An article over at Lib Dem Voice proposed replacing Council Tax with a system of Domestic Rates like in Northern Ireland, the first comment is from a complete moron who comes out with the usual Home-Owner-Ist DuckSpeak:
You seem to have ignored every single argument against this from the last few decades. (1) e.g. That an elderly retired widow in a large house pays more than a family of four earners in a small house.(2) That people who do not own property but just rent it pay nothing.(3) That it weakens the link between local expenditure and local taxation.(4) Who cares if Winston Churchill or John Stuart Mill thought it was a good idea? (5) What did they know about property and the economy in the 21st century? (6)
Finally, it is somewhat disingenuous of you to talk about "Land Value" tax when you plainly mean "Property Value" tax.(7)
1) Anybody who ever suggests this sort of thing has heard it all a zillion times and is sick and tired of hearing about Poor Widows In Mansions and most have no doubt explained why this is not a relevant argument. In Northern Ireland, the government said, quite sensibly, that there would be a deferment/roll up option for pensioners, end of discussion.
2) I call bullshit. That's a diagonal comparison and totally irrelevant at best; and an argument in favour of LVT at worst. It also merrily glosses over the fact that the "family of four earners" would still be paying fifty times as much tax as the PWIM, once you take income tax, NIC, VAT etc into account.
3) More bullshit. The tax is a tax on rental income, so tenants are already paying it, in the same way as they are paying the landlord's mortgage, repair bills, insurance etc. In any event, the other twatty Home-Owner-Ist KLN, as advanced by a cretin further down is that LVT would particularly harm tenants because "landlords would just add it to the rent", which is surely an argument in favour of LVT anyway (it wouldn't hurt the precious landowners and would clobber those lazy feckless tenants) - so as usual the Homeys are advancing two arguments, both of which are incorrect and which completely contradict each other anyway. Could these people make up their minds which non-argument they want to use?
Further, the author suggested a flat tax at a national rate of about 0.6%, beyond the control of any special interest group. So there's no question of wicked tenants pushing through tax increases and then twisting the arm of the council to spend the money exclusively on things which benefit them but which magically neither benefit owner-occupiers nor benefit tenants to such an extent that landlords can charge them more. And even if tenants were tempted to do so, owner-occupiers have an electoral majority in ninety per cent of local council areas anyway, so tenants would (nearly) always be defeated. There's no need to speculate on this, we can just look at Northern Ireland.
4) With LVT there is a perfect 100% link between the level of the tax and the value of whatever bundle of benefits you get from owning (or occupying) land in any particular location, and the markets will sort out what the correct level of tax is in any area. If it is judged 'too high', then selling prices will fall and the tax gets adjusted down and vice versa. Funny how these supposedly free-market chaps are so terrified of tax rates being set by the markets.
Further, in the real world, what connection is there between the amount of income tax or VAT you pay/suffer and expenditure which benefits you? Absolutely none, and possibly the correlation is negative (high earners pay the most income tax and are most likely to send their kids to be private school etc).
5) It is interesting to note that they did. And how come the Faux Lib's always hark back to what they think Hayek or JS Mill said (what they actually said was not anti-LVT at all)?
6) What they knew about land values - and how they soak up wealth from the productive economy and cause booms and busts in the absence of LVT - is as valid today as it was then, and it will still be valid in a century's time. If anything, their arguments become more important all the time - as we can observe, land rents as a share of GDP increase as GDP increases.
7) You can call it what you like, the simple fact is that any tax on land and buildings acts primarily as a tax on land values or the rental value of land, because tax is always borne by the least elastic factor. Whether we had an 0.6% tax on total values incl. bricks and mortar, or a 1.2% tax on the land value alone makes precious little difference (except at the very upper and lower ends).
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Apart from those two idiots, there are a lot of good responses from other commenters on that thread, they appear to be in the majority for once.
Sioux chef
36 minutes ago
26 comments:
What I cannot understand is why these people just cannot see how all profits eventually end up as rents? And that the 'value' of the land occupied by anyone in any way generally gets its value from all those around it? I mean, they all bang on about location, location and location being the three main factors that drive house (or other land and buildings) prices.
