As we near the magic one hundred mark, let's turn to the quasi-mythical objection as propounded for example on a pro-Ron Paul website:
My question is, how do think you can own your home if it is contingent on your paying a state property tax. If you don't pay the tax, the government will place a lien on the property and dispose of it to satisfy the tax debt. Please tell me how you will ever own your property with this bogus tax in place. Feedback would be appreciated.
The comments seem to be split between Faux Libertarian indignation and realist-geo-libertarianism, the neatest summary being probably this by TenBobNote:
You can never really own your property because we are on this planet temporarily for but a brief moment in time, we use what we will and claim them to be ours but they are all simply borrowed.
1. It's difficult to know whether we are arguing on the level of economics, morality or administrative simplicity, but the correct response is, from a full-on LVT/CI Georgist point of view, that every citizen will always own his or her individual share of the land, because the bulk of LVT receipts would be dished out as a Citizen's Income.
2. You may choose to occupy a smaller or less valuable home that the average citizen, in which case you can spend the difference on something else; you may be a higher earner or be prepared to do without other things in order to occupy a larger or more valuable home (in which case you have to pay the difference); you may end up living on the streets and spending the lot on booze; but (unless you do something really dreadful, or move abroad), that Citizens Income will never be taken away from you.
3. You may imagine that you own your house, but it still requires upkeep and maintenance, heating and utility bills to be paid or else it quickly becomes uninhabitable. The same applies to a car; surely you still own your car, even though you have to pay for petrol, repairs and insurance, knowing full well that after a few decades it will be nought but a pile of scrap.
4. You may even imagine that you own yourself (and this is the closest that you can come to truly owning something), but without being prepared to spend money on essentials (like food or heating or medical treatment) you will die, and we are all going to die anyway, however well-fed or cared for.
5. I fail to see why doubling people's net incomes and reducing the costs of 'everything else' slightly (which is what scrapping all other taxes would achieve) and increasing the net cost of land 'ownership' slightly (you have to make up the shortfall of your Citizen's Income minus any LVT due) is such an affront to common sense, and I do sometimes wonder whether this obsession with 'owning' land is somehow a quest for immortality, cf. the reverent tones that people adopt when they say "this land has been in the family for centuries".
Doppelgänger
2 hours ago
10 comments:
I do sometimes wonder whether this obsession with 'owning' land is somehow a quest for immortality, cf. the reverent tones that people adopt when they say "this land has been in the family for centuries".
But there's also a common view in this country that owning almost anything is better than renting things. People see renting as "wasting money".
I explained to someone that sometimes I rent cars. If I need to see a client, and they're in the sticks and I can't borrow my wife's car, I rent one. I've had people say "but isn't that expensive" and even after explaining that it's a cheaper than paying for and running a car, they still don't get it.
Go into a DIY store and you'll see all sorts of tools like angle grinders. People buy them because they're only a bit more expensive than renting and so it seems like a bargain. The fact that they need to store it, maintain it, and probably never use it again (and that the hire tools are better, professional tools) is basically lost on them.
And it's what I think led to a lot of the growth of homeownerism. That people saw rent as a waste, and that mortgages were good because eventually you stop spending rent (the French attitude to housing seems to be more that you rent until you're basically settled in like your 2nd family home).
I think this is kind of missing the point about ownership. It's not just a cost thing. It's the fact that nobody can take the thing off you. It's yours. It's property.
Rental is not ownership. You only have the thing while you are paying out for it. Once you stop paying, you lose it again.
Rental is often a good strategy. It applies well when the thing you want to use would cost more to buy than to rent. If a builder only rarely needs a big crane, it makes sense to rent it for a day or a week. But it makes no economic sense to rent it continuously. And doing that means that it is never his.
In fact, a rule of thumb is, that if anybody is continuously renting something, there is something economically wrong somewhere.
The fact that everything needs maintenance is a canard. Houses don't instantly collapse if you stop maintaining them. In hard economic times, you can just stop pretty much all the maintenance for a while, and the house will still stand. You can't just stop paying a rent, or a tax.
So this is a fundamental moral problem for an LVT. You are demanding tax for something which is owned, even though it produces no income and never will, in the case of a residential plot. Housing is a cost, not a source of income (to owners). So effectively you've got a double whammy. The homeowner is paying once in tax and once for maintenance. Just to keep a roof over his head.
Which is why I suggested previously that one way to make an LVT palatable is to have a "land allowance". It might be a quarter of an acre, or less[1]. Enough for a decent residence, without paying tax.
People who own larger plots may reasonably be presumed to be doing so for commercial purposes, so an LVT is less of a punishment. But to tax a man for his non-commercial property is just fundamnetally unjust.
I know, yes, we do that now with some taxes (road tax for instance). It doesn't make it right, not if we're discussing "better systems than we currently have".
People like owning things. The justificiation for this is... that people just like owning things.
[1] I believe 10 houses per acre is not an uncommon modern housing density in fact.
