Sunday, 10 July 2016

Killer Arguments Against LVT, Not (398)

This one arrived via email, he knows who he is:

… as for land tax… good luck with that… I haven't got the foggiest clue about how you could explain that a high land tax is beneficial to anyone who's not an economist. Most people either own houses or aspire to own houses in the future, how to communicate that sky-high property taxes are a great idea that they're just going to love....?????

We're in a fact and logic free zone here.

Let's start with "sky high property taxes".

Taxes are a certain fraction of GDP, just under 40% in the UK. If we collect more tax on rental values and monopoly privileges and reduce taxes on output, employment, earned profits and transactions, then that percentage would stay the same for the time being.

(The purist Georgist view point is that the % collected in taxes would fall quite dramatically - free of most of the deadweight costs of VAT, NIC and so on, the economy would grow much quicker, assuming govt spending can be kept constant (big IF) taxes as a fraction of GDP would fall. There is also the mathematical point that a large chunk of govt. spending would not be real govt. spending, it would be a universal tax rebate i.e. Citizen's Dividend, so most people's net tax bills would be much lower than now).

So by all means, describe 40% as "sky high", in which case, people's current tax bills are already "sky high" so that is not an argument.

You don't need to be an economist to know that most people, who derive most of their income from actual non-rental earnings and own little or no land by value, pay a disproportionate share of that total tax bill. If you shift taxes from earnings to land values, most people would pay less tax and would be better off. That is a simple mathematical thing which is easily provable.

To give a simple example, if they increased tobacco duty and reduced other taxes, most people (non-smokers) would be better off. Land ownership is very concentrated among a small fraction of the population, the same as smokers are a small fraction of the population, so the same logic applies.

I would consider that all these effects are beneficial for most people. And for "aspiring home-owners", it will be much easier because they will have higher disposable income and land i.e. homes will be much cheaper.

(We're coming up to the 400th episode of this series, does anybody know any KLNs we haven't demolished yet?)


The Cowboy Online said...

It seems to me that the biggest barrier to implementing LVT is, by far, the amount of government apparatus employed in the current model of tax collection. Would be nice if it happened, but politics and what's good for the country are uneasy bedfellows.

Mark Wadsworth said...

TCO, that is the same as the lobby against Citizens Income in place of the existing welfare system and a flat income tax instead of income tax/NIC/VAT. But those are arguments in favour of both of those.

As to LVT, in practice, LVT would need barely need more people to administer than Council Tax and Business Rate (a few thousand for the whole country). Which puts paid to the KLN that we need "an army of surveyors".

Mike W said...

When I first started to read these Arguments Against LVT I thought the number 96, whatever it was back then, was just you being ironic and picking a silly number! o boy was I wrong.

Get to 400 and publish like Randell Wray's MMT handbook.

The problem is can any Tory Party tax reform against its own support base and land and bank masters? I will leave that to Mr Lola. So my vote for failed 400 is the hard core Tory move from the likes of Redwood I seem to recall who should know better, but who pretend that you need to spell out every move in the transformation from here to a LVT system and as you have not they object.(not their position on EU exit I note)

Of course, as a matter of fact, LVT is the perfect Popperian social reform capable of incremental adjustments as you go; in perfect accord with the Open Society model and testable results.

James Higham said...

Just placing on record that it warnt me what dun it.

Ben Jamin' said...

Why complicate things?

A 100% LVT is merely the way we all equally share the value nature supplies for free.

Who other than a complete fascist could be against doing that?

Mark Wadsworth said...

MW: " LVT is the perfect Popperian social reform capable of incremental adjustments as you go"

Exactly, we can start small by just replacing Council Tax and SDLT and most people won't notice the difference, then a year or two later increase LVT a bit more and get rid of IHT, CGT, IPT and the TV licence fee, having got rid of those, reduce VAT and NIC by a couple of per cent and bump up LVT a bit more…

If at any stage all the doomsday scenarios kick in (tenants and poor widows made homeless etc), then we have a rethink. As these things clearly won't happen, we just march on and end up collecting the bulk of govt revenues via LVT.

JH, nobody said you did :-)

BJ, apart from Fascists, it's the Home-Owner-Ists ("I paid for my house out of taxed income" and "It;s a tax on aspiration" and "It's nationalisation of land without compensation" and so on). I'm not worried about Fascists, I'm worried about Home-Owner-Ists.

Mark Wadsworth said...

MW: "The problem is can any Tory Party tax reform against its own support base and land and bank masters?"

That's not an argument against LVT, that is the actual reason we don't have LVT.

Compare: the reason we have wars is because warmongers enjoy warfare, that is not an argument against pacifism or unilateral disarmament etc, which would clearly lead to better outcomes.

Ben Jamin' said...

@ MW

I feel some sympathy for Home-Owner-Ists, even if they are unwitting Fascists, just like 99.9% of the population.

They really haven't given it much thought, because the basis for LVT zeal is never put to them. Least of all by economists or politicians.

The KLN was simply saying how do we convince people LVT is a good idea. A fair point.

