Property Taxes Became
Land-Rent in New York

Mark Ferran

[Comments posted by the author on militia-discuss@yahoogroups.com, 8 January 2003. Also included below are responses by Dan Sullivan and an exchange between Mr. Ferran and Jeff Smith.]

If the Property Tax Amount is levied EQUAL TO the Rental Market Value of the land and, (as according to current NY statutes), a failure to pay the "tax" will result in a complete loss of possession AND of ALL EQUITY, then the "owner" is in exactly the same position as a "tenant" paying "rent" to the state. It is a physical fact. "Tenancies" are marketable whether they are freehold or leasehold. In Law, a landowner is a "Tenant" and co-owners are referred to as "Co-Tenants." This is because at common law there were practically differences in law between the rights of a freeholder and a leaseholder, apart from remedies for "waste."

It is not uncommon today for one corporation to offer cash to another corporation to induce the second to assign its commercial lease of a good retail location. Therefore a leasehold (tenant) interest can be bought and sold in a market, just as a freehold (fee owner) interest can. And, to further blur any supposed distinction between leasehold and freehold interests are the "100 year leases". Banks Can and DO give "mortgages" based on such long-term LEASES as security in a Mortgage, especially in commercial property contexts. There are no practical differences between a long-term leasehold interest and a fee ownership interest other than the amount that someone else may be willing to pay to acquire it, which is not a LEGAL difference. The value of each is based on the fact that they grant the exclusive right of "possession" and "use." See "Rights of NY Landowners" at http://billstclair.com/ferran/

If one has to pay a private "landlord" or instead a "government" for the continued privilege of possessing and using land, RETAINING NO EQUITY upon default, then one is in the same position in contemplation of the law, - a tenant. The "owner" then has "merely nominal proprietorship in the same" which he can transfer to others, while he is able to pay the tax/rent. The Works of Karl Marx (1869) http://www.marxists.org/archive/marx/works/1869/12/03.htm

The fact that the property taxes TODAY are generally not levied at amounts equal to the rental market value of the land does not change the fact that the legal status of land-ownership in New York state has been changed. With the cooperation of profoundly dense people, property taxes someday may generally be levied equal or nearly equal to the rental market value of the land. All that is necessary for this final change in practice to occur is for people to continue to waste the time, and dissipating the energy, of those moral and intelligent people who would speak up against, and perhaps even fight against, the "Georgist" (and Socialist) heathens that despise the institution of private property.

The Theory of "Georgist" revision of the tax laws is explained as follows: "Rather than nationalize land outright, the single taxers would levy a 100 percent tax on the annual land rent-the annual [rental] income from the site-which amounts to the same thing as outright nationalization. Georgists anticipate that the revenue from such tax on land would suffice to conduct all the operations of government-hence the name "single tax. [The] "single taxers" expect that confiscation of this "unearned increment" will keep public coffers overflowing far into the future. ... The deficiency in that argument is the neglect of the time factor in production."" http://www.mises.org/rothbard/georgism.pdf

In 1880, Henry George proposed that all existing taxes on labor and capital (e.g., income, sales, trade; buildings, houses & other improvements to property; agricultural, industrial, commercial, and all other productive activities), be abolished. He wanted public revenue to be raised from only one "single tax," to be imposed on "unearned" land values. These values supposedly derived from such factors as urban concentrations of population, fire and police protection, good schools, libraries and entertainment facilities, arteries of transportation, scenery and climate, and other amenities unrelated to anything done by non-producing landholders.

In other words, the result is, if you and your neighbor own the same amount and kind of land, and your neighbor builds a Million Dollar House on it, but you have a built modest $100,000 house on your lot next door, you both pay the same amount of property taxes. And, if your neighbor's house increases the value of your neighborhood's land, YOUR TAXES INCREASE to compensate for the fact that he does not pay any more land taxes than you do. In other words, a savvy millionaire would build his fancy house in a middle-class neighborhood to get them all to pay increased land taxes that under the present land and improvement taxation system, he would pay taxes for. He minimizes his land-taxes by living in a fine home among poorer people. Naturally, he would build a fine gate and fences to keep the rabble from peering into his lot to see what they were, in effect, paying for. Similarly, a smart slumlord will want to built a very tall slum building in the middle of a poor or middleclass area in order to squeeze many Section-8 rent-paying people onto the smallest footprint of land, while offering them the quality of life in the neighborhood of productive middle-class people. The Slumlord does not pay more land taxes if he builds upwards with more slum units, so he has no economic incentive to choose tenants carefully. He thinks "quantity", rather than "quality". And, the slumlord can afford to charge less for rent, so he can afford to have really very unproductive slummy people as his tenants.

