Friday, 11 January 2013

Killer Arguments Against LVT, Not (299, 300)

A favoured Home-Owner-Ist tactic is to propose two contradictory counter-arguments, neither of which is correct and which cancel each other out anyway. So it's nice doing KLN's in matching pairs, it saves time.

The first two comments to a reprint of a pro-LVT article at Liberal Conspiracy are as follows:

1. GO: In fact there seems to be a risk of perverse outcomes. E.g. if property/land ownership became affordable only for people who use the land/property they own to generate a profit (or who have high incomes from another source, I suppose), would we not see more and more owner-occupied homes – especially those owned by lower-income people – being transferred into the hands of profiteering landlords (or high earners)?

That looks suspiciously like a transfer of wealth from ordinary people to an elite capitalist class.

2. Tyler: “and find the courage to tax property”

Stamp duty, Capital gains tax, council tax. What you are really trying to say is that the government should tax anyone who has the cheek to be rich enough to own a property.

No mention of all the massive problems surrounding an LVT either – notably the (common) case where homeowners have a valuable property but no cash to pay taxes, forcing them to sell, or the fact that it will be the government acting as judge of the value of land.

They both play the Poor Widow Bogey for the eight zillionth time of course (see UK Liberty's riposte further down the chain), but the first commenter claims that LVT is somehow a subsidy for rich people, and the second claims that LVT is a tax solely on rich people.

Actually LVT is neither, but the arguments cancel out anyway and it's certainly not and can't be both. Truth of the matter is, LVT is a tax on the [consumption of the] rental value of land, just like booze duty is tax on booze and fuel duty is a tax on road use etc.

And the final barb about valuations is nonsense. (Establishing the "site premium" of any building/site is the simple matter of comparing the total rental value of any building/site with the total rental value of the cheapest available physically similar building/site in the same category; the difference is the "site premium".) If you are going to argue against LVT on that basis, you might as well argue against income tax on the basis that the government can charge you to tax on their own estimate of your income.
UPDATE: Tyler later goes round his own psuedo-logic clock at comment 13 with this:

Nor do you take into account the fact that an LVT could actually end up being quite a regressive tax, increasing inequality, as those unable to buy might end up paying higher rents as landlords pass the tax on to tennants [sic].

So in his eyes, LVT is an evil tax which only the rich landowners would pay but which would be born by the poor and landless?

Does he not realise that the whole point of the Home-Owner-Ist system (heavy taxation of earned income with revenues being used to subsidise landownership and bankers) is quite measurably leading to an ever increasing concentration of land in ever fewer hands (with banks making a killing out of people desperate to "get on the ladder" or become BTL landlords)? So what evidence does he have to say the opposite tack (untaxing incomes and taxing the rental value of land) would lead to the same outcome? None?

In any case, we have a welfare system, old age pensions and personal allowances; assuming we retain this concept (preferably simplified into a Citizen's Income/Pension) then any "regressivity" automatically falls away; the median household in the median home would pay plus minus nothing in tax; that's basic maths. If rents go up, so do LVT revenues and so does the Citizen's Income/Pension. The median household will never pay any tax, whether they are homeowners or tenants.


Graeme said...

First, it was odd to see an LVT article on Lib Con. Second, how all the old arguments against get trotted out and none of the forward-thinking lefties seemed to realise that LVT is damned difficult to evade and that it is a tax on physical establishments - so if Google, Amazon, Starbucks or whichever company is currently hated by lefties has an office/warehouse in the UK, it is subject to LVT, regardless of where the monetary flows go. What is not to like?

Mark Wadsworth said...

G, ah, but the Homey argument goes "If the land is used by a business or a landlord, it generates cash income to pay the tax, but what about Poor Widows etc?"

Which is like saying "Yes, we see the point of freeing slaves used by evil plantation owners to generate profits, but what about a Poor Widow who is old and feeble and has a few house slaves to do her cleaning and cooking? Those slaves don't generate any cash income and she can't afford servants?"

This counter-counter-argument was submitted by Ben Jamin' a while back.

Steven_L said...

300! Woohoo! Only seems like yesterday I was cheering on 100. Mark Wadsworth, the Brian Lara of blogging!

Mark Wadsworth said...

SL, thanks. Lib Con delivered me a lovely matching pair to help my celebrate my 300th.

Physiocrat said...

Yes, LVT will benefit the richest landowners the most. That is why people like Lord Marchmain who owns most of central London, and the Duke of Beattock who owns a laarge chunk of Scotland, and HM The Queen, are all queuing up to shower the LVT movement with campaigning funds to pay for publicity and lobbyists.

If you really want to promote LVT why don't you apply for some of this pile of loot?