Critique of a Single Tax System: LVT

The Single Tax: Economic and Moral Implications
By Murray Rothbard

Seventy-five years ago, Henry George spelled out his "single tax" program Progress and Poverty, one of the best selling economic works of all time. According to E. R. Pease, socialist historian and long-time Secretary of the Fabian Society, this volume "beyond all question had more to do with the socialist revival of that period in England than any6 other Book."

Most present-day economists ignore the land question and Henry George altogether. Land is treated as simple capital, with no special features or problems. Yet there is a land question, and ignoring it does not lay the matter to rest. The Georgists have raised, and continue to raise questions that need answering. A point-by-point examination of single tax theory is long overdue.

 

There is one community, Arden, DE that implemented George's ideas and has been successfully managing itself for 113 years.

 

LVT can work, mostly in small communities, providing it provides enough revenue to sustain government. But even in Arden, it only works for the municipal taxes, rather than as envisioned by George that it would be a single tax for all levels of government. Most communities use property tax which includes taxes on improvements as well as on the land. LVT is frequently thought to be a good way to manage land such that it is used to its best/highest potential. Even in Arden, use is dictated by law, with such a law being the Vacant Dwelling Ordinance. Other states and municipalities manage use of property through zoning laws and neighborhood restriction pacts.

There is always more than one way to skin a cat.

 

Rothbard:

But the single taxers are also interested in urban land where the value of the lot is often separable, on the market, from the value of the building over it. Even so, the urban lot today is not the site as found in nature. Man had to find it, clear it, fence it, drain it, and the like; so the value of an “unimproved” lot includes the fruits of man-made improvements.

Thus, pure site value could never be found in practice, and the single tax program could not be installed except by arbitrary authority.

 

All systems of taxation are arbitrary.

 

You know that I have already comprehensively and conclusively demolished and humiliated Rothbard for his fallacious, absurd and dishonest anti-geoist screed.

All competent real estate appraisers know the fact that land value is always separable from improvement value, as they do it every day of their lives.

False. Unimproved urban land never had to be "found" (what a ridiculous crock of $#!+), nor did it ever have to be cleared, fenced or drained. Rothbard is just flat-out lying.

Nope. Not the fruits of any improvements TO THAT LOT, anyway. Rothbard is just lying again.

Already proved a stupid lie from a stupid liar.

 

Much of the cost of those "man made" improvements were paid for with subsidies from government. When I was younger, my father and I worked in 'earth moving', which consisted of grading rice fields so they could be easily flooded with water and then later drained at harvest time. The bulk of what we were paid came from government subsidies, so it was actually the tax paying public which paid for those improvements. However, the profits from those improvements went only to the landowners. Landowners got richer, while everyone else got poorer by having to pay for those improvements through taxes. This is why landowners get rich even in their sleep, while productive working people never get ahead. Landowners have consistently used government to get productive working people to pay (through corrupt taxation policy) for improvements which only make them, the landowner, richer.

 

Mise, Rothbard and Reisman are 3 of the worlds most renowned economists. No one has successfully refuted any of their theories, and no one has ever successfully proved the value of LVT. Recognizing that LVT can be useful in municipalities and that it will never adequately replace other methods of taxation requires understanding the futility of introducing such a system in a mature economy and the futility of relying on LVT as a single tax system.

In spite of wild claims to have refuted those three wise economists prove to be nothing more than hot air coming from a very gaseous atmosphere.

 

I have no doubt that farmers and other rent-seeking corporations have taken advantage of government subsidies to their advantage, and it does nothing to prove the value, if any, of using LVT as a single tax. Effectively rent-seeking (looking for advantage from the government) is an entirely separate issue from taxation and I personally believe all rent-seeking should be eliminated and that fair taxation (progressive income taxation) should be introduced to provide ALL OF THE REVENUES for ALL LEVELS OF GOVERNMENT while eliminating all regressive taxation such as sales tax, value added tax, fuel tax or property tax. Any tax which does not take into account the relative wealth of the tax paying citizen is grossly unfair to over half of our citizens. Rothbard has successfully rebutted the contention of Georgists and others that first possessors of land can hold to ransom all others.

 

Interesting point! And landowners aren't the only ones getting rich as a result of tax payer funded government action, regardless of what type of legislated money funnels we;re talking about.

 

Great observations by Murray Rothbard:

The deficiency in that argument (LVT as a single tax system) is the neglect of the time factor in production. Capital is the product of human energy and land . . . and time. The time-block is the reason that people must abstain from consumption, and save. Laboriously, these savings are invested in capital goods. We are further along the road to a high standard of living than India or China because we and our ancestors have saved and invested in capital goods, building up a great structure of capital. India and China, too, could achieve our living standards after years of saving and investment.

