|An aspect of fiscal policy|
A land value tax or location value tax (LVT), also called a site valuation tax, split rate tax, or site-value rating, is an ad valorem levy on the unimproved value of land. Unlike property taxes, it disregards the value of buildings, personal property and other improvements to real estate.A land value tax is generally favored by economists as (unlike other taxes) it does not cause economic inefficiency, and it tends to reduce inequality.
Land value tax has been referred to as "the perfect tax" and the economic efficiency of a land value tax has been known since the eighteenth century.Many economists since Adam Smith and David Ricardo have advocated this tax, but it is most famously associated with Henry George, who argued that because the supply of land is fixed and its location value is created by communities and public works, the economic rent of land is the most logical source of public revenue.
A land value tax is a progressive tax, in that the tax burden falls on titleholders in proportion to the value of locations, the ownership of which is highly correlated with overall wealth and income.Land value taxation is currently implemented throughout Denmark, Estonia, Lithuania, Russia, Singapore, and Taiwan; it has also been applied to smaller extents in subregions of Australia, Mexico (Mexicali), and the United States (e.g., Pennsylvania).
Most taxes distort economic decisions and suppress beneficial economic activity.LVT is payable regardless of how well or poorly land is actually used. Because the supply of land is essentially fixed, land rents depend on what tenants are prepared to pay, rather than on landlord expenses, preventing landlords from passing LVT to tenants.
The direct beneficiaries of incremental improvements to the area surrounding a site are the land's occupants. Such improvements shift tenants' demand curve to the right. Landlords benefit from price competition among tenants; the only direct effect of LVT in this case is to reduce the amount of social benefit that is privately captured as land price by titleholders.
LVT is said to be justified for economic reasons because it does not deter production, distort markets, or otherwise create deadweight loss. Land value tax can even have negative deadweight loss (social benefits), particularly when land use improves.Nobel Prize-winner William Vickrey believed that
"removing almost all business taxes, including property taxes on improvements, excepting only taxes reflecting the marginal social cost of public services rendered to specific activities, and replacing them with taxes on site values, would substantially improve the economic efficiency of the jurisdiction."
A positive relationship of LVT and market efficiency is predicted by economic theory and has been observed in practice.Fred Foldvary stated that the tax encourages landowners to develop vacant/underused land or to sell it. He claimed that because LVT deters speculative land holding, dilapidated inner city areas return to productive use, reducing the pressure to build on undeveloped sites and so reducing urban sprawl. For example, Harrisburg, Pennsylvania in the United States has taxed land at a rate six times that on improvements since 1975. This policy was credited by mayor Stephen R. Reed with reducing the number of vacant structures in downtown Harrisburg from around 4,200 in 1982 to fewer than 500.
LVT is arguably an ecotax because it discourages the waste of prime locations, which are a finite resource.LVT is an efficient tax to collect because unlike labour and capital, land cannot be hidden or relocated. Many urban planners claim that LVT is an effective method to promote transit-oriented development.
The value of land is related to the value it can provide over time. This value can be measured by the ground rent that a piece of land can rent for on the market. The present value of ground-rent is the basis for land prices. A land value tax (LVT) will reduce the ground rent received by the landlord, and thus will decrease the price of land, holding all else constant. The rent charged for land may also decrease as a result of efficiency gains if speculators stop hoarding unused land.
Real estate bubbles direct savings towards rent seeking activities rather than other investments and can contribute to recessions. Advocates claim that LVT reduces the speculative element in land pricing, thereby leaving more money for productive capital investment.
At sufficiently high levels, land value tax would cause real estate prices to fall by removing land rents that would otherwise become 'capitalized' into the price of real estate. It also encourages landowners to sell or relinquish titles to locations that they are not using. This might cause some landowners, especially pure landowners, to resist high land value tax rates. Landowners often possess significant political influence, so this may explain the limited spread of land value taxes so far.
A land value tax has progressive tax effects, in that it is paid by the owners of valuable land who tend to be the rich, and since the amount of land is fixed, the tax burden cannot be passed on as higher rents or lower wages to tenants, consumers or workers.
