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Jerome A Paris has great diary currently found on the rec list pointing out how much oil companies are struggling still with the damage done to infrastructure by Katrina.

I understand the struggle but it is not like this sort of problem hasn't happened before and been surmounted.

San Francisco was leveled in the great earthquake of 1906 and came back in a most remarkable way. Lets take a look at a way to help the citizens of New Orleans while at the same time help the energy infrastructure for the country and point the way towards progressive taxation with the help of this nifty little article  from a website calle Economicprinciples.com that looks at Mason Gaffney and his recounting of how San Fran came all the way back from destruction and how that can be applied to best rebuild New Orleans.

The article starts off
A century after the devastating San Francisco earthquake, are there lessons from that city's remarkable revival that might be useful to New Orleans today? There are, according to Mason Gaffney, professor of economics at the University of California at Riverside. San Francisco, 1907 to 1930, was a case study in born-again disaster recovery...

Gaffney goes on

"San Francisco bounced back so fast its population grew by 22% from 1900 to 1910, in the very wake of its destruction; it grew another 22% from 1910 to 1920 and another 25% from 1920 to 1930, becoming the tenth largest American city. It did this without expanding its land base, as rival Los Angeles did, and without stinting its parks. Its rail and shipping connections were inferior to the major rail, port, and shipbuilding complex in rival Oakland, and even to inland Stockton's. It was hilly; much of its flatter space was landfill, in jeopardy both to liquefaction of soil in another quake and to precarious land titles. Its great bridges were un-built, so it was more island than peninsula."

I didn't know this, but allegedly at the time, the city where Tony Bennett left his heart

was known mainly "for eccentricity, drunken sailors, tong wars, labor strife, racism, vice, vigilantism, and civic scandals.

If the Bad News Bears was a city it sound like it was San Francisco pre earthquake. So what happened?

Before I go on let me say that I am a Henry George guy, I am a Georgist, whatever that means, until recently I sat on the board of the Robert Schalkenbach Foundation - a Georgist organization and I'm co-producing a film (we have a distributor and everything) about poverty and its causes and solutions with a Georgist perspective - more on that another time.

Back to the story, George - the man who invented the term "progressive" and who wrote the best selling book on economics ever "Progress and Poverty" was a true original economic thinker and political philosopher who was at first deified and then vilified after his death by the economic cognocenti. One of Georges followers,Edward Robeson Taylor  got elected Mayor in 1907.



Henry George? Edward Robeson Taylor? A generation of Americans born after the Civil War, at least a certain subset of them, accorded Henry George the status of economic prophet that a later generation reserved to John Maynard Keynes. George's great book, Progress and Poverty, appeared in 1879, at a time when Americans felt themselves at the mercy of economic forces they could neither understand nor control.

George argued that a single tax on land, exempting labor, buildings and other forms of capital, coupled with government prizes for invention and innovation (instead of patents) were a surer way to stimulate growth and insure an equitable distribution of income and wealth than were the more complicated schemes of income taxation then just coming into vogue.

I happen to not believe that a single tax on land would work now for lot of reasons but I do beleive it should be a massive part of a progressive taxation plan that would radically reduce personal income but force productive use of common resources and create loads of jobs and jumpstart the economy.

sorry about the little interjection...

Asks Gaffney, "If you had been a partner in writing Progress and Poverty, and composed its call to action, and become mayor of a razed city with nothing to tax but land value, what would you tax?"  And that is exactly what Taylor did.  He raised the assessment on land to replace the part of the tax base that had been lost in the fire. The city's credit was restored; it immediately began borrowing to restore infrastructure. Taylor gave way in 1909 to James Rolph, who continued in his footsteps for 19 years, building city-owned water facilities, tunnels, street-cars lines and a Civic Center. The result was density:  tightly packed residential housing and taller buildings with more mass transit.

How exactly did single tax work its magic in San Francisco? In modern-day language, it solved a coordination problem. It forced people to get the most out of the land by building on it. (What is a skyscraper, goes an old saw, but a machine for getting cash out of the ground?) Taxing land disproportionately was a way "kindling a new kind of fire under landowners to get on with it or get out of the way," says Gaffney.

In 1907, single-tax ideas were in the air. Cleveland, Detroit, Toledo, Milwaukee, Chicago, Vancouver and Houston all had mayors who insisted on taxing buildings less and land more. "It was the golden age of American cities, when they grew like fury, and also with the grace of the popular 'City Beautiful' motif," Gaffney says.

The article closes

To help New Orleans, Gaffney recommends strong dose of Georgist tax policy, based on San Francisco's experience and designed to revive the private sector of the city --begin by adjusting tax assessments to tax land more heavily than the buildings that may rise on it. Plow the proceeds into public works for the city -- and rely on the federal government to invest in better flood controls for the mighty river. New Orleans city voted Saturday on a field of 24 candidates. A runoff for the top two vote getters is scheduled for May 20. That is time enough to compare the candidates' positions on city tax policy.

Look, this will work. People have already bought land in NO speculating on land value to go up. This method of taxation can be a total savior for the Crescent City and implemented in even small ways in other cities as a replacement for other taxes - dead downtowns nationwide will be revitalized. Places like Detroit and Buffalo would come back. This mode of taxation has worked incredibly well in cities around Pennsylvania. Philadelphia is slated to start implementing this taxation next year and this method has been used around the world with similar positive effects.

