Why Georgism Is Wrong

I support a Land Value Tax.

After all, I’ve created one of the most popular videos on the subject, but I’m not a Georgist because unlike Henry George I don’t believe in a single 100% LVT.

Why not 1 tax?

The advantages which would be gained by substituting for the numerous taxes by which the public revenues are now raised, a single tax levied upon the value of land, will appear more and more important the more they are considered. This is the secret which would transform the little village into the great city. — Henry George

Georgists support LVT because it discourages land speculation, but then why not also support taxes on other rent-seeking behaviors like dollar speculation? After all, inflation is a tax. If we removed all inflation (i.e. fixed the supply of money) then people would hoard money much like land.

Georgists support LVT because it disproportionally taxes the rich, but then why not have a progressive income tax on the top 10% of earners because otherwise they could avoid all taxation by opting out of owning American land for storing their wealth in art, commodities, stocks, patents, foreign land, etc.?

Georgists support LVT because it incentivizes a more efficient use of land, but then why not also tax things to incentivize a more efficient use of our natural and artificial resources such as by disproportionally taxing things with high negative externalities like smoking, alcohol, sugar, waste, and pollution?

Georgists support LVT because it incentivizes economic development, but then why not also support an import tax to disincentivize companies from offshoring it?

Georgists support LVT because they feel it’s only fair people pay for using a public good, which they consider land to be, but what about public transportation, public utilities, and corporations (a corporation is basically just a business with a public liability insurance option so why shouldn’t its owners pay for its costs)?

I support lower overall taxes (max 30% of GDP), but to rely on one tax for all levels of government is too simplistic for even Simple Anthony. It’d not only undermine our federalist system, but if all our problems were so simple then we would’ve solved them long ago.

Why not 100% tax?

Tax manufactures, and the effect is to check manufacturing; tax improvements, and the effect is to lessen improvement; tax commerce, and the effect is to prevent exchange; tax capital, and the effect is to drive it away. But the whole value of land may be taken in taxation, and the only effect will be to stimulate industry, to open new opportunities to capital, and to increase the production of wealth.  — Henry George

The total value of US land is about $26 trillion.

The total income of the US is also about $26 trillion.

Americans spend about 37% of their income on housing (land, mortgage, rent, utilities, property taxes) so if we were to pay the same amount under a 100% LVT then that would mean US land values would have to drop by 63% to $9 trillion.

But of course, land values would drop by much more… as Georgists want… because real estate would go from the largest financial investment to the largest tax liability.

The rich would dump over 16 million vacant homes (about 9% of US homes).

The middle class would also dump many of their single-family homes because the median home value is about $400,000 and the median household income is about $70,000 so this means for the median home value to equal 37% of the median household’s income it’d have to fall to $25,900, which if this 93% drop in the median home value occurred nationally then that would mean a 100% LVT would only collect about $1 trillion.

But land values would drop even further because today much of the 37% that the middle class spends goes toward their mortgage in order to build up their own equity whereas few people who could afford to move abroad or above would choose to pay 37% in rent to Landlord Sam.

And then land values would drop even more because after much of the middle class’s wealth is eviscerated due to having had so much of it stored in the value of their homes, there’d be many more poor people whose plight would also be exacerbated by the fact that in 2022 total government revenue was about $10 trillion so for it to fall to less than $1 trillion would mean we’d have to abolish or at least radically cut Social Security, Medicare, Medicaid, food stamps, etc.

To be a Georgist means you have to be an odd mix of a communist who believes all the land should effectively be confiscated by the government and a libertarian who wants to radically downsize the government.

This massive drop in home values would also cause an unprecedented deflation where the Fed would have to print a lot of money to give to the big banks, therefore massively increasing inequality, who will then use some of that money to build skyscrapers.

A 100% LVT would basically turn America into a giant game of “the floor is lava.”

Those who buy on high would then have the same financial incentive to constrain the housing supply as when people bought more wide.

A land value tax isn’t a living space tax!

There isn’t a 1-to-1 ratio between the land value and condo value. The latter can rise faster!

Once enough of the electorate owns condos they’ll vote to increase zoning and parkanization™ (turn vacant properties into public parks) ostensibly on the basis of the environment, congestion, safety, beautification, historical preservation, etc. while doing so just so happens to disproportionally increase their condo’s value.

Once all the residentially zoned areas have skyscrapers then it’d be extremely difficult to develop them further because the cost would be tremendous to buy an entire condominium (only individual condos tend to get resold), knock it down, and then rebuild higher… all the while paying a 100% LVT.

But let’s say there was still an empty lot next to it…

The land value could be super low because no one wants to buy it due to a super high regulatory cost that effectively prohibits profit, e.g. a structure must have at least (or at most) 10 eco-friendly tornado-resistant voodoo-dispelled floors constructed by a diverse cast of unionized workers with 126 parking spots.

And then once virtually none of the underlying land in any given jurisdiction is being resold due to overdevelopment and overregulation it’d be more difficult to determine the land’s market value, which with increased tax assessment subjectivity, residents who are one of the most powerful voting blocs could lobby the government to err on the side of undervaluing the land.

Overall a single 100% LVT would massively decrease government revenue and the middle class’s wealth while making those who can afford to live above live more dependently on a heavily monitored artificial structure while those who live further down in smaller buildings would pay the bulk of taxation and then those who live the furthest down would be the homeless roaming around the great vastness of our ever-expanding public parks.

Make America Native Again?

In the end, if you aren’t persuaded by my logic then I hope you’re humble enough to realize that since Henry George proposed his 100% LVT over 100 years ago not a single government at any level anywhere in the world has implemented it so instead of imposing it on the most successful economy in human history we should as a matter of principle err on the side of caution by initially only implementing a single-digit LVT on the state-level via abolishing taxes on improved land values. And then if we coupled this property tax cut with ending the Fed (BlackStateVanguard™ would no longer have as much funds to buy up single-family homes) and implementing a Neo-Homestead Act then rather than becoming a peoples of the Earth we’d be a nation of owners again.