An old fall back of the Faux Libertarians (who are far more sophisticated in their arguments than yer common or garden Home-Owner-Ist, but all the wronger for it) is the 'feudalism' card, e.g.
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Perry de Havilland, posted here: Yes, we are all de facto feudal tenants of the state. Let's have LVT and make it official, I mean what could possibly go wrong with that? :-)
The point of having LVT and 'making it official' is to be able to replace all the really bad taxes (income tax, VAT) with a much better tax (or at least 'far less bad' tax) and get rid of the Home-Owner-Ist elite (i.e. the new aristocracy). Nothing will go wrong, people have tried it and the results are always surprisingly positive.
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Anon, posted here: I think you've outed yourself at last, Mark. You are quite openly stating that I should pay the State a rent in order to occupy my own property.
You are, in fact, a feudalist: "everything belongs to the state, and everyone must pay". Thanks, but I'd rather remain a freeholder. Apart from being cheaper, it's one of the things that has given us freedom and the rule of law in the half-milennium or so since the late feudal system fizzled out in the aftermath of the Black Death.
Oh dear. I never said that "everything belongs to the state", I pointed out that the rental value of urban or residential land (putting farm land to one side, which is a complete red herring in all this) is created by the efforts of society as a whole and thus is fair game for taxation (unlike incomes which are the result of the efforts of each individual and thus not fair game for taxation).
Of course he'd rather remain a freeholder, because he thinks that this makes him an 'aristocrat' rather than a 'serf'. It certainly isn't cheaper in the long run or for society (or the productive economy) as a whole. And he gets marked down severely for imagining that 'feudalism' ended with the Black Death. Has he not heard of The Enclosures which happened centuries later?
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Anyway, while I was searching for other comments using the F-word, I stumbled across this corker by Lola (in a slightly different context) which bats all that aside quite admirably:
I reckon what we have today is 'new feudalism'.
The State is the King. The banks are the lords of the manor. We are the serfs and the villeins. We are in thrall to the banks through debt which permits the employers to enslave us in work. Home owning limits our ability to move to arbitrage our labour just as surely as the feudal laws tied us to the manorial lords. This all suits the State as it is then able to operate a confiscatory tax regime.
The method of enslavement is debt, rather than coercion, but it works just as well.
1. Well, add homeowners who've paid off their mortgage as 'freemen' and buy-to-let landlords as 'squires' to Lola's list and that's pretty much it - what we currently have is the worst kind of feudalism, where young people and the truly productive sector pay privately collected taxes (rents or mortgage repayments) to the 'landed gentry' and publicly collected taxes (income tax, VAT etc) to The Crown (whether this is the 'government' or 'the king').
2. The government in turn funds three groups of rent seekers; welfare and pensions claimants; the quangocracy; and the government-funded private sector; each of these groups rakes in a couple of hundred billion a year. The Home-Owner-Ist elite (banks, landowners, landlords and those who've paid off their mortgage) rake off another couple of hundred billion between them. It's difficult to say which of the four groups benefit most, so I'd call it evens.
3. So... the point about a Georgist system (i.e. LVT/Citizen's Income) is that it is indeed like a pre-Magna Carta feudal tax system (you pay ground rent on the land you want to occupy) but the upsides are
a) There are no taxes on incomes, output or profits; and more importantly
b) There is no aristocracy either. Sure, a centralised body will collect all the LVT, it will give a bit to 'the government' to run the core functions of the state (law and order, defence, major roads, refuse collection and fire brigade) and the rest gets dished out as a Citizen's Income. Instead of people living in the biggest houses being the ones who collect the most rent from the productive economy, those living in the biggest houses will be the ones who make the most money in the productive economy and are prepared to contribute the most ground rent or LVT back into the common fund.
4. What the Faux Libertarians say they want (low flat income tax, no taxes on land 'ownership') is of course far closer to post-Magna Carta feudalism, as they would like to keep the land price pyramid scheme in place for ever. Presumably, they see themselves as being fairly high up the landownership pyramid and so think of themselves as 'aristocracy' (who benefit from feudalism) rather than realising that as a matter of fact most of them are closer to the bottom (and if they aren't, then their children will be) and so really they are 'serfs' or 'villeins' like the rest of us.
