"The Single Tax"

[Omnizoa]

https://www.movieforums.com/community/attachment.php?attachmentid=49627&stc=1&d=1542100403


With the creeping doom of politics on this forum I figure now is as good a time as ever to squeeze in one final installment in the epic saga, which is sure to disappoint audiences and infuriate long-time fans.

THE PREMISE
Multiple times in the Trump thread I challenged people on the topic of economics, but nobody ever took me up on it. I don't believe this is merely for partisan reasons, I think most people don't have a very firm grasp of market economic problems and their various causes. People can variously observe the effects of these problems; poverty, homelessness, gross income inequality, but most can only point a finger at those not under apparently similar duress ("those damn dirty rich people!") and vaguely hang all of these problems around their neck; it is the downtrodden who are entitled to the earnings of the successful. But why, how much, and why that much? Current politics is a never-ending debate between moralizing why those who have more deserve less and moralizing why those who have the least just aren't trying hard enough.

It's Socialists vs Capitalists, both trying to rationalize their preconceived conclusions to these problems: Tax to the max (which is to abolish private property; Communism), or not at all (which is to abandon the government; Anarcho-Capitalism). The middle ground most people occupy between these two realms is to quibble back and forth endlessly over how much certain people should be taxed, which is fundamentally a futile question because there is no objective reason why a tax rate should be 1% vs. 99%. What constitutes not paying enough or paying too much? You're just stuck in a conflict of interest where the person in question wants to pay is little as they can, and everyone else wants them to pay as much as they can. Because the purpose is implicitly redistribution.

THE PROBLEM
But how often does the argument concern the kind of tax? "The Free World" various entertains Income Tax, Sales Tax, Corporate Tax, Capital Gains Tax, Gift Tax, Inheritance Tax, Council Tax, Business Rate Tax, Estate Tax, Head Tax, all of which functionally make it harder to:
1.) Earn money,
2.) Own a home,
3.) Run a business,
4.) Sell a product,
5.) Give away a product,
6.) Die without having your products taken away from you,
7.) Live,

This is all in addition to countless costly regulations and other mandated expenditures like insurance. And people realize, at least in some part, that these taxes kill the economy, so we have a whole 'nother bureaucratic mechanism called "tax returns" just for the purpose of giving you back money they shouldn't have taken in the first place.

Making economic activity more expensive is precisely what limits economic activity; there will be smaller and fewer markets, less jobs, and all the greater demand for competition because while the fat cats are already in the game, new businesses are throttled due to these restrictions. You now have a fresh dilemma where not even the businesses under tax want to get rid of it because keeping it maintains their market domination! Socialists blame Capitalists for the Corporations, Capitalists blame Socialists for the Corporations, you may think Corporations are simply the problem, and they are... one problem... but you still have the matter of tax.

THE PROPOSAL
I propose that all taxes be abolished save that upon the unimproved value of land, with the possible exception of pigouvian taxes (taxes on negative externalities). I further propose that excess revenue derived from these taxes be redistributed back into the population in the form of a Citizen's Dividend.

To clarify, I want to emphasize that:
A.) Land here refers to economic land (https://en.wikipedia.org/wiki/Land_%28economics%29). Economic land refers to any geographical space and it's attendant resources.
B.) This is not a land tax, it is a land value tax. It is not a tax on the mere ownership of land, it is a tax on the value derived from owning land.
C.) The value of land refers to it's market value, which is to say that where demand is high (such as in cities) the tax will be proportionally high, and where demand is low (such as in rural areas) the tax will be proportionally low. Where there is no competing demand for land, there is no tax.
D.) Improvements, such as buildings and infrastructure, are not counted in the tax so as not to discourage development. If and when the owner cedes ownership of the land, the improvements are folded into it's market value and it is considered to be "unimproved" again by it's new owners.
E.) A Citizen's Dividend is similar but distinct from a Universal Basic Income. A CD, unlike a UBI, is not intended to satisfy any preconceived standard of living, and is strictly conditional and proportional according to the tax derived. Specifically, save that which goes to essential services, there is a direct correlation between the cost of the natural opportunity denied to non-landowners by land owners, the market value derived thereof, and the size of the Citizen's Dividend. A CD is fundamentally compensatory.

THE REASONS
The reasons for why this is a good idea are multitudinous, but to begin, I will [attempt to] offer 3:

1.) Private landownership is a natural monopoly (https://en.wikipedia.org/wiki/Natural_monopoly). There being a finite amount of land and an unlimited amount of land any one person can permanently own necessarily implies an exclusive ownership to both physical space and the resources in it, something which necessarily climbs in demand (and value) as population increases. With fertile farmland and entire commercial districts legally under the thumb of a select few, the majority whom have no land are entirely subject to their whims, whether they use the land profitably or allow it to collect in value, only to sell it at a greater price. This results in inefficient use of land and rent-seeking, both of which retard societal development at large but which are cured by a constant financial pressure such as that which a Land Value Tax (or LVT) provides.

