Variations on the Land Value Tax
The Land Value Tax, like the Fair Tax, is meant to be a single-tax scheme to replace the current multitude of taxes. Readers of the old Free Liberal will recall quite a few articles where I poo-poo it and one where I posit that in some form it might help as housing prices reach their bottom - assuming you do something to compensate those of us who are underwater on our mortgages.
In this essay, I will cover two topics: a variation on wage value and the main implementation difficulty of land value tax implementation: federalism.
First, the wage value alternative. LVT supporters trace their intellectual heritage to John Locke, who like modern geolibertarians believe that the moral justification for an LVT is to compensate individuals who do not have access to the ownership of that piece of land - especially renters. Landlords would pay others for the right to exclude others and even to charge them for holding land that should be available, but cannot be because land is a fixed resource.
Land is not important merely because it is fixed, but because it is productive. In libertopian theory, if everyone had their own land in a free economy, everyone could grow their own food or otherwise exploit their land and thereby avoid working for others - or if they did - they could get a fair wage.
When the labor market (and market for goods) is not free, business owners can be more selective in hiring and pay less, even to the extent of pocketing some portion of the productivity of labor rather than paying it fully to employees. Indeed, retention of such profit is a key component of capitalism and why capitalism cannot be said to be the same thing as a free market. Indeed, in a perfectly competitive labor market, even in a principle-agent hierarchical organization - all employees and managers would be paid the same wage - all things being equal.
How is that possible? Simply, the top manager is responsible to the owners for running the firm. If the manager hires someone to help him carry out his job, that person is doing the manager or owners work and therefore has the same value. Assuming no barriers to entry and homogenous resources, which are essential assumptions in a free market, all work must have equal value since the authority to do it comes from the same place.
It is only when work is segmented that markets become unfree - which is the essence of an unfree market - which leads to unequal wages, unequal positions and segmentation, as well as a scarcity of positions and the retention of profit from labor by management and business owners rather than its full distribution to wage earners. This type of market is called monopsonistic competition, or monopsony if there are very few employers.
It would seem that the scarcity of positions is the modern equivalent of the scarcity of land. When individuals are excluded from land ownership, they are morally entitled to the proceeds of a land value tax. As the economy moves from being land based to talent based, are not those who are excluded entitled to the same type of compensation from an income-value tax, especially if they have been disadvantaged in their ability to obtain an education? I am not talking about simple unemployment compensation here, but either a permanent payment for being excluded from the labor force (roughly equivalent to a pension when someone is "retired" - which is a form of exclusion) or by payments to become competitive in terms of skills. This training should be available to all who desire an upgrade in their skill level, not just the illiterate. If such a training program were fully implemented, there would be no justification for divergent wages and the labor market would, in fact, be free.
The second topic explores why federal income taxes can never be replaced by a federal land value tax. I currently live in Alexandria, Virginia and am planning a move to the New York metropolitan area. Land values are significantly higher where I am going, so one would think that I would favor a land value tax to reduce the land prices I would have to deal with - or to at least provide me with a dividend so that I can afford housing. Leaving aside the appropriateness of higher prices because too many people desire to live in too small a space, there remains the question of how high LVT taxes would have to be and how widely the proceeds of that tax would have to be distributed. If the LVT is federal, then the scope of the tax would be nation-wide and the goal would be for land in Great Neck, Long Island to have the same value as equivalent land in Cedar Rapids, Iowa; Alexandria, Virginia and Stanton, Virginia. That would create some wicked tax rates in urban areas and some hefty dividends in rural areas.
This is also the Achiles Heel for any national LVT, since the most populous states, while not a majority in the Senate, are a majority in the House of Representatives. For a federal LVT to be enacted would require a constitutional amendment. There are simply too many members of the House for such an amendment to ever be submitted to the states for ratification - or to call a constitutional convention upon petition by low-property value states. Congress has the plenary power to judge both ratification and convention calls - these are not justicable (there is no access to the courts for disputes), so any such amendment try is dead and with it the LVT as a federal source of revenue.
