Politicians as a general rule are rapacious by inclination, but what really differentiates them from ‘private sector’ thugs, such as muggers, burglars and home invaders, is their breathtakingly smug sense of morality inverting entitlement to your things… a conviction that anything you ‘own’ is only done so at their sufferance.
Mr Cable’s move to back a land tax is likely to prove the most controversial. Supporters of a land tax, who outlined their case at a fringe event at the conference, say that an annual tax on the rental value of land would be fairer than levying charges on the sale of homes or on the purchase of goods through VAT. Land, they argue, “is a basic community asset” and individuals should be taxed when they claim “exclusive use” of particular plots.
In other words, you cannot ‘own’ land in reality, you can only rent it from the state, who will allow you to control their land only if you can keep paying the annual rent they decide to levy on it. Moreover the notion of taxing a non-producing asset like private residential land is tantamount to a ‘war on retirement’ and wholesale residential collectivisation. It is a literal end to the notion of freehold.
I have never understood how some credulous libertarians and conservatives have ever seen supporters of the Land Value Tax as anything other than the rapacious collectivising rent seekers that they are.
I’ll take a land tax over an income tax (no tax is ideal, of course) because a land tax would discourage existing rent-seeking through the nationalised planning system, whereas income tax discourages work.
Huh? A LVT is about the purest example of ‘rent seeking’ possible. Indeed as they are talking about taxing non-producing assets like private freehold property, it turns all land ownership into mere rental-from-the-state… it is nothing less than a feudal relationship.
An income tax by definition means income has to occur to incur any tax, and therefore ability to pay has to be there. No income means no income tax.
But simply taxing land means you are taxing ownership rather than acquisition, so no such ability can be imputed short of selling the home that is being taxed in order to pay the taxes… so therefore if you do not have some other income, you cannot ‘own’ land as mere possession requires you to pay annual rent to your overlords.
You can borrow on the security of your land, and pay your land tax with that. You don’t need an income.
The essential distinction is that income is portable – an English plumber can move to Australia and plumb there. But land isn’t. If you own English land, they can take it all if they want. And, in time, they almost certainly will.
So you can mortgage the non-producing land to pay the taxes? And banks will want to lend money to people for that so that when they default or die, they can end up with a nice highly taxed bit of land no doubt 😀
Well as I said, talk about a ‘war on retirement’… not to mention a war on inheritance, a war on severalty and a war on security. Who the hell would want to buy property in the UK? So the solution to excessive property prices is to collapse the market by making the prospect of owning land so unattractive than no one actually want do do it any more.
Except of course the state, who can dole out nice egalitarian state houses to people.
Which is actually the objective.
What is council rates if not a land value tax? We already have it. Has it replaced any other tax burden? no. Will it remain the same? no. Does it have an inherent ability to pay included? no. Do you go to prison for not paying it? yes.
Indeed Peter, and this notion promises to vastly increase the amount taxed on non-producing land. If council rates are a Bad Thing, LVT is a vastly worse thing.
The claim is made that “an annual tax on the rental value of land would be fairer than levying charges on the sale of homes or on the purchase of goods through VAT.”
Fair is a matter of opinion. They could squeeze less out of us in the first place too.
Taxes on economic activity are restrained by the Laffer curve and politics. LVT is only restrained by politics.
Perry de Havilland,
“Who the hell would want to buy property in the UK? So the solution to excessive property prices is to collapse the market by making the prospect of owning land so unattractive than no one actually want do do it any more.”
We tax people quite heavily, but people still work here, so that logic makes no sense.
The question is which has the most impact on productivity: taxing land or taxing work. If we tax work, we get less of it. People will move abroad. If you tax land, you don’t get less tax. Furthermore LVT is a tax on people who gain advantage from location values that are generally created by the state – the state improves a railway line, the house prices rise near the stations on that line. The state opens a new department in a town, the price of housing rises in that town. Why should those landlords get an untaxed windfall? The flipside is that people oppose developments that have a detrimental effect on their house prices, things that all of us want. Why should those people lose out for services that we want? Why not reduce their tax rate accordingly?
Tim Almond says:
then
So the logic apparently does make sense.
Also:
No, LVT is a tax on people who own land, whether they “gain advantage” or not.
I’m not a landlord; why should I pay extra tax when I’m not getting extra benefit?
Of course it makes sense. People will simply be less inclined to buy land.
No, that is not the question. The question is “what does undermining the core aspect of severalty by replacing the possibility of actual ownership with that of renting do to a person’s entire relationship to the state?”
Not true but even if it was, so what? You get less owner occupied freeholders living ion their own homes and more and more land ends up owned either by the state or by large professional landlords whose relationship with the state makes owning land still economically viable for them, i.e. they have lots of producing land so they end up buying non-producing land (i.e. people’s homes) and turning them into producing land, which is to say rental properties. You get less people owning land in the form of homes, which of course makes it cheaper and easier to tax for the state, and almost everyone rents where they live from a big well connected landlord.
Why not? They are the ones risking their capital owning that land. Of course to a statist, that might seem inexplicable. Likewise, when a state opens a new department, people like me start looking at property prices in New Zealand.
Perry,
Of course it makes sense. People will simply be less inclined to buy land.
Right, so, it’s “less inclined” rather than “no-one”. In exactly the same way as people being less inclined to work if you tax work.
Not true but even if it was, so what? You get less owner occupied freeholders living ion their own homes and more and more land ends up owned either by the state or by large professional landlords whose relationship with the state makes owning land still economically viable for them, i.e. they have lots of producing land so they end up buying non-producing land (i.e. people’s homes) and turning them into producing land, which is to say rental properties. You get less people owning land in the form of homes, which of course makes it cheaper and easier to tax for the state, and almost everyone rents where they live from a big well connected landlord.
Firstly, can you explain how you destroy a location (which is what LVT is really a tax on), and secondly, why would people buy less land? We’re talking about a very simple collection system, much like rates, which don’t deter people from buying homes. The average guy will see their income tax fall by the same amount as their LVT. They can still afford to buy a home. Someone renting would simply be passing on the LVT via their landlord.
Why not? They are the ones risking their capital owning that land.
Well, for starters, because once they own the land, they then have an incentive to stop the productive use of land nearby that will reduce the value of their land.
This is simply the Norman Conquest approach, you are all vassals, although English land law was not homogenised until the Law of Property Act 1925.
If your land renders no income, then you face capital consumption, land confiscation or forced sale (to whom?) and ever-shrinking plots of land, a long, slow march back beyond the Stone Age, as the economy’s capital stock is consumed.
This is Pol Pot with patience.
You do not destroy it, you make it less valuable and thus less desirable to own it in the first place (which is always what I have thought was the main objective of LVT: the end of several ownership of land).
Because the cost of ‘owning’ it (not that you will really ‘own’ it in any meaningful sense) would be increased. You seem to have understood the “tax work, people work less” logic, so why is this so hard to understand?
And you actually believe that?
Nope. Income reduced? Retired? ‘Your’ non-producing asset is now going to destroy you. Unlike income tax, which by per force goes down if your income goes down, LVT will do no such thing. Moreover the amount you will pay is simply down to politics rather than your ability to pay.
Indeed, which is why owner occupied freeholders will be a thing of the past. The “average guy” will rent and only professional landlords will actually ‘own’ property (or more accurately, rent it from the state) and then rent it to your “average guy”.
Oh and far from opposing local developments that might cause the value of their homes to go down, rational ‘owners’ will oppose local development that will make the value of their land go *up* if all they are “average guy” owner-occupiers who just want to live there rather than professional landlords.
Sounds like a perverse incentive to build upwards (or, indeed, downwards, as is happening a lot in Kensington and Chelsea). I saw a statistic a little while back, that the Burj al Khalifa supports 3 people per square metre of land its base footprint occupies.
This all depends on the definition of “land”, of course; if the area of one storey on top of another storey is classed as land in its own right, then you can indeed make land; however if it’s classed as naturally occurring stuff you can stick a spade or a pickaxe in, then any land tax would need to be divided between everyone living in a building based on its cross-section at surrounding ground level.
I’ll bet they didn’t think about changing mineral rights, either. People in some areas might be inclined to take the hit of a land tax, if they get to extract whatever of value might lie under their feet and sell it.
Really, it sounds like what they’re ham-fistedly describing as a “land tax” will really be a “space volume tax”.
In the US, over the course of your adult life (say 50 years) you will pay, in most localities, the full value of your residential property to the local authorities in real estate tax. This is not market rent (the old thumb rule would have you paying the full value in about 10 years) but it is a significant rent.
Is the LVT rate higher than US real estate taxes? Just curious.
FYI, there has been some public outcry over property valuations not reflecting current prices after the real estate crash but the local authorities have, in most places, been able to drag their feet and not decrease valuations to reflect the drop in market value. However, when homes sell, that usually causes the value to reset lower.
This is a local tax so tax rates are voted on fairly frequently (especially when increased rates are proposed). However, the money is often touted as supporting local school systems so there is the powerful argument that it is “for the children.”
Perry,
You do not destroy it, you make it less valuable and thus less desirable to own it in the first place (which is always what I have thought was the main objective of LVT: the end of several ownership of land).
Less desirable to own? How? This is a tax on the value. If somehow, the state overtaxed the value of a piece of land, what’s going to happen to it? The value of the land is going to drop at which point the value of the land decreases.
LVT isn’t about destroying the ownership of land. It’s about taxing the exclusive use of it.
Because the cost of ‘owning’ it (not that you will really ‘own’ it in any meaningful sense) would be increased. You seem to have understood the “tax work, people work less” logic, so why is this so hard to understand?
But as we have now both agreed, you can neither create nor destroy locations. They are finite in number, so it isn’t like “tax work, people work less”, which is flexible.
Nope. Income reduced? Retired? ‘Your’ non-producing asset is now going to destroy you. Unlike income tax, which by per force goes down if your income goes down, LVT will do no such thing. Moreover the amount you will pay is simply down to politics rather than your ability to pay.
The solution to that is that people move to cheaper parts of the country where the tax would be far smaller.
Indeed, which is why owner occupied freeholders will be a thing of the past. The “average guy” will rent and only professional landlords will actually ‘own’ property (or more accurately, rent it from the state) and then rent it to your “average guy”.
Why would someone having to hand £x to the government for their LVT rather than £x to a landlord to pay his LVT deter them from buying a house?
Oh and far from opposing local developments that might cause the value of their homes to go down, rational ‘owners’ will oppose local development that will make the value of their land go *up* if all they are “average guy” owner-occupiers who just want to live there rather than professional landlords.
Why would they do that? While their tax has risen, it’s also the case that the land value has risen, so they can sell it for more. In other words, there is neither a positive or negative incentive from either sort of development.
@ Tim, you are proposing internal tax refugees as a solution, but why should people move and what guarantee would there be that taxes would not rise after you move?
As for ‘the exclusive use of land’ being taxed, if A shares his land with B, and vice versa, would their lands be tax-exempt? Or would they have to lodge any passing scroat to show non-exclusive use? This plan sounds worse than a barracks, not unlike Utopia.
Or is the plan ‘The Common Good before the Individual Good?’.
Perry : “So you can mortgage the non-producing land to pay the taxes? And banks will want to lend money to people for that”
Er, yes. The great majority of mortgages are of owner occupied property, not buy to lets. An asset does not have to generate an income to have value – it can have use value. VAT is essentially a tax on use. You buy a DVD to watch it, and the government taxes you for using it, by levying a tax on the sale. Since most assets wear out pretty quickly, a tax on sale is effective as a tax on consumption But this doesn’t work on assets that don’t wear out. A land value tax taxes the use of land.
The most obvious and immediate economic effect of a land value tax is not to reduce the supply of land (which is more or less fixed) but to reduce the value of land. That inflicts a deadweight upfront loss on the current owners of existing land, rather than affecting economic incentives to use land in future. Unlike an income tax, where the supply of work is variable, and does vary with taxes.
Of course there are secondary effects which are more pernicious. First there is the risk of future hikes in the land tax. Before there is a tax on land, the market may perceive little risk of a land tax and so may not discount land values substantially for the possibility of a land tax. Once there is a land tax, the market will expect it to rise. If it is interested in maximising revenue (it is), the government has a trade off between rate and value. Second, the land tax will act as a disincentive to improving the value of land, which will be economically harmful. Third, the state and perhaps other players (eg favoured charities) will get exemptions or reliefs, so that the land market will be seriously distorted. Fourth, it will be expensive to collect as valuation arguments will take a long time and a lot of effort to resolve.
Yes I know, and the effect of a LVT is to make many more people take out a mortgage just to pay the tax, rather than to work towards outright ownership, which is why most people currently have a mortgage (i.e. in the hope that at some point they don’t have to pay that mortgage). Having to mortgage just to pay the state’s taxes materially changes why people want to buy a home (security) as in fact it will provide nothing of the sort.
Indeed once you abolish freehold land ownership and replace it with substantial rental-from-the-state (which is what LVT does), the whole notion of owner occupied land as security is pretty much eliminated.
“LVT isn’t about destroying the ownership of land. It’s about taxing the exclusive use of it.”
Its the same thing. If I have to pay a tax on the ownership of ‘my’ land, which if I don’t pay it the land (eventually) gets taken away from me, then I no longer own that land, I am merely renting it from the person/entity taxing me. It can be the State or the King in his castle, the end result is the same – I have no independence from the taxer, I cannot stick two fingers up at them and tell them to go forth and multiply, because my home is my castle, because its their home now, they’re just letting me live in it as long as I pay their demands.
