I suppose it's time to cover a few more supposed killer arguments:
1. Land Value Taxers point out that Hong Kong derives a lot of its revenues from rents and granting leaseholds (the state owns all freeholds), which is why they can keep their income tax/corporation tax rate to a nice flat 16 % or so. The anti-LVT people cheerfully ignore this, and use Hong Kong to "disprove" a completely different pro-LVT argument, namely that LVT acts like a higher interest rate on land value and hence keeps property prices low and stable. The anti-LVT argument is that Hong Kong has property price bubbles just like anywhere else.
This is perfectly true, but that is because Hong Kong grants long leaseholds of up to 99 years. As we well know, if you have a leasehold with more than twenty or thirty years to run, its value goes up and down pretty much in line with that of freehold land. So that argument is not an argument against LVT, it's an argument against the grant of long leaseholds, and hence against the grant of freeholds.
2. The anti-LVT crowd also try these two arguments simultaneously:
a) LVT does not take into account ability to pay.
b) A Poll Tax is fairer than LVT.
As a general rule, people in bigger and nicer houses in a more expensive area have more income (and certainly more capital to draw on) than people in smaller and cheaper homes (or who may even be tenants). So LVT does take into account "ability to pay", or at least, takes it into account far more than a Poll Tax. And if you don't like paying LVT, at least you can trade down and slash your LVT bill - there's no escaping a Poll Tax.
3. Here's another nice pair of completely conflicting arguments advanced by the anti-LVT crowd:
a) If we tax land values then farmers will be forced to sell off their land and we'll end up with the whole of the countryside being concreted over.
b) Land values are higher in towns and cities, so cities will become more and more densely developed.
The first argument is completely laughable of course. The second argument is probably closer to the mark, but if so, why is this A Bad Thing, seeing as of how the NIMBYs are always wailing on about "protecting The Hallowed Green Belt? The truth of the matter is, LVT would lead to neither extreme - it acts just like a higher interest rate. If interest rates went up, would farmers sell off their land for housing and factories? Nope. So why would LVT have that effect?
4. Or how about this inherently self-contradictory statement advanced by those who oppose LVT and/or liberalising planning laws:
"What we need is less taxation and less regulation"
What are ground rents if not taxation? Rents and mortgage payment consist, to a large extent, of a payment for the right to occupy a certain 'location', in other words, the ability to enjoy transport links, a nice view, close proximity to shops, schools etc. The landlord or the vendor of a home (let along the mortgage company) did not provide any of these things, so what is the location rent if not a tax? Sure, it's a privately collected tax, but without society in general to provide the location value and the force of the state to guarantee/protect it, landlords/banks simply would not be able to collect it.
So when the anti-LVT crowd call for "less taxation", what they mean is the state should collect less tax so that landlords and home-owners can collect or keep more - this is a straight squabble between the state (acting on behalf of everybody) and landlords/homeowners acting out of naked self-interest. And although naked self-interest is the driving force of free-market capitalism, it is only a force for good in non-monopoly situations - the combination of naked self-interest and a monopoly position is definitely a very, very negative thing.
The same double standard applies to NIMBYs, who absolutely love restrictions on the free-market economy when it comes to their own narrow interests; not forgetting that supply restrictions act in much the same way as a tax from the point of view of the customer.
That's enough for you to be getting on with for the time being.
PS, I seem to have missed out the number 26, the one prior to this is number 25. Ah well.
I Knew I'd Be Wrong...
24 minutes ago
6 comments:
From a purely pragmatic andd logistics point of view, if you were the one who had to collect the taxation money, which would you choose?
1. Taxation based upon an immovable asset, where you can be fairly sure people can be found who will pay up, or
2. Taxation based upon a movable person on an individual basis, who will do everything they can to evade taxation and can side step requests by not being found...
BID, the anti-LVT crowd turn that (impeccable) logic on its head - they say that LVT is a tax on 'living' because you can't escape or avoid it unless you leave the country.
This glosses over the fact that you can cut your LVT to a bare minimum by moving somewhere cheaper/smaller or taking in lodgers to share the bill, of course, but that's not good enough for them.
With a high LVT paid as a CD it's actually free to live in the average house.
So LOLs don't despair, unless you live alone in a mansion in the middle of a business zone.
So LVT does take into account "ability to pay", or at least, takes it into account far more than a Poll Tax.
That much is so.
On 3b)
"Destroying speculative land values would tend to diffuse population where it is too dense, and concentrate it where it is too sparse. City tenements would give way to homes with gardens. People in the country would share more of the economies and social life of the city."
It would bring out of use land into use in the city too. There's more here:
http://www.henrygeorge.org/pchp37.htm
Land Value Taxers point out that Hong Kong derives a lot of its revenues from rents and granting leaseholds (the state owns all freeholds),
With the exception of the land on which the Catholic Cathedral stands, which is just behind the HSBC headquarters.
You should also note that the Govt auctions parcels of land with planning permission, which is a very good source of revenue. They could, if they wished, use this flow to control property bubbles, but they don't/didn't. Some say that they were in league with the very few billionaires who could afford to bid, but I couldn't possibly comment.
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