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If you’re going down this route, many will argue that all forms of income tax are equally “wrong”. Henry George - a 19th century political economist - proposed

If you’re going down this route, many will argue that all forms of income tax are equally “wrong”. Henry George - a 19th century political economist - proposed exactly this, and suggested the only thing that should be taxed should be land: impossible to hide from a tax inspector, potentially a waste to the public commons if useful land that could be exploited isn’t and you can even protect land you wish to keep pristine more easily (tax it very, very highly). His ideas are now considered eccentric, but I do wonder if the World would be a great deal simpler if globally we moved to a Henry George system and stopped trying to tax sales, income and everything else going we do.

MrPowers 5y ago
The deadweight loss of taxation is much lower for a land tax than an income tax. The deadweight loss is the economic resources allocated to complying with the tax. The armies of tax lawyers would be able to perform other economically productive activities if they weren't pouring over the tax code. Pigovian taxation is even better. Taxing gas is a great example. Gas consumers emit carbon which has a cost for society. We should make them pay for this negative externality via a gas tax, so their consumption is economically optimal. This is how to prevent the Tragedy of the Commons. I'd argue that some taxes are objectively better than others and not all equally wrong.
- lars512 5y ago
  As an Australian who moved to Sweden, I was amazed at how efficient the Swedish income tax process was. The government already knew everything they needed to calculate your return, and gave it pre-filled. There were not endless exemptions. Nobody at my work used an accountant, most approved their tax with a few clicks and were done. So much more efficient than in Australia!
  - throwaway894345 5y ago
    The American tax system is similarly frustrating. I’m a senior engineer and I have a hard time navigating tax forms even with the help of Intuit, and it frustrates me that I have to pay Intuit (or someone else) to help me do taxes which are complicated in large part because Intuit et al lobby for complex tax codes and against the sort of Swedish model you describe. Worse, when I moved to Chicago the state of Illinois wouldn’t even accept my taxes electronically because their form required one of a handful of authentication methods—the only one of which that ought to have worked for me was to use my Illinois driver’s license number—a 12 digit sequence; however, their form only permitted 8 digits. It was a significant hassle just to get them to take my money. I’ve also had difficulties figuring out how much to withhold. In the US they give us a form that calculates “allotments” (or something—I forget the term) but it’s unclear whether more of those correspond to more or less withholdings and in any case the form computed incorrectly for me for several years (I’m sure it was user error somehow and senior engineers are just not reliably smart enough to figure it out, even with the help of HR) and I would end up owing thousands in taxes as well as a separate penalty for not withholding enough. It’s maddening that our government makes it so difficult for earnest people to pay their taxes.
    - aisengard 5y ago
      It's because they're trying to give people breaks on what they owe. The more money you make (and the more ways in which you make it), the more exemptions and breaks you tend to be eligible for, so the more complicated your taxes tend to be. A realistic simplified tax code would probably mean you, as a senior engineer, would pay much more in taxes, which would be fine with me! A properly-funded government can be a great boon to society. But you might not feel the same way, so be careful what you wish for.
      - presentation 5y ago
        Governments that can print money don’t need taxes to be funded, they can just print money. Taxation is more useful for redistribution, incentivizing behavior, and controlling the money supply/inflation - not funding the government.
    - tzs 5y ago
      > I’m a senior engineer and I have a hard time navigating tax forms even with the help of Intuit, and it frustrates me that I have to pay Intuit (or someone else) to help me do taxes which are complicated in large part because Intuit et al lobby for complex tax codes and against the sort of Swedish model you describe. I don't think Intuit has anything to do with why the tax code is complex. Their lobbying is for making filling out the forms complicated, such as by stopping the IRS from pre-filling forms with the information they already have. The tax code complexity almost all stems from people not wanting to pay tax. That complicated the code in two ways. First, it means that we get exceptions and special cases written into the code either because people that want to pay less tax convince Congress to make a special case for them or Congress takes advantage of the desire to pay less tax to provide exceptions to motivate people to change behavior. Second, it means that if there is any ambiguity or wiggle room in interpreting something, someone will exploit that to pay less tax than Congress intended them to pay. The tax code gets patches to fix that, usually resulting in an increase in complexity. A great example of the later was that a long time ago a big company was going to give shareholders a dividend. This would be taxes as ordinary income to the shareholders. Someone came up with an idea to turn that into capital gains instead. Rather than give a divident, the company first did a stock split, say 100 for 99. So each 99 shares each stockholder held became 100 shares. This is not a taxable event. Then the company did a stock buyback, 1 out of every 100 shares. That decreased