Taxing More from the Rich Is Difficult. This Is How to Do It.

By Polly Cleveland

In the March 1 UK Prospect, economist James Galbraith offers the Brits, and us, two proposals to repair a broken economy. The first, unsurprisingly, is a heavy tax on estates, with a high exemption. Not inheritances, but estates, because that encourages philanthropy, which creates jobs. A highly progressive income tax, though desirable, still misses a lot of income, notably unrealized capital gains. But an annual tax on personal wealth, as touted by Elizabeth Warren and some prominent economists, would be “a full employment scheme for appraisers, consultants, money laundries and tax lawyers.”

Galbraith’s second proposal is a land tax. Yes! This was the preferred tax of the classical economists, the one Adam Smith called “the most equitable of all taxes.” This tax—at the extraordinary rate of 4 shillings to the pound or 20%—launched the British Empire in 1692, by funding the British fleet. (The tax was eventually wiped out by inflation.)

A land tax is part of the ordinary tax on property, the part of property value that makes owners “grow richer in their sleep,” and that blows up in a bubble and then collapses. Some cities in Pennsylvania tax mostly land and not buildings; many Australian cities, including Sydney, tax only land, as do California irrigation districts. But Galbraith says, along with land we should tax “other publicly created property rights, such as mineral rights, parts of the electromagnetic spectrum, corporate charters, licenses, patents, copyrights and rights of way.” The One Percent own the bulk of all these valuable rights, either directly or through corporate shares.

Galbraith says, “Unlike financial wealth, land value can be measured, appraised and taxed each year on its market value. The result is efficient use of land and other rights, and abundant funds for urban reconstruction, development and maintenance—a virtuous cycle of public investment, land value and public purpose. Exceptions can be made for historic preservation and for elderly homeowners, with the taxes deferred until properties change hands.”

If land taxation is so good, why does it get so little support and attention? As Galbraith understates, “landowners, anciently the most reactionary of all social classes, do not like it.” That means you, Charles Koch.

Galbraith told me that in circulating this, I should acknowledge his debt to “the late, great Mase” Gaffney. I deserve some credit too, for introducing them some twenty years ago.

Our latest issue!

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We have sent our latest (July/August 2020) issue to the printers and to e-subscribers, and we’d already posted several articles from the issue to the website, including the cover story by Mateo Crossa and James M. Cypher, “Essential–and Expendable–Mexican Labor.”

Here is the p. 2 editors’ note from the issue:

Loss and Hope

As infections and deaths from the Covid-19 pandemic spike in the United States, largely due to incompetence at all levels of government, we bring you two feature articles about the impact of the pandemic outside of the United States.

Mateo Crossa and James M. Cypher relate how U.S. corporations and the U.S. government have pressured the Mexican government to declare maquiladora workers as “essential,” forcing them to produce decidedly non-essential consumer products for U.S.-based corporations, even as the novel coronavirus spreads in the factories. Meanwhile, President Trump invoked the Defense Production Act not for much-needed personal protective equipment, but to force meatpacking workers, many of them Mexican immigrants, to work in even more dangerous conditions.

Smriti Rao details how, under India’s right-wing Prime Minister Narendra Modi, the plan was to have no plan. Although Modi imposed a stringent and punitive lockdown, with police ready to throttle violators with batons, the lack of a transportation plan for migrant workers and the lack of a meaningful relief program has led to economic devastation for most Indian households.

Ongoing nationwide protests against police violence in the United States continue to offer glimmers of hope in an otherwise bleak political and economic scene. Here we include two articles about how liberal politicians and corporations alike contribute to the over-financing of the police. Plus: John Miller on the cure-all of capital gains tax cuts, Mark Maier on the ideology of entrepreneurship, Mark Paul on how to make sense of the current unemployment crisis, and more.

Amidst the stories of death from a global pandemic and from a rash of police violence, we are mourning the loss of three friends and supporters of Dollars & Sense.

Mason Gaffney, professor emeritus at the University of California at Riverside and a proponent of the ideas of 19th-century economist Henry George, died on July 16. Mason wrote a piece for our March/April 2006 special issue on the aftermath of Hurricane Katrina about how San Francisco after the 1906 earthquake and fire, rebuilt with the help of a Georgist land tax, could be a model for the rebuilding of New Orleans (find the piece here). Mason was a friend of and mentor to frequent D&S author Polly Cleveland, who said in a tribute that she will always be grateful for Mason’s “courage and honesty in confronting bastardized economics and history, and for his generosity, clarity, and humor in this benighted world.”

London-based economist John Weeks died on July 26. John wrote frequently for the magazine and our blogs (especially Triple Crisis), serving as our de facto London correspondent, with several articles updating our readers on Brexit. His most recent piece
for us was a post at the D&S blog on June 16, “The Murder of George Floyd and My Segregated Youth,” about his upbringing in Austin, Texas. John was a friend and mentor to the British economist Ann Pettifor, who said on Twitter that John’s death “leaves vacant an important intellectual leadership role in macroeconomics.”

And Louis Kampf, professor emeritus of literature and women’s studies at MIT and a long-time friend and supporter of D&S, died May 30, at 91. He was born in Vienna, and he and his parents fled the Nazis, via Belgium, France, and Casablanca, to New York. In 1967, Louis published the widely acclaimed On Modernism: The Prospects for Literature and Freedom. The book appeared to be launching him into a career of academic fame, but Louis chose political activism instead. He was heavily engaged in anti-war work and support of the women’s and the civil rights movements. D&S columnist Arthur MacEwan described Louis as “smart, erudite, funny, loyal to many friends and students, and a stalwart progressive.” And D&S collective member Jeanne Winner said that what made him so important to his friends “was Louis’ intellectual power combined with his passionate sympathy for people and their well-being, and his very sensitive and powerful aesthetic feelings.”

In these troubled times with some glimmers of hope, Mason, John, and Louis would want us to look to the glimmers of hope and fight on. All three have left us with ample inspiration and tools to do so.