David Bergland gives the purist-libertarian response as follows:
Isn’t taxation the only way to pay for necessary government services?
Libertarian: Taxation is immoral and indistinguishable from theft. We should replace taxation with voluntary methods of funding legitimate government functions. Besides, most “government services” can be provided by private sector business, charities, and other organizations.
This is a Big Subject and so has to be broken down into bits. My pragmatic view, for what it's worth:
Taxation is to pay for public goods (and merit goods)
There is no 100% agreement on what should be in either category. I think a reasonable answer is that public goods are defence; law and order; protecting private property rights; and, at a pinch, roads and transport infrastructure. Merit goods are decided by society and would appear to include education, health and social cohesion.
Taxation is (as a matter of fact) used to pay for vast amounts of waste and quangocracy, or 'pork barrel' spending
This should be stopped immediately. Work by the Taxpayers' Alliance and commonsense indicate that about 15% - 20% of government spending falls into this category, i.e. about £100 billion per annum. The two million extra taxpayer-funded jobs 'created' since 1997* could be scrapped with no damage to 'front line services'.
Taxes should disrupt the economy as little as possible
I am with Milton Friedman on this. The least bad tax is a tax on unimproved site-only land/location values. The next least bad tax is a low, flat rate of income/corporation tax (let's say, no higher than 30%).
Taxation is theft, but then so is, ultimately, private land-ownership
For this reason, and a million-and-one others, land value taxation is infinitely preferable to taxation of incomes.
Spending on merit goods should go with the flow of the markets
I (personally) am a big fan of taxpayer-funded education vouchers and health vouchers. Sure, raising the taxes to pay for them dampens the economy, but at least we should have competing providers. I also believe (I might be in the minority here) that a bit of redistribution and/or spending on social cohesion never went amiss. The least bad form of welfare is universal, non-contributory, non-means tested, non taxable benefits, i.e. a Citizen's Income.
Isn't a higher tax-free personal allowance better than a Citizen's Income?
Perhaps it is - taking my suggested figures of a CI** of £60 p.w. (=£3,000 p.a.) and a flat tax rate of 30%, everybody would be allowed to choose between a) taking the CI and paying 30% tax on all their income OR b) waiving the CI and having a £10,000 tax-free personal allowance, thus saving £3,000 p.a. in income tax.
Would a Citizen's Income be enough to cover housing costs?
Nope, certainly not. Housing Benefit is a direct subsidy to landowners and so just distorts the market for those who don't qualify. I envisage a universal CI of about £60 p.w. (for working age adults), if unemployed households need to pay rent, then instead of an extra £100 p.w. Housing/Council Tax Benefit and so on, the State should offer them Workfare jobs paying £100 a week, doing whatever they can that is of some benefit to society/the taxpayer.
* Multiply the % figure for "Public Admin, Education, Health" in column L by the total number of employees in column B of this.
** Half that for children, double that for people over pension age, let's say.
Once I dipt into the future
3 hours ago
7 comments:
I don't see how land ownership is theft. Theft is when you take someone else's property without permission. Nobody owned the land before somebody put up a fence and started owning it, so they never stole it. When you buy the land from them it's not theft either because you have permission.
There are two types of tax I support:
1) Negative externalities taxes e.g. a tax on anything that pollutes the air. The tax should equal the sum needed to neutralise the effect or otherwise make up for the damage plus the administrative costs of taking the tax and spending it, so in the case of air pollution it would be however much it costs to plant however many trees needed to soak up that pollution, or the cheapest other method.
2) A directly apportioned tax paid by all adults capable of working to pay for national defence. I consider this theft, and it is, but sadly we do not live in a libertarian world where no government has the power to raise armies and for this reason a small tax, a necessary evil, may be required. Better to have a little each year stolen by government than everything stolen forever by an invader. The total defence expenditure should be divided by the number of eligible tax payers and each should pay an equal share. This would be the least intrusive in the economy, and the fairest method. I would also only support this with very strict constitutional rules about what constitutes national defence. For instance, invading countries thousands of miles away with no force projection capability and who have never threatened us is not national defence. Keeping a million strong army in peacetime is not national defence. Wqually, keeping a dozen soldiers when we're about to be invaded, is not national defence.
Re land ownersip = theft, a tad contentious I know, but
1. You or I legally bought a house (and with it land) from somebody who bought it from somebody ... right back to the Normans, who certainly did nick it from the Anglo-Saxons, who in turn nicked it of off the Celts etc (or the Romans or whomever).
2. The value of land is not influenced very much by what the owner does, it is influenced by what others do, including how the State spends tax money. Right wingers always abhor somebody getting something for nothing, but they have a complete blind spot to the fact that land owners (including everybody who bought a house more than a few years ago) and esp. agricultural landowners (i.e. CAP payments) have seen huge rises in their wealth for no effort whatsoever.
3. Anyway, don't argue with me, argue with the experts say, like Adam Smith or David Ricardo or Milton Friedman or Winston Churchill.
I can't belive you leave houses for immigrants and welfare for those millions of our fellow citizens unable to work out of social welfare.
bloody reactionary!
'The value of land is not influenced very much by what the owner does, it is influenced by what others do, including how the State spends tax money'
Please elaborate on your plans for additional taxes on those who have invested in shares, gold, etc etc, who have benefited in identical ways.
After all, in Norman times, etc etc.
HH, are you deliberately confusing issues here...
1. The income you earn from shares has already suffered horrendous amounts of tax (it's after VAT, Employer's NI, corporation tax, higher rate income tax), that's enough tax on shares, thank you.
The value of those shares is created (largely) by the joint efforts of employees and people who provide finance, not by the government. CGT and Stamp Duty are minor taxes and ought to be scrapped.
Did you miss the bit where I said "reduce taxes on income and increase them on land" (in relative terms, of course, while reducing tax burden overall)?
2. Gold costs a fortune to mine and purify. If a private company mines it (at own risk and expense) and you buy it from them (possibly paying VAT) and it goes up or down in value, well that's your good or bad fortune.
In neither case is there any direct correlation between value of gold or shares and how State spends taxpayer's money.
3. On t'other hand, if State keeps streets clean and well-lit, and puts coppers on beat, opens grammar schools, keeps local post office and hospital open, that has a fairly direct impact on land/location values. (see Churchill speeches in Words of Wisdom section). And if the State is not doing those things, it isn't doing anything of value and so should not be collecting any tax.
And land costs a fortune to drain, improve, develop, etc, just as gold does.
I cannot understand how this is any different to gold. And gold can and does fluctuate in value depending on what governments do, just as land can.
To me, LVT is just the mass nationalisation of land, that the state the graciously 'rents' to you for the rest of your life.
I followed Milton Friedman and said "a tax on site-only unimproved land values".
The cost/value of improvements such as bricks and mortar are by definition excluded from the tax base (drainage is a tricky one).
The value of the site depends on how near it to transport links, businesses, shops, and/or scarcity value - how restrictive the local authority is with planning permission. All factors beyond control of land owner and/or for which he does not directly pay.
Sure, he pays the previous owner for the VALUE when he buys, but in turn the previous owner has not paid directly for the COST of building transport links, or the social/economic cost of restricting planning permission.
So LVT is more like a user charge. And of course, more LVT = less Bad Taxes on business and employment (assuming a benign and sensible government, which is of course not the case nowadays).
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