Wednesday, August 15, 2012

Alimentos del oso

Spanish house prices drop 11.2%

"The government's decision to raise VAT from 4% to 10% on house purchases as of next year is expected to depress the market still further" Ho hum. They clearly don't understand Home-Owner-Ist economics which say that a landlord or landowner can ALWAYS pass on any tax you throw at him IN ITS ENTIRETY.

Posted by mark wadsworth @ 03:30 PM (1848 views)
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16 thoughts on “Alimentos del oso

  • “They clearly don’t understand Home-Owner-Ist economics which say that a landlord or landowner can ALWAYS pass on any tax you throw at him IN ITS ENTIRETY.”

    Given the current state of the job market in Spain, if said landlord really wants to sell/rent the property they won’t.

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  • general congreve says:

    And what has this got to do with house prices in the UK? Might as well talk about gold. 😉

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  • Marxist, this is not home-owner-ist, and as I have said to you, the opposite to that is Communist non-ownership. This in reality occurs in every market at every time. VAT on ALL products and services gets passed down both in higher prices and in lower choice due to business failures for those incapable of passing on the costs. Yet you always refer, in your Marxist way to the defunct, benal suggestion that those who seek to own their own home are in someway morally deficient. It is total crap, but then in your Marxist religion you have to see the home owner as the devil.

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  • Marxist, this is not home-owner-ist, and as I have said to you, the opposite to that is Communist non-ownership. This in reality occurs in every market at every time. VAT on ALL products and services gets passed down both in higher prices and in lower choice due to business failures for those incapable of passing on the costs. Yet you always refer, in your Marxist way to the defunct, benal suggestion that those who seek to own their own home are in someway morally deficient. It is total crap, but then in your Marxist religion you have to see the home owner as the devil.

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  • mark wadsworth says:

    Lib,

    1. Simple fact is that there is a limited amount of land and if one citizen is granted exclusive occupation to land he is imposing a burden approx. equal to the rental value of that land on ‘everybody else’. And indeed every other exclusive occupier places a burden on him.

    2. The right to exclusive occupation of land is in and of itself a good thing, because we want to live in peace and quiet, sit in our own back gardens, not have our valuables stolen etc.

    3. The government is supposed to act on behalf of all of its citizens and to step in to prevent some individuals from imposing force on others (which is why it has police to try and deter or detect and punish criminals). The government is not really supposed to be there to enforce the bargaining position of cartels.

    4. Taxes on earned income and output are very bad things, on a moral level, and economic level, an administrative level, whatever.

    5. We can square all these circles by having LVT, spending what little we need to spend on core functions of the state (law and order, refuse collection, road maintenance, defence etc) and dishing out the rest as a Citizen’s Income/Personal Allowance.

    6. The result of all scrapping taxes on income and shifting to LVT and dishing out the proceeds is a thriving economy, social cohesion, no more booms and busts (or at least, much more limited ones), a smaller state to meddle in people’s private business affairs and so on.

    7. Basic maths (I don’t know if you understand maths) is that the median household in the median home pays LVT exactly equal to its personal allowance, pays no income tax on its earned income (by definition) and lives as free as is possible to be in a modern civilised society.

    8. Nobody is forced to live somewhere expensive, so LVT is an entirely voluntary tax and is a contribution to the community in general, which created that rental value as compensation for excluding them from the “fruits of their collective efforts”.

    You clearly don’t like this idea, heck knows why. I don’t know why people are so opposed to it. We’d all be better off, and we’d be far better off under such a system than under a Victorian-style low tax system where the only role of the government is to help landowners oppress workers and to help bankers exploit landowners.

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  • mark wadsworth says:

    Lib, there is something else which you clearly don’t understand (it’s probably quicker doing a list of things you do understand, to be honest) and that is:

    VAT on privately produced exchange of goods and services = VERY BAD TAX, in fact probably the worst tax of all. Discourages efficient use of resources and helps large monopolies protect themselves.

    LVT on rental value of land is more or less the exact opposite, being a user charge for service provided by the community = VERY GOOD TAX in fact clearly the best tax of all. Encourages efficient use of resources and prevents large monopolies from arising.

    They are polar opposites.

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  • Excellent summary of LVT that I will copy and paste for future use, thanks MW. (Much more interesting than gold as well ;-))

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  • Marx, you put words into my mouth and express such hypocrisy. What you fail to recognise is that the monopolies you hate are caused by INFLATION, i.e. the printing of money for and by banks, corporations and government. These monopolies have nothing to do with a lack of taxation and only the restoration of sound money and limited government would resolve this.

