513 lines
19 KiB
TeX
513 lines
19 KiB
TeX
\documentclass{beamer}
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\usepackage{amsfonts}
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\usepackage{amsmath}
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\usepackage{amssymb}
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\usepackage{amsthm}
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\usepackage{mathtools}
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\usepackage[ngerman]{babel}
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\usepackage{multimedia}
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\usepackage{tikz}
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\usetikzlibrary{decorations.pathreplacing,calc}
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\usetheme[compress]{Berlin}
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\setbeamertemplate{navigation symbols}{}
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\title[Hacking rent]{Hacking the economic system: How to fix high rent in your municipality and what does it
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have to do with german colonial history?}
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\author{rfl}
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\institute{flipdot}
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\date{2024-10-26}
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\logo{\large \LaTeX{}}
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\makeatletter
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\setbeamertemplate{footline}{%
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{\usebeamerfont{institute in head/foot}\usebeamercolor[fg]{institute in head/foot}\insertshortinstitute}%
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\begin{beamercolorbox}[ht=2.5ex,dp=1.125ex,%
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}
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\makeatletter
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\begin{document}
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% Title page frame
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\begin{frame}
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\titlepage
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\vfill
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\centering
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slides at \url{https://code.flipdot.org/rfl/talks}
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\end{frame}
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% Remove logo from the next slides
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\logo{}
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\begin{frame}
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\centering
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\begin{figure}
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\includegraphics[width=0.8\textwidth]{the-rent-is-too-damn-high}
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\end{figure}
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\footnotesize{source: \url{http://www.quickmeme.com/meme/3td09l}}
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\end{frame}
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\begin{frame}
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\begin{figure}
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\centering
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\includegraphics[width=\textwidth]{woods_trees.jpg}
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\end{figure}
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\end{frame}
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% Outline frame
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\begin{frame}{Outline}
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\tableofcontents[hideallsubsections]
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\end{frame}
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\section{Short Story}
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\begin{frame}{Short Story\footnote{source: \url{https://www.youtube.com/watch?v=MOmz2KRH15w}}}
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% doesnt work
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% \movie[width=3cm,height=2cm,poster,autostart,externalviewer]{}{stop-paying-twice.mp4}
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\end{frame}
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\section{Basic Argument}
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\begin{frame}{Basic Argument\footnote{inspired by this discussion:
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\url{https://old.reddit.com/r/georgism/comments/1esw8l9/where_do_you_start_when_introducing_georgism_to/}}}
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\begin{small}
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\vspace{-0.3cm}
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\begin{itemize}
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\item Nobody likes taxes, but we gotta pay for some stuff, so we should tax in
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the least destructive way we can.
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\item Turns out, land has this neat property where we can't really create it
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or destroy it, so it's almost immune to distortionary taxes.
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\item Plus, land has this ugly tendency to get hoarded and milked as a source
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of income for people who don't actually contribute anything to society.
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\item Plus plus, because of the eccentricities of how land works, you can tax
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land a fair amount before landlords can pass those costs on to land users.
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\item So, we can cut a bunch of bad taxes, like income tax and sales tax,
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replace them with a tax on unearned income from land, and make almost
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everybody better off!
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\end{itemize}
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\end{small}
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\end{frame}
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\subsection{Why taxes are necessary}
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\begin{frame}{We gotta pay for some stuff}
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``a government that issues its own fiat money:
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\begin{itemize}
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\item Can pay for goods, services, and financial assets without a need to
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first collect money in the form of taxes or debt issuance in advance of such
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purchases
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% \item Cannot be forced to default on debt denominated in its own currency
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\item Is limited in its money creation and purchases only by inflation, which
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accelerates once the real resources (labour, capital and natural resources)
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of the economy are utilized at full employment
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%\item Should strengthen automatic stabilisers to control demand-pull
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% inflation,[10] rather than relying upon discretionary tax changes
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% \item Issues bonds as a monetary policy device, rather than as a funding device
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\item Uses taxation to provide the fiscal space to spend without causing
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inflation and also to give a value to the currency. Taxation is often said
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in MMT not to fund the spending of a currency-issuing government, but
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without it no real spending is of course possible''\footnote{\url{https://en.wikipedia.org/wiki/Modern_monetary_theory}}
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\end{itemize}
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\end{frame}
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\subsection{What we mean by (some) taxes being destructive}
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\begin{frame}{Destructive Taxes - An Example}
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\begin{itemize}
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\item Imagine there will be a 10\% tax on apple sauce starting next year.