Several practical issues are involved in the implementation of a land value tax. Most notably, it must be:
Levying a land value tax is straightforward, requiring only a valuation of the land and a title register. Value assessment can be difficult in practice. In a 1796 United States Supreme Court opinion, Justice William Paterson said that leaving the valuation process up to assessors would cause bureaucratic complexities, as well as non-uniform assessments.Murray Rothbard later raised similar concerns, claiming that no government can fairly assess value, and that this can only be determined by a free market.
Compared to modern day property tax evaluations, land valuations involve fewer variables and have smoother gradients than valuations that include improvements. This is due to variation of building style, quality and size between lots. Modern statistical techniques have eased the process; in the 1960s and 1970s, multivariate analysis was introduced as an assessment means.Usually, such a valuation process commences with a measurement of the most and least valuable land within the taxation area. A few sites of intermediate value are then identified and used as "landmark" values. Other values are filled in between the landmark values. The data is then collated in a database and linked to a unique property reference number, "smoothed" and mapped using a geographic information system (GIS). Thus, even if the initial valuation is difficult, once the system is in use, successive valuations become easier. Although still easily distorted by corrupt politicians through the excuse of the complex coding.
In the context of land value taxation as a single tax (replacing all other taxes), some have argued that LVT alone cannot raise enough revenues.However, the presence of other taxes can reduce land values and hence the amount of revenue that can be raised from them. The Physiocrats argued that all taxes are ultimately at the expense of land rental values. Most modern LVT systems function alongside other taxes and thus only reduce their impact without removing them. Land taxes that are higher than the rental surplus (the full land rent for that time period) would result in landowner abandonment.
In some countries, LVT is impractical because of uncertainty regarding land titles and established land ownership and tenure. For instance a parcel of grazing land may be communally owned by village inhabitants and administered by village elders. The land in question would need to be held in a trust or similar body for taxation purposes. If the government cannot accurately define ownership boundaries and ascertain the proper owners, it cannot know from whom to collect the tax. The lack of clear titles is found in many developing countries.In African countries with imperfect land registration, boundaries may be poorly surveyed and the owner can be unknown. LVT proponents argue that such owners can be made to identify themselves under penalty of losing the land.
The owner of a vacant lot in a thriving city must still pay a tax and would rationally perceive the property as a financial liability, encouraging him/her to put the land to use in order to cover the tax. LVT removes financial incentives to hold unused land solely for price appreciation, making more land available for productive uses. Land value tax creates an incentive to convert these sites to more intensive private uses or into public purposes.
The selling price of a good that is fixed in supply, such as land, decreases if it is taxed. By contrast, the price of manufactured goods can rise in response to increased taxes, because the higher price reduces the number of units that are made. The price increase is how the maker passes along some part of the tax to consumers.However, if the revenue from LVT is used to reduce other taxes or to provide valuable public investment, it can cause land prices to rise as a result of higher productivity, by more than the amount that LVT removed.
Land tax incidence rests completely upon landlords, although business sectors that provide services to landlords are indirectly impacted. In some economies, 80 percent of bank lending finances real estate, with a large portion of that for land.Reduced demand for land speculation might reduce the amount of circulating bank credit.
While owners cannot charge higher rent to compensate for LVT, removing other taxes may increase rents.
Assuming constant demand, an increase in constructed space decreases the cost of improvements to land such as houses. Shifting property taxes from improvements to land encourages development. Infill of underutilized urban space is one common practice to reduce urban sprawl.
LVT is less vulnerable to tax evasion, since land cannot be concealed or moved overseas and titles are easily identified, as they are registered with the public.Land value assessments are usually considered public information, which is available upon request. Transparency reduces tax evasion.
Land acquires a scarcity value owing to the competing needs for space. The value of land generally owes nothing to the landowner and everything to the surroundings. LVT supporters claim that the value of land depends on the community.
In religious terms, it has been claimed that land is God's gift to mankind.For example, the Roman Catholic Church as part of its "universal destination of goods" principle asserts:
Everyone knows that the Fathers of the Church laid down the duty of the rich toward the poor in no uncertain terms. As St. Ambrose put it: "You are not making a gift of what is yours to the poor man, but you are giving him back what is his. You have been appropriating things that are meant to be for the common use of everyone. The earth belongs to everyone, not to the rich."
