Article 1: Each person
right to decide whether and how to use his or her talents. Those who
are self-employed have a right to the full economic product of their
efforts. Those who are employed by others have a right to the full
amount of the compensation that their employers agree to pay them.
Thus Congress and state legislatures shall levy no tax on wages or
interest or spending. ...
Mason Gaffney: Cannan's Law
Article 3: All persons, in all
generations, have equal rights to natural opportunities, such as the
use of land, natural resources, and the frequency spectrum. Therefore
Congress shall place levies on states to equalize among states the
per capita annual value of access to natural opportunities, and to
compensate for the harmful effects of activities in states on other
states and on future generations. State legislatures shall place
corresponding levies on their subdivisions.
Article 4: Congress may place
levies on states to collect from states a portion of the benefits
they receive from national defense, national systems of
infrastructure, research of national significance, or any private
activity that has widespread public benefits. State legislatures may
place corresponding levies on their subdivisions. ...
Article 1 says
that we have a right to
what we produce: as workers, as entrepreneurs and as savers. Neither
Congress or state legislatures may tax this income, or our
corresponding spending. While they may not levy taxes on these
things, Article 3
says that Congress and
state legislatures are required to place levies on states and state
subdivisions respectively, to equalize the per capita annual value of
access to natural opportunities, to compensate for the harms that
activities in states cause for other states, and to compensate for
losses to future generations. Article 4
permits Congress and state legislature to finance activities that
have benefits beyond a single subdivision, but only by levies on
subdivisions, not by taxes on persons.
Federal taxation should bear
heavier on land income, and
lighter on wage and salary income, as in 1916. It was constitutional
then; it still is. The combination of a citizens' dividend and
income-tax reform would drastically rebalance local incentives. Cities
would compete to attract median people rather than, as now, to
repel them. This would not cause swamping of cities with people
because it is a zero-sum game in a closed system. Competition would
simply raise wage rates and lower living costs.
Congress should repeal the tax
exemption of state and local bonds,
a massive ongoing subsidy to local landowners. This repeal will be
challenged as an invasion of state sovereignty, but recall that
Congress had no trouble in 1939 repealing the tax exemption of state
and local employees. Would the courts find bonds to be more sacred
than payrolls? To find out, we only need a simple act of Congress
that would quickly be adjudicated.
The federal government should
review local zoning, and other
exclusionary policies, as barriers to interstate migration.
is a federal interest in
better tax assessment of land, to
keep buyers of used buildings from overallocating their tax "basis"
to depreciable buildings, thus arranging falsely to depreciate land,
and erode federal revenues. Something like a national board of
equalization is called for. The U.S. Census of Governments, with the
pioneering work of Allen Manvel and political support from Illinois
Senator and Economics Professor Paul Douglas, established the
precedent. While we're at it, let us outlaw the sequential
depreciation of the same building by successive owners, an obvious
The result of such measures would
be to restore the concepts of
dignity of labor, and the key role of income-creating investing (as
opposed to acquiring existing wealth and rent-seeking). ...
the whole article
Nic Tideman: Improving
Efficiency and Preventing Exploitation in Taxing and Spending Decisions
Of course, we are very far from public acceptance of geoliberal principles.
So the question arises of what might be
done within current political understandings to reduce inefficiency and exploitation
in taxing and spending. It is hard to know how much more than what
is being done might be done. Let me be on the imaginative
There is a proposal that tax increases
be allowed only with a two-thirds majority of both houses of Congress. That
has some merit, but it carries a risk of excessive deficits. It also allows
the existing level of taxation to go unquestioned. It would probably be
better to have a rule that every spending proposal must be approved by
a two-thirds majority of both houses of Congress to be enacted. Maybe three-fourths.
If spending is truly worthwhile, then, as Wicksell said, there is a way
of financing it that will secure the approval of nearly everyone.
The current trend toward returning functions to the states is a step in
the right direction. But it encounters understandable objections that poor
states cannot afford to do what they ought to do. Some form of revenue sharing
is needed. But it is important to have the right definition of which states
are rich and which are poor. The level of
well-being in a state is determined in part by the wisdom of its public policies. States
should not be penalized for adopting productive policies. Revenue
sharing should equalize per capita levels of natural opportunities (mineral
revenues, fishing rights, pre-development land rents, etc.) Replacing
the personal and corporate income taxes with either a flat income tax or
a national sales or value added tax would greatly reduce the excess burden
of federal taxes. (Excess burden is roughly
proportional to the square of the typical marginal tax rate.) But
almost all the gains go to the rich. Perhaps the flat tax could be combined
with a guaranteed income.
