Re: better tax code: no income tax, head tax (&| ppty t)

On Feb 28, 3:37 am, ro...@xxxxxxxxx wrote:
On Wed, 27 Feb 2008 15:39:05 -0800 (PST), Lysander

<lysan...@xxxxxxxxxxx> wrote:
On Feb 27, 1:42=A0am, "J.H.Boersema" <jo...@xxxxxxxxx> wrote:

Ownership (property tax) can be taxed, as that wouldn't impede
trade.

It can impede trade in land markets, however the impediment is less
than other markets given the tax burden is relieved by selling. You
need very restrictive assumptions that are unlikely to hold to get an
efficient land tax.

Wrong. The "restrictive assumptions" are true by definition.


Roy refuses to understand the definition of supply. Instead he spouts
religious dogma that the evidence is apparent for anyone who believes.
I believe this is what supply is therefore it is according to Roy. The
proof is obvious to all that believe.

The data on elasticity of labor supply seems to
indicate payroll are as likely to be as close to efficient as land
taxes.

Wrong. As I have already proved to you, none of the data you claim
show elasticity of land supply in fact show any such thing.

Quite the contrary. There are few studies of the elasticity of land
raw land supply. The few that exist suggest it is not 0.


Labor supply is very inelastic like land supply is.

Wrong. The supply of land is fixed. The supply of labor is not.


Even if Roy was right about land and he is not there is never a fixed
supply of anything, he is still being awfully dense here. If the
elasticity of supply of raw land is 0 and the elasticity of supply of
labor is .00001 then they are pretty close. The labor supply curve is
very close to perfectly inelastic. When one understands that a supply
curve is the pairing of prices and the corresponding amount that
PEOPLE ARE WILLING TO SELL AT THAT PRICE, it is obvious the amount of
land in existence has nothing to do with whether or not the supply
curve is perfectly inelastic. Just because the land exist does not
mean I will sell it at the market price or any other price for that
matter. We buy land because it has value. Different land has
different values due to the characteristics of the land. We only sell
when the market price exceeds the value we place on the land. Since
different land has different value, the market price effects how much
land is sold.
Note: This assumes perfect competition in the land market. Roy is so
dense to argue that the land market is a monopoly market while, his
reasoning for a monopoly actually points to oligopoly. When we are not
in perfect competition there is NO SUPPLY CURVE! Roy can not have it
both ways in that land is a monopoly market but it has perfectly
inelastic supply so therefore a tax is efficient. There are no supply
curves in monopoly and no elasticity of supply. A tax that does not
change decisions in monopoly leaves the market AT THE SAME INEFFICIENT
SOLUTION THAT PREVAILED BEFORE THE TAX just as tax that does not
change decisions leaves the perfectly competitive market at the same
efficient solution that prevailed before the tax.

Roy can not understand that taxes that would impose a deadweight loss
in competition CAN lead us to efficiency in Monopoly. Roy does not
understand that if as he argues land is allocated inefficiently before
the tax then you DO WANT to change incentives. In competition having
more land sold on the market is inefficient. Under monopoly it leads
us closer to efficiency. Yet Roy wants to stick an old insane argument
that every piece of land in existence is sold regardless of the price,
a perfectly inelastic supply curves says that people will sell the
same amount, in Roy's argument all that is in existence, regardless of
the price. That means you will sell your land if the price is 0 or if
the price is $1 million the price will not affect your willingness to
sell. He wants to argue that price does not affect the amount of land
sold then turn around and say that people will not sell below the
market price. Then he adds that in some countries the amount of land
sold decreases when the price is rising due to specualtion. Sorry Roy
that means the supply curve IS NOT vertical.

Land taxes have their arguments but Roy muddles them way too much and
he refuses to learn the proper argument. Instead he attacks anyone who
points out that HIS understanding of the LVT is entirely wrong and
muddled. They calls them anti-LVT because they do not subscribe to
High Priest Roy's misunderstanding of economics. If Roy would open his
eyes he would see that the real economic case is much more sound and
solid than I define it that way so therefore it is or the it is self
evident to those who believe.


You're the one who proved he does not know what either price or supply
mean, claiming that if price was low, land would not be supplied.

