Deseret Taxation

Compadres, it's an article about taxation in a scifi setting (mostly for my own use as a reference). It's dry stuff, read at your own risk.

Overview When the Republic of Deseret was established, its founders were determined to avoid the human rights abuses that flourished back in the Sol system. One of the major sources of these abuses was the laissez-faire atmosphere of trans-national corporations and landlords on Mars and the Belt colonies, where everything necessary for human life (land, air, water) was commodified. These entities sought to extract all value from the systems in which they existed while externalizing (making others pay for) all the costs (social, environmental, and financial) of their businesses. This context was foremost in influencing the writings of political theorists during the Second Enlightenment, which then went on to influence the charters written by countless colonial expeditions. In addition, the Deseret founders were concerned with historical examples of rampant land speculation in frontier settlements both on Earth and humanity's earliest space colonies.
In contrast to many other colonial expeditions however, the Deseret founders were not at all interested in establishing a society based on the theories of anideotism, anarchism, feudalism, or any other extremes of economic or political systems. Instead, they hoped to create a system that provided a high quality of life, provided a strong safety net, established a strong defense force, financialization of their economy, and provided enough freedom for individuals to experience prevented the cycles of success and failure necessary for the process of apotheosis to occur. In their minds, this required a powerful federal government and the taxation to support it.  Understanding that the mechanics of economics shaped the relationships between individuals and taxation shapes the relationship between citizens and government, the Deseretis laid out a framework of taxation policy for their new nation.

Taxes on What You Own

Land Value Tax

The most widespread and popular form of taxation on Deseret. Private ownership of land is restricted to carefully delineated cities, with the rest of the planet being held as a national trust. This means that taxes on land are user fees, granting the right to exclude other citizens from land that is part of the national inheritance. For land in the cities, owners pay a tax based on the value of the land itself (Land Value Tax or LVT), not on the value of the property of the land itself. This has several advantages over the more historical property tax.

• Tax rate is easy to calculate, based off the cost of infrastructure and services provided per square meter as opposed to a percentage of the value of property on the land (which may or may not cover the same costs). Most LVT in Deseret follows the formula of (I+S)*D+F=LVT.
• LVT discourages idle land speculators, who intentionally or unintentionally abandon their property. These speculators contribute nothing to the community, allowing their properties to deteriorate until the efforts of the rest of the community raises the value of the land high enough to sell at several times the value they bought or received it in. Since properties in the same area are taxed the same regardless of improvements, owners find that there is little financial incentive for idle land to lay dormant, encouraging development.

Examples

Example 1, a representation of taxation based on property value. Despite the fact that these properties receive the same infrastructure and services paid for by the community, the abandoned property pays significantly lower taxes because of the ruined state of the building. When land prices rise because of the hard work of the owner on the left, the owner on the right can sell their land for a large sum despite leaving their property in a state for years that fostered crime and disease to the detriment of the community as a whole.

Example 2, a representation of taxation based on land value. In this scenario the owner on the right must pay the same taxes as the owner on the left, punishing the owner on the right for making inefficient use of their land. Coupled with fines for blighted property (a condition that can sometimes lead to the revocation of a landlords legal authority to extract rents), the land on the right can become prohibitively expensive to leave idle. Regardless of whatever choice the owner on the right makes, the community is compensated for the cost of infrastructure and services provided through taxation.

• LVT reduces foreclosures by preventing the boom and bust cycle of land value caused by speculators. Also, any bank or mortgage company that forecloses on a property must pay the LVT themselves, encouraging them to negotiate in order to avoid being in possession of numerous tax obligations. This is compounded by the fact that these organizations can own residential buildings but are prohibited by Desereti law from extracting rents, meaning that if they want any return they must find a buyer for the property.
• LVT helps small business as they are more land-efficient, compared to big businesses that are more labor efficient.
• LVT promotes architectural investment, as under property tax owners are encouraged to hide improvements inside buildings where appraisals are more difficult to perform.
• LVT is naturally progressive as it is most burdensome to those who hold valuable urban land that they keep idle. The more land someone owns, and the more valuable the land, the higher their LVT. This system protects small land owners (families, small businesses) who typically have no choice but to make the most efficient use of their land and typically do not own the most valuable land in a community.
• LVT reduces sprawl by replacing taxes that drive people away from communities with a tax that discourages land speculation, drawing development inward and promoting efficiently compact development.
• LVT reflects taxpayer benefits as every taxpayer pays in proportion to the benefits they receive, leaving the fruits of their own labors (development on their land, etc) relatively untaxed.

Property Tax

Property tax is based on the value of the land plus the value of the improvements made on that land. Because the tax is seen to penalize people for improving their land, property taxes are nonetheless allowed in the Desereti constitution. Predominantly reserved for times of emergency such as natural disaster or war. Automatically expires at the end of a four year period.

Waste Tax

Long gone are the barbaric days when humanity's filth would be buried in giant holes in the ground or burned. Waste management is carefully monitored on most civilized planets, with recycling rates of almost 100%. Industries and businesses that produce wastes over a certain (low threshold) amount are charged for the cost of handling their waste, causing most heavy industries to happen in space.

Estate and Inheritance Taxes

Key to Desereti philosophy is the belief that every individual is responsible to make their own fortune in the world, and that any measure of success one achieves is made possible by the community at large. Because of this, part of an individual's collected wealth is taxed upon their death to be redistributed to the community through infrastructure maintenance or other social programs.

Taxes on What You Buy

• Sales Tax

Typically use only in times of war, sales taxes are used on Deseret as a way to tap into the wealth of its non land owning citizens.

• Gross Receipt Taxes

Applied to a company's gross sales, Gross Receipt Taxes because they do not deduct a firm's business expenses, like employee compensation or research and development. This prevents a company from overpaying executives, leaving no profit eligible for taxation.

• Excise Taxes

Sometimes referred to as "sin taxes", excise taxes target activities that are damaging socially or personally. For example, alcohol and tobacco are taxed on Deseret as they can create conditions detrimental to an individual's health and burden the healthcare system with their treatment.

Taxes on What You Earn

Desereti economic theory stresses that individuals should retain as much of the benefits of their own industry as possible. For this reason, the smallest form of taxation.

Income Tax

An individual income tax is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The Desereti Constitution states that all income taxes must be flat while at the same time stating that all forms of income tax exemption are illegal. While relatively low in comparison to other star nations (thanks in large part to the LVT), the income tax is considered a personal responsibility demanded of every citizen.

Capital Gains Tax

Capital assets generally include everything owned and used for personal purposes, pleasure, or investment, including stocks, bonds, homes, vehicles, jewelry, and art. When a person “realizes” a capital gain—i.e., sells an asset that has increased in value—they pay tax on the profit they earn. Predominantly reserved for times of emergency such as natural disaster or war. Automatically expires at the end of a four year period.

Pictures of Property Tax vs Land Value tax from http://savingcommunities.org/issues/taxes/landvalue/