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Golf Clubs, etc.


Mason Gaffney: In Memoriam, Stan Sapiro

In 1971 he sued the Assessor to hurry up and deny preferential low tax valuations to private country clubs that discriminate against Jews and other ethnic groups. In this case, amazingly, the Calif. Supreme Court ruled the private country clubs may continue to exclude Jews and others, while still enjoying their low tax valuations. One of the most powerful Jewish communities in the country might have taken the lead, but private Jewish country clubs may also exclude gentiles, by inference. It took our man Stanley to bring a case in the general public interest, and challenge the whole notion of underassessing the land of any private country club.

Nic Tideman: The Case for Site Value Rating
The Social Justice of Site Value Rating
The Efficiency of Site Value Rating
How Valuations would be Made

Both for reasons of social justice and for reasons of economic efficiency, site value rating deserves a continued place in the programme of the Liberal Party.

The case for site value rating in terms of social justice is founded on two understandings: first, that the value of land in the absence of economic development is the common heritage of humanity, and second, that increases in the rental value of land arising from economic development and government expenditures should be collected by governments to finance those activities. What is meant by "land" is the unimproved value of sites and the value of extractable natural resources such as North Sea oil.

While there may someday be institutions capable of implementing a recognition of land as the heritage of all humanity on a worldwide basis, in the absence of such institutions each nation should implement a recognition that land within its boundaries is the common heritage of its citizens. This is accomplished not by making the nation a gigantic Common or by instituting government management of all land, but rather by requiring all persons and corporations that are granted the use of land to pay a fee or tax equal to what the rental value of the land they control would be if it were in an unimproved condition.

The case for site value rating in terms of economic efficiency is founded on the fact that a tax on resources that are not produced by human effort is one of the few sources of government revenue that does not reduce incentives for people to be productive. Two other revenue sources that have this virtue are taxes on other government-granted privileges such as exclusive use of radio frequencies and taxes on activities with harmful consequences, such as polluting the air. An economy will be more efficient if revenue sources that do not diminish productivity are employed to the greatest possible extent before any use is made of taxes that impede productivity.

What makes a tax efficient is that the amount of tax that is due cannot be reduced by reducing productive activities. When incomes are taxed, people can reduce the amount of taxes owed by working less. They do so, and the productivity of the economy falls. When houses are taxed, people can reduce the amount of taxes owed by building fewer house and smaller houses. They do so, and the housing shortage worsens. But when the unimproved value of land is taxed, there is no resulting diminution in the quantity of land. Thus taxes can be levied on land without diminishing the productivity of an economy. And shifting taxes from other, destructive bases to land will improve the productivity of an economy.

Subsequent sections explain in more detail these social justice and efficiency arguments for site value rating, describe procedures for implementing such a tax system, and explain why a variety of potential objections are without merit. ...

Another objection sometimes raised against site value rating is that it would make leisure uses of land, such as golf courses, impossibly expensive. There are two parts to the answer to this objection.
  • First, people who wish to devote land to golf courses do not deserve special privileges and the expense of other members of society. Any person or group that wishes to use land for a golf course should be free to do so, provided that they are willing to compensate the rest of society for the smaller amounts of land that will be available to everyone else because they want a golf course. And the rental value of the land that is used for the golf course measures what is owed to the rest of society.
  • The second part of the answer is that to the extent that golf courses raise the value of surrounding land, it qualifies for receipt of the increase in the rental value of surrounding land that results from the use of the land as a golf course.... Read the whole article

Mason Gaffney: Economics in Support of Environmentalism

... Other worthy goals that conflict are open space and water conservation. A major problem in an arid land is that much wide open space guzzles up water. Conserving open space and conserving water conflict directly. Green grass uses more water per acre than almost any farm crop except rice (and rice returns part of it downstream). In cities most water is used not for swimming pools or toilets or washing machines, but for sprinkling lawns. Cemeteries, golf courses, horse-pastures, parks, freeway banks, and the spacious tax-exempt grounds of institutions are the greatest water junkies outside of farming itself, which of course takes much more than all cities.

Something has to give. Thus far it has been wetlands that gave. Once, perhaps, we had too much wetland, but that was long ago. We cannot accommodate all those uses, and save wetlands too, just by having restaurants stop serving water, or putting bricks in toilet tanks. Those are just token or "Goo-Goo" measures for parlor reformers; they distract us from real problems, and substitute for real solutions. What is the highest and best use of water? Wetlands, maybe; more golf courses, maybe not. But we need a rule to gauge "highest and best use." Is it the market? Read on. ...

On what basis shall habitat-savers identify with median Americans? We share a problem: we are all victims of private property rights carried to extremes. Abraham Lincoln, the original Radical Republican, once spoke to the effect that whenever landless people cannot find work and shelter, then the rights of private property have been carried too far and must be curbed. We have seen what Gifford Pinchot said.

"... natural resources must be developed and preserved for the benefit of the many and not merely for the profit of a few. ... the people shall get their fair share of the benefit which comes from the development of the country WHICH BELONGS TO US ALL."

Belongs to us all? Was Pinchot a Communist? Not likely: he was a Republican, an active political one, twice Governor of Pennsylvania.

We have too little time together to develop that fully, but here are some ideas. First, environmentalists might rethink what we mean by "open space." To Pinchot, "open" meant the space had public access. Today it often means the reverse: golf courses, duck clubs, sacred Indian lands, private beaches, cemeteries, farmlands, vacant speculative holdings, unpoliced parks taken over by gangs, protected and posted habitat, water from which swimmers are excluded for power boats, rights-of-way closed to hikers, University experimental plots, and so on. In this sense, there is more open land in downtown Manhattan than in many of our rural and sylvan areas. Many a water reservoir is open to beavers, ducks and geese, who routinely powder their noses there, but not to humans who seldom do, and can be trained not to.... read the whole article

Mason Gaffney: 18 Fallacies

5. "The cost of water is passed through to consumers in higher prices"
Wrong! At last I'm in my own field. Prices are determined by supply and demand, not cost. If you sell in a national or world market, or even a competitive local market, you are a price-taker, not a price-maker. You can't pass cost hikes on to consumers; you have to eat them.
In addition, water (like energy) is an unusual kind of input whose high price may actually increase production.
It would be easy to assume, using the good old idea of diminishing returns, that dearer water would reduce intensity of land use.
It certainly cuts water use, but when you pay more for water you often switch to higher-valued crops. That is what Southern California farming is all about. You substitute capital and labor for water on the same land, and often raise yields per acre.
You cannot afford to dump high-priced water on barley, or alfalfa, or rice, or irrigated pasture, or any other of these domesticated phreatophytes that guzzle up most of our underpriced water today.
A number of fairways and cemeteries would also give way to higher-valued uses.
With dearer water you use less by controlling it better, switching from primitive furrow irrigation to sprinklers, spitters and drip.
This in turn lets you do new things like growing avocados on steep hillsides formerly barren, yielding more dollars of product for less water (and in this case on waste land).
The above facts point to a fascinating, portentous corollary: you can tax water withdrawals without wrecking the water economy.
On the contrary, such taxes (carefully crafted to be constructive) can encourage conservation, getting more bins and bales for the bucket, so to speak.
Americans are raised on anti-tax slogans masquerading as economic analysis, always presuming taxes destroy good incentives and wreck the economy.
Here is a kind of tax that raises revenue while strengthening the economy.
This corollary is too good to drop, and is highlighted later. ... Read the whole article


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Wealth and Want
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