Paaty/Meeting followup, Steve Cord's 238 LVT study document

[Scott Baker]

Hello Common Groundlings (and friends)!

Thanks to all who were able to attend last night's Common Ground-NYC annual holiday party/meeting.  About a dozen of us had good talks, good food and good cheer!

Unsurprisingly, we got into a pretty good discussion of Georgism, how to implement it, how our group can be more effective and also work with like-minded groups and others.  I've already started looking into some of your suggestions and will report back in the future.

One of the things that came up, and which is important in making our "pitch" is the question:

Does Land Value Taxation raise or lower the cost of housing in a given area for most people?

The answer is not as simple as saying: Yes, because more land would be freed up by the tax. 

This is because as land is freed up, opportunities increase, people flock to the area, wages rise, and land prices go up, etc.

However, there is another way to look at this, courtesy of 238 empirical studies, highlighted by very long-time Georgist, Steve Cord (with my help) in the 2 attached documents. 

    Cord concludes (emphasis added):

Here’s How Your State Could Reduce Taxes For Most Taxpayers And Stimulate Your Economy While Maintaining Complete Revenue Neutrality

Your state can gain these 2 advantages by taxing land assessments more and what is produced (like buildings) less. Find out the various ways to do this. It would be completely revenue-neutral since an economically beneficial tax would be reducing economically harmful taxes. This is what would happen:
(1) Most taxpayers would be taxed less because their tax reduction will exceed what they would pay with the higher tax on land assessments. All nonlandowning renters would pay less because there’d be less building tax passed on to them and in the long run the land tax cannot be passed on to them.
(2) New construction & renovation, in particular, would be more profitable because they’d be taxed less. Perhaps tax-exempt these activities entirely (not their land) for the first 7 years. Here’s how to stimulate your state’s economy.

Nothing in economics seems as well substantiated. Eight (8) American winners of
the Nobel Prize in economics have endorsed this tax...

Then follows 28 pages of summarized LVT studies.  It was quite interesting to compile all of this, but of course, Steve Cord had done most of the heavy lifting throughout his more than half-century career (Steve is in his 90s now, so perhaps use the document's advice to contact him for further info cautiously.  The younger Josh Vincent has taken on the mantle of direct implementation at the Center for the Study of Economics, CCed on this email).

I posted these 2 similar files to this email and to the Economic Reform Yahoo group: https://groups.yahoo.com/neo/groups/EconomicReform/info files section, and to the Effective Georgism Facebook group files section: https://www.facebook.com/groups/effectivegeorgism/files/.  They use the same studies, but the openings and formatting and descriptions differ, so pick the version you like best!  Then, follow the instructions, go to your council member, assembly member or state senator, and advocate for land value taxation!

 

Member Ron Rubin also brought up State Senator Brad Hoylman's recent Pied-a-terre tax, which you may remember was referenced in the December 4 e-update:

A Land Value Tax is just the beginning, unfortunately.  Things have gotten way out of hand, with non-resident billionaire owners absent 10 months a year and paying NO income tax either because they don't live here!

Pieds-à-Terre Owners Dominate Some New York Buildings

				Pieds-à-Terre Owners Dominate Some New York Buildings The Census Bureau tracks vacancy rates to find out who lives in Manhattan full time.
				View on www.nytimes.com	Preview by Yahoo

State Senator Brad Hoynman is trying to pass a pied-a-terre tax, but even if it passes - a very big if in this Real Estate-dominated city - it would only put a tax on multimillion dollar apartments amounting to about half what London taxes, and London isn't exactly land-owner unfriendly either. 

One interesting finding, which I hadn't had before, is this figure as quoted by (my) Senator Liz Krueger (whom I and Rita, or just me, have discussed this issue with or supplied data for, several times now).  From the Moyers' show transcript:

NEW YORK STATE SENATOR LIZ KRUEGER: An example in a recent news story was a $90 million, 13,554 square foot penthouse and with 421a exemption allowed in this bill, their taxes per year would be $20,000. If they were not rolled into this legislation their taxes would be $230,000.

BILL MOYERS: Let’s hear that again.

NEW YORK STATE SENATOR LIZ KRUEGER: Their taxes per year would be $20,000. If they were not rolled into this legislation their taxes would be $230,000.

We have supported these measures and/or met with both of them in the past, but of course, they need our support now more than ever.