Originally posted to stillman on Mon Jun 26, 2006 at 09:07 AM PDT.

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Comment Preferences

  •  ok (1+ / 0-)
    Recommended by:
    mariva

    I'm going to need a little more time to think about this one than I have at the moment.....bookmarked....

    You are not the Kingpin of me

    by Buffalo Girl on Mon Jun 26, 2006 at 09:09:38 AM PDT

  •  problems... (2+ / 0-)
    Recommended by:
    Buckeye BattleCry, mariva

    ...rely on the federal government to invest in better flood controls for the mighty river.

    1. "...rely on the federal government...":

    That would be the US government, right? The same government that we were talking about when we said, "They're not coming."

    1. "...flood controls for the mighty river."

    That would be the Mississippi River, right? The same River that had basically nothing to do with the flooding in NOLA and surrounds after the storms. Alotta folks don't understand that the River wasn't the problem, the storm surge from the Gulf breached the levees.

    •  fair enough (2+ / 0-)
      Recommended by:
      mariva, luckydog

      we need to be assuming a non-ignarant federal government..

      but what you bring up doesn't undermine the structural argument about how to raise revenue for the city.

    •  Well, the great Mississippi did have an influence (3+ / 0-)

      Because of the manmade engineering of the river thwarted the natural processes that built the delta in the first place, the wetlands and the actual land of the delta has been vanishing for decades. So the flooding and storm surge were worse than they would have been without man's helpful tinkering.

      Can the delta and wetlands be brought back(rebuilt?)?  Yes, but it will take radical change and more decades.  There is no fast fix.

      We must never lose it, or sell it, or give it away. We must never let them take it from us.

      by Fabian on Mon Jun 26, 2006 at 09:30:30 AM PDT

      [ Parent ]

      •  Fast fix... (1+ / 0-)
        Recommended by:
        NOLAWitch

        ...in this situation, when I see "fast fix", I think of Rovian fast fixes on republicrony contracts. Rovian fast fixes on painting the needs of citizens as "the dole". Rovian fast fixes on shifting responsibility. Rovian fast fixes on morphing the tragedy of citizens into opportunities for cronies.

        You're right, there is no fast fix to the problems, except the problems of the republicronies.

    •  luckydog, (0+ / 0-)

      if you get a chance, please drop me an email - I have something to ask you.

      Sorry for the off-topic comment.  You may now return to your regularly scheduled program.

      Saint, n. A dead sinner revised and edited. - Ambrose Bierce

      by pico on Mon Jun 26, 2006 at 09:35:45 AM PDT

      [ Parent ]

  •  I'm a little skeptical (3+ / 0-)
    Recommended by:
    Fabian, sbdenmon, mariva

    of comparisons to San Francisco, but at this point I'm willing to keep an open mind about a lot of things.

    The article is correct that San Francisco was a little backwater town of vice and sin, so the parallel to New Orleans isn't totally off - except that San Francisco had an economically vibrant town right across the bay, and reaped the side-effects of that.  New Orleans has nothing - it is the economic center of the increasingly poor river delta/gulf coast, an area that was in serious decline long before the hurricane.  Without a strong economy anywhere nearby, more and more businesses were fleeing the region years ago.  

    But, like I said, I'm not an economist by a long shot, so let me do some research on this, and I'll get back to you.

    Thanks for the thought-provoking diary.

    Saint, n. A dead sinner revised and edited. - Ambrose Bierce

    by pico on Mon Jun 26, 2006 at 09:17:42 AM PDT

    •  I grew up along the gulf coast and (0+ / 0-)

      know quite a lot about the poverty in the deep south.  Guess what?  AL, MS, and LA have some of the lowest land taxes in the USA.  The low land tax is the cause of the poverty, not the result.  Everywhere you look you will see the correlation: A Low land taxes is connected with widespread poverty.

      Some places like CA once taxed land heavily and prospered but have since greatly cut land taxes.  CA is on the slow but certain downward trajectory of Mississippi and Lousiana with ever tightening land monopolies.  Those land monopolies lead to ever higher housing costs and ever lower wages, and ever richer uber-class, ever more out of touch with ordinary realities.  

      Geonomist - Impeachment and conviction---the beginning of an American renewal.

      by Geonomist on Mon Jun 26, 2006 at 11:17:28 AM PDT

      [ Parent ]

      •  Correlation or causation? (0+ / 0-)

        Are you saying that low land taxes are the reason for poverty in the area?  I understand they may correlate, but I don't understand how low land taxes have convinced businesses to relocate to other areas of the country.

        Saint, n. A dead sinner revised and edited. - Ambrose Bierce

        by pico on Mon Jun 26, 2006 at 12:14:17 PM PDT

        [ Parent ]

        •  Speculators (1+ / 0-)
          Recommended by:
          pico

          There are three factors of production and each has it's income.

          Labor -->Wages
          Capital --> Interest
          Land --> Rent

          When the tax on land is low, speculators, seeking a tax haven for the wealth, will sink it into land. This removes that land from production, leaving less opportunity for everyone. Less factories. Less housing. less everything.

