Again, from here:
I commented: "We also know that ntl/telewest went bankrupt a couple of times and went through debt-for-equity swaps to get where they are know (part of Virgin); I sorely doubt whether their current income justifies the original investment in digging up pavements and laying cables.
So to whom should that extra land value [on the reasonable assumption that properties in a broadband area are worth more] accrue - land-owners, the cable company who paid for it, or society in general? I fail to see why the default answer should always be 'the land-owners'. Is it not possibly fairer to capture the gain to reimburse the cable company for part of their losses/expenditure? And if you don't like subsidies, how about capturing that windfall uplift and using it to cut income tax or repay the national debt?"
To which Llamas responded: "Why should the landowner get to claim the increase in the value of the land? How about, 'Because it's HIS GORRAM LAND'?"
OK, let's assume that where some development happens, some properties fall in value (because of noise from a new road, railway line or airport etc), is it fair for the state or railway company or airport operator to compensate surrounding land-owners? I would say yes, it is, and I'm sure most would agree. So why is there no symmetry here - if a development increases land values (new railway station, more jobs at the airport) then why shouldn't surrounding land-owners pay something for it?
Or is land-ownership a one-way bet? You get compensated for falls in value but you don't have to pay for uplifts in value?
Saturday, 20 June 2009
Killer arguments against LVT, not. (2)
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15 comments:
You make sense, unsurprisingly enough.
I think a lot of libertarian opposition to LVT is because the movement fetishises land above other production factors (particularly labour) - the attachment is more mystical than rational.
See also: people who think it's OK to tax money you've earned but not property you've been given through an accident of birth, despite the better incentives and greater moral worth of taxing the latter.
The thing is Property by definition is an externalisation (i.e. a legitimate target for tax) whereas working or employment don't have any negative externalisations (so are not legitimate targets for taxation.
The above doesn't even take account of the fact that taxing working and employment is a massive negative externalisation that hugely destroys economic growth.
Agreed, that's what I meant by 'better incentives'.
I'll agree to having to pay more in tax if some development makes my house worth more, if I'm allowed to veto the development if I don't fancy paying more tax. Then I can decide whether the extra benefit is worth the extra tax. I'm not going to get into a situation where I end up owing more tax because of the actions of others that I can do nothing about (other than move).
S, agreed, that's why local councils (who decide on planning) are subject to democratic control.
Having local planning authorities decide who gets planning permission may nominally be 'democratic' but it won't stop a development just because I don't want to pay more LVT. Either all affected land owners (positively and negatively) get a veto over any new development or the system is unfair. If things can happen outside my control that mean I must pay more tax, or move house in order to avoid doing so, then the LVT system is unfair.
S, on a philosophical point, maybe you're right, but how is this supposed to work in practice? What if 999 people in the village vote in favour of building a by-pass or a new station or flood defence and 1 person votes against?
And what about tenants? If the new station gets built, the area becomes more desirable for commuters and their rent goes up, despite it may be the tenants themselves who pay for the railway via their season tickets? Is it really so important to protect land-owners and throw tenants to the wolves?
If 999 vote one way and 1 votes the other, the 999 will have to make him an offer he can't refuse!
On a different tack, has there ever been an implementation of LVT anywhere in the world, particularly in modern times? Was it a success, and is it still in operation?
S, that's one way of resolving it.
To your second question, yes of course. In the UK we still have Business Rates (which is more or less LVT), and in Northern Ireland they replaced Domestic Rate with a flat Progressive Property Tax a couple of years ago. Historically, most revenues in this country were via LVT in one form or another; even more recently we had Schedule A Taxation and Domestic Rates. Once they were abolished all Hell broke loose.
Further afield, we have Taiwan, Hong Kong**, Sark, Harrisburg Pa, parts of Australia and countries in the Middle East where the 'land' is worth f*** all but The State derives most of its revenues from taxes on oil extraction licences, which is just another form of LVT.
** OK, in Hong Kong technically it's not LVT but a post-imperial feudal system where you pay rent to occupy land nominally owned by 'The State'.
Mark, you missed 'the North Sea', where UK corporation tax on oil extraction is a good 20 points higher than 'doing any other stuff'.
John B, sure, I could also have mentioned the 3G licence auction, but that's getting a bit obscure.
"Or is land-ownership a one-way bet? You get compensated for falls in value but you don't have to pay for uplifts in value?"
Such changes are often forced onto the land owner. Paying someone compensation is different to forcing them to pay for improvement's, though neither is ideal.
> Such changes are often forced onto the land owner.
Who then takes the benefit when the property is sold.
"Who then takes the benefit when the property is sold."
Oh well that's ok then, nevermind that people have household budgets, just tell them to sell the house if they find themselves short because of a cost forced upon them.
Anonymous.
Under an LVT people are allowed to pay in kind for their house i.e. they give over ownership of a percentage instead of paying with cash.
With renters however their bill goes up (as it should).
It sounds like you'd just like to be subsidised by those around you.
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