The Real Problem with a Progressive Tax Structure [W:103]

[austrianecon]

Smith is NOT arguing for a property tax.
Rather he argues, specifically, for a tax on Land Rents, & generally, for a tax on Economic Rent, of which Land Rent is but one form.

Smith specifically states in his argument those with bigger homes should pay more. From Adam Smith himself: "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

So it wouldn't be a tax just on land rents. Rather land and house rent tax. It's another from of an Ad valorem tax, aka Property tax.

 

[austrianecon]

He did not.

He argued for a tax on Land Rents.

He did believe land should be common property. If you argue for the economic rent of land should be shared by society rather than being owned privately then you are arguing for property to be for the common.

 

[austrianecon]

A Land Rent Tax (Economic Rent Taxation in general) taxes privilege not work.

A privilege that does not exist today.

The tax falls only on income derived from privilege.

Again the privilege does not exist today.

For example, public infrastructure spending increases real estates prices allowing the owner to benefit without exerting any effort or work. This unearned increment would be the subject of an Economic Rent Tax.

Public infrastructure spending doesn't increase real estate prices in old developments, rather home improvements and upkeep do. Repaving a road that has been there for decades and paid by 10xs over by current property taxes is not an added value as the cost to repave that road has already be paid by past taxes. Future taxes will pay for the future repaving.

When the "privilege" doesn't exist anymore it actually targets those who are of modest or even lower stature today. For example.. all the public improvements (roads and water) made in a new housing development being build for middle income families costs them in the purchase of the home and the taxes each year for the property. It'll take them years to recoup the costs of what should be a naturally neutral for them and the State. But with the increased cost passed to them on the front end (buying of the home), they paid for it in increased costs on their mortgages.

If, however, the owner invests in making improvements on the property that increases real estate price & result in gains, these gains, being derived from work, would not be subject to an Economic Rent Tax.
It encourages production & discourages privilege (rent seeking).

An Economic Rent Tax does NOT add to price, deter production, distort market mechanisms or otherwise create deadweight losses the way other taxes do.

I never said such thing. What I did say was it's regressive for first time home buyers or those who don't improve the land as quickly which is the middle and poor class.

 

[imagep]

Could someone else explain this mythical taxation = violence logic?

It's something that conservatives say, when they are pretending to be passivists.

 

[Vilhelmo]

A privilege that does not exist today.

Economic Rent does indeed exist.

I think you need to look up the definition of Economic Rent.

 

[Vilhelmo]

He did believe land should be common property. If you argue for the economic rent of land should be shared by society rather than being owned privately then you are arguing for property to be for the common.

No.
Economic Rent Taxation doesn't affect private property.
If you think it does then you must also think that Adam Smith advocated the abolition of private property.