Monday, 1 November 2010

Efficient taxes

Sinclair Davidson spoke against efficient taxes at this year's Mont Pelerin meetings. My summary of that portion of his talk: you want the duck to squawk when it's being plucked lest the bird be completely denuded. If we take a leviathan model of taxation rather than a public interest model, then high excess burden can be a plus rather than a minus.

Colby Cosh writes in favour of Georgist land taxes. A tax based on the unimproved value of land would be about as efficient as can be achieved. But as I suggested here last year, switching from income to land tax is a risky game. It's politically easy to reinstitute punitive tax rates on higher income cohorts. Unless this kind of tax switch is accompanied by credible long term cuts to overall spending, the size of government is likely to creep up.

If I could push a button that would flip our current tax structure to a pure Georgist land tax, with a guarantee that the move wouldn't affect the overall size of government, I'd push the button. As is, I'd prefer to snip the wires to keep others from pushing the button.

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