Corruption of Economics by Mason Gaffney

[cjppjc]

Re: Corruption of Economics by Mason Gaffney

Actually, the primary purpose of my original post was to present and discuss the width and breath of corruption and deception in our society. For example, economic teachings were modified, textbooks redrawn, academia co-opted with some academicians suppressed, media complicity, and entire histories rewritten.... and all of this can be demonstrated just by studying one person in our history: Henry George.

Yes well your primary purpose has hit the reality of the law of decent. The teachings of Henry George have as well. Nothing moves in a straight line. It is either moving forwards or backwards.

[cjppjc]

Re: Corruption of Economics by Mason Gaffney

the video will play now. The URL was old. It has been corrected now. Land value taxation is in place in a number of locations in the US and the rest of the world -- and it works quite well as is shown in some of the other links.

For someone who can access the Akashic Records maybe you could tell me how much money would be raised using this method. Also a consumption tax. The real problem is not the revenue side of the ledger.

[Rajiv]

Re: Corruption of Economics by Mason Gaffney

From one of the links I had posted - Pennsylvania's Success with Local Property Tax Reform: The Split Rate Tax

Fifteen cities in Pennsylvania are pioneering an innovative approach to local tax reform that harnesses market incentives for urban renewal.

Opting for the so-called 'two-rate' or 'split-rate' property tax, these cities are lowering taxes on buildings, thereby encouraging improvements and renovations, while raising the tax on land values, thus discouraging land speculation. The resulting infill development as indicated by increased building permits means downtown jobs, efficient use of urban infrastructure, an improved housing stock, and less urban sprawl.

Cities in other states are poised to follow Pennsylvania's example.

Pennsylvania's Initiative

Pennsylvania has been experimenting with a new approach to property tax reform which has already begun to attract attention in New York, Maryland, and other states. This policy offers an entirely different angle to the current mainstream dialogue on property tax "reform" which consists mainly of efforts to reduce and curtail the use of property taxes while increasing sales or income taxes.

The property tax is actually two types of taxes - one upon building values, and the other upon land values. This distinction is an important one, as these two types of taxes have significantly different impacts on incentive motives and development results.

Pennsylvania's pioneering approach to property tax reform recognizes this important distinction between land and building values through what is now known as the split-rate or two-tier property tax. The tax is decreased on buildings, thereby giving property owners the incentive to build and to maintain and improve their properties, and the levy on land values is increased, thus discouraging land speculation and encouraging infill development. This shifting of the tax burden promotes a more efficient use of urban infrastructure (such as roads and sewers), decreases the pressure towards urban sprawl, and assures a broader spread of the benefits of development to the community as a whole.

Taxing land values, while decreasing taxes on buildings, is sometimes proclaimed as a way to increase development. However, in today's world the word "development" is likely to be a red flag to many ears.

It is important to keep in mind that the purpose of this policy is not first and foremost to encourage development, but rather to assure that the benefits of development be broadly shared while impacting as lightly as possible on existing ecosystems.

Land value taxation was a key policy recommendation made by the Committee on Banking, Finance and Urban Affairs of the House of Representatives, 96th Congress whose groundbreaking report was entitled "Compact Cities: Energy Saving Strategies for the Eighties."

Current mainstream development models and methods in most cases contribute to the maldistribution of wealth. Statistics show that the richest 1% of Americans possess greater wealth than the bottom 90%.¹ The land value tax, in essence a type of user fee for access to limited natural resources, is a policy that both harnesses market incentives and individual initiative and furthers social cohesion and well-being by narrowing the rich/poor gap. There is even greater need to make this point now, when the direction is towards cutbacks in many social services, the removal of the bandages placed to hold back the hemorrhage of the body politic.

Better tax policy could reduce the need for social services provided via government spending.

Land value based public finance policies encourage home improvements and affordable housing. In Pennsylvania 85% of homeowners pay less with this policy than they do with the traditional flat-rate approach. For those who do pay more it is not significantly more and they tend to be wealthier homeowners who can better afford to pay a little more.

