They showed the film 50 First Dates on Channel 5 this evening.
I'm no expert in these matters, but I'd describe it as a downmarket hodge-podge of Groundhog Day and Eternal Sunshine of the Spotless Mind featuring Drew Barrymore and a bloke who looks a bit like Ben Stiller, but if you pay attention, it turns out that the poor lass lost her memory because she crashed her car swerving off the road to avoid hitting a stray cow.
I cheerfully admit that simply pointing out that 'land is different' is not in itself a definitive argument in favour of taxing land values (and a few narrow classes of other government-protected monopoly rights) rather than anything else, because there are those who say that merely because something works in practice does not prove that it works in theory. But the reverse logic that 'land is an asset like anything else and therefore if you are going to tax land you have to tax everything' simply does not wash. For example:
Roger Helmer at ConHome: "Fifth, if we can tax mansions, what about other property? Cars? Racehorses? Pension funds? ISAs? Where do we stop?"
Or IanB in the comments here recently: "Look Mark, the whole economy is about allocation of scarce resources. Anything that isn't scarce ends up being free because supply is infinite. This whole "land is scarce but other products aren't so land is different" thing is inept reasoning, and if you are honest you have to use the same reasoning to conclude that anyone owning a scarce resource-which is just about everything from cheese to chalk- is a "monopolist" making unjust profits."
This notion that land is like any other asset or that rental income (cash or non-cash) is like any other source of income is quite clearly hokum. Let's start with 'cheese', but we can do the same exercise for cars, racehorses, pension funds or chalk if you really want:
1. As the economy grows, the price of basics/manufactured items tends to fall relative to wages (because we are more efficient or more productive) but land values rise relative to wages.
2. This is mathematically true and verifiable - when the Mini was first made, it was sold for £500 and a house cost £2,000. Nowadays you can buy a small car that's far better than a Mini was then for £7,000. You cannot buy a house for £28,000 today (or only in the most depressed parts of the UK).
3. If there were some horrible situation, like pestilence, or war, or all our young people emigrating abroad, then cheese prices (in the UK) would rise and house prices would fall.
4. There are no NIMBY restrictions on how much cheese can be produced; there are not even any practical or economic restrictions (or if there are, we are nowhere near those upper limits).
5. A piece of cheese has inherent value. A piece of land has no inherent value, it is just mud and stones. Its value depends entirely on where it is. Cheese with planning permission is not worth a hundred times as much as cheese without planning permission. The value of cheese or chalk does not change depending on where it is. A piece of cheese in Newcastle is worth the same as piece in Mayfair.
6. The only instance where cheese behaves a little bit like land is where the producer can exclude other suppliers from the market. The price of a cheese sandwich in the supermarket is £1.50, but on a train you are a captive audience, there are no competitors and they can charge you £3, take it or leave it (what I refer to as 'embedded rent').
7. If one man wants a piece of cheese he places no burden on others who also want one. If there were no demand for cheese, it would not be made in the first place. Not only is the amount of physical land fairly fixed, it does not need to be manufactured, it is just there. There is a natural tendency for people to want to live in urban areas (more jobs, more amenities); there are centripetal forces, which drive land values in urban areas ever higher.
8. Supply of cheese rises to meet demand. In demanding cheese, I am creating employment opportunities for cheese makers and retailers. If demand for cheese goes up, then that does not push up the price, it creates even more jobs.
9. Cheese producers and suppliers are fairly competitive and do not make super-profits. Demand for cheese is what it is, and as long as the price offered is more than the cost of producing and selling it, it will be produced and sold.
10. Land rents quite clearly reflect landowners’ monopoly power (or their share of the cartel’s monopoly power). A cheese factory in the middle of prime Surrey commuter-belt will be no more profitable than one outside Swansea (because they compete with each other), but land in Surrey commuter-belt will always command a much higher price than on the outskirts of Swansea. Two landowners in different parts of the country do no compete with each other, and two landowners of neighbouring plots do not compete either – they are members of the same mini-cartel.
11. Do cheese prices increase when interest rates fall and vice versa? Does the price of cheese depend largely on credit conditions?
12. Is there an eighteen-year credit-driven boom-bust cycle in the price of cheese, which always ends up with a financial crisis and a recession?
13. The supply of cheese rises to meet demand and prices stay stable (or might even fall because of economies of scale). If demand for land goes up, the full benefit of that increased demand accrues to land owners as supply of land in desirable locations is fixed.
14. Does The Daily Mail celebrate when the price of cheese goes up?
15. Do countries fight wars over cheese? Did the Normans invade us or did we invade North America to secure cheese supplies or did they/we just announce that the land belonged to them/us?
For sure, countries fight wars over natural resources, such as water or oil, and in olden times may have fought over valuable agricultural land (needed to make cheese) but that is secondary.