          This also causes the rents of the land to increase, driving the poor to the margins. Driving factories away towards lower rent areas. Driving wages down.

          When the rents increase, the speculators begin a building spree, condo's, residential complexes, huge urban sprawl areas. See my post here for more detail. Rents go down. Speculators sell. The market crashes and we have a recesion.

          Drive around your area if you are in a city and see if you see any chained off empty lots. If you live in the suburban areas, drive around and see what the pattern of development is. Does it seem to "skip over" places? like a checkerboard. If you live in the country, see if you can find old farms just sitting there, hundreds of acres just lieing dormant.

        •  Of course for correlation to imply (2+ / 0-)
          Recommended by:
          stillman, pico

          causation there must be a sensible theory to connect the two.  Classical rent theory has always tied them together.

          With persistent poverty the cause arrows do become complicated and self-referencing.  Poverty leads to despair, leads to school dropouts, leads to substance abuse and broken families, yadi, yadi.  The linkages are never exact at the person level but are grindingly connected in a statistical sense. The results of poverty feed other economic causes into a hopeless downward spiral.  Places with beaten down, uneducated, alcoholic people tend to not attract available investment capital.  Places with concentrated ownership and power tend to become corrupt in other ways, all leading to further deterioration.

          It is the right wingers who are generally abusing correlation=causation connection by always trying to posit the consequences of poverty with the root-level cause.  

          But pick any inpoverished county anywhere in the USA and I will bet you a lot of money that one thing you are certain to find is highly concentrated land ownership....always.

          Geonomist - Impeachment and conviction---the beginning of an American renewal.

          by Geonomist on Mon Jun 26, 2006 at 01:00:35 PM PDT

          [ Parent ]

  •  interesting... (0+ / 0-)

    probably the first step, in my mind, is to get a handle on the national political situation.  as long as we have a president and a congress who view the destruction of new orleans as an advantageous political situation, we will never be able to get real rebuilding accomplished.  

    once that happens, however, this could be an interesting way to kick-start the economy of the whole area.  there is so much potential in my old homeland; we just have to get people in office who can see that.

    "our politics are our deepest form of expression: they mirror our past experiences and reflect our dreams and aspirations for the future." - paul wellstone

    by liberalsouth on Mon Jun 26, 2006 at 09:28:29 AM PDT

  •  Is this what we really want? (0+ / 0-)

    It forced people to get the most out of the land by building on it. (What is a skyscraper, goes an old saw, but a machine for getting cash out of the ground?)

    Beware of unintended consequences. Do we really want to destroy the special and unique character of New Orleans in the process of saving it?

    Lying can never save us from another lie - Vaclav Havel

    by Muwarr90 on Mon Jun 26, 2006 at 09:32:33 AM PDT

    •  obviously zoning still would be in place (0+ / 0-)

      NOLA shouldn't become office tower central but the point is that building and having an incentive to build   generates capital and jobs etc.

      remember also that open space creates value as well...it is why homes near parks are so valuable as well as businesses near infrastructure hubs or valuable locations.

      •  Zoning (1+ / 0-)
        Recommended by:
        Catte Nappe

        But if I'm going to get taxed the same no matter what I build on the land, am I going to build a modest home that lower income people can afford, or am I going to build the biggest McMansion I can?

        This is a recipe for wholescale gentrification.

        Lying can never save us from another lie - Vaclav Havel

        by Muwarr90 on Mon Jun 26, 2006 at 09:43:08 AM PDT

        [ Parent ]

        •  i can see how you would think that (0+ / 0-)

          but it hasn't worked out like that where this has been implemented. check out urbantools.net

          first of all McMansions are a creature of suburban sprawl so they aren't an issue for the city of new orleans.

          the tax will vary based on assessment and location. so neighborhoods will have the same tax rate but not the whole city neccessrily.

          but also when this tax has been put into place and it spurs building...it increases supply and takes speculation out of the equation. prices for land drop and stabilize and rental prices drop as well.

          •  An example (1+ / 0-)
            Recommended by:
            Catte Nappe

            Lets say I owned a small house in a modest neighborhood. It was one of the smaller houses on the block.

            With this new tax scheme, can I afford to rebuild my small house? Not if it is going to be taxed at the same rate as my larger neighbors.

            This plan will homogenize neighborhoods, eradicating much of the smaller scale texture that makes for vibrant communities.

            Lying can never save us from another lie - Vaclav Havel

            by Muwarr90 on Mon Jun 26, 2006 at 09:56:28 AM PDT

            [ Parent ]

            •  sure you can (0+ / 0-)

              your improvements wont raise your taxes because the tax is based on the location not the structure sitting upon it.

              also homes would be taxed at a different rate than businesses.

              again, i see your concern about homgenized neighborhoods (as bad in milkas it is in cities) but history just doesn't bear it out. where this mode of taxation has been put into place neighborhoods are more diverse building wise because ther is no penalty tax-wise for improvements.

              as it stands now thee is a disincentive to improve your home because in x years your home will be re-assessed and your taxes will go up.

            •  housing prices (0+ / 0-)

              With the Land Value Tax (LVT) your taxes will go down as your improve your home.

              lets say your house is 100,000 dollars with 1,000 of tax per year, so 1% of the total value.