2.) Private landownership creates poverty. Rent, being the cost of using someone else's land, is only as high as the cheapest land of equal value. And while the owner of such land has a captive consumer base (as population climbs and the demand for land increases), the owner may freely raise the cost of rent, which in turn permits other landowners in similar markets to raise their rent as well. Consequently, rent perpetually increases, which means the cost of living perpetually increases, and the cost of land perpetually increases. For this reason, no amount of technological advancement and no consolidation of labor or capital can or will prevent a proportional rise in poverty (https://en.wikipedia.org/wiki/Henry_George_theorem). Because all material wealth comes from land, and land is the exclusive right of the very few. Where wealth consolidates to raise the value of land, so too does it raise the cost of rent, which it turn drives us ever deeper into poverty.

3.) Trading taxes on production for taxes on negative externalities will send the economy into overdrive. The effect of removing all of our conventional boundaries to economic progress in exchange for redistributing the value of a privilege, which itself is a boundary to economic progress, cannot be understated. Not only would you leave the working man unmolested for the crime of work, but you would put money in his pocket in exchange for the land which he needs to live, but need not live on. Investing would explode, old monopolies would crumble, vacant land would be forced into productive use, wealth would circulate more rapidly and more equitably than ever before, and homelessness would virtually vanish. The noble ideals of the socialist can be realized in a laissez-faire market economy and a Land Value Tax is the way to do it.


I don't claim that a Land Value Tax would be a cure-all for modern government's economic problems; unchecked money printing is an unrelated but ceaseless cause of inflation which drives the value of every penny down. But it would utterly disembowel what is easily one of the oldest forms of oppression in history.

If you are skeptical, which you rightly should be, consider the game Monopoly (https://en.wikipedia.org/wiki/The_Landlord's_Game). How does it end? When a player makes a certain amount of money? Buys a certain number of houses? Collects a certain number of properties? No. It ends when everyone else is reduced to absolute bankruptcy. That was the point. To teach you.


My challenge to you, MoFo, assuming you've followed me this far, is to explain to me why I'm wrong. Tell me why we should not abolish all taxes on production in favor of a single tax on the unimproved value of land.

[chawhee]

I don't have enough time to fully respond, but I do want to bump this for someone who may have more time. As you stated, this would not be a silver bullet solution for the economy. It is certainly a utopian view almost in the same way that communism has a lot of utopian characteristics. I think you would still end up with quite a lot of income/quality-of-life disparity with this scenario.

[Omnizoa]

I don't have enough time to fully respond, but I do want to bump this for someone who may have more time. As you stated, this would not be a silver bullet solution for the economy.
It is frequently referred to in that way, actually.

https://prodimage.images-bn.com/pimages/9780904658101_p0_v1_s550x406.jpg


Though it should by no means be taken to mean it is a solution for all related problems.

It is certainly a utopian view
Part of what ought to be compelling about the concept is that there's nothing utopian about it. A tax shift is so mundane a solution that it's entirely plausible. Shift the tax rate towards an LVT by 5% per year and by the end of a US presidential term the economy will have hit a record boom.

almost in the same way that communism has a lot of utopian characteristics.
LVT rests on a single basic principle of human nature, one which we rely on for the market economy to function: That is that we seek to achieve our desires with the least exertion. It is this principle that creates capital, it is this principle that creates competition, and it is this principle that creates rent-seeking. It is nothing short of an honest acknowledgement of human nature.

By contrast, Marxist theory explicitly entails reinventing human nature; that only through dictatorship by the proletariat the people will let go of their selfish desires and become "a new man" (https://en.wikipedia.org/wiki/New_Soviet_man), wherein society falls into a selfless communist autonomy and the state becomes unnecessary.

Quite a reach to call both concepts "utopian". You might as well call any legislative change "utopian" if it's expected to have positive results.

I think you would still end up with quite a lot of income/quality-of-life disparity with this scenario.
Of course you would, that's simply what comes of a market economy. As long as the consumer has the freedom to choose what to spend their money on, wealth will not be shared equally. And I would want nothing less. The important distinction here is that under the conditions I've proposed there is now 1 less class of people whom reap an exclusive privilege which comes perpetually at the cost of the rest of society. That cost is functionally collected and returned to the society which creates it. After all, it is society's collective demand which creates the market value which landowner's exclusively profit from.

