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> The other theories of taxation is that it should be used to raise revenue from the best means possible. I disagree with that framework but applying taxes arbi

> The other theories of taxation is that it should be used to raise revenue from the best means possible. I disagree with that framework but applying taxes arbitrarily hardly seems fair or the best way to raise revenue. Economists have known for 100 years that land value taxes (LVT) are by far the most efficient way to raise taxes. After that consumption taxes are the next most efficient. Corporate taxes and taxes on investment income are one of the least efficient, most distortionary, forms of taxation. Yet policymakers and voters show no sign of changing their opinions, despite how much economic evidence continues to pile up. LVTs are extremely unpopular, because home ownership is fetishized by the middle class as a vehicle for wealth accumulation. Even in progressive polities like California, there's always tremendous political will to keep residential property taxes artificially low. VAT taxes are almost just as despised, especially in America. Meanwhile higher corporate and investment taxes are supported by large majorities. Despite the fact that they impose serious drags on productivity and growth. If your goals is having a more progressive tax code or increasing income equality, the much better strategy is to combine high LVT/VAT taxes with a UBI, rather than explicitly try to target poorly designed tax schemes at rich people.

99052882514569 7y ago
> If your goals is having a more progressive tax code or increasing income equality, the much better strategy is to combine high LVT/VAT taxes with a UBI, rather than explicitly try to target poorly designed tax schemes at rich people. Effectiveness of UBI is still an area of much debate and research. Early results of this research based on a few pilots is decidedly not positive.
nostrademons 7y ago
Much of this is because of information distortion - when the state directly collects an LVT from homeowners or a VAT from consumers, every individual citizen is aware of that tax and feels the pain of it. When they collect a tax from corporations, only the corporation feels it as a tax, and they raise their prices to compensate for losses from it, and the consumer instead sees it as simply the price of goods. The consumer has no information for what things would have cost without the tax, so they simply accept it as how things are. Meanwhile, the beneficial effects of an LVT or VAT all appear in reduced opportunity costs (the price of housing comes down, the prices of consumer goods more truly reflect supply & demand), so they're completely unaware of them. It makes me wonder, now that cryptocurrency is a thing, if fiscal policy could be embedded directly in the monetary system. Rather than a separate tax that's charged and remitted to the treasury, it'd simply be the difference between what a consumer spends and what a producer receives, much like how transaction fees come straight out of the transaction.
pyrale 7y ago
LVT and VAT are considered effective because they're hard to dodge and easy to collect. They pose major problems in terms of tax fairness though. The reason for this is that VAT efects the poorer disproportionately (poor people spends almost 100% of their income, while richer people won't spend a larger fraction of their revenue) while LVT targets the middle class (AKA those that don't have enough capital to diversify their assets and invest beyond their home).

99052882514569 7y ago

> If your goals is having a more progressive tax code or increasing income equality, the much better strategy is to combine high LVT/VAT taxes with a UBI, rather than explicitly try to target poorly designed tax schemes at rich people. Effectiveness of UBI is still an area of much debate and research. Early results of this research based on a few pilots is decidedly not positive.

nostrademons 7y ago

Much of this is because of information distortion - when the state directly collects an LVT from homeowners or a VAT from consumers, every individual citizen is aware of that tax and feels the pain of it. When they collect a tax from corporations, only the corporation feels it as a tax, and they raise their prices to compensate for losses from it, and the consumer instead sees it as simply the price of goods. The consumer has no information for what things would have cost without the tax, so they simply accept it as how things are. Meanwhile, the beneficial effects of an LVT or VAT all appear in reduced opportunity costs (the price of housing comes down, the prices of consumer goods more truly reflect supply & demand), so they're completely unaware of them. It makes me wonder, now that cryptocurrency is a thing, if fiscal policy could be embedded directly in the monetary system. Rather than a separate tax that's charged and remitted to the treasury, it'd simply be the difference between what a consumer spends and what a producer receives, much like how transaction fees come straight out of the transaction.

pyrale 7y ago

LVT and VAT are considered effective because they're hard to dodge and easy to collect. They pose major problems in terms of tax fairness though. The reason for this is that VAT efects the poorer disproportionately (poor people spends almost 100% of their income, while richer people won't spend a larger fraction of their revenue) while LVT targets the middle class (AKA those that don't have enough capital to diversify their assets and invest beyond their home).