The Landlord Relief Act of 1997

According to its authors, the new tax law signed by Our President in August is designed to encourage investors and families and to correct errors in existing tax laws which were either unfair or inefficient. This would be very funny, except that it's such a slap in the face to most people, especially the poorest and hardest working. Nearly every major change made by this law is simply a gift to real estate and banking, a method for taking more out of the pockets of those who rent and putting it into the pockets of those who own; a Robin Hood-wink.

The biggest change is that capital gains taxes on real estate held for more than a year will be cut by over 25%. Why not tax weekly paychecks 25% less, so more people can afford to feed their families and companies can afford to hire more workers? If the desired change were taxpayer relief, why give a higher incentive to real estate investment?

Another big change is a $500 deduction for every child in your house. On the surface, this is a break for families. But let's think for a second. Will this deduction have the effect of increasing your disposable income? Will it afford you more food, clothing, books or training? No "tax credit" for poor or working people has ever had that effect before -- why should this one? Inflation may be low, but housing costs increase faster than any others in such a "robust economy". If you rent your home, this means that before long, higher rents will absorb any tax relief you get!

The new tax law trumpets its "incentives for education". But let's apply some simple boneheaded logic to this for a moment. Alan Greenspan and his Team say we are nearing "full employment" -- the economy is chugging along and only some four per cent of the people looking for jobs can't find one. Now let's say the entire workforce gets a college degree (and all those with Bachelors Degrees upgrade to graduate creds). Will there be any more jobs for them? Won't the net effect be to increase competition for what high-wage jobs there already are? And when supply (of educated workers) increases relative to demand, what happens to the price (their wages)?

In fact, when it is subjected to stubborn logic, every provision of this law is shown to be just a way to further squeeze the poor and swell the pockets of landlords. Providing incentives for investing in IRAs (Individual Retirement Accounts) seems sensible until one realizes that it is being accomplished by merely reducing the tax penalty on individual wealth-production and saving! (Not to mention that most of the savings we invest in banks, whose primary business, of course, is real estate speculation, serves to inflate the boom/bust real estate bubble.) Bigger incentives for giving to charity? If the charitable initiatives are successful, they'll reduce the public burden, increasing the general efficiency of the economy and raising rents! Hiring former welfare recipients? Ditto.

The most amazing thing about it is how the media goes along with this sham. There's no outrage, no biting criticism, just piled- on details -- and jokes about how complicated economics is.

Seriously, though, why not give the country some real taxpayer relief? Why not raise the taxes on land speculation and lower the taxes on working at a job? The government could make housing costs actually go down while raising wages and increasing the number of jobs. That in itself would lower the crime rate. Instead, the government has chosen to reward land speculators even more than they already were, while the standard of living for most people goes down. Instead of decentralizing land ownership and alleviating the increasing disparity between rich and poor, they have enacted a law which will further that disparity.

This is for William "Jefferson" Clinton. Your namesake, Thomas Jefferson, would not have supported this bill. "The Earth is given as a common stock..." he wrote. "Wherever, in any country, there are idle lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right."

Adam Monroe -- November 22, 1997


Here's what folks have been saying:
I would like to know have you ever consider combining your idea with Louis kelso and Mortimer Adler(Universal Capitalism). I think combination of both land tax plus capital democracy would change the US economy.
Craig <U49246@uic.edu>
Chicago, IL USA - Tuesday, November 25, 1997 at 10:46:27 (EST)
Interesting, Craig. Want to include some references so our readers can inform themselves on these ideas?
Lindy Davies <lindy@henrygeorge.org>
- Tuesday, November 25, 1997 at 12:55:17 (EST)
I agree. I'm a Georgist. See my "Is Democracy Possible?" Univ of California Press, 1985.
john burnheim <john.burnheim@english.usyd.edu.au>
sydney, nsw australia - Wednesday, November 26, 1997 at 01:16:15 (EST)
I have found your site through a friend of mine, a retired philosphy professor. I am also taking a CGA course, my first exposure to accounting and economics. I am interested in your site. I will contact you again!
Rick Doucet <douce@nbnet.nb.ca>
Bathurst, NB Canada - Sunday, November 30, 1997 at 18:37:00 (EST)
Very interesting. It seems if there were one tax that could be morally and justifiable and utilitarian, it would probably be the land tax and a corollary resource based tax to discourage pollution. However, just because a resource such as land may be counted as "in common," the government, which is only composed of individuals and not gods, has no more right to the land than private individuals. The land was here before people, and people were here before there was government. Government has no more omnipotence, omniscience nor infallibility than private interests regarding disposition of wealth. Also, while admit I have not studied your whole site, I am a bit sceptical about your simple approach to the value of land both improved and "unimproved." The value of land is relative not only in place but also in time. The fact that some speculator holds land over time does not necessarily mean that this fallow use has not increased its value. If rabid development goes on all around his speculative land, does not his land become more valuable because it has become more rare and it is "unspoiled" at least in the eyes of some people? And does not his purchase of the land to be held unused pose and opportunity cost from his capital, for which he could have reaped a return from investing the capitlal in something else besides land? And how about eminent domain. What official government may decide is adequate compensation for the "taking" may not agree with the original owner nor the market value of the land after the new use has been developed onto the land.
Chris Toto <ChrisToto@aol.com>
nj - Monday, December 01, 1997 at 07:33:35 (EST)
Quite good questions, Chris. In fact, they are the sorts of questions to knock around with one of our instructors. Take the course!

Two quick comments from my point of view. First, the Georgist position is that the rent of land belongs not to private landholders but to the community. There is not unanimity on exactly what the role of government (at various levels) should be in this. The minimum role, I believe, would be the administration and collection of the rent. It could be rebated back equally to the citizens, if we want minimal government...

But no, the landowner does nothing at all to create land value. Sites held vacant or underused are very, very seldom enhancements to their communities. Generally they are garbage-strewn vacant lots, rundown slums, porno strips, strip malls, and other forms of blight.
Lindy Davies <lindy@henrygeorge.org>
Waldo County, me - Monday, December 01, 1997 at 09:56:38 (EST)


if life is as bad as you think, why not apply more of your boneheaded logic and go jump off the roof of the jefferson memorial?
b mckenzie
- Tuesday, December 02, 1997 at 17:23:19 (EST)
Thanks for that constructive suggestion, b. IMHO, it's not life that's bad; it's the tax system.
Lindy on the Brink
- Wednesday, December 3, 1997
Thanks, everyone! I'm glad you seem to have enjoyed my rant. I think society has been and is being malformed by incorrect perspectives resultant from a long history of incorrect governments and that a more accurate perspective (which is available to anyone who gets the opportunity to consider the theories of George and the other classical economists) can help us all as individuals to fortify the accuracy of our personal understandings and to keep from being misled and confused. I believe it is a very good thing for us to report and to read the news as it acually is, in order to dissipate the flawed, yet widely accepted perspectives cultivated by the reporting of the news by landed interests, as well as other cultural influences. I also think it is a lot of fun! This is all very serious business, indeed, but one of the misconceptions promoted by the powers that be is that truth is a drag! Not so! It's hilarious! Beautiful! Inspiring! People who understand the real science of economics have a very positive attitude about the possibilities for humanity. Let us continue to help each other maintain and strengthen each other in that perspective by visiting and participating in the upkeep of all the terrific Georgist websites, like this one! Sincerely Yours, Adam Monroe
Adam Monroe <TheMKing@aol.com>
Texas City, TX USA - Wednesday, December 03, 1997 at 16:35:23 (EST)
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