[Omnizoa]

Aaaanybody else?

[Yoda]

Would require a lot of thought to think about the consequences of this, I think. There would be some unintended ones, no doubt.

What I find interesting is how often radical ideas (about taxes or interest rates or whatever) become less radical if you compare them to the confused reality that is currently their alternative. IE: I might not like this in a vacuum, because it seems reasonable that we should have more elaborate taxes to encourage or discourage things without banning them or subsidizing them outright, but there's no way to have that without its attendant corruption (or even just over complication), so I see the appeal of something clean and simple merely for the clarity it provides.

That said, one thing I've concluded about other vaguely similar proposals (like the Flat Tax) is that a lot of exceptions to clean tax rules are actually very important, and if I don't trust a society or government to keep such exceptions in check, I'm not sure I'd trust it to avoid them altogether, anyway.

Simply put: I wonder if the only societies in which these kinds of things would work and stay as-is are the ones that don't need them.

[Omnizoa]

Would require a lot of thought to think about the consequences of this, I think. There would be some unintended ones, no doubt.
A popular contention is that the idea runs contrary to the dream of owning your own home, indefinitely. Although I would contend that most people never realize that dream anyway and that a tax which functionally serves as a rent to the state is still ultimately a superior tradeoff to taxes you may otherwise pay through estate taxes, property taxes, or whatever taxes which come with the job you need simply to afford the house in the first place.

It's kinda funny, in one of the bigger debates I had on the subject my opponent stressed the importance that their parents put on owning land. Well yeah, that's because it's economically to their advantage, even if they chose not to live on it, land speculation is among one of the safest investments you could make with your money.

What I find interesting is how often radical ideas (about taxes or interest rates or whatever) become less radical if you compare them to the confused reality that is currently their alternative.
Much agreed. This is very much a "trim the fat" approach, whereas the problems are considered to come from the bureaucratic machine itself, as opposed to the solutions, but not taking it to such an extreme that the state need be abolished in it's entirety.

IE: I might not like this in a vacuum, because it seems reasonable that we should have more elaborate taxes to encourage or discourage things without banning them
This is actually why I said "with the possible exception of pigouvian taxes", things like a Carbon Tax, while still vague and arguably brutish in their attempt to resolve the problem they're intended to solve, are a substantially more rational in their premises than most any other taxes. It's understood from the outset that taxes, being costs, implicitly disincentivize what they tax, and so are implemented with a very specific narrow goal in mind, but with a solution specifically tailored to it.

This still runs into the "what %?" problem though because we acknowledge that society would ideally function with some un-specified degree of carbon emissions, which we of course would not want to punish with taxation (appeal to moderation arguments, etc...). This is another way in which a Land Value Tax is superior, even to conventional Pigouvian Taxes, because any degree of exclusivity to land is [ostensibly] bad and so a 100% tax can be safely levied.

or subsidizing them outright, but there's no way to have that without its attendant corruption (or even just over complication), so I see the appeal of something clean and simple merely for the clarity it provides.
Streamling the tax code, if nothing else, is something I think everyone can get behind.

That said, one thing I've concluded about other vaguely similar proposals (like the Flat Tax) is that a lot of exceptions to clean tax rules are actually very important,
This is why it's not so "simple" a land tax as was proposed by the likes of Thomas Paine. It's not merely a tax on land, or even a quantity of land, or even a quality of land. It's a tax on land value, and an unimproved value at that. Without these caveats the suggestion would either fail to solve the problem or simultaneously discourage development.

and if I don't trust a society or government to keep such exceptions in check, I'm not sure I'd trust it to avoid them altogether, anyway.
Unfortunately that lack of trust (if you could even call it that), must necessarily extend to any government project. That level of skepticism leads to anarchy.

Simply put: I wonder if the only societies in which these kinds of things would work and stay as-is are the ones that don't need them.
Seems a bizarre question to me, given the solution offered exists explicitly to solve a very specific problem, which necessarily must exist in the first place for any sort of "solution" to it to make any degree of sense. Again, I feel as if this sort of "we can't trust the government to reform taxes" thing could be just as easily applied to any reform you might want the government to undertake.

[Yoda]

Streamling the tax code, if nothing else, is something I think everyone can get behind.
In theory, but not in practice. And unfortunately things like the tax code are issues that are entirely about the implementation. I think this is kind of like "Congress is terrible but I like my Congressman." The tax code has too many rules, but I like the tax breaks I qualify for.

Sadly, I think a lot of issues are like this. Guns and debt among them.

