These are the sorts of standard LVT talking points that I already addressed in my article, but I’ll just use a simple example.

In 2018, we moved states to be close to family and be able to afford our second child. Last year we just finally paid off our health care and student loan debt at the start of our 40s, then bought a house which has appreciated by something like 40k since then. We’re doing stressful jobs and raising two young children.

Now imagine a benevolent dictator has the choice between taxing that 40k away from us, or from Jeff Bezos. Obviously it makes more sense to tax Bezos, because he’s extremely wealthy and thus the marginal utility of his dollars is much smaller. This is a no-brainer. The only rational argument for taxing us is that it doesn’t introduce dead weight loss, thus it is “efficient”. But this is an incredibly minor issue compared to our vastly different marginal utilities. Especially because the rich people who pay the wealth tax already have almost zero marginal utility per dollar and are only working for the personal satisfaction and/or competitive instinct. The effective dead weight loss is very close to zero.

Refocus on what counts. Rents are ours.

This is deeply flawed reasoning. Yes, rents are a positive externality. But you fix a positive externality with a subsidy. That is, whoever creates the positive externality ought to be reimbursed for it, ideally. But even if you could do that accurately (you absolutely can’t), it wouldn’t make sense to get the money for that subsidy via a tax on the lucky recipient of the rent. That’s the hypothecation fallacy. You want to get money from whatever least decreases net utility, i.e. from wealth taxes and Pigouvian taxes on negative externalities.

Georgists constantly make this fallacy of confusing the difference between negative and positive externalities. The former is addressed via a tax, and the latter a subsidy.

Advocate of Score Voting and Approval Voting. Software engineer. Father. Husband. American.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store