As promised ...
In response to Patrick, who commented: "You make great play of funding the built infrastructure [with LVT], but why on earth should I be paying for it if I don't use it?"
I said this: "Why on earth should you be entitled to make a tax-free profit from selling a property that has gone up in value because somebody else has been forced to pay for the infrastructure?"
Patrick countered thusly: "It's hardly my fault if other people do stuff that I have no interest in that affects the market, is it? We're back to a collectivist argument, where the individual is penalised for the actions of the collective (state). Doesn't that rankle with you just a tad?"
Me again: "All excellent stuff, raw material for Part 12 [bumped back to part 14, obviously] , keep it coming. Here's my first draft response:
1. When a first time buyer manages to scrape together his deposit and take on a mortgage, he is an 'individual', yes?
2. If property prices are kept artificially high via restrictions imposed by The State on behalf of existing property-owners, he is being penalised, yes?
3. So in this case, the individual (the first time buyer) is being penalised by the actions of the collective (the state acting on behalf of existing property owners), yes?
4. So yes, it does rankle with me, and rather more than a tad. So are you with me on LVT or not?
Patrick never answered points 1 to 3, let's put it that way.
The Movies Are Lying Again...
24 minutes ago
9 comments:
#15 That LVT reduces the security of those who have got theirs, in that they already own their property. By doing so it greatly improves social mobility & has all the economic advantages you say which is why I favour it.
Still I can understand that security is a human need & understand why people find the change disconcerting.
I think the answer to that is that people make their decisions based on the system we have now, not one that we might have in the future. It is unfair in my view to propose that the whole basis of the tax system is removed and replaced with a totally different one that will undoubtedly put many people at a disadvantage through no fault of their own. Changing tax rates is one thing, changing what is taxed entirely is a different matter.
Its like the old Irish joke, how do you get to Limerick; well, I would start from here! Given the current political, tax and planning systems, and the history involved, there is no way in hell that any govt is ever going to implement such a scheme, not least because it would involve a massive reduction in State power and tax revenue. If you were designing a tax system from new, for a new country, then LVT would make sense. But we aren't, so it doesn't (for us).
The current system penalises people, and so it's ok if LVT penalises people.
Uh?
Can't see you for dust, Mark.
I don't know. I seem to be seeing people arguing that there are no externalities and who haven't heard about pin factories and pencils. And I just wonder... why they're trying to talk about economics.
Sobers, the logical consequence of you point is that the only truly fair approach for a government to take would be to keep everything exactly as it is in perpetuity, because that's what people have made their decisions based on, irrespective of how unjust or inefficient it may be. The taxes we face, the rates we pay them at and the laws we are bound by would remain unchanged for ever more.
That kind of extreme conservative approach would have the benefit of predictability, but I don't think predictability is such a major benefit that it should trump everything else.
@Paul Lockett: I'm did not say things should always stay exactly the same, just that we have had certain ways of taxing people in this country for many years. Income tax dates back to the Napoleonic Wars. Sales taxes even futher, though VAT only came back in the early 70s. We have a form of mild LVT in council tax and business rates.
Given that people grow up, start careers, families and businesses based on the basic premise that the major forms of taxation will be on income, expenditure and council tax, I think it is unfair to suddenly say that all those will be abolished and solely replaced with a tax on land. It is too great a jump to take.
I think the State has a moral duty to provide a stable tax framework for people to arrange their affairs around. Anything else smacks of arbitrary State confiscation of peoples assets. Taxation is too fundamental to how people live their lives to keep chopping and changing it every few years. It is always better to minimise the number of losers to any change to the tax system because they will be more vocal than the winners. As in the poll tax. And if they are large enough in number they will effect a change via the ballot box, which will probably be unfair to a whole new section of society. And the cycle continues. Better not to stir up the hive in the first place.
I would also say that the idea that its OK for some people to suffer if LVT were introduced, because its for 'the greater good', strikes me as rather akin to totalitarianism, or even communism.
You would get round a lot of these problems if you allowed land prices to bottom out and then had a sentinel tax that only kicked in when values started to rise again.People would start off from a low land value base and if they played their cards right i.e did not whack on an arbitary few thousand pounds onto the asking price of their houses,could end up not paying a vast amount of money-once the concept of house price inflation being a bad thing took hold.
I should say that not all land taxers (they are not a homogenous group) think the same: a lot want to take a very high percentage of land value.
I would n't care if Sentinel LVT was n't used much as long as people kept land values down.
sobers, there is a reasonable aspect to your comment, in that sudden drastic changes to the tax system can be problematic, which is why I would support the idea of LVT being introduced gradually and other taxes phased out gradually.
However, I think it's an excessive leap to try to go from that to the extreme conservative position that anything other than cosmetic change is dangerous and should be resisted.
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