Saturday, 15 March 2014

Killer Arguments LVT, Not (319)

The Guardian ran an editorial in praise of income tax:

Mark Wadsworth:

Yes of course, wealth is created by entrepreneurs, business people and anybody who goes out and does a proper job.

But as Physiocrat keeps pointing out, and as a cursory think confirms, a lot of that wealth is sucked up by land values and benefits only landowners.

So there is a huge difference between somebody who makes £100,000 a year running his own proper business or being a well-paid employee and somebody who owns a dozen buy-to-lets.

The former is largely earned income, the latter is almost entirely unearned.

Andy Zama:


If you have a bunch of properties, you need sufficient funds to buy those properties in the first place. So they represent investments.
The sort of thing that pays for your pension.

Why on earth does it matter how you acquired land? Maybe you inherited it, maybe you paid off a mortgage, maybe you still have a big mortgage; maybe you've had it for decades, maybe you bought it last week; maybe it's gone up in value since you originally acquired, maybe it's less.

The rental value is always unearned. It's like a banana is a banana whether you bought it out of your net salary, whether somebody gave it to you or whether you nicked it from the shelves.

Or let's take a counter-example, if you buy farm land and get the paperwork right, then the government pays you £80 per acre in subsidies. That's entirely unearned and the amount you get is entirely at the whim of the government.

If the taxpayer put pressure on the government to finally ditch the farm subsidies, can current land owners use the argument "But we bought that farm land out of taxed income?"

And he also overlooks that one man's pension (rental income) is another man's penury.


Ben Jamin' said...

I had same sort of KLN a couple of days ago.

"Not only do subsidies distort markets, it means damaging taxes on work and enterprise have to be raised as revenue to fund them.

End the subsidy and we will have a level playing field. For our economy and our housing market.
1 • Edit• Reply•Share ›
GhostCat&Co. Ben Jamin' • 5 days ago
Owning something others will pay to borrow isn't what a subsidy is.
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Ben Jamin' GhostCat&Co. • 5 days ago
That's an extraordinarily enlightening response.

Say the government gave me a £10,000 pa payment in perpetuity. If I could sell that right on, are you saying that would no longer be a subsidy?

Just because the right to a subsidy can be sold on, doesn't mean they don't exist.

Just ask farmers ;)"

Mark Wadsworth said...

Bj, correct.

By saying this:

Owning something others will [borrow to pay for] isn't what a subsidy is.

That's the usual Faux Llib Neo-Classical crap that equates labour, the product of labour (i.e. capital) and monopoly entitlements (i.e. land).