Saturday, February 14, 2009

A thought on LVT

I've just had a thought about Land Value Tax (LVT)—it offers governments no incentive to support employment or wealth generation.

When most of the state's income is generated from a percentage tax on employment—as it currently is through people working (income tax, NICs) and thus having money to spend (VAT, stamp duty, vehicle duty, etc.)—that same state has a financial interest in ensuring that as many people as possible are employed, and that wages are rising faster than inflation.

With something like Land Value Tax (most especially if that tax is, as those such as Mark Wadsworth would advocate, the only tax), the state has no such incentive; they can keep on raising the value of the land, and thus the amount of tax that they collect, with almost no disincentive.

If people cannot pay, the state can dock the money from their wages, or fine them. If they still cannot pay, the state can put those people in prison and confiscate their property and sell it on to someone who can pay (right now anyway, until the next rise).

Wealth creation becomes an irrelevance to the government; in fact, the state has almost unlimited tax raising power because everyone has to live somewhere. As such, they can keep on raising the tax and there will be no clamouring about unemployment figures.

Actually, I don't know why NuLabour hasn't done it already...

26 comments:

Blue said...

Good point!

The other thing about it is that it forces people to move to a cheaper area once their income falls even if they have finished paying for the home itself. That doesn't sound right to me.

Guthrum said...

Don't give them ideas !

Mark Wadsworth said...

You're making two big mistakes:

1. The government does not 'support employment or wealth creation'. These happen all by themselves and are most likely to happen in the absence of taxes on production, investment and income.

2. There is a natural upper limit to the amount of tax that can be raised from LVT. If the amount of tax is set as a percentage of land values (i.e. property values in excess of bricks and mortar) then the amount is decided on a voluntary basis by people who buy homes in that area. if the tax were 'too high' then by definition house prices would drop to adjust.

If we ignore those two misconceptions and focus on the truth of the matter, the best way in which society in general (which you might call 'the state') can support wealth creation and overall happiness is to improve infrastructure, have better schools, cut crime and so on - all things which make an area more desirable, thus make people more willing to pay more for houses.

If you look at Monte Carlo, the main reason why property prices are so high is because income taxes are so low - cutting income tax is in itself something that boosts land values.

Therefore, land values are a function of people's net incomes. So the tax collector still has a strong interest in boosting net incomes - except that while taxes on income and production tend to depress economic activity, LVT has no such effect, because simply owning land is not an activity and requires no special effort or special skill.

@ Blue, as a pragmatarian, I can live with the idea that people with high incomes go on the nicest holidays, drive the nicest cars and send their kids to the best schools. If they lose their jobs, obviously, that puts an end to it. So why is it so terrible if people with the highest income live in the nicest houses as well, and pay some purely voluntary taxes into the bargain?

richard allan said...

How the hell can the government "keep raising the value of the land" without "support[ing] employment or wealth generation"? If people aren't generating wealth, then how are they paying these high land prices? Good grief.

Devil's Kitchen said...

Richard,

Council Tax has risen by nearly 100% in the last ten years. Have people's wages risen by 100%? No.

How do people continue to pay? By sacrificing everything else.

In fact, Council Tax -- a tax that has risen out of all proportion to earnings and which everyone has to pay because everyone has to live somewhere -- is an excellent example of what I am talking about.

DK

Dominic Allkins said...

I'm with Guthrum on this one - don't give them ideas.

I'm not sure whether the one-eyed Scottish idiot reads DK, but I'm sure that there must be one the remaining stupid gullible fuckers that still believes in Cyclops bashing away at the keyboard like a chimpanzee right now drafting a totally incoherent policy. That seems to be the form this far.

Mark Wadsworth said...

"Council Tax has risen by nearly 100% in the last ten years. Have people's wages risen by 100%? No. How do people continue to pay? By sacrificing everything else."

OK, Council Tax has risen (on average) by £1,000 per household per annum. Total tax burden has risen by over £10,000 per annum.

So are you trying to say that people can easily pay that extra £9,000, but they 'sacrifice everything else' to pay the extra £1,000?