And there’s another point that is often forgotten in all these debates – LVT can only be paid out of income. It may be calculated from the value of an asset, but the only source of cash to pay it is income. Thus eventually, under a LVT system, once its all settled down, and everyone has moved house to one they can afford, and house prices have adjusted to the new system etc, everyone then pays pretty much the same tax as they did before. All you will achieve is a distribution of house prices that exactly mirrors the distribution of income, as everyone will need to live in a house that they can afford to pay the LVT for.
Tim Almond wrote:
And people will try to get the state to declare land being used in the wrong way in order to get the taxes raised and the undesirables moved out. (Much like using zoning here in the States to keep stores like Walmart out, because the Wrong People shop there.)
Just this weekend I heard this interview on Radio Prague, where the interviewee complains about people doing things she doesn’t like:
No, you stupid bint. Just because people are using the land in a way you don’t like doesn’t mean the land is being wasted.
Do a search of the page for the word “wasted” and read down — the lady shows some nasty bigotry towards the Wrong People.
I find it hard to believe you cannot see how. Simply ‘owning’ it brings costs. By taxing a non-producing asset, you make renting it from the state the privilege of people with enough income to pay that rent. You cannot invest your capital and simply live in your home. With LVT property is owned by the state and people rent it from the state at a rate decided by the state on a value decided by the state. Your ability to pay does not even come into it. It will lead to fragmentation and positive inducement to not ‘improve’ properties that you are renting from the state as they will just increase your rent.
And who decides what this taxable value is? Well the state of course. Unlike taxing the sale or purchase of land, which by definition can be accurately quantified by what was paid, an annual LVT is necessarily arbitrary… it is a tax on what someone thinks the value is, moreover it is someone who has a vested interest in that value being as high as possible.
It is about making the idea of ‘ownership’ meaningless. It turns ownership into rental from state for the ‘privilege’ of living in your home for as long as you can pay them off. It is a return to a more feudal view of land, an attack on severalty itself.
From my brief experience as a criminal defence lawyer, I am afraid to say that the sense of entitlement – if not quite the smugness – is to be found in private sector thieves too. It’s just another thing the politicians have in common with them. Where the politicians differ from more honest thieves is that they infuriatingly expect you to cooperate.
When I took a college level course in business law, decades ago now, it was explained to us that as a matter of law in English-speaking countries, all land is owned by the sovereign: the king or queen in the UK, the people in the United States. This is the justification for property tax (paying rent to the owner), for inheritance tax (paying a fee to the owner for a right to take up occupancy), and for eminent domain (the owner deciding they need the property for some other use), not just rhetorically but as a matter of standard legal theory. Any title held privately is to a subordinate interest in the land. Not very different from medieval rules in which feudal lords held their land “of the king” or “of [some intermediate feudal lord].” Libertarianism implies not a return to old rules on property but an invention of entirely new ones.
Slow day, Perry? We haven’t had a good LVT brawl here for quite a while so you thought you’d stir one up?
I agree with you on the pernicious effects of a LVT and oppose it strenuously. The arguments in favor of it are seriously flawed on both moral and economic grounds unless one is a collectivist who views all land as the exclusive property of the state (or of “society” however defined). Nonetheless, as Peter Whale has noted an LVT differs from a real estate tax (as we call it in the US; I presume that’s the same thing as a “council tax” in the UK) only in degree, not in kind. And I don’t propose the absolute abolition of real estate taxes.
It is an undeniable fact that we have governments which are going to tax us, so (assuming that we’re not discussing pure theory) one has to be practical and accept that there is going to be some sort of taxing scheme. All forms of tax are inherently unfair to someone. To my mind, there is merit in having a variety of different types of taxes (income, sales, property), to more or less equalize the unfairness. Placing too much emphasis on any one tax concentrates the unfairness on one group. For this reason alone replacing an income tax with a LVT would be a Very Bad Thing. (And of course one must keep in mind that it is highly unlikely that the income tax would actually be abolished; more likely the LVT would be added on top of it, so you’d wind up with both. That’s why I’m leery of proposals in the US to “replace” the income tax with something else, such as a VAT. I don’t trust politicians to actually do what they promise. Quelle surprise.)
That’s not to say that there aren’t problems with the real estate tax. There have been well-documented abuses of it, not only on the valuation end but also (especially) in its collection. Here is the US a whole sub-industry of buying up tax liens has arisen, and its abuses are just beginning to be widely recognized. But those abuses could be ameliorated by changing the collection mechanisms, without having to abolish the entire tax as some have proposed.
I have no doubt that a similar collection problems would arise with an LVT, and probably would be a few orders of magnitude more severe that what we see here. Best to stay away from too great a reliance on such a user tax.
There is no such thing as a good tax. And arguing over what does more damage, an income tax or a property tax, misses the point – for two reasons.
Firstly what matters most about a tax is HOW BIG IT IS (talking about “a land tax” is almost meaningless if there are no numbers involved – how big would it be, one Pound for every 100 square miles you own? a thousand Pounds per square inch? what?) what matters in government is its SIZE (how big the parasite drinking your life blood is).
Also “Uncle Vince” Cable and co and not really “Single Taxers” at all – they are not going to get rid of Income Tax or Sales Tax, they want to add the new Property Tax ON TOP OF the other taxes
As for the arguments of Henry George.
It should not have been necessary for Murray Rothbard to refute Henry George (in Man, Economy and State and Power and Market) as they had already been refuted by Frank Fetter a century ago.
But like Frank Fetter’s refutation of Irving Fisher (whom Milton Friedman, absurdly, thought was “the greatest American economist of the 20th century) Fetter’s refutation of Henry George appears to have been forgotten.
I doubt there is even a statute to Frank Fetter in Peru Indiana where he was born and raised.
My standing suggestion is that real estate valuations for tax purposes should obligate the state to buy the property for 90% of that amount, or revalue it, upon the owner’s demand. That should get rid of valuations very far off real market values.
One of the arguments made by those who claim “you can’t own land” is that land is finite, very long lasting and that allowing it to become funnelled into a few hands is detrimental to future generations.
But, if you think about it, that is true of all commodities. They are all composed of essentially indestructible base materials, which are always scarce to a degree and which would cause inherent problems if they all wound up being owned by a small group of people in the future. There is nothing particularly special about land, other than the fact that it is one of the easiest commodities to “harvest” in terms of labour input and that laying claim to it is inherently visible.
If you are against private ownership of land, you are against private ownership of all commodities.
JV – quite so.
And some(NOT all) of the anti private land owning crowd go further, they start going on about how the ultimate test of land ownership (and everything else) is how it benefits an “ethnic population group”. That the interests of this “ethnic population group” are how one should judge everything.
That some of these people call themselves “libertarians” is truly horrible.
William: The freehold is the highest estate in land in England, the Crown claimed (by force) higher right and there is no option (in the Crown’s courts, then by statute) for a pure ownership of land not subject to the whim of William the Bastard, of Normandy and subsequent developments.
However, in England, Inheritance Tax is purely statutory, and applies to all assets, land, money, shares, chattels etc. and it started at the end of the 19th Century. As the Civil War showed, the Crown needs consent to tax (and it gets it in spades from politicians). Property taxes are also statutory, but they are, in the UK, local to the Council(s) for the area in which the land lies, although business rates are set nationally. Eminent domain in the UK is also statutory, provided for under planning laws and acts that permit, say, the Olympic Games.
I do get the impression that the State, a ravenous beast, sets out to tax first, then seeks justification for it.
I don’t know whether to be amused or depressed by the thought that Holyrood politicians who cheered the prohibition of unlimited leases (“feus”) barely a decade ago as “the final end of feudalism in Scotland” will likely hail this idea, without the slightest hint of irony, as Progress and Modernisation.
“That some of these people call themselves “libertarians” is truly horrible.”
There are folks who usurp names(theories) for themselves to “imply” all SORTS of things.
“Round here,(northern New Hampshire USA) “(L)libertarians” are reviled for their failure to even acknowledge any special “ethnic population group”, or other special hyphenated considerations, Certainly by “socialist” folk (by any other name), but also by rent seeking folk who caaaaaaaaaalll themselves conservative.
Note: Current U.S. “interpretations” of Liberal(Democrat-ish), Conservative(Republican-ish), and Libertarian (U.S. Constitutional-ish) “labels” apply.
Subject to change over night.
Paul:
I’m way outside my area of expertise here, but wasn’t Fetter’s critique of Georgism more of a pragmatic objection than a theoretical one? Georgism would require some means of determining what portion of the market value of land was the result of improvements (i.e., the owner’s “labour”) and what portion was the result of the development of surrounding land (i.e., the “labour” of other land owners). Wasn’t Fetter’s argument that it was not possible to make that evaluation, making Georgism unworkable in practice (as opposed to objectionable in principle)?
All land in the UK is owned by the Crown, so that is the reality and has been for very many years. I see nothing wrong in principle with the owner of that asset taking a fair rent for it. You can call it ground rent, or you can call it land value tax.
Paul L. The Scots law of land is vastly different to the English/Welsh system, and not all land was covered by the same law, e.g. udal law in Orkney and Shetland. A bit of info in Wikipedia to bore you to tears.
http://en.wikipedia.org/wiki/Abolition_of_Feudal_Tenure_etc._(Scotland)_Act_2000
Paul Marks:
I would tend to agree, but in a much broader sense than I think you intended it.
To a libertarian, the size of a tax isn’t (or at least shouldn’t be) just the amount of money that it involves, but the intrusiveness of the collection mechanism. The same amount of money collected over a large number of taxes will generally involve the state having an associated right to intrude in more areas of your life. Even with a tax base generated from a single tax, the level of intrusiveness is necessarily higher in, for example, an income tax than a land tax.
@Paul Marks: “There is no such thing as a good tax. And arguing over what does more damage, an income tax or a property tax, misses the point.”
On the contrary, as I noted at the beginning of my previous post some sort of taxing scheme is a practical imperative given the realities of modern life. Discussing the relative fairness of different types of taxes, or of their various combinations, is the only discussion worth having. Asserting that “there is no such thing as a fair tax” or “taxation is theft” or something similar accomplishes nothing; it’s worthwhile only in a purely theoretical discussion having no relevance to the real world.
Nothing could be further from the truth. To tax a non-producing asset is to turn freehold into rental and cuts to the very nature of ownership and the security of land, not in some abstract way of saying “all property is owned by the crown” but in a very intrusive concrete way of perpetually taking for the ‘privilege’ of nominally owning. It is the most intrusive tax of all as it denies the very security of owning your own home. And whilst council tax is a relatively trivial amount, LVT will result in your financial destruction unless you have the non-trivial money needed to pay it.
Georgists are no more friends of liberty than your typical right-socialist, who will allow you nominal ‘ownership’ whilst in fact allowing you nothing of the sort.
In tend to agree, which is why I abominate the LVT as the very worst kind of tax on not just philosophical grounds but also utilitarian ones. It is truly feudal in nature and I am all for burning down the lord’s castle, ideally with its inhabitants still inside.
Late to the show, but here we go:
Missing elements:
Value
Fair Value
Fair Rental Value
Fair Market Value
Suggested reference – city of Detroit where properties containing abandoned houses may bring a price (if any) equivalent to the salvage of building materials and metal scrap, indicating the ground space is worthless (at least in the transaction).
Transaction taxes, such as actual rents, actual exchanges of goods or services can provide a non-arbitrary basis for the determination of the value of a transaction (e.g., incomes). Can this be said for taxes on non-transactional-based “values?”
Further suggestion – consider the “public opinion” reaction to considering the form of taxation known as “rates” applicable to “services” (or expenses incurred by public authority) as beneficial to individuals (per poll or kurtax) rather than beneficial to a specific segment of real estate.
In addition to lots to chat about, there is a lot to think about.
An income tax requires you to provide far more information and be far more accountable to the state than a land value tax. That was my position and nothing you’ve said contradicts it. What you’ve offered is a straw man, where the word “intrusive” is stripped of its meaning.
Freehold is rental. You claim to hold ownership in high regard, yet when presented with the reality that land is owned by the Crown, you treat that ownership with contempt, viewing it as something which can be disregarded, with the owner being expropriated and the land handed to the tenant.
Maybe so, in many cases, but somebody who much would rather have a tax base which requires a the state to have a significantly more intrusive collection infrastructure is no friend of liberty either.
Empty words as usual Paul L. You take an essentially fascist approach to private ownership, also as usual. The ‘fact’ the Crown ‘owns’ all land only matters as a practical matter if it takes steps to enforce that claim in a meaningful way. LVT is exactly such a ‘meaningful way’. It denies you the security of spending your capital to actually own a home. I dislike council tax, even though it is trivial, because it opens the way for things like LVT in principle.
I also oppose income tax but at least that has the virtue of intrinsically having ‘ability to pay’ built into it. I think sales tax (ie a consumption tax) is the only way a state should tax (and that includes sales, not mere ‘ownership’, of residential property).
People like you hate the idea of capitalist ownership.
Perry de Havilland:
Why the scare quotes around “owns”? Is it because you only consider ownership to be valid if you personally approve of the owner.
It doesn’t deny you the right to own bricks and mortar. It might deny you the right to own land, but that’s the way ownership works; the owner can deny you the right to become the owner of what they own. You don’t automatically have a right to somebody else’s property just because you want it.
