While that would be cool, the concept of never owning your land smacks of feudalism. It's almost like we're sharecroppers to the government. Taxes are important, however, those taxes could be collected instead by taxing the consumption of necessary resources rather than just having the piece of ground. For example, fire protection -- it could be argued that the virtue of owning land itself doesn't necessarily require fire protection. So rather than using the land as effective collateral to ensure tax payments, why not simply charge the landowner for fire protection in lieu of taxes? If they refuse to pay, their land isn't seized (as is the case now,) they merely have to assume the fire risk. Of course, getting insurance on the land (or improvements) would necessarily require fire protection, so the tax base would be minimally effected, yet not make a person subject to losing their home and land as a result of taxation.
Water and sewer is already paid for by taxes on those services. Really the big issue is with the schools, however existing income and/or sales taxes could compensate.
The problem with taxed land is that the taxable value determines the taxed amount rather than some other, more objective measure. Valuations on land and improvements are subject to external, market forces and by their nature are unfair. Imagine a family that purchased unused Napa farmland 100 years ago. Their real income has stayed the same (or declined) yet their taxes have increased with no correlation to their income. Even if the land was prime vineyard, unless they're actually making income from it, the effective output of the land didn't change from when they purchased it. So by the mere fact that they chose not to plant grapes and produce wine, they could lose their land due to an inability to pay the taxes. That then puts economic pressures on landowners that would lead them to selling out to large conglomerates.
For example, if you have prime farmland and choose not to capitalize on it, you'd have a big incentive to sell-out to a company like Monsanto, or else lose the land or go bankrupt paying the taxes. Yet if you were taxed on the land's income (and services consumed,) you'd be able to afford the taxes which would be based on output rather than potential output.
This would benefit everyone, except perhaps country property appraisal offices. As it is now, you're taxed based on potential market value and not necessarily real value. Real value can't be determined until someone actually pays money for a property -- anything before the actual purchase is just somewhat educated speculation.
Life, ultimately, requires continuous activity to sustain. So I don't get very bent out of shape about the perpetual nature of property taxes, because it's fairly minor compared to e.g. the perpetual nature of food.
You can come up with ways to replace property taxes, without a doubt. There's nothing necessary about any particular tax. The question is just whether it's the best way to do things.
Water and sewer would work fine without it, I agree. A bigger problem, I think, is roads. Highways are mostly funded from gas taxes but local roads are not. It's not practical to directly charge for use of local roads.
You could compensate with other taxes, but now you're taxing (and thus somewhat discouraging) productive activity.
The scenarios you paint don't necessarily seem bad to me. Unfair to the owners, perhaps, but it doesn't seem to benefit everybody else as you say. You correctly infer that property taxes encourage productive use of land and discourage allowing it to sit fallow, but isn't that a good thing? If we make the strong but at least partially true assumption that money is a proxy for value, land that produces enough money to pay for its taxes is producing more value than land that does not. Someone sitting on prime farmland and not actually farming it is a net negative to society unless they're getting more value out of that land than a farmer would.
I don't mean to go all Ayn Rand here and start acting like nature, parks, and anything that's not economically productive is valueless. But still, I think there is value to be had in encouraging land owners to put their property to some actual economic use.
I'd be more upset if property taxes were higher, perhaps. Here, for example, they're about 1%, which is not much. If you can't afford 1%, then you have an enormous amount of money tied up in your property without much money outside of it. It's hard to fit right into a spot where you could afford to maintain your property, but can't afford the taxes. For the vast majority of property owners, the mortgage is by far the major question when it comes to losing one's house or land because they don't have money. Pay off your mortgage and have some savings and you are nearly safe from losing it due to property taxes.
>Someone sitting on prime farmland and not actually farming it is a net negative to society unless they're getting more value out of that land than a farmer would.
To play the devil's advocate: Why stop at land? What about people who have gold under their mattress? Or perhaps (stick with me here) someone who owns the patents for a machine that he refuses to sell anything himself and forbids anyone else from selling anything remotely similar?
Also, I hear we pay farmers not to produce crops because we are afraid seasonal over-production could destabilize prices?
I don't really see a problem with either of your "devil's advocate" positions. Especially the patent one. Given where you're posting, I have no idea why you'd think that would be a "devil's advocate" idea.
A wealth tax is an interesting idea. I have to wonder why it's so uncommon. I'd guess it's some combination of being hard to enforce and easy to move money around. Such a tax would trigger a flight of capital, something that can't happen with a tax on houses. And you can't audit people's mattresses very easily, so it would just encourage hoarding cash.
In a world where such a tax could be enforced and applied worldwide, it doesn't seem like a terrible idea. It shouldn't be very large, but it could have similar effects to property taxes.
On the other hand, we already effectively have such a tax, we just call it "inflation" and the tax rate isn't directly controlled by the government. Inflation has the same good effects I described for property taxes, in that it discourages hoarding and encourages putting money to work. (It has bad effects to, no doubt, so this isn't a total endorsement of inflation or anything.)
Patents aren't private property. They're a government-granted temporary monopoly. In the absence of government, there's still some notion of property, but no notion whatsoever of patents.
Yes, they are. (Particularly, they are intangible personal property.)
> They're a government-granted temporary monopoly.
