Saturday, March 10, 2012

Taxing "Wealth" (i.e. property) instead of Income

Britain is in a big debate over tax reform right now, with the conservative government proposing to drop the top individual rate of 50%.  Fifty percent!  We haven't seen that rate in America for some time. Progressives argue that this is the wrong direction; in It's time to shift the tax burden from income to wealth the argument is to drop the income tax all together and shift taxation fully on to property:

"If taxes on income are to be reduced, as they must be, either through a significantly higher personal allowance (as the Liberal Democrats suggest) or through a reduction in the basic rate, then taxes on wealth should be increased. In an age when capital is so mobile and the rich are so adept at avoiding taxation, property taxes have the merit of being easy to collect. Even the most determined tax avoider cannot move his or her mansion to Geneva. In addition, as a recent report from the Organisation for Economic Co-operation and Development noted, property taxes benefit the economy by shifting investment away from housing and into wealth-creating industries. Consequently, they are seen as less economically harmful than taxes on consumption, income and corporations."

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