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\item Producers are allowed to pass them to the consumer (as usual, and it
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can not be prevented really)
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\item Prices will increase by almost exactly 10\% (all things being equal)
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\item Less people will buy apple sauce, even though the underlying demand does
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not change
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\item In a year's time, there will be around 10\% less apple sauce, because
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here supply follows demand
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\item Now imagine this for other, more important goods, like medicine and
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income taxes that affect prices indirectly
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\end{itemize}
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\end{frame}
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\subsection{Why land is different}
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\begin{frame}{The few different ways to make money in the economy}
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\begin{itemize}
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\item Labor: You can sell your time to produce more of a valuable good or
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service.
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\item Capital: You can lend someone else your money, allowing them to make
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investments that will produce more valuable stuff.
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\item Information: You can do research, developing and selling knowledge of
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ways to create more valuable stuff.
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\item Entrepreneurship: You can take on personal risk and leverage the labor,
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capital, and information of others to create new valuable stuff.
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\end{itemize}
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And then there's land ownership. You can buy land, and then you collect rent
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from people who want to use your land.
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\end{frame}
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\begin{frame}{Problems with land ownership}
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\begin{itemize}
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\item (scarcity) there's a fixed supply of land. Realistically you can't
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create or destroy land (surface, which a mathematical area).
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\item (inelasticity) the demand for land is very stable. You can't decide to
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just not take up any physical space tomorrow.
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\end{itemize}
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This means
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\begin{itemize}
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\item landowners are effectively always running an auction for land use
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\item the rent for land use keeps rising to the highest rate someone is willing to pay.
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\item because you can't make more land, land owners get to capture more and
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more value as the economy grows, without the land owners actually doing
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anything valuable.
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\end{itemize}
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\end{frame}
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\begin{frame}{A tax on land value has no dead weight}
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\begin{minipage}{0.45\textwidth}
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\begin{figure}
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\centering
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\includegraphics[width=\textwidth]{dead-weight}
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\end{figure}
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\end{minipage}
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\begin{minipage}{0.45\textwidth}
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\begin{figure}
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\centering
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\includegraphics[width=\textwidth]{no-dead-weight}
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\end{figure}
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\end{minipage}
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\vspace{0.1cm}\\
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\footnotesize{
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\textit{price ceiling} means \textit{price before tax} in this context\\
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source (left): \url{https://en.wikipedia.org/wiki/Deadweight_loss}\\
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source (right): \url{https://en.wikipedia.org/wiki/Land_value_tax}
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}
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\end{frame}
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\begin{frame}{Actually, there are a few other things like land}
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\begin{itemize}
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\item domains
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\item patents
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\item electromagnetic frequencies
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\item satellite orbits
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\end{itemize}
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(my) rule of thumb: if the thing you pay for is more like a right of usage
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than an actual item, then the market for it is economically similar to the
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land market
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\end{frame}
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\subsection{The land value tax can not be passed to tenants}
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\begin{frame}{The land value tax can not be passed to tenants}
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\begin{itemize}
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\item The tenant is already paying the maximum price they're willing to pay
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for housing.
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\item If the landlord could increase the price further without negative
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consequences, they would've already done so.
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\item If taxes are passed onto the tenant, the tenant can no longer afford to
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live there, and the landlord will lose all revenue.
