James Leroy Wilson's blog

Tuesday, March 01, 2005

Tax Reform

Fred Foldvary:

Any government service for which the beneficiaries can be identified should be paid for by user fees, such as a fee to get a passport. Many user fees are economically land rent paid to be in some location during some time. The fee to enter a park, for example, pays rent for the use of that area. A parking meter is really a rental paid for that street space. Use user fees whenever possible, at the amount that covers the cost. For example, fees to enter national parks should be increased so that they pay for much-needed maintenance.

The U.S. government deals with pollution mainly with regulations. This is inefficient. The government should make all polluters pay the social cost of the damage they cause. Germany does this with good effect. The federal government should tax pollution that affects a wide area, such as the atmosphere. State and local governments should tax more local pollution, such as from car exhaust. Pollution taxes could raise billions of dollars without harming the economy, because the pollution is harmful, and if polluters are not charged, they get subsidized, making others pay for their social costs.

Most economists agree that a tax on land rent is efficient in not causing any economic damage. But it gets better, because taxing land rent can even improve the economy, promoting infilling in cities and reducing development in the urban fringes. Taxes on land value are also equitable, since much of the value of land comes from government's public works and services, and a tax on the land value repays value received from government.


It is Constitutional for the federal government to levy a direct tax on land value, apportioned by the population of the states. The federal government did this in the late 1700s and early 1800s. The land-value tax can replace federal income taxes.

2 comments:

  1. John Boanerges Redman9:03 PM PST

    I think that Fred is a statist. He completely ignores that government parks are a violation of all principles of private property, likewise most (all) such "services". "The government should make..." is such crap. It is coercion. Nothing this person opines is in the least valid. Check with your Austrian economics text for proofs. If you get postings from Mises Institute, read them, for Gods sake.

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  2. Fred Foldvary is a disciple of Henry George. George's economics saw a distinction between property, which is the product of one's own labor, and mere title to land. No tax would be paid on property improvements, or income, or sales, only land rents and other forms of exclusive use of natural resources. This requires greater elaboration than can be summed up in a post, but a growing number of libertarians, including myself, are beginning to discuss this and write about it. Many who disagree see that it is a reasonable position.

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