Killer Arguments Against LVT, Not (164)

An argument advanced by Deniro and before that by The Fat Bigot (link below), which adopts the fairly standard Home-Owner-Ist practice of completely abandoning logic or facts or anything:

"have you thought that there may be political consequences of millions of people paying no tax whatsoever and all government spending being funded from people who own property.... Under LVT renters would pay no income tax, no duties , no VAT. My question is what would those who do fund Government say about that. And what would be the political power of the renters and the owner occupiers. Would the owners say no taxation without representation and no representation without taxation. Don't you think the political consequnnes of taxation are different from the economic distinction."

OK, ignoring the use of the emotive term "millions", conflating the terms "property" and "land" and the fact that "Under full-on LVT owner-occupiers would pay no income tax, no duties , no VAT" either, let's do facts and logic:

1. Everybody lives somewhere. Either you're an owner-occupier, a tenant or anything in between (such as living with your parents and chipping in towards costs).

2. Currently, about seventy per cent of UK households are owner-occupiers, just over ten per cent are private tenants and just under twenty per cent are social tenants (local council or Housing Association). UPDATE: Sobers addresses the issue of social tenants in the comments, that's the least of our worries.

3. Logic says, for every tenant there is a landlord.

4. So let's assume there are ten identical houses on the street, all owner-occupied and all paying the same tax, fair enough.

5. Now let's assume that (say) two of them are rented out, by a purely private agreement between landlords and tenants. The tax on those two houses is exactly the same as on the owner-occupied ones. Just to remind you of a bit of basic maths: each owner-occupier pays one-tenth of the tax due on that street. His tax bill is not affected, neither increased nor decreased, by the precise tenure of the other residents. Somehow or other, the landlord and tenant have to share that tax bill between them; either the rent is a fixed lower figure and the tenant pays the LVT on top; or the rent is a higher fixed figure and the landlord pays the tax out of the gross rent.

6. At this stage, what are the eight owner-occupiers whining about? The fact that the tenant doesn't pay enough, that the landlord pays too much, what? If the landlord thinks he's paying more than his fair share, then he can sell the house again, nobody's forcing him to be a landlord, yes?

7. As we also know, ignoring capital gains/losses, the cost of buying and the cost of renting are usually much the same. If the landlord decides to sell because he thinks that he was shouldering too much of the LVT, and the eight owner-occupiers don't want to shoulder it (which is what they were whining about in the first place), then who's going to buy that house? One of the tenants, of course, so hey presto, we now have more owner-occupiers, result! The selling price will adjust up or down until so that the tenant is no better or worse off than when he was renting. Call me old-fashioned, but I'd always assumed low and stable house prices and higher levels of owner-occupation to be A Good Thing.

8. In real life, higher taxes on land values and lower taxes on incomes lead to higher levels of owner-occupation, as we well know from all the studies. The Fat Bigot of course claims that exactly the opposite would happen: "There are no checks on how high the tax rate will be other than the ballot box, and once recipients outnumber payers the result is obvious...".

Do the Home-Owner-Ists seriously believe that under LVT, people will abandon owner-occupation and sell their homes to a landlord for a depressed amount, knowing full well that they will end up paying much the same amount of LVT as before plus an unknown amount in rent, losing the right to decorate or renovate as they please and losing some security of tenure? I dunno. Are they that brainwashed? Possibly...

9. Or let's assume that one of the eight owner-occupier households has an adult child or children living with them, and that being old softies, they don't make that child pay any rent or contribution at all? Will the other seven owner-occupiers go and knock on their door and complain that their adult child is not paying enough tax?

10. Probably yes, to be honest, but then the retort is: the couple with adult child are using their land more intensively/efficiently, it's like three people sharing a car on the way to work; they have to put up with the hassle but can split the petrol bill three ways. If we follow Home-Owner-Ist logic, then fuel duty would have to be graded according to how many people are in the car; if a single person fills up, it's 80p a litre, if there are two people in it, it's £1.60 a litre and so on.