BY JAMES WERNICKE

“I can see no reason why Los Alamos alone should retain its wartime status as a government-owned and managed community. Our way of life is not the normal American way of life. Where else is housing assigned on the basis of salary and length of employment? Where else is one’s choice of home dependent upon his employer’s rules and not upon his own desires and abilities? … It is not the way of independence and free enterprise.” – Norris Bradbury

Last night, Los Alamos County Council voted 4-3 against a minimum wage increase. While the intent was to make it easier for hard-working people to be able to afford to live in Los Alamos, it would impose too much strain on local businesses that already face significant economic challenges, driving them out of business and hurting minimum wage workers (and tax revenues) instead of helping them. On the one hand, it is great that the Council is holding to their commitment to support local businesses. On the other hand, we still have an affordability crisis to solve.

We need not increase wages if we can lower costs of living, of which rents are the most dominant. One interesting idea is Land Value Tax (LVT). LVT was a popular idea in the 19th century thanks to the economist Henry George and his work “Progress and Poverty”. He argued that the value of real estate in constrained areas is mostly determined by the location and what’s around it – like schools, businesses, public infrastructure, and nature – not the buildings or other improvements. In other words, the value of land is earned by society, not the landowner. George championed LVT as an equitable way to redistribute land value to the society that earned it, using it to reduce economic inequality and promote fairer community development. Today, Georgism is regaining popularity in places like Chicago to combat the blight.

LVT shifts the focus from taxing buildings or improvements, which can discourage productive use, to taxing the land itself. Land value is defined as the maximum amount someone is willing to rent the unimproved land for, i.e. its productive potential. This means a plot of land is taxed the same whether it’s sitting empty or has a skyscraper on it. The beauty of George’s idea is that it encourages landowners to use land productively, such as building new housing and revitalizing blighted areas to meet demand and help with affordability. It can even mean protecting an area from development if that is what a community truly values. It also encourages county planning departments to work with developers because they also benefit when land is productively used.

Given that nearly 100% of land value in Los Alamos is earned by the community, compensating the public with nearly 100% of the value makes sense. What’s incredible is that there is so much value in land and LVT works so efficiently and effectively to capture it that even a modest LVT could generate more revenue than ALL OTHER TAXES COMBINED. This is partly because current taxes discourage productivity and can be passed on to the consumer. Because the supply of land cannot change, a tax cannot discourage its production and landlords cannot simply pass the tax on to their tenants. Additionally, one cannot hide their land assets in an offshore accout. Who is taxed how much is as transparent as property records.

While the minimum wage didn’t get increased, the principles laid out by Henry George offer us an alternative solution to our affordability crisis. By looking at LVT, we might find a way to ease the cost of living in Los Alamos without putting more pressure on small businesses. It’s a different route, but one that might lead us to a more balanced solution for everyone involved.
If you’d like to learn more about LVT and the benefits it offers, check out the book Land Is A Big Deal.