inequality tariff populist income tax

Monbiot With Churchill on Rents to Close Wealth Gap
land value tax unearned gift parasite

The Perils of Income Inequality

The past and future of taxation meet below. We excerpt two 2012/13 articles from (1) Huffington Post, Nov 5, on tariffs by G. Stone, and (2) Guardian, Jan 21, on reversing hoarding by G. Monbiot.

by Geoffrey R. Stone and by George Monbiot

Before passage of the Sixteenth Amendment to the US Constitution, the federal government obtained its funds primarily from tariffs on imported goods. The effect of these tariffs was to artificially raise the price of foreign products and thus to protect American manufacturers from international competition. American workers and farmers paid more for their purchases, while the moguls of industry (whom we would today recognize as "the 1 percent") reaped the benefit.

By the mid-1890s, in the midst of a devastating depression, tariff reform leapt to the front of electoral politics. In order to lower artificially-inflated prices, Populists and Democrats demanded tariff reform. To make up for lost revenue to the government, in 1894, congressional Democrats enacted a federal income tax.

But the Supreme Court, then -- as now -- controlled by a coterie of very conservative justices, wasted no time in holding the income tax unconstitutional.

Republicans in a Senate dominated by a cadre of men representing the boardrooms of corporate America enacted an even more aggressive tariff. This led to a bitter dispute that eventually split the Republican Party, paving the way for the Democratic Party's capture of the White House by Woodrow Wilson in 1912.

Wilson made tariff reform his first priority. He denounced high tariffs as a hidden subsidy to industrialists. In 1913, the Underwood Tariff Act, which was supported by a coalition of Democrats and progressive Republicans, cut tariff rates by more than a quarter. To make up for the reduction in federal revenue, Congress once again turned to the idea of a federal income tax.

Because the Supreme Court had ruled a legislated income tax unconstitutional, Congress proposed the Sixteenth Amendmennt, which was ratified by the states. Congress then enacted an income tax that left most workers and farmers untaxed, but focused primarily on corporations and the wealthiest Americans.

Over the past half-century a succession of Republican administrations, representing the same constituents as those who opposed the income tax a century ago, has lowered the marginal tax rate on the wealthiest Americans from 90 percent under President Eisenhower, to 70 percent under President Nixon, to 50 percent under President Reagan, to 35 percent under President George W. Bush.

To read more

JJS: Most people assume taxes are necessary and fail to consider quid pro quo fees and dues for services rendered.

The most expensive flat in that favorite central London haunt of the international super-rich, One Hyde Park, cost £135m. The owner pays £1,369 in council tax, or 0.001% of its value. The Sultan of Brunei pays only £32 a month more for his pleasure dome in Kensington Palace Gardens than some of the poorest people in the same London borough. The simplest, fairest, and least avoidable levy is called land value tax.

The term is a misnomer. It's not really a tax. It's a return to the public of the benefits we have donated to the landlords. When land rises in value, the government and the people deliver a great unearned gift to those who happen to own it. In 1909 Winston Churchill noted that.

As Churchill, Adam Smith, and many others have pointed out, those who own the land skim wealth from everyone else, without exertion or enterprise. A land value tax would recoup this toll.

It would have a number of other benefits. It stops the speculative land hoarding that prevents homes from being built. It ensures that the most valuable real estate -– in city centres -– is developed first, discouraging urban sprawl. It prevents speculative property bubbles, of the kind that have recently trashed the economies of Ireland, Spain, and other nations, and that make rents and first homes so hard to afford. And it could probably discharge the entire deficit.

The skivers and shirkers sucking the money out of your pockets are not the recipients of social security. We are being parasitised from above, not below, and the tax system reflects this.

To read more

JJS: Not only should residents pay a rent for surface land, but so should businesses, and for resources, too. If society were to recover the values of nature in use, including the airwaves, and charge full value for privileges like corporate charters, it’d have plenty of money to share, and it’d close the income gap at the same time.

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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 .

Also see:

US Orders Tariffs on Chinese Solar Panels
http://www.progress.org/2012/hardinga.htm

n Indonesia, It's Blatant, In the US It's Subtle
http://www.progress.org/2012/washtrad.htm

Land Booms, Capital Stretch-Out, & Banking Collapse
http://www.progress.org/2012/landboom.htm

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