No, that's objectively false. You don't need to tax capital gains at all if you are taxing the value of the underlying assets. Consider property taxes, which are paid almost entirely by the wealthy. No, it's actually inferior because it just reduces allocative efficiency. When Japan tried to damp its land bubble by imposing a high capital gains tax on real estate sales, owners just opted for low-taxed rent income rather than high-taxed capital gain income. Market inventory dried up, and prices soared higher than ever. The extreme length and severity of Japan's post-1990 depression was partly due to this foolish policy of taxing capital gains rather than the value of the underlying assets.
See my previous response. Capital gains are a special kind of income that is closely related to allocative efficiency. It is much more efficient to tax the value of the underlying assets than to tax capital gains on their sale.
Progressive taxes provoke hiding and splitting as evasion tactics. All competent economists are aware that taxes on the value of factors in fixed supply, such as land, are best. The next best taxes are Pigovian taxes that penalize exploitative or socially undesirable activities such as pollution, resource consumption, alcohol and tobacco use, etc. A steeply progressive income tax that burdens mainly the highest incomes is OK because very high incomes are almost entirely unearned, and consist of economic rents that can be taxed away entirely without harming the economy. There is no rationale for taxing earned income at all. Inheritance taxes are too easy to avoid. Tax the value of the underlying assets, then you don't have to wait for rich people to die before you recover some of what they have been given.
The logical fallacy is blaring in your statement. a) It's perfectly defensible to enact a progressive taxation on income of individuals and businesses. It's already been done in the U.S. and around the world and has worked out very well. The wealthy have the money, and with their growth exponentially more than the other 98% of us, it's not like they can't afford it. b) I live in a state and (a nation) that has many problems with people unable to pay for their property taxes. Particularly with urban sprawl, manhy elderly residents who bought homes decades ago are now faced with tax bills that are becoming out of reach (particularly if they also lost money in the markets from the GOP housing bubble).
I like property taxes - as long as they don't get too high, they are a reasonably fair way to generate funds. Consumption taxes are a good way to control the size of government. When they get too high, more goods move to a black market, limiting revenue. They become fairly self-regulating. Income taxes can be ok as well, but not when they are used by government to try to further its own preferences. They should be simple and flat, no exemptions or variation. This would also keep them under control and control the size of the government because everyone would have a vested interest in keeping the taxes low. I'd like to see a situation with about a 1-3% property tax, about a 5% consumption tax and a flat 10% income tax. This should create enough revenue for a reasonable-sized government to function properly.
Enforcement and prosecutions, making a few examples out of those dirty thieves who evade taxes cuts down on that. The decimation of investigative arms of the SEC, IRS and other regulatory and law enforcement agencies has resulted in some wealthy people acting as if they are above the law. Seeing that the competent economists favor progressive taxation by a wide margin, I doubt seriously that those economists you're talking about are competent. adam smith argued for it in "The wealth of Nations" and many economists since then have taken the debate up. and as we saw in the post-WWII economy, high income tax rates on the wealthiest income earners did not hurt the economy. It helped it, because the government was able to spend more on infrastructure improvements and balance budgets. Let's see some numbers.
Rates would depend on class; the top 40% or so could handle it. The top 20% is a stretch. Assets owned aren't necessarily in the form of property. Nor are they an accurate measure of ability to pay. And thus it's not a good measure of ability. In today's market economy that's not quite possible or even suggested.
No. You will not be identifying any such fallacy. The fact that it has been done does not make your claim defensible, and it hasn't worked out very well for anyone but the privileged. Income tax does not tax the wealthy, it taxes those who have the most taxable (especially earned) income. That is why the rich have got rapidly richer under progressive income taxation. No, you don't, because there is no such state or nation. No, they are not. They just want to pocket the publicly created land value the community has given them, and not have to repay any of it in taxes. It is pure greed. Nothing but their desire to keep pocketing publicly created land value is preventing them from just pocketing their huge unearned capital gains and seeking accommodation better suited to their needs and means.