In any event, house prices trebled over the last decade - that's the comparison you should be making. As something very vaguely akin to LVT, Council Tax has actually been falling as a % while other far more damaging taxes have been rising disproportionately.

Devil's Kitchen said...

Mark,

"So are you trying to say that people can easily pay that extra £9,000, but they 'sacrifice everything else' to pay the extra £1,000?"

The phrase that I used was slight hyperbole, but do remind me -- at what point did I say that two wrongs make a right?

Have other taxes risen by 100%? No. Thank you.

"In any event, house prices trebled over the last decade - that's the comparison you should be making. As something very vaguely akin to LVT, Council Tax has actually been falling as a %..."

Right, and yet so wrong.

Council Tax may have been falling as a proportion of the price of a house, but it has not been falling as a proportion of income.

And for heaven's sake, Mark, when will you learn to make the distinction between capital and income? I have pointed out so many, many times that they are not the same thing.

DK

Mark Wadsworth said...

DK, "when will you learn to make the distinction between capital and income?"

Capital is the net present value of future income and/or the net present value of the rent you won't have to pay, or alternatively, capital is that bit of your income you can save up. They are quite closely correlated. I have always known that distinction.

What you have to learn is that there is a difference between 'productive capital' (your education, skills, the goodwill in a business, plant and machinery and so on) and the bare value of a plot of land, that has no productive capacity whatsoever - it's only value is its relative scarcity value.

1. Imagine, that all taxes were completely localised, and each London Borough either had LVT or flat income tax. As a tenant, where would you choose to live?

a) If you move to an LVT area, you just pay for the value of where you live, which includes the value of whatever it is that the state does that adds value, like police, street lighting, road maintenance, refuse collection - the LVT is borne by the landlord, and you pay no income tax.

b) If you move to an income tax area, you pay for the COST of police, street lighting, road maintenance, refuse collection in income tax to the council, but then you pay again for the VALUE of these things to your landlord. Is that not a double burden? So how is a tenant supposed to build up capital to meet the deposit to buy a house? he is running to stand still.

2. LVT is, from a first time buyer's point of view, an entirely voluntary tax. He can choose to stay renting, in which case his landlord bears the tax. Or he can find out what the bricks and mortar value of a flat is, say about £50,000 for where you live, and if he pays £60,000, then the land value is £10,000 and the LVT is 5% thereof, say £500.

If people are happy to pay ludicrous prices like £150,000 for a flat in Brixton, then they are also signing up to pay £5,000 in LVT. But we know that the latter wouldn't happen, so property prices would stabilise at somewhere slightly above bricks and mortar cost and property prices would be low and stable.

From which follows:

c) Property prices would be low and stable, so we wouldn't have asset price bubbles and credit bubbles, there would be much less of the boom/bust/recession cycle.

d) If first time buyers can afford the tax and are happy to pay the tax, then existing owners, with higher incomes and smaller mortgages, where Mrs doesn't have to take a couple of years off work can also afford to pay it. Unless you want to argue that an area can somehow be more attractive to FTB's than it is to existing home-owners - and if they think the bill is too high, they can bank their capital gains and move elsewhere, thus pushing prices down again for those happy to stay in the area.

"Have other taxes risen by 100%"

Well, government spending has just about doubled sine 1997, and seeing as all spending must come out of present or future taxes, yes, I think they have doubled. You are still making a false comparison. What happens if the price of matches doubles and the price of food goes up 1%? Your annual weekly shopping bill goes up by 1.000001% or something.

Roger Thornhill said...

Mark,

1.a It also includes all the value that you and your neighbours do to make the place better. And, btw, in many areas this is MASSIVE. How your neighbours behave, what they have done or are doing to their property has an impact way over the roads and street lighting "provided" by the State. And do not try and expect me to believe that the State will not cash in on that unearned income.

b. Double Burden? I thought you kept banging on about Ricardo. According to that doctrine income tax in an area WILL depress rental values all other things being equal, for it will be factored into the total valve/cost of residence. One way or the other, Mark.

c. We will have a disaster for those with property who will be dispossessed. I suspect lurkers in the LVT sphere lick their lips at the prospect, frankly.

d. What capital gains? I only see the erosion of value just as happens when a property is leasehold with high service charges. LVT is defacto enforced retrospective leaseholding with a ramp on the ground rent resulting in the lease itself becoming almost worthless.