The single tax theory is further defective in that it runs up against a grave practical problem. How will the annual tax on land be levied? In many cases, the same person owns both the site and the man-made improvement, and buys and sells both site and improvement together, in a single package. How, then, will the government be able to separate site value from improvement value? No doubt, the single taxers would hire an army of tax assessors. But assessment is purely an arbitrary act and cannot be anything else. And being under the control of politics, it becomes purely a political act as well. Value can only be determined in exchange on the market. It cannot be determined by outside observers.

 

True, but landowners pocket by far the largest share of the loot.

 

Whom, as you are aware, I have demolished utterly.

No, there is no such deficiency. It's simply a fabrication on Rothbard's part.

Oh, my goodness, time! Who would have thought that there was such a thing as time?

Notice that Rothbard immediately stops talking about land altogether.

But mostly because having lots of good land available meant that even while capital investment accumulated, land rents in North America were low and wages high. In China and India, crowding for centuries has pushed land rents to the limit of survivability, and wages commensurately lower. That is why they are poor. In fact, China and India had more capital investment than Europe or North America until the 19th century, and correspondingly higher production and wealth. But as the Law of Rent dictates, that capital investment made only landowners richer, not the whole society.

That's easy: by people who are willing to know self-evident and indisputable facts (i.e., not anti-justice, anti-freedom filth like Rothbard).

Same way any privately engaged real estate appraiser would.

No doubt Murray Rothbard is a lying sack of $#!+. No such army is needed. Modern computerized assessment systems can take publicly available price data and compute land values for a whole city accurately in minutes.

No, Murray Rothbard is an evil, lying, anti-geoist sack of $#!+, and cannot be anything else. Measuring land value by known-accurate methods is no more arbitrary than measuring the mass of the planets by known-accurate methods.

And being an evil, dishonest sack of $#!+, everything Rothbard says is evil, dishonest $#!+ as well.

No, that is false, as already proved. It is PRICE that can only be determined by an exchange in the market. Value is what an item would trade for, not what it DID trade for. Rothbard is simply chanting stupid, irrational Austrian-school garbage.

 

It does prove the value of using LVT a lot more than we do, though.

Garbage. Rent seeking is the ideal tax base, because it can be taxed into non-existence, and do nothing but good for the economy and society.

Property taxes are progressive, and LVT even more so, as already proved.

Stupid garbage with no basis in fact, logic, morality or economics.

No, he has not. Rothbard has been refuted, demolished, pulverized, crushed, flattened, defeated, and humiliated for his anti-economic stupidity and ignorance. By me.

 

I have demolished and humiliated them for their ignorance and dishonesty.

The value of LVT was proved by the physiocrats, and proved again by Smith, Ricardo, Mill, George, Vickrey, Samuelson, and many other economists incomparably superior to groveling lickspittles of privilege like Mises, Rothbard and Reisman.

You continue to post claims absolutely lacking any basis in fact, logic or economics.

Inevitable resort to denial in the absence of fact and logic noted.

 

Actually Roy, all you have done is make a fool of yourself without rebutting anything I have posted and you have yet to refute anything Rothbard has said. Your bloviating is showing you for what you really are, a loud mouth know nothing about economics. And yes, you are totally lacking in fact or logic. You are just rude because you attack anyone with whom you disagree and have no basis to justify those attacks.

 

Go on, defend Rothbard's claims against Roy's rebuttals. Posting his work as a thread and then refusing to address rebuttals is weak.

This entire post is nothing but bloviation.

 

You are correct, your entire post is nothing but bloviation, with a little blather thrown in for good measure. LVT as a single tax will only work at municipal level in an immature economy.

 

Again, nothing but bloviation on your part. No valid reasons given, if any reasons at all, no logic offered, and, of course, no attempt at defending Rothbard's claims against Roy's rebuttals.

 

What I can see is, you and Roy are determined to ruin this discussion just as you have done to others. I recognize that LVT CAN be used, but I also recognize that it is not always the best solution to taxation. As a single tax it can never fully satisfy the needs for revenue at all levels of government. Assessment of Land Value is either subjective or political based on the wishes of he who does the assessment. Assessors with an agenda can, and will, use it indiscriminately to further their agenda. An attempt to introduce an LVT in a mature economy has the issue of politicians tacking on additional taxes arbitrarily as they desire. The most important issue of introduction of an LVT in a mature economy is the method/means to properly compensate current land owners for the value of the land if it is to be further considered as owed in common by society. Failure to justly compensate those who had previously bought or developed land is tantamount to theft by fiat.

As to defending Rothbard against Roy's arbitrary and rude accusations, there is no point. Rothbard needs no defense against the ignorance of Roy. Rothbard's comments ARE THE EPITOME OF LOGIC. What ROY is lacking in intelligence, he more than makes up for in IGNORANCE.

Now that you and Roy have joined this discussion, and based on my experience that you two tend to be rude and narrow minded it is time for me to depart. Since it is obvious neither of you are willing to consider alternate opinions I bid you adieu.

 

I get the feeling you never intended this to be a discussion.