What do you mean, "class"? Why do you refuse to consider taxing anything but economic activity and production? You mean real estate? Please understand: a financial instrument is property. A car is property. Everything that is owned is property. Assets owned are by definition exactly equal to ability to pay. Stop talking nonsense. Value of assets owned is exactly equal to ability to pay, by definition. It is most certainly possible; it would be far superior to income taxation; and I have just suggested it. Try to think of a response that is not a self-evidently fallacious attempt to avoid the issue.
Because your suggestions are simply ridiculous. To assume that all assets are liquid in nature and their transaction a representation of one's ability to pay when Americans are notorious for debt and credit. Your dreams are silly, though I applaud the imagination.
You too. It's been a long time. Check your email, if you haven't changed it. I'd agree, and depending on how much revenue certain rates on the taxes I previously mentioned would bring it, I'd still keep income taxes in the back of my mind. Unless something's changed with one or both of us, I imagine we both for the most part think the same general way.
Problem is, it becomes difficult to separate evasion from legal avoidance. How can you stop someone from distributing their assets among their family to reduce a progressive asset tax liability? That is one reason property tax rates are not progressive. True but not really relevant. <sigh> Wrong. They favor progressive INCOME tax by a wide margin because that is the only way to make income tax less unfair and inefficient. That doesn't mean they favor either income tax or progressive taxes separately. <sigh> "The expense of government to the individuals of a great nation is like the expense of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation." -- Adam Smith, The Wealth of Nations, 1776 But more importantly, a steeply progressive tax on the highest incomes falls mainly on economic rents, which can be taxed away entirely without harm to the economy. So, why not just tax rents? Consider property taxes. They are mostly very low, but could be much higher. New Hampshire has a 4% property tax rate and has prospered well with it (also thereby avoiding the recent real estate bust). The rich don't get to pocket as much publicly created land value, the government gets more stable revenue, and it is almost impossible to avoid.
No, that is a silly lie. My suggestions are supported by the established facts of economics. I assumed no such thing. The illiquidity of real estate does not stop governments from levying property taxes on it. Please try to address what I have written instead of making up silly strawmen. I stated specifically that it was ASSET VALUE that by definition conferred ability to pay, NOT TRANSACTION VOLUME. Americans are notorious for debt and credit partly BECAUSE asset value is not taxed. Tax it, and it will no longer pay to go into debt to acquire assets. The fact that one may be in debt does not mean assets do not confer ability to pay. Assets can always be sold to pay taxes, BY DEFINITION. If one is still in debt, then it is the debt that can't be paid, not the tax. Please try to address what I have written. So you can offer no actual facts or arguments. Thought not.
Pretty much, the goals are the same, just a few details in differences of approach to how to go about it.
That's why there are courts to sort it out, too. Extremely relevant, because at least on the tax evasion issue, those other agencies can help to put a kibosh to evasion. Plus, when the Obama Administration even talked about going after monies in off-shore tax havens, the right about blew their brain cell out with an anuerysm over it. Like who? Name names. Because it's a regressive form of taxation. If the wealthy gain a lot of wealth, but property taxes remain relatively low in relation to the wealth gained, while those lower on the economic ladder are struggling to hold on to their property because the taxes on property are too high for them, then the wealthy are being subsidized by the lower middle class-upper middle class for all of the services the wealthy rely on to maintain their wealth.
How busy do you want the courts to be with tax cases, which typically drag on for years? How busy do you want THEM to be dealing with tax evasion? Oh, only Nobel economics laureates like Milton Friedman, William Vickrey, Franco Modigliani, Robert Solow, James Tobin, etc. The property tax? No, it most certainly is not. Who has been filling your head with such nonsense? The wealthy largely gain their wealth from increased property value BECAUSE property taxes are too low. Try again. The poor do not own real estate. They rent. Try again. Not possible. Property taxes fall almost entirely on the owner, and very little of them are shifted onto renters, ESPECIALLY poor renters, because they tend to live in older, fully depreciated buildings. Property owners, by definition, tend to be wealthier than non-owners. Try again. ?? You seem to be agreeing with me that low property taxes imply a welfare subsidy giveaway to the wealthy at the expense of working people, which is certainly true. You have in no way made a case that property taxes are regressive. They are in fact the most progressive tax we have, even more than the nominally progressive income tax.
