Implementing Geolibertarianism

Written on December 14, 2010. Written by .

I have been thinking about an economic system called geolibertarianism for some time now. It seems to be the most moral and practical economic system, but very few people have heard of it or thought about it. Therefore, I have outlined below a possible implementation of geolibertarianism as a foundation to begin a discussion of the system’s potential.

Natural resource consumption (including real estate residency, mining, drilling, and pollution) is taxed and there are no other taxes. All taxes besides property taxes are used for government, military, and infrastructure. Property taxes are assessed in proportion to the value of the land, neglecting the value of any improvements such as houses and buildings. Land values are computed in arbitrary units by multiplying the area of the plot by a function of the local population density, considering only non-vacant land in the density calculation. A dollar value is generated by multiplying by a scale factor discussed below. The nation’s property tax revenue is then distributed evenly to all citizens age 18 or over as a monthly check called the citizen’s dividend.

When property taxes are delinquent for an extended period of time, the government does not interfere or try to force the resident to pay, it simply lists the property as vacant. When someone starts paying the tax for that property, they are declared the new resident and the previous resident is now considered a trespasser. However, this will almost never happen because the grace period for tax payment will be long enough that an owner will be able to sell their property before a new resident can take over, even in the event of an unexpected loss of income. This allows the original resident to avoid losing the improvement value of the property.

The tax rate will be scaled annually based on the level required for the citizen’s dividend to constitute a “living wage”. In other words, the tax rate is chosen so that an individual could live a modest life in a small apartment using his or her citizen’s dividend, relieving individuals of the need to work to survive. I would estimate that a living wage for 2010 would be about $1000 per month, or $12,000 per year. This amounts to a total cost of $2.761 Trillion per year for all adult Americans. [1] This cost could be supported by a land value tax in which the annual tax for each property is 9% of its 2010 market value, even if farmland is exempted from taxation. [2] However, since the assessment neglects improvement value, tax rates would not be proportional to 2010 market values, since these do incorporate improvement value. Still, 9% of 2010 market value is a good estimate of the expected tax rate. This is significantly higher than the current rate of 0.2 – 4%. [3] So for a typical family with two adults living in a home that is currently valued at $200,000, annual property taxes would be around $18,000 and their citizen’s dividend would be $24,000, with a net gain of $6,000 per year that can be used for health insurance and other necessities.

For more on the philosophy of geolibertarianism, see Ownership and Georgism.

[1] US Population age 18 and over (2008): 230,118,000
http://www.census.gov/compendia/statab/2010/tables/10s0007.pdf
[2] Total non-farm non-financial real estate value (2010): $30,892,100,000,000
http://www.federalreserve.gov/releases/z1/current/z1.pdf
[3] Annual state property taxes vary from 0.2 – 4% of market value.
http://en.wikipedia.org/wiki/Property_tax

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