Exchange at Tim W's, spotted by Richard Allan:
Paul B: What [Richard Murphy] wants to do, and he’s very clear about this, is to use penal taxation to deter people from putting their money in tax havens. What the LVT people want to do is to reduce their own taxes (1) by confiscating (2) the wealth (3) of anyone who’s chosen to invest in property. (4)
MattyJ: @PaulB. That’s one way of looking at it. The other is that land is a common good just like the airwaves and, as such, if you want exclusive access to it then it’s only right that you reimburse the rest of us. Rental value is simply one way of valuing the land in question.
I’d also like to point out that "the LVT people" aren’t one homogeneous group. Some, like Mark Wadsworth, want to replace all taxes with LVT. Others would just like to reform the council tax system we already to have to be more economically efficient.
Good riposte. What we could add to that is:
1) Bollocks. What LVT people want to do, as a generalisation, is to reduce taxes on earned income* for everybody. By and large, and this is a simple question of fact, two-thirds of people would pay less tax overall if we did a full-on shift. The total taxes collected from productive businesses would go down by four-fifths on average. Quite probably Paul B would end up better off as well, and good luck to him.
2) And taxes on earned income* are not "confiscation" because..?
* There is no real distinction between "earned income" and "income from capital", the two things are more or less interchangeable and quite distinct from rental income derived from privileged monopoly positions. It is not for nothing that some land valuers refer to the "ransom value" of particular plots, if you think about it, all location values are "ransom values". So if Mr A kidnaps Mr B's child and demands £100,000 ransom (which Mr B pays), it is clear that Mr A has not created £100,000's of wealth or done £100,000's worth or work, he has just appropriated wealth from Mr B.
In any event, LVT is not confiscation, it merely prevents appropriation in future. It's like the police shutting down a protection racket.
3) Land wealth is not "wealth" in an absolute sense, it is merely a measure of a) wealth which is appropriated from the productive economy (or from nature) by land "owners" and/or b) the burden which land "owners" place on everybody else. These two come to much the same thing in £-s-d terms. Mr A's income is Mr B's loss.
4) Using the word "property" as interchangeable with "land and buildings" is one of the finest bits of Homey brainwashing. Earned income (or your potential to earn income) is not your property because..?
A grim document
15 hours ago
2 comments:
There is no such thing as "land wealth". Land titles are a claim on wealth. Land rental value is the stream of wealth that arises due to the differential productivity of locations. Land price is the capitalisation of that rental stream into a lump sum payment - it is analogous to the purchase of an annuity.
Every bank manager should have a sign facing his desk with the words LAND IS NOT WEALTH.
Same applies to money. It too is a claim on wealth. The other sign should read MONEY IS NOT WEALTH.
Claims on wealth can and often are reneged on, especially if they are just on pieces of paper.
Ph, agreed, that's what I meant in my footnote 3.
I'd also argue that there's no such thing as "productivity of locations", how can a location itself be productive?
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