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View Diary: What did Adam Smith really have to say... (105 comments)

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  •  Great Diary but about your comment (8+ / 0-)

    that land is not so important anymore, au contraire.  By "land" Adam Smith meant all natural resources.  Oil, coal, broadcast spectrum, fishing rights, are all "Land" in the economic sense.  And these add up to a very large chunk of the wealth.  

    Every progressive should read Smith, especially the cannons of taxation.  It is ironic that so many conservatives cite Smith apparently not understanding what he was saying.  The cannons basically say to tax "Land and other monopolities".  Smith say something like "tax in proportion to the advantages enjoyed under the protection of the state" (paraphrasing).  That is 18th century-ese for tax land and monopolies.  Smith would be appalled at what is claimed in his name by conservatism.

    The Long War is not on Iraq, Afghanistan, or Iran. It is on the American people.

    by Geonomist on Thu Mar 03, 2011 at 01:56:10 AM PST

    •  I guess I was unclear (1+ / 0-)
      Recommended by:
      Ignacio Magaloni

      I was definitely not saying that land was not important. The nature of rent and ownership has not changed one bit and land, along with the resources taken from it, are vital, integral parts of the economic system. No less so now than then.

      What I was trying to point out was simply that the landed aristocracy that he was describing, the country gentleman whose income was generated solely from rents upon his land, and therefore the idleness he enjoys, is not something pertinent in that form to America today. We certainly have an idle rich but in America they belong to the profit taking class whether they be land and resource owners as well or not.

      We successfully did away with that sort of aristocracy. Unfortunately we have not done so well at keeping another form of aristocracy from being created.

      Peace,

      Andrew

      "Do what you can with what you have where you are." - Teddy Roosevelt

      by Andrew C White on Thu Mar 03, 2011 at 06:20:26 AM PST

      [ Parent ]

      •  We might have done away with them here... (1+ / 0-)
        Recommended by:
        Andrew C White

        But along the lines of what Geonomist is saying, I think you could argue that the Saudis and other oil states (usually with absolute monarchies or other totalitarian style governments) have taken that place to some degree.  

    •  Most rental agreements (1+ / 0-)
      Recommended by:
      Andrew C White

      state that tax increases can be passed on to the tenant.

      •  As a practical matter (1+ / 0-)
        Recommended by:
        Andrew C White

        landlords can not increase the rent due to their leasees beyond that which the market can bear. Thus, the landlord will end up bearing the "cost" of the tax.

        Under current law and tax systems, landlords can get away with raising the rent because the tax falls mostly on land improvements (such as the building, etc) then it does on actual land. Taxing the improvement value leads to scarcity of housing, which is what allows landlords to pass on the tax.

        If property taxes only affected land and not their improvement value, landlords would not be able to pass on the tax. They would be able to raise the rent however, if the actual ground rent increased because of nearby improvements or something similar, in which case they would be able to increase the rent. Which is what landlords do now, of course. Once a parcel becomes more trendy, they increase the rent. However, if taxes were born only the land the tax would capture that increase in land value, while not affecting the improvement value or incentive to produce better improvements. By way of example, if you decide to build a garage, most likely your property taxes will increase, if the tax was born solely on the land, your taxes would not increase, which would increase the likelihood that people would improve the land in a way that fits the area.

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