BenJamin stumbled across an article at thismatter.
Lovely, it's got all the charts explaining that taxes are borne by whoever is less price sensitive - the consumer or the producer. So taxes on tobacco are borne by smokers and taxes on petrol are borne by motorists - but general sales taxes on everything (like VAT) are mainly borne by the supplier/producer.
Obviously, some things are completely price insensitive because they are fixed in quantity, such as the supply of land. So we get this:
Property Taxes
Buyers can choose what property they want to buy, but sellers have no choice other than to sell the property that they own. Since most buyers consider how much tax they will have to pay on the property when making offers, the tax burden will most often fall on the seller of the property.
Yup, agreed.
For sure, we can increase the amount of usable land by building more roads and building more buildings, but the supply of each individual plot as regards a transaction between the owner and a potential purchaser or tenant, supply is 100% fixed. If the total amount usable land were to increase, then the demand curve would shift. So the landowner might get a lower or higher price/rent for a pre-existing site in future, but the burden of taxes will still fall on the landowner.
Then they completely contradict themselves:
However, if the property is rented out, then the landlord can easily pass the cost of taxes on to the tenant.
WTF? Why did they not just paraphrase the first part, to wit:
Tenants can choose what property they want to rent, but landlords have no choice other than to rent out the property that they own. Since most tenants consider how much tax they will have to pay on the property when renting in future and will adjust down the rent payable to the landlord accordingly, the tax burden will most often fall on the landlord.
They then keep digging:
A business that serves a locality can also usually shift the cost of property taxes on to consumers, since property taxes are part of the cost of providing the product or service and the same tax rates are usually assessed.
We know that this is not true - even though occupation costs per square foot are much, much higher in city centres than in small villages (rents are higher and Business Rates are higher, the two together = the true rental value), the selling price of consumer goods is more or less the same across the whole country. It is the higher sales per square foot in city centres which drive up the rental value, I don't see how anybody could argue the vice versa.
Further, in the USA there are also quite different levels of general Sales Tax in different states, but selling prices are still more or less the same everywhere, because, as mentioned above, the tax (and indeed rent) is borne by the supplier.
Debate Magazine
