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LVT - An affront to all we hold dear.

As I hoped my friend Mark Wadsworth responded to my Land Value Tax post below.

Call me slow but I think the reason I couldn't understand his arguments before is that I didn't realise he was using words in ways that are different to the ordinary meaning of them.

Taxes on wealth are things like income tax...Land is an entitlement to wealth and not wealth in itself...

In my simplistic view there are two sorts of taxes, tolls and confiscations.

Tolls are a demand for a share of some sort of transfer. Society enables you to conduct some business and it is just that a portion of that business; such as hiring out your labour, taking possession of a new pair of shoes; goes to towards paying the costs of providing the environment that enables such transactions.

Confiscations are just that, You have a nice stamp collection, every year you must sell a couple of stamps because society demands you hand over a proportion of your stamp collection wealth. Just because it can demand money with menaces.

In everyday terms, car tax is a confiscation, petrol duty is a toll.

Your shiny big car doesn't cost society anything if it is on your drive. Speeding up the M4 does.

Income tax, VAT, Stamp Duty etc are tolls. Confiscatory taxes are "wealth" taxes.

An Englishman's home is his castle and all that. Once you have possession of something, whether it is a Penny Black or an acre of Berkshire, it is yours, and yours alone. There should be no further mulcting from it. It is un-English, it is not our way, it is wrong.


Comments

I've had a brief wander around PHO's response to your earlier post and his own site. I'm sorry to have to observe the poor old sausage hasn't got clue no.1 about economic realities, though I've noticed this before as a common failing among the tiny, scatty minority who apparently support LVT.

Luckily, this absurd tax (originally proposed in the UK well over 200 years ago, and we can see how far it's got since) hasn't a prayer of being enacted, so I think we can consign its proponents to the cupboard marked 'harmless eccentrics'. Or possibly 'deeply misguided idealists'.

I wonder if PHO is the same weirdo who posts in Comment is Free (if we agree with you) as Physiocrat? Wouldn't surprise me.

Wadsworth is a one trick pony.

Fair enough, let's divide taxes into tolls and confiscation.

Tolls are like rents, it's money collected from third parties by dint of legal privilege (mainly land ownership, but there are others) for the right to be somewhere. Land value is based on the right to collect tolls from the general public. Land ownership IS a toll. So LVT merely reverses that by being a public toll on a private toll so that the whole deal is set back to zero.

Income tax is confiscation, it's punishing people for making an effort. Stamps have got nothing to do with it. They are real wealth and shouldn't be taxed. By owning stamps, you do not deprive other people of owning stamps or cars and cannot demand payment from third parties for so doing, and no special privileges or income accrues to you by owning stamps.

Funnily enough, you get it right with cars. The road fund licence is clearly confiscation (registering your car is for the benefit of 'everybody else' and not for your benefit, so why should the car owner pay? VAT is another confiscation, the manufacturer has to sell £12,000 worth of car for £10,000 net) and petrol duty is like a simple and effective road use charge, i.e. rent, i.e. toll.

Phil D, I am not Physiocrat, you don't know anything about history, it was Queen Elizabeth I who introduced the first national LVT ('poor rates') with the explicit aim of funding a national welfare system.

Where does Mark use that quote? I can't find it on his blog: could you post a link...?

DK

"An Englishman's home is his castle and all that. Once you have possession of something, whether it is a Penny Black or an acre of Berkshire, it is yours, and yours alone. There should be no further mulcting from it. It is un-English, it is not our way, it is wrong. "

In the end, something has to be taxed. It's going to either be goods, income or raw materials (like land and the radio spectrum). If you tax producers then they clear off elsewhere or stop producing. If you tax land owners then they can't take their land with them. It would also more efficient to collect and would encourage people to use land more productively. It would fairly recompense blight and fairly tax windfalls from development.

Whoops! Sorry—I see it was a comment...

DK

Mark Wadsworth said: "Income tax is confiscation, it's punishing people for making an effort. Stamps have got nothing to do with it. They are real wealth and shouldn't be taxed. By owning stamps, you do not deprive other people of owning stamps or cars and cannot demand payment from third parties for so doing, and no special privileges or income accrues to you by owning stamps."

Stamps are property. Land is property. Both are a means to store wealth and both can be made to provide an income. By owning stamps you are not depriving others of the right to own stamps but you *are* depriving others of owning those specific stamps. Land is no different - by owning land you are not depriving others of owning land, just of owning that particular piece of land. You view stamps as wealth and wouldn't tax them but would tax land. Why treat them differently? And of course special privileges accrue to you as owner of said stamps (insofar as all property ownership confers 'special' privileges) - you can sell or rent them just as you could a piece of land.

We do not tax savings but we do tax the income that accumulates as those savings and the income that is generated on those savings. Land is little different. It is a form of savings, the income used to purchase the land already having been taxed and the income from renting the land and any capital gains on the land when you sell it get taxed too.

Mark states that: "Land is an entitlement to wealth and not wealth". This strikes me as tosh. If others are willing to pay $1 million for land, then it is an asset to that value and hence part of one's wealth (wealth is owning things of value). The bank recognises this by being willing to loan money againat the value of the land and, presumably, one cannot actually have an LVT unless the land has value. But Mark also states that: "With all these true wealth taxes, there is at least not a problem with 'ability to pay', so the fact that the anti's always wheel out The Poor Widow In A Mansion On A Fixed Income With No Savings as an argument against proves that point beyond reasonable doubt." This statement seems to be an acceptance of the fact that the "anti's" have a valid point with their Poor Widow (belittling an argument is not answering it). What the statement does not do is prove (beyond a reasonable doubt or to any extent) that land is not wealth. Since the tax collector does not come round with a wheelbarrow to collect soil, owning high value land does not mean that one can pay taxes, wealth does not have to capable of being readily accessible to make it wealth.

In principle, I believe we should all pay the same for the services we use, and presumably want, e.g. we all get the same benefit out of bombing Libya so we should all pay, ditto street lights, rubbish collection, etc. There seems to be general agreement that some people should get a free or much reduced ride and that the evil rich should subsidise these people, but it seems odd to me to advocate that someone with a mere entitlement to wealth and little income should cough up more than people earning a good wedge.

The point about stamps being real wealth and land not seems to me to be equally tosh. If I own stamps I do not deprive others of owning stamps except for the stamps I own. The same is true of land, people can go and buy other land, just not my land if I don't want to sell.

Other objections to LVT: If you own land long enough, you could pay more in tax than the land is worth. If you come to realise your entitlement to wealth, and can only sell for half the value on which the LVT was based, will the taxman reimburse your LVT?

Call me slow but I think the reason I couldn't understand his arguments before is that I didn't realise he was using words in ways that are different to the ordinary meaning of them.

That's Mark.

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