Episode 95 – The Land Value Tax with Joshua Vincent and Rich Nymoen

Macro N Cheese – Episode 95
The Land Value Tax with Joshua Vincent and Rich Nymoen
November 21, 2020

 

[00:00:02.820] – Joshua Vincent [intro/music]

If you want to sit on your land for decades, knock yourself out. That’s the American way. You own it, but you’ve got to pay for the privilege. And that’s really the crux of what we would say to a vacant land owner or a speculator.

[00:00:18.840] – Rich Nymoen [intro/music]

Most bank lending is against real estate. And so what that means is people who are buying land, they typically will borrow from a bank to purchase the land and then they’re essentially paying the land rent to the bank. So that’s really how the one percent is being created.

[00:01:26.670] – Geoff Ginter [intro/music]

Now, let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N Cheese, with your host, Steve Grumbine.

[00:01:34.630] – Steve Grumbine

All right, folks, this is Steve with Macro N Cheese. Today, I’ve got Joshua Vincent and Rich Nymoen. And I’m excited because these guys are going to talk to us about land value tax, the Georgist strategy for eliminating rent seeking. And it’s something that is not directly MMT-related, or Modern Monetary Theory related, for those of you who have joined this podcast for the first time.

But it’s something that I feel is very adjacent and possibly complementary. And I want to explore that with these guys today. So what I’m going to do is I’m going to let Josh and Rich introduce themselves. And let’s start with you, Josh. How are you doing today, man? Thanks for joining us, both of you guys.

[00:02:14.970] – Joshua Vincent

Oh, man. It’s my pleasure. How are you? I’m Josh Vincent. I’m the executive director of the Center for the Study of Economics. And we’re based in the Philadelphia area. And we’re a 501(c)3 nonprofit, but we’re not that run of the mill. We’ve been around since 1926 and we work with communities from the very local level up to the state level to educate, inform, and help administer, eventually, the land value tax.

[00:02:46.440] – Grumbine

Great. OK, and Rich, introduce yourself, sir.

[00:02:49.680] – Rich Nymoen

Yes, thanks, Steve. I am Rich Nymoen. I’m president of Common Ground USA. We’re actually not 501(c)3, we’re 501(c)4, so that means we can actually kind of get involved in politics and we work on a number of these kinds of approaches. So both LVT [land value tax] and what we call rent sharing land trusts and land value capture and all kinds of other strategies along these lines.

[00:03:15.230] – Grumbine

Fantastic. Sounds like I got the right guys to talk about this. So do me a favor, let’s start off with explaining, number one, what land value tax even is. And maybe even before we go there, this is typically considered Georgism, the Georgist advanced land value tax. So why don’t we start out with what Georgism even is and then we can migrate into land value tax.

[00:03:41.330] – Nymoen

OK.

[00:03:42.680] – Grumbine

Josh, you want to start?

[00:03:44.360] – Vincent

Yeah, actually, we are Georgists, but we could just as easily call ourselves “Smithists” after Adam Smith, or “Ricardo-ists” after David Ricardo.  There’s been a line in economic thinking for centuries now that the best source of government revenue is the land – land value – and Henry George sort of popularized that to a fever pitch by writing a book called “Progress and Poverty” in 1879.

And he asked a very basic question that I think people of goodwill are asking, which is why in the middle of so much wealth and prosperity, is there poverty? And he tried to answer that question by researching and hypothesizing and then concluding that lack of access to the Earth and all of its gifts is what prevents people from making it in their lives.

[00:04:41.440] – Grumbine

Interesting. All right. So, Rich, do you have anything to add to that? That seems like a pretty stout, smart mindset?

[00:04:48.480] – Nymoen

Yeah, well, I guess what I would add is, you know, kind of a controversial thing. Henry George was known for, as he said, that land, not just land surfaces, but, you know, all natural resources should be held on a common basis within society. So by that, he meant something similar to like when people inherit land in common.

So you and your siblings inherited land from someone in common, that would mean that you each had equal share to all the land. So when you have a situation like that, we have common property, you typically will rent it out and then you collect that rent and you share equally among yourselves. So it’s using that concept in kind of a social context.

[00:05:30.980] – Grumbine

OK, so from a standpoint of the public purpose – I have built my activism on spending money into the economy, on the public purpose. And what we oftentimes don’t have a good grasp on is how to tax that money out of the economy or, at the local level, ensure that certain behaviors are not predated on people, not lorded over them to allow rentier type behavior, rent-seeking behavior and so forth. It sounds to me like land value tax might be one such way of attacking that. Which one of you guys would like to take a crack at answering that question? I’ll leave it up to both you.

[00:06:15.740] – Nymoen

I’ll jump in. I’ll jump in because I had a thought on this. So the whole idea of rent-seeking behavior, that’s almost more modern terminology, and I think it kind of stems from these ideas from centuries ago, but I think there’s essentially two ways you can avoid rent-seeking behavior. Number one, you can avoid creating these privileges in the first place.

