Economics and snake oil

andalusia wrote:This is a good article about the difference between earned and unearned income.  

the income tax should spare the earnings of the working person
and productive entrepreneur, and fall on unearned gains that arose from land and resources or the
exercise of monopoly power in all its subtle forms.


https://peter-barnes.org/article/earned-vs-unearned-income/?fbclid=IwAR26DiwOqtvO-NKq30wnR_y3BZRCQNd0TJ5WtaGTF9VWmgi53R3JoL49ZjQ

This is why Russia's taxes lean heavily on oil and gas exports. So Russians get a flat 13% income tax which is superior to any
of the "progressive" taxes in the west.

Naturally, the taxation of resource rents in Russia is derided as Russia being "a gas station posing as an economy".

Taxes say a lot about the true power distribution in a country. Western elites can avoid taxes and make sure the rotten politicians
in their pockets write tax legislation that is thousands of pages long, grotesquely opaque and riddled with loopholes.

kvs wrote:

andalusia wrote:This is a good article about the difference between earned and unearned income.  

the income tax should spare the earnings of the working person
and productive entrepreneur, and fall on unearned gains that arose from land and resources or the
exercise of monopoly power in all its subtle forms.


https://peter-barnes.org/article/earned-vs-unearned-income/?fbclid=IwAR26DiwOqtvO-NKq30wnR_y3BZRCQNd0TJ5WtaGTF9VWmgi53R3JoL49ZjQ

This is why Russia's taxes lean heavily on oil and gas exports.   So Russians get a flat 13% income tax which is superior to any
of the "progressive" taxes in the west.  

Naturally, the taxation of resource rents in Russia is derided as Russia being "a gas station posing as an economy".

Taxes say a lot about the true power distribution in a country.   Western elites can avoid taxes and make sure the rotten politicians
in their pockets write tax legislation that is thousands of pages long, grotesquely opaque and riddled with loopholes.  

I think the flat 13% income tax is a by idea in that it still taxes work.   An income tax on unearned income would be vastly superior.

This is a very interesting essay about how the income tax became a tax on labor here in America. While the essay talks about the United States; I think the insights and good thinking could be applied to other countries tax systems as well.


https://schalkenbach.org/wp-content/uploads/2019/09/How-The-Income-Tax-Became-A-Tax-On-Labor-4.pdf

If that doesn't work you can click on this:


https://www.readkong.com/page/how-the-income-tax-became-a-tax-on-labor-5137549

The core of the problem is that the working man generally pays taxes, while those earning from wealth spend a little extra money to pay accountants to minimise or even eliminate the tax they pay.

The people who earn the most money tend to pay the least in tax because tax law is so complex but favours the rich...

GarryB wrote:The core of the problem is that the working man generally pays taxes, while those earning from wealth spend a little extra money to pay accountants to minimise or even eliminate the tax they pay.

The people who earn the most money tend to pay the least in tax because tax law is so complex but favours the rich...

LVT is cheaper to collect than other taxes and, unlike VAT does not impose collection costs on businesses.

LVT cannot be avoided. Offshore trusts and wealthy non-residents, the ultimate owners of much of the most valuable land in any country, would make a fair contribution any country's revenue.

BENEFITS OF LAND VALUE TAXATION

Land is a natural resource that existed before mankind walked the earth.

Land values are created by the whole community because of our need to use land for housing, education, public services, agriculture, mining, business, transport and recreation.

Landowners do not create land values. It is the efforts of others that generate land values. (Imagine the effect on the price of housing land in an area which has no public services).

Expenditure on public services usually leads to an increase in land values. For example, with few exceptions, new motorways or rail systems lead to dramatic increases in land prices.

The planning process often provides landowners with huge windfall gains. Not only the site to be developed, but often also adjacent or related sites.
Natural justice. Land values belong to the whole community and not just a few landowners.

Land Value Taxation (LVT) is a just and fair way of paying for public services. Every site in the country would be valued according to its permitted planning use and the Government would decide the rate of LVT to be applied nationally. The tax would be assessed annually (although monthly payments could be made).
Compared to taxes on buildings LVT provides a broad tax base because it would include all empty properties and empty sites.

