Getting There

Last of four. Part one: the economics. Part two: the governance. Part three: legitimacy and resilience.

The first three posts describe a system. This one asks the question that separates design from fantasy: how do you get there from here without breaking everything on the way?

The overnight version would crash land prices, put every mortgage in Alberta underwater, and collapse the banking system. So you don’t do that. You build a bridge from the current system to the new one, and you make every step reversible.

the mortgage problem

This is the thing that kills most georgist proposals before they start. Half of Canadian household wealth is in real estate. Most of that “wealth” is actually land value — the exact thing LVT captures. If you flip the switch tomorrow, land prices drop, mortgages go underwater, banks eat losses, credit contracts, recession. Nobody votes for that.

But the problem is more specific than it looks. Homeowners don’t actually care about their land value. They care about three things: can I keep my house, can I afford my monthly payment, and am I worse off than before? If the answer to all three is yes, yes, and no — they’ll go along with it.

The key innovation is voluntary mortgage conversion.

the mortgage trick

Take a typical Edmonton household. $380,000 home, $300,000 mortgage at 5.5%, monthly payment around $1,750. Under the current system, they also pay property tax on the full assessed value — land plus building — maybe $3,600 a year, call it $300 a month. And they pay income tax on everything they earn. Total housing-plus-tax burden is substantial.

Now split the mortgage. The property is roughly 80/20 building-to-land by value. The building loan continues at $240,000 — monthly payment drops to about $1,400. The land component ($60,000) converts to an LVT bond. The government assumes that portion, pays the bank directly, and the homeowner pays ground rent instead — maybe $250 a month at Phase 1 rates.

Monthly housing cost: roughly $1,650. That’s $100 less than before, and we haven’t even counted the income tax cut yet.

Phase 1 cuts income tax by 25%. For a household earning $90,000, that’s roughly $350 a month back in their pocket. Net effect: the family is $450 a month better off. The house is still theirs. The bank is whole. The land component is now government-backed, which is actually more secure than a private mortgage.

The trick is that the land portion of most mortgages is small relative to the building portion. Splitting them doesn’t create a crisis — it resolves one. The homeowner’s monthly cost drops. The bank gets a guaranteed payout on the riskiest part of the loan. The government funds it from the LVT revenue that’s now flowing in. Everyone’s incentives align.

What about the homeowner who’s 90% land, 10% building? A downtown condo on expensive dirt. Their LVT obligation is higher, but so is the income tax savings — people who own expensive land tend to earn more. And the land under a condo is split across all units. The per-unit land cost in a 200-unit building is a rounding error. Density is rewarded, not punished.

the twenty-year phase

Years 1–5: Replace property tax with LVT at 25%.

Kill property tax entirely. Replace it with LVT at 25% of ground rent. Cut income tax by 25%. Create the legal framework for separating titles from improvements.

This is the phase where people notice something strange: their tax bill went down even though the government is collecting more. That’s because the old property tax penalized buildings. Remove that penalty and construction activity increases. New buildings generate economic activity, which generates more income tax revenue even at lower rates. Meanwhile, speculators holding vacant land start paying for the first time. The revenue base shifts from punishing production to charging for location.

Voluntary mortgage conversion happens here. No one is forced. But the math is compelling enough that most homeowners opt in within a few years, the same way most people switched from cheques to direct deposit — not because anyone mandated it, but because it was obviously better.

Years 6–10: LVT to 50%, income tax to 50%.

The service-citizenship program launches. The commission system begins. Revenue bonds become legal instruments.

This is the phase where the system starts feeling different. Young people doing their service term are building infrastructure, restoring wetlands, teaching in underserved schools. The commissions are funding public goods — open-source textbooks, carbon removal, rural broadband — and the results are visible. The citizen dividend starts flowing, small at first.

Land speculators are mostly gone by now. Vacant lots in Calgary and Edmonton have either been developed or sold to people who’ll develop them. Housing costs are falling because supply is no longer artificially constrained by speculation.

