Killer arguments against LVT, not (46)

The Fat Bigot goes for broke by saying things that are patently not true, neither on a factual nor logical basis:

This is a very fine summary of the downside of LVT. Combined with the Citizen's Dividend it is tax credits writ large (1), writ so large that everyone is tied into the scheme. The State will tax you according to one capital asset only (to which it can apply any value of its choosing) (2). There are no checks on how high the tax rate will be (3) other than the ballot box, and once recipients outnumber payers the result is obvious...(4)

I could waste everybody's time by simply substituting the words "income tax" for "LVT" and "the value of goods and services you exchange for mutual benefit" for "one capital asset" (strictly speaking, an artificially rationed state-protected monopoly right), but let's look at the specific untruths, as numbered:

1) A Citizen's Dividend is more akin to Child Benefit or the Basic State Pension, flat rate, non-means tested etc. Tax Credits are quite clearly the worst benefits because they are the opposite of a Citizen's Dividend, they are 'targetted' (and far from universal), heavily means tested, expensive to administer, prone to fraud and error etc etc.

2) The value of land and buildings is decided by how much people are prepared to pay for them. A land value tax would respond to what prices are doing in any defined area.

If we went with my modest 1% flat rate property tax to replace Council Tax, Stamp Duty, Inheritance Tax etc, then it is quite easy to monitor selling prices and continually re-set the tax so that it averages out at 1% of current selling values.

If we went the whole hog, then if buildings in any particular are being sold for more than their rebuild cost, then the tax is 'too low' in that area gets hiked a bit; if buildings in an area are being sold for less than their rebuild costs, the tax is 'too high' and gets reduced a bit (but no lower than zero, obviously).

In any event, it must be better for the economy for us to try and keep house prices down than desperately trying to inflate them as high as possible, which is what UK governments have been doing for the past forty or fifty years.

3) Yes there are checks, see (2).

In any event, don't forget that for every seller there is a buyer. Land is continuously bought and sold (in the last ten years, half of all privately owned houses in the UK have been bought and sold at least once). If the vendor thinks the tax is 'too high', then he is free to sell... but to whom? He can only sell it to somebody who thinks the tax is reasonable.

Therefore, from the point of view of all subsequent purchasers in all eternity, it is an entirely voluntary tax. And in the absence of that entirely voluntary publicly collected tax, all future purchasers would have to pay a fairly similar amount in 'privately collected tax' to the previous owner (as well as all the 'publicly collected taxes' like income tax etc).

4) "... once recipients outnumber payers the result is obvious..."

By definition, the number of CD recipients will always be equal to the number of LVT payers. Even council tenants have to pay rent/Council Tax, which includes the LVT element on their home. Sure, recent immigrants will pay LVT but not get the CD, and in some particularly run down areas, LVT would be nil, but that's details.

It is far more interesting to apply TFB's concept to all the stealth taxes that are collected, and which don't really register with people. Most people are only dimly aware of how much PAYE is deducted from their salaries every month, how much VAT they have to bear, by how much their dividend income is depressed by corporation tax etc.

It is really only the people in the accounting departments who hand over the cheques who are aware, but by that stage, it's 'somebody else's money' and it's no big wrench. VAT is an even bigger lie and under normal accounting rules, you are not even allowed to include it in your gross turnover. It is only a million or two self-employed people and small businessmen who have to calculate their own income tax and VAT and hand over the cheque who are really aware of the pain involved.

But most people know how much Council Tax they pay. All twenty seven million households in the UK get a Council Tax bill. It is an in-your-face tax.

So that's the beauty of stealth taxes, from the point of view of the government. There is a complete and utter mismatch between who bears them legally and hands over the cheque; and who bears the burden economically. The number of people who are aware that they are 'payers' is dwindlingly small, in any event, far smaller than the number of 'recipients'. These stealth taxes are not even payment for any particular benefit arising to the person paying them.

Not so with in-your-face taxes like Council Tax. Admittedly, Council Tax is a completely made up figure that bears little relation to anything, but if we councils were to be funded solely by Council Tax (and Business Rates), then the amount of stealth taxes on incomes that central government needs to collect could come down by (say) £60 billion per annum and Council Tax would be trebled.... but would it?

For some reason, people are far more sensitive about the proceeds of an in-your-face tax (like Council Tax) being wasted than if stealth taxes are wasted, but that to me is an argument in favour of Council Tax: councils are far less likely to waste money if they have to raise it via an in-your-face tax.