Anonymous said...

Skimming around the edges.

Tax should only exist to pay for those services that by defintion need to exist for society as a whole, police, firemen, defence and the like. Everything else is not 'investment' it is theft straight from our pockets.

I'd say about 10% of total economic output is a fair burden. It is currently getting on it's way to 50%.

Kill them, and then hang their bodies on lampposts on every motorway. Not just the 646 but every fucking politician in the country.

Mark Wadsworth said...

Roger... I find it helpful to look at logic and facts first, before coming to decisions ...

"1.a It also includes all the value that you and your neighbours do to make the place better."

I bought my house in 1998 for £90,000 and sold it ten years later for £400,000. How much of that is down to my personal efforts? Pretty much bugger all. And even if it were down to my neighbours' efforts, why is it OK for me to cash in on that?

"c. We will have a disaster for those with property who will be dispossessed. I suspect lurkers in the LVT sphere lick their lips at the prospect, frankly."

Nobody will be 'dispossessed' - if LVT were a straight swap for Council Tax, Stamp Duty Land Tax, Inheritance Tax, Business Rates etc, there would be as many winners as losers, by definition.

And isn't income tax a way of 'dispossessing' people of their income? What about people with mortgages or tenants - if they lose their jobs then they lose their homes as well? Why are home-owners put on a pedestal? Why should they be protected from the ill winds?

Home-owners who don't like the sound of it can opt to continue paying Council Tax & Inheritance Tax and SDLT when they sell. LVT would only apply to the next person who buys any property, thus making it an entirely voluntary tax - they can stay renting if they like. And pensioners who 'opt in' would be allowed to roll up unpaid tax. Why is it acceptable to expect pensioners to live off the income from their savings or use up the capital via annuities, but not to live off the tax-free, unearned capital that they have accumulated in the value of their homes?

FFS, there are far worse taxes - how about getting rid of VAT (which costs the average household £3,000 a year); doubling the personal allowance (saving the average household another £1,500) and scrapping higher rate tax (that would save people in million pound houses £10,000 a year) etc etc.

It puzzles me that there so many in LPUK are actually Daily Mail readers who think that the entire purpose of the economy is to feather-bed land-owners, landlords and owner-occupiers, and to hell with the productive economy.
--------
Anyway, given how dumb people are, and the fact that the Daily Mail appears to dictate not only drugs policy but tax policy in this country, I have little option but to wait until the next bottom of the market and do exactly the same as I did last time, buy myself a house and a few investment properties, gear up a bit and then sell out a decade later having made a 1,000 % profit on the deal.

I mean, I try and educate people, but they won't listen. The only way to teach them is by taking their money and laughing at them.

richard allan said...

I mean, I try and educate people, but they won't listen. The only way to teach them is by taking their money and laughing at them.

Amen to that. I know that I should just stop getting calluses on my fingers and, in the event that the landlords' party gains power, buy land at the bottom of the market and profit (after all, it's not like I don't already have an interest in some quite nice land, and plenty of capacity for credit financing of plenty more). The difference is that I have a shred of intellectual integrity and would prefer a "good" society rather than one in which I would personally prosper. (As would Mark, I'm sure).

Council Tax has risen by nearly 100% in the last ten years. Have people's wages risen by 100%? No.

Mark already covered this with: "Well, government spending has just about doubled sine 1997, and seeing as all spending must come out of present or future taxes, yes, I think they have doubled. You are still making a false comparison. What happens if the price of matches doubles and the price of food goes up 1%? Your annual weekly shopping bill goes up by 1.000001% or something."

Still, I think this post is progress. By stating that:

"Wealth creation becomes an irrelevance to the government; in fact, the state has almost unlimited tax raising power because everyone has to live somewhere."