each stockholders holding by 1%, so every 100 shares a stockholder held became 99, and the stockholder got some cash. That is a taxable event, but it is capital gains. Net result: every stockholder ended up with the exact same percentage of the company that they started with, with some cash from the company, and got to pay the lower capital gains tax on that cash instead of the higher income tax. The tax code was patched to fix that. Buybacks became ordinary income. But it didn't end there. Consider a family owned business owned by four members of the same family. One of them is moving away and will not be participating in the business. The company wants to buy him out. It was generally agreed that this was not a buyback to dodge taxes--it is a legitimate buyback and should get capital gains treatment. And so the patch to fix the buyback tax dodge needs an exception to try to recognize "legitimate" buybacks. It ends up having a formula that involves looking at the distribution of ownership before and after the buyback and having several criteria for recognizing when the distribution change signifies a legit buyback that should get capital gains treatment. This was a fairly simple instance, so it only added maybe a few paragraphs to the tax code, plus some more to the regulations. But that sort of thing is all over the code, sometimes just adding a few sentences, and sometimes pages.
  - gambiting 5y ago
    In the UK if you're in full time employment and only have one job, then there's literally nothing to do. Not even clicking somewhere to approve your tax return - your employer does it all for you. I know people who are literally unaware when the tax year ends because they never in their entire adult lives had to do anything with the tax return - it's just completely irrelevant to a normal working person. And on the ocassion that you have to fill one out for whatever reason, most of it is already prefiled from the information HMRC holds about you already.
    - briane80 5y ago
      It's even better - they work out if you paid too much automaticallly and send you a check in the mail. Had 3 checks over the past decade or so from having time off between jobs but paying full rate for the remaining time. Nothing quite so satisfying as a £1000 check from HM Revenue and Customs!
      - Ekaros 5y ago
        Finland has next step. They have my account number in records so every year they move what they owe me automatically to my account.
      - jejones3141 5y ago
        Would I be correct in suspecting that you don't get interest on overpaying, but get charged serious fees for having to pay too much on tax day?
        ownagefool 5y ago
        No. HMRC pay interest on money they hold that belongs to you. You pay interest if you fail to pay on time. They may additionally fine you though.
      - briandear 5y ago
        You should be furious that you gave them a free loan.
    - 5y ago
  - booleandilemma 5y ago
    I’m pretty sure the system we have here in the US is designed to be complicated to encourage us to rely on tax filing companies. Also, a more complicated system is easier to game. Makes it easier for the rich to take advantage of loopholes.
    - reedjosh 5y ago
      I think a lot of it is the nudging that the US does with tax incentives. Taxes are often used as a way to economically nudge society toward desired outcomes. Think tax breaks for solar panels or even just getting insulation added to your home. There are thousands of this type of tax break available to nudge people to move toward the gov's goals.
  - oblio 5y ago
    In Romania if you're a regular employee, you don't have anything to do. Flat tax rate, taxes at the source, no exemptions, no deductions. You don't even file.
  - wildfire 5y ago
    However, what are you missing is that there are exemptions available to you. You could choose to use them (for example, the self education one) and get SEK5000-SEK10000 (~€500-€1000) BUT then you would have to fill out a tax return. That is just one exemption. Another one relevant for our field is working from home. Similar amount. In order to claim those, though, you will need to file a tax return. If you do not consider that money to be worth the time, then not filing one is a good choice. The Australian system - which could definitely be improved by at least pre-filling things - forces you to actively choose to leave the money behind. The default in the UK, Europe and the Nordic countries is that the money is kept by the taxaxtion office. Defaults are powerful. And they thank you for entrusting them with your extra SEK that you do not want to claim.
- CryptoPunk 5y ago
  The deadweight loss is different than the overhead cost. What you're describing is the overhead cost, which indeed is much lower for a land value tax. The land tax has zero deadweight loss, because what it's taxing is pure economic rent, rather than production of value: https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax Any tax imposed on anything except scarce natural resources will be penalizing the creation of wealth, and impose deadweight losses.
- seanmcdirmid 5y ago
  > Taxing gas is a great example. Gas consumers emit carbon which has a cost for society. This isn't even why gas is tax heavily in developed economies. First, gas taxes pay for roads. Second, the negative externality that Europe, at least, is trying to reduce is dependency on Middle Eastern oil, since that opens a huge can of worms with respect to world stability. If they really cared about air pollution, they wouldn't have pushed diesel so much.
  - ljf 5y ago
    In many countries gas does not pay for roads, but goes into a general taxation 'bucket'. https://en.m.wikipedia.org/wiki/Fuel_tax https://en.m.wikipedia.org/wiki/Fuel_tax
world_peace42 5y ago
George’s ideas are interesting to ponder now and then. I’d definitely want to be a billionaire in that system, though, you’d pay pennies on your penthouses split with everyone living below you. If only taxes were that easy to figure out.