              If you build on your house and double its value to 200,000 you still play 1,000 in tax, or .5% of the total value.

              •  That's my point (0+ / 0-)

                Encouraging people to build out their lot to the maximum is not always a good thing.

                Lying can never save us from another lie - Vaclav Havel

                by Muwarr90 on Mon Jun 26, 2006 at 11:09:31 AM PDT

                [ Parent ]

                •  It depends... (0+ / 0-)

                  ... on how you are defining "build out your lot"

                  Now, no one is going to argue with that each lot filled out with a 20 story apartment would be bad. That is clear.

                  But, lets take a look at farmland. Most people at least visit the countryside and some of us live here. If you drive around, what do you see? Empty abandoned barns, stagnant fields (possibly collecting government rents) and huge agri-corps. The family farm, a life which I grew up, is disapearing in favor of the huge agri-corp.

                  Now, huge agri-corps happen to have extremelly low capital / land ratios, small family farms have high capital / land ratios. We tax capital, not land, we push more land into the hands of the agri-corps.

                  "build out your lot" will change for each parcel land, and for each owner because different value things differently. For some people and in some places this will mean growing corn on 20 acres and for others it will mean having 250 acres of timber full of whitetail deer and for still others, in the inner city, it will mean building that 20 story office building.

                  Drive around in your local neighborhood or the country and ask yourself how many things just "don't make sense".

          •  Suburban sprawl? (0+ / 0-)

            Then why am I being afflicted with McMansions in my little middle class near-inner-city neighborhood?

            Practice absurdus interruptus - Support ePluribus Media.

            by Catte Nappe on Mon Jun 26, 2006 at 10:07:21 AM PDT

            [ Parent ]

            •  i would need to see you local assessments (0+ / 0-)

              to be sure but i would heavily suspect it is because because of poor and inefficient use of land in said city. Possibly tax abatements might be a cause as well... in New York certain types of housing gain X year tax abatements.

              •  The reason we have inner city McM's is this (0+ / 0-)

                your improvements wont raise your taxes because the tax is based on the location not the structure sitting upon it.

                Property tax here is largely based on the value of the structure, not the value of the land.

                1554 Sq Ft house, valued at 284K, taxes 7K
                Similar house across the street torn down and replaced by:
                3470 Sq Ft house, valued at 511K, taxes 15K

                Regardless, your observation that this is a "suburban" creature is in error. McMansions are impacting numerous inner/near inner neighborhoods all over the country.

                Practice absurdus interruptus - Support ePluribus Media.

                by Catte Nappe on Mon Jun 26, 2006 at 10:47:12 AM PDT

                [ Parent ]

                •  well you have described the problem (0+ / 0-)

                  since the taxes sit largely on structure.

                  see comments below regarding Sydney.

                •  McMansions... (0+ / 0-)

                  require a lot of land to sit under them also, remember and around them. Do you see many of those without huge sprawling yards, cul-de-sacs and so on? Probably not.

                  Two, sprawl happens because we subsidize sprawl through our building massive highways at the expense of the inner city. The wealth from the inner-city is drained to the outerlieing area without ever taxing the sudden windfall gain that the govenrment bestowed on those near the highway. See the Denny Hastert scandel for an example or go to my blog to read up on it if you haven't seen it.

                  Three, speculators within the city buy up land and withhold it from use preventing any development. They are awaiting a similar windfall, like a large stadium to be built or something else.

                  Fourth, I'm not sure I understand you example in the above, it seems as though you are contradicting yourself to me, but maybe I am not reading it as you intended.

                  •  Yes, bunches (0+ / 0-)

                    Do you see many of those without huge sprawling yards

                    I hope to cover all four of your points here.

                    Speculative developers have taken to buying up homes in older, but still well-maintained, neighborhoods. They then tear down the previous structure and build a McMansion on the property. Yes, it uses up much of the land under it, so there is no sprawling yard. Some have almost no "yard" at all; although there is often a bit of "front" left in order to pave a circle driveway. They loom over the yards of their neighbors, cause run-off onto neighbor property, and other unpleasant effects. My example above is of two properties immediately across the street from one another. Originally pretty much identical in lot size and original home structure. One remains the same single story dwelling around 1500 sq.ft. The new McMansion is two story and totals 3470 sq.ft. It has an "interesting" effect on the character of the neighborhood when you have a mix like this.

                    Practice absurdus interruptus - Support ePluribus Media.

                    by Catte Nappe on Mon Jun 26, 2006 at 11:30:31 AM PDT

                    [ Parent ]

                    •  question (0+ / 0-)

                      because I don't know and don't want to presume anything...

                      Do you consider:

                      It has an "interesting" effect on the character of the neighborhood when you have a mix like this.

                      a good thing or a bad thing for the neighborhood?

                      You know the this place, not me after all ;)

                      •  A matter of persepctive I suppose (0+ / 0-)

                        "Interesting" was placed in quotes, because from my perspective (living in one of those smaller single story homes) I am not excited to see the McMansions going up in the area. Not a good thing for my neighborhood - ambience, character, home value, water run-oof effects, etc.

