Being required to sell at exactly the value you place on something seems unlikely to work out well in practice. As a toy example, carabiners are cheap, but if you’re using one to hold your weight over a hundred foot drop, its value to you is approximately equal to the value of your life. Depending on any asset the sale of which can be forced is very risky, and assessing all critical components of a business at the entire value of the business seems incoherent.
Strongly agree. Sell-price tax with forced sales sounds like something a cryptocurrency would implement. It might work there, since if a malicious bidder tried to buy your TOKEN at above-market price, you could automatically buy a new one within the same block, at actual-market price. This could also work for fungible but rapidly-transferrable assets like cloud GPU time.
If taxing physical goods (like infrastructure or even land) which is where a lot of value in the world lies, this does just open up companies for extortion. E.g. what if I demand to buy one square inch of land under Bill Gates’ house, then demand he remodel his house around the square inch. Or suppose his summer house is in the middle of the Pennsylvania woodland, where the land is actually quite cheap, so he’s either forced to pay extremely high tax on his land for, or he’s open to extortion in the same way.
I think implementing a Georgist land tax basically requires that we trust some government bureaucrats to approximately accurately determine the value of plots of land. This isn’t an unreasonable level of trust for a first-world country; in the UK we trust government bureaucrats to draw the boundaries for our election districts, and that works alright.
See other thread where we discuss a variant without forced sale, but with forced re-evaluation.
I don’t think anyone would advocate a naive universalist approach to this with square inches for sale. This does point at an interesting mereological dynamic here though where the boundaries of ‘an item’ might in principle be subject to some gerrymandering!
I do think that a large part of the point is to incentivise a high (somewhat Georgist) tax on ‘counterproductive’ uses of land (or similar), if I’ve read correctly.
I happen to know a former low-level land evaluation bureaucrat in the UK (for council tax) and he said it’s a huge pain. For annoying bureaucratic activities, two standard questions are ‘can we sensibly decentralise?’ and ‘can we sensibly automate?’… maybe so.
It seems like it would be pretty hard to define a single reasonable delay period for land sales. An example case where a large delay would be justifiable is: a business manufactures cars, and has a single factory that makes some critical component. The value of their business is effectively zero if they can’t manufacture that component. But it takes N years and D dollars to get zoning, environnemental, safety etc approvals for a new factory (and also to actually build it and get it running as smoothly as the last one, and hire competent staff, and lay off the old staff...). Having a variable “reasonable” delay and switching-cost compensation might work, but that sounds like a recipe for endless litigation.
On top of that, land can have network effects within a single owner—if a business builds 5 codependent factories and has to sell one of them, but cannot feasibly replace the one sold with something new nearby, each of the factories would have to be valued at the entire value of the network, multiplying your tax burden by the number of parcels your network is broken into.
I agree that the way we do land now is not good, but at first glance I don’t see a way to fix this proposed system without a bunch of patches with their own problems.
Leaving aside delays, this does get at a point I noticed wasn’t obviously addressed in that paper which is what to do about very seasonal things. The example I thought of (rather less macabre) was an umbrella in a rainstorm. I don’t think it’s sensibly applicable to most personal property.
Agreed, but the timing issues seem applicable to businesses’ property as well. Sudden unpredictable spikes in value (e.g. of a mine for a rare metal that somebody figured out a new use for) could result in a lot of churn and removes the upside (but not downside!) variance in asset value.
By this, do you mean something like: when I purchase a mine or whatever, I’m speculatively pricing in some upside (e.g. a new use) which is part of my valuation for it, and if later a marginally more alert person buys me out because of a new actual use before I update my valuation, I fail to realise that value? But if no new actual use comes up, I’m left holding the bag? I agree. And possibly we also agree that’s the same issue as the umbrella, where someone noticed it’s raining before I did?
Wouldn’t the equilibrium here trend towards a bunch of wasted labor where I deliberately lowball the value of the land, and then if someone offers a larger amount, I just say no and then start paying the larger amount, thus having a potential to pay less tax but losing nothing if I’m called out for it? No downside to me personally, and if this became common, it’d be harder to legitimately buy stuff. Seems like you’d need to pay some sort of fee to the entity credibly offering this larger amount to make it worth it.
