Like I said, I don't dislike the fairtax. It just has huge drawback and in reality is incredibly difficult to enforce. It allows for a massive black market to form with almost no way for the government to regulate it. It also requires effort to ensure that the poor are exempt. Under LVT there is no way to evade the tax. There is no black market. It is simple to calculate and collect. The poor are automatically exempt if they don't own property. Your other point is debatable. Can land be individually owned? Or does land actually belong to the community? Who decided that any given person has the right to own a piece of land? Who gave that person the authority to decide that?
The only way I see it working is only those who pay the LVT are allowed to vote and then only in proportion to their tax obligation should their vote be weighted. Also I see huge problems in fair valuation/manipulation of supposed land value assessments. 40% tax on land yeah that will work
You're getting pretty silly here of course anything could get perverted politically. However right here in the incubation stage you are proposing radical tinkering because you KNOW it won't work even in the concept building stage much less practical application. If you cannot grasp the difference (and obviously you don't otherwise you would not have written your silly reply) I suppose I'm done.
A large number of states have property tax right now that is based on the entire property value yet most tax assessments actually slightly under value the property. Re: the rate. Sure it is high because the question was revenue neutral. The govt is getting that money from you one way or another. How is taking $20k from you for land tax worse than $20k from you for income and sales tax?
I thought I made it obvious that the "virtual" tax was just an idea that I threw out there to address the modern issue of companies that function mainly in the digital world. Many people expect them to contribute to the tax base. But the concept of LVT isn't silly. Quite the contrary actually. It is the preferred tax of a greater portion of the most esteemed economists from both sides of the isle than any other type of tax.
I might point out that while I support the "fairtax" and have been a proponent of it for years, it seems fairly obvious to most economists that in contrast to what you claim about the rich paying the most, the most common consensus is that it places the heaviest burden on the middle and upper middle class. The poor are generally included in some type of pre-bate voucher program and thus pay nothing. The rich actually don't spend anything close to their entire income. They invest most of it and gains in the fairtax would not be subject to any type of tax. Completely different story for the middle class. They typically spend their entire income. The savings rate is very close to zero and in hard times it is actually negative. Most revenue neutral estimates have the fairtax at 30% when calculated as an add-on sales tax, or 23% as an included tax. It's the same nominal value either way and it generally applies to cars and homes as well. So as a % of income it easily places the greatest burden on the middle class.
okay knock yourself out, institute this sort of tax as sole revenue for the US govt and I will divest myself of real property, import all my food (since prices would necessarily sky rocket) and completely avoid federal taxation entirely. Sounds like the perfect plan to me, it doesn't take too much real estate to trade. I like the idea of being 95-99% tax free. I don't mind suckers in the market and I certainly don't mind easily avoided taxation (left for other suckers to pay).
Actually, the economic theory suggests that as a portion of income, food prices would not skyrocket, but would actually fall slightly. Economists suggest that the efficient land use incentive is so strong with a tax like this that people could not afford to hold land in an unproductive state. Urban sprawl would theoretically be reduced dramatically, as there would be large incentives against expansive parking lots and other inefficient uses of land. The theoretical shift in land prices would be as follows. Commercial land prices would increase relative to other types of land. Residential would be expected to decrease relative to commercial. Agricultural land would be expected to drop significantly in relative terms. We are in the realm of theory (although all real world evidence supports the theory), but with such a strong efficiency incentive, businesses and residential land moves toward a state of higher density over smaller areas. Agricultural doesn't get crowded out so quickly, while at the same time all owners of ag land have a strong incentive to put that land to productive use for the highest yields possible. In short... more ag land with higher production equals dramatically higher supply. Higher supply with constant quantity demanded results in dramatically lower food prices. I don't know that I can ever fully believe untested theory, but it says a lot that many of the big names in the economics world support that idea. The biggest difficulty with this tax is that while most of them agree that it is the most efficient, most fair, and simplest form of tax, resulting in the greatest economic growth, it is easy to implement in a new nation but difficult in an established nation that has been built on the dream of land ownership. LVT focuses the wealth creation incentives on productivity and innovation at the expense of land speculation. It also doesn't have any of the incentives against consumption that other taxes like a fairtax have. (We live in a society driven by consumption. It is hard to imagine the effect of a 30% consumption tax in the short term. Imagine the immediate impact on home prices.) No incentives against actively earning income like income taxes have. We have built our entire economy around the idea of using land ownership speculation to create wealth. Consequently, upon implementation, land values would theoretically drop pretty significantly during the first couple years. They would balance out at prices that accurately reflect only the value of their most productive use. Right now we have values that reflect speculative premiums. My personal opinion is that this is the main reason it would not be possible to switch directly to an LVT. Additional drops in property values would be a tough pill to swallow. Obviously this would also lead to a tax revenue drop where politicians would have to increase the rate to some higher figure like 50% to remain revenue neutral. Which leads us to the second problem, and the problem for any major tax reform. None of them would be as bad as our current system, but they cannot be implemented without major disruption as long as govt spending is so high.
I have nothing of value to add here, except that I have say to Epic...see flame wars notwithstanding, everyone down here is up on everything.
Well, I tried to promote a debate, but maybe the topic was a bit too unfamiliar and foreign to our American way of thinking about land and tax. I suppose a better idea might have been to debate "fair tax" instead. I tried. I will say that a couple people argued their case, and presented some good points.