Some, indeed, whose business efforts are encouraged by this policy, come out ahead.

The Current Situation in Pennsylvania

There are now 15 Pennsylvania cities (Table 1) using the two-rate approach. Pittsburgh and Scranton implemented this policy as far back as 1913. Since then enabling legislation was passed which gave this option to third class cities as well. Land value tax policy in Pennsylvania really took off in the 1980's through the "Johnny Appleseed" work of Steven Cord, formerly a professor at Indiana University in Pennsylvania, now director of the Center for the Study of Economics in Columbia, Maryland.

Table 1

Two-Rate Pennsylvania Cities as of 1995
Two-Rate Since Date	Land Tax Rate %	Building Tax Rate %	One-Rate % *	% of Tax on Land	Removed From Buildings in $000's	Population
Aliquippa Schools '93 Aliquippa '88 Clairton '89 Coatesville '91 Connellsville '92 DuBois '91 Duquesne '85 Harrisburg '75 Lock Haven '91 McKeesport '80 New Castle '82 Oil City '89 Pittsburgh '13+ Scranton '13+ Titusville '90 Washington '85	16.3 7.9 10.0 5.2 11.3 5.1 8.0 3.2 3.1 10.0 8.7 8.5 18.4 6.6 61.3 17.7	1.1 0.7 2.1 2.5 1.7 1.3 3.8 1.1 1.0 1.9 2.2 2.7 3.2 1.2 1.5 1.8	4.4 2.3 3.7 3.0 3.0 1.9 4.6 1.4 1.7 3.6 3.4 3.8 6.1 2.6 2.0 4.8	85.5 75.9 53.7 33.9 50.1 43.9 34.0 36.0 61.8 59.0 46.6 42.5 57.4 65.9 32.9 70.4	2,115 1,001 300 70 384 31 134 2,533 117 865 1,192 478 73,739 3,997 308 1,495	13,374 13,374 9,656 11,038 9,229 8,286 8,845 52,376 9,230 26,016 28,334 11,949 369,379 81,805 6,434 15,791
Total amount of taxes removed from buildings: $88,767,010
* One-Rate refers to the tax rate if there were no rate differentiation between land and buildings and the tax yield was unchanged. Scranton and Pittsburgh had a land tax to building tax ratio of 2 to 1 from 1913 until 1979 when both expanded land tax rates beyond that ratio. Please note: PA property tax rates are expressed in mills, i.e. Aliquippa: 16.3% = 163 mills Source: Center for the Study of Economics, 2000 Century Plaza, Suite 238, Columbia, MD, 21044

I posted more details in the other thread and that is worth reading as well

[Rajiv]

Re: Corruption of Economics by Mason Gaffney

I just put my reply in the wrong place

[cjppjc]

Re: Corruption of Economics by Mason Gaffney

Can one assume Pa. is doing as well as ND?

No system will work if more is spent then recieved.

[Rajiv]

Re: Corruption of Economics by Mason Gaffney

The cities that had the two tier taxes had a minimal housing bubble as I mentioned here

Doing a quick search, this is what I found on Pittsburgh
Local housing trends buck nationwide declines

Quote:

When local real estate company officials meet with colleagues from other parts of the country these days, they're often the only ones who are happy. That's because the steady, stable Pittsburgh area housing market hasn't suffered the bumps and bruises that have battered other, higher-flying U.S. markets and the nation as a whole. Neither housing prices nor home sales have suffered precipitous declines in the seven-county Pittsburgh region, local experts note. They don't expect that to change in 2007. "There definitely has been no burst of the housing bubble in Pittsburgh, because we haven't had a housing boom," said George Hackett, current board president of West Penn Multi-List Inc., the region's major home-listing service.