It gets worse. Morally, if an LVT is a just act, then in a world economy it must be a world-wide tax - meaning that if someone is not able to get land in Bombay or New York, they must be compensated. In practice, this would require that the LVT be collected globally with a global citizens dividend to be paid to everyone, especially those who are not allowed to come to more developed areas. Anyone who is not allowed to immigrate to the United States would be entitled under LVT principles to a payment and everyone who is keeping them out - in essence all Americans and Europeans, would be required to make a payment for that world citizens' dividend. I challenge anyone who favors an LVT to examine this implication of their argument and see if they can swallow it and its implications.
I suspect this call to be ignored, since going down that road makes enacting an LVT impossible in Tea Party America.
In this essay, I will cover two topics: a variation on wage value and the main implementation difficulty of land value tax implementation: federalism.
First, the wage value alternative. LVT supporters trace their intellectual heritage to John Locke, who like modern geolibertarians believe that the moral justification for an LVT is to compensate individuals who do not have access to the ownership of that piece of land - especially renters. Landlords would pay others for the right to exclude others and even to charge them for holding land that should be available, but cannot be because land is a fixed resource.
Land is not important merely because it is fixed, but because it is productive. In libertopian theory, if everyone had their own land in a free economy, everyone could grow their own food or otherwise exploit their land and thereby avoid working for others - or if they did - they could get a fair wage.
When the labor market (and market for goods) is not free, business owners can be more selective in hiring and pay less, even to the extent of pocketing some portion of the productivity of labor rather than paying it fully to employees. Indeed, retention of such profit is a key component of capitalism and why capitalism cannot be said to be the same thing as a free market. Indeed, in a perfectly competitive labor market, even in a principle-agent hierarchical organization - all employees and managers would be paid the same wage - all things being equal.
How is that possible? Simply, the top manager is responsible to the owners for running the firm. If the manager hires someone to help him carry out his job, that person is doing the manager or owners work and therefore has the same value. Assuming no barriers to entry and homogenous resources, which are essential assumptions in a free market, all work must have equal value since the authority to do it comes from the same place.
It is only when work is segmented that markets become unfree - which is the essence of an unfree market - which leads to unequal wages, unequal positions and segmentation, as well as a scarcity of positions and the retention of profit from labor by management and business owners rather than its full distribution to wage earners. This type of market is called monopsonistic competition, or monopsony if there are very few employers.
It would seem that the scarcity of positions is the modern equivalent of the scarcity of land. When individuals are excluded from land ownership, they are morally entitled to the proceeds of a land value tax. As the economy moves from being land based to talent based, are not those who are excluded entitled to the same type of compensation from an income-value tax, especially if they have been disadvantaged in their ability to obtain an education? I am not talking about simple unemployment compensation here, but either a permanent payment for being excluded from the labor force (roughly equivalent to a pension when someone is "retired" - which is a form of exclusion) or by payments to become competitive in terms of skills. This training should be available to all who desire an upgrade in their skill level, not just the illiterate. If such a training program were fully implemented, there would be no justification for divergent wages and the labor market would, in fact, be free.
The second topic explores why federal income taxes can never be replaced by a federal land value tax. I currently live in Alexandria, Virginia and am planning a move to the New York metropolitan area. Land values are significantly higher where I am going, so one would think that I would favor a land value tax to reduce the land prices I would have to deal with - or to at least provide me with a dividend so that I can afford housing. Leaving aside the appropriateness of higher prices because too many people desire to live in too small a space, there remains the question of how high LVT taxes would have to be and how widely the proceeds of that tax would have to be distributed. If the LVT is federal, then the scope of the tax would be nation-wide and the goal would be for land in Great Neck, Long Island to have the same value as equivalent land in Cedar Rapids, Iowa; Alexandria, Virginia and Stanton, Virginia. That would create some wicked tax rates in urban areas and some hefty dividends in rural areas.
