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Wealth and Want | |||||||
... because democracy alone is not enough to produce widely shared prosperity. | |||||||
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Shrinking
Government
Like all creatures --
goldfinches, squirrels, butterflies, cicadas --
we humans are squatters on this planet. We all need a part of earth for
shelter, nourishment, a work site and a place to raise the next
generation. Otherwise we perish. ...
In the 1980s, Washington, D.C., was concerned about its growing army of homeless. At that time I found there were 8,000 boarded-up dwelling units in our Nation's Capital -- more than enough to accommodate some 5,000 street people. I also found there were 11,500 privately owned vacant lots in the District of Columbia, mostly zoned for and suitable for homes or apartments. Decent housing on these sites held in cold storage would have provided an alternative for the many low-income families squatting in places that were overcrowded, overpriced, overrun with vermin and overloaded with safety hazards. These issues spurred my research described in a 1988 report, "Affordable Housing -- A Missing Link." Evidence from the Census Bureau, Bureau of Labor Statistics and other sources over a 30-year period revealed the following average cost increases of items that go into the building and maintenance of housing:
Why do those statistics not seem to jibe with what you have been told,
seen with your own eyes, and felt in your own pocketbooks?
The
answers would be obvious except that, so far, I have not mentioned
what happened to the price of the land that housing sits on. Many of
those who talk and write about housing conveniently overlook the fact
that housing does not exist in mid air but is attached to the land, and
that the price of this land has gone through the stratosphere.
In contrast to those 11- to 14-percent annual increases in housing-related costs, residential land values nationwide rose almost 80 percent a year, or almost 2000 percent over those three decades. ... A close friend in Bethesda bought a house and lot there 40 years ago for $20,000. Two months ago he sold the property for a cool half million. That 2400 percent increase was entirely land value. The buyer immediately demolished the house to put up a larger one, so he clearly paid half a million for the location value -- the land value -- alone. Officials, civic leaders and commentators who bemoan the lack of affordable housing nevertheless applaud each rise in real estate values as a sign of prosperity. Seeing their own assets multiply through no effort of their own apparently makes them forget the teachers, firemen, police and low-income people who are boxed out of a place to squat in their cities and neighborhoods. ... Many of our Founding Fathers, George Washington included, had amassed huge estates. But the property tax induced them to sell off excess lands they were not using. ... One of the many virtues of a tax on land values is that it can be introduced gradually. Cities that take this incremental approach report that homeowners-voters-taxpayers hardly notice the change. What's important in modernizing your taxation is not the speed of change but the direction you choose. If you keep the present tax system with its disincentives for compact and wholesome growth, you will experience the treadmill effect that has been so familiar in so-called urban and housing "solutions." You will have to keep running faster and faster with patchwork remedies to keep from sliding backward. A caution. Revising taxes as proposed here will not end the need for housing subsidies, at least not in the short run, but it will do three things that should greatly reduce subsidies.
In Conclusion, I have tried to show that America has a housing land
problem, not an affordable housing problem. This problem can be
substantially alleviated by freeing the market of anti-enterprise taxes
and by turning the property tax right
side up -- that is, by dropping
tax rates on housing and by raising them on publicly-created land
values. Read the whole article
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Wealth
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... because democracy
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prosper
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