Henry "George himself expected that the single tax would 'accomplish the same thing (as land nationalization) in a simpler, easier, and quieter way.' The hollow form of private ownership in land would remain, but the substance would have been drained away." http://www.mises.org/rothbard/georgism.pdf

This is the propaganda of a Georgist-Progressive Organisation: "Common Ground-U.S.A. is dedicated to the ... replacing taxes on labor, capital, and wealth, and to using the value of land and other natural resources to pay for essential governmental services." http://www.progress.org/cg/

The Institution of Private Property rights - "was the one on which this nation was based, and which helped make it the most peaceful, free and wealth-generating society the world has ever known." http://www.reviewjournal.com/lvrj_home/2002/Dec-23-Mon-2002/opinion/20323952.html

The Georgists simply want to cash in on the "value" that has built up in private land over time, since it was cleared and settled hundreds of years ago. "Man had to find it, clear it, fence it, drain it, and the like; so the value of an "unimproved" lot includes the fruits of man-made improvements." http://www.mises.org/rothbard/georgism.pdf They call this built-up value "the maldistribution of wealth" and view Georgism as a way to correct that by re-distribution of the wealth into the hands of the government. http://www.earthrights.net/docs/advisors.html

The Georgists freely admit that the result will be to depress the market value of the land to the point were it is worthless to "own" unless you need it (e.g. for a residence) or find a way to make activities on it produce income. "Land price would disappear ... The Georgist proposals [would mean that] there is no ... income to be made from ... investment in land." http://www.multiline.com.au/~georgist/pat.htm "A 100 percent tax on rent would cause the capital value of all land to fall promptly to zero. Since owners could not obtain any net rent, the sites would become valueless on the market." http://www.mises.org/rothbard/georgism.pdf In other words, people will NOT INVEST in American land ownership, and will instead tend to invest in movable or intangible ventures, such as overseas and multinational corporations. And, in turn, Wealthy Multinational Corporations with the money to invest in putting land to their use could buy up vast tracts of America, including a majority of all residential units. In time, all private single-family homes would be voluntarily sold to corporations, which would then maintain them for the tenants (former owners). The elderly will receive no economic retirement reward from the investments they made in land and home during their younger years. Their equity will vanish.

Georgists believe that "the site-owner ... is, therefore, a parasite and an exploiter, and so taxing 100 percent of his income could not [be deemed a form of stealing]." http://www.mises.org/rothbard/georgism.pdf

John Adams stated: "Property must be secured, or liberty cannot exist." John Adams ("Discourses on Davila," 1790)

Adams also said: "The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence. If 'Thou shalt not covet' and 'Thou shalt not steal' were not commandments of Heaven, they must be made inviolable precepts in every society before it can be civilized or made free." (A Defense of the American Constitutions, 1787)

Some people, determined to maintain their "ownership" in a Georgist confiscation system will desperately Try to invest in improvements upon the land to make it produce income sufficient to pay the rent demanded by the government, but the Georgists' "attempt to force all land into production would bring economic disaster. Forcing all land into use would take labor and capital away from more productive uses, and compel their wasteful employment on land, a disservice to consumers." http://www.mises.org/rothbard/georgism.pdf

Some of these Georgists seem to covet privately owned land, and desire to use or control it without the interference of "landowners." Other Georgists seem to be simply income-tax protestors who think that the income tax burden should be shifted to anyone who has accumulated and invested enough wealth (income) in land ownership. Ultimately, Georgism is mere Covetousness.

Georgists seem to operate on the outdated presumption that Wealth is produced by Land, and that Land (Real Property) Taxes can be a surrogate for Income Taxes. Their presumption is based on a agricultural economy, which prevailed in this Country until WWII, but which has ceased to exist. Wealth is not created by the action of sunlight striking the land and producing crops. Wealth in this Century is generated by the directed application of Energy derived from Oil and Fossil Fuels.

The Georgist school asks: "What steps would you propose for widespread understanding and adoption of the Georgist philosophy?" http://www.henrygeorgeschool.org/pdf%20output/microsoft%20word%20%20-%20aeq10.pdf

All that Georgists require to accomplish the "adoption" of their intended conversion of Property Taxes into Rent payments is for ignorant people to remain ignorant of and indifferent to the changes the made to the Tax Law, while the property taxes are incrementally raised, generation after generation.