DK is implicitly admitting that "wealth creation is an irrelevance to landlords; in fact, landlords have almost unlimited rent raising power because everyone has to live somewhere." Which is just a few short steps away from admitting that landlords are entirely parasitical on the productive economy, and that under a "royal libertarian" administration wages would be nailed to the floor. And don't come back with the canard about landlords "competing" with each other, because that implies LVT would be fine as long as it was levied on a council-level as councils would compete with each other.

Roger Thornhill said...

Roger... I find it helpful to look at logic and facts first, before coming to decisions ...

Cattiness will make you look a fool, Mark. And if you suggest looking at logic, one could ask why do you expect other people to do what you have yet to do yourself?


I bought my house in 1998 for £90,000 and sold it ten years later for £400,000. How much of that is down to my personal efforts? Pretty much bugger all. And even if it were down to my neighbours' efforts, why is it OK for me to cash in on that?

AND? What kind of logic is that? "My Ford Focus did not break down, so your warranty claim is not valid". Are you trying to deny that the value of a 2 bed terrace has NOTHING to do with the state of repair or behaviour of the neighbours? Why was Notting Hill a dump one decade and an expensive enclave the next? If you had moved into Notting Hill...ok, had *I* moved in when I wanted to I would have made a FORTUNE on the regeneration paid for, mind, by individuals doing up houses and returning them to their former glory. Diid the State support or pay for that improvement in value? Did it HECK. If anything state legislation made the place a haven for slum landlords. The State destroyed the value so why should it gain?


Nobody will be 'dispossessed' - if LVT were a straight swap for Council Tax, Stamp Duty Land Tax, Inheritance Tax, Business Rates etc, there would be as many winners as losers, by definition.

You have absolutely no way to prove that in the slightest. Many many LVT promoters are not so sandboxed as you, Mark. I see no automatic mechanism for restraint on LVT. Land held for living but not "productive" enough is at risk of ending up in the hands of the big developers who are the only ones with the resources to convert it. Nice. We have enough of a problem with farmland being rezoned and only developed by the incumbents and not individuals due to barriers to entry without you dreaming up more/replacements.


And isn't income tax a way of 'dispossessing' people of their income? What about people with mortgages or tenants - if they lose their jobs then they lose their homes as well? Why are home-owners put on a pedestal? Why should they be protected from the ill winds?

1. Income Tax should be abolished. Two wrongs don't make a right, anyway.
2. If someone loses their job under LVT what then, eh? Same thing. No point made.
3. Home owners are not put on a pedestal, all I don't want to see is them thrown down a well.
4. What "ill winds" do you think I am in some way suggesting?


Home-owners who don't like the sound of it can opt to continue paying Council Tax & Inheritance Tax and SDLT when they sell. LVT would only apply to the next person who buys any property, thus making it an entirely voluntary tax - they can stay renting if they like.

If the next owner has to consider it, the resale value hit is borne by the person who has been paying Council Tax already - thus the new owner gets an LVT-adjusted market price and the vendor gets SHAFTED. And what is this nonsense about it being "Voluntary"?

FAIL.


And pensioners who 'opt in' would be allowed to roll up unpaid tax. Why is it acceptable to expect pensioners to live off the income from their savings or use up the capital via annuities, but not to live off the tax-free, unearned capital that they have accumulated in the value of their homes?

In my exploration of trying to make LVT "work", the ability for people to defer payment until sale has factored into that almost from the start. Not sure how to read your last bit though - sounds a bit like envy politics. However, pensioners have pretty much paid their way under current tax regimes - so why then do they have their assets taxed AGAIN? If I have assets as I die, I want my family to get them in toto, not some horny-handed agent of the state to demand up-front payment causing dispossession. The State will get its chance when or if my descendent decide to sell or spend. LVT if used in the pensioner scenario will NOT remove the hideous impact of IHT, just replace it.


FFS, there are far worse taxes

Few. LVT is utterly unavoidable unless you give up something massive - like, er, your HOME? You know, that place you have spent years improving, maintaining and that cannot ever be moved to try and reduce an unavoidable tax.


- how about getting rid of VAT (which costs the average household £3,000 a year);

You keep bringing up VAT and time and again people tell you why it is a load of crock to end it if you move the burden to income or corporation tax. What is your problem with that? Why are you so obsessed with taxing our local companies?


