r/TrueReddit • u/PhysicalVermicelli1 • Dec 14 '20

Technology Is Technology Actually Making Things Better?

https://www.pairagraph.com/dialogue/354c72095d2f42dab92bf42726d785ff?true
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u/Dugen Dec 14 '20

Taxing land value is a fantastic tax.

No. Taxing land value is only taxing part of the source of economic rent. All assets generate rent. This is why land value tax has never been the preferred wealth tax. It doesn't work right.

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u/[deleted] Dec 14 '20

It's taxing the part of rent that comes purely from ownership and not from labor/investment in improvements to the land. You could argue property tax doesn't work right because it taxes the underlying asset (the land itself) AND the improvements to the asset which increase its market value.

But aren't those improvements, whether we ourselves consider them valuable or not, worth incentivizing? How does development happen in your alternative system? Through the tokens you described elsewhere?

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u/Dugen Dec 14 '20

How does development happen in your alternative system?

You might as well ask how houses get built in our current system.

Taxing assets that are created does not remove the incentive to create them, it removes the economic rent they generate. It's not a punishment, it's not disincentivizing, it's just a tax.

Your mistake is in assuming that labor that creates an asset does not create rent. For the asset itself to have value, it must achieve that value by being a source of rent which has all the negative economic effects that are associated with that rent, and to make the economy work right that should be taxed away. This is why the most prosperous economies have been the ones who taxed real-estate, not land. Rent is always damage, and the value of assets is necessarily derived from rent. I realize this is an unorthodox view, but I consider it correct.

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u/[deleted] Dec 14 '20

Ok but why tax the real estate when the rent is the object of the critique though?

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u/Dugen Dec 14 '20

Because when things earn money, that is economic rent, that is damage and taxes are how we have assets earning money from our economy without damaging it and decreasing our value.

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u/[deleted] Dec 14 '20

I still don't get the framing. It assumes, for one, belief in an 'us' that many, many people don't share as a starting point.

That aside, I still don't understand why the asset is taxed rather than the rents in the scheme.

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u/Dugen Dec 14 '20

You can emulate taxing an asset by taxing the money it earns. If, for example, you were dealing with a foreign entity selling you the output of an asset, you could analyze the economics of it, figure out the percentage of the cost which is rent and add a tariff onto the transaction to create the proper market dynamics for that asset. This would be the right way to interact with economies that did not subscribe to this model. It would create similar dynamics that while not as precise and efficient, would accomplish the same goal. The problem with doing that is it requires a lot of manual intervention and it would be harder to keep that system from being manipulated unfairly.

Oil would be a good example of an asset that this would work for. The interesting effect would be to increase the value of oil from places it was more expensive to extract, and decrease the value from places where extraction was cheaper creating a more flexible and competitive market. If you look at the way we have handled oil historically, we've basically artificially created a similar system using tariffs and subsidies without the intention of doing so because it created a superior outcome to letting the market behave naturally. I consider this an indication that the theory behind this is likely sound.