Killer Arguments Against LVT, not (91)

The eternal fall back of the Home-Owner-Ists when opposing the idea that we tax incomes less (or not at all) and tax land values instead, is 'The Poor Widow Bogey', which had its most recent outing e.g. here:

jaffa said... You all seem to forget the old 85+ pensioners who live in a house they bought and paid for 40 years ago out of their earnings. They have no income so are unable to get a mortgage of any sort, they have no cash all spent/inflated away. So where do they get the dosh from to pay this bill that lands on their mat..?

If you apply common sense to this, as I did at length here, you'll know it's not really an issue.

To cut a long story, assuming a given required total amount of tax revenue (a large chunk of which is used for paying old age pensions and NHS costs for the elderly, let's not forget), it makes little difference whether we keep it simple and collect LVT of about 6.5% of the total current market value of all UK land and buildings and make pensioners pay as well (allowing them to roll up and defer the tax if they so wish), or whether we exempt pensioners main residences completely and apply a rate of 8% to everybody else.*

We can think up any number of transitional or relieving provisions, it's just a question of working out which one has the least bad unintended consequences. I personally am not too fussed what we do, this is politics not economics.

So for future reference, I have added a new widget to my side bar called The Poor Widow Bogey, which links back to the earlier detailed post and to which I will refer people in future to save me explaining this again and again and again and again. And again.
---------------------------
* People who are hoping to inherit a large house might take the superficial view and say they prefer the latter solution (and people who aren't will prefer the former) but actually that's not necessarily the cleverest thing to do; assuming they intend to sell the house as soon as they get their hands on it:

Imagine you are in line to inherit a large house in the next few years - although there'd be no LVT in the interim, would you rather inherit something with an annual LVT bill of £16,000 (8% x £200,000) or with an annual LVT bill of £13,000 (£200,000 x 6.5%)? The selling price of the former will be (say) £60,000 less than the latter (assuming the annual difference of £3,000 is capitalised at 5%), so that's a one-off cost of £60,000.

Add to this, the fact that the NPV of the LVT payments on the houses that you and your fellow heirs are living in (let's say three heirs, who pay an extra £2,000 a year each if LVT were 8% and not 6.5%), that's an additional capitalised cost of £120,000, so the total cost is £180,000. We could add on further costs for your own children etc, but let's skip that step.

We compare that £180,000 extra one-off cost with how much the accrued LVT would be, assuming £13,000 a year, i.e. if you expect the elderly relative to live another 14 years or more, you prefer the total exemption method (whereby pensioners pay £nil and everybody else pays 8%), and if you expect the elderly relative to die before then, you actually prefer the 'everybody pays 6.5%' method.