It's the best tax there is, and it's not even close. Because there is no
deadweight loss associated with it. Compared to other systems of taxation,
the land value tax will not provide any incentive for anyone to produce
less wealth than they could. It simply shifts the land rent landowners
currently collect for doing nothing and routes it to the government to use
as revenue instead, who, unlike the landowner, helped create it in the first place.

That's debatable. Most government spending appears as land value
somewhere, the Henry George Theorem demonstrates that. We should at least
fully exhaust that stream of revenue before even considering tapping
another stream of revenue. I personally think that if the land which is
held out of it's best use due to speculation enters the market and other
tax burdens are lifted off producers, a lot of government spending like
welfare, food stamps, etc. will become unnecessary.

It would be a much more transparent process than the current system. How much resources do we waste trying to figure out how to beat the tax man with our overcomplicated tax code? All of those resources could be used to increase the total wealth of society instead. Just pay the land rent and you're done with the tax man.

If you're talking about middle class people, it's the mortgage companies and landowners who have been robbing them. Anyways, there may be some transitional issues with productive people who have tied their justly earned wealth into landed assets, but I think that's minor compared to the ongoing injustice in the current system. And cutting incomes and sales taxes plus some form of universal individual exemption or citizen's divident would make that transition much easier. I've thought about this a lot. The only ones who'll be hit really, really hard is the wealthy landowners while most others would see immediate benefits. And they should be hit hard, just like slave owners should be hit hard, even if the former ones aren't necessarily aware of the negative impact their appropriated wealth has on other people. We all just grew up that way to believe landownership is right and it's earned money. Well, I guess that's the same reason people used to believe slavery was okay. It was normal.

Bloviation.

It was considered and then it was easily refuted and dismissed. BTW, the history of land value taxation, and Henry George in general, are mentioned very, very little in educational institutions. It's like the whole system has been corrupted. I never even heard of Henry George until about 4 years ago. LOL!!!!! So, most of the people you'll meet who share this idea have had to let go of some erroneous beliefs in the first place. That's certainly not narrow minded or refusing to consider others' opinions.

 

The text, it it's entirety:

http://mises.org/rothbard/georgism.pdf
Once Rothbard refuted the LVT that George endorsed, clearly a system with Marxist tendencies, it helped evolved the libertarian standpoint and only went to reinforce the moral imperative that ALL taxes are immoral and unjust.

 

I read through the whole thing. It's HILARIOUS.

I like this part:

Assuming the full land rent is taxed, he's right to say that sites higher in demand will no longer command a higher price, but they will still command a higher land rent than the poorer sites. People will just no longer pay as much upfront and instead pay it periodically to a different party. Whatever is due under the LVT will just no longer go to the landowner when you purchase land. Let's say a piece of land has a price of $100,000 in the absence of any tax on land rent. Tax 50% of the land rent it's price drops to $50,000. Tax 100% of the land rent and it's price drops to $0.00. But the land rent won't drop to zero. In the same sense that someone who rents an apartment in a better location pays more than someone who rents an exactly same apartment in a worse location. Payment for the apartment is the same. Land rent is different. Just because it isn't paid upfront as part of a purchase does not mean the payment just disappears. But, who knows, maybe I'm wrong. I should call my landlord and let him know that since I didn't buy the land from him that he should only charge me for the apartment but not the land rent since it obviously doesn't exist and I'm just imagining it. If he disagrees, I'll just tell him that the great Murray Rothbard told me so. A shiver will run down his spine as he cuts my rent more than in half. Murray Rothbard, unwitting hero of the landless. Hip, hip, HURRAY!

LOL!

There was an LVT in the Articles of Confederation. That must mean the founders had Marxist tendencies. How dare you!!!!!

Learn some economics and you may change your mind. I was rescued just in time before falling any further into the all taxes are bad dogma which I started to believe when I hit 20. And when I realized what the real culprit is, and that the only way to address the problem is a tax, my whole world was shattered. Good thing I wasn't too deeply entrenched yet. It convinced me rather easily, although I still had to fight some misguided considerations in my head. But deep inside I knew from the get go that this would be the right thing to do.

 

Reading it and comprehending it are two entirely different matters. Place some effort into understanding the text, and you will undoubtedly learn something. Start with the foundational writings upon which Rothbard bases his reasoning.

You keep bringing up this point of irrelevance- why? Aristotelian logic, good man. Another recommended reading.

Rest assured, I have "learn(ed) some economics" to a much greater extent than you- my profession dictates it.

 

I comprehended it just fine.

Here is what happened: I, ironically, after you tried to connect the LVT to Marxism, brought up in a previous post in another thread that the founders must be Marxist because they supported the LVT in the Articles of Confederation. As a rebuttal, you claimed that it is irrelevant because the founders predated Karl Marx. Well, yes, fine. So did David Ricardo, so did John Stuart Mill, and so did the physiocrats: and they all supported the LVT. It predates Karl Marx and therefore cannot have anything to do with Marxism. That's according to the logic you used. Aristotelian logic, good man.

Right. Well, let's see it. I notice that you skipped my refutation of the small part I quoted of Rothbard's article.