Not in any meaningful sense that can’t also be applied to land value taxation.
I disagree. I prefer LVT, as it’s less intrusive, in terms of information gathering and as it is a charge for the use of someone else’s property, it is more justifiable than the expropriation of property for the spurious reason of exchanging it with someone else.
Coming from somebody who has spent the last couple of comments arguing for the expropriation of property from its current owner, I’ll treat myself to a chuckle at the irony.
I would suggest that the modern politician’s mentality is not just that anything you own is their’s to dispose of as they should wish, but that the only purpose for which you exist is to be farmed for revenue like ants may farm aphids for sap.
If as you state the crown owns the land does it have the right to sell its ownership or is it restricted in its ownership? Would it have to pay its own LVT or is it exempt could it grant exemption or maybe sell the freehold?
Peter Whale:
I suspect there’s a convoluted constitutional answer to that, where the answer is, in theory yes, but in practice no.
I would envisage LVT being in effect a rental payment to the Crown, so if the Crown was using the land and also had to pay, the answer would be broadly irrelevant, as the Crown would be paying itself.
The LVT would be a statutory construct and it would require whatever the statute provides for, so discussion of the implications is moot.
Note that the schemes for Land Registration, with a State-backed title to land, facilitate the taxation of land. The Law, not the State, should be the guarantor of title.
Is Council Tax more or less the UK version of property taxes in the US?
Alisa:
Essentially. In England, it’s based on the combined land and building value in 1991 and charged based on which of 8 bands the value falls into.
Paul L,
I’m geniunely confused as to how the Crown owns the land. If I purchase land from person X, who previously purchased from person Y then eventually I’ll surely end up back at some person in the past who purchased it from the Crown or a representative working on behalf of the Crown. How can the Crown still claim to own land it has sold in the past?
Alisa, my house now valued at c £185,000, annual Council Tax £1,284, which is band C, A being the lowest, for which my bins are emptied on a fortnightly basis, with garden waste/recycling the other week.
Thanks, Paul and Ed.
Another question: if Perry doesn’t mind, can any of you make the sales tax vs VAT case, from either side?
Because if I have to pay the state rent, I am a renter, not an owner.
It is like saying “just because we demand you accept we own your mouth, we don’t deny you the right to food, just your use of the mouth we own”. It is not ‘someone else’s property’. I do not accept that the state legitimately ‘owns’ property that I buy in freehold and has any ownership right to make me pay it rent. It has that ability, of course, just as it has the ability to do anything it can get away with. My argument that as civilisation and severalty are so closely linked, allowing this is A Very Bad Thing.
A non-producing asset CANNOT have any intrinsic ability to pay other than liquidation, so that is preposterous.
Alisa:
Sales Tax has is only assessed at the end point, reducing the burden on the payer/collector, while VAT is more resistant to evasion, which, for me means there isn’t much in it.
Perry de Havilland:
You appear to be confused. We weren’t talking about you being the owner, but the Crown. Here’s the relevant section:
So yes, you are the renter, not the owner, but we were discussing the Crown being the owner, or as you suggest, the “owner.”
It is the Crowns, whether you like it or not.
Here’s where your argument descends into complete absurdity. The freehold is a right to tenancy granted by the Crown. You cannot simultaneously say that the Crown has no rights over the land, but it is your land because you hold a Crown granted freehold. It is a “cake and eat it” argument of epic proportions.
So, you’ve outlined how an asset can be used to pay, then claimed that it is proposterous that holding an asset be viewed as indicative of ability to pay. That in itself is proposterous.
What you could legitimately claim is that taxing cash (note, cash, not income) rather than other assets aids technical ease of payment, but ease of payment and ability to pay are not the same thing.
It seems that many fail to appreciate that no asset is worth anything unless and until it is valued, and valuations are subjective. A value is a voluntaristic concept, arising in the mind of an acting being at the time that the valuaion is made. For (bureaucratic) convenience, arbitrary valuatons are made of values. A piece of land might be capable of producing a monetary return, which might lead one to compute a value but it might not be so used. A land owner might wish to grow thistles on his land to feed wild goldfinches, and not use the land in an economic manner, not to say that no utility is derived from the land, but one cannot price the delight of a charm of goldfinches to yje land owner as one might a ton of wheat, which is, to an extent, fungible and for which a price can be estimated.
A tax on income, however, is readily reckoned in monetary units as a % of the income or a portion of it. The ascetic who shuns monetary exchange might be forced to engage in it by circumstances if a tax is demanded on his land, lest he lose his land. Taxing his income would at least only cause him to forfeit income, not capital.
A land value tax distorts the benefits gained from land ownership, and may cause land to be put to uses not desired by the owner, so as to meet the tax demand, thereby increasing misery all round.
Mr Ed:
And you think that is a good thing because?
Essentially, what you’re saying is that LVT might result in land moving from the current holder, to someone who would put it to a use which they derive more value from, as revealed by market preferences.
Saying that market transactions don’t indicate personal benefit, in the way that you are, is to argue, not against LVT, but against the free market.
Paul L, you think ability to pay exists because you can liquidate the asset? Un fucking believable. This is why is is a waste of time to try and reason with thugs like you. It is a fact that the Crown can impose its will on anyone and do anything… but only if it is allowed to by the political process. I got my property for the actual previous owner and it is from him my rights come in exchange for what I gave him. At the moment Crown ‘ownership’ is mostly hypothetical but collectivists like you want it to be applied with a ferocity not seen since feudalism. That is why I would like to see people like you and Cable hanged from the nearest lamppost.
Yes, because it does. If we followed your line of reasoning, people could argue that they have no ability to pay an income tax bill using cash in the bank, because they have to take some action to move it from their bank account. I repeat, having assets in a form other than cash may reduce ease of payment, but it doesn’t necessarily impact ability to pay.
Except we’ve already established that what you got from him is the freehold, not outright ownership. Transferring something which is not outright ownership doesn’t magically make it outright ownership, no matter how many times you do it, or how much you might wish it to be otherwise.
In which case, your freehold is mostly hypothetical. For you to claim otherwise would be ridiculous. Even if we were to accept your claim that it is hypothetical, it does little to help your case. It’s still clearly more legitimate, from a property rights perspective, for the state to tax something it has hypothetical ownership over, than something it doesn’t have any ownership over, hypothetically or otherwise, such as the goods we buy and sell, which would be your preference.
The reason you feel such animosity towards me is that I hold up a mirror to how anti-liberty and anti-property some of your opinions are.
Double speak worthy of Orwell’s 1984. You want the place the state in the very centre of people’s lives and property, and force people to pay for the ‘privilege’ of ownership and you have the temerity to call me anti-liberty and anti-property? You have trolled us for far too long.
If you ignore the “land” part of the LVT and substitute “property”, then it all becomes clearer. The LVT is, purely and simply, a wealth tax. The equivalent is if you had, say, a hundred thousand pounds in a safe deposit box in a bank, and because the money was not being “productive”, you were charged a tax on the value of that money. Would there be outrage at this kind of tax? Hell, yes. Yet there is no call for the revolting Cable’s head to be stuck on a pike and paraed around the country (although there should be). Compared to this travesty, income tax is positively benign.
Here is the States, at least we get to vote on property tax rates because the taxes are mostly applied locally. In most cases, by the way, these tax hikes are voted down, especially in Texas, which is why our property taxes are relatively low. (They’re actually quite high in percentage terms, but that’s because we don’t have a state income tax in Texas. Property taxes are seen as preferable, which they are.) But if the Federal government were to decide to impose an LVT, the number of states seeking to secede would make 1860 look like a (ahem) tea party by comparison.
There’s also the morally wicked underlying assumption that the State must always get its cut first, and must get it under any circumstances.
I don’t know how many of you read this article that came out of Washington DC last week, about what Government does to people who can’t pay even small tax bills.
Paul L, pray do show me where I said it was a good thing?
And how is it a ’market transaction’ if a seller is obliged by circumstances (we presume the seller elects to sell for fear of penal laws as yet unwritten) to sell? It is more akin to a fire sale under threat.
I am fascinated by your mindset.
Perry de Havilland:
Clearly not, but where you talk of “ownership” in that context, you’re referring to something which isn’t owned by the person you are referring to as the owner.
What I actually want, which is perfectly clear from what I’ve said, is a tax system which leaves people’s property untouched and their lives as unimpeded as possible, by having a tax base constructed solely of user fees for the use of assets which the state/Crown owns, be that land, roads or council houses.
Kim du Toit:
It may do. It also becomes a straw man.
Mr Ed:
You said:
The use of the words “at least” implies that the former is preferrable to the latter.
Because, given the available options, the seller chooses to pay more to hold the asset than the buyer.
I see the point you’re trying to make, but it doesn’t really work, because it applies to any tax, not just LVT. If I have to pay income tax, it reduces my disposable income, so it may drive me to liquiditate assets to cover my reduced income, or not to acquire those assets at all. Your argument implies that it is impossible for market transactions to exist if any form of taxation exists, because taxation reduces their spending power and therefore skews their choices. I personally think that’s taking it a bit too far and in any case, it is only an argument in favour of anarchism, with no tax funded state, rather than an argument against specific taxes.
Paul L, your powers of deduction and logic are lamentable. ‘Preferable’ does not mean ‘good’. french Resistance members in Amiens prison said that they would prefer to die by RAF bombs than a German firing squad, by your standard of reason, they felt that being bombed was a good thing. Now why don’t you come back in a few years when you have grown up a bit and learnt how to make sound deductions?
Paul, I am curious: how do you define ‘ownership’?
Paul L. all land in England is NOT owned by the Crown – that would make a nonsense of the distinction between the Crown Estates (and so on) and land that is NOT owned by the Crown.
The language of Feudal law implies that all land is owned by the Crown – but this is NOT so in practice. This was settled in France as far back as 877 (Edict of Q – where it was accepted that a King of France could NOT take land from one family and give it another.
In England this was settled in various stages.
In 1100 Henry the First swore an oath to uphold the laws of England. What was this about? It was about REJECTING any power (a power claimed by his father William the Bastard and by his brother William Rufus) to take land from one family and give it to another.
The Great Charta of 1215 (of which you may have heard) was motivated by resistance to the idea of King John that he was the “owner” of England (long some oriental Despot).
Even as a late as the 18th century (under George III) the idea that the Crown was the owner of all land was not just rejected in the American colonies (1776 – again you may have heard of these events), it was also rejected in ENGLAND.
The officials of the Crown (not George III himself) demanded that the Duke of Portland prove his right to freehold of various lands – otherwise it would “revert” to the Crown. The House of Commons (led by Edmund Burke) formally denied the Crown’s right to do this.
In short the “ownership” of all land by the Crown is NOT a matter of practical reality – the Crown does NOT have the right to take the land of one family and give it to another. The Crown is NOT the real “owner” of all land in England – the Freeholders are for all PRACTICAL purposes the real owners (otherwise such things as the Great Charter of 1215 are meaningless).
As for the position in Scots law.
John Dundas in his “A summary view of the feudal law with the differences of the Scots law from it” (1710) indicates the differences between “feudal” law and modern law.
And it was under “feudal” law that a King of Scotland could NOT take land – not even to build a road or to “prefect an estate”.
If a King can not take land (not even to build a road) to call him the “owner” of that land is absurd.
By the way – up till 1845 the formal ceremony for changing land ownership in Scotland involved handing over a handful of the soil to the new owner (in public before witnesses).
The land belonged to the person whose fist held that soil – NOT to the King or Queen.
[Interestingly in old Scots law (although not in English law) a title of nobility went with the owner of the land – buy the land and you become a noble (whether the King or Queen of Scotland liked it or not) – hence the Scots habit of addressing an owner of an estate by the name of the estate, nor by their family name.]
As Edmund Burke had shown (in his defence of the Duke of Portland against the agents of the Crown – in the late 1700s) the same lack of a REAL monopoly of land ownership by the monarch is true in England and Wales.
The King has no right to take land from a family – either to keep himself (as a new part of the Royal Estates) or to give to some other family. In short for PRACTICAL purposes the Monarch is NOT the owner of all land in England and Wales.
The Oath of Henry the First in 1100, the Great Charter of 1215, the stand of Hampden (and others) in the 1600s, the stand of Edmund Burke (and others) in the 1700s settle the matter.
Mr Ed, my apologies. Had I realised you were a pedant, I would have done more to accommodate you. Feel free to replace “good” with “preferable” as it makes no difference to my post.
Alisa, I’m just working on the basis of what the extant property rights are.
Alisa – sorry I missed your comment.
You raise an important point (indeed one I “bang on about” a lot).
Under the Roman Empire land was, in theory, privately owned – yet an Emperor could take any land and either keep it himself, of give it to someone else.
Under Feudal law land was LINQUSITICALLY owned by the Monarch – yet Kings and Queens could NOT take land and keep for themselves or hand it to others (they faced a Feudal revolt if they tried that).
So under which system was their REAL private ownership of land?
I would say the latter.
Paul Marks, you make some good points, but in sum total, I don’t think they undermine the position of the Crown as ultimate owner and the freehold being a perpetual tenancy.
LVTs (including the council tax) strip you of what I would call an essential freedom. The freedom to buy a plot of land, build a wall around it and to decide to have nothing to do with the outside world. Thanks to LVT sooner or later government representatives will crash through that wall in an APC and arrest you for non payment of taxes. In my view one of the key functions of these taxes is to deny individuals and communes the ability to opt out of their society.
