Re: Relative poverty, a problem?

On Mon, 09 Apr 2007 10:29:53 -0400, Nospam <nospam@xxxxxxxxxxx> wrote:

Why don't come with a numeric example into the following hypothesis:

Will you consent to know the facts I identify for you? I am betting
that you will flatly refuse to know them.

Case 1: Income taxation
=====
A company in city make 100M. Pays 33M is income taxes and 33M in 1 acre rent
to a landlord. Tax revenue is 33M (company income)+1/3*33M(landowner
income)=44M

A farmer making 20M rent his land into a cheap countryside, paying 0.1M/acre
for 100 acres. Tax revenue is 1/3*20M(farmer income)+1.3*0.1*10M (landowner
income)=9.99M (alost 10M)

Total tax revenue 54M

OK. Now remember that, and don't try to change it after I prove this
model is garbage, too.

The company, decide to move to countryside to pay less in land rent and the
government rise the income tax to maintain revenue. How this new tax burden
is distributed on company and on farmer?

Because the company has moved, no one is paying any rent to the city
landowner. His income is 0, and he therefore pays 0 income tax.

Because the countryside location is not suitable for its business, the
company no longer makes any money, either. In fact, it will probably
take a loss. 0 income, 0 tax. The entire tax burden must therefore
be borne by the farmer and the owner of the farmland.

How this influence the prices of food ?

To exact income tax revenue of 54M from the farmer's income of 20M and
the landowner's income of 3.33M, the income tax rate must be raised to
231%. The landowner cannot change the land rent, so in order to avoid
getting stuck paying an income tax in excess of his land rent income
out of his assets, he stops renting the land and his income drops to
0, too. The farmer, lacking any land to use, cannot grow any food.

The government's revenue therefore declines to 0, so in order to
finance its operations it starts printing more money. Food production
likewise declines to 0, and the price of food becomes infinite.

Case 2: LVT Only, no income taxation
=====

A company in city make 100M. Pays 44M is LVT for 1 acre.

A farmer making 20M rent his land into a cheap countryside, paying 10M in
LVT for 100 acres.

Total tax revenue 54M

The company, decide to move to countryside to pay less in LVT

No, it does not, because it has no financial motive to do so. The
land rent of 44M is the measure of the economic advantage the company
obtains by using the good location in the city rather than an inferior
one in the countryside. If it moved to the countryside, it would
incur financial disadvantages in excess of the 44M it pays in land
rent. That is why it located in the city in the first place.

and the government rise the LVT to maintain revenue.

The LVT remains the same, as proved above.

How this new tax burden is
distributed on company and on farmer ?

The land rent remains the same, and the tax burden likewise remains
the same, as proved above.

How this influence the prices of food ?

The price of food is unaltered, because as economists have know for
nearly 200 years (but you have decided to remain permanently ignorant
of), levying a tax on the rent of land cannot, repeat, _cannot_ alter
producers' production or location decisions.

I predict that you will now refuse to know these facts.

-- Roy L
.

Relevant Pages

  • Re: Relative poverty, a problem?
    ... the idea of REMOVING ALL THE OTHER TAXES and replacing them with LVT alone. ... Social Security income that I have earned by virtue of PAYING out ... that FICA tax all of my life. ... In a system of land rent redistribution I will ...
    (sci.econ)
  • Re: Relative poverty, a problem?
    ... traders because it is a tax on income. ... LVT would reduce the tax burden on farming ... Use 100 acre of land in countryside. ...
    (sci.econ)
  • Old WD Needs Memory Transplant - Forgets IRS Answered
    ... IRS Tax Correspondence ... deduction recoveries under sections 111and 56. ... improperly excluding such refunds from alternative minimum taxable income ...
    (misc.taxes)
  • IRSs Multi-Billion Flimflam: "Double or Nothing" Taxation of Tax Refunds
    ... arguments for "DOUBLE OR NOTHING" taxation of tax refunds. ... include itemized deduction recoveries in the calculation of taxable ... the gross income attributable to an itemized ...
    (misc.taxes)
  • IRSS FEEBLE ATTEMPT TO DEFEND DOUBLE TAXATION OF RECOVERIES
    ... When the following letters were published in Tax Analysts Tax Notes ... What was not addressed by the IRS respondents is that a state income ... AMTI in a year the AMT was paid. ... mechanism concerns whether the taxpayer got a reduction in tax ...
    (misc.taxes)