Article by Jazz Shaw in HotAir
The socialist dream of the "land tax"
Here’s something a little different for you this afternoon. Hearing progressives like Bernie Sanders and Elizabeth Warren lecturing the country about the need for a (likely unconstitutional) “wealth tax” is nothing new. There have been plenty of “eat the rich” plans proposed to address what activists see as the “problem of some people having too much money.” But I ran across a slightly different version of these redistributionist dreams today in a column at The Editorial Board written by Polly Cleveland. It caught my eye, partly because of the long and rather laborious title, “What if we replaced all federal levies, including the income tax, with a tax on land?”
Most of you who are already familiar with the ongoing tug-of-war between free-market capitalism and redistributionist socialism can likely deduce at least half of what would follow and form an opinion just from the title question. But I hate to miss out on a good scolding so I dove in to get the details. Cleveland launches into a brief history lesson starting in the 19th century, featuring the evils of wealth-holders ranging from railroad land tycoons to oil barons, moving on to the depression era of the 1870s. The conclusions reached focus on the idea that the rapid accumulation of wealth primarily creates inequality since it is not distributed equally and the imbalance can lead to economic collapse.
The author then glowingly recommends an 1879 book by San Francisco journalist Henry George, who argued for a complete reformation of the tax system. He would solve society’s problems by essentially removing the burdens of all governmental taxes and fees from the general population and install a tax on all landowners as the government’s sole source of revenue. What follows is a brief portion of the author’s reasoning as to why this would work out simply wonderfully.
George’s remedy was equally simple: shift all taxes onto land and use the revenues for public benefit.
His audience easily understood. In his day, state and local governments relied largely on property taxes. Since only a minority of citizens owned property, everyone rightly understood property taxes as wealth taxes, much of which fell on corporations like the hated railroads.
Taxing land meant leaving out the buildings and other improvements and raising rates to cover the difference. The obvious intended effect would be to penalize those who held good land from use.
In California, that would force absentee speculators to sell off their land to small settlers. The tax would also pop speculative bubbles.
Who knew it could be so simple, right? Just remove all financial burdens from everyone else and take all of the money needed to fund the government and many expansive social safety net programs from the evil bastards who own land. At first glance, it probably does sound like a vision for a socialist paradise.
There are a couple of immediate problems that are already jumping to mind for any of you who didn’t cut class in school when the basics of the economy were covered. First of all, the amount of money that government at all levels collects in the form of property taxes is a pittance when compared to the total cost of running the government. To reclaim all of the other lost revenue, property taxes wouldn’t have to go up “a little.” They would skyrocket catastrophically.
And who would bear the brunt of those massive increases? Certainly, there would be some of the evil fat cats like Elon Musk and the corporations with Wall Street valuations that begin with a “B” who would take it on the nose… initially. But as recent data shows, of all residential properties in the country, more than 68 million of them are single-family homes. Few people who are not among the fabulously wealthy simply purchase their property with cash. The vast majority pay into mortgages for decades and the value of their land comprises a significant portion of their “wealth.” (That’s because of the insane types of interest assessment built into home mortgages that would probably be illegal if more people understood how they work.) It’s also worth noting that many of the economically disadvantaged workers in the country who are renters still harbor dreams of someday owning their own home. This plan would likely be a hard sell with them also.
Other people who own land but are far from rich are family farm-owners. Yes, there are fewer of them today and a lot more farming is done by corporate giants, but plenty of small farm owners are still around. Most can barely pay their annual bills without government subsidies. They are “land rich” but cash poor. Imagine telling them that their property taxes were about to go up twentyfold.
Jacking up those property taxes as proposed would put the vast majority of those individual families out of their homes and farms. Who would take control of the property? The banks would take the homes and the food industry giants would gobble up the farms. The same would apply to all of the mom-and-pop small business owners and landlords. Nearly everyone would be out on the street, looking for someplace to rent from the aforementioned fat cats. And all of the jobs they create would go away with them, leaving everyone with no alternative other than to work for Walmart or Tesla.
The one class of landowners who would be able to shoulder the burden of funding the entire government would be the massively large corporations. But they don’t do business at a loss. They would simply raise the prices of all of their goods and services in an equally massive fashion until they reached profitability again. So all of the non-landowning renters that would then make up 98% of the country would be hard-pressed to afford to pay for anything.
But hey… perhaps that’s the entire point of Polly Cleveland’s dream. Everyone would finally be equal, right? Equal in poverty.
https://hotair.com/jazz-shaw/2022/02/02/the-socialist-dream-of-the-land-tax-n445887