Paul L, the Crown in England may not simply displace a freeholder, so the freeholder is not a tenant of the Crown. If you look at Land ownership documents, they refer to, in the main, freehold and leasehold land. A lease is granted by a freeholder or another leaseholder, but nowhere is there reference to the Crown as superior to a freeholder, and there is no mechanism in law bar a statutory one (or a court order for sale) to displace a freeholder.
The fact that eminent domain is England is statutory is indicative that the Crown may not displace a freeholder absent a specific statutory power, whether exercised by the Crown or another.
Paul L:
You argued that the extant property laws in the UK are such that ownership of all land lies with the Crown. But when asked for your definition of ‘ownership’, you refer back to those same property laws. Can you separate you assertion from the semantic definitions upon which it rests, so as to avoid an appearance of a circular argument?
Alisa, the answer is no, I can’t answer your question any more fully than I already have.
Paul L. – I predicted that you would reply in this way.
Your claim that the Crown is the (real – not just linguistic) owner of all landed property, puts you on the opposite side from that of the men of 1215, and of Hampden and the others in the 1600s, and the people of 1688, and of Edmund Burke (and the others) in the 1700s, and of the League for the Defence of Liberty and Property in the 19th century, and Sir Earnest Benn and the others in the 1920s and 1930s, and of us libertarians today. All of whom held that “Free Hold” in PRACTICE did (or should) mean real private ownership of land.
To bring things bang up to date…….
In most States of the United States (I believe Louisiana is an exception) have (like England and Wales) a “Freehold” system – i.e. linguistically they do not have private ownership of land, but do they have it in REALITY?
This brings us to the “Kelso” case – where the Supreme Court decided on YOUR SIDE of the debate (I ADMIT that), the Supreme Court held that government (specifically State and local government) could take property from one person (or private association) and give it to another person (or private association) – in the hopes of “economic benefit”.
This means that you are CORRECT – under Kelso the United States does NOT have (real) private ownership of land.
HOWEVER, the people in many States reacted to this judgement – by passing ANTI Kelso provisions into State laws and Constitutions.
It would seem that most people in most States hold that “free hold” means REAL PRIVATE OWNERSHIP.
Mr Ed, your argument doesn’t hold. In exactly the same way you refer to freeholders, a leaseholder may not simply be displaced during the course of the lease, but that clearly doesn’t mean that the leaseholder isn’t a tenant.
Paul L, your argument is misconceived. A leaseholder may lose a lease upon breach of terms, and shall upon reversion of the lease, but a freehold does not revert to the Crown, ever.
I do have the benefit of legal training, and a capacity for rational argument.
Paul Marks, that the Crown cannot simply cancel a Freehold at will does not mean that the Crown is not the ultimate owner, just that a freehold confers certain tenancy rights, which cannot simply be extinguished. As I said to Mr Ed, the same can be said of a leaseholder.
An interesting difference between Roman Law (even under the Republic) and “Feudal” law was over the ownership of sea shore and river banks.
Under Roman Law (at least if we believe Gaius) neither sea shore or river banks could be privately owned, whereas under “Feudal” law they could (at least if, unlike Paul L., we accept Freehold as real private ownership).
Both Irish and old Scots law went further – they held (and, I believe, still hold) that rivers (including rivers that were suitable for ships) themselves could be privately owned.
So such things as having to build an artificial lake (a practice that led to very unfortunate events in the United States when a certain dam broke – leading to the disgrace of the some of the richest men in America) simply would not make sense in old Scots or Irish law.
You want a river and lake?
Buy one. No need to build an artificial one.
And, yes (in case anyone is wondering) the public ceremony in Scots Law (before 1845) on the changing of ownership of a private river (the Clyde was government owned – which is why it was so polluted, no private owner to protect it) did (I believe) involve getting wet.
I wish the old ceremonies in Scots Law had been kept.
Someone who is not prepared to grab a fistful of sold before the public (because they are too shy) is a bit pathetic.
Ditto someone who is not prepared to hold a fish in their hands (to represent fishing rights).
And (yes) is prepared to get a bit wet to show (before the public) that they are the new owner of a certain river.
Of course – the old ceremonies came from days when most people could not read or write, so written documents were of little use.
But “I remember who is the owner of this land – I was there at the ceremony when he held the soil in his hands having paid the old owner” was useful.
I repeat – the old pro liberty tradition holds that “freehold” is real (if not linguistic) private ownership of land in ENGLAND (and AMERICA) also.
Pro Kelso people have no business on the site.
Mr Ed, if you had a capacity for rational argument, as you claim, you would recognise your last post as a straw man, as the scenario you presented doesn’t relate to somebody being “simply displaced.”
There are probably different meanings of ‘ownership’ being discussed. I find sorting out the semantics helps; at least it helps me.
Linguistic ownership is merely fiction, we can all agree.
Practical ownership is clearly with private land owners today, council tax and planning notwithstanding. The crown can not take away my land or charge me rent. Perry is making his arguments to help keep it that way.
Moral ownership: who knows? Has Paul L made the moral case that the Crown rightfully owns the land? I think the rightful owner is the one who homesteaded the land; but this only helps when there is land obviously not used by anyone.
That leaves the consequentialist arguments. Perry’s arguments at the top of this comments thread seem convincing to me. If there is LVT then in practice the state owns the land and there is no liberty.
Rob Fisher:
No, I haven’t. I don’t necessarily think you can make an all encompassing case that the Crown should own the land. All I think you can say is that it does own the land and that nobody can demonstrate a stronger claim, given that all extant land rights stem from that ownership and stand or fall with it.
I own my house and the land on which it was built. I am “seised in fee simple”. In English law, this is the highest possible interest in real property. Note “highest possible”; not “second-highest because it’s really owned by the state”. I have “a permanent and absolute tenure in land with freedom to dispose of it at will”. I can do anything with it; sell it, will it, give it away. The state can do none of those things.
It could be argued that I also own my car and my television yet the state demands annual tributes for such ownership so a house and land should be no different. However, vehicle excise duty and the TV licence were originally charges for the use of a service (roads and a state-owned broadcaster). Furthermore, a car and a television are chattels, not real property.
Rob – Kelso makes (de facto) linguistic government ownership into real government ownership. That is why it is important to do know whether people are pro or anti Kelso.
I missed Alisa question about Sales Tax versus Value Added Tax.
For most practical purposes there is no difference – VAT is a sales tax (at this point Economist magazine people start to scream at me – good, I like upsetting them).
The only practical difference is that VAT tends to be included in the price (so people do not know they are paying) whereas American State Sales Taxes tended to be added to the bill – so that customers know they are paying a tax.
I prefer the system most American States use. People should KNOW they are paying a tax – not just blame high prices on “corporate greed” (as people are taught to in Britain – not knowing that the profits of Tesco and so on are TINY compared to that 20% “not a sales tax”).
Just as I prefer the 4% Sales Tax in South Dakota (and no State income tax or business tax – New Hampshire actually has a business tax as well as a State income tax on share income) to the 20% “not a sales tax” in Britain.
Rob Fisher : “Perry’s arguments at the top of this comments thread seem convincing to me. If there is LVT then in practice the state owns the land and there is no liberty”
And this is the bit I don’t get. We don’t like taxes, and all of them infringe liberty in one way or another. A tax on my income from labour makes me a part time slave. So what’s so bad about a land value tax ? Perry seems fixated on the notion that taxing a non income producing asset is especially wicked. But why ? It’s not inherently non income producing and valueless, it’s only non income producing because Perry chooses to use it rather than rent it out. A LVT is simply a tax on consumption like a sales tax or VAT. Is VAT that much more wicked than income tax ?
Consider a man who owns a house worth £300,000 and lives in it. If he rented it, it would cost him £12,000 a year, but it costs him nothing as he owns it. He goes to work and earns £30,000 a year on which he pays tax at say 25%. So he pays £7,500 a year in tax. His next door neighbour rents (at £12,000 a year.) He owns some bonds, worth £300,000, which generate an income of £12,000. He also works in the next door office earning £30,000. But he pays £10,500 a year in tax. It’s not obvious to me that there’s a good reason why he should pay £3,000 more tax than the first guy.
You may say that the second guy is perfectly at liberty to sell his bonds and buy his house, thereby reducing his tax bill to the same as the first guy, and that is true. But then you have designed a tax regime which incentivises buying houses as against other assets. And it incentivises owner occupation as against buy to let. This is obviously a whopping distortion with no obvious justification, either in terms of liberty or in terms of economics.
No doubt one can enjoy a libertarian fantasy, living The Good Life in an owner occupied house (containing Felicity Kendall – mmmm), holding the forces of the state at bay, by growing your own and avoiding commerce as much as possible, but if the tax system was designed to favour such lifestyles over the dull grind of employment and supermarkets, we’d all be very much poorer.
Says you, and perhaps the Crown. But that does not make it so. I claim my ownership rights from my purchase from the previous freeholder, just as people in England have claimed for centuries. The Crown’s claims are only of interest if they try to enforce them, which is what you want them to do in spades. Hence my desire to see you and those like you hanging from a lamppost as enemies of severalty and liberty.
Why should anyone consume wealth they haven’t created for free? That sounds like theft, feudalism and slavery to me.
Of course landowners want to enjoy their monopoly privileges for free. Getting something for nothing is very appealing to the greedy.
A land title is nothing more than a privately exchangeable licence that enables consumption of commonly created wealth for a fraction of it’s value. The price of this licence merely the capitalised value of the savings.
That’s not the same as paying just compensation.
Slave owners used exactly the same arguments. They had bought a legal title out of earned capital, that entitled them to the labour of others without paying them just compensation. Legalised theft in other words, with the State as enforcer of those rights.
Many of the early anti-single taxers thought slavery a legitimate “enterprise”. At least they were being consistent.
The customary means of demonstrating title to land in England (prior to Land Registration) was to show conveyances of the land going back 15 years (despite the limitation period for land claims (in most cases) being 12 years. Provided that the conveyance was stamped (i.e. a tax was paid), it was admissible in court in evidence and proof of ownership (as the conveyance provided) against all comers.
Nowhere in my conveyancing training, nor in my land law studies, was there any mention of the Crown as having any right higher than a freehold absolute in possession.
If the Crown were to go to court to seek to enforce a claim, the judge would most likely throw back at the Crown the fact that the State, via Her Majesty’s Land Registry (that is the term used) guarantees registered title.
And the effect of Section 5 of the Land Registration Act appears to be to dispose of any interest of ‘His Majesty’ in registered land which is a freehold estate as against the person registered as the proprietor of the said land.
And the Law of Property Act 1925, Section 1 provides for the estates in land which are capable of subsisting or being conveyed or created at law, and the Crown’s superior right does not appear to be one of them. And Section 208 (3) provides with relevant savings, that that Act binds the Crown.
We’ve already been over this Perry. If you purchase the freehold from the previous freeholder, you are the legitimate freeholder. That much is true.
What is missing in the analysis is an acknowledgment of what the freehold is. It is in effect a perpetual tenancy granted by the Crown. That is a simple statement of fact.
Therefore, asserting an absolute right of ownership based on being the freeholder creates a contradiction, because you’re relying on a title granted by an entity which you insist has no legitimate rights over the land.
As an aside, although I have no fondness for your ambivalence towards liberty or your inconsistent view of property rights, I’ve no desire to see you hanging from a lamppost, as such a situation would almost certainly necessitate a violation of the non-aggression principle.
Btw, various common law free holder rights have been severed by statute over the centuries.
Gold and silver. Obviously.
Then when the possibility of air travel became apparent, the space above your property. If it hadn’t, freeholder would now be charging rent to airlines, mobile phone operators, broadcasters, satellite operators and even NASA.
Oil and gas were severed in the 1930’s, as was Uranium. Coal I believe was severed more recently.
This still leaves a freeholder with one acre of farmland, worth say £10,000 property rights over 160bn tons of minerals under their land.
That’s quite a chunk of the Earth’s resources given away, and the exclusive rights to protected by Common Law.
These rights will all be severed eventually, natural justice demands it. Along with it, the right to monopoly rents from location, which is no more created by landowners than the minerals under their feet.
Paul L, when you say that the freehold is a perpetual tenancy granted by the Crown, as I heard a High Court judge say to my opponent once, ‘What principle are you relying on that isn’t in any of my law books?’.
@Paul Marks
Like Rothbard, Fetter’s banal assertion that Land is Capital, doesn’t amount to a refutation.
It only serves to obscure reality from the weak minded.
You can pay for land with capital. So what? you can pay for labour with capital? Does this mean everything is Capital? Well you could certainly say so if you want to, but when you are trying to model the effects of taxation, or Government subsidies for example, it will lead you to erroneous conclusions.
Neo-Classical economics has been an abject failure. We only have to look at the last in a long line of boom/bust crashes as evidence the NCE model is defunct.
NCE is nothing more than the intellectual shield of the wealthiest, who use it to protect their monopoly privileges. No wonder inequality rises, as disposable incomes fall. That’s what monopolies are all about.
Typical communard. People like you are why I support the notion of a well armed population.
I am not a lawyer. However the wikipedia article on FEE SIMPLE tells us :
“In English common law, the Crown has radical title or the allodium of all land in England, meaning that it is the ultimate “owner” of all land. However, the Crown can grant ownership in an abstract entity—called an estate in land—which is what is owned rather than the land it represents”
I think what this means is that all the freeholder has is a right to occupy the land (and do what he likes with it) and that he also has the right to sell his right to occupy to the next guy. But he doesn’t own the land itself. Once upon a time his right to occupy may have been subject to the performing of various feudal duties, but not any more. But his freehold may have been subject to other common law rights in the same land, such as easements.
