Harmonious Tax Reform

But who among us could lay claim to the sunlight for his own? Sounds ridiculous, right? Yet isn't that the exact thing that is done for land? No one has right to your labor, yet no one has right to that which he did not create! This is different from what one labored to ... improve!

Try to keep an open mind in what follows.

What?

In light of the increasing calls for guaranteed income from the Left and calls to reel in 'property' and other taxes on the Right, it is time to revisit Thomas Paine's plan, at least conceptually, that would likely resolve differences with those on the left and the right, hence harmonious tax reform.

To understand, we must first understand that NONE of US made the SUNLIGHT (electromagnetic spectrum), the LAND (minerals and surface), or the AIR. Imagine how many of us would challenge someone who had declared he could prevent one from collecting rainwater or sunlight! Yet, we allow this EXACT thing for the land, without which NONE of us can feed ourselves and which NONE of us created. The result is forced reliance on the system we have created at the expense of our natural rights to the LAND, SUNLIGHT, WATER, etc. The problem is that property has been defined as including the LAND itself, rather than the result of LABOR, which would be improvements on the LAND.

For a more Leftist view, (die evil capitalist pigs die), what if one could claim exclusive use of the sunlight to detriment of his or her neighbor, and his claim on the sunlight could earn him a profit, which could eventually be used to lay claim to even more sunlight? Further, if none could claim the sun, yet it were possible to consume it, how quickly would its light be blotted out like the buffalo on the American plains? We call this the Tragedy of the Commons in some circles. I also propose that those on the Left are right, that everyone deserves an equal opportunity. Where I differ is that equal opportunity does not mean equal result. To demand equal result is unbalanced thinking.

For a Rightist perspective, one should work for their keep. Where I differ with the Right is that that one's Labor can be used to take away the use of the LAND, SUNLIGHT, or AIR from others without some just compensation. Everyone should have access to the SUN, the AIR, and the LAND to provide for themselves - to be driven by their own hunger to plant a garden! It is a type of birth right given to us by who or whatever made this world.

But, alas - life is not so simple - some time ago, we redefined property to include the LAND. We might as well have included the SUN. We have been taught our whole lives that the LAND is something you own rather than occupy during your sojourn here. Perhaps the Tribes of the Continent called America had a way of thinking, no one "OWNS" the land, which requires revisiting. In the event that you think these notions are completely off-base, consider that note worthy founding father Thomas Paine, whose works arguably helped fuel the revolution which allows us to enjoy at least some of our freedoms, wrote.

Consider his quotes as follows:

“The present state of civilization is as odious as it is unjust…The contrast of affluence and wretchedness continually meeting and offending the eye, is like dead and living bodies chained together.”

“Man did not make the earth, and though he had a natural right to occupy it, he had no right to locate as his property in perpetuity any part of it; neither did the Creator of the earth open a land-office, from whence the first title deeds should issue. Thus, Every proprietor, therefore of cultivated lands, owes to the community a ground rent (for I know of no better term to express the idea)... Each individual attaining the age of 21, should receive the sum of fifteen pounds sterling, as compensation in part, for the loss of his or her natural in heritage, by the introduction of land property…and the sum of ten pounds per annum, during life, to every person now living, of the age of fifty years, and to all others as they shall arrive at that age.” 

"But the earth in its natural state, as before said, is capable of supporting but a small number of inhabitants compared with what it is capable of doing in a cultivated state. And as it is impossible to separate the improvement made by cultivation from the earth itself, upon which that improvement is made, the idea of landed property arose from that parable connection; but it is nevertheless true, that it is the value of the improvement, only, and not the earth itself, that is individual property."

It's subtle: "it is the value of the improvement, only, and not the earth itself, that is individual property".