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\end{itemize}
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\end{frame}
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\subsection{Where does land value come from}
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\begin{frame}{Land value is (mostly) the value of society}
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\small{
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\begin{itemize}
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\item Close to essential services like schools, hospitals, shopping centers,
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and recreational facilities
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\item Easy access to public transportation and major highways
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\item Near cultural amenities like theaters, museums, and restaurants
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\item Safe area with low crime rates
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\item Well-maintained public spaces and active community organizations
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\item Strong sense of community with local events and activities
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\item Located in an area with job opportunities and economic stability
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\item Presence of thriving businesses and a flourishing local economy
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\item Upcoming infrastructure projects or public improvements planned
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\item Zoning changes that allow for increased development potential
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\item Scenic views or natural beauty
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\end{itemize}}
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\end{frame}
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\subsection{Where do the wealth inequality really comes from}
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\begin{frame}{Land has the ugly tendency to get hoarded}
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\begin{minipage}{0.4\textwidth}
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\begin{figure}
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\centering
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\includegraphics[height=0.9\textheight]{wealth-types-distribution}
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\end{figure}
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\end{minipage}
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\hspace{0.01\textwidth}
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\begin{minipage}{0.4\textwidth}
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\begin{figure}
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\centering
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\includegraphics[height=0.3\textheight]{wealth-types-distribution-legend}
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\end{figure}
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source: \url{https://www.bpb.de/kurz-knapp/zahlen-und-fakten/datenreport-2021/private-haushalte-einkommen-und-konsum/329964/zusammensetzung-des-vermoegens/}
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\end{minipage}
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\end{frame}
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\section{How would I do it in a (german) municipality}
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\subsection{Background}
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\begin{frame}{In General}
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\vspace{-0.26cm}
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\begin{figure}
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\centering
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\includegraphics[width=\textwidth]{property-tax}
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\end{figure}
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\vspace{-0.3cm}
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source: \url{https://leg.colorado.gov/sites/default/files/images/land_value_tax.pdf}
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\end{frame}
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\begin{frame}{Background}
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\begin{block}{Grundsteuer (property tax in Germany)}
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$T=b_{federal}(type, A_{total}, A_{useable}, A_{net dwelling}, N_{floors},
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N_{garages}, $
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$R_{rentlevel}, Y_{building},\dots) * B(L) * H_{munincipality}$
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\end{block}
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\begin{block}{weighted location value $B(L)$}
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$B(L) = (\frac{B_L}{\frac{1}{|\mathcal{L}|}\sum_{L'\in \mathcal{L}}
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B_{L'}})^{0.3}$
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\end{block}
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\begin{block}{Hessian Model (type B, most buildings), Example Kassel
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\footnote{avg found here: \url{https://finanzamt.hessen.de/sites/finanzamt.hessen.de/files/2022-06/2022_06_13_stanz_ausgabe_24_s691_durchschnittliche_brw.pdf}}}
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$T=(A_{net dwelling} * 0.5 * 0.7 + A_{usable} * 0.5 + A_{total} * 0.04) *
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(\frac{280}{214})^{0.3} * 490$
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\end{block}
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\end{frame}
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\begin{frame}{Constraints}
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\begin{itemize}
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\item city recalculates location value for a city quarter almost regularly (2y)
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\item city (Stadtverordnetenversammlung) can \emph{only} change $H$
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\item city has to set corporation tax factor (Gewerbesteuerhebesatz) to 200
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or more
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\item depending on tax distribution in the federal state and the whole nation
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the city budget is (relatively) lowered or increased (Länderfinanzausgleich,
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kommunaler Finanzausgleich)
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\item people still have to pay those taxes
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\item city is only allowed to see aggregated statistics not individual tax statements
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\end{itemize}
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\end{frame}
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\subsection{Proposal}
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\begin{frame}{Proposal Outline}
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\begin{itemize}
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\item provide a online platform where citizens of the municipality can upload
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their tax statements
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\item increase $H$
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\item repay registered amounts equally
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\item probably easiest to first focus on income, corporate, property sales
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taxes first
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\item in addition: because the property tax includes a tax on non-land-value,
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these amounts should be payed back as well
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\end{itemize}
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\end{frame}
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\begin{frame}{Proposal Open Questions}
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\begin{itemize}
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\item how to mitigate value added tax (Mehrwertsteuer)? (arguably one of the
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most unfair taxes on the poor)
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\item how to include people that do not work (kids, elders, refugees)?
