End All Taxes...Except One
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In this case there would be a great incentive for people to live less densely, which seems a bad thing. Someone who went off and lived in the sticks where land was practically worthless could reduce their tax bill to next to nothing. Especially if they lived in a mobile home (deluxe versions of which would rapidly appear).
What's wrong with low density? There is a real economic value to variety and a minimum density to support certain kinds of commerce. You can't take this to a limit assuming there is no cost (if only opportunity cost) to moving to a less dense area.
Also, at least in the easy coast, the least dense areas are typically already state or national parks. Wyoming is the exact opposite. 5 digit license plates are common there.
Also, I'm surprised you would suggest that law makers give a shit about the distortion taxes cause, and hope to minimize it. A politician's actions can pretty much always be directly tied to motovations to increasing influence and getting elected. Altruistic politicians that actually care about society don't exist.
The only way to get around it is to operate in another currency. But if there are any expenditures at all, they are going to pay someone in the currency, and need to be spent somewhere. This would work best with minimal government expenditures to minimize the motivation to avoid using the currency.
It would be pretty easy to make the implicit tax small enough to not only discourage avoiding the currency, but actually make the currency more stable than others tied to governments that don't know how to control spending.
However, it might be temporarily sustainable if a large entity (e.g. China) behaved irrationally and decided to hold dollars in spite of the tax.
If new cash was created only by government expenditures, and not by a lending model like the Fed, I can easily imagine a smaller inflation rate than any other currency. Just limit spending to be a small percentage of the previous year's growth in GDP.
Then people would avoid taxation in other countries and inflation in other currencies by holding this currency.
In a libertarian sea-steading micro-nation, the government would spend money on the police, courts, and prison (though banishment would be a common punishment). The police could be a few prefects who control robots.
Second, as tome suggested, the government would have to take measures to force people to use the currency. This has all kinds of bad effects.
Nope. They use a variety of taxes because that increases the ways that people are interested in the tax system, which increases their power. Every different tax is an opportunity to reward/punish and "you want to give me money to make sure your interests are represented."
And, the variety of taxes actually makes the system more vulnerable to gaming. Complexity is how/why tax lawyers make big bucks.
I am loath to use the term "wealth redistribution" because it tends to bring around the less thoughtful, but louder, segment of the population which rails against anything that remotely sounds like socialism. However, consider that this is one of the reasons for the progressive income tax. Essentially, money means less to you the more you have of it, especially considering that sustainable goods for comfortable life actually cost very little (thus meaning that taking ten percent of someone earning $35,000 dollars a year is far more likely to cut into their cost of living than taking ten percent of someone earning $500,000 dollars a year). One tax certainly introduces problems of point vulnerability, but it also brings up a problem with different taxes on different income brackets.
If the tax rate is so high that this is a worthwhile use of a rich person's money, we've already lost.
However, every time I try, I find the concept of "unimproved value of the land" coming apart in my hands. There's really no way to separate the value of the item on the land from what is on the land. Oh, we do talk about lot values, but that's ultimately an abstraction that once it actually started to matter would be subject to gaming and interpretation.
It isn't really meaningful to talk about the economic value of something that doesn't exist. You can only determine the value of something by seeing what people will actually give up to obtain the item. When you ask about something that doesn't exist, you are asking people to estimate what they might be willing to give up if the thing actually existed, and people are notoriously bad at that.
(Note that the failure is ultimately human, not economic; a being that was more rational about being able to hypothesize what they would give up might not have this problem, but we have to go to government with the beings we have, not the beings we wish we had. This metric would start game-able and get worse.)
So I guess my answer is I can't seem to wrap my head around what's actually being proposed enough to elaborate on what my point was meaningfully. Consider this a strike against this summary of the proposal. (Whether it applies to the original I don't know, and I don't care enough to go check.)
(... actually, if you want to get really meta, the problem is that even if you waved a magic wand and had this implemented, Congress would still have it mangled inside two years flat. Congress is the real problem here, or government, or special interests, etc. The tax system is more effect than cause.)
We just need the Constitution, U.S. Code, and state laws on a DVCS. It wouldn't need to even be official; representatives would just essentially make the formal commit of publicly popular diffs, or lose reelection.
Sure there is. We know this because commercial real estate appraisers (whom I wrote software for for many years) do it all the time. The best method is to look for comparable unimproved properties, or to get a value on an improved property and then subtract the cost of the improvements. Not an exact science, but quite doable if you triangulate from several properties.
Even anti-redistributionists acknowledge that taking 10% of the income of someone making $5e5 will reduce that person's lifestyle less than taking 10% of someone making $35k. I think the issue is more that this isn't the case -- the 500,001st dollar is taxed at a much higher rate than the 35,001st dollar.
