Fun Online Polls: Donald Trump and Severn Tolls

The results to last week's Fun Online Poll were as follows:

Did Trump collude with Russia in the 2016 Presidential election?

No - 70%
We'll never find out - 11%
Trump is clearly trying to cover up something - 12%
Yes - 5%
Other, please specify - 3%

Well that's conclusive enough. I still think there was something fishy going on, but I'm in the minority.

Thanks to everybody who took part.
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I allowed this poll to run for far too long, partly out of laziness and secondly because I haven't been inspired to start a new one. If anybody has any bright ideas on which burning issue of the day can be resolved by asking the internet, please advise.
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I just stumbled across this article of a year ago, from the BBC:

Estate agents in south Monmouthshire claim about 80% of home buyers are now coming from the Bristol area ready for the halving of the Severn bridge tolls. As a result, property prices have been rising quicker than the Wales average as Bristol commuters seek new homes, figures have suggested...

"House prices in Bristol are off the scale," said agent Charles Heaven, "People know the tolls are coming down next year and hoping to get a bargain... With the railway electrification of the south Wales mainline, the planned south Wales Metro, the proposed M4 Relief Road around Newport, coupled with the beautiful countryside of south Monmouthshire and the Wye Valley, this is desirable place to live."

Two big housing developments are planned at Chepstow's old dockyard and near its hospital while a new estate is heading for Undy, bordering the M4 motorway near Magor. Severn Tunnel Junction railway station in Rogiet, between Caldicot and Magor, has recently undergone an £8m refurbishment while a new train station at Magor has the backing of Monmouthshire council and is part of the new South Wales Metro proposal.

Nathan Reeks, owner of Nathan James Estate Agents in Caldicot and Magor, explained why south Monmouthshire is becoming attractive for commuters from Bristol.

"We recently had a couple from Bristol who bought a property in Rogiet near Severn Tunnel Junction station, they bought a four-bedroom detached house with detached garage for about £295,000, after selling their three-bedroom mid-terrace in Bristol for £390,000. So they made almost £100,000 on a bigger house and the new owner can get to his work in Patchway on the outskirts of Bristol quicker from Severn Tunnel Junction than from when he lived in Bristol.

"That's typical of our business in the last six months as since the government was announced they are reducing the bridge tolls, 80% of my buyers have come from over the Severn Bridge. The accessibility for Bristol, the Midlands, the south west, south Wales, London and Heathrow Airport is all the more desirable as south Monmouthshire offers a semi-rural location with a stunning backdrop. It's a great place to bring up children and with a new comprehensive school opening soon in Caldicot, the Monmouthshire market is very strong."

They say "location, location, location", the Georgists say "community-generated value of land", it's two ways of describing the same thing.

This all reminds me of a Winston Churchill speech when he was (fairly briefly) a land value taxer:

Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains -- and all the while the landlord sits still. Every one of those improvements is effected by the labor and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced.

He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived...

Some years ago in London there was a toll bar on a bridge across the Thames, and all the working people who lived on the south side of the river had to pay a daily toll of one penny for going and returning from their work. The spectacle of these poor people thus mulcted of so large a proportion of their earnings offended the public conscience, and agitation was set on foot, municipal authorities were roused, and at the cost of the taxpayers, the bridge was freed and the toll removed.

All those people who used the bridge were saved sixpence a week, but within a very short time rents on the south side of the river were found to have risen about sixpence a week, or the amount of the toll which had been remitted.

Reader's Letter Of The Day

From The Evening Standard (19 Feb 2014, page 47):

We were delighted by Danny Dorling's endorsement of a land value tax.

The Holy Grail of high wages/low house prices can be achieved by collecting taxes from the rental value of land instead of from earnings and output. Our calculations show that replacing council tax, VAT and National Insurance with a fiscally neutral Land Value Tax would leave most young couples £10,000 a year better off.

As well as reversing the rising tide of wealth inequality, such a measure would dampen the boom-bust cycle and lead to more efficient use of existing buildings.

Land Value Tax was supported by figures as diverse as Marx, Churchill and Milton Friedman. Now that corporations can shift profits between jurisdictions at the touch of a button it has ore relevance that ever as land cannot be hidden abroad.

Mark Wadsworth, Young People's Party.

