LVTfan

Real Estate Lending: Did Henry George Get It Right?

I'm not so sure Karl Marx got all that much right. But if you do, you might take a look at Bob Andelson's essay "Henry George and the Reconstruction of Capitalism."

Many people who were drawn by Henry George's vision ended up as socialists -- George Bernard Shaw being one of the most famous.

Henry George's ideas offer a stable, sustainable economy, a level playing field on which those who want to work can prosper, taxes which don't steal from producers that which they produce; affordable housing; a slowing and even reversal of urban sprawl. To me, any one of of those is reason enough to get excited, and any two should be enough to get the attention of most thinking people.

Mason Gaffney's book also appears as part of the American Journal of Economics and Sociology, so if you've got online access, you might read it there. I commend it to your attention, if you're interested in a stable economy for your children, if not for yourself.

Why Property Taxes Must Be Cut

Vahan writes, "reducing property taxes would go a long way to provide a much needed boost to the housing market."

Yes -- that's what drove California's housing prices sky high, and its housing affordability to the point that the California Association of Realtors stopped publishing the Housing Affordability Index each month. People were forced into ridiculous mortgages, bidding for a relatively limited supply of housing. Proposition 13 has benefited one class of people greatly -- those who were of prime homeownership age in the 1970s and early 80s, and their heirs (who inherit their grandfathered miniscule tax bills) -- at the expense of young people. California has approximately the 4th lowest homeownership rate in the US -- but its seniors have a homeownership rate *above* that of their counterparts in the remainder of the US! And the younger people must subsidize them as well as pay huge mortgages to finance windfalls to those few who do sell, or drive long distances daily to new housing on the fringe. It is a very miserable system. It causes municipalities to court the big box stores and other things that destroy the downtowns. It makes it difficult for new owners to compete with longtime competitors, raising prices.

Prop 13 is a failed experiment, and we ought to learn from it and never repeat it.

Why Property Taxes Must Be Cut

Have you noticed that the places with the highest property taxes are also the places which send the largest share of their high school graduates to four year colleges, and that the places with the lowest property taxes tend to send relatively few to college and have many dropouts?

Does a college education matter in 2009?

Why Property Taxes Must Be Cut

DionyzJ, I think you're wrong. Property taxes are generally used to provide exactly the services which maintain the value of the land you own. Schools, police, fire, street maintenance -- all of these maintain your property value. I agree with you that property taxes should not be placed on houses (see my comment on that, below). People flock to communities where the living is good, and taxing the land value is the best way I can imagine to collect the revenue to support those services rationally and justly.

I disagree about taxing people with children more than those without. We all benefit when our community's children are well educated. Even the childless, in their old age, will not want an uneducated illiterate person responsible for their care, or voting on who will govern and represent us. And it takes a community to finance good schools; families with school-age children are so financially stretched in most places, even with just one or two children.


On Jan 12 09:31 AM DionyzJ wrote:

> The key is not only cut property taxes, but also how they are assesed.
>
> Ask yourself what do property taxes go for - schools, police, fire
> dept, street maintenance.
> Now ask yourself what does a value of a home have to do with any
> of this? NOTHING.
> Property taxes have to be restructured such that they are not base
> on the value of the property. They should be equal for all houses
> regardles of value, except for the school portion of the property
> tax. Portion of property taxes going for our schools should be based
> on the number of children living in the home.
>
> Lets stop DISCRIMINATING against the sucessful people and move to
> a fair property tax system.

Why Property Taxes Must Be Cut

The property tax as most of us (outside of a few wise cities and towns in PA) is two taxes yoked together. They have very different effects, and we ought to separate them. The current property tax is a tax on land value and a tax on building value, both with the same millage rate.

Taxing buildings leads to fewer buildings, less redevelopment, lower quality buildings, poorer maintenance, a deader economy.

Taxing land value leads to prompter redevelopment, buildings closer to the highest and best use of prime sites in the central business district, more jobs, more vendors competing for your business, more housing, more opportunities.

So the answer is to unyoke the two taxes, and apply a lower millage rate to buildings -- say, 10% or 20% lower than the current millage rate (or be bold and eliminate the building tax completely!) -- and raise the millage rate on land value.

Not a single acre will leave town. Owners of prime sites who are sitting on vacant lots, or obsolete buildings serving a single tenant where there ought to be a multi-story building serving several or many will be motivated to either develop the land themselves or sell it to someone who will. Either way, the community gets better. Opportunities for those who want to work or to have a good location where customers and employees can reach them will increase. Housing will be available and affordable, and in central places where people can do without a car for much of their activity.