This is also the Achiles Heel for any national LVT, since the most populous states, while not a majority in the Senate, are a majority in the House of Representatives. For a federal LVT to be enacted would require a constitutional amendment. There are simply too many members of the House for such an amendment to ever be submitted to the states for ratification - or to call a constitutional convention upon petition by low-property value states. Congress has the plenary power to judge both ratification and convention calls - these are not justicable (there is no access to the courts for disputes), so any such amendment try is dead and with it the LVT as a federal source of revenue.
It gets worse. Morally, if an LVT is a just act, then in a world economy it must be a world-wide tax - meaning that if someone is not able to get land in Bombay or New York, they must be compensated. In practice, this would require that the LVT be collected globally with a global citizens dividend to be paid to everyone, especially those who are not allowed to come to more developed areas. Anyone who is not allowed to immigrate to the United States would be entitled under LVT principles to a payment and everyone who is keeping them out - in essence all Americans and Europeans, would be required to make a payment for that world citizens' dividend. I challenge anyone who favors an LVT to examine this implication of their argument and see if they can swallow it and its implications.
I suspect this call to be ignored, since going down that road makes enacting an LVT impossible in Tea Party America.
posted by Michael Bindner at 9:40 PM
21 Comments:
The arguments you present against the adoption of land value as a primary (and, potentially exclusive) source of revenue for public goods and services have been raised before. They were addressed in Henry George's own writings and those of a long list of writers who followed in George's footsteps. Even a handful of prominent economists have stood beside George on these matters over the last century.
In the end, the question raised is one of moral principles: Is the earth the birthright of all persons equally? Or, Do some persons have a greater claim to portions of the earth than other persons?
The course of history has involved endless and bloody conflicts over the control of territory. The borders of our "modern" nation-states are each and every one the outcome of some distant, recent or ongoing war. One group of people is displaced or annihilated by a stronger or more numerous group, until the next war forces a mass migration or decimation of yet another group of people.
Henry George's perspectives are derived less from Locke than from those advanced by Thomas Paine. Paine's pamphlet 'Agrarian Justice' is one of the most remarkable documents of the late eighteeenth century (perhaps of any century). He understood fully that the earth was our common heritage, that its resources provide a common fund from which all that was needed for survival came. And so, he called for the individual to compensate society for the privilege of exclusive access to any portion of the earth. This compensation was to be in the form of a "ground rent" payment associated with that parcel or tract of land. Henry George's unique contribution to the discussion was to observed that market forces would determine by competitive bidding what the amount of ground rent payment would be.
This rental payment was, in his view, not a tax at all because taxation involved the confiscation of legitimate private property or of earned income. Rent (or its capitalized selling price for land) is neither.
As time has passed, less and less of the rent fund Paine and George pointed to has been relied upon for public revenue. Instead, societies have imposed taxes on income from all sources, on all commerce and on all assets. However, by cleverly redefining the gains on the sale of assets that are not capital goods but only claims on capital goods, unearned income flows are today taxed at much lower effective rates than income earned by actually producing goods and services.
In summary, there is so much wrong with how government raises its revenue via taxation that economic stability and growth are strangled. Rather than re-examine long-held but mistaken conclusions about the economics of taxation, government puts off real reform and resorts to borrowing (and who has the funds to lend to government but those who have benefited most by the status quo) and, when this is insufficient, to the self-creation of credit by means of monetary expansion.
Ed, thanks for commenting. It is good to hear from you.
I am arguing against the practicality of implementing the tax, not the tax itself. It may be possible to implement it in the future, but not without first having world federalism and currency reform first.
I have long held that cooperativism, aka libertarian socialism is the answer to the mal distribution of land, as cooperativist employers also serve as purchasing agents - and can even hold the land in trust for their members. Once cooperatives hold "enough" land, the ability for the remainder to be used exploitively falls to zero.
