5 ms·

End All Taxes...Except One

53 points by robg 17y ago

aberman 17y ago
"In 1879, Henry George...published Progress and Poverty, a scathing polemic that blamed all economic ills on the private ownership of land.[he] found it perverse that we tax productive activities like work and innovative investment while letting landowners grow rich simply because they scooped up property at the right time. " 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.
- ivankirigin 17y ago
  Taxing land (and not the buildings on top of it) would incentivize people to improve the buildings to add value. Currently, other taxes such as capital gains disincentivizes improvements to the property. 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.
TweedHeads 17y ago
Taxes are evil. 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.
- lsb 17y ago
  Economies of scale make taxation efficient if you have publicly available goods, like water, or mass transit, or roads, or primary health care.
  - grandalf 17y ago
    What is non primary healthcare? Should people have to pay for their own brain surgery but not for their nicotine patches?
    - mrtron 17y ago
      That question is reasonably answered in many countries across the world. 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.
      - grandalf 17y ago
        Should the president of the US get the exact same quality of care as a homeless person? If not, why not?
        zmimon 17y ago
        Why do people always equate universal healthcare with some kind of extreme socialist conspiracy to remove healthcare from the wealthy and place it in the hands of the poor? 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.
        rdouble 17y ago
        Canada's health care system essentially bans private health insurance for core health services. "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=d8125140338c3cf146595341cd194aa6c5bfbbaa&keytype2=tf_ipsecsha http://content.nejm.org/cgi/content/full/349/8/804?ijkey=d81...
mattmcknight 17y ago
It's odd that this would be suggested now, when falling property values are killing the tax revenue across the USA. The government just adjusts the tax rate every year so they have adequate funding. Of course, why limit the tax to land, why not tax all property, like my county does to my business? Even if I lease a printer, I end up paying a surcharge for keeping it here. Property tax sucks. I think a consumption tax is much more reasonable, with the end goal of increasing exports in mind.
- trickjarrett 17y ago
  It's a news journal's version of link bait. Anything to suggest lower taxes for the individual (well, some individuals) is seen as a viable column.
- anamax 17y ago
  > It's odd that this would be suggested now, when falling property values are killing the tax revenue across the USA. 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.
  - mattmcknight 17y ago
    It's very different in my county in VA, assessments are done every year on commercial and residential property. So, the revenue drops quickly if the tax rate isn't increased. They actually did drop the tax rate as values were rising, but not enough to prevent a $315M gap this year, even with a 12% increase in the tax rate. http://www.washingtonpost.com/wp-dyn/content/article/2009/06/29/AR2009062903924.html http://www.washingtonpost.com/wp-dyn/content/article/2009/06... 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.
mblakele 17y ago
Let's see.... Fewer people would invest in property because of the increased tax burden, making property owners a minority in the electorate. Then non-taxpaying voters would notice that they can vote in officials who give them free stuff. Then taxpaying property owners would declare a tax strike. 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).
- ShabbyDoo 17y ago
  All costs are transferable. So, whether you rent or own, you will pay property tax -- just like today. In my hometown, one prominent landlord sent out letters to his tenants telling them that, if an upcoming school levy passed, their rents would be raised. The same transfer goes for commercial property as well. If the "single tax" was levied, one conceivably could compute the portion of the cost of a gallon of milk attributable to the cumulative taxation through the supply chain. 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.
  - yummyfajitas 17y ago
    Regarding renting, there is a huge problem with that in many eastern states: rent control. 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.)
ShabbyDoo 17y ago
It strikes me that environmentalists should want to tax land improvements and/or the procurement of physical goods. Imagine if a new toaster cost $100 after taxes but the toaster repairman only charged $30/hour because he was able to keep 100% of his earnings. Today, if you can buy a new toaster for $60 and toaster repair costs $50/hour, you're a lot more likely to buy a new one and put the old one out on the curb for the trash man. Would people buy houses so large if property tax rates were twice what they are today? 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.
pg 17y ago
I think one reason governments use a variety of taxes is that otherwise there is a single point of attack for people who want to game the system, and all that energy focused on one point could produce weird distortions. 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).
- Locke1689 17y ago
  Also, at the moment we only tax "land" -- meaning actual physical land, not space inhabited. Therefore, the truly rich could afford to construct difficult vertically engineered buildings, thus reducing their tax burden while simultaneously keeping a superhigh lifestyle. Meanwhile, many middle class who are wealthy enough to afford a home but not wealthy enough to afford a towering monstrosity would be taxed at a higher rate. 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.
  - jerf 17y ago
    "Therefore, the truly rich could afford to construct difficult vertically engineered buildings, thus reducing their tax burden while simultaneously keeping a superhigh lifestyle." If the tax rate is so high that this is a worthwhile use of a rich person's money, we've already lost.
    - Locke1689 17y ago
psadauskas 17y ago
I think this is the best proposal for just one tax: http://www.fairtax.org http://www.fairtax.org 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.
- yummyfajitas 17y ago
  Why do we want to encourage exports?
  - DougWebb 17y ago
    If we make something and sell it overseas, it brings wealth into the country. That's good for us. It's the opposite of what we've been doing: importing massive amounts of cheap products, sending all of our wealth overseas to other countries. 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.
    - yummyfajitas 17y ago
      I think you may be confusing wealth (goods and services) with money. 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).
    - Darmani 17y ago
      I've never bought arguments like that. To me, this is just neo-mercantilism. 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.
      - DougWebb 17y ago
fizx 17y ago
Any time you tax something, you disincentiveize it. 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.
grellas 17y ago
The problem with this single-tax approach, as with all others, is that it ignores human nature. 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?
- thristian 17y ago
  For people like myself who aren't familiar with the history of California's constitutional reforms, Wikipedia describes this "proposition 13" as follows: "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_%281978%29 http://en.wikipedia.org/wiki/California_Proposition_13_%2819...
  - grellas 17y ago
    Just to clarify further: 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.
TrevorJ 17y ago
A single tax, or a flat tax will never ever be allowed for a very simple reason: Power. The government uses taxes to encourage behavior it likes and discourage behavior it dislikes. 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.
- tybris 17y ago
  The majority of society wants those things to be punished and encouraged and tax is not an especially powerful tool.
johnnybgoode 17y ago
I am familiar with Georgist ideas but I didn't expect to see them in the Atlantic. The single land value tax is perhaps the least evil of all tax systems, but it has serious flaws (beyond simply being a tax in the first place). 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.

