[philiphos]

After watching their 30 mins documentary about Land Value Taxation(LVT) and how it tackles tax avoidance, increases public revenue and decreases other taxes like corporate and income tax boosting the economc activity, what's your opinion on this? Is this really the solution, is this even feasible? o.O

http://www.landvaluetax.org/what-is-lvt/
http://www.economist.com/blogs/economis ... explains-0

[Paradigm]

It might be a feasible solution in a world in which governments are actually structured to serve the population as a whole, rather than the mode of production for which they were designed. And if we lived in that world, then LVT would no longer be needed.

[Rich]

I long ago independantly came to favour a land value tax. In fact I probably came to the idea the first time I thought seriously about taxation. Of course we shouldn't imagine it could be the only tax without massively reducing the size of the state. I would suggest it should be introduced gradually and increased to a rate of 60%. higher than that would risk serious market distortion from mis-valuations.

Unfortunately for the chances of getting it implemented, two powerful groups stand to lose by it, the rich and the old.

[Stormsmith]

No.

1. House and land values widely vary, even within a city, but the consumption of tax-paid services does not.

2. Land values can spike for a wide variety of reasons, but the occupant's income may not. If you don't live near a university etc, and one is suddenly introduced within a two mile circle, your home's value will suddenly increase. that's swell if you want to realise a higher capitial gain by selling it. If, however, you built your home 20-30 years ago, and are on a pension, your income may not be adequate to pay the new tax value.

All governments require capital. Personally, I'd like t o see a government that runs a few companies, ie, postal services, liquor and pot distribution, pharmacies, hydro power, forestry, oil, - in short, a diverse publically owned portfolio that provides well paid jobs and creates enough profits, without gouging taxpayers, to pay the lion's share of government services but failing that, a graduated income tax is the fairest way forward

[philiphos]

You do know that in some cases land is just that, land and is not being used other than the fact to get someone richer and richer by speculating and contributing nothing to society, by taxing land you would diminish Social inequality raise public revenue leading to deficit zero or a surplus and besides the land owner would start "using" his land and not just living from speculation...

[Contrapunctus]

Georgist land taxes are something I'm moderately familiar with. From the little I've read, I feel like a Land Value tax would work best for urban environments in order to prevent too much sprawl, keep the local economy flourishing, and promoting land utilization. I'm not sure how it would work in rural areas, or on a national scale for that matter. As far as other taxes go I support progressive income tax, and a negative income tax.

[Truth To Power]

After watching their 30 mins documentary about Land Value Taxation(LVT) and how it tackles tax avoidance, increases public revenue and decreases other taxes like corporate and income tax boosting the economc activity, what's your opinion on this? Is this really the solution, is this even feasible? o.O

http://www.landvaluetax.org/what-is-lvt/
http://www.economist.com/blogs/economis ... explains-0

It's certainly feasible, and has created economic miracles everywhere it has ever been tried. It's been known for over 200 years that land value taxation is the fairest and most economically and socially benign form of taxation, a fact that no competent economist disputes. That is why the Founding Fathers specified in the Articles of Confederation that the government of the newly formed USA should be funded entirely by a land value tax. Unfortunately, rich landowners did not want to give up their privilege of robbing and enslaving everyone else, so they refused to pay it, and threatened to start and finance a civil war if the federal government tried to collect it. This prompted the states to call a constitutional convention. That resulted in the current US Constitution, which explicitly forces the federal government to steal money from producers and consumers and give it to greedy, idle, landowning parasites.

You can read more, including comprehensive and conclusive refutations of all objections to LVT, in the, "Why I support Georgism and Land Value Taxation" thread here:

viewtopic.php?f=9&t=153750

No.

Yes. Without reading any further, I know that you will be offering objections to land value taxation that are fallacious, absurd, and dishonest. I know that because all objections to land value taxation have always been fallacious, absurd and dishonest, and they always will be.

1. House and land values widely vary, even within a city, but the consumption of tax-paid services does not.

No, that's baldly false. Consumption of tax-paid services varies even more than land value: some people hardly use any services, others use lots.