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30 comments:
I think I have conclusively proved that incomes ARE intimately linked to the type, size and level of sophistication of society, and as such, IMO, are perfectly fair game for taxation.
Try being an accountant in a society with no State. Your income might take a bit of a drop..............
Currently, the bulk of tax is collected from the working population in the form of income tax and VAT. Under LVT, the bulk of tax will still be collected from the same people, except in the form of "rent". Landlords will be able to pass the tax onto their tenants, because the tenants will be richer by paying no VAT or income tax (or corporation tax, for commercial tenants) and therefore will be able to pay more rent. The CI element, by which everyone but the richer half of the population become better off than the current system, presupposes a huge cut in government expenditure, which is an entirely different kettle of fish, and independent of the introduction of LVT, so it's a bit of a red herring to introduce it.
Arguments for LVT should concentrate on the fact that it is a more efficient tax, not that it is going to make anyone richer or poorer, not so much "how much?" but "how".
Oh dear. I never said that "everything belongs to the state", I pointed out that the rental value of urban or residential land (putting farm land to one side, which is a complete red herring in all this) is created by the efforts of society as a whole and thus is fair game for taxation (unlike incomes which are the result of the efforts of each individual and thus not fair game for taxation).
Mark, you've had 112 posts to explain it but it does look awfully like it's a rental paid to the state. I suppose it comes down to how the state is constituted.
S: "incomes ARE intimately linked to the type, size and level of sophistication of society, and as such, IMO, are perfectly fair game for taxation."
Yes, GROSS earned income, before taxes or rents (i.e. actual rent, mortgage repayment or notional expenditure on owner-occupied housing) are very much correlated with how organised society/the economy is, I've never disputed that as it's patently true.
But the point is, the rental value of land is even more closely correlated with GROSS incomes, and soaks up most of the increase in GROSS incomes (whether you compare this between high income/high rent and low income/low rent areas in the UK at any one point in time; or whether you compare rents/incomes today with what they were fifty years ago).
So in practice, it comes to the same thing in £-s-d on a static basis whether you make working people in any area pay tax on their incomes or make landowners in that area pay tax on the rents. It's just that it is far better on a medium-term dynamic basis, and a lot simpler, to tax the rents than it is to tax incomes, end of.
B, yes, agreed, CI is a good idea in its own right (irrespective of how taxes are raised - but it could easily replace existing welfare and tax-break system on a fiscally neutral basis) and govt spending is far too high (irrespective of how it's financed), but Georgism is a 'package' and the three things, LVT, small government and Citizen's Income all dovetail nicely.
JH, yes, it's rental paid to 'the state' (and spent on things that benefit society as a whole), but if you don't tax these rents then they still get collected by the 'private state' (i.e. banks, landowners, landlords etc), who provide no public services whatsoever.
The question is - do you want the productive economy to pay publicly collected taxes like income tax (i.e. paying rent on your own skills and efforts) AS WELL AS paying privately collected taxes, i.e. rents?
OR would the productive economy just be better off paying no taxes at all, and 'the state' swiping the taxes (i.e. ground rents) which would otherwise be collected privately anyway?
Finally - who is 'the State'? As far as i can see it is all of us, hence by dishing out the LVT as a Citizen's Dividend, each one us gets our share. Call it 'unearned income' if you will, it doesn't matter who doesn't earn it, it only matters who gets it.
"who is 'the State'? As far as can see it is all of us"
I don't think this stands up these days. "Society" is all of us but "the State" is a separate body which is run by an increasingly unaccountable elite for the benefit of their own agendas (often of utterly unaccountable supranational origin) which, as far as I can tell, do not accord with the interests or desires of most of the people in this country.
"Mark, you've had 112 posts to explain it but it does look awfully like it's a rental paid to the state."
JH, it depends which way you look at it. By the same argument, you could say that all cars belong to the state because road tax is like rent paid to the state on the car.
TFB, no, that's "the government". As to "the interests of the people of this country" they are completely brainwashed ("Britain is a crowded island" etc) and want pretty much the same as what the pol's want (ever rising house prices).