It puzzles me that there so many in LPUK are actually Daily Mail readers

Pathetic, Mark. Really pathetic. You will be calling us racists and paedophiles, next.


who think that the entire purpose of the economy is to feather-bed land-owners, landlords and owner-occupiers, and to hell with the productive economy.

Nonsense. Unsubstantiated, emotional piffle, Mark. It is particularly rich coming from someone who wants to end VAT and push tax onto corporations directly and indirectly via LVT on their production facilities.


The only way to teach them is by taking their money and laughing at them.

Is that why you want LVT in the form you propose?

Paul Lockett said...

I really don't know where to begin fisking this piece, but I think a good place to start is:

they can keep on raising the value of the land, and thus the amount of tax that they collect, with almost no disincentive.

How can the state increase the value of land while at the same time happily letting people fall into unemployment? Rents are driven by incomes.

A government is a geographical monopoly, so land values are a far better indicator of how well a government is operating than income; if my local authority stopped collecting the rubbish or maintaining the roads, it would probably have very little impact on incomes in the area, but house prices would look a lot less healthy.

Actually, I don't know why NuLabour hasn't done it already...

I imagine that they wouldn't want to give up the authoritarian monitoring mechanisms which accompany sales and income taxes.

Anonymous said...

Mark, maybe we should tax you on "car value tax", or "wine cellar value tax", or "anything else you've bought and paid for and thought belonged to you tax"?

Can you not see the injustice of this?

I spent half my life buying my house (after I'd built it with my own hands). I don't care what some jealous fucker thinks it might be worth, I am not selling it, I am not renting it out, I am not making a pile from it, it's mine and I just want to live here. Why should I hand the whole thing over to the State (because eventually that is what it would come to)? I already pay income tax and all the rest of it.

What you are proposing is just confiscation, why not admit that?

As for the LVT "replacing" all the other taxes, well don't make me laugh. If they take up your idea, it will be additional, just like everything else.

Paul Lockett said...

anonymous: Mark, maybe we should tax you on "car value tax", or "wine cellar value tax", or "anything else you've bought and paid for and thought belonged to you tax"?

For the simple reason that the cars and wine are produced by someone and they are that person's property to use or sell as they see fit.

Land titles aren't legitimate man-made wealth, they are a state granted monopoly. They would only be legitimate property if the state at some point had absolute ownership of the land and therefore had a right to sell it. I don't think the state has any right to claim that power.

I completely agree that you should have absolute ownership over your bricks and mortar, I just don't think you have a right to claim a location as your absolute property just because that's where you put them.

Devil's Kitchen said...

Some home truths...

1) @Paul Lockett. Rents are not driven by incomes. Rents, like every other business, are driven by (landlords' costs + renters' incomes).

2) "Land titles aren't legitimate man-made wealth, they are a state granted monopoly. They would only be legitimate property if the state at some point had absolute ownership of the land and therefore had a right to sell it."

Then who does own the land, Paul? "Society"? Don't make me fucking laugh.

And if the state doesn't own the land, then the state has no implicit right to charge rent, a.k.a. LVT, on that land.

I have always found the idea of a "leasehold" to be instinctively disgusting: the idea that you can buy a house and yet still have to pay a rent on the land that it stands on is something that I find utterly wrong, on an emotional level (I admit it).

When I bought my flat in Edinburgh, it was a freehold and I owed my existence to no one. But with the state charging you rent wherever you live, you can never escape the cunts.

And, as people keep constantly saying, like Council Tax, LVT has no bearing on ability to pay.

DK

Devil's Kitchen said...

P.S. With LVT,

1) the value of the land is set by the state.

2) the percentage of the LVT is set by the state.

Does no one see a problem with that?

DK

richard allan said...

1) @Paul Lockett. Rents are not driven by incomes. Rents, like every other business, are driven by (landlords' costs + renters' incomes).