- Ericson2314 5y ago
  Well, the hope would be that you would have never become a billionaire in the first place because somewhere along the line that wealth was predicated on holding cheap real estate and collecting rents. Now, that argument doesn't help with switching too an LVT, but there are other reasons to be optimistic. Taxing Jeff Bezos at any level is worthless in comparison to a) Paying enough UBI that the warehouses would unionize, b) directly expropriating the warehouses into the postal system. (post : IP :: warehouse sku system : content-address based networking). Basically, trying to account for the power of billionaries and mega corps in monetary terms is a dangerous exercise where they can probably out-loophole you.
- closeparen 5y ago
  Middle class families in single family homes are hoarding a scarce and essential resource. Billionaires in high rises aren’t. The idea is to punish bad behavior and reward good behavior, not to cut down the tall poppies.
  - reedjosh 5y ago
    In urban area's sure, but I don't think it's fair to call it hoarding in suburban or rural areas. There's tons of land in the US, it's just that there are no homes _right_ next to jobs and restaurants and the culture people want to live in. Now that I'm remote, I plan to move to a rural area and grow some of my own food in a single family home. I don't think that should be considered hoarding.
    - closeparen 5y ago
      Where there’s tons of land, it’s not that valuable. LVT would be low. It would only be punitive to people with a lot of land (per person) in those spots that are valuable because of those restaurants, culture, jobs, etc. nearby.
PragmaticPulp 5y ago
> Henry George - a 19th century political economist - proposed exactly this, and suggested the only thing that should be taxed should be land That may have made sense in the 19th century when agriculture dominated the economy, but it’s irrelevant today. At scale it becomes a tax on how space-inefficient your business is. Bad news for farmers, great news for the business running a 1000-person operation out of a skyscraper. You could of course start trying to change taxation rates based on various factors to compensate, but those factors reduce to proxies for revenue, which puts us back to square one. 19th venture taxation theories don’t translate to modern multinational trade with digital commerce.
- MrPowers 5y ago
  Land taxes are based on the value of the land, not the size of the land. The property tax system already performs land value assessments. Land taxes are highly progressive. Note that land taxes are only assessed on the value of the land, not the value of any buildings on the land. This incentivizes land owners to put the land to its highest and best use.
  - pbourke 5y ago
    How much land does Google use vs the most successful farmer in a given county? What’s the value of the land that Google uses?
    - tristanj 5y ago
      Google owns more than $50B of real estate...
    - claudiulodro 5y ago
      The value of the land that Google uses is tremendous because the Google offices are located on it!
      - edgyquant 5y ago
        But an LVT isn’t a tax on the infrastructure it is a tax on the value of the underlying land.
odiroot 5y ago
> If you’re going down this route, many will argue that all forms of income tax are equally “wrong”. I frequently come to a conclusion personal income tax should be abolished as it punishes work. CIT, VAT, capital gains and inheritance taxes should be enough to sustain a budget. These are all unrelated to performed work.
- 542458 5y ago
  I was under the impression that CITs were far, far more distortionary than well structured progressive PITs.
- daveFNbuck 5y ago
  Why is punishing adding value not wrong? Isn't adding value a good thing?
- relaxing 5y ago
  I frequently come to the conclusion that personal grocery bills should be free, as charging for food punishes existing.
  - Ericson2314 5y ago
    I mean, socialism for basic needs and capitalism for status symbols is a pretty nice system. No problem doling out status symbols for productivity improvements which benefit basic needs production.
  - closeparen 5y ago
    Groceries are exempt from sales tax.
  - mjmahone17 5y ago
    Yes that sounds right: everyone should probably be given a ration for a guaranteed allotment food each month. In NYC during the pandemic they opened up free meals for everyone, regardless of income. A society where enough food is provided by default seems like a more humane society to me.
oivey 5y ago
This system sounds like would be gamed just like how property taxes are now: bogus assessments. At least income and sales have a clear, non-subjective value in dollars.
- larsiusprime 5y ago
  If "bogus assessments" lead to an incentive to declare a low value for your land, then that will be caught if and when you try to sell it or rent it out for a higher price. So if people just stick with a low valuation to pay less land tax, this will have the effect of greatly decreasing land prices, which are the principal cause of housing unaffordability, which seems like a good thing to me.
- yourapostasy 5y ago
