If we taxed land properly, we'd have billions of extra dollars to fund big tax cuts elsewhere. So why don't we do it?
If we taxed land properly, we'd have billions of extra dollars to fund big tax cuts elsewhere. So why don't we do it?
Prosper Australia says if we were smarter about taxing land, we could slash taxes on workers and businesses, writes Gareth Hutchens.
@Longmactoppedup What you're looking at here are the economic ideas of a late-19th century American economist named Henry George: https://en.wikipedia.org/wiki/Henry_George
At its furthest extreme, the argument is that land and licences to exploit finite natural resources (potentially including the rights to mine minerals and emit greenhouse gasses) should be taxed heavily.
For property, the tax should only be levied against the underlying land, and not any buildings or improvements that add value. So you get taxed on what the price would be if it were a vacant lot (the unimproved site value).
Meanwhile, *all* other taxes on productive wealth generation — income tax, company tax, GST, etc., should be completely abolished.
Advocates generally combine this with a universal basic income.
https://en.wikipedia.org/wiki/Georgism
The logic is that taxing finite natural resources will cause them to be used more efficiently, and the benefits distributed widely throughout society.
Meanwhile, activity that creates wealth or adds value should be encouraged, and that means it should go untaxed.
When land and resource taxes are combined with a universal basic income, what ends up happening is that people with a lot of expensive land or who use a lot of natural resources pay a net tax.
Meanwhile, people who use few resources get a UBI that's higher than their tax bill, and therefore a net credit.
What it offers is a way that free market libertarians can respond to climate change and other environmental issues.
That being said, even if you don't agree with the full Georgist program, there is still a decent case to be made that more of the tax burden should be filled by taxes on land and natural resources.
The kind of post you read the comments for!
This is interesting. So therefore a plot of land in the centre of a city would be so expensive for land taxes that the best way to reside on it would be for it to be subdivided and have lots of people be responsible for its cost. Therefore, it encourages densification through tax.
@Railison Exactly.
@Railison @ajsadauskas That happened quite a long time ago here in the US, Canada and elsewhere.
I'm also sure if land is properly taxed. It will mostly fall on everyone except the 1%
It's not in the interests of the owners of society.
This is the best summary I could come up with:
Its members draw on insights from economists such as Adam Smith, John Stuart Mill, and most significantly Henry George, to explain how policymakers could slash taxes on labour and businesses.
Last month, former treasury secretary Ken Henry warned Australia's tax system had deteriorated so much in the last couple of decades that he was worried about our "social compact" holding together.
To explain what they mean, they say Australia's states and territories could raise an extra $27 billion in tax revenue each year, without reducing investment or economic growth, if they were smarter about land taxation.
They estimate the additional $27 billion that would be raised from best-in-class land taxation and value capture could fund a halving of welfare taper rates with no reduction in maximum payments for recipients.
They say the ACT prices rezoning via its Lease Variation Charge (LVC), which captures 75 per cent of the windfall gains landowners would otherwise receive from permission to redevelop at higher density.
State governments have access to the land base for taxation, they say, but they underuse it and rely heavily on Commonwealth grants funded by less efficient taxes on work and investment instead.
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