Whatever it takes. Make a few examples of those deadbeats, and watch the rest of the lily white weasels start coughing up the dough they are cheating all of us out of. http://www.cbsnews.com/8301-503983_162-20054892-503983.html Miltie was a hell of a statistician and certainly contributed to knowledge about monetary policy, but his downfall was in arguing against fiscal policy. it remains to be seen if it isn't, I've seen problems with people of moderate means losing homes, often due to rising school taxes after urban sprawl drives up costs for educating kids in suburbs and the elderly are taxed out of their homes. Not to mention the difference between unused, unimproved land versus farmland or city land versus rural lands, and different tax rates for them. In real estate. Not in industry or financial sectors. In industry, you may own land, but also need machineryu and people to earn the wealth. Land taxes wouldn't take that into consideration. Neither would it for financial services. "The rent is too (*)(*)(*)(*) high!" That guy was funny... The poor and working poor do own land. Try again yourself. Ever been to Appalachia? Many of those people are dirt poor and own the land they live on. You haven't made a coherent case for property taxes being better than income taxes. If an investment bank wants to lower it's costs and still make the billions it does by moving money around the world, moves out of Manhattan to Secaucus, NJ, it has just lowered it's taxes on the land it owns or rents (those taxes are passed on through higher rents/leases) for it's offices. Granted, I'm up late and tired, but you still haven't shown any advantage to doing it that way by the numbers, or how to reconcile the poor and middle class being priced out of their homes in certain areas.
In making that false accusation, you are ignoring one very important fact, land value taxes are offset by lower purchase costs. Property taxes which fall on land values make land cheaper to buy, so buyers have to pay less to the previous owner, less to the real estate agents and brokers, less mortgage interest to the bank. Land value taxes CANNOT POSSIBLY BE REGRESSIVE because after the are levied they are BURDENLESS. Read this until you understand it: The overall effect of land value taxation is to make it cheaper to own or use land... to the direct benefit of the poor.
Its too easy for a very wealthy person to avoid paying into the system at a rate higher than the average guy. Often wealth is created with little in the way of needed space. If a company wants to avoid paying land rents, and is say an investment bank or financial services company, they pay a slightly higher pay scale to their people to stay at home to make the money for the company. and because taxes are a necessity, the money has to come from somewhere, and it will fall on the middle class homeowners (because there's a hell of a lot more of them). Another point to this is that because some businesses are land intensive, while not being as profitable as less land intensive businesses, it's not even progressive for different industries. Overall, there's definitely regressivity to be found in the land tax. It can still be used for some smaller, more local forms of taxation, but not as a replacement for more progressive forms of taxation, particularly earned income and profits.
The vast majority of the very wealthy gain the bulk of their income from economic rents, all that needs to be done is identify the source of those rents (usually some form of monopoly privilege) and tax those rents to their full market value. A far better solution is to identify why there is a lack of competition into high profit industries, which are often protected from competition by some form of privilege, then change the law so as to allow competition to flourish. More competition --not higher taxes -- is the correct answer to excessive inequalities of income. Personally I think medical doctors are (in general) overpaid, but I dont propose taxing those existing doctors into oblivion. I would just train enough more doctors till doctors incomes became ordinary. This is how you lower healthcare costs. A land value tax is only levied on the advantages of one location to another. The middle class will only be taxed in accordance to how much advantage (above the exemption amount) they are gaining from their location, surrounding infrastructure and services. The land at locations at which high wages are available is usually more valuable, those middle class homeowners will pay accordingly nothing more or nothing less. This is anti-economic gibberish! If what you say is true, then land would be abandoned as labor and capital would seek lower taxed endeavors but it is not true, as it is know that land value taxes do the opposite, they bring idle land being held for speculation into productive use, and expand land use by bringing down the cost of secure land tenure. This is false. The land value tax CANNOT BE REGRESSIVE because the tax is only levied on the advantages (rent) obtainable from owning superior land. Poor people do not own superior land so they will not pay much if any of the tax. It (land value taxation) guarantees that no one dispossess fellow citizens by obtaining a disproportionate share of what nature provides for humanity. William Vickrey, Nobel laureate in Economics (1996) That doesnt sound like a description of a regressive tax to me. Why are you so eager to tax earned income when there is enough unearned income to fund the government?