    Maybe you will get your nice tax, but that would simply empower government who would use income from the tax as collateral to print more money, thus exacerbating the problem.

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  • MW – You continue to spout this rubbish I see? You really don’t seem to be able to tear yourself away from the ‘don’t tax my income, you thief’ mentality do you? Do you own a house? You probably think you pay far more that you should in tax don’t you? Unless you are single and earn more than 35k, or married with kids and earn more than around 60k you are a DRAIN on society, so which is it for you, Mark?. LVT is the most pathetic way to raise revenue that I have ever heard of, to suggest that someone who earns a fortune should not pay any tax because they don’t own any land is just ridiculous – grow up Mark, buy a house, work hard, and pay your taxes. LVT will NEVER be used in this country, so get used to it, Wolfie.

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  • mark wadsworth says:

    Lib, that’s something else you don’t know.

    Monopolies are caused by one person owning all of one thing, cartels is when a small group all own one thing.

    The land owning cartel quite like inflation because it erodes their money debts and pushes up land prices relative to everything else.

    Cause and effect you zoo

    The land owning cartel causes inflation and NOT the other way round.

    Pepper, thanks.

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  • GC talking about gold it has dropped quite a bit since 2011 I noitce gold is getting portugal into a bit of trouble due to lack of it

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  • The Landlord cannot pass on ANY of an increase in tax according to economic theory…

    Here’s why..

    If we assume that the landlord is already charging as much as he/she possibly can to clear the market.. (not an unfair assumption) then ANY tax increase must be suffered by the landlord.. So say rent was £1000 and there was a new tax of £100.. if he could pass this on.. then why wasnt he charging £1,100 in the first instance??? Likewse with a tax reduction.. Are we suggesting that the landlord would pass that on? Of course not.. The tenant cannot either benefit from or suffer from taxes.. purely market rent from their ability to pay..

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  • mark wadsworth says:

    Dig Dug, exactly.

    More to the point and in real life, mortgage interest is, from the point of view of the payer, pretty much like Land Value Tax. The amount you have to pay is a % of the value of the site and is fixed and independent of the actual cash rental income you get (or rental income you enjoy/consume yourself).

    So when interest rates go up, do all landlords put up the rent accordingly? Or do they reduce rents when interest rates go down?

    Methinks not. So taxing the rental value of the site instead of taxing their cash rental profits has no impact.

    If the Homey myth that “landlords pass on the tax” were true, then house prices would not be sensitive to interest rates.

    The reason that house prices are sensitive to interest rates is because current selling price = rental value ÷ interest rate

    We can express this as rental value = current selling price x interest rate

    If the Homey’s were correct (and they seldom are), then that second formula would be

    rental value = selling price AT SOME RANDOM STAGE IN THE PAST x current interest rate.
    . If the Homey myth were true, then the calc

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  • At the risk of sounding a bit Flashman, house prices have not been particularly sensitive to interest rates. I recall a thread where a number of impressive graphs were produced and the only really positive correlation was between unemployment levels and house pricess.

    Spain’s crash is all linked to the fact that Spain as a nation is viewed with suspicion by the markets; UK is not. Therefore sadly the factors that are driving (and will drive) Spanish house prices down do not apply here.

    Am probably depressed because the missus showed me some nice simple 3-bed cottages she liked the look of last night; all are 500k+. The insanity is still strong in the SE.

    Good summary in post 4 btw; still struggling to see how it could ever be implemented though. But hey, where there’s a will there’s a way…

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  • mark wadsworth says:

    Bubba, yes, Flashman illustrated quite clearly that the link was nowhere near as clear cut as people usually assume*, but there is a link nonetheless.

    * I think he used raw figures. You’d have to adjust the interest rate figures for inflation to get the real rate, then you’d have to factor in people’s expectations of future inflation (if they fear high inflation they will buy land to get out of cash) and so on, you’d have to make so many assumptions that you can prove more or less anything (i.e. zero correlation or 100% correlation).

    Implementing is easy, you do the same as Business Rates, job done. All it requires is for people to realise that it’s a far better way of running the country for ninety per cent of us. Call it tyranny of the majority if you will, but it’s better than having The One Per Cent have everything their way and using Poor Widows In Mansions as a human shield for the rest of eternity.

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  • Your better off using the edgeinvestor site, hopefully this will atleast keep my income at a pace with inflation and beyond the pitance the banks are paying on my savings..! safer than the stock market anyway…

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