                        On the other hand, I suppose if I had dreams of owning a 500-600K McMansion with no yard, near downtown, I would be watching the area with a different level of interest in hopes that many of more McMansions would come into being so I could have one of my very own.

                        Practice absurdus interruptus - Support ePluribus Media.

                        by Catte Nappe on Mon Jun 26, 2006 at 11:41:16 AM PDT

                        [ Parent ]

                        •  I think you just hit the nail... (1+ / 0-)
                          Recommended by:
                          stillman

                          ... on the head.

                          As time goes by, in your neighborhood for whatever reason. Maybe a new road went in, maybe your area has become "trendy", maybe it has become known as being a safe area to live, etc. more and more speculators will look with eyes of wolf on the hunt towards the property going for sale. Some of those homes will get knocked down and cookie cutter homes will go up in their place. The point that you can observe this right now is critical and frankly, most people don't actually see it happening until they can no longer afford their homes.

                          Now, maybe this one home is just a fluke and, frankly, we are never going to stop they guy down the road from painting his house hotpink if he wants to (i actually had a neighbor who did that as revenge towards another neighbor. heh) Anyway.

                          the way the system is set up now, it actually favors those who have a lot of money regardless who values the lot the most.

                          here is an example, very easy to follow.

                          Lets say there are two people, rich and Jamie. Jamie is poor, rich is rolling in it. Jamie really values this particular lot and needs a loan. Rich also values this lot, but not as much as jamie, and he also needs a loan.

                          Rich believes he can get an income of 300 dollars from this lot. Jamie is poor but is really productive and believes he can get an income of 600 dollars because he has a great business idea. Who will the land go to? Let's see.

                          Rich:

                          Rent(R) = 300
                          Interest (i) = .05

                          Value (V) = 6000

                          Jamie

                          Rent(R) = 600
                          Interest (i) = .20

                          Value (V) = 3000

                          jamie looses, the speculator gets the land. Too bad, so sad. No jobs created.

                          But, lets see what happens when we tax land.

                          If we tax the rental value of land, then the rental value is R- T and so V = R-T / i

                          Lets start with a tax of 100 dollars on the rent.

                          Rich

                          Rent(R) = 300 -100 = 200
                          Interest (i) = .05

                          Value (V) = 4000

                          jamie

                          Rent(R) = 600 – 100 = 500
                          Interest (i) = .20

                          Value (V) = 2500

                          Now with a 200 dollar tax

                          rich

                          Rent(R) = 300 -200 = 100
                          Interest (i) = .05

                          Value (V) = 2000

                          jamie

                          Rent(R) = 600 – 200 = 400
                          Interest (i) = .20

                          Value (V) = 2000

                          So, any tax > then 200 in this scenario will cause the land to go to the most productive user of the land. Interesting, no? Now, in real life there are many bidders. Sometimes the most productive person is the wealthiest person. Sometimes, however, the most productive person is least well off and sometimes it's the family in the little neighborhood who doesn't like salt run off.

                          •  Not a fluke (0+ / 0-)

                            It is not just one home. I just did a typical pairing for an example. Depending on the street or general neighborhood it is somewhere between 5%-40% of homes.

                            As to the most "productive", that has to be our version of Rich. Whether or not good ole Rich makes a profit on building and selling his McMansion (we presume he does, or he wouldn't keep buying/demolishing/building), the city and county are quite happy to have the taxes jump from 7K to 15K.

                            Practice absurdus interruptus - Support ePluribus Media.

                            by Catte Nappe on Mon Jun 26, 2006 at 12:21:26 PM PDT

                            [ Parent ]

                          •  Not rich (0+ / 0-)

                            As to the most "productive", that has to be our version of Rich.

                            Take a look at those houses again, and tell me, after adding up all those costs, do you think they are more "productive" then anyone else? By what you have told me, I sincerely doubt it. Frankly, they sound fairly waistful to me.

                            the city and county are quite happy to have the taxes jump from 7K to 15K.

                            ahh, and here you have found another truth.

                            if only land was taxed and not buildings, would the city and county have an incentive to propel this sort of sprawl? You can complain all you won't vote for them now, but they don't care, because others will move in who will vote for them.

                            The fact is, a land tax would keep out those speculators and would keep it in the hands of people who deserve it.

                  •  McMansions don't necessarily require large lots (0+ / 0-)

                    Where I live, an hour from NYC, I've seen older homes on 2-acre lots torn down and replaced with, in one case 4 large boxy colonials, facing each other in pairs, and, in the other case, 12 new homes tucked onto a cul de sac, the last of which is on the market for $1.2 million.  If I recall correctly, the old house on 2 or so acres sold for about $600, and the site required a lot of blasting.  The resulting houses are rather attractive, and most have sold quickly, though I couldn't imagine paying that much for them.  

                •  Value the land first (1+ / 0-)
                  Recommended by:
                  Catte Nappe

                  Land is often a lot more valuable than assessments would suggest.  Investors would prefer that most of the value appear to be in the building, because they can depreciate the building, but they can't depreciate the land.  So assessors tend to oblige them, and value the land low and the building high.

                  When there are teardowns in the neighborhood (not in New Orleans situation, but in a more normal state of affairs), it is an indication that the sites are very valuable and the older houses are becoming obsolete, at least in the minds of some buyers.  

