Jump to content
House Price Crash Forum
Sign in to follow this  
blobby o mr blobby

New Renegade Economist Video

Recommended Posts

yes, but Fred didn't answer the question he himself posed which was why don't other economist shout the value of land taxation from the rooftops ?

IS it because land taxes just aren't as easily recoverable as taxes on income, meaning those perceived savings are only in an 'ideal' scenario where all land taxes are recovered and paid ?

I don't know, i'm just posing the question. I find Freds arguments very persuasive but there's not many shouting from the rooftops.

Share this post


Link to post
Share on other sites
yes, but Fred didn't answer the question he himself posed which was why don't other economist shout the value of land taxation from the rooftops ?

IS it because land taxes just aren't as easily recoverable as taxes on income, meaning those perceived savings are only in an 'ideal' scenario where all land taxes are recovered and paid ?

I don't know, i'm just posing the question. I find Freds arguments very persuasive but there's not many shouting from the rooftops.

A landowner is a sitting duck when it comes to taxation (if he doesn't pay then the state just forecloses and takes the land). We already have models of land-taxation in the form of council tax and business rates; it's not as if one can hide one's land/property, or pretend it's unowned. Evading work-based taxes seems much easier to me (not for salaried employment, of course).

I'd suggest that the lack of rooftop-shouting is because:

1. the existence of powerful vested land-owning interests (Fred directed attention towards the land-owning aristocracy, but everyone who owns a house would potentially be impacted and they don't know to what extent -- would an individual be forced to sell, to cover his liabilities?).

2. Rules changes half-way through the game turn winners into losers and vice-versa. People have been incentivised to buy property and to go into deep debt to do that; they will feel hard-done-by if those incentives are arbitrarily reversed in a way that further destroys their property value while adding to their burden of outgoings (my guess is there would be civil disorder/disobedience over this).

3. Lack of confidence in a fair, impartial and sustainable valuation process (e.g. if I own a meadow that I want to keep like that, and some bureaucrat comes and says 'you could build a factory there, that'll be a million quid please' ... the bureaucrat's incentive is to maximise his revenue, but developing the meadow is not necessarily the best thing to do.

4. As a general principle, taxes should not be levied on those who can't afford to pay them. Land tax would make it even more impossible to opt-out and do your own thing on your own patch, because you'd be obliged to pay the state for the space you occupied and if you didn't, you would be forcibly evicted so that they could seize and sell your land.

I think the debate comes down to 'An Englishman's home is his castle' vs. 'Property is a commodity and should be traded/allocated to maximise economic value' (which is what a land tax ends up doing, because the asset will be sweated to pay the tax).

Personally, if we must have variable taxation, I would like to see it shifted away from work and land, and towards consumption.

Share this post


Link to post
Share on other sites
A landowner is a sitting duck when it comes to taxation (if he doesn't pay then the state just forecloses and takes the land). We already have models of land-taxation in the form of council tax and business rates; it's not as if one can hide one's land/property, or pretend it's unowned. Evading work-based taxes seems much easier to me (not for salaried employment, of course).

I'd suggest that the lack of rooftop-shouting is because:

1. the existence of powerful vested land-owning interests (Fred directed attention towards the land-owning aristocracy, but everyone who owns a house would potentially be impacted and they don't know to what extent -- would an individual be forced to sell, to cover his liabilities?).

2. Rules changes half-way through the game turn winners into losers and vice-versa. People have been incentivised to buy property and to go into deep debt to do that; they will feel hard-done-by if those incentives are arbitrarily reversed in a way that further destroys their property value while adding to their burden of outgoings (my guess is there would be civil disorder/disobedience over this).

3. Lack of confidence in a fair, impartial and sustainable valuation process (e.g. if I own a meadow that I want to keep like that, and some bureaucrat comes and says 'you could build a factory there, that'll be a million quid please' ... the bureaucrat's incentive is to maximise his revenue, but developing the meadow is not necessarily the best thing to do.

4. As a general principle, taxes should not be levied on those who can't afford to pay them. Land tax would make it even more impossible to opt-out and do your own thing on your own patch, because you'd be obliged to pay the state for the space you occupied and if you didn't, you would be forcibly evicted so that they could seize and sell your land.

I think the debate comes down to 'An Englishman's home is his castle' vs. 'Property is a commodity and should be traded/allocated to maximise economic value' (which is what a land tax ends up doing, because the asset will be sweated to pay the tax).

Personally, if we must have variable taxation, I would like to see it shifted away from work and land, and towards consumption.

