Killer arguments against LVT, not (13)

Patrick again, here:

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?

I am against subsidies, full stop, that is my starting point, and I would like to think that Patrick is too.

Overt subsidies, e.g. for car manufacturers/importers, or wind-turbines or all the other nonsense cost money and lead to misallocation of resources, and although these subsidies ostensibly "save" or even "create" jobs, for every 1 job saved or created, on average 1.5 jobs are destroyed somewhere else, it is just that it is very difficult to say which incremental extra 0.5 of a person is unemployed as a result.

So subsidies harm "the common good" and I am against them.

Now, unless you live under a stone, you may have noticed that housing is actually heavily subsidised. There is the non-monetary subsidy that land use is strictly controlled, hence supply is kept at well below any sort of optimum level, hence prices are kept at well above their optimum level, which is a covert subsidy to property owners (which I covered here).

Then there is the overt subsidy that the UK government is currently depressing interest rates to way below market rates, which transfers wealth from savers to reckless borrowers and further inflates property prices.

And finally of course, thre is the fact that council tax on pays for a small fraction of the cost of "local services" (about a quarter) and an even smaller fraction of the value thereof; the rest is paid by taxes on people in the productive economy (some of whom are also property owners, of course, so for many households, it nets off).

But these taxes on wealth-creation or true investment have massive deadweight costs; they are inimical to "the common good", they make us all poorer, tenants and property owners alike, that is the main reason that I am against them (the "moral" argument that people should not be taxed on their own efforts is also valid, but secondary) unlike taxes on land values which have negligible or even negative deadweight costs, so do not damage "the common good".

Seeing as the core functions of the state have to be paid for somehow, why not choose the tax that does the least damage to "the common good"?

Now of course Patrick will say that he's against income tax as well (but he's not against sales tax, funnily enough, which are just income taxes by stealth).

Fine, that's another point of agreement.

But what would happen to property prices if we scrapped income tax? Under Ricardo's Law Of Rent, rents and prices would merely increase by the amount of the income tax cut (compare rents and prices in a low-tax country like Monaco with rents and prices across the border in France!), so scrapping income tax would, taken in isolation, be a massive one-off transfer of wealth from future generations (who have to pay off much higher mortgages for ever more) to anybody who happened to own property at the time of the change.

Sure, we would be, collectively, better off being exploited by property owners (through higher rents and prices) than being exploited by the government (through income tax) but the gains to future generations are not that significant; we would be merely getting rid of "the state" in its narrow sense and returning to a feudal system where land-owners are, de facto, "the state".