5 ms·
As an interesting thought experiment - What if we taxed land, but the tax rate was based entirely on the size of the parcel, and the total valuation (land + im
by Yen 12y ago
As an interesting thought experiment -
What if we taxed land, but the tax rate was based entirely on the size of the parcel, and the total valuation (land + improvements) of all nearby parcels, not including the current one.
In theory, this adjusts the price of holding the land based on how desirable it is, encouraging either efficient use, or selling, and doesn't encourage trickery where someone tries to keep their appraisal low so as to reduce their tax burden.
- nwah1 12y agoTaxing by size is how Israel does it. It isn't a good idea, though, because it falls disproportionately on rural owners, and it ignores the central insight of the law of rent. The point is that monopolization of prime locations is what drives "real" wages down. In other words, the amount you can afford after rent and taxes take their cut, is determined by these factors. You should instead pay for what you use, by value. If that doesn't happen, rents will just flow as unearned income to owners of the best land, and wages will be depressed. And then we'll additionally need to tax productive activity to make up the shortfall. The "margin of production" is the best available rent-free land, and the point is that the better this land is, and the more productivity is possible upon it, the better your next best alternative to paid labor is. Thus, employers must pay you more, or landlords must demand less... because otherwise you'll take that next best alternative. Of course, the alternative includes all subjective and intangible things too... but that is what I mean by "real wage."