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\item can it be explained easier?
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\end{itemize}
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\end{frame}
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\begin{frame}{Detailed Handbook}
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\vspace{-0.3cm}
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\begin{itemize}
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\item explain proposal $\leftarrow$ we are here
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\item ...
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\item get political majority, set current $H_0:=H$
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\item simplify building codes (bebauungspläne) \tikz[remember picture] \node[coordinate] (top) {};
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\item add priority property sale order (vorkaufssatzung)
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\item add city property lease order (erbbausatzung) \tikz[remember picture] \node[coordinate] (bottom) {};
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\item activate tax portal
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\item make citizen council on distribution mechanism
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\item every year $n=1,2$ until ``optimality''\footnote{total property tax
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revenue is at least the same as other tax revenue}
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\begin{itemize}
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\item increase $H$ by adding base rate $H_0$, eg $H_n= (n+1)H_0$
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\item distribute $\frac{N}{N+1}$ of total property tax revenue to citizens
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according to distribution based on tax statements
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\end{itemize}
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\end{itemize}
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\begin{tikzpicture}[overlay,remember picture]
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\draw[decorate,decoration={brace,amplitude=10pt,raise=4pt},thick]
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($(top)+(0.8,0.25)$) -- ($(bottom)+(0.2,-0.25)$)
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node[midway,right=12pt] {\footnotesize{more or less optional}};
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\end{tikzpicture}
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\end{frame}
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\section{Positive Effects}
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\subsection{Good things that will happen}
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\begin{frame}
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\begin{itemize}
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\item empty houses/flats will be put on the market because it is financially
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reasonable to do so
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\item additionally there is now incentive to building new houses on vacant
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lots or add floors to existing buildings in high demand locations
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\item the rent distribution will shift downwards
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\item (small) businesses will have an easier time finding locations or
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operating in the existing ones
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\end{itemize}
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\end{frame}
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\subsection{More positive Effects}
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\begin{frame}
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\begin{itemize}
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\item people will move into the city
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\item the base property tax revenue $H_0$ will increase, thus public infrastructure
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can be funded better
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\item if land value is faithfully reflected in parking tickets, people will
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park cars on their own property or get rid of it
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\item tax evasion will become impossible
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\end{itemize}
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\end{frame}
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\subsection{Even more positive Effects}
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\begin{frame}
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\begin{figure}
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\centering
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\vspace{-0.25cm}
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\includegraphics[height=0.8\textheight]{figures/lvt-outcomes}
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\vspace{-0.5cm}
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\label{fig:lvt-outcomes}
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\end{figure}
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\footnotesize{source: \url{https://old.reddit.com/r/georgism/comments/qp69t9/upgraded_graphs_of_lvt_outcomes/}}
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\end{frame}
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\section{History}
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\subsection{Adam Smith and David Ricardo and the law of rent}
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\begin{frame}{Law of Rent}
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\centering
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\begin{figure}
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\includegraphics[height=0.7\textheight]{rlof-0}
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\end{figure}
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\footnotesize{source: \url{https://sciolizer.github.io/ricardo-law-of-rent/}}
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\end{frame}
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\begin{frame}{Law of Rent}
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\centering
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\begin{figure}
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\includegraphics[height=0.7\textheight]{rlof-1}
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\end{figure}
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\footnotesize{source: \url{https://sciolizer.github.io/ricardo-law-of-rent/}}
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\end{frame}
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\begin{frame}{Law of Rent}
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\begin{block}{Law of Rent - your perspective}
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To some extent, it doesn't matter what location you chose for your coffee
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shop. Any excess profits you would have gained from a better location just
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go to the landlord there, and so your \textit{kept income} stays the same.
