Thursday, 17 January 2013

U. Re-writing history

• If LVT is such a great idea, how come no country has ever tried it?

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• LVT is un-British as it is an attack on land ownership

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• Land ownership is the foundation of free enterprise (skip to article)
• We are a property owning democracy (skip to article)

1. "If LVT is such a great idea, how come no country has ever tried it?"

Plenty of countries have forms of LVT, or have had in the past, and it works exactly the way we expect it to work, keeps prices down, keeps land in use, discourages monopolisation, cheap to assess and collect, low evasion rates etc.

The oldest surviving tax we have in the UK is Business Rates, which goes all the way back to the Poor Rates introduced nationally in England & Wales in the 16th century. Queen Elizabeth I, canny politician that she was, must have twigged that the reason there were so many poor people in the first place was because they were being driven off the land; so the neatest way to alleviate poverty was to levy a tax on those people (land owners) who had caused it in the first place and dish it out to the landless. So the earliest Georgist was in fact Queen Elizabeth I.

Over the centuries, the Poor Rates were then split up into Agricultural Rates (which disappeared around 1900), Domestic Rates (which ended in 1990, except in Northern Irelan) and Business Rates (which is still going strong). We still had Schedule A income tax on the notional rental income from owner-occupier housing until 1963.

2. "LVT is un-British as it is an attack on land ownership

"

See above. LVT is very British indeed, and we exported to idea to lots of our colonies, most of whom still have it.

Historically, the bulk of UK government revenues were from annual taxes on land values, it is taxes on income, employment and output which are modern inventions, and over time, the amount collected in annual land taxes has gradually fallen.

And it's not an "attack on land ownership". LVT only works if people own land, or else there's nobody to pay the tax. The whole point is to maximise the benefits to owning land in the UK (such as cutting taxes on earned income) and then reclaiming those benefits for the benefit of everybody.

3. "Land ownership is the foundation of free enterprise"

Where on earth does this come from? LVT is synonymous with land ownership (if nobody owns land, then there's nobody to pay the tax).

a) Not even farmers need to "own" the land they farm. Historically it was "the community" which "owned" the land (i.e. the community put together the army to fight off invaders) and people just farmed their share, strips would be allocated to individuals for one season, and when people died or became adults, the strips were reallocated.

b) In more modern nation-states (feudalism), the King nominally owned all the land and everybody else was a tenant, but they all farmed away quite happily, and the King was responsible for sorting out defence, law and order and so on. In modern times, only a third of UK farmers are still tenants, but they farm away quite happily. The only important thing is that they have exclusive possession of the land they work.

c) Businesses don't need to own land either. Office blocks and retail premises are all pretty generic, whether you rent or own your premises makes no difference. Some manufacturers need to install huge amounts of expensive equipment, so they need exclusive possession, but as we know, these businesses tend to occupy huge amounts of very low value land at the edge of towns and cities, and their LVT bills will be no more than what they currently pay in Business Rates anyway (it's just that the other taxes they pay would be halved).

4. "We are a property owning democracy"

This is another of those now-meaningless phrases, which was first used in 1923. As it happens, the originator meant something quite different to Home-Owner-Ism. It is a modern perversion of the phrase to describe any Western country as a "property owning democracy", as over half of people do no own any land, they are paying rent or mortgage interest instead.

The "democracy" owns stuff which is public, government, national or common property, like the army, the roads, council housing, the biros in No 10 Downing Street, the village green. We decide (in a very haphzard democratic fashion) who uses it, what we use it for, how much we spend on it, and how much tax or rent we collect from it.

Planning laws dictate how land may be used, so the "democracy" also controls and "owns" land use. So what's wrong with taking the phrase as it was originally meant and letting the "democracy" collect the rental value, which the "democracy" creates in the first place. Without a stable government and a stable, reasonably law-abiding society, there is no land ownership and there are no rents to collect. Or have you tried buying land in Afghanisatan or Somalia recently?

Surely LVT is better than the "democracy" owning half the value of everybody's output via income tax etc? If, worst case, LVT demotes a landowner to being a tenant again, then that's not as bad as being demoted from a free man to a semi-slave via income tax etc.

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