"Because Brexit" headline of the day

From today's Evening Standard. Read the article - it has nothing to do with Brexit whatsoever, apart from an out of context sound bite at the end:

Killer Arguments Against LVT, Not (455)

KJP trotted out half a dozen traditional KLNs on #454, including:

In the long term, over 2 or 3 generations, LVT could be introduced... Overall it could be equal but what for those individuals who had recently purchased properties and the banks that lent them money?

He claims it will be a problem for recent purchasers with large mortgages. Why? They will be the people who save the most tax in future, as the homes which recent purchasers bought are relatively small multiples of their income.

Pension funds have shares in financial institutions not just rich people.

Counter-argument: "Pension funds have shares in productive businesses, which will benefit enormously from a shift to LVT."

What do 'rich people' have to do with this? High earners will pay less tax; people who own valuable land will pay more tax. This is not about rich v poor or young v old.

The special pleading for banks is (I assume) based on the assumption that selling prices will fall. Seeing as selling prices are ultimately dictated by younger people's disposable incomes, it is quite possible that under a 50/50 tax shift, selling prices would go up (whether that is desirable or not is a separate issue). So it's a flawed argument based on a flawed assumption.

Fairness and the productive sector? There are no taxes on turnover...

Value Added Tax, a tax on net turnover or gross profits, take your pick.

... Taxes on wages, yes; PAYE and NI; profits, corporation tax and consumption, VAT.

But it does seem to shift the goalposts. In the past you paid income tax and bought your house; now no income tax so you have to pay LVT to cover the shortfall. Retired, not much income, tough.

Let's imagine we'd always had LVT. In the past, people would have paid LVT and bought their house. Why is different to having paid income tax and bought their house?. Those who now have to pay LVT are not necessarily better or worse off than if it had been introduced "2 or 3 generations ago" and they'd always had to pay LVT.

Either way, all mainstream LVT-ers agree that pensioners would be able to roll up and defer their LVT bills, so it's not their problem, it's their heirs' problem.

Note also the sneaky diagonal comparison:

KJP highlights:
a) recent purchasers (younger, higher earnings, lower value housing) and
b) pensioners (older, lower earnings, higher value housing) and claims they will both be worse off under LVT.

They are diametric opposites!

Recent purchasers will be massively better off; pensioners will break even (roll up and defer) and their heirs might be worse off (if they were basing their life plans on a juicy inheritance) or better off (if they are working and earning, and their parents' homes aren't worth that much anyway).

I misread this Met Police advert on the Tube

Cheap food

I was listening to Radio 4 today and there was an article on cheap food, which mentioned, inter alia, that the government has a policy of keeping food cheap, to the detriment of farmers in particular and others in general.

This is something my mother had been wont to bring up now and again since my childhood and for some time I wondered why.

However, my wondering ceased when I heard on Radio 4 a few months ago that 100 years ago, on average, 20% of the expenditure of the poor went on rent and 50% on food. Now it's the other way around. A similar point is made in this article.

So basically, farmers are kept poor and subsidised, we eat rubbish food and animals are reared in inhumane conditions so that landlords can grow rich, but, of course, it's never put like that.

"Creativity peaks in your 20s and 50s"

From the BBC:

If you've ever wondered why your mind is a hotspot for new ideas in your 20s, it could be that you're experiencing the first of two creative peaks.

New research from Ohio State University found that our mid-20s is when our brains first become fertile ground for innovation.

The study looked at previous winners of the Nobel Prize in economics. It found that those who did their most groundbreaking work in their 20s tended to be "conceptual" innovators. So basically they had a light bulb moment and acted upon it.

But don't panic if you've gone past your mid-20s without a flicker of an idea - some of us won't hit our inspirational stride until our mid-50s.

The headline might as well say: "having kids at home stifles your creativity", which I suspect explains most of it. As lovely as kids are, you have to always go for the safe and steady options while they are in your care. Give me two more years and I will once again be the creative powerhouse I once was (if I ever was, which is debatable).

Wow, how did that get past the censors?

At the end of an article at the BBC, which merrily jumbles up organic matter and carbon dioxide under the catch-all heading 'carbon', which in nature only exists as coal, charcoal, graphite or diamonds...

Brexit could give the UK greater flexibility on how to spend public money on farming - enabling much more leeway to reward farmers for capturing carbon in the earth.

Killer Arguments Against LVT, Not (454)

Submitted by Me, from the comments at bondeconomics.com, it's a three-parter, somehow the Homeys don't notice the inherent contradictions:

Not a fan of land tax.

Courtesy of adding an extension on my house, I will face a greater tax bill than my neighbour, who has a lot that is probably the same size as mine.

That's an argument against 'property tax' and an argument for LVT.

Meanwhile, some dimwit ripped down the house a few doors over, and put up a monstrosity that has probably 40% more square footage than my house, but on a smaller lot.
Taxing land alone would reverse the tax burden than what happens under property taxes (the monster house faces the largest property tax, but the smallest land tax). This would be so unfair that Canadian voters would obliterate anyone foolish enough to propose such a policy.

That's now an argument for 'property tax' and against LVT. Can he make up his mind?

The rule is that LVT is set according to site premium assuming optimum permitted use. In any area, some plots will be over-developed and some will be under-developed; we don't need individual and specific valuations of each plot or each building; they get averaged out in each area and each plot is taxed as if it were put to the average or typical use.

