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Land Tax Gaining (Some) Political Space In Britain

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Taxes on property and land gaining (some) political space in Britain:

"a progressive alternative is to shift the tax base to property and land which cannot run away and represent, in Britain, an extreme concentration of wealth." (Vince Cable, today, at their conference.)

Full speech: http://www.guardian.co.uk/politics/2010/sep/22/vince-cable-full-speech

On taxes:

Fairness and tax

The biggest test of our party's contribution to the coalition is whether we can ensure fairness more widely. You'll remember our Conservative colleagues campaigned in the General Election to lift the inheritance tax burden on double millionaires.

But they have dropped that commitment. They have gone halfway to accepting our case for equalising income tax and capital gains tax rates. They have accepted in the Coalition Agreement that the priority for cutting income tax is for low earners not top earners.

Ironically, we may be able to make more progress on a fairness agenda with the Conservatives than New Labour was willing to do. Labour was constantly on its knees trying to prove that it was a friend of the super rich.

It will be said that in a world of internationally mobile capital and people it is counterproductive to tax personal income and corporate profit to uncompetitive levels. That is right. But a progressive alternative is to shift the tax base to property and land which cannot run away and represent, in Britain, an extreme concentration of wealth. I personally regret that mansion tax did not make it into the Coalition Agreement but in a coalition we have to compromise. But we can and should maintain our distinctive and progressive tax policies for the future.

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Good to hear it, but actions speak louder than words. It's all been discussed here, many times and it's good to see it getting a mention in the political circles. Many a Lord Troy of Suchensuch will be disgusted with the idea though.

This bit was encouraging too:

But I am not seeking retribution. We have a pressing practical problem: the lack of capital for sound, non-property, business. Many firms say they are already being crippled by banks' charges and restrictions.

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Good to hear it, but actions speak louder than words. It's all been discussed here, many times and it's good to see it getting a mention in the political circles. Many a Lord Troy of Suchensuch will be disgusted with the idea though.

This bit was encouraging too:

Yes, I still think it is politically unlikely.

But I am starting to doubt it a bit less than a few weeks ago.

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We effectively already have a land tax.. it's called council tax.

Should council tax be raised and restructured..? perhaps.

It is worth bearing in mind though that we currently tax mainly based on earnings. If you shift tax emphasis too far away from earnings towards land tax, you create a large tax loophole allowing high earners to avoid tax by moving to smaller properties (say trendy flats) and just owning property abroad instead. If the high earners can avoid tax, lower earners will have to fill the gap to fund the public sector.

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We effectively already have a land tax.. it's called council tax.

Should council tax be raised and restructured..? perhaps.

The problem is it's capped and there are exceptions to ensure big land owners don't pay more than a pittance.

If you shift tax emphasis too far away from earnings towards land tax, you create a large tax loophole allowing high earners to avoid tax by moving to smaller properties (say trendy flats) and just owning property abroad instead.

This isn't actually a PROBLEM as such. Thos people would have to SELL all there extra houses... which will push house prices down, lowering the cost of living for everyone else. IF you only pay half as much for your accomodation, you can afford to pay more tax.

It's a well thought out and planned concept, the only thing stopping it being sucessfully implemented is that it would force some exceptionally wealthy people to give up their land and do somethign productive, and those people will do whatever it takes to prevent that.

To be honest, I expect we will see concentration camps holding poor people and the government buying empty houses and demolishing them long before we see a true land tax being implemented.

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The problem is it's capped and there are exceptions to ensure big land owners don't pay more than a pittance.

This isn't actually a PROBLEM as such. Thos people would have to SELL all there extra houses... which will push house prices down, lowering the cost of living for everyone else. IF you only pay half as much for your accomodation, you can afford to pay more tax.

It's a well thought out and planned concept, the only thing stopping it being sucessfully implemented is that it would force some exceptionally wealthy people to give up their land and do somethign productive, and those people will do whatever it takes to prevent that.

(...)

+ 1

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Why not just charge 100% income tax, if we're throwing daft ideas out there! :rolleyes:

At what point between someone taking 0% and 100% do you become their slave?