How is that working out for you? Income tax evasion just about ended, has it...? Even if evasion is punished by draconian means, avoidance is still legal. Content = 0. Friedman's endorsement of the property tax on unimproved land value was based on fundamental facts of economics that have been known for 200 years and are not disputed by any competent economist. They are merely facts that are not known to YOU because you are not a competent economist. No, it provably isn't. Sure, but only as a result of low property tax rates and the consequent excessive house prices, not as a result of high property tax rates. When people find it difficult to meet property tax payments because the community has shoveled so much additional land value into their pockets in return for nothing that they can't repay even a small fraction of it, they sometimes find it prudent to sell, pocketing enormous tax-free capital gains, and seek out accommodation better suited to their needs and means. But only a lying sack of $#!+ would try to describe pocketing enormous tax-free capital gains and buying a different house in a less costly neighborhood as "losing your home." No. "Losing your home" is when you can't pay the mortgage on it and it is repossessed. As higher property tax rates reduce the purchase prices of homes, people are LESS likely to lose their homes where property tax rates are highest. This FACT has been confirmed in spades by the recent real estate crash, where the states with the lowest property tax rates, like CA, NV and FL, have the highest foreclosure rates, and the states with the highest property tax rates, like NH, NB and TX, experienced little or no real estate bubble and have maintained low foreclosure rates. The case of CA is especially piquant, as they putatively passed Proposition 13 in 1978, reducing property taxes to the lowest level in the country, because people were "losing their homes" to high property taxes ROTFL!!! So what has actually happened? Property tax rates in CA are the lowest in the country, and the mortgage foreclosure rate is the highest. Are you willing to know facts that prove you wrong? Utter garbage. Where is the documentation for such claims? We see them made often enough, but WHERE IS THE DOCUMENTED CASE? While it is true that people who own houses in areas of skyrocketing land value often find it advantageous to sell and pocket the enormous tax-free capital gain the community has shoveled into their pockets in return for nothing, it is idiotic and dishonest to claim they are being "taxed out of their homes." They end up with plenty of money to buy homes better suited to their needs and means in less pricey neighborhoods. Different tax rates are neither necessary nor beneficial. Land value encompasses all the factors that affect the economic advantage of using the location. Right. To EARN wealth you need to make a commensurate contribution to production by providing machinery, labor, etc. to the production process. Owning land, by contrast, entitles you to GET wealth without having to make any sort of contribution in return to EARN it. Wrong again. Land taxes absolutely take it into consideration: they require repayment of what the landowner takes from society, rather than punishing the productive for what they contribute TO society. No, they do not. You are merely parroting the lie that wealth is defined by income rather than wealth. No, they aren't. They may LOOK poor to you because they pursue a simple rural lifestyle -- they may even be on welfare because they qualify by virtue of low income -- but it is only the landless tenants who are genuinely poor (i.e., who lack the material wherewithal to sustain themselves), not the landowners. The case has been made many times, and no one has ever offered a rational objection to it. And they never will. The example of CA is conclusive and irrefutable: since Prop 13, as average property tax rates have relentlessly fallen and income tax rates risen, every day in every way, CA has got worse and worse. Fine. It is no longer benefiting so much from government and the community, and is no longer depriving others of the opportunity to use the high-value land in Manhattan. You don't seem to understand that the bank's office was located in Manhattan for a reason: the company was WILLING TO PAY for the advantages the location offered. Why would it be less willing to pay the community the same amount for the advantages it provides than it is to pay a private landowner for doing nothing? No, you are objectively wrong. A tax on land rent cannot, repeat, CANNOT be passed on to tenants. This is a fact of economics that has been known for 200 years and is not disputed by any competent economist. Google "Law of Rent" and start reading. Land value taxation reduces the price of homes, making it LESS costly for the poor and middle class to afford their own homes. You just don't know enough economics to understand why that has to be so. There is a direct relationship between property tax rate and housing affordability. Why else has affordability in CA relentlessly declined as Prop 13 has relentlessly reduced the average property tax rate? Why else is housing most affordable in states with the highest property tax rates, such as NH, NB and TX?
