Monday, May 18, 2015

Can a Land Tax Fix Problems of Inequality?

Slate brings the ideas of Henry George to the fore:

To see a good argument for a land tax, look to any high-cost city where the tax code penalizes construction and rewards speculation, encouraging landowners to keep land vacant. On West 29th Street in New York City, two blocks east of the High Line and a couple of blocks from Macy's, Edison ParkFast charges drivers $40 to park for a day in its vacant lot. That may be a lot to pay for parking, but it’s not an impressive haul for 180 square feet of earth in Midtown. Yet the annual property taxes for this asphalt parcel amount to just $9,404. Parking just one car each day of the year would more than foot the bill. The seven-story building next door, by contrast, pays more than $250,000 in taxes each year.

So what would actually happen if we taxed land instead of buildings? Unfortunately, the various American experiments in Georgism don’t tell us everything we’d want to know about how it might play out in society writ large. Still, there are lessons to be learned from places like Fairhope, Alabama, a charming town on the Eastern Shore of Mobile Bay. Home to the nation’s oldest and largest single-tax colony, Fairhope has waved the Georgist flag from its scenic, public bluffs for more than a century. Its evolution offers a glimpse of a world in which a different approach to tax law radically reshapes the structure of a society—and shows how implementing a land tax in isolation can be frustrated by the layered burden of state and federal laws.

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