What's new now, is that we now have a bill number:

S7941-2013 - NY Senate Open Legislation - Imposes an additional tax surcharge on certain non-primary residence class one and class two properties in a city with a population of one million or more - New York State Senate

My State Senator, Liz Krueger, is already a co-sponsor, so it's up to you to add some more to the list.  This is not LVT, but it is something from a Senator who might then be on our side if we support him on this.  Let me know if you want me to attend a meeting with you and your Senator on this important, albeit limited, bill.

OK, that's enough reading assignment for now.     Until next time, Happy Landings....

 

Scott Baker - President: Common Ground - NYC; NY State Coordinator, Public Banking Institute; Opednews Blogger/Managing Editor; Huffington Post Blogger; Author

Video Appearances & Slideshows here:
http://newthinking.blogspot.com/

Petitions:
-- Commemorate President Lincoln's Assassination with 1 Billion Debt-Free Lincoln $5 Bills
-- Replace Property Tax with Ground Rent in New York State
-- Assess NYC buildings using comparative properties
-- California Dreaming: Set up a State Bank with abundant CAFR funds
-- Complete the East Side Manhattan Greenway from 38-61 Streets and save bikers, help the environment, and clear up traffic
-- Tax Vacant & Unused Land to Return its value to the Community
-- Close New York State's budget Gap with money from its own agencies by setting up a State Bank
-- Defend the Clean Air Act
-- Produce debt-free United States Notes
-- Reclassify the FED's account, from private to public

[Scott Baker]

Hi Mike et al,

(I think these addresses all work - at least none of them bounced for me).

I actually do believe that LVT will create free land, albeit so briefly that it's impossible to stake a claim there, in a city, state, or whatever desirable place to live it is implemented within.  And that is where the cheaper land will be found too, next to the free land.  As the market settles a price on this "new" land, which is really just land that has been wrested from speculators by the new tax, people and businesses will move into it - while some leave other land because they can't make good use of it.  Land at the margins will increase in quantity.  After all, in NYC, who thought a derelict, rusting former inner-city train trestle would be a desirable place to live near and work?  But now we have a thriving neighborhood worth over $2B, so far, near the Highline Park.  Former Mayor Giuliani wanted to tear it down!  You can't get much freer than that, though more through policy and withholding than through actual market forces.  

In any case, the point is that with LVT, there will always be some marginal land for people to start out on, though it may not be so obvious at the time where it is. (Von Thunen diagrams won't help much at this level of nuance, I'm afraid). The thing that short-circuits the market is not having LVT, not having it.

Cord's studies show in a very direct way that land rent will go down in the immediate term.  In my discussions with him, he stressed not to emphasize the later benefits of LVT in bringing up land rent, since he thought A) no one would believe us, and B) it would discourage its implementation because politicians would fear for their constituents ability to continue to live in now more desirable places.

I can testify that he is right on both counts.  When I talked to my state Senator Liz Krueger, sometimes with Rita, sometimes alone, she did come around to seeing that it would work - she is smarter than the average politicians, IMO - but then worried her elderly fixed income constituents would be "forced out."  She said her district would be over-taken by unaffordable high-raises.  I tried to point out that this was already happening, in spite of her and others' efforts to keep rent affordable, because the overall supply of housing was inadequate, partly because of the lockup of un- and under-utilized land, but she saw this as a minor influence in her crowded midtown Manhattan neighborhood.  She suggested this might work in outer Queens etc. where land is already cheap.  Oh, did I mention her husband is a R.E. developer?

There is a reason Josh and others focus on smaller towns, though I don't believe that is because a case couldn't be made for highly desirable places like NYC, if some provision was made to take care of land-rich, but cash poor residents during the transition (for example, to give them comparable housing in other areas, or deferral on land-rent until the property is sold or the occupant dies).

 

Scott Baker - President: Common Ground - NYC; NY State Coordinator, Public Banking Institute; Opednews Blogger/Managing Editor; Huffington Post Blogger; Author

On Monday, December 29, 2014 8:32 AM, Mike Curtis <mikecur...@verizon.net> wrote:

Dear Scott and fellow Common Grounders, thanks again for a wonderful party.  As I am sure you all noticed, I had a great time.

 Thanks for sharing our discussion, and sending Cord’s studies. I had forgotten about them.  They are most impressive, and I think a great incentive for people who might otherwise dismiss our claims, to pursue an understanding of the reason why LVT yields more jobs and housing, while homeowners and all other people who put their land to its highest and best use pay less.

