This is assuming zero govt. corruption.
Also, the 1% don't save. They invest. Which would have created the coffee shop in the first place.
There's really no need to blame the 1% for your coffee shops.
You think those are the only kind of investments? The local small businesses don't get loans? The local small businesses don't depend on other businesses?
I guess you are not from the US but I really am a fan of better economics and financial education worldwide.
There are no Scrooge McDucks hoarding gold coins in a vault.
The Scrooge McDucks are landowners who disproportionately benefit from low property taxes relative to the security they receive from the rest of taxpayers paying for police/courts/etc. For example, a coffee shop or whatever business built on someone else’s land might as well just be a job you bought for yourself, because the landowner is going to come for the extra profits at some point.
The US does allow for copyright/IP though, which adds an additional asset to rent seek from.
asking as someone who's never owned property.
https://en.wikipedia.org/wiki/Land_value_tax
Also, get rid of 1031 exchange.
https://en.wikipedia.org/wiki/Internal_Revenue_Code_section_...
Once land is properly taxed, supply of housing units will increase to limit its price.
Precisely why the LVT is inherently flawed and regressive, and prone to abuse and exploitation by the rich and powerful, instead of being dictated by the aggregate market demand of regular citizens.
>Empirical data from the US and France, however, indicates that ownership of land value (in absolute terms) is negatively correlated to the social welfare weight. Middle income households would pay relatively more land value taxes than high income households, but less in absolute terms.
Unfortunately, the "relatively more" aspect (to one's income) is what matters.
LVT is predicated on this idea landowners will be forced to "make efficient" land for common good, as an empty lot is taxed the same as the skyscraper. In practice, this just makes desirable areas unaffordable for the middle class and completely forces out the lower class. e.g. it _makes explicit_ into the tax laws, what is already happening in practice with property tax.
property taxes in a desirable area say "sorry you're poor and your house isn't nice, but you pay less tax than your rich neighbor". LVT says "don't let the door hit you on your poor ass on your way out, but if you want to stay you can pay the same tax as Mr Moneybags next door".
Not to mention the irony that LVT actually decreases the value of the land.
>If buyers know that they’ll have to pay £10,000 in tax on a piece of land they valued at £100,000, they’ll only be willing to pay £90,000 for that land. The tax lowers the returns from land ownership which is reflected in the value of the land. The current owners of land are the ones who bear the full cost of future tax bills.
Again this disproportionately affects the middle class landowner and unceremoniously kicks the lower-class former-landowner who inherited the property out of the landowner class.
LVT is ultimately the billionaire's dream. It's a dressed up neo-Eminent Domain, pretending to be progressive while being punitive to those without means.
Worst of all* is the suggestion LVT it discourages land speculation - it actually does the exact opposite. It severely exacerbates speculation, akin to how people scalp concert tickets or limited edition Jordan shoes today.
*there's also countless issues with trusting the government to evaluate the land; the issue of value vs. area; subjectivness of varying types of land value from agricultural farmland vs. industrial land vs. service-oriented vs. transport/logistics vs. inherent value from resources, but "make the poor family living in a shack pay the same tax as the rich guy who build a skyscraper" is sufficiently flawed without going in depth into those issues.
One is incentivizing land to be used more productively, for example for public transit, higher density housing, so that more people benefit.
Another is a too large rich/poor gap.
The latter problem requires a different solution, which is taxes to redistribute wealth.
Where are the 1% most likely going to invest to maximize profits? More likely with stocks or areas with a higher yield. Sticking with coffee, very unlikely that they will invest in the shop down the road. More likely in Starbucks. Yet franchises actually slowly siphon out the local economy. Unless there is a means to bring wealth back in the community, it will slowly die.
When was the last time you saw Starbucks investing in the community, such as helping finance / sponsor the local boys and girls baseball teams? Would it be more likely that local coffee house or business will be doing just that versus Tesla? Is that not an economical investment, one in the community, where the local food truck can benefit from those local baseball games?
This weekend I dined at a restaurant where the bartender was living out of his car for a portion of his life. Talking with him I also found out, he is going to school for botany. Turns out he taught himself how to grow and maintain exotic plants. Going there and tipping is an investment in him and those around him in my community. A social economic investment as such is very unlike going to be from 1% wealthy that are looking an a pure financial gain.
An unbalanced economy where the wealth are very top heavy prevents local investments. For example, lets say the taxation is cut for them and thus needs to cut funding for Mental Health Facilities. That reduced the probability to invest in people that could be assisted in becoming a more stable part of society. Doesn't a dramatic cut in education speeding reduce the ability for a more talent pool of people in the community? This type of investment must be long term and equivalent to R&D in a company. It does not pay off right away but done the road it has a high potential.
Economic abuse can be exacerbated by large economic inequality. Take a bank, turns out that there are 100 deposits in the bank to fund the loans departments. One person's account contains 90% of all funds. Now that one person closes their account and the bank becomes defunct and all others loose. With enough wealth people can concluding to make this happen. Lets conclude to invest in a bank, that has stock in the market, though deposits. We become over 60% of the loan department. We wait a while and then start shorting the bank stock. Pull our money out and make money on other people misery. Where a well balanced economy would prevent this ability and create a more long term stable economy.
Fraud is part of every Government and society. Some people just want to make as much money as possible as soon as possible. No matter how big or small the community is. Decent firewalls need to be put into place to prevent it and forensic accounts needs to be deployed to find it. Fraud is crime, is it not? Where does most crime take place? Probability states in larger populations such as California and Texas versus smaller ones such as Maine and Wyoming. Based of probability, wouldn't most fraud be from the more affluent individuals?
Look at Toyota vs Ferrari. Ferrari is priced for the rich and has the highest margin per vehicle between the two. Toyota is priced for the non-rich, produces the most cars, employees more people directly, and has more manufactures. Toyota is more of a driving force for the economy though initial sales and second hand market than Ferrari. Driving force of any economy is not dictated by the wealthy but by everyone else. Coffee is no different. 1% cannot economically support that coffee shop, it is the community with spending power that can.
*Fixed wording.