Georgism proliferates in Government Policy through the agency of panderers called "Land Value Taxation Advisors": "Land Value Taxation Advisors can assist you and your community through all stages of implementation of this policy, including: Initial education and advocacy ... Political groundwork to obtain enabling legislation." http://www.earthrights.net/docs/advisors.html

"No doubt, the single taxers would hire an army of tax assessors. But assessment is purely an arbitrary act and cannot be anything else. And being under the control of politics, it becomes purely a political act as well. [A]nd the single tax program could not be installed except by arbitrary authority." http://www.mises.org/rothbard/georgism.pdf

The following two people are Georgist Land Value Taxation Advisors:

Land Value Taxation Consultants, Scotland, PA, USA, Alanna Hartzok, Coordinator, mailto:earthrts@pa.net

International Union for Land-Value Taxation and Free Trade (UN), Washington, DC, USA, Robert V. Andelson, President, mailto:rvandelson@mindspring.com

People like these infiltrate state, local and national legislatures as "advisors", and induce them to jack-up Real Property Taxes to confiscatory levels, simply because they CAN. I can prove that Avowed Georgists have surreptitiously influenced changes to New York State's Real Property Tax Laws as advisors to the NYS Legislature. Consequently, New York has the highest Real Property Taxes in the United States. These Georgists seek to extract the wealth that has been invested into land over the past 4 centuries of freedom and property rights. Once the wealth has been extracted by confiscatory taxation, they seek to control what are today private lands as absolutely as if the Government were the title owner, as in Fascism. In summary, Georgism is simply a scheme to induce a mob to confiscate privately owned land rights in a systematic and orderly manner, without the pitfalls of an all-out socialist Revolution. Georgist revision of the Tax Laws of a state "is a long step toward ...government ownership." http://www.mises.org/rothbard/georgism.pdf

A specific intent of Georgists is to transform the ancient Real Property Tax system of every state into a Rent-Collection system in which the Government practically and ultimately owns 100% of the EQUITY value remaining in the premises, regardless of the amount of the "taxes" actually needed for public purposes. It encourages waste in government spending. This subversion has already occurred in New York (where, because a proliferation of spending opportunities, it takes many extra months for state legislators to decide how to spend taxpayer's dollars.)

Georgists believe that: "It is necessary that there should be rent, but it should be paid to the state or to some body which performs public services; or, if the total rental were more than is required for such purposes, it might be paid into a common fund and divided equally among the population."

Georgists freely admit that under their system of Government, the Real Property Tax ceases to be a "Tax" and becomes "Rent" paid to the Government. "Economic rent, if collected by society, is not a tax ... [And] rental value of land (economic rent) should be the main source of public revenue" http://www.multiline.com.au/~georgist/pat.htm

Georgists believe that "land cannot justly be private properly. ... This is Georgism." "The fatal flaw in libertarian thought is not in the unabashed substitution of private enterprise for all the activities assumed to be functions of the state. Rather, it is in its defense of private property in land."
http://www.cooperativeindividualism.org/johannsen_georgism_libertarianism.html

Georgists believe what Adolf Hitler later said: "WHAT we need ... is a land reform.... And land [Grund und Boden], we must insist, cannot be private property. Further, there must be a reform in our law. Our present law regards only the rights of the individual. It does not regard the protection of the race, the protection of the community of the people. ... A law which is so far removed from the conception of the community of the people is in need of reform." - Adolf Hitler, MUNICH, SPEECH OF APRIL 27, 1923

http://www.propertyrightsresearch.org/dear_fellow_property.htm [Apparently a quote from a Karl Marx manuscript published in April 1868.

See http://www.mlwerke.de/me/me18/me18_059.htm - Scott]

Georgists "simply laugh at the idea that there could be moral rights of property."
http://www.progress.org/lambert06.htm

"Private property must, therefore, be abolished .... In fact, the abolition of private property is.... rightly advanced by communists as their main demand." Frederick Engels, The Principles of Communism
http://hometown.aol.com/ctgabe/communist.manifesto.01.htm

Now, see if you can point out any differences between Georgists and Socialists and Communists with respect to the Abolition of Private Property. And see if you can find in the STATUTES of New York any real difference between Real Property Taxes and Rent. The only difference at this time is amount of rent/tax demanded by the Government, which is not a legal difference. There is no longer any difference in NY statutes between Property Taxes and Rent. The Georgists are winning in New York, thanks to dense people. The members of this group should make an individual and collective decision whether you are For or Against the Abolition or Private Property by agents of "Georgism." To help you decide you position on Georgism, you may want to read all of http://www.mises.org/rothbard/georgism.pdf and my articles at:

http://www.propertyrightsresearch.org/dear_fellow_property.htm and http://billstclair.com/ferran/

Dan Sullivan Responds

Actually, Mark Ferrin just subscribed to this list. Thought you might want to know.

