Killer arguments against LVT, not (12)

While I was typing part 11, another nugget of economic logic comment popped up here.

As background, Patrick had earlier claimed that sales taxes were preferable to land value taxes as people "aren't forced to buy things", to which I replied "Wot? How many people can live without buying anything?"

Anonymous' comment was: "You can reduce the amount/quality of what you buy. It is possible (though no one wants to do it) to live off the land, not with LVT as you are forced to earn an income for the state. In LVT if someone makes improvements, you have to pay more tax, it is not your choice. You can as you said downsize, but then you are again forcing choices upon people, and forcing housing to be viewed as a bankable value instead of a home."

OK, let's keep things simple and compare LVT and sales tax (i.e. VAT) on a like for like basis. An average household pays/bears £3,000 VAT. This makes things they buy more expensive (and/or reduces their disposable incomes).

So VAT is also "forcing choices" upon each and every household. Instead of enjoying £20,000's worth of goods and services per annum, they can only enjoy £17,000's worth. Each household is forced to make the tough choice about which £3,000's worth of enjoyment they will forego; they are forced to "downsize" their consumption and hence "downsize" the income that producers can earn and hence "downsize" the productive economy generally (the deadweight costs, which make us all poorer); the producer and consumer between them "are forced to earn an income for the state" (to use his or her own words).

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.

I generally find that it is opponents of LVT who see housing as a "bankable value" rather than as a home, which is why they are so against a tax system that would keep values low and stable.