I left a comment on a thread at HPC concerning an article in which members of The Tea Party expose themselves as Faux Libertarians, aka Home-Ownerists, which prompted this admission by Capitalist: "I'm completely lost on the notion that people outside government can collect taxes themselves"
For posterity, I replied thusly (tidied up slightly):
I have explained to you before, rents from land (or radio spectrum, mining rights etc) are just privatised tax collection.
1. The government creates and protects the right to 'own' land
2. Land 'ownership' is a contract between the individual land 'owner' and society in general, giving one individual special privileges relative to all others in respect of something that nobody in particular has created. It is not like a car which is the result of a mutually beneficial contract between an individual customer and a specific factory
3. The govt also protects the right to broadcast at a particular frequency, to drill or mine for minerals etc.
4. Therefore, anybody who derives a net profit from renting out land (as distinct from renting out the bricks and mortar on it) or makes super profits by having exclusive permission to broadcast at a particular frequency is in practice a privatised tax collector. Without the force of the government to back up these privileges, the 'assets' would be worthless. 'Super profits' can be measured by the price for which you can sell the exclusive right to broadcast at any particular frequency.
5. That is quite different to e.g. a car, which you can take abroad with you. The government has no part in creating the value of that car*. If the government decided that all and sundry were allowed to broadcast at 95.8 FM, the value of Capital Radio would plummet; but if the government said that more car manufacturers were allowed to sell cars in the UK, this would not affect the value of the car that you own.
* No doubt some smart arse will say "Ah, but doesn't the government, i.e. the police, protect your legal ownership aka right to exclusive possession of the car?" Well, in theory yes, in practice no. What guarantees your ownership of the car is the fact that you lock the doors, park it somewhere safe etc. In practice, the police recover relatively few stolen cars, and those they do recover are often write-offs, so this is dealt with by entirely private insurance.
In any event, even if it can be argued that the government helps to protect your legal right to the car, it certainly does not create the car, and neither does society in general create it, and neither is the car a gift of nature. And nor can you double the value of your car by driving it from Leeds to London, which would be the case if you could physically move your house from Leeds and plonk it down in London somewhere.
Thursday, 9 December 2010
Privatised Tax Collection
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9 comments:
The government does, of course, charge for radio spectrum, intellectual property rights, etc.. Land is probably the only thing which is very lightly taxed!
BE, yes, in that respect, the UK government has got it right in many ways - oil extraction licences in North Sea, auctioning off 3G licences for twenty years etc. But as to radio spectrum, the right itself is very valuable, ergo, the tax paid is 'too low'.
The 20% income tax on royalty income is fair play, as far as I can see. It's a fair charge for the protection that copyright owners enjoy (could argue for higher or lower %, who knows).
I'm not entirely convinced by your "cars in practice" counter-argument. What if it was my Picasso original? I'll bet the police would get it back then. It isn't the police that define whether something is my property or not.
Land is continuous, therefore the only way to sell it in discrete chunks is to have some external authority defining were those chunks are. Without that authority my neighbour (or anyone else for that matter) can simply move the boundary. Who is to say what is and isn't his? The fact that that external authority is necessary for land to have an owner means that it is special compared to most other property.
It's not just land that is "special" -- copyrights, patents and trademarks (and your favourites: spectrum and mining rights) are all possible only if there is state enforcement and I think there is a reasonable argument to say that there should be an LVT equivalent for them (one might argue that it is currently income tax, but that wouldn't be true in an LVT world).
I've just reread the above, and realised that I have made my point dreadfully. Please ignore.
OP, in practice, valuable paintings are usually not 'stolen', as such, they are 'taken hostage'. The thieves usually contact the insurance company or the owner after a couple of years and negotiate a ransom, usually ten or twenty per cent of the stated 'value' of the painting.
As to the police getting your Picasso back in one piece, forget it.
In any event, the government did not create the Picasso at the stroke of a bureacrat's pen (although to be fair, the Nazis should have been given credit for inspiring La Guernica).
OP, please ignore my previous comment.
There's a hint of sentimental naturism in your "something that nobody in particular has created". It was created, in part, by human action, it's just that much of that action occurred so long ago that we've no idea who did it. So, some neolithic johnnies cleared woodland to get some pasture or arable; we don't even know how they cleared the woodland, never mind who did it. It was fenced or hedged, and drained, defended from the sea, or a river, or just enemy action, bought, sold, bequeathed and inherited, and you end up with "land" fit for current uses.
In a way this is just a nitpick, brought about by my contempt for sentimentalism. Carry on!
D, me? Sentimental? As to this: "It was created, in part, by human action"
Location values are created almost entirely by human action (or human inaction, in the case of beauty spots). Presence or absence of railways, roads, local shopping or employment opportunities, how good the local state school is, what the crime rate is, that's what decides land values.
The point is that it was not the current registered freeholder of any site who built the railway, the road etc, it was 'everybody else'. And it is the land 'owner' who in turn is enjoying a government protected privilege vis a vis 'everybody else'.
Yep, the cars value is not really affected by what other people do around it, unlike land.
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