Re: novel argument against taxing rents


<ruetheday@xxxxxxxxxx> wrote

Income that derives from the creation of
goods and services that people want
is productive and thus earned.


Some people want heroin, hookers, or hip-hop. Pushers, pimps, and punks are
therefore productive? Okay.


Income that derives from restricting access
to something that already existed
(land in the case of landlords,
taxi service in the case of the government
granting of taxi medallions,
and the right to do business without being
beaten by thugs in the case of the
Sopranos example)
is not productive and thus unearned.


"Taxi service" is not exactly what "already existed" before governments took
to issuing taxi medallions. Sure, there were (and are) people willing to
drive strangers around for money. Maybe there would be nothing wrong with
letting them all have at it, without regulation of any sort. Maybe. But
that approach might, also, lead to the sort of turf wars that the Sopranos
would just _love_ to settle by cracking a few heads -- for a price. Maybe
such head-cracking goes on anyway -- I don't know. Maybe such head-cracking
would be "productive" in your sense -- I don't know that, either. But
suppose, for a moment, that the issuing of a (fixed) number of medallions
actually results in reasonably orderly "taxi service". In particular, taxi
fares are regulated by the same government that issues the (fixed) number of
medallions.

Now, who gets the "unearned income"? I am supposing here that if I want to
buy a taxi medallion, I have to buy it from someone who already owns one.
Because I am competing against other potential buyers, I will end up paying
him pretty much the net present value of the "unearned income" stream it
represents. My _total_ income (what strangers pay me for driving them
around) is the sum of the income I "earn" plus the "unearned income" that I
get for just having a medallion. But that latter fraction is what I paid to
the former owner up front.

So here's a question: if the "former owner" was in fact the government,
would you still object to taxi medallions? Assume that all details are as I
described above.

Here's another question: is "the government" the "former owner" of the
(fixed) number of acres of land over which it has jurisdiction?

-- TP


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