Wednesday, April 9, 2008

Putting an end to boom-and-bust

Time to look at Land Value Tax?

Here was my bright suggestion, which went down like a cup of cold sick, but there you go. For a more left wing spin, see the Labour Land Campaign's Manifesto. I had a hand in that as well, tee hee.

Posted by mark wadsworth @ 09:57 AM (698 views)
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18 thoughts on “Putting an end to boom-and-bust

  • Mark – I have posted this before but this is the solution from our friend Mr Fred Harrison.

    http://uk.youtube.com/watch?v=6ZkfmY1PMng

    It is the only logical way forward. Politicians and power brokers know this but won’t make the change as they are hell bent of keeping the minority happy / richer at the expense of the majority.

    Simple stuff. The public needs to know this vital information – it has been withheld for years.

    It needs the groundswell of public support to have any chance of seeing the light of day.

    Churchill saw the light he got LVT onto the statute books but the Landlords blocked him. The only war Winston Churchill lost was the war with the landlords.

    During a protracted bust / depression is the best time to implement these changes. There would be over a decade to fifteen years and older folk would not be affected as the tax would be paid after they had passed after the sale of the property.

    Think Sustainable Growth v’s Unfettered Rampant Growth – it’s a no brainier really.

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  • Stillthinking says:

    People are sick of taxes and they dream of one day being free and just owning somewhere and living in peace. A land tax is no freedom, ever, and you can imagine the inevitable tax abuse as time goes on.
    Council tax is bad enough. Why not just use political power to move job availability with tax breaks. There is still ( for a while ) plenty of room in the UK, but there is no room where the jobs are. Move the jobs and the people can move. Give tax breaks to companies based out of London.
    Who really wants to live in London? If they could get a similar job somewhere else they would be out of the place.
    Are we just breeders who get a house and then forced to give it back after the children grow up? I don’t want to give money to the state anymore. The only way for the UK government to move forward is if the tax intake is reduced to force them. If there really is a need to force people out of houses then the government should look to make arrangements for destinations where the excess population wishes to live, thank god we have the option of the EU. This idea only works if there is a chronic housing imbalance and there isn’t, we moved from 5% property owning to baby boomer owning.
    Imagine this as an idea. No more new taxes.

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  • “On a practical level, land with planning permission is in more or less fixed supply (barely over 10% of the UK by surface surface area is developed; even in the South East the figure is only about 15%), and in long run, house prices are a fairly fixed multiple of net incomes”

    Are you retarded? You have a big graph showing wild swings in house prices/incomes in the same document. Also, planning permission – that’s what we need to fix – not add yet another tax so we can buy our MP’s even more lavish second homes.

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  • It could be considered to be a “resource charge”. Isn’t going around calling it a Land Value Tax going to put people off?

    Also it should be part of a set of overhauls that see the tax burden reduced. This shouldn’t be additional money for government to waste.

    Light, clever frameworks please (financial regulation was light but it was far from clever).

    cheers

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  • Good luck with this. One point of a land value tax, or similar property taxes as they exist in the US, is that it leads to a much more efficient use of property. Judging from my neighborhood (prime commuting territory into London), the problem with the property market is not a shortage of houses, it’s that all of the larger family homes are occupied by high-wealth, low-income pensioners, many with just one person living there. In my neighborhood of large family homes, only about 20% of the houses actually have families with children living there, the rest of the residents are retired or soon to be so. High-income, wealth-poor younger families who need the space of a larger home are generally forced into smaller flats or houses with enormous commute times. Actually, if you look at the growth in households, which is often cited as a rationale for house price inflation, rather than deriving from young families, a huge proportion of the growth is coming from the increase in single person households with an average age in their 50s and 60s. My guess is that a lot of those people are living in large family homes bought some time ago. In a market with a constrained supply of family homes within reasonable commuting distance of jobs, there’s a huge externality created by pensioners living in larger homes, enjoying the benefits, but bearing none of the costs created by long commute times and cramped living conditions for others. By taxing property, low income people who have large houses but don’t need the space would be encouraged to move to smaller flats, clearing the way for income-earning families. Rather than acting as a barrier to transactions in the property market like stamp duty, this would speed the market up and bring down prices.

    Of course, politically, this is never going to fly. Just like high inflation of house prices, the majority believes that they benefit, even if it’s just on paper, while a minority of FTBs are cast into a lifetime of debt slavery. The generation of people over 45 bleed the country dry through generous pensions, flooding the country with low-skilled immigrant labour and massively inflated house prices creating a huge intergenerational wealth transfer, but no one dares question any of this.

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  • land is the resource. with nothing on it – it is still the resource.

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  • mark wadsworth says:

    Thanks, but if possible, could you post comments over at ConHome, they are the people with the ear of the next PM.

    White Knight, correct, nomen est omen, strictly speaking what I suggest is a tax on the location/speculative element of house prices. But “House price bubble tax” doesn’t sound serious enough. As to which taxes I’d scrap first, read the article and comments and make up your own mind.