DK, you're someone who prides himself on having never read a single work of political economy, so I'm going to have to quote one at you here. Let's try "Economics" by Samuelson and Nordhaus:

"The striking result is that a tax on rent will lead to no distortions or economic inefficiencies. Why not? Because a tax on pure economic rent does not change anyone's economic behavior. Demanders are unaffected because their price is unchanged. The behavior of suppliers is unaffected because the supply of land is fixed and cannot react. Hence, the economy operates after the tax exactly as it did before the tax--with no distortions or inefficiencies arising as a result of the land tax."

Explain to me what the landlord's cost is involved in ownership of a plot of land. He doesn't even need to pay the cost of defending the land - the government pays that for him! Pretty sweet deal, eh?

Then who does own the land, Paul? "Society"? Don't make me fucking laugh.

Who do you think owns the land, then? The Queen? The Duke of Westminster? Now THAT is fucking funny. I can't see any means by which anyone other than "society" can come to own a plot of land. Usually the argument goes along the lines of:

"The person who gets there first owns it."
"Why? That's stupid. And even if it were true, what do you do about the fact that nowhere in the world is the original occupier in possession of the land, but always and everywhere people who have stolen it at some point?"
"Err... dunno. Just forget it, I suppose."

It drives me up the wall. I've never heard an even remotely plausible argument for why land should be anything other than the common birthright of mankind, beyond blind conservatism. "B-b-b-but we've always done it this way!" It would be funny if it weren't quite so depressing.

When I bought my flat in Edinburgh, it was a freehold and I owed my existence to no one.

Except the person whom you'd bought the flat from, hmm? And if the value subsequently went up, that just means all the people around you paying taxes to support the infrastructure and public services that gave your land its value now owed part of their existences to you - which you had done nothing to earn. Funny how libertarians only oppose "benefit scroungers" when it's not them doing the scrounging.

Devil's Kitchen said...

Richard,

I'll have a think about the rest of the stuff, but this is the purest horseshit...

"Except the person whom you'd bought the flat from, hmm?"

Um, no. Had they been bad tenants, and screwed up the neighbourhood, the flat would have been worth less, so I would have got it cheaper.

I certainly don't owe them for their good behaviour, for it cost me more in the purchase.

"And if the value subsequently went up, that just means all the people around you paying taxes to support the infrastructure and public services that gave your land its value now owed part of their existences to you - which you had done nothing to earn."

Really? Am I not paying the same taxes? Am I not being a good neighbour? Is the price of their asset not appreciating?

"Funny how libertarians only oppose "benefit scroungers" when it's not them doing the scrounging."

It's funny how morons seem to think that libertarians only see things in purely personal terms when that is demonstrably not the case.

Seriously, I don't get you argument here at all. If I, or anyone else, is a bad neighbour, or doesn't pay their taxes, the price of all houses fall.

If everyone is good, the price of said assets rises.

However, this has absolutely less than fuck all to do with the price of the land -- or at least this is what we are told by LVT enthusiasts.

Seriously, look -- really look -- at this whole thread. Please note the number of times that LVT supporters establish that the house and the land are separate things, and then notice how many times they conflate the value of the land and the house stood upon it.

LVT supporters, it seems, are unable to separate the two things: why should anyone else.

Oh, and yes, I shall take the deeds of ownership as they now stand.

Why? Because I don't believe in retrospective laws. Under any circumstances.

Retrospective laws are, and always will be, deeply evil and nothing you can say will change my mind on this.

And yes, I deeply resent government claiming to "own" the land that I have bought, just as I resent the idea that "society" owns that land. Fuck society.

Of course, if one of my neighbours is convicted of a crime -- can I then sue him for bringing down the price of my asset? Actually, if anyone commits a crime around my neighbourhood, can I sue them for the same reason?

Oooh, if I am not planning to sell for a while, can I persuade local gangs to come and commit crime in my neighbourhood in order to bring the value of the LVT down?

Oh, oh, oh; and how often does the LVT land get revalued? And will it be subject to when the next election is?

Yes, come to think of it, LVT is a great idea. Let's let the most corrupt people in the country play politics with the one asset that we can never be without! Hoorah!

DK

Paul Lockett said...

Rents are not driven by incomes. Rents, like every other business, are driven by (landlords' costs + renters' incomes).

