Monday, 23 April 2018

Killer Arguments Against LVT, Not (438)

I've not done one of these for a while as I hardly see any I haven't already done. There was a mildly original one from the comments at LibDem Voice last month.

He warms up with a couple of standard-fare KLNs...

William Fowler: Any tax not based on personal income or company revenue is going to be unfair, if you want to get at wealth an inheritance tax levy and sales tax on property/land/leases would surely do it.

1. Land Value Tax is not about "getting at wealth", it is about, er, taxing land values. that's why it's called "land value tax" and not "wealth tax". The clue is in the name.
2. We already have IHT, CGT and SDLT, which are pretty much at the top of their own Laffer Curves, and between them, they capture less than one-tenth of the annual rental value of UK land - in a very cumbersome and economically damaging fashion.

Council tax makes up a small part of the council’s income and if you are going to replace government money with local taxes then does this mean a massive increase in taxes for the home owner or is all the burden going to be on companies with business rates replaced by LDV. Neither of which will have a very nice outcome.

Ah, the glorious double- if not treble-think.

Local councils are "government" just as much as the central government; both raise taxes and spend money. But miraculously, he does a diagonal comparison; comparing "government money" (good) with "local taxes" (bad) rather than acknowledging what most LVT supporters want - lower taxes on incomes ("government money") and higher taxes on land values ("local taxes"). So there would would be a massive reduction in the former to offset the "massive increase" in the latter.

And clearly, if you replace the worst taxes (list above) with LVT, home owners who are still working will see net large reductions in their tax bills. The same goes for the total taxes paid by businesses and their commercial landlords (how they share the spoils remains to be seen).
... and then launches the Exocet of Home-Owner-Ism hypocrisy:

As Liberals, who believe in freedom of the individual, surely putting a huge burden on home owners, making them slave away at work forever or go on benefits to avoid it, would not produce much liberty?

As mentioned, working home-owners will be the group which would benefit most (insulated as they are from rent increases) if Council Tax, SDLT, VAT and NIC were replaced with LVT, that's just a mathematical fact. And clearly, for pensioners there would be a deferment option.

So presumably he is talking about the semi-retired people in fairly valuable homes who do not wish to contribute to society, neither by working nor by paying taxes.

So we could fire this back at him:

As Liberals, who believe in freedom of the individual, surely allowing the semi-retired in valuable homes to opt out of working and paying tax puts a huge burden on 'everybody else', making them slave away at work forever, as well as paying all the taxes to support the lifestyles of the self-same semi-retired, would not produce much liberty?


benj said...

If people honestly think taxes should be based on incomes, why not the prices we pay for goods and services?

As LVT is economically the same a rent, and its capitalisation into selling prices, the only difference is who collects. Therefore if LVT is unfair, so must rent and mortgage interest on land.

This isn't about getting at wealth anymore than abolishing slavery was. It's about people getting paid what they are owed, without which excessive inequality is baked in. Re distributive taxes on output are an unfair, inefficient way of mitigating this excessive inequality.

Assuming spending on services stays constant, the result of a LVT means that in aggregate,no one is better or worse off. However, the distributional effects transfers incomes back to those who currently pay a greater proportion of taxes, relative to the value of land they own from those whom the opposite is true. Given that, typical working households, whether they are homeowners or tenants, would be far better off. Not to mention that new homeowners in the future will benefit from lower house prices.

As usual, people knee-jerk at any mention of the word tax.

Mark Wadsworth said...

BJ, as you may remember, in a later comment he played the good old "I paid for my land out of taxed income" card, and was trounced by jock coats.

Graeme said...

Doesn't there need to be a proper debate about the dividing line between local and national taxation? The line shifted decisively in the late 1980s in favour of central government in order to stop "abusive" local authorities, but now we have councils who don't maintain roads etc while central government creates an ever growing civil service. Local tax, based on local land values, for local citizens. But please spend the money on roads, street lights, police patrols etc rather than educating Somalian women on feminist rights and circumcision

benj said...


Why should land rents only go to local people? Mayfair land rents going to Mayfair people, solves nothing.

LVT is a compensatory payment to those excluded from valuable land. As such we should all receive an equal share of land rent. Local government should get a per capita income on that basis to spend or rebate as their voters wish.

Mark Wadsworth said...

G, we had that debate and decided that national taxes, distributed equally and spent locally are best. "Local taxes" sound all lovely but are incredibly regressive.

Lola said...

And anyway retired people in big house under the MW plan will be allowed to roll up the LVT, n'est pas?

Mark Wadsworth said...

L, yes of course. All sensible LVTers say that.