The Best Tax is a Tax on Land and Some of that Revenue should be Divided Equally to all Citizens

The land value tax (LVT) is a tax on the value of economic land. Some definitions: Land: for the purpose of this debate, 'land' will mean economic land which is any resource used to create wealth that exists regardless of whether labor or capital are applied to it. It is in fixed supply. Site: To differentiate between economic land and the earth under a building, I will refer to the earth under a building as a 'site'. Capital: Wealth gained from applying labor to land. Labor: Actions to produce wealth from land or capital. Citizen's Dividend: Compensation paid to a citizen for his/her lack of access to the commons. From these definitions, it can be seen that land is that which exists prior to and without human input. While that includes the layman definition of land (the space of earth on which your house sits), it also includes portions of the electromagnetic spectrum (Verizon owns a piece of invisible light), and natural resources like unrefined oil. Note: the land under your house would be taxed, but not your house itself. One argument against this taxation at first glance is that it may be difficult to separate the value of the home from the site on which it sits; however, upon further research, one will learn that real estate agencies already separate those values quite easily- it is also done in places where site location is taxed at a different rate than the building on the site. I will be focusing mainly on the site value tax over other types of land just because there are a whole lot more sites than other types of land. A. Land Value Tax There are several benefits to taxing land over other things that are commonly taxed: 1. First and foremost, taxation on income and/or sales is backwards. Income and sales are both generated by the private sector and with those tax systems, their work is harvested by the public sector. Site taxation is more logical. A site's value goes up not because of a building put on it, but because of the community growing up around it. If in 1796 one purchased a site in the middle of what is today known as Times Square for $100 and did nothing to improve that land, but just slept and ate, the site would have increased to $10M dollars today without one having done ANYTHING to contribute to that increased price. That is to say, site values are created publicly. Under the common system of taxing labor (income) and sales (voluntary exchange) while allowing some landowner to harvest the increased value of the site, the public harvests the work of the private and the private harvests the work of the public. With LVT, the site's publicly created value would be harvested by the public while labor and exchange would remain in private. 2. LVT doesn't distort the economy. Sales, income, and general property taxes change the decision making processes of the people in a given economy. Sales tax is particularly bad because it raises the cost of goods. In a given percentage of sales tax, it is likely that the producer will pay less than half of the total cost of the tax by passing the tax on to the consumer. The income tax is also detrimental because it means that, similar to the sales tax, the supplier (the worker) and the demander (the employer) won't meet at their normal equilibrium point. Where a worker might have accepted X per year to be happy at a job, the employer (as a consumer in this case) would have to raise the amount he/she is willing to pay to X+1 in order to get that worker. Property tax is perhaps the worst of all. The property tax encourages run-down neighborhoods and subsidizes unimproved sites. Under normal economic conditions, a landlord/landlady might decide to improve the building which they rent out to tenants, however these are not normal economic conditions and the property tax exists. Every dollar he/she puts toward improving the property will increase the amount he/she pays in taxes when the collector comes around. The obvious incentive, then, is not to improve property. The lower the value of the property, the lower the taxes. For the same reason, it subsidizes unimproved sites and encourages the use of sites as a store of value. Since the site has no improvements, the property tax taxes that site at a lower rate than it does even the landlord/landlady who doesn't improve the property. With our current system, we are telling people not to build. Because of this, a site tax would also decrease urban sprawl. The incentive of the site tax is to put one's land to the highest economic use or to sell it. So, one would choose to buy a site in the city instead of in the suburb. Unlike other taxes which raise the cost of goods, site tax actually lowers the cost of sites because it would cause entities hoarding sites to sell them or pay high taxes, thereby increasing the number of sites in the market. 3. At present, big real estate companies have a huge monopoly on sites. Because land is in fixed supply (as is stated in the definition), the incentive to real estate companies is to NOT sell land. I recommend a movie called "Real Estate for Ransom" (the sound quality isn't great) The US mortgage crisis was really just a land crisis. The big real estate companies will hold 200 sites. Their incentive is not to sell sites, but to make profit, so it follows that the most profit would be had by selling 100 sites while holding 100 off the market to artificially create scarcity. This drove up the prices of homes and the number and amount of mortgages along with them. Banks couldn't see the unsustainability of that system any more than the common buyer could. 4. Philosophically, the land value tax checks out better than other taxes, also. Land is in the commons. Since no one created it, if it weren't for governments allowing it, no one could own it. Absent the government, owning land is tantamount to stealing from everyone who could have gained use from that land. So, while some feel that all taxation is theft, LVT is actually the opposite. NOT taxing land is theft. This brings me to 5. Site values increase with the addition of public infrastructure nearby. A site value tax would make public infrastructure self-financing. At present, the private landowner captures totally the increase in value that comes from taxes. People who labor to improve their life are taxed to pay for improvements that a landowner receives the benefits of without having had to work a single hour. B. The Citizen's Dividend (CD) 1. I argue that since the thing being taxed doesn't legitimately belong to any one person or exclusive group of people (it wasn't made by anyone), we should view the taxation of land as a rent paid to the community in exchange for using the commons. This is what is done in Alaska where the oil belongs to the State. They allow the extraction of the oil, but only in exchange for money. This money is given to the citizens of Alaska and has paid out everywhere from ~$300 to ~$3000 per person per year. This year's amount is $900: http://pfd.alaska.gov...... You can read more about previous payouts on the wiki page: https://en.wikipedia.org...... If it works for Alaska, why not every state? Sure, not every state has oil, but every state has land of other types. And we could auction off carbon permits and the electromagnetic spectrum and other things that nobody can own because they're in the commons. "We have it in our power to begin the world over again" ~Thomas Paine (Who first talked about the CD in his pamphlet Agrarian Justice) 2. The replacement of welfare maladies At present, the welfare system is "means-tested" i.e. the government has made a bureaucracy in order to determine whether or not a person deserves financial assistance. They do this to cut down on fraud. This bureaucracy is made in every program the government sets up. The government even sets up a program to provide phones for the poor in the United States. I sell phones and phone plans on a regular basis. It is silly when I help these people buy their subsidized plans. The plans wouldn't cost more than $35 even without government intervention, but because of means-testing, the government is spending MORE than $35 to give these people a $35 equivalent. It's nonsense. Surely it is better to just give them $35 and let the market work. The same can be said of food stamps and subsidized college loans and grants and any other system wherein the government gives $X only after checking whether the person is poor enough to merit it. People aren't poor because they don't have food. People aren't poor because they don't have phones. People are poor because they don't have MONEY. Another problem of welfare is the social stigma associated with it. A person who would help out himself/herself (and the economy) by going on these programs might decide not to because they feel like a burden because of how much our society demonizes welfare recipients as parasites. No such stigma would exist in a system where everyone received a check in the mail. I look forward to this debate. I'm excited to see Con's response.