But even if you were right about that (you're not), it would be irrelevant, because what matters is not the consumption of tax-paid services, but the benefit derived from them, which the landowner gets, and deprives others of. When a vacant lot rises in value from $1K to $1M, that is a welfare subsidy of $999K from the community to the landowner, even when no one has been consuming any tax-paid services on that lot. The unimproved value of land simply records the market's estimate of the value of the net subsidy the landowner can expect to pocket at the expense of the community.

2. Land values can spike for a wide variety of reasons,

They can't spike in a community where the welfare subsidy to the landowner is being recovered by taxation, because there is no welfare subsidy to speculate about.

but the occupant's income may not.

Too bad the occupant and his income are both completely irrelevant to the fact that land value is simply the size of the expected subsidy to the owner, which should rightly be repaid to the community that creates it.

Land value tax is paid by the owner, not the occupant, and the occupant's and owner's income are both completely irrelevant to the fact that the owner should rightly be repaying what he takes from the community, and of which he is depriving others who would otherwise be at liberty to enjoy it.

If you don't live near a university etc, and one is suddenly introduced within a two mile circle, your home's value will suddenly increase.

The land's value, you mean. So the community has given you a gift, a welfare subsidy.

that's swell if you want to realise a higher capitial gain by selling it.

It's also swell -- for you, that is -- if you don't. You are still being given a larger welfare subsidy.

If, however, you built your home 20-30 years ago, and are on a pension, your income may not be adequate to pay the new tax value.

In which case you have some happy options to choose from:

1. You can take advantage of the increased welfare subsidy the community is giving you by renting out space to students or employees of the university, gaining enough additional income to pay the tax (and probably quite a bit more).

2. You can sell your house and land for an unearned capital gain and buy a nice house in a neighborhood where the public services and infrastructure are better suited to your needs and means.

3. You can provide lodging to your grandkids while they go to the university.

4. Etc.

All governments require capital.

And the best source is self-evidently the value their spending creates. That value is currently taken by landowners, as the Henry George Theorem shows.

Personally, I'd like t o see a government that runs a few companies, ie, postal services, liquor and pot distribution, pharmacies,

There is no reason to expect that government could operate such businesses profitably in competition with private business. Liquor and pot should just be taxed to raise revenue. Especially liquor, as unlike pot, its use is associated with violent crime and other socially costly phenomena.

hydro power, forestry, oil,

These are different in that they involve recovering the rents of natural resources, not trying to profit from efficient operations. Oil and forests can be leased competitively to recover the resource value for public purposes and benefit. Utilities like electric power, transportation infrastructure, water and sewer systems, etc. should be run by government, as much of their value is taken into land value, and private industry therefore can't invest efficiently in them.

- in short, a diverse publically owned portfolio that provides well paid jobs and creates enough profits, without gouging taxpayers, to pay the lion's share of government services

See above for better ideas.

but failing that, a graduated income tax is the fairest way forward

No, a graduated income tax is not fair or economically efficient, because it explicitly declines to distinguish between income that the recipient earns by his contributions to the welfare of the community and income that the recipient obtains without making any commensurate contribution, through privileges such as land titles. The latter should rightly be taxed away completely, the former left to the person who earns it.

Georgist land taxes are something I'm moderately familiar with. From the little I've read, I feel like a Land Value tax would work best for urban environments in order to prevent too much sprawl, keep the local economy flourishing, and promoting land utilization.

It will work well in all environments. It's actually ironic that you make such an objection, as others opposed to LVT typically claim -- absurdly, given its astronomical value in urban and suburban areas -- that land is irrelevant except to farmers.

I'm not sure how it would work in rural areas, or on a national scale for that matter.

LVT is best suited to local government, as land can't move to a lower-tax jurisdiction.

As far as other taxes go I support progressive income tax, and a negative income tax.

LVT with a universal individual exemption (or, second best, a citizens' dividend) is a much better alternative.

[Stormsmith]

You do know that in some cases land is just that, land and is not being used other than the fact to get someone richer and richer by speculating and contributing nothing to society, by taxing land you would diminish Social inequality raise public revenue leading to deficit zero or a surplus and besides the land owner would start "using" his land and not just living from speculation...

