Greeks face off. What happens when the police switch sides?
(Image by Murplejane) Permission Details DMCA
The problem of capital flight Steven Jonas identifies as happening in Greece and as a cautionary tale for Leftists, is not as hard to deal with as it sounds. There were two part-contemporaries of Karl Marx, cited by Jonas who effectively did it, without that being even their main objective: Henry George (1839-1897) and President Abraham Lincoln.
George came up with a formal and thorough description of a tax that has actually been around to some degree since the Old Testament (economists, like humans, have to re-learn the lessons of the past, over and over). It was called the Land Value Tax. The Land Value Tax is a tax on the site value of the Land, primarily though it is also a tax on resource-wealth and even, in modern form, on pollution. None of these forms of taxation, unlike taxes on income or sales, can be driven offshore -- income taxes drive income offshore, while taxes on sales drive sales offshore. But taxes on Land (the classical economic term meaning ALL of nature's resources and most importantly, location) cannot be avoided. This satisfies one of the cannons of taxation, first laid out by Adam Smith, who also advocated taxing landowners on their unearned income. Here they are (see slide 13):
1. Light on production
2. Easy and cheap to collect
The Land Value Tax satisfies all of
these, including #1 because it is merely collecting for the public good what
the landowner currently collects for his private gain. It is also Fair (#4) because it is the
community demand that created the value of the location in the first
place. It is Easy and cheap to
collect because locational value, apart from improvements like buildings which
are untaxed, is something brokers and assessors have been determining for
centuries, and it is easier than ever with modern computerized tools. The Land Value Tax, at least in this
country, could raise trillions in America, as I document in my new book, "America is
Not Broke!" and even in Greece, where the value of housing (read:
Land) has declined 50%, there are vast under-taxed estates.
Collapse in House Prices is really a collapse in Land prices
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Rather than selling off public lands at fire-sale prices to the outside Troika or other vulture capitalists, Greece should retain these, and then collect full rental value on its private properties, which by definition cannot be moved offshore.