Land Value Tax Analysis: Simulating Effects in Multnomah County

Prior measures to limit property tax growth in Oregon have created inequitable tax burdens. Recognizing that adoption of a land value tax (LVT) might bring some relief to lower income residents while encouraging desired infill development,

RSF funded the Northwest Economic Research Center (NERC) to simulate the localized economic impacts of implementing LVT.

NERC’s findings supported the conclusion that implementation of LVT within the study area could be expected to produce significant, positive effects – a finding with potentially significant implications for one of the most costly housing markets in the country. 

To see more details click on the report below.

3 Replies to “Land Value Tax Analysis: Simulating Effects in Multnomah County”

  1. Good golly, I’m staying to read! At last a reason to tune in to a Georgist website and the voice of us otherwise mere outliers! Go, RSF. Next thing you know, I’ll be donating to the ol’ alma mater!

  2. How are we to properly appreciate all of the effects of the introduction of LVT, unless somebody makes a complete and summarizing list of them? The following is my attempt at this where I cover 17 of them.. I would welcome anybody else’s improvements in this number too, providing it is not an expansion in details.

    17 Aspects of LVT Affecting Government, Land Owners, Communities and Ethics

    Four Advantages for Government:
    1. LVT, adds to the national income as do other taxation systems, but it should replace them. The author has shown in REF.5, that taxation of any kind is beneficial to the country as a whole due to its national income providing for more work too, but that when the tax applies to land the topology and spread of its effects are about 3 times as beneficial as when the same amounts of income are taken directly from labor.
    2. The cost of collecting the LVT is less than for all of the production-related taxes–tax avoidance becomes impossible, because the sites are visible to all and who owns each site is public knowledge. The army of tax collectors who are opposing a similar set of lawyers, are no longer busy with tax loop-holes in the law, so the number of people more productively employed will grow and the penalty on the country of having complicated taxation is less.
    3. Consumers pay less for their purchases due to lower production costs (see below). They can buy more goods and enjoy a raised standard of living. This creates greater satisfaction with the management of national affairs and more prosperity.
    4. The national economy stabilizes—it no longer experiences the 18 year business boom/bust cycle, due to periodic speculation in land values (see below). The withholding of unused land is eliminated see item 7, so there is less need for the complications of frequent land sales, with developers searching and buyers hunting for unused sites.

    Six Aspects Affecting Land Owners:
    5. LVT is progressive—this tax depends on the site area as well as its position. The owners of the most potentially productive sites pay the most tax per unit of area. Urban sites provide the most usefulness and their owners will pay at greater rates, whilst big rural sites have less value and can be farmed appropriately, to meet their ability to provide useful produce. Small-holder farming closer to population centers becomes more practical, due to local markets and reduced distribution costs.
    6. The land owner pays his LVT regardless of how his site is used. A large proportion of the present ground-rent from the tenants (who do use the land properly), becomes transformed into the LVT, with the result that the land has less sales-value but retains a significant “rental” value.
    7. LVT stops speculation in land prices, because the withholding of land from its proper use is not worthwhile.
    8. The introduction of LVT initially reduces the sales price of sites, even though their rental value can grow over a longer term. As more sites become available, the competition for them is less fierce and entrepreneurs have more of a chance to get started.
    9. With LVT, land owners are unable to pass the tax on to their tenants as rent hikes, due to the reduced competition for access to the additional sites that come into use.
    10. Speculators in land values will want to foreclose on their mortgages and withdraw their money for reinvestment. Therefore LVT should be introduced gradually, to allow these speculators sufficient time to transfer their money to company-based shares etc., and simultaneously to meet the increased demand for produce (see below, items 12 and 13).

    Three Aspects Regarding Communities:
    11. With LVT, there is an incentive to use land for production, transport or residence, rather than it being vacant and held unused.
    12. With LVT, greater working opportunities exist due to cheaper land and a greater number of available sites. Consumer goods become cheaper too, because entrepreneurs have less difficulty in starting-up their businesses, and because they pay less ground-rent–consequently demand grows, whilst unemployment and poverty decrease.
    13. Investment money is withdrawn from land and placed in durable capital goods. This means more advances in technology and cheaper goods too because the effectiveness of labor has been raised.

    Four Aspects About Ethics:
    14. The collection of taxes from productive effort and commerce is socially unjust. LVT replaces this national extortion by gathering the surplus rental income, which comes without any exertion from the land owner or by the banks–LVT is a natural system of national income-gathering.
    15. Previous bribery and corruption for gaining privileged information about land, cease. Before, this was due to the leaking of news of municipal plans for housing and industrial development, causing shock-waves in local land prices (and municipal workers’ and lawyers’ bank accounts!)
    16. The improved use of the more central land of cities reduces the environmental damage due to unused sites being dumping-grounds, and the smaller amount of fossil-fuel use (with its air-pollution), when traveling between home and workplace.
    17. Because the LVT eliminates the advantage that landlords currently hold over our society, LVT provides a greater equality of opportunity to earn a living. Entrepreneurs can operate in a natural way– to provide more jobs because their production costs are reduced. Then untaxed earnings will correspond more closely to the value that the labor puts into the product or service. Consequently, after LVT has been properly and fully introduced as a single tax, it will eliminate poverty and improve business ethics.

  3. References 5 in this list is my recent book “Consequential Macroeconomics–Rationalizing About How Our Social System Works”. This is the first occasion when our much loved subject of macroeconomics has been turned into a more exact science using common sense, logic and numerical analysis.

    I believe it is a vital step toward a better civilization, because in this book are shown the way that we can use a representation of the whole of our national economy to examine the effects of specific changes to policy.

    It does (of course) have a strong Georgist inclusions, but not all of our economy can be better understood by merely “seeing the cat”. There is a lot more to it (a whole menagerie of creatures), and this book brings these basic effects together in a seamless way.

    If you write to me at [email protected] I will gladly send you a free e-copy. This book was also published in soft-cover in 2015.

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