I'm well aware of it. This is what's happening right now, where I live and in the Vancouver regions. Wealthy Asians are speculating, but spending their time at home.

They pay property taxes. If they only buy one piece of real estate at a time, they may not even have to pay capital gains tax when they sell. That said, one can make money and not do much to contribute to society by purchasing comic books and keeping them until they've accrued value, too.

What the result has been is to drive up home aned land values, a boon for the municiple governments, but everyone else's property tax is also escalating. Property prices are so high, young people/couples are becoming priced out of the market. There are other cities and towns of course, in the province, but the lion's share of the people and the jobs are in these two . If you think that's reducing the tax rates in other venues, you'd be dead wrong. The province announced a huge list of things that will have increases in taxes as of Jan. 1, 2015.

I know that because all objections to land value taxation have always been fallacious, absurd and dishonest, and they always will be.

Source, please. I'm particularly interested in the source pertaining to the predictive portion.

[Truth To Power]

This is what's happening right now, where I live and in the Vancouver regions. Wealthy Asians are speculating, but spending their time at home.... They pay property taxes.

Their property taxes are a fraction of 1%, and a much smaller fraction -- typically 1/10 to 1/20 -- of the average annual increase in their publicly created land value.

That said, one can make money and not do much to contribute to society by purchasing comic books and keeping them until they've accrued value, too.

Three differences:
1. The comic books aren't something that others would otherwise have been at liberty to use.
2. The value of the comic books doesn't come from other people's taxes.
3. Holding the comic books idle doesn't impose costs on society.

What the result has been is to drive up home aned land values, a boon for the municiple governments,

It's not a boon for municipal governments. They have to pay more to acquire land for public purposes.

I know that because all objections to land value taxation have always been fallacious, absurd and dishonest, and they always will be.

Source, please.

Just look at all the threads where LVT is discussed.

I'm particularly interested in the source pertaining to the predictive portion.

<yawn> Keep reading, pal. Just keep reading.

[ingliz]

There is nothing inherently special about land. Taxing of negative externalities is plainly superior from an efficiency perspective.

Arthur Cecil Pigou, The Economics of Welfare (1920)
Baumol, William J. 1972. On Taxation and the Control of Externalities. American Economic Review 52(3): 307-322.

[Truth To Power]

There is nothing inherently special about land.

I already refuted that FALSE, ABSURD AND DISHONEST GARBAGE in the post immediately above yours:

1. Land was already there, ready to use, with no help from the present or any previous owner. Nothing else was or is, certainly not capital goods.
2. The desirable services and infrastructure that taxes fund can only be accessed to advantage from certain locations -- land -- in fixed supply, and the full market value of those tax-funded services and infrastructure is therefore taken by those who control access to those locations -- i.e., almost always, private landowners.
3. Whenever anything but land is taxed, people have to pay for government TWICE: once in taxes to the government to fund desired services and infrastructure, and then again in land rent to landowners for access to the same services and infrastructure their taxes just paid for.
4. So landowners and ONLY landowners inherently get to pocket everyone else's taxes.

Taxing of negative externalities is plainly superior from an efficiency perspective.

Arthur Cecil Pigou, The Economics of Welfare (1920)
Baumol, William J. 1972. On Taxation and the Control of Externalities. American Economic Review 52(3): 307-322.

And for the exact same kinds of reasons -- as well as others -- taxing the positive externalities the landowner and ONLY the landowner inherently benefits from is also superior from an efficiency perspective.

[Stormsmith]

<yawn> Keep reading, pal. Just keep reading

Okay. Which source would you like me to read? Other peoples' opinions in other threads are opinions, not proof.

[Truth To Power]

Okay. Which source would you like me to read? Other peoples' opinions in other threads are opinions, not proof.

You could start with this:

http://en.wikisource.org/wiki/Open_lett ... chev_(1990)

It identifies most of the relevant facts, and is signed by dozens of eminent Western economists, including four (count 'em, four) Nobel laureates.

[ingliz]

taxing the positive externalities the landowner and ONLY the landowner inherently benefits from is also superior from an efficiency perspective.

Not politically.