I also appreciate your stating our discussion about whether a switch to LVT will make land cheaper in a city that makes the switch.  

My reason for saying it won’t is because of the law of rent:  "The rent of land is determined by the excess of its produce over that which the same application [of labor & capital] can secure from the most productive land that is free.”  Or, if there is no free land, as Ricardo formulates it, “ the most productive land in use”.  Since a switch to LVT in a single city or even a state won’t create any free land that yields more than the normal wages and interest, all the increase in productivity that results from revitalization of a city, will go to landowners.

This is not in any way to say that LVT is not a positive thing in a regional application.  More jobs, and more housing means less poverty — less unemployment and less homelessness.  It means that people who are buying a house and have made a down payment will pay less in taxes and enjoy a higher standard of living, as Steve Cord’s studies show: homeowners pay less with LVT.  But, there is no conceptually way that you can increase the desirability and the productivity of a region by encouraging economic development and cooperation, and have it be worth less than it was before — unless you create free land, which is exactly what will happen when the switch is implemented throughout the entire country.  So, as someone said on Saturday, “but we are advocating it for the whole country.

Again, it was great seeing you all.

Happy New Year,

Mike Curtis

<238 Peer Reviewed Studies of LVT by Steven Cord.pdf><233 Empirical Studies Plus 5 Endorsements of a Tax That  Has Stimulated the Economy & Lowered Taxes for Most People.pdf>

[Scott Baker]

I did say in regard to policy:

After all, in NYC, who thought a derelict, rusting former inner-city train trestle would be a desirable place to live near and work?  But now we have a thriving neighborhood worth over $2B, so far, near the Highline Park.  Former Mayor Giuliani wanted to tear it down!  You can't get much freer than that, though more through policy and withholding than through actual market forces.

Also, what we have in NYC is perhaps anti-LVT, as exemplified by the 5 ultra-lux properties that are 94% tax-exempt and are selling for 10s of millions (including the $95m penthouse at One57).  There are tax breaks like this all over the city, as you know, that rob us blind of revenue that ought to go to the city.  Obviously, the prices on these properties would come way down if the tax was normalized to comparable properties/locations.  I don't think we are in disagreement here, since I too talk about "free land" locked up in condo and other under-assessed spaces.

See here (which includes some of you material): OpEdNews Diary: Case Studies in New York City Property Development Presented to the Henry George School

				OpEdNews Diary: Case Studies in New York City Property... Public money for private benefit? I examined a selection of development projects in New York City, and evaluated the economic benefits given to encourage developm...
				View on www.opednews.com	Preview by Yahoo

 

 

Scott Baker - President: Common Ground - NYC; NY State Coordinator, Public Banking Institute; Opednews Blogger/Managing Editor; Huffington Post Blogger; Author

On Monday, December 29, 2014 10:20 AM, Lindy Davies <li...@henrygeorge.org> wrote:

Scott, LVT in one city will not create free land; it will tend to raise the price of land in that city. Let's remember that empty land isn't free land. We might be tempted to think that abandoned, city-owned lots are "free land," but they got that way in a specific tax and market environment. If we make their areas more attractive, either by LVT or by conventional gentrification, then those lots will be very valuable again. We need to realize that local LVT can be seen as an engine of gentrification. That might not be an entirely bad thing, but we're mistaken if we leave it out of the mix in our advocacy.

We MUST be clear about the distinction between the full national -- or preferably international -- single tax and partial local implementation. The latter is still a good and desirable outcome! We just need to understand what we are -- and aren't -- promising.

-----> Lindy

p.s. Another thing that is incredibly important to remember is that government regulation, assessment and tax policy has EVERYTHING to do with what land is, and what natural opportunities are worth, especially in cities. There's "free land" in condo units, when they are underassessed. There's even free land, of a sort, in rent-stabilized leases. In some ways, this really is rocket science. We need to be doing our homework.

