Killer arguments against LVT, not (61)

The Home-Owner-Ists have been busy churning out propaganda to protect their own vested interests for years*, which the Land Value Taxers do their best to counter-act with logic and examples, so far to little avail.

What worries me is that the Home-Owner-Ists don't just churn out propaganda, they appear to have a counter-insurgency element which knows perfectly well all the arguments in favour of taxing land values rather than incomes; of liberalising planning laws; of building more council housing or indeed ending the bank bail outs. This element does not usually mention 'Land Value Tax' by name, but it certainly gets its retaliation in first.

Exhibit One

From John Redwood's blog yesterday:

The third [idea for dealing with windfall planning gains] is that the wider nation should pocket the gain, through moving to a system of land nationalisation, where everyone just rents their property from the state and the state collects all the rents and therefore benefits from new construction. Effectively land values are abolished as no-one is allowed to be a freeholder apart from the state.

It was nice to see the usual suspects, Lola, Steven_L, DCB Reed, Derek, and Steven W pile in over there. To debunk Redwood's twisted logic and lies, let's apply it to taxation of normal incomes and output:

The third [idea for dealing with employment income and business profits] is that the wider nation should pocket the gain, through moving to a system of taxation of incomes and output, where everyone just rents their own time and effort from the state and the state collects all the rents and therefore benefits from new business activity. Effectively, effort and enterprise are nationalised as no-one is allowed to be a free man apart from the state.

No serious Land Value Taxer has ever said land would be 'nationalised' or that people would 'rent their properties from the state'. They would merely pay tax or ground rent for the value of the state protecting their exclusive right to occupy whatever bit of land they wish to occupy - what that person or his predecessors have chosen to build on that site or what they do in that building is entirely up to him.

It's no different to owning a caravan or tent and paying the farmer a daily charge for the pitch when you're there on holiday - you own the caravan, and you pay him for the right to exclusive occupation of that pitch while you are there.

Or does somebody think it is better if, for the few days or weeks that you are on holiday with your caravan or tent, that you pay the farmer up to 50% of your income, time-apportioned to that time period? Wouldn't that mean that lower income people pay less than higher income people? What motivation does the farmer have to improve the facilities if the rents he can collect are decided by somebody else? Isn't price rationing the best form of rationing?

No doubt somebody will whine and say "But it's my land". Fine. The physical land is fairly irrelevant - what is relevant is the value of all the local amenities.

To continue the analogy, what if the farmer sold off little caravan sized 'freehold' patches to campers? Who'd pay for the facilities to be maintained in future? What do you do if the owner of the plot next door decides to dump a load of rubbish on his pitch? Who'd chuck him off? Within weeks or months the place would be in chaos.

Anyway, all Land Value Taxers agree that some or all other taxes should be replaced (we differ hotly on which ones and in which order, of course). I've never met one yet who said otherwise. Even the Labour Land Campaign has a list of other taxes which they'd like to reduce or phase out.

* Stuff like "House prices can only go up"; "Your house is your main asset", "Rising house prices make us wealthier", "An ever expanding banking sector is the driver of the UK economy", "We can't build any more houses because of food security", "We have to protect vulnerable homeowners from the spectre of repossession", "We have to keep house prices high or else the banks will go bust" and "We have to bail out the banks to keep house prices up", "We have to keep house prices up to protect hard working homeowners from the spectre of negative equity", "Council Tax is unfair because it does not relate to ability to pay" and so on, which is all lies and half-truths.

Fun With Numbers

Percentage of adults who would support a ban on smoking in cars: 74%

Percentage of adults who don't smoke: 79%

Oh shit!

Twenty-one injured as train hits sewage tanker

"Research suggests..."

The BBC have started using the fakecharity article template again:

1. Kick off by quoting a bit of research 'suggesting' something or other:

Teenage smoking rates in England have dropped since the legal age for buying cigarettes rose from 16 to 18, research by University College London suggests. Researchers surveyed more than 1,000 teenagers aged 16 and 17 before and after the age rise in October 2007.

Well duh. It's illegal now, so some 16 or 17 year olds who smoke will simply not admit it.

