Could someone explain to the editor that this piece is hardly relevant in Australia because we already have our local taxes levied on land value. They are called "rates". And the rest of the article is little more than luddite voodoo with barely sufficient economics thrown in to impress the punterazzi.

And in Australia, as in the USA, Canada NZ and UK it is not the rising cost of land that is grinding the poor. It is the impact of regulation and that crock of proverbial known as local government planning that is both limiting the supply of housing land and increasing the cost of construction. One simply cannot build a small, affordable house these days. The council would not approve the Development Application, the neighbours would all lodge objections and the banks would not lend you the money to build it.

But I wish Alana well on her journey up the remaining 97% of the learning curve.

Whoa, wasn't expecting the attack of the basket-weavers over my monday morning tea.

A few simples points to make:

The main problem with human rights are that they simply do not exist. The vague "right to the land" is an example of this... it's a political convenience which conveys next to no meaning whatsoever, and what it does convey is sufficiently vague to allow it to mean anything from a right to live near a national park, or the right to kick people off their land because they are richer than you... it sounds too much of Mugabe and his thugs demanding the right to "their land".

"Our treatment of the earth as a market commodity, just like a car or television, is the basic flaw in our economic ground rules."

Well, no. The problem is that all those people who talk about "animal rights" (another politically convenient lie for those wishing to alienate conservative rural voters) are destroying all the vestiges of rural agricultural community which raise the value of land to something higher than an amount of money, into a living community from which most people would not like to leave. That is, it limits supply, and thus reduces transactions. The perfect example is the hunt in rural England, now illegal, in which property boundaries dissolve away as the group do their work of being stewards of an area... the hunt goes where it may, over fences, into the properties of neighbours, poor and rich alike, to unify the people of the area in community and a profound bond with nature. Remove the hunt, remove one more reason to consider one's land as something more than a commodity, but rather an intrinsic part of one's self. This involves private property, hereditary property rights, lack of government intervention, and traditions and customs which only exist when there is minimal change in an area. Your utopia will destroy all these natural bonds and customs, by bringing upheaval to rural areas.

It is hard to believe that a “lack of security” in basic necessities stems from anything but absent budgeting skills and wrong spending priorities. It takes two workers in the family to sustain the standard of living people aspire to these days, but it is certainly not the same standard that people were content with when there was one breadwinner in the family. People are presented with luxury consumer goods and they simply must have them. It is not the basic needs of life that cause the problem.

The rest of the author’s arcane babble doesn’t seem to have anything to do with anything – certainly not in Australia. It’s interesting to note that she is attached to the UN, which probably explains her problem.

ARHU, thanks Leigh, now I realize what quadrant she is coming from: The one that demands notice and a point that needs to be made to justify their existence. Maybe a little bit of guilt in there also, as her wealth is ill begotten. I mean, Made no constructive effort or actually produce anything tangible, but gobelty goo., but gets paid heaps of loot for promoting misery.

I often wonder, if they actually believe in the Darwinian evolutionary theories, or Alien visitations and or abductions, that would help explain a lot of this rant. hmmmmmmm.

The author said....

.... "The other way to secure democratic rights to the earth is this: land could be made available to individuals and groups who wish to live in ecologically sustainable villages and farms. Community land trusts"

Yikes.. I don't know why but the words 'Animal Farm' come to mind here.
Just imagine the 'power trip' of those on the Land Trust. Or.. the potential for abuse.

I prefer individual holding, and if we want to move in the direction of more environmentally sustainable living, our councils can legislate it. Each new home has MORE than enough roof space to provide all their Electricity needs as long as they don't use electric cooking or heating, and use high efficiency lights.

Having worked in the Solar industry, I know this to be a fact.

Would the major utilities like that ? Would they move behind the scenes to prevent it ?

Is the Pope Catholic ?

Critics of Alanna Hartzong claim to know economics. They should read their textbooks more carefully. They should also read Alanna's speech more carefully and try not confuse rates on land with rates on buildings.

