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Land Value Taxation: Rebuttals to Common Objections

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Geolibertarian
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« on: August 23, 2010, 04:21:57 pm »

Since ruling-class minions are fond of promoting the value-added tax (VAT), and since most Americans seem to know little if anything about this horrendous tax -- and thus how it compares with other taxes -- I thought I’d start off by posting the following excerpt (all emphasis original):

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“One proposal is to substantially reduce or replace personal and corporate income taxes with a tax on consumption. One such tax is the value-added tax (VAT), which is like a retail sales tax except that it applies only to the difference between the value of a firm’s sales and the value of its purchases from other firms. For example, Intel would pay the VAT—say, 7 percent—on the difference between the value of the microchips it produces and sells and the value of the materials used to make the chips. Compaq, IBM, and other firms which buy the chips and other components to make personal computers would subtract the value of these materials from the value of their sales of personal computers. They would then pay the 7 percent tax on that difference—on the value they added.

“Economists reason that since the VAT would apply to all firms, sellers could shift their VATs to buyers in the form of higher prices without loss of sales to other firms. Final consumers, who cannot shift the tax, would end up paying the full VAT as 7 percent higher prices. So a VAT would amount to a national sales tax on consumer goods.”

-- Campbell R. McConnell & Stanley L. Brue, Economics, 14th ed., pp. 657-8

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There’s a widely propagated myth concerning the VAT that is revealed in the above quote:

“Economists reason that since the VAT would apply to all firms, sellers could shift their VATs to buyers in the form of higher prices without loss of sales to other firms.”

The establishment economists who employ this argument are obviously counting on the gullible masses to ignore or overlook the obvious questions it begs: If, due to the VAT-caused spike in prices, retail stores experienced a consequent drop in sales, wouldn’t this force them to reduce how much they purchase from the producers of what they’re attempting to sell? And wouldn’t that, in turn, trigger the very “loss” in sales -- and hence in available “investment” dollars -- from which the process of “shifting” the VAT to consumers would allegedly protect mining, agricultural and manufacturing firms?

One doesn’t have to have a degree in economics to see clearly that the answer to both questions is a resounding “yes!”

So we see that, contrary to popular belief, the VAT penalizes and discourages not just “consumption,” but production as well. It is a tax on -- as Robert De Fremery would put it -- the “privately created values” of labor and capital goods (“capital” for short). Only in the Orwellian fantasy world of economic snake-oil salesmen can such a tax be imposed without penalizing production as well as consumption, and without reducing (consequently) the ability of the average firm to invest in production.

Bottom line: like the ridiculous carbon tax, the VAT is just one more glorified way of taxing labor and capital to death while leaving publicy-created land values largely untaxed -- all so overprivileged landlords, slumlords and banklords can continue to quietly parasitize both wage-earners and productive entrepreneurs through systematic rent-gouging.

Ever notice how you never hear that particular assessment from either Keynesians or Austrians? And on the issue of monetary reform, ever notice how both groups -- despite being supposed “opposites” -- seem equally opposed (albeit for different reasons) to debt-free Greenbacks?

If so, why do you suppose that is?

Could it be that Democrat-vs.-Republican is not the only “false paradigm” within which countless people have allowed their minds and intellects to be literally enslaved via elite-funded propaganda campaigns? Could the reason why Austrians obsessively attack Keynesians -- and vice versa -- be that each group must rely heavily upon the other’s fatally flawed agenda as comparative foil against which to define its own, lest the masses they’re trying desperately to dupe notice the respective flaws in each?

Read the following and decide for yourself:

       http://www.henrygeorge.org/isms.htm
       http://www.politicaleconomy.org/gaffney.htm
       http://www.wealthandwant.com/docs/Andelson_HGRC.html
« Last Edit: October 07, 2010, 12:46:18 pm by Geolibertarian » Report Spam   Logged

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