That’s one thing that (i think) most economists do agree on: the first best tax scheme is a land tax scheme—on the value of the land, not the value added (by building houses, apartment buildings, or skyscrapers).
This is politically infeasible and measuring the value added is difficult, so the second best most economists push for (i think) is a sales tax which at least doesn’t discourage productive behavior.
The income tax, on the other hand, is just a terrible idea.
Many economists do support the land tax, but think it is too low to support government functions. I think a better criteria is—restrict the government only to the extent that you can support with a land tax, since a land tax is basically the approrpriation of a positive externality(civilization all around you)
When the tax approaches the rent of the property, the capitalised land value drops to zero. If the land tax is based on percentages, you’ll have the rate escalating way beyond 100%. No problem for homo economicus, but most real world people would be shocked by seeing property tax rates of 100000%.
That’s one thing that (i think) most economists do agree on: the first best tax scheme is a land tax scheme—on the value of the land, not the value added (by building houses, apartment buildings, or skyscrapers).
This is politically infeasible and measuring the value added is difficult, so the second best most economists push for (i think) is a sales tax which at least doesn’t discourage productive behavior.
The income tax, on the other hand, is just a terrible idea.
Is this your statement or that of economists? (I ask because the rest of your post is about what economists say.)
Both, though like the other statements about what most economists think, I’ll note that I’m not super-certain.
Many economists do support the land tax, but think it is too low to support government functions. I think a better criteria is—restrict the government only to the extent that you can support with a land tax, since a land tax is basically the approrpriation of a positive externality(civilization all around you)
Why can’t the rate just be set higher?
When the tax approaches the rent of the property, the capitalised land value drops to zero. If the land tax is based on percentages, you’ll have the rate escalating way beyond 100%. No problem for homo economicus, but most real world people would be shocked by seeing property tax rates of 100000%.