As for Jeff's responses to his past writings, it is common for people in the LP, ignorant of the long historical connections between libertarianism and land value taxation, to react to their misperceptions of heresy. However, some of the great thinkers in the LP (David Nolan, Karl Hess, John Hospers, etc.) have sort it out and come to substantially support key Georgist positions.

The right-wing reactionary tendencies of some libertarians are no worse than he left-wing reactionary tendencies of some greens. The key is to identify with their fears and values and address them. Beating them in debate is only useful if there is an audience to win over, as one almost never wins over the person one is debating.

In that vein, I think my "Common Rights vs. Collective Rights" is more useful for libertarians who are genuinely interested in understanding than my earlier "Are you a Real Libertarian or a Royal Libertarian?" While the latter presents something of a tour de force against the myth that libertarianism is synonymous with unlimited property in everything, the former goes right to the fundamental fear that George would grant discretion over land use to the state.

http://geolib.com/sullivan.dan/commonrights.html

http://geolib.com/sullivan.dan/royallib.html

Similarly, while Mike O'Mara's analysis showing that the landlord is actually a governing entity over a political subdivision, while logically solid, also fails to address those key underlying fears, causing many libertarians to react instead of reason things out.

It is not so much a matter of finding things that will *make* them understand as it is of first understanding them and finding the things that will *allow* them to understand.

Mark Ferran Responds to Jeff Smith

Mark Ferran:
To what exactly do I owe being selected to receive your letter?

Jeff Smith:
Your address being on what I got.

Mark Ferran:
Since the "rent" amount to be demanded by the government is essentially governed arbitrarily by the government, only those who have the money will pay it, and those who do not will move to cheaper places if any exist.

Jeff Smith:
A fair fear, but unfounded, tho' prevalent. Check reality, in particular all the examples of public land, such as the US West, where users pay well under market value, the port districts of most port towns, Hong Kong, Canberra, etc.

Mark Ferran:
In fact it seems to be one of the subtle forms of income tax which existed in the former Soviet Union.

Jeff Smith:
"fact" - interesting choice of words. The xUSSR did not charge any rents for occupation or use of sites. That was one of their big problems.

Mark Ferran:
The public necessities of the people (as classically defined),

Jeff Smith:
That classical definition is?

Mark Ferran:
intend to harvest such income to the largest extent possible (by force).

Jeff Smith:
All taxes are by force. Hence, some of us libertarians propose abolishing them and replacing them with user fees.

Mark Ferran:
Citizens Dividend" to all those of the Proletariat mob who voted for the measure.

Jeff Smith:
Here's the nub. Many do not feel worthy of justice, of a fair share.

Mark Ferran:
You want to redistribute the income of the productive into the hands of the less productive.

Jeff Smith:
Not redistribute, but predistribute, just as a REIT does. And there's nothing productive about land speculation, as even Carnegie noted.

Mark Ferran:
Replacing the Institution of Private Property with an institution of Communism.

Jeff Smith:
Actually, solidify property, both private and public, by erecting both on secure moral foundations. That is, what you produce is yours forever, untaxed. What we produce (locational values) are ours to share.

Mark Ferran:
Undoubtedly someone in the government will decide to demand labor and services (or votes and other support) from recipients of this largess, thereby instituting a communist-government type labor-system.

Jeff Smith:
"Will"? That's what's going on now, demanded by both politicians and whom they serve, the rentiers.

Mark Ferran:
The society which you describe,

Jeff Smith:
Me describe? I didn't pen the following.

Mark Ferran:
The REAL intention (which you expressly described) simply and ultimately is to establish a communist-type system of income/wealth-redistribution.

Jeff Smith:
And this constant commie carping, gee, I'd thought the red scare was passe.

Mark Ferran:
The First Plank of Communism.

Jeff Smith:
Funny you'd call Paine, Jefferson, Friedman, the Lib Party founder communist.

Mark Ferran:
Non land-owners renting on the other side of the state did not contribute to the rental-value of my land.