Hmm I don’t think so? If you buy land for $X, that’s the floor on what you could reasonably assess it at, which is basically the status quo world. So we’re in the status quo until someone comes along and bids up the price to their willingness-to-pay: Then, the asset either moves to someone who values it more, or you start paying higher taxes on it. I think either branch is preferable to the status quo?
Ideally you would want to allow depreciation though, which is a definite phenomenon! (Especially if things are neglected.)
Yeah, there’s some design questions. You’re right, the upside to the corrective bidders is naively nothing if they get called on it: they’re doing valuable corrective cybernetic labour for free.
Maybe a sensible refinement would be for them to be owed a small fee… or roughly equivalently some (temporary) direct share of the resulting increased Harberger tax.
I’m not sure what you mean. You can list something at market price rather than how you actually value it, but that opens you up to significant risk from market volatility and malicious bids (from competitors looking to cripple your business, rich people you’ve offended, etc). If sales cannot actually be forced this seems more workable, but still exploitable by malicious actors.
Yeah I think I got a bit confused with the wording. My point is that a Harberger tax is a tax on the opportunity cost of you holding the thing being taxed, so if you are genuinely the single person who benefits most from holding the thing being taxed, then no one else would want to buy it from you.
I think unless they explicitly want to harm or threaten you, was the point—which incidentally is often a situation not accounted for in the foundational assumptions of many economic models (utility functions generally considered to be independent and monotonic in resources and so on).
Being required to sell at exactly the value you place on something seems unlikely to work out well in practice. As a toy example, carabiners are cheap, but if you’re using one to hold your weight over a hundred foot drop, its value to you is approximately equal to the value of your life. Depending on any asset the sale of which can be forced is very risky, and assessing all critical components of a business at the entire value of the business seems incoherent.
Strongly agree. Sell-price tax with forced sales sounds like something a cryptocurrency would implement. It might work there, since if a malicious bidder tried to buy your TOKEN at above-market price, you could automatically buy a new one within the same block, at actual-market price. This could also work for fungible but rapidly-transferrable assets like cloud GPU time.
If taxing physical goods (like infrastructure or even land) which is where a lot of value in the world lies, this does just open up companies for extortion. E.g. what if I demand to buy one square inch of land under Bill Gates’ house, then demand he remodel his house around the square inch. Or suppose his summer house is in the middle of the Pennsylvania woodland, where the land is actually quite cheap, so he’s either forced to pay extremely high tax on his land for, or he’s open to extortion in the same way.
I think implementing a Georgist land tax basically requires that we trust some government bureaucrats to approximately accurately determine the value of plots of land. This isn’t an unreasonable level of trust for a first-world country; in the UK we trust government bureaucrats to draw the boundaries for our election districts, and that works alright.
See other thread where we discuss a variant without forced sale, but with forced re-evaluation.
I don’t think anyone would advocate a naive universalist approach to this with square inches for sale. This does point at an interesting mereological dynamic here though where the boundaries of ‘an item’ might in principle be subject to some gerrymandering!
I do think that a large part of the point is to incentivise a high (somewhat Georgist) tax on ‘counterproductive’ uses of land (or similar), if I’ve read correctly.
I happen to know a former low-level land evaluation bureaucrat in the UK (for council tax) and he said it’s a huge pain. For annoying bureaucratic activities, two standard questions are ‘can we sensibly decentralise?’ and ‘can we sensibly automate?’… maybe so.
UK council tax is based on overall property value, not unimproved land value.
Did they do whole properties or was there an even weirder system where one bureaucrat does the land and the other does the property?
Uhh, not sure. I think it was just a holistic consideration including the property.
Many versions of the proposal do not require you to sell immediately. Often there’s a built in delay period before the trade occurs.
But more generally, yeah, you don’t want to to do this with carabiners. But you might want to do it with land.
