I agree with Churchill: let's get stuck into the real shirkers!

[chem1st]

[quote=I agree with Churchill: let's get stuck into the real shirkers

They parasitise us from above. But landowners and the Tory party's idle rich are spared the fairest and simplest of taxes]

But the loudest silence surrounds the issue of property taxes. The most expensive flat in that favourite central London haunt of the international super-rich, One Hyde Park, cost £135m. The owner pays £1,369 in council tax, or 0.001% of its value. Last year the Independent revealed that the Sultan of Brunei pays only £32 a month more for his pleasure dome in Kensington Palace Gardens than some of the poorest people in the same London borough. A mansion tax – slapped down by David Cameron in October – is only the beginning of what the owners of such places should pay. For the simplest, fairest and least avoidable levy is one that the major parties simply will not contemplate. It's called land value tax.

 

The term is a misnomer. It's not really a tax. It's a return to the public of the benefits we have donated to the landlords. When land rises in value, the government and the people deliver a great unearned gift to those who happen to own it.

 

In 1909 a dangerous subversive explained the issue thus. "Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains – and all the while the landlord sits still. Every one of those improvements is effected by the labour and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived ... the unearned increment on the land is reaped by the land monopolist in exact proportion, not to the service, but to the disservice done."

 

Who was this firebrand? Winston Churchill. As Churchill, Adam Smith and many others have pointed out, those who own the land skim wealth from everyone else, without exertion or enterprise. They "levy a toll upon all other forms of wealth and every form of industry". A land value tax would recoup this toll.

 

It would have a number of other benefits. It stops the speculative land hoarding that prevents homes from being built. It ensures that the most valuable real estate – in city centres – is developed first, discouraging urban sprawl. It prevents speculative property bubbles, of the kind that have recently trashed the economies of Ireland, Spain and other nations, and that make rents and first homes so hard to afford. Because it does not affect the supply of land (they stopped making it some time ago), it cannot cause the rents that people must pay to the landlords to be raised. It is easy to calculate and hard to avoid: you can't hide your land in London in a secret account in the Cayman Islands. And it could probably discharge the entire deficit.

 

http://www.guardian.co.uk/commentisfree/2013/jan/21/i-agree-with-churchill-shirkers-tax?CMP=twt_gu

 

Land value tax is the way forwards.

 

For you see, as people improve parts of the city, the city improves, but not only does the city improve, the property prices in the improved parts rise.

 

People create real value, but this value is sucked up by the landowners, the landlords and home-owners.

 

This unearned increment in land values does not belong to the landowners, landlords and home-owners, it belongs to us all. If somebody improves the city, it should become a better city for us all.

 

Unfortunately, what happens is that improvements result in a financial gain for a few, and increased expense for the many.

 

Without land value tax, we have perverse incentives in society.

 

The perverse incentive not to build decent housing.

 

The perverse incentive not to improve ones area. (Why improve an area if it means it becomes more expensive to live in - I tell you now, if you are a private tenant, the most rational thing you can do is destory your area and make it less desirable to live in, for then you can benefit from cheaper rents. To improve your area and make it desirable would be very foolish indeed!).

 

LVT is what we need to implement in order to have a better society.

 

We need to do away with council tax (the poll tax) and replace it with a tax on property.

 

How can it be fair for a property-less person to pay council tax of roughly £1000 (an infinite amount compared to his property's value), when the owner of a £135 000 000 mansion pays about £1000, just 0.001% of its value...

[southcoast]

The rich have got it made here,while everyone else suffers.

[tinfoilhat]

The rich have it made everywhere.

[skinz]

http://www.guardian.co.uk/commentisfree/2013/jan/21/i-agree-with-churchill-shirkers-tax?CMP=twt_gu

 

Land value tax is the way forwards.

 

For you see, as people improve parts of the city, the city improves, but not only does the city improve, the property prices in the improved parts rise.

 

People create real value, but this value is sucked up by the landowners, the landlords and home-owners.

 

This unearned increment in land values does not belong to the landowners, landlords and home-owners, it belongs to us all. If somebody improves the city, it should become a better city for us all.

 

Unfortunately, what happens is that improvements result in a financial gain for a few, and increased expense for the many.

 

Without land value tax, we have perverse incentives in society.

 

The perverse incentive not to build decent housing.

 

The perverse incentive not to improve ones area. (Why improve an area if it means it becomes more expensive to live in - I tell you now, if you are a private tenant, the most rational thing you can do is destory your area and make it less desirable to live in, for then you can benefit from cheaper rents. To improve your area and make it desirable would be very foolish indeed!).

 

LVT is what we need to implement in order to have a better society.

 

We need to do away with council tax (the poll tax) and replace it with a tax on property.

 

How can it be fair for a property-less person to pay council tax of roughly £1000 (an infinite amount compared to his property's value), when the owner of a £135 000 000 mansion pays about £1000, just 0.001% of its value...

 

Parp! Zzzzzzzzzzzz - what? who said that...zzzzzz

[epiphany]

Excellent post Chem1st. The need for meaningful land reform is (or at least it should be) the proverbial elephant in the room amidst any small talk of nibbling at the edges of the current system. Or when the legal theft of the fruits of one's labour (income tax) dominates discussions on so-called wealth distribution. But in the name of what? Social justice? Why not make an objective, genuine economic cause for reform like many economists have been for centuries - i.e. a policy which isn't just about getting on the side of the poor and feeding the Marxian dialectic? Rather, a policy that is essential in moving towards a sustainable, free market system.

 

This whole subject matter of land reform is not a campaign to bring down the rich, or other such nonsense, it is, among other dillemas, about avoiding a property based "tragedy of the commons".

 

LVT proponents want wealth to be the unlimited reward for labouring, producing, creating and improving. They are perhaps only "left wing" in that they believe labour is the true source of value in this world.

 

Do people stop and wonder why LVT has been supported by notable economists and reformists from right across the economic spectrum? Or do they perhaps assume it is purely a partisan doctrine of the envious "lefty"?

 

Even Milton Friedman (individualist, pro-capitalist, libertarian) empathised with the Georgist position, stating that,

 

The least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago.

 

Even guffawing fans of Churchill are forced to acknowledge the fact he was keen to take a stand against the monopolistic land owner. I'm sure he wasn't called a jealous lefty because of it. Even if he were, his reassurances were more profound than anything we could put into words...

 

I hope you will understand that, when I speak of the land monopolist, I am dealing more with the process than with the individual land owner who, in most cases, is a worthy person utterly unconscious of the character of the methods by which he is enriched. - Winston Churchill

 

LVT is not about "bringing down the rich". It's about disincentivising and thereby minimising one of the often unseen parasitic externalities (the unconscious "process" Churchill spoke of) in what would otherwise be a system that encourages the most efficient use of a naturally scarce and ever scarcening resource - land.

 

Why is it that a reform concerning a resource so integral to our defining of market economics, property, liberty and opportunity, consistent in the writings of some of the most respected economic minds of our times, can be so confidently put to one side, in favour of sticking-plaster fixes such as minimum wage, income tax, council tax and a whole host of other inefficient means of correcting what are natural inbalances.

 

Until we fully understand what these economists saw, we will continue to laden proposals such as LVT with false presumptions fuelled by the "pop economics" of mainstream thought.

 

"A tax on land? Surely the price of land will skyrocket" (as if economists who propose LVT haven't thoroughly considered and debunked that possibility within their vast literature)

 

Read up on alternatives to the current system. We are still evolving as a society and we perhaps don't yet fully understand the implications of continuing with the status quo. But we will soon enough.