Monday, August 29, 2011

One for Mark Wadsworth

Coalition divided over Cable's plan for land tax

It seems that the Land Value tax idea is getting some high level support, but mostly from the Left. Why don't more free-market right-wingers support it - because they or their friends or relations own lots of property? It would clearly reward hard work and innovation at the expense of the rentier class. The main drawback that I can see is that it would inevitably be imposed on top of income tax, NI, VAT and all the rest, not instead of them, just as all the environmental taxes have been.

Posted by monty032 @ 09:36 AM (2150 views)
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18 thoughts on “One for Mark Wadsworth

  • We’ve all been here before and it didn’t work then. Remember the Community Land Tax Act in the sixties?
    Why ever should it work now?

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  • The Left see LVT as a way of increasing taxes on ‘the rich’ (after all people in big houses must be rich right?), not as a way of re-organising taxation so its less burdensome on the productive parts of society. The Left would never support a Mark Wadsworth type LVT (abolish all other taxes, and just have LVT + a Citizens Income) because it would in fact tax the rich less, or rather those rich whose business and financial assets out weigh their property ones any way. Remember the fuss about Philip Green – under LVT he’d pay even less tax on his businesses in the UK than he does now, even after his tax avoidance measures. Not really what the Left are trying to achieve I suspect.

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  • We're All In This Together says:

    Mr Wadsworth, I think you are absolutely right, but do you really believe the people who own the land will ever allow such a thing? Ivana Trump let the cat out of the bag when she said, ‘only the little people pay taxes.’

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  • LVT encourages owners of productive land to use the land for the benefit of the population by taxing the landowner on the value that it has to that population. The government would then spend the tax take among the population so the population can buy the product of that land (the landowner will sell the product because they require the income to pay the tax). Simple.

    Without a periodic tax based on the value of the land, landowners can work the land only enough for their own needs and everybody else would die – based purely on wealth at a single instant (when the land was bought). LVT therefore simply ensures that a persons wealth cannot be used to exclude an otherwise equal party from having wealth.

    The left therefore normally likes LVT. The right normally hates it.

    Small-time land owners like homeowners or mortgagees think they would be hurt by LVT but the big green estates are those that would be most hurt to the benefit of everybody.

    The current governments policies are aimed at driving people out of the UK in order to reduce the population (not /necessarily/ a bad thing) so that LVT can be avoided without those who are left noticing that they’re still getting screwed.

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  • A simple income tax system based on a progressive sliding scale (not a two/three point system) or simple algorithm would be much better, get rid of N.I. and have a flat rate VAT system of say 10% that is also levied on all property transactions. Job done, but would massacre tax-advisors, the inland revenue and other hangers on that leach good livings off the taxation system.

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  • Goweresque, it’s quite simple, the left see the productive parts of society as workers rather than rentiers. Which is why, on the contrary, they would be all in favour of the burden of tax moving to land rather than income.

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  • mark wadsworth says:

    This is all rather heartening, they are blundering vaguely in the right direction.

    Which taxes LVT would replace first is a separate debate. None of this really matters, any tax on land and buildings tends to act as a tax on land rental values, however badly designed and whatever the intentions were, and most existing taxes we have are so awful, I’m not too fussed which ones they reduce (or which ones they don’t increase, more like).

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  • Anyone else think Vince is toward the top end of leaders we have at the moment?

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  • ‘It seems that the Land Value tax idea is getting some high level support,’

    ~ And the coverage also.

    GET IN!

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  • What a silly precis. There are people who are on the left of politics who own property as an investment, and there are people on the right who see it as immoral (including me). Let’s leave petty falsehoods out of this debate and stick to facts rather than uninformed opinion posing as fact.

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  • PS – rantnrave, you’re joking right? Vince is a tireless self-publicist who says one thing to one person and another thing to another (just like 99% of all other politicians). His vanity exceeds that of almost any politician I’ve ever known, with the sole exception of Mandelson. And he loves to rewrite history, often claiming credit for things he opposed in the first place.

    My favourite quote about Cable (which appeared in the FT): “He’s predicted 13 of the last two recessions”.

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  • Anyone else think Vince is toward the top end of leaders we have at the moment?

    Absolutely, but its hardly a glowing reference, given the competition.

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  • “Anyone else think Vince is toward the top end of leaders we have at the moment?” – yes, but as tick tock suggests he’s hardly up against stiff competition from other members of the 3 main political parties and talk is cheap.

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  • @shipbuilder: The Left see ‘money’ and want it. It matters little to them if it was gained via productive means or rent seeking ones. LVT is a tax on the rental value of property, not its capital value. As such business already pays LVT, its called business rates. Ergo if you abolish VAT, income tax, NI etc and replace business rates with LVT, by definition businesses would be better off. Anyone with large amounts of cash/shares/financial investments would be better off. LVT redistributes wealth from the rent seeking sections of society to the productive ones. This not necessarily ‘the workers’. In fact the uber-wealthy would do very well under LVT. LVT would not hit the large landowning estates that badly either – the rental value of agricultural land is around £50/acre. The rental value of a 200 sq yard house plot is £8-10K/pa by comparison. The burden of the tax would fall almost entirely on housing, not open countryside.

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  • European-bear says:

    @goweresque. There is a huge multiple of agricultural land at £50/acre compared to house plots so the sheer area of such green and pleasent land would still make a substantive contribution. Also one of the reasons that real estate prices are so distorted is the lack of LVT. Put on a LVT and suburban house plots will drop in value (they do not produce anything) and will also remove the “tax free” speculative element. Consequently there would be a relative change in land values due to the tax. One might also see LVT higher in “catchment areas for good schools, which is a natioanl resource but hovered up bys the upper middle classes with no additional contribution to society. One can see endless other examples. It would also help get all these under occupied and empty houses back into use….

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  • Goweresque, as I said, the ‘left’ are concerned about the workers, or ‘productive’ getting their fair share, no matter who they are. There’s plenty of source material on left wing theory about. Of course in practice, there are plenty looking for money from any source as you say, but they’d be more accurately termed as statists.
    Therefore your points about the rich winning or losing under LVT are irrelevant other than within your perspective of wanting to attack what you see as the ‘left’. This ‘soak the rich’ for the sake of it idea is simply fantasy – ask anyone, all they want is their fair share.
    My own concern is that any system should be ‘natural’. Therefore it makes sense to tax something earned at the expense of the rest of us, rather than a person’s effort, work, innovation and creativity which can only benefit the rest of us.

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  • mark wadsworth says:

    Goweresque: “… businesses would be better off…. The burden of the tax would fall almost entirely on housing, not open countryside.”

    Yup, that is what it boils down to. It’s up to each individual to decide whether he or she earns more from ‘business’ (whether that’s running a business, owning shares or just getting out of bed each morning and doing a proper job) or from the [notional] rental value of his or her house. For most people, the answer must be pretty clear. For farmers, it can’t be too difficult to estimate an LVT rate which equates to much the same amount as they currently pay in income tax, NIC etc, which happens to be in the order of £50 per acre per year.

    Ship, amen to that!

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  • mark wadsworth says:

    European Bear: “There is a huge multiple of agricultural land at £50/acre compared to house plots so the sheer area of such green and pleasent land would still make a substantive contribution.”

    OK, let’s call it 45 million acres of farm and 2 million acres of residential. The rental value of residential is about a thousand times as much as farmland, so the relative amount to be raised from farmland is a pittance. It’s actually more logical to exempt farmland and tax the farmhouses just like any other houses. The rental value of all the farmhouses is probably roughly as much as the rental value of the farms.

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