Killer Arguments Against LVT, Not (366)

From The Scotsman:

That the council tax system badly needs to be overhauled or even replaced is not in doubt... The most progressive option is probably land value tax, where the rate is based on the market value of the land alone.

Along comes a Home-Owner-Ist in the comments with a tried and tested variant of the Poor Widow Bogey:

Rubbish - how on earth is it "progressive" to residents on the legacy value of land. What's progressive about taxing the poor as a punishment for living on a high value inner city site that they can't cash in?

1. They can cash it in. They can sell up. An unearned, windfall gain is an unearned, windfall gain, whether it accrues to a pauper or a millionaire.

2. LVT is a tax on consumption, a user charge, a charge for services rendered by society. You might as well argue that taxes on fags or booze are regressive because poor drinkers and smokers pay more as a percentage of their income than wealthy drinkers and smokers. Which is quite true, they do, but those taxes are - in political terms - sin taxes and so acceptable.

So if 'poor' people want to occupy valuable land, then why shouldn't they pay the same as people who can afford it, the same as poor smokers paying the same duty on their booze as wealthy drinkers?

3. Most 'poor' people don't own valuable land. The richest ten per cent own about half of all land (in Scotland at least) and the bottom fifty per cent own no land whatsoever (i.e. tenants and people whose mortgage debts exceed the selling value of the land under their homes). Most valuable land is owned by people who could easily afford the LVT. That there will be some collateral damage is inevitable.

4. It is difficult arguing with this people who insist that LVT would be regressive. They never say quite what they mean by that. Regressive to incomes? To house prices? To what? And even if LVT in itself were slightly regressive, it wouldn't be as regressive as a Poll Tax (which many Homeys think is a splendid tax) or Council Tax; and the top ten per cent would end up paying close to half of it.

5. Ignoring changes in behaviour, just about ALL taxes apart from Poll Taxes and sin taxes reduce overall inequality by levelling people at the top downwards; and if the money is spent equitably, this levels people at the bottom up. Bugger the clever maths and statistics bit (which is completely above the Homeys heads anyway), less inequality must be "progressive" in the political sense.

6. However, because of changes in behaviour i.e. Laffer effects, some taxes increase inequality. Clearly, the unemployed and low earners don't pay much in VAT and National Insurance but many of them are ONLY unemployed because of those two taxes choking the economy and reducing employment.

7. Land ownership is very concentrated, much more so than incomes. So taxing land reduces inequality much more than taxing incomes, and unlike taxes on income/output (like VAT and NIC), LVT doesn't then choke off the economy and create unemployment.

8. LVT is not a standalone thing. The receipts could be used to fund higher welfare payments (i.e. levelling everybody up with a Citizen's Income) or to reduce regressive/damaging taxes - both of which reduce inequality even further.

Therefore, taxing land values is "progressive" in the political sense and "progressive" in the sense that it leads to "economic progress".

How the fuck anybody can object to LVT on the basis it is "regressive" is a mystery to me.