2. Get a few rent-a-quotes from an appropriate fakecharity:

Jenny Fidler, who led the study and is based at Cancer Research UK's health behaviour research centre at University College London, said: "The new law looks to have helped reduce smoking prevalence among younger age groups. This is good news for the future health of this generation of young people and shows that tobacco policies can make a real difference."

So the research wasn't biased or skewed to try and get a particular result, then?

Jean King, Cancer Research UK's director of tobacco control, said "We need to do more to protect young people. We urge the government to prevent more lives being lost to an addiction that will kill half of all long term smokers."

She said putting tobacco out of sight in shops and removing cigarette vending machines would be a good place to start.

3. Finally, the most important element, and its presence here is most worrying (this element had been missing over the past few months), is for a government spokesman to agree that 'more must be done".

A Department of Health spokesman said they were in discussions across government on how best to progress to tackle smoking.

He added: "We welcome these findings as nearly all adults who smoke get hooked when they are young. Smoking is the biggest preventable cause of death in England, causing over 80,000 premature deaths in England each year."

Readers' Letters Of The Day

From The Evening Standard (I can't find this online):

My respects to Winnie Langley's family, but I dispute her title as Britain's oldest smoker. My grandmother, Esther Zietman, is coming up to 103 in December and has smoked since she was 13. At 99, she asked her doctor about giving up and he advised against it, saying that to do so would kill her.

Clive Zietman

A potted history of the next ten years from the FT:

... for so long people have sneered at the Japanese for their inability to steer their economy to recovery. Perhaps because they have sneered so much, it is no longer possible to admit that after a huge housing bubble bursts, there is nothing to do except suffer many years of economic indignity.

The fixation with Japan was not helpful during Mr Greenspan’s watch, nor I fear will it be of much use this time. The Japanese may be different, but they were not stupid.

Takashi Ito, Tokyo, Japan

And, the slightly longer summary of how we got here from The Metro:

Aran tells us we need to reform the international finance system to fund the vision of risk-taking entrepreneurs, but how many of those making millions in bankers' bonuses are doing just that?

Much of the 'wealth' supposedly created by the financial system in recent years has been mortgage debt. The more people borrowed because they were scared of being left off the property ladder, the more house prices rose and the more money (but really debt) was used to pay for it.

There is no real entrepreneurial wealth creation in this vicious circle. It has brought the country to its knees, not just because of the misery of those forced out of decent housing by high prices, but also the stress caused by borrowing too much and the resultant economic crash as the boom turned to bust. The only people who profit are those who are so wealthy they don't need a mortgage, or those who oil the wheels of the system and take their cut.

Matthew Huntbach, via e-mail.

NIMBYs Of The Week

From The Evening Standard:

A series of bizarre protests from residents has left 1,000 “Boris bikes” stranded in an underground garage and unable to be used by cyclists... One group of residents claimed it would be a “violation of their human rights” if a docking station were to be built outside their mansion block in Bloomsbury.

Another complaint centred on the fact that the bikes would be positioned under a tree and would be covered in bird-droppings. Many residents have expressed concern that the bikes would be used by drunken revellers indulging in “horseplay”. One Kensington resident said anybody wanting to cycle “will already own a bike”.

More from the Disfunctional Bureaucracy

I am not Mark Wadsworth

I am in business in a small way. We are a partnership.

Recently we had to dispense with the services of a bloke who worked for us for gross misconduct. He sexually harrassed a lady member of staff and deliberately tried to undermine our business for his personal financial gain. The Lawyers reckon we have an excellent case against him and the Police have warned him regarding the harrassment. But since he worked for us through a private service company, and it has no, assets it is pointless to sue it. In any event we got rid of him and refused to pay him £624 for his last two invoices - since he was not doing much for us at the time.

Anyway, predicatbly he issued a summons for us to pay. We responded on time and exactly as the Court requires, with an excellent defence.

But guess what? The Court cocked up the paperwork! And we have had a judgement entered against us. We have had a stand up row with the Court office but the 'computer says no'. And we are screwed. The Court will not admit that it made an error and we have to go through a whole expensive and time consuming procedure to put it right. So the upshot is that it's better to pay than to fight.

Really, what can you do? The whole bloody State bureaucracy including now the Court 'Service' is utterly F****d. (You may recall that it tried to kill me last year)

Suggestions will be welcomed, up to and not excluding revolution.