All "property" is government-granted monopoly in the control/use of some thing (sometimes dependent on a grant from another private party, but still ultimately government granted), concrete or abstract. Some are temporary (this is true of real and tangible personal property, too), some are permanent.
> In the absence of government, there's still some notion of property, but no notion whatsoever of patents.
Outside of government/legality, there's certainly still some notion that things, concrete and abstract, can belong to certain people such that it is wrong to "steal" them, and that certainly includes ideas. The particular details and names of particular classes of property are, of course, products of people, over time, spending time teasing out vague notions into more detailed sets of rules -- which, in the case of property rights, is something that tends to happen in the context of government (not always by government, but you don't even have developed philosophy of property rights without government existing to create a stable enough society for people to spend time writing rather than defending their immediate personal possessions and survival necessities.)
A patent is, ultimately, a negative entity. Before a patent is granted, anybody can make certain objects or perform certain techniques. After it's filed, the patent owner's rights remain unchanged, but everybody else is restricted from doing those things.
Humans have an intrinsic idea of "property" that the legal idea is built upon. A two-year-old child understands the idea of "mine". People still own things when government is not present, they just have a harder time enforcing that ownership.
Patents, on the other hand, are an entirely governmental construct.
Thank you. I guess cash currency isn't really property either. It is backed by the "full faith and credit" of the government so it is like a IOU that the government requires you to accept to settle existing debts.
There's definitely a slope, and trade-offs in both direction.
In the case of land, there's an absolutely limited supply of land, and so I think it could be argued that, in balance, it's more important to make sure that limited supply is used effectively.
Gold, by itself, isn't actually very useful. If someone wants to hoard it, they'll increase the market price for it, and maybe luxuries like jewelry or electronics will be more expensive, but it won't affect much.
I'd actually argue that patents that aren't being used should be made public domain. There's only so many good ways of solving some problem, and if society is blocked off from using some or all of them, then society is that much worse off.
If used as intended, to protect the results of invention/research until a product is brought to market, a patent's downsides are outweighed by its benefits.
From another perspective, some of those downsides could be considered behavior as intended.
Basically, in a tax-less scheme, there's a strong financial advantage to just showing up first.
There is an absolutely limited supply of land, and society has an incentive to make sure this limited supply is being used effectively to produce wealth. Society also has an incentive to make sure that everyone is housed, financially stable, and healthy. These are competing concerns.
Say there were no property taxes, so the only incentive for selling land would be a high enough price. Your hypothetical family would be sitting on prime Napa farmland, not producing wine, and society would have that much less wine to drink.
An aspiring young wine-grower might like to purchase this land, and could even trade a bit of land of his own. If the original family doesn't want to move, though, the aspiring wine-grower is out of luck.
A property taxation scheme encourages people to use their land to produce wealth, either by producing it directly, a la farmland, or by housing people and keeping them healthy, such as houses or apartment buildings.
In a tax-less scheme, there's a strong advantage to just showing up first. The lucky few to first colonize Napa can maintain control of the land indefinitely, and younger generations and immigrants are at a financial disadvantage, as they won't have the option of owning their own land, but they'll be in a marketplace competing with persons who don't have to worry about housing at all.
> If they refuse to pay, their land isn't seized (as is the case now,) they merely have to assume the fire risk.
The problem being, of course, that fire has a habit of not staying put.
This kind of idea becomes even more ridiculous if you apply it to police service instead. Are they not going to arrest the criminals because the person didn't pay their quarterly police stipend? Do they get arrested after they step off the property, and the stolen goods just auctioned off?
There is a societal benefit to having these services, so therefore society as a whole is requested to pay.
I've long thought the exact same thing. Taxation of property based on the government’s assessed value seems unfair simply at face value. It punishes the financially responsible citizens who pay off their property in the scenarios you mentioned. It seems to me that if you buy a piece of property you should be able to live there as long as you want without paying any taxes on it. Why should you be indebted forever to the government?
Econically speaking, taxing land ownership directly is pretty efficient. After all, it's hard to evade this tax since you can't hide land, and the tax won't affect the (fixed!) supply of land either.
Water and sewer is already paid for by taxes on those services. Really the big issue is with the schools, however existing income and/or sales taxes could compensate.
The problem with taxed land is that the taxable value determines the taxed amount rather than some other, more objective measure. Valuations on land and improvements are subject to external, market forces and by their nature are unfair. Imagine a family that purchased unused Napa farmland 100 years ago. Their real income has stayed the same (or declined) yet their taxes have increased with no correlation to their income. Even if the land was prime vineyard, unless they're actually making income from it, the effective output of the land didn't change from when they purchased it. So by the mere fact that they chose not to plant grapes and produce wine, they could lose their land due to an inability to pay the taxes. That then puts economic pressures on landowners that would lead them to selling out to large conglomerates.
For example, if you have prime farmland and choose not to capitalize on it, you'd have a big incentive to sell-out to a company like Monsanto, or else lose the land or go bankrupt paying the taxes. Yet if you were taxed on the land's income (and services consumed,) you'd be able to afford the taxes which would be based on output rather than potential output.
This would benefit everyone, except perhaps country property appraisal offices. As it is now, you're taxed based on potential market value and not necessarily real value. Real value can't be determined until someone actually pays money for a property -- anything before the actual purchase is just somewhat educated speculation.