I think the issue is more that this isn't the case -- the 500,001st dollar is taxed at a much higher rate than the 35,001st dollar. I can't quite tell if you are agreeing or disagreeing here. I was saying that the property tax is unfair in this case. There are many ways in which someone who has a high income could be taxed lower than someone with a lower income (which is what the progressive income tax is supposed to correct).
Are you arguing that the complexity of the tax code makes it more impervious to cheating?
Sigh. I wonder if forums train one to write verbosely. When I say exactly what I mean, and no more, I always seem to end up having to produce the macroexpansion of it in the grandchild. I wonder if one eventually starts to anticipate this.
Can we address the problem by extending the language? Another poster mentioned a /noextrapolate tag.
What about qualitative metadata, to indicate how carefully one should read the comment?
We could end our comments with a comment character in a representative language.
; means "brief"
# means "pretty normal"
// means "I am (tired || pained
// || procrastinating worse than usual)"
//
But if they did actually clone genetically engineered dinosaurs from mosquito DNA,
I'd prefer they did it on an island well off the mainland to ensure that
they couldn't escape and endanger the population at large.
/noextrapolateI see now that you were making a point about the distribution of economic incentives that result from tax policy.
> Someone who went off and lived in the sticks where land was practically worthless could reduce their tax bill to next to nothing.
Depending on the method used to assess the value of land, the market would adjust for this. There are still other great incentives for people to live in cities, of course.
As acquiring expensive, more attractive, inner city land would be a recurring burden for land owners, they would try to make enough profit out of it to offset the tax. The best way to do that would be to build tall buildings that have high population density.
Am I wrong ?
It would be much smaller, of course, but the cost and accident risks of commuting and loss of high-density conveniences would be a strong countervailing force for most.
The real trick of a tax system is to punish productivity as little as possible while charging fees for resource usage. Toll roads, gasoline taxes, park entrance fees are "good" taxes. Part of the problem with Henry George's scheme is that it doesn't take those into account.
It falsely assumes that the single tax will supersede all others.
The probable outcome, though, is that such a tax would be, in effect, a massive tax increase on a particular asset class, which would then be added to the other taxes, if not at inception then slowly over time.
There is a compelling reason why average Californians cling to Proposition 13 even though its major beneficiaries by far are commercial property holders. They sense intuitively that, if they repeal Prop 13, the dispensers of public largesse in Sacramento (and their counterparts at the county level) will simply devour the new funds and stand there panting for more.
If that is the historical record with Prop 13 (and it is), why would anyone want to permit the government to declare open season in a tax sense upon such property as an asset class? Could we really trust our leaders to honor the limitation that is implicit in the idea of a single tax?
"The proposition's passage resulted in a cap on property tax rates in the state, reducing them by an average of 57%. In addition to lowering property taxes, the initiative also contained language requiring a two-thirds majority in both legislative houses for future increases in all state tax rates or amounts of revenue collected, including income tax rates. It also requires two-thirds vote majority in local elections for local governments wishing to raise special taxes."
-- http://en.wikipedia.org/wiki/California_Proposition_13_%2819...
In 1978, Californians voted a radical roll-back in property taxes when they enacted Prop 13. This proposition also stipulated that every person owing real property got a baseline valuation (either its fair market value in 1978, when Prop 13 took effect, or its fair market value on the date of any transfer upon its sale), from which the tax could only increase at a maximum of 2% per year.
Thus, companies like HP, which owned vast tracts of valuable property in prime areas, have reaped huge benefits from this cap because they are effectively paying property taxes on values from a different era altogether.
Young couples who bought small condos within the past 5 years are also paying far more in property tax than upper middle class persons living in fancy suburbs (those who have held their homes since 1978).
Yet, in spite of the obvious inequities that have resulted, voters won't even touch any attempts to repeal Prop 13 or even to enact special propositions that would put commercial property owners on a separate, higher-taxed path.
The reasons, I think, are those I set forth in my comment above - they don't trust what public officials will do with an expanded taxing power.
The problem with radical changes to taxation schemes is that they have to be made slowly to avoid chaos. Ignore for a moment the last ten years of US housing history. If property taxes doubled tomorrow, the prices of houses would drop by some percentage as the marginal cost of a bigger house increased. And, we now know what happens when housing prices drop :) Slow changes could allow for gradual adjustment.
I think a consumption tax is much more reasonable, with the end goal of increasing exports in mind.
Actually, falling property values are not killing tax revenues in CA. Because of Prop 13, the taxable basis for a lot of property is less than the market value, so the taxes on that property will continue to go up.
