A better world is possible - Global Commons Institute
A better world is possible - Global Commons Institute
A better world is possible - Global Commons Institute
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Copyright Bruce Nixon 2010. All rights reserved. Th<strong>is</strong> electronic copy <strong>is</strong> provided free for personal, non-commercial use only.<br />
www.brucenixon.com<br />
payment to access the benefits it provides -- cutting out the something-for-nothing payment to the<br />
landowner.<br />
A landowner either charges tenants for what government, the community and nature provide, or gets those<br />
benefits by using the land himself. Land value <strong>is</strong> the exact measure of how much more benefit the landowner<br />
expects to get than he expects to pay in taxes - i.e., how large a net subsidy he will receive from the<br />
community. As land rent amounts to about 1/5 of GDP in typical industrialized countries (more in densely<br />
populated ones), private land ownership has the effect of transferring an enormous quantity of wealth every<br />
year from workers, entrepreneurs and investors in capital goods - buildings, machinery, etc. -- to landowners,<br />
in return for nothing. The subsidy to landowning <strong>is</strong> thus the major cause of the working-class poverty,<br />
unemployment, low wages, social problems and great inequalities of wealth typical of capital<strong>is</strong>t countries.<br />
LVT recovers the land subsidy for the purposes and benefit of the public that provides it, rather than letting<br />
landowners take it in return for nothing.<br />
LVT consequently has an important but widely m<strong>is</strong>understood effect: requiring the landowner to repay the<br />
benefits he gets from government and the community just by owning the land reduces its value, because it<br />
reduces the net subsidy the landowner receives at the expense of taxpayers and the people. If all the<br />
publicly created land rent <strong>is</strong> recovered for public purposes and benefit, the land will have no value at all as an<br />
asset: it will have rental value only, because the owner will not be getting any net subsidy.<br />
LVT Can Provide a Citizens Income -- for Free<br />
LVT clears the way to implement an effective citizens' income – see below in Part 3 - without having to ra<strong>is</strong>e<br />
any additional tax revenue to fund it: a flat, universal, personal LVT exemption for every resident citizen -<br />
adult and child – in owner occupation, similar in concept to the personal income tax exemption, and<br />
applicable only to land the recipient <strong>is</strong> using. Land rent accounts for half or more of the poor's average living<br />
expenses, so replacing current taxes with a revenue-neutral LVT with a modest universal personal exemption<br />
would effectively lift almost all the poor out of poverty at a stroke, while costing the public treasury -- i.e.,<br />
taxpayers -- no more than their current taxes.<br />
In addition, because high housing costs are always driven by land value -- the need to either pay for land up<br />
front, or pay mortgage interest in addition to land rent -- reducing land value towards zero by LVT tends to<br />
remove mortgage interest from the housing cost equation. As LVT also stimulates the best use of each<br />
location, it increases the supply and quality of built space, dramatically improving the supply, quality and<br />
affordability of housing, especially for the poor. So paradoxically, taxing land value at a high rate with a flat,<br />
universal personal exemption eliminates the unearned profits of land speculators, but makes owning a<br />
decent home far more affordable for the great majority of people.<br />
LVT: Better for Communities, Business and People<br />
A high LVT rate dampens boom and bust cycles based on land speculation. LVT makes development more<br />
compact by stimulating the most productive use of high-value downtown sites, revitalizing blighted areas,<br />
and reducing sprawl. If land <strong>is</strong> not designated for development, taxable value of sites will be low: LVT <strong>is</strong><br />
'Development Plan led'. Providing the whole Plan-making and Plan-managing processes of government are<br />
open and transparent, for example by using land value maps that are kept up-to-date and publicly available,<br />
opportunities for corruption of public officials should greatly reduce and quality of involvement of the public<br />
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