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John Stuart Mill argued that unearned income should be taxed. As a result, he advocated taxes on gifts and inheritance (let's remember that the inheritance tax is on the receiver of the property, not on the giver - who is free to dispose of it without paying taxes). He also advocated taxes on residential values on the argument that ability to pay relates to disposable income of which the size of one's dwelling is a good proxy.
We would be rather better off policy-wise if we followed the ideas of late 19th century English liberal patricians, which means politically we're somewhere before 1850... tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
But wealth should theoretically come from past taxed income so it shoudn't be taxed again as that is your hard earned property (not in the real estate sense but in the I own it property sense)
I don't thing taxes are there to incentivize anyone in any direction, I think they are just a way to fund government. They sould be as neutral as possible which is why I think all kinds of income which generates should be taxed.
When you say wealth should theoretically come from past taxed income, you open yourself to the retort that wealth does not, in practice, come from there. We're not designing some sort of utopia here, but talking about pubic policy for the here and now. And, in fact, John Stuart Mill (again) argued
The principle of private property has never yet had a fair trial in any country; and less so, perhaps, in this country than in some others. The social arrangements of modern Europe commenced from a distribution of property which was the result, not of just partition, or acquisition by industry, but of conquest and violence: and notwithstanding what industry has been doing for many centuries to modify the work of force, the system still retains many and large traces of its origin. The laws of property have never yet conformed to the principles on which the justification of private property rests. They have made property of things which never ought to be property, and absolute property where only a qualified property ought to exist. They have not held the balance fairly between human beings, but have heaped impediments upon some, to give advantage to others; they have purposely fostered inequalities, and prevented all from starting fair in the race. That all should indeed start on perfectly equal terms, is inconsistent with any law of private property: but if as much pains as has been taken to aggravate the inequality of chances arising from the natural working of the principle, had been taken to temper that inequality be every means not subversive to the principle itself; if the tendency of legislation had been to favour the diffusion, instead of the concentration, of wealth--to encourage the subdivision of the large masses, instead of striving to keep them together; the principle of individual property would have been found to have no necessary connexion with the physical and social evils almost all Socialist writers assume to be inseparable from it.
As to "any tax is expropriation"
the Distribution of Wealth [is a] matter of human institution solely. The things once there, mankind, individually or collectively, can do with them as they like. They can place them at the disposal of whomsoever they please, and on whatever terms. Further, in the social state, in every state except total solitude, any disposal whatever of them can only take place by the consent of society, or rather of those who dispose of its active force. Even what a person has produced by his individual toil unaided by any one, he cannot keep, unless by the permission of society. Not only can society take it from him, but individuals could and would take it from him, if society only remained passive; if it did not either interfere en masse, or employ and pay people for the purpose of preventing him from being disturbed in the possession. The distribution of wealth, therefore, depends on the laws and customs of society. The rules by which it is determined, are what the opinions and feelings of the ruling portion of the community make them, and are very different in different ages and countries, and might be still more different, if mankind so chose.
Uh, public. tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
It is not the owner of a productive asset who earns money, but rather the asset, and there is no reason whatever why privileged property rights - such as exclusive rights over the commons of land or knowledge; or 'free' limited liability on investment through joint stock limited liability corporations - should not be taxed.
It is a misleading canard to say that people are taxed twice: they are taxed once (too highly IMHO) on earned income and then the income from the asset is taxed.
There is a bonus here in that taxation of such property rights is much less avoidable, and much easier to collect. Friedman himself considered Land Value tax to be the 'least worst' and most economically efficient tax.
So I would (if I did not regard taxation as pretty Last Century) advocate drastic cuts in taxation of earned income and commensurate increase of taxes on unearned income from privileged property rights. "The future is already here -- it's just not very evenly distributed" William Gibson
There should be limited taxation on useful investment and massive taxation on hoarded resources (including land, gold, artworks, antiques, etc) and casino speculation.
Enhanced taxation on luxury spending wouldn't be a bad thing either.
But while we're in fantasy land, it would also be a good idea to disbar anyone with a net worth of more than £x million from political office, and to make it an offence for any corporation with a net worth of more than £y billion to spend money on lobbying.
