Wednesday, February 10, 2010

US debate on land value tax /Greek crisis

Greek retailers are complaining about a new rule: they are expected to give a receipt for every sale, however small. See The Times today (1o Feb).  Roger Boyes reports on the practical problems of Greeks as their country teeters on an economic precipice. The  government is also going for rich tax evaders as well as shopkeepers.  It seems that the average family pays out 1700 euros each year in bribes. No wonder they avoid taxpaying. 

In Connecticut US, read the debate that is running about land value tax in New London. See website. Land value taxes are probably the least avoidable of all taxes. Establish  a land registry of ownership, update values regularly and the owner's liability is known for all to see. Refusal to pay would involve a charge on the land when sold or even a forced sale for persistent refusers.  The reduction of taxes from such activity as retailing and ordinary work should be mirrored by the tax take from land values.  

No land owners of any sort create the land value that their house or office sits on. The success of a society does that. So the land should be charged with public tax needs each year (monthly instalments acceptable - like income tax 'pay as you earn'). Cut out income tax and the sums would equalise for most people, and in countries like Greece a whole lot of bureaucracy and littering receipts would save money and lower taxes a bit. Land tax is deemed the least damaging tax for an economy - so more gains there too.  Bribery is different though - not sure what to do about that. Perhaps with more money around from lower taxes bribes would rise? Oops.  Ask a Greek.   

People demanding bribes have power over something someone badly wants, but which is rationed. An public official is trusted to manage public goods fairly according to instructions.  It is stark-staring corrupt if a man needs an envelope packed with money before he lets your relative occupy a publicly-funded hospital bed. The land market (including every homeowner) operates as a monopoly because land is vital for life - we all need it. Landowners are operating through a monopoly - a rationed vital resource - more 'polite' than the above corrupt official, but just as pernicious.  The official takes value that he had no part in creating. Just like land value accrued by landowners.     

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