                  When builders can't find virgin land to build on, they start looking for other sites on which to build, and look for the best location with the least valuable structure on it.  While this is not precisely true, one way to look at a teardown is that the old house was valued at $0 and the entire purchase price was for the site.  In addition to that, the buyer pays for the demolition and removal, and it would be fair to say, after, say three or four of these in a neighborhood, that the value of a building site there is the average of the sum of those purchases plus some allowance for demolition and removal.  

                  The value of the other houses in the neighborhood is the difference between what they would sell for and the value of the land itself.  Where I live, raised ranches and split levels seem to be the prime tear-down candidates.  I don't know whether they weren't well built in the first place, or have simply fallen out of fashion, or whether builders will just buy whatever sites they can get.

                  •  Good overview (0+ / 0-)

                    And as you will recognize, it is not pelasant to be in a neighborhood where your perfectly nice, but no longer "fashionable" house, is now de facto valued at $0.

                    It is all the more distressing that this sort of neighborhood adjustment is happening at the same time as we get a report of serious reduction in middle class neighborhoods, global warming impacts, etc.

                    Practice absurdus interruptus - Support ePluribus Media.

                    by Catte Nappe on Mon Jun 26, 2006 at 11:35:55 AM PDT

                    [ Parent ]

                    •  Change can be upsetting (1+ / 0-)
                      Recommended by:
                      stillman

                      I've lived in my present town for over 30 years, and have watched the changes that have taken place here.  Neighborhoods near downtown that contained older single family homes that still looked quite fine to me gradually became multi-family housing and/or office building neighborhoods.  I still miss some of the old houses.  

                      A column in the local paper, written by an elderly gent who grew up here goes back many more years than I can describing what neighborhoods were like in his childhood.

                      Where I live, there is one-acre zoning, and wells and septic systems, and the local property owners association is trying to get laws written that will prevent sewers and city water from ever being extended into this area.  I find that ridiculous.  If the residents of our area fifty years ago had tied the hands of the future the way these people want to, most of them wouldn't have a place to live here now.  And besides, most of them won't be here 50 years from now.  We're all just passing through. Neighborhoods change.  More people want to live close to the center of things, and farmland gives way to single-family residential, which may give way to smaller lots and then to multifamily residential and to commercial uses of various kinds.

                      We should encourage those incentives which prevent checkerboarding and leapfrogging, and promote more density where infrastructure already exists.  Many neighborhoods that consisted of single-family homes when I came here now are dense with condos and townhouses, which house many more people than lived there formerly.  Is this tough on folks who come back to visit, in search of the place of their childhoods?  Yes, most likely.  But many more peoples' needs for an affordable place to live are being met, and many more people are avoiding long commutes, and those strike me as good things.   The land is being used more intensively to serve human needs.

                      •  Density (0+ / 0-)

                        Density is a goal our city is supposed to be pursuing. Of course, there is no increase in population density when you are replacing single family homes of 1550 sq ft with other single family homes of 3470 sq ft. And it is not expanding the housing options for more people to have affordable places to live when the single family homes of 284K are replaced by single family homes of 511K.

                        I will admit to being and old fud who doesn't like this particular change. Not because I miss the haunts of my childhood, but because my single most valuable asset is at risk of losing substanital value. And a move to an equivalent home elsewhere would mean moving from near downtown and a 10 mile commute to work to some suburb with a 30+ mile commute to work. Except, there isn't an equivalent home elsewhere because of the custom improvments we have made over the years, and those would be lost as well.

                        Practice absurdus interruptus - Support ePluribus Media.

                        by Catte Nappe on Mon Jun 26, 2006 at 12:29:27 PM PDT

                        [ Parent ]

        •  responding to incentives (1+ / 0-)
          Recommended by:
          stillman

          If you are going to be taxed the same amount whether you build a cottage or a four-family, you might be very tempted to build the four-family, if zoning permitted -- assuming that you felt that your investment there was safe.

          In the process, you'd be creating housing for three other families or individuals, and likely making the neighborhood a better place for everyone.

          •  And.. (1+ / 0-)
            Recommended by:
            Catte Nappe

            If most of my neighbors come to the same conclusion, completely changing the character of the neighborhood. That's the risk.

            Lying can never save us from another lie - Vaclav Havel

            by Muwarr90 on Mon Jun 26, 2006 at 11:10:58 AM PDT

            [ Parent ]

            •  It depends... (0+ / 0-)

              ... Do you realy like your neighborhood the way it is and do you like the charector and is there absolutly nothing you would ever change about it?

              There is a good chance that all your other neighbors feel the same way. Maybe one or two don't, but they will improvments which willl make sense for the neighborhood.

              Maybe a larger garden, for example. Maybe a new garage. Maybe a new addition in the back. Maybe new trees down the lane. Maybe that house that never gets painted will finally get painted. It just depends.

              •  So your assumption is.. (0+ / 0-)

                That most neighborhoods in New Orleans are flawed and need to be "fixed".

                Your plan isn't about recovery then, it's about wholesale redevelopment.