The work with local officials continues with moderate success given the resources available for the effort. This is being done under the direction of Josh Vincent who heads the Center for the Study of Economics based in Philadelphia. The approach of his organization has always been incremental for reasons of practicality.
As my comments above reveal, my sense of what will trigger change is to stimulate a deep public discussion of how societies ought to be better organized so that all persons will have the opportunity to reach our full potential. My experience teaching political economy to adults has convinced me that the fundamental challenge is one of countering the idea that it is somehow just for some individuals and some entities to control a portion of the earth and its natural resources without fully compensating the remaining members of the community (local and global) for this privilege.
The ultimate success of cooperative movements and of world federalism as a replacement for the system of nation-states will occur only when moral relativism has been rejected in favor of universal principles of justice.
This is why I stress that any discussions of where public revenue should come from distinguish between societally-created values (i.e., rent) and taxation as confiscation of legitimate private property and earned income.
Just a few comments beyond Ed Dodson's contributions:
(1)LVT already is in effect in most American (and many other) communities, in that a large portion of the real estate tax base is land value. Single-tax advocates just want to expand it, to replace all other taxes.
(2)The 16th Amendment to the U S Constitution already authorizes Federal collection of land rent:
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived..."
(3) There's a good argument for worldwide sharing of land rent, but there are plenty of moral and practical benefits to LVT even if limited to any nation, state, or smaller jurisdiction.
(4)"As the economy moves from being land based to talent based, are not those who are excluded entitled to the same type of compensation from an income-value tax...?" Well, there has been a proposal to tax genetic endowment (see http://menaceofprivilege.com/2008/10/taxing-your-genes/) which I find appalling but might appeal to those who feel the government should control everyone's actions to the maximum feasible extent.
Hello, I'd just like to leave a comment on the issues on LVT you raise.
It would seem that the scarcity of positions is the modern equivalent of the scarcity of land.
The fundamental difference is that positions can be created by people, land cannot. There is no theoretical scarcity of positions, more or less true depending on how free the economy is ofcourse.
When individuals are excluded from land ownership, they are morally entitled to the proceeds of a land value tax.
You will find that most LVT/CD proponents nowadays say that anyone (who is a citizen, that's another debate) is entitled to the proceeds of a land value tax, and compensation automatically occurs if you own/reside on land that is less worth than what you getting as a CD.
As the economy moves from being land based to talent based
The economy is and will be land-based as long as we live on the earth. Everyone lives somewhere and profits from "place" somehow.
Leaving aside the appropriateness of higher prices because too many people desire to live in too small a space
If a lot of people wants to live in a certain place, it is because there is economic and other perceived benefits in living there, hence the premium on land. Almost all GDP growth occurs in large cities these days, and this is both good for the economy, and unfortunately excellent for the owners of property in these scarce locations, because they can cash in most of the increase in economic activity simply by owning a claim to land.
...and the goal would be for land in Great Neck, Long Island to have the same value as equivalent land in Cedar Rapids, Iowa
Absolutely not, the goal is for land value to be taxed on what the market decides the rental value is.
That would create some wicked tax rates in urban areas and some hefty dividends in rural areas.
The tax rates would be the ecact same (10, 50, 80, 100% of rental value, or whatever is decided), but the proceeds different from different sites. Dividends would be the same for all, and in rural areas they would benefit from the difference between LVT/CI, yes.
Morally, if an LVT is a just act, then in a world economy it must be a world-wide tax - meaning that if someone is not able to get land in Bombay or New York, they must be compensated.
Morally it is better to apply the principles one believes in, at whatever scale it can be done, than not do it at all. Implementing LVT on any level is just, even if it is not applied everywhere.
I haven't treated employment vs land rents, because I don't agree that other people's talents deprive me of anything, quite the opposite, but landownership does in a very real sense. Witness the events of 2008, land values are real, occur whether we tax them or not, and better to tax them away than to letting them be capitalized into speculative, mortgaged claims on real wealth, benefitting some people over others in an arbitrary way.
