--- [EMAIL PROTECTED] wrote: >> A tax on economic rent is neutral, since by definition, economic rent >> is income not necessary in order to put a factor to its most >> productive use. >> Fred Foldvary >> > I'm not sure if I'm following this, but it sounds like you're saying > that it's okay to tax "non-productive" income because that's bad.
I'm surprised that it "sounds" like this, because I see nothing in my statement that implies it. From what do you infer a "bad"? > That sounds > very much again like a Progressive notion of taxation, Do you mean progressive as in the tax rate increasing with income? The rationale for taxing rent has nothing to do with this, and the tax rate would be flat. > Incidentally, you talked earlier about taxing land value rather than rent Taxing land rent is the same as taxing land value. The price or value of land is based on the expected future rent. The simplified formula is: p = r / i, where p is the price of land, r the annual unchanging rent, and i the real interest rate. Given a tax rate t based on p, the equation is p = r / (i+t). The fraction f of rent taxed is thus f = t/(i+t) So for example if i=.05 and t=.20, the tax rate is 20% of the price of land, and the percent of rent taxed = .20/.25 or 80%. > which might, as sometimes happens with existing real > estate taxes, force the owner to sell his or her land just to pay the > tax. That seems like one of the greatest wrongs of all. If that happens, the title holder is underusing his land. Otherwise, it would fetch a market rental higher than the tax on the rent. If the user holds idle land, then it is socially efficient for him to transfer the site to someone who puts it to a more optimal use. Fred Foldvary ===== [EMAIL PROTECTED]