Jeff Smith:
So if you put an apartment building on your land, your land has no value?

Mark Ferran:
So, if "all" my neighbors are to fairly receive a "dividend" from the rental value of my land, then it should be in-proportion to the amount of land rental value that they own, and in proportion to the amount of land-taxes which they paid.

Jeff Smith:
That does seem fair. But the reason for paying is to compensate those whom you exclude. Exclude them from valuable sites, pay more. Exclude them from low value sites, pay less. The reason all get back the same amount is all have an equal right to mother earth, to the natural opportunities bestowed upon us all, without any input of human labor (if you're religious, it's even in the Bible).

Mark Ferran:
Taking money from their pockets, only to put it back, is pointless.

Jeff Smith:
True, if the amount you take and the amount you pay back are the same, no one would ever buy stock, or, in this case, pay rent to their neighbors.

Mark Ferran:
You seem particularly interested in redistributing the land-wealth of "New York City."

Jeff Smith:
I seem or you judge? Looking inward, I feel no such particular interest.

Mark Ferran:
I think though that your idea to put "affordable housing" along Central Park.

Jeff Smith:
My idea? Your writing it is the first I've read it.

Mark Ferran:
From what little I know

Jeff Smith:
Thanks for not letting that remain a permanent condition.

Mark Ferran:
Georgists will place into the hands of government Assessors the power to decide what is the "best use" of land,

Jeff Smith:
False. Let the market decide.

Mark Ferran:
Such "best use" decisions will of course require enormous bureaucracy in a place of high population density.

Jeff Smith:
False. See New Zealand and other places doing it.

Mark Ferran:
Utterly fail to consider whether your proposals are consistent with American Constitutions.

Jeff Smith:
False. In fact, the original constitution, the Articles of Confederation, had a version of this system.

Mark Ferran:
Forbid the "Taking" of "Private Property" except for "public purposes" upon payment of "just compensation."

Jeff Smith:
The big taking now is of public property, of publicly-generated rents.

Mark Ferran:
Thus, the land-confiscations which you propose, even if adopted by local or state statutes, would be contrary to the United States Constitution, and to the constitutions of the several states.

Jeff Smith:
Your misconstruing puts you in a bad light. I propose rent sharing. And many jurisdictions already tax private land and lease public land, so it must be constitutional.

Mark Ferran:
Government is DeFacto Communist and the Gun-Owning Masses Are Resisting it.

Jeff Smith:
More mental masturbation.

Mark Ferran:
So, I assume you have a plan to disarm the rural populations of the United States as effectively as some of the urban populations have been disarmed, right?

Jeff Smith:
You do a lot of assuming to no useful effect.

Mark Ferran:
Oregon, where you operate, is in the 9th Federal Circuit. Isn't that where some Federal judges recently declared that rural landowners have no "individual right" (under the Second Amendment) to Keep and Bear Arms? Didn't those same Judges also forbid telling school-children about the Commandments: "Thou Shalt Not Steal; Thou Shalt Not Covet they neighbor's ... land"?

Jeff Smith:
This is your nightmare, not mine. All this is news to me. Maybe some day it'll interest me, but considering the source, someone who refuses to hear and puts words in others' mouth, hmm.

Mark Ferran:
'Thou shalt not covet' and 'Thou shalt not steal'

Jeff Smith:
Precisely. Let's stop hoarding rent. Like the good book says, the fruits of the earth belong to everyone.

Mark Ferran:
Given your Georgist/Communist colleagues' successes to date within the United States so far (e.g., in New York state):

Jeff Smith:
I missed the celebration. What successes?

Mark Ferran:
ALL current and prospective land-owners should NOW ARM and train themselves in preparation for Self-Defense of the Constitutional Institution of Private Property, and to forcibly Resist the Unconstitutional Institution of Communism.

Jeff Smith:
Yes. People who feel unworthy have utmost faith in violence, not reason. The only assault on private property is the mortgage, and your guns won't ever stop the big banks.

Mark Ferran:
Bottomline, land is not free. To whom should we pay? No one made it. We all need it. So pay those whom you exclude from yours, as they pay you.

Jeff Smith:
What is -- "GINI quotients"?

Mark Ferran:
Percentage of people who own everything. "1" means one guy owns everything. A high percentage, like .84, means few people own almost everything. Places with exclusive concentration of ownership have little or no sharing of rents.

P.P.S. What have Georgists accomplished in Pennsylvania?

Jeff Smith:
Please check our website in my sign-off. Thank you.