As predicted in Piketty's book "Capital in the Twenty-First Century". He posited that wealth trumps labour and the post-war period was an anomaly. His proposed solution is a wealth tax. I can't see those with wealth/power implementing a wealth tax, so the alternative is to invest to accumulate wealth and know that your children, who are not in a position to invest, will probably be relying on that wealth.
Capital flight is a thing. Land isn't going anywhere.
Economists including multiple Nobel laureates on both the left and right have been screaming for land value tax for almost a century for this and many other reasons.
Is it basically saying to tax land that has productive assets? Like if you have land that has a factory, you're paying taxes, but if you have land with a house, you're not?
I was thinking it makes sense to tax land with productive assets and don't tax those without. Housing is not a productive asset so it shouldn't matter how much you fix it up. If you tax productive land there shouldn't be an incentive to not do anything as there would be nowhere to "escape" to that has a greener financial pasture. The problem I see with this route is the tax payers with productive land will start making a case for them being the only ones who should vote.
The tricky thing is it’s taxing land on what your neighbors built in their land.
If you build something that makes my land valuable, I get taxed more.
I like the incentive structure, but I think part of the incentives are towards collectivization so you and I become one unit, which may or may not be a good thing.
Yeah one problem I still haven't seen solved is that when you build improvements on both neighbouring land, taxes on both of those lands will increase. It seems unfair for big developers who essentially built their own cities. I've heard something about rent system where the tax is frozen for 99 years, but this seems like an obvious rule patch that'll make LVT loses what makes it unique and relevant.
The big problem with a land tax is that you'd have billionaires paying little tax. One may reasonably counter that that's fine if they aren't actually consuming much and it's probably correct. The majority of society won't go for it though.
What is this obsession people have with the taxation of billionaires?
There aren’t many billionaires. Expropriating all their wealth wouldn’t move the needle for any of our budgetary problems.
I’m all for closing the step up in basis on death, which is what allows billionaires (and of course only moderately rich folks) to avoid paying much tax over their full life cycle.
But LVT is a good idea, regardless of whether billionaires get some extra punishment for having the temerity to create successful businesses.
One of the largest drivers of social issues is the magnitude of the wealth inequality that is present. Taxing the high end should help to address this. Also, I think there's a general sense that they can afford it.
I'm with you. But that means little. Society has a warped view of "fair" an always has. Any tax idea that you want to put in practice has to account for it. Else you may as well be counting horse teeth.
> The big problem with a land tax is that you'd have billionaires paying little tax.
I don't think so. Billionaires consume quite a lot of real-estate, even if indirectly through their business enterprises. Consider the Google campus in Mountain View or the Microsoft one in Redmond.
the chief challenge is: how does one actually value land?
if I own 1000 acres in the middle of nowhere that holds an enormously profitable business, I could end up paying almost zero tax simply because I dont have any nearby real estate development
Also, LVT has never been proposed with taxing 100% of the annual rental value of land. This means you do not need to be 100% accurate with your assessment in order for the land to still be profitable to utilize. A 33% tax would mean you could literally be off by a factor of three in the assessment and it would still be marginally profitable.
I'm not sure about your example, but land of little potential value should be taxed little. Keep in mind that it is taxed according to its potential value though - not its current. 1,000 acres in the middle of nowhere is likely to cost basically zero in taxes if it can't be utilized for any purpose either now or in the future. If it has future value then you would need to do a net present value calculation.
except that capital flight usually takes place in the form of exchanging one asset for another (stocks for crypto or money, for example), an event that is subject to taxation (in the US at least) if a profit is realized.
I also enjoyed the comic book version of “ Capital and Ideology” by Picketty, Claire Alet and Benjamin Adam which follows the fortunes of a French family through the generations.
I haven’t read Piketty, but another book pointing in the same direction is The Meritocracy Trap, essentially explaining how non-meritocratic a lot of the economy is despite the common belief that it is. Wealthy parents spend a ton of resources developing the human capital of their children. It has basically eroded the middle class as a result. The author calls for an inheritance tax among other things.