Best regards
- Mr. Johansen
In a monopsony, employers create a scarcity of positions for hire. If the same firms also lock competitors out in a less than free labor market, they have no self-employment alternative.
Land can absolutely be create, or at least artificial growing space, hydrponically. Also, most animal husbandry is done factory style nowadays. Irrigation turned the California central valley from a dessert to the source of most vegetable production. Not only can land be created, it has been - and space is infinite.
Taxing land value away will never fly, nor will a national LVT. While rental income can be (and is) taxed (except to the degree that it is hidden from taxes in trusts) - the road to get such taxes is almost impossible. Just taxing rent from land now hidden in trusts is impossible. A federal LVT that goes beyond that is just silly.
A federal land value tax for privately owned real estate is problematic. But a land value tax is a viable way to fund state and local governments. More viable than income taxes, really.
The federal government could have a carbon tax, other pollution taxes, radio spectrum taxes, port fees, and airspace fees. This probably wouldn't be enough to fully replace the current labor/income system, but it could replace a significant chunk.
I'm personally not sold on funding government entirely with land value taxes. I just think it should be a significant component. User fee like taxes (gasoline for highways, etc.), moderate tariffs (between 10 and 20%), and a tax on older copyrights should also be part of the mix.
Thank you for your response!
First of all, LVT isn't about farming. Land values are now primarily in urban land.
Land can absolutely be create, or at least artificial growing space, hydrponically. Also, most animal husbandry is done factory style nowadays. Irrigation turned the California central valley from a dessert to the source of most vegetable production.
"Land" in this question is not arable land, it is the advantage of location and natural endowment
not produced by the single land-owner. If you can somehow magically grow all the food in the world on a half-acre residential plot in Cincinatti, that is fine, you'll get taxed on the current market rental value of a half-acre residential plot in Cincinatti.
Not only can land be created, it has been - and space is infinite.
Then why does land command a premium? If location here in the real world doesn't matter, why is there still an enourmous difference between land values in rural Iowa and New York? As the growth of the economy makes most products cheaper in real terms, and we move towards city-living, we tend to spend even more of total income on land.
Taxing land value away will never fly, nor will a national LVT.
Arguing for political possibilities is one thing (I don't particulary deal in that), but the merits of a proposal still stands. I don't care if the death penalty is politically impossible to remove, I'm still against it.
While rental income can be (and is) taxed (except to the degree that it is hidden from taxes in trusts) - the road to get such taxes is almost impossible. Just taxing rent from land now hidden in trusts is impossible. A federal LVT that goes beyond that is just silly.
LVT is a tax on imputed rental income from land only, collected on all sites. If you have a land registry, and an adress to send the tax-bill to, you are pretty much good to go. It's income tax, VAT/sales taxes and CT that creates compliance difficulties.
-Mr. Johansen
Carl M: Ok, I'd agree that in so far individual states create land value more than the federal government, they should be the primary receipients of LVT, and I also agree that typical cross-border "land" such as you mentioned are more worthy of federal funding. In the previous posts I've been mainly arguing on the merits of LVT, not what level of government should collect it.
-Mr. Johansen
As long as the wealthy and others create an aristocracy of debt holders, income at the high end should be taxed to pay that debt, until that debt no longer exists.
As for taxing away land value, not everyone needs to be able to buy or rent property in midtown Manhatten. The best way to rationalize land values is to shift the ownership of the workplace to the employees and have these firms obtain the land (and build and finance the housing and pay any land value taxes) for cooperative members. Cooperative members would not need a citizen dividend, although one might be paid to cooperative non-members who reside in areas dominated by the cooperative so that they may receive some servides as if they were members. Of course, all of this could be handled on ledgers without the flexing of tax authority. Cooperatives could also provide most of those educational and social services most often associated with taxation.
