Killer Arguments Against LVT, Not (202)

Here are a couple more of Homey arguments which actually cancel themselves out:

1. I bought my house out of taxed income, so taxing me on the rental value is double taxation.

2. If you want to tax wealth, why should the owner of a £2 mansion with a £1.8 million mortgage (net assets £200,000) pay the same tax as one who owns a £2 mansion outright?

a. Double taxation is when the same income is taxed twice. The income you earn next year has not been taxed yet; and neither has the rental income you will receive next year. True, we are used to earned income being heavily taxed and non-cash rental income has not been taxed for the last fifty years, but so what? If, from next year, we untax earned income and tax only rental income, that does not amount to double taxation any more than (for example) scrapping VAT on restaurant meals and imposing VAT on children's clothing instead.

b. Those who own outright will probably have bought their home for a fraction of its current value decades ago. If you bought it for £20,000 and that house is now worth £200,000, only one-tenth of it is "tax-paid" anyway and 90% was windfall gain. LVT is only a tax on the location value, which is part of the windfall gain element, not the bricks and mortar you originally paid for.

c. The argument that some people have large mortgages but still have to pay the tax misses the point - LVT is quite simply not a tax on private wealth and in its purist/purest form is not intended to be; it is a tax on the rental value of land you own or occupy.

d. Further, for recent purchasers with large mortgages it is even less double taxation than for outright owners. Only a small part of their house is "tax paid" and the rest has not been paid for yet in any way shape or form, taxed or otherwise.

e. Finally, for these recent purchasers with large mortgages, instead of paying off the large mortgage out of earned income net of tax, they will be paying off that mortgage out of gross income, free of income tax and paying the LVT instead; in nine cases out of ten, the LVT will be a lot less than the income tax they would have paid (that's basic maths).