Killer Arguments Against LVT, Not (168)

Sobers worked himself up into a frenzy here:

And the end result is a system that is seriously inflexible. At the moment you have system that allows many people, who have zero or low mortgages, to get by if they lost their jobs. Their outgoings are small and by pulling their horns in, using some savings and taking what benefits are available (1), they can get through a rough patch until they find new employment.

Now I know that the riposte to this is 'Well millions of people have mortgages, and if they don't pay them they will lose their houses too!'. That is indeed true. But it is no reason to put everyone else in the same situation. LVT would put everyone in the same position as someone with a large mortgage [not true either - see (3)], and worse than that, a large mortgage with a company that brooks no missed payments. Don't pay your LVT for a few months and the bailiffs would be round tout [de] suite. (2)

Everyone will therefore be in a position of having no safety cushion.(3) Even those who have no mortgage, and have income that covers their LVT nicely will have to live with the fear that at any moment they might lose their job (4) and have to try (at the same time as having no job) to sell their home in order to not incur massive LVT bills (5) which the only way they would have of paying would be the capital released from their homes if they managed to downsize. Thus at any point they risk losing both their home and the capital it represents, just because they lost their job.

And people have the nerve to say that LVT is not the nationalisation of property. (6)

OK, before we go through the numbered points, what is an ideal sort of tax/welfare system?

The answer is none at all, no taxes on income or accumulated income (aka 'wealth creation'), no welfare system, not even old age pensions. Nobody pays for anybody, everybody just does their best etc. The problem is that in such a system, as long as you have private land 'ownership' without taxation of the rental value, there would still be 'privately collected taxes', in other words rents. Those who happen to 'own' more land than they need to live on on the day that all taxes and welfare are scrapped would have their own welfare system, because they can collect rent from people who are 'creating wealth' (i.e. going out to work for a living), and everybody who does not 'own' land would have to pay tax forever more (or pay a large capital sum to become one of the favoured group).

That's one of the many advantages of collecting ground rents from everybody, spending a little on the core functions of the state (which need cost no more than 5% of GDP, if truth be told) and dishing out the rest as a Citizen's Income, by and large, most people would not pay any tax at all (i.e. their household's CI would be equal to or greater than their LVT bill), and neither would there be a favoured class of private tax collectors. The top third of households would be net taxpayers (their LVT bill is more than their CI) but that's their choice to live in a particularly nice house; in the same way as you have to pay more if you go on nice holidays, drive a nice car, send your kids to private school, or indeed earn more than you need to spend, which enables you to defer consumption to the future. That's the whole point of earning a lot, isn't it?

Righty-ho, let's crack on:

1) Just to remind you, if you have any significant savings, you are denied most welfare payments until you have spent it all. So even the welfare system subsidises housing; if you have a £100,000 house and £100,000 in savings (cash, shares) you get nothing at all, but if you have a £200,000 house and no savings, you qualify for full welfare from Day One. And that's before we look at extra subsidies for 'home owners' like support for mortgage interest.

2) Well, what use is a tax system without some sort of enforcement, pray tell? And who mentioned 'bailiffs'? Politically, this is a bit of a non-starter, but all we have to do is flip the current system on its head. Under current rules, most taxes are collected fairly directly from people's earned income. If you manage to evade income tax and they catch up with you, then, assuming you've squirrelled away the cash money somewhere abroad, they can put a charge on your house, and possibly force a sale. With a full-on LVT system, they would just collect as much as they can from your earned income (however defined) and place a charge for the shortfall on your house. For sure, there'll be some who dig their heels in, be prepared to live off little or no net income for years and run up such huge arrears that their net interest in the house is £nil or £negative, so what, there are few people mad enough to want to live like that?

3) That's a very glib use of the word 'everyone', methinks. For about two-thirds of households, the CI they get would be greater than or equal to their LVT bill*. That is the safety cushion; if these two are netted off at source and only the balance paid out, then to all intents and purposes, these people are living in a tax-free and welfare-free world. So all they have to do is put enough aside in the good years to see them through any possible bad ones. It's up to each individual to take a guess at what his income is going to be for the foreseeable future and budget accordingly, by and large, people are far better at doing these forecasts for themselves that the likes of Sobers give them credit.

4) In the absence of taxes on the productive economy, with land brought into its most productive use and with land price/credit bubbles more or less abolished, very few people would ever lose their jobs, and if they did, they'd very quickly find new ones. And if you are a worrier, well take out some sort of unemployment insurance (even though you'll find that self-insuring is a far better way of doing things).

