Playing catch-up ... this was in my "drafts" collection.
One Nation, Two Deficits - Readers' Comments - NYTimes.com.
I was happy to read this comment to Peter Orzag's recent column, which ends, "Senate Democrats and Republicans almost never come together anymore. This month, they should fight the dual deficits rather than each other. Let’s continue the tax cuts for two years but end them for good in 2013."
The comment comes from Frederick Singer, of Huntington Beach, CA, September 7th, 2010:
Eighteenth century economist Henry George had an idea he called the Single Tax, also known as the Land Value Tax. Essentially, there would be no income or sales tax, only a tax on the value of land. Not to be confused with a "property" tax, the Single Tax would apply only to the land, not to any buildings or equipment.
Simple to define and enforce: The tax would be "x" percent of assessed land value, no exceptions. You can try to hide income but you can't hide land.
Progressive and pro-growth: Wealthy people are disproportionate owners of high priced real estate and would pay most of the taxes, but the marginal tax on both income and consumption would be ZERO. A win-win for liberals and conservatives.
The philosophy: Henry George believed that money you earn from own efforts, from your skills, profession or business belongs to you 100%. But the part of your wealth that comes from your ownership of land derives from the economic activity of the surrounding community ("location, location, location") and is therefore fair game for taxation to support that community. In other words, your own business may be doing lousy, but the land under your business may still be very valuable due to regional economic conditions - and you could close the business and profitably sell or rent the land to someone else. Money earned or wealth accumulated from land ownership is the true definition of "unearned" income.
Could the Single Tax raise sufficient revenue? If my math is right, taxing all the privately held land in America at an average of just ten cents per square foot (obviously, higher in some places, lower in others) would yield about six trillion dollars - which I believe is in the neighborhood of current total federal, state and local government spending.
Most importantly, the Single Tax would send the message that you make money by creating useful products and services, not wheeling and dealing in real estate.
For more information, Google "Henry George"
You might also read Fred Foldvary's paper, "The Ultimate Tax Reform."
10 cents per square foot per year would be an average of about $500 for a standard 50x100' lot. But some land is worth considerably less in annual rent, and some is worth significantly more. There are lots that size in major cities which sell for many, many millions of dollars, and farmland is worth considerably less than that average (except, perhaps, in a few wine-grape counties). Quick-and-dirty, the annual value of a $1 million lot is $50,000. The annual value of a $100,000 lot is $5,000.
Most of us own land worth considerably less than $100,000 (the major exceptions being homeowners in certain parts of California and near a few coastal cities), and ownership of those $1,000,000 and $5,000,000 sites is pretty well concentrated in high-income -- and, almost by definition, high net-worth folks. Such land is also owned by corporations and so-called "small businesses." The owners of such land would much prefer that your labor and mine, your buildings and mine -- and theirs, too -- your purchases and mine -- and theirs -- be taxed, rather than collecting the rental value of the land they call their own. They like the way the current set of privileges bring them returns they don't have to work to earn, and which their heirs will enjoy, too.
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