To suggest, as some have, that site revenue public financing increases the price of land is amazingly ignorant. Land tax is one of very few taxes that actually reduces the price of land. See Adam Smith, Wealth of Nations, Book 1, Ch 8, Ch 11 and Book 5, Ch 2; David Ricardo Principles of Political Economy, John Stuart Mill, Book 5, Ch. 2 if you don't understand why this is so.

Indeed, any first year economics textbook will probably the same matter discussed (e.g., Paul Samuelson's Economics, 16th edition, p250).

Further, the matter of "rights" in economics is not vague subject at all! People have the right to what they produce, as both a cost and a benefit - to all else, the gifts of nature, they have the right of equal access. That much is obvious from John Locke onwards.

The simple empirical fact of the matter is that site revenue public finance (including "pollution taxes") both encourage conservation of resources, internalises externalities, shifts investment from speculation to production and lower the cost of home ownership with minimal market distortions (indeed, some claim none at all). This is recognised across the spectrum - it's just that few politicians have the will to advocate it

Clyde Cameron (Labor) and Sir Alan Fairhall (Liberal) were two exceptions. It would be welcome if some more politicians had the courage that these individuals had.

Really, Lev. You should see what Fernand Braudel has to say about the critical role played by the divisibility and tradeability of land in the economic takeoff called the industrial revolution.

And in Australia, Rates are levied on land values, not building values.

Dear Perseus,

Noone is disputing, lest of all Alanna, that land should not be available for use at market values. As a matter of interest, I have read Braudel's analysis on the enclosures; noone is denying that they contained a dynamic element.

As for suggestion that rates are levied on land values not building values, you're simply wrong and a modicum of research will discover this. The method used to determine rateable values varies according to state, territory and council.

It will be interesting to see if you can admit you've made this error.

Regards,

Lev

That Australia raises rates (local government taxes) on land values is clearly questionable. Victoria, for example has only one council,Monash, using the system. The use of that system was destroyed by Jeff Kennetts government. In NSW Neville Wran destroyed the system of rating on land value by freezing the valuations. Nick Griener introduced a split system and there are a heap of "charges"
for as many activities of council as they can dream of. Queensland, where Land Value Rating started about 1896, still has the method of raisinf rates, but here again they tax anything that comes their way. Simply they have diminished the method of rating.

I own property in both NSW and Qld and can confirm with absolute certainty that rates are levied on the basis of land valuations. I also work as a property planning consultant in both states. Indeed, I am involved in negotiations with the NSW government over the purchase of land where the valuation of land for rates purposes plays a central role. I do not know the situation in Victoria but have reason to doubt that Lev actually owns any property or pays any rates. But nice try fellas, I have no need to admit that I am wrong because my statements are capable of substantiation by the facts.

You are quite fortunate to have properties in those councils in NSW and Qld where rates a derived from a partial value of the unimproved site value. However, if you knew your occupation as well as you think you do you would also find that even in the cases I have cited that rates are also partially determined by building value or land use (e.g., residential, farmland, mining and business).

In all cases where rates are more heavily based on unimproved site value rather than property value development is stronger. One of the key recommendations of Ms. Hartzog's proposals is to further encourage the use of unimproved site revenue public financing to encourage economic development. This is what the empirical evidence supports in every instance where it has been tried.

The fact that you are a property consultant and don't know that the way that rates are determined or that they are varied according to councils does not bode well for you claims to be a professional. It is fortunate for you, and unfortunate for your clients, that you are anonymous on this forum.

As I suspected it would seem lack the moral integrity and intellectual humility to admit that you've made a mistake in claiming that council rates are determined on unimproved site values across Australia.

A squirm, a sidestep and a defamatory statement will not enhance your argument, Lev. Rates are levied on property values while other charges are levied as fees for services. You cannot get away with a vague assertion that they fall within the meaning of Rates.

