Killer Arguments Against LVT, Not (369)

Benj did his best with this twat over at the ASI, but here goes:

...now that we’re on the subject, I don’t agree with the claim that [LVT] is non-distortionary. It implies that storing your stuff in a stack 100 m high and 1 metre square horizontally is economically a more efficient way to do business than storing it in a box 5x5x4 metres. Why?

Nobody said anything of the sort. Out in most industrial estates in the real world, buildings are usually only one or two storeys high because they are cheaper to build and more convenient to use. Because land out there is cheap, so it doesn't matter if you use a lot of it. If you (for some bizarre reason) wanted to have a warehouse in central London where land is expensive, it is worthwhile building up into the sky and digging down into the ground. The extra construction and running  costs are, hopefully, a less than the extra you pay for the land.

An LVT pushes the economy away from business applications that require a lot of land and towards those applications that require none, compared to the situation that would arise if there were no taxes.

That shows straight away that he knows fuck all about land values. Farmers would pay little or nothing for the three-quarters of land which is farmed, because farm land has a very low rental value (per acre). Manufacturers at the edge of town who require large amounts of space would also pay relatively little because land at the edge of town is relatively cheap. High street retailers and offices, who require little actual surface area, will be in the centre of town, where land is very expensive.

Ultimately, if ramped up high enough (always a good trick if you want to see what’s wrong with an idea)...

But then that's not Land Value Tax. We might as well argue against income tax on the basis that the government could ramp it up to over 100%.

... it would result in most land being deemed worthless and left unused (a land value tax presumably collects no tax on land that has no value) as all those applications that cannot make enough per acre to pay the tax go out of business, and those that can expand only up to the point where they can meet demand at the higher price.

LVT is just like renting from the government, or having an interest-only, non-repayable, non-recourse mortgage on your land. If the government were so stupid as to choke off its main source of income by demanding above-market rents or 1,000% interest, well, that problem is not inherent in LVT. And clearly he does not understand the rent-setting process or the difference between rental values and selling prices.

And if you avoid that problem...

Which is only a problem in this idiot's fevered imagination.

... by taxing it all at a flat rate, and insisting that every square foot of land must be owned by somebody, then you’ll likely find the price of land going negative, with people paying you to take it off their hands.

That is the stupidest idea ever, hardly a surprise coming from this person.

The difference in rental values between urban/developed land and farmland is about 1,000:1 and the difference between the most desirable and most marginal urban/developed land/locations is also about 1,000:1.