Great post, nicely explained

I'm particularly interested in this avenue of economics but share some of your concerns regarding the fair valuation of land. The key though to setting the system up correctly would be to remember Kirsty's motto: location, location location, this is the major component in attributing a value to land and is what people are prepared to pay such a high price for in terms of rent. This rent will be charged regardless, the fundamental question is whether the payment falls into the hands of private landlords and speculators or whether it falls back into the public purse.

The trouble with taxing it very lightly though is that it leaves it wide open to speculation and the associated problems that we're seeing now as some people trample over others' rights in the hope of a quick and easy buck.

It's impossible to run an effective capitalist system without reforming the land market as the benefits fall entirely into the wrong hands. This leads to perverse incentives such as landlordism being more profitable than labouring to earn a living.

Edited by chefdave

Share this post


Link to post
Share on other sites
I believe homeowners would be exempt in Fred's NWO.

It's those who use the land "unproductively" that would pay, ie those that rent it out, or hold it waiting for land prices to rise.

I think the problem with that is that the benefit of controlling future HP bubbles would not materialise (it could be done by a tax on speculative gains, but then perhaps the wider aims of land taxation could be met in that way as well?)

I'd definitely be concerned about the need to secure a steady stream of fiat-money simply to be able to occupy and use space, seems to me it's a step closer to slavery.

Share this post


Link to post
Share on other sites
I believe homeowners would be exempt in Fred's NWO.

It's those who use the land "unproductively" that would pay, ie those that rent it out, or hold it waiting for land prices to rise.

Anyone using land would pay. This would include homeowners, to exempt them would leave a giant tax-free loophole in the proposed system.

Share this post


Link to post
Share on other sites
It's impossible to run an effective capitalist system without reforming the land market as the benefits fall entirely into the wrong hands. This leads to perverse incentives such as landlordism being more profitable than labouring to earn a living.

It's one of those cases that's impossible to get (morally) right. For example, one of the points about land tax is that those who benefit from developments (such as new roads or railway stations) should pay for them, and end up doing so because the increased land-value derived from these developments leads to increased land-taxes.

But you also have to consider all the people who invariably campaign against local developments. Under a land-tax system, not only will they have the developments crammed down their throats, but they'll be presented with the bill, too. Their only remedy will be to cash in their newly-valuable land and suffer the cost and disruption of moving elsewhere (and hope that development doesn't arrive on their doorstep again).

I think it would work in societies where everybody agreed that more development and more land-productivity is invariably the best way to go, and that the value of land is principally its economic value. An economist might automatically judge this to be the case, but I believe that many ordinary people have other concerns.

Share this post


Link to post
Share on other sites
It's one of those cases that's impossible to get (morally) right. For example, one of the points about land tax is that those who benefit from developments (such as new roads or railway stations) should pay for them, and end up doing so because the increased land-value derived from these developments leads to increased land-taxes.

Avoiding a land tax doesn't mean avoiding the cost of higher land prices though. The costs will still be there and emerge as either higher rental prices or higher house prices in general, in other words the current owners will get the spoils of something they didn't have a hand in creating, this link needs to be broken if we want housing to be seen as a place to live/work rather than an investment vehicle.

But you also have to consider all the people who invariably campaign against local developments. Under a land-tax system, not only will they have the developments crammed down their throats, but they'll be presented with the bill, too. Their only remedy will be to cash in their newly-valuable land and suffer the cost and disruption of moving elsewhere (and hope that development doesn't arrive on their doorstep again).

The problem with the current tax system is that it leads to a geographically lopsided economy, too much is concentrated in the South at the expense of other areas of the country. If tax were to be taken off labour and capital and placed onto land then areas of the country that are currently under utilised would become relative tax havens and take pressure off constant expansion in already over crowded areas.

Edited by chefdave

Share this post


Link to post
Share on other sites
The problem with the current tax system is that it leads to a geographically lopsided economy, too much is concentrated in the South at the expense of other areas of the country. If tax were to be taken off labour and capital and placed onto land then areas of the country that are currently under utilised would become relative tax havens and take pressure off constant expansion in already over crowded areas.

I'll declare a VI at this point ... I live in an 'under-utilised' part of the country and would prefer it to stay that way :lol:

Share this post


Link to post
Share on other sites

The people in Whitehall should, at the very least, be having discussions, right now, that raise all the points in this thread. Maybe they are? Who knows.

My guess is that they're probably discussing how to try and solve the problem of an insolvent country by buying shares in banks.

