Richard Murphy — Two proposals for reform

Two proposals from Richard Murphy.

Tax Research UK
The argument for fundamental reform of accounting as well as auditing goes on

Tax to Save The Environment: a land value tax with a woodland twist
Richard Murphy, Professor of Practice in International Political Economy at City, University of London, and chartered accountant.

Brian Romanchuk — Principles Of Canadian Municipal Finance (And Why A Land Value Tax Is Inferior)

The fundamental question involves addressing economic rent. 

The first step is determine whether and to what degree economic rents are involved in changes in land valuation. 

Secondly, if so, how to deal with this is a manner that is socially, politically, financially, and economically feasible. 

Thirdly, how to optimize this, given the tradeoffs.

The funding of Canadian municipal governments is not normally thought of as interesting topic; even Canadian fixed income investors are not particularly excited about it. However, there are two side issues that are of general interest. The first question is: what happens to Canadian municipalities if the housing bubble pops? (As a spoiler, not very much.) The second question is the feasibility of a Land Value Tax (LVT) which is a concept that gets some people on the internet very excited. I will then outline why a LVT is inferior to the Canadian property tax system (which is not that different than the American system for that discussion)...

Bond Economics
Principles Of Canadian Municipal Finance (And Why A Land Value Tax Is Inferior)
Brian Romanchuk

Andrew Lainton — @Asymptosis [Steve Roth] asks a good question – why isn’t #LVT Everywhere?

I think there are three reasons:

Decisions, Decisions, Decisions

@Asymptosis asks a good question – why isn’t #LVT Everywhere?
Andrew Lainton

Michael Hudson — “Creating Wealth” through Debt: The West’s Finance-Capitalist Road

I kid to this previously, but it was in a list of links. It is important enough to give it its own post.

Hudson at his best. It's a must-read. Longish, so save it for the weekend if time is an issue.

Michael Hudson — On Finance, Real Estate And The Powers Of Neoliberalism
“Creating Wealth” through Debt: The West’s Finance-Capitalist Road— To be delivered at the Peking University, School of Marxist Studies, May 5-6, 2018

Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University

Michel Hudson — Tollbooth Trump

Shamini Peries interviews Michael Hudson. Video and transcript.

Michel Hudson
Tollbooth Trump
Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University

Alex Tabarrok — The Return of Henry George?

The notion that property owners should pay extra for their proximity to the subway is called “value capture” and has long been debated in urban planning circles. Now Gov. Andrew M. Cuomo, a Democrat, has made value capture a prominent part of his plan to salvage the subway system by proposing to give the Metropolitan Transportation Authority the power to designate “transit improvement subdistricts” and impose taxes.

Marginal Revolution
The Return of Henry George?
Alex Tabarrok | Bartley J. Madden Chair in Economics at the Mercatus Center and Professor of Economics at George Mason University, and a research fellow with the Mercatus Center

Andrew Lainton — Time for Think Tanks to Work on The Details of Implementing A Land Value Tax

Where thinks tanks are at there best is investigating long terms trends and international best practice, lifting eyes above the day to day crisis management of civil servants.One such area is Land Value Taxation.  In our age of rentier capitalism, poor productivity and a housing crisis our latest policy hero seems to be Henry George, with think tanks across the political spectrum championing it. 

Of course it is far easier to propose a policy reform than to get down to the nitty gritty details of implementing it.  The great mistake for example of of the Centre for Social Justice was to treat the wicked problem of welfare reform to introduce Universal Credit as a simple one. 

Replacing SDLT, council tax and business rates with a new land value tax, even in increments, is a wicked problem.  Beyond perhaps the institutional capacity of the DCLG and treasury to get right.  They need the think tanks help and they need to cooperate to look individually and selectively at many of the issues....

If only most think tanks were not highly ideological. What many put out is not analysis but propaganda fashioned to resemble analysis.

Decisions, Decisions, Decisions
Time for Think Tanks to Work on The Details of Implementing A Land Value Tax
Andrew Lainton

Bill Mitchell — Modern Monetary Theory and Value Capture

"Value capture" would be land value capture through taxation in cases of windfall profits (unearned gain).

Also discussion of fiscal operations in a federation. About Australia but applicable to any federal state.

Bill Mitchell – billy blog
Modern Monetary Theory and Value Capture
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Miles Kimball — The Wrong Side of Cobb-Douglas: Matt Rognlie’s Smackdown of Thomas Piketty Gains Traction

What's getting traction is Henry George's idea of a land value tax. Miles Kimball follows his student Noah Smith in advancing consideration of it.

Talk of taxing away economic rent can only be good. It's a discussion that needs to be had.

Confessions of a Supply Side Liberal

The Wrong Side of Cobb-Douglas: Matt Rognlie’s Smackdown of Thomas Piketty Gains Traction

Miles Kimball | Professor of Economics and Survey Research at the University of Michigan

Noah Smith — A misguided attack on Land Value Taxes

Noah doubles down on the LTV after his Bloomberg View post generated some critical response.

Henry George rules. Take that John Bates Clark.

John Bates Clark (January 26, 1847 – March 21, 1938) was an American neoclassical economist. He was one of the pioneers of the marginalist revolution and opponent to the Institutionalist school of economics....