In addition, the Church maintains that political authority has the right and duty to regulate, including the right to tax, the legitimate exercise of the right to ownership for the sake of the common good.
LVT considers the effect on land value of location, and of improvements made to neighbouring land, such as proximity to roads and public works. LVT is the purest implementation of the public finance principle known as value capture.
A public works project can increase land values and thus increase LVT revenues. Arguably, public improvements should be paid for by the landowners who benefit from them.Thus, LVT captures the value of socially created wealth, allowing a reduction in tax on privately created (non-land) wealth.
LVT generally is a progressive tax, with those of greater means paying more,in that land ownership is correlated to incomes and landlords cannot shift the tax burden onto tenants. LVT generally reduces economic inequality, removes incentives to misuse real estate, and reduces the vulnerability of economies to property bubbles and their collapse.
Land value taxation began after the introduction of agriculture. It was originally based on crop yield. This early version of the tax required simply sharing the yield at the time of the harvest, on a yearly basis. [ clarification needed ]
Aryan sages of ancient India claimed that land should be held in common and that unfarmed land should produce the same tax as productive land. "The earth ...is common to all beings enjoying the fruit of their own labour; it belongs...to all alike"; therefore, "there should be left some for everyone". Apastamba said "If any person holding land does not exert himself and hence bears no produce, he shall, if rich, be made to pay what ought to have been produced".
Menciuswas a Chinese philosopher (around 300 BCE) who advocated for the elimination of taxes and tariffs, to be replaced by the public collection of urban land rent: "In the market-places, charge land-rent, but don't tax the goods."
During the Middle-Ages, in the West, the first regular and permanent land tax system was based on a unit of land known as the hide. The hide was originally an amount of land sufficient to support a household, but later became subject to a land tax known as "geld".
The physiocrats were a group of economists who believed that the wealth of nations was derived solely from the value of land agriculture or land development. Before the Industrial Revolution, this was approximately correct. Physiocracy is one of the "early modern" schools of economics. Physiocrats called for the abolition of all existing taxes, completely free trade and a single tax on land.They did not distinguish between the intrinsic value of land and ground rent. Their theories originated in France and were most popular during the second half of the 18th century. The movement was particularly dominated by Anne Robert Jacques Turgot (1727–1781) and François Quesnay (1694–1774). It influenced contemporary statesmen, such as Charles Alexandre de Calonne. The Physiocrats were highly influential in the early history of land value taxation in the United States.
A participant in the Radical Movement, Thomas Paine contended in his Agrarian Justice pamphlet that all citizens should be paid 15 pounds at age 21 "as a compensation in part for the loss of his or her natural inheritance by the introduction of the system of landed property." "Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."This proposal was the origin of the citizen's dividend advocated by Geolibertarianism. Thomas Spence advocated a similar proposal except that the land rent would be distributed equally each year regardless of age.
Adam Smith, in his 1776 book The Wealth of Nations , first rigorously analyzed the effects of a land value tax, pointing out how it would not hurt economic activity, and how it would not raise land rents.
Ground-rents are a still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground. More or less can be got for it according as the competitors happen to be richer or poorer, or can afford to gratify their fancy for a particular spot of ground at a greater or smaller expense. In every country the greatest number of rich competitors is in the capital, and it is there accordingly that the highest ground-rents are always to be found. As the wealth of those competitors would in no respect be increased by a tax upon ground-rents, they would not probably be disposed to pay more for the use of the ground. Whether the tax was to be advanced by the inhabitant, or by the owner of the ground, would be of little importance. The more the inhabitant was obliged to pay for the tax, the less he would incline to pay for the ground; so that the final payment of the tax would fall altogether upon the owner of the ground-rent.— Adam Smith, The Wealth of Nations, Book V, Chapter 2, Article I: Taxes upon the Rent of Houses
Henry George (2 September 1839 – 29 October 1897) was perhaps the most famous advocate of recovering land rents for public purposes. An American journalist, politician and political economist, he advocated a "Single Tax" on land that would eliminate the need for all other taxes. In his best-selling work Progress and Poverty (1879), Henry George argued that because the value of land depends on natural qualities combined with the economic activity of communities, including public investments, the economic rent of land was the best source of tax revenue.This book significantly influenced land taxation in the United States and other countries, including Denmark, which continues 'grundskyld' (Ground Duty) as a key component of its tax system. The philosophy that natural resource rents should be captured by society is now often known as Georgism. Its relevance to public finance is underpinned by the Henry George theorem.
