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Comment by chongli | Hacker News Reader

It’s regressive because rich people pay a smaller total percentage of their income in VAT, compared to poor people. That’s the definition of a regressive tax. Progressive taxes flip that trend. A land value tax is progressive because rich people tend to own more land and thus end up paying more tax, percentage-wise, than poor people.

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The progressive / regressive terminology takes it for granted that income is the right denominator to measure against, rather than consumption, which is not obvious in my opinion.

Are you implying that consumption is a bad thing and we should discourage it? That would put consumption taxes in the category of Pigovian taxes [1] in your eyes. If that is the case, and other sales tax supporters agree with you, then it's not obvious from this discussion.

In my experience, it's generally been the case that rich people are anti-consumption, at least on a personal level. Poor people often splurge on luxuries to relieve some of the pressure of grinding poverty. They buy things to signal status in order to attract a partner. A sales tax on luxuries like this is effectively a wealth transfer from the poor to the rich, not altogether dissimilar to government-run lotteries which fund scholarships.

[1] https://en.wikipedia.org/wiki/Pigovian_tax

He simply said "perhaps consumption is a better way to tax people than income." Which is quite the opposite of what you think he said.

Not really, landlord will pass costs through to renter. So the Land Value Tax isn't really paid the the land owner but by the tenant of the land, through the land owner, to the Gov.

And the Gov sees the rich land owner as the source, not the renter. And it makes the land-owmer seem like their taxes are high - when the burden is not theirs

> Not really, landlord will pass costs through to renter.

This argument, followed to its logical conclusion, would tell us to abandon all taxes, all monetary penalties short of total seizure, and any form of finance-based incentive on companies and landlords.

So, what would you propose instead?

Edit: ....Also, this ignores the fact that not all land owned by the wealthy is being rented. Indeed, there are landlords that deliberately keep units empty, in part to reduce supply and keep the price of the units they rent higher. Taxing them even when they're inactive would prevent this kind of perverse incentive and help (at least in some small way) to alleviate the housing shortages in some areas.

Wealth tax is the alternative. It's a tax rich folk cannot pass-thru.

It is not like one tax type or another will prevent them from rising prices to lay their taxes if they are powerful enough.

Land Value Tax is not the same thing as property tax. LVT is a tax on the unimproved value of the land. That means when the owner builds something on the land, it does not affect the tax. Instead, the tax increases when the value of the land increases due to external factors, such as a new light rail transit line is built.

This means that a wealthy person owning an empty lot in an expensive part of the city pays just as much tax as the condominium owner next door. This encourages the empty lot owner to build and collect some rents in order to offset the tax. This ultimately increases the supply of real estate and puts downward pressure on rent.

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