source: Chapman University Survey of American Fears
I don’t know that governments are always and inevitably corrupt, but there sure seems to be a lot of corruption going on. It isn’t a new development; maybe it’s worse nowadays or maybe just more visible.
So how can we single taxers say that we want the government to collect all, or nearly all, of the economic rent? Don’t we know that it will be stolen or, at best, wasted?
Not necessarily. Consider the following:
In the U S at least, real estate tax is administered and collected at the local — that is, substate– level. This is where the records and expertise needed to operate a land value tax exist.
Unlike income tax or sales tax, nearly all the data involved in real estate taxation is public information. Most of this data is accessible to everyone with internet access, generally without fee. I can see how much real estate tax my neighbor paid. I cannot see how much income tax they paid. The same goes for sales taxes and most other kinds of taxes. So cheating in real estate tax can be seen. That doesn’t mean it will always be impossible for people to cheat, but it provides a much greater possibility that cheating will be observed and rectified.
Government corruption seems to be a function of government size. A survey earlier this year found that “87% of voters nationwide believe corruption is widespread in the federal government. Solid majorities believe there is also corruption in state (70%) and local (57%) government.” Looked at the other way round, only 13% of us believe the federal government is possibly honest, compared to 30% for states and 43% for localities. I actually believe that one of the local governments to whom I pay taxes is pretty honest and efficient.
State and federal governments might logically collect some of the economic rent. Examples currently include severance taxes and could reasonably include rents for electromagnetic spectrum should our rulers become persuaded to levy and collect them. Existing federal agencies are able to review and evaluate collection efforts.
A “not so concise explanation of Land Value Tax and some brief responses to some of its most common objections” at Jock’s Place
A good balance between failing to adequately describe it and going beyond the readers’ attention span. British, but comprehensible.
The March ’08 issue (pdf) of the Center for the Study of Economics’ Incentive Taxation newsletter has a couple of positive notes.
Washington, PA, a split-rate city for decades, solved a budget deficit by raising the tax on land to 82.63 mills, while taxing buildings at a rate of only 3.5 mills. Thus the added tax burden goes mainly to people who are leaving land idle, and doesn’t discourage productive construction or investment.
And in New London, CT., the Re-New London Council recommends a land tax because of its benefits to, among other things, housing affordability. Had such a policy been in place over past decades, perhaps the Kelo case would never have happened.
A new report prepared by a consultant for the National Association of Homebuilders reviews dozens of strategies which have been proposed or used to promote affordable housing. It points out that an increased tax rate on land values, balanced with decreased taxation of improvements, reduces real estate taxes for most homeowners, while encouraging owners of vacant or underused land to get their land developed, often increasing the supply of housing.
The report also notes that it costs virtually nothing to tax land at a higher rate than improvements. Examples cited include Harrisburg and Allentown, PA. Information is from Josh Vincent of the Center for the Study of Economics.
In Illinois, the Cook County Board could pursue a similar strategy using existing authority to tax land and improvements as two different classes of real estate. As previously discussed here, the Assessor could take a big step in this direction by just valuing vacant land as prescribed by existing laws and ordinances.
Eastern Georgist Wyn Achenbaum has started the lvtfan blog. Wyn is creator of the massive wealthandwant reference site as well as whatwouldjesustax.