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Tax
Simplification, Tax
Simplicity
Bill Batt: The Fallacy
of the "Three-Legged Stool" Metaphor
... This is why the principle of simplicity is important: the more complex the
tax design, the more lawyers and accountants will find
loopholes, encourage the appearance of unfairness, and
drive up the cost of its administration. People know that
with simple taxes other parties are also paying their
fair share, and all this enhances the legitimacy and
therefore the compliance of the tax system.
...
Bill Batt: Who Says Cities
are Poor? They Just Don't Know How to Tax Their
Wealth!
People are frequently most concerned about the
fairness of a tax, which is typically measured according
to both horizontal and vertical equity. Horizontal equity
means that those in similar circumstances will bear
similar burdens. Vertical equity prescribes that those
with greater resources will pay more. Although studies
have yet to show this, land taxes are likely the most
"progressive" of any levy, as tenants bear no
passed-through burden at all.[22] Not only does
no household or office tenant bear any tax burden,
locational sites distant from the urban core, mostly
homeowners and farmers, typically find their burden
reduced. Vacant or underused lots in high value areas
pick up the difference, employing a design that employs
an alternate criterion of equity: taxing according to
use. "Paying for what you take and not for what you make"
encourages efficient consumption of space and resources
in an automatic and non-coercive manner. The one-third of
households that own no land are relieved of all taxes,
and residential and non-residential property owners split
the rest. Farmers, whose land is typically of
inconsequential value relative to sites in urban areas,
are likely to pay little if anything even if they are not
already protected by other save-harmless provisions. By
eliminating taxes on building improvements they typically
enjoy savings just as do other businesses.
All this makes for a far simpler and more
comprehensible system of taxation. Land taxes are totally
transparent, impossible to evade, and therefore much more
administrable. This further engenders the legitimacy of
taxation and of government itself. What it also does is
assure stability to the tax system, for the reason that
land values are not subject to the variations and
vacillations that other tax bases frequently have.
Indeed, the removal of economic rent from locational
sites discourages speculative bubbles and the related
economic cycles that are associated with them. This
greater stability and reliability is to the advantage of
every sector of the economy — private, public, and
non-profit. ... read the
whole article
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