Bill: And we're (Scott, Rita and me) arguing that all that economic rent is the thing that people should tax and we shouldn't tax people's labor. Because people own their bodies and they work hard , and then you tax people's labor away from them? It's crazy"
Bill: "and other people who do nothing or sleep, they get money without doing anything. They didn't do anything to earn it.
Rita: They didn't labor to create that stuff.
Emmanuelle: Yeah, but at the same time the owner of the middle square is not developing his land. He is not getting anything out of it"
Scott: He's getting what economists call imputed income"
Bill: Uh huh.
Emmanuelle: So you would tax on something that he hasn't benefited from?
Scott: Yes, but nobody else is getting anything either. It's sitting there in the center unused and because the owner has exclusive title, there's no opportunity for anyone and they're excluded. You know, if you have a big property in New York, like I do near my place -- a nine-acre property -- then that means that nobody else can take the opportunity to use that land.
Rita: That takes that useful land out of production.
Scott: Yeah. So they're hoarding and speculating"
Emmanuelle: But in a city you don't necessarily want to have all the land used.
true, but you see what happens in practice is that is that as you tax the land
the market price comes down commensurately,
because the total capitalization amount is less .
More of the value is collected in taxes
instead. T he
market forces won't allow the sale price and
the tax to go up at the same time.
So that as you increase one, the other comes down. So, now you've made the land cheaper,
so that means it is not so important to develop every square inch and it
doesn't take the much revenue out of the community.
Bill: If we really wanted it to be a park or other open space , we should take it off the tax roles and make it public property.
Scott: You know 30% of the land in New York is untaxed anyway. It's excluded. It's a church or a hospital or a school, etc. Universities are big real estate owners now and they don't pay any property taxes. Or, firms like Goldman Sachs, who has a get special deal that they extorted from (Mayor) Bloomberg in which they said "We're going to leave the city if we have to pay property taxes."