Yes, the property taxes paid by recent buyers will go down because their taxable basis is decreasing with market value.
The net result is that the hardest hit areas are seeing a modest decline in property tax revenues.
Before Prop 13, CA govts simply adjusted the rates to keep revenues stable/increasing when property values dropped. When values increased again, the rates didn't go back down, thus ratcheting revenues up.
That's why Prop 13 was passed.
The scenario is different in CA and other locales with only event driven reassessments, but prop 13 and similar measures only provide upside protection for the consumer, there isn't downside protection for the state.
Actually, there is downside protection for govt, and we're seeing it now.
The downside protection is in the property whose taxable basis is lower than its market value. If the taxable basis tends to grow slower than the market value, some basis will be going up even when overall market value goes down.
And then there's the question why govt should have downside protection. I don't.
The government really shouldn't have downside protection, it's just more evidence as to why property taxes aren't a very good basis for taxation, as the original article suggested and I disputed. Property had the distinction of being a more stable asset price, but when the market rose abnormally, government got fat off of the proceeds, and is now paying the price as capital is being reallocated from property assets.
At that point the system would be reformed, peacefully or not. Either the burden of taxation would be shared more evenly across the electorate, or a new electorate would consist entirely of taxpaying property owners.
My only question is: why does Reihan Salam want to start a civil war?
All this brings up an interesting point: the saving grace of the USA's hideously complex tax code is that practically everyone complains about paying taxes. Maybe that's what holds the country together.
(I'm joking, but only a little bit).
My issue with property taxes is that the government gets into the estimation business. I'd prefer a sales tax because it seems less likely to distort market behaviors and is less susceptible to political manipulation.
As for estimation, we can create good incentives. If the government estimates the value at X, and you can't sell it for at least 95% of X (lets say in 6 months), then the government must buy it at X.
(Not that I expect this to ever happen.)
Tobacco tax and tax breaks for energy efficient cars being prime examples.
They will never willingly give up that kind of power to modify behavior.
People don't really get rich simply by owning land -- well, not since the Industrial Revolution in early 1800s. One tax on land would have made sense then, but it would not make sense now. People now make money on land by buying and selling it -- as an investment. By taxing land now, you would be doing what you are trying to prevent, namely, taxing productive behavior.
I can't think of a modern day equivalent to land 200 years ago. The closest I can get is inheritance -- tax people for winning the lucky sperm club.
The biggest benefit to such a simple tax system is the simplicity itself. It isn't just that a complex tax code makes for dead weight loss in paying taxes and the loopholes to evade them.
The process of creating loopholes is extremely corrupting.
If you want a heathly democracy, keep things simple to disincentivize corruption. The US is not a healthy democracy, largely due to the incredible size of government and extreme corruption of our tax code. Other problems such as unfunded liabilities or overly influencial corporations stem from this core issue.
I think the point is to tax things that society considers negative: carbon, alcohol, nicotine, potentially marijuana. Because you can't raise enough from those, we may also tax land. But let's not tax the positives, like income/production.
Essentially, a national sales tax, and low-income people get a rebate for what they might have spent on taxes every year. Encourages individual saving and exports.
International trade is a good thing, but if it's balanced or if you're on the exporting side. Being a net importer is impoverishing.
I don't see why it makes a difference if the person who buys our product is in Seattle or Vancouver. If we're producing the most value we can at the least cost (not in the naive sticker-price sense), it doesn't matter who or what is the least cost labor. Drawing borders around countries and treating them as fundamental units of trade is just 19th-century nationalism in disguise.
If you have a local market, the people producing products, and getting paid to produce the products, are also buying the products and/or buying other local services from people who can then afford to buy the products. The same money can circulate many times within the local market to keep the economy moving, and support the production of valuable things.
In an extended market, you've got a separation between the people creating the products and the people buying them. Money has to travel between these groups in order for trade to exist. If there is a balance of trade between the groups, the money circulates evenly and both groups benefit; it's like the local market, but bigger.
If trade is not balanced, the money winds up on one side and the products on the other. Eventually, the flow of money stops because one side runs out. For the people running out of money, must do one of the following:
(1) Start producing additional goods/services that can be sold to the other side, in order to increase the flow of money back and restore a balance of trade.
(2) Reduce the amount of goods/services being bought from the other side in order to reduce the flow of money out, also restoring a balance of trade (at a lower level than #1).
(3) Purchase the goods/services on credit rather than with cash, in hopes of having the cash later to pay off the debt.
(4) Inflate the money supply by producing more money, and hope that the other side doesn't increase prices to reflect the lower value of your money.