It seems like it would be pretty hard to define a single reasonable delay period for land sales. An example case where a large delay would be justifiable is: a business manufactures cars, and has a single factory that makes some critical component. The value of their business is effectively zero if they can’t manufacture that component. But it takes N years and D dollars to get zoning, environnemental, safety etc approvals for a new factory (and also to actually build it and get it running as smoothly as the last one, and hire competent staff, and lay off the old staff...). Having a variable “reasonable” delay and switching-cost compensation might work, but that sounds like a recipe for endless litigation.
On top of that, land can have network effects within a single owner—if a business builds 5 codependent factories and has to sell one of them, but cannot feasibly replace the one sold with something new nearby, each of the factories would have to be valued at the entire value of the network, multiplying your tax burden by the number of parcels your network is broken into.
I agree that the way we do land now is not good, but at first glance I don’t see a way to fix this proposed system without a bunch of patches with their own problems.
Leaving aside delays, this does get at a point I noticed wasn’t obviously addressed in that paper which is what to do about very seasonal things. The example I thought of (rather less macabre) was an umbrella in a rainstorm. I don’t think it’s sensibly applicable to most personal property.
Agreed, but the timing issues seem applicable to businesses’ property as well. Sudden unpredictable spikes in value (e.g. of a mine for a rare metal that somebody figured out a new use for) could result in a lot of churn and removes the upside (but not downside!) variance in asset value.
By this, do you mean something like: when I purchase a mine or whatever, I’m speculatively pricing in some upside (e.g. a new use) which is part of my valuation for it, and if later a marginally more alert person buys me out because of a new actual use before I update my valuation, I fail to realise that value? But if no new actual use comes up, I’m left holding the bag? I agree. And possibly we also agree that’s the same issue as the umbrella, where someone noticed it’s raining before I did?
A less crazed approach might be more like
if someone bids at or above your assessed value, you have to sell or start paying commensurably more tax (possibly backdated some amount)
Yup this makes more sense imo, basically having a right of refusal on the sale, but reflecting the now-assessed-higher tax rate
Wouldn’t the equilibrium here trend towards a bunch of wasted labor where I deliberately lowball the value of the land, and then if someone offers a larger amount, I just say no and then start paying the larger amount, thus having a potential to pay less tax but losing nothing if I’m called out for it? No downside to me personally, and if this became common, it’d be harder to legitimately buy stuff. Seems like you’d need to pay some sort of fee to the entity credibly offering this larger amount to make it worth it.
Hmm I don’t think so? If you buy land for $X, that’s the floor on what you could reasonably assess it at, which is basically the status quo world. So we’re in the status quo until someone comes along and bids up the price to their willingness-to-pay: Then, the asset either moves to someone who values it more, or you start paying higher taxes on it. I think either branch is preferable to the status quo?
Fair point, if you add that you can’t assess it at less than you paid for it, this problem goes away.
Ideally you would want to allow depreciation though, which is a definite phenomenon! (Especially if things are neglected.)
Yeah, there’s some design questions. You’re right, the upside to the corrective bidders is naively nothing if they get called on it: they’re doing valuable corrective cybernetic labour for free.
Maybe a sensible refinement would be for them to be owed a small fee… or roughly equivalently some (temporary) direct share of the resulting increased Harberger tax.
Yes, I think we agree here.
Good thing you’re only incentivized to sell at market price then, not how much value you’d assign personally!
I’m not sure what you mean. You can list something at market price rather than how you actually value it, but that opens you up to significant risk from market volatility and malicious bids (from competitors looking to cripple your business, rich people you’ve offended, etc). If sales cannot actually be forced this seems more workable, but still exploitable by malicious actors.
Yeah I think I got a bit confused with the wording. My point is that a Harberger tax is a tax on the opportunity cost of you holding the thing being taxed, so if you are genuinely the single person who benefits most from holding the thing being taxed, then no one else would want to buy it from you.
I think unless they explicitly want to harm or threaten you, was the point—which incidentally is often a situation not accounted for in the foundational assumptions of many economic models (utility functions generally considered to be independent and monotonic in resources and so on).