Wednesday 30 August 2017

Killer Arguments Against LVT, Not (420)

From a thread on the YPP Facebook group:

Will Smithy: [Land Value Tax] was one bit of the manifesto i didn't hugely agree with, VAT i believe is a fairly progressive tax as the more you spend the more you pay. I was very interested in all the VAT ideas because thats a great way to transfer wealth. I've read some interesting articles proposing raising VAT to 40% and ridding all other tax's and they offer just as convincing an argument as yours...

Maths isn't his strong point, he appears to think that government spending adds up to 170% of government spending:

Old peoples pensions and those who require regular medical attention thats 80% of the governments budget gone, the remaining UBI would be such a tiny amount it wouldn't be useful... I would be interested to see your numbers, you must have cut something pretty big because 90% of Government spending wouldn't really change under UBI i.e. Schools, NHS, Defence Transport, Agriculture, Debt payments.

[He then debunks a claim which we never made]

I just cannot see LVT providing £750B a year, so i think other tax's will be necessary. [My VAT proposal] aims to put money back into peoples pockets which puts money back into the economy for people to spend on other business's so the aim is the similar even if it does embrace VAT.

Wealth inequality is an argument in favour of VAT and against LVT, apparently:

Many people will go through life not owning a house but still paying plenty of tax

Asks a dumb question:

Would you like to see LVT paid annually or on death? I've seen both suggested.

He doesn't like the answer and shows his lack of financial savvy:

I just don't understand how it could work done annually. I mean i own a house i'm renting out to pay of my mortgage before i move in, but at the moment i get £1,600 Rent and pay £1,700 mortgage each month, i don't know how i could pay a monthly LVT ontop. Especially if for any reason i wasn't employed for a month or so.

He doesn't understand tax incidence:

Would rents just rocket up 2x to cover this?

He decides they would, despite Mark Foster explaining tax incidence to him:

For many low income people doubling rent would be much more significant than removing their tax.

All i can see is articles talking about why its good not how it would apply.


I refer him to the KLN blog, he now goes full Homey on us:

Only just started reading it, but already you've upped my tax from around 3.5k a year to £10,0000. I can imagine later in the reading i will find I'm not worthy of owning land and should be forced to sell to somebody earning more.

If he only pays £3,500 a year tax (income tax, NIC, VAT, council tax) then his earnings can't be much more than £10,000 a year. How did he manage to persuade the bank to lend him well over half a million quid? Like all his sums, it doesn't add up.

I don't understand why rents wouldn't rise by the exact amount of lvt in any area. I cannot find any example of any country who have tried this. The housing stock doesn't increase and demand doesn't decrease, it would just hurt the poorest.

Progressive taxing has shielded the poorest from most of the tax burden but I'm there's nothing to protect them from rent rises. And the transition would see too many people declaring bankruptcy,

There would be no public benefit for poorer people to sell their homes to richer people.


Scott Grant and Mark Foster step in again, to no avail and are brushed aside, he gets rantier:

I believe rents are indeed elastic, people NEED to live in London, i pay 50% of my salary in rent i could pay more. Likewise i could and would just raise my rent to compensate the last money. Anybody in North London would be paying a tax of £40,000 - £60,000.00 a year... you would just case an insane crash.

Might as well call for just renationalising all property and redistributing it based on your wish's if your planning to bankrupt everybody with a mortgage. I am now firmly in the opinion this would be a terrible idea and it seems the rest of the world is with me because nobody is pursuing this policy.


I point out for the second or third time that LVT is a straight swap for VAT and NIC. If people can afford to pay VAT and NIC they it must be pretty obvious that most can afford to pay LVT instead.

He plucks another figure out of the air and then claims it's wrong:

People spend nowhere near 20% of their income on VAT, so thats a silly comment

He refuses to accept that the YPP proposal under discussion would retain income tax.

I was all for the idea of taxing wealth ownership instead of wealth creation but i would do it though big inheritance tax's. I don't believe it would be unfair to tax somebody's estate at 90%, but a 3% LVT a year could end up meaning you owe more than your assets and millionaire renting wouldn't be putting in a fair share.

If 50% of the country would be bankrupt by a country decision, then its the governments responsibility to make sure it doesn't happen. theres an easy argument that its not for the greater good.

I just don't understand how anybody with a mortgage wouldn't go bankrupt, I have a Tiny Tiny Tiny mortage and i would be bankrupt i can only assume that means anybody with a larger mortgage would too.

It would even mean out government would default on its debt because our 1.8Trillion debt wouldn't be secured by 10Trillion in property anymore.


(I can't make head or tail of this next musing, but include it for the LOLZ: i wonder how much extra money the government could make if they just stopped making it perfectly legal / acceptable to pass your house onto your kids entirely tax free as long as you gift it to them.

I step in again: Rents would go up as other taxes are cut. The LVT is no more dramatic than higher mortgage interest rates, which most people can afford out of the VAT and NIC they save.

Despite doubling the rent he charges his tenants to cover the LVT, he won't be able to afford the LVT.  That's like the missing homes conundrum. Apparently he earns so little that his VAT and NIC savings will be negligible, but once he's paid off the mortgage he will earn more and the savings will kick in:

Sure, once my mortgage is paid i would have no problem paying a LVT, its just why fuck everyone with a mortgage. Isn't there a better why to implement without having to fuck over one part of society... any implementation of LVT would hit anybody with a mortgage hardest.

Perhaps you can think of a way to mitigate this and then more people might come round to liking your idea... You will mainly be hurting those who have just come out of what you are describing. First time buyers not hitting people who benefitted from Skyrocketing land prices. (my parents home went up 1,200% in value from 1990 - 2015)


I try numbers yet again which he completely ignores:

Avg FTB couple, home value to income ratio = 4, times 3% LVT minus existing council tax = 11% more of income in tax.

NIC plus vat is about 30% of earnings = 30% less of income in tax.

Overall, net disposable income after tax up by >20% or so.

That is not hurting, that is a massively helping.


He ignores that completely of course.

7 comments:

ThomasBHall said...

This is not worthy of being called a KLN- it's just a load of incoherent rubbish. A decent KLV should at least give the average reader a moment of doubt!

Mark Wadsworth said...

TBH, it's a glorious melange of contradictions, inaccuracies and straw man arguments.

Bayard said...

There was an interesting article in the New Yorker recently saying that the activity of arguing evolved with the purpose of winning the argument, not being accurate or logical. You can see, with only a little thought, how the persuasive would do better in primitive society than those in command of the facts or possessed of the faculty of logical reasoning.

Bayard said...

Link, in case anyone is interested: http://www.newyorker.com/magazine/2017/02/27/why-facts-dont-change-our-minds

Physiocrat said...

VAT is one of the most useless taxes ever inflicted on people.
Here is why.

The government would lose little if any net revenue if the Chancellor just scrapped it.

Mark Wadsworth said...

B, yes, winning arguments is more about emotional/intellectual bullying, oversimplifying, exaggerating and cheating. Facts and logic have fuck all role to play. I usually lose arguments short term because I will not stoop to this crass behaviour.

Happily enough, every now and then somebody comes back to me days, weeks, months or even years later and says "Actually, you were right."

Mark Wadsworth said...

Phys, agreed on VAT.