Hi Mike et al,

(I think these addresses all work - at least none of them bounced for me).
I actually do believe that LVT will create free land, albeit so briefly that it's impossible to stake a claim there, in a city, state, or whatever desirable place to live it is implemented within.  And that is where the cheaper land will be found too, next to the free land.  As the market settles a price on this "new" land, which is really just land that has been wrested from speculators by the new tax, people and businesses will move into it - while some leave other land because they can't make good use of it.  Land at the margins will increase in quantity.  After all, in NYC, who thought a derelict, rusting former inner-city train trestle would be a desirable place to live near and work?  But now we have a thriving neighborhood worth over $2B, so far, near the Highline Park.  Former Mayor Giuliani wanted to tear it down!  You can't get much freer than that, though more through policy and withholding than through actual market forces. 
In any case, the point is that with LVT, there will always be some marginal land for people to start out on, though it may not be so obvious at the time where it is. (Von Thunen diagrams won't help much at this level of nuance, I'm afraid). The thing that short-circuits the market is not having LVT, not having it.

Cord's studies show in a very direct way that land rent will go down in the immediate term.  In my discussions with him, he stressed not to emphasize the later benefits of LVT in bringing up land rent, since he thought A) no one would believe us, and B) it would discourage its implementation because politicians would fear for their constituents ability to continue to live in now more desirable places.
I can testify that he is right on both counts.  When I talked to my state Senator Liz Krueger, sometimes with Rita, sometimes alone, she did come around to seeing that it would work - she is smarter than the average politicians, IMO - but then worried her elderly fixed income constituents would be "forced out."  She said her district would be over-taken by unaffordable high-raises.  I tried to point out that this was already happening, in spite of her and others' efforts to keep rent affordable, because the overall supply of housing was inadequate, partly because of the lockup of un- and under-utilized land, but she saw this as a minor influence in her crowded midtown Manhattan neighborhood.  She suggested this might work in outer Queens etc. where land is already cheap.  Oh, did I mention her husband is a R.E. developer?

There is a reason Josh and others focus on smaller towns, though I don't believe that is because a case couldn't be made for highly desirable places like NYC, if some provision was made to take care of land-rich, but cash poor residents during the transition (for example, to give them comparable housing in other areas, or deferral on land-rent until the property is sold or the occupant dies).
 
Scott Baker - President: Common Ground - NYC; NY State Coordinator, Public Banking Institute; Opednews Blogger/Managing Editor; Huffington Post Blogger; Author




On Monday, December 29, 2014 8:32 AM, Mike Curtis <mikecur...@verizon.net> wrote:

Dear Scott and fellow Common Grounders, thanks again for a wonderful party.  As I am sure you all noticed, I had a great time.

 Thanks for sharing our discussion, and sending Cord’s studies. I had forgotten about them.  They are most impressive, and I think a great incentive for people who might otherwise dismiss our claims, to pursue an understanding of the reason why LVT yields more jobs and housing, while homeowners and all other people who put their land to its highest and best use pay less.

I also appreciate your stating our discussion about whether a switch to LVT will make land cheaper in a city that makes the switch. 

My reason for saying it won’t is because of the law of rent:  "The rent of land is determined by the excess of its produce over that which the same application [of labor & capital] can secure from the most productive land that is free.† Or, if there is no free land, as Ricardo formulates it, “ the most productive land in useâ€.  Since a switch to LVT in a single city or even a state won’t create any free land that yields more than the normal wages and interest, all the increase in productivity that results from revitalization of a city, will go to landowners.

This is not in any way to say that LVT is not a positive thing in a regional application.  More jobs, and more housing means less poverty — less unemployment and less homelessness.  It means thatt people who are buying a house and have made a down payment will pay less in taxes and enjoy a higher standard of living, as Steve Cord’s studies show: homeowners pay less with LVT.  But, there is no conceptually way that you can increase the desirability and the productivity of a region by encouraging economic development and cooperation, and have it be worth less than it was before — unless you create free laand, which is exactly what will happen when the switch is implemented throughout the entire country.  So, as someone said on Saturday, “but we are advocating it for the whole country.

Again, it was great seeing you all.

Happy New Year,

Mike Curtis


On Dec 28, 2014, at 5:15 AM, Scott Baker <ssbak...@yahoo.com> wrote:

Hello Common Groundlings (and friends)!

Thanks to all who were able to attend last night's Common Ground-NYC annual holiday party/meeting.  About a dozen of us had good talks, good food and good cheer!

Unsurprisingly, we got into a pretty good discussion of Georgism, how to implement it, how our group can be more effective and also work with like-minded groups and others.  I've already started looking into some of your suggestions and will report back in the future.