  Gaming of tax systems by large capital players is a big challenge. I have wondered whether bogus assessments could be mitigated through some kind of open market price discovery with unlevered, unencumbered cash with full party disclosure. Make residential, owner-occupied homes and special categories (like public transit-related or infrastructure-related improvements like healthcare/power/water/waste/telecomms/etc. property) exempt. All other property post their assessments at tax jurisdiction's office. Anyone, at any time, can post to that office cash that is 10% more than the assessment upon the property. If the owner does not challenge the cash assessment, they must accept the cash offer within 180 days or are evicted. The catch is, that cash must be absolutely unlevered and unencumbered, the property is carried on everyone's books as a cash asset of the prospective new owner, and the property cannot be pledged as collateral, for the next 21 years (with an upward adjustment for deep-pocketed backers of offers) or until the property is sold, whichever comes first. The offering party must provide full disclosure and auditability of the source of the cash and the "Source Of Truth" controlling interest, no shell games. The legal jurisdiction enforces this transactional structure by refusing all cases entangling the property. The owner can respond to the price discovery cash offer by paying the tax jurisdiction the "back taxes" implied by the cash offer, back to the last time the property transacted on the open market. No penalty. If the owner can deliver proof that the offering party hid their ties to deeper (ultimate beneficial controlling interest) funding sources, then the entire offer is forfeit to the owner. This creates an incentive to discover badly out-of-alignment prices, but the intention is to gate out anyone playing financialization games or asymmetrically deep pockets parking cash badly distorting a small player-dominated market's historic valuations.
Khaine 5y ago
I’d also like to point out that for the longest time the Roman and Byzantine states taxed land and not commerce. It is not a new idea. In some ways it is an ancient idea. Land value and use is dependent on the climate and success of farming. It can be volatile, and while land may have an intrinsic value, the earnings to pay the tax can be highly variable (I.e. a drought). I don’t think this is the best idea to solve tax issues in the modern world
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eloff 5y ago
I remember my economics professor arguing that would be the most efficient tax after he explained how all taxes have the side effect of reducing the thing being taxed. So taxing something bad like CO2, great idea. Taxing something good like income or creating jobs - bad idea. Land tax would be simple, and very progressive, the tax rate of most young people renting world now be 0. It's more complex than that because the landlord pays the tax and hikes the rent appropriately. It enforces that land is used efficiently, which is so dysfunctional in many large cities. It's a great idea in my opinion. You'd solve taxation, eliminate personal accountants as a class, and solve the housing crises with one stroke (there is still zoning, but this makes poorly zoned land undesirable to hold because it bleeds money - creating an incentive for the land owners to vote for zoning the land better). But politicians deal with popular ideas, not smart ideas. The odds of any country trying it seem slim.
- silexia 5y ago
  I actually love this idea, although I would just do a wealth tax. Anyone who owns wealth gets taxed a bit. If you only taxed land, then lots of people would just move all their assets into stocks instead of land.
  - dodobirdlord 5y ago
    Someone still has to be owning the land though, and paying taxes on it in proportion to its value. In most cases that’s going to be corporations. If I own stock in a corporation that owns land and the tax burden shifts from corporate income taxes to land taxes, on the whole this isn’t much different except for rewarding corporations that make efficient use of land and punishing ones that make inefficient use. Similarly, if I sell my land to a corporation, everyone who collectively owns the corporation is now paying what used to be my land taxes.
  - ckw 5y ago
    Seems like the price of land would drop and the price of stocks would rise such that the yield on improved land (after taxes and mutatis mutandis) would match that of stocks.
- 5y ago
dennis_jeeves 5y ago
>World would be a great deal simpler if globally we moved to a Henry George system Yes it would, but you see that will not be popular for many obvious reasons ( less jobs for tax collectors/consultants/auditors etc.) A more non-obvious reason is that the ordinary Joe on the street hates the rich so much that he wants the rich being taxed rather than see the simplicity of taxing no one. >His ideas are now considered eccentric, He actually seems a level headed guy to me :) I would go even one step ahead and say that even land should not be taxed except for the cost of keeping land records.
mensetmanusman 5y ago
That’s an interesting thought experiment: What if we got rid of all taxes, and the only thing the govt. could do was print money at some fixed %GDP rate to induce inflation. Then everyone would try to spend faster than inflation and the velocity of money could be quite fast (to increase GDP and spending, etc.) Maybe a flywheel-economy?
- beisner 5y ago
  This is very similar to Modern Monetary Theory, which views taxation as a means to control inflation rather than a source of funds for a sovereign government. Maybe only applies to a country whose currency is the reserve currency of the world tho…
seanmcdirmid 5y ago
This is more about corporate activities leading to other kind of taxes. E.g. they pay rent, the landlord pays property tax, they pay salaries, employees pay income taxes, dividends are taxed, capital gains on stock price rises are taxed, etc... The problem with corporate taxation is that...we really want R&D and employment to be tax deductible for them, but a company like Amazon can just plow all their profits into R&D and focus on growth (even without R&D tax credits, they would still take a loss on earnings due to R&D outlays). Of course, all of that R&D money is still mostly taxed (via tech worker income taxes), so its not like the government isn't seeing any of it. Corporate income taxes really come down hard on a successful company that doesn't have any avenue to grow...maybe they should?