But what practical difference does it make that the freeholder strictly owns an estate in land rather than the land itself, and the land itself is owned by the Crown (though the Crown no longer makes any feudal demands in respect of the tenure ?) Well – and I’m guessing here – I suspect that it makes a difference when the freehold is acquired by a foreign sovereign. The foreign sovereign can do what it likes with the land, but the land still forms part of the territories of the English Crown and remains subject to English law. If the freehold is bought by the King of Denmark, the land does not become part of Denmark rather than England. Of course in t’olden days it was quite normal for a sovereign of Country B to be a feudal vassal of the sovereign of Country A, if he had lands in Country A.
I intended to add that the English Crown can presumably transfer the allodium of a chunk of English land to the KIng of Denmark by making a treaty. Although that’s a deal between the two sovereigns, it presumably also has implications for whoever is the freeholder of that chunk of English land. The King of Denmark may have different arrangements for land tenure by his vassals.
No, VAT is less wicked than an income tax. But LVT removes your actual ownership of land, requiring you to use it in a way that suits the state (i.e. making it a ‘producing’ asset in order to pay their tax demands). If I cannot control even that, how do I own it in any meaningful way (and without regard to context of that use as some mere regulation might by not allowing me to do with it what I wish (which is materially worse that perfectly reasonable restrictions prohibiting uses that damage or impose unreasonable nuisance on others).
So no, LTV is NOT a consumption tax. Taxing any rent I charge to other on that land I own would be a consumption tax based on actual values (i.e. the demonstrable amount of rent charged), but simply taxing the ownership is an ownership tax based on a state imposed notional value.
LVT requires the right-socialist (i.e. fascist) approach to ‘ownership’… rather than nationalise the means of production directly, they allow you to nominally ‘own’ something just as long as you use it in the way they demand. LVT demands you make all land ‘producing’ because that is what suits the needs of the state
Lee, in England there is no legal mechanism for the Crown to displace a freeholder other than by selling after imposing a charge on the land (like a mortgage) e.g. In pursuit of satisfaction for a debt, like any other person might do, or by compulsory purchase, as local ouncils might do, provided they have the right under an Act of Parliament to do so.
Wikipedia might refer to ‘English Common Law’ but the Law of Property Act (see above) 12.32 pm codified English land law and swept away 900 years of odds and ends of various systems of land ownership.
The Crown’s ‘ownership’ of freehold land is now a nonsense and at most a legal fiction (barring mineral rights etc.) as the Crown may not assert in law any right over freehold land without a statutory authority, e.g a right to create a wayleave or compulsory purchase, or in pursuit of a debt.
Well, it is about time we had a ding-dong about LVT!
Several points: first of all, Georgists come in different, often contradictory guises. I note that some might claim that LVT will not cause that much pain and is far preferable to the alternatives, while others claim that LVT will bring about all kinds of significant re-allocations of activity, which implies quite a lot of pain, in fact.
To own land is, as benj says, an exclusive right. But that is a feature, not a bug. If own my house outright – that means no-one else does unless I consent to its transfer in some way. What benj, and others in the collectivist tradition are claiming, is that Man cannot in any sense claim exclusive use of anything on this Earth. Well, our organs are not made by us: we inherited them, so does that mean that humans cannot even own their own bodies?
I have debated LVT endlessly on this blog and I have come to several conclusions:
LVT will not remain at a low level after its introduction; the temptation to ratchet it up is too great;
I doubt it will replace other taxes. Given what we know about the imperfections of government, it will be another tax. (Laird has made this point already);
LVT, as Perry says, essentially puts all property holders in the status of tenants. Some such as Paul Lockett, talking about the Crown, don’t seem to mind this, but I think they are missing Perry’s point about “severality”. While not a sufficient condition for a free society, private, widely dispersed ownership of private property is a necessary condition. A society where we are all tenants, even if nominally in a free markeet, will not be as free as one where there are many owners. Under LVT, big landlords/corporations will be owners, and everyone else is a tenant.
LVT is likely to be more complex to enforce than its proponents claim.
It is not possible in my view to disentangle the rises in the value of “unimproved” land from “improved” land in a developed country. Such divisions are arbitrary.
Elderly people in large properties unable to pay LVT will have to sell, and although LVT proponents may not care less, this is clearly unfair on those who may have bought long before the value changed and who had no reason to want to move. Inheritance tax exemptions could be introduced, I suppose, but then this makes LVT more complex, and we keep getting told LVT is great as a simple tax.
There will mis-allocations of capital/labour as a result of LVT. There is a good analysis via this link.
Finally, too many of the sort of people who like LVT are, when scratched hard, exposed as collectivists in their thinking about notions of ownership. I don’t trust these people.
Perry : “But LVT removes your actual ownership of land, requiring you to use it in a way that suits the state (i.e. making it a ‘producing’ asset in order to pay their tax demands)”
No it doesn’t. If you choose not to use the land to produce an income, it requires you to find the money to pay the tax from somewhere. From your other income, from your capital, by borrowing, or by begging for a subsidy from your rich aunt. You can continue to use the land as you please. So long as you pay the tax.
This is no different from paying VAT on your DVD acquisition. You do not rent out your DVD, you just use it. So you have to find the money to pay the VAT from some other source. But the VAT doesn’t impinge on the reality of your ownership of the DVD. Of course if you haven’t got another source of cash to pay the VAT you won’t be able to own the DVD. And likewise if you haven’t got another source of cash to pay your land tax. This is how taxes work. They require you to find the money from somewhere. Bummer, but that’s just the way it is.
Mr Ed : “Lee, in England there is no legal mechanism for the Crown to displace a freeholder other than by selling after imposing a charge on the land (like a mortgage) e.g. In pursuit of satisfaction for a debt, like any other person might do, or by compulsory purchase, as local ouncils might do, provided they have the right under an Act of Parliament to do so.”
What does this prove ? A freeholder cannot displace a leaseholder other than by the same sort of stuff (until the lease expires – indeed thanks to the commies, sometimes not even then.)
If I as the agreed true owner of some land grant a lease to a third party that is a) perpetual, b) can be transferred to the nth number of subsequent leaseholders, c) demands no rent, d)places no requirements on the leaseholder to do anything, and e) has no pathway for returning practical rights over the land to me ever again, even if the leaseholder abandons the land, in what way can I be considered the ‘owner’ of the land any more? I would merely be able to stand on the public highway and look at ‘my’ land, but I (and all my successors for infinity) would never have any practical ability to use said land every again. That to me seems to be the position of ‘The Crown’ in English land ownership. It sort of was the land owner, but has given all the practical rights away in perpetuity, and now exists only as a sort of legal fiction backstop. Paul L wishes the State to be able to take the position of the Crown, AND have practical rights over ‘its’ land, ie the right to demand rents (and who knows what else).
As such I’m with PdH, hang ’em, and hang ’em high.
I’m not an English lawyer (although I am an American one), but it seems to me that Mr. Ed’s citation of Section 5 of the Land Registration Act disposes of the argument that the Crown retains some residual ownership of the land. “but free from all other estates and interests whatsoever, including estates and interests of His Majesty“ seems pretty clear to me.
Incidentally, I appreciate (as always) the history lesson from Paul Marks. That all seems consistent with what ultimately culminated in the aforementioned Section 5. However, I think he misstates the effect of the US Supreme Court’s 2005 Kelo (not “Kelso”, btw) decision. That case merely addressed the 5th Amendment “takings” clause “nor shall private property be taken for public use, without just compensation” in the context of a state condemnation. It was concerned with the “public use versus public purpose” distinction, and (essentially) concluded that the two terms are synonymous, i.e, that because a taking serves a public purpose (in that case, increasing municipal tax revenues) it therefore also qualified as a public use and was thus not unconstitutional. I think that decision was wrong (for a number of reasons not germane here), but the relevant point is that it did not make (or rest upon) any claim that the government (any government, either state or federal) holds some superior ownership right to land. On the contrary, it recognizes that fee simple ownership is absolute, subject only to divestment (by proper legal action) but not reversion. Eminent domain is essentially a utilitarian doctrine, resting upon the assertion that public need can outweigh private ownership rights (provided “just” compensation [whatever that means] is paid to the dispossessed owner). I have never heard it asserted that there is any sort of superior ownership right inherent in the government; certainly Kelo doesn’t make that claim.
JP:
What’s the rationale behind that assertion? Given that we currently have heavily concentrated land holding, the status quo isn’t great and logically, if there is less financially to be gained from being a landlord and less outlay needed to become a freeholder, you would tend to expect an increase in the number of freeholders.
benj – you clearly know very little about the work of Frank Fetter or Murray Rothbard.
And, given the tone of your comment, I am not interested in instructing you. Other than to point out that both of these people (Frank Fetter and Murray Rothbard) were arch CRITICS of what has become the dominant position in economics.
Laird, I don’t think the allodium is an “estate or interest” of His Majesty. All section 5 says is that the fee simple in possession is held free of any estate or interest of His Majesty. It does not make you, in law, the owner of the land, you are still just the owner of an estate in the land.
So Jim, are you a pure anarchist who seeks to obliterate the state entirely and believes that proposing any other course of action deserves death?
Lee Moore writes: “This is how taxes work. They require you to find the money from somewhere. Bummer, but that’s just the way it is.”
With income tax, you need to have an income in the first place to be taxed on it and then, by definition, there will be deemed an amount available to pay the bill. With LVT, you have to find money – not necessarily from the land in question – and that amount will vary due to factors sometimes entirely outside the control of the taxpayer.
@JP,
It is a natural right to own ones labour(your organs) and the efforts derived from it. ie Capital. Of the efforts of others if you have paid just compensation.
At the moment, because landowners are not paying just compensation for the efforts of others(theft), the Government then has to thieve peoples real personal wealth through taxes.
Double theft by force.
Under LVT (a misnomer because it is a voluntary user fee),
What people produce they keep 100%. People of pay for what they consume. Like all consumption, you choose the level to suit your income/personal wealth.
We should not tax people for what the contribute, we should only ask them to pay for what they consume.
Sounds like an efficient and morally just way of going about things to me.
Libertarianism is about freedom. Not the freedom to thieve or enslave. The freedom to make what you want from life, with real free choices. Like how much of your earnings you pay as Government revenues.
Anti-LVTers must love taxes, because that’s exactly where their logic leads. In this they have far more in common with Socialists than real libertarians.
I take issue with Lee Moore’s assertion that “this is no different from paying VAT on your DVD acquisition.” A VAT (or other form of consumption or sales tax) is a one-time event, levied at the time of sale. Real estate taxes (whether LVT, property or council taxes) is a continuing exaction, repeated every year and continually increasing. I submit that the difference is not merely one of degree, but is of a fundamental nature. The two are not comparable.
LVT is not a tax on the income property produces. If it were, it would be an “income tax”. LVT is based either on the estimated sale value of a property or of its estimated income potential.
These estimates must be calculated by somebody acting in the name of “The People” or “The Common Good” or “The Crown” (which is presumably why PL relies so heavily on the fiction of Crown ownership), or some other named collective authority.
LVT is a tax on physical space. Whether a plot for a house, a few square feet for a parking spot, or even the area taken by a sleeping bag, all area is taxed (unless it is property of the collective authority).
Existing as a human being takes up space. Even if one manages to sleep vertically in a phone booth and somehow acquire all of the life necessities while never leaving that space, it is still real estate required for existing. Even if one leaves that space and transits land that anybody else is paying tax on, the tax on whatever land they are transiting must still be paid.
Human beings exist in space and time. LVT is a tax on space/time. One must either pay the LVT, have somebody else (a landlord) pay it for you, or appeal to the collective for “free” space in which to exist.
LVT is a tax on the right to exist.
@Laird.
Landownership is an on going consumption of commonly created wealth.
What your saying is, just because you’ve bought one bunch of bananas of someone who stole them in the first place, you should get all you banana’s free from now on.
If you, and any other Anti-LVTers don’t get this point, you will never understand what LVT is, or what it’s goals are.
@ Paul Marks
I’m familiar enough with Rothbard and Fetter to make a fair critique.
If you don’t feel as though you want to defend their tenuous position then fine. I draw my own conclusions. Ta.
“Libertarianism is about freedom. Not the freedom to thieve or enslave.”
So according to benj, it is not possible for any individual to own anything of this Earth, including their own talents and abilities that they have inherited from the genetic soup.
You obviously don’t have much time for the Lockean and other defences of how Man can appropriate, or homestead, previously unowned stuff.
It is not really possible either to distinguish movable from immovable goods coherently, since all stuff, including goods we think we can move around, are made out of the substance of nature, which, according to the Georgists, is part of God’s creation and owned by us all. So we all “borrow” from nature/God and therefore ownership can not be an absolute.
But please spare us the lectures about liberty. If you cannot defend several property, then liberty is more or less finished.
benj – the confusion of Feudalism with serfdom (which can exist with or without Feudalism – for example Feudal Sark was not exactly known for serfdom) is one of the reasons I broke with the Libertarian Alliance back in 2006. Indeed the favoured writer (an American by the name of Kevin Carson) even declared that all paid employment was serfdom – it was “Contract Feudalism” (a double lie – the false claim that Feudalism means serfdom, and the false claim that paid employment depends on a Feudal system of law).