He will only pay less if he is TAKING less from government and the community. And you should be aware that the burden of a land tax is borne entirely by the landowner at the time it is enacted. So the wealthy person who seeks to sell his land afterwards will find it is too late: the land's value has already declined by the amount of the future tax liability, so he has in effect already paid the tax in advance. In fact, such companies find they do better when located in the financial district, which is why they are WILLING TO PAY for the advantages such locations offer. Wrong again. Middle class homeowners would end up paying LESS tax than they do now -- in most cases, FAR less -- especially as there would be a universal individual exemption similar to the universal individual income tax exemption. It's really very simple: you can pay taxes to government to fund services and infrastructure, and then pay a landowner for access to the same services and infrastructure your taxes just paid for, or you can pay government directly for access to the services and infrastructure, and cut out the something-for-nothing payment to the landowner. You can continue to pay for government TWICE so that landowners can pocket one of the payments in return for nothing, or you can wake up and smell the coffee, and demand that government be funded by recovering the land value its spending creates. Garbage. Such industries have to pay for land anyway. Why would they be less willing to pay the community the same amount for the advantages it offers that they would otherwise pay a private landowner for doing nothing? That is nothing but a flat-out lie. The rich and privileged will do ANYTHING to stop land value taxation, because they know it is the one tax they cannot avoid. There is no more progressive form of taxation, and taxing earned income and profits is morally and economically indefensible.
That's what congressional elections are for: to elect the guys who you think should crack down on avoidance to make it illegal if there's a reason to do so. I'm a competent reader and a competent thinker. we'll see if you are too or not. You're now not sure if the property tax scheme is regressive or not? This should be interesting. High property tax rates will lower property values? Ity hasn't in Westchester County, NY. It hasn't in Nassau County, NY. It hasn't in Suffolk County, NY. It hasn't in Manhattan. Besides, if people are losing their homes to low property taxes, high property taxes will make it more difficult to own a home. So high property taxes pushing old folks out of their homes is the goal? Some end up renting houses, or at worst just seeing a lifetime of dreams go away because the home they were in was where they wanted to stay for life. You now have a mortgage and higher property taxes. Hmm... You should see how many people are losing their houses in tax sales because of not being able to pay the property taxes. And because those states had low property taxes had no bearing on the GOP's housing bubble much. Texas avoided it because of stricter rules for mortgages within their state (a holdover from the 1800s). Correlation and causation rules still apply here, you know. It was a bad idea because of how it hampered the ability of the state to raise taxes as necessary. But you haven't shown causation between the low tax rates on property and housing bubbles. New Jersey has the highest property tax rates in the country and ranks 15th in highest rates of foreclosures. http://www.nj.com/news/index.ssf/2010/02/nj_property_taxes_climb_70_per.html http://www.realtytrac.com/foreclosure/foreclosure-rates.html Let's see you bring some. I'm open to seeing your way, but I've already poked holes in it easily. Repeating yourself? *YAWN* Still waiting for facts. Let's see a CBO report on this. The same rates for desert lands as land in Manhattan? This should be interesting. Let's see numbers crunching so you can not merely say it, but prove your point. That's why so many people are underwater in their mortgages! Ahh... I see where you're going with this... Its silly. And land is only one part of that equation. And the $0.75 they can't come up with to buy a cup of coffee and malnourished kids is a sign of power, baybee! Proving nothing about your proposal's ability to correct any of it. I understand that. That's why it's an example of how wealth can be made with little to no land, even though that wealth may heavily rely on government to help grow or protect that wealth. Bill Gates sells his house and travels byu train every day for the rest of his life still has more wealth than a thousand trailer owners in Appalachia. Manhattan rents are pretty (*)(*)(*)(*) high, with high property taxes. Oops! The Contract Rent just reared its head... Google-fu that (*)(*)(*)(*). again, you've made the assertion but haven't made a rational argument or facts supporting your premise.