MrPowers 5y ago

The deadweight loss of taxation is much lower for a land tax than an income tax. The deadweight loss is the economic resources allocated to complying with the tax. The armies of tax lawyers would be able to perform other economically productive activities if they weren't pouring over the tax code. Pigovian taxation is even better. Taxing gas is a great example. Gas consumers emit carbon which has a cost for society. We should make them pay for this negative externality via a gas tax, so their consumption is economically optimal. This is how to prevent the Tragedy of the Commons. I'd argue that some taxes are objectively better than others and not all equally wrong.

lars512 5y ago
As an Australian who moved to Sweden, I was amazed at how efficient the Swedish income tax process was. The government already knew everything they needed to calculate your return, and gave it pre-filled. There were not endless exemptions. Nobody at my work used an accountant, most approved their tax with a few clicks and were done. So much more efficient than in Australia!
- throwaway894345 5y ago
  The American tax system is similarly frustrating. I’m a senior engineer and I have a hard time navigating tax forms even with the help of Intuit, and it frustrates me that I have to pay Intuit (or someone else) to help me do taxes which are complicated in large part because Intuit et al lobby for complex tax codes and against the sort of Swedish model you describe. Worse, when I moved to Chicago the state of Illinois wouldn’t even accept my taxes electronically because their form required one of a handful of authentication methods—the only one of which that ought to have worked for me was to use my Illinois driver’s license number—a 12 digit sequence; however, their form only permitted 8 digits. It was a significant hassle just to get them to take my money. I’ve also had difficulties figuring out how much to withhold. In the US they give us a form that calculates “allotments” (or something—I forget the term) but it’s unclear whether more of those correspond to more or less withholdings and in any case the form computed incorrectly for me for several years (I’m sure it was user error somehow and senior engineers are just not reliably smart enough to figure it out, even with the help of HR) and I would end up owing thousands in taxes as well as a separate penalty for not withholding enough. It’s maddening that our government makes it so difficult for earnest people to pay their taxes.
  - aisengard 5y ago
    It's because they're trying to give people breaks on what they owe. The more money you make (and the more ways in which you make it), the more exemptions and breaks you tend to be eligible for, so the more complicated your taxes tend to be. A realistic simplified tax code would probably mean you, as a senior engineer, would pay much more in taxes, which would be fine with me! A properly-funded government can be a great boon to society. But you might not feel the same way, so be careful what you wish for.
    - presentation 5y ago
      Governments that can print money don’t need taxes to be funded, they can just print money. Taxation is more useful for redistribution, incentivizing behavior, and controlling the money supply/inflation - not funding the government.
  - tzs 5y ago
    > I’m a senior engineer and I have a hard time navigating tax forms even with the help of Intuit, and it frustrates me that I have to pay Intuit (or someone else) to help me do taxes which are complicated in large part because Intuit et al lobby for complex tax codes and against the sort of Swedish model you describe. I don't think Intuit has anything to do with why the tax code is complex. Their lobbying is for making filling out the forms complicated, such as by stopping the IRS from pre-filling forms with the information they already have. The tax code complexity almost all stems from people not wanting to pay tax. That complicated the code in two ways. First, it means that we get exceptions and special cases written into the code either because people that want to pay less tax convince Congress to make a special case for them or Congress takes advantage of the desire to pay less tax to provide exceptions to motivate people to change behavior. Second, it means that if there is any ambiguity or wiggle room in interpreting something, someone will exploit that to pay less tax than Congress intended them to pay. The tax code gets patches to fix that, usually resulting in an increase in complexity. A great example of the later was that a long time ago a big company was going to give shareholders a dividend. This would be taxes as ordinary income to the shareholders. Someone came up with an idea to turn that into capital gains instead. Rather than give a divident, the company first did a stock split, say 100 for 99. So each 99 shares each stockholder held became 100 shares. This is not a taxable event. Then the company did a stock buyback, 1 out of every 100 shares. That decreased each stockholders holding by 1%, so every 100 shares a stockholder held became 99, and the stockholder got some cash. That is a taxable event, but it is capital gains. Net result: every stockholder ended up with the exact same percentage of the company that they started with, with some cash from the company, and got to pay the lower capital gains tax on that cash instead of the higher income tax. The tax code was patched to fix that. Buybacks became ordinary income. But it didn't end