The use for which the land is used is merely to distinguish between categories of rateable land but all the rates are then levied on the valuation. NSW valuations are not frozen, it is the percentage at which rates are levied that is subject to control but rises have been approved.

And it should also be pointed out that Land Taxes are paid in every state and are levied on the valuation OF THE LAND. So Australia, generally, already has what the author was proposing. And as that was the only element of the article that could be classed as of a specific, rather than generalised or vague, nature, then there seems no more need for further comment.

Perseus,

Look at your claims:

"And in Australia, Rates are levied on land values, not building values."

Proven to be false, but you lack the moral ability (or perhaps the cognitive ability) to admit it.

Since modified to:

"And it should also be pointed out that Land Taxes are paid in every state and are levied on the valuation OF THE LAND."

But not in the Northern Territory - and nowhere to on the full site rental value either.

"So Australia, generally, already has what the author was proposing."

Generally, no it hasn't. The author suggests, quite explicitly that taxes should be shifted off labour and the products of labour to land use. That is obviously not the case in Australia.

So, Lev, we finally get to your point. After all your shifting categories and vague definitions, you, and apparently the author are arguing for a complete switch in taxation from income tax to taxes on capital. You want to jack up the tax on land by an amount that would enable the removal of income tax. Is that it?

And how, exactly would that assist the landless?
And how would that impact on the asset rich but income poor?

For a start, either rents will rise by the amount of the tax to a point where the renters will continue to pay the equivalent of their previous income tax, or, the price (value) of land will drop to factor in the changed cost structure. Banks will need to seriously adjust their borrowing limits (a credit squeeze) banruptcies will sky rocket and your renters will be out of a job.

Dream on, little broomstick cowboy.

So at last you've actually read the article.

"You want to jack up the tax on land by an amount that would enable the removal of income tax. Is that it?"

As much as is possible, yes. It was what was stated in the original article. Shift taxes off productive activity and on to use of resources.

How does this help the landless? Unlike other taxes, a tax on unimproved site value reduces the price of land. This is well known. It substantially reduces the cost of home affordability.

How does it affect the asset rich and income poor? Depend on what their assets are of course. If they are 'rich' through owning naught but land then the sensible thing is to redirect their invesments to something productive - like buildings. That is what Alanna's piece illustrated.

As for comments regarding rents, I have already provided several citations why this is not the case. I urge you to give yourself a basic reading in the economics of land and rent. To put simply you cannot pass on the cost a land tax to a renter as it is already included in the market value of a rent. This has been known, and proven, for over three hundred years.

You playground abuse follows the standard USENET rule for such matters; it is clear you've lost the argument when you have to resort to such foolishness.

Dude proposes we return to a standard 1950's british bolshie style substantial steepening of the tax regime and then has the gall to suggest that MY reading in economics is limited.

Gosh Lev, you must be in really big demand in Pyong Yang.

Evidently you haven't been reading what has been written.

There is no suggestion of replicating a 1950s British tax regime. The recommendation is lower income and company tax on revenues raised from production. This is quite the opposite of the British model of the 1950s ("tax and spend" Keynesianism). Indeed, if you knew British taxation as good as you think you do you will find that marginal income rates increased in the 1960s and 1970s.

The proposal actually means a net reduction in the amount of tax collected. The proposal is to reduce taxes on productive activity and increase taxes on resource use (such as pollution, site rental values).

This increases employment, reducing the need for social welfare, policing and related costs. As site rental values have extremely low transaction and compliance costs there are further savings; also avoidance is impossible.

As for the silly comments alluding to North Korea, I leave you with one from Milton Friedman. I presume you know who he is.

"Land should be taxed as much as possible, and improvements as little as possible."

Friedman, the arch-capitalist, got it right. And of course, North Korea doesn't raise public finances through site rental value does it?

Guess your economics is closer to North Korea - and mine is closer to Milton Friedman.

HTH HAND.

Quotes Freedman without the reference, and without the full context - par for the course.

