mortality tax repeal oecd mining tax

Living Longer to Avoid Taxes
lvt toronto downtown

The OECD and Independent writer For a Tax

Taxes cause loud complaints but a certain type of taxation actually is much better than the rest of its ilk. We trim, blend, and append (1) one article from Uppsala University (Sweden), Working Paper 2007:8, on delaying death by Marcus Eliason and Henry Ohlsson, and three 2010 articles from: (2) BBC, Nov 14, on Australia; (3) The Independent, Nov 15, on land concentration by Roy Douglas; and (4) Frank de Jong of the Canadian Greens and the Robert Schalkenbach Foundation, Nov 17, on Toronto.

by M. Eliason and H. Ohlsson, by BBC, by R. Douglas, and by F. de Jong

Does taxation affect the timing of death? Whether terminally ill persons are able to postpone their death by will is a controversial issue. Some studies have shown that deaths seem to be postponed until after symbolically meaningful occasions such as birthdays and religious holidays, but there is no consensus in the literature. We found on the day immediately preceding repeal of inheritance taxes, the number of deaths decreased 16.3%, whereas no effect is found in any other day in the 14-day period surrounding the repeal.

JJS: So taxes do influence our behavior, big time (duh). That makes some taxes onerous, others fair. A tax on the parts of nature we use is not onerous because nobody had to exert any effort to produce any nature, and its value is generated by society acting in concert. So a major voice calls for such a tax.

The Organisation for Economic Cooperation and Development (OECD) has called on Australia to extend its new mining tax to all mining companies, not just the largest.

The body said the planned tax, which has proved very unpopular with miners, was "justified" and should also be extended to all commodities.

Former Prime Minister Kevin Rudd had set the Australian mining tax at 40% of miners' profits. However, following strong opposition from mining giants such as Rio Tinto and BHP Billiton, a compromise to set the rate at 30% for coal and iron ore miners was agreed in July with his successor, Julia Gillard.

But the OECD said some of the potential gains from the tax would be lost "by its relatively low level and by its coverage of only larger firms and certain sectors".

"A well-designed resource rent tax extended to all commodities and all companies irrespective of their size would be desirable," the body said.

JJS: Besides taxing resources below (or above) the surface, it’s also a good idea to tax the surface itself, a sentiment a British newspaper published.

Harriet Walker raises the immensely important question of the maldistribution of land in Britain (Opinion, 11 November). Three members of the present Cabinet -- Nick Clegg, Vince Cable and Chris Huhne -- were (and presumably still are) honorary officers of Action for Land Taxing and Economic Reform, the Lib Dem organization which presses for land value taxation. LVT is the only device which will ensure that the value of land is shared equitably throughout the community. Will they stick by their principles and impress them on their Tory colleagues?

JJS: More than just advocate it, some citizens -- and powerful ones at that -- actually did it.

Hundreds of frustrated Toronto landowners and merchants have taken matters into their own hands, voluntarily taxing themselves to finance a redesign of their local street.

Six hundred and fifty-eight businesses in the Bloor and Yonge shopping district agreed to levy themselves $20 million to finance sidewalk widening, adding benches and granite planters, and planting trees along the street.

But don't assume that these particular Toronto business owners were simply overflowing with civic pride. These merchants knew what all merchants know; improved street design boosts business. More people will visit the area, stay longer, enjoy their experience more, invite friends, and return repeatedly.

Clearly, these businesses were able to afford the $20 million voluntary levy without fear of bankruptcy. The anticipated increased economic activity was no doubt more than adequate to finance the levy, the ROI no doubt healthy. Commercial leases and residential rents would rise, but the increased commercial activity would more than compensate. Landowners would benefit from the rise in land values.

This win-win example is a model for Toronto and, indeed, every other city, town, and village. But why should citizens and businesses be driven to self-finance local improvements when municipalities could employ land value taxation to do the job?

Unlike the present municipal tax -- which is applied to both land value and building value -- LVT is a levy on land value alone, leaving buildings (improvements) untaxed, so as not to punish owners from renovating or expanding the building stock. By levying land value alone, municipalities would collect a portion of the "community-generated" income that accrues annually to land, sufficient to finance city programs and infrastructure construction and maintenance.

Recovering a percentage of land value, regardless of how land is used, encourages land owners to put land to its best use or sell it to someone who will, reducing suburban sprawl and spurring redevelopment of vacant and derelict properties. Collecting this rent for public purposes deflates land speculation, the cause of destructive and disruptive real estate bubbles. Indeed, not collecting the economic rent of land damages the economy by rewarding land speculators rather than rewarding productive enterprises.

Furthermore, infrastructure construction, when based on LVT, becomes a self-regulating system, immune to political interference and pork-barrel politics. Warranted infrastructure will pay for itself while non-warranted infrastructure will not, so political whimsy or self-serving schemes to build white elephants are exposed.

Adopting LVT can be smoothly accomplished by gradually shifting municipal fees off buildings and onto the land beneath. The ensuing benefits will include a re-invigorated economy, more jobs, needed infrastructure, improved urban design, a move to low-energy walkable neighborhoods, improved building stock, sufficient affordable housing, less sprawl and strip development, more land left to nature.


Editor Jeffery J. Smith runs the Forum on Geonomics.

Also see:

Most private fortunes come from public favors

Australia and Kenya propose ways to settle claims

Toronto To Collect Billboard Rent

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