One of the things that came up, and which is important in making our "pitch" is the question:
Does Land Value Taxation raise or lower the cost of housing in a given area for most people?
The answer is not as simple as saying: Yes, because more land would be freed up by the tax. 
This is because as land is freed up, opportunities increase, people flock to the area, wages rise, and land prices go up, etc.

However, there is another way to look at this, courtesy of 238 empirical studies, highlighted by very long-time Georgist, Steve Cord (with my help) in the 2 attached documents. 
    Cord concludes (emphasis added):

Here’s How Your State Could Reduce Taxes For Most Taxpayers And Stimulate Your Economy While Maintaining Complete Revenue Neutrality

Your state can gain these 2 advantages by taxing land assessments more and what is produced (like buildings) less. Find out the various ways to do this. It would be completely revenue-neutral since an economically beneficial tax would be reducing economically harmful taxes. This is what would happen:

(1) Most taxpayers would be taxed less because their tax reduction will exceed what they would pay with the higher tax on land assessments. All nonlandowning renters would pay less because there’d be less building tax passed on to them and in the long run the land tax cannot be passed on to them.

(2) New construction & renovation, in particular, would be more profitable because they’d be taxed less. Perhaps tax-exempt these activities entirely (not their land) for the first 7 years. Here’s how to stimulate your state’s economy.

Nothing in economics seems as well substantiated. Eight (8) American winners of

the Nobel Prize in economics have endorsed this tax...

Then follows 28 pages of summarized LVT studies.  It was quite interesting to compile all of this, but of course, Steve Cord had done most of the heavy lifting throughout his more than half-century career (Steve is in his 90s now, so perhaps use the document's advice to contact him for further info cautiously.  The younger Josh Vincent has taken on the mantle of direct implementation at the Center for the Study of Economics, CCed on this email).

I posted these 2 similar files to this email and to the Economic Reform Yahoo group: https://groups.yahoo.com/neo/groups/EconomicReform/info files section, and to the Effective Georgism Facebook group files section: https://www.facebook.com/groups/effectivegeorgism/files/.  They use the same studies, but the openings and formatting and descriptions differ, so pick the version you like best!  Then, follow the instructions, go to your council member, assembly member or state senator, and advocate for land value taxation!
 
Member Ron Rubin also brought up State Senator Brad Hoylman's recent Pied-a-terre tax, which you may remember was referenced in the December 4 e-update:

A Land Value Tax is just the beginning, unfortunately.  Things have gotten way out of hand, with non-resident billionaire owners absent 10 months a year and paying NO income tax either because they don't live here!

Pieds-Ã -Terre Owners Dominate Some New York Buildings

 
 

 
 
 
 
 
Pieds-Ã -Terre Owners Dominate Some New York Buildings

The Census Bureau tracks vacancy rates to find out who lives in Manhattan full time.

View on www.nytimes.com
Preview by Yahoo

 

State Senator Brad Hoynman is trying to pass a pied-a-terre tax, but even if it passes - a very big if in this Real Estate-dominated city - it would only put a tax on multimillion dollar apartments amounting to about half what London taxes, and London isn't exactly land-owner unfriendly either. 

One interesting finding, which I hadn't had before, is this figure as quoted by (my) Senator Liz Krueger (whom I and Rita, or just me, have discussed this issue with or supplied data for, several times now).  From the Moyers' show transcript:

NEW YORK STATE SENATOR LIZ KRUEGER: An example in a recent news story was a $90 million, 13,554 square foot penthouse and with 421a exemption allowed in this bill, their taxes per year would be $20,000. If they were not rolled into this legislation their taxes would be $230,000.

BILL MOYERS: Let’s hear that again.

NEW YORK STATE SENATOR LIZ KRUEGER: Their taxes per year would be $20,000. If they were not rolled into this legislation their taxes would be $230,000.

We have supported these measures and/or met with both of them in the past, but of course, they need our support now more than ever.

[Jeffery J. Smith]

How come you leave out the CD? Works for greens.

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SMITH, Jeffery J.

President, Forum on Geonomics

Editor, www.progress.org

Share Earth's worth to prosper and conserve.

[Godfrey Dunkley]

Hi

 

I am writing on behalf of Godfrey Dunkley.

 

He has been in hospital and is now recovering in respite.

He is unlikely to respond to your correspondence in the near future.

 

Regards

Shona Thomlinson

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