B, more relevantly, isn't income tax, VAT like paying a 50% penalty for exercising your right to work? That makes everybody a 50% slave, it's like working two or three days a week unpaid for the government.
I am indeed a 50% slave to the State (more probably). But crucially I can stop paying them if I want to. All I have to is earn less money and live more frugally. Its my choice. Under LVT I have no choice. Work to pay the LVT or be chucked out of my house. Thats real slavery IMO.
I've always said effectively LVT is the nationalisation of land. If the State can make you leave your house because you haven't paid its LVT, then it is the de facto owner. It can never own the capital that the property represents but has a perpetual right to the 'rent' from it.
The State will decide what your 'rent' is, via the planning system - houses are only as valuable as they are due to the artificially restricted supply. So it holds all the cards, and the 'owner' none.
I think its obvious under LVT where the real power would lie, and who the real owner is.
I think I have conclusively proved that incomes ARE intimately linked to the type, size and level of sophistication of society,
The sum of incomes (ie total production) increases as society progresses, but the societal constructs that facilitate that progress are all
geographically limited. The further away you are from a police station/fire brigade/hospital danger is posed to you personally by any crisis that those
services combat for example.
The benefits of society fall unevenly. This manifests itself in either reduced incomes *or* greater expenses. Those in disadvantaged locations who
have greater net income have achieved such in spite of society not because of it. Taxing incomes does not result in people paying for
their societal benefits equitably in the same way that LVT does. It is simply false.
Wow, the last post really misformatted...
I am indeed a 50% slave to the State (more probably). But crucially I can stop paying them if I want to. All I have to is earn less money and live more frugally. Its my choice. Under LVT I have no choice.
/facepalm....so reducing work to pay less income tax is a choice but moving to a cheaper location to pay less LVT is not? There really are no words.....
If the State can make you leave your house because you haven't paid its LVT, then it is the de facto owner.
Whoever ends up with the land-rent is the de facto owner, kind of by definition. There is however, a fundamental difference between the state making decisions on land use and the state receiving the rental value for the purposes of a CI. Who then ultimately is the owner? The recipients of the CI.
It can never own the capital that the property represents but has a perpetual right to the 'rent' from it.
Whoever owns the land gets a perpetual right to the rent from the land from whoever uses it. This is basic economics. Now tell me by what right is the entity that receives that value from the land a private individual?
Sobers, don't be such a drama queen. You might as well say:
"I am indeed a 50% slave to the landlords and banks (more probably). But crucially I can stop paying them if I want to. All I have to is decide to move into a smaller house. It's my choice. Under our Feudal system with income tax on top, I have no choice. Work to pay the income tax and rent or mortgage or be chucked out of my house. That's real serfdom IMO.
I've always said effectively Feudalism-with-income tax on top is the privatisation of other people's work and efforts. If the bank can make you leave your house because you haven't paid it's mortgage, then it is the de facto owner. If home owners can 'opt out' of paying income tax then the burden of taxation falls disproportionately on the "serfs" further down the chain who have no such luxury until they have bought their own "freedom" by the age of sixty and can then become "aristocrats" for the last few years of their lives.
The government can never own your body but has a perpetual right to the 'rent' from it.
The State will decide how much 'rent' they will charge you for your labour, via the tax system; and the banks and NIMBYs will decide how much rent they would like to collect from you privately, via the planning system and credit bubbles - houses are only as valuable as they are due to the artificially restricted supply. So the government and the Home-Owner-Ists hold all the cards, and the average businessman or worker holds none.
I think its obvious under Feudalism-with-income tax where the real power would lie, and who the real slave owners are."
What you are saying is that you like land owners being slave owners; whether the government enslaves people as well is of no concern to you, is it?
F, ta for back up.
@Fraggle: 'Whoever owns the land gets a perpetual right to the rent from the land from whoever uses it. This is basic economics.'
This is what it boils down to really isn't it? You don't like the idea that I can own land outright, and can charge someone to use it, and you can't stop me.
But you don't come out and say it - that you dont believe anyone should be allowed to own land, that all land belongs to the State, or society or whatever collective title you give it. Instead you wrap it all up in a LVT wrapper, but the real issue is your dislike of private landownership and nothing else.
