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So... "Salaried professionals in big cities have long complained that they bear an unreasonable share of the tax burden. That is because firms are legally requ

by netcan 8y ago

So... "Salaried professionals in big cities have long complained that they bear an unreasonable share of the tax burden. That is because firms are legally required to withhold a portion of salaries in taxes. The rich, whose income usually does not come in the form of a pay cheque, and those in the informal economy." Economists and politicians justify tax setups in terms of efficiency or fairness. Ultimately though, practicalities are the main authors. ... whatever yields the highest tax in a given economy. The reason tarrifs & trade taxes were such a big deal is that ports are centralized & taxable. Way back in the day, rivers, roads and bridges made good tax collection points. Land taxes were also practical. In advanced economies, income taxes have been practical because enough income is earned as salary at firms large enough to be regulated. Firms are structured around avoiding corporate tax, not income tax. China is at the point now where it's practical to tax income. The west is now at a point where the ultra-rich are an attractive tax target. But, trying to apply the income tax system to them is not practical for the same reason it is practical in China.

isostatic 8y ago
> Land taxes were also practical. Why aren't they now?
- perpetualpatzer 8y ago
  Not OP, but i imagine it would face political pressure in the US. Farms take up more land than penthouse apartments, but likely have less ability to pay. You could pass the costs on to customers, but then you're advantaging food imports, which has national security implications.
  - isostatic 8y ago
    But an acre of land in Ohio isn't worth anywhere near as much as an acre of land in Manhattan.
- speleding 8y ago
  Actually, in a previous article in the Economist on taxes, they claimed taxing land and real estate is a very good non-distorting way to levy tax, and urged western governments to do it more. My country (the Netherlands) has an estate tax of sorts and at least one problem with it is that the legal system is getting clogged by hordes of people challenging the government over the valuation of their property (you pay a percentage of the property value).
  - netcan 8y ago
    Good point. Iirc correctly, they suggest taxing land value, excluding the buildings on it. So, a parking lot is taxed like the skyscraper beside it. This is "non-distorting" and efficient in an economst-ey sort of way. It will however, strongly affect land use and make certain uses immediately unviable. Golf courses, amusement parks... The efficiency of moving to such a system is premised on encouraging underdeveloped land to be immediately developed. Say a skyscraper is 80% building, 20% land. That's tax efficient in that world. It'd be a hard transition.
    - isostatic 8y ago
      Not sure why a golf course or amusement park would be unviable. Alton Towers' 910 acres is worth at most 3.8 times that of this 240 acre £2.2m farm [1], or £8.4m. Total UK land is worth £5394b [2], and total budget revenue is £800b, requiring a 15% land value tax to cover total spending. At 15% LVT, Alton Towers would attract taxation of £1.2m a year, spread over 2 million visitors, or about 64p on the ticket price. Currently tickets are in the £30-60 range, so already attract £5-10 of vat. A land value tax will actually mean that Alton Towers tickets would be cheaper, and as they wouldn't be paying things like national insurance contributions, overheads would be cheaper. [1] https://www.rightmove.co.uk/commercial-property-for-sale/property-68170718.html https://www.rightmove.co.uk/commercial-property-for-sale/pro... [2] https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/bulletins/nationalbalancesheet/2018 https://www.ons.gov.uk/economy/nationalaccounts/uksectoracco...
- netcan 8y ago
  They are fine now, it just doesn't add up the that much tax. In the middle ages, land represented most of the income generating asset pool. The income tax system (supplemented by all the other taxes) is the most tax generating tax system in history.
  - isostatic 8y ago
    15% land tax in the UK would cover 100% of government revenue.
    - conanbatt 8y ago
      15% tax on the entirety of the land annually???
- conanbatt 8y ago
  Land taxes are politically unfeasible: it would increase taxes on americas favorite setup: the single family home. Economically speaking, Land Taxes are a consented tax by economic left and right: the consensus has been in for decades. LVT is a great tax. In my opinion, this is San Franciscos best chance to get out of its spiral it got into: remove sales tax and put LVT. It would change the face of the city in 10 years. But go vote that: the SF city spends 2,600U$S per household in the city. If they removed all kinds of taxes and put it on land, a single family home would have to pay that just intaxes every month. And single family homes are the politically most represented.

by netcan 8y ago

isostatic 8y ago

> Land taxes were also practical. Why aren't they now?

perpetualpatzer 8y ago
Not OP, but i imagine it would face political pressure in the US. Farms take up more land than penthouse apartments, but likely have less ability to pay. You could pass the costs on to customers, but then you're advantaging food imports, which has national security implications.
- isostatic 8y ago
  But an acre of land in Ohio isn't worth anywhere near as much as an acre of land in Manhattan.
speleding 8y ago
Actually, in a previous article in the Economist on taxes, they claimed taxing land and real estate is a very good non-distorting way to levy tax, and urged western governments to do it more. My country (the Netherlands) has an estate tax of sorts and at least one problem with it is that the legal system is getting clogged by hordes of people challenging the government over the valuation of their property (you pay a percentage of the property value).
- netcan 8y ago
  Good point. Iirc correctly, they suggest taxing land value, excluding the buildings on it. So, a parking lot is taxed like the skyscraper beside it. This is "non-distorting" and efficient in an economst-ey sort of way. It will however, strongly affect land use and make certain uses immediately unviable. Golf courses, amusement parks... The efficiency of moving to such a system is premised on encouraging underdeveloped land to be immediately developed. Say a skyscraper is 80% building, 20% land. That's tax efficient in that world. It'd be a hard transition.
  - isostatic 8y ago
    Not sure why a golf course or amusement park would be unviable. Alton Towers' 910 acres is worth at most 3.8 times that of this 240 acre £2.2m farm [1], or £8.4m. Total UK land is worth £5394b [2], and total budget revenue is £800b, requiring a 15% land value tax to cover total spending. At 15% LVT, Alton Towers would attract taxation of £1.2m a year, spread over 2 million visitors, or about 64p on the ticket price. Currently tickets are in the £30-60 range, so already attract £5-10 of vat. A land value tax will actually mean that Alton Towers tickets would be cheaper, and as they wouldn't be paying things like national insurance contributions, overheads would be cheaper. [1] https://www.rightmove.co.uk/commercial-property-for-sale/property-68170718.html https://www.rightmove.co.uk/commercial-property-for-sale/pro... [2] https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/bulletins/nationalbalancesheet/2018 https://www.ons.gov.uk/economy/nationalaccounts/uksectoracco...
netcan 8y ago
They are fine now, it just doesn't add up the that much tax. In the middle ages, land represented most of the income generating asset pool. The income tax system (supplemented by all the other taxes) is the most tax generating tax system in history.
- isostatic 8y ago
  15% land tax in the UK would cover 100% of government revenue.
  - conanbatt 8y ago
    15% tax on the entirety of the land annually???
conanbatt 8y ago
Land taxes are politically unfeasible: it would increase taxes on americas favorite setup: the single family home. Economically speaking, Land Taxes are a consented tax by economic left and right: the consensus has been in for decades. LVT is a great tax. In my opinion, this is San Franciscos best chance to get out of its spiral it got into: remove sales tax and put LVT. It would change the face of the city in 10 years. But go vote that: the SF city spends 2,600U$S per household in the city. If they removed all kinds of taxes and put it on land, a single family home would have to pay that just intaxes every month. And single family homes are the politically most represented.