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\end{block}
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\end{frame}
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\subsection{Henry George}
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\begin{frame}
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\begin{minipage}{0.4\textwidth}
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\centering
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\begin{figure}
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\centering
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% \includegraphics[width=0.8\textwidth]{henry-george}
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\includegraphics[height=0.6\textheight]{henry-george}
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\end{figure}
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\end{minipage}
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\hspace{0.01\textwidth}
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\begin{minipage}{0.4\textwidth}
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\centering
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\begin{figure}
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\centering
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% \includegraphics[width=0.8\textwidth]{progress-and-poverty}
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\includegraphics[height=0.6\textheight]{progress-and-poverty}
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\end{figure}
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\end{minipage}
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\begin{block}{Fundamental Insight}
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Progress is a wedge that increases the divide in wealth between the land
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owners and the landless. Progress is the cause of poverty!
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\end{block}
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\footnotesize{
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source (left): \url{https://en.wikipedia.org/wiki/Henry_George}\\
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source (right): \url{https://en.wikipedia.org/wiki/Progress_and_Poverty}
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}
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\end{frame}
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\subsection{Cutting all destructive taxes does not mean less budget}
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\begin{frame}{Henry George theorem\footnote{\url{https://en.wikipedia.org/wiki/Henry_George_theorem}}}
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\vspace{-0.3cm}
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\begin{figure}
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\centering
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\includegraphics[width=0.3\textwidth]{h-g-theorem}
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\end{figure}
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\vspace{-0.3cm}
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\begin{itemize}
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\item maximize utility of public goods wrt population size
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\item land rents would be just sufficient to finance a provision of local
|
||
public goods
|
||
\item is also that land rents equals government expenditures on local public
|
||
goods
|
||
\end{itemize}
|
||
Work done by Joseph Stiglitz, who later won the Prize in Economic Sciences in
|
||
Memory of Alfred Nobel 2001, although for a different
|
||
topic\footnote{\url{https://www.nobelprize.org/prizes/economic-sciences/2001/stiglitz/facts/}}
|
||
\end{frame}
|
||
|
||
\subsection{Connection to german colonialism}
|
||
\begin{frame}
|
||
\centering
|
||
\begin{figure}
|
||
\includegraphics[width=\textwidth]{german-colonial-empire}
|
||
\end{figure}
|
||
\footnotesize{source: \url{https://en.wikipedia.org/wiki/File:GermanColonialEmpire(UPT3).jpg}}
|
||
\end{frame}
|
||
|
||
\begin{frame}{Or how that one point in time we almost got the (economic) solution right}
|
||
``The territory fully implemented Georgist policy. Its sole source of government
|
||
revenue was the land value tax of six percent which it levied in its territory.
|
||
The German colonial empire had previously had economic problems with its African
|
||
colonies caused by land speculation. One of the main reasons for using the land
|
||
value tax in Jiaozhou Bay was to eliminate such speculation, which the policy
|
||
achieved.''\footnote{\url{https://en.wikipedia.org/wiki/Kiautschou_Bay_Leased_Territory}}
|
||
\end{frame}
|
||
|
||
\begin{frame}
|
||
\begin{figure}
|
||
\centering
|
||
\includegraphics[width=\textwidth]{kiaochow-report}
|
||
\end{figure}
|
||
\begin{figure}
|
||
\centering
|
||
\includegraphics[width=\textwidth]{kiaochow-paper}
|
||
\end{figure}
|
||
\end{frame}
|
||
|
||
\section{Final words}
|
||
\begin{frame}{Final words}
|
||
\begin{itemize}
|
||
\item ``taxation is theft, but unmitigated negative externalities is
|
||
thefter'' - reddit user nivlac22
|
||
\item ``[Georgism] is the best idea that will never happen. '' -
|
||
BritMonkey\footnote{in \url{https://www.youtube.com/watch?v=smi_iIoKybg}}
|
||
\item ``There isn’t a single person in power that doesn’t own a lot of land.''
|
||
- youtube user @tc3884 \footnote{as a comment to the video above}
|
||
\end{itemize}
|
||
\end{frame}
|
||
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