After the 1868 Meiji Restoration in Japan, Land Tax Reform was undertaken. A land value tax was implemented beginning in 1873. By 1880 initial problems with valuation and rural opposition had been overcome and rapid industrialisation began.
In the United Kingdom, LVT was an important part of the platform of the Liberal Party during the early part of the twentieth century: David Lloyd George and H. H. Asquith proposed "to free the land that from this very hour is shackled with the chains of feudalism."It was also advocated by Winston Churchill early in his career. The modern Liberal Party (not to be confused with the Liberal Democrats, who are the heir to the earlier Liberal Party and who offer some support for the idea ) remains committed to a local form of land value taxation, as do the Green Party of England and Wales and the Scottish Green Party.
The 1931 Labour budget included a land value tax, but before it came into force it was repealed by the Conservative-dominated National Government that followed shortly after.
An attempt at introducing site value taxation in the administrative County of London was made by the local authority under the leadership of Herbert Morrison in the 1938–9 Parliament, called the London Rating (Site Values) Bill. Although it failed, it detailed legislation for the implementation of a system of land value taxation using annual value assessment.
After 1945, the Labour Party adopted the policy, against substantial opposition, of collecting "development value": the increase in land price arising from planning consent. This was one of the provisions of the Town and Country Planning Act 1947, but it was repealed when the Labour government lost power in 1951.
Senior Labour figures in recent times have advocated an LVT, notably Andy Burnham in his 2010 leadership campaign, current Leader of the Opposition Jeremy Corbyn and Shadow Chancellor John McDonnell.
Alfred Marshall argued in favour of a "fresh air rate", a tax to be charged to urban landowners and ‘‘levied on that value of urban land that is caused by the concentration of population’’.That ‘‘general rate’’ should have ‘‘to be spent on breaking out small green spots in the midst of dense industrial districts, and on the preservation of large green areas between different towns and between different suburbs which are tending to coalesce’’. This idea influenced Marshall's pupil Arthur Pigou's ideas on taxing negative externalities.
Paul Samuelson supported a land value tax. "Our ideal society finds it essential to put a rent on land as a way of maximizing the total consumption available to the society. ...Pure land rent is in the nature of a 'surplus' which can be taxed heavily without distorting production incentives or efficiency. A land value tax can be called 'the useful tax on measured land surplus'."
Milton Friedman stated: "There's a sense in which all taxes are antagonistic to free enterprise – and yet we need taxes. ...So the question is, which are the least bad taxes? In my opinion the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago."
Michael Hudson is a proponent for taxing rent, especially land rent.".... politically, taxing economic rent has become the bête noire of neoliberal globalism. It is what property owners and rentiers fear most of all, as land, subsoil resources and natural monopolies far exceed industrial capital in magnitude. What appears in the statistics at first glance as "profit" turns out upon examination to be Ricardian or "economic" rent."
Paul Krugman agreed that a land value tax is efficient, however he disputed whether it should be considered a single tax, as he believed it would not be enough alone, excluding taxes on natural resource rents and other Georgist taxes, to fund a welfare state. "Believe it or not, urban economics models actually do suggest that Georgist taxation would be the right approach at least to finance city growth. But I would just say: I don’t think you can raise nearly enough money to run a modern welfare state by taxing land [only]."
Joseph Stiglitz, articulating the Henry George theorem wrote that, "Not only was Henry George correct that a tax on land is nondistortionary, but in an equilitarian society ... tax on land raises just enough revenue to finance the (optimally chosen) level of government expenditure."