I suppose they might all be rentiers?
L, I suppose that their get-out-of-jail free card is "I've paid for my share of rents generated by the Location Location Location". Yes, maybe, but paid to whom? How much of those future benefits which the landowner enjoys will be contributed by the previous owner? Answer = none.
>Who cares if Winston Churchill or John Stuart Mill thought it was a good idea? (5) What did they know about property and the economy in the 21st century?
What about Adam Smith and David Ricardo?
SB, you know the Homey/Faux Lib rules. If they don't like an idea, it's "outdated or superseded", if they like something, then it has "stood the test of time".
So they like the venerable tradition of a widespread of home-ownership (which we've only had for a few decades) but revile taxes on land (which this country like most others, had for centuries, and have been phased out over the past century or so).
In Ricardo's time his main opponent was the risible predictor of the future, Malthus. The one who seems to have started the catastrophist left movement.
MW / SB - or it's a 'modern' idea. The worst excuse of all. As in a political 'moderniser'. Yuck.
The complaint that gets me when I see it is that LVT reform is "social engineering". As if the choice to not have LVT isn't.
@Derek - forced unemployment due to income tax, NI, corp tax, VAT, etc. is the worst kind of social engineering...
D, ah yes, that's another KLN (which I must have covered somewhere or other): "Why should The State tell me what to do with my land?"
LVT is no such thing of course, optimum permitted use is optimum permitted use, and it's particularly galling when you hear it fromthe NIMBYs who are all in favour of using the power of the state to tell other people what they can or cannot do with their land.
Too true, Mombers!
>"Why should The State tell me what to do with my land?"
I'll bet if you proposed building lots of houses nearby he'd want the state to control what people do with their land.
The obvious error that Richard Dean (the second idiot) is committing when he says that LVT can be passed on to the tenant is that somehow a land owner can get more money than a land user is willing to pay. Let's say we are in a world with no taxes at all (on land or otherwise), and a seller of bare land is conducting an auction. Let's say the market value of the land is $1000 a month, based on the auction results, and there are two people who are willing to pay this amount, Landlord (LL) and Landuser (LU). The LL has no plans to use the land himself, he just wants to collect rental income. But to realize an income without working, he needs an LU to provide more than $1000 in rent income. But the LU was only willing to pay $1000 for using the site, otherwise the site becomes uneconomical to the LU for the intended use. But according to the idiot Richard Dean, the LO can just demand any amount over what the LU was willing to pay. (And remember, I'm talking about a world with no government, so you can't blame the government for imposing the cost of the amount that the LL has to pay.)
Let's say that the LL decides to charge the LU $1500. The idiot Richard Dean apparently thinks that the LL can charge whatever he wants, rather than the highest amount a LU can pay for a particular site. So what if the LU is able to pay the amount? This would mean that the LU would have outbid the LL in the original round of bidding, up to at least $1500. But for every dollar higher that the LU would bid, the LL gets less. In the idiot Richard Dean's world, though, the LL can just keep increasing his rent demands to maintain a $500 rental income. But as long as the LU can pay the rental income, it means that the LL has to bid higher and higher in the original bidding, to infinity and beyond, until the LU calls uncle and says no more. But if the LU is not able to pay the original owner the payment necessary to use the land, then the LU will have to seek out other land. But now the LL is in a bind. He owes the original owner the $1000 per month, but the LU is now seeking out land worth $1000 or less to purchase or from someone who will rent the land to him for less than $1500. The only way the LL can lure the LU back is to offer the LU a rent of $1000, the original amount of the market rent, and can therefore earn no pure rental income.