16. A tax on cheese is shared between supplier and consumer, leads to a fall in cheese output/consumption, destroys businesses and jobs, makes us all poorer. The tax leads to evasion and smuggling and thus pushes up the tax rate on everything else to compensate.
17. A tax on land-location values does not affect the amount of desirable locations. It is paid by the occupant and born by the owner but cannot be passed on in higher prices, so it does not reduce output or increase prices one iota.
18. This is evidenced by the fact that the retail price of consumer goods is much the same all round the country, even though the Business Rates payable by shops in desirable city centres is a vast multiple of that paid shops in less desirable locations.
19. If all businessmen and workers decided that their income was taxed too heavily and went on strike to avoid earning money and thus having to pay tax, the country would grind to a halt. If all landowners decided that their rental income (non-cash rental income in the case of owner-occupiers) was taxed too heavily and decided to abandon their land and stop collecting rents, then the government would acquire the land by legal default and it could rent it all back to us and would have far more revenues than it could ever raise in income tax etc.
20. Ownership of land tends to become concentrated in fewer and fewer hands over time - look at the USA, they started off with everybody owning a smallholding and where are they now? Land ownership is almost as concentrated as it is in the UK. This is precisely because land ownership is so lightly taxed. Taxes on cheese are not particularly high, as it happens, so let’s look at taxes on motor vehicles. In the UK, they are very high indeed, about £50 billion year (mainly on road usage, i.e. fuel duty) on vehicles worth maybe £300 billion. As a result, people drive smaller cars or drive fewer miles than they otherwise would do, roads are used more efficiently and there is, unsurprisingly, a much wider spread of car-ownership than there is of home-ownership.
21. There is no 'community' input into the value of a piece of cheese - the cheese is made by a small group of individuals (farmer, factory, supermarket). There is a producer surplus (profit) and a consumer surplus.
22. To make money from cheese, you can't just make one piece – or buy one piece - and then sit back and collect rent for the rest of your life, you have to make and sell more cheese every day. A piece of cheese deteriorates and goes off, it does not slowly increase in value. It needs to be stored and looked after. Cows and machinery and lorries and fridges have to be regularly used and maintained at huge cost to remain profitable.
23. This is quite unlike bare land, which can increase in value enormously without the owner lifting a finger, all he needs is a register in HM Land Registry, a legal system prepared to evict squatters, an exemption from Business Rates or Council Tax and for the economy to grow or the amenities provided around his site to improve and he earns money in his sleep.
24. A tax on land values tends to depress buying and selling prices without affecting gross rents, thus dampens the boom-bust cycle without discouraging new development. See Business Rates, which is the closest thing we have to LVT, see also the fact that house prices were low and stable between 1950 (once the supply shortage caused by bombing in WW2 had been overcome) and the late 1960s, a period in which we had Domestic Rates and Schedule A tax (which between them amount to crude forms of Land Value Tax). High taxes on incomes, profits and output certainly do no dampen the boom-bust cycle, and if anything greatly worsen the impact of the bust/recession periods.
From The Daily Mail:
Drinking alcohol can increase your risk of cancer because ethanol is itself a carcinogen on certain parts of the body, scientists have found. Researchers said they found that when ethanol is broken down by the body, it can cause DNA damage that may lead to dangerous changes to the cells.
The U.S team from the National Institute on Alcohol Abuse and Alcoholism in Maryland, used human cells engineered to produce an enzyme that is found in liver and breast tissue...
Righty ho. No risk of them being in any way biased as to what sort of outcome they were looking for, eh?
There's another article in today's Daily Mail about Lib Dem proposals for taxing land values with the usual torrent of lies and misinformation. Most of the comments are the usual Home-Owner-Ist special pleading, but the quickest way to find the most intelligent ones is to select the worst-rated. Worst-rated comments numbers 2 to 5 are as follows:
I don't believe it! Some common sense from the LibDems. Why should I pay the same council tax as some toff living in a mansion in Surrey? The rich need to make a bigger contribution so the disadvantaged people like me have a much higher standard of living. Ken, Liverpool, 16/9/2011 9:32
If you put up tax on property (unearned wealth gained through house price inflation) and cut taxes on income (money earned through hard work) then Britain would be a more enterprising, competitive society. John, Dartford, 16/9/2011 9:58
Not very different to the IFS proposals reported on this site yesterday: "Council tax should be replaced with a new tax where people pay a percentage of the value of the property that they live in. All homes would have to be revalued. Council tax is still based on valuations made in 1991 which the IFS said was ‘ridiculous’." Here in Australia you pay rates on the value of your property - no top limit and regular revaluations. If you have significant property holdings other than your own home, e.g. several BTL properties, you pay land tax too. Guess what, it works! TonyB, Melbourne, Australia, 16/9/2011 8:00
Folks, the Tories are also a high tax party look how they racked-up VAT...(!). Alan, beverley, east yorks, 16/9/2011 9:26
Pickles - matey why don't you take a leaf out of the interferring government into the private lives of people AND LOSE SOME WEIGHT. Jane Davies, swansea, 16/9/2011 7:06
My dilemma is always this: should I click the green arrow to say I agree, and thus possibly push them out of the top five or should I click the red arrow to say I disagree, but which helps them to stay in the top five and at least get read? I usually go with red.
