I have cleaned this up a little. A few years ago after much discussion with purported geolibertarians about land tax (land value tax) and reading this article I wrote:
A land tax will not work.
A land tax can only work where it meets economies of scale. That means it can only work in the major coastal cities of Australia and nowhere else.
It deprives those that manage to pay off their mortgage or first home buyers, etc of having the security of an actual home unless it becomes a business, i.e. becomes productive.
It deprives those in country-coastal towns and even more of those that live inland.
The reason there is so many speculators on land and housing, primarily in housing is because it is the only way to make any significant money. You can do it about every 10 years as Real Estate’s about the only product that you can buy that appreciates. Arguably the stock market is another way but that takes at least 20 years and you have to avoid watching your stocks every minute and hope someone doesn’t buy out the companies your stocks are in so you end up with nothing.
When I see TV shows like Hot Property the fools that buy a house for $700 000 and over a million dollars… Generally because the house they are buying is only worth it due to the foolish idea of location, location, location, i.e. usually beachfront. Even more so when the house depending on the size would only cost around $200-300 000 to build. It is not reasonable.
I do not own property but I know there is no way that you can ever possibly save enough to buy a home outright and live within reason on the median-to-average wage. Sure you can get a mortgage but then that’s another 30+ years to pay off. And in today’s economic climate where job insecurity is paramount and rising interest rates.
The only solution is to do what is suggested in the article, get multiple-properties, pay off the principal-of-interest on the loans and every 5-10 years sell the house. You may also need to account for some housing upkeep and thus make a loss, as it is money out of your pocket – hence negative gearing. It is the only way to get ahead. It is the only way for the average, perhaps even median person in Australia to make any money.
To which someone called grputland replied to the fact that I said land tax takes away the security of those who have paid off their homes.
My answer: Only if it applies to owner-occupied residential land, and only if the owner-occupants can’t pay it. The latter condition holds for any other tax and, for that matter, any other debt. In general, if you can’t pay your debts, you go bankrupt and lose your house. But this is LESS likely to happen with land tax, because the tax is commonly allowed to be deferred until the property is next transferred.
He also seems to think land tax discriminates against country and inland areas. Not so. Because the highest land values are in coastal cities, greater reliance on land value taxation would AUTOMATICALLY give much needed tax relief to struggling rural towns (without technically violating any constitutional strictures against discriminating between locations in matters of taxation).
And some guy called Lev added this veiled insult:
Your assertions were well answered by grputland. Read them carefully.
I am happy to accept grputland‘s caveat it only applies to owner-occupied residential land, and only if the owner-occupants can’t pay it.
Whilst I can accept in theory that a land tax assists regional and rural areas (my area) but as I’ve said previously political reality tells me the politicians will hold revenue for that back as a sweetener for something else, most likely in a high density urban area.