Did you catch it? Consider reading a bit more:

• See: Agrarian Justice by Thomas Paine
• Consider: Locke's treatise on property.
• Consider: What is Land Value Tax?
• Consider:The idea of property
• Consider:Why LIbertarians should support a land value tax
• Consider: Affordability ranking comparing Texas which relies more heavily on property taxes including land value, and California which relies heavily on income Taxes
• Consider this discussion of property and reason: [1]
• Consider this discussion of Thomas Jefferson et al on land: [2]:

Thomas Jefferson, letter to James Madison, dated October 28, 1785:

"Legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children, or to all the brothers and sisters, or other relations in equal degree, is a politic measure, and a practicable one. Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise."

"Whenever there is in any country, uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. The earth is given as a commonstock for man to labour and live on. If for the encouragement of industry we allow it to be appropriated, we must take care that other employment be provided to those excluded from the appropriation. If we do not the fundamental right to labour the earth returns to the unemployed."

"It is too soon yet in our country to say that every man who cannot find employment but who can find uncultivated land shall be at liberty to cultivate it, paying a moderate rent. But it is not too soon to provide by every possible means that as few as possible shall be without a little portion of land. The small land holders are the most precious part of a state."

Why

The idea behind the land value tax is to provide a fair opportunity for those entering this world. Note: I did not say result! Fairness for what people have labored to create. No one has right to your labor, yet no one has right to that which he did not create! See another article here for a deeper explanation.

How

From a practical perspective, many states already have an existing property tax system. The proposal is simple - identify a county, to run as a pilot program to test for feasibility - gradually reduce the taxation on structures and improvements to nil, and gradually raise the taxation on the land - provide some compensation to members of the county who do not have access to the land either through services or direct disbursement for counties with responsible citizenry. Include a sunset clause just in case it goes poorly.

For a more detailed discussion see this video series. Many taxation systems may employ an exemption system and the land value tax could and has incorporated exemptions on the basis of homesteading or agricultural usage - this may mitigate the negatives of this system.

Examples of Success?

On a national level: Denmark, Singapore, Hong Kong, Taiwan, laid the foundation of the land value tax in their system and appears to have reaped the rewards; however, they eventually turned towards income taxes and the like. See here for commentary and discussion.

Here is a sample quote:

"Apologists for state planning and state partnership with big business point enthusiastically to Pacific Rim Asia but overlook the fact that all these success stories began on a firm footing of land reform. The city-state Singapore, founded on Georgist tax principles, reached a tax rate on land of 16%. Hong Kong existed only on crown land, funding 4/5 of their budget with 2/5 of site Rent (Yu-Hung Hong, Landlines, 1999 March, Lincoln Inst., Cambridge, MA). The city uses land rent, not subsidy, to fund their new metro and in its suburbs grows much of its own food. Hong Kong enjoys low taxes, low prices, high investment, and often the highest per capita salaries. The city is often voted the world’s best city for business and the freest for residents. " 

Some towns in America have had success with one town, Fairhope, Alabama noting a key part of our current issues:

"There was fierce opposition to the idea of taxing 100% of the rental value of land on the part of railroads, mining companies, land developers, and others, and the single tax was never implemented. In the 1880's when the single theory was being promoted, the responsibilities of government were such that the revenues from a single tax on land could probably have paid all government obligations of the time. As years went by, however, the role of government has changed to the point where a single tax on land could not generate the revenues required to fund the expanded government activities."

Note: "role of government has changed to the point where a single tax on land could not generate"

Unfortunately, the concept is very difficult for some to wrap their mind around as they can not seem to differentiate land property from property. Detractors reading this last sentence are now saying: "Because it's a stupid idea". :)

Challenges

All systems have their challenges, here are a couple for the LVT.

• Some segments of the population may spend their inheritance on frivolous living
• It may not deal well with derivative financial instruments
• There may need to be homestead or other exemptions, similar to how 'unimproved' food is exempted in many sales tax systems.

Local Conditions

Local conditions may alter the value proposition or what makes sense. When I visited Iceland I learned that they have very cheap energy there. It has something to do with the island being on top of one big volcano.

The Game Plan / Next Steps

• Join the Facebook group if you would like to support efforts to implement at the state, county, or local level, particularly for Texas.
• Create a bill to adjust Texas property tax system
• Identify and recruit politicians to sell the idea in a pilot for an independent county, city, or school district.