Wealth and Want
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Taxing Income

Georgists and the "starve government" folks do agree on one thing: both believe that it is wrong to tax wages.

Georgists, however, are not opposed to all taxes. In fact Georgists believe that society and the economy will actually improve if we apply the right taxes, just as it will improve if we remove the perverse taxes.

Most of us suspect that the "starve government" folks aren't prepared to accept that there actually are taxes that promote the common good. (We're willing to be surprised.) Most Georgists, I suspect, believe that the "starve government" folks are not particularly interested in the common good and/or the well-being and prosperity of society as a whole.

Certain things are inherently private property: wages and interest. Certain things are rightly common property: land and natural resources and the social surplus. We ought to tax the privatization of common property — fully — before we turn to taxes on that which is rightly in the private realm! Therein lies both justice and sanity.



Ted Gwartney:  Estimating Land Values

While the major argument for raising public revenue from land rent and natural resources is because it is equitable and fair, it is also the most efficient method of raising the revenue which is needed for public facilities and services. Land is visible, can't be hidden and its valuation is less intrusive than valuations of income and sales. Taxes on labor and capital cause people to consider alternative options, including working with less effort, which produces less real goods. For example, a tax on wages will reduce after-tax net wages and weaken the incentive to work. A person might be willing to work hard for a wage of $20 per hour, but decide to drop out if the taxes take $8 and the net wage is only $12 per hour. Economists claim that present taxes account for a 25% loss in production in the United States. Production and consumption would be greatly improved if public revenue came primarily from land rather than a wage tax. The same would occur when buildings and machinery are taxed. The tax on building reduces the quantity and quality of buildings produced. A tax on sales, commerce or value added reduces consumption, production and net wealth. Sales tax evasion in the United States has exceeded 30% in recent years. .... Read the whole article

Bill Batt: The Fallacy of the "Three-Legged Stool" Metaphor

Contemporary economists and conventional tax theorists well recognize that taxing Labor and Capital is detrimental to economic vitality — politicians thrive on repeating this ad nauseam.  Currently the Republican party candidates seem best able to exploit resentment about the negative impact of taxes.  But they are not alone in failing to appreciate the nature of tax shifting.  What all fail to realize is that there are notable exceptions to the rule that taxes are oppressive: any tax imposed on an inelastic base — that is, any form of Land — constitutes no distortion or excess burden whatsoever.

Far from spreading the burden of distribution over a wide array of  tax bases, the ideal tax, then, should be imposed solely on those factors of production that form an inelastic base, i.e., that constitute forms of Land -- whether they be locational sites, natural resources, the spectrum, time slots, or others as they may arise in the future.  Land, in any of its forms, is totally inelastic.  Will Rogers in his pithy way said it well, "Buy land.  They ain't making any more of the stuff."  Mark Twain said it too. Read the whole article

Mason Gaffney:  Full Employment, Growth And Progress On A Small Planet: Relieving Poverty While Healing The Earth

By loading the Federal tax burden on labor, while sparing capital, Congress creates a universal bias for cities and counties to see purely proletarian labor as a “fiscal deficit generator,” a parasite to repel, while capital and housing for the rich generate local fiscal surpluses. The resulting local biases toward selective growth policies are well known, but most advocates of housing for the poor are merely hacking at the branches of evil, ignoring the roots in Federal tax policies. Read the whole article

Fred Foldvary: Underprivileged or Rights-Deprived?
Poor folk are often labeled "underprivileged" and richer folk are called "privileged." For example, there is a book titled "One Nation, Underprivileged: Why American Poverty Affects Us All." But "privileged" and "underprivileged" are confused and misleading expressions. If you think the poor are "underprivileged," then you don't really understand poverty.

What is a "privilege?" The term originally meant "private law." A privilege is a special advantage or prerogative or immunity or benefit given only to some people only because they have power or are favored by those with power. If everyone is entitled to something, like freedom of expression, or if everyone may obtain an item such as a passport with the same rules applying to all, then it is not a privilege but a right.

Whether a rich person is "privileged" depends on how he got the money.  ...

So if a person is poor, it is not because he is lacking in special protections, subsidies, and other privileges. A person is usually poor because he has been deprived of the natural right to work. Governments world-wide impose barriers between labor and productive resources, keeping some workers deprived of labor and others who do work deprived of their earnings from labor.

Taxes on wages create a wedge between the cost of labor to employers and the take-home pay of the worker. More costly labor results in less employment. Taxes on the income from capital goods and on the sale of goods has the same effect. There are unemployment taxes, disability taxes, and payroll taxes that increase the tax wedge. On top of that, there are minimum-wage laws that prevent the least productive workers from getting hired. There are permits, zoning, and other rules and costs that also prevent some workers from becoming self-employed.

Deprived of the full natural right to peaceful enterprise and labor, and the natural right to fully keep one's earnings, the poor have little or no income, and depend on charity and governmental assistance. To call them "underprivileged" is a lie. The rights-deprived poor do not need privileges. They just need government to stop interfering with their right to work and save! ...

The really underprivileged folks are all consumers, taxpayers and those who are restricted from peaceful and honest practices or have to pay extra to the government while others are unrestricted and non-taxed. These people lack privileges which others have. The proper remedy is not to expand privileges, but to eliminate all governmental privileges. That is why libertarians and geoists alike have the motto: "Equal rights for all; privileges for none!"Read the whole article

 
The Most Rev. Dr Thomas Nulty, Roman Catholic Bishop of Meath (Ireland): Back to the Land (1881) 
I have already shown that the land of every country is the public property of the people of that country, and consequently, that its exclusive appropriation by a class is a substantial injustice and wrong done to every man in that country", whom it robs of his fair share of the common inheritance. The injustice of this appropriation is enormously enhanced by the fact that it further enables the landlords, without any risk or trouble, and in fact makes it a matter of course for them, to appropriate a vast share of the earnings of the nation besides. They plundered the people first of God's gifts in the land, and that act of spoliation puts them under a sort of necessity of plundering them again of an enormous amount of their direct earnings and wages. The line of argument that leads directly to this conclusion seems abundantly clear. ...

Now a system of Land Tenure which thus despoils the people of a nation of a vast amount of their earnings, which transfers a valuable property which they have created by patient, painful and selfdenying efforts of their labour, to a class who do not labour at all, and make no sacrifices whatever, can, I think, be fairly characterised as a system of national spoliation. The hardworking, industrious masses of the nation are taxed twice, and for an enormous amount each time. They are taxed first for the benefit of the owners of the soil, to supply them with all the comforts, enjoyments and luxuries which they desire, and are taxed again to the amount of eighty millions annually for the government and defence of the country.  Read the whole letter

 

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... because democracy alone hasn't yet led to a society in which all can prosper