“Put to the vote: as many are of the opinion that a public tax upon the land ought to be raised to defray the public charge, say ‘yea’.” …. “Carried in the affirmative, none dissenting.”
- Philadelphia’s first tax law, 30 January 1693
Clearly, it was once understood that land values—reflecting relative size, shape, topography, location of the allotment as to services, etc., were the perfect revenue base. The owner of a site should pay more for the privileges it held over other sites (and vice versa).
There was no consideration of taxing incomes nor local sales.
It was recognized that site values are community-created, owing nothing to what any individual had done on the site.
The American property tax has now come to confuse land and buildings, thereby placing a penalty on construction.
In Australia, the state of Victoria—which used to allow rating on the value of sites as though they were vacant (indeed half the population existed in site value rating municipalities in the 1990s)—now also taxes land and buildings together.
Although municipalities in the states of Queensland and New South Wales rate only on vacant land/site values, enterprising speculators have seen to it that an excellent principle is defeated by applying a “minimum rates” charge. This, of course, has the effect of those on the minimum rate therefore subsidising the holders of more valuable sites. (Joe Hockey would be pleased with this outcome!) In Queensland, former Gold Coast City Council mayor, Ron Clark, actually boasted that most of his ratepayers were on the minimum rate. (Sounds good, doesn’t it?)
The retrogression away from land-based revenues since the Progressive Era, has been matched by increasingly greater taxes on incomes and sales, revenues that are both more difficult to assess and collect, quite apart from having an anti-productive effect.
QUESTION: Why have we gone backwards in this fashion?
ANSWER: Because the rent-seeking 1% have had undue influence in designing our revenue systems.
QUESTION: What happens when reversal of this pathology is recommended?
ANSWER: The 1% resist it at any cost – even at the cost of an economic depression. (Refer to previous post.)
Such has become our ‘democracy’.