These things will not happen, but most of our current problems are caused by corrupt money swilling around politics, and they'll only be solved once money and politics become separated.
Taxation is about power redistribution, not about money as a conserved object.
When the Inland Revenue in the UK let Goldman Sachs off a sizeable tax bill while bankrupting small business owners for relatively tiny amounts due, that's very much a live political issue.
There must be taxation (or rental of the commons) as long as we want to have a government (and the alternative is Somalia, not Ayn Rand fantasy). There is no a priori reason to tax A rather than B. Ideally, we'd like to tax negative things more than positive things -and so wealth more than income since it has more negative consequences. But, of course, externalities even more so.
Besides, any tax on the value of houses would be priced in so only a sudden major hike after buying would have a significant negative effect.
Also besides, there is nothing inherently virtuous in saving
Also also besides, refusing taxes on wealth is the ultimate fait accompli policy. All you need is a few years of conservative governments, those in position of power make out like bandits (think Russian oligarchs) and thereafter maintain a huge position while the plebs who need to work for a living suffer through years, nay decades of adjustment. Rinse, wash, repeat. Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
Instead, we're hearing noises about Merkozy wanting to shift gear to "growth and jobs" at the January 30 summit, but the proposals will be along the lines of "active employment policies" which is EUspeak for blaming the unemployed for the lack of job offers. tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
Old Soviet Union joke:
They pretend to pay us, and we pretend to work.
I think the concept needs work. Align culture with our nature. Ot else!
Guaranteed living income means that everyone receives Y% of median income. tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
The problem currently is not that they do exist, but that governments (such as the French) do issue them. tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
Now seriously, why is this funny? tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
Why should the value of that home be taxed again?
related topic: I sometimes think there should be a way to flag one's comment as "my fantasy wish / utopia" and "realistically doable now or in the futurs". No offence to anyone, just sayin'...
If you stay in the same place for 60 years discrepancies can crop up. Poor neighborhoods can become wealthy neighborhoods. (Cabbage town in Toronto for example). In effect this type of policy hits the poor and elderly quite hard.
Of course you could do worse and follow California's proposition 13.
aspiring to genteel poverty
Are you advocating rent control as well?
I'm not sure where this comes from, but the answer is - As a retired landlord specializing in lower working class tenants - hell yes. There are again particular problems - including the possibility of pricing rents so low that repairs to buildings become impossible but that must be weighed against throwing people out into the streets, and the importance of avoiding the boom bust building cycle that leads to gluts of rental accommodation and landlords being unable to make repairs as they go bankrupt. A regulated rental market is necessary to provide the highest quality housing to those who are unable to afford to buy and don't have the clout or money to challenge their landlords.
SInce you are obviously not one of these, I basically agree with you, except that you would be exempting the poor person from tax increases (which are partly needed to pay increased salaries to city workers etc.) so that their heirs can cash in. One solution might be to allow people below a certain income level to postpone tax increases until selling, and then pay back taxes at that point.
Incidentally, I know people in NY (with strong rent control on older buildings) who have invested quite a bit in improving their own apartments. But this may be due to the combination of rent control with lack of rent control on newer apartments, so that they know they'll probably live in the apartment for the rest of their lives.
I paid the property taxes on my building, not the tenants. Rent control did not limit property tax increases in Ontario. I believe that if you lease a property you typically pay property taxes, but not for renting.
Maybe property taxes on rent-controlled buildings simply doesn't go up much? After all, the "value" (in the normal, vague sense, not the fashion of using it as a synonym for price) of a rent-controlled building, in the sense of the income stream it provides, doesn't go up much, whatever happens to its price. So maybe the law has two ways of determining value, either based on purchase price, or based on rental value.
There was (is?) something similar with faculty housing. NYU attracts potential faculty with inexpensive housing. Back in the 80s, tax reform meant that the difference between the rent and market value (a lot...) would become taxable income. But their lobbyists managed to insert into the law an alternative way of calculating the size of the subsidy, namely the difference between the university price and similar, non-subsidied apartments in the same building. They just happened to have a few rent-controlled tenants from before they bought the building that they hadn't managed to evict.....
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