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land tax

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  • Simon Norton
    For every pound of tax raised by the government an average of 2 pounds (Fred Harrison) or 1 pound 30 (UK Treasury) is lost to the economy... This surely
    Message 1 of 1 , Mar 21, 2006
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      For every pound of tax raised by the government an average of 2 pounds (Fred
      Harrison) or 1 pound 30 (UK Treasury) is lost to the economy...

      This surely depends on what kind of tax is used. In a rational taxation system
      the rates would probably be set so that the same amount was lost for each
      marginal rise in any individual tax, but we clearly live far from such a
      system.

      Certain types of tax bring more into the economy than they take out. This is
      true for example of green taxes, where the private loss to the taxed person is
      offset by the reduction in environmental disbenefit. It's also true of
      redistributive taxes, as the gain in welfare from one's private spending
      decreases rapidly as one's wealth rises. (This follows immediately from the law
      of diminishing returns, as where people's spending money is limited they will
      clearly give greater priority to those goods/services which give a high return
      in terms of welfare per unit spent.) I presume that it is part of the whole
      thesis that this is also true of a land value tax.

      Simon Norton
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