The first half of that sum is what determines supply, the second half is what determines demand. As land is in fixed supply, the first half is irrelevant, which brings us back to land rents being driven by incomes.

Then who does own the land, Paul? "Society"? Don't make me fucking laugh.

I'd say no-one should be viewed as owning it, like the air or the broadcast spectrum.

And if the state doesn't own the land, then the state has no implicit right to charge rent, a.k.a. LVT, on that land.

I agree, but as individuals, I believe we have a right to claim payment from those who exclude us from those resources. Having the state doing the collecting and taking its costs from the revenue is just a matter of practicality.

We already do it with oil drilling licences and parts of the broadcast spectrum. I don't see the problem with extending the same approach to locations and hopefully raising enough revenue that the state can stop robbing me of part of my earnings.

When I bought my flat in Edinburgh, it was a freehold and I owed my existence to no one.

Except having to account to the state for every penny you earn, which you seem to view as a far less serious intrusion. On top of that, I imagine you would have also be paying Council Tax, so you would have been paying a partially land based tax already.

the value of the land is set by the state.

It doesn't have to be. You can incorporate self-assessment into the system, or even make it completely self-assessed.

the percentage of the LVT is set by the state.

That's true of any tax, so it isn't something which applies specifically to LVT.

Retrospective laws are, and always will be, deeply evil and nothing you can say will change my mind on this.

The logical conclusion of that traim of thought, if you are viewing LVT as a retrospective law, is that no taxes should ever be changed, either up or down, as people will have made decisions based on what they are now.

richard allan said...

m, no. Had they been bad tenants, and screwed up the neighbourhood, the flat would have been worth less, so I would have got it cheaper.

I don't understand what you mean by this. I was pointing out that instead of paying rent on a yearly basis, you had chosen to pay all the rent up front. You still had to pay, didn't you?

Really? Am I not paying the same taxes? Am I not being a good neighbour? Is the price of their asset not appreciating?

As for the first two, no, not necessarily. As for the third, well, two wrongs don't make a right. "Well, I'm capturing unearned benefits from them, but so are they so it's OK!" Even this implies that if one person gains more benefits than another then he should compensate. Otherwise you wouldn't have asked "Is their asset not appreciating?" as if it mattered.

It's funny how morons seem to think that libertarians only see things in purely personal terms when that is demonstrably not the case.

I don't see anything personal... I'm just ashamed to see libertarians protesting against one group receiving unearned benefits, and championing another.

However, this has absolutely less than fuck all to do with the price of the land -- or at least this is what we are told by LVT enthusiasts.

It has everything to do with the price of the land. I've never heard any "LVT enthusiasts" say otherwise (that a local school can somehow make bricks and mortar cheaper, what?!), perhaps you could quote one of them directly?

Seriously, look -- really look -- at this whole thread. Please note the number of times that LVT supporters establish that the house and the land are separate things, and then notice how many times they conflate the value of the land and the house stood upon it.

Well, I count none. Sure, a couple of times people say "house prices" when they shouldn't, because that is the colloquial use of the phrase, and it aids understanding on both sides when people use common language. But "conflate"? No.

LVT supporters, it seems, are unable to separate the two things: why should anyone else.

They are perfectly able, and anyway, two wrongs don't make a right.

Oh, and yes, I shall take the deeds of ownership as they now stand.

Why? Because I don't believe in retrospective laws. Under any circumstances.

Retrospective laws are, and always will be, deeply evil and nothing you can say will change my mind on this.


Why is return of stolen goods a "retrospective law"? If I stole something from you, how long would I have to wait before using this same defence myself? Just wondering. Anyway, my implementation of LVT would protect the "residual interest" of current landholders via a gradual implementation process, there's nothing retroactive about it. I believe Mark has a similar system where you opt-in.

And yes, I deeply resent government claiming to "own" the land that I have bought, just as I resent the idea that "society" owns that land. Fuck society.

