Spotted over at SNP Tactical Voting:
Doug Daniel: "Stuart [who brought up LVT], isn't council tax essentially a land value tax, and one that most people have already decided is a pretty unfair one at that?"
Nope. Council Tax is about 50% Poll Tax and about 50% property-size tax. It bears little relation to 'land value' in an absolute sense, although since Labour skewed the funding formula, Council Tax in Tory or Lib Dem controlled councils (where property values are a bit higher) tends to be higher than in Labour controlled councils. Is it 'unfair' because it is a Poll Tax or 'unfair' because it is a property-based tax? I'd say because it's a Poll Tax, others may not agree.
"I might be misinterpreting what it would entail, but would it not mean someone could end up paying more tax merely because the area they've lived in all their lives has suddenly seen a surge in housing development etc which has pushed up the value of their property?"
It might well do, but then again, if newcomers to an area are prepared to pay more to live in that area, why shouldn't existing residents? And what about the people who'd pay less tax because 'the area they've lived in all their lives' has gone downhill? In which area would you rather have been living? Price rationing is the best form of rationing etc.
"Let's face it, if someone's got enough money, they'll find a way out of wriggling out of a land tax as well. All they need to do is buy smaller properties. Should a single millionaire in a one bedroom house pay less tax than a family with a modest income living in a three bedroom house?"
That's the whole point. It's like pointing out that a single millionaire can 'wriggle out of' VAT by buying an old banger for £500 while the family buys a new mid-price saloon, or pointing out that a single millionaire can 'wriggle out of' tobacco duty by stopping smoking. To be fair, Doug Daniel then answers his own question:
"Although then again, it could be argued that he might use a lot less resources than the family, so maybe he should pay less. It all comes down to how we think the tax burden should be spread and why."
It's not such much a question of 'the tax burden', it's a question of who creates those land values and who should benefit from them: the state-protected monopolist, or 'society in general'? Seeing as people's contribution to [rising] land values is broadly proportional to the value of their output (which is clobbered by income tax, National Insurance, VAT, corporation tax), a fair way of allocating the revenues from taxes on land values would be to reduce taxes on output (but repaying the national debt would be a top priority as well).
Sioux chef
17 minutes ago
2 comments:
"... if newcomers to an area are prepared to pay more to live in that area, why shouldn't existing residents?"
Because newcomers have a choice, existing residents don't.
"... It all comes down to how we think the tax burden should be spread and why." ... "It's not such much a question of 'the tax burden', it's a question of who creates those land values and who should benefit from them ..."
It's a cart and horse juxtaposition conundrum.
The argument for LVT presumes it to be fair to tax people primarily by the value of the land they own / occupy. It seems an inevitable consequence that personal circumstances are relevant for tax purposes primarily insofar as they relate to land.
The argument against LVT presumes it to be more fair to tax primarily by reference to annual income.
The difference is very much one of "how we think the tax burden should be spread".
TFB:
1. "Because newcomers have a choice, existing residents don't."
Yes they do. It's like owning shares - buy, hold, or sell.
3. "It's a cart and horse juxtaposition conundrum."
No it's not.
Without playing the 'little old lady in a mansion card', tell me who creates land values? Is it the person who happens to 'own' each individual plot from time to time, or 'society in general' - including those who don't happen to own land?
(You have already made it perfectly clear that you think that only people who 'own' land should benefit from rising values so you needn't bother answering the second part of my question for now.)
3. "The argument for LVT presumes it to be fair to tax people primarily by the value of the land they own / occupy"
Firstly, there is no "primarily" about it. Please frame your criticisms of LVT not at the full-tilt Georgist model, but at my basic idea to roll Council Tax, Business Rates, Inheritance Tax, TV licence fee, capital gains tax, insurance premium tax etc into a flat property tax of about 1% of property values which would be fiscally neutral.
I can rephrase your statement as either:
"The argument for paying a mortgage or rent presumes it to be fair to pay more or less depending primarily on the value of the land you own / occupy."
or
"The argument for fuel, tobacco or alcohol duty presumes it to be fair to tax people ... by the amount of petrol, tobacco or alcohol they consume."
so what's your point exactly?
4. "It seems an inevitable consequence that personal circumstances are relevant for tax purposes primarily insofar as they relate to land."
Again, I can answer that with the following two statements, the first of which seems quite sensible and the second of which appears faintly ridiculous.
"It seems an inevitable consequence that personal circumstances are relevant when deciding how big a house you can afford to rent or buy"
"It seems an inevitable consequence that personal circumstances are relevant for tax purposes primarily insofar as they relate to spending on goods and services*"
* Remember that VAT raises £80 billion a year, as against £60 billion for all the taxes that I would roll into LVT - i.e. Council Tax, Business Rates, Inheritance Tax and so on.
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