Given a 'council tax' of 1.5% per annum; a flat tax of 20%; an average UK house price of £272,000; and a minimum state pension of £113 per week.

LVT: 272.000 x 3/200 = £4,080

Flat tax: 5,876 x 20/100 = £1,175

Total tax to be paid: 4,080 + 1,175 = £5,255

Pension: 113 x 52 = £5,876

Leaving roughly 1 million asset rich/cash poor landowners* trying to live on £12 a week. With 76% of pensioners voting, a political party that even hints at introducing such a tax is toast electorally. Even if you promise to give the poorest pensioners it all back in benefits you're screwed as this is bound to piss off those who don't get a pass.


* Of the 3 million pensionable widows and widowers in the UK, only 50% get a full state pension, 76% own a house.

[Truth To Power]

taxing the positive externalities the landowner and ONLY the landowner inherently benefits from is also superior from an efficiency perspective.

Not politically.

Mod Edit: Rule 2 violation removed

Given a 'council tax' of 1.5% per annum;

Council tax is not LVT.

a flat tax of 20%;

What flat tax? LVT is not an added tax, it replaces other taxes.

an average UK house price of £272,000;

Land is not housing, housing is not land. You have to think in terms of land rent as the tax base, not land value, because land value depends quite sensitively on the tax rate.

and a minimum state pension of £113 per week.

Remember: modern LVT proposals all include a universal individual exemption (or, second best, a citizens dividend).

LVT: 272.000 x 3/200 = £4,080

Nope. Wrong again. That implies land rent of £340/month. Not too unlikely, but you forgot the individual exemption, which would be around half the median per capita residential land rent. I don't have a strong opinion on how much the UK's median per capita residential land rent might be, but it's probably around 6% of per capita GDP. Per capita GDP is £25K, so call it £1500. Half that is £750. So someone using the median amount of land by value would pay about 63 quid a month in LVT -- and NO OTHER TAXES. Plus the cost of living would be roughly halved by the lifting of the burden of taxation from production.

Now you need to explain why the land rent of this widowed pensioner's house is assumed to be nearly three times the median per capita land rent. Surely such a prime location should be used by someone better able to take advantage of it.

I'm waiting.

Mod Edit: Rule 2 violations removed

Pension: 113 x 52 = £5,876

The one accurate claim in your post.

Leaving roughly 1 million asset rich/cash poor landowners* trying to live on £12 a week.

No, they'd be living on nearly £100 a week, which would go twice as far as it does now.

With 76% of pensioners voting, a political party that even hints at introducing such a tax is toast electorally.

Because fools believe liars.

Even if you promise to give the poorest pensioners it all back in benefits you're screwed as this is bound to piss off those who don't get a pass.

There is only one group who would lose by LVT: rich, greedy, landowning parasites. Even 90% of the liars who serve them would actually be better off.

* Of the 3 million pensionable widows and widowers in the UK, only 50% get a full state pension, 76% own a house.

Probably 90% of UK homeowners would be better off with LVT. But they would rather go on tugging their forelocks to the Duke of Westminster and his greedy, idle ilk.

The question is, do the home-owning widows and widowers want their children and grandchildren to live in a society of liberty, justice, prosperity and opportunity, by giving up the (illusory) value of the land under their homes, or do they want their children and grandchildren to continue to live out their blighted, futile lives as the slaves of landlords and mortgage lenders, praying for Grannie or Grandpa to die so that they may at last inherit the little postage stamp of land the rich have permitted them, and finally live?

The English working class's instinctive urge to prostrate themselves before landowners is remarkably impervious to all considerations of fact, logic, economics, morality, justice, and basic human rights.

And that is no laughing matter.

[Lightman]

I once saw a proposal in which landowners would self-appraise the value of their land, with the proviso that they would be legally obliged to sell if someone met that price. An interesting idea, though has the unfortunate side effect of potentially rendering people homeless if they value their homes low.

[ingliz]

it replaces other taxes.

Only if your intention is to cut public services, if that is not your goal, you would need the flat tax to make up for lost revenue. As you are taxing only land, and LVT is designed to bring down the value of land, the tax take will inevitably fall over time if you don't prop it up somehow.