Lola

@ Eurojohnny

Eurojohnny left a comment on my earlier post, Universal Credits/Single Unified Taper:

Unfortunately, you have been a bit selective. Looking at your graph for a single person 25+ you don't appear to take any account of WTC! Looking at the source figures, the tables also seem a bit confused on this, though the graphs seem to pick it up?!?

For example your graph shows someone with income around £100pw netting around £60pw and performing better under your system. In fact, as shown in the appropriate DWP graph, such an individual would be better off under the current system provided WTC is added to their income: if they were working 30+ hours (many self-employed here) their income would be £150pw; even a part-time employee receiving the basic element would be slightly better off now.

You need to redraw your graphs taking care to include basic and 30+ hours WTC.

Well, yes and no to that. I'll call that a score-draw...

The various dotted lines in the charts are taken straight from the Tax Benefit Model Tables, which are based on people living in social housing or renting privately (as explained in the original post), and represent the net income after housing costs i.e. wages - PAYE + Tax Credits (basic or 30+ hours) - rent - Council Tax + Housing Benefit + Council Tax Benefit. The bold lines in my graphs are also the figure for net income after housing costs (which are paid for by the Universal Credit and clawed back via PAYE under the Single Unified Taper).

So I am very much comparing like-with-like.

As to Eurojohnny's specific example...

Table 1.1b of the TBMT shows that a single adult who is an owner-occupier (ignoring any mortgage subsidies) and who is earning £195 a week also ends up with a net income before housing costs of £195 a week (PAYE and WTC net off to nothing); but at this level of earnings, Council Tax Benefit is tapered to £nil, so his or her net income would be £181 per week after paying £14 Council Tax (again, ignoring mortgage costs).

Under my suggestions, his UC would be £65 cash, and he gets a K-code of £131 per week*. So at earnings of £195 per week, the PAYE deducted would be £98**, so his net cash income after notional Council Tax (dealt with via UC/SUT) would be £65 UC + £195 gross wages - £98 PAYE = £161.

So this particular adult would be £19 a week worse off, assuming absolutely no change in behaviour, which he can easily make up by working a few extra hours, and if not, it must be worth £19 a week for the peace of mind that no horrible bill for overclaimed WTC will land on the doormat; or the peace of mind that there is no huge form filling nightmare if the number of working hours or wages goes up or down etc.

As my original charts showed, the black line criss-crosses with the three dotted lines, so at very low incomes, some people will be a bit worse off and some will be a bit better off (more or less at random - but the randomness is embedded in the current rules, and not what I suggested); simply picking one example of somebody who would be worse off, assuming absolutely no change in behaviour, is pretty pointless.

* UC = £65 cash + £14 Council Tax 'paid' = £79; £79 ÷ 31% = £255; £255 - weekly personal allowance [= £6,475 ÷ 52] £124 = £131.

** The lower of [50% x £195] and [31% x £195 + £131].

That's one way of doing it...

From the BBC:

A man sat in his car for 30 hours to prevent it being towed away after it was clamped.

Haroon Zafaryab began the protest in Wembley on Wednesday when he returned from Ramadan prayers to find his car clamped and was asked to pay £365. He said that, as he sat in the vehicle, all four wheels were clamped and about 40 tickets were stuck to its window, amounting to £3,565 in fines...

On Thursday evening, Mr Zafaryab's car was finally released after he paid £100. He said he planned to challenge the fine in court.

Mr Zafaryab, you rock! And best of luck with your appeal.

There's a first and a last time for everything...

... I agree wholeheartedly with Dennis MacShane's diatribe against the sell-off of council housing (and the failure to build any more) in particular, and Home-Owner-Ism in general, in Sunday's Observer. He concludes thusly:

This is the most selfish generation of homeowners in British history. Until we confront our own selfishness, there will continue to be huge housing shortages, especially for young and less-affluent citizens.

Taking on selfishness, the Thatcherite shibboleth of right-to-buy, and the green lobby is a mammoth task for any party. Will it be too much for Cameron? And will any future Labour leader admit the last government had no social housing policy that was worthy of the name?

Can't add much to that.

UPDATE: Rantin' Rab concurs.