                Lying can never save us from another lie - Vaclav Havel

                by Muwarr90 on Mon Jun 26, 2006 at 11:23:59 AM PDT

                [ Parent ]

                •  On the contrary... (0+ / 0-)

                  ... my point was if people like thier neighborhood the way it is, they will not change it. I said:

                  is there absolutly nothing you would ever change about it?

                  There is a good chance that all your other neighbors feel the same way <as you>. Maybe one or two don't, but they will <make> improvments which willl make sense for the neighborhood

                  It depends on the people living there, like anything else. Under the above scenario, the neighborhood would not change because that is how people value it.

        •  Much of the problem with McMansion (1+ / 0-)
          Recommended by:
          eire1130

          construction is actually driven by land speculation across an entire city.  A few neighborhoods become "hot" and builders want to make the most out of the situation.  But the reason that a given neighborhood "pops" into a gentrification state is because so much urban land is generally held undeveloped, or grossly underdeveloped.  A land tax (withoug building taxes) would smooth out development pressures.  As a city grew all neighborhoods would gradually grow more dense with the close in areas becoming the most dense.  The process would happen slowly and evenly creating very liveable cities.

          Geonomist - Impeachment and conviction---the beginning of an American renewal.

          by Geonomist on Mon Jun 26, 2006 at 11:04:37 AM PDT

          [ Parent ]

        •  why do we get McMansions? (0+ / 0-)

          I think one of the reasons we get McMansions is that builders seem to maximize their profit on a spec house when they build a house that will sell four about four times whatever they paid for the land.

          With land costs rising, the size of the house they must build to maximize their profits rises.   Where land is expensive, you don't see modest new houses being built on largish lots.

          But if you can do things that bring down the price of land, the builder will be able to maximize his profit with a smaller house on the same property.

          So in many places, it may be that large-lot zoning is helping to drive the builder's profit structure and forcing him toward McMansions, even if there aren't all that many people who can afford to buy, furnish, clean, heat and cool a McMansion.  

          I've never been able to get a handle on why that 4:1 ratio seems to hold, but I've seen it quoted by a lot of people now.

          A recent Federal Reserve Board study showed that across 46 of our major metropolitan areas, for single family housing, land was, on average, about 50% of the total property value in 2004, up from 32% in 1984.  For New Orleans, the figure was 46.6%, up from 28.6% in 1984. (Table 6e, at http://www.federalreserve.gov/...

          For newly built houses, the ratio tends to be lower, and for older houses, the ratio tends to be lower, partly because the houses themselves are smaller and have depreciated and partly because older houses on average are closer to the center of things and therefore sit on more valuable sites.   They have city water and sewers, establish schools, transportation systems, shopping and other services, etc., already in place, not to mention many potential places of employment, and most people would prefer to live there if they can afford to, even though (or sometimes precisely because) they have less land to call their own.

          But if an owner is not going to penalized at all, or not going to be penalized much by a property tax that relates to building value, he is far more likely to build the best house he can given zoning constraints, and in a dense place, that may very well be a multi-family building.  Over time, neighborhoods tend to become denser.

      •  along that line (1+ / 0-)
        Recommended by:
        stillman

        Central Park and at least one of the major parks in Chicago are there largely from the efforts of georgists.

    •  Can you build UP in NOLA? (0+ / 0-)

      Wouldn't you have to sink very deep pilings in order to support tall buildings?  

      We must never lose it, or sell it, or give it away. We must never let them take it from us.

      by Fabian on Mon Jun 26, 2006 at 10:25:11 AM PDT

      [ Parent ]

    •  The land tax would work to preserve (1+ / 0-)
      Recommended by:
      stillman

      local character in most cases.  By taxing buildings we punish anyone for creating anything beautiful, while rewarding people for tearing down old structures.  

      Geonomist - Impeachment and conviction---the beginning of an American renewal.

      by Geonomist on Mon Jun 26, 2006 at 10:55:04 AM PDT

      [ Parent ]

      •  Bcakwards (0+ / 0-)

        A land tax rewards you for building every last allowable square inch of building area. It punishes you for building a smaller home. It taxes both exactly the same.

        Lying can never save us from another lie - Vaclav Havel

        by Muwarr90 on Mon Jun 26, 2006 at 11:12:58 AM PDT

        [ Parent ]

        •  but... (0+ / 0-)

          ... in some places small buildings don't make sense. For example, in manhatten. What if someone built a doublewide modular on the corner on Houston? or on 4th, positivly even.

          In the country small homes make sense for those that want them. Right now, it is backwards. We have people buildings shacks in the inner city and huge mcmansions out in the country.

          •  Again, you make my point (0+ / 0-)

            You don't want to save the unique and precious New Orleans that was, you want to create a new "better" denser New Orleans, changing it beyond recognition.

            Lying can never save us from another lie - Vaclav Havel

            by Muwarr90 on Mon Jun 26, 2006 at 11:26:27 AM PDT

            [ Parent ]

            •  again... (0+ / 0-)

              ... that's not the case. If people value it a certain way,

              the unique and precious New Orleans that was

              then that is how it will be.

              •  No (0+ / 0-)

                Because you are radically changing the economics of land developement, many people may no longer have a choice to keep things the way they are. Yopu are making it more expensive for people who want a less dense neighborhood, you are tilting the playing field against them.

