That may have made sense in the 19th century when agriculture dominated the economy, but it’s irrelevant today.

At scale it becomes a tax on how space-inefficient your business is. Bad news for farmers, great news for the business running a 1000-person operation out of a skyscraper. You could of course start trying to change taxation rates based on various factors to compensate, but those factors reduce to proxies for revenue, which puts us back to square one.

19th venture taxation theories don’t translate to modern multinational trade with digital commerce.

Land taxes are highly progressive.

Note that land taxes are only assessed on the value of the land, not the value of any buildings on the land. This incentivizes land owners to put the land to its highest and best use.

Doesn't it incentivize them to put land to the use that generates the most revenue? I don't see how that is necessarily the "best" use.

There will almost always be a way that a yard or garden could make more revenue, for example, such as by letting a bunch of advertisers put up billboards on it or letting someone use it for storage.

Is it really best to make it so that only the wealthy can afford to use land in a way that they enjoy rather than as an asset to be exploited for maximal revenue?

The main difference between property and land tax is that with a land tax, the structure isn't taxed. So you can build up "for free" wrt taxes, which encourages more density on the most valuable land.

E.g. land in the middle of downtown San Francisco that's currently rented out as a flat parking lot, could instead be built up into multi level parking or housing instead. Whereas the current tax structure would punish such developments by increasing the tax (which is why it's still a flat parking lot).

Contrast that with New Orleans after Hurricane Katrina. Property owners had their buildings destroyed, so taxes went to zero (taxes based on the property value, not the land value). This incentivized property owners to wait and see if their neighbors would rebuild rather than take immediate action.

Property taxes on land aren't unique to San Francisco. It's basically standard practice in most cities to have one tax for property and one tax for improvements.

> Contrast that with New Orleans after Hurricane Katrina. Property owners had their buildings destroyed, so taxes went to zero (taxes based on the property value, not the land value)

New Orleans has separate property taxes on land and structures, so property taxes did not go to $0 after Katrina.

Overall property tax rates went up because income from taxes on structures went down, but unimproved lots still get a tax bill.

Maybe in the 19th century, where this idea originated. Economics of business have changed too significantly to use it as a one size fits all taxation scheme.

It may have made sense when revenue was somewhat proportional to the amount of land a business occupied, but that no longer holds true in the age of skyscrapers and digital revenue generation.

An internet company in a 10-story building would love this scheme, though, because they could generate billions in revenue but be taxed at the same rate as a local neighborhood of people who owned their homes for a few decades.

Land-only taxes may have been an interesting idea in the 19th century, but they aren’t relevant to a modern economy.

That's irrelevant, because the ultimate owners of the corporation - the shareholders - will always be in demand of land. Real estate explains most of the growth in wealth inequality in the US over the last 60 years:

https://medium.com/the-ferenstein-wire/a-26-year-old-mit-gra...

For example, if fewer wealthy individuals bought sprawling estates, and more bought high-rise apartments, we'd see more production of the latter, which would increase housing concentrations in high-productivity urban areas, and in doing so, apply downward pressure on rental rates in areas which offer the most economic opportunities.

This is basically saying real estate isn't relevant to a modern economy for tax policy. Broadly true in 19th century United Kingdom in the midst of the Industrial Revolution [1]. Disputed by many millionaires today in the US [2]. Another way to track the relative weighting of land in wealthy portfolios is by aggregate measures.

The wealth of the US 1% grew 2.22X from 2005-2020 [3]. During the same period, the value of land held by the US 1% grew from $3,176,274 million to $4,607,729 million, 1.45X [4]. Not a proportional tracking of wealth increase, but I wouldn't call it "not relevant"; this is hardly rounding error territory where I would dismiss it for tax policy purposes. The sample period is also during an ahistorical secular trend when held across decades when securities were and are quite strong compared to real estate assets, so I don't know what a broader and more granular analysis would reveal, but my cursory glance across a one-generation span would make me hesitate to strongly take the "aren't relevant to a modern economy" position with our current set of policies.