Unfortunately that lack of trust (if you could even call it that), must necessarily extend to any government project. That level of skepticism leads to anarchy.
It's skepticism in breadth, rather than depth: I'm skeptical about many things (including this), but not so skeptical as to advocate government not be involved at all. This isn't an unusual distinction; it's the same distinction that allows small government conservatism to exist at all.

Seems a bizarre question to me, given the solution offered exists explicitly to solve a very specific problem, which necessarily must exist in the first place for any sort of "solution" to it to make any degree of sense.
Sure, but there are problems that exist for arbitrary or avoidable reasons, and problems that exist because of who we are at a fundamental level, and how our system works. Reform is worthwhile either way, but in the latter case it should be treated as a temporary reprieve before we fall back into old habits.

I think the very nature collective action and the distributed costs/concentrated benefits split of things like the tax code mean its problems are probably unavoidable for long. Reform is still worthwhile, just means it's best to temper expectations, since a lot of these reforms are cyclical. Which means, in turn, that piecemeal returns may be the way to go, as opposed to cutting a big swathe through the issue.

[Omnizoa]

In theory, but not in practice. And unfortunately things like the tax code are issues that are entirely about the implementation. I think this is kind of like "Congress is terrible but I like my Congressman." The tax code has too many rules, but I like the tax breaks I qualify for.
I'm thinking of streamlining in terms of removing obstacles: If you're to end up with X money at the end of the year, simplify the obstacle course of calculations taken to get there.

It's like, why use the quadratic equation to find the hypotenuse when you could use the pythagorean theorem? It's just a dumb question, and one of the few things I'll remember from math class because of how infuriating a waste of time it was.

It's skepticism in breadth, rather than depth: I'm skeptical about many things (including this), but not so skeptical as to advocate government not be involved at all. This isn't an unusual distinction; it's the same distinction that allows small government conservatism to exist at all.
Well I hope you'll understand why I interpreted it as an objection at least (apart from the fact that I regularly have self-described anarchists say the same thing).

Sure, but there are problems that exist for arbitrary or avoidable reasons, and problems that exist because of who we are at a fundamental level, and how our system works. Reform is worthwhile either way, but in the latter case it should be treated as a temporary reprieve before we fall back into old habits.

I think the very nature collective action and the distributed costs/concentrated benefits split of things like the tax code mean its problems are probably unavoidable for long. Reform is still worthwhile, just means it's best to temper expectations, since a lot of these reforms are cyclical. Which means, in turn, that piecemeal returns may be the way to go, as opposed to cutting a big swathe through the issue.
Well part of this is acknowledging and resolving one of those cyclical problems, this issue is regularly blamed for the boom-and-bust cycle; the chief cause of recurring industrial depressions. Take this 1997 prediction of the 2008 financial crisis for instance:

https://www.youtube.com/watch?v=dSAHSPY7wUg

Even apart from this, there are other cyclical problems this helps to mend: As population increases, the demand for land increases, and therefor the value of land increases, along with this rent and land speculation increases, this causes increases to cost-of-living and homelessness, which the government attempts to solve in at least 2 ways:

In one way it attempts to combat poverty by legislating minimum wage hikes which is why minimum wage has progressively increased over time. This increases the cost-of-hiring which shrinks the job market and increases homelessness.

In the other way, the government attempts to solve homelessness by redistributing wealth, usually by constructing local public services which ironically only goes back to raise the value of land and continuing to perpetuate the problem. In this way your taxes literally fund poverty under a guise of attempting to solve it. It's actually quite insidious (https://en.wikipedia.org/wiki/Henry_George_theorem).

There's a "semi-public" transit system near me that I have to pay upfront not only to use, but also fund the development of through my taxes, and you can damn well bet it greatly profits any landowners in proximity of it.

So here you have a project which
I pay once for if I don't use it,
I pay twice for if I do use it,
and I pay thrice for because it causes rent to skyrocket in any area it brings profitable traffic to.

And I have no choice in the matter whether it gets it's next subsidy, the whole thing is run by an unelected pet government. It is quite frankly a disasterous situation and the general population is so ignorant that they just voted in a big government Democrat, even as Democrats have consistently failed to staunch the rising rate of homelessness.

Speaking of Democrats, might this not explain the peculiar divide between heavily populated urban areas being predominately Democrats, and less populated rural areas being predominately Republicans? Cities are where the land is valued highest, because it's where population is densest. Likewise it's where rent is highest, which means the cost-of-living puts poverty in an ever sharper contrast. Democrats riding the "the government will save the people" vehicle are no doubt popular because this is where economic problems will concentrate most heavily.

There are host of "cyclical problems" which spin out from this fundamental problem with how we've organized society, if you believe an LVT would be only a temporary solution I challenge you to name the mechanism of retention which would drag us back from the "short-term" advantages it would give us.