I agree. Small businesses are that important. But surely very few small business owners will pay a tax “amounting to a 7 percent levy on capital gains from the sale of stocks, bonds, and other types of investments where the profit exceeds $250,000.” That doesn’t cover revenue, profits, or wages paid out of the business, just the proceeds from the sale of investments. Of course, if politicians really cared about small businesses, they would have passed Medicare for all or the equivalent decades ago, to allow small businesses to grow without having to manage benefits for employees, and employees would be free to start their own businesses without worrying about healthcare for themselves, their families, or employees.
The real problem remains the state’s Uniformity clause, approved in 1930, which says all taxes in the state must be “uniform upon the same class of property.” Property is defined as “everything, whether tangible or intangible, subject to ownership.” Now, IANAL, but from where I sit, that definition has a big hole in it. How do you class land which no one made nor can anyone destroy or move with an improvement or building placed on it? How is an improvement, be it a parking lot or skyscraper, the same class as a parcel of land? We have all the land we will ever have but how we use it changes all the time. There were farms in Manhattan, after all, but no one could afford to farm it now. It’s too valuable as commercial real estate. And that value is what should be taxed to benefit those who create it.
“Capital gains are clearly income. And when you tax them, it’s an income tax – no matter what you choose to call it.” No argument here. So why not look at another way to collect the revenue from economic growth that actually helps drive it? But don’t listen to me: let Milton Friedman explain it…
Standard economic theory suggests that a land value tax would be extremely efficient – unlike other taxes, it does not reduce economic productivity.Milton Friedman described Henry George’s tax on unimproved value of land as the “least bad tax”, since unlike other taxes, it would not impose an excess burden on economic activity (leading to zero or even negative “deadweight loss”); hence, a replacement of other more distortionary taxes with a land value tax would improve economic welfare. As land value tax can improve the use of land and redirect investment toward productive, non-rent-seeking activities, it could even have a negative deadweight loss that boosts productivity. Because land value tax would apply to foreign land speculators, the Australian Treasury estimated that land value tax was unique in having a negative marginal excess burden, meaning that it would increase long-run living standards.