The incredible Ritchie

The FT notes this morning that:

Buyers spent £1.8bn on land for property development in central London in the second quarter of 2015, according to figures from CBRE, the world’s largest property adviser. This is the highest level since 2007, and up 118 per cent year on year.

If only we had a land value tax so much of that gain would be captured for public good.

No it wouldn’t you ignorant tosser. LVT doesn’t tax a gain nor a transaction.

10 thoughts on “The incredible Ritchie”

  1. If only we taxed the profits arising from property development, and the gains arising when land is sold to the developer.

    Oh, wait…

  2. LVT has even been hailed as a good idea by libertarians but I recall that Murray Rothbard attacked it. The idea goes back to Henry George who regarded value gains on “unimproved” land as collective property. Sounds quite socialistic to me since what about earning power that comes from inherited mental or physical traits? LVT sounds rational until you actually think it through.

  3. @ Pellinor

    Property development is taxed like any other industry – so no beef there.

    Gains on land sold for development, on the other hand, are woefully undertaxed relative to the incomes of those of us who work for a living so that we might one day get to live on said land.

    Plus, once land falls into the residential sector – or whatever snazzy trust arrangements are in vogue at the moment – then many future gains fall out of the tax system.

    Murphy has come around to liking LVT because he sees a new tax base. But it’s not a bad idea just because a twat likes it.

    @ Gareth

    Yes. It’s a stupid figure to draw conclusions from. Some of the plots might even have been sold at a loss. But the fact that land values have been shooting up in London isn’t in dispute. A step increase in volume might even suggest that an increasing number of sellers are seeing an attractive exit point.. though the relevant of that rather depends on who they’re selling to.

  4. Johnathan, LVT does not have to rely on a moral argument that land should be collective property. One can argue for it in moral-free terms: it is a perfectly efficient tax because it does not distort the market: it does not encourage anyone to do things or not to do things.

    “what about earning power that comes from inherited mental or physical traits?” What about them? Yes, some people are smarter or stronger than others, but if you start taxing the exercise of intelligence or strength, people will exercise those traits less. The analogy with LVT fails.

  5. “LVT doesn’t tax a gain nor a transaction.”

    I thought it was x% of unimproved land value, in which case doesn’t it tax gains in value, whether or not actually realised?

    Of course, when he says more money has been spent, that could just as easily reflect an increase in transactions as a gain in value – I am not committing the heresy of agreeing with him.

  6. Land Value Tax was “invented” by the Physiocrats who came up with the terms “laissez faire: laissez passer” in the late eighteenth century. Henry George came quite late on after Adam Smith and JS Mill had already written definitively in support of the idea.
    JS Mill proposed in the Manifesto of the Land Tenure Association that they would not tax existing land values but only gains over a tax year. So once again TW is wrong.
    The great merit of Henry George was that he spelt out in flaming letters 20 ft high in his bestseller “Progress and Poverty” that commercial Progress will always lead straight back to Poverty because land prices will inflate with the increase of money around and then all the potential spending power will disappear into increased rents and property prices. Like now but in spades now.
    Martin Wolf writes in favour of the so-called from-here-on LVT (and also stripping banks of the power to create money also seriously proposed 100 years ago).
    But there is a majority of fuckwits in this country who cannot believe that people as fabulously intelligent as they , are being taken for fools and right royally shafted.

  7. “that commercial Progress will always lead straight back to Poverty because land prices will inflate with the increase of money around and then all the potential spending power will disappear into increased rents and property prices. Like now but in spades now.”

    Interesting that. For of course we’re vastly richer today than we were in George’s time. Like 8-10 times so. Yet land values are a much smaller percentage of GDP than they were back then (see Zucman and Saetz for proof). So the contention isn’t actually true, is it?

  8. @TW
    You’re saying that land values don’t increase with the increase in the money supply , and this doesn’t decrease overall demand .Prove it. A difficult ask since you are an Adam Smith style land taxer.
    I notice you’ve given up claiming LVT can’t tax land value gains which was the subject of the argument. Perhaps you don’t want to admit to the neoliberal know-nothings on here that in recommending LVT ,Murphy has much in common with yourself.

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