:angry:

EDIT: To add:

I think that if the Government could put together a version of what Fred is suggesting, which they have very carefully considered, and because of this, they think the law will stand a good chance of passing through the current House of Lords and ERII, then I think it wise to assume that the law will also have the backing of the majority of British homeowners. (except possibly BTL'ers?)

The 'Land Tax' idea that I took from Fred's Boom Bust book is not just a straight Land Tax, but a tax on the RENT of the land. That is, the income generated from owning the land.

Say that you own three, average houses. You live in one, you use the second as a holiday home, and you rent out the

third. My take on the "Land Tax" idea is based on loose assumptions that you would probably not pay Land Tax on the first house as you live there. You would pay a very low "Land Tax" on the second house (Government Ministers ALL have two homes). On the third house you would pay a "Land Tax" on the rental income from renting out the property. As it's your only rental, you pay a low rate. This rate could stedily increase against the number of properties that you own and rent out.

Lords are happy(?), the majority of british households are happy(?). I'm certainly happy.

I've been a fan of Fred's since I read his book in 2006 ("Boom Bust" kinda got me started on the whole HPC thing) and I think Freds idea is the only way for capitalism to survive it's current form. The question for me has become, to what extent will the country let itself be destroyed before such a law would pass, through the People, Government, Lords and Queen. It will need to be pretty bad. I see it heading there.

James

Edited by Blink-Star

Share this post


Link to post
Share on other sites
The people in Whitehall should, at the very least, be having discussions, right now, that raise all the points in this thread. Maybe they are? Who knows.

My guess is that they're probably discussing how to try and solve the problem of an insolvent country by buying shares in banks.

:angry:

EDIT: To add:

I think that if the Government could put together a version of what Fred is suggesting, which they have very carefully considered, and because of this, they think the law will stand a good chance of passing through the current House of Lords and ERII, then I think it wise to assume that the law will also have the backing of the majority of British homeowners. (except possibly BTL'ers?)

The 'Land Tax' idea that I took from Fred's Boom Bust book is not just a straight Land Tax, but a tax on the RENT of the land. That is, the income generated from owning the land.

Say that you own three, average houses. You live in one, you use the second as a holiday home, and you rent out the

third. My take on the "Land Tax" idea is based on loose assumptions that you would probably not pay Land Tax on the first house as you live there.

I haven't read the book, but from what I've seen of his documentaries I assume that he's using the term 'rent' figuratively, and that you would have to pay land tax on your residence based on its putative rental value (i.e. what you'd have to pay to rent an equivalent place).

If that's not the case, then those who owned their houses (or stately homes) would pay no tax at all (since Fred's idea, as I understand it from his video documentaries, is to use land tax to replace other taxes, not to supplement them).

To me, having exclusions of any kind amounts to a dilution of the whole point of land tax in the first place.

Maybe the best thing to do would be to live on a boat ;)

Share this post


Link to post
Share on other sites
I haven't read the book, but from what I've seen of his documentaries I assume that he's using the term 'rent' figuratively, and that you would have to pay land tax on your residence based on its putative rental value (i.e. what you'd have to pay to rent an equivalent place).

If that's not the case, then those who owned their houses (or stately homes) would pay no tax at all (since Fred's idea, as I understand it from his video documentaries, is to use land tax to replace other taxes, not to supplement them).

To me, having exclusions of any kind amounts to a dilution of the whole point of land tax in the first place.

Maybe the best thing to do would be to live on a boat ;)

Fred argues that all previous economic boom-bust cycles are, in the boom-to-bust phase, preceeded by a rise in the price of land. He shows how, historically, this rise in the price of land is responsible for the bursting of whatever bubble the economy is, then, currently caught-up in.

He does not claim to have a fix for boom-bust economics. He believes that booms and busts are fair game in Keynesian economics. Fred tries to teach us that, over the last 400 years, a collapse in the land market has occured at the top of each and every boom. Fred claims to have found the method of direct taxation that will stop all future house-price bubbles.

It's either this, or the nationalised banks repossess everyones homes. Maybe the people in Whatehall already know this?

James

EDIT: And to come back to the part I bolded, this land tax is not meant as a replacement to Income tax, but instead as a supplement to a lower income tax rate. (well, we can dream can't we!)

Personally, I don't think Fred counted on the collapse of the Global Banking System. I certianly didn't pick-up that from the book. He simply saw that house prices cause booms turning bust, and has offered us a sound way to fix it.

It''s a shame they didn't listen back then, cos now we is fekked!

James

Edited by Blink-Star

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.