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0 pointsneilparikh6y ago0 comments

LVT is least distortionary tax, because you can't create or destroy land.

> Why should a low-margin supermarket which people need, occupying tons of space, pay huge taxes, while a tiny very profitable ultra-luxury boutique hotel pays only 5% of the taxes?

Because the supermarket is using more land compared to the hotel. Every bit of land the supermarket owns is land you and I can't use. It's only fair that the supermarket compensate the community for this, since the land could have been used for something else instead (like an apartment building, or an office building).

It's also not a given that the ultra-luxury hotel will pay less tax. It's likely that a luxury hotel will be in a more desirable area of town, where land values are higher, and so tax there will be higher.

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crazygringo6y ago· 1 in thread

That's an argument for pricing land according to market value, which we already have.

It's not an argument for why we should rely solely on a land tax in lieu of e.g. taxes on corporate profits, income taxes, or sales tax.

wnavarre6y ago

Why tax those other things? Is there a moral reason to do so?

I'd say there's a moral reason not to!

Is there a practical reason to tax those things? Not if the goal is to maximize government revenue!

If you tax land as high as possible -- at 100% of rent -- then it's not usually possible to increase revenues by taxing the stuff you mentioned. Doing so would almost invariably decrease the revenue the LVT raises by more than the revenue your proposed taxes would raise.

There are exceptions.

1) Certain non-traditional land like radio spectrum, minerals, pollution rights, parking, space on a congested highway, etc can and should be taxed.

2) Some luxury goods could be taxed. Whether or not they should probably depends on the situation and opinion. (By luxury goods, I mean goods that are valuable in part because other people don't have them. A cell phone is thus not a luxury good, for example, because the more people have cell phones the more useful your phone is. Luxury goods in the sense I mean are not merely "expensive" or "for rich people," though most luxury goods are.)

See ATCOR: http://www.wealthandwant.com/themes/ATCOR.html

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