In 1888 Clark wrote Capital and Its Earnings. Frank A. Fetter later reflected on Bates' motivation for writing this work:

"The probable source from which immediate stimulation came to Clark was the contemporary single tax discussion. ... Events were just at that time crowding each other fast in the single tax propaganda. [ Henry George's ] Progress and Poverty... had a larger sale than any other book ever written by an American. ... No other economic subject at the time was comparable in importance in the public eye with the doctrine of Progress and Poverty. Capital and its Earnings "... wears the mien of pure theory .... But ... one can hardly fail to see on almost every page the reflections of the contemporary single-tax discussion. In the brief preface is expressed the hope that 'it may be found that these principles settle questions of agrarian socialism.' Repeatedly the discussion turns to 'the capital that vests itself in land,'...[6]"

Tax away the land rent.

Noahpinion
A misguided attack on Land Value Taxes
Noah Smith | Assistant Professor of Finance, Stony Brook University

Noah Smith — Piketty's Three Big Mistakes

Noah Smith is a Georgist! Who knew?

Bloomberg View
Piketty's Three Big Mistakes
Noah Smith | Assistant Professor of Finance, Stony Brook University

Bill Mitchell — Henry George and MMT – Part 2

This is the second part in my discussion about Henry George and Modern Monetary Theory (MMT). In general, there is nothing particularly incompatible between the introduction of a broader LVT at the Federal level to replace or reduce other taxes currently levied and the insights provided by MMT. However, once you understand MMT, you realise that the discussion of the design of the tax system is quite different than just raising income from the most ‘efficient’ means. The Georgists would do well to come to terms with that and demonstrate how a land value tax (LVT) would work to free up real resources to give the real space for governments to spend. There doesn’t appear to be any analysis provided by Georgists to calibrate the impacts on non-government spending of such a tax and how this would alter the tax mix required to maintain full employment spending levels and satisfy the socio-economic spending goals of government. There are other things that might be done as well (if not prior to imposing a LVT) which would reduce the likelihood of property price bubbles. Finally, the obsession with the single LVT as a saviour is in denial of the causes of recessions and the the role that financial capital plays in destabilising economic systems. A LVT alone will do little to resolve those problems.

Bill Mitchell – billy blog
Henry George and MMT – Part 2
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Australia

Bill Mitchell — Henry George and MMT

I get several E-mails (regularly) from so-called Georgists who want to know how the Single Tax proposal of Henry George, outlined in his 1879 book Progress and Poverty, fits in with Modern Monetary Theory (MMT). I have resisted writing about this topic, in part, because the adherents of this view are vehement, like the gold bugs, and by not considering their proposals in any detail, I can avoid receiving a raft of insulting E-mails. But, more seriously, I see limited application. In general, the Georgists I have come across and the literature produced by those sympathetic to the Single Tax idea, is problematic because there is a presumption that national governments need tax revenue to fund their spending. Clearly, this is an assertion that MMT rejects at the most elemental level. But there is some scope for considering their proposal once one abandons the link between the tax revenue (which they call rent) and government spending capacity. The question that arises, once we free ourselves from that neo-liberal link, is whether a land tax has a place in a government policy portfolio with seeks to advance full employment, price stability and equity. The answer to that question is perhaps. I am writing about this today and tomorrow (with an earlier related post – Tracing the origins of the fetish against deficits in Australia) as part of my research into the life of Clyde Cameron, given I am presenting the fourth Clyde Cameron Memorial lecture tomorrow night in Newcastle. I hope this three-part blog suite is of interest. In some parts, the text is incomplete.…

Bill Mitchell – billy blog
Henry George and MMT
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Australia

George Monbiot calls for a land value tax

In 1909 a dangerous subversive explained the issue thus. “Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains – and all the while the landlord sits still. Every one of those improvements is effected by the labor and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived. … the unearned increment on the land is reaped by the land monopolist in exact proportion, not to the service, but to the disservice done.”(13)

Who was this firebrand? Winston Churchill. As Churchill, Adam Smith(14) and many others have pointed out, those who own the land skim wealth from everyone else, without exertion or enterprise. They “levy a toll upon all other forms of wealth and every form of industry.”(15) Land value tax recoups this toll.

Monbiot.com
A Telling Silence: Why we need land value taxation
George Monbiot

Beowulf on a land value tax — promoted from the comments

"nonetheless, a land value tax would be much better than an income tax."

You're probably right but there are two problems with a federal LVT, one legal and the other political.

There's a constitutional restriction on direct taxation of property that would kneecap a federal LVT. A workaround here would be to use the income tax to levy annually the imputed rental value of land (It would take a brave congressman to sponsor that bill).

However even with a workaround, any effort to levy federal taxes on land would lead to the state governments waging Jihad on Congress. Regardless of party, state governors will line up shoulder to shoulder to keep the Feds from stepping on their monopoly on taxing real property.

So what can be done?
Federal taxpayers are already given an income tax credit for foreign taxes paid (and the estate tax used to credit state inheritance tax paid).
If Congress understood MMT, there'd be no reason not to create a federal income/payroll tax credit for any state LVT paid (as with the foreign tax credit, phased out for higher incomes).

It would take state governors and legislators about 10 seconds to figure out that every dollar of tax burden they shifted onto land was a dollar their residents could legally avoid paying those suckers in Washington. (link)

A federal credit for LTV paid that phases out with higher income (remember a 100% tax credit is worth more than an at most 35% tax deduction) would divide the economic interests of the vast majority of property owners-- middle class homeowners who'd pay dramatically lower federal taxes -- from the tiny minority of very wealthy land barons who'd still be paying full freight on their federal incomes as well as their new state LTV.

The purpose of the LTV tax credit isn't to replace the federal income tax with a federal LTV (which is impossible in any event for the reasons I mentioned above) but to bribe state governments into shifting their tax burden off of sales, incomes and property improvements and onto land value.

I would like to think that furthers the purposes of the LTV admirably. (link)