You go one step further and confuse Feudalism with “slavery”. A rather astonishing claim about pre 1925 England and Wales (which was governed by “Feudal” land law).
However, let us examine Roman Law systems – no “Feudalism” there.
In both France and Germany there is a private landownership – are you saying the population of France and Germany are “slaves” and that landowners are committing “theft” by collecting rent? Is the French Civil Law Code of 1804 and the German one of 1900 (or the Austrian one of 1811 – or….) based upon “slavery” and “theft”.
If you are claiming this, then please go away.
My point exactly: you are making a circular argument – which is not an argument in any real sense. This is also known as trolling, but you already knew that.
For the record – neither slavery or serfdom were a mainstream feature of England and Wales, even in the 1400s.
In some areas of England serfdom has never been mainstream feature. Kent was one such county (as Kent was the home county of the head of the Libertarian Alliance in 2006 I found his support of Kevin Carson inexplicable – and unacceptable).
Although it should be noted that some features of Anglo Saxon land law (rather than Norman land law) existed in Kent till the Acts of the 1920s.
Most notably what happens to land if a will is not made.
Under Anglo Saxon land law, if no will is made – then land is divided among the children on the death of the landholder. Under Norman land law (as with the old law of Norway – Norse law, not “Feudal” law), if no will is made (dividing the inheritance) then the land all automatically goes to the eldest son.
Midwesterner:
Let’s put the issue of LVT aside for a second; your comment implies that I have a right to land, because it is required to exist and I have a right to exist. Is that what you intended, or do you view it as acceptable for that right to exist to be denied if it’s not done on a collective basis?
@ Lee
It is in relation to the assertion that the Crown holds a higher Estate or ownership of English land in regard to a freeholder.
The difficulty that the English Crown will have here is that the Law of Property Act 1925 Section 1 (1) – (3) has extinguished the right of the Crown (which is not the same as the King, for what it matters) to transfer any ‘allodium’, as on what basis does one show that allodium exists?
1 Legal estates and equitable interests.
(1)The only estates in land which are capable of subsisting or of being conveyed or created at law are—
(a)An estate in fee simple absolute in possession;
(b)A term of years absolute.
(2)The only interests or charges in or over land which are capable of subsisting or of being conveyed or created at law are—
(a)An easement, right, or privilege in or over land for an interest equivalent to an estate in fee simple absolute in possession or a term of years absolute;
(b)A rentcharge in possession issuing out of or charged on land being either perpetual or for a term of years absolute;
(c)A charge by way of legal mortgage;
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F1 and any other similar charge on land which is not created by an instrument;
(e)Rights of entry exercisable over or in respect of a legal term of years absolute, or annexed, for any purpose, to a legal rentcharge.
(3)All other estates, interests, and charges in or over land take effect as equitable interests.”
I fear that this post has descended into a discussion of land law and folklaw.
Leaving aside issues of the “Norman yoke” and all the other real-life examples of theft of land that undoubtedly has occurred around the world over the centuries, those who go on about how “land was stolen” need to realise that we have to draw the line at the ripple effects of such theft somewhere, else any property, however faint the connections to land, will be tainted as somehow less than 100 per cent legit.
If I own an oak chest build from wood that was from trees on some old estate that was stolen from Ethelbert the Lazy in 1000, does that mean that piece of furniture is common property? Of course not. It seems to me that there are just too many advantages for a liberal, prosperous order in having people able to own land outright, rather than just be treated as temporary tenants on stuff that has been endlessly fought over.
These comments have been very revealing. While they have dealt with the concept of “property,” particularly in land, they seem to have avoided the distinctions between Tax Policy and Taxation Theory.
As noted by Mancur Olson, Tax Policy (inter alia) in open societies is largely determined by concentrating benefits and diffusing burdens; whereas, Taxation Theory would be concerned with the impacts of methodologies on resources selected for revenues.
Taxes on Property [the concept of property being a relationship between persons and physical objects] have their initial impact upon those persons having that particular relationship; and, with respect to a particular form of property, generally tend to concentrate that burden on those relationships.
In most open societies (some might say “competitive”) attaining the relationship (property) requires varying degrees of efforts such that the relationship tends to be more concentrated than diffuse. As a result the burden of taxation on that relationship (property) falls on a more concentrated group of persons to provide benefits for more diffuse groups. Thus, the utility of taxes on property in Tax Policy may be constrained.
The reactions of those who have put forth significant efforts to obtain the relationship of Property can be a very strong factor in constraining Tax Policy.
However, when there has been a long period of lesser efforts (and risks) in attaining the relationship (property), such as periods of easy credit, etc., the reactions to the burdens on the relationship may decrease in intensity and public extent by reason of the more diffuse presence of the relationship and the ease with which it has been attained (sort of “easy come easy go”). In these latter circumstances, Tax Policy maybe less constrained in placing burdens on property.
The old aphorism: “The art of taxation is to pluck the most feathers from the goose with the least squawks,” may be supplemented with the art of selecting the geese to be plucked.
By the way – in case in anyone brings it up..
Only in one county in England or Wales was a majority of land “enclosed” by Act of Parliament – I am sitting in that county, Northamptonshire.
Social historians often use as a major source for the Northamptonshire experience the poet John Clare – they sometimes “forget” that this man was a lunatic (his “evidence” is worthless from an historical point of view – whatever its value as poetry).
In reality we are sometimes forced to deal with another double lie.
This time that most land in England and Wales was enclosed by Act of Parliament (not true – that is only true in one county, see above). In most counties change in land use was decided WITHOUT the need for Acts of Parliament over most land area.
Also it is implied (when it is not formally stated) that enclosure meant the “theft” of land – this is not true either as it was really a matter of the change of land USE not land OWNERSHIP.
It is also forgotten that without enclosure (without the general agricultural revolution) millions of people in England and Wales would have starved to death. As the old ways of farming (that were, tragically, still practiced in the 19th century in much of Ireland) could not support a rising population – or withstand the shock of a sudden dramatic event.
The role of modern farming methods (and the land use system they depend on) in preventing the deaths of millions of human beings, is a “detail” that some of us regard as quite important.
Lastly – in case anyone mentions the “Norman Yoke” (and “forgets” that the Normans intermarried with the Anglo Saxons and that most Norman families lost the land over the centuries anyway – they went bankrupt, new people bought up the estates although they sometimes changed their names to sound Norman and hide their humble origins).
I made a special point (again years ago) of raising the example of one of the few Anglo Saxon families to remain landowners after the Norman Conquest – the old Staffordshire family whose motto is “Man is as Wolf to Man” (a reminder of how they cleared the land of wolves – or was it Wolfheads….).
I expected no sympathy to be expressed for them (they were going bankrupt at the time – the result of a failed theme park venture) and none was expressed, just the same hostility as for all other estate owners.
Those who raise the “Norman Yoke” do not really support the old Anglo Saxon landowners – they really hate them just as much.
Again – the idea that this leftism is based on a sincere opposition to the “Norman Yoke” is just yet another lie.
Paul L:
Not hardly. What I am stating, not “implying”, is that the collective has no right in an individual’s property. I say I have the right to seek consensual transactions with other individuals to acquire land. You say that I do not and must instead pay (_insert collectivist authority here_)for the ‘privilege’ of using some of society’s monopoly on space.
If I am completely destitute, perhaps even unable to engage in any productive activity, then I will far rather take my chances of finding a safe haven somewhere among myriad individual property owners than from the one and only collective authority. Collective authorities have a long demonstrated pattern of maximizing the benefits to (_insert collectivist authority here_) at the expense of the individuals it has forcibly collected. One of the first things that utopian schemes in pursuit of ‘the greater good’ do is terminate resource allocations to any member who is not contributing to the alleged ‘greater good’.
LVT and forcibly collectivizing individuals is inextricable. Individual liberty and LVT are physically exclusionary of each other.
Tedd – Frank Fetter’s objection to the ideas of Henry George was both practical and theoretical.
Although, like all “Austrian” style Economists, his real target was more David Ricardo than Henry George.
Contrary to what supporters of Henry George like to claim – Henry George was NOT the leading American economist of the 19th century (even before Frank Fetter came along). Henry George was more of a popular organiser of a movement than an economist and the movement he created still exists.
Sadly I still suspect that most people think the only important person to come out of Peru Indiana was Cole Porter.
Not that I have anything against Cole Porter.
The most important free trade American economist of the 19th century was A.L. Perry (not Henry George). A.L. Perry was a follower of Bastiat (and the French Liberal School generally) and wrote the major texts for students of Political Economy – before the German trained Richard Ely (and his fellow statist Progressives) came along.
Sadly I suspect that A.L. Perry is now forgotten – even in Lyme New Hampshire (where he was from).
The statist control of the education system means that the MEMORY of society is controlled by the collectivists – by the anti property people.
This is why statist “classics” are taught in schools and universities (even if they sold very few copies when they were originally published) and pro private property works (novels as well as economics and so on) are forgotten – even if they were best sellers when they came out.
Those who control the memory of the past have great power in the present – and in the future?
Paul Marks,
I believe you are overlooking that Kyle Macy came out of (though not born in) Peru, Indiana. No doubt he was a better shooter than Cole Porter.
I generally take the Georgist view that land is a distinct form of property. Land and natural resources are necessary to human life, indeed to human existence; since private ownership of land includes the right to prevent others from using it, the logical conclusion of all land being owned privately owned is that those without property have no right to exist.
Rosen, exactly the same argument could be made for food, housing, clothing…. Most things in fact.
To be a logically consistent Georgist, you should in fact oppose ALL private property.
Rosenquist, that worked out really well for the kulaks and with Pol Pot, don’t you think?
Which leaves poor people the choice of hoping that at least one of the countless landowners will extend safe haven to them or, conversely, that they can attempt to please the collective authority and hope that the collective authority will stay pleased with them until the end of their natural life.
The track record on societies that choose one or the other of these two courses is that poor people prosper where land title and private contracts are most immune to collective power, and poor people are consumed by voracious states where collective power usurps private contracts and controls title to land.
All private savings are improvements to either, to use your words, “land and natural resources” or they are tokens exchangeable for improved “land and natural resources”. Food itself is nothing more than a thing made from the skillful combination of “land and natural resources”.
There is no end to your chain of argument short of a totally collectivized society. The best your approach can do is rationalize various exceptions you will make based on your own personal values and biases.
Aha, I see the Faux Lib’s are out in force.
I trust that none of you chaps ever use railways, motorways, mains water, mains electricity or the internet, all things which could only ever happen because “the state” passed Acts of Parliament or similar to have these things built without landowners being allowed to hold the rest of society to ransom?
Returning to the feeeble KLN advanced in the post: “I have never understood how some credulous libertarians and conservatives have ever seen supporters of the Land Value Tax as anything other than the rapacious collectivising rent seekers that they are.”
Estate agents call it “location, location, location” and LVTers call it “community generated land values”, it’s two phrases for the same thing which quite definitely exists. The LVTers say “pay the community for the value of what you take from the community. You do not take your income from the community, by working, you benefit the community, so we can rule out taxing earned income. But by occupying land, you take from the community, so it’s fair and reasonable for you to chip in again.”
Those rents will always be collected by “rapacious rent seekers”, So why is it somehow noble and right for landowners to be able to sit back and collect or enjoy them at everybody else’s expense rather than the money going into a common pot, and then we can argue about how they are dished out again on a democratic basis, whereby a flat rate universal Citizen’s Dividend is a perfectly sensible way of doing it?
What is the community, who decides who they are, how do I rob them simply by owning land and who places a price on my “theft”?
JV, we have a precedent, and someone is making notes and your name will go on the list, and you will be brought to account.
Because they are the ones risking their capital, not you. You risk nothing yet you have a grotesque sense of entitlement to impose rents on others. The Georgists are just socialists seeking the same old collectivisation they always have. They are motivated by envy and avarice.
Mark W: so pray do explain how canals came to be built without compulsory purchase?
And how is refusing to sell one,s own property holding anyone to ransom? If I wish to put a train through your front door, should I not seek your permission?
And if you are consistent, would you accept the Common Good before the Individual good?
Only a quarter of the way through this but I thought I’d just pop down to the bottom and add this.
I see quite a few people whose opinions I respect getting into quite heated disagreements over this. I think that comes from trying to rationalize the fact that some people with a lot of guns are wanting to take our money. It’s like being faced with a cannibal and trying to decide whether to offer up the left or right leg first.
The truth is that there is no real fair way to divvy this up and trying to do so will just lead to people mentally suppressing the unsavoury parts that they are more comfortable with and getting into all sorts of cognitive dissonance malarkey.
Take a step back and reconsider your perspective.
Hi Mr Ed
So your view is that if the UK and Denmark make a treaty, stating that the UK cedes the Isle of Wight to Denmark in perpetuity, and that henceforth the UK will not exercise or assert sovereignty in respect of the Isle of Wight, that has no legal effect because there are freeholders in the Isle of Wight ?
I think the point you’re not absorbing is that the 1925 statutes which have been quoted are all dealing with estates or interests in land, which are not the same thing, in English law, as the land itself. All that stuff about conveying or creating estates is about estates, a legal construct representing occupation rights over land, not the land itself.
Yes but some ways are manifestly worse than others. LVT which taxes not acquisition but mere possession is the worst of all and it forces the state as super-owner on all land to an extent that is so toxic to liberty it would be hard to overstate. It is as profoundly statist and collectivist as it gets as it is the price that just keeps on being payed until you have nothing left to pay them off with unless you cut their throats, either figuratively or literally, before they can exert that much power over every property holder.