Putting the 'sub' into 'Standard'

From the Evening Standard:

AV, if adopted, would mean the end of the first-past-the-post system that has served this country well so far (1). First-past-the-post does have shortcomings: it allows votes to pile up in many seats without directly influencing the result, and it makes it harder for smaller parties to win (2). But first-past-the-post is clear and simple: anyone can understand it; there is no doubt about the winner.(3)

AV is far more complicated. (4) Voters may name candidates in order of preference. In constituencies where one candidate gets a majority of first-preference votes, the other preferences are ignored and the result is much the same as under the existing system. (5) Where they garner fewer than half of first preferences, then second, third and other preference votes are taken into account too. As Churchill said, AV thus means elections can "be determined by the most worthless votes given for the most worthless candidates". (6)

This can and will produce perverse results. In a close-run contest, it is quite possible that the candidate who comes second or even third on first-preference votes can end up winning, having mopped up second and third preferences.(7) AV thereby encourages the most Byzantine tactical voting (8) and political fixing. (9)

1) Says who? We've no idea how things would have turned out if we'd had AV all along.

2) Exactly. Those are the arguments for AV in a nutshell, there's not much more to it than that. The notions that MPs will work harder or be less corrupt are entirely secondary and not proven either way.

3) In that case you might as well argue for electing MPs by toss of a coin: cheap, simple, clear. There will be no doubt who is the winner under AV either, so what?

4) No it's not. People loyal to one party and one party only are free to vote for that party only; but most people are capable of casting a "conscience vote" and one or two "compromise votes". Or does the ES take all its readers for morons?

5) Exactly. I doubt it will change the results much.

6) So if the pro-FPTP crowd (mainly Conservatives) think that AV is such an awful idea, why didn't they give us a choice between FPTP and something better than AV, like AV+ or whatever? It's almost as if they have rigged it to ensure we stay with FPTP. And would that be the same Churchill who said this:

The present system has clearly broken down. The results produced are not fair to any party, nor to any section of the community. In many cases they do not secure majority representation, nor do they secure an intelligent representation of minorities. All they secure is fluke representation, freak representation, capricious representation."?

7) So what? Under FPTP it is no doubt the case that a lot of MPs are elected on the basis of people's "compromise votes" and not their "conscience votes", is that not 'perverse'?

8) This is complete shite. Under AV there will be much less "tactical voting", certainly with regards to the first preference, and to the extent that MPs only made it past the post on the basis of second and third "tactical" votes, well maybe they won't be so bloody uppity in future.

9) All politics is 'fixing', all parties are in fact coalitions with as many different views on as many different issues as it has members. So what?

Spotter's badge: Sibley's B'stard Child.

"First they ignore you, then they ridicule you, then they fight you..."

There's a cracking article in The Daily Mail. It appears that they are moving from the "ridiculing" to the "fighting" stage.

The comments are the usual drivel (plenty of raw material, at least!). The "best rated" comment draws deeply from the seemingly bottomless well of Home-Owner-Ist DoubleThink:

Been here before! (1) The 'soak the rich' policy of the Labour government in the 70s resulted in the wealth creators, innovators, in fact anyone with the potential to succeed, leaving the country (2). It came to be known as 'The Brain Drain' and came close to reducing us to 'third world' status. "Those who ignore the lessons of history are destined to repeat it" (3)... The last thing this country needs now is more befuddled fog of leftist ideology.(4)

1) Yup. We used to have Domestic Rates and Schedule A Taxation, and as a result, we managed a quarter of a century of low and stable house prices. Scrapping those directly contributed to the return of the bubble/bust cycle from about 1970 onwards.

2) Yup. But that was because they were taxing incomes at punitive rates. So let's scrap income tax, VAT, corporation tax etc. and have Land Value Tax instead; higher earners (relative to the value of land and buildings they own/occupy) will end up better off. The UK would become a magnet for inward investment and most importantly - you can't take land abroad.

3) Yup. See point (1).

4) Yup. Socialism - whereby the productive economy is milked by the senior echelons of The Party - clearly doesn't work. But neither does Blue Socialism, whereby the productive economy is milked by the land owning classes. Most homeowners own very little land indeed and a lot of them have huge mortgage debts, which they have to repay out of income from which far too much tax has been deducted (so they are running up a down escalator). Yer average homeowner is being used as a human shield by the big guys: "Don't tax us or this puppy will die!".

Killer arguments against LVT, not (53)

An eternal fall back argument against Land Value Tax is that 'pensioners would be forced to sell their homes'*, which Winston Churchill dismissed as 'The Poor Widow Bogey' over a century ago** when he was still mates with Lloyd George (PS, that speech is worth reading in full, ninety per cent of it still applies today). A secondary argument is that 'I want to be able to leave the value of my home to my children', which slots in neatly at point 8. below.

