how to fund infrastructure
I've been reading a collection of land rent stories published in respected British magazines. This little nugget caught my attention. When the British government extended the Jubilee railway line in London, it cost £3.5bn ($5bn). But it caused land values to rise by £13bn. Next time, the government should pay for it by taxing the land value increase. Landlords would benefit because, even after the tax, they still make big profits from the new transport link that otherwise would never be built. And everyone else benefits from the link itself. Everyone wins!
posted by Chris Tolworthy at 7:31 AM
2 Comments:
How is land tax much different than our property tax? If the value of our property goes up, so does our annual taxes. Our taxes, of course, adds the value of the land and structures into the equation.
The problem here (and I am sure it would happen there if implemented) is that the state goverment then adds other taxes here and there putting our kids, police and fire up as ransom, and you have a lot taxing avenues once again. They tried putting in a sales tax over and over, but it keep failing when put to a vote by the people, problem is they won't eliminate any other taxes in its place, maybe offer to lower another one. I am sure we will eventually have sales tax here added to every other type of tax imaginable. WE even have "sin" taxes, cigarettes are highly taxed for example
I agree that extra taxes muddy the waters. If one tax provides a benefit, it is easy for it to be swamped by the negative effects of other taxes.
I disagree with taxation in principle. Taxation is just theft. It allows a government to steal whatever it can get away with. However, I find myself reluctantly using the word "tax" when talking about land rent, because it makes the initial idea easier to understand.
Tax is unnecessary. Society creates wealth by adding good stuff like infrastructure. This wealth is seen in increased land values. This can be calculated objectively, and claimed back from the landowner who benefit - the landowner is paying rent for the use of society's good stuff. But society does not own my buildings or employees or anything else, so it has no right to tax them at all, in any way.
From a theoretical point of view, it is a question of elasticity and margins. By removing tax, we reduce the necessary profit margin, and so we can make more stuff. But this does not apply to land - land is inelastic, it is fixed, if we move taxes onto land we still have the same amount of land. So if we want to maximize wealth we should tax land and not the things we do on that land.
If the government wants even more money, it is free to offer goods and services in a free market with everyone else. A government has economies of scale that allow it to make a better offer, so it can easily make money honestly, in fair competition. It has no reason to steal money.
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