The global urban real estate market so severely punishing younger generations for so long with such high prices relative to income and income precarity indicates some severe secular rent-seeking / gatekeeping taking place at an ahistorically wide scale, scope and duration. I have no dog in that hunt; I was purely lucky by timing to not live in that cohort, but I share their hostility to the status quo. If you favor the "modern economy making real estate not relevant" position, then tax, monetary, finance, social and industrial policies like LVT (though LVT is not without its challenges [5] [6]) that disincentivize such rent-seeking and favor a more efficient allocation of limited capital away from real estate towards such modern industries would be welcome, to the point that aggregate measures show little to no correlation between wealth concentration and real estate instead of our current situation.

I'm personally in favor of more metropolitan transit authorities consciously and deliberately using public transportation corridors as part and parcel of an explicit industrial policy that drives down residential costs over time. Residential development is planned more along Singaporean public housing lines with a goal of ever-decreasing DTI ratios (possible with more modern construction techniques like Lstiburek'ean Perfect Walls and Passive Net Zero in structures that last centuries, and co-operative financial organizational structures), than open market operations in the US. This doesn't have to come at the expense of open market operations; they're free to syndicate their own transit networks and monetize those networks. I'm advocating the free market advocates in US real estate becoming even stronger in the global market by practicing true free markets instead of relying upon the crutches of publicly-funded infrastructure to break the capital ground in front of them.

[1] https://www.hbs.edu/ris/Publication%20Files/Land_e202c898-eb...

[2] https://www.cnbc.com/2019/10/01/real-estate-is-still-the-bes...

[3] https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...

[4] https://fred.stlouisfed.org/series/WFRBLT01002

[5] https://www.lincolninst.edu/publications/articles/land-value...

[6] https://www.lincolninst.edu/sites/default/files/pubfiles/ass...

What’s the value of the land that Google uses?

I say the land value tax (LVT) is best grouped with Pigouvian taxes; as PP says, normal property tax relatively incentivizes holding undeveloped land, which is like charging a higher carbon tax if your car has a better MPG.

One one hand, we can also do a VAT in developed countries --- perhaps more feasible than in the 19th century and making more sense if we are no longer rapidly developing and reliant on private investment to foster those changes --- on the other hand in big closed economies we can also just print money quite safely, so Henry George is quite right to focus Pigouvian taxes when "taxation for the revenue" is far less important than curbing bad material outcomes.

(I only suggest VAT with a UBI to make it no longer regressive.)

Land value taxes adjust based on how desirable a plot is: basically, you get to keep any value you generate above and beyond the value the society surrounding the land gave it. If you leave a plot of land empty in downtown, you’re preventing someone else from using that plot productively, and adding a net negative cost to the surrounding properties. So you should be taxed accordingly.

If you keep the zoning then maybe the land isn’t worth that much, but if property taxes were based on the “true” land value then it would mean farmers sell out faster to create sprawl.

I would rip up urban zoning with an LVT to ensure density, but keep the agricultural zoning because we can't eat skyscrapers.

Not especially. The skyscraper land is probably 10000x more valuable per square foot so the tax will be 100x higher.

If you assume every square foot is taxed the same then you've kind of missed the point of a land value tax.

It won't fix the inherent problems with intellectual property though.

This would also help push back against ridiculous patents and eternal copyright.

Eternal copyright, however - yes, sucks.

If you have a good idea and patent it, then taxation of that patent right would force you to license it or lose your monopoly protection granted by the government.

If you have a good expression of an idea and copyright it, then taxation of that copyright would force you to license it or lose your monopoly protection granted by the government.

Either way, you are still granted the IPRs, on a "pay for it" basis that captures some of that value back.

Pigovian taxation is even better. Taxing gas is a great example. Gas consumers emit carbon which has a cost for society. We should make them pay for this negative externality via a gas tax, so their consumption is economically optimal. This is how to prevent the Tragedy of the Commons.

I'd argue that some taxes are objectively better than others and not all equally wrong.

They may additionally fine you though.

But in either case - sure, but the system means absolutely no worries about your tax return for 90% of British employees.

To follow on it is easy to hit the limit on dividend allowance if you have shares outside of your ISA

Where these US companies? employee share holders in the USA really get screwed

And no, it's a British company .

Bit of a red flag that the company is so badly run.

Also I'm not sure how much tax this would actually save - you can only get £3600 worth of shares tax free per year on the employee incentive plan(which seems closest to what I'm getting, flat number of shares after 4 years). That's a very....low amount.