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  • How about considering various areas like the auction of bandwidth?

    Rather than have prices determined by edict – let market forces set them.

    I am allergic to single authorities having too much licensing or control. Its open to massive abuse. Crony networks and so forth will be the death of this country before we are through.

    Nice to see people unafraid to intelligently discuss.

    cheers

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  • planning permission needs radical thought on a starship enterprise level because it delivers the ability to kick prices upstairs in the hands of a few locals.

    I have a few thoughts …

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  • I don’t dislike people you understand. Its just unfair temptation.

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  • planning4acrash says:

    House price inflation is caused by money supply growth stimulated by our unregulated fractional reserve banking system. Land value tax would therefore merely displace house price inflation elsewhere, possibly to productive commodities.

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  • planning4acrash says:

    The royal town planning institute proved last year that house builders have enough permission, but hoard it in land banks. Money supply is the issue, not planning, which is one of our few remaining sources of local democracy.

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  • Mark – I thoroughly agree with your proposal. LVT is certainly a very good idea…worthy of serious consideration…without a snowflakes chance in hell of ever getting off the ground. Too many powerful vested interests would be against it, and I don’t think the average Joe would be able to see through all the hostile spin that an LVT would be to their and societies’ long term advantage.

    I thought the responses to your article on the Conservative Home were telling. The pro-LVT camp seemed to provide thoughtful replies. The anti-LVT response were simple one sentence “Not over my dead body” replies. This is why the LVT will not be adopted by any party in the foreseeable future. The problem is that people like getting money for free and tend to blot out the possibility that they will be the losers (why else would anyone start a restaurant?!) Besides, houses always go up. Taxing them on the increased value of their property is just going to rankle.

    By the way, if land values are negative, would that mean we get a cheque from HMRC? 🙂

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  • mark wadsworth says:

    Neo-serf, thanks, a lot of the article is based on Fred Harrison.

    Still Thinking – read the article and all the taxes it would replace! As to subsidies for people outside London, with LVT or similar, it would be much cheaper to live/do business where land is cheapest, ergo this would happen automatically. And if you want your peace and quiet, go and buy farmland which is so cheap, the tax thereon would be pennies (unless we just exempted it, which I suggested in the article).

    Mightytharg, I am not retarded. Read your own comments.

    P4AC, if we have a bubble in tulip bulbs, gold or dot-com shares, then so what? This does not affect the man in the street. Maybe, just maybe, LVT would constantly rechannel excess money into productive business rather than land speculation.

    D’oh, thanks, superficially, people wouldn’t like being taxed on the bubble value of their property, but provided this is always matched with an equal and opposite cut in other taxes (first council tax, SDLT and so on) and then VAT and income tax, the average Joe would be perfectly happy. And if they whine, we just say “Don’t you remember what happened in the early 1990s? Don’t you remember what happened after 2008?”

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  • I agree with the concept of this, but can’t agree with the execution, becuase I think it is wrong to be taxed for simply living in a home, which is what this (and council tax) essentially is. My ideal would be slightly different. I believe a basic right is for someone to be able to live while paying in proportion to the services they receive. However, I also believe in common ownership of land – I find the idea that someone can ‘own’ part of the earth (and the resources therein) a ridiculous concept. And no, I haven’t worked out the details.

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  • mark wadsworth says:

    Shipbuilder “I think it is wrong to be taxed for simply living in a home”.

    There is no morality in tax! If my ‘Property bubble tax’ replaced Council Tax, SDLT, Inheritance Tax, TV licence fee, VAT on domestic fuel and Capital Gains Tax in their entirety, it would still be less than 10% of current tax revenues (which are far too high, different topic).

    And if it were to raise more than that (the aim of the tax is not to raise money, the aim is to keep house prices low and stable), then it’s up to you what to do with it (depending on your political persuasion) – pay off national debt, increase welfare and pensions, cut VAT, cut income tax, cut corporation tax, spend it white elephants or second homes for MP’s!

    The Henry George idea was to levy very high LVT and dish it out as a Citizen’s Dividend and scrap all other taxes. In economic terms, that is common ownership of land (but as I said, I am not approaching this from a moralising point of view, I am looking at the practicalities). That way, anybody who owns less than the average amount of land (by value) is a net winner.

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  • Mark

    I like the Henry George idea. Thanks for posting this – i’ve been thinking a bit recently on this subject, so it came along just at the right time.

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  • In my opinion, discussions and ideas like these are more productive and ultimately harder hitting to the ‘elite’, whomever they may be, than 9/11 truth campaigns. Ultimately people feel powerless not because of the power of the elite or government – remember, revolutions have happened through all of history, no government is indestructible – but because of what comes afterwards. Who takes charge? Will they be any better? Has the ‘system’ really changed, or just its face?
    I think that providing ‘truths’ to people and expecting them to ‘wake up’ is too easy and ultimately pointless. If there is no viable alternative, the status quo prevails.

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