So maybe Brian's neighbour owns an under-developed plot; the dimwit lives on an over-developed plot and Brian has hit the optimum - so Brian will be paying the right amount of LVT.

Even if final LVT assessments are a bit arbitrary, so what? The aim is not primarily to achieve 'fairness' between land owners, which would happen anyway. (Even if certain individual assessments are too high/low, then today's landowner's loss/gain is tomorrow's land owners corresponding gain/loss.)

The aim is to achieve 'fairness' between land owners and the productive sector. Any LVT, however arbitrary the valuations, is always going to be 'fairer' than smashing the real economy with massive taxes on turnover, wages, profits and consumption to pay for the public services which create and maintain land values in the first place.

Since there are almost no transactions for land alone in developed areas, there is literally no way to get a legitimate value on land; any valuation is purely guesswork pulled out of some "expert's" nether regions.

That's easy; LVT assessments are based on rental values; we compare like with like to arrive at the site premium, average it all out a bit, job done.

Furthermore, funding a basic income with a land tax shows a huge lack of understanding of Functional Finance. A basic income is extremely inflationary, which is why it is a bad idea relative to a Job Guarantee. Taxing land (or property) is hitting the people who have the lowest propensity to consume out of income -- which is a terrible way to control inflation.

i) He's confusing the taxation side with the spending side. It's a traditional KLN.

ii) A basic income is not inflationary, and certainly not any more than any item of government spending - such as Job Guarantee - is inflationary.

iii) There is no inflation in the real economy, people get better at doing stuff, and over time everything gets cheaper. The only inflation that matters - and which really damages the economy - is land price inflation.

iv) He finishes off by chucking LVT and property tax in the same pot, and overlooks the basic point that landowners are consuming; they're just consuming out of taxes on other people's income. Which makes it the worst kind of consumption.

Before/after

A factory fresh MR2 Roadster headlight v one that's about twenty years old and has covered 80,000 miles:

Conspiracy Theory Of The Week

From The Guardian:

It is a dastardly trap, designed to lock freedom-loving Britain into the European Union’s protectionist customs union: that is the argument against the so-called backstop, cited by hardline Brexit advocates as the main reason why they have thrice voted down Theresa May’s deal with the European Union.

But as the dust settles after months of chaos in Westminster, suspicions are growing on the other side of the Channel that the backstop could in fact be the very opposite: a brilliant deception device constructed by crack UK negotiators, which would allow a more reckless British prime minister to undermine the EU’s green and social standards while still keeping access to the European single market.

Private school bullshit

From The Daily Mail (as The Times is behind paywall):

Private schools save the taxpayer billions of pounds every year, their head teachers claimed yesterday.

The schools not only provide a huge financial benefit to the Exchequer but also wider benefits to society, according to analysis from the Independent Schools Council.

The report found that private school fees have doubled over the last 15 years, with the latest annual rise hitting more than 3 per cent.

Fees go up at compound 7% year because they are largely rent, they charge according to what parents are [daft enough to be willing] to pay*. The fees have nothing to do with real costs, if parents' net disposable income goes up by £x,000, then fees go up by £x,000.

But heads said the savings from taking pupils out of the state education system as well as the added benefits of community facilities, jobs created and tax contributions added up to a £20billion boon for the taxpayer, The Times reported.

£20 billion? That's bollocks. There are 615,000 children at private school, the average cost of/amount spent on one child at a state school place is about £6,000 a year, 615,000 x £6,000 = £3.7 billion a year.

Ah...

This was made up of £3.5 billion saved by freeing up state school places...

OK.

... £4.1 billion in tax paid by the schools and their suppliers

How is that relevant? If people weren't doing work for private schools they'd be doing something else, possibly much more useful to the economy, and still paying the same amount of tax.

... and a further £13.7 billion in the value of the work supported by the schools across the economy.

A completely made up figure, in other words.

I wonder why they opened themselves to ridicule like this, had their headline figure been £5 billion a year, that still sounds like a lot of money to Joe Public (although it isn't, in national accounts terms) and I wouldn't have questioned it.

* I am happy to report that my 18 year-old's grammar school has taken the last term's fees, ever, and I have cancelled the direct debit. That's £150,000 I'll never see again. Two more years of my 16 year-old's school gouging me and I'm done with this bullshit, which was all Mrs W's idea, as you can imagine.
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UPDATE re Bayard's comment: "I do know that now they charge what the market will bear so that they can offer bursaries to pupils from a less wealthy background, which they didn't do in my day. If you wanted money off then, you had to win a scholarship. However, I don't suppose all private schools do this."

I'm not sure what the difference between a 'bursary' and 'scholarship' is, but I was clever/lucky enough to get a free place at what was (and possibly still is) a very good grammar school Up North in the late 1970s. It was blindingly obvious to me even at the tender age of ten or eleven that this was not an act of charity or benevolence on their part, they needed ten per cent or so of smart kids from poorer families to bump up their grade averages; thus making the school more marketable to wealthy parents.

So I got the 'free' (and very good education, no complaints there, apart from Mr Illingworth the maths teacher and Mr Dorian the English teacher who were unalloyed cunts, but even they couldn't drag me down from an A at O-level) and the school could bump up their fees a bit; both parties win! I fulfilled my side of the bargain by getting very good O-level results, much better than the average for my year, and then my idiot parents fucked both sides over by taking me out of school at 15 3/4.