Worse, when I moved to Chicago the state of Illinois wouldn’t even accept my taxes electronically because their form required one of a handful of authentication methods—the only one of which that ought to have worked for me was to use my Illinois driver’s license number—a 12 digit sequence; however, their form only permitted 8 digits. It was a significant hassle just to get them to take my money.

I’ve also had difficulties figuring out how much to withhold. In the US they give us a form that calculates “allotments” (or something—I forget the term) but it’s unclear whether more of those correspond to more or less withholdings and in any case the form computed incorrectly for me for several years (I’m sure it was user error somehow and senior engineers are just not reliably smart enough to figure it out, even with the help of HR) and I would end up owing thousands in taxes as well as a separate penalty for not withholding enough.

It’s maddening that our government makes it so difficult for earnest people to pay their taxes.

I don't think Intuit has anything to do with why the tax code is complex. Their lobbying is for making filling out the forms complicated, such as by stopping the IRS from pre-filling forms with the information they already have.

The tax code complexity almost all stems from people not wanting to pay tax. That complicated the code in two ways. First, it means that we get exceptions and special cases written into the code either because people that want to pay less tax convince Congress to make a special case for them or Congress takes advantage of the desire to pay less tax to provide exceptions to motivate people to change behavior.

Second, it means that if there is any ambiguity or wiggle room in interpreting something, someone will exploit that to pay less tax than Congress intended them to pay. The tax code gets patches to fix that, usually resulting in an increase in complexity.

A great example of the later was that a long time ago a big company was going to give shareholders a dividend. This would be taxes as ordinary income to the shareholders.

Someone came up with an idea to turn that into capital gains instead. Rather than give a divident, the company first did a stock split, say 100 for 99. So each 99 shares each stockholder held became 100 shares. This is not a taxable event.

Then the company did a stock buyback, 1 out of every 100 shares. That decreased each stockholders holding by 1%, so every 100 shares a stockholder held became 99, and the stockholder got some cash. That is a taxable event, but it is capital gains.

Net result: every stockholder ended up with the exact same percentage of the company that they started with, with some cash from the company, and got to pay the lower capital gains tax on that cash instead of the higher income tax.

The tax code was patched to fix that. Buybacks became ordinary income. But it didn't end there. Consider a family owned business owned by four members of the same family. One of them is moving away and will not be participating in the business. The company wants to buy him out. It was generally agreed that this was not a buyback to dodge taxes--it is a legitimate buyback and should get capital gains treatment.

And so the patch to fix the buyback tax dodge needs an exception to try to recognize "legitimate" buybacks. It ends up having a formula that involves looking at the distribution of ownership before and after the buyback and having several criteria for recognizing when the distribution change signifies a legit buyback that should get capital gains treatment.

This was a fairly simple instance, so it only added maybe a few paragraphs to the tax code, plus some more to the regulations.

But that sort of thing is all over the code, sometimes just adding a few sentences, and sometimes pages.

You don't even file.

You could choose to use them (for example, the self education one) and get SEK5000-SEK10000 (~€500-€1000) BUT then you would have to fill out a tax return.

That is just one exemption. Another one relevant for our field is working from home. Similar amount.

In order to claim those, though, you will need to file a tax return. If you do not consider that money to be worth the time, then not filing one is a good choice.

The Australian system - which could definitely be improved by at least pre-filling things - forces you to actively choose to leave the money behind. The default in the UK, Europe and the Nordic countries is that the money is kept by the taxaxtion office.

Defaults are powerful. And they thank you for entrusting them with your extra SEK that you do not want to claim.

Think tax breaks for solar panels or even just getting insulation added to your home. There are thousands of this type of tax break available to nudge people to move toward the gov's goals.

The land tax has zero deadweight loss, because what it's taxing is pure economic rent, rather than production of value:

https://en.wikipedia.org/wiki/Land_value_tax

Any tax imposed on anything except scarce natural resources will be penalizing the creation of wealth, and impose deadweight losses.

This isn't even why gas is tax heavily in developed economies. First, gas taxes pay for roads. Second, the negative externality that Europe, at least, is trying to reduce is dependency on Middle Eastern oil, since that opens a huge can of worms with respect to world stability. If they really cared about air pollution, they wouldn't have pushed diesel so much.

