Sunday, June 09, 2013

Taxation justified.

Libertarians generally have no decent response to Georgist justifications of a tax on land.  David Friedman points out that because "most income in a modern society does not come from unproduced resources, hence the solution to the problem of who is entitled to collect it does not matter very much -- not a very satisfactory response, but I had no better one."  In other words, because land taxes could not raise enough to fund a welfare state, the issue could be ignored.

The Georgist idea of unproduced means "unproduced by humans."  But if we expand the idea a little to mean "unproduced by individual humans", then all social facilities are unproduced, and thus taxation based on their use is justified.  Take for example the very large value of American residency: you get to live and work in America, with excellent defense, law enforcement and economy.  People spend large amounts of money to immigrate legally or illegally.  Residents make use of this value: why should they not be taxed for it as they might be taxed under a Georgist system of paying taxes on land they use?

Update 7/14/2013:

Like most good ideas, this one has antecedents that go way back.  Tom Paine had some similar ideas, that can be updated to be very much like mine.

Thomas Paine’s “Agrarian Justice” and the Origins of Social Insurance [More...] (Edit)
Thomas Paine proposed the first realistic plan to abolish poverty on a nationwide scale, a universal social insurance system comprising old-age pensions and disability support, and universal stakeholder grants for young adults. Compared to Condorcet, Locke, Spencer, Rawls and especially Hayek.


Michael said...

Very interesting. One of the things I like about this site is the exposure to new ideas, and this is a good one. Thanks!

Anonymous said...

Ronald Burgess argues in "public revenue without taxation" there is a distinction between publicly and privately created value. For example when I improve my house, and if as a result of this the value of my house increases, this is privately created value. If however the value of my house increases, because the government had build a railroad connecting my house with a large city center, it will be publicly created value. According to Burgess, the state is fully entitled to collect this publicly created value to fund its activities. Libertarians on the other hand believe that this whole distinction does not exist, and hence any increase in the value of my house is fully mine.

Mike Huben said...

That's an interesting reference, republicoflagrangia.

There's essentially nothing about it online that I can find. If you have a good online reference, I'd like to know.

Both our ideas rely on lifting the libertarian individualist blinders, to observe that capitalism does not say that you deserve profits from externalities of the work of others.