Top Ten Arguments for a Land Value TaxA land value tax is a tax on the value of all the land a person owns, excluding any improvements on the land, such as houses. A land value tax isn't a new idea. It was proposed by economist Henry George in the 19th century, but it is now gaining more and more support by economists. Here are ten reasons why we should eliminate all our taxes and replace them with a tax on land.
Right now, we have income taxes, payroll taxes, sales taxes, capital gains taxes, corporate income taxes, etc. Along with these taxes, we have hundreds of deductions and loopholes, and a large and bloated IRS that invades our privacy. Taxes are too complicated. Adam Smith said that the perfect tax system would make paying taxes simple and painless. Our system isn't like that. Under a land value tax, here's how you would pay taxes. One, find out how much your land is worth. Two, find ten percent of that. Three, cut a check of that amount to the federal government. You're all done for the year. No audits, tax returns, tax filing, tax forms, etc. It would make paying taxes simple and painless, just like Smith advocated.
All Americans, even the rich, would receive a tax cut. The average income in the U.S. is 40k. The average worth of an acre of land is 5k. With a tax of ten percent, that person would only pay a tax of around 1%. That's a huge tax cut.
Right now, tax avoidance is very common. People keep their wealth offshore, offshore jobs, buy items from states with no sales tax, etc. With a tax on land, there's only one way to avoid the tax, which is to sell your land. That's the reason why everyone gets a tax cut but yet we still raise enough revenue. It's nearly impossible to avoid.
Most taxes hurt the economy. Income taxes reduce the motive to work, capital gains taxes reduce the motive to invest, sales taxes reduce the motive to consume, etc. Even if you had a land tax of 100%, it would do very little damage to the economy. In fact, it might even help the economy, because it would encourage people to use land more efficiently, and to sell any that they do not truly need.
Henry George stated that land belongs to all of us collectively. Humans didn't create land, so it belongs to all of us. Just like how fire and wind belong to all of us. They can't be privatized. However, the government shouldn't take land and distribute it, like in communist societies, because the government can't own land either. After all, government is made of people. Therefore, George stated that while land can't be fully owned, it can be rented. You can buy land, but because land is a finite resource that belongs to all of us, you must pay the community compensation for using the land and excluding other people from it. Therefore, if you don't really need the land, you would be discouraged from buying it. This would cause land to be used more efficiently, which will help the economy and cause less homelessness.
I don't know many middle class families that own a million dollars worth of land. I also don't know many rich people who own land that is not very valuable. Therefore, a Land tax would be progressive, ensuring that the people at the bottom pay less tax than the people at the top.
Imagine this scenerio. You're homeless, but have a decent amount of money. Just enough to buy a modest piece of land and a modest house. However, there's no vacant spots. You find this field of land that looks vacant, so you check it out. No one lives on it. So, you begin to settle down. A couple hours later, a guy comes by and commands you to get off his land. You tell him that you saw no one living here. He tells you that he personally doesn't live here. He is just waiting for the value of the land to go up so he can sell it for a profit. Now, does this guy have the right to exclude you from his land that he doesn't even use? He absolutely does, even though he is kind of a jerk. However, if he truly wants the land, he should pay you compensation, to help you with your basic needs. Under a tax on land, he would have to pay taxes on that piece of land, and if the land is turning up a mediocre profit, he would have to give the land to you.
Right now, if someone wanted to go onto an environmentally stunning area and build factories there, they can. Under a land value tax, they would still be able to, but they would only buy land that they needed. This means that people would use less land, which would either allow others to use it, or leave it alone, protecting the environment. It's also worth noting that most Georgists also support implementing a carbon tax, and a tax on resource extraction.
No more IRS, AMT, or may other of those silly acronyms. They would vanish under a land value tax.
Right now, because our tax system is so complicated and inefficient, illegal actions such as fraud, bribery, money laundering, etc. pop up. Under a LVT, there would be a lot less corruption in the country.