James Leroy Wilson's one-man magazine.

Thursday, December 29, 2005

Plugging the Single Tax

I am anti-State because I am anti-monopoly, and the State is a form of monopoly. And I am anti-monopoly because I am anti-coercion. And I am anti-coercion because I believe in things like human dignity and freedom. And I believe in human dignity and freedom because I believe in the Golden Rule, do unto others as you would have done unto you. And I believe in the Golden Rule because I'm selfish.

Anyway, getting back to the monopoly part. I suspect that land monopoly is inevitable, and that the State is more or less inevitable. And the best thing to do is mitigate its negative effects and maximize any possible benefits without inflicting harm on others. Better to do that than pretend that it doesn't exist just because I think it shouldn't exist. We'd be better off to use whatever means to reduce the overall level of coercion in society.

I'm on a normally non-political e-mail list in which the subject of taxes came up, with the predictable responses that a) we're overcharged, and b) we should be grateful for what taxes provide. I wanted to make a few points, but settled on just one for now. I wrote with a clear conscience, since I wasn't the one who brought up the subject:

I had a couple of other comments, but because of
length I will go to the most important one:

To borrow from Homer Simpson, who was speaking of alcohol, "To taxes: the cause of, and solution to, all of life's problems." That's basically true. For every "good" thing government does, the costs and the means by which it is paid for often does more harm than the overall "good" that government does. Taxes on wages, capital, purchases, and property improvements discourage those very things. Taxes, rather than being the "price we pay for civilization," are actually an impediment to its growth.

Adam Smith, Thomas Paine, and John Stuart Mill agreed on one point, which was also expressed by the Articles of Confederation, the constitution of the United States that existed for eight years before the current Constitution was illegally drawn up. How was the Union to be funded?

" All [...] expenses that shall be incurred for the common defense or general welfare, and allowed by the United States in Congress assembled, shall be defrayed
out of a common treasury, which shall be supplied by the several States in proportion to the value of all land within each State [...]."

They had the right idea, picked up by Henry George in the late 19th century. George's solution was to not tax anything at all except land values (land meaning not just dry surface but all natural resources). As William F. Buckley, a mostly closet supporter of the idea, described it, the owner of a vacant lot adjacent to the Empire State building, and the owner of the Empire State building, would pay the same tax. You
would see a rush for landowners who currently hold on to vacant land while waiting for its value to appreciate, to either develop it or sell it to people who will. Jobs will increase. Ghettoes will see construction booms. The cycle of speculative bubbles
and busts would end. And if you want to build a deck or remodel your home, you won't pay additional taxes on your improvements. If you make a zillion dollars a year and live on a thousand squarefoot plot in Nowhere, Nebraska, you'll pay almost no tax, even while your wealth circulates into the economy, helping others. Every non- landowner would be freed from the hassle of paying income and sales taxes.

And the dilemma of "liberty vs. equality" would end.

Even when the people have been burdened by other taxes and unnecessary regulations, the idea of taxing land more and improvements less has worked wherever it's been tried, from several cities in Pennsylvania and Australia, to the "Asian Tiger" economies.

Life, liberty, happiness,

James Leroy Wilson

6 comments:

  1. Anonymous7:51 AM CST

    Here in Ohio, the Libertarian Party candidate for Governor, Dr. William Peirce, is promoting this very same concept.

    http://peirceforohio.com/

    I too am curious about how this tax would work. Thanks for the post.

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  2. Anonymous8:42 AM CST

    Wouldn't all the land be gobbled up by those who have the resources to pay the (much higher) taxes on all those vacant lots? It seems to me that it would be a buyers' market for sure, since the seller would not be able to hold out against his land being "sold for taxes"?"

    Everett Wilson

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  3. Anonymous8:41 PM CST

    A phased in transition to this sort of tax would ease market distortions / disruptions (or rather, the resolution of today's distortions / disruptions.) Perhaps over 19 years, where in year 1 this tax would be required to make up 5% of overall government revenues, and by year 19, 100%, increasing at 5% per year -- whatever else were to happen in the meantime (short of rolling back the original requirement) would be rather inconsequential, tax-wise...

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  4. My response to anti-growth people wanting to use government laws to restrict developers and establish metropolitan growth limit lines has been, "you're perfectly free to buy all the land you don't want to see developed and do nothing with it" as a way of forcing them to put their money where their mouth is. With your idea, this could make anti-growth even more costly an ideal to hold.

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  5. Anonymous4:25 PM CST

    Everett,

    You may be partially right, even if your description is a bit exagerrated.

    Basically, a shift to the land tax would hurt those who produce nothing, and just live off of land ownership, while it would help those who produce a lot but haven't had the chance to accumulate any wealth.

    If you want to pity the poor parasites who produce nothing for our society, go ahead. However, remember that their (direct) loss would be exactly offset by the benefits to the working-stiff who otherwise couldn't get ahead because the state (or landlord, depending on how you look at it) takes a chunk of his produce before he has a chance to save/invest it. We expect that in the long run, society will be better off by allowing producers to reap the full reword of their work, thereby encouraging them to be more productive.

    To sum it up, if you want to make sure that those at the top stay at the top, then support taxes on production and consumption. If you want to make sure that those on the bottom have the opportunity to improve their lot through hard work, then support land tax.

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  6. Anonymous4:30 PM CST

    Everett,

    Another point: The land wouldn't go to "the person with the most resources" --it would go to the person who is willing to pay the most, which in the long run is no different than how things work without the land tax.

    A rich person would have no reason to buy up the land and pay heavy taxes in perpetuity unless he could gain enough of an income from the land to justify the cost of the land.

    The beautiful thing about land tax is that it doesn't change the real cost of the land, it just changes how we pay for land when we use it. Rather than paying up front to "own" the land, we would be paying taxes year to year for the right to occupy the land. If anything, it would help the poor and middle class since they wouldn't have to take out such large loans in order to buy the land that they live on.

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