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this post was submitted on 01 Apr 2024
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Why a land tax? Many (most? all?) towns and cities have a real estate tax.
You forgot long term capital gains tax. There is no reason that the investor class should be paying a flat 15% tax. Critics will quickly jump up to say that we need to incentivise people to make long term investments in businesses, which I agree with, so short term capital gains should be taxed like gambling winnings.
Also, minimum wage can be addressed with a one time bump and after that, make tax brackets, 401k contribution limits, etc. multiples of the federal minimum wage.
There's a movement called Georgism that advocates for abolishment of all taxes, except for a land-value tax. ("Land" being any extractive natural resource use.) It's really the only fair tax system. At the risk of oversimplifying it: All wealth comes from a combination of natural resources and labor. Natural resources belong to all of humanity, so it's not fair to give ownership of them to well-connected individuals or firms to profit from extracting and selling them. On the other side, an individual's labor is the only thing that people have that's entirely their own. It's not fair to tax individual labor, like an income tax, as nobody else should have any claim on its value. Thus, the taxes to run a society should come from the use of humanity's limited store of natural resources/land, rather than have value which belongs to us all disappear info the pockets of a few individuals, while most people must work to justify their existence while the value of that labor is siphoned away.
It is a beautiful philosophy, but the issue with a land tax is that it is regressive, meaning the poor pay a larger portion of their income than the rich. If you look at detached suburban homes, from 100m² single floor starter homes to 1000m² mansions, the size of the lot is about the same. If you look at high density urban housing, a skyscraper full of luxury condos uses less land per occupant than cheap multi-family homes.
It seems to make the most sense in Soviet style ultra high density housing where the poor live 4 to a shoe box while the rich have luxury country estates.
I took a while to ponder this point, to respond without writing a novel. To keep it brief, I'd say that whether it's a regressive tax depends on the structure or the tax rates. Here in the U.S., poor people most definitely do not own houses, or at least not houses in high-value locations on lot sizes anywhere near the lot sizes that rich people own. Only people with money own big lots in high-value locations, like desirable city centers.
Our property tax system already contains terrible perverse incentives, such as taxing the value of land and buildings, which means that rich people can afford taxes on an expensive house, and middle-class people get slammed with taxes on additions and improvements to their houses.
Poor people rent, and landlords have the same perverse inventive to avoid fixing up their properties. Their taxes are lower if they let their buildings decay, keeping them just above the condition the building code requires.
Capital in the form of machines, buildings and tools is also important in the creation of value.
Machines, buildings, and tools are themselves products of natural resources and labor.
This is true, as the constituent parts of the instruments are the act of labor forming natural resources into the instruments.
But this isn't necessarily relevant to the processes of production. The role of the instruments is to assist labor into effectively and efficiently creating the product. They are enabling and organizing labor. This is capital.
We should never forget that all forms of capital are created through accreted layers of labor. But in terms of value creation, the must be seen as capital because the instruments serve a productive process resulting in a product that is valued by society. As such, capital is in conversation with society.
To highlight the above, I'll create an egregious example. We could argue that all labor is essential natural resources as all bodies are just made of matter anyways. But labor is directed through the needs of the laborer and society. Through a mixture of consciousness, intention, and creativity, that labor creates something of value for themselves and others.
Capital, in my understanding, is akin to this in the productive process.
Good question because I think land value is important.
Pretty much every country in the west has a housing shortage. There is no free land anywhere downtown so you can't just take some land and build on it for free.
With real estate tax. Let's say you have 3 patches of land around the central railway station downtown. You have huge office building on one, you have a old, crappy by modern standard, home and you have a vacant lot that the owner can't be bothered doing anything with. They all get taxed three different amounts. In fact by taxing them different amounts you are encouraging the market to devalue assets on that land to minimise their taxes.
If taxes were based on the value of that land it would incenitivise you to maximise the space. So a 1 person home would end up paying 10x that of a 10 home apartment complex per home. Low cost housing would be cheaper, lavish estate homes would be costlier.
If you want a market oriented fix to the housing crisis, to low density, to lack of public transport, for people buying land and sitting on it doing nothing, for rich people not paying taxes on thing and just holding onto wealth they have inherited. Then land value tax solves all these issues, or at least encourages it.
(I still think corporations should be able to own homes. It's a fantasy to expect the hosuing system to be better without it. But I does need fixing LVT is a way to help fix it).