SIdenote: this is the case right now in Netherlands (and 2 or 3 other European countries) and has been for decades. They tax capital value instead of capital gains value.
So, if you bought $100K of bitcoin, then 10 years later the value of bitcoin drops by 50% you not only lost $50K you also paid taxes just for possession of the bitcoin? That seems awful. It'd also incentivize a lot of people to get "hacked" and lose their bitcoin.
Let's say you invest 100k in Bitcoin and 10 years later it's 1M. In a capital gains system you would pay 252000 EUR in taxes on that (assuming 28% capital gains tax, which at least 1 country in Europe actually has).
In the capital tax system you would have paid between 15.000 and 100.000 EUR of taxes on that over the same 10 years. Which is... much less.
So you could argue that the tax on capital is much more "fair". It's definitely MUCH simpler in terms of administration, because you never ever have to prove the cost-basis of your investment. All you need to know is your current P&L. There are a lot of US brokers out there who deliberately "forget" to provide a cost basis when you buy shares (hello and fu DriveWealth).
> In the capital tax system you would have paid between 15.000 and 100.000 EUR of taxes on that over the same 10 years. Which is... much less.
Unless bitcoin crashes to zero. Then you've not only lost the $100K you spent to buy the bitcoin. You've also paid these taxes just because you possessed this now-worthless asset.
This is why capital taxes suck: you haven't actually made any money until you sell the asset. You can easily end up paying taxes on something that has zero value.
Yes, however I'd argue that land, maybe more than other property, is one of the main property rights that government exists to enforce. If the land value tax becomes a land property rights enforcement subscription payment, maybe it makes more sense to have it be an annual payment so that the government (courts, cops, etc) makes sure others respect that you own the land.
Property taxes and property ownership are fundamentally at odds with each other.
Fundamental rights should never be taxed and the government should never be able to take them away from us. If either of those are true then it's a privilege not a right.
As soon as a government can tax me just for owning a piece of land, rather than for the original purchase of the land or the produces I make and sell from the land, I no longer have a right to property ownership. At that point I am effectively renting the land from the government.
That landlord can take the land back if I don't pay my taxes. They can even kick me off the land if they decide they need it, graciously throwing some money at me based on whatever they think my claim to ownership is worth while they send me packing.
You say that the government should never be able to take away land from us that we own. But what if they take away the services that guarantee other people don't take away that land from us?
In that way, they're not taking the land, they're just ceasing to provide police officers, judges, courts, etc., to ensure no one else takes the land.
I think I agree with you in theory, that if we own it, we own it, and yet I think "owning" something is a social construct protected by institutions doing services.
It almost seems like the debate in software where companies have often shifted to subscription SaaS models and customers want to be able to own the software outright. And customers say they don't want updates, but often they still want security updates and for as long as the product exists, which is an ongoing service software companies provide, not so dissimilar to services governments might provide to protect land.
In other words, if I buy a plot of land, does that entitle me to 10 years of someone defending my land borders? 100? 1,000? And if not and i have to defend those borders myself, do we really have government property rights or lots of individuals with guns saying who owns which property?
I dont think it HAS to be paid with property taxes, but i also dont think the concept of infinite ownership makes sense either.
Are governments really protecting our land borders in that situation though, or protecting their monopoly such that they are the only ones who can take it from us? Governments can absolutely protect our borders, my only issue is that it should be universal and governments should also be ensuring that even they can't strip us of land that we own based on the existing laws and social contracts that are fundamental to our society.
I totally agree that land ownership is propped up on by social contracts, and that we have institutions meant to enforce those contract. I'd be okay with getting rid of land ownership entirely if it also meant getting rid of all those centralized powers that are supposed to defend it but sometimes do the opposite.
Because of what you said, I'm starting to think about human rights and how governments also provide services to protect citizens from others and yet, if I don't pay any tax as a citizen, often the government still provides those services to me, because it's not just for my benefit but the benefit of the community.
So I wonder if this is kinda what you meant about still guaranteeing those rights as property as well.
And also, if i understand correct, youre saying that you just want the governments to abide by the social contracts and laws that exist to protect these land rights, not revoke them, correct?
I think i may really enjoy a proper conversation with you about this and I struggle sometimes in these long HN chains to learn and reply.
> Property taxes and property ownership are fundamentally at odds with each other.
This makes absolutely no sense.
> Fundamental rights should never be taxed and the government should never be able to take them away from us.
Property is not a fundamental right and never has been. Firstly, a huge number of people do not own land (which an LTV would apply to) so in declaring it a fundamental right, you'd need to start thinking about how to get land to those people. Good luck doing that without violating the "fundamental right" of the existing property owners.
Secondly, many cultures (past and present) simply don't recognise property rights in the way outlined in the legal codes of western governments. Traveller communities & nomadic tribes, for example, have far fuzzier concepts of property ownership than you or I understand.
To be clear I'm talking about the US here. I actually very much align with the views of some other cultures where land can not be owned at all. I'd much prefer that model, it just isn't what we have today.
> This makes absolutely no sense.
For something to be a right means that we are each entitled to it simply by being human [1]. Free speech, for example, is a right that isn't supposed to be infringed upon regardless of what you say.
Privledges come with strings attached. you have the opportunity to drive a car but not the right to do so. You have to be licensed, you have to pay taxes, you have to register your vehicle, etc. If you don't follow the rules you may lose that privledge.
Many of the US founding fathers wrote extensively about the importance of property rights [2]. They also viewed slaves as property and took land from loyalists after the revolutionary war was over, so by no means am I saying they were perfect. The history of the right to property ownership literally goes back to the creation of our country though.
The right to own property doesn't mean that everyone must own some though, I'm not sure where you're getting that. The government doesn't have to ensure that everyone does own land, only that everyone can own land.
So let's look at the United States. By your definition, this "property right" is still not fundamental, as Property Tax seems to be a thing. [1]
According to the US Constitution, property is outlined as a right but not inalienable. Clearly it's possible for governments to take property with due process (i.e. a process written down) and they don't mention taxing them at all. Article 17 of the Universal Declaration of Human Rights also doesn't mention taxation, so I still don't see how any of this supports your argument that property taxes violate property rights.
This is close to, but not entirely, true. The US federal government also has the power to levy direct capitation taxes (taxes that are effectively constant per-person without regard to any other factors).
In practice, those taxes are impractically regressive, but the federal government does have that power under the Constitution.