I find this strange. It is quite allright when it comes to taking people's income for contribution of work and capital, or enacting business and labour-busting taxes like VAT. But when it comes to land values, which by definition is created by anyone but the landowner, that's called flexing tax authority. I love worker-owned businesses and coops, and I think nothing benefits such modes of operation more than removing as much damaging taxes on work and capital as possible and taxing unearned wealth instead.
-Mr. Johansen
On another note. As long as incomes are to be taxed, I quite like your NBRT-proposal, if it is used to eliminate payroll and corporate taxes. It's much better than a VAT by not punishing lower profit-margin businesses, much less paperwork and can be made progressive. Count the NBRT as tax paid for individuals (whether received as wages or dividends), apply a handsome standard deduction in the bottom so employees can get a refund.
-Mr. Johansen
The NBRT is all about distributing tax benefits to displace government as the source of social goods, from family wages to social spending. It is designed to give all employers an incentive to do what cooperatives do naturally. The VAT is designed to keep taxation noticable so it stops. If an LVT were more prominent, it would eventually make it into product cost, both through land rents by business and individuals, which demand some kind of revenue to pay the tax. If the amount of government funded by the VAT is the same as funded by the LVT, then the cash flows eventually must be similar in terms of the impact on the price of goods, all other things being equal.
The NBRT is all about distributing tax benefits to displace government as the source of social goods, from family wages to social spending.
Ok. Agreeable goals. I see you've included credits for Ed, healthcare etc. Fine by me, but these credits will also need to be extended on individuals if people don't want the coop to manage things for them.
If an LVT were more prominent, it would eventually make it into product cost, both through land rents by business and individuals which demand some kind of revenue to pay the tax.
No. The economics of LVT shows that it doesn't increase cost on it's own, it takes from the privately collected land rent that occur anyway. Returns to land rents are residuals from labour and capital. Taxes on income depress land rents to a certain degree, while public spending increase land rents, usually in a very inequitable way. I'd rather not have tax from income create land value for some.
If the amount of government funded by the VAT is the same as funded by the LVT, then the cash flows eventually must be similar in terms of the impact on the price of goods, all other things being equal.
As long as land rents occur anyway, encouraging speculation and fattening the financial sector, I'd rather have them collected, and if that's still not enough for public spending, go for pigovian excises or income/NBRT in that order. If income/NBR-taxes on top of LVT behaved the way you want them to, making businesses provide for people, or enabling indivuals to do it themselves, potentially avoiding them at all, I wouldn't disagree with that so much.
-Mr. Johansen
Imposition of an LVT will drive people into rentals to avoid taxes, changing the price of rentals upward, although tax cost shifting from existing rentals will not increase the tax cost - however transferring the entire burden of spending to an LVT where it is currently a marginal tax, or even expanding it to what would otherwise be collected by a VAT, would cause landlords to pass these costs to tenants, although some landlords may attempt to sell properties to those who would want to pay the tax. The point is, this will not be disruptive AND more importantly, there are only two avenues to fund payment of the tax - sell/forfeit property or pay with cash income from personal or tenant wages - so from a product cost basis some amount of every product purchase price can still be traced to the amount required to pay the LVT.
Let me say that again - the share of purchase price that is used to pay the LVT is knowable and it is not zero, even though it is hidden and not specifically an object of tax.
Imposition of an LVT will drive people into rentals to avoid taxes,
Why? Land costs are the same whether you pay them as an owner or a landlord pays them, and whether they are collected privately or publicly. If you want to avoid taxes on principle, sure, you have the opportunity to avoid them by moving. Individuals and businesses have the opportunity to move to lower value land now, but that doesn't seem to happen as a rule.
however transferring the entire burden of spending to an LVT where it is currently a marginal tax, or even expanding it to what would otherwise be collected by a VAT, would cause landlords to pass these costs to tenants
Landlords will not be able pass on the cost LVT that's the whole point, but removing other taxes will increase the market rental vale of land, which the landowner will receive (either as actual or imputed rents), and pay up. Passing on is what VAT does, LVT takes what value exist in the market.
although some landlords may attempt to sell properties to those who would want to pay the tax.
