What is a threshold negative wealth tax?
An explainer for the term used across this project. Groundshare's mechanism
is, in public-finance language, a threshold negative wealth tax on land. This
page defines the object from scratch — no prior economics assumed — and then
shows why restricting it to land turns a fragile idea into a workable one.
Companion pages: nit-for-land.md (the flow version of this argument),
analysis/prior-art.md (who got here first), mechanism.md (the full spec).
1. Start with the wealth tax everyone has heard of
The wealth taxes in the news — Warren's proposal in the US, the European versions — all share one shape: pay a percentage of what you own above a high threshold. Two percent above $50 million, say. Below the threshold, nothing happens; the line sits flat at zero and then kinks upward. It's a one-way instrument aimed at a small group, and its revenue goes to the treasury.
2. Now make two changes
Change one: move the threshold from "very rich" down to the average. Not a number a politician picks — the arithmetic average: total wealth divided by total people. Everyone can compute it; nobody chooses it.
Change two: let the line keep going below zero. Above the average you pay on the excess, exactly as before. But below the average, the same line runs negative — the "tax" reverses direction and pays you, at the same rate, on your shortfall.
That's the whole object. One straight line through the average:
your settlement = rate × (what you hold − the average holding)
Positive above the line, negative below it, zero at it. No brackets, no kink, no phase-out — the schedule is a single slope, which is why holding one more dollar is treated identically whether you're rich or poor.
3. Three properties fall out immediately
It funds itself. Because the threshold is the average, the amounts above it and below it are equal by definition — that's what an average is. Every dollar paid in by over-holders is a dollar paid out to under-holders. The sum of all settlements is exactly zero. No treasury collects a pool; the government's role is bookkeeping, not banking.
Everyone is on it. There is no "taxpayer class" and no "recipient class" — just one line and your position on it. A person's status can drift across zero over a lifetime (young renter → mid-life owner → downsized retiree) without ever entering or leaving a program, because there is no program.
It equals a flat tax plus an equal dividend — provably. Standard public
finance: a flat r% levy on all wealth, with the proceeds paid back as an
identical per-person dividend, produces precisely the same net position for
every person as the threshold negative tax. Same line, drawn as two flows
instead of one. (Saez and Zucman work through this equivalence for wealth
taxation; the algebra is three lines.) So the choice between them is not
economics — it's design: which drawing do people actually experience? The
carbon rebate's death and Alaska's survival say the drawing decides the
politics (analysis/political-viability.md).
4. A worked example, with Groundshare's real numbers
Restrict the wealth in question to land, use Canada's measured figures — equal share ≈ $164,000 of land value per resident, settlement rate 5.5% — and let household members pool their thresholds:
| Who | Land held | Threshold | Settlement (5.5% × difference) |
|---|---|---|---|
| Renter, single | $0 | $164,000 | receives ≈ $9,000/yr |
| Single owner, modest lot | $90,000 | $164,000 | receives ≈ $4,100/yr |
| Family of four, $300k of land under the home | $300,000 | $655,000 | receives ≈ $19,500/yr |
| Single owner, prime-city lot | $500,000 | $164,000 | pays ≈ $18,500/yr |
| Corporate holder | any | $0 — entities hold no share | pays 5.5% on all of it |
Read the fourth row carefully, because it contains the design's honesty: the line has a paying side, the payments are real, and in expensive cities they are large. What the threshold structure changes is who else is standing where — the first three rows are the national majority.
5. Why the general version stays on whiteboards
An honest explainer says why economists who like this shape on paper hesitate to apply it to all wealth:
- Valuation. Total wealth includes private businesses, art, pensions, crypto — assets with no annual price. A tax needs a number every year; producing one for everything a person owns is somewhere between expensive and impossible.
- Avoidance. Wealth moves. It re-domiciles, restructures, hides in holding companies, emigrates. Europe's wealth taxes mostly died of this.
- Incentives. A tax on all wealth is partly a tax on saving and building — the things policy usually wants more of.
6. Why land dissolves each objection
Groundshare is the threshold negative wealth tax restricted to the one asset class where the whiteboard problems don't apply:
- Valuation exists already. Every parcel in Canada is assessed, most annually, with the land/improvement split published in BC and Quebec and computed internally everywhere else — we've measured nine full city rolls in this project (1.4 million parcels) to prove the data is real. The assessment system the scheme needs is the one already funding your municipality.
- Land cannot avoid. It can't emigrate, re-domicile, or hide — a parcel's location is its identity. Entity structures don't shelter it here: corporate and trust holders get no threshold and pay on everything, which makes the obvious dodge (move the land into a company) strictly worse.
- The incentive runs the right way. A levy on land value doesn't discourage making land — nobody can — and doesn't touch what you build on it. What it discourages is holding ground idle, which is the one behaviour Canada's housing crisis could use less of. And it leaves saving, earning, and building entirely alone — the base is only the value nobody produced.
- One real problem survives: liquidity. A person can hold valuable ground
and little cash — the retiree on the appreciated lot. The general wealth
tax has this problem too; the land version at least has a century of
workable answers (deferral against the title, as BC has run since 1974,
plus the transition path in
analysis/transition-path.md).
7. How it relates to designs you may know
| Design | Base | Threshold | Below the threshold | Flows |
|---|---|---|---|---|
| Warren-style wealth tax | all wealth | high ($50M), chosen | nothing | one-way, to treasury |
| Friedman's negative income tax | income (a flow) | poverty line, chosen | you're paid | netted |
| Ackerman & Alstott's stakeholder grant | — | — | $80k once, at 21 | grant + payback at death |
| Carbon fee-and-dividend | emissions | none | dividend for all | two visible flows |
| Groundshare | land value (a stock) | the average — measured, not chosen | you're paid, annually | one netted settlement, ΣT = 0 |
The column that distinguishes Groundshare is the threshold: every other design either picks its number politically or has no threshold at all. Here the threshold is a fact about the country — total ground over total people — and the annual settlement is just each household's distance from it.
Sources
- Milton Friedman, Capitalism and Freedom (1962), ch. 12 — the negative income tax (the flow-version ancestor).
- Saez & Zucman on wealth taxation and the levy-plus-demogrant equivalence
(see
analysis/prior-art.md, §4, for the placement of this result). - Ackerman & Alstott, The Stakeholder Society (Yale, 1999).
- Warren wealth-tax proposal (2019) as the reference one-way design.
- All Groundshare figures:
NUMBERS.md(net basis); mechanism detail:mechanism.md; measured rolls:data/land-shares.csv; BC deferral program and transition machinery:analysis/transition-path.md.