Why Tax Land Value?

The reason economists say that a tax on land value is the "least bad" tax is that such taxes have no deadweight loss. Any tax on production or exchanges or movable assets causes economic inefficiency. A tax on these things causes a deadweight loss (i.e. allocative inefficiency) because people who would have more marginal benefit than marginal cost are not buying the good or service — just as a subsidy induces people to buy who impose more marginal cost than their marginal benefit. However, this effect of taxation does not happen when the supply of the taxed good is perfectly inelastic, as is the supply of land — more precisely, the surface area of the Earth. Sites cannot flee or evade taxation, and the available amount of them is not reduced when they are taxed. (When a tax is not on a good but rather on a "bad", like pollution or congestion, it's the very absence of the tax that causes allocative inefficiency, because external costs are not internalized.)

Taxing land value is not only more efficient than taxing production or exchanges, but it is also less intrusive. All the government needs to know is who owns each plot of land and how much the unimproved land is worth. Appraisers and insurers make such calculations routinely, and one variant would have each land-holder self-assess as long as he's willing to take any offer over his assessed value. There's no need to audit anyone's behavior, as with taxes on income/production/exchanges. You don't even need to visit the site or look over the fence, as you do with taxes on land improvements or square footage. For illiquid landholders, taxes could accumulate as a lien against the property, capped at its market value, so nobody need ever be taxed off the land they hold.

Land value taxes are naturally local, and so encourage Tiebout Sorting. If the the local mix of government services is too high (or too low) for your taste, or if they aren't a good value for the LVT rate financing them, then you can vote with your feet. By contrast, income and sales taxes tend to get centralized at the state or even national level, because (unlike land) income and sales can flee to lower-tax jurisdictions. (New Hampshire is among the most free states, and gets the highest percentage of government revenue from property taxes. California finances its high government spending with high centralized state income taxes that rose after Prop 13 restricted local property taxes in 1978.)

LVT retrieves the extra land value created by public services — streets, pipes, levees, police, parks. This creates pressure to defund public services that do not actually add value in the free market for land.

LVT turns out to closely model how consensual private communities tend to govern themselves. Malls, business parks, hotels, condominiums, homeowners associations — all tend to "tax" their tentants not according to profits or revenues or inventory or improvements, but mostly by site value (for which square footage is often a good proxy).

LVT imposes a built-in ceiling on government revenue. Critics of land value taxation claim it wouldn't raise enough revenue because ground rent is allegedly only a small fraction of GDP. That sounds like a good thing to me. If government revenue is restricted by definition to ground rent and fees for polluting/congesting/depleting the commons, then government cannot be nearly as big as when it is allowed to tax labor, production, exchanges, and all resulting products. Once you have taxation of people's labor and exchanges and produced assets, there is no limit to what the government can take from you.

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The Decade Ends Tonight

The Gregorian Calendar has a bug, in that it maps years to integers but fails to map any year to the integer zero.  There's no reason for this bug to prevent native speakers from defining "the seventies" as 1970-1979, or defining "the twentieth century" as 1900-1999.  No dead Pope gets to overrule what we native speakers currently mean by the words and phrases in our language.

If the Gregorian Calendar started from the year 2, who would say that the present decade will continue for another two years?

NORAD and 9/11

NORAD was never advertised as being able to prevent hijackings.

Throughout most of my life, there have been thousands of nuclear weapons aimed at the U.S. Some of those nuclear weapons were targeted straight at the SAC bases on which I and my family lived during both the 1962 DEFCON 2 and the 1973 DEFCON 3. When I was a kid and the network signal went out on the TV, I quickly switched channels to another network, to test whether New York had been vaporized and I thus had only a couple minutes to live. And yet, none of those nuclear weapons ever hit the U.S., or were ever used to coerce us.

So yeah, I’d say NORAD lived up to its advertising.

As for the gap in our defenses revealed by Mohamed Atta on the morning of 9/11: that problem was fixed within an hour by a small group of heroes in the skies above Pennsylvania.  Their number included Tom Burnett, Mark Bingham, Jeremy Glick, Todd Beamer, and Sandra Bradshaw.

Non-Profits and Land Value Taxation

Churches and other non-profits are usually exempt from property taxes, but there's no good reason for treating them differently. 

Example: In the Silicon Valley suburb where I live, land is worth about $2 million per acre. There is a 20-acre monastery here (adjacent to the mansion recently sold by Barry Bonds, and down the street from Cisco's CEO) where 16 cloistered elderly nuns sleep on straw mattresses, have no TV, and wake up in the middle of the night to pray.  Their only "work" is "prayer", and they live only on "alms". I kid you not: http://www.poor-clares.org/losaltos/losaltosl.html.

Example: About a mile north of here are hundreds of acres of land owned by Stanford University in the hills above campus, with sweeping views of the San Francisco Bay.  Nearly all of the land is off-limits to everyone but -- wait for it -- cows.  The university grazes a handful of cows there, in order to comply with Leland Stanford's requirement that a demonstration farm be maintained on a portion of the vast amount of land he used to create the university.

So we have nuns and cows, both sleeping on straw, keeping hundreds of acres of prime Silicon Valley land off the market, thus propping up property values for me and my zillionaire CEO neighbors, and making sure that their gardeners and maids can't afford to live anywhere near them.

For the market to be able to guide all land to its best use, all land has to be treated equally -- even land owned by churches and governments.  If people really value churches, they'll either pay for them to occupy prime sites, or they'll drive a little further when they want to go pray as a group.