Thursday, April 29, 2010

Principles of Taxation

Those Who Benefit Should Pay
A drink tax to pay for alcohol-related problems might make sense. Using it to pay for transit makes no sense at all. However, access to transit increases urban land values by many times what a land value tax would cost.

Taxes Should Not Burden the Poor
It is a myth that a drink tax falls on the rich. Wealthy people are more likely to entertain privately and escape the tax. Property tax occasionally falls on the poor, but land value tax almost never falls on the poor.

Taxes Should Not Drag the Economy Down
Drink taxes make the county less attractive to tourists, vacationers and conventioneers who bring money into the county and stimulate the economy. Land value taxes make the county less attractive to slumlords, speculators and absentee landlords who take money out of the county and hold back the economy.

Even property taxes prevent speculation and real estate bubbles. Cities with the lowest property taxes had the worst housing bubbles and now have the most foreclosures. We can stop taxing people’s homes, but we must never stop taxing the value of land if we want stable land prices.

A Tax on Restaurant Customers is Worse Than a Tax on Restaurant Owners
Most restaurant owners will pay more under a land value tax than under a property tax. Still, the ones we have talked to don’t mind paying more if it allows their customers to pay a lot less. Restaurant owners view their customers as partners in trade. You give them something, and they give you something; what robs you, robs them.

Political developers and land speculators, on the other hand, view taxpayers as victims to be fleeced. They do not understand that nobody wins when working people and honest businesses are overtaxed.

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