Mark Wandsworth your claims are false.
There is no reason why can a private company can not voluntarily agree a price with a landowner – that is not “holding the country to ransom” it is simply a refusal to use the power of the state (VIOLENCE) to get the company access on the cheap.
And if no agreement is reached – then a company has the option of taking its services to an area where people are less demanding (and the landowners who rejected a deal get NOTHING).
When, for example, the landowners of Stamford decided they did not like the deal the railway company offered for the East Coast Mainline – the company did not take the land by VIOLENCE (i.e. by using Parliament to steal the land) it decided to build the line via Peterborough instead (so the landowners of Stamford got nothing).
By the way – by saying that you are prepared to use state violence for the benefit of railway companies, motorways (why not turnpikes?), mains water (never heard of water companies?), mains electricity, the internet… indeed ANY EXCUSE WHAT-SO-EVER you prove that it is you who are the FAKE libertarian.
You have just revealed that you are NOT just in favour of a tax on land Mr Wandsworth – you are in favour of taking land (by violence) on the basis of any excuse what-so-ever.
By the way – I notice you did not reply to the point of Mr Ed about how the canals were built.
Mr Moore – what has the Isle of Wight becoming part of Denmark got to do with the landholders of the Isle of Wight losing their land?
You seem to be confusing a change in nationality with a loss of land ownership. The people of the Isle of Wight would simply become citizens of Denmark (not the United Kingdom) they would NOT lose their land.
TK.
Ouch yes – you are right and I was wrong, I did not know about Kyle Macy.
Hi Lee,
You are conflating sovereignty with land ownership. Look at Louisiana, it is not Common Law, and it did not change its legal system when the USA took over.
If the UK ceded territory to Denmark, that would cede sovereignty but it would not change the legal system. Denmark might change the legal system in its new territory, or it might not. If it did, then we soukd see what the law says, but that is a red herring, as the UK Parliament could simply change the law itself, either for the IoW, or England.
As for the LPA 1925, S1(3) is a point you have not directly addressed. I believe that it should dispose of your query, and you have asserted no legal basis, neither case nor Statute, whatsoever for the proposition that the Crown owns land in a superior or alloidal manner in England, so why would you maintain that it does?
When the Irish Free State came into being (pre-1925), a new form of government came into being subsequently a republic. Did land ownership change, bar the landed exodus?
Hi Mr Ed
Why not have a glance through this :
http://obiterj.blogspot.co.nz/2011/09/english-land-law-no1-estates-in-land.html
“Tenure reminds us that the land ownership is not absolute. In some instances, land can be taken by the Crown. This usually arises when there is a death and no will has been made (i.e. an intestacy) and there is no one to take the land under the rules governing distribution of property on an intestacy – (see Bona Vacantia).
It surprises many to learn that their home (freehold) is held on a fee simple absolute in possession and is, legally speaking, usually held on socage tenure. Although little mention is made of the tenure, it nevertheless remains the law.”
Perry, I agree. Although I am sympathetic to some of the perspectives of the LVTers, I find the LVT itself is not a good answer to the problem posed. It’s as if one looked at a plate of pork and said “I can’t eat this, I’m a vegetarian. Bring me some steak”.
I equally find property taxes abhorrent. It’s like the fella too many scrolls back said. If I want to wall my place up and tell the rest of the world to go stuff itself, so should be my right.
I’ll just add that I see a strong grain of truth in what Paul L says. Whatever the legal history, the crown owns all the guns and they tell you what to do. Whichever way you slice it, de facto they do own the land. That doesn’t mean there’s not good meat on the bones of an argument, of course. It’s just a sorry state of affairs.
Lee, that blog fails to mention that the Administration of Estates Act 1925 so provides at s46 (1) (vi), so the property, not just land but all heritable property, of an intestate without heirs passes to either the Crown or the relevant Duchy (so the Crown cannot, on your line of argument, ultimately own land in either Lancaster or Cornwall).
This is again, an area where statute has displaced the Common Law. The author provides no case law or statute to support an assertion that the Common Law remains unaltered by the 1925 Acts.
http://www.duchyofcornwall.eu/latest/?page_id=130
benj said
Really? How so? I am a landowner; please explain how I’m consuming anyone’s wealth. On the contrary, LVT would eventually consume my wealth by repeatedly demanding a portion of it.
Lee Moore seems to have gone from supporting a land tax to supporting government CONFISCATION of land.
If Mr Moore really does support government confiscation of land (and I hope that I have MISUNDERSTOOD him – and that really he only saying what the statists claim and what he OPPOSES) then he has placed himself (for example) on the side of those who rejected the idea that non-Normans in England in 1100 should have rights (i.e. on the side of William Rufus and Henry the first’s other older brothers – of course Henry, as the youngest brother, may have been playing a cynical card by standing for the English as how else could he hope to become King?)
But Mr Moore (if I have not MISUNDERSTOOD him) has also placed himself on the side of King John in the conflict of 1215, on the side of the enemies of Hampden (and others) who stood against the arbitrary power of “the Crown” in the 1600s, on the side of “the Crown” in the land conflict with both the Americans and in England (for example the attempt to steal some of the land of the Duke of Portland and others) and so on.
YES servants of “The Crown” have at times (on and off) made these claims for many centuries – but it is the mark of pro freedom person that we REJECT these claims.
Mr Moore – I hope (as I have already said) that I have MISUNDERSTOOD you, that (in fact) you also REJECT such statist claims.
It is the mark of a pro liberty person that we REJECT such claims.
To put things in an American context (which I have already done) – someone can not be pro “Kelso” and be a pro freedom person (not just not a libertarian – can not be an even vaguely pro freedom person).
To be pro Kelso and declare oneself pro liberty is a basic contraction – it is an absurdity.
One might as well call oneself a libertarian and then say humans are not beings – i.e. have no choice over any of their actions (could not have done otherwise than they did – in any case at all).
One can hold the determinist position – but one can not (honestly) then (at the same time) declare one’s self a libertarian. There is a basic conflict between being a libertarian and a necessitarian (between believing in choice and believing that choice is just an “illusion”).
Just as there is a basic conflict between being pro Kelso (being in favour of the state being allowed to confiscate land) and being pro liberty.
One can not be pro Kelso (in a British context – pro King John, anti the Great Charter of 1215) and be a pro liberty person – not at the same time.
One might as well declare oneself an supporter of religious toleration – and (at the same time) declare oneself a supporter of Pope Innocent the third.
By the way one argument in FAVOUR of a land tax has been neglected.
This argument is that those who own the land should pay for the defence of the land.
However, this argument would also depend (in order to have an real moral force) on those who own the land deciding what policy was (in relation to the defence of the land). That the vote be restricted to landowners – and the number of votes each landowner had be roughly proportionate to the amount of land they owned.
I present this argument in a sense of fairness – not because I support it myself, but because it is an argument for a land tax system (and a much better argument than the absurd “arguments” the defenders of a land tax have presented).
By the way, as an historical note, the United Kingdom before 1832 had some elements of this system – in that it was possible for a rich person to buy estates where there were very few people (and all of whom would be his or her tenants – with a system of OPEN voting, work it out…..) yet had seats in Parliament (from the days when these fields and so on had been villages and towns of some importance).
Before 1832 it might be argued that a land tax system was “fair” due to the great political power the landowners had over the political system.
Should supporters of the land tax system of financing government openly come out in support of a return to a pre 1832 electoral system – I will listen to them.
However, obviously, a land tax based government is not likely to be compatible with non landowners having the vote. Otherwise these non landowners (being the majority) are likely (although it is not inevitable) to push the land tax higher-and-higher in the MISTAKEN belief that a tax they do not pay directly does not effect them.
This can also be the case in an income tax based system – for example……
In New York City some 30 thousand people pay about HALF the tax that goes to the city (a city of some eight MILLION people).
The recently nominated Democrat candidate for Mayor has had a burst of mathematical genius (just as Pericles and co had in ancient Athens and the “Populari” did in ancient Rome) he has worked out that 30 thousand is a much smaller number than 8 million – he is thus appealing for votes of the eight million on the basis of taxing the thirty thousand even MORE highly than they already are taxed.
Should the voters of New York City choose to follow the path of evil in November (in the mistaken believe that “taxing the rich” more highly will not hurt the majority of people) they (the eight million) will suffer greatly.
And, as the moral issue is so clear (as the Democrat candidate has been so open about his own wickedness – for example getting himself arrested recently, in a “protest” to support endless government spending, and so on) that those who vote for him will DESERVE to suffer (they can not seriously claim to not know what sort of person they would be voting for).
The problem with democracy is that the guilty majority (when they are guilty) do not suffer alone (if they did there would be no moral problem – those who choose evil would suffer, AS THEY SHOULD) they, tragically, also drag down the innocent (including the innocent POOR) with them.
So here I have been fair – I have shown that an income tax system (when it is “Progressive”) can be just about as vile as a land tax based system.
We shall see in November – the people have a choice, they do not have to choose evil if they do not wish to do so.
G’day Paul
1. I am not in favour of a land value tax. I am against all taxes. Except that I recognise that if we have a state (and I do favour having one) it has to raise some money somewhere. Taxes should be low, unobtrusive and even handed. see A. Smith. Whether a land value tax is a particularly bad way of raising taxes, I cannot say (though I am prejudiced against wealth taxes on economic efficiency grounds.) I noted some particular objections to a LVT myself above, but there are particular objections to all taxes. Since taxes are already imposed on income from land, gains from land, conveyances of land, the inheritance of land, and the occupation of land (business rates and council tax) it seems plausible to me that replacing them all with one tax based on value might be more economically efficient. But I don’t claim that it is so, it just might be so. But mostly, so far as this thread is concerned, I simply don’t think that Perry has succeeded in demonstrating that a LVT is wickeder than other kinds of taxes.
2. As regards being a disciple of King John, I am just saying what I suspect the law is. I doubt very much, if you went to see the twelve most eminent barristers specialising in English land law, that any of them would say
“No no, that Parliamentary answer from February 2009, in which the Minister asserts that the Crown (or the Duchies of Lancaster and Cornwall) is the ultimate owner of all land in England, and freeholders merely hold an estate in land, subordinate to the Crown, is just a state lackey showing away, claiming things on behalf of the state that no English court would entertain for a moment.”
I rather suspect they’d all say – “Ms Prentice was correctly advised, that’s what the law is.”
Of course if one of the twelve happens to be following the thread, I should be delighted to be corrected, since, I repeat, I am not a lawyer. I am a mere googler. One of the reasons I googled and posted that last thing about the Duchy of Cornwall was that Mr Ed made a reference to the Duchies and I wanted to comment on their anomalous position. But mostly I thought it was instructive that this was a Parliamentary answer from 2009, not from 1924. Folk on here have been arguing that the ancient system – Crown owns the land, and grants estates over the land to the hoi polloi – was completely overturned by statute in 1925. It seems not – at least according to the expensively legally advised Minister.
As regards what I approve of, I do think there is a necessary connection between land and sovereignty. If we are to have states, their territorial extent cannot be changed by private land deals. So Denmark cannot annex the Isle of Wight simply by buying out all the private landowners. If the Crown’s ultimate ownership of land simply preserves its sovereignty, and doesn’t interfere with private estate holders doing what they like with their estates then I don’t see any harm in it. If it does interfere, then I’m against it.
Once again, though I have some libertarian sympathies I find myself mystified by the theology. Only a few years ago, the state by statute granted “rights to roam” over great tracts of private land . This was, in my book, a thousand times more of an infringement of freedom and property rights than the legal vestiges of the feudal system in providing for an ultimate, but practically irrelevant ultimate Crown ownership. When they can and do swipe property rights by Act of Parliament on pretty much an annual basis, the wailing of the libertarian clerisy over feudal theory utterly baffles me.
Paul, you’ve been very forceful in stating what you don’t want, but what are you in favour of? You’re clearly anti LVT, but then you have just been similarly negative about income tax.
The whole issue boils down to either concluding that the state should be removed entirely, or accepting a system of taxation.
I’ve given solid argument as to why, if there is to be a state, having it funded by LVT is the most tolerable approach in terms of liberty and property rights. If anybody else has an alternative approach, I’d like to hear their case.
Paul, defence of land would not justify LVT; at most it would justify a flat fee, probably not very large, to pay for police, courts, land registry and so on.
I think there are clear benefits to having well defined property rights; these are clearly to the benefit of the owners, but also even to those who do not own a specific lump of land but who benefit from the wide division of labour and incentive structure of which several property is a part.
Final thought on LVT: why does it stir so much passion among people who might, on a lot of other issues, be in the same trench? I think it is because some libertarians are still attached to the notion that the Earth is something to which “we” are entitled to a share of, possibly a hangover from religious belief. The idea that is is evil to exclude, and thus benefit from the scarcity of said property, comes from this. But as I say, once you start saying that God-given material of this Earth belongs to “everyone”, then why stop there? Why not demand that healthy people give over their kidneys to the sick, on the grounds that our organs are not really “ours”, as we were “given” them by Mother Nature, God?