there. Consider a family owned business owned by four members of the same family. One of them is moving away and will not be participating in the business. The company wants to buy him out. It was generally agreed that this was not a buyback to dodge taxes--it is a legitimate buyback and should get capital gains treatment. And so the patch to fix the buyback tax dodge needs an exception to try to recognize "legitimate" buybacks. It ends up having a formula that involves looking at the distribution of ownership before and after the buyback and having several criteria for recognizing when the distribution change signifies a legit buyback that should get capital gains treatment. This was a fairly simple instance, so it only added maybe a few paragraphs to the tax code, plus some more to the regulations. But that sort of thing is all over the code, sometimes just adding a few sentences, and sometimes pages.
- gambiting 5y ago
  In the UK if you're in full time employment and only have one job, then there's literally nothing to do. Not even clicking somewhere to approve your tax return - your employer does it all for you. I know people who are literally unaware when the tax year ends because they never in their entire adult lives had to do anything with the tax return - it's just completely irrelevant to a normal working person. And on the ocassion that you have to fill one out for whatever reason, most of it is already prefiled from the information HMRC holds about you already.
  - briane80 5y ago
    It's even better - they work out if you paid too much automaticallly and send you a check in the mail. Had 3 checks over the past decade or so from having time off between jobs but paying full rate for the remaining time. Nothing quite so satisfying as a £1000 check from HM Revenue and Customs!
    - Ekaros 5y ago
      Finland has next step. They have my account number in records so every year they move what they owe me automatically to my account.
    - jejones3141 5y ago
      Would I be correct in suspecting that you don't get interest on overpaying, but get charged serious fees for having to pay too much on tax day?
      - ownagefool 5y ago
        No. HMRC pay interest on money they hold that belongs to you. You pay interest if you fail to pay on time. They may additionally fine you though.
    - briandear 5y ago
      You should be furious that you gave them a free loan.
  - 5y ago
- booleandilemma 5y ago
  I’m pretty sure the system we have here in the US is designed to be complicated to encourage us to rely on tax filing companies. Also, a more complicated system is easier to game. Makes it easier for the rich to take advantage of loopholes.
  - reedjosh 5y ago
    I think a lot of it is the nudging that the US does with tax incentives. Taxes are often used as a way to economically nudge society toward desired outcomes. Think tax breaks for solar panels or even just getting insulation added to your home. There are thousands of this type of tax break available to nudge people to move toward the gov's goals.
- oblio 5y ago
  In Romania if you're a regular employee, you don't have anything to do. Flat tax rate, taxes at the source, no exemptions, no deductions. You don't even file.
- wildfire 5y ago
  However, what are you missing is that there are exemptions available to you. You could choose to use them (for example, the self education one) and get SEK5000-SEK10000 (~€500-€1000) BUT then you would have to fill out a tax return. That is just one exemption. Another one relevant for our field is working from home. Similar amount. In order to claim those, though, you will need to file a tax return. If you do not consider that money to be worth the time, then not filing one is a good choice. The Australian system - which could definitely be improved by at least pre-filling things - forces you to actively choose to leave the money behind. The default in the UK, Europe and the Nordic countries is that the money is kept by the taxaxtion office. Defaults are powerful. And they thank you for entrusting them with your extra SEK that you do not want to claim.
CryptoPunk 5y ago
The deadweight loss is different than the overhead cost. What you're describing is the overhead cost, which indeed is much lower for a land value tax. The land tax has zero deadweight loss, because what it's taxing is pure economic rent, rather than production of value: https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax Any tax imposed on anything except scarce natural resources will be penalizing the creation of wealth, and impose deadweight losses.
seanmcdirmid 5y ago
> Taxing gas is a great example. Gas consumers emit carbon which has a cost for society. This isn't even why gas is tax heavily in developed economies. First, gas taxes pay for roads. Second, the negative externality that Europe, at least, is trying to reduce is dependency on Middle Eastern oil, since that opens a huge can of worms with respect to world stability. If they really cared about air pollution, they wouldn't have pushed diesel so much.
- ljf 5y ago
  In many countries gas does not pay for roads, but goes into a general taxation 'bucket'. https://en.m.wikipedia.org/wiki/Fuel_tax https://en.m.wikipedia.org/wiki/Fuel_tax

world_peace42 5y ago

George’s ideas are interesting to ponder now and then. I’d definitely want to be a billionaire in that system, though, you’d pay pennies on your penthouses split with everyone living below you. If only taxes were that easy to figure out.