£750

According to Glasgow City Council Local Taxation Working Group Overall Findings, a revenue-neutral LVT is 3.7%, but council tax only provides about a quarter of local funding with 75% being a central government grant. So if LVT is to replace other taxes entirely, you would have to multiply that figure by 4, and even then it would not cover all costs.

Realistically with the semi-detached still the most popular type of housing in England.:

The CT charge on a modern semi-detached house in band D rose from £1,213* to an LVT charge of £1,920.

LVT: 1,920 X 4 + y = £7,680 + y


* As of 2011, the average annual levy on a property in England was £1,196.

[Truth To Power]

I once saw a proposal in which landowners would self-appraise the value of their land, with the proviso that they would be legally obliged to sell if someone met that price. An interesting idea, though has the unfortunate side effect of potentially rendering people homeless if they value their homes low.

Now, they'd still have the value of their improvements, and presumably the ability to pay whatever land tax they estimated for their parcel.

it replaces other taxes.

Only if your intention is to cut public services,

Much if not most current government spending would not be necessary with LVT, as there would be little poverty or injustice to ameliorate.

if that is not your goal, you would need the flat tax to make up for lost revenue.

No. Prof Mason Gaffney has demonstrated that LVT's revenue capacity is ample to fund desired services and infrastructure, because reducing other taxes increases land rent. This is true almost by definition (the Henry George Theorem).

As you are taxing only land, and LVT is designed to bring down the value of land, the tax take will inevitably fall over time if you don't prop it up somehow.

No. It reduces the value of land because it reduces the subsidy to the landowner, not because it reduces land rent. Removing other taxes and increasing efficiency and production will probably increase aggregate land rent, which is the actual tax base. Land value is just a convenient way to measure relative land rents for the purpose of levying the tax. At a high level of LVT, land value becomes derisory, and the tax is then calculated directly from land rent, not land value.

£750

According to Glasgow City Council Local Taxation Working Group Overall Findings, a revenue-neutral LVT is 3.7%, but council tax only provides about a quarter of local funding with 75% being a central government grant. So if LVT is to replace other taxes entirely, you would have to multiply that figure by 4, and even then it would not cover all costs.

As explained above, much of current government spending would be unnecessary, and the revenue capacity of the land tax would increase as other taxes were removed.

Realistically with the semi-detached still the most popular type of housing in England.:

The CT charge on a modern semi-detached house in band D rose from £1,213* to an LVT charge of £1,920.

OK, so you agree the numbers in your previous post were just made up, as is:

LVT: 1,920 X 4 + y = £7,680 + y

LVT can't raise more than the land rent, which would require an infinite ad valorem tax rate. In practice, it would be like leasing land from the government at the market rent. IOW, people would just be paying in tax what they would otherwise pay a private landowner for use of the land. The purely parasitic landowner is just taken out of the equation, and other taxes reduced accordingly.

* As of 2011, the average annual levy on a property in England was £1,196.

A more meaningful number would be the median levy on a residence. And how much were people paying in other taxes?

[ingliz]

LVT can't raise more than the land rent

That is true, but when the government is assessing rental value and can set a rent at any level it pleases, for any purpose it chooses, it is wide open to abuse and unintended consequences. The neutrality of LVT is only guaranteed on the condition that a central government applies ‘uniform’ rate of payment on perfectly competitive market based rents of the land throughout the whole area of an economy.

much of current government spending would be unnecessary

Why?

Much if not most current government spending would not be necessary with LVT, as there would be little poverty or injustice to ameliorate.

[wat0n]

That is true, but when the government is assessing rental value and can set a rent at any level it pleases, for any purpose it chooses, it is wide open to abuse and unintended consequences. The neutrality of LVT is only guaranteed on the condition that a central government applies ‘uniform’ rate of payment on perfectly competitive market based rents of the land throughout the whole area of an economy.

Indeed, though as long as the tax doesn't surpass the land's value (without improvements) there should be no change in behavior.

On the other hand, assessing the value of land without improvements is not an easy task and even a well-meaning government could make mistakes, overestimating land value and setting a tax above its value.