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RE: Land Value Tax & Basic Income Already Exist, Just Not For Our Benefit
Would you eliminate the rest of the taxes and only leave this tax? Is the tax a kind of rent or is it a percentage tax based on the profits obtained from the exploitation of the land? Will banks not be obliged to eliminate mortgage loans and therefore many people would not have anywhere to live?
For the most part, it should eliminate most other taxes. Most Georgists (land value taxers) are single-taxers. However, I think certain Pigouvian taxes, like taxing pollution (fining companies for polluting on a percentage of profit basis) should accompany LVT. Also, public shares of companies that have been subsidized or bailed out should serve as an analogue to corporate taxes, or taxes ought to be used to confiscate a public share of profits for such parasitic corporations.
Land value tax would be collected as a fixed percentage of land value. It would not totally prohibit rent or profits. Banks would continue to issue mortgages because the tax would only take a portion of their profits, not the whole thing; just like how people keep working when income is taxed since they still get to keep most of their income—the tax is just a percentage of income.
I like the idea simply because in general it ends up decreasing the general taxes. But I do not understand how you will prevent the banks from ending up with the properties of the people who do not pay the loans.
Will not that increase the cost of interest? That is, tax + interest = the debtor pays more. The tax would end up falling on the worker and not on the banker, failing that, the consumer will end up paying, or the person to whom the debtor sells the fruit of what the land produces.
The interest rate might go up (I'm not sure), but the debtor would still end up paying less. Currently, the prices of real estate is kept artificially high due to land speculation, etc. A speculator buys land in the country for cheap, holds it for decades, then when land is scarce in the area and more expensive, he sells it at an inflated price. Such speculative investment is actually discouraged by land value taxation. Say the speculator buys a 10,000 dollar property but has to pay a 6% LVT. Each year he holds that property out of use at a 10,000 dollar value, he has to pay 600 dollars. But as the value continues to rise, so does the tax. When the value goes to 30,000 dollars, he has to pay 1,800 dollars. If the value goes to 100,000 dollars, he must pay 6,000 a year. As time goes on, the speculators taxes go up and the yearly cost compounds. Speculative investment and holding land out of use becomes less profitable. So, land would actually decrease in price.
Furthermore, land-owners would be encouraged to use land for the most productive purposes. It encourages land-owners to do something productive with the land sooner, something that generates wealth and creates value (earns money) to offset the taxes. And if the speculator can't think of a productive use, he'll be more eager to sell (lower price) to someone who can. So the debtor may have to pay greater interest, but land will usually be cheaper and easier to come by, so the amount of his loans will be lower. The burden of tax shifts largely to other types of land-owners too, like people who own land that is incredibly valuable because it contains oil or gold. Businesses that own highly valued land in the city would pay more taxes too.
As for foreclosures, they'd happen less often under a system of land value tax linked to a basic income. Let's go to my example of the guy who defaulted on his loan because he lost his job and fell behind on payments. Under LVT+UBI, that would not happen as much. If he loses his job, either UBI covers his mortgage costs during transition to new work or the extra money from UBI already allowed him to save up a "rainy day fund," so now he never falls behind on his mortgage payments and the bank never forecloses.
It would be interesting to pose a system like that in a region of the world, a considerable space, in a way that allows us to appreciate how well it works in practice, and appreciate if there are indirect effects that we simply are not seeing. In general terms, I support that a reduction of taxes be carried out.
As for land value tax of the sort I advocate, they already have it in Denmark and Estonia, but there's also lots of municipalities and provinces in other places that have land value tax.
In Alaska, in America, there is the Alaska Permanent Fund, which is a citizen's dividend. The payment isn't quite high enough to be considered a basic income, but in combination with Earned Income Tax Credit and tax refunds, it could be very close to a basic income for many people. There's actually a ton of basic income pilots. Here's a list of some (but not all of them): https://en.wikipedia.org/wiki/Basic_income_pilots
There's many basic income experiments going on, both public and private (some of them are crowdfunded or funded by private billionaires rather than governments). Basic Income Earth Network (http://basicincome.org/) is a good source of info on all things basic income, including pilots and expiriments.
Yes, my problem with these pilot programs is that I do not think they cover the whole aspect of a complete economy, so as to understand what the real impact would be, and what effects it would generate in the long term.