[ Pobierz całość w formacie PDF ]
.They believe that these can alter the “distribution” of incomes without lowering the efficiency of productive allocations.In this way they rely on an equivalent of Keynesian “money illusion”—a tax illusion, a belief that individuals will arrange their activities according to their gross rather than net (after-tax) income.This is a palpable error.There is no reason why people should not be tax-conscious and allocate their resources and energies accordingly.Altering relative rewards by taxation will disrupt all the allocations of the market—the movement of labor, the alertness of entrepreneurship, etc.The market is a vast nexus, with all strands interconnected, and it must be analyzed as such.The prevailing fashion in economics of chopping up the market into isolated compartments—“the firm,” a few “macroscopic” holistic aggregates, market exchanges, taxation, etc.—distorts the discussion of each one of these compartments and fails to present a true picture of the interrelations of the market.6.The Incidence and Effects of TaxationPart IV: The “Single Tax” on Ground RentWe have refuted elsewhere the various arguments that form part of the Henry Georgist edifice: the idea that “society” owns the land originally and that every new baby has a “right” to an aliquot part; the moral argument that an increase in the value of ground land is an “unearned increment” due to external causes; and the doctrine that “speculation” in sites wickedly withholds productive land from use.Here we shall analyze the famous Georgist proposal itself: the “single tax,” or the 100-percent expropriation of ground rent.41One of the first things to be said about the Georgist theory is that it calls attention to an important problem—the land question.Current economics tends to treat land as part of capital and to deny the existence of a separate land category at all.In such an environment, the Georgist thesis serves to call attention to a neglected problem, even though every one of its doctrines is fallacious.Much of the discussion of ground-rent taxation has been confused by the undoubted stimulus to production that would result, not from this tax, but from the elimination of all other forms of taxation.George waxed eloquent over the harmful effect taxation has upon production and exchange.However, these effects can as easily be removed by eliminating taxation altogether as by shifting all taxes onto ground rent.42 In fact, it will here be demonstrated that taxation of ground rent also hampers and distorts production.Whatever beneficial effects the single tax might have on production would flow only from the elimination of other taxes, not from the imposition of this one.The two acts must be kept conceptually distinct.A tax on ground rent would have the effect of a property tax as described above, i.e., it could not be shifted, and it would be “capitalized,” with the initial burden falling on the original owner, and later owners escaping any burden because of the fall in the capital value of the ground land.The Georgists propose to place a 100-percent annual tax on ground rents alone.One critical problem that the single tax could not meet is the difficulty of estimating ground rents.The essence of the single tax scheme is to tax ground rent only and to leave all capital goods free from tax.But it is impossible to make this division.Georgists have dismissed this difficulty as merely a practical one; but it is a theoretical flaw as well.As is true of any property tax, it is impossible accurately to assess value, because the property has not been actually sold on the market during the period.Ground-land taxation faces a further problem that cannot be solved: how to distinguish quantitatively between that portion of the gross rent of a land area which goes to ground land and that portion which goes to interest and to wages.Since land in use is often amalgamated with capital investment and the two are bought and sold together, this distinction between them cannot be made.But the Georgist theory faces even graver difficulties.For its proponents contend that the positive virtue of the tax consists in spurring production.They point out to hostile critics that the single tax (if it could be accurately levied) would not discourage capital improvements and maintenance of landed property; but then they proceed to argue that the single tax would force idle land into use.This is supposed to be one of the great merits of the tax.Yet if land is idle, it earns no gross rent whatever; if it earns no gross rent, then obviously it earns no net rent as ground land.Idle land earns no rent, and therefore earns no ground rent that could be taxed.It would bear no taxes under a consistent operation of the Georgist scheme! Since it would not be taxed, it could not be forced into use.The only logical explanation for this error by the Georgists is that they concentrate on the fact that much idle land has a capital value, that it sells for a price on the market, even though it earns no rents in current use.From the fact that idle land has a capital value, the Georgists apparently deduce that it must have some sort of “true” annual ground rent.This assumption is incorrect, however, and rests on one of the weakest parts of the Georgists’ system: its deficient attention to the role of time.43 The fact that currently idle land has a capital value means simply that the market expects it to earn rent in the future.The capital value of ground land, as of anything else, is equal to and determined by the sum of expected future rents, discounted by the rate of interest
[ Pobierz całość w formacie PDF ]