Taxes on land are a tax on past savings. So in the face of unprecedented economic growth since the introduction of the GST, you want to reduce taxes on income AND consumption and load it all onto the past savings of empty nesters and retirees?

The net long term result would be;
incentive to save = zero,
voluntary savings = zero,
compulsory savings = limited by duress,
private investment = zero,
public investment = no match,
innovation = minimal,
economic growth = zero (or worse),
market capitalisation = reduced,

No, I was wrong, it is not a Pyong Yang scenario, more like Zimbabwe. The poor have lots of land but had no idea how to repair the confiscated tractor and now they starve.

So ask not for whom the supposed liberty bell tolls.

If Alanna's stats are correct only 30% of the US pop actually have a full time job.What are the other 210 million doing?No wonder the country is in dire straights.

About half of the Aust.pop works and we have huge bureaucracies to support as well as 1.5 million social security recipients.[excluding old age pensioners]

A major problem for the US is the trillions they spend on weapons to maintain the balance of power on this planet.They also have enormous problems with illegal immigrants just crossing their borders at will.They are rapidly achieving third world status with crime and corruption soaring and need to search for the root causes for their demise. Throwing the past PC attitudes out the window would be a good start.

Perhaps they need to think about manufacturing once again and limit cheap imports from China.There are a whole miriad of reasons for the demise of a country from social,economic,genetic,values,ethics, general attitudes,discipline,incentives,family stability and aspirational motivations to consider.Once the grip of poverty takes hold,it is very hard to reverse as demonstrated by our African Nations.

I don't believe any nation really wants a pool of poor.Poverty brings about political and economic instability.Real wealth for all, exists in the minds of your people and there is no economic or social advantage in keeping people poor and ignorant.

Taxes on land are a tax on past and current speculation. If savings in productive investments are taxed less than resource holdings then investment will shift.

incentive to save = zero,
Shifting taxes from production to resource use increases producity and reduces net taxation. Marginal propensity to save increased.

voluntary savings = zero,
See above.

compulsory savings = limited by duress,
As above.

private investment = zero,
Private investment shifts and net taxation reduced = more private investment

public investment = no match,
As above.

innovation = minimal,
Innovation increased as investments move to technology rather than resource holdings.

economic growth = zero (or worse),
Economic growth increases significantly as production is released from the dead-weight loss in taxes on goods and services. Empirical evidence shows that everywhere a land tax is introduced and taxes on goods and services reduced, economic growth increases.

market capitalisation = reduced,
As investment.

Quote from Milton Friedman from Human Events, November 18, 1979. He followed with;

"There's a sense in which all taxes are antagonistic to free enterprise -- and yet we need taxes. ...So the question is, which are the least bad taxes? In my opinion the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago."

You will find followup comments in his correspondence with William Newcomb (President, Media Foundation for Land Economics) in that year.

The position is supported by another Nobel prize winner in economics, Paul Samuelson.

"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."

and another Nobel prize winner in economics, Robert Solow

"The user of land should not be allowed to acquire rights of indefinite duration for single payments. For efficiency, for adequate revenue and for justice, every user of land should be required to make an annual payment to the local government equal to the current rental value of the land that he or she prevents others from using."

and by another Nobel prize winner in economics, William Vickery

"Economists are almost unanimous in conceding that the land tax has no adverse side effects. ...Landowners ought to look at both sides of the coin. Applying a tax to land values also means removing other taxes. This would so improve the efficiency of a city that land values would go up more than the increase in taxes on land."

Friedman (capitalist), Samuelson (Keynesian), Solow (conservative), Vickery (radical) cover a comprehensive political and economic spectrum.

The main problem with this argument,

"The user of land should not be allowed to acquire rights of indefinite duration for single payments. For efficiency, for adequate revenue and for justice, every user of land should be required to make an annual payment to the local government equal to the current rental value of the land that he or she prevents others from using."

