Originally Posted by
helmuth_hubener
Now what if you added a hefty land tax to the picture. As I said, property values have skyrocketed into the stratosphere. I don't know what your proposed mil rate is, but if it's high, much higher than the land value component of current-day property taxes, it is going to drastically affect the choices of the land-stewards. And that's you're whole point, isn't it -- that choices will drastically change with an LVT and that will be a good thing. So let's examine what will happen with an LVT. All of a sudden a ranch that was paying $10,000 a year gets a bill for $100,000. Due January 1st. They've got to sell! Everybody's got to sell. The old little diner in town has to sell, because their prime location means they owe a million in taxes. All local establishments that are not wildly profitable enough to still have a positive profit margin in light of ten times higher property value and thus 10X the LVT, all of them will have to sell. You'll get a lot of new fast food and man camps. You got that anyway above, without the LVT, but now you'll get a lot more. All the businesses that were built around the way the local economy used to be, that don't exactly cater to roustabout workers, they will all be annihilated. Sewing shop, tack and saddle store -- ha! -- make way for another McDonalds and another bar.
So you see, LVT doesn't encourage efficiency exactly, it encourages uniformity. It makes the land market too "efficient". With just the single whammy of possible windfall profits by selling, everything balances out as perfectly as possible. The sewing shop might decide to just keep piddling along, while the tack store does decide to convert into a drive-through liquor. You would say "That sewing shop's inefficient!" And short term, you might be right. They could make ten times more money and thus benefit the community ten times more by converting into the town's twelfth fast food place. We've got a Hardees, but all the workers are wishing there was a Carl's Jr. Something like that.
Eventually, however, the oil boom ends. The mobile homes are hauled back out to Wyoming or wherever the boom is now. And then the town is left with a whole bunch of empty trailer parks, vacant strip malls, and acres of empty houses selling for pennies on the dollar. It's a skeleton. Now that's going to happen anyway in the non-LVT scenario. I personally may help it to happen. But it will happen in a much bigger way with a hefty LVT. Without the LVT, the opinions of the oil-boom-profit entreprenuers has a counter-balance. Their opinions carry the weight of the single whammy of their money, but there's another whammy on the other side of the teeter-totter: the opinions of the locals who already own the land. The LVT plunks a second whammy on the one side of the teeter-totter and now there is no balance. The locals on the other side are slingshotted off the teeter-totter and hurtle across the park. When the boom ends, all the old local businesses are long gone, they're all destroyed. Now what? The correction to a non-boom optimality will be a lot slower in coming than without the LVT. Wouldn't it have been better to have a little bit more inefficiency for five or ten years in exchange for a lot more efficiency afterwards? Well, who's to say? But who is in a better position to say than those with a financial stake in it? Who's smarter: all the private landowners, or the central planners and land assessors of the government? I say let all the landowners decide, don't let the socialist land assessment board skew the outcome. We entreprenuers, speculators, whatever you want to call us, we have enough power without an LVT -- just the right amount of power. Put in a big LVT and now we can get a lot more land for a lot lower bids, because you're pushing the existing stewards out by charging them taxes they can't afford. They can't afford it because they're not as "efficient" in their land utilization by your definition. We are. We will come in and fill every field and cranny with housing. Then when comes the bust you will have a whole lot more skeleton and a whole lot less life left than would otherwise be the case.
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