Cities, states and countries around the world are facing a common dilemma — too much debt and not enough growth. Entitlement spending and spending on favored unions for teachers and construction workers are growing faster than the rate of inflation, but tax collections from everyday workers cannot keep up.
One of the reasons growth is slow is because taxes are too high and the most productive citizens leave the high-tax jurisdictions and head for places like Texas, Florida and Tennessee, which have no income taxes. Of course, the politicians’ solution to high taxes is — to raise taxes!
Eventually, income taxes and sales taxes reach a breaking point and even the big tax-and-spend progressives can’t raise those rates any higher. Instead, they look for new items to tax including soda, gasoline, bridge and highway tolls and services that previously escaped the sales tax. Eventually, those tax targets get tapped out also.
What’s next? Los Angeles believes it can solve this problem by taxing — nothing.
This article describes a new tax on empty apartments. This “empty space” tax is in addition to the property taxes, income taxes and other taxes that already hit apartment owners.
In theory, this is a penalty on owners for failing to let homeless people live in their empty apartments. Never mind that apartments are empty because owners are renovating them or preparing them for sale (both of which help the economy).
In the late Roman Empire, Rome taxed agricultural output at 20%. Many farmers resisted this by leaving their land uncultivated. Rome then attacked those farmers by taxing actual output or “deemed” output, even if the land was left fallow. This was a “tax on nothing” similar to what Los Angeles is considering.
Roman farmers then abandoned title to the land to avoid the deemed tax on nothing. Eventually, barbarian invaders arrived and offered the farmers a better deal. The barbarian tax rate was only 10% and did not apply to empty land. The farmers embraced this tax deal.
The barbarians did not “conquer” Rome. They were welcomed with open arms by Roman farmers. If history is any guide, Los Angeles is approaching the same state of terminal collapse as ancient Rome.
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