To summarize, any given rental revenue (RR) that a LL wishes to receive has to be paid by a LU. If the LU is able to pay the RR desired by the LL, then by definition, the price paid by the LL to obtain the land will be bid up by the LU until it equals the desired RR, and the profit accruing to the LL will be 0. If the LU cannot pay the desired RR, then the LU will shop for land to purchase from some other land owner or rent from another landlord. The LL will be forced to rent the land to the LU at the LU’s maximum offer. This is true in the no-LVT “pure market” world, and shows conclusively that an LL cannot charge more than a LU is willing to pay, i.e. pass on the cost of the land to the user. Even the idiot Richard Dean cannot argue that a potential LL can outbid a LU and simultaneously expect the LU to pay what the LU could not pay (the LL’s higher bid). If so, than there would be no limit to what a potential LL would pay for the land or charge to a tenant for the use of it.
This was the pure market model, but what about in an LVT world? It actually is exactly the same as the pure market model, only substitute original owner with the government. Bare land auctioned by the government is the same as bare land being auctioned off by a non-governmental actor. The mechanics and the consequences are the same in both worlds. An LL cannot outbid all potential LUs to pay the LVT and then expect any of the outbid LUs to pay the LL’s LVT bill (which they couldn’t pay before the land was awarded to the LL) plus whatever the LL chooses to charge on top of that. As Mark would say, this is simple maths.
LB,
You forgot to add that it's the state that's maintaining the land ownership!
These people argue that:
a) The land is mine and the state should leave me alone
b) the state should protect my land ownership.
c) the state should do this for free by charging other people who work.
The bit that I also like very much about LVT is that its in yer face. Once its implemented politicians and quangocrats will find it bloody difficult to extract increases from the taxpayer...
LB, thanks for that, but it doesn't matter how much evidence you present, the Homeys will insist that LVT can be passed on, that it discourages investment in buildings and so on. But of course, it is not clear why they think that this is a bad thing - surely they think that this is a good thing?
SB, correct. The Homeys - and especially the Faux Libs - believe that land owners came first, and then the stupid "state" came along and imposed itself upon the poor pioneering land owners.
L, exactly, that's our insurance.
That Richard Dean is being remarkably obtuse.
True. However he is being polite and thus giving the pro side a good opportunity to point out why he is wrong in such a way that others may be convinced even if he himself may not be. I think that the exchange is actually rather useful.
He may be polite and obtuse, but he has not yet repudiated the argument, and I also threw this at him: if landlords could just pass on any cost to their tenants regardless of their ability to pay, then a property bust would be impossible. A property bust, after all, is when rents and land prices fall below the level of the debts that have been incurred to obtain the land. If tenant cost-passing is possible, then landlords could just continue asking for and getting rents and selling prices over or equal to their mortgage obligations. All current and past property busts are empirical attestations against the argument that LVT can be passed on to tenants.
Now, since we've laid that to rest, on to the Poor Widow Bogey... :-)
"You seem to have ignored every single argument against this from the last few decades."
Mark, perhaps you should send him "KLN, the Complete Works".
D, LB, it is a very useful exchange, if only because it reassures me that there are plenty of other people with the patience to chip away at the likes of Dean.
B, perhaps I should. But the Homeys are capable of operating on a different level of reality and contradicting themselves, so unless they are actually interested in facts and logic, it is all for nothing.
Dean has now moved the goalposts.
Phys, it looks to me like he gave in fairly graciously an hour ago.
Richard Dean moved the goalposts and suggested that it would benefit the rich.
If this idea gets around, the LVTC is going to get deluged with cash from wealthy benefactors, so we are planning to appoint a firm of parliamentary lobbyists, and a top advertising agency, and run a high profile campaign.
Phys, I didn't see that bit. but yes, I've had that crap a dozen times: "Spongers will love Georgism because of the CI, the wealthy wil find ways of avoiding the LVT or move abroad and so the "squeezed middle" would end up even worse off."
Truth is, Georgism starts in the middle and works outwards, I see no reason to fret about its impact on extremes and the (genuinely) hard working middle would obviously be better off.
Dean is putting up goalposts all round the field now.
But we are still waiting to be approached by Grosvenor Estates so that we can really bring LVT on.
Phys, yes, he's churning out the same tedious old KLN's again, he's off in la la land with his intrepid frontiersmen building villages in the middle of nowhere.
Keep up the good work, I might cut and paste a bit of his idiocy and your replies for future episodes.
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