state budgets tax holidays tax free consumer spending

Don't tax sales, do tax land -- People cheer and boo
retailers public services land rent public outcry

More states exempt sales as Frisco leader pushes rent

Poor people get their way some times, but some times their way backfires. We trim, blend, and append three 2010 articles from: (1) USA Today, Aug 2 on holidays by Martha T. Moore; (2) Cairns Post, Aug 6, on a rent hike by Jennifer Eliot; and (3) Warwick Daily News, August 12 on a rent deadline by Jenna Cairney.

by M. Moore, by J. Eliot, and by J. Cairney

Despite state budget troubles, more states than ever are embracing sales tax holidays, which aim to please back-to-school shoppers even as they draw criticism from economists [none of whom were able to predict the recession, unlike geonomists, whose ranks include at least four accurate forecasters].

Illinois will offer tax-free shopping this month for the first time, bringing to 18 the number of states that suspend sales tax on designated days, up from 16 states in 2009 and seven in 2000.

The end of summer is the most popular time for tax holidays: 15 states will suspend sales taxes this month.

In Massachusetts, a bill to offer sales-tax-free shopping in August is awaiting the governor's signature.

Holiday-granting Mississippi, like other states, made deep cuts to balance its budget for fiscal year 2011.

States face a budget gap of $84 billion for fiscal year 2011.

Georgia skipped a tax holiday this year for the first time since 2002. The state faces an estimated $371 million deficit for 2011. Its tax holiday last year, on clothing and school supplies including computers, cost an estimated $13.2 million in lost revenue.

Mark Robyn of the Washington, D.C.-based Tax Foundation, which backs broader tax cuts, says tax-free days cause shoppers to shift their spending, not increase it [but heís not poor and canít be sure how the poor spend; retailers have a different notion].

Retailers say they favor anything that gets consumers into stores. "It might be a short-term thing, it might be a temporary thing, but that's the kind of stimulus" that's needed, says Rachelle Bernstein of the National Retail Federation.

The Center on Budget and Policy Priorities, which analyzes public spending's effect on low-income people, says that states can't afford to give tax holidays.

JJS: Who canít afford to spend? States or poor people? States currently lose revenue (according to them), since they donít recover socially-generated land values. All else being equal, where you drop taxes, you attract people, which pumps up site values. Recovering those rents would easily make up the difference.

Taxes should be forgotten, anyway. Instead, do-gooders need to look at the commonwealth, the social surplus, the money that is already ours -- the worth of Mother Earth, geonomists say. To recover it, you donít need taxes; fees or dues would work just fine.

A candidate for the San Francisco County Board of Supervisors promotes the idea.

Leon Phat: If you pay for where you live, you've paid for public services.

Because the price you pay for the place you live reflects all the things you like about it -- ambiance, area businesses, paved streets, police and fire protection, schools, even the public services such as general assistance and health care.

What's screwy is that the landlord or the bank gets most of this community-generated value. Taxes are placed on work and business. That's wrong. Land values should pay for government because the value of government (if it has any value) is embedded in land value.

I will implement a Community Benefit District Land Rent Tax (CBDLRT) of 50% of the potential land rent of every parcel in his district. This tax, combined with the elimination of business taxes and the local sales tax will result in business moving to the district.

This CBDLRT won't raise the price of rent, it simply reduces the amount of land rent the land owner gets to keep. As business earnings go up (from eliminating business taxes and fees and revoking the local sales tax), and income from merely owning land goes down, landowners will more fully use their land.

JJS: Even though most people know that the three most important things in real estate are location, location, location, and that itís value is generated not by an individual owner but by the surrounding society, most residents still want that money for themselves, such as the Australians below.

Thousands of Far Northerners have been hit with increases as high as 500% in crown land rent.

Cassowary Coast councillor and cane farmer Carmel Sivestro has also been hit with the increase. She is concerned the increase, which mainly affects rural residents, will lead to pest and weed problems as people abandon plots.

Department of Environment and Resource Management director-general John Bradley thinks it is fair and 15 years overdue. "It reflects a fair and reasonable rent taking into account both benefits leaseholders gain from using the land and the stateís cost in administering the leaseholder portfolio, which is currently worth some $6.812 billion."

Following public outcry over a massive rent leap on Crown land, the State Government has been forced into extending the deadline for payment until December 1.

Emu Vale pensioner, Michael Parris, paid $82.50 last year for his 25sq m piece of land, of which he uses only about one square metre. This year the government is charging him $407. ďAs pensioners we find this increase very difficult to meet.Ē

The Department of Environment and Resource Management said, ďThese arrangements are designed to provide a better balance between achieving a financial return to Queensland taxpayers for the private benefit use of state land and recognising the community benefits provided by community service lessees such as sporting clubs and charities.Ē

JJS: Poor pensioners always appear to oppose public recovery of publicly-generated rents, but reporters never cite them in stories about truly onerous taxes, such as those on sales, wages, and homes. And the rich leaseholders whoíd been making out like bandits for the last 15 years donít even make a cameo appearance in articles about recovering ground rents. Such bias!

Nevertheless, peopleís attachment to land and its rental value must be dealt with by geonomists. Rather than give all the rent to government -- who have no greater claim to it than do the people (and perhaps less) -- society should use a healthy portion of the recovered rents to pay residents a dividend, similar to what Aspen Colorado does. Itís how Canadaís British Columbia got a carbon tax passed.

Sharing natural rents should reinforce the realization that Earthís worth belongs to all of us and is the right way to go.


Editor Jeffery J. Smith runs the Forum on Geonomics.

Also see:

Compared to other cities with corruption Ö

In New Zealand, Australia, and Canada Ö

Australia and Kenya propose ways to settle claims

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