[EM] decision process design: wealth tax

[Dave Ketchum]

On Mon, 10 Apr 2006 14:48:50 -0700 (PDT) mrouse1 at mrouse.com wrote:

> I recently became interested in the problem of taxation myself, though at
> this point I kind of lean toward the geolibertarian side -- tax people for
> the "land rent" of their property (equivalent to what renting bare land
> would be, rather than the total cost of land+improvements like a property
> tax), regardless of what they have on it. People would tend to either
> improve their property, or sell it to someone who would, and land
> speculators would have a serious disincentive to grabbing vast areas of
> bare land without actually doing something with it. If the tax for a piece
> of land was the same for a five-star hotel as for a slum, you would tend
> to have more of the former than you do with the current system. I
> particularly like the philosophical justification for it -- since no one
> creates the land, and its price is determined by its location and
> infrastructure improvements created by others in society, people should
> repay society for that value. On the other hand, if you build something on
> that land with your own capital and labor, you should reap the full value
> of that improvement.


Thanks for thinking, though I disagree with the result.

Agreed that the bare land should be taxed, mostly for consuming roadside 
frontage.

But, the five-star hotel owes more because it requires access to a major 
highway.

In other words, whatever activity imposes a load on a government budget 
should be paying for the services it consumes.  Pick on water as a 
service, and that can be charged by measuring consumption.  Try police 
services and that fits more into people living.

> 
> It would also somewhat sidestep the issue of the Supreme Court decision to
> allow government to grab land from one party to give to another for
> development -- if the value of land increased because of demand, the
> current owner could either sell it or pay the higher tax. Granted, it
> would be annoying to pay higher taxes just because a developer wanted your
> land, but you would still have more choice than would happen via eminent
> domain.


Eminent domain is tricky, for it needs intelligent response to excessive 
greed:
      Once a developer has acquired most of the property for a project, 
remaining owners are tempted to inflate demands beyond reason.
      Developers can use eminent domain power, if possessed, to steal 
property without offering a reasonable payment.
      Figuring out where the greed is excessive is tricky.

> 
> This is also extended other resources claimed by society as a whole, like
> clean air and water. Companies would pay a tax (carbon tax or pollution
> tax) based on what they cost society as a whole, which would give a
> financial incentive to reduce pollution, rather than just government
> guidelines. It doesn't make much sense to charge nothing for polluting up
> to a certain point and then charge a huge fine above that point, when you
> can charge what it actually costs society.
> 
> (For more info, just Google geolibertarianism and Henry George)
> 
> Michael Rouse
> 
> 
> 
>>Dear election methods fans:
>>
>>	I'm interested in enacting a progressive wealth tax in place of the
>>income tax, property tax, capital gains tax, etc.
>>	Although this is a bit beside the point, I'll give a quick argument for
>>it here. Imagine that person A has $1 billion in the bank, and makes
>>$200,000 in 2006, whereas person B is absolutely dirt poor and then by
>>some wonderful stroke of luck or effort earns $200,000 one time and one
>>time only. My opinion is that person A should pay more tax.
>>	Anyway, since this is a voting systems list, I'll not focus on that,
>>but
>>rather focus on how a public vote could shape a wealth tax, i.e.
>>determine how progressive it is, or whether it is progressive at all.
>>This fits into a broader interest of mine, which is reducing real social
>>issues to manageable public votes, preferably ones where Condorcet
>>cycles are not possible, e.g. a series of yes or no choices or one
>>dimensional spectra.
>>	Here is the wealth tax decision process that I have in mind: The basic
>>idea is to use a series of brackets, as we do with the income tax, to
>>have people vote on the rates for the different brackets, and to base
>>the tax rates on the median vote for each bracket. If the revenue
>>generated by the tax is either too great or too small to meet the target
>>revenue, we can multiply all rates by a scalar (that is, if you multiply
>>the top bracket rate by 1.3, you have to multiply all the other rates by
>>1.3), but this can be decided by a separate process. In other words,
>>this process determines the "shape" rather than the "size" of the tax.
>>	To be a bit more specific about the brackets, let me give a simple
>>example: The lowest bracket is from $0-$50,000, and the next lowest
>>bracket is from $50,000-$100,000. The tax rate for the lowest bracket is
>>0%, and the rate for the next lowest bracket is 1%. If my wealth totals
>>$70,000, then I will owe ($50,000)*0 + ($70,000-$50,000)*0.01 = $200.
>>	To be a bit more specific about the definition of a wealth tax, assume
>>that a person's "wealth" is measured as the total of their money
>>holdings and the approximate value of their non-money property (stocks,
>>house, car, etc.). It is understood that no one will be able to produce
>>an exact figure for their total wealth, but as long as what you report
>>is "close enough", you pass.
>>	Note that the boundaries of the different brackets should be adjusted
>>for
>>inflation over time.
>>	Here's one example of how the brackets might be constructed, and a
>>series
>>of rates that might be reasonable. I personally like the general
>>progressivity of these rates, but to be honest I don't know whether it
>>would generate too much or too little revenue; this is intended as a
>>very rough sketch rather than a serious proposal.
>>
>>wealth	tax per year
>>0-100k	0%
>>100k-300k	0.25%
>>300k-600k	0.5%
>>600k-1m	0.75%
>>1m-3m	1%
>>3m-6m	2%
>>6m-10m	3%
>>10m-15m	4%
>>15m-30m	5%
>>30m-50m	6%
>>50m-100m	7%
>>100m-500m	8%
>>500m-1b	9%
>>1b+		10%
>>(k=1,000; m=1,000,000; b=1,000,000,000)
>>
>>	I have no idea whether this level of progressivity is anywhere close to
>>the kind of response that you would get if a representative subset of
>>the population participated in the vote, but I would like to find out,
>>if possible. In particular, I'm interested in the interplay that would
>>occur between different motives such as self-interest, altruism, and
>>ideas of fairness. If we inhabited a simplified world where the tax
>>structure did not affect the amount of wealth that people chose to earn,
>>an
>>self-interest was the only motive, then you might expect all brackets
>>above the median wealth level to be voted a tax rate of 100%. However, I
>>would not necessarily expect to see this in practice, in part because of
>>people's idea of fairness, in part so that the very wealthy wouldn't be
>>driven out of the country, or something like that.
>>
>>my best,
>>James Green-Armytage

-- 
  davek at clarityconnect.com    people.clarityconnect.com/webpages3/davek
  Dave Ketchum   108 Halstead Ave, Owego, NY  13827-1708   607-687-5026
            Do to no one what you would not want done to you.
                  If you want peace, work for justice.