In the new issue of the Atlantic, there is this very wise pair of paragraphs.
"END ALL TAXES - EXCEPT ONE" by Reihan Salam, Fellow at the New American Foundation
[email protected]
"The property tax may be the most loathsome tax in America. During the 1970s, a number of activists - angry that their tax burdens were rising as their neighborhoods became more desirable - pushed to abolish it altogether. President Nixon proposed significantly reducing state property taxes by implementing a federal consumption tax that would fund public education across the country. But when this proved a lost cause, the masses sought instead to strictly limit annual property tax increases through a series of ballot initiatives. The result hasn't been pretty. Chronic revenue shortfalls have crippled local governments ever since, leading to heavier reliance on punishing state income and sales taxes.
What if the problem isn't the property tax at all but rather, well, all other taxes? In 1879, Henry George, a brilliant if slightly crankish autodidact, published Progress and Poverty, a scathing polemic that blamed all economic ills on the private ownership of land. A staunch believer in laissez-faire economics, George found it perverse that we tax productive activities like work and innovative investment while letting landowners grow rich simply because they scooped up property at the right time. In that spirit, George called for a "Single Tax" on the unimproved value of land. There's a certain compelling logic to the Single Tax that stands the test of time. When you tax income, aren't you punishing people for working hard? But when you tax an asset like land, you're simply encouraging the most valuable use of that land. In the years since George faded from the scene, a number of economists, from Milton Friedman to Paul Romer have found virtue in the Single Tax, not least because it creates the right incentives for government. Simply put, the better you govern, the more valuable the property. The more valuable the property, the more revenue you raise."
[email protected]
"The property tax may be the most loathsome tax in America. During the 1970s, a number of activists - angry that their tax burdens were rising as their neighborhoods became more desirable - pushed to abolish it altogether. President Nixon proposed significantly reducing state property taxes by implementing a federal consumption tax that would fund public education across the country. But when this proved a lost cause, the masses sought instead to strictly limit annual property tax increases through a series of ballot initiatives. The result hasn't been pretty. Chronic revenue shortfalls have crippled local governments ever since, leading to heavier reliance on punishing state income and sales taxes.
What if the problem isn't the property tax at all but rather, well, all other taxes? In 1879, Henry George, a brilliant if slightly crankish autodidact, published Progress and Poverty, a scathing polemic that blamed all economic ills on the private ownership of land. A staunch believer in laissez-faire economics, George found it perverse that we tax productive activities like work and innovative investment while letting landowners grow rich simply because they scooped up property at the right time. In that spirit, George called for a "Single Tax" on the unimproved value of land. There's a certain compelling logic to the Single Tax that stands the test of time. When you tax income, aren't you punishing people for working hard? But when you tax an asset like land, you're simply encouraging the most valuable use of that land. In the years since George faded from the scene, a number of economists, from Milton Friedman to Paul Romer have found virtue in the Single Tax, not least because it creates the right incentives for government. Simply put, the better you govern, the more valuable the property. The more valuable the property, the more revenue you raise."
Bravo! From Reihan Salam's pen to the eyes and ears of all who are trying to figure out how to get us out of our current tax and revenue mess.
And if you're curious about what others have said about land value taxation, google "quotable notables" and "quotable nobels"
P.S. This is part of the cover story, entitled "The Ideas Issue: How to Fix the World"
I spotted that! Thanks for your post; I'll link to it.
Posted by: Nicholas D. Rosen | June 17, 2009 at 12:30 AM