An esoteric point that illuminates a key point: a land value tax (#LVT) is not a tax; rather, it is a method to remove a subsidy, which is the price of land. Passing an LVT is akin to repealing a subsidy payment to landowners not wanting to pay the current market value of land.
What is the key point? If an LVT repeals a subsidy, then we can sidestep discussion about whether it is a "progressive tax" or not. Rather, we can then frame the discussion around whether repealing the subsidy is a progressive move.
When there is talk about cutting food stamps, it is said that removing this subsidy is not progressive because it goes exclusively to lower income people. So if we look at land price as a subsidy, to whom is this subsidy going, i.e. cui bono?
You would be hard pressed to argue that low income people are beneficiaries of high land prices as they rarely own land, so the benefit is going exclusively to middle and upper income folks who can at least afford to purchase land. This is enough to label LVT as progressive.
But we can continue on: can the middle class ride land price waves as well as upper income folks? Again, one would be hard pressed to really defend this position. First off, for richer people, it is easier to buy land with less debt, so they are less exposed during downturns.
It is said that for the middle class, their home is their biggest investment. But not only does every rich person has a home, they are more likely to have multiple properties, often as investments to collect passive rental income, so they are getting more subsidies than avg.
In sum, middle income people are more leveraged and more dependent on their land asset, so during any downturn, are more likely to lose the one asset they rely on most more than a rich person. This means the subsidy is more likely to be consistently pocketed by the rich.
And during downturns, who is most likely to buy up land lost by the middle class? The rich, of course, so subsidies are redistributed upwards. So any way you look at it, funneling subsidies into the economy via the land market is haphazard and captured easily by the rich.
Would some in the middle class lose out if the land subsidy was repealed? Sure, but no where near the proportion of rich people who would lose the subsidy. And remember, low income people were never getting the subsidy, so a vast majority of people aren't losing a huge subsidy.
Would low and middle income people still need to be subsidized post-LVT? Possibly: a better economy and distribution of income made possible by an LVT economy would lift many out of indigent status, but some would remain. But it would be easier to cut a check directly to them.
The political message is simple: "Repeal the land subsidy that is pocketed mostly by the rich, and if subsidies are still needed, they will be directed exclusively to those that need them through equal or means tested benefits."
This should build a coalition of lower income people who get no subsidy and middle class people who fear losing a needed subsidy. As long as the safety net remains via direct subsidies, the middle class wouldn't feel they need indirect land subsidies as their safety net.
@threadreaderapp unroll