Is that no distinction is made between a "user" of land and an "owner" of land. And whether you, or anyone else thinks otherwise, the OWNERS of land have already acquired rights of indefinite duration for a single payment of a capital nature. And a move to capture all of the benefits of ownership by the state is clearly a "taking" of property.

And your assertion that land ownership is not "past savings" but, rather, past speculation, makes it very clear to me that you have never actually paid a mortgage yourself.

Your list of economic experts appear to have projected some, as yet unproven, benefits without having actually conducted a real life experiment. And what they have left out of the projection is the reverse multiplier effect of diminished (confiscated) capital.

When you and your mates have actually tried and tested this whimsy on a real live economy, (and survived the truck bombs) then do come back to us with some hard evidence

Do you seriously think that Nobel Prize winners would make theoretical claims without "real life" evidence?

What do you call Alanna's examples of Pittsburgh and other cities in Pennsylvannia?

Here's some more.

1. California, 1890s. The state government passed the 1887 Wright Act which allowed communities to irrigate districts and pay for them by taxing the resultant rise in land value.

In ten years, the Central Valley was transformed into over 7,000 independent farms. Over the next few decades, those tree-less, semi-arid plains became the "bread basket of America", one of the most productive areas on the planet. Thanks to land tax.

2. New York City, 1920s. After World War I, many New Yorkers suffered from lack of housing. To solve the problem, Governor Al Smith persuaded the New York legislature to pass a law allowing New York City for the next ten years to tax land but not the buildings on it.

New construction more than tripled providing more housing, and lower cost apartments, there were more jobs and higher wages for construction workers, and more business for merchants who sold goods to the employed workers.

Economic good times in New York came to an end, though, when owners in 1928 began to anticipate the expiration of the tax-shift law and building ground to stand-still. Some claim this was the predecessor to the Great Depression. ("How New York Solved Its Housing Crisis",Charles Johnson Post, 1931, Schalkenbach Fdn, Mason Gaffney, 2001)

3. Taiwan, 1950s. In old Formosa hunger afflicted the majority of people; less than 20 families monopolized the entire island. A follower of Sun Yat-sen, the Nationalist Chiang taxed farm land according to its value. Landowners sold off their excess to farmers at prices the peasants could afford.

From 1950 to 1970 hunger was ended and Taiwan set world records with growth rates of 10% per annum in their GDP and 20% in their industry. (Fred Harrison, Power in the Land)

4. Denmark 1950s-1960s
In 1954 the land taxation commission, declared that they would support a gradual change from income tax to land tax. This result had an interesting effect on the fortunes of the DJP, which got nine seats at the election in 1957. It entered into government responsibility by forming a coalition with the Social Democrats and the Radical Liberals.

Anticipating a higher rate on land, investors switched from land speculation to real enterprise. One year later, inflation had gone from 5% to under 1%; bank interest dropped from 6.25% to 5%. By 1960, 100,000 unemployed in a country of just five million had found jobs and at higher wages, the highest widespread pay raise ever in Danish history. (The New York Times editorial, "Big Lesson From A Small Nation", 1960 October 2)

In the next election landowners went on a PR offensive; the Justice Party lost its seats, the land rate lost its boost, and investors again became land speculators. Quickly inflation climbed back up to 5% and by 1964 reached 8%. Land prices began to sky-rocket, from 1960 to 1981 increasing 19-fold while prices of goods and services went up merely fourfold.

5. Melbourne, 1970s. Around Melbourne, some towns tax land alone. Dr. Ken Lusht, visiting from Penn State, found they have 50% more built value per acre than those that tax both land and buildings. Between 1974 and 1984 (last year the government released these statistics), coinciding with some recession years, the number of businesses in the towns taxing property decreased by 20% while in the towns taxing only land it increased by more than 10%. (Phil Anderson, Economic Indicator Services, Melbourne, Australia)

I could give another thirty or so examples, but surely these are sufficient for a mature and intelligent person to realise the efficiency and effectiveness of taxing resource holdings over production.