality of opportunity to earn a living. Entrepreneurs can operate in a natural way-- to provide more jobs. Then earnings will correspond to the value that labor puts into the product or service. Consequently, after LVT has been properly introduced it will eliminate poverty and improve business ethics.

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