… because he would have paid all of his taxes via a land value tax.
My Facebook feed is alive with people complaining that Trump hasn’t paid sufficient taxes over the past decades for which the NYT has obtained his personal tax returns (see Holy Grail attained: NYT gets hold of Trump’s tax returns). Essentially they are complaining that the real estate industry is not taxed properly. For the first 39 years, for example, depreciation may cancel out much of the rental revenue (and this clock can be accelerated by the sophisticated, as I learned from a friend who owns a huge office building and will pay no taxes for the first 15 years). As with Warren Buffet’s fortune, as long as assets aren’t totally cashed out, any tax on capital gains can be deferred for decades or perhaps centuries.
Maybe this is the nudge that the U.S. needs to move to what might be a much better and fairer tax, i.e., one on the value of land. This won’t discourage investment in nice buildings because the value of the building isn’t taxed. As the U.S. gets bulked up via immigration to a Chinese level of population density, land per person should become more scarce and valuable. Already we’ve seen that much of the fruits of economic growth in the U.S. have ended up accruing primarily to property owners (i.e., as soon as wages rise in a city, rents rise so that landlords soak up most of the increase and leave the workers with little additional spending power).
An advantage of the land value tax is that the U.S. could shut down its income taxation scheme, thus encouraging people to work more. Note that everyone who isn’t homeless, unhoused, or living in a car would end up paying the land value tax directly (homeowner) or indirectly (renter). It is also easy for governments to collect property-based taxes. The government knows where all of the land is and who owns it. In the hysteria around Trump and his taxes, one thing that I haven’t seen mentioned is the extent to which the hated dictator has paid 50+ years of property tax on the various properties that he owns. According to the NYT, Trump is an arch criminal and a mastermind at tax evasion (so much so that the IRS hasn’t actually changed his tax liability, though supposedly such as finding by the IRS will come any day now). Yet there is no indication that Trump or his companies have managed to escape paying property tax every year.
What’s not to love about a tax that even Donald Trump is not smart enough to avoid?
(A federal land value tax might be awesome for redressing income inequality. Wealthy coastal elite states have a lot of valuable land so they would pay more than states where median incomes are low. Uber rich Californians who may be paying almost nothing in property due to Proposition 13 could finally be taxed on the rise in land value to which they contributed nothing.)
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But how exactly are you going to measure value of land?
SK: It is already being done for property tax assessment. There is a whole professional industry for people who appraise the market price of land!
(A typical property tax bill, at least here in Maskachusetts, includes an estimate of the value of the unimproved land and also an estimate of the value of the structure(s) on the land. So the land value tax could be adopted overnight here in MA. Just raise the rate on the land and cut it to zero on the structures part.)
But what if the federal government can print an unlimited amount of money and the value of the dollar falls through the floor as a result? If every tax dollar people collect is worthless in the United States, because the properties themselves are worthless, how does this pay for anything?
As far as I understand it, MMT is the best way anyone has ever come up with to devalue real property by increasing the money supply with no limit. People who pay “taxes” on the their property based on some assessed value are just throwing money into a toilet where the values of the dollars they pay in taxes just diminish until they’re worth nothing.
I’m not a “gold bug” but I do know that when my father graduated from College, an average person could buy an ounce of gold in about a month from their earnings. Now they can buy almost nothing, particularly because they’re all in debt and earning $12.50 an hour or less. So if we devalue the currency even further, they won’t be able to buy a grain of it.
I think what I’m saying is: if the federal government can print money without limit, what’s the real value of the property? How does anyone assess that in a timely and fair way? You can’t, because it depends on whatever the government decides to spend, which is up to the whims of our politicians. So what you thought you had is worth nothing.
Since everybody wants MMT now, I think this means that you can have all the people in the world assessing “property value” and it means just about zilch. So why pay it?
I don’t know, Alex, the median household earns around $63k per year in the US, so at $5k per month and gold at $1900 per ounce, looks to me like the median household can buy 2.6 ounces, which is better than the ounce you cite.
If U.S. currency loses value, how does that make a land value tax worse than the mishmash of taxes we have right now? If the dollar is worth less to the government, the value of income tax receipts would also be lower. The only difference that I see is that income tax can be collected on U.S. citizens and Green Card holders who live outside of the U.S. and earn money in foreign currency and/or residents of the U.S. who own foreign assets and receive dividend checks here.
And what’s the point of saving or having anything that can convert into “dollars” when the value just keeps decreasing? Some tax assessor can say: “Your house is worth 5 million dollars, but six months from now it’ll be 10 million dollars.” At that point what do you own that has any real value? Gold? Guns? Drugs? Women in a cage? Sounds a lot like it.
While dollars may be depreciating, the real value of land, gold, etc remains the same. So what anyone with a clue does is avoiding holding any significant amount of cash.
The real isses with money printing are progressive tax rates: more and more working poor and middle class are forced to pay taxes at rates once reserved for “the rich”; and second is eventual loss of reserve currency status which allowed US to leach off other countries by depreciating money. The second part is really dangerous as it can trigger complete currency collapse with resulting economic destruction.