Forbes Wants the Tax that Does Not Distort
Depardieu and Fat Joe Vs. The Tax Collector
Who's in the wrong? Tax dodgers or tax collectors? We excerpt four articles, two from 2012, two from 2013, from: (1) AP, Jan 7, on Depardieu by E. Ganley; (2) Associated Press, Dec 20, on Fat Joe; (3) Los Angeles Times, Dec 20, on taxing income by M. Kinsley; and (4) Forbes, Dec 22, on taxing land by T. Worstall.
by Elaine Ganley, by the AP, by Michael Kinsley, and by Tim Worstall
Depardieu: 'I'm French' Despite Russian Passport
"I have a Russian passport, but I remain French and I will probably have dual Belgian nationality," he said. "But if I'd wanted to escape the taxman, as the French press says, I would have done it a long time ago."
Depardieu, 64, is one of France's best known actors, has appeared in more than 150 films and has an international following. He has been at the center of a heated debate over tax exiles as France's Socialist government looks to fill state coffers with a hefty tax on the rich. Depardieu drew scorn and insults with his recent decision to move to neighboring Belgium, where taxes are less steep for the well-off.
After Prime Minister Jean-Marc Ayrault called him "pathetic" and "unpatriotic," Depardieu penned an open letter in mid-December saying he was handing in his passport and social security card. Then, over the weekend, Depardieu showed up in Russia to accept a passport delivered personally by President Vladimir Putin.
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Rapper 'Fat Joe' Admits Evading Taxes
Rap star "Fat Joe", a 42-year-old Miami Beach, Fla., resident, faces up to two years in prison after pleading guilty to failing to pay taxes on nearly $3 million in income over two years.
The performer, whose real name is Joseph Cartagena, entered the plea in federal court in New Jersey because some of the companies he earns money from are incorporated there.
Federal prosecutors said the total tax demanded was $718,038.
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JJS: Celebrities would not have any trouble with the tax man if the commentators below had their way.
Tuning the Tax Code: what kinds of taxes do we want?
Throw fairness into the equation: The capital-gains tax is paid by people who trade stocks and bonds, or buy and sell real estate or whole companies. The ordinary income tax is paid by people who work for a living.
Yes, yes, people with capital gains work too. They may even work hard. And they take risks. But it's still a heckuva lot easier to watch your stock go up than it is to work on the assembly line, and adding in a tax differential really adds insult to injury.
Capital gains are also exempt from Social Security and Medicare taxes, which start at the first dollar of ordinary income.
It's sometimes said that capital gains are "taxed twice." First they tax your wage income, and then they tax the return on anything you manage to save out of it. In reality, much of the income of the very rich is not taxed on either occasion.
My favorite economist, Henry George (1839-1897), wanted a tax on the ownership of land, because — unlike almost any other good in our economy — you can't make more of it and you can't make less of it. If you own some, you're at the mercy of the tax collector and have nowhere to hide.
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What Michael Kinsley Gets Wrong About Taxation
George wanted to tax the rental value of unimproved land, as that was the least distortionary tax possible. I also think it’s a great idea: although what really makes it appeal to me is that George went on to say that as this is the only non-distortionary tax then it should be the only tax. And as you cannot get more than about 15% of GDP out of this tax then that would just mean that government (of all levels, added together) would need to shrink to 15% of GDP. Which I also think is a great idea.
Land taxation is, as we know, the least distortionary. Then, with more, comes consumption taxes: things like a sales tax or a VAT. Then, more distortionary again, are taxes on incomes (this includes both income taxes and FICA). Then, again yet more distortionary are taxes on capital and corporations.
So, if we are to try and reduce the distortions from the tax code we want to move from the latter part of the spectrum to the earlier -- have lower taxes on capital than we do on incomes. Best of all would be no taxes on corporations, capital, incomes, or consumption. Just land value taxes and, if you insist, a few sin and Pigou taxes. In which case we’d just have to have a lot less government and a lot fewer politicians: and that would be a real shame, wouldn’t it?
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JJS: Actually, society could recover more than just the value of surface land and could recover those rents without taxing. Besides rents for surface people pay tons for buried resources, the airwaves, and ecosystem services. Government, society’s agent, could also charge full-market value for its privileges, like corporate charters, utility franchises, patents and copyrights, and bankers’ sovereignty. Add up all those flows of wealth and it’s probably three or more times more than the 15% of GDP cited above, plenty for any needed public services with enough left over for a Citizens’ Dividend. And to collect it, you don’t need taxes, since fees, leases, dues, etc, would work just fine. Plus, if you charged land dues instead of taxed income, you’d still have your celebrities for neighbors.
Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .
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