5) Aha, Sobers hints that everybody's LVT bill will be "massive", which is quite simply not true. You'd have to get into the top ten per cent of houses for the household's net tax minus CI bill to be more than £20,000 a year. And the average net bill of those who actually have a net bill would work out at something like £7,000 a year, big deal.

6) Replacing most taxes with LVT is the un-nationalisation of most property (earned income and just about any accumulated income). It'd be helpful if people would learn to distinguish between this on the one hand; and land or other government-protected monopolies on the other.

In any event, land already is nationalised, there is one national set of rules and one national register to say who owns which bit; local councils (on behalf of NIMBYs) enforce strict rules on who can build what and where; land values are subsidised by countless government schemes etc etc. It's just that the profits are channelled, by the government, from the productive economy into the hand of land 'owners' (obviously, most people have a foot in both camps - but for reasons which escape me, are happy to be robbed blind on the earned income side as long as this money is used to subsidise the land they 'own').

I'm no big fan of planning restrictions anyway, but LVT works with or without them, and LVT in itself does not affect ownership of land any more than fuel duty affects ownership of your car: LVT does not impinge on the fundamental rights of land 'owners' which are, for example, the right to do what you like in your own house or on your own land, the right to exclusive possession, the right to have squatters evicted or burglars convicted, the right to rent out or sell it, and so on. If anything, these rights would be strengthened, because that increases the potential rental value of land and hence boosts receipts.

* In theory, everybody could live in an average value home, in which case every household's net tax bill would be much the same, i.e. a few thousand quid each a year to cover the cost of the core functions of the state. But that would be rather a drab world, methinks.

"Couple hospitalised after being trampled by herd of cows"

Spotted by Pavlov's Cat in The Independent:

A herd of cows has trampled a man and woman, leaving them with serious injuries. A man in his sixties sustained chest, arm and pelvic injuries, and was airlifted to hospital from a farm near Ledbury, Herefordshire, on Friday, an ambulance spokesman said. A woman believed to be in her fifties sustained a chest injury and suspected fractured ribs, and was in Hereford County Hospital...

The article then mentions a couple of famous cow attack stories of recent years:

... In 2009, the former home secretary David Blunkett broke a rib after being trampled by a cow. In January, a fireman on a 999 call was spared jail after cows, startled by his engine's siren, killed a 75-year-old farmer.

Thereby lulling the reader into a false sense of security by implying that cow attacks are few and far between, which they are not.

"A playground for the rich"

Some splendid Homey whining in a recent Evening Standard:

Houseboat owners on the Thames fear their way of life will be threatened if huge rent increases are imposed on them. About 280 boats moored will be affected, with many facing rises of more than £1,000 [per annum]...

But residents of the Thames marinas and riverside moorings have accused the PLA of cashing in on the increasing popularity of living on the water. They fear the rise in mooring fees - by an average of about a third - will drive out traditional river dwellers, leaving only a "playground for the rich" *...

Alison Barnes, 47, a mother of two, said of the rise in mooring fees: "It's difficult to know what we'll get for the new charges, apart from the mud. They want a portion of our 'notional income' from the mooring, but we don't get any. It's not like we have an income from our boat and that's why people are objecting to these high increases."

Ho hum.

This lady doesn't know much about cost-accounting or economics. Of course she receives "notional income", it's however much she would have to pay for that mooring site on the grey market**. As we know, the best form of rationing is price rationing, and distant second best is the waiting list approach - if the waiting list is too long (which it is***), then the prices are too low. If it's true that the PLA could double or treble their mooring fees and still find tenants, then that shows that the value of those moorings is in fact two or three times what they are currently charging, and that's exactly how much the "notional income" is.

Are social tenants allowed to refuse to pay rent on the basis that they don't get any "notional income" from their home? Or private tenants for that matter? And shouldn't it be illegal for people to sell houses to owner-occupiers for more than a nominal sum, seeing as the new owners will never get any "notional income"; and if a buyer didn't get any "notional income", why would they pay more than a nominal sum anyway?

* You can look at the prices for houseboats in London here, it quickly becomes clear that, just like with houses, you are largely paying for the location.

