Can Georgism save berlin?
Hey everybody! I'm Alex, an Irish guy who's been watching Berlin's housing crisis unfold over my 15 years living here. Like many of you, I've seen rents skyrocket and wondered what can be done about it. Then I stumbled across this interesting idea called Georgism after reading this book review by Lars Doucet. There's been a lot of words written about Berlin's housing crisis, but Georgism doesn't come up much in the discussion, so that's where this blog comes in.
For those who don't know, Georgism is an economic ideology proposed by Henry George in the 19th century. He had a lot to say about rent and what causes it to increase, but more importantly he also had ideas on how to solve that.
His main suggestion was a "Land Value Tax", which is a tax on the rental income of just the land itself independent of the improvements to it (you can think of improvements as buildings or roads or tennis courts or whatever).
Doesn't sound like a big deal phrased like that but it has some big implications:
- reduce rents
- reduce speculation
- reduce inequality
- can be used to reduce other regressive taxes (income tax, VAT...)
- more efficient land use
That "reduce rents" point might sound counterintuitive - how could a new tax lower rents?
Let's take an example: if you own a vacant lot in Mitte worth €2M, you'll pay a hefty tax based on that prime location - whether you build apartments on it or not. Since the tax bill comes either way, leaving the lot empty becomes extremely expensive. Most owners would need to develop the land just to generate enough income to cover the tax. When lots of owners face this same pressure to build, we get more housing supply, which helps bring down rents across the city.
Plus since land can't be moved to the Caymen Islands, the rich can't tax evade a land value tax!
All of this sounds pretty sweet, and is maybe just what Berlin needs... and maybe a few other places too, nobody is saying great things about rent in Dublin, London, Paris, New York, San Francisco, Amsterdam, the list goes on.
So with this blog I will explore Georgism and Land Value Tax in the context of Berlin. This should take me down many paths, from the theory and history of Georgism, to Berlin politics/law/activism, and various forays into land valuation, tax rules, economics and beyond.
I don't have any particular experience to prepare me to tackle such a broad topic, but hey let's see how far I get and what mistakes I make! I'm excited to dig in and share what I learn along the way.
My next few posts will cover:
- A deeper dive into how LVT actually works
- What Berlin's current property tax looks like
- Some interesting examples of LVT in practice
If any of this sounds interesting to you, you can follow along at:
And if you have any relation to this or related areas, it'd be great to hear from you! Please do reach out to me on social media or at [email protected]