[article] Australian housing wealth is meaningless, destructive and fundamentally changing our society | The Guardian

www.theguardian.com

[article] Australian housing wealth is meaningless, destructive and fundamentally changing our society | The Guardian

www.theguardian.com

Fried_out_Kombi@lemmy.worldM to

Just Tax Land@lemmy.worldEnglish · 1 year ago

Australian housing wealth is meaningless, destructive and fundamentally changing our society | Alan Kohler

www.theguardian.com

High-priced homes do not create wealth, Alan Kohler says, they redistribute it. Now financial success is largely a function of geography, not accomplishment

This op-ed details how housing has gotten faaaar more expensive over the past several decades but without corresponding wage growth, leaving it increasingly unaffordable. The author (correctly) argues that this is due to the rising land values, which does not represent true wealth creation and is rather simply a vehicle for wealth redistribution from the younger and working class to the older and landed.

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Land Value Tax

From Wikipedia:

A land value tax (LVT) is a levy on the value of land without regard to buildings, personal property and other improvements.[1] It is also known as a location value tax, a point valuation tax, a site valuation tax, split rate tax, or a site-value rating.

Land value taxes are generally favored by economists as they do not cause economic inefficiency, and reduce inequality.[2] A land value tax is a progressive tax, in that the tax burden falls on land owners, because land ownership is correlated with wealth and income.[3][4] The land value tax has been referred to as “the perfect tax” and the economic efficiency of a land value tax has been accepted since the eighteenth century.[1][5][6]

…

Most taxes distort economic decisions and discourage beneficial economic activity.[14] For example, property taxes discourage construction, maintenance, and repair because taxes increase with improvements. LVT is not based on how land is used. Because the supply of land is essentially fixed, land rents depend on what tenants are prepared to pay, rather than on landlord expenses. Thus landlords cannot pass LVT to tenants, who would move or rent smaller spaces before absorbing increased rent.[15]

…

LVT’s efficiency has been observed in practice.[18] Fred Foldvary stated that LVT discourages speculative land holding because the tax reflects changes in land value (up and down), encouraging landowners to develop or sell vacant/underused plots in high demand. Foldvary claimed that LVT increases investment in dilapidated inner city areas because improvements don’t cause tax increases. This in turn reduces the incentive to build on remote sites and so reduces urban sprawl.[19] For example, Harrisburg, Pennsylvania’s LVT has operated since 1975. This policy was credited by mayor Stephen R. Reed with reducing the number of vacant downtown structures from around 4,200 in 1982 to fewer than 500.[20]

LVT is arguably an ecotax because it discourages the waste of prime locations, which are a finite resource.[21][22][23] Many urban planners claim that LVT is an effective method to promote transit-oriented development.[24][25]

Georgism

Georgism (otherwise known as geoism) is an economic philosophy holding that the economic value derived from land, including natural resources and natural opportunities, should belong equally to all residents of a community, but that people own the value that they create themselves.

Most Georgists support:

A broad-based land value taxation scheme, either to mostly or entirely replace existing harmful taxes on income, consumption, and corporations.
The social redistribution of this revenue either directly, through a Citizens’ Dividend, or indirectly, through government programs, to citizens.
Some (but not all) forms of market intervention by the state.
The abolition of tariffs, quotas, patents, and other barriers to trade and commerce.

The overall goal of Georgism can be summarized as follows: to eliminate rent-seeking and monopolism so that the economy can be free, fair, efficient, and prosperous for all.

The Georgist paradigm crosses the left-right political divide. This means that there are statist, anarchist, progressive, and conservative Georgists.

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