The ABC of taxation

Bibliographic data

Monograph

Identifikator:: 1010741608

URN:: urn:nbn:de:zbw-retromon-21094

Document type:: Monograph

Author:: Fillebrown, Charles Bowdoin

Title:: The ABC of taxation

Edition:: Fourth edition specially revised

Place of publication:: Garden City, New York

Publisher:: Doubleday, Page & Company

Year of publication:: 1916

Scope:: 1 Online-Ressource (236 Seiten)

Digitisation:: 2018

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part I. The three legs of the Tripos

Collection:: Economics Books

THE A B C OF TAXATION 40 1100 reduces the selling price of the land by the amount of the mortgage, $2,000. It is equally true that the tax charge of $100 reduces it by the same amount, $2,000; the mortgage and the tax together therefore reduce it by $4,000; and you will buy the land at $2,000, the value of the equity which remains after both mortgage interest and tax have been paid. This $2,000 is the capitalisation of the annual value of the lot to you after all charges have been met. (b) In purchasing you will assume both mortgage interest and tax and will pay them, but you will pay them out of the gross income of $300, and not out of the net income of $100 from your investment of $2,000. Therefore no part of the $2,000 which you pay for the equity will be taken from you in taxation, either as principal or interest. (c) The lot of land will thus cost you for use: in terest on your purchase price ($2,000 at 5 per cent), $100; plus mortgage interest ($2,000 at 5 per cent), $100; plus taxes, $100; and these together aggregate $300, what the land is worth for use, the same as before. (d) It follows then that, under the present system, assuming free competition, the selling value of land is an untaxed value,* and land owners who invest to-day are exempt from taxation — not indeed upon their land, but upon its annual net or income value to them, or, in other words, upon their investment. The gross value is a taxed value. The net value is an untaxed value. (e) As this exemption of the present owner holds * Assessors make use of the selling value of land as the basis for their levy because it is more easily ascertainable than the gross value, but in reality and effect the levy is upon the gross value, which, if land were not taxed at all, would be also the selling value.

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