Rick Falkvinge has proposed a "Simplified taxless state" where the state is said to own all the land it can defend from other states, and may lease this land to people at market rates.
Land value taxes were common in Western Canada at the turn of the twentieth century. In Vancouver LVT became the sole form of municipal taxation in 1910 under the leadership of mayor, Louis D. Taylor.Gary B. Nixon (2000) stated that the rate never exceeded 2% of land value, too low to prevent the speculation that led directly to the 1913 real estate crash. All Canadian provinces later taxed improvements.
Land taxes in Australia are levied by the states, and generally apply to land holdings only within a particular state. The exemption thresholds vary, as do the tax rates and other rules.
In New South Wales, the state land tax exempts farmland and principal residences and there is a tax threshold. Determination of land value for tax purposes is the responsibility of the Valuer-General.In Victoria, the land tax threshold is $250,000 on the total value of all Victorian property owned by a person as at 31 December of each year, and taxed at a progressive rate. The principal residence, primary production land and land used by a charity are exempt from land tax. In Tasmania the threshold is $25,000 and the audit date is 1 July. Between $25,000 and $350,000 the tax rate is 0.55% and over $350,000 it is 1.5%. In Queensland, the threshold for individuals is $600,000 and $350,000 for other entities, and the audit date is 30 June. In South Australia the threshold is $332,000 and taxed at a progressive rate, the audit date is 30 June.
By revenue, property taxes represent 4.5% of total taxation in Australia.A government report in 1986 for Brisbane, Queensland advocated a land tax.
The Henry Tax Review of 2010 commissioned by the federal government recommended that state governments replace stamp duty with land value tax. The review proposed multiple marginal rates and that most agricultural land would be in the lowest band with a rate of zero. Only the Australian Capital Territory moved to adopt this system and planned to reduce stamp duty by 5% and raise land tax by 5% for each of twenty years.
Common property taxes include land value, which usually has a separate assessment. Thus, land value taxation already exists in many jurisdictions. Some jurisdictions have attempted to rely more heavily on it. In Pennsylvania certain cities raised the tax on land value while reducing the tax on improvement/building/structure values. For example, the city of Altoona adopted a property tax that solely taxes land value in 2002 but repealed the tax in 2016.
In the late 19th century followers of Henry George founded a single tax colony at Fairhope, Alabama. Although the colony, now a nonprofit corporation, still holds land in the area and collects a relatively small ground rent, the land is subject to state and local property taxes.
Government rent in Hong Kong, formerly the crown rent, is levied in addition to Rates. For properties that are located in the New Territories (including New Kowloon), or located in the rest of the territory and whose land grant was recorded after 27 May 1985, government rent is levied at 3% of the rateable rental value.
Estonia levies a land value tax which is used to fund local municipalities. It is a state level tax, but 100% of the revenue is used to fund Local Councils. The rate is set by the Local Council within the limits of 0.1-2.5%. It is one of the most important sources of funding for municipalities.The land value tax is levied on the value of the land only, improvements are not considered. Very few exemptions are considered on the land tax and even public institutions are subject to the land value tax. Land that is the site of a church is exempt, but other land held by religious institutions is not exempt. The tax has contributed to a high rate (~90%) of owner-occupied residences within Estonia, compared to a rate of 67.4% in the United States.
Kenya's LVT history dates to at least 1972, shortly after it achieved independence. Local governments must tax land value, but are required to seek approval from the central government for rates that exceed 4 percent. Buildings were not taxed in Kenya as of 2000. The central government is legally required to pay municipalities for the value of land it occupies. Kelly claimed that maybe as a result of this land reform, Kenya became the only stable country in its region.As of late 2014, the city of Nairobi was still taxing only land values, although a tax on improvements had been proposed.
A land value taxation on rural land was introduced in Namibia, with the primary intention of improving land use.
Singapore owns the majority of its land which it leases for 99-year terms. In addition, Singapore also taxing development uplift at around 70%. These two sources of revenue fund most of Singapore's new infrastructure.
As of 2010, Land Value Taxes and Land Value Increment Taxes accounted for 8.4% of total government revenue in Taiwan.