From Houseboats: A Buyer's Guide:

** "With a mooring you basically get the ability to stay, plus key facilities: mains, gas, sewage, and in more up-market places, broadband and so on. Usually you're all connected up, though a lot still have to pump out sewage into the Thames at high tide. A boat roughly triples in value when you put it on a residential mooring, assuming it's secure in length of time (at least ten years)."

*** in London [mooring] licences are extremely hard to come by. A spokesperson for British Waterways, who control London's canals, says: "We provide permanent residential moorings in places like Bloomfield Road, Little Venice and non-residential sites which allow people to live four nights a week on sites like Lisson Grove. But it's very difficult to get a mooring - we have a waiting list with hundreds of people on it." Demand is also massively in excess of supply on the Thames.

Fun Online Polls: Xmas decorations

It strikes me that complaints about retailers etc putting up their Xmas decorations earlier each year seem to come earlier each year. Here's one I spotted in The Evening Standard two days ago.

So that's our next Fun Online Poll: "Have you seen any Xmas decorations in your area yet?"

Vote here or use the widget in the sidebar. I did see a Xmas wreath with holly and red candles in the pub' yesterday, so I voted yes.
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I normally start a new Fun Online Poll on Monday, but last week's had to be closed because Liam Fox actually [was] resigned, in case you're wondering.

Arg

Rumble In The Jungle At The Bus Stop

Spotted by Sean aka Vice Pilot in the Sheffield Star:

Cheryl Wall, from the Hallamshire Physiotherapy Clinic opposite, said: “There is a very big gap where the pavement has collapsed. It’s amazing no-one was standing at the bus stop at the time.”

A worker at The Rutland Hotel across the road said she had heard a rumbling noise before the pavement fell in and the wall collapsed at around 1.45pm yesterday. “It’s a biggish section of wall and the pavement next to it has just gone,” she said.

The Wisdom Of Crowds [Liam Fox edition]

Ho hum, Liam Fox has [been] resigned, so I've pulled this week's Fun Online Poll.

As at five minutes ago, opinion was as follows:

Will Liam Fox still be Defence Secretary next Monday?

Yes - 57%
No - 37%
Other, please specify - 6%

So we, collectively, called that one wrong (I voted 'no' as it happens).

Then And Now (2)

Adam Collyer spots Michael Gove criticising his own policy.

Fun With Oliver Letwin

From The Daily Mail:

A senior Cabinet minister has been caught throwing away sensitive papers in park bins around Westminster.

In a clear security breach Oliver Letwin, David Cameron’s policy adviser, was spotted on five separate occasions disposing of correspondence about national security and terrorism in a public park. Some of the documents he threw away revealed private details of his constituents.

Exhibit One:

Spies have been known to use dead drops, using various techniques to hide items (such as money, secrets or instructions) and to signal that the drop has been made.

The system involves using signals and locations which have been agreed upon in advance. These signals and locations must be common everyday things to which most people would not give a second glance. The signal may or may not be located close to the dead drop itself.

The location of the dead drop could be a loose brick in a wall, a library book, a hole in a tree, or under a boulder etc. It should be something common and from which the items can be picked up without the operatives being seen by a member of the public or the security forces who may be watching.

Exhibit Two (h/t Woman On A Raft)

The government says it will make £250m available to help English councils keep or restore weekly bin collections... Conservative Chairman of the Local Government Association, Sir Merrick Cockell, welcomed the news.

He told BBC Radio 4's Today programme: "Any bid has to demonstrate the potential to increase recycling rates, which is one of the reasons a lot of councils went to every two weeks, and to provide other environmental benefits - reducing fly tipping, litter and all that side of good environmental waste collection. So, there's not one side to these bids."

On a lighter note: "... Labour's Caroline Flint said the money was effectively a bribe to councils to 'save Eric Pickles' face'". Crikey, if it costs £250 million to save the man's face alone, how many billions will it cost to save the rest of him?

"Northampton to Rugby rail services hit as cow derails train"

Spotted by RH at the BBC, adding "Now it's sabotage!":

Rail services through Northamptonshire and Warwickshire were suspended after an engineering train derailed as it hit a cow.

Buses are replacing London Midland trains between Northampton and Rugby after the engineering train hit the animal early on Friday at Long Buckby. Services are not likely to return to normal until Friday afternoon.

The train remained upright after the crash. The incident has not affected Virgin services. A Network Rail spokeswoman said: "An engineering train struck an animal in the early hours causing two sets of wheels to come off the tracks. Engineers are working to get the train back on the rails so the line can be reopened."