As the tax reform debate begins to heat up, businesses and investors are beginning to pay closer attention to the House GOP Tax Reform Blueprint, a tax plan released last June by Speaker Paul Ryan and House Ways and...
- The Tax Policy Blog
- Response to Jesse Myerson's Land Tax Idea
Response to Jesse Myerson's Land Tax Idea
Jesse Myerson has made a splash lately, writing a Rolling Stone piece that sounded communist even if it wasn't, and a less disguised "why you're wrong about communism" piece for Salon. Someone today sent me a piece that he actually wrote late last year, advocating a land tax to replace all other taxes:
If we want a real overhaul/simplification of the tax code, the way to do it is to tax land value. It might be the only tax we need. No sales tax. No income tax. No payroll tax to fill a Social Security trust fund. No corporate income tax that, as we can plainly see, offshores profits. No need to tax labor and industry at all. Just tax the stuff that humans had nothing to do with creating, and therefore have no basis to claim ownership over at all. You’ll find that almost all of it is “owned” by the fabled 1 percent.
This idea, popularized by economist Henry George, is one that historically has had support from left and right. The left supports it in the belief that wealth comes primarily from land, taxing it prevents excessive wealth accumulation and speculation, and that it would be progressive since the poor don't usually own land. (These arguments were first made over a century ago, and our switch from an agricultural economy to a more service-based economy may undermine some of them.) The right supports it because a land tax, unlike other taxes, does not discourage productive activity since no more land can be created, and taxing land instead of income is less harmful to investment and development.
That said, while it's a nice idea, the actual numbers may give people pause. Federal, state, and local governments in the United States collect about $4.2 trillion in taxes each year. (They spend slightly more than that, resulting in a budget deficit, but ignore that for now.) All land values in the United States is a bit tricky to calculate, as it involves adding up different state measures. My back-on-the-envelope guesstimate has all privately-held land value in the U.S. totaling about $13 trillion. Structures add about another $35 trillion, for a total of just under $50 trillion in property values.
Just looking at land values as a tax base, raising $4.2 trillion on a base of $13 trillion means a hefty land tax rate: 32 percent a year. People complain today when their property taxes edge above 1 percent! Even if you tax land and structures, that would require about an 8 percent annual property tax rate. A land tax might be better for economic growth and discouraging land speculation, but those tax rates would be a tough sell for people!
Get Email Updates from the Tax Foundation
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.