Pavlov's Cat reminds us that the list of the Top Forty Librarian Blogs has been published, yours truly scraped in at 36. I duly downloaded the badge...
Obviously, under the Dewey Decimal System, 'forty' and 'fifty' are interchangeable, but I'm sure you knew that.
There's a veritable feast of Home-Owner-Ist squealing and contradictions concerned the Mansion Tax in CityWire Money, betraying as usual nil understanding of economics and is more or less a logic-free zone. But let's home in on this bit:
... but what, today, does it mean to be rich? Is it fairer to tax income or another measure of wealth?
Taxing income is a bad idea, taxing wealth is a ridiculous idea (it's either double taxation or easily avoidable), but land rental values aren't wealth in any way, shape or form. They are a state-sponsored entitlement, which only has value because of scarcity i.e. because others can be prevented from having a similar entitlement, and because money (or valuable benefits) is transferred to the lucky owner from 'everybody else'.
Think about it: if a welfare claimant is entitled to £10,000 a year in various benefits, without him having to do anything for it, that's their income, but we know that this £10,000 comes out of the taxes we pay; it's a mere transfer payment and that £10,000 does not add to GDP. And it would be unusual indeed to capitalise that £10,000 and say that the claimant has £200,000 in welfare 'assets' (even though we do this exercise when it comes to public sector pensions liabilities).
Similarly, if a landlord is collecting £15,000 rent, of which £10,000 relates to the location value, that £10,000 is his income, without him having to do anything for it, but it's the tenant's expense. It is a transfer payment which does not add to GDP. We are used to capitalising that £10,000 and saying that the land under the house is worth £200,000, but why not capitalise the expense and say that there is a £200,000 liability on the tenants?
And the same goes for owner-occupiers. They are receiving non-cash benefits of £10,000 a year, purely and simply because others are excluded; if there were no natural, economic or artificial shortage of land, then it would not have any value and nobody would ever pay rent.
So welfare payments aren't wealth and land values aren't wealth. They are transfer payments to a favoured group from 'everybody else'.
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As a further thought experiment, imagine that the local council privatises the road and pavement in front of your house. The new owner, Road & Pavement Company plc ('RPCo') will charge 'what the market will bear'. If the rental value of your house is £15,000 a year, then RPCo knows it can charge you (say) £10,000 a year for a permit to use the pavement and roads. It is pure ransom value, no value is being added at all and GDP or national wealth is not being increased.
The rental value of your house would plummet to (say) £5,000, because if you advertised for a tenant, he'd know about the £10,000 road and pavement charge, which comes out of his budget of £15,000 and so he'll only offer you £5,000 rent for the house itself.
So the entitlement shifts from you to RPCo; total wealth of the nation is unaffected (it's the same house and the same road and the same pavement). You will be understandably miffed and say that RPCo has effectively robbed you of £200,000 in assets, but you only had that asset because you in turn were depriving somebody else of it (however indirectly).
So RPCo is laughing, it collects £10,000 from everybody on your street. But your road leads into another road (let's assume you live in a cul-de-sac); the council can sell that one off to a different company, and then RPCo and that other company have to share the £10,000 between them, somehow. Boo-hoo, their income stream has just been halved. And so on in a never-ending chain without a single penny of value or wealth ever being created... because the wealth was never there in the first place.
Spotted by Sue in The Local - Sweden's News In English:
A homeowner from Storebro in northern Kalmar County arrived home on Wednesday night to find his garden littered with bits of apple and other signs that an elk had been partying in his back yard, the local Östran and Barometern newspapers reported.
The concerned homeowner also discovered that the children's swing set which normally sat in the yard was missing. The man immediately called police, who contacted a local hunter to track down the inebriated elk who was thought to possibly be injured.
Drunken elk are common in Sweden during the autumn season when fermenting apples are plentiful, both on the ground and hanging from the branches of trees which many Swedes have in their yards.
While police and the hunter failed to meet up with the prank-playing elk, they did eventually find the family's swing set, propped up in a tree deep in the woods about 500 metres from their home.
Possibly one of the greatest headlines of the modern era.
Having spent the last couple of days staring intently at women's elbows/waistlines, I announce this week's winner to be Sarah Jessica Parker (see poster for her latest film).
The narrowest part of her waist is three or four inches above her elbow line so she probably has incredibly long legs.
Ah... she does.
