What makes it difficult to argue with Home-Owner-Ists is that they are capable of believing things which are not only untrue but which completely contradict each other. So as soon as you've rebutted one particular argument, they then do an about-turn and start on a line of argument based on yet another false premise which would in itself cancel out the first premise.
Let's take a group of three KLN's to illustrate how they do this:
Premise One
"Our homes are our main asset and our store of wealth. If you tax these you are stealing our wealth and we are left with nothing"
Well, factually completely untrue. Your main asset, the main asset of any society, is the skill and effort which you will expend over your working life. So each person starts off with between thirty and fifty years productive work 'in the bank', and a married couple has between sixty and a hundred years' worth. If they are lucky, they'll end up with a house and land worth maybe five year's gross income.
(Yes, I accept that people use up their labour 'bank' over their lives, but realistically, what are the most valuable things for retired people? Their state pensions, free health care and other services. Their memories, friends, family, books, souvenirs, non-land investments. Pensioners who live in subsidised rent social housing are not materially worse off than owner-occupiers.)
And only half the value of that home, the land/location element. would be liable to LVT. So if you're lucky you'll end up with land/location worth 2.5 years' earnings. And if some people end up owning more than 2.5 years' worth, then other people will have to make do with less than that or nothing at all in many cases. It is quite pathetic if in a modern and advanced economy such as ours, that people's most prized possession is a few hundred square yards of earth.
Can it possibly be the case that people derive more income (or pleasure) from those few hundred yards of earth than from all the income they can generate with their own efforts, which is not a zero-sum game, when people work they benefit everybody else as well? And as to 'stealing', why is income tax or VAT not stealing and a far more brutal form of theft anyway? People working and producing is a good thing and ought not be punished; the land is just there whether people work or not. So on a practical level, taxing land is far less bad for the economy (it being a desirable but unproductive asset) than taxing incomes and output.
Finally, even if this premise were true, and land really is the most important and biggest asset, then surely that's an argument in favour of taxing it? Consider: the average motorist buys a 1,000 litres of petrol a year, paying 80p in tax (VAT + duty) for each litre. That's a good way of raising £40 billion a year. An average motorist also replaces his tyres (say) every fifteen years. So to raise £40 billion by taxing tyres instead would mean a tax of £12,000 on each set of tyres (as a result of which, people would be discouraged from changing tyres, so it's bad for safety etc). So the general rule is: better to tax the big things at a low rate than the little things at a high rate.
Premise Two
The Homeys then do their usual about-turn:
"The UK is not an agricultural or land based economy, and land is not so important as a factor of production. I don't understand why you are so obsessed with taxing one kind of property, land is no different to any other kind of property and shouldn't be singled out."
Sure, farming and agriculture is only a few per cent of our economy and the rental value of all the farmland put together is a very small percentage of the rental value of urban land, we can simply assume that farm land is exempt from LVT and focus on urban land.
All the other activities which we do - the high value stuff like services, manufacturing, housing - require land or more importantly, location. So shops on the high street are not farmers, they do not use the soil as such, but they do need the location, and are in fact perfectly happy to pay more for the good locations in the same way as they will pay more for better goods because they can sell them for more.
And let's remind ourselves that the Home-Owner-ist elite (bankers and politicians) persuaded us that we could base our entire economy on speculating in and lending on every rising house prices! For some reason, they want the whole economy to be based on land values, or at least for people to believe that it is (another contradictory Home-Owner-Ist premise). It's me saying the opposite - I want the economy to be based on production and output so let's un-tax them. For sure, land rental values will always be there, but we can hoover those up via the tax system, spend what little we need to spend on government and dish out the rest as a Citizen's Income.
The claim that "land is not different" is not only idiotic but irrelevant:
a) Land is completely different to anything that is produced by a group of people applying their skills and labour (and accumulated skills and labour, in other words intellectual property and capital) in order to produce something. Services are intangible, manufactured products are tangible, but in either case they need skill and labour to produce. The same principles apply to both - what about a hair cut? Is that an intangible service, or is the haircut a manufactured good? A new car is a manufacture, but you need to pay to have it serviced. Why distinguish between the work the people do in the factory to make the car and the work the mechanic does to keep it running? "Land ownership" on the other hand is merely an agreement between the land "owner" and "everybody else" that he will have exclusive possession to a certain area of pre-existing land, at the expense of "everybody else", and this agreement is respected by most people and enforced with gusto by the legal system.
b) And if land is the same as anything else and it's just another factor of production which people are prepared to pay for, why should we give it a hallowed tax status? At the very least, notional income from owner-occupier housing should be included in the tax base (i.e. via Schedule A) which means that the overall tax rate could be dropped quite significantly. If a tenant or purchaser is prepared to pay for the protection the legal system gives, why should outright owners be exempt?