No the amount of land offered for sale is less when price is low. What
you call supplied is the carpenters definition not the economic
definition. I have a car. It is not for sale because I do not want to
sell at the price the market would offer for it. In economic terms I
am not supplying the car yet it exist. The same goes for land. I can
subdivide my lot and sell the raw land that I have to mow. I will not
because the market price for it is less than the value I put on it. My
land exist but it is not supplied on the market. If the price rises I
will sell. Then it will be part of quantity supplied. Roy wants to
stick to a carpenters definition of supply. That is what is on hand is
the supply whether or not I will use it or sell it.

Have you figured out yet why that claim was and is utter nonsense?


You obviously are spouting more nonsense. Again I ask you the
question, if you own a piece of land that is worth $500 to you will
you sell when the price is $400 ? Will you sell when the price is
$550? If the answers to the first is no and the second yes then the
supply curve IS NOT perfectly inelastic.

=
That being said I support the ability to pay principles. Those with
the highest ability to pay should pay the most.

Indeed they should. But of course, you define ability to pay as
income, not as what by definition it really is: assets.


According to high priest Roy.

This does not mean tax
rates have to be progressive. A flat tax still means those with higher
incomes pay more taxes just that everyone pays the same percentage.

Why should those with higher _incomes_ pay more tax, especially higher
_earned_ incomes?

The ability to pay principle those with high incomes should pay more
tax than those with lower incomes.

Why define progressivity according to income rather
than assets?

Assets are illiquid and we want incentives to hold assets like
capital. Taxing capital and land redistributes the assets. People do
not invest as much in capital if you tax it. Capital is an asset. Some
people will work less when income is taxed. The majority of the data
show the majority of the people do not adjust work habits to tax
changes. Obviously if we tax labor too high no one works. No one works
if the government taxes labor at 100%. So there are rates where all
incomes will work less if labor taxes get too high. In the past this
did happen with the high income group. However, at current tax rates a
small decrease in taxes in unlikely to encourage more or a small
increase in taxes is unlikely to discourage work. The Clinton and Bush
tax increases where small. We went from 28% on the top to 32% to 35%.
This is still half the rate under Carter. Incentive to work hardly
changed. Now at high tax rates it was very discouraging to work. A lot
of the increasing disparity under Reagan was because the rich worked
and invested more due to lower tax rates. When Bush (GH) and Clintion
raised taxes the tax increases were small and still not in the
extremely high range that discouraged work.

You still do not understand that if the land market is a monopoly the
tax will change incentives. If price affects the amount of land sold
on the market, the tax will affect how much land is sold. It
redistributes from people who had a higher value on the land before
the tax to those who put a lower value on the land. That is not
efficient. Is the deadweight loss smaller than if we have a more
rightly termed oligopoly? Yes. It is smaller than monopolistic
competition? Likely. The tax is an improvement in imperfect markets
yet not efficient. Note that is not knocking the tax, I doubt any
policy in imperfect markets actually makes them efficient. It is hard
to get the policy to having just the right effect. At best in perfect
competition it does not change market. At worst it creates a small
dead weight loss where no deadweight loss was before. If the worst
case is true, it is not much different in the amount of deadweight
loss than an income taxes. Hence, I go back to the argument that the
LVT is about what people believe is fair.


Shouldn't those who get more from society through their
ownership of rent collection privileges pay more tax, rather than
those who contribute more to society by their productive efforts?


A completely normative question that I can offer no proof for or
against. I as argued before this is the crux of your argument. This is
an argument about fairness. I can logically debate efficiency and show
you why the LVT is not efficient but perhaps better than many taxes. I
can not prove or disprove what is fair. That is a value judgement that
people of different backgrounds will have different opinions on. I can
scientifically argue efficiency I can not scientifically argue values.
This would be like arguing if Buddhism is better than Christianity. I
can not scientifically argue that. There are even value judgements in
what you call productive. So I will stay silent on this question. You
have your beliefs and you are entitled to them. I will not try to
change your beliefs. I will however, put out where your idea of the
scientific argument is wrong and lacking. Which it is in many places.
I think part of the reason why i still have this discussion with you
is simply because you take a good idea and then attribute such bad
analysis and such false arguments to it that you ruin the good idea.
You are like Pinochet who looked at Freidman and got it all wrong. The
end result was disaster.

.

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