Ericson2314 5y ago
Well, the hope would be that you would have never become a billionaire in the first place because somewhere along the line that wealth was predicated on holding cheap real estate and collecting rents. Now, that argument doesn't help with switching too an LVT, but there are other reasons to be optimistic. Taxing Jeff Bezos at any level is worthless in comparison to a) Paying enough UBI that the warehouses would unionize, b) directly expropriating the warehouses into the postal system. (post : IP :: warehouse sku system : content-address based networking). Basically, trying to account for the power of billionaries and mega corps in monetary terms is a dangerous exercise where they can probably out-loophole you.
closeparen 5y ago
Middle class families in single family homes are hoarding a scarce and essential resource. Billionaires in high rises aren’t. The idea is to punish bad behavior and reward good behavior, not to cut down the tall poppies.
- reedjosh 5y ago
  In urban area's sure, but I don't think it's fair to call it hoarding in suburban or rural areas. There's tons of land in the US, it's just that there are no homes _right_ next to jobs and restaurants and the culture people want to live in. Now that I'm remote, I plan to move to a rural area and grow some of my own food in a single family home. I don't think that should be considered hoarding.
  - closeparen 5y ago
    Where there’s tons of land, it’s not that valuable. LVT would be low. It would only be punitive to people with a lot of land (per person) in those spots that are valuable because of those restaurants, culture, jobs, etc. nearby.

PragmaticPulp 5y ago

> Henry George - a 19th century political economist - proposed exactly this, and suggested the only thing that should be taxed should be land That may have made sense in the 19th century when agriculture dominated the economy, but it’s irrelevant today. At scale it becomes a tax on how space-inefficient your business is. Bad news for farmers, great news for the business running a 1000-person operation out of a skyscraper. You could of course start trying to change taxation rates based on various factors to compensate, but those factors reduce to proxies for revenue, which puts us back to square one. 19th venture taxation theories don’t translate to modern multinational trade with digital commerce.

MrPowers 5y ago
Land taxes are based on the value of the land, not the size of the land. The property tax system already performs land value assessments. Land taxes are highly progressive. Note that land taxes are only assessed on the value of the land, not the value of any buildings on the land. This incentivizes land owners to put the land to its highest and best use.
- pbourke 5y ago
  How much land does Google use vs the most successful farmer in a given county? What’s the value of the land that Google uses?
  - tristanj 5y ago
    Google owns more than $50B of real estate...
  - claudiulodro 5y ago
    The value of the land that Google uses is tremendous because the Google offices are located on it!
    - edgyquant 5y ago
      But an LVT isn’t a tax on the infrastructure it is a tax on the value of the underlying land.

odiroot 5y ago

> If you’re going down this route, many will argue that all forms of income tax are equally “wrong”. I frequently come to a conclusion personal income tax should be abolished as it punishes work. CIT, VAT, capital gains and inheritance taxes should be enough to sustain a budget. These are all unrelated to performed work.

542458 5y ago
I was under the impression that CITs were far, far more distortionary than well structured progressive PITs.
daveFNbuck 5y ago
Why is punishing adding value not wrong? Isn't adding value a good thing?
relaxing 5y ago
I frequently come to the conclusion that personal grocery bills should be free, as charging for food punishes existing.
- Ericson2314 5y ago
  I mean, socialism for basic needs and capitalism for status symbols is a pretty nice system. No problem doling out status symbols for productivity improvements which benefit basic needs production.
- closeparen 5y ago
  Groceries are exempt from sales tax.
- mjmahone17 5y ago
  Yes that sounds right: everyone should probably be given a ration for a guaranteed allotment food each month. In NYC during the pandemic they opened up free meals for everyone, regardless of income. A society where enough food is provided by default seems like a more humane society to me.

oivey 5y ago

This system sounds like would be gamed just like how property taxes are now: bogus assessments. At least income and sales have a clear, non-subjective value in dollars.

larsiusprime 5y ago
If "bogus assessments" lead to an incentive to declare a low value for your land, then that will be caught if and when you try to sell it or rent it out for a higher price. So if people just stick with a low valuation to pay less land tax, this will have the effect of greatly decreasing land prices, which are the principal cause of housing unaffordability, which seems like a good thing to me.
yourapostasy 5y ago
Gaming of tax systems by large capital players is a big challenge. I have wondered whether bogus assessments could be mitigated through some kind of open market price discovery with unlevered, unencumbered cash with full party disclosure. Make residential, owner-occupied homes and special categories (like public transit-related or infrastructure-related improvements like healthcare/power/water/waste/telecomms/etc. property) exempt. All other property post their assessments at tax jurisdiction's office. Anyone, at any time, can post to that office cash that is 10% more than the assessment upon the property. If the owner does not challenge the cash assessment, they must accept the cash offer within 180 days or are evicted. The catch is, that cash must be absolutely unlevered and unencumbered, the property is carried on everyone's books as a cash asset of the prospective new owner, and the property cannot be pledged as collateral, for the next 21 years (with an upward adjustment for deep-pocketed backers of offers) or until the property is sold, whichever comes first. The offering party must provide full disclosure and auditability of the source of the cash and the "Source Of Truth" controlling interest, no shell games. The legal jurisdiction enforces this transactional structure by refusing all cases entangling the property. The owner can respond to the price discovery cash offer by paying the tax jurisdiction the "back taxes" implied by the cash offer, back to the last time the property transacted on the open market. No penalty. If the owner can deliver proof that the offering party hid their ties to deeper (ultimate beneficial controlling interest) funding sources, then the entire offer is forfeit to the owner. This creates an incentive to discover badly out-of-alignment prices, but the intention is to gate out anyone playing financialization games or asymmetrically deep pockets parking cash badly distorting a small player-dominated market's historic valuations.