LVT would encourage new capital investment rather than sterile land speculation as it would encourage a shift of private investment from land speculation (which creates no extra land but only higher land prices) to productive enterprises.

LVT would encourage the use of empty sites zoned for development, creating more job opportunities and wealth.

LVT would help avoid urban sprawl. As brown field sites would be developed within towns and cities it would be unnecessary to permit urban sprawl. Compact towns are also more efficient in their use of resources for transport and other services.

LVT could not be avoided. (Unlike income tax and business taxes where tax avoidance experts are in great demand and the ‘shadow economy’ flourishes to evade taxes.) Every landowner would be required to register their land and to pay LVT on all their land holdings. With LVT any site with no registered owner would be sold by auction for the benefit of the Government.

LVT would provide automatic compensation for those sites which are disadvantaged by a new development. For example: with a new railway line most sites (especially those near stations) benefit from big increases in land values but some sites (maybe housing close to the track and suffering from its noise and vibration) would lose some value. These sites would pay a lower Land Value Tax, providing automatic compensation without any complicated appeals system.






What is needed is a land value tax which is much better and progressive than an income tax:

https://mcleveland.org/publications/Restore_the_Original_Wealth_Tax_DandS_2011.pdf

What is needed is a land value tax which is much better and progressive than an income tax:

You know it is a good idea when it is the opposite of what the pro 1% want... a land tax is the opposite of the poll tax that Maggie Thatcher wanted in the UK... so a family of 10 living in a small flat pays tax on 10 people while some rich toff living alone in a 200 bedroom mansion pays tax for himself.

Certainly land tax is a good idea, the more so with so many of the rich making money buying up property to create demand and then selling for enormous profits a few years later...

Property taxes are abuse. Your example is extraneous. In Toronto, house prices have been driven well over a million dollars. The
property tax rate is always close to 1% in spite of all the lies by municipal politicians how it will be adjusted down. So families
making $70,000 per year have to pay well over $10,000 in property taxes alone. Note that these families did not buy their homes for
over a million dollars, they typically bought them back in the 1980s and earlier for under $300,000.

I routinely hear smug, retarded "advice" for people to sell their overpriced homes and move where it is cheaper. I say f*ck off to this
drivel. The house prices are insane well beyond Toronto's boundaries. There is a plateau of prices extending over 2 hours of highway
driving in every direction. You have to move to another country by European standards to "cash in" on your "wealth".

The municipal level of government is the most corrupt. This cannot be fobbed off. In Toronto we had grants (not loans) to condo
developers for "affordable units" in their condos. Nobody even knew about the existence of this racket and clearly there were not
actual affordable units. The property taxes pay for such rackets.

The only fair taxes are income taxes. Making people homeless because they have insufficient income to pay $15,000 per year for
property taxes is grotesque and obscene. Toronto cannot claim that it needs billions for capital investments. The vast majority
of its infrastructure has been paid off long ago. They cannot excuse spending equal amounts of money on maintenance.

Another side effect of property taxes is urban sprawl. Farm land around big cities in North America always falls into the clutches of
subdivision development because farmers cannot afford enormous property taxes. It is not because of zoning changes. Tying
property taxes to "land value" is BS. Land price is not liquidity.

Most families who bought their houses more than 30 years ago might have million dollar houses but they are scared too, because the market has changed and prices have changed so even for the million dollars they sell their current house for they are not going to get much more of a decent house to live in when they spend that money... it is not the windfall it appears because what they gain when they sell they mostly lose when they buy again because it is that sort of market.... and house prices make rents higher too.

Then of course there is the problem that the family might have more than one kid so when the parents die or move out and it is time to split the assets or pay for care for the parents the money will be spent on elderly care and what is left goes to the kids, which likely wont be enough to buy a house for any of them...

The problem fundamentally is that buying a house and sitting on that house for a year or two and then selling it is a great way to make easy money and as more and more people do that as an "investment" the price of houses is always going to keep going up... which quickly makes that first house unaffordable for new house buyers... who these days likely already have crippling student debt... I rather suspect the tendency will be for kids to stay with their parents and work to save for the down payment on a house and loan from the bank.

kvs wrote:Property taxes are abuse.   Your example is extraneous.   In Toronto, house prices have been driven well over a million dollars.   The
property tax rate is always close to 1% in spite of all the lies by municipal politicians how it will be adjusted down.   So families
making $70,000 per year have to pay well over $10,000 in property taxes alone.   Note that these families did not buy their homes for
over a million dollars, they typically bought them back in the 1980s and earlier for under $300,000.  

