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


"RogerDodger" <none@xxxxxxxxxxxx> wrote in message
news:iatds39esjerivimj72rg6jnpf2cpvmlk7@xxxxxxxxxx
On Thu, 28 Feb 2008 08:24:39 -0800 (PST), Lysander
<lysander@xxxxxxxxxxx> wrote:

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.

Of course, supply is the amount of something *brought to market*, not
the amount of something existing in the physical universe.

Friedman himself made this point in a friendly letter to a Georgist
web site, in respose to a question from it about why he wasn't a
Georgist or single-taxer in light of a quote from him that Georgists
always throw about on the potential virtues of a land tax.

The Georgist claim is that land tax is superior to taxes on labor,
improvements, etc. because land supply is inelastic and their supply
is not.

Friedman pointed out that labor supply certainly *is* inelastic in the
"physical existence" sense in the near to intermediate term --
dropping a big tax on labor doesn't reduce the population or number
ofr workers at all at the time -- and buildings and other
improvements to land are even more inelastic in supply, dropping a big
rent tax on them doesn't eliminate them from existence at all (and
they can't sell their homes and move away in the long run).

That's clearly wrong..A high tax on labor would cause some people to stop
working, thus reducing the number of workers.
A high tax on buildings would reduce the amount of new buildings and
increase the number of old buildings becoming derelict.


Yet dropping a big tax on labor or on rent for improvements to real
estate *immediately* drive supply of these items *out of the market*,
harming the economy. Workers immediately start working under the
table, off the books, or cease working altogether. Rent for
improvements to real estate goes under the table, or is sharply
reduced in back-room deals (I slash your rent, you hire my wife for a
no-show job, etc.)

All this is entirely well known and extremely well documented.

Thus, the Georgist claim that because the physically existing supply
of an item (such as land) is inelastic a tax on it won't disrupt
markets for it by reducing the amount brought to market, is seen to be
very naive nonsense -- contradicted by their own examples.


What the Georgist needs is some explanation, some mechanism, that will
keep rental arrangments for land from fleeing offmarket and into
backroom deals just exactly like rental arrangements for improvements
to land do when steep taxes are imposed on the rents.


When the tax is on the value of the property, there's nothing to gain by
hiding the rental arrangements. The only reason for 'backroom deals' is when
the landlord is trying to avoid income tax.


.

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