The capital city of Baja California, Mexicali, has had a Land Value Tax since the 1990s when it became the first locality in Mexico to implement such a tax.
In 1990, several economists wroteto then President Mikhail Gorbachev suggesting that Russia adopt LVT; its failure to do so was argued as causal in the rise of the Oligarchs. Currently, Russia has a very modest Land Value tax of 0.3% on residential, agricultural and utilities lands as well as a 1.5% tax for other types of land.
China's Real Rights Law contains provisions founded on LVT analysis.
In 2010 the government of Ireland announced that it would introduce an LVT, beginning in 2013.However following a 2011 change in government, a property value tax was introduced instead (see Local property tax (Ireland)).
After decades of a modest Land Value Tax, New Zealand abolished the tax in 1990. Discussions remain as to whether or not to bring it back (see Land Taxes in New Zealand).
In September 1908 Prime Minister Lloyd George instructed McKenna, the First Lord of the Admiralty, to build more Dreadnought battleships in the financial year to the following April, the ships were to be financed by a proposed new Land Tax. Lloyd George believed relating national defence to land tax would both provoke the opposition of the House of Lords and rally the people round a simple emotive issue. The House of Lords, composed of wealthy land owners, rejected the Budget in November 1909, leading to a constitutional crisis.
LVT was on the UK statute books briefly in 1931, introduced by Philip Snowden’s 1931 budget, strongly supported by prominent LVT campaigner Andrew MacLaren MP. MacLaren lost his seat at the next election (1931) and the act was repealed, MacLaren tried again with a private member's bill in 1937; it was rejected 141 to 118.
Labour Land Campaign activities within the Labour party and the broader Labour movement for "a more equitable distribution of the Land Values that are created by the whole community" through LVT. Its membership includes members of the British Labour Party, Trade Unions and Cooperatives and individuals.The Liberal Democrats' ALTER (Action for Land Taxation and Economic Reform) aims
to improve the understanding of and support for Land Value Taxation amongst members of the Liberal Democrats; to encourage all Liberal Democrats to promote and campaign for this policy as part of a more sustainable and just resource based economic system in which no one is enslaved by poverty; and to cooperate with other bodies, both inside and outside the Liberal Democrat Party, who share these objectives.
The Green Party "favour moving to a system of Land Value Tax, where the level of taxation depends on the rental value of the land concerned."
A course in "Economics with Justice"with a strong foundation in LVT are offered at the School of Economic Science, which was founded by Andrew MacLaren MP and has historical links with the Henry George Foundation.
Since the establishment of the Scottish Parliament in 1999, interest in adopting a land value tax in Scotland has grown.
In February 1998, the Scottish Office of the British Government launched a public consultation process on land reform.A survey of the public response found that: "excluding the responses of the lairds and their agents, reckoned as likely prejudiced against the measure, 20% of all responses favoured the land tax" (12% in grand total, without the exclusions). The government responded by announcing "a comprehensive economic evaluation of the possible impact of moving to a land value taxation basis". However, no measure was adopted.
In 2000 the Parliament’s Local Government Committee'sinquiry into local government finance explicitly included LVT, but the final report omitted any mention.
In 2003 the Scottish Parliament passed a resolution: "That the Parliament notes recent studies by the Scottish Executive and is interested in building on them by considering and investigating the contribution that land value taxation could make to the cultural, economic, environmental and democratic renaissance of Scotland."
In 2004 a letter of support was sent from members of the Scottish Parliament to the organisers and delegates of the IU’s 24th international conference—including members of the Scottish Green Party, Scottish Socialist Party and the Scottish National Party.
The policy was considered the 2006 Scottish Local Government Finance Review whose 2007 Reportconcluded that "although land value taxation meets a number of our criteria, we question whether the public would accept the upheaval involved in radical reform of this nature, unless they could clearly understand the nature of the change and the benefits involved.... We considered at length the many positive features of a land value tax which are consistent with our recommended local property tax [LPT], particularly its progressive nature." However, "[h]aving considered both rateable value and land value as the basis for taxation, we concur with Layfield (UK Committee of Inquiry, 1976) who recommended that any local property tax should be based on capital values."
