Monday, March 8, 2010

Reconsidering taxes

It would not surprise the reader to learn that I'm generally in favor of public reinterpretation of taxes and taxation. The joke goes that a republican can't say "tax" without "cut," and that a democrat can't say "tax" without "on the rich," and this sort of vastly undercuts what should be understood as a public good.

Jeremy Adam Smith has some interesting commentary on this. He describes his local faltering infrastructure and laments the inadequacy of the currently defined tax base. His home of San Francisco is in particular trouble what with the state of California capping property tax at 1%. It is interesting that he does not mention this, given that most of the public goods that he mentions as depending on taxation are location-based: schools, libraries, public transit – mind you, I'm very optimistic about reducing the location-dependence of public education and information, but at the moment, most people's education is still determined very largely by where they live. Smith's personal connection with the dismal situation regarding public taxation is he just did his taxes, presumably income taxation – another odd disconnect.

He goes into detail about public transit, and cites a study [pdf] that illustrates fantastically what kind of public good a usable transit system is:

Providing high quality public transit service typically requires about $268 in annual subsidies and $108 in additional fares per capita, but reduces vehicle, parking and road costs an average of $1,040 per capita. For an average household this works out to $775 annually in additional public transit expenses and $2,350 in vehicle, parking and roadway savings, or $1,575 in overall net savings, in addition to other benefits including congestion reductions, reduced traffic accidents, pollution emission reductions, improved mobility for non-drivers, and improved public fitness and health.

The value of that savings is reflected in the value of the property that is serviced by such a transit system – which is to say that unless that fifteen hundred dollars is recollected in property taxes, landowners are given a handout.

But the important point is: this transit service costs significantly less than than the value it produces. The local government would not need to recollect all the land value it created to fund the transit services that create it. It could be argued that the government would have the right to, because they created the value and not the landowner, but if it were to do so, a legitimate government of the people would in turn return such value to its citizens equally, not just to the landowners.

If one must call the people recollecting the value they created a "tax," then so be it.

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