Killer Arguments Against LVT, Not (302)

I've been compiling these on my other blog for the time being. This week's mutterings from The Two Eds has really flushed out the idiots but we've heard it all before:

1. Boris Johnson in The Telegraph:

What about someone who owns several houses, all of them worth £1.9 million: why should he or she pay nothing, while someone who owns just one pricey home gets totally clobbered?

What about someone who lives in a home worth a million, but happens to have a load of Van Goghs and Cézannes on his kitchen wall, or gold bars under his bed? Why should he get away with paying nothing, while the taxman pulverises the little old lady still living in the former family home next door?

This is what we refer to as The Diagonal Comparison.

2. Allister Heath, who never read Adam Smith, also in The Telegraph (via CK):

Yet regardless of its intellectual origins, a tax on people’s assets is ethically wrong, economically destructive and would damage growth and job creation, with the poor and middle classes suffering intense collateral damage.

A tax on productive assets or the income therefrom, or a tax on the free exchange of output is indeed enormously destructive. Which is why our economy is in such a mess: most of our taxes are raised from output, employment, income, profits. For the economy to grow, people need to specialise and this means that there have to be ever more exchanges between ever larger groups of ever more specialised people who each do what they do that tiny little bit better than anybody else.

But land is not a productive asset, it is merely a government protected license for the unproductive sector to collect money from the productive sector ("rents" or "mortgage interest"). So a tax on those rents has no negative impact on the productive sector. Heath's argument is so fucking incredibly stupid that I didn't even bother to cover it on the KLN blog, so you'll have to make do with this rebuttal.

3. Dominic Lawson in The Independent (via BE):

The point of principle here is that tax is generally paid on property when income from it is available – for example, on rent accruing; and the reason why stamp duty works is that in the great majority of cases a person has cash available from the sale of an existing property, when buying a new one.

Therefore, if there were to be an additional property tax, it would be much fairer to decide that capital gains tax should also be charged on the primary residence, when it is sold, rather than levy a tax simply on the fact that someone – whether or not a little old lady – happens to be living in a home above a certain value. Such a change, however, would affect all home owners making a profit on sale and would, therefore, not meet the politicians’ objective of seeming to be nasty only to rich bankers.

This is basically the twisted argument that my land doesn't generate income, which is nonsense - or else we could say that all fines and penalties imposed are void because "Breaking the speed limit doesn't generate income". With just a sprinkling of Poor Widows In Mansions.

He rounds off with this:

if it’s windfalls you’re after taxing, Ed, Nick, Vince, here is a helpful suggestion: there is a group of 3,000 millionaires who, over the past 20 years or so, have had a total windfall of £8.5bn – that’s an average of £2.8m each. None of them did a stroke of work for that sum and yet, when it landed in their laps, entirely at random, they were not obliged to pay a penny in either income or capital gains tax on it. I am referring, of course, to Britain’s Lottery Jackpot winners.

LVT is not a tax on wealth, of course, so I am surprised to see a second generation hereditary Tory propose such a tax, but he misses the point. Lottery winners pay their tax when they buy the ticket; buying a ticket is an entirely voluntary transaction and the deal is that most lose a small amount and a few win a big amount. That is quite different to the land ownership system where everybody has to buy a ticket, whether they like it or not, and the same people at the top are always the winners.

4. But a special place in Hell must be reserved for a Blue Socialist troll called Newsbot9 in the comments to an article in the New Statesman, variously:

Ah yes, another attack by Lucas on the poor... Higher rents and lower net incomes. People "downsizing" to homeless. Your plan... As magic doesn't exist, [Land Value Tax is] passed on. There is a hard minimum income to rent, thus, and we have a massive housing shortage... How are you going to handle the fact that it, as a council tax replacement, will be passed on to poor tenants who might formerly have claimed council tax benefit..? And you have no problem with closing over over a million flats, many in multiple occupancy, then. Rents will soar further. Your version of a LVT is indeed targeted, against the poor - rents will rise sharply under it. It will simply help control land ownership under your model, where there are no safeguards. And I see, your answer is social cleansing. Purge the poor. Got it. Tory. And I understand why you support it now, it's a way for you to deprive millions of shelter.

I referred him to the article and embedded spreadsheet here showing that private tenants would be a lot better off, even if the LVT were passed on in full, but he dismissed these as "magic" numbers.

So to sum up his shite:

- LVT will be passed on
- rents will rise
- tenants will be unable afford the rent and will become homeless

Therefore...
- greedy landlords will snap up all the land and buildings, demand rents which nobody can afford and then happily pay the LVT for all the vacant homes they own, while out on the streets the masses huddle? Where will these greedy landlords get the money from to pay the LVT with no tenants?

He also overlooks the point that a proper comprehensive package of taxes on the poor include would include things like:
- reducing benefits
- increasing means-tested benefits withdrawal
- reducing the personal allowance
- introducing a Poll Tax
- increasing regressive taxes like National Insurance, VAT or taxes on booze, fags and petrol.

(The Coalition have been guilty of some of these and quite good on others, overall bad but no worse than Labour)

This is pretty much the opposite of the LVT package:
- flat rate non-means tested Citizen's Income/personal allowance, which is a negative Poll Tax
- reducing taxes on earned income, especially regressive ones like National Insurance or VAT (flat rate income tax is OK).
- more social housing (and hence lower rents)

Or have I missed something?