Absorb thoroughly. Twist.
Let me first translate for all the thread's loyal readers what I see to be your point: Factories actually are taxed with an LVT. Both the resources used to build and also to maintain and operate them -- concrete and metal and whatever -- are taxed, back when they're in the ground.
Originally Posted by MattButler
That's the big point, and then the grand finale is: "So it turns out not only does LVT efficiently allocate resources to which factories get built, it also allocates resources efficiently to those which wish to remain in operation." Umm, no, let's be precise: it turns out that an LVT taxes resources. Well bully for the LVT. That's not a great selling point for me. It's not that hard to set up a system that taxes raw materials -- you just start stealing from people based on their ownership of raw materials. Most saliently: it remains utterly beyond me why one would equate being taxed with being efficiently allocated. Thing X is taxed... that means Thing X is efficiently allocated? What? Because you taxed it? It's just totally ludicris.
The only reason why you think you can get away with it, why you think you can lay a burden on landowners without getting any blowback, that sole reason comes to one word: Fixed. You think you've got them under your thumb. You think there's nothing landowners can do about the tax. There's this fixed quantity of land, and it can never ever desert you, and so even if one landowner says "rats to you" and quits, another one inevitably will come to take his place. Because the supply of resources is fixed. Someone's going to own all of it; if not one guy, then another. 'Cause it's fixed. "By Definition"!!! And that's that.
The point of my last post is that it's not fixed.
The factory's not fixed. Just as you said, if you tax it bad enough, it will be abandoned. The whole factory building could even be hauled away, I suppose, to greener pastures in non-taxing jurisdictions.
The land's not fixed either. Set your LVT high enough, and no landowner will be able to make a profit on it. The land will be abandoned. Top soil could even be scraped off and hauled away, I suppose, though this is even more unlikely and unfeasible with land than with the factory. In any case, even though it's more difficult for land to be transported, it's not impossible at all for it to disappear... from the economy.
Taxation is a parasitic activity. You understand this, I think, when it comes to everything but land. Tax factories, or income, or whatever, and you're sucking blood out of your host. Do it overmuch and you'll end up with an empty ruined shell. Do it even a little and you're still sucking the health and vitality out of your host. Making the economy that much worse. What I'm trying to explain is that it's the same for land. Land is not a magic special category. The same principle is at work. Tax natural resources enough and eventually no one will be able use them profitably. You'll have fallow fields, ignored oil deposits, and unfished oceans as far as the eye can see. Tax them even a little and you're still draining that much life out of the economy, and that much life, satisfaction, and enjoyment out of the lives of the the individuals who would have otherwise benefited from the money going now instead to the political class.
Land is not fixed. Land can be taxed out of economic existence, just like a factory can be.
So then, you may say, the task of the LVT planner is merely to determine the right amount of tax wherein you take all the landowner's "excess profits" -- for Roy L., 100%; for you, 100% minus the average rate of return. Good luck with that. Omniwise bureaucracies have always proven so easy to create. At least you realize that if there's no rate of return then no one will invest their money in landowning. So you understand that that is too high. But even 90% minus avg. rate of return will remove lots of marginal resources from play. And even 10% or 1% is still draining the economy and distorting the market, and thus hurting people.
There's just no LVT that in any way increases efficiency. A 1% income tax wreaks havok on an economy. A 1% LVT wreaks havok on the economy. There's no end to the distortions, unintended consequences, blowback, lost productivity, and wasted wealth caused by either one.
Last edited by helmuth_hubener; 11-13-2011 at 11:48 PM.
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