Killer arguments against LVT, not (69)

There was another fine article on Land Value Tax in The Guardian yesterday, which linked to an earlier article in The Spectator (of all places!), the comments sections of which provide us with a wealth of economic illiteracy to fisk at a later date.

But I'll pick up on these two from The Guardian anyway:

1. Peitha: "... the argument being advanced is that LVT represents a tax on (sometimes unearned) wealth but if the tenant is having to pay it when he does not himself own the asset then clearly it isn't a tax on wealth at all."

a) Epic fail, nope, neither nor. Pay attention at the back: Land Value Tax is a tax on 'consumption' of land and/or a user charge paid to [the government as democratically appointed representative of] society in general for respecting/protecting your right to exclusive possession of a scarce resource whose value is created entirely by that self-same society in general.

b) Never forget that tenants already pay Land Value Tax. It's just that the tax is collected privately by the landlord (who in turn pays a bit of income tax on it, fair enough).

2. Peitha (again): "LVT penalises anyone who stays in their property for an extended period... because the rate of rise in land values historically outstrips the rate of rise in wages over an extended period, so unless the % LVT is to fall to bring the two back into line the tax becomes increasingly onerous the longer you stay in the same property... Try running a few numbers."

a) That's factually correct - land prices rise slightly faster than wages over time, and no serious economist disputes that.

b) But the comment turns logic on its head: the land value taxers say, why should we allow landowners to collect an ever increasing share of an ever increasing GDP for absolutely no input on their part? Surely it is better to scrap existing publicly collected taxes (income tax, VAT etc) and collect the land rents that are currently privately collected? Economically, everybody would be a tenant, but everybody would also be a landlord (the bulk of government spending is redistribution in one form or another, whereby a Citizen's Dividend is the easiest and best way of doing it, together with paying off the National Debt).

c) Peitha's argument appears to be that it is better for people to pay ever larger amounts of income tax, VAT on their ever increasing pre-tax incomes as well as ever increasing land rents out of their post-tax incomes, which would have the observed result that most people's net disposable incomes after tax and housing costs, i.e. their living standards, rise much more slowly than GDP growth generally, possibly staying flat.

d) We ran the experiment in the 19th century of what would happen if we had very low income tax and phased out existing taxes on land values: of course the economy grew, but the gains to the huddled masses were minuscule compared to the gains to the landed gentry. So I'm afraid that's not really an option either.