You really must understand what happens now, then try and project that to a far superior economic system.
New Hampshire was chosen by American Libertarians as the "free state," to which libertarians are encouraged to migrate. New Hampshire gets two thirds of its state and local revenue from real estate taxes. No other state gets more than half from real estate.
There is a direct correlation between the amount of taxes collected on real estate and the stability of housing prices. Far more people are losing their homes to banks where there have been housing bubbles, and housing bubbles have been worst where real estate taxes have been lowest.
Prior to a shift to a more right-wing "neolibertarian" approach, almost all libertarians challenged the legitimacy of state-issued titles to land. Property must flow from liberty for liberty to flow from property.
The issue of land value tax is naturally a state and local issue. The way we issue money is the most fundamental federal issue. Ron Paul's focus has been on the federal government, which should stay out of the land question. The federal government should own no land other than what is needed for Constitutionally authorized federal purposes. To reduce the abuse of federal landholding, the federal government should pay the same taxes on the land it holds as anyone else pays.
Local governments compete, and, without state and federal interference, can discover for themselves which revenue approaches and which expenditures are most attractive. State governments complete less, and national governments use tariffs and immigration limits to severely curtail competition. The shift to sales and income taxes (which Ron Paul has always opposed) accompanied the shift from local government to centralized government. This is not coincidence, I think.
Even if that was true, correlation does not equal causation. All you really showed is that real estate taxes are a strong disincentive for investment (and improvement), because you're just paying for something the government is going to claim ownership to and rent back to you.
Hey, but there is an upside to a housing bubble crash for tax collectors everywhere, because while the Fed-engineered housing bubble produced a windfall for property tax collectors, those same collectors and assessors are loathe to have that revenue stream collapse along with the real estate bubble. In California, the tax is based on whatever you paid, plus any improvement assessments that only add to you already pay. It's not until the next owner pays that there's a reduction in taxes - the person holding undervalued property is stuck with overvalued taxes.
When the housing bubble collapsed, property taxes tended to stay where they were at, or even continued (in the case of North Dakota and many other places) to grow in many places, as if nothing special happened to the housing market.
What a nice bubble-collapse proof tent that is. So much "stability" - for them.
Last edited by Steven Douglas; 03-15-2012 at 10:46 AM.
I'm not for any taxes, but if they are a necessary evil then the more local the better, and a local property tax or land tax to me is vastly different than some Federal or Global land tax which is what I inevitably see Georgists argue for.
Push power down to State and County governments and let them be the primary taxing authority, not the Federal Government. While not a perfect solution by any means it's a step in the right direction.
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NO MORE LIARS! Ron Paul 2012