But this has more or less been done for the most powerful, e.g. corporate income tax exists but Apple doesn't pay it, capital gains tax exists but is deferred until you sell the shares and then rich people don't do that. So then Rockefellers don't pay the tax, but you do as an ordinary peon who has a good run messing around on Robinhood, or when you start making withdrawals from your IRA. Meanwhile we can't get rid of the tax which now only applies to the middle class because people claim that you're trying to give a tax cut to the billionaires who aren't actually paying it.
> there'd be a lot more money in people's pockets if they didn't have to get bureaucrats to agree on what they should be working to support.
It's really an argument for tax simplification.
As far as I can tell the way tax policy works is that rich people hire lawyers and PR firms to cast the forms of taxation they would actually have to pay as regressive (e.g. consumption taxes, because you can't register the Rolls Royce without paying the tax and you can't sell into the jurisdiction without collecting VAT) and the forms they can avoid through shell games and accounting tricks as The One True Way To Tax The Rich (e.g. "profit" taxes, because profit is fuzzy around the edges and has high inter-region liquidity), which the rich then weasel out of and leave only the middle class paying the tax.
> capital gains tax exists but is deferred until you sell the shares and then rich people don't do that
This gets pretty quickly into the philosophical what-are-we-doing-here-exactly of taxes, but:
1) Shares don't do very much on their own, so there isn't really a problem with that. I mean, dude owns a billion in shares - if they earn income dude will pay tax, if they don't the only true to get to the value is to sell them.
I imagine there are some gaping loopholes involving charities and debt, but that isn't anything to do with the deferment of the tax.
2) Because of inflation - and asset inflation is markedly higher than CPI - CGT is effectively a wealth tax because fairly quickly most of the value of an asset is the inflationary component. I've got gold bars where I allegedly am making a 100-and-something% return and that just flies in the face of the inert reality of the metal itself. The tax is markedly unfair, anyone trying to be a responsible saver ends up paying much more of their income in tax than someone who just spends it on the day and it effectively becomes a wealth tax that stops anyone in the middle class moving up over time. Moving wealth between assets is catastrophic to your financial health once CGT is a factor.
There are a bunch of quirky distortions in the tax system. CGT might even be one of the contributing factors to why people don't tend to have savings (although the biggest factor is probably psychology). Rationally speaking saving is quite an inefficient use of money if you end up paying CGT.
Are you aware of the "buy, borrow, die" strategy? In short, you can borrow against the value of appreciated assets to get income during your lifetime, then pass the assets (and the debt) on in inheritance, and your heirs don't have to pay any capital gains tax because of cost-basis step up when they sell the assets to pay the debt. You effectively avoid any taxation on the appreciation.
But all the money you borrowed needs to have been spent, or it's subject to inheritance tax (or paying back the debt it came from), and all that spending needs to be on things that are taxed with VAT, with employees providing services you buy who are paying income tax, and the businesses you're buying from paying corporation tax, etc etc. Tax is never avoided; it's just paid through other means.
There's a reason it was pushed mostly by billionaires.
LVT is the most egalitarian tax. It's completely unavoidable for land owners, renters pay nothing at all, it skews highest on the biggest landowers and it doesnt disincentivize productive investment or productive work.
This is essentially the same thing as buying up land and leaving it fallow, but with human resources instead of land. In some ways this is worse, as society has already invested in training those workers.
Land is finite. Buy half of all the land and that won't exactly drive the creation of more land will it? It'll just drive up the price of existing land.
This is in a nutshell why some things in America are dirt cheap (e.g. electronics, clothes) while houses keep getting more and more absurdly priced.
This is the rich corporation PR that I'm talking about.
So here's Richie Rich not spending most of his income, but also not selling any shares unless he wants to buy something. In fact, he doesn't sell shares even then, because instead he borrows money to buy things, so there are never any capital gains. Without a consumption tax he pays no tax at all.
But you're saying we need this tax, whose practical effect is to tax middle class people on the inflationary component of asset price increases, because they spend more of their income. Instead you want to tax middle class people on their income. But then what benefit do they receive by using an income tax which immediately taxes all of their income?
For years Steve Forbes the billionaire was the face of "the consumption tax". You dont get richer or more corporate than that fucker.
I dont want to tax the middle classes on their income either. It's regressive just not AS regressive as a consumption tax.
I want a land value tax.
In this world, renters pay all of the expenses incurred by land owners via a payment we call "rent".
Note that LVT discourages diverse development. You see an empty piece of land that should be filled with condos. I see an open space that lets me see something other than condos.
There is law, economic or otherwise that a business has to make a profit. With an LVT you cant profit from land speculation only providing a good, well maintained property which uses space efficiently.
LVT does not discourage diverse development. It only discourages land hoarding and inefficient use of land (e.g. San Francisco's one family homes).
That's an argument for taxation, not against it.
People love bringing up roads in this sort of topic for some reason but they really aren't a big enough spending target to be worth it.
So people have to pick trivial examples to try and brush aside that all the realistic ones are actually up for debate.
people who say this need to remember what makes the most money vs. what are the actual most necessary goods for basic civilization. Sadly, most people would not fund the electric company to keep their lights on as they throw thousands at sport merchandise, including a new TV that they cannot power on.
There's definitely tons of corruption, but we do need someone with a wider scope to budget for the "boring" stuff.
People fund it with their electric bill every month. If the business isn't viable and can only stay open through massive government subsidies that's a much more fundamental problem.
Why does the government get to decide what is best for people to spend their money on? If consumers really would prefer to spend money in TV and sport merchandise, well it's their damn money to spend and none of the government's concern.
But people are funding it. They're not the ones borrowing from Macquarie, but they are the ones paying them back. Is there a more direct way to do this, is the question.
There are taxes that are there to nudge people and encourage certain things, but all in all the point is to finance the state.
In most developed countries the state, in one form or another, has taken on many functions and services and that implies that taxation has to be significant. So before discussing cutting tax we need to think about what the state should offload (if anything) first.
An LVT feels like pure downside to the taxee. There are no beneficial _direct_ effects. Its psychologically very different, especially for residential land.
That is actually a great theoretical argument against taxes generally by the way - there'd be a lot more money in people's pockets if they didn't have to get bureaucrats to agree on what they should be working to support.