So if we’re talking about patents and copyrights and things like that, you can just limit the number of those you issue or extend time there, in effect, or things like that. But, you know, if you’re going to create those kind of privileges, if you’re going create a land title for people, if you’re essentially creating this privilege, then that should be done on the condition that the rental value for that privilege is being collected. So that’s my thinking on how you can use these ideas to avoid that kind of behavior.

[00:07:05.170] – Vincent

At the local level when you’re talking about the policy, the last thing you can do in the USA is say we’re going to take your land. So the idea is it’s the rental value, not the actual land itself that belongs to the community. And most of that wealth is publicly created, is community created. If you look at a city, almost all of its value, some comes through the location, but most of the value comes from the investments that have been made into that city: infrastructure, sewers, schools, fire protection, that kind of thing. And so I think it’s our view that none of that wealth should be short-stopped by private operators, private players, rent-seekers.

[00:07:51.510] – Nymoen

Yeah, and oftentimes that kind of return is described by people who act upon this as unearned income, as unearned increment. So, for example, you know, I own the land under my house. And I think 20 some years ago, I paid probably about 20,000 dollars for the land itself, excluding the structure. And now it’s probably worth about 50,000 dollars.

So that thirty thousand dollar increase had nothing to do with anything that I’ve done. It’s just what the community around me has done. So I’m going to pocket that – which I probably will if I ever get around to selling this place. To me, that’s just a windfall. It’s just unearned and it really makes more sense for me to be paying that value to the community in return for what the community is providing to my location.

[00:08:36.780] – Grumbine

OK, so let’s walk through – I’m in a city or a random township, I own four lots.. Of those four lots, I’m living in one of them and the other three are just sitting there and maybe I have houses on them or maybe I’ve got factories or any number of things.  Lay the scenario out for me how a land value tax actually functions.

[00:09:02.010] – Vincent

I think I can jump on that because it’s really what I do. Every town, every locality, every jurisdiction has a tax rate, property tax rate, and if they’re unfortunate, they have a sales tax rate, they have a wage tax rate and a business rate. In other words, a lot of taxes. But for simplicity, we start with the property tax and the tax rate falls equally on land and buildings. And we think that’s a really backward way of approaching the property tax.

If you, say, buy some land and you put a house on it, your taxes will go up because of the building you put on there. Where, suppose you go into an old neighborhood and fix it up on your own dime in your own time. Your taxes go up. So for you, the property owner, doing the right thing for the community and for yourself by improving that property, then the government comes over and says, stick ’em up, not to put too fine a point on it.

[00:10:05.370] – Grumbine

Right. [laughs]

[00:10:07.060] – Vincent

And in practice, land values raise very little money through the traditional property tax. Very little revenue. And the revenue that it could be raising is a direct cause and effect of public investment in infrastructure, and that value should go to us, but what we have to then do is change the tax structure. So in Allentown, Pennsylvania, you pay one point eight percent on the building value, one point eight percent tax, and about four point six percent tax on the land.

So you’re really shifting the tax burden away from the good things that we want and on to things that it doesn’t matter how much you tax them – land – because it’s not going anywhere and it’s not going to lose its value, at least in the local state jurisdiction level. And we do that all over Pennsylvania and we’re expanding it into other states right now. It works. In formerly very poor cities like Harrisburg, Pennsylvania, Allentown, I mentioned, and the old steel towns. So they’ve really got a second chance, I think, at becoming a healthy community by using land value tax.

[00:11:24.100] – Nymoen

Yeah, and so what it does is it’s putting development pressure on sites that either are vacant or they have very little building value on them. So it’s going to dramatically increase the taxes on those parcels, and then parcels that have a lot of building value on them will see kind of dramatic reductions. The parcels that are kind of in the middle, distribution-wise, may see some change, but not as much of a change as on those two extremes.

Here in Minnesota,  we’ve been working on a bill at the legislature that would allow cities to create what we call land value tax districts so they could create one of these districts citywide or just for like a particular corridor or neighborhood. And we actually over the summer have gotten quite a bit of interest as a result. A lot of the unrest that happened here in Minneapolis and St. Paul, a lot of buildings have been burned down.

And, you know, there’s been talk that these sites are just going to be snapped up by speculators who are going to sit on it for decades without have anything happen on them. So we think giving cities the chance to create a corridor where you’re making this kind of shift is going to really help redevelop those sites.

[00:12:29.740] – Grumbine

OK, so bottom line is, it’s kind of like use it or get off the pot, so to speak. Is that kind of the flavor here?

[00:12:36.300] – Nymoen

Yeah, exactly.

[00:12:36.850] – Vincent

You got it. Tastes good.

[00:12:40.180] – Grumbine

So how do you sell that? Obviously, I could see the value right away, but I’m just curious – if I’m a politician looking at who’s donated to my campaign, how am I going to be pitched? Sell me land value tax. Sell this to me.

[00:12:54.130] – Vincent

If I were a politician, it would be tough because who contributes most to campaigns? If you notice, it’s developers and the real estate, quote, community, unquote. And that’s sometimes kind of a hard thing to overcome. But in the time of coronavirus, and as Rich mentioned, rebuilding of our cities right now is crucial.