In 2009, Glasgow City Council resolved to introduce LVT: "the idea could become the blueprint for Scotland’s future local taxation"The Council agreed to a "long term move to a local property tax / land value tax hybrid tax": Its Local Taxation Working Group stated that simple [non-hybrid] land value taxation should itself "not be discounted as an option for local taxation reform: it potentially holds many benefits and addresses many existing concerns".
In Zimbabwe, government coalition partners the Movement for Democratic Change adopted LVT.
Republic of South Africa
This section needs expansion. You can help by adding to it.(November 2019)
|Country||Average rate||Lowest rate||Highest rate||Year||Name||Description|
|2.627%||1.6%||3.4%||2013||grundskyldspromille / ejendomsskat||The municipality (kommune) decides the local tax rate within 1.6 and 3.4 percent|
A tax is a compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures. A failure to pay, along with evasion of or resistance to taxation, is punishable by law. Taxes consist of direct or indirect taxes and may be paid in money or as its labour equivalent. The first known taxation took place in Ancient Egypt around 3000–2800 BC.
Proposition 13 was an amendment of the Constitution of California enacted during 1978, by means of the initiative process. The initiative was approved by California voters on June 6, 1978. It was upheld as constitutional by the United States Supreme Court in the case of Nordlinger v. Hahn, 505 U.S. 1 (1992). Proposition 13 is embodied in Article XIII A of the Constitution of the State of California.
Georgism, also called geoism and single tax (archaic), is an economic ideology holding that, while people should own the value they produce themselves, economic value derived from land should belong equally to all members of society. Developed from the writings of the economist and social reformer Henry George, the Georgist paradigm seeks solutions to social and ecological problems, based on principles of land rights and public finance which attempt to integrate economic efficiency with social justice.
A property tax or millage rate is an ad valorem tax on the value of a property, usually levied on real estate. The tax is levied by the governing authority of the jurisdiction in which the property is located. This can be a national government, a federated state, a county or geographical region or a municipality. Multiple jurisdictions may tax the same property.
Geolibertarianism is a political and economic ideology which integrates libertarianism with Georgism. It is a moderate, softly propertarian strain of left-libertarian thought, often associated with radical centrism.
Rates are a type of property tax system in the United Kingdom, and in places with systems deriving from the British one, the proceeds of which are used to fund local government. Some other countries have taxes with a more or less comparable role, like France's taxe d'habitation.
A single tax is a system of taxation based mainly or exclusively on one tax, typically chosen for its special properties, often being a tax on land value. The idea of a single tax on land values was proposed independently by John Locke and Baruch Spinoza in the 17th century. The French physiocrats later coined the term impôt unique because of the unique characteristics of land and rent.
Taxation in the United Kingdom may involve payments to at least three different levels of government: central government, devolved governments and local government. Central government revenues come primarily from income tax, National Insurance contributions, value added tax, corporation tax and fuel duty. Local government revenues come primarily from grants from central government funds, business rates in England, Council Tax and increasingly from fees and charges such as those for on-street parking. In the fiscal year 2014–15, total government revenue was forecast to be £648 billion, or 37.7 per cent of GDP, with net taxes and National Insurance contributions standing at £606 billion.
As a legal term, ground rent specifically refers to regular payments made by a holder of a leasehold property to the freeholder or a superior leaseholder, as required under a lease. In this sense, a ground rent is created when a freehold piece of land is sold on a long lease or leases. The ground rent provides an income for the landowner. In economics, ground rent is a form of economic rent meaning all value accruing to titleholders as a result of the exclusive ownership of title privilege to location.
Affordability of housing in the UK reflects the ability to rent or buy property. Housing tenure in the UK has the following main types: Owner-occupied; Private Rented Sector (PRS); and Social Rented Sector (SRS). The affordability of housing in the UK varies widely on a regional basis – house prices and rents will differ as a result of market factors such as the state of the local economy, transport links and the supply of housing.