S; "the real issue is your dislike of private landownership and nothing else."
Not really.
LVT works best if there is private land ownership, as it happens. More to the point, the LVTers object to collection of tax from INCOMES, whether that be by landowners (backed up by the force of government) or HM Revenue & Customs (backed up by the force of government).
e.g. by contrast, if you own a car or a telly, this does not entitle you to collect rent from other people. If you have a car and I want a car, I can go out and buy one from any one of competing suppliers, but land ownership is by definition a cartel or a monopoly.
Oh dear Sobers, I expected better from you.
The real issue is whether our land-use arrangements are equitable and efficient. I have stated why I think not. Do you actually have an argument, or do you think trying to tar me with a 'closet commie' brush is sufficient?
If you think privatisation of land rents is equitable and efficient then you need to state why. I note that you have avoided answering my question.
Oh Dear Sobers thinks Adam Smith is a communist.
Just google Adam Smith LVT.
F, that's another 'Killer Argument' that land value taxers are all closet Commies.
If we had a public debate then most people would probably agree with him, no matter how carefully you explain that land rents are simply the irreducible minimum of taxes, you can never legislate them away, it's all just a question of who creates them and who collects them.
And even if you convince people about who or what creates land rents, the Homeys then hit back with "It's my land because I've paid for it" and we are bacl to Square One. Homey propaganda is self-repairing and deeply engrained.
Even though Sobers knows perfectly well that we are right, he still finds it easier to argue against it than in favour.
AC1, yup, I've had hardcore Homeys and Faux Lib's seriously contend that Smith, Ricardo etc were in fact closet Commies.
The more smarmy Faux Lib's go as far as saying that "Even Karl Marx thought that collecting land rents publicly was a stupid idea, so there!"
Sobers,
I am indeed a 50% slave to the State (more probably). But crucially I can stop paying them if I want to. All I have to is earn less money and live more frugally. Its my choice. Under LVT I have no choice. Work to pay the LVT or be chucked out of my house. Thats real slavery IMO.
LVT: A tax system that rewards people (relatively speaking) for being productive and generating wealth as opposed to the current system that rewards the lazy and the idle. Given the current financial state of the UK, might that be a good idea?
This is what it boils down to really isn't it? You don't like the idea that I can own land outright, ...
One solution is to give landowners that want this full independence as a separate country. Provide no public services to that land (you will benefit indirectly from defence spending, like San Marino does from Italy). Private utility provision is OK provided that you pay them. Of course, the rest of us may choose to impose passport controls at the border of your land[1], thus travel and trade on/off your land could be difficult or impossible if your land isn't on the coast, at least until you can negotiate travel rights and a trade deal. Sadly I think this has to be with the EU rather than the UK at the moment, such are the laws and treaties in place. Good luck.
[1] Physical barriers (fences, walls, etc) may be needed if illegal entry into the UK becomes a problem.
... and can charge someone to use it, and you can't stop me.
I've no problem whatsoever with a landowner charging someone to use their land. LVT doesn't prevent that in any way. In fact you can pass on the LVT to the leaseholder or tenant, if they are (a.k.a. the market is) willing to pay it.
Call it communism if you like, call it whatever. But if the 'community' has the power to tax my property, whatever my level of income, then they have the whip hand over me. If I'm sick and my income goes down, or business has a bad year and I make less money, does my LVT go down? Of course not. So how am I expected to pay it?
All you LVT freaks should remember this - once the State has the power to decide how much you must pay to stay in your own house, and (if it were imposed at the same time) how much CI it might give you back, that power may not be used in ways that you find in your favour. I can guarantee that a universal CI would last less than a year before the 'millionaires shouldn't get CI' cries go up. Then it'll be 'Higher bands of LVT for rich people' and so and so forth. You all think that this system will reduce your taxes and redistribute the wealth in your direction. That won't last for long before who gets money from CI is reduced and the rate you pay LVT grows inexorably.
Its simple electoral arithmetic - taxes (of whatever type) will always be increased on the few to benefit the many. Whatever levels of CI/LVT is chosen, they can easily be changed such that those with more assets are taxed more and receive less, while those with less can receive more and pay less or nothing. Don't assume you will always fall the right side of such a dividing line.