You can say we’re going to bring in the same amount of revenue to your town, we’re just redirecting it. We’re redirecting it away from small businesses, from hardworking homeowners, from responsible landlords that keep their rental properties up. And we can also pretty much guarantee – this is not in every case – that taxes will go down for most citizens in a community.

[00:13:43.360] – Nymoen

Yeah, when we meet with officials, we start off by first kind of describing the experience in Pennsylvania because that’s where it’s been done the most. So there’s just some really incredible stories coming out of places like Harrisburg. That was one…

[00:13:56.110] – Grumbine

That’s where I’m from, by the way. I’m here right now.

[00:13:58.900] – Nymoen

That’s right. So, you would know, back in the 70s, it was one of the most distressed cities in the nation. And Josh can talk more about it. I think…  wasn’t there like a hurricane that had come through there or something like that? So there was a lot of devastation and speculation going on. And then they put this into effect and saw a tremendous number of businesses created and vacant buildings restored, real estate value created, and then all the kind of small rural mining and steel towns – which we have in Minnesota – have seen the results, getting tax reductions, seen building permit data increasing. So we pitched it as a way not only to get redevelopment and infill in your communities, but just really to have an overall stimulus effect to your local economy.

[00:14:42.220] – Grumbine

Yeah, you know, I see this. So by “move it or lose it,” you’re going to be moving capital around. You’re going to be spending money. You have no choice but to spend money or you’re going to spend money on taxes, or are you going to spend money beautifying or making your land productive? You take your pick. Do you want to be productive or do you just want to pay some taxes? And I think that that is the real carrot and the stick right there. That seems like a really fantastic way to stimulate purchasing.

[00:15:10.420] – Vincent

You’re absolutely right. And in fact, a carrot and stick is kind of the phrase that we use when introducing people to this idea for the first time. We do it gently by simply saying, yeah, if you want to sit on your land for decades, knock yourself out. That’s the American way: you own it, but you’ve got to pay for the privilege.

And that’s really the crux of what we would say to a vacant land owner or a speculator. And the local elected official would say, yeah, why are you paying nothing when everybody else pays something? And that’s how you can get buy-in from Republicans and Democrats, it doesn’t matter what side of the aisle. Allentown is a case where Republicans and Democrats joined to put in LVT.

[00:15:57.190] – Grumbine

That’s amazing. Nobody gets along… red and blue. [laughter] Just to see something that brings them together, you’ve got to scratch your head. There’s got to be a secret there. What’s the problem? Why are they agreeing? What is going on here? [laughter] It really does seem like a win-win, even as the land owner, if you’re going to spend money to improve your situation, if you’re smart and you have some good ideas, it’s also invigorating for entrepreneurial pursuits as well.

I mean, I could see a lot of real genuine value across the divide. I could see a very progressive case for beautifying the area or making it productive, providing jobs, providing stimulus. But I can also see it on the capital-friendly side where people can turn this into something valuable for themselves as well. So it seems like a win-win.

[00:16:47.210] – Nymoen

Yeah, I think it really is, and I think that’s why it has appeal across the political spectrum. So you’ve had Milton Friedman come out in favor of this, but you’ve also have Joseph Stiglitz come out in favor of this.

[00:16:58.790] – Grumbine

Michael Hudson came out in favor of it on my show not too long ago, so…

[00:17:02.540] – Nymoen

Yeah, he’s been a big proponent of it. So, yeah, its biggest obstacle is just been people not knowing about it. And that’s been my experience. If you actually sit down and explain it to people, most people are either indifferent to it or they actually like the idea. It really depends on how much experience they’ve had with speculation, how tuned into it they’ve been. So, for example, right next door to me, a house went into foreclosure about 10 years ago after the 08 crash.

And I’m not sure what happened on the inside of the house, but the bank just tore it down. So it’s been a vacant lot for 10 years, and the bank sent someone out there to mow it during the summer. But to them, it’s just one little item on probably thousands of similar properties that they own. But if you increase the holding cost on that site, maybe they’d pay more attention to it and actually do something with it instead of just sending out someone to mow it.

[00:17:55.800] – Grumbine

Absolutely. So being from Pennsylvania, we see nonstop Republicans and Democrats pandering to the fracking industry and you see the Marcellus Shale funding highways and you see all kinds of stuff that I would consider to be deleterious to the environment and to mankind and our survival as a whole. And it’s all in the name of tax revenues. It’s all in the name of funding.

And here we have an opportunity where we can make different value judgments on those sorts of things, apart from the idea of, hey, we got to do whatever we can to get revenue if we instituted this throughout the state. And I’ll use Pennsylvania, my home state, as the proving ground of this. You’ve got Philadelphia on one side, Pittsburgh on the other, and then Alabama in between. At the end of the day, you see the schools run down. You see all kinds of public works – the bridges are rated D.

