Good question. The stated goal (generalizing of course) of the LVT is to replace most other forms of taxation, particularly income tax. I've seen napkin calculations where that's possible, but the other side of the question of course is the payout. Most 'realistic' estimates I've personally seen of that don't necessarily assume that a UBI will provide above a very basic living. There's usually the intention of incentivizing additional income, but the UBI at least provides the security to be selective in the job market or promote risk taking in ventures. By the way, it's also apparently commonly held among economists that the LVT is a very efficient tax with low evasion. The difficulty in implementation has historically been considered to be land valuation itself, but recent advances in things like GIS apparently make high resolution valuation feasible.
The UBI is quite thinkable without an LVT, and if your accept the GPs description of housing supply curve, trying to solve the problem it creates by lining UBI to an LVT would just create a huge positive feedback loop and inflationary spiral.
Really, independent of the unlikely characterization of housing supply curve in this subthread, UBI makes more sense tied to a progressive income tax without preferential treatment of capital income than to an LVT.
This assumes that a UBI would be funded by redistributive income taxation. Many formulations of a UBI actually fund it through a land value tax. Connecting the two concepts basically amounts to land owners paying rent to society.
Your overall point stands, I just want to point out the LVT aspect as UBI is increasingly discussed as a topic separated from that original context.
I think any funding of the UBI cannot be distorted by the UBI itself, at any level of the UBI.
Imagine the UBI was raised to a level high enough that essentially no one wanted to work anymore; how could this possibly be funded, insofar as there IS no income to be taxed?
The LVT avoids this particular problem, in that it's driven fully by the value of land within a city. No matter how much or little people work, this land will continue to have value.
Basically the point is that a VAT with a UBI tied to inflation WOULD be redistributive. It effectively nullifies the regressive portion of a VAT and ties the UBI to the overall productivity and cost of doing business of the nation.
The whole point is that a UBI is a realization of the wealth that is being automatically generated. Calculate it from the GDP. It doesn't require a tax. Prices continue adjusting accordingly.
The primary motivation of UBI is not to increase production, but to change its structure so that people who are poorer are better of. After all, according to the theory, the production should already be at the peak.
My point is though, if you naively ignore V in the equation (and yes, usually it's considered to be a constant), then you might think that increasing price of labor can lead to decrease of production, because the term PY must be constant. But it's not constant if you increase V correspondingly, and so the decrease in production won't happen in UBI, even with inflation.
In practice, the production is often not at a peak, and there are savings too (not everything gets invested or consumed). Redistribution in UBI has then potential to reduce savings (because savings really make rational sense only if you're powerful enough) and through that increase the economic production in the slump.
I reckon if you fix that, with say the LVT proposed by Henry George in SF during a similar explosion in wealth (and accompanying inequality), you’ll find UBI likely unnecessary. If it is still necessary, you’ll have overflowing public coffers to pay it out with, AND it won’t be eaten by landlords.
You make good points here, thanks. It was interesting to think about rate of increase of utility over time, it did throw new light on the idea of UBI for me.
Except if UBI is $10, then cost of living will increase $10. This is an impossibly recursive feedback loop. UBI's effects on the COL is ultimately a turing complete equation, and thus suffers from an inability to analyze when exactly such a recursive scenario will halt.
reply