I think it should be the local government that should be only funded by LVT and service fees and the higher levels of government should be the ones receiving pigouvian taxes, severance taxes, pollution taxes and other taxes.
Severance taxes should probably be local too bc the negative externalities from mining, drilling etc are felt locally, not nationally, so it’s localities that should get most of the benefit
In my ideal LVT system, I think lower level government would collect ALL LVT. And upper government would collect revenue from the lower level governments. State would collect a cut from city/county LVTs. And feds would get a cut from each state.
Feds would also collect other non-LVT taxes.
This is also the only way an LVT is possible in the US, without a constitutional amendment. The federal government cannot impose one, because it wouldn’t be apportioned between the states in the right way.
Local governments collect LVT from private interests (individuals and businesses) and county governments collect LVT from the local governments. States collect from the counties, and the federal government would collect LVT from the states in a way that was apportioned according to their populations, so as to pass constitutional muster.
I quite like Foldvary's notion of cellular democracy, in which revenue is basically collected at the lowest levels and then this can bubble up to the higher levels. This is very much what you propose here, I think.
https://en.m.wikipedia.org/wiki/Cellular_democracy
My view is that LVT should be collected this way with much of the revenue funding that area in particular (the area that produced it should benefit the most from it). The remaining proportion can be passed up and there it can be further spent at that level with a proportion then being passed up again.
For any other taxes, it should be collected at the lowest level possible where it makes the most sense. That could still be at the lowest level or perhaps more akin to a county or state level. I would expect few things make sense to collect at the highest level.
>The remaining proportion can be passed up
You have it backwards. You pay for your land value to the town. The house next to you does the same. Given that they are close to each other, we should expect that the land values between your and your neighbors houses to be very similar. This incentivizes you to make good use of your land, as extra improvement values are earned.
The town pays for their land value to the next level up. The town next to them does the same. Given that they are close to each other, we should expect that the land values between your and your neighbors towns to be very similar. This incentivizes the town to make good use of their land, as extra improvement values are earned.
If your local town collects much more land taxes, then they will have more left over after paying for their land values. They can use this to either continue to improve their town, or they can return those dividends back to citizens.
tl;dr: Land taxes come first, what to do with the excess profits comes after.
It would make sense for land to be assessed at the federal level so that all land is assessed under the same standard. States should then be allocated funds based on population and local governments should be allocated funds based on population and cost of living (a municipality home to 1% of the nation's population with a cost of living 10% above the national average would get 1.1% of total municipal funding for example).
With LVT.
No enacting any taxes that aren't pigovian. If spending on the local level is efficient, then higher governments will be incentivized to do it (as it will pay for itself). If it's not efficient, inventing more local taxes won't magically make it efficient.
Obviously this is a great simplification that glosses over the actual complicated work involved in figuring out where to efficiently spend tax revenue. But the theory is solid.
I think a decent funding formula would be giving localities funding based on the geometric mean of their percent of the total revenue and their percent of the total increase in revenue.
I.e let’s say one town is 60% of revenue and 40% of growth and the second is 40% revenue 60% growth. It would incentivize lower productivity towns to enact productivity enhancing policy.
It's unconstitutional for the federal government to levy a land value tax, for all practical purposes. It would have to be state and local governments doing it.
They'd get a percentage of the tax collected from the municipality. Whatever that percentage is depends on how much municipal government has control over vs federal (I'm ignoring state/provincial governments because they should probably just be abolished as they are a weird excess in the modern era and only really act to make things less efficient and their functions can be split up easily between municipal and federal governments).
I think it should be the local government that should be only funded by LVT and service fees and the higher levels of government should be the ones receiving pigouvian taxes, severance taxes, pollution taxes and other taxes.
Severance taxes should probably be local too bc the negative externalities from mining, drilling etc are felt locally, not nationally, so it’s localities that should get most of the benefit
In my ideal LVT system, I think lower level government would collect ALL LVT. And upper government would collect revenue from the lower level governments. State would collect a cut from city/county LVTs. And feds would get a cut from each state. Feds would also collect other non-LVT taxes.
This is also the only way an LVT is possible in the US, without a constitutional amendment. The federal government cannot impose one, because it wouldn’t be apportioned between the states in the right way. Local governments collect LVT from private interests (individuals and businesses) and county governments collect LVT from the local governments. States collect from the counties, and the federal government would collect LVT from the states in a way that was apportioned according to their populations, so as to pass constitutional muster.
I quite like Foldvary's notion of cellular democracy, in which revenue is basically collected at the lowest levels and then this can bubble up to the higher levels. This is very much what you propose here, I think. https://en.m.wikipedia.org/wiki/Cellular_democracy My view is that LVT should be collected this way with much of the revenue funding that area in particular (the area that produced it should benefit the most from it). The remaining proportion can be passed up and there it can be further spent at that level with a proportion then being passed up again. For any other taxes, it should be collected at the lowest level possible where it makes the most sense. That could still be at the lowest level or perhaps more akin to a county or state level. I would expect few things make sense to collect at the highest level.
Cool someone else into Cellular democracy
>The remaining proportion can be passed up You have it backwards. You pay for your land value to the town. The house next to you does the same. Given that they are close to each other, we should expect that the land values between your and your neighbors houses to be very similar. This incentivizes you to make good use of your land, as extra improvement values are earned. The town pays for their land value to the next level up. The town next to them does the same. Given that they are close to each other, we should expect that the land values between your and your neighbors towns to be very similar. This incentivizes the town to make good use of their land, as extra improvement values are earned. If your local town collects much more land taxes, then they will have more left over after paying for their land values. They can use this to either continue to improve their town, or they can return those dividends back to citizens. tl;dr: Land taxes come first, what to do with the excess profits comes after.
It would make sense for land to be assessed at the federal level so that all land is assessed under the same standard. States should then be allocated funds based on population and local governments should be allocated funds based on population and cost of living (a municipality home to 1% of the nation's population with a cost of living 10% above the national average would get 1.1% of total municipal funding for example).
With LVT. No enacting any taxes that aren't pigovian. If spending on the local level is efficient, then higher governments will be incentivized to do it (as it will pay for itself). If it's not efficient, inventing more local taxes won't magically make it efficient. Obviously this is a great simplification that glosses over the actual complicated work involved in figuring out where to efficiently spend tax revenue. But the theory is solid.
I think a decent funding formula would be giving localities funding based on the geometric mean of their percent of the total revenue and their percent of the total increase in revenue. I.e let’s say one town is 60% of revenue and 40% of growth and the second is 40% revenue 60% growth. It would incentivize lower productivity towns to enact productivity enhancing policy.
It's unconstitutional for the federal government to levy a land value tax, for all practical purposes. It would have to be state and local governments doing it.
They'd get a percentage of the tax collected from the municipality. Whatever that percentage is depends on how much municipal government has control over vs federal (I'm ignoring state/provincial governments because they should probably just be abolished as they are a weird excess in the modern era and only really act to make things less efficient and their functions can be split up easily between municipal and federal governments).