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"if You Run A Business On Rented Premises And Aren’T A Full-On Georgist, You Need Your Head Read!"


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“When you’ve paid your rent, you’ve paid your tax.”

“So what’s a Georgist?” you ask. A Georgist (or at least a “full-on” Georgist) is someone who says there should be no taxes except those on land values, payable by the owners — and is keen to explain that “land” doesn’t include buildings. (It does include natural resources, monopolies and statutory cartels; but those details affect only a minority of businesses.)

Under a full-on Georgist system, a typical business on rented premises never hears from the tax man, ever. You don’t pay income tax on your profits. You don’t pay payroll tax on your workforce. You don’t collect personal income tax owed by your employees. You don’t collect GST/VAT from your customers or pay sales tax on your sales. You don’t pay stamp duties on your insurance premiums. If you rent your premises, you don’t pay council rates or property taxes; they’re your landlord’s problem (and are levied solely on the land value).

http://www.prosper.org.au/2013/02/04/if-you-run-a-business-on-rented-premises-and-arent-a-full-on-georgist-you-need-your-head-read/

Edited by Chugger
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Yes, but empty properties would cost a fortune to keep - hence the rent would fall to attract paying tenants. A rental/value equilibrium would ensue.

This is effectively the way land is taxed in America - of course all the other taxes are still in place - so it is far from a Georgian paradise.

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The landlord wouldn't be paying all the taxes as an act of charity though, he'd pass on the costs in the rent charged.

Good point. I'm wondering how land value would change too. Cigarettes are taxed into oblivion and kill you, yet the market bears the price. If land is taxed as a percentage of value then the value would fall and the tax revenue shrink?

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The landlord wouldn't be paying all the taxes as an act of charity though, he'd pass on the costs in the rent charged.

Yup Land Value Tax would get passed on.

No, this can't happen.

The rental value of a property is already set at the maximum the market can stand (else, they would charge more). The landlord can't just 'pass on the costs', as the rent is already at saturation point.

Therefore, whatever the tax man asks for, needs to come out of the current rent received.

Take a look at the chart on this page, if it helps: http://en.wikipedia.org/wiki/Georgism

BTW, the article is ok, but completely misses out any theory and cuts to the implementation. The reasoning behind it is very important - there is no evidence that a location can be 'owned' (that is, no labour input can change it etc); putting a fence around it and threatening people who walk over it, is just a coercive monopoly.

EDIT: P.S. FWIW, a land value tax and a citizens income pair seem about the most fair way statism can operate. It is essentially compensation taken from coercive monopolists, to give to those who have been displaced. Ofc, such an equitable system would never be allowed and would be quickly subverted by the liars in suits anyway.

Edited by Traktion
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Yup Land Value Tax would get passed on.

Only some of it. Landlords would have a much higher incentive to strike a deal over a property when its a ticking time bomb of taxation, and so would be unlikely to recoup the full amount of taxation.

Rates and council tax get passed on to property-owning landlords, too, because it reduces the amount of money tenants have to pay rent. The proportion of a tax that gets passed though the economic value chain depends on who pays it (amongst other things), with landlords paying more if they are faced with the tax, and landlords paying less if the tenant pays the tax.

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No, this can't happen.

The rental value of a property is already set at the maximum the market can stand (else, they would charge more). The landlord can't just 'pass on the costs', as the rent is already at saturation point.

Therefore, whatever the tax man asks for, needs to come out of the current rent received.

Really? They may charge as much as local market can bear, but they just make sure that the property is either tiny, i.e cram as many tenants as possible on patch of land, and/or lower the quality of the development to compensate.

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No, this can't happen.

The rental value of a property is already set at the maximum the market can stand (else, they would charge more). The landlord can't just 'pass on the costs', as the rent is already at saturation point.

Therefore, whatever the tax man asks for, needs to come out of the current rent received.

Take a look at the chart on this page, if it helps: http://en.wikipedia.org/wiki/Georgism

BTW, the article is ok, but completely misses out any theory and cuts to the implementation. The reasoning behind it is very important - there is no evidence that a location can be 'owned' (that is, no labour input can change it etc); putting a fence around it and threatening people who walk over it, is just a coercive monopoly.

EDIT: P.S. FWIW, a land value tax and a citizens income pair seem about the most fair way statism can operate. It is essentially compensation taken from coercive monopolists, to give to those who have been displaced. Ofc, such an equitable system would never be allowed and would be quickly subverted by the liars in suits anyway.

rolleyes.gif

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Insightful commentary there.

Funny how libertarians and free-marketeers turn out to be socialists in disguise (or so it seems by their support for these ideas).

Odd how a scheme that pursues the idea that everyone should operate on a level playing field, that those with an unnatural advantage be taxed to "handicap" them, is seen as socialist.

when socialists always say they want to persue equality by enforcing it on everyone else, meanwhile taxing everyone equally...but not themselves as they are entitled to a villa, a public yacht and private breaks from the stress of public life.

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Yup Land Value Tax would get passed on.

Well, there's real life and "things which people say on the internet" and I'll stick with real life thanks.

I've compiled some actual real life evidence here to show that with Business Rates the tax is not passed on to the tenant,

http://kaalvtn.blogspot.co.uk/2013/01/q-businesses-will-go-bankrupt.html#1

paragraph (d)

it is not passed on in higher prices,

http://kaalvtn.blogspot.co.uk/2013/01/q-businesses-will-go-bankrupt.html#4

it is borne by the landlord (the least elastic factor of production). Or why do you think that the large landowners and landlords are so dead set against Business Rates (which is pretty close to LVT).

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Good point. I'm wondering how land value would change too. Cigarettes are taxed into oblivion and kill you, yet the market bears the price. If land is taxed as a percentage of value then the value would fall and the tax revenue shrink?

A tax is borne by the least elastic factor. Smokers are addicted and hence insensitive to price. Cigarette manufacturers would be just as happy making ice cream. So the smoker pays the tax.

Supply of land (or location) is 100% inelastic. Demand from tenants or purchaseres is elastic. So the landlord or vendor bears the tax.

LVT would be on annual rental values anyway, just like Business Rates so price changes are nigh irrelevant

http://kaalvtn.blogspot.co.uk/2013/01/o-land-prices-are-real-wealth-or-capital.html#6

or to get the ball rolling, we do like Council Tax and set the tax as a % of selling prices at a fixed point in time (as approximation of rental values) and then it does not matter if prices go up or down.

http://kaalvtn.blogspot.co.uk/p/valuations-and-potential-lvt-receipts.html

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  • 415 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%



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