Just did some calculations
San Diego median income 64,273 median house 569,900 ratio 8.9
Pittsburgh median income 30,278 median house 74,000 ratio 2.44

From Pittsburgh, Pennsylvania

Pittsburgh is consistently ranked high in livability surveys. In 2007, Pittsburgh was named "America's Most Livable City" by Places Rated Almanac, and "America's Best City for Relocating Families" in 2008 by Worldwide ERC, a relocation services industry trade group
.
.
.
.
Livability rankings typically consider factors such as cost of living, crime, and cultural opportunities. Pittsburgh has a low cost of living compared to other cities in the northeastern U.S. The average price for a 3- to 4-bedroom, 2-bath family home in Pittsburgh is $162,000, which is well below the national average of $264,540, as of October 2004, according to the Federal Housing Finance Board.

[ThePythonicCow]

Re: Corruption of Economics by Mason Gaffney

I fail to understand this obsession with taxing land. An entire country financed only by those who own property?

It could work rather well, I think.

In order to pay their taxes, those who own land would usually need to find some way to make it productive, such as by growing food on it, building factories on it, or renting to shops and residences.

The abstract view looks good as well. A nation should perhaps consider that which it, the government, owns is not the labor of its citizens (as in a personal income tax) or a cut of various business transactions (whether of the gross, as in a sales tax or of the net, as in a corporate income tax.) Rather the proper wealth of a government, from which it should collect rent (land taxes) to fund its activities is the land over which it is sovereign. This seems less intrusive to me.

Certainly it should be a single tax, not yet another tax added to the current suite of taxes on everything imaginable.

This also reduces the incentive for corporations to fudge which country their earnings came from, so as to reduce income tax. Wherever companies have land they pay in proportion to the land they have.

A single tax, whether land or sales (Fair Tax, with the prebate to counter its regressiveness), would be much better than we have (but seems quite unlikely.)

[ThePythonicCow]

Re: Corruption of Economics by Mason Gaffney

I did just refreshed my memory with those links, thanks. But it is not a viable solution. Should I find myself with lots of money I would avoid owning land in a system that heavily taxes land.

I doubt you'd avoid owning any land. Rather you would just own the land for which you had a use, either a personal use such as for a residence, or a productive use such as a farm, factory, rented shop space or rented housing producing sufficient income to yield a profit after taxes and expenses.

It is true, however, that the rich don't like the idea much, which is a major reason why it got shot down.

[radon]

Re: Corruption of Economics by Mason Gaffney

I doubt you'd avoid owning any land. Rather you would just own the land for which you had a use, either a personal use such as for a residence, or a productive use such as a farm, factory, rented shop space or rented housing producing sufficient income to yield a profit after taxes and expenses.

It is true, however, that the rich don't like the idea much, which is a major reason why it got shot down.

That and people will just find ways of getting out of the tax. In many states agricultural land is taxed at a much lower rate already, so some people get together with their neighbors and put a couple of goats in their back yard to get the reduced tax rate.

If you want the tax to be a proxy for economic value you can't tax the land under a fab at the same rate you would a 200K acre desert ranch.

Besides the rich people I know own considerable property outside the US nowadays. This will just make it more fashionable to buy somewhere else.

[Starving Steve]

Re: Corruption of Economics by Mason Gaffney

Actually, the primary purpose of my original post was to present and discuss the width and breath of corruption and deception in our society. For example, economic teachings were modified, textbooks redrawn, academia co-opted with some academicians suppressed, media complicity, and entire histories rewritten.... and all of this can be demonstrated just by studying one person in our history: Henry George.

Working in the public schools of California from 1993-date, part-time, as a non-contracted substitute teacher but with a Clear Cal. Teaching Credential, I can tell you first-hand from my experience that teachers are not allowed to teach. Teachers are told what to teach, and they are handed scripts to play-out in the classroom. Thinking is not allowed, not by the teacher, and not really by the student. Everything is taught to standardized and timed-tests. Control is from above, i.e, from the government, especially from the federal govn't. Even language is strictly controlled: English-only. Understands of history are strictly controlled by the government..... From an ocean away, life in the Peoples' Republic of China looks about as free as what we have in America to-day, and maybe even a bit freer.

