The brilliant idea that housing economists have could solve almost all problems.
A relatively straightforward policy that could significantly alleviate both of these crises—lowering housing costs in the most expensive areas while simultaneously encouraging investment in underperforming communities—is being advocated by economists and policymakers more and more.
The renowned book "Progress and Poverty," written by American political economist Henry George, marked the beginning of it all in 1879. George became a national hero as a result of the opus, which condemned industrial capitalism and the mistreatment of the working class and ultimately gave rise to the Georgism school of thought.
The ideology's central tenet is that everyone should share in natural resources rather than having the wealthy elite monopolize them. About 150 years later, pro-development activists and urbanists are pushing land-value taxation, a Georgist idea, as a way to address the issue of housing affordability and other issues.
The plan is to tax landowners every year according to the value of their property and to lower or completely remove taxes on any improvements made to it, like retail establishments, office buildings, or apartments.
The idea is to "tax what you take out of the natural world, not what you make," according to Resource Justice's research director and self-described Georgist, Stephen Hoskins.
In recent years, land-value taxation has drawn some mainstream attention. Urbanists and YIMBYs have come to use the sometimes-comic tweet "A land value tax would fix that" in response to a variety of policy quandaries.
Any new tax has difficult political dynamics, but land value taxes are popular with voters of all stripes. Leftists enjoy the tax's greater progressive nature, while pro-development and free-market conservatives value its effectiveness.
Only a few cities in America and several other nations are experimenting with it. Pennsylvania has seen success with land value taxes in over a dozen cities. New construction has exploded in cities like Pittsburgh, Harrisburg, and Allentown since the taxes were first imposed.
Versions of the tax have also been proposed by legislators in Minnesota and Detroit. Mayor of Detroit Mike Duggan is a fervent supporter of taxing land more heavily than homeowners in order to combat blight and promote development. In order to actively harm the neighborhood, he wants to make it more expensive for investors to purchase and sit on parking lots, abandoned buildings, and scrapyards in the city, waiting for it to appreciate.
