Yes, that’s our one

I once researched some American writers who had been influenced by Henry George and discovered that his “single tax” on land values was considered a heresy among “proper economists”. As John Rapley remarks, Milton Friedman was then “one of the most influential economists of the late 20th century” but his belief that the single tax on land values was “the least bad tax” went unnoticed by admirers Margaret Thatcher and Ronald Reagan, and their countries subsequently suffered near terminal property price crashes.
DBC Reed
Northampton

Strangely, Maggie brought in the poll tax which was rather close to the idea of LVT.

Property tax in the US is for counties and cities, not the Feds.

40 comments on “Yes, that’s our one

  1. It speaks volumes for the Guardian letter page that DBC’s confirm utiin is’t the most numbskull. My vote goes to the Kushner’s. But then, I was predisposed to vote.for them the second my eyes alighted on “Emeritus Professor”.

    “Why isn’t he ‘In Practice’?” I asked myself.

  2. I thought there were two arguments in favour of LVT, an inelastic supply and an incentive to optimise land use?

  3. Yes, thus a poll tax is like LVT in he sense that it is taxing something in inelastic supply.

  4. “an inelastic supply and an incentive to optimise land use?”

    The same could be said for a poll tax, which is a tax on the individual person – each person only is one unique person (ie there’s an inelastic supply of me) and they would have an incentive to optimise their use of themselves (ie earn more money).

    I don’t know why the LVT crowd aren’t in favour of an high poll tax – if everyone had to pay £10k/yr poll tax, that would make people work hard wouldn’t it? Its ensuring the most efficient use of labour!

  5. The BBC exacts what is damn near a poll tax, but objected strongly to local councils exacting a poll tax.

  6. The supply of people is elastic. Heathrow alone handles 76m passengers a year.

    So no, Poll Tax is nothing like LVT.

  7. I think in terms of ease of collection a poll tax is nothing like LVT – houses don’t move, people do.
    I have lodgers some in the past stayed with me for 3 months or less – how easy would that be to tax?

  8. How dear to see DNR Reed engaging on a different platform and doing SO well until he got to the “near terminal” bit at the end.

    Bless!

  9. @anon – so you’re saying that HMRC are incapable of taxing people that move address? good to know – must look to move home in March next year… no tax for me!!

    Or we could set up a system where each person has a unique id – let’s call it “Unique Tax Payer Reference” or maybe “National Insurance Number” or “NHS Number” or “Driver Number” or any one of the million “Unique” ids we all have – and then at the start of the year we ask them to pay what’s due during the next year… if they don’t pay they don’t get to vote, treatment in hospitals, access to GPs, etc…

  10. ‘Property tax in the US is for counties and cities, not the Feds.’

    Changing. Obamacare created a 3.8 percent federal health care tax on the sale of houses. Exclusions have it applying “only to the rich,” but Fed taxes always morph over time to cover everyone.

  11. Council Tax is closer to LTV than the Poll Tax was.

    Poll Tax was liability=number_of_people*base_rate.
    Council Tax is liability=value_of_property*fudge*base_rate.

    The property value had no input into the Poll Tax liability. Getting rid of the fudge would make Council Tax into a proper LVT.

  12. What is the value of unimproved land in the UK?
    May I suggest that it is less than the capitalised value of agricultural production (preferably, being a pendant, times the ratio of agricultural plus urban land to agricultural land) and that you cannot levy a one-off tax more than the capitalised value nor a recurring tax greater than the annual income.
    With gross agricultural production of £12-13bn, less than 1% of GDP, and government spending in excess of 40% of GDP, Mr Reed’s idea that a LVT could replace other taxes verges on the ludicrous.
    Mr George’s idea may well have been viewed as heresy by those “proper economists” who had learned arithmetic instead of rhetoric.

  13. @Bloke in Cornwall
    I am saying that local Government are incapable of taxing people who move a lot in a cost efficient way.
    LVT is on a building which doesn’t move, income tax is often collected PAYE so easier, taxing people for being in an area is much harder.

  14. john77, that’s not how LVT works. Under LVT, the tax on a parcel of land varies depending on what is going on around it (the value of what other people are doing with the location, if you like). It’s not a fixed rate, and it’s not the same rate for every piece of land.

  15. An acre of Belgravia might pay £5 million a year (dunno, just a guess) while an acre of Northumberland Moor might pay 5 pence a year.

    It’s not the value of agricultural land being taxed, it’s the value of the land *where it is* but with nothing on it being taxed.

  16. “it’s the value of the land *where it is* but with nothing on it being taxed.”

    Confused?

    If there is “nothing” on it, presumably it doesn’t have planning.

    In that context, Hyde Park or Green Park doesn’t have much value to anyone who might own it (assuming they can’t charge for access / concerts or whatever else), or otherwise do anything with it?

    And if one charges an LVT on the fact that it already has planning, then one is already charging LVT on elements of value “in excess of nothing”, and in which case why does the definition stop at “just planning” (and hence value the benefit of planning in that location)?

    Just curious.

