It's the gift that keeps on giving ...
Patrick, in the comments here: "You make great play of funding the built infrastructure, but why on earth should I be paying for it if I don't use it?@
Which I countered, I think not unreasonably, with this: "Why on earth should you be entitled to make a tax-free profit from selling a property that has gone up in value because somebody else has been forced to pay for the infrastructure?"
Anonymous then asked: "So you think housing should be treated as an investment, and not a home?@
From the context, I assume that he or she intended this as an argument against LVT, but to answer the question with a straight bat, I think that an owner-occupied property IS a home, i.e. private consumption expenditure, and NOT an investment (* to which, see footnote), and hence should be treated as such.
If you want to drive a nice new car, you have to pay the manufacturer for its value. If you want your kids to have a good education, you have to pay the school for the value of the education they get. And so on for all other forms of expenditure. So by analogy, if you want to live in a nice location, you ought to pay for the location value to whomever it is who creates the location value. So the question is, who creates the location value?
I accept that "the state" only directly provides some of the services that create location values (police, law and order, prisons to keep criminals off the street, fire brigade, road maintenance, refuse collection, i.e. the core functions of the state) and that a lot of the location value is created by purely private activities (shops, places of work) as well as things that are usually state-run but could just as well be provided privately (schools, hospitals, sports centres); but even this private wealth-creation depends to a large part on the framework set by the state (i.e. legal system, planning controls and so on).
In the absence of all this framework, location values would be more or less nothing (compare for example property values in the Gaza Strip with those in Israel). So whoever it was who creates the location value, it sure as heck wasn't one single individual property owner who sold you the house.
So, in the absence of an identifiable producer, what's wrong with individuals who want to enjoy privileged exclusive access to that collectively created value being asked to pay for that value to fund things that are of collective benefit? Rather than the current system where "the collective" (i.e. income tax and VAT payers) are forced to pay for things that are of purely private benefit (i.e. the infrastructure that boosts the value of Patric's property)?
* With a shift in taxation, however modest, from proper wealth creation (i.e. investment, in the narrower sense, of your own skills, labour and capital), the tax burden on proper investments, those things that make us all wealthier and make the economy grow, would come down and so the after-tax returns thereon would go up. Capital gains tax is straight out of the window, for example. Rising house prices coupled with a correspondingly higher debt burden do not make us wealthier, they merely creates the illusion of wealth, as we are now finding out - it's called "a recession", in case that point had escaped anybody.
Thursday, 9 July 2009
Killer arguments against LVT, not (11)
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7 comments:
Can you answer my basic ideological disagreement, Mark? Or are all your 'killer arguments' merely appeals to 'the common good', which no libertarian* would ever recognise as valid?
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* Excepting a particularly prolific tosser on the LPUK blog, who I believe is an outcast from your party?
Mark, you seem to be going for a war of attrition over the matter, it's an effective way of "winning" the discussion i admit.
This latest wall of text is also another circle jerk.
"So, in the absence of an identifiable 'producer', what's wrong with individuals who want to enjoy privileged access to that collectively created value being asked to pay for that value to fund things that are of collective benefit?"
Because, here we go again, why should i, an existing homeowner, be forced to pay more "rent/tax whatever" because of others activities.
your answer = they can sell if they don't want the extras.
So houses = investments.
And you must work to provide for the state, yes i know this already exists with council tax, but what is the bloody point of this whole LVT buisness if it just gives the same result.
Not convinced at all.
Anon.
1. "why should I, an existing homeowner, be forced to pay more "rent/tax whatever" because of other's activities?"
I've covered that - why, conversely, should somebody be entitled to make a tax-free capital gain when they eventually sell their house, which has only gone up in value because of other's activities?
And where or when did I say "more tax"? I'd far rather we paid much, much less tax overall, so for every £1 LVT goes up, other taxes go down by £2.
2. LVT does not give the same result as council tax, it acts like a permanently higher interest rate so it keeps house prices low and stable, so dampens the whole 'boom and bust' that we have been going through since the 1960s (after we got rid of Schedule A taxation; once we got rid of Domestic Rates fifteen years later, all hell broke loose on the house-price-bubble front).
Patrick: "are all your 'killer arguments' merely appeals to 'the common good', which no libertarian* would ever recognise as valid?"
I suppose the truth of that statement depends on who you think is justified in calling themself a libertarian, but I'm aware of plenty of consequentialist libertarians who support libertarian ideas on the basis that it generates a general increase in wealth.
LVT needed not be ahigh charge anyway. When you really get down to it the 'core functions of the state' are very minor indeed. Defence aka security generally, rule of law (but not ...and order), sound currency (the states consistent biggest failure), acting as umpire not player, and the upholding of the right to enjoy private property, and democacy.
Suer 'society' that is ema nd you might agree that some transfer payments need to be made to encourage education and health care and you might a very small local VED tax to deal with raod maintenance. But arerial routes like motorways should be funded by raod pricing - tolls. Even or especially refuse collection could be just manged riather than run by thr LA.
Just going back to Gaza or perhaps bits of Liverpool, the improvements will arise by the will and effort of the local people if they can be sure of the rule of law.
In my view LVT has to work with a massive reduction in what the state does. This will lead to low rates of LVT and more freedom for people.
Where do I sign?
L, the core functions of the state cost £100 billion a year or less (about one-sixth of all government spending), we could pay for that by keeping Business Rates as they are, trebling Council Tax and scrapping just about every other tax on the statute book.
At this level, it is then just a question of whether you leave 'Council Tax' as a poll tax (like in Mainland Great Britain), or make it more proportional to property values (like in Northern Ireland). I would prefer the latter, as it happens.
"I've covered that - why, conversely, should somebody be entitled to make a tax-free capital gain when they eventually sell their house, which has only gone up in value because of other's activities?"
circle jerk again?
"I already covered the topic of whether housing is a "bankable value or a home" in the previous post and have come down firmly on the side of it being a, er, home, rather unsurprisingly, for that is what a home is. It's a home. "
So which is it, is it firmly a home, or an investment, the two quotes seem contradictory to me.
I am not all to against a house being an investment, but let's not pretend it's one thing to justify another.
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