[BuckarooBanzai]

Re: Corruption of Economics by Mason Gaffney

It's so interesting that George lived around the same time as Marx, and probably was a prolific and his work as significant. But George has all but been wiped from economic history, while Marx lives on as almost a household name. How can that be, and why?

The answer is quite simple-- Marx's ideas are kept alive because they are an excellent framework that a tyrannical minority can use to economically and politically dominate a substantial majority. Marx is a "one stop shop" for would-be tyrants-- you get a political, moral, economic, and religious philosophy, fully integrated, a turnkey operation if you will.

Keynes ideas persist for a similar reason-- they support a well-integrated economic and political framework that can be easily used to promote and justify a self-serving political elite.

George's ideas don't appear to lend themselves easily to such abuse. Hence, they are discarded.

[BuckarooBanzai]

Re: Corruption of Economics by Mason Gaffney

It could work rather well, I think.

In order to pay their taxes, those who own land would usually need to find some way to make it productive, such as by growing food on it, building factories on it, or renting to shops and residences.

The abstract view looks good as well. A nation should perhaps consider that which it, the government, owns is not the labor of its citizens (as in a personal income tax) or a cut of various business transactions (whether of the gross, as in a sales tax or of the net, as in a corporate income tax.) Rather the proper wealth of a government, from which it should collect rent (land taxes) to fund its activities is the land over which it is sovereign. This seems less intrusive to me.

Certainly it should be a single tax, not yet another tax added to the current suite of taxes on everything imaginable.

This also reduces the incentive for corporations to fudge which country their earnings came from, so as to reduce income tax. Wherever companies have land they pay in proportion to the land they have.

A single tax, whether land or sales (Fair Tax, with the prebate to counter its regressiveness), would be much better than we have (but seems quite unlikely.)

Better than what we have? I find that hard to believe.

For anyone who cares a whit about personal freedom, taxation is first and foremost a moral question. Life, Liberty, and Property are the three legs of Freedom. Any tax that is compatible with Freedom cannot impinge on any of these three fundaments. Any property tax undermines freedom because it effectively eliminates the notion of private property-- the State now having the final claim on your property.

Income taxes are another tax incompatible with individual freedom. Your freedom of action is now permanently constrained as you no longer have the final claim upon your productive efforts. In fact, in any modern implementation of the income tax (where taxes are withheld), the State gets paid for your labor before you do.

Excise taxes are the only form of taxation with a moral basis consistent with freedom.

My final comment: taxes used as a form of redistribution, or to correct perceived "injustice" or "economic inefficiency", are tyrannical on their face once you think about it for longer that 30 seconds. Taxes have one legitimate function-- to pay for the functions of the state. Taxes cannot be used as policy tools because they are inevitably abused to serve the interests of those who get control of the state, and not the state itself.

And that's the problem I have with Gaffney, Hudson, George, et. al. They are useless to me because their "solutions" are incompatible with any kind of meaningful individual freedom.

[Starving Steve]

Re: Corruption of Economics by Mason Gaffney

My solution to over-priced urban land would be for governments to empower people to go outward, all around the city and build their homes there, on their terms, not the the terms of land-flippers, nor the terms of bankers, nor mortage companies, nor the terms of zoners, nor the terms of government ministries, nor the terms of preservationists. Not that I would always agree with Milton Friedman, but really: "Let people be free to choose."

