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Dan Sullivan on Taxes, Part One
On Thursday evening, Georgist stalwart Dan Sullivan, president of the Council of Georgist Organizations, gave a presentation over Zoom on various taxes; this is one of a series of talks, substituting for our usual in-person annual conference. The standards by which a tax can be judged are whether it is progressive, whether it correlates to benefits, its economic impact, its environmental impact, whether its collection is minimally invasive, and also minimally disruptive, whether it is transparent, whether it is difficult to avoid or cheat on the tax (except, perhaps, by behaving in socially desirable ways), whether it is decentralist, and whether it has a low implementation cost.
He went over various taxes, from income tax, to property tax, to land-only tax on surface real estate, to land value tax on mineral extraction, to sales tax and its cousins value-added tax and gross revenue tax, to tariffs, to real estate transfer tax, to per capita tax, to special taxes on alcohol and cigarettes, and so forth. His conclusion, unsurprisingly, is that land value taxation is either best or pretty good by all measures.
He quoted Upton Sinclair, who said that he no longer advocated the single tax (on land values), but many taxes, including a graded tax on land, higher on big landowners. People thought that the land tax would be rough on homeowners and small farmers, and Sinclair argued that land taxation wouldn’t touch the jewelry owned by the rich man’s wife, or other valuables, such as shares of stock, which the rich man owned. Dan Sullivan disagreed, and it was pointed out that if the rich man puts some of his land in his wife’s name, some in his son’s, and some in his daughter’s, while also owning mortgages which give him most of the land rent from properties which other people theoretically own, figuring out how to apply a graded land tax would be a nightmare.
Also, the rich man’s wife isn’t impoverishing anyone by wearing jewelry, whereas taxing jewelry would take away someone’s chance to make a living as a jeweler. Mention was made of a tax on the sale of yachts in late twentieth century America, which, before it was repealed, destroyed many jobs in the yacht industry.
Dan Sullivan regards the sales tax, VAT, and gross revenue tax as among the most regressive. They help entrench existing interests, because if someone starts a new business, he probably doesn’t make a profit the first few years, and doesn’t pay personal or corporate income tax, but does have to pay sales tax from the start. Dan also quoted a businessman as telling him, “You haven’t been through Hell until you’ve had a sales tax audit.”
To be continued.
He went over various taxes, from income tax, to property tax, to land-only tax on surface real estate, to land value tax on mineral extraction, to sales tax and its cousins value-added tax and gross revenue tax, to tariffs, to real estate transfer tax, to per capita tax, to special taxes on alcohol and cigarettes, and so forth. His conclusion, unsurprisingly, is that land value taxation is either best or pretty good by all measures.
He quoted Upton Sinclair, who said that he no longer advocated the single tax (on land values), but many taxes, including a graded tax on land, higher on big landowners. People thought that the land tax would be rough on homeowners and small farmers, and Sinclair argued that land taxation wouldn’t touch the jewelry owned by the rich man’s wife, or other valuables, such as shares of stock, which the rich man owned. Dan Sullivan disagreed, and it was pointed out that if the rich man puts some of his land in his wife’s name, some in his son’s, and some in his daughter’s, while also owning mortgages which give him most of the land rent from properties which other people theoretically own, figuring out how to apply a graded land tax would be a nightmare.
Also, the rich man’s wife isn’t impoverishing anyone by wearing jewelry, whereas taxing jewelry would take away someone’s chance to make a living as a jeweler. Mention was made of a tax on the sale of yachts in late twentieth century America, which, before it was repealed, destroyed many jobs in the yacht industry.
Dan Sullivan regards the sales tax, VAT, and gross revenue tax as among the most regressive. They help entrench existing interests, because if someone starts a new business, he probably doesn’t make a profit the first few years, and doesn’t pay personal or corporate income tax, but does have to pay sales tax from the start. Dan also quoted a businessman as telling him, “You haven’t been through Hell until you’ve had a sales tax audit.”
To be continued.