                Lying can never save us from another lie - Vaclav Havel

                by Muwarr90 on Mon Jun 26, 2006 at 11:35:47 AM PDT

                [ Parent ]

                •  but that is tbe beauty of it (0+ / 0-)

                  it doesn't do that at all. Because those who wish to live in a more dense atmosphere will move to areas that are more dense.

                  From one of your prior examples, people who choose to live in the neighborhood they are in now, chose it speccificaly because they liked it compared to all other neighborhoods that were available.

                  The land in an area where there are family houses is not as valuable as the land in the urban center where the skyscapers and buisness complexes are found. Most likely, your taxes would actually go down and no one in neighborhood wold get punished. urbantools.net and the maryland land tax project have both done studies indicating that most family homes (around 80%) would see a tax decrease.

        •  A land-only tax simply removes (0+ / 0-)

          the dis-incentive for building due to taxes.  The owner always has an inherent dis-incentive to build out of proportion on the high side to the value of the land.  It costs more to build vertically or more extensively.  Nature's laws, not man's.

          The absense of a land tax emphatically encourages (in most cases) the underuse of the site.  If population is rising at all, then land values will also eventually rise.  There is more to gain by waiting than by using the site.  Why risk any more development than is needed to cover the low land tax?

          The combination of high building taxes and low land taxes has destroyed vastly more beautiful old buildings in the USA than a land tax ever would.  Most visitors are familiar with the lovely French Quarter in NO.  Did you know that most of the area west of Canal Street that is now empty parking lots was once practically as beautiful and unique?  Those hundreds of beautiful buildings were torn down because the buildings were taxed while an empty parking lot was not taxed at all.  The same process destroyed the beautiful areas of west Mobile, AL and central Montgomery, AL, two areas I am particularly familiar with.  What has been lost from our current insane tax strucuture is tragic beyond words.  It may be that a land only tax would occassionally result in a loss of a lovely historic structure, but many fewer would be lost with a land-only tax system than with our current tax systems.

          Geonomist - Impeachment and conviction---the beginning of an American renewal.

          by Geonomist on Mon Jun 26, 2006 at 11:46:21 AM PDT

          [ Parent ]

  •  Lousiana tax income booming (0+ / 0-)

    The state predicted that tax collections would plunge by almost $900 million this year, and it slashed spending to match. Instead, a record $9.2 billion is on track to be collected by the time the budget year ends on June 30, and at least some of that tax flow looks as if it is likely to continue.
    Part of the upswing has come from gamblers dropping more dollars at casinos and video poker machines. More has come from higher oil and gas prices, which not only increase the state's taxes and royalties, but also increase profits in the petrochemical industry, which is a vital part of the Louisiana economy.
    But the biggest surge has been in sales taxes, as hurricane victims have used federal aid, insurance proceeds and their savings to replace items as varied as socks and SUVs. Officials forecast that the state will end up with almost $500 million more in sales tax revenue than they expected before the storms hit.

    http://www.dallasnews.com/...

    Practice absurdus interruptus - Support ePluribus Media.

    by Catte Nappe on Mon Jun 26, 2006 at 10:15:13 AM PDT

  •  When Progressives get serious about (3+ / 0-)
    Recommended by:
    stillman, hoolia, eire1130

    building a comprehensive and coherent economic philosophy we will eventually return to Henry George's ideas with a touch of modernization.  Tax privileges in naturaly resources and get rid of taxes on productive activities.  I.E, tax land values, broadcast spectrum, pollution privileges, mineral rights, fishing privileges, Utilitiy rights of way, railroad rights of way, and aircraft landing privileges.  Get rid of taxes on sales, buildings, income, and wages.

    When you understand what to look for you will see the vital importance of taxing land values heavily.  Everywhere throughout history the principle holds: cities and regions that tax land heavily thrive; where land is not taxed poverty rules.  This may sound like an exageration but look carefully at the facts.  Some prosperous places tax natural resources indirectly through cumbersome means such as capital gains on real estate but the best way is to tax privileges such as land ownership directly.  

    In the early 20th century there were many cities where "Georgist lite" theories were implemented and it is remarkable how so successful a theory has been buried.  The California Irrigation projects were funded by land taxes that also broke up the huge land holdings.....a process since reversed by the reduction in CA land taxes.  Sidney (Australia) taxes land but not buildings, while Melbourne taxes buildings.  Sidney is the more vibrant city.  Johanesberg (South Africa) was in a much poorer location than Capetown but greatly outgrew Capetown.  Guess which one taxed land values?  

    Much of the Roosevelt New Deal in the US was structured around crude "rent sharing" ideas.  Unions, for example, are only able to take hold where there is some sort of natural resource rent that cannot move. (Airlines, railroads, Docks, and mines.)  Utility and Railroad regulation is also just crude rent-sharing, and the de-regulation promoted today is concentrating rent back into the hands of the few.

    Note that every Neo-con scamm ALWAYS involves concentrating rent collection while pushing taxation onto labor in one form or another.  It is just what the Republicans do.  What we need to do is push the taxes back onto privileges of all kinds and remove taxation from labor.

    Geonomist - Impeachment and conviction---the beginning of an American renewal.

    by Geonomist on Mon Jun 26, 2006 at 10:48:12 AM PDT

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