Premise Three
Then it's about turn time yet again:
"If we taxed land values, then businesses which use a lot of land would all go bankrupt, it would be a huge distortion in the economy"
Hey ho, I thought that they said that land was only a small part of the economy?
c) We know that agriculture can survive paying LVT, because a lot of farmers are tenant farmers. The LVT would come out of the rent the landlord collects anyway (it cannot be passed on to the tenant, by definition), so they'd do just fine. Most business start off as tenants, so they are paying a full rent on everything, not just on the location value element, and they seem to survive. Some businesses rent from Crown Estates, so the entire rent goes to the government (either as headline rent or as Business Rates) and they seem to manage.
d) Running a business is a voluntary thing, you just do your sums and work out how much you can pay in rent. Being a landlord is a voluntary things as well, and if you have to pay the LVT whether you have tenants or not, then you will have to adjust your rents to a level where as much space as possible is let out. And if nearly 100% of available premises are being rented out and used by those who run their business best - i.e. in such a way as to be able to pay the most rent, how is that bad for the economy?
e) Finally there is the simple fact that at present, most taxes are raised from businesses - i.e. from employees and owners and the simple fact that out of about 2.4 million acres of privately-occupied developed land in the UK, only about one-eighth is used for business purposes, the rest is residential. So with full-on LVT, only about an eighth of tax revenues would be paid by users of commercial land and buildings, that's an 80% or 90% reduction in the 'taxes' which businesses pay (even taking the extreme view that LVT is a tax in the first place, and not just rent).
f) So some businesses would be a bit better off, some would be a lot better off and some would be enormously better off. Land prices would fall but share prices would rocket. No business anywhere would pay more than now, unless it is a supremely badly run owner-occupier business, and if they fall by the wayside to be replaced by better run tenants who produce more and employ more people, that's called creative destruction and is a win-win.
Huw Edwards, a lucky man in many respects
2 hours ago
11 comments:
"as soon as you've rebutted one particular argument, they then do an about-turn and start on a line of argument based on yet another false premise which would in itself cancel out the first premise."
Yes, but you've just demonstrated that the first premise was false, ergo the second premise, which cancels out the first, false premise, is more likely to be true. You've just got to try and keep up!
B, not necessarily.
Imagine a perp trying to invent an alibi. He tells the cops "It can't have been me, because I was in the pub when the murder is alleged to have taken place".
The police then interview everybody who was in the pub on that evening, looks at CCTV etc and prove that he wasn't in the pub.*
"Ah" says the perp "Sorry, bit of a mix up, actually I was in Magalufe on holiday"
Then the police check his bank statements, passenger lists, records from passport control etc and prove that he can't possibly have been out of the country at the time.
"Silly me," says the perp "Actually i was in hospital in a coma [etc]"
The fact that none of his claims are true does not stop them cancelling each other out.
* Alternatively, the police might not bother checking the veracity of his claim and just say to him "OK, you say you were in the pub, that's you nicked because that's where the murder happened." then the perp switches to the Magaluf story and so on.
Some businesses rent from Crown Estates, so the entire rent goes to the government
Would the government pay LVT to itself on land that it owns?
It is quite pathetic if in a modern and advanced economy such as ours, that people's most prized possession is a few hundred square yards of earth.
This is absolutely true. Imagine someone's funeral.. "he went to the same office every day for 50 years and did nothing else with his life except pay off his mortgage, and he died penniless but at least he owned his million pound house(of which 40% is promptly taken away by HMRC)"
Anon @20:26, the rent that Crown Estates charge is partly ground rent and partly building rent. Basically it doesn't really matter whether HMG pays LVT on it or not, since it all ends up in Government coffers anyway. However for the purposes of calculating Citizen's Income, the taxman would only count the ground rent portion as LVT.
Anon: "Would the government pay LVT to itself on land that it owns?"
Yes of course.
They do this now, actually - included in government income is the rental value of govt owned buildings, and included in the expenditure of each department is the nominal rent it is paying.
For sure, this is largely a book keeping entry because no money changes hands, but it would be even better if it did. Then every department and every local council will be incentivised to minimise the space it uses and/or maximise the income it gets from land under its control.
It's the same as a local council department having to buy postage stamps from the govt owned Royal Mail rather than getting them for free. Things run much better if everybody has to recognise the full cost of what they do.
D, Crown Estates belongs to the government i.e. to the whole population, so the rent it collects goes into the general pot. Even if they split the rent into buildings rent and ground rent, the buildings rent still belongs to the government i.e. to the whole population.
"sixty and a hundred years' worth. If they are lucky, they'll end up with a house and land worth maybe five year's gross income."
So only 5/60ths of their productive capacity is needed to supply them with housing. Just goes to show how cheap houses are doesn't it.
W42, if we just look at the physical house and assume its price had increased in line with cars over the last 50 years, the house would cost something like 1/60 or 2/60 tops.
So are you of the view that our houses are our main asset or not? And why is this an argument for taxing incomes and not the rental value of land?
"B, not necessarily."
Indeed. Sadly there is no emoticon for tongue-in-cheek.
"An average motorist also replaces his tyres (say) every fifteen years."
!!! Every 15 months surely?
Quite right. People who say land is no longer important are conceding your point.
That the more power to produce wealth, the more intense the demand for land becomes. Everywhere actually.
The margin for its use moves out.
Its OK they have not thought about it yet. Hopefully one day they will
TS, i dunno. I've never owned a car that long.
RS, the point is that OT1H they say "land is our biggest and most important asset" and OTOH they say "Land is not important to the economy"*. It's both bollocks, but at least if they could stick to one premise, we could defeat them in argument. But they hate losing an argument, however wrong they are, so once they realise they are on a sticky wicket five minutes later, they just come up with an equally invalid premise and we start all over again.
* Compare: is "fresh air" important to our economy? Yes of course, without it we'd all suffocate. But because few people think about it (Clear Air Acts aside) and because nobody can monopolise it and nobody has to pay for it, there is little need to account for it in terms of income or expenditure, no bank loans are secured on fresh air, nobody speculates in it etc.
"Land" the natural resource is just as important as "fresh air". But we only have to account for it as income, asset, expenditure because it has been monopolised and privatised.
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