1. People use this to argue even against the most modest kind of property tax, such a having income tax on the notional rental income (formerly known as 'Schedule A taxation' scrapped in 1963 or thereabouts, see famous quote by Dearieme's father) or, in my terms, a flat 1% tax on residential property values (which could and should replace Council Tax, Stamp Duty, Inheritance Tax, TV licence fee etc).

A modest tax such as this would leave most households slightly better off on an annual basis (as compared to Council tax and TV licence fee), and for those that pay more, they can either ask their heirs to pay (as a quid pro quo for one day inheriting the house - the value of which would be boosted by up to 5% if Stamp Duty were scrapped) or be allowed to roll up the unpaid tax to be repaid on death (which is why Inheritance Tax would have to go as well). In the long run, these families would be no worse off either. The people who would be worse off are non-doms who own huge villas and are exempt from Inheritance Tax anyway.

2. This argument clearly doesn't hold against a modest property tax, so let's examine what might happen if we scrapped all taxes on incomes and production (from worst to 'least bad': VAT, Employer's National Insurance, higher rate income tax , Employee's National Insurance, corporation tax and basic rate income tax) and just raised as much as we could from a tax on land values (whether residential or commercial).

3. Before we put numbers on this, let's look at the justification for the Basic State Pension or Pensions Credit (which ought to be rolled into a non-means tested Citizen's Pension, of course) - surely it is there so that people who are beyond working age (as arbitrarily decided) have enough to support a certain standard of living (as arbitrarily decided).

4. Let's not forget that I am a UK resident Englishman who has not the slightest intention of moving abroad again (I once lived in Germany for nine years, that's enough for me), who has every intention of surviving well into pension age (or dying in the attempt), so I have to come up with some sort of plan.

5. Assuming we don't just cop out and give owner-occupying pensioners large discounts or exemptions (and I wouldn't be totally averse to this as an interim thing for the next couple of decades), let's imagine we had full LVT without exemptions, and the tax on each property were around 7% of its current market value (which sounds like a lot, but don't forget that the downside of scrapping taxes on incomes and production is that most of the benefit would merely boost rents or selling prices), the LVT on a median home would be about £11,000 per annum (it could be anywhere between £nil on a small flat in a high tower block in an undesirable area up to £100,000s for a mansion in West London, of course).

6. So the basic state pension would have to be increased so that the average pensioner household can still afford a certain standard of living. In practice this would mean that the Basic State Pension/Pensions Credit would be approx. doubled for pensioners who do not receive additional public sector pensions. I guess that a Citizen's Pension of about £250 a week would cover it (i.e. pensioner couple with no other sources of income in a median house still has £10,000 a year net income from the taxpayer).

Doubling the Basic State Pension/Pensions Credit would 'cost' an additional £50 billion per annum or something, i.e. a large part of LVT receipts from pensioner households would be divvied out again as an additional Citizen's Pension (and some of it used to pay for non-cash benefits such as their healthcare costs and long term care etc).

7. This still wouldn't be enough to pay for the tax of A Poor Widow In A Mansion, but hey.

I guess politically it would be impossible to actually repossess the homes of Poor Widows Who Don't Pay Their LVT Bills, and politically necessary to them with at least £100 a week to live on after deducting the LVT from their Citizen's Pension, so a Poor Widow In A Median Home would get £13,000 a year Citizen's Pension and the amount of LVT collected would be restricted to £8,000 a year, and the shortfall of £3,000 would just be rolled up for later.

If the annual shortfall is huge and the Poor Widow lives for decades, then the arrears might exceed the value of the house (which would probably have gone to rack and ruin because the Poor Widow can't afford the upkeep), but hey, in that case the family comes out slightly ahead.

8. Those people who genuinely 'want to leave the value of their home to their children' have a simple choice, of course. Assuming a single or widowed person retires at 65 in a very nice house worth £200,000 (rebuild cost) with a higher-than-average LVT bill of £20,000 wants his or her children to inherit as much of that as possible, what they'd do is trade down into a nearby very nice flat costing £100,000 (rebuild cost) on which the LVT is only £5,000; that frees up an extra £100,000 to be left to the children or grandchildren; and they can also squirrel away some of the £8,000 a year net income they receive from the taxpayer. What could possibly go wrong?