"I fail to see why doubling people's net incomes and reducing the costs of 'everything else' slightly (which is what scrapping all other taxes would achieve) and increasing the net cost of land 'ownership' slightly (you have to make up the shortfall of your Citizen's Income minus any LVT due) is such an affront to common sense"
I'm always happy to help, as you know Mr W.
The affront to common sense is that doubling incomes by removing existing taxes will result only in a slight net increase in the cost of land ownership. Unless the total tax-take falls (some chance) a doubling of incomes by removal of existing taxes must result in the same amount being charged against land. It affronts common sense to describe this is a "slight" increase in the net cost of land ownership.
IanB "If a builder only rarely needs a big crane, it makes sense to rent it for a day or a week. But it makes no economic sense to rent it continuously."
Not necessarily, in fact rental or buying of plant & equipment is one of the decision making elements which are taught in management accounting modules. It is not always better to buy depending on what deal you can get on renting as these things depreciate over time.
"The fact that everything needs maintenance is a canard. Houses don't instantly collapse if you stop maintaining them. In hard economic times, you can just stop pretty much all the maintenance for a while, and the house will still stand. You can't just stop paying a rent, or a tax.
So this is a fundamental moral problem for an LVT. You are demanding tax for something which is owned, even though it produces no income and never will, in the case of a residential plot. Housing is a cost, not a source of income (to owners). So effectively you've got a double whammy. The homeowner is paying once in tax and once for maintenance. Just to keep a roof over his head."
Regarding the bit i've bolded. EXCUSE ME? TAX FREE CAPITAL GAINS!?
Regarding the rest of the quote, how many people (not including pensioners) have no mortgage on their residential home BUT are not also higher than average earners getting fucked over by the taxman?
"But to tax a man for his non-commercial property is just fundamnetally unjust.
Two things, LAND value tax does not tax property, it taxes the value of the land which is created by society as a whole, it is ACTUALLY therefore fundamentally unjust to tax people so highly on the individual fruits of their labour (i.e. their income) when the value that both their labour & their very existence within the community adds to the land and eventual TAX FREE unearned gains of "owners."
SW, ta for spirited response, but even in absence of capital gains (absolute poison), land does generate income, that's what gives it its value.
i.e. I consume £20,000 of land services a year (I pay rent) and my landlord banks £20,000 (his rental income).
If landlord moved back in to this house, then he still has £20,000 rental income, but he spends it on consuming the services supplied by the land.
The fact that most people are owner-occupiers clouds the issue that they are simultaneously providers and consumers of land.
Like one farmer might grow food and sell it, he has income £10,000 a year which he spends on something else; the guy on the next famr might decide to eat the entirety of his output instead. The two farmers have the same output/income and consume goods/services to the same value. To say that the first farm generates income but the second one doesn't is nonsense.
Ian B,
Housing is a cost, not a source of income (to owners).
If only everyone agreed on this! You asked why people rented for long periods of time - one could also ask why people buy property that they only plan to live in for a few years? They cannot get the full value of the purchase price + fees in that time period, so their decision is based upon the expectation that the resale value of the house will be greater than what they paid for it. In other words, they see buying property as an investment, not a cost, hence that home is a source of income to that owner.
Aside: This is why the government should IMO do absolutely nothing about negative equity:
* If people are planning to live in their property for the long term, the value of that purchase is in using the property as a home. Re-sale value is irrelevant, so if that re-sale value has gone down it is not a problem, thus no help is necessary.
* By contrast, if the owner is relying on the re-sale value, then it is an investment. It is a very bad idea for governments to bale out people who made bad investment choices, and I see no reason to distinguish between property and any other potential investment choice (e.g. shares).
one way to make an LVT palatable is to have a "land allowance"
The proposed CI is a land allowance, it's just defined in money terms. We cannot define a land allowance by acreage, as the land value differs so much across the country.
But to tax a man for his non-commercial property is just fundamnetally unjust.
But it is OK to tax that man on his labour?
Ed: "The proposed CI is a land allowance, it's just defined in money terms. We cannot define a land allowance by acreage, as the land value differs so much across the country."
Spot on, thanks. To be fair to Ian B, he is probably against income tax as well; the sticking point is that I reckon that any land rents collected privately are a form of taxation; IanB begs to differ and says it's only "tax" if you pay it to the government.
I reckon that a full on LVT/CI system is the closest we can ever get to a truly tax-free economic system.
Regarding the rest of the quote, how many people (not including pensioners) have no mortgage on their residential home BUT are not also higher than average earners getting fucked over by the taxman?
Well, me for one and I know three other people who fall into this category, but we are, I suspect, a tiny minority.
MW: the sticking point is that I reckon that any land rents collected privately are a form of taxation; IanB begs to differ and says it's only "tax" if you pay it to the government.
I like this little piece to help solidify the idea...(I first saw it on tpaine.org which now appears to be defunct)
http://www.sherdog.net/forums/f54/landlord-government-libertarian-basis-land-rights-606312/
F, it's not so much that landlords are mini-governments that bothers me (their house, their rules), but that 'the state' provides landlords or landowners with so many valuable services for free, which they can then sell on to their customers for large amounts of money.
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