Hermeneutics and Land Tax
|Subject||Hermeneutics and Land Tax|
|Created||11/12/2010 11:08:00 AM|
|Posted||11/12/2010 10:55:00 AM|
|Body||An Economic Turn: A Hermeneutical Reinterpretation of Political Economy with Respect to the Question of Land’– a seminar hosted by Todd Mei from the University of Kent (now at Dundee).Which I read to be about appraising land use for taxation purposes – so here are some notes.
Would changing the basis of tax have any unintended business effects? As huge sums of money would be at stake, it would be imperative for businesses to keep their financial reporting relevant – for example monitoring tax arising from land use. Some economic activity will be designed solely to try to manage and / or minimise the impact of taxation. Traditional views of profit attribution and limiting factor change over time.¹ Tax arising from land use would become the new limiting factor and so change the basis of financial reporting. It would also affect investment appraisal – and here I am thinking in terms of a bias against schemes that carry a potentially onerous burden of tax liability.
Where the deal requires little or no space and can be done anywhere, what then? Land usage based taxes are arguably ideal for capital intensive environments. Technology – in particular communications – is developing rapidly. It already allows deals / value exchanges to be concluded ‘on the hoof’. Take professional services; these deals may require little more than a mobile plus notebook. An accountant might ask: is there a piece of land to which such deals could be apportioned?
What are the chances that taxing the profitability of land usage would change the emphasis of tax avoidance schemes? There would be a business imperative to structure operations so that profits couldn’t be attributed to capital intensive – and thus land using – activities. This imperative would be analogous to the ‘transfer pricing’ schemes currently in use. To ensure that the public coffers don’t become impoverished, governments would need to design a statutory framework to ensure that statements of financial affairs fit a tax reporting ‘straightjacket’.
A change in the emphasis of financial reporting would be almost impossible to avoid, which I assume wouldn’t be an insurmountable obstacle. More problematical would be the inevitable tax tourism.
¹ For example ‘value added’ became popular in the 1980’s. It is derived by matching labour expenses to the net income (gross income less disbursements) and treats labour as a limiting factor. So all non-labour expenses (including the cost of land) are stripped out – in effect treating them as refundable disbursements.
– unearned income (Paul Ricoeur’s definition has flaws but is entertaining nonetheless)
– and the land value tax theorists? Ricardo and his law of economic rentÂ
– Normans – their land grab (!?) still in the minds and hearts of some
– market economies – forum to enable exchange where common practise determines the going rate
– the petri-dish analogy and the land grab of the West which temporarily defers Malthus… who, in current parlance, covers much to do with limiting factor.
– Market segments
Did someone mention jargon? Do I somewhere hear the sound of angels dancing?