In the US/China trade, the US has been buying lots of Chinese goods, but the Chinese haven't been buying much US goods. Instead, the Chinese have been collecting US money (in the form of both actual currency and bonds.) Trade has been out of balance, with the US on the side running out of money. We'd like to do #1, by selling more into the Chinese marketplace, but the Chinese government has been very slow to open its markets to outside companies. We can't do #2 for a number of reasons; we've lost our capacity to produce many of the good we buy, we can't produce similar goods at competitive prices, and for political reasons we can't raise tariffs on Chinese imports to bring their prices in-line with domestically produced goods.
So, we've been stuck with #3 and #4: going into debt and inflating our money supply. These options can only work for so long before the other party stops accepting credit and inflated currency. The US has pretty much reached that point with China now, so we're going to have to go back to #1 or #2.
Importing: China sends us big screen TV's, we send them green pieces of paper. Net gain (more TV's).
Exporting: China sends us pieces of paper with Mao on them, we send them Macbooks. Net loss (fewer macbooks).
1) It is difficult or impossible to properly assess the unimproved value of the land. This means political power would be used to influence the process, just as it is today.
2) There is no guarantee whatsoever that the single tax would remain so.
3) Although a land value tax would cause fewer distortions than virtually any other tax, these distortions would still reduce economic productivity.
The bigger the government the more taxes they need to collect to sustain themselves, making it a vicious cycle, where the only one who gets fucked is the people whom the government is supposed to serve.
End all taxes, minimize government, serve the people.
Only if providing said goods is done efficiently, which it never is.
It's always about efficiency. More to your point, the more important the need, the more important efficiency is.
Do you really think that it's better to provide water for $100 than it is to provide it for $10?
Remember - the claim was "Economies of scale make taxation efficient". Economies of scale aren't the only factor as taxation isn't necessarily efficient. In fact, it tends to be inefficient because it's folks spending other people's money on other people's behalf, which is the worst possible situation for efficiency. (Your money for your benefit is the best - you care about cost and quality. Your money for someone else's benefit, you care less about quality. SOmeone else's money for your benefit, you care less about cost.)
I'm glad that the Dutch govt seems capable of doing certain things. However, that experience doesn't translate. (Current US govt healthcare isn't as good as govt healthcare advocates assert that US govt healthcare will be. In other words, we have an existence argument. Fix US govt healthcare, and their argument becomes credible.)
If such goods are provided by taxation, this will encourage overconsumption. If I'm already paying for it, I might as well use it, right? It also forces a "one-size fits all" solution. I.e., rather than purchasing the amount of mass transit I want, I'm forced to purchase the amount that the average person (as envisioned by politicians) wants.
Usually it is defined as 'essential' and not optional services. Breast implants aren't covered, but breast cancer surgery is (potentially finishing with a breast implant).
The details are really a moot point - the bigger issue is whether it is a basic human right to receive treatment regardless of your economic situation.
Isn't housing a basic human right? How about clothing? Or food? Or heat? Why is health care singled out?
There are programs to help the poor with those things, and there are programs that do the same with healthcare. Not all states fund it to the same level. Just increase the funding, and be done. There is no need for a national program.
Having a single national program is like doing an experiment with a single petri dish... unscientific and absurd.
Unfortunately, due to illness, addictions and other problems the programs often have difficulty reaching the people in need.
I can't think of a single jurisdiction where universal care is provided that prevents a private individual from going out and purchasing more or better care if they want it. The point is to put a floor under the quality of care, not a ceiling.
"The system is unique in the world in that it bans coverage of these core services by private insurance companies, allowing supplemental insurance only for perquisites such as private hospital rooms. This ban constrains the emergence of a parallel private medical or hospital sector and puts pressure on the provinces to meet the expectations of middle-class Canadians."
http://content.nejm.org/cgi/content/full/349/8/804?ijkey=d81...
Suppose you are willing to sell your house to get an expensive procedure... in the UK that requires opting out of all of the free care (and getting a retroactive bill for it).
What this ends up meaning is that elites pull strings to get superior care while telling the masses how great the free healthcare system is.
As far as I know, I am not a member of any shadowy elites and I've never felt the need for any form of private healthcare. The NHS has always sorted me out - and on several occasions cheerfully saved my life - with no bills and minimum of fuss.
But, that things are changing suggests that the system is not working to provide equal care, since there is significant demand for going above and beyond what the NHS offers.
It's essentially turning into an apartheid style system where the poor get one thing and the rich get another. Which may be the reality of the world in some sense, but is surely not the objective of the system.
That said, I think the NHS is the best nationalized healthcare system in the world b/c it does actually impose accountability on itself for costs and outcomes, and publishes the results.