Saturday 20 June 2009

Killer arguments against LVT, not. (5)

Again, from here:

Ian B then plays the Poor Widow Bogey: "I return to the example I have used here before- an elderly widow living in the house she bought decades before with her husband, on a meagre pension income. She owns the house outright, for the mortgage is long paid off. But she cannot afford your LVT, which has been pushed up beyond her control because, since they bought the house a railway link, shopping malls and many new leisure facilities, which she does not use, have been built by others nearby which the LVT assessor concludes have raised the price of her land.

The market value of her land is beyond her control. You would tax her for the actions of others on land surrounding it, and, when she cannot pay the tax, force her to leave. All tax regimes are unfair, but some are more unfair than others. I remain unable to accept that the above scenario is the fairest. If we must tax something, let it at least be a proportion of something gained- far better than a continual state charge for something already owned."


As I have said a thousand times, if she wants to stay there, fine, she can roll up the tax to be repaid on death (which is another reason why it is vitally important that Inheritance Tax is scrapped as well). If we replaced as many taxes as possible with LVT, then people would have more disposable income during their working lives, so mathematically, they could easily build up a fund to pay the LVT in retirement in the same way as people build up a fund to pay for food or electricity or anything else in retirement.

But I shall hand over to...

Richard Allan: "I can't believe you would bring up the Old Widow Bogey argument in this context.

Churchill described that argument as having been repeated to "exhaustion" over 100 years ago!

But when we seek to rectify this system, to break down this unnatural and vicious circle, to interrupt this sequence of unsatisfactory reactions, what happens? We are not confronted with any great argument on behalf of the owner. Something else is put forward, and it is always put forward in these cases to shield the actual landowner or the actual capitalist from the logic of the argument or from the force of a Parliamentary movement.

Sometimes it is the widow. But that personality has been used to exhaustion. It would be sweating in the cruellest sense of the word, overtime of the grossest description, to bring the widow out again so soon. She must have a rest for a bit; so instead of the widow we have the market-gardener...
As Mark has explained plenty of times elsewhere, the jurisdictions that have LVT exempt widows for precisely this reason.

Ian B, struggling badly: "If your tax needs exemptions to cover specific classes of citizens, it's broken, simple as that. Any tax should self-adjust. The poor widow is just a placeholder for the citizen- any citizen- whose income does not suffice to pay the rentier state."

This is what we call 'one-sided economics'. The Georgists and the Single-Taxers are right- the state should scrap all taxes on income and production, collect as much as it can in LVT (however much or little that is), pay for the core functions of the state (about 5% of GDP) and dish out the rest as a Citizen's Dividend. Whatever the maths of this, by definition, those living in below-average houses would receive more in Citizen's Dividend than they pay in LVT, so they'd be quite happy with all this. So Ian B just looks at the tax but not what it will be spent on.

And the tax doesn't "need" exemptions - it's the Poor Old Lady who wants to stay in a big house who's demanding the exemption, so we offer her a kind of state-sponsored equity release scheme.

1 comments:

Lola said...

Anyway the house is just unspent or unspendable income. The opportunity cost of the capital locked up in the house is the reason that she is a poor widow. This is where good equity release schemes could work well in tandem with LVT. It would encourage the widow to access the income locked up in her property and wean herself of winter fuel payments and the like. It might also make her think about how best to transfer her wealth to her children and it would wean them off treating the hosue as a golden goose. Good. Why should the rest of us pay for their inheritance?