[Retric]

To be clear, I agree the costs of work caps maximum tax rates well below 100%.

However, I was dumping government into that same cost of work category as commuting costs. It just makes more sense to work in a country where you make 100x as much even if you’re paying 50% in taxes than a failed state with zero income taxes. As such it also makes sense for governments to impose income taxes to be able to pay for things like education that improve short or long term productivity.

[lotsofpulp]

> As such it also makes sense for governments to impose income taxes to be able to pay for things like education that improve short or long term productivity.

Why can’t land value tax be used? It already is in the USA (and probably around the world), but the labs value tax rates can be increased to properly allocate tax liability to this who consume more.

[Retric]

Because market distortion harms society?

Tax homes based on the number of rooms and people suffer without closets even though total revenue remains the same. Income taxes have this wonderful property where factory workers can’t game the system thus avoiding distortions. Land taxes high enough to offset income taxes results in all sorts of unpleasant side effects.

The US approach of funding local schools is horribly inefficient. People like it because it reinforces the class system, but just as with closets people end up with lower standards of living because they’re optimizing around arbitrary rules.

[lotsofpulp]

> Tax homes based on the number of rooms and people suffer without closets even though total revenue remains the same

How is this relevant to land value tax?

> Income taxes have this wonderful property where factory workers can’t game the system thus avoiding distortions. Land taxes high enough to offset income taxes results in all sorts of unpleasant side effects.

Why would earned income taxes not have unpleasant side effects if land value taxes have unpleasant side effects? All taxes affect the market, and they are supposed to.

Isn’t it unpleasant that people in large lots who inherited from their ancestors’ pay very little tax for all the security an orderly society provides and all the courts/police/military that keeps their land safe?

Isn’t it unpleasant that too low land value tax rates keep empty store fronts, empty lots in the middle of urban areas, increasing the lengths people have to travel and removing the ability to walk anywhere?

> The US approach of funding local schools is horribly inefficient. People like it because it reinforces the class system,

Only because it’s a flat tax rates. If it was a power law formula, then people using less land (aka those in apartments and in general, far poorer) would pay far less than those on 0.06 acre lot townhomes who would pay less than those on 0.15 acre lot mansions. Not to mention all the rich landowners (via REITs and other real estate holding companies) paying far more for commercial real estate, incentivizing them to make productive use of their land, such as dense housing and not keeping spaces empty.

[Retric]

> How is this relevant to land value tax?

It’s an example of distortion.

> Why would earned income taxes not have unpleasant side effects if land value taxes have unpleasant side effects?

Distortion requires some way to optimize for the tax by charging behavior unnaturally. Maximizing income results in the same behavior with and without an income tax. Instead distortion comes modifications like not taxing health insurance and lower rates on long term capital gains etc.

A land value tax incentivizes less efficient allocation of resources on the other hand because land becomes artificially more expensive. For example it heavily disincentivizes farming etc. Obviously you’d end up with same kind of tax breaks but now you’re further distorting the market.

[lotsofpulp]

Land value tax rates can vary within and without metro areas.

It already does, and no one is going to farm a few acres in the middle of a metro or suburb. They will hoard the land and keep it empty or underutilize it with low density housing/business to serve as a piggy bank they can 1031 exchange.

And again, the big distortion is old and wealthy people disproportionately benefiting from an orderly and secure society, while paying the least, while young people who work pay the most. See Additional Medicare Tax for another example.

> Maximizing income results in the same behavior with and without an income tax. Instead distortion comes modifications like not taxing health insurance and lower rates on long term capital gains etc.

I disagree from a society wide perspective, levying a higher tax burden on rent seekers is beneficial. Rent seeking needs to be disincentivized, and using earned income tax to keep rent seeking taxes low (such as land value and estate and cap gains taxes) is overall a negative for the future of society.

[Retric]

> vary within and without metro areas

Even more distortion.

When you look land value tax and start thinking ahh but this impact needs to be mitigated that’s a sign there’s an inherent problem with the approach. There’s an endless list of things people would tweak if it was high enough replace income taxes the flawed system that resulted would still just be less efficient overall.

Just by comparison people don’t single out professions and say lawyers should have higher rates than doctors. You’re not tempted to try and manipulate the economy through central planning as we would be with land value taxes.