Take the landpill: Thoughts on Georgism and a land tax

I was reading about the economics of land during the COVID pandemic. I think some ideas about land are underrated. This essay contains a brief summary of what I’ve learned

  • A house doesn’t just go up in value, it’s always the land underneath it
  • Houses are depreciating assets, and require costly maintenance to maintain (or increase) their value
  • Land sucks up much of the economic surplus that is created in an area
  • When people’s productivity goes up, most of the value-add will be vacuumed not into the pockets of the workers, but rather into the pockets of passive land-owners, who will just raise rents accordingly
  • A long time ago, there was a self-thought economist who popularized the idea of a land value tax to combat land-owners sucking up much of the economic surplus that’s generated by hard-working people, his name was Henry George
  • Such a land tax simply means that land owners pay taxes on the land they own
  • Henry George wanted to remove all other taxes, and only have a single tax; the land value tax
  • In and near most urban areas, you could find empty plots of land that are completely unused
  • If you own an empty plot of land, you’ll notice that the price is always going up together with the productivity of the local economy. And because the price is going up, you won’t be in a rush to sell it to someone who wants to put it to use
  • A land tax will incentivize people to not own any land they aren’t using
  • Society could incentivize putting empty plots of land to use by taxing the land. This will push land owners to either sell it or rent it out to someone who has a use for it
  • Once you take the landpill, you start noticing land everywhere, and empty plots of land in areas where economic activity is high are especially noticable.
  • If you would like to learn more about this subject, I recommend three books
    • Progress and Poverty by Henry George (classic book but it’s written in old English)
    • Rethinking the Economics of Land and Housing by Josh Ryan-Collins (best book in my opinion)
    • Hoe Ik Toch Huisjesmelker Werd by Hans de Geus (excellent book if you speak Dutch)
August 9, 2022

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