We’ve got terrible infrastructure here. It’s a beautiful state, but it’s going to seed. And I believe that a land value tax might exactly be what the doctor ordered to bring it out of this. It’s really a shame. Driving around, you see it’s just really rundown in places where it used to be beautiful. I don’t think there’s any excuse for it. I think that this would go across to places like Detroit, Michigan. What a great way to stimulate investments in the community. I know I’m probably preaching to the choir here, but I mean, am I on the right track?

[00:19:26.880] – Vincent

Yeah, you are, because Pennsylvania, of course, brought in the Industrial Revolution along with some of the New England states. It got into the game early, so it got into the post-industrial collapse early. Since the mid-70s, it’s been really a horror story and it has implications politically, certainly. Why are people voting for a certain candidate in Pennsylvania, even though it might be against their best interests? But they’ve been forgotten and they really have been de-invested. One of our towns, Clairton, actually had street lights and stop lights turned off because they couldn’t pay the electric bill.

[00:20:09.870] – Grumbine

Jeez.

[00:20:09.870] – Vincent

Yeah, it’s crazy. They went into receivership under Pennsylvania law and they eventually got out of it. But one of the things that the Pennsylvania Economy League recommended was the land value tax. And so both the school district and the city use it. And therefore, most of the revenue comes from the big giant vacant lots of the old steel mills owned by people that live somewhere overseas – in London, I think. So we’re actually kind of undoing the problems of the extractive economy.

If we adopt that with fracking in Pennsylvania – there’s almost no tax on it. It’s really frustrating. I mean, if you’re going to frack, you’re going all-In for something that could be really bad, as you said, deleterious. And we don’t even have a severance tax in Pennsylvania, which is a cousin of land value tax. Alaska, for example, has the permanent citizens dividend, and that’s based on the severance tax that they have. I think it’s ironic that Sarah Palin and Governor Bush all pushed for severance taxes as a cheap and easy way to raise revenue. But that’s not happening in this state. It’s barely taxed.

[00:21:31.330] – Grumbine

I’m curious, when you look at Pennsylvania, it’s really easy to see some of the things that you’re talking about. But Rich, I’m interested in your area. Tell me a little bit about the conditions in Minnesota and the like, and some of the stories maybe that we get out of the Midwest.

[00:21:49.770] – Nymoen

Yeah, well, I mean, there’s a lot of talk here about the metro-rural divide. So within the metro area, it’s probably fairly, you know, Biden-leaning. When I drive around in greater Minnesota in the rural areas, there’s a lot of Trump signs. [laughs] So I think that’s kind of indicative of what’s going on across the country. And some of what Josh described in Pennsylvania, I think, is occurring here.

I mean, there are mining parts of Minnesota that have really been in decline over the past few decades up in the Iron Range in northeast Minnesota.  But then, a lot of Minnesota is farming land. And I think what we’ve seen over the last number of decades is a real consolidation in terms of the number of farmers and how big the farms are.

And so where a land value tax has been used around the world, you’ve really seen the breaking up of these large landholdings, so you get more population in the rural areas and you get more revitalization. And I think doing that would actually break up some of this metro-rural divide that we’re seeing. When we meet with rural legislators about our bill, one of the first things they ask is whether this is going to apply to farmland. And we tell them actually it doesn’t because it’s just authorizing cities to use it.

So it’s almost like a third rail to talk about using this on farmland. So we’ve actually taken to really approaching to more from a land trust approach. So trying to get farmland into trust and then having the farmers rent the land from the trust. They can have title to their buildings and their improvements, but they can pool the collected rent and use it in kind of common ways to benefit everybody. As you may know, about a hundred years ago, there were some towns that were created that were called single-tax communities, like Arden, Delaware, is one of them is still in existence today, where there the homeowners have title to their houses, but they’re renting the land from the town.

The town has set up a trust that owns the land. And they’re renting land from the trust, and that collective rent is used to provide the services of the town, but also to pay the property taxes at the county and the school district level. So we think that approach can be used in some of these farming contexts and other contexts to kind of make inroads when the tax approach politically is hard to do.

[00:24:05.550] – Grumbine

That’s very interesting. I’m curious because it seems like just on the surface, we’re talking about getting land to be useful again. Don’t just sit on it; beautify it, make it useful. It’s a funding mechanism either through the taxation or by stimulus-spending it into the economy. One way or the other, money is moving. It’s forcing money to move. It’s not allowing it to pool. It’s forcing it into action.

But you brought up trusts and you brought up some other avenues that sound like adjacent to land value tax. That seem like they’re in a family of tax schemes that allow for this sort of city-based or locality-based approach to community building. I’m interested. What does that menu look like? What are my options, ala carte, that we can talk about?

[00:24:54.840] – Vincent

Land value taxation is just one way to collect what we call the economic rent of land. But as Rich noted, the community land trust idea is a natural. If you want to have a land value tax that’s sufficient, it funds things well. We also have land value capture and in Rich’s neck of the woods, the University of Minnesota did a magisterial study, I think the phrase goes, on the concept of if you put a railway line out to a suburb, what happens to the land values? Well, they skyrocket.

