Land Tax

So I have been continuing to read Henry George's Progress and Poverty and did some math.

If you take his idea and ONLY tax land and not anything else (i.e. income, sales, cigarettes, gas, excise, use, death, inheritance, etc.) then the average tax per acre of land (not including water resources) in the Unites States would be $1012.83 per year.

I get that figure from the total expenditures of the US government (2004) of $2,193 billion (this is the complete expenditure including any deficit spending that we happen to be doing and is not solely what is the accumulated tax revenue of the US, i.e. this is a balanced budget value) and divide it by the total land area of the US (not including any water area such as lakes and rivers and stuff, though it could be included and reduce the tax per acre) which is 3,537,422 square miles or 2,263,950,080 acres (1 sq mi = 640 acres).

So basically for every acre of land, one would pay about $1000 per year per acre.

If you owned 5 acres of land, you would pay $5000 per year as tax to the government.

How much do you pay now per year? Let's see, usually we pay 37% of income, so let's see, if I make say, $30,000 I would be paying the government in income taxes (alone) about $11,000.

I just saved myself $6000, woot go me!

What if I made $500,000 and lived in the same 5 acre land, I would save myself $180,000...woot go me!

Ok, so that seems unrealistic and it sorta is.

If you owned an 80 acre farm (average size) then you would be paying $80,000 per year, ouch!

So the real deal is this. Urban areas are worth more than rural areas. Make sense?

Say I have an acre of farmland in Kansas, is that worth the same as an acre in downtown Manhattan? Umm, no.

So why do the Manhattanites get to only pay $1000 per acre which is a HUGE bargain while those in Kansas have to pay $1000 per acre for farmland which would never make that much income from said acre.

So I did another calculation.

The amount of rural area in the US is 37x that of the urban areas. Say there was a bi-modal system of dividing taxes. One rate for rural, one rate for urban.

Kinda makes more sense than making some swamp in Louisiana worth the same as an acre in Hollywood.

Ok, so if, for example, a rural acre's share was 1/37 that of an urban acre. Yes, I know an extreme example. Then per acre, a farm would have a tax of $27.20 per acre per year. So an average 80 acre farm would pay $2,200 per year. Go me!

Unfortunately, an average acre in the urban area would be $37,717. Ouch.

But still, think about that. A 5 acre homestead in downtown NYC would be taxed $188,586 about the same as is paid now in taxes. Interesting.

So my real point is this. The debt of the US, barring of course reducing our extravagant spending, could be paid for with JUST land taxes that to me seem reasonable. It would completely change the tax system (for the better I must say) and most people would not be spending 40% of their income on income taxes, let alone sales tax etc.

So to round out my simple example, if we raised the per acre rural tax to say $200 then a typical farm would spend $16,187 in taxes per year and the average tax per acre in urban areas is reduced to $31,282. Making the urban family 5 acre homestead $156,410, about $30,000 less than is currently spent on income taxes.

Needless to say, each city/town, county and state would have to evaluate the worth of the land (and NOT the property or use on the land) for themselves and not use my crude calculations.

All I am saying is that it can work, it will free up land that is currently not being used in many urban areas due to speculative land grabbing, and people would be able to retain all of their income and not pay taxes on anything except the land they wanted to live on. If they choose not to then they just pay rent to the landowner (as is currently now) and still have plenty left over from no taxes.

Simple tax system, makes more sense, and frees up money for companies and individuals alike to expand on capital, production and wages.

Go us!