53 points by robg 17y ago

"In 1879, Henry George...published Progress and Poverty, a scathing polemic that blamed all economic ills on the private ownership of land.[he] found it perverse that we tax productive activities like work and innovative investment while letting landowners grow rich simply because they scooped up property at the right time. " 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.

ivankirigin 17y ago
Taxing land (and not the buildings on top of it) would incentivize people to improve the buildings to add value. Currently, other taxes such as capital gains disincentivizes improvements to the property. 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.

TweedHeads 17y ago

Taxes are evil. 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.

lsb 17y ago
Economies of scale make taxation efficient if you have publicly available goods, like water, or mass transit, or roads, or primary health care.
- grandalf 17y ago
  What is non primary healthcare? Should people have to pay for their own brain surgery but not for their nicotine patches?
  - mrtron 17y ago
    That question is reasonably answered in many countries across the world. 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.
    - grandalf 17y ago
      Should the president of the US get the exact same quality of care as a homeless person? If not, why not?
      - zmimon 17y ago
        Why do people always equate universal healthcare with some kind of extreme socialist conspiracy to remove healthcare from the wealthy and place it in the hands of the poor? 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.
        rdouble 17y ago
        Canada's health care system essentially bans private health insurance for core health services. "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=d8125140338c3cf146595341cd194aa6c5bfbbaa&keytype2=tf_ipsecsha http://content.nejm.org/cgi/content/full/349/8/804?ijkey=d81...

mattmcknight 17y ago

It's odd that this would be suggested now, when falling property values are killing the tax revenue across the USA. The government just adjusts the tax rate every year so they have adequate funding. Of course, why limit the tax to land, why not tax all property, like my county does to my business? Even if I lease a printer, I end up paying a surcharge for keeping it here. Property tax sucks. I think a consumption tax is much more reasonable, with the end goal of increasing exports in mind.

