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Dan Sullivan on Taxes, Part Two
Apr. 22nd, 2021 12:13 amTo continue with the presentation Thursday evening (Thursday the 15th of April), Dan Sullivan said that taxes on alcohol and tobacco tend to be regressive, as do tariffs. The deed transfer tax is bad, because it poses an obstacle to transferring land (and other real estate) to the people who want to put it to its best use, while not taxing landowners so long as they don’t sell. A sales tax on necessities is bad and regressive, of course, as is a per capita tax, which hits the rich and the poor with the same tax bills.
The inheritance tax is disruptive. If a rich man has a portfolio of various stocks and bonds, his heirs can sell some of them to pay the tax, but if he has a business of his own, having to come up with money can be a problem. Dan Sullivan gave the example of a stadium-owning family, I think in Pittsburgh, where the patriarch hadn’t prepared by, for example, buying life insurance.
Any tax is regressive if the revenue is spent badly enough. For example, taxes to subsidize a sports stadium: the poor, who pay some of the taxes, watch the games at home or in a sports bar, on TV, while the well-off may buy tickets to the game, and millionaires can have their private boxes. This is a transfer of money from the poor to the rich.
In Pennsylvania, many poor communities have LVT in the form of a two-rate tax; the land value tax hits absentee owners.
There’s the ghetto effect: suppose that someone from a poor neighborhood goes to college and earns a good income (or possibly becomes a pro athlete). Living in a poor community, he’s hit with a high wage tax and building tax, since high taxes are needed to raise revenue in a place where most people have low incomes and cheap houses; therefore, he’s likely to move to a more prosperous town, where the taxes are lower. But with land value taxation, he wouldn’t pay as much for a plot of land in the poor town as in a rich town, so he’ll stay where he grew up, and contribute to the community, and help make the poor place better.
People criticize the property tax to fund local schools, etc., since poor communities need higher tax rates to raise less revenue, but that’s not really a problem with the property tax; it’s a problem with local taxes. To ameliorate the situation, at least some taxes should be imposed on a statewide or national level, and the revenue shared. (As I recall, Polly Cleveland chimed in on this.)
Dan quoted Dave Wetzel, who’s British, saying that the one good thing about a poll or per capita tax is that it got rid of Maggie Thatcher. When she tried to replace the rates (property taxes) with a poll tax, there were riots, and she was booted from office.
Cecil Rhodes in Africa wanted and got taxes on the natives, not so much to raise revenue as to force them to participate in the cash economy, and get jobs working in the mines, or for white settlers. There was discussion of how to treat indigenous people fairly. I suggested that even a land value tax, in that kind of situation, should be levied with payment in kind accepted, so as to be fair to people who didn’t want to sell their labor for cash.
The consensus was that there should be a per capita dividend (I agree). Indigenous people could live traditionally, and use their dividends to pay the taxes on their lands; or if they chose to participate in modern civilization more, they could do that.
The inheritance tax is disruptive. If a rich man has a portfolio of various stocks and bonds, his heirs can sell some of them to pay the tax, but if he has a business of his own, having to come up with money can be a problem. Dan Sullivan gave the example of a stadium-owning family, I think in Pittsburgh, where the patriarch hadn’t prepared by, for example, buying life insurance.
Any tax is regressive if the revenue is spent badly enough. For example, taxes to subsidize a sports stadium: the poor, who pay some of the taxes, watch the games at home or in a sports bar, on TV, while the well-off may buy tickets to the game, and millionaires can have their private boxes. This is a transfer of money from the poor to the rich.
In Pennsylvania, many poor communities have LVT in the form of a two-rate tax; the land value tax hits absentee owners.
There’s the ghetto effect: suppose that someone from a poor neighborhood goes to college and earns a good income (or possibly becomes a pro athlete). Living in a poor community, he’s hit with a high wage tax and building tax, since high taxes are needed to raise revenue in a place where most people have low incomes and cheap houses; therefore, he’s likely to move to a more prosperous town, where the taxes are lower. But with land value taxation, he wouldn’t pay as much for a plot of land in the poor town as in a rich town, so he’ll stay where he grew up, and contribute to the community, and help make the poor place better.
People criticize the property tax to fund local schools, etc., since poor communities need higher tax rates to raise less revenue, but that’s not really a problem with the property tax; it’s a problem with local taxes. To ameliorate the situation, at least some taxes should be imposed on a statewide or national level, and the revenue shared. (As I recall, Polly Cleveland chimed in on this.)
Dan quoted Dave Wetzel, who’s British, saying that the one good thing about a poll or per capita tax is that it got rid of Maggie Thatcher. When she tried to replace the rates (property taxes) with a poll tax, there were riots, and she was booted from office.
Cecil Rhodes in Africa wanted and got taxes on the natives, not so much to raise revenue as to force them to participate in the cash economy, and get jobs working in the mines, or for white settlers. There was discussion of how to treat indigenous people fairly. I suggested that even a land value tax, in that kind of situation, should be levied with payment in kind accepted, so as to be fair to people who didn’t want to sell their labor for cash.
The consensus was that there should be a per capita dividend (I agree). Indigenous people could live traditionally, and use their dividends to pay the taxes on their lands; or if they chose to participate in modern civilization more, they could do that.
