Simplification, Tax Simplicity
Bill Batt: The
Fallacy of the "Three-Legged Stool" Metaphor
... This is why the principle of simplicity
is important: the more
complex the tax design, the more lawyers and accountants will find
loopholes, encourage the appearance of unfairness, and drive up the
cost of its administration. People know that with simple taxes other
parties are also paying their fair share, and all this enhances the
legitimacy and therefore the compliance of the tax system. ...
Bill Batt: Who Says Cities are Poor? They Just
Don't Know How to Tax Their Wealth!
People are frequently most concerned about the fairness of a tax, which
is typically measured according to both horizontal and vertical equity. Horizontal
equity means that those in similar circumstances will bear similar burdens.
Vertical equity prescribes that those with greater resources will pay more.
Although studies have yet to show this, land taxes are likely the most "progressive" of
any levy, as tenants bear no passed-through burden at all. Not
only does no household or office tenant bear any tax burden, locational
sites distant from the urban core, mostly homeowners and farmers, typically
their burden reduced. Vacant or underused lots in high value areas pick
up the difference, employing a design that employs an alternate criterion
taxing according to use. "Paying for what you take and not for what you
make" encourages efficient consumption of space and resources in an
automatic and non-coercive manner. The one-third of households that own
no land are relieved
of all taxes, and residential and non-residential property owners split
the rest. Farmers, whose land is typically of inconsequential value relative
sites in urban areas, are likely to pay little if anything even if they
are not already protected by other save-harmless provisions. By eliminating
on building improvements they typically enjoy savings just as do other
All this makes for a far simpler and more comprehensible system of taxation.
Land taxes are totally transparent, impossible to evade, and therefore
much more administrable. This further engenders the legitimacy of taxation
of government itself. What it also does is assure stability to the tax
system, for the reason that land values are not subject to the variations
that other tax bases frequently have. Indeed, the removal of economic
rent from locational sites discourages speculative bubbles and the related
cycles that are associated with them. This greater stability and reliability
is to the advantage of every sector of the economy — private, public,
and non-profit. ... read the whole article