As I said, it just might be best that before we complicate things by showing them how an LVT leads to less inequality and better efficiency, it is explained first exactly what an LVT is actually trying to achieve.

More equality and better efficiency are just symptoms of that.

Maybe that will help the penny drop?

We certainly don't need reams of crap like Progress and Poverty to explain something that can be put into one simple sentence a child can understand. FFS! :)

Mark Wadsworth said...

BJ: "The KLN was simply saying how do we convince people LVT is a good idea. A fair point."

Yup, sorry, I got bogged down in technicalities again, your one simple question and obvious answer is probably the best way.

But the Homeys will still say "But I paid for my house out of taxed income" etc.

TheFatBigot said...

Why do you allow someone who (i) describes those who do not approve of 100% LVT as fascists and (ii) describes 99.9% of the population as fascists to post articles on your site?

Perhaps he was drunk when posting those absurd and offensive comments yet there is much truth behind "in vino veritas".

You know I am entirely unpersuaded by LVT. I hope you also know from our many years of occasional discourse that I am no fascist.

Discard that silly little boy or your name and reputation risk a future in the gutter.

Mark Wadsworth said...

TFB, go on then, justify why some people should be forced to pay other people for the use of natural resources or indeed common resources (e.g. taxpayer funded railways). To do so requires a disregard for the liberty or dignity of others which is a symptom of fascism (i.e. the opposite of libertarianism or democracy).

And try and do this without your idiot barrister sophistry, condescending tone and double think, which is a dead giveaway that you know you are in the wrong. If you were in the right, you'd be able to explain it in a simple step by step manner, starting with why it is beneficial some people to be forced to pay other people etc.

BTW, I'm a land value taxer, so people like you assume that my name and reputation are by definition "in the gutter" anyway.

mombers said...

Politically the only way that you can collect 40% of GDP as taxes is death by a thousand cuts. A little VAT here, a little NI here, a little income tax, etc. LVT would shrink the size of the state enormously as you get rid of armies of means testers (the numerator effect) AND the pie gets bigger (the denominator effect). And since rents and mortgages would shrink as much as land tax increases, indeed most people would be substantially better off. The 'losers' can wait to take the hit when they die or move.

Mike W said...

Ben Jamin,

Re Poverty and Progress (1880)

'We certainly don't need reams of crap like Progress and Poverty to explain something that can be put into one simple sentence a child can understand. FFS! :)

I think you mean '...reams of heavey 19th language, and classical examples and long sentence structure.

I think the updated version of Progress and Poverty (2006/2010), by Bob Drake, is a necessary introduction to political economy for all students.

Or are you using 'crap' in a special meaning? :)

Ben Jamin' said...
This comment has been removed by the author.
Ben Jamin' said...

@ Mike W

No, I personally don't think anyone needs to waste time reading P&P to understand basic moral/economic principles that can be summed up in one sentence. If George had written a book about the mechanics of how these principles would be applied into policy, then that would have been fair enough. But it seems to me that although George was a decent chap, he was prone to verbosity and self aggrandizement. By taking away the plaudits academic economists thought rightfully theirs, he only managed to alienate them. In some cases motivating them to trash his reputation and "his" theory. Unwittingly, between Marx and George, they may have set back the cause of economic justice by hundreds of years, causing no end misery for the human race.

Just my opinion.


When we think of Fascists, we think of goosestepping Nazis. But it's a bit more nuanced than than.

What Fascism really boils down to, and makes it unique, it that it overtly states that humans are not equal. And it is natures way that the strong dominate the weak, and the strong should therefore own whatever or whomever they wish.

With regard to economic justice, an LVT is merely one part of the way we share this Earth as equal human beings. Not something Fascists agree with.

I don't consider that an ad hom on 99.9% of the population, just a statement of facts.

Remember, 200 years ago, most thought black people were not equal humans, and it perfectly reasonable to consider them private property. The Nazis considered all non-Aryans in a similar manner.

I note your somewhat emotional response, devoid of any attempt to use argument to refute what I've said. I'm guessing you are upset, sorry about that, I was merely making an observation about humans in general, not fat bigots specifically.

However, seeing as Mark has over the years put the case to you many times, you have far less of an excuse for being a fascist than nearly everyone else.

It's never too late to change your mind you know :)

Mike W said...


Mirleese (Nobel Prize on tax) in Tax By Design, cannot think of any either. Expect for a short argument that planning permission would have to change. Again a political matter to be changed as LVT is introduced.That's it!

Check 'Henry George in the reports index if anybody is interested.

Ben Jamin,

Thanks for clarifion above,there is much in what you suggest.

The Cowboy Online said...

@Mark W, I think you misunderstand me. I think LVT, and Citizen's Income, would hugely simplify the revenue collection process, and need less government departments and less people employed, hence my suggestion that it's unlikely to find favour in the corridors of power.

Mark Wadsworth said...

TCO, don't worry, you were perfectly clear first time, I was just extrapolating a bit.

With Citizen's Income we know this for a fact, IDS was gently drifting towards the idea pre-2010, but once he was in charge, his civil servants kept making it more and more complicated and just as bad as when he took over only even messier and more complicated.