Not yet. LOL! I've been arguing this issue with some quite knowledgeable and intelligent people for 15 years, and haven't met my match. You aren't it. ?? I've stated that it provably isn't. Why lie about what I have plainly written? Property tax rates are not high there. Or there. Or there or there. The rates are less than 2% of assessed value, and most of the assessments are years or decades out of date. Assessors also have to accept income-based valuations even if they are far below market value. NY is just not a high property tax state. ?? No, easier. Obviously. High property taxes will reduce prices, making it easier to buy. No, getting one honest sentence out of you is the goal. So far, no luck. How large a welfare subsidy giveaway do you want the productive to give idle landowners in order to ensure that no old person ever has to move? It is passing strange how apologists for landowner subsidies get so exercised over old folks who own land pocketing large, tax-free capital gains as a reward for getting out of the way of the productive, but have never a care for old folks who are evicted from their homes by their PRIVATE landlords because the welfare subsidy giveaway to idle land hoarding has driven housing costs sky high. So, in what you are no doubt pleased to call your "mind," we have to keep on giving 20% of GDP to landowners for doing nothing so that one old person's dream doesn't have to go away? WHAT ABOUT THE MILLIONS OF YOUNG PERSONS' DREAMS OF SOMEDAY OWNING A HOME THAT CAN NEVER COME TRUE BECAUSE YOU INSIST HOUSE PRICES SHOULD BE FORCED UP AS HIGH AS POSSIBLE FOR THE UNEARNED PROFIT OF RICH, GREEDY, IDLE, PRIVILEGED, PARASITIC LANDOWNERS? But lower other taxes, so you can still afford to pay the mortgage -- which was only necessary in the first place because a ticket on the landowners' subsidy escalator was so expensive. Where? There aren't any. People who can't pay property taxes just sell their homes and pocket the tax-free capital gain. Tax sales are almost always of abandoned and/or heavily mortgaged properties whose owners can't or at least don't pay the mortgage, either. Then why did the states with the lowest property tax rates have bubbles, but not states with high property tax rates? <sigh> Then why did all the other states with high property tax rates ALSO avoid the bubble, which was worst in low-property-tax CA, NV, FL and AZ? That is just an excuse to ignore the facts. Do you even know what the present value equation is? Here: V = R / (d + t - g) Land value V is equal to annual rent R divided by discount rate d plus tax rate t minus rent growth rate g. Higher tax rate --> lower land value. No, it doesn't. NH does. NJ has the highest nominal per-property tax AMOUNTS because land values are so high (it is very densely populated), but in fact, generous rebates and state income tax deductions mean the effective property tax amount and rate are lower in NJ than in some other states. Foreclosure rates are also affected by other factors, such as state banking laws and population trends. No, you have been refuted over and over again. Of course. Desert land isn't worth much, so the same ad valorem rate applies. Do you not even understand how standard ad valorem property tax rates work? Seriously? Say an acre of land in the desert is worth $10. In Manhattan, an acre is worth $10M. If you own an acre in Manhattan your land tax bill is 1M times as much as if you own an acre in the desert. Clear? No, they are underwater on their mortgages because they tried to pay for depreciating improvements with interest-bearing debt, and didn't plan for not being able to use the property productively enough to pay the interest. OK, so you agree that defining poverty by reference to income rather than wealth is deceitful. Good. It could be a sign of many things -- most likely mental illness or addiction -- but it's not a sign of owning land. Recovery of publicly created land value for public purposes and benefit has to correct it as a matter of economic law, and this has been proved everywhere it has ever been tried, from ancient Egypt to modern China. Trailers are not land and people who live in trailer parks are tenants, not landowners. I certainly agree that landowning is not the only form of government-issued and -enforced privilege that enables people to get rich without making any commensurate contribution to production; and I agree that land rent recovery only corrects the privilege of landowning, not other privileges like IP monopolies, bank debt money issuance, etc. But landowning is the biggest, most important, most unambiguous and least defensible privilege, and the simplest and most worthwhile to correct. Manhattan property tax rates are not high, and are unfortunately skewed to fall more on improvement value than land value, discouraging construction that would relieve the shortage of supply. Rent control is another huge problem that prevents development by giving tenants a stake in rent seeking. See above.
So basically, you can't answer my questions and you're no match for me. I'm done, unless you can a) provide facts, b) not engage in logical fallacies (I pointed out some already) and c) you don;t act like a dope. Maybe Geofree knows something about it since you're inept, and he can explain the idea to convince me.
