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Capitalism was designed for one tax – a property tax.
The average person thinks taxing high incomes makes more sense, and rich folks are happy you think that... because it doesn't.
Quick thread on why income taxes should be low, and property taxes should be high.
<thread>
The average person thinks taxing high incomes makes more sense, and rich folks are happy you think that... because it doesn't.
Quick thread on why income taxes should be low, and property taxes should be high.
<thread>
2/ Adam Smith argued land is a natural monopoly. As people earn more money, the rents of the land scale.
No additional productivity was created on the land, but additional productivity created by the user was leached by the land's lord.
No additional productivity was created on the land, but additional productivity created by the user was leached by the land's lord.
3/ If wages grow faster than the annual rate of property taxes, extra income is captured for non-productive purposes.
This creates incentive to hoard, and it also creates incentive to do literally nothing with the land. This is called land banking. Buy, hold, and pay low fees.
This creates incentive to hoard, and it also creates incentive to do literally nothing with the land. This is called land banking. Buy, hold, and pay low fees.
4/ Now, let's circle back to income taxes. People think they have a sweet deal, because the guy in the bracket above them pays way more taxes.
Not exactly. The truly wealthy don't make money through an annual wage. They make money by buying assets, and holding it.
Not exactly. The truly wealthy don't make money through an annual wage. They make money by buying assets, and holding it.
5/ Depending on how they make the wealth, taxes can also be minimized. Dividends, not realizing gains and borrowing against it, etc..
The result is a lot of those dollars are taxed at a lower rate than middle class people pay. In fact, if you're rich enough, you stash offshore.
The result is a lot of those dollars are taxed at a lower rate than middle class people pay. In fact, if you're rich enough, you stash offshore.
6/ Now you've got a super rich politician, uh... no one in particular, or wealthy person, making their money in a lower tax jurisdiction. Totally legal.
Except now the high tax rate means they have less incentive to bring the money on shore, and spend or invest domestically.
Except now the high tax rate means they have less incentive to bring the money on shore, and spend or invest domestically.
7/ To put it bluntly, the high tax rate incentivized people to keep their money out of the financial system.
After all, for every dollar they want to bring back, they now have to lose $2. But like, they're already wealthy. They're in no rush to invest or flex spend.
After all, for every dollar they want to bring back, they now have to lose $2. But like, they're already wealthy. They're in no rush to invest or flex spend.
8/ Meanwhile, back to land. You think, I got this 400 sqft condo worth a million dollars. "I pay a lot of taxes already! 40% of my income is taxed, I don't want to pay more."
Except, the guys with billions offshore? They don't have a little bit of property. They have a LOT.
Except, the guys with billions offshore? They don't have a little bit of property. They have a LOT.
9/ They're already rich. They bought land when it was worth nothing, and in some cases their grandparents were just given the land when they got here.
You've been convinced to give them every tax advantage because it benefits you, but that's not how it works.
You've been convinced to give them every tax advantage because it benefits you, but that's not how it works.
10/ The system convinced you a tax on actually working is superior to a tax on holding immoveable profit.
You have practically no land, and you earn your money from labour.
They don't earn money from labor, and own more land than you can imagine. Y'all got played.
You have practically no land, and you earn your money from labour.
They don't earn money from labor, and own more land than you can imagine. Y'all got played.
bonus land fact about a Russian oligarch in Canada.
Canadian immigration officials at one point expressed concerns he "profits from organized crime."
He owned 111 properties in Toronto. It's unclear if he still owns them, because we have no beneficial ownership registry.
Canadian immigration officials at one point expressed concerns he "profits from organized crime."
He owned 111 properties in Toronto. It's unclear if he still owns them, because we have no beneficial ownership registry.