My approach would be to flood urban land markets with cheap land, in all directions around the city, even upward and into high-rise developments. So the planners of long ago ( the 1950s ) were absolutely right to let cities sprawl and let cities be re-newed by urban renewal projects. The pot-heads who came along later (in the 1970s) and killed urban renewal and killed urban sprawl were absolutely wrong. Shame on them!:rolleyes:

[reggie]

Re: Corruption of Economics by Mason Gaffney

Working in the public schools of California from 1993-date, part-time, as a non-contracted substitute teacher but with a Clear Cal. Teaching Credential, I can tell you first-hand from my experience that teachers are not allowed to teach. Teachers are told what to teach, and they are handed scripts to play-out in the classroom. Thinking is not allowed, not by the teacher, and not really by the student. Everything is taught to standardized and timed-tests. Control is from above, i.e, from the government, especially from the federal govn't. Even language is strictly controlled: English-only. Understands of history are strictly controlled by the government..... From an ocean away, life in the Peoples' Republic of China looks about as free as what we have in America to-day, and maybe even a bit freer.

Have you ever listened to John Taylor Gatto, a former teacher of the year from NYC? If not, I think you would enjoy listening to him and reading his books/papers.

As far as freedom in the Peoples' Republic of China, I surmise that this is merely a temporary matter.

The answer is quite simple-- Marx's ideas are kept alive because they are an excellent framework that a tyrannical minority can use to economically and politically dominate a substantial majority. Marx is a "one stop shop" for would-be tyrants-- you get a political, moral, economic, and religious philosophy, fully integrated, a turnkey operation if you will.

Keynes ideas persist for a similar reason-- they support a well-integrated economic and political framework that can be easily used to promote and justify a self-serving political elite.

George's ideas don't appear to lend themselves easily to such abuse. Hence, they are discarded.

You're quite an astute chap!

Better than what we have? I find that hard to believe.

For anyone who cares a whit about personal freedom, taxation is first and foremost a moral question. Life, Liberty, and Property are the three legs of Freedom. Any tax that is compatible with Freedom cannot impinge on any of these three fundaments. Any property tax undermines freedom because it effectively eliminates the notion of private property-- the State now having the final claim on your property.

Income taxes are another tax incompatible with individual freedom. Your freedom of action is now permanently constrained as you no longer have the final claim upon your productive efforts. In fact, in any modern implementation of the income tax (where taxes are withheld), the State gets paid for your labor before you do.

Excise taxes are the only form of taxation with a moral basis consistent with freedom.

My final comment: taxes used as a form of redistribution, or to correct perceived "injustice" or "economic inefficiency", are tyrannical on their face once you think about it for longer that 30 seconds. Taxes have one legitimate function-- to pay for the functions of the state. Taxes cannot be used as policy tools because they are inevitably abused to serve the interests of those who get control of the state, and not the state itself.

And that's the problem I have with Gaffney, Hudson, George, et. al. They are useless to me because their "solutions" are incompatible with any kind of meaningful individual freedom.

Agreed.

However, IMHO these sources can serve as a stepping stone of thought and self-reflection that may help someone transition to the philosophical issues that you so appropriately raise in your post.

[WildspitzE]

Re: Corruption of Economics by Mason Gaffney

Better than what we have? I find that hard to believe.

For anyone who cares a whit about personal freedom, taxation is first and foremost a moral question. Life, Liberty, and Property are the three legs of Freedom. Any tax that is compatible with Freedom cannot impinge on any of these three fundaments. Any property tax undermines freedom because it effectively eliminates the notion of private property-- the State now having the final claim on your property.

Income taxes are another tax incompatible with individual freedom. Your freedom of action is now permanently constrained as you no longer have the final claim upon your productive efforts. In fact, in any modern implementation of the income tax (where taxes are withheld), the State gets paid for your labor before you do.

Excise taxes are the only form of taxation with a moral basis consistent with freedom.

My final comment: taxes used as a form of redistribution, or to correct perceived "injustice" or "economic inefficiency", are tyrannical on their face once you think about it for longer that 30 seconds. Taxes have one legitimate function-- to pay for the functions of the state. Taxes cannot be used as policy tools because they are inevitably abused to serve the interests of those who get control of the state, and not the state itself.

And that's the problem I have with Gaffney, Hudson, George, et. al. They are useless to me because their "solutions" are incompatible with any kind of meaningful individual freedom.

hear, hear!