Khaine 5y ago

I’d also like to point out that for the longest time the Roman and Byzantine states taxed land and not commerce. It is not a new idea. In some ways it is an ancient idea. Land value and use is dependent on the climate and success of farming. It can be volatile, and while land may have an intrinsic value, the earnings to pay the tax can be highly variable (I.e. a drought). I don’t think this is the best idea to solve tax issues in the modern world

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eloff 5y ago

I remember my economics professor arguing that would be the most efficient tax after he explained how all taxes have the side effect of reducing the thing being taxed. So taxing something bad like CO2, great idea. Taxing something good like income or creating jobs - bad idea. Land tax would be simple, and very progressive, the tax rate of most young people renting world now be 0. It's more complex than that because the landlord pays the tax and hikes the rent appropriately. It enforces that land is used efficiently, which is so dysfunctional in many large cities. It's a great idea in my opinion. You'd solve taxation, eliminate personal accountants as a class, and solve the housing crises with one stroke (there is still zoning, but this makes poorly zoned land undesirable to hold because it bleeds money - creating an incentive for the land owners to vote for zoning the land better). But politicians deal with popular ideas, not smart ideas. The odds of any country trying it seem slim.

silexia 5y ago
I actually love this idea, although I would just do a wealth tax. Anyone who owns wealth gets taxed a bit. If you only taxed land, then lots of people would just move all their assets into stocks instead of land.
- dodobirdlord 5y ago
  Someone still has to be owning the land though, and paying taxes on it in proportion to its value. In most cases that’s going to be corporations. If I own stock in a corporation that owns land and the tax burden shifts from corporate income taxes to land taxes, on the whole this isn’t much different except for rewarding corporations that make efficient use of land and punishing ones that make inefficient use. Similarly, if I sell my land to a corporation, everyone who collectively owns the corporation is now paying what used to be my land taxes.
- ckw 5y ago
  Seems like the price of land would drop and the price of stocks would rise such that the yield on improved land (after taxes and mutatis mutandis) would match that of stocks.
5y ago

dennis_jeeves 5y ago

>World would be a great deal simpler if globally we moved to a Henry George system Yes it would, but you see that will not be popular for many obvious reasons ( less jobs for tax collectors/consultants/auditors etc.) A more non-obvious reason is that the ordinary Joe on the street hates the rich so much that he wants the rich being taxed rather than see the simplicity of taxing no one. >His ideas are now considered eccentric, He actually seems a level headed guy to me :) I would go even one step ahead and say that even land should not be taxed except for the cost of keeping land records.

mensetmanusman 5y ago

That’s an interesting thought experiment: What if we got rid of all taxes, and the only thing the govt. could do was print money at some fixed %GDP rate to induce inflation. Then everyone would try to spend faster than inflation and the velocity of money could be quite fast (to increase GDP and spending, etc.) Maybe a flywheel-economy?

beisner 5y ago
This is very similar to Modern Monetary Theory, which views taxation as a means to control inflation rather than a source of funds for a sovereign government. Maybe only applies to a country whose currency is the reserve currency of the world tho…

seanmcdirmid 5y ago

This is more about corporate activities leading to other kind of taxes. E.g. they pay rent, the landlord pays property tax, they pay salaries, employees pay income taxes, dividends are taxed, capital gains on stock price rises are taxed, etc... The problem with corporate taxation is that...we really want R&D and employment to be tax deductible for them, but a company like Amazon can just plow all their profits into R&D and focus on growth (even without R&D tax credits, they would still take a loss on earnings due to R&D outlays). Of course, all of that R&D money is still mostly taxed (via tech worker income taxes), so its not like the government isn't seeing any of it. Corporate income taxes really come down hard on a successful company that doesn't have any avenue to grow...maybe they should?