what if old folks paid land rent?
My brother and I somehow got onto the subject of tax. I mentioned that land values should be taxed. He said, "That would make all the retired people homeless. They save all their lives to own a house, then they retire on a tiny pension, and they would not be able to afford the land value rent."
I didn't answer him (arguing with siblings is a bad idea) but he only looked at one side of the equation. Each person would gain more wealth over a typical 40 year working life than they would lose in a typical 20 year retirement. Moreover, anyone who held more land than they needed would have an incentive to sell their excess, thus returning the land to useful production, and benefiting all of society.
Of course, if society thinks that old people should pay no land rent, it is free to create an 'old folks allowance' that is exactly equal to whatever old folks pay in land rent. But we cannot ignore the facts: occupying land - preventing others from using it - has a real cost. Land rent simply forces us to face reality.
posted by Chris Tolworthy at 10:10 AM
2 Comments:
How does one calculate land value and how does one figure out how much they owe "society"? How would it be collected and who would determine how to use it?
I am thinking if I keep at it, I just might figure out this land rent idea.
I need to make this much clearer, don't I? Still, this blog is just "work in progress."
Land rent is the rental value of the bare land. If there is bare land nearby, that gives the answer. The value of bare land depends on access to roads, law enforcement, and all the other things that society pays for, so that value properly belongs to society.
In most cases there is no bare land for comparison, but there are always plots of land put to different uses. By comparing the rental price of different plots of land (including their buildings), we can work out what the bare land would be worth on its own.
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