Years 11–15: LVT to 75%, most other taxes eliminated.

Full tokenization of land titles. Voluntary governance layers emerge. Border fluidity between municipalities starts reshaping the map — well-governed towns grow, poorly-governed ones contract.

The income tax is nearly gone. Sales tax is gone. The economy looks different. Small businesses thrive because the tax on production is essentially zero. The tax on idle land is high. Capital flows from speculation into actual enterprises.

Years 16–20: Full implementation at 85%.

No income tax. No sales tax. Government funded entirely by LVT and resource rents. The system is mature. Citizens have earned their franchise. Commissions fund public goods. The dividend distributes surplus revenue to all residents.

Every five years, citizens vote on whether to continue. It’s reversible at each checkpoint. If it fails — revert. If it succeeds — it locks in. The system earns its own continuation.

what the speculator sees

Follow Glen from Part 1 through the transition. He’s holding a vacant downtown lot in Red Deer, bought for $180,000 in 2015, now worth $320,000.

Year 1: property tax disappears. LVT at 25% of ground rent arrives. Glen’s annual cost on the vacant lot roughly doubles, because the old property tax was low (nothing to assess) but LVT charges for the location regardless. He’s paying maybe $6,000 a year instead of $2,800.

Year 3: LVT creeps up as the system beds in. Glen’s lot is costing $8,000 a year to hold. He’s earning nothing from it. The math that made land-banking profitable — appreciation outpacing holding costs — starts to break.

Year 5: LVT at 25% means Glen’s lot costs $10,000 a year. Five years of holding costs have eaten $38,000 of his $140,000 paper gain. He sells to a developer who builds a mixed-use building. Twenty apartments, ground-floor retail. The neighbourhood gets housing, jobs, and foot traffic. The developer’s LVT is the same as Glen’s was, but the building generates enough revenue to make it worthwhile. Glen walks away with his remaining gain. The community starts getting the land value it was always generating.

That’s the whole point. Not to punish Glen — he responds rationally to incentives. Change the incentives and he does something different. The transition is designed so that every participant’s best move, at every phase, is also the move that’s best for the community. No one needs to be altruistic. The structure does the work.

what remains open

Four posts to sketch something that usually takes a book. Open questions remain, and I’d rather name them honestly than hand-wave.

Disability accommodations in the service path. The service requirement must be universally achievable. “Deliberately challenging but achievable regardless of physical ability” needs more than a sentence — it needs specific program design. Cognitive disabilities, chronic illness, mental health conditions. The service paths need to be genuinely diverse, not performatively so.

Existing zoning unwind. Every municipality has decades of zoning decisions baked in. How do you transition from “this parcel is zoned single-family residential” to “build what the land value supports”? Probably gradually, with the LVT incentive doing most of the work — zoning restrictions that suppress land use become obviously costly when you’re paying for the location value you’re not using.

Revenue bonds in bankruptcy. If a revenue bond issuer goes bankrupt, what happens to the bonds? They’re tied to LVT increases, not the issuer’s balance sheet, so they should survive. But the legal framework needs to be explicit.

Judicial structure. The constitutional core needs a court system to interpret and enforce it. How that court is selected, how it’s checked, and how it interacts with sunset provisions — all unresolved.

Scale. Could a single municipality in Alberta actually deploy this? Provincial law constrains what municipalities can do with property tax. You might need provincial cooperation, or a sufficiently autonomous charter city framework. This might be the hardest political problem of all — not designing the system, but getting permission to try it.

I keep coming back to the oldest question in political philosophy: how do free people govern themselves without the government eventually eating the freedom? Making the government re-earn its existence every year, from citizens who earned their voice — that’s one answer. Whether it works is an empirical question, and empirical questions need experiments.

Part one: the economics. Part two: the governance. Part three: legitimacy and resilience.