I deeply resent being told I have to pay someone for land which his ancestors illegally occupied when I've never been told why originary appropriation/outright theft of land results in ownership rights in perpetuity. Anyway, the only way you can say "fuck society" is if you build a big wall around your land to ensure that you don't capture any of the benefit from society like schools, roads etc. In which case, enjoy subsistence agriculture! Besides, my parents just bought a flat in an excellent area, upon which the ground rent was £300 per annum. You are objecting to being asked to contribute a similar amount to "society" - it beggars belief! - to pay for the roads which, for all we know, you didn't contribute a penny towards (indeed you would not under a Georgist administration because all other taxes would have been abolished).

Of course, if one of my neighbours is convicted of a crime -- can I then sue him for bringing down the price of my asset? Actually, if anyone commits a crime around my neighbourhood, can I sue them for the same reason?

You tell me! If someone vandalised your property, you would sue him, wouldn't you? If you think of land as your property, then I don't see why you shouldn't do the same. Of course, under my regime, you would be paying lower taxes if the value of your land dropped, to compensate you, so that would be taken care of.

Oooh, if I am not planning to sell for a while, can I persuade local gangs to come and commit crime in my neighbourhood in order to bring the value of the LVT down?

If you want to live in a crime-ridden area in order to pay less tax, then absolutely you should be allowed to do so if you're willing. I don't think your plan would last very long, however, because the locally-elected police chief would be very quick to chase the rotters off his patch to prevent cuts in funding from the loss of land values.

Oh, oh, oh; and how often does the LVT land get revalued?

Presumably exactly as often as your income tax, VAT, corporation tax, and council tax are "revalued", every financial year. Seriously, did you think that was somehow a knockout question?!

Yes, come to think of it, LVT is a great idea. Let's let the most corrupt people in the country play politics with the one asset that we can never be without! Hoorah!

The Aristocracy and the Forestry Commission? We have that now, mate. None of them are elected, I'd prefer directly elected council members to have that power. They could even compete with each other to find the fairest system! As opposed to your system, whereby the government can play politics with people's employment (flat rate of income tax), consumption (sales taxes on "luxury goods", whatever the hell they are), business (corporation tax)... everything in their lives, really.

Besides, I find all this LVT doom-saying really odd, given that it's not some radical untested system. It works exceptionally well in Hong Kong, Singapore, Taiwan, Australia... some of the most prosperous, capitalist societies out there. So unlike dear old Blighty, with her third-world infrastructure and cripplingly high house (oops, "land") prices... but wait, what's that I hear? "House prices are only high because of planning laws, which I would get rid of!" Well, Harry Haddock assures me that you would indeed cut 50% off "house/land" prices if you did so. But what on earth gives you the right to damage the value of people's assets via "retrospective law"?!

Anonymous said...


If people are happy to pay ludicrous prices like £150,000 for a flat in Brixton, then they are also signing up to pay £5,000 in LVT. But we know that the latter wouldn't happen, so property prices would stabilise at somewhere slightly above bricks and mortar cost and property prices would be low and stable.


Actually, I pay about £5,000 in property tax on my average suburban home in the US. Now, granted, property taxes are rather higher than the national average in these parts. Granted also, this isn't an LVT - the tax is on the value of the home + land, but i doesn't seem too unreasonable.

The biggest part of that pays for the local schools (which are among the most desirable pubic schools in the state, hence property prices are high in the school district...)

richard allan said...

Whereabouts is it, anon, if I may ask? Pennsylvania?

Anonymous said...

Well well, Devil's Kitchen, you are an unpleasant little isolationist!

No-one wants to deprive you of your flat, in the same way that the government is now depriving you of a huge cut of the fruits of your own labour. Merely that you pay society a fair price for the small plot of its land you occupy. Has it not occurred to you that you would be hugely better off under this system? Not just financially, but because you would be part of a more equitable society, with less crime, more opportunities, more wealth for everyone?

Don't you think it's incredibly sad, and unfair, that so many people are now suffering because of the bust created by our current tax and tenure laws, and that so many are locked out from ever getting a part of the bubble created wealth (which isn't really wealth, it's a bubble blown up by debt) because their hard labour (sometimes two or three jobs) doesn't pay enough to let them 'get on the ladder'? We should all be ashamed of this injustice, even us who are lucky enough to own our own homes and benefit from increase in land value.