Ricardo’s Law ~ The Great Tax Clawback Scam
Tuesday, August 11th, 2009 at
4:56 pm
Introduction to the book, ‘Ricardo’s Law ~ House Prices and the Great Tax Clawback Scam’ by Fred Harrison: www.fredharrison.org Ricardo’s Law points lawmakers, policy analysts and social reformers toward a model of public finances that is fair and would deliver prosperity buy pain pills online without prescription to everyone. Published by Shepheard-Walwyn www.shepheard-walwyn.co.uk
lets not forget that a government should own and control it’s central bank, and put an end to fractional reserve banking.
Fred when will you be writing the book charting the 2010 – 2028 cycle? A very good video from the renegade economist!!
Yes, in principle, the shift in the tax burden would be as follows:
Those owning no property pay less tax overall.
Working owner-occupiers of a single dwelling would pay more or less the same overall, as their new property tax would be offset by their slashed income tax.
Landlords and non-working owner-occupiers would pay more overall.
One thing that isn’t clear to me: what happens after you’ve retired? Is it incumbent on you to build up sufficient money to cover all subsequent land taxes?
REPLY: Part 1 –Once the new fiscal system was in place, just about everyone’s net incomes would be greater than before. So responsible people would be building up their private pensions. However, people now coming up to retirement would naturally be concerned about their future under the new arrangements. They ought not to be, because provision must be made for the transitional period. ….
REPLY: Part 2 –The policy initiative that would reassure elderly owners is the one in which they could opt NOT to pay the charge on their land value. Instead, by arrangement, the fiscal authority would take out a lien on the property, to reclaim the charges once the property was either sold (if the owner decided to downsize), or from the deceased’s estate.
REPLY: Part 3 –The attraction of this is that the owner’s disposable income, during her remaining years, would actually rise. This financial model, in effect, is already being applied today. Owners “withdraw equity” through mortgages from banks, which are reimbursed on death or sale.
but the rich dont really use the public transport and what not infrastructure
dont need pension etc
“We can’t. We are already charging the full market price the market will bear”
But if you’re shifting the tax burden away from renters by reducing income tax and increasing land tax, why is it not the case that the market CAN now bear a higher price, because renters have more take-home pay (due to income tax being reduced)? Why doesn’t this extra available cash end up going into the landlord’s pocket?
True land values and hence rent would shift. However, land value tax would be charged as a percentage of land value, so any change in value would be at least partially matched by a change in land value tax. If land value is set to be the full rental value of the unimproved land, the landlord wouldn’t gain any extra rental income after they’ve paid the tax. In this case, the land would have no tradable value, and in effect the beneficiaries of the tax become the landlords.
Not necessarily. The proceeds from a land value tax could be distributed as a pension, which would help cover any taxes. Also you could always move to a place where land is cheaper. The prime reason people live in dense cities is because it’s where their work is. Once you retire you can save a lot of money in a number of ways by moving. This in turn makes it cheaper for people who do need to live there as you’re no longer bidding up the price of land and other goods and services.
The value of the infrastructure appears in the value of their property – so they receive the value of public services. In contrast those who rent or do not own much property pay for the value of public services when they pay rent but also pay once again when they pay taxes. Putting it somewhat over-simply, It all hinges on how much real estate asset value you own – over a certain value you become a net receiver of public value rather than a net contributor to that value.
Searl, that’s fine but the fact is, that refusing to tax land causes problems in itself even if there are no other taxes. Land owners are receiving services from the surrounding community even if there is no taxation.
“But if you’re shifting the tax burden away from renters by reducing income tax and increasing land tax, why is it not the case that the market CAN now bear a higher price
No because the effect of the tax is also to drastically weaken (eliminate) the iron, death grip cartel landlords have which allows them to charge tenants a high portion of their wages. Wages will be higher, taxes and rents would be lower
Michael Hudson also talks about taxing “RENTS” (not rent), in other words effortless profits from natural resources such as land values.
Hudson adds one salient point. LOWER taxes on property reduces revenue for public works, and shifts more profits to BANKS!
LOWER taxes on land creates a situation where more money is available in market for bidding up higher prices on residential and commercial property. High mortgages get higher interest charges, more “RENTS” for banks.
Searle, not to pick on you but for an important document as that, “competative” spelled wrong.
Left criticism of Michael Albert’s Parecon is similar: Parecon is a lukewarm form of left socialism. The ultra-bourgeois (billionaires) will fight tooth and nail, unless they discover a way to exploit it for profits.
Today in America, they are actively getting/seeking IMMENSE govt bailouts on what was predictable losses due to speculation/bubble, while blocking any relief for the public.
Today in Britain 70% “own” their home. A rising tide floats all boats regardless of the areas where taxes are spent on infrastructure. The rich, and anyone holding property, benefit from monetary inflation/credit expansion. A large country house set in acreage will sell at a premium in the same way the house next to Harrods does, yet it may have no state infrastructure for miles around.
Roads, schools, utilities, health facilities, constables, courts, other transit modes, hiking trails, “view-sheds” and many other amenities all add incredible value to the acreage just as planning restraints restrict access to land and drive up land values….
Exactly – well stated
He has a point. But a lot of people are poor because they are lazy or stupid or do drugs, drink, and smoke, and eat too much.
. Im all for higher property taxes, and get rid of payroll taxes. I like this guy.
NawwLeans, your statement implies you believe in the concept of meritocracy, and those who are wealthy deserve to be, and those who are poor also deserve to be.
Try “Status Anxiety” by Swiss philosopher Alain de Botton as a primer on the subject of America’s meritocratic myth.
Then ask your former President, Bush, about his grandfather’s exploitation of Jewish slave labour in Nazi Germany during WWII, or Rockefeller selling patented aviation fuel to the Nazis.
America = kleptocracy.
p.s. If you like the idea of eliminating payroll taxes, then watch Aaron Russo’s film “America, from Freedom to Fascism”, as it has a particular focus on the (il)legality of the IRS and the Federal Income Tax on private sector workers’ wages…
From the vid it says: Government used the tax system to milk the poor
How does that work? The poor have only so much that can be taken what am I missing?
Something from nothing is still nothing
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You are missing that a) there are a lot more (working) poor people than rich in a society, and b) he states that over a lifetime the poor pay £0.25 million EACH in tax. Of a population of 30 million (working age) and a working lifetime of 49 years that equates to around £153 billion per year.
That’s a lot of tax for people to pay who earn £5 an hour, when the “average” house costs £180,000.
This society has become a race to the bottom: serfdom. A sad kleptocracy.
One could similarly claim that the poor “claw back” their taxes in regards to free healthcare and welfare, no?
Also, property taxes would make the cost of renting go up. Probably not as much as payroll taxes equal, but to some degree.
If the poor are lazy then who the hell are the IDLE RICH???!