A Finance Act is the headline fiscal (budgetary) legislation enacted by the UK Parliament, containing multiple provisions as to taxes, duties, exemptions and reliefs at least once per year, and in particular setting out the principal tax rates for each fiscal year.
Taxes in New Zealand are collected at a national level by the Inland Revenue Department (IRD) on behalf of the Government of New Zealand. National taxes are levied on personal and business income, and on the supply of goods and services. There is no capital gains tax, although certain "gains" such as profits on the sale of patent rights are deemed to be income – income tax does apply to property transactions in certain circumstances, particularly speculation. There are currently no land taxes, but local property taxes (rates) are managed and collected by local authorities. Some goods and services carry a specific tax, referred to as an excise or a duty, such as alcohol excise or gaming duty. These are collected by a range of government agencies such as the New Zealand Customs Service. There is no social security (payroll) tax.
The Valuation Office Agency is a government body in England and Wales. It is an executive agency of Her Majesty's Revenue and Customs.
Value capture is a type of public financing that recovers some or all of the value that public infrastructure generates for private landowners.
Optimal tax theory or the theory of optimal taxation is the study of designing and implementing a tax that maximises a social welfare function subject to economic constraints. The social welfare function used is typically a function of individuals' utilities, most commonly some form of utilitarian function, so the tax system is chosen to maximise the aggregate of individual utilities. Tax revenue is required to fund the provision of public goods and other government services, as well as for redistribution from rich to poor individuals. However, most taxes distort individual behavior, because the activity that is taxed becomes relatively less desirable; for instance, taxes on labour income reduce the incentive to work. The optimization problem involves minimizing the distortions caused by taxation, while achieving desired levels of redistribution and revenue. Some taxes are thought to be less distorting, such as lump-sum taxes and Pigouvian taxes, where the market consumption of a good is inefficient and a tax brings consumption closer to the efficient level.
Helvering v. Bruun, 309 U.S. 461 (1940), was an income tax case before the Supreme Court of the United States. It is notable for holding that under section 22(a) of the Revenue Act of 1932, a landlord realizes a taxable gain when he repossesses property, the value of which has increased because the property was improved by a tenant.
Taxation in Denmark consists of a comprehensive system of direct and indirect taxes. Ever since the income tax was introduced in Denmark via a fundamental tax reform in 1903, it has been a fundamental pillar in the Danish tax system. Today various personal and corporate income taxes yield around two thirds of the total Danish tax revenues, indirect taxes being responsible for the last third. The state personal income tax is a progressive tax while the municipal income tax is a proportional tax above a certain income level.
Land value taxation has a long history in the United States dating back from Physiocrat influence on Thomas Jefferson and Benjamin Franklin. It is most famously associated with Henry George and his book Progress and Poverty (1879), which argued that because the supply of land is fixed and its location value is created by communities and public works, the economic rent of land is the most logical source of public revenue. and which had considerable impact on turn-of-the-century reform movements in America and elsewhere. Every single state in the United States has some form of property tax on real estate and hence, in part, a tax on land value. However, Pennsylvania in particular has seen local attempts to rely more heavily on the taxation of land value.
Most local governments in the United States impose a property tax, also known as a millage rate, as a principal source of revenue. This tax may be imposed on real estate or personal property. The tax is nearly always computed as the fair market value of the property times an assessment ratio times a tax rate, and is generally an obligation of the owner of the property. Values are determined by local officials, and may be disputed by property owners. For the taxing authority, one advantage of the property tax over the sales tax or income tax is that the revenue always equals the tax levy, unlike the other taxes. The property tax typically produces the required revenue for municipalities' tax levies. A disadvantage to the taxpayer is that the tax liability is fixed, while the taxpayer's income is not.
The history of taxation in the United Kingdom includes the history of all collections by governments under law, in money or in kind, including collections by monarchs and lesser feudal lords, levied on persons or property subject to the government, with the primary purpose of raising revenue.
Ground-rents are a still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground.
A land tax is considered a progressive tax in that wealthy landowners normally should be paying relatively more than poorer landowners and tenants. Conversely, a tax on buildings can be said to be regressive, falling heavily on tenants who generally are poorer than the landlords
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