Re that Guardian article again, another strategy that the Home-Owner-Ists like to adopt is taking completely extreme examples and contradicting themselves, so that it is difficult to know what you are arguing against, e.g.
Federal Express: Even physiocrat accepted there would be winners and losers. A highly paid public servant with a big final salary pension living in a flat will love it to bits.
James St George: There is no income [from owning a house] at all*. Example poor owner lets the property run down, it loses value, there is no income even from capital growth profits. Nor could you collect any accrued nasty lvt until people died!
Miraculously, in these discussions The Undeserving Rich always live in small flats and The Deserving Poor always live in large houses. As it happens, the value of people's houses is broadly proportional to their lifetime's earnings, so the chances are, The Ex-council Fat Cat lives in a mansion** and the retired street sweeper lives in a council flat, so the problem simply does not arise.
Epidavros: ...while a lot of land may be owned by very few people, it is mostly undeveloped or farm land - charge a tax on that and you hurt us all by either pushing up food prices (again), forcing land owners to find commercial uses for open countryside or causing land neglect.
Notwithstanding that there is little point taxing farm land (the total rental value of UK farm land is about 1% as much as the total rental value of the small part of the country that is developed); and notwithstanding that a tax on farm rental income can't possibly push up food prices (because food prices are a fixed quantity and rents are simply value of output minus production costs - the tax merely splits the rent between land owner and government), this particular idiot refuses to accept that LVT on farm land would have little impact and insists that either land would be put to more profitable use (hooray!) or that is would be abandoned completely (highly unlikely - in the 1970s, when investment income was taxed at approx. 100%, did rich people give their stocks and shares and houses away? I think not.)
What a bunch of tossers, frankly.
* To say that there is no income is f***wittery of the highest ordure - there are clearly financial benefits to owning a house (you don't have to pay rent) and a financial benefit may not be cash income, but an expense spared (rent) is as good as income, and people are prepared to pay large amounts of money for this privilege, i.e. those financial benefits have real value.
** Of course, part of my manifesto is that public sector pensions that have accrued before the transition continue to be subject to whatever income tax rates were in force when the pension accrued.
Even though the world went mad
2 hours ago
2 comments:
I was about to come here and ask an LVT related question, so I'm glad this post is up.
Is there a bad time to introduce an LVT? One of the benefits of the tax is that it would restrain property bubbles, but would introducing it tomorrow whilst house prices are teetering on the brink of collapse, not risk sending people into negative equity?
Apologies if this is one of the previous 86 arguments against an LVT that you've already raised.
Ross, the best time is of course when prices are very low (i.e. early to mid 1990s) but there is never a bad time.
Fact is, cutting income tax, VAT etc by £1 boosts economy by £1.50, and the bulk of that £1.50 goes straight back into higher rents, so if we cut income tax, VAT by £1 and increased LVT by £1, the impact on buying/selling prices would be negligible (might go up, might go down).
As to negative equity, it is not a big issue unless you want to move. In which case, the government can rejig bankruptcy laws so that the banks take half the loss on the chin and the other half is deducted from that person's future Citizen's Income or something.
For the priced out generation lower prices would be a good thing, the older Home-Owner-ists will be spitting feathers, so lower prices are not a cost to society as a whole (and probably a benefit).
I've crunched the numbers, it is all perfectly do-able.
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