  17. PF, Hyde Park would have an enormous value if it were for sale. LVT encourages the efficient use of land. If you have an enormous tax liability on a piece of land that is not generating income, it concentrates the mind

  18. If my house is worth £500,000 and it would cost £126,000 to rebuild it (I have just renewed my insurance, so this is the figure from the tables) then the land itself must account for the difference

  19. So the Highways Agency builds a bypass to my village – the residential value goes up as the roads are quieter, but the businesses lose value as the passing trade never sees sight of them. Under a LVT some government committee has to work out the wins and losses and adjust accordingly. I don’t like things that involve government committees.
    But if there was a market mechanism for determining the change in value, then LVT could work, but keep government out of it, thanks.
    Stamp Duty would have to go imv – it would be unfair on the hermit family who’ve seen their residential LVT rise due to the bypass, who didn’t ask for the bypass, and don’t benefit from the extra value unless they sell up and relocate. somewhere cheaper.

  20. Diogenes accurately presents the standard way of working how much the land value amounts to in the going-price of your house: just find out what the insurance rebuild value is by using the ABI calculator (Association of Building Insurers) then deduct this from the selling price; what’s left is the land value.
    Yes it is a lot. That is why Land Taxers consider the present position a crisis.In the 1930’s the land value was about 3% of the house price; now it accounts for 70%.

  21. I and all my family and most friends believed the Community Charge was a sensible & equitable replacement for rates.

    If Blair & Brown or even Wilson had introduced it BBC et al would have been in favour.

  22. Some fecker with a government badge still has to work out the selling price. Unless you want to wait the average of 15 years or so until it actually does get sold and then charge CGT ( with adjustment for inflation. )

  23. “Some fecker with a government badge still has to work out the selling price.”

    And if the property lies in an area that developers are interested in, the government fecker will be under the “influence” of said developers.

    Which is why I regard LVT as a kind of automated, ongoing eminent domain scam. If people with significantly more money covet your property, they can have it. It’s like the Russian gangsters kicking people out of their lovely Adriatic homes but without even having to bother with the threats.

  24. “LVT encourages the efficient use of land.”

    If the efficient use is defined as “being in the possession of who can most easily afford it”, then yes.

  25. Bongo, if there are no house transactions in your neck of the woods then you live somewhere where few people want to live. Hence land values must be low.

  26. Pjf, gave you any examples of government officials knowingly undervaluing assets? How will these gangsters underpay for your land, extract profits and pay low LVT?

  27. “..how would you define the efficient use of land?”

    There are, of course, many definitions depending on context.

    In this context, I’d go with “being utilised as the landowner wishes (within the law)”.

    I believe a poor landowner should be able to retain ownership without additional penalty, even if Donald J. Trump builds a 17 hole golf course next door.

  28. @tim “But the economic argument in favour of LVT is that supply is inelastic.” – are you sure? I thought it to do with that land rent is entirely economic rent – due to no person’s toils, and hence a tax on something valuable that nobody can really claim is theirs.

    And there’s a lot of it.

    That it be inelastic wrt supply is what makes it a ‘pure’ rent, but what makes it a good idea to tax is that nobody ‘earned’ it themselves ( and there’s a lot of it, as already said).

  29. “Pjf, gave you any examples of government officials knowingly undervaluing assets? How will these gangsters underpay for your land, extract profits and pay low LVT?”

    You have it backwards. With LVT, a corrupt government fecker will overvalue land in order to force poor owners off. Once the richer person has possession, values can be reassessed…

  30. Diogenes: if there are no house transactions in your neck of the woods then you live somewhere where few people want to live. Hence land values must be low.

    On the contrary, it could mean that there are infrequent sellers because it’s so nice a place to live. Hence land values must be high.

  31. If LVT is (as its proponents state) a tax on the unimproved locational value of land, then its should really be unrelated to the nominal value of any particular house, office, park etc that is on it. It should merely be a charge per square meter, each area having its own multiplier. How big each ‘location’ is would be up for discussion, but the principle is clear – any plot of land in location A of the same size should pay the same LVT, because both have identical location value, regardless of what is built (or not) on them. Thus a council house should have the same LVT as a detached house on a private estate, if they are in the same geographical area and have the same plot size, as should a same sized piece of open space.

    Once you start valuing individual properties and using that as a basis for the LVT, then you are bringing into the equation the nature and type of improvements that have been done to the land, and also the State imposed restrictions on its use via planning, none of which affect its pure location unimproved value.

  32. “Once you start valuing individual properties and using that as a basis for the LVT, then you are bringing into the equation the nature and type of improvements that have been done to the land, and also the State imposed restrictions on its use via planning, none of which affect its pure location unimproved value.”

    The purpose of any property value assessment is to establish the level of demand for the location. If Steptoe and Son’s rag and bone yard sits in newly redeveloped Kings Cross, the LVT authority will assess the value of those neighbouring properties (via resale vs rebuilding?) and charge LVT on the Steptoe’s land (yes, by area) according to that level of demand.

  33. LVT is related to the value of the crop, minus input costs, that could be grown on the land, before improvements like drainage, windbreaks, fertilisers etc..
    Let’s have a discussion about LVT OR a discussion about rates on the improved value of the land but please can we decide which one we’re having?.

  34. @ PJF
    Look it up – once you build, or park a mobile ice-cream van/burger-bar, on it you no longer have unimproved land.

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