trickjarrett 17y ago
It's a news journal's version of link bait. Anything to suggest lower taxes for the individual (well, some individuals) is seen as a viable column.
anamax 17y ago
> It's odd that this would be suggested now, when falling property values are killing the tax revenue across the USA. 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.
- mattmcknight 17y ago
  It's very different in my county in VA, assessments are done every year on commercial and residential property. So, the revenue drops quickly if the tax rate isn't increased. They actually did drop the tax rate as values were rising, but not enough to prevent a $315M gap this year, even with a 12% increase in the tax rate. http://www.washingtonpost.com/wp-dyn/content/article/2009/06/29/AR2009062903924.html http://www.washingtonpost.com/wp-dyn/content/article/2009/06... 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.

mblakele 17y ago

Let's see.... Fewer people would invest in property because of the increased tax burden, making property owners a minority in the electorate. Then non-taxpaying voters would notice that they can vote in officials who give them free stuff. Then taxpaying property owners would declare a tax strike. 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).

ShabbyDoo 17y ago
All costs are transferable. So, whether you rent or own, you will pay property tax -- just like today. In my hometown, one prominent landlord sent out letters to his tenants telling them that, if an upcoming school levy passed, their rents would be raised. The same transfer goes for commercial property as well. If the "single tax" was levied, one conceivably could compute the portion of the cost of a gallon of milk attributable to the cumulative taxation through the supply chain. 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.
- yummyfajitas 17y ago
  Regarding renting, there is a huge problem with that in many eastern states: rent control. 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.)

ShabbyDoo 17y ago

It strikes me that environmentalists should want to tax land improvements and/or the procurement of physical goods. Imagine if a new toaster cost $100 after taxes but the toaster repairman only charged $30/hour because he was able to keep 100% of his earnings. Today, if you can buy a new toaster for $60 and toaster repair costs $50/hour, you're a lot more likely to buy a new one and put the old one out on the curb for the trash man. Would people buy houses so large if property tax rates were twice what they are today? 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.

pg 17y ago

I think one reason governments use a variety of taxes is that otherwise there is a single point of attack for people who want to game the system, and all that energy focused on one point could produce weird distortions. 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).

Locke1689 17y ago
Also, at the moment we only tax "land" -- meaning actual physical land, not space inhabited. Therefore, the truly rich could afford to construct difficult vertically engineered buildings, thus reducing their tax burden while simultaneously keeping a superhigh lifestyle. Meanwhile, many middle class who are wealthy enough to afford a home but not wealthy enough to afford a towering monstrosity would be taxed at a higher rate. 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.
- jerf 17y ago
  "Therefore, the truly rich could afford to construct difficult vertically engineered buildings, thus reducing their tax burden while simultaneously keeping a superhigh lifestyle." If the tax rate is so high that this is a worthwhile use of a rich person's money, we've already lost.
  - Locke1689 17y ago

psadauskas 17y ago

I think this is the best proposal for just one tax: http://www.fairtax.org http://www.fairtax.org 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.

yummyfajitas 17y ago
Why do we want to encourage exports?
- DougWebb 17y ago
  If we make something and sell it overseas, it brings wealth into the country. That's good for us. It's the opposite of what we've been doing: importing massive amounts of cheap products, sending all of our wealth overseas to other countries. 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.
  - yummyfajitas 17y ago
    I think you may be confusing wealth (goods and services) with money. 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).
  - Darmani 17y ago
    I've never bought arguments like that. To me, this is just neo-mercantilism. 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.
    - DougWebb 17y ago

fizx 17y ago

Any time you tax something, you disincentiveize it. 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.

grellas 17y ago

The problem with this single-tax approach, as with all others, is that it ignores human nature. 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?

thristian 17y ago
For people like myself who aren't familiar with the history of California's constitutional reforms, Wikipedia describes this "proposition 13" as follows: "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_%281978%29 http://en.wikipedia.org/wiki/California_Proposition_13_%2819...
- grellas 17y ago
  Just to clarify further: 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.

TrevorJ 17y ago

A single tax, or a flat tax will never ever be allowed for a very simple reason: Power. The government uses taxes to encourage behavior it likes and discourage behavior it dislikes. 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.

tybris 17y ago
The majority of society wants those things to be punished and encouraged and tax is not an especially powerful tool.

johnnybgoode 17y ago

I am familiar with Georgist ideas but I didn't expect to see them in the Atlantic. The single land value tax is perhaps the least evil of all tax systems, but it has serious flaws (beyond simply being a tax in the first place). 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.