9. A slight variation of 8. is the mantra that 'The Family Home should stay in the family'. Again, this is easily fixed: instead of a pensioners rattling around in The Family Home while their children or grandchildren are priced out of buying a house and starting a family themselves, the pensioners could simply give The Family Home (and the corresponding LVT bill) to whichever child or grandchild wants it, and ask that child or grandchild to buy them somewhere smaller in exchange.

* For every seller there has to be a 'willing buyer' of course. And I'm guessing that most of those willing buyers will be today's 'priced out generation' who are currently 'forced' to either live in a very small home or vastly overpay for one suitable for bringing up a family. Boot, other foot etc.

** A lot of LVT opponents solemnly quote Adam Smith, who said that a tax should be payable when convenient; but he said this two centuries ago when there was no such a thing as a state/public sector pension system which is now the main source of income of about a third of voters; and at a time when most people were tenants (i.e. the tax would be payable by landlords). A tax on rents would not result in an increase in rents, of course - the only way to increase rents is to subsidise them, for example via Housing Benefit.

I have no idea whether Adam Smith would have supported the state/public sector pension system in its present size; or guessed that one day a majority of households would be owner-occupiers; but I am pretty sure that he would not have approved of the idea that the tax would only be applied to tenanted property and not owner-occupied property, as that would be taxing form over substance - it's the same people in the same houses.

Dave The Chameleon (2)

Harry Haddock v Winston Churchill

At last weekend's drink up organised by DK, I was lambasted for my support for Land Value Tax, which I see not only as a welcome simplification* but also as the 'least bad tax' (per Milton Friedman).

DK himself advanced the Poor Widow Bogey, whether he was playing Devil's Advocate or whether he is at heart a member of Tory land-owning aristocracy I do not know, and I still haven't summoned the energy to list his arguments or go through the counter-arguments.

Harry Haddock advanced the 'market gardener' anti-LVT argument, which runs briefly as follows:
1. I am a market gardener on the edge of town with a lot of Valuable Fruit Trees on my one acre.
2. The town expands, and all the surrounding bits of land are sold off for development.
3. My hitherto agricultural land becomes potential building land, and so its market value jumps from a few thousand pounds to a million pounds (assuming that getting planning permission is a shoo-in).
4. A fiscally neutral LVT rate would mean that I have to pay about £20,000 in LVT**.
5. As a market gardener, I can't make that much money so but I would be forced to sell my land and I would lose my Valuable Fruit Trees.

This is not actually a big issue (but difficult to explain in a pub setting) so I'll do it here:

1. Economics says, people put their assets to most efficient use. The market gardener has a choice: sell off your one acre, bank £1 million cash and - if you so wish - buy yourself 200 acres of farmland. Sure, you might not be able to take your Valuable Fruit Trees with you, but hey. Maybe just buy 50 acres of farmland and spend £750,000 on replanting the Valuable Fruit Trees, or something?

2. English land law says, you are allowed to enter into a Restrictive Covenant to devalue your own land. See Tulk v Moxhay (The Leicester Square case). So if the market gardener is so wedded to his trees, he can enter into a Restrictive Covenant with surrounding home owners and/or the local council and their heirs, successors and assigns to use the land for market gardening in perpetuity and never to build on it. The market value of the land thus reverts back to normal agricultural value of £5,000 or so, for which LVT of £100 or so is payable every year.

3. Of course, once Market Gardener pegs it, unless his kids want to follow in his footsteps, they will be pretty miffed to find out that what they thought was a site ripe for development is in fact worthless, but hey, that's life.

If you prefer words to logic, Winston Churchill no less covered this topic in a speech much cited by Land Value Taxers (most recently Jock Coats).

* Here's the list again: LVT could and should replace Council Tax, Business Rates, SDLT, Inheritance Tax, Capital Gains Tax, the TV Licence fee, Insurance Premium Tax and VAT on domestic fuel, s106 agreements and roof taxes; net of agricultural subsidies, Housing and Council Tax Benefit, VAT zero-rating for new residential construction. Total net revenues in the order of £60 billion = 4% of GDP = 10% of all current tax revenues.

** HH didn't actually say £20,000 (I don't know if he was imagining a higher or lower figure), but this is roughly the amount that would be due were a single LVT to replace all the taxes less subsidies in the above list on a fiscally neutral basis. And yes, of course there is massive waste in gummint spending and hence scope for cutting taxes, but let's cut the worst ones first (VAT and Employer's national insurance - total revenues £120 billion - twice as much as property/wealth taxes), eh?