Sunday, 27 October 2019

Killer Arguments Against LVT, Not (471)

Faced with the incontrovertible assertions that:

a) LVT is not a "tax" but just a user charge for benefits received, like paying a roofer to fix your roof or paying the utility company for the power and water you use, and

b) that is totally unreasonable to make 'everybody else' to pay for the cost of those benfefits,

... the Homeys claim that the circumstances under which current owners acquired their land - or what they intend to do with the proceeds - entitle them to a special exemption.

Here's a selection from the years I've been doing this:

What about somebody who bought decades ago and whose house price has rocketed because of lack of supply/immigration/lax lending standards/gentrification?" (a variant of the Poor Widow Bogey)

What about a recent purchaser with a big mortgage who will be pushed into negative equity? The banking system will collapse!

I bought a semi-derelict house in a run-down area, I have spent tens of thousands on improvements, so it's unfair to tax me on the value I added.

I bought my house out of taxed income!

I inherited this house, it is my family's main asset and I want to leave it to my children who don't have much income or other assets.

I bought additional homes to rent out for security in my old age. (Bonus: I'll just pass on the tax to my tenants, who can't afford it)

I scrimped and saved my whole life, built up and sold a business. I've paid enough tax and I just want to enjoy the rest of my life in my mansion.

My house has shot up in value. I'd like to cash in and downsize, and the surplus cash will be my pension.

I made sacrifices to pay off the mortgage, why do you want to take that away from me?

Pensioners need to be able to release equity in their homes to pay for long-term care, if they can't do that, they'll just be a burden on the taxpayer

And so on and so forth.

1. None of these is an argument against LVT, taken in isolation.

2. Many of the categories are polar opposites.

A pensioner couple who bought their home for a regulated, below market price under Georgism Lite decades ago and paid off the mortgage out of petty cash is the polar opposite of today's FTB couple who have to take out massive mortgages which will take them thirty or forty years to pay off.

The argument that it is unfair to tax somebody on windfall, unearned gains is the polar opposite of the argument that is unfair to tax somebody on the increase in value of their home because they have ploughed so much into improving it. (LVT does neither of course, but that's by-the-by here).

3. The glaring problem, if you look at the whole list...

The categories cover just about everybody, and many - including me - will fall into more than one category.

I might as well accept that income tax is a good idea in principle - but that we should exempt employees (because they have to work hard and need their wages to live off); we should exempt businesses (because they maximise value in an economy); we should exempt business owners (because they are risk-takers and stand to lose everything); we should exempt savings and pension income (because that's return on savings); we should exempt consumers (because without them, businesses would collapse) and so on, in which case there's nobody left.