Except you have done nothing of the sort. LVT is the least compatible with liberty and it is the very negation of property rights. The only taxes should be consumption taxes, never ownership taxes, but at least income taxes only occur if someone actually has an income. Supporters of LVT are opposed to severalty itself and that is why I regard you as no less despicable than a fascist or communist or feudalist (which is what you really are). A consumption tax, which has been preposterously claimed to be a consumption tax, is like not just taxing the purchase of a laptop (which is indeed a consumption tax) but coming back each year and taxing it again if you still own it (at which point it is an ownership tax).
But of course if you have that laptop, someone else cannot have it, so why should you not pay the state an annual laptop tax, yes? Now where have I heard that before. And of course that *is* where this ultimately leads. Once the thugs start to tax ownership, and turn it into rent, they do that to everything. It is like a cancer than never goes away.
The Georgists are no less the enemy than the socialists and fascists and corporatists and all the other statist collectivists who despise severalty.
Perry, that’s exactly what I was talking about, lots of blustering ad hominem, but nothing reasoned offered in return.
You berate support of LVT, because it would tax a particular type of property, yet your alternative is to level a tax on all forms of property, including true material property, which, in terms of infringing property rights, is many degrees worse.
Sorry Lee – I see I did misunderstand you. My apologies.
Your position is that the law is such-and-such but that you OPPOSE this.
I do NOT agree with you with that the law is such-and-such (like Mr Ed – I think you have fundamentally misunderstood the legal position), but I AGREE with you in opposing the idea that the law should be such-and-such.
To take the King John example.
I would say “the law is not what King John says it is”.
You would say “the law is what King John says it is – but it should not be, we must CHANGE the law”.
In theory there is a big difference between thee and me Lee.
But in practice there is no difference between thee and me.
As we would both be fighting AGAINST King John – not in favour of him.
Paul L. asks “what are you in favour of Paul?”
A fair question.
I am in favour of in THEORY – no taxation in peacetime, and no “legislation factory” (no “legislature” for making “new laws” like a factory turning out tins of baked beans) either.
A state of affairs much like Tolkien’s Shire (before the agents of Saraman messed it up).
“But Paul that is THEORY – what about PRACTICE?”.
Well I really liked Sark a few years ago – when there was virtually no taxation at all (although there was a property transfer tax).
“No Paul a BIG example”.
Well of the 50 American States the one I think has the least bad system is South Dakota (that big enough – after all you could lots of United Kingdoms into the place).
Actually there is a property tax in South Dakota (although a low one) and a 4% sales tax as well.
But, overall, it has the second lowest tax burden of the American States.
Alaska has the lowest (no sales tax as well as no income tax – and not much of a property tax either), but then Alaska is basically (for tax purposes) a giant oil well with people living on top of it.
So, as with my answer to Al Jazeera, (the Q based television station – that endlessly denounces other countries BOTH for their high taxes and for the “low” government spending) my reply to an Alaska example would be…..
“Well give me all your oil and I might have government spending without taxation – as you do”.
I do not count Alaska as a proper example – but South Dakota is a real example.
Pity that States such as South Dakota in modern times have a vast bloated Federal government on top (once the Federal government hardly existed, in terms of taxation, at all).
As for Britain……
Actually as late as the time of James II there was hardly any taxation at all (and no Central Bank either). Although there was the Poor Rate (financed by the local, YES, rates – property tax).
Those people who claim a “Poor Rate” is inevitable need to explain 19th century France (surely a big enough example – being bigger than Britain)
In France (even in the 1880s) there was no Poor Rate (and no Income Tax either) – the farmers of France, mostly, owned their own land and were not taxed.
Should they have been?
As far as I know there were just a few excise taxes in France in (for example) the 1860s. Not much higher than taxation under James II in England and Wales in the 1680s (and with no Poor Rate and no Church Tax on top).
Still had I been about at the time of Louis Napoleon III I would have (no doubt) been DENOUNCING him over those excise taxes.
“Much too high – and the money is being wasted on your redesign of Paris, you statist sh.t!”
“Paul you are never satisfied”.
No – I suppose I am not.
By the way – on the counter argument that young women in France were forced to prostitution because of the lack of government welfare (till the very late 19th century).
There was actually at least as many prostitutes in London (which had government welfare) as in Pairs (which did not).
By the way – now brothels are illegal in France (have been since the 1940s).
Are we really supposed to believe that prostitution is rarer in France (where brothels are illegal), than in Germany and Austria (where brothels are legal)?
As Gladstone pointed out (and remember the choice of prostitutes as a charitable cause was a random choice in the Oxford student club of which young Gladstone was a member – he could have got coal mine pit ponies, and would have a lot less whispering against him, in later life, if he had) it is NOT from the State that we should look for moral improvement.
In modern France there is a vast amount of government welfare (the highest taxes in the world I believe), and drugs, brothels (and so on) are illegal.
So, according to statism, French cities should be models of virtue.
Does anyone actually believe that?
Ditto with British towns and cities.
On the contrary. You wish to tax ownership, taxing the same thing over and over again. I only wish to see consumption taxed. That is what makes you so thuggish
How is taxing something once, with the intrinsic ability to pay as the money must be there to incur the tax, worse that taxing something over and over again until it is gone? Moreover rather than placing social interaction (i.e.markets) at the centre of society, you place the state, in a feudal position of super owner. This struggle has occurred through history and you are very much on the side of the Men in the Feudal Castle. Regulating land use heavily is bad enough, your intention is to make it so that if you cannot produce rents from land (ie you only wish to live on it), then you will be driven off by the state’s taxes as that form of use is inconvenient for it. Rather than market values, which can only be known with certainty when the land is SOLD, you want taxes based on theoretical values chosen by politics.
So yeah, ad homenim… fuck you, you collectivist thug.
I am glad that the recurring nature of LVT has finally come up – I’ve been missing that point, and I think that in the technical sense it best explains why LVT is so much more objectionable than other taxes.
The practical advantage of taxing consumption, over taxing ownership, is that the falsehood (and it is a falsehood) that “this tax only hits the rich” is harder to use.
If sales are taxed – then everyone can see they are being taxed (and can unite in opposing higher taxes).
Whereas if it is property – the lie can be spread that only property owners are harmed by the tax.
Of course one problem is that in Britain the sales tax (VAT) is included in the price – so people do not see they are being taxed.
If people could see that 20% was being added to their bills, I suspect they would be rather upset.
Have we sufficiently flogged this deceased horse yet? Could we perhaps move on to some other topic?
There is of course one huge bastion against LVT – women, their children, and the female desire to provide a secure home for them. I can see the scene now as the MP returns from Parliament, flushed with success of passing LVT into law:
‘You’ve done what??? Passed a law meaning if you lose your job we have to leave this house, the home for your wife and children, because even though we own it outright, we won’t be able to afford to live here any more? On your bike sonny, you can sleep in the garden shed until you’ve reversed that little lot.’
Laird: I am still not sufficiently clear on the difference between VAT and sales taxes as practiced in the US (say VAT was clearly displayed as not being part of the price).
Paul L: In regards to revenues, how about a form with a box which is labelled “How much do you want to give us?” and enclose check by return of post 🙂
No, but seriously, how about those that want to lord it over the rest of us pay for it their-f’ing-selves?
The essential difference between a sales tax and a value added tax is that the sales tax is levied just once, on the final sale to the consumer, whereas a VAT is levied on each stage of the production chain, with each business in the chain charging VAT on its sales, but then reclaiming the tax it paid on its purchases. So in a simple two step production process, imagine a business that manufactures garden gnomes from garden gnome kits, and then sells them to the public. The kits cost $10, on which the kit supplier charges 20% VAT (and so pays $2 to the state.) So the garden gnome producer pays $12 including the VAT to buy the kit; it then assembles the kits and sells the completed garden gnomes for $30, adding an extra $6 of VAT. So the final consumer pays $36. But the garden gnome producer only pays $4 to the state because its VAT bill is $6 (the VAT on its sales) minus $2 (the VAT previously collected on its purchases.) Exactly the same $6 could be charged by levying a 20% sales tax on the sale to the final consumer.
The point of a VAT is that it provides the seller with a better incentive to collect the tax than a with a sales tax. If there’s just a final 20% sales tax, both parties have an incentive to evade the tax, eg by lying about whether the purchaser is the final customer, or just a link in the chain. Or by simply not reporting the sale at all. Whereas with a VAT the seller has an incentive to report the sale and charge the tax because only by doing so does he recover the tax he paid himself on his purchases.
So by collecting the tax in itty bitty pieces all along the supply chain, the theory is that evasion will be reduced. The price is that there’s a lot more administration involved in doing it along the whole chain.
From a libertarian point of view it’s much worse than a sales tax because (a) in theory and to some extent in practice it allows the state to raise higher taxes, by reducing evasion and (b) it puts 140 people to the trouble of complying with tax collection and accounting rules while a sales tax will only trouble 1 person.
@ Lee, a quote from a debate in Parliament is not a statement of the law. That is just folk law. If you have any statute or case law relevant to the Statute I have cited, I would be grateful to see it. The situation appears to be that for those who say that the Crown ‘owns’ land, they have no answer to S1 LPA 1925 and the estates in land, all other interests being equitable interests. If the Crown does own land, it cannot do anything as a consequence of this ‘ownership’, and can claim no right as a consequence. It is at most, a legal fiction, or a legal myth.
Lee: thank you – that was my understanding too. But, there are two other points: from the POV of the state, the downside of VAT is that businesses claim returns on all kinds of stuff that is not truly a direct production cost – or, to put it from the POV of the business owner, everything he buys – including food – can be seen as production cost.
Another point is the one you mentioned about sales tax, and that is the final-sale point and related attempts at evasion.
In fact, both these points have to do with the possibility of evasion – and with the excuses they give the state to try and prevent such evasion. So in the case of sales tax, do the various US state governments not put the burden of proof as to the sale being final on the businesses, resellers etc., and so isn’t there eventually as much bureaucracy and intrusiveness involved as with VAT?
So Paul, it looks like, on a practical level, we’re in a similar position. Your preferred real world example, of the entire tax base being drawn from property and sales taxes would be a significant step in the right direction from my perspective, although, unsurprisingly, I’d rather go a step further and remove the sales tax to reduce the volume of bureaucracy and state intrusion.
Alisa –
forgive me if I interject myself into your inquiry to Laird.
The Sales Tax and Value Added Tax, are similar in that they are both taxes on transactions.
In the US a Sales tax is imposed (usually) on a final transaction (retail sale of an item). As a result that transaction may be taxed in the jurisdiction in which it occurs; where it occurs by reason of some physical presence. Thus, those transactions become a source of taxation revenues to local and state jurisdictions in which the transactions occur.
In the forms of Value Added Tax (which was originally known as “Taxable Value Added”) currently in use, each transaction, occurring at each stage as a particular good or service is developed for ultimate consumption or application is taxed. Generally the “Value Added” is determined from the price realized upon a particular stage of development. That price is compared to the costs incurred during the development, which would include taxes paid for any previous stages in the development.
As a result, in the US, a Value Added Tax cannot be applied by state and local jurisdictions because of the constraints upon interstate commerce that would result. Most goods and services are not developed within a single jurisdiction (however, some are).
Take a rough example; a sweater: Begin at the production of wool. An initial tax would be placed upon the raw wool when sold to the first processor for cleaning and carting. We will skip how that particular first tax is determined. But, in addition to the price that the rancher needs to cover his costs and profit, he must collect the assessed tax. A receipt for that tax is passed on to the processor, along with the wool. After processing, the processor sells the process will do a spinner and based upon the price he charges a further tax is assessed on that transaction based upon the theoretical value added to the wool by reason of the processing. However, the processor is allowed to include in his costs (and thus a reduction in the value added) the previous value added tax paid to the rancher. The spinner then sells to the textile producer and the same stages of taxation are repeated with credit given for the previous value added tax incurred, until finally at the end when the consumer purchases the sweater the last value added tax is incurred and there are no further credits.
Since both are transaction taxes they appear to be very similar, but they are quite distinct in their impact at the various stages in development as compared to the final point of retail sale and consumption. The application of VAT to particular services is less distinct from the application of the sales tax on those services (particularly those which occur exclusively within a local jurisdiction).
One of the impacts of VAT is to hasten the demise of less effective operations in particular stages of developments. As securities analysts are well aware from the financial reporting of many types of enterprises, an immediate and total shift to VAT in the US, displacing various credits against taxation under income tax structures could have devastating effects.
After scanning the other comments similar to mine on VAT, I did not note any reference to the fact that all taxes incurred at various stages in the development and distribution of goods and services ultimately have to be included in the final prices.
Any enterprise has to “pass-through” all of the taxes it incurs, including taxes upon net profits, as part of its costs to be recovered in prices. Peter Drucker once pointed out that even the profits constituted “costs” of an enterprise.
The property taxes paid by BMW on their extensive facilities in Laird’s area are included in the price of each vehicle produced there. So are all of the other taxes included in the pricing structures in order to arrive at net after tax results.
Even in the matter of professional services, perhaps often unconsciously, consideration is given by the professional as to what must be charged for services in order to bear a specific burden of taxation (in addition to all other costs) to provide a particular desired quality of life and standard of living.
I apologize for much of the repetition of other comments contents in my previous post.
RRS, you are of course correct that the cost of taxation has to be covered by the price of a final good or service, at least if the producer wishes to say in business.
However, that does not mean that in all cases that the introduction of a tax will force up the price, or the removal of a tax will cause the price to fall. That would only be the case if prices were set by reference to the break even point, rather than supply and demand.
Here is what libertarian economist Andrew Lilico thinks. Writes for The Telegraph and