2% Asset Tax Can Eliminate All Other Taxes
invite response
2011 Nov 2, 5:54am 34,103 views 98 comments
« First « Previous Comments 97 - 98 of 98 Search these comments
Because in order to have a rational "Free Market" you have to exactly determine the value of things.
If the value of things can be exactly determined, why would there be a market at all? Free or otherwise. If an apple is exactly 25 cents everywhere, why would anyone move it from the orchard to the supermarket?
It is not at all easy to assess the value of illiquid assets like houses. I just recent bought a house on the open market MLS listed for weeks, yet tax assessor in that particular town insists the valuation is 3x what I paid! I'd love to flip it to the town this very moment for half of the assessed value!
That's why asset tax is fraught with valuation problems. The value is extremely difficult to assess . . . in fact price discovery is the very function of a market place. To think that tax assessors know the best smack of the good old soviet style central planning, where the central bureau has massive table for the "correct price" for everything, yet not much gets traded at those officially "correct prices."
In addition, the tax itself would affect valuation. For example, if something yields only 2% return a year, a 2% asset tax would make it worth exactly zero! An example would be a currently $1M house that can collect $20,000/yr rent (after insurance, water, sewer and maintenance repairs, but before tax), if the property tax were $20,000/yr, how much is the house worth? ZERO!
Some people hold assets they might not be able to afford to keep at 2% load. Also, some people might own something very expensive and would have to liquidate it or the position to afford to pay 2%. Also, value is subjective and market driven. Whats the value of a priceless heirloom or a numismatic coin.
I do think those with massive wealth/power power/wealth need to pay into the system a bit more than currently, but stuff like this is tough.
I would say a consumption tax and a luxury tax is probably the best way to go with exemptions for life staples on the consumption side.
However, our idiot corrupt moron government would just spend the extra revenue and load the system even further.
« First « Previous Comments 97 - 98 of 98 Search these comments
If the total value of all US assets is about $200 trillion, and the total tax revenue in the US (federal, state, and local combined) is about $4 trillion per year, then it follows that a simple tax of 2% on all US assets would pay all taxes.
So we could eliminate the income tax, the sales tax, the inheritance tax, and the current property tax.
Here's one estimate of all US assets at $188 trillion:
http://rutledgecapital.com/2009/05/24/total-assets-of-the-us-economy-188-trillion-134xgdp/
Here's US federal tax revenue at $2.7 trillion:
http://en.wikipedia.org/wiki/Federal_tax_revenue_by_state
A 2% tax on all assets is simple and fair, and pretty easy to verify for large assets (real estate, stock, bonds). Why not do it?
#housing