I routinely hear smug, retarded "advice" for people to sell their overpriced homes and move where it is cheaper.   I say f*ck off to this
drivel.   The house prices are insane well beyond Toronto's boundaries.   There is a plateau of prices extending over 2 hours of highway
driving in every direction.   You have to move to another country by European standards to "cash in" on your "wealth".  

The municipal level of government is the most corrupt.   This cannot be fobbed off.  In Toronto we had grants (not loans) to condo
developers for "affordable units" in their condos.   Nobody even knew about the existence of this racket and clearly there were not
actual affordable units.   The property taxes pay for such rackets.  

The only fair taxes are income taxes.   Making people homeless because they have insufficient income to pay $15,000 per year for
property taxes is grotesque and obscene.   Toronto cannot claim that it needs billions for capital investments.   The vast majority
of its infrastructure has been paid off long ago.   They cannot excuse spending equal amounts of money on maintenance.

Another side effect of property taxes is urban sprawl.   Farm land around big cities in North America always falls into the clutches of
subdivision development because farmers cannot afford enormous property taxes.   It is not because of zoning changes.   Tying
property taxes to "land value" is BS.   Land price is not liquidity.    

Many developing countries would greatly benefit from taxing land values.

This is a good quote from the article below:

   "All but the most primitive governments keep some sort of registry of property, crude and out of date in Greece, Haiti, and Puerto Rico. A reform government can easily create new cadastral maps—that’s what George Washington did as he surveyed Native American land. In the age of GPS it’s even easier. The government can then place the existing claims on the map. The recorded “owner” may be a shell corporation based in the Bahamas, but no matter. Just tax it. Where claims overlap, they can be taxed twice—forcing owners to resolve the boundaries. The government can claim any blank spots—forcing hidden informal owners to declare themselves or lose the property."


https://mcleveland.org/blog/index.php/2018/06/how-colonies-can-liberate-themselves-by-taxing-real-estate/


http://dollarsandsense.org/blog/2021/03/taxing-more-from-the-rich-is-difficult-this-is-how-to-do-it.html


"The only fair taxes are incomes taxes" quote by kvs; I strongly disagree with this statement.  If liberals or conservatives were truly pro -labor, they would support eliminating the personal income tax on people's wages (that is earned income).


This is a good article by Paul Craig Roberts:

https://www.paulcraigroberts.org/2022/02/10/every-state-with-an-income-tax-is-a-slave-state/


http://www.savingcommunities.org/issues/taxes/landvalue/

These are two good articles that make an important reason why the Founding Fathers of the US supported the Estate Tax.  

It is a shame that such a tax is not better supported.  


https://www.theatlantic.com/business/archive/2016/02/resistance-estate-tax/470403/?fbclid=IwAR365DSP8yR4wTHu7Fg9FFsmC-1sG7mjOVOMDs0S--VZXqi2Iilah7r0C_o

https://www.economist.com/lexingtons-notebook/2010/10/14/you-cant-take-it-with-you?fbclid=IwAR3hTaCFlMQy8Crt3Eqqr3k33EEziUQMqKFL8GR4DBE9sZVb9OZZjhXUTOA

An inflation tsunami is coming.   If you have cash, dump it into real estate and tangible assets.

The CPI is a total joke.   I have been seeing food price increases routinely over 7% in the last 10+ years.   Real estate is through the roof and this
is driving rents upward.   But the CPI was claimed to be about 2%.   It was grossly underestimated even before the actual inflation surge.   So
15% is a lower bound.

This is a good article about why a National Sales Tax that is supported by conservatives would be a failure.  I don't understand why many European countries have a VAT tax system which in my opinion is bad.  

https://www.brookings.edu/research/dont-buy-the-sales-tax/?fbclid=IwAR37aP1US7hK29Zpb1qTtRs6YQVDvANJ1JrLIbDagShWwSWFPQPfeK9lvlY