That's what drives out speculation from the land-market, yes.
there are only two avenues to fund payment of the tax - sell/forfeit property or pay with cash income from personal or tenant wages - so from a product cost basis some amount of every product purchase price can still be traced to the amount required to pay the LVT.
Sure, but not as an imposed cost as the result of the tax, the land values are there no matter what.
Sorry for cut and pasting, but the wikipedia-article on LVT explains this simply:
Because the supply of land is inelastic, market land rents depend on what tenants are prepared to pay, rather than on the expenses of landlords, and so LVT cannot be directly passed on to tenants.[4] The direct beneficiaries of incremental improvements to the surrounding neighborhood by others would be the land's occupants, and absentee landlords would benefit only by virtue of price competition amongst present and prospective tenants for those incremental benefits; the only direct effect of LVT on prices in this case is to lower the unearned increment (reduce the amount of the socially generated benefit that is privately captured as an increase in the market price of the land). Put another way, LVT is often said to be justified for economic reasons because if it is implemented properly, it will not deter production, distort market mechanisms or otherwise create deadweight losses the way other taxes do.
-Mr. Johansen
Let me say that again - the share of purchase price that is used to pay the LVT is knowable and it is not zero, even though it is hidden and not specifically an object of tax.
True, but the cost of not taxing land values is known, it's called debts and privately collected taxes on socially created wealth, and the cost is definetly not zero.
-Mr. Johansen
Some of the distortion is welcome. An LVT is invisible to non-property owners unless the landlord makes a point of having to pay it, which he will if it is a component of rent control, which I know you would think is unneccessary under an LVT regime, but will likely happen anyway. The value of a VAT is that it can appear on a receipt to make government spending more visible. That is the whole point of having a VAT rather than rolling everything into an NBRT.
which he will if it is a component of rent control, which I know you would think is unneccessary under an LVT regime, but will likely happen anyway.
I live in northern Europe, and when rent control shows up from time to time, it is referred to as US-style rent control. Even countries that taxes half your income without grinning thinks rent-control is overly socialistic. So yeah, I think it is uneccessary. If rent-control for some reason is applied, and caps on LVT not applied, landowners won't moan, they will either flee or appeal the valuation, and the land value/LVT bill will quickly wither down to rent-control levels, LVT adapts to any usage-restrictions.
The value of a VAT is that it can appear on a receipt to make government spending more visible.
Are you seriously saying that having a VAT is preferrable, even when distorting the economy, because then people could get receipts to moan about? I respectfully disagree. What I would have liked to have when I bought a house, was a detailed description of what I was paying for, and a reasonable explanation why the h... I was paying the previous owner for a good, central location with lots of amenities already paid for by my income-taxes/VAT.
-Mr. Johansen
The purpose of the VAT is to fund government services, like Defense, that we could otherwise do without. My argument is that, compared to LVT, the amounts are about the same in terms of product cost, regardless of the distortion.
The real distortions are of unequal power. Until these are solved, an LVT will be a Band-Aid, with the biggest source of these being power over the production and distribution process. Taxes on capital gains and dividends must be high enough to counter these in the short term, but the real corrective is to use social insurance taxes and pension contributions to channel power and ownership from plutocrats to employees. Land is an afterthought if you do that.
The real distortions are of unequal power. Until these are solved, an LVT will be a Band-Aid, with the biggest source of these being power over the production and distribution process.
If you are so concerned about unequal power, why do you advocate taxing production (the real economy) and herding profits over to land and financial markets? I recommend you watch this interview with Michael Hudson, especially from 3:07 and onwards for a take on this. Land is not an afterthought.
Taxes on capital gains and dividends must be high enough to counter these in the short term, but the real corrective is to use social insurance taxes and pension contributions to channel power and ownership from plutocrats to employees.
+ removing barriers to entry, including taxes on real wealth-producing activities.
-Mr. Johansen
Post a Comment
<< Home