A hundred years ago the average working man paid no income tax whatsoever. Nowadays he pays c. 40% on all his income over £7K. What makes you think that LVT/CI won't move in the same direction?
S, no system is politician-proof. They can f*ck up anything, so it's no argument against LVT to say that the politicos will f*ck it up.
I really don't know where you get this idea from that it is possible to live without paying any tax whatsoever. Sure, under the present system you could have an income so low as to be untaxed, but you'd still pay VAT on everything you buy except food. So what difference does it make whether you pay your tax on your property or on your purchases, it's still money out of your pocket.
LVT is a TAX, FFS, it's not rent, or feudal dues, or anything else, it's a tax. Just because you pay a tax on something doesn't mean to say that the recipient of the tax owns what you pay tax on. The state doesn't own all the stuff you paid 20% VAT on, it doesn't own your car you pay road tax on, the petrol you paid fuel duty on, the drink you paid alcohol duty on, etc etc, why should it suddenly own the land you pay LVT on?
S: "It's simple electoral arithmetic - taxes (of whatever type) will always be increased on the few to benefit the many."
That is a stupendously incoherent rewrite of history - the point is that the whole system of taxing incomes at 50%, using a large part of the revenues to subsidise land values (and other monopolists) while allowing land-rents to be collected privately (and taxed lightly, if at all) has always been geared up to taxing the efforts of the many to benefit the few.
"A hundred years ago" there was no need for the elite to make the little people pay 40% income tax because a hundred years ago nearly everybody lived as a tenant, so the elite could reclaim the bulk of his income via the rent he paid.
A slave is a slave is a slave. Whether he is underpaid in the first place, or whether the bulk of his income is collected as taxes or as land rents makes no difference.
As it happens History and the Real World do not agree with Sobers when he says,
I can guarantee that a universal CI would last less than a year before the 'millionaires shouldn't get CI' cries go up. Then it'll be 'Higher bands of LVT for rich people' and so and so forth. You all think that this system will reduce your taxes and redistribute the wealth in your direction. That won't last for long before who gets money from CI is reduced and the rate you pay LVT grows inexorably.
The examples of 18th/19th century Britain, and 20th century New Zealand provide examples where Land tax went from providing a lot of government revenue to none of it. And if you take the example of 20th/21st century Detroit, you can see an example of a once prosperous LVT/CI city which has been going downhill ever since they replaced Land Value Taxation with a "more business-friendly" tax regime. They had to drop the CI payments long since. Nowadays I believe they still hope to avoid cannibalism, if they can just make the city "business-friendly" enough.
So while Sobers may be worried about LVT/CI becoming bigger and more onerous once it has been introduced, the Real World suggests that we should really worry about it being reduced and repealed. That's what happens according to history.
@Derek: so what you're saying is that wherever LVT has been in existence it has proved so unpopular that it has slowly been reduced and eventually replaced with other taxes?
Why then are you all so sure it'll be so popular this time? Or is it like socialism - its never been implemented properly so has never actually failed?
You know, Mr Sobers, that is what I'm saying. Land taxes are always unpopular. Not surprisingly since they are in-your-face, upfront taxes. They are particularly unpopular with the rich and powerful because those tend to be the people who have a lot of land and who are in a good position to do something about it. In particular to convince those who unknowingly benefit from LVT that it's a bad thing.
And I'm not so sure that it will be any more popular now than it has ever been. However I am absolutely convinced that it does what it promises. It makes the majority of people in an economy better off.
Unlike those Socialists and Libertarians who complain that you can't say that their particular solutions never work because they've never been 100% implemented, Georgists are in the happy position that they can point to lots of historical examples where the Single Tax was partially implemented to a greater or lesser extent and even to one happy case where it was 100% implemented.
The good news is that as far as it hs been used, it has worked. Where it has been partially implemented it has made the economy slightly better; where it has been thoroughly implemented it has made the economy a lot better. It may not be "popular" but it is "right".
In a nutshell LVT is like cough medicine. It tastes awful, but it works. That's why we like it. That's why we keep telling people about it.