So taxing something bad like CO2, great idea. Taxing something good like income or creating jobs - bad idea.

Land tax would be simple, and very progressive, the tax rate of most young people renting world now be 0. It's more complex than that because the landlord pays the tax and hikes the rent appropriately. It enforces that land is used efficiently, which is so dysfunctional in many large cities.

It's a great idea in my opinion. You'd solve taxation, eliminate personal accountants as a class, and solve the housing crises with one stroke (there is still zoning, but this makes poorly zoned land undesirable to hold because it bleeds money - creating an incentive for the land owners to vote for zoning the land better). But politicians deal with popular ideas, not smart ideas. The odds of any country trying it seem slim.

It's worked well in some cities but been repealed in others because people were upset that mansions weren't taxed enough relative to smaller SFH.

I frequently come to a conclusion personal income tax should be abolished as it punishes work.

CIT, VAT, capital gains and inheritance taxes should be enough to sustain a budget. These are all unrelated to performed work.

Now that I'm remote, I plan to move to a rural area and grow some of my own food in a single family home. I don't think that should be considered hoarding.

That said, I'm a crazy pro individualism and no tax no government guy, so I have no real place in this thread. : p

That land would probably serve society better if it had more than a single family dwelling on it, you could have 10 families in walking distance of their jobs rather than one, and 9 families commuting via car.

Now, that argument doesn't help with switching too an LVT, but there are other reasons to be optimistic. Taxing Jeff Bezos at any level is worthless in comparison to a) Paying enough UBI that the warehouses would unionize, b) directly expropriating the warehouses into the postal system. (post : IP :: warehouse sku system : content-address based networking).

Basically, trying to account for the power of billionaries and mega corps in monetary terms is a dangerous exercise where they can probably out-loophole you.

I don’t think this is the best idea to solve tax issues in the modern world

The problem with corporate taxation is that...we really want R&D and employment to be tax deductible for them, but a company like Amazon can just plow all their profits into R&D and focus on growth (even without R&D tax credits, they would still take a loss on earnings due to R&D outlays). Of course, all of that R&D money is still mostly taxed (via tech worker income taxes), so its not like the government isn't seeing any of it. Corporate income taxes really come down hard on a successful company that doesn't have any avenue to grow...maybe they should?

Yes it would, but you see that will not be popular for many obvious reasons ( less jobs for tax collectors/consultants/auditors etc.) A more non-obvious reason is that the ordinary Joe on the street hates the rich so much that he wants the rich being taxed rather than see the simplicity of taxing no one.

>His ideas are now considered eccentric,

He actually seems a level headed guy to me :)

I would go even one step ahead and say that even land should not be taxed except for the cost of keeping land records.

What if we got rid of all taxes, and the only thing the govt. could do was print money at some fixed %GDP rate to induce inflation.

Then everyone would try to spend faster than inflation and the velocity of money could be quite fast (to increase GDP and spending, etc.)

Maybe a flywheel-economy?

Make residential, owner-occupied homes and special categories (like public transit-related or infrastructure-related improvements like healthcare/power/water/waste/telecomms/etc. property) exempt. All other property post their assessments at tax jurisdiction's office. Anyone, at any time, can post to that office cash that is 10% more than the assessment upon the property. If the owner does not challenge the cash assessment, they must accept the cash offer within 180 days or are evicted. The catch is, that cash must be absolutely unlevered and unencumbered, the property is carried on everyone's books as a cash asset of the prospective new owner, and the property cannot be pledged as collateral, for the next 21 years (with an upward adjustment for deep-pocketed backers of offers) or until the property is sold, whichever comes first. The offering party must provide full disclosure and auditability of the source of the cash and the "Source Of Truth" controlling interest, no shell games. The legal jurisdiction enforces this transactional structure by refusing all cases entangling the property.

The owner can respond to the price discovery cash offer by paying the tax jurisdiction the "back taxes" implied by the cash offer, back to the last time the property transacted on the open market. No penalty. If the owner can deliver proof that the offering party hid their ties to deeper (ultimate beneficial controlling interest) funding sources, then the entire offer is forfeit to the owner.

This creates an incentive to discover badly out-of-alignment prices, but the intention is to gate out anyone playing financialization games or asymmetrically deep pockets parking cash badly distorting a small player-dominated market's historic valuations.