Re: Income from a tax on land.
royls_at_telus.net
Date: 12/14/04
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Date: Tue, 14 Dec 2004 22:57:36 GMT
On Tue, 14 Dec 2004 13:40:52 GMT, Igor <jjweatherby@houston.rr.com>
wrote:
>frisbieinstein@yahoo.com wrote:
>
>> Rent of an acre of Indiana cropland is $90, which is 4.5% of $2000.
>> So if all undeveloped land in the US became public the rent could be
>> $45 billion a year. A more moderate plan of private title and a 1%
>> land tax would bring in $10 billion.
>
>Which is:
>
>a. much less than current taxes
>b. a flawed number because a tax on land would reduce market prices
A 1% tax would not reduce them significantly. And the rent is not
affected by the tax, only the value. They are two different things.
>and a tax on market rents reduces market rents.
That is irrelevant, because the current market rents are not
comparable to land rents under public ownership of land.
>Economic rents are not market rents.
Right. Kindly remember it.
>> Developed land is the joker in the deck. There are 80 million acres of
>> that. The four borough NY generates about $7.7 billion in property
>> tax. This is 15 million people, most of them not very well off. So
>> we can guess that all property tax for the urban US is about ten times
>> that which would be $77 billion. I would guess the total price of
>> developed land would be about $8 trillion, or $100,000 an acre.
>
>Taxing improvements gives disincentive to improve land.
Correct. But taxing developed land does not mean taxing the
improvements.
>The land tax on
>unimproved land is efficient because it can not be avoided so it does
>not affect decisions.
Likewise a land tax on the unimproved value of improved land.
>It would be similar to taxing every land owner $X,
>the only way to avoid the tax is to sell the land.
It would not be similar in the least.
>This is a short run
>argument. It must be noted that such a tax WOULD cause marginal firms
>those barely making profit to exit in the long run as there profits
>became zero or below.
Right. Unproductive current landholders would, absent the privilege
of pocketing the publicly created rent of their land, be displaced by
more productive ones.
>I do not know how many firms this would affect but
>someone barely making now would go under if fixed cost increase too
>much.
That is one of the great benefits of a free market economy: resources
move into the hands of those who will use them most productively.
>On the other hand, if SS taxes were eliminated then they would not
>have to match employees contributions. I am not sure if only a land tax
>would cover current federal budgets. I would love to think implementing
>this would reduce the size of government but history shows governments
>would just impose other taxes to make up the difference.
History certainly shows that governments impose other taxes when they
_don't_ tax land....
>> Income from a federal land value tax of 1% would be roughly $90
>> billion.
>
>Again TAXES AFFECT MARKET PRICES. It is seriously flawed to think adding
>a tax will not change prices and therefore yield %X * current market value.
A land tax changes land prices, but not land rents.
-- Roy L
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