The very point about LVT is that it is an in yer face tax. This makes it very difficult for 'looters' to increase it to take wealth from you to hand over to their mates and those whose votes they want to buy. The 'looters' are therefore more likely to buy votes by reducing LVT. This must lead to small government - good. And LVT being very simple and cheap to collect is proof that the existing vast tax and spend bureaucracy is largely redundant - it just doesn't know it yet.
A few basic points:
1) LVT won't fly without CI. With CI enough people are better off, or not worse off, that it 'could' be implemented. Without CI there would be a much greater number of losers, possibly even a majority.
2) CI is never going to fly because of the depth of the welfare state nowadays. The level of CI mooted by MW is nothing compared to the cash people on benefits get. So there would be millions of losers, right at the bottom of the income scale, and the sort of people who live chaotic lives and are basically unemployable. If they were all given £80/week and told thats it, sort yourself out, there would be riots. And people starving on the streets I suspect. Crime would go through the roof. I cannot see the UK public voting for a system that takes money away from those at the bottom and gives it to those at the top. Economically efficient it may be, human nature it ain't.
3)The biggest vested interest is not 'the wealthy'. I'm wealthy by any objective standard, but I have no power. Wish I did! And the truly wealthy (ie the ones who are so rich they do have power and influence) would be in favour. Do the maths. If you're worth a couple of hundred million, and your income runs into the tens of millions, 0% income tax is going to save you a lot. Even if you lived in houses worth £50m, at 8% thats £4m/pa. If your income was £10m or more you're quids in. That's before you factor in CGT/VAT/NI gains in their businesses.
The vested interests that are more likely to stop LVT/CI are the State employees themselves. Under such a system a massive amount of them would be out of a job, and (if Lola is correct) there would be a general constant pressure to reduce State employment/costs anyway to keep the LVT rate down and the CI up.
B, D, L, excellent points. Ta muchly.
S,
1) Nope. As it happens, the core functions of the state (pollice, prisons, roads, fire brigade, refuse collection and roan maintenance) cost barely five per cent of GDP. If you wanted, you could have LVT of about 2% of capital value of all UK land and buildings and it would cover all expenditure most handsomely.
For sure, most of the gains would accrue to land owners and pensioners wouldn't be too chuffed, but the economy would probably do better than it does now.
It is then a philosophical point whether we would not be even better off if we increase the LVT rate to the full amount of land rents generated by 'society' and dish out the proceeds as pensions, health and education vouchers, paying off national debt and Citizen's Income.
2) Nope. I know more about this than most people. The CI I suggested of £70/week adults, £35 for children and £140/week for pensioners is a pretty straight swap for the entire welfare system (including tax breaks which benefit higher earners, such as personal allowance, ISA tax breaks, pensions savings tax breaks etc). There'd be surprisingly few winners or losers. Housing Benefit is separate topic and easily dealt with (build more social housing).
3) Yes of course, if we shifted to full-on LVT the winners would be those with high earned-income-to-house price ratio, the cut-off is about seven, so if you earn £10m a year and live in a house worth £50m, you would clearly be better off. The same applies to a household earning £40,000 in a house worth currently £200,000. So what?
4) Yes, a key point of resistance to LVT/CI will be the state quangocracy; along with the usual Home-Owner-Ist vested interests (banks, land owners, landlords, NIMBYs etc). We've never denied that.
You ignore my point - millions of people get more than £70/week/person from the current benefits system (lets ignore housing costs for now). Therefore if you abolish the entire benefits system and replace it with CI there WILL be lots of losers, and they will ALL be poor.
If you went for a minimalist State financed by LVT, even more people would lose out.
S, I'm not ignoring your point and unlike you I have spent months delving into the overlaps between tax and welfare systems and looking at total cost, various statistics, impacts on different household types etc etc.
As a simple matter of fact there would be surprisingly few winners or losers AND more to the point the only significant group that would lose out ('single parent families') can and will adapt their behaviour and become better off.
Those are simple questions of fact. I looked at all the facts and figures BEFORE coming up with the CI proposal (else I would never have proposed it), unlike most people who do "policy based evidence'.
And yes, with a minimal state and no pensions or welfare most people would be worse off - which is why I didn't propose it - I was illustrating that your point 1) was quite incorrect.
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