Even better than a flat tax or a national
sales tax, in my view, would be a return to the revenue system that was
apparently envisioned by the drafters of the Constitution in 1787. I mean
a rule that the federal revenue requirement would be allocated to the states
in proportion to their populations. The use of population as the
allocation device seems anachronistic in this era of concern for impoverished
regions. But the allocation could be corrected by an expenditure that equalized
per capita access to natural opportunities.
I see three important virtues in allocating the revenue obligation to the
- First, it gets rid of the IRS and its intrusions. (A national sales
or value added tax would do most of this, leaving only firms subject
tax man's scrutiny.)
- Second, it requires the states to compete in seeking ways of raising
revenue that do not reduce the productivity of their economies. The
competitive equilibrium is to raise as much revenue as possible from
charges for exclusive
use of land and other natural opportunities, and to tax labor and capital
only as a last resort.
- The third virtue is the likelihood that placing the revenue obligation
on states rather than on individuals would lead to more careful scrutiny
of the value of proposed expenditures.
With only fifty states and each state aware of exactly how much each spending
proposal will cost its treasury, I believe that it would be much harder to
secure approval for inefficient or special-interest spending. ... read the whole article
Fred E. Foldvary — The
Ultimate Tax Reform:
Public Revenue from Land Rent
The United States is a federation of states (and Indian-nation reservations),
with many government functions such as criminal law, education, and local
services provided by the states. Since the federal income tax was enacted
in 1913, taxation and authority have shifted increasingly to the federal
In 1902, federal taxes represented 37 percent of total revenue to governments
at all levels.45 By 2002, federal taxes represented 67 percent of the
government revenue pie.46 The share taken by state governments rose from
in 1902 to 21.5 percent in 1986. Local governments’ share fell
from 51.3 percent in 1902 to 13.7 percent in 1986.
The change in the share of tax revenues taken by each level of government
has occurred in large part because of the relative ease of increasing
income taxes at the federal level, and the relative difficulty of increasing
and state taxes. Taxpayers find it much easier to respond to changes
in state and local taxes, by moving to lower-tax communities. It is far
to avoid taxes imposed by the federal government — especially since
U.S. citizens are taxed even if they are abroad.
Revenue-sharing from the federal government to the states is, in effect,
a tax cartel among the states, collusion to tax the population and then divide
the funds among the states. Taxation at the federal level also encourages
spending by the federal government instead of the states, so now we have
federal departments and agencies for education, housing, health and welfare,
energy, and other fields that once were local, state, or private-sector matters.
Local and state governments, once willing to go along with the federal
tax-and-revenue-sharing scheme, are beginning to realize centralized
taxing brings with it centralized authority, dramatically reducing local
Revenue-sharing comes with strings attached: Local and state governments
must abide by federal government mandates in order to obtain the funds,
taken from their residents in the first place. Revenue-sharing allows the
government to sidestep the Tenth Amendment to the Constitution, which
provides that powers not specifically delegated to the federal government
to the people and the states.
Land value taxation would shift economic power back to state and local
governments. Land is suited to local taxation because — unlike enterprise, capital,
and labor — it cannot be moved. Land is also the logical source of
local public finance because it does not burden enterprise, so that entrepreneurs
don’t even want to run from it. Indeed, entrepreneurs welcome a
shift to land value taxation, not only because their economic profits
are not taxed
if all taxation is on land values, but also because land value taxation
reduces the price of land, so they do not need to borrow so much when
funds in an enterprise.
When public finance is based on land value taxation, government revenues
flow up, instead of trickling down from the federal government to the states
and then to local governments. Real estate taxes today are assessed and collected
primarily by county governments; under a system of land value taxation, funds
raised would flow up from the counties to the states, and only then to the
Land value taxation would create a decentralizing force, shifting or “devolving” power
down to local government in accord with the principle of subsidiarity:
that which can be most efficiently done by individuals or smaller jurisdictions
should not be done by larger or higher-level jurisdictions. Government
would then come under more observation and control by the voters, who
can monitor and alter local governments much more easily than remote federal
agencies. ... read the whole document