> Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains — all the while the landlord sits still. Every one of those improvements is affected by the labor and cost of other people and the taxpayers. To not one of these improvements does the land monopolist contribute, and yet, by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived…The unearned increment on the land is reaped by the land monopolist in exact proportion, not to the service, but to the disservice done.
But isn’t land ownership and renting free markets? If there is profit to be made by renting out land, investors should look to buy land to rent out, since both the land market and pool of renters are limited this should naturally drive up prices of land while driving down rents. And as such you should move towards buying land to rent out becoming a very low margin business and renters end up paying only marginally more than they would if they bought the land themselves.
That’s in theory though, so what’s keeping this from happening in practice?
Not sure how it's "free markets" to distribute land to the people good at conquering things and then let their descendants hang on to it for the next 1000 years.
There’s a realeastate market, we agree on that right? That market is a free market in the econ 101 sense is what I’m saying. You are questioning whether it is morally fair that the world is the way it is. That has nothing to do with my post.
Because the higher house prices are, the less people can afford to buy (to live). Those people then need to rent, increasing demand for rental, so rental prices go up too.
When housing bubbles burst, rental prices go up.
I really don't think it's a free market because people must live somewhere.
Further, banks only let you have one normal mortgage, so you can't buy multiple properties unless you're already wealthy.
That wouldn't be a sustainable pact. Any builder could profit by breaking it and there would be nothing the colluding builders could do about it.
Builders have an incentive to liberalize development laws and do push for upzoning. It's those who own condos who have an opposing financial interest in limiting development.
Beyond financial interests there are NIMBY and other cultural interests that seem to be decisive, like heritage preservation.
There is also bureaucratic inefficiency limiting housing development by imposing lengthy and expensive processes for getting permits and approvals.
A condo is an apartment unit in a building where units can be owned individually. Upzoning means changing the zoning laws of the neighbourhood where the property is situated to allow taller buildings with more square footage of living space.
Many neighbourhoods have zoning laws that impose height limits that prevent high-density developments, and this constrains growth in the supply of housing.
Winston was writing in England (which is what the article is about) in 1909.
Property taxes in the UK essentially don't distinguish between "nice house" and "an actual palace". A tiny bedsit pays grade A taxes, my nice flat is grade B, My mother's old house (a four bedroom cottage in a pleasant village where lots of rich people live) would be category H. There aren't any categories above H. They're charged to the occupants, so if you own a town of a hundred dwellings and let them out, the residents pay those taxes, not you. The exact mechanism has changed substantially since Winston's time (and indeed was the cause of major riots decades ago) but this general thrust has been true for generations.
It's true that rental income due to a landlord is taxable income, after expenses, but I don't see how that's relevant?
Capital Gains Taxes only kick in if you sell. If you're content to profit off ownership indefinitely you are never charged CGT.
They used to. In 1909 we had rates not council tax. Rates were originally brought in during 1601 to fund poor law provision!
They had a huge advantage over the council tax - and Thatcher's brief foray into a poll tax. Houses don't move, people do. The rates were on the property and were charged on rateable value which was a value distinct from market value, but not banded. People and inhabitants did not matter (at least in the 20th century - not sure about earlier).
Every government from Attlee's in 1945 onward promised to replace or reform the rates. Every one except Thatcher concluded it would be not worth doing, and far more expensive to run. All that was needed was a tax break for the little old widow stuck in the old family home after the family had left, as an exception.
Council tax is in effect a massive tax break for the wealthy, compared to domestic rates, as the highest band is an absurdly low value that catches every property worth more than £320,000 in band H. Same tax for £320k and £25m.
Ah, Hacker News, where even Winston Churchill is an ignorant leftist.
1909 was a very different tax landscape. Income tax was 3.75% and Winston Churchill was trying to raise it. I don't think CGT existed in its current form at all.
You are correct, I think his sentiment still has a great point though when looking at it through the eyes of ownership being of the few, and inheritance tax being overlooked in the UK in some cases.
Especially seeing as royal family wasn't the greatest fan of him.
— Winston Churchill, 1909