I could take a few different paths to back up my claim that property taxes are the most evil form of taxes, but I’ll stick with the angry rant. There is no topic that gets me hotter under the collar than property taxes, and I’m flummoxed when so-called libertarians are pro-property taxes. I’m not big into purity tests for libertarians, but I may just make an exception for the Georgists.
Instead of doing a comparative analysis of different types of taxes, I’m going to explain why land is no different than any other sort of personal property in the realm of justifying taxation, and I’m also going to explain why land is different from other property in the realm of personal liberty. Perhaps if I can be persuasive in showing that there is no good reason to single out real property for a possession tax and there is plenty of good reason to single out real property for protection from government, I can make a decent case for deep-sixing property taxes.
The Marxist Fallacy of Labor as Value
Cutting to the chase, the single most glaring flaw of Georgism is that it’s predicated on the labor theory of value. It ignores the value of capital, the value of ingenuity with regard to capital, and the value of taking on risk. In a simplistic Georgist view, we can somehow separate the value obtained through labor from the value inherent in a product. See, to the Georgist, sand is sand, and it’s owned by the community. If you bag it up and sell it, you’re only entitled to be compensated for the service of bagging it. If you melt it into glass, we somehow have to separate out the value of the sand from the value of the glass, and the value of the sand goes to the government to be used to the benefit of the community. Of course, like any other crypto-communist solution, the Georgist government is going to have to appoint omniscient superhumans to staff the boards and councils used to determine exactly how much of the $100 for the glass pane is for the communal sand and how much is for the transformation to glass. Nevermind the fact that the guy buying the pane of glass wouldn’t have even paid a penny for the untransformed sand. You know, because he needs a pane of glass, not a sandbox. Nevermind, also, the next-door neighbor who wouldn’t pay a penny for the pane of glass, but would pay $20 for the untransformed sand.
Tearing this down to its most basic, Georgist economics suffers from the same misconception as socialism, that there is a “true price” for a good, and that the “true price” reflects some “true input value” of capital and some “true transformative value” of the labor put into the capital.
Can’t Quite Describe It
Much like the ubiquitous water weenie, it’s near impossible to grab hold of the difference between land and land-derived goods in the Georgist philosophy. What makes land community owned but my coffee table mine? This is where the stupidity of the property tax shines through. See, if the coffee table is 100% mine, then I had to have, at some point, paid the community for the portion of natural resources (trees) that were used to build my table. Assuming that a sales tax was this theoretical payment, it still makes no sense that I must pay a yearly remittance on my land. The TOP MEN have decreed that 6% of my table was community owned, and I paid 6% tax to purchase the table. However, property tax is infinite taxation. It is countably infinite, but it is infinite nonetheless. If I were to own the land forever, I would pay property taxes forever. If it worked like the table, a property owner would be allowed to pay a one-time fee to the community for the value of the underlying natural resources (standard “there’s no such thing as true value” disclaimers apply), and then own the property sans encumbrance.
The fact that property tax is infinite taxation leads to one of two conclusions. Either 1) natural resources are infinitely valuable and labor sullies that infinite value (a premise that can be dismissed without discussion); or 2) something magical happens when you transform natural resources that makes them no longer property of the community. Even if we were to accept the second premise, it still does not explain why improved land is still subject to property tax. Like the water weenie, any coherent classification of what is subject to property tax seems to slip through our hands.
Property Ownership as Deprivation of the Community’s Right
The single most unconvincing portion of Georgism is this pervasive hostility to private ownership of natural resources. This concept that the “community” owns the land and all value inherent therein. This neo-feudalist idea that the modern Crown grants the modern peasant a tenancy on the land to make public good come from the land is antiquated and hostile to natural rights theory. It amazes me to see so many otherwise brilliant libertarian thinkers fall hook, line, and sinker for this magical thinking that bestows upon the government special rights and privileges made up wholecloth, rather than granted from its constituents. Basic application of the NAP says that 5 guys with guns and badges can’t do anything that 5 guys with guns and torches can’t do. Similarly, the “community” (or society or the government or whatever name we give a collection of people) does not have a claim to the property unless members of the community, in the aggregate, have at least that same claim to the property. If no other person has a legitimate claim to the property, then who could? God? Gaia? The government is ill equipped to adjudicate ownership conflicts between man and God (much good it would do, anyway).
I have found no convincing philosophical argument establishing a communal right to land. In fact, most Georgists seem to shift to a more utilitarian mode of argumentation when this comes up.
Property Taxes: the Original Penaltax
I see that my rant is running long and getting incoherent, so I’ll quickly wrap it up. Property taxes are a tax on inaction, much like the O-care penaltax. Broadening that out, if government were truly a product of a Social Contract, and that contract were to be said, with a straight face, to be voluntary, there would need to be some course of action able to be taken to openly reject said Social Contract. No action is more clearly a refutation of society and the Social Contract than hermitage, and the modern equivalent: homesteading. A self-confinement to one’s dwelling, self-sufficiency, nearly non-existent use of the community assets. One’s dwelling is their retreat from the “community.” Furthermore, it is a mandatory part of human existence. People can exist without incomes, without commerce, without vices. However, even the homeless have a cardboard box and a sleeping bag. To tax one’s dwelling is to reach into that last corner of their life untouched by the “community” and say “we still own you, even when you try to get away.”
Appeals to fairness be damned. Ones right to property ownership is not subject to some balancing test against the desires of the community. Either land can be owned outright, or we are slaves captured by a do-gooding master.
Sorry for the sloppy article. I may address property taxes as payment for community services in the comments, but needless to say, I think it is just petty rationalization. Selling one’s soul to the Devil isn’t less Hellish just because they got a few trinkets in return.
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