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Can't see it being practical without so many tweaks that it'll be full of loopholes, particularly if you don't want to put every farmer in the country out of business (unless agricultural land is exempt - and what's considered agricultural - land that's just been left and happens to have some sheep on it?).

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Why not just charge 100% income tax, if we're throwing daft ideas out there! :rolleyes:

I'd imagine that the 90+% of land held by 1-2% of the population thats stayied in the same hands for hundreds of years in this country was seized in much the same way as whites did in Zimbabwe. Time to seize it back. :)

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Can't see it being practical without so many tweaks that it'll be full of loopholes, particularly if you don't want to put every farmer in the country out of business (unless agricultural land is exempt - and what's considered agricultural - land that's just been left and happens to have some sheep on it?).

This was discussed in a thread recently. As LVT is a land value tax and agricultural land has a relatively low value, by implication, the tax would be low for said land.

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Can't see it being practical without so many tweaks that it'll be full of loopholes, particularly if you don't want to put every farmer in the country out of business (unless agricultural land is exempt - and what's considered agricultural - land that's just been left and happens to have some sheep on it?).

Didnt mark wadsworth suggest a residential LVT of £4 per sq metre of residental land or something. Cant imagine people with big gardens (ie pretty much every ex council house in the country) would be very happy. New build shoeboxers/postage stamp plots OTOH might like the idea.

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I'd imagine that the 90+% of land held by 1-2% of the population thats stayied in the same hands for hundreds of years in this country was seized in much the same way as whites did in Zimbabwe. Time to seize it back. :)

That seems a bit heavy handed, but I agree with your sentiment. A LVT seems a more balanced approach, IMO.

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Why not just go the whole hog and seize it, mugabe style?

My annual council tax, in this ugly little flat I rent, is about 1% of this flats' market value.

Why not make this 1% the rate for all properties in Britain?

Or do you think richer people should pay lower rates? If so, why??

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The problem is it's capped and there are exceptions to ensure big land owners don't pay more than a pittance.

This isn't actually a PROBLEM as such. Thos people would have to SELL all there extra houses... which will push house prices down, lowering the cost of living for everyone else. IF you only pay half as much for your accomodation, you can afford to pay more tax.

It's a well thought out and planned concept, the only thing stopping it being sucessfully implemented is that it would force some exceptionally wealthy people to give up their land and do somethign productive, and those people will do whatever it takes to prevent that.

To be honest, I expect we will see concentration camps holding poor people and the government buying empty houses and demolishing them long before we see a true land tax being implemented.

+ 1

my sentiments exactly, however I am less pessimistic as I really don't see any other way out for rich democracies like ours. Our economies need to tax labour less and unproductive assets more to compete in the new global reality (or watch the Asian tigers overtake us).

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+ 1

my sentiments exactly, however I am less pessimistic as I really don't see any other way out for rich democracies like ours. Our economies need to tax labour less and unproductive assets more to compete in the new global reality (or watch the Asian tigers overtake us).

Exactly!

In addition, taxing the wealthy is the only way to reverse the huge imbalances. If they sell up and bugger off, then we get cheaper houses. If they stay, we get more tax take... win, win as they say!

Perverse taxation methods resulted in this mess, so the obvious solution is to reverse them.

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So are we going to eradicate what's left of the Aristocracy and shift all those stately homes and castles into wealthy foreign hands?

Great plan.

Those wealthy foreigners would have to pay tax on the land too, so I'm not sure what your point is.

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So are we going to eradicate what's left of the Aristocracy and shift all those stately homes and castles into wealthy foreign hands?

Great plan.

Well, since we missed the French solution 200 years ago, a small tax on properties (say only 1%), is the most we can hope for now.

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Those wealthy foreigners would have to pay tax on the land too, so I'm not sure what your point is.

What would be done with the collected money?

iraq_victims.jpg

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My annual council tax, in this ugly little flat I rent, is about 1% of this flats' market value.

Why not make this 1% the rate for all properties in Britain?

Or do you think richer people should pay lower rates? If so, why??

1.Thats not a "land" value tax.

2.No.

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