Tax Reform Debate
|January 9, 2007||Posted by Staff under Progress Report, The Progress Report|
Tax Reform Debate
Site Revenue Not Taxes Be it resolved that all taxation be done away with, replaced by the market revenues of sites throughout the nation. “Sites” are generally thought to be land-locations, but they can also be air-waves, internet site-names, landing slots at airports, access to over-crowded freeways, etc., etc.
There are three major virtues of using site-revenue fees as a substitute for taxation: simplicity, fairness, and non-distortion of the economy.
The simplicity of site-revenue is apparent. There is no need for businesses to hire teams of accountants whose purpose is to legally conceal profits from the tax-man. Site-revenue is determined by the market price for the use of a site for a particular period of time. Market pricing of sites removes a great deal of complexity from taxation, as there is very little need for assessment–which can be arbitrary, corrupt or incompetent. The only exception to this rule is that a lookout must be kept for collusion. So, assessors take on the role of watchdogs, rather than of active economic players.
On the receiving end, there is no need for the govt to hire armies of tax-collectors whose most effective tool is intimidation. The entire IRS would be replaced by the existing pool of county tax assessors, who are already in place across the United States.
The fairness of site-revenue is also apparent. A country may seem huge, but it has only a finite number of revenue-capable sites. Yet, its armies and legal system must protect the entire landmass/ airwaves, etc. It only seems fair that those who would privately profit from the use of part of that entity should help to support the defense of their property, whether they make profits or losses at the end of the day.
It can be considered a fair cost of doing business in a country, which is directly proportionate to the amount and quality of land which is utilized. Since the utilization of land excludes all other businesses from using that same parcel–which is a hidden cost to competition–it is only fair that a higher amount be paid to the community or govt for the exclusive use of good land.
Further, under the system of site-revenues, there is no longer any fear of failure to pay taxes resulting in criminal penalties. The only crime involved would be the fraud of manipulating the market price of sites.
But the most important aspect of site-revenue collection is its non-distortion. It is the only “neutral tax.” If we tax profits, great teams of accountants are hired to disguise profits and utilize every loophole in the tax code– and the tax code grows beyond the pale of most encyclopedias.
If we tax labor, more and more labor is done “off the books.” If we tax sales, a greater black market for goods is created. If we implement VAT, great hordes of bureaucrats must track every particle of the production process.
Contrast that with the simple, upfront collection of site-revenues. Since the cost of doing business under a system of site-revenue collection is known in advance, there is no need to hire accountants beyond what is needed for balancing the books honestly. Site revenue is a _fixed cost_, which is known even before production and hiring begins. The only distorting feature is that it encourages enterprises to use as little land as is actually needed, and no more.
So, there are plenty of reasons to recommend site-revenue as the most desirable form of public revenue. But the best of all is the ability to finally stop the damaging and wasteful taxation of capital and labor, which has resulted in untold economic distortions, loss of freedoms and the politics of envy.