Killer Arguments Against LVT, Not (115)

Sobers' comment on the fact that homes and gardens only take up 3.5 per cent of the UK's surface area:

And this supports your argument that housing is zero-sum, and me owning a particular house stops you from owning a similar one how precisely?

Looks to me as if there's more than enough land for everyone to have a reasonably priced house if only the government would let people build them... no need for LVT whatsoever, problem solved.

To which I responded:

S, come off it.

a) As you know perfectly well there's no point building houses out in the middle of nowhere, they are best built in or around existing towns and cities where there are jobs etc, and there is by definition a restricted amount of such land.

b) If you liberalise planning laws, then yes, at the very margin* house prices might drop but there will still be big differences between a marginal plot and land in the centre of towns and cities, near the stations, with a nice view etc (so the rationale for LVT still holds).

c) If you liberalise planning laws, then all things being equal, the total rental value of UK land goes UP (even though house prices at the margin go DOWN), therefore tax base for LVT goes UP and therefore the % rate we'd need to raise £x00 billion a year to replace all other taxes goes DOWN.

d) Thus with or without planning restrictions, all the arguments for replacing income tax with Land Value Tax still hold.

* And those people who buy a house at the margin will only pay very little LVT, but we've already got plenty of marginal housing in the UK, as Jer points out further down that thread.