So land value capture is a way for government to – not claw back, but recycle the value it’s created back into the community. And the same thing applies to subways. In New York City when they extended the subway up Second Avenue, as sure as night follows day the land values, which were already astronomical, jumped by a factor of two or three overnight.

And there’s also the broadcast spectrum, which is made by nature, not made by anybody, but right now we’re just selling the broadcast spectrum to the highest bidder, just a one-off benefit to the government as our representative. And the spectrum value actually should and could be rented out on an annual basis. I’m sure I’m missing something – Rich can jump in – but there are a lot of ways you can do land value tax, not necessarily through tax.

[00:26:31.600] – Nymoen

Yeah, and in our local Common Ground chapter, we’ve started a project that we call Public Land Trust. So we’ve been approaching the city and the county here because both the city and county, they come into possession of a lot of land. We’re talking about things like tax forfeiture, public golf courses closed down, other public properties closed down, development deals go bad. And so all this land is coming into possession of the city and the county, and they’re typically just selling it off.

And we’re saying instead of doing that, why don’t you retain title to the land? The people can have title to the buildings. The city and the county can retain title to the land and collect that value for the benefit of the community. Also, these entities – both the city and county – are providing a lot of public financing to developers and homeowners and home buyers. In exchange for that financing, they could put deed restrictions on the property so that it’s obligating the land rent to be paid into the trust in lieu of property taxes.

And I think that kind of gets people thinking about how you can go from a land trust to a tax approach, because if you put a deed restriction on a property to pay six percent of its land value into the trust, that’s the same thing as putting a tax of six percent on the land to pay the land rent into the community.

[00:28:03.070] – Intermission

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[00:28:52.300] – Grumbine

OK, so I go back to a scenario that happened a few years back with Cliven Bundy. And the land was used for ranching and things like that. Cliven Bundy felt like it’s his land, it’s his thing – whole militia thing going on. If you were the administrator of one of these schemes looking at this scenario, part of the deal was he hadn’t paid back taxes on this property or whatever.  Was that a land value scheme or was that something else? Do you know the story there? And how does that play into this? How might that play into this?

[00:29:24.790] – Vincent

I’d say that Cliven Bundy and his brood are sort of the flip of the coin of land value tax. It’s federal land that he was using and you’re supposed to pay for that land. But the prices set are rock bottom and artificial. They’re very distorted. The land is not valued as if it were in the private market. And so Cliven Bundy maybe cut a very handsome figure on a horse, but I’m just looking at the horse’s rear end on this. That’s all the people are getting.

If he paid the going rate for what a private landowner would ask, he wouldn’t have known what to do. He’s essentially living off the state. He’s a welfare king, if you will, and is taking advantage of all of us. Who’s helping him avoid his taxes? A registered nurse in Harlem, New York, she’s paying taxes and I’m sure she doesn’t know she’s helping indirectly to support the Bundys.

[00:30:30.030] – Nymoen

Yeah, and of course, that’s how Donald Trump made his money, was buying up parcels in New York and convincing the city to exempt him from taxation, and then he just rides the increase in land values to make his money.

[00:30:44.860] – Grumbine

Interesting. OK, so in cities where you have tremendous amounts of poverty and the stratification of – it is almost like two Americas, I can see where this could be seen a little bit – and I want you to slap me down because I’m saying something I know right up front is probably wrong – but it feels a little bit like elitism. This bot plays into the whole taxpayer narrative.

Now, all of a sudden, the good guys are funding government. “We are the land-owners. We’ll tell you how it is.” And now you’re kind of going back in a different direction. I can see an angle here that smacks of elitism and at the same time kind of breeds that ownership stake. “I’m the reason why you got anything there. I’m the one.” I know that that’s out there. I’m just curious, what would you say to someone that took a view like that?

[00:31:38.010] – Vincent

I would disagree. It’s not elitist at all. What we’re trying to do is overturn decades or centuries of elite privilege, monopoly privilege in land, of course, and also in federal tax policy. Federal tax policy favors beyond measure, almost, people that own land and let land fall apart. Depreciation is the most magic word that you can give to somebody like Trump or anybody, really, that knows how to play the game and gaming that system after you’ve built that system, that’s elitist.

And if you think about it, these post-industrial places that use land value tax  – and not just in Pennsylvania, but Australia, New Zealand, Estonia, we could go on. Namibia. In fact, Namibia is a great case. I’ll go back to that later. But it’s in these old towns, people are getting a second chance. They’re getting the current chance of saving on their taxes and not getting hosed, really. But they’re giving the community as a whole a second chance.

I don’t think it’s a coincidence that Allentown, after it adopted land tax, went from worst place to live in the US, according to Fortune, to now the third-largest city in Pennsylvania. And people are building, people are opening businesses. And one could make the case – and a lot of people have – that land value tax caused that.

I don’t think it’s elitist in a lot of ways because the mayor of Harrisburg, Steve Reed, who had a long and checkered career, but he said one reason I don’t like land value tax in my city is that there are no ribbon-cutting ceremonies. I can’t go and take credit for this person fixing up their house. I can’t really take credit for this corner store reopening after 30 years. People just roll up their sleeves and they do it on their own.

[00:33:36.670] – Grumbine

Interesting.

[00:33:37.630] – Nymoen

I think it’s also important to keep in mind the financial industry’s connection to land. I know Michael Hudson has talked a lot about this, how most bank lending is against real estate. And so what that means is people who are buying land, they typically will borrow from a bank to purchase the land and then they’re essentially paying the land rent to the bank.

So that’s really how the one percent is being created: by all this land rental and natural resource rentals being paid to the finance industry. Whereas if you were paying that to the community, it would be shared more equally than being funneled to the top. So you may be aware that the board game, Monopoly was originally intended to teach these principles?

[00:34:22.390] – Grumbine

Yes. [laughs]

[00:34:22.870] – Nymoen

It was created by a single-taxer named Lizzie McGee over a hundred years ago, and it was called The Landlord’s Game. In the game, players could decide to switch the rules of the game so that you’re no longer seeing one player take everything. You could have the land rent be pooled and then shared equally among the players and you’d have this real equalizing result. So this polarizing result, that’s a reflection of our actual economy.

[00:34:47.910] – Grumbine

That is amazing. I love it. So let me ask you a question. If you were writing your pluses and your minuses – and I appreciate the pseudo-minus of no ribbon cutting ceremonies – but what are some of the pushbacks you typically get?

[00:35:02.600] – Vincent

Yeah, and in fact, we can split this into almost two answers. I’ll take the very local micro-level approach because I actually had a punch thrown at me in front of Allentown’s City Council in 1996 because I described the land value tax, what it would do, and a notorious slumlord in town – I can’t name him – all of a sudden the light bulb went off and he started screaming and yelling and jumping up and down. Now Rich can speak to the macro effect of who’s going to oppose it.

But I think that it’s generally automobile-intensive businesses that really have no business being in a city. Allentown or Fairfax City, Virginia, both have more car dealers than the less developed surrounding county. And they really hate this. And of course, landlords can either support it or dislike it, but speculators definitely hate it. And speculation is as American as apple pie. Our first president was the biggest land speculator probably in the history of this country.

And what we wanted to do at the local level is find out who the opponents would be, because that’s the way you can sort of strangle the revolt in the crib, if you will, by describing the benefits, connecting the beneficiaries to the idea, but also debating opponents. And we had a lot of luck doing that. In Altoona, however, we always had a problem with a landowner who owned just strips of asphalt off of two interstate exchanges.

Now, if you have an interstate exchange, an exit, you’ve got high land values. And again, for nothing that you’ve done, you haven’t raised your finger to make that land valuable. You’ve just enjoyed the privilege given to you. And this landowner in Altoona fought the land value tax without mercy for 10 years. And eventually they got rid of the land value tax. They brought in a new mayor who said, oh, wow, we can’t let Buzz Connelly – that wasn’t his name; something like that, though – we can’t have him be hit.

So let’s put the taxes back on the retired steelworkers and the retired railroad workers. In a small-town government, small city government, if somebody makes a decision, it usually happens. So we’re going to go back to Altoona. It’s getting worse off now, now that they’ve gotten rid of it. But, yeah, you can find incredible bases of opposition. People that owned a side lot in Altoona, they hated the land value tax because a side lot meant that even though their house would save three hundred dollars a year, on the side lot, their taxes went up forty-five dollars a year and that was just enough to set their hair on fire.

[00:38:09.640] – Nymoen

Yeah. Well, here the most opposition we hear is from extreme property rights types who don’t like the idea of any kind of pressure being put on people to use their land in a particular way.   So we get pushback. I was meeting with one legislator who, when I got around to the slide and we talked about land having community-created value, was really taken aback by that concept.

He didn’t believe that something like community-created value even existed. And so that’s kind of the ideological opposition that we run into. It’s just not that close to being implemented here, so that kind of opposition that I think Josh has seen just hasn’t really surfaced yet.

[00:38:53.210] – Grumbine

Yeah, sure. So in the theoretical sense, what is the tenor in the country? Let me back up. As an MMT advocate and activist, the big concern that I end up finding is that the average person, the average voter, doesn’t have time to understand basic economics. And the economics they were taught in school was such garbage, you should ask for a refund [laughter] So knowing from a heterodox perspective and I would imagine even the land value tax predated a lot of these other concepts, it’s still probably considered heterodox at this point now, just simply because it’s out of the main.

Most people don’t take the time to learn this stuff. To the average person – I know this because I live and breathe it every day  – their eyes roll back. What is your experience in communicating these ideas with rank and file voters and town halls and other places you might speak?  Maybe give me some examples and some experiences that you’ve actually done similar to the Allentown story.

[00:39:57.430] – Vincent

For example, Philadelphia is again looking seriously at land value tax. And I’ve been going to the community meetings and speaking to the Chamber of Commerce, that kind of thing. But one thing that really helps and this may sound unfair to the opponents, but we try to make them the villain and you barely have to lift a finger to make them the villain. [laughter] People that are bad actors, it’s really easy. They’re not twirling their mustaches, but just about.

[00:40:33.160] – Grumbine

[laughs] Close enough.

[00:40:33.160] – Vincent

And so if somebody owns a valuable vacant lot or 12 valuable vacant lots in downtown Philadelphia, that’s millions of dollars worth of value. And if we say to the community, shouldn’t they be paying at least something towards the schools and to public safety and infrastructure? And they go, yeah, that’s a little too abstract, perhaps.

But in a lot of neighborhoods in Philly and in Washington and Detroit, Hartford – you can go on; this plays out just about all over the country and all over the world – you say to people in the community meeting, does anybody have any problem properties in your neighborhood? And of course, the hands all shoot up and everybody identifies the vacant lot, the blighted house, as a reason for their values to go down.

And that’s been proven empirically that the more blighted a lot is, no matter how well you keep up your house, your value is low. And minority communities especially are very sensitive to this, as well they should be. So if we can make a villain out of them and it’s easy, as I said, we do so. And that gets us a lot of movement because you’re identifying a villain who doesn’t live in the city, that doesn’t even live in the state, probably, and is an interloper in the worst sense of the word.

[00:42:02.640] – Nymoen

Yeah, from our experience when we were working on the LVT approach and bill, we find folks who are kind of wonkish seem to appreciate it. So, a lot of the city council members that we meet with, I mean, they tend to get it right away because they know about the speculation that’s going on in the community and they know that the existing development structure that’s in place is really kind of corrupt and inefficient.

And we’ve had success getting like the Sierra Club to support our bill because they’re fairly wonkish and they can kind of see how this helps stem sprawl and spurs redevelopment. But, yeah, just regular average people. I’ve had a hard time interesting people like that in it, but the land trust approach, they seem to really take to and I think it’s less abstract and it kind of has the appearance of a program. Because people on the left, they tend to like programs. [laughter]

They don’t really care… like it’s always secondary how are you going to pay for the program? But if you have a program, that’s something you can get behind. And a land trust – that looks like a program. So you can kind of begin introducing these concepts to them and then I think lead them down the road to the tax approach. But we’ve kind of made some inroads, I think, taking the land trust approach to it.

[00:43:20.410] – Grumbine

It’s interesting because places like Baltimore, with the row houses and the abandoned homes everywhere and a lot of these are, I guess, possessions of the city or banks. And places in particular, like York, Pennsylvania, where there’s so many abandoned row houses and the like, they’re practically giving them away to people to renovate and fix. Help me understand if any number of these… All across America, these dust towns exist. Help me build that community from a land value tax perspective.

[00:43:55.660] – Vincent

Well, in Baltimore, which is a good case because we’re studying it and we actually have a GIS project on the web that lets you fiddle with the numbers yourself and create your own land value tax in a bunch of cities across the US. But Baltimore is now… the biggest landowner is the city of Baltimore. And that’s because of what you reference, Steve.

The city has to take this property off the hands of people who just walked away. And it’s a generational thing. In Philly or Baltimore, the kids don’t want these row homes. It doesn’t seem worth it to them and so they just walk away – literally turn the key and walk away. And so the city takes them over and they come up with a “program” to echo Rich. [laughter] And the program is “We’ll sell this house to you for a dollar. And all you have to do is fix it up within three or four years and you’re good to go.”

But the problem with that is you’re releasing this property back into the current tax environment that discourages you from fixing up a property, which is why nobody really takes the city up on it. It was an interesting story last week out of Baltimore. Five years ago, we had 14,000 vacant buildings in Baltimore City. And the city just dove right in and knocked down hundreds of them, thousands of them. And guess how many vacant buildings they have now after all that? Fourteen thousand. Because the conditions….

[00:45:34.800] – Grumbine

Thank you for not making me guess by the way.

[00:45:38.670] – Vincent

Math is hard [laughter] But it’s just the fact that the environment itself, the economic environment, just precludes any band-aid fixes or applications. In my opinion, community land trusts in Baltimore ought to take up 15 percent of the land because people have been disinvesting and depopulating for so long in that city that it’s almost like a frontier. It’s almost like the margins now. So it makes sense for a community land trust.

[00:46:14.760] – Nymoen

Because most community land trusts leave the existing property tax system in place. But you wouldn’t have to do that, you could create a land trust where the trust is paying the property taxes on the properties. So that means the person who’s renting the land, they’re just paying the land rent.

And then from that land rent, the trust pays the property taxes on the property. So then you’re taking away from the individual homeowners those disincentives to improve the property. So even if you can’t shift Baltimore’s entire tax system to a land value tax, you can do it internally within the trust.

[00:46:48.870] – Grumbine

Interesting, interesting. So you talked about the Monopoly game being a single-tax game and you discussed some of these communities that were based on a single tax. Obviously, there’s politics and politics is just too screwy to even try to make a bold scientific claim on. But in a perfect world where people are logical and reasonable and make arguments in good faith, what would a single tax in the U.S. look like? Would that be a viable option? Would an LVT be a viable option for the country?

[00:47:23.160] – Vincent

I’ll just say it took us maybe one hundred and fifty years to get into this mess. It’ll take us maybe that long to get out. So that’s really all I can say about a national single tax or something like that. What I think it would do, a national single tax, for sure, is devolve power back to local and state governments.

The federal government is already screwing everything up no matter who’s in charge, and they’re just wasting everybody’s money or they’re overheating government printing presses. And so I think that the power can devolve back with a single tax. But Rich I’m sure has a more developed view than I do.

[00:48:06.390] – Nymoen

I don’t know about that. There have been efforts at the national level. I know back in Henry George’s day there were efforts to replace the tariffs with federal land value tax. And then when the income tax was first created back in 1919, something like that, it was actually intended to collect economic rent. That’s how it was designed. But in the next hundred years it kind of devolved into a wage tax.

So there’s ways you can do it. But I don’t think you could ever collect the full rental value of land at a federal level because it’s so tied to what the city is doing, what the county, the state is doing, that really those entities need to collect the greatest portion of it. The full rental rate for taxing land would be about six percent. So I could see maybe the local government gets two percent, the state gets two percent and the feds get two percent. Maybe something like that could occur.

There’s things nationally that lend themselves more to a federal approach like taxing carbon or collecting, like Josh mentioned, the full rental value of electromagnetic spectrum and what we’re doing for patents and copyrights and things like that. So I think tax bases that are more suitable to this kind of approach federally than the land value itself.

[00:49:18.000] – Grumbine

I have some good friends in the Modern Money Network that are focused on the legal perspective of money and the credit relationships that started money. And they particularly talk about time-boxing patents, really shrinking the range on them, and realizing basically the land value of creating those patents was dependent on a whole lot of other community investments. It didn’t just happen in a vacuum.

And so the idea of minimizing that is a huge thing. So when you were saying that, it was ringing in my ear, because one of the things that I wanted to say as part of this from my vantage point is: within Modern Monetary Theory, it’s really largely a lens, a discussion about the way finance works, in particular in the U.S. from 1972 to present since we left the gold standard of the Bretton Woods accord.  And so the concept of federal taxes is very different than state and local taxes.

And with the federal tax, if you’re printing money by spending money, then you’re deleting money or “unprinting” money by taxing it. It’s literally the circuit, if you will. And that’s the MMT perspective, is that taxation destroys currency and congressional spending creates currency. And so with that framework in mind, I’m envisioning a nice circuit here where the states are being able to more proportionally defend their own interests with the land value tax, while understanding the natural ebbs and flows of the business cycle, being able to be offset with automatic stabilizers at the macro federal level.

I see this is very complementary as a micro perspective to the MMT lens. I think this is a wonderful idea. I’m really excited about learning more. So with that, let me ask you guys, what are some final thoughts that each one of you might have to listeners who might be interested in learning about trusts and land value taxes? And I’ll start with you, Rich.

[00:51:17.430] – Nymoen

Oh, well, people can go to the CommonGround USA website. It’s at commonground-usa.net and you can also email us at info@commonground-usa.net. And also I always refer people to a book that came out, I think about five years ago by Martin Adams is called Land A New Paradigm for a Thriving World. So if you want, like a plain language explanation of these ideas, you can find it there.

[00:51:43.470] – Grumbine

Fantastic. And how about you, Josh?

[00:51:45.900] – Vincent

Yeah, I have a nice website and I’m working with another organization on which Rich sits as a board member, and it’s called the Center for Property Tax Reform, centerforpropertytaxreform.org. Say that twice fast. And that’s where we put up these simulations so people can kind of get a handle on what’s going to happen if a land value tax is enacted. And we’re going to use Maryland soon, because Maryland has a state property tax. So that’s going to be a wild and crazy ride as we explore Maryland.

[00:52:21.430] – Grumbine

OK, all right. Very good. Well, guys, listen, it’s been a real pleasure. I hope I can have you guys back on because I know as soon as we close this off, I’m going to have 40 million questions. And it was really a pleasure to talk to you both. Thank you so much for joining me.

[00:52:36.320] – Vincent

It was really fun. Thanks, Steve.

[00:52:38.540] – Nymoen

It was a real pleasure. Thank you very much, Steve.

[00:52:40.640] – Grumbine

All right. So this is Steve Grumbine, Josh Vincent, and Rich Nymoen, with Macro N Cheese. Thank you all so much. We’re out of here.

[00:52:54.630] – End Credits

Macro N Cheese is produced by Andy Kennedy, descriptive writing by Virginia Cotts, and promotional artwork by Mindy Donham. Macro N Cheese is publicly funded by our Real Progressives Patreon account. If you would like to donate to Macro N Cheese, please visit patreon.com/realprogressives.