Thursday 16 April 2015

LVT is inevitable...

I have a little hobby of spotting bits of news about how taxes are getting harder to collect on labour and capital.  A good bit on that is here.

Given things like this you think that Governments would eventually be forced to tax the things that can't be off-shored, like land say.

Either that or you'll get a lot of government hysteria to push for 'global' taxation.  I seem to recall the EU banging on about that.

But overall, I think that some form of LVT is going to arrive.


ThomasBHall said...

I believe we will see a move to higher taxation of housing and land combined- although sadly, I do not believe it will come with any reduction in taxes on labour and trade.
Separating land from buildings is too much an acceptance of land not being the same as other capital/wealth/property- and too close to too many sacred cows to countenance IMHO. Even a global income tax system allows rents to be collected privately.

Bayard said...

Well, the Lib Dems have this to say in their manifesto:

"(They) remain committed to introducing Land Value Tax (LVT), which would replace Business Rates in the longer term and could enable the reduction or abolition of other taxes

Lib Dems to extend the Business Rates review to ensure it considers the implementation of LVT, as well as interim reforms like Site Value Rating that could be completed within five years

Lib Dems to charge Land Registry with completing registration of all substantial land and property holdings in England and Wales by 2020"

If it wasn't for their dismal record on turning manifesto pledges into policy, I might even vote for them. OTOH, the Tories won't find them such a pushover this time.

Mark Wadsworth said...

TBH, because of the maths involved, there is little difference between LVT and a tax based on averaged out value of land and buildings in an area minus a decent exempt band. Would that make them happier?

(Sadly, your point about them not cutting NIC or VAT applies to the current shower).

B, that is wishy-washy to a heroic level. Boo Lib Dems!

Pablo said...

Don't the Greens' have LVT in their manifesto?

Random said...

"Governments would eventually be forced to tax the things that can't be off-shored"
Oh but will they? So much hate for the rich - let them count their coins.
Here's a thought experiment - the govt prints money and hands it to some rich people who save it in offshore bank accounts. Does it effect the real economy much? Not really, if they save it.
Which is why I find it funny lefties 'finance' spending by 'taxing the rich' as printing money would have much the same affect but when you call for this it is 'irresponsible' whereas destroying private savings is 'prudent.'
The problem is the rich extracting rents through e.g. land and bonds. But we know how to solve that.
Every pound of govt spending comes back as 'taxation.'' To realize this you have to think harder about what taxation really is for. It certainly is not to 'fund' spending. It is to stop spending become inflationary.
Once you realise this you see people voluntary tax themselves - it is called 'saving.' In MMT it is referred to 'voluntary taxation.'
So we get the equation Govt spending = voluntary taxation + compulsory taxation. (Or govt spending = local saving + net imports (foreigners saving) + tax)
Or to put it more neatly govt spending = taxation.
Now we can argue over who gets compulsory taxation and who gets voluntary taxation. But it has nothing to do with public services.
The main power of billionaires (even if they don't know it yet, and if rich people are reading this, then yep) is the ability to spend their billions on real resources and cause inflation. Then govt has to cut spending/raise taxes to stop it. (and extract rents/super profits.)
Once you see things from the MMT point of view it is very clear. For example in developing countries capital controls won't be all that is needed. The govt needs to ban imports of luxury goods as rich people spend money on foreign goods and the exchange rate declines.
There is tons of material on this - Neil Wilson's site on economics displays things very clearly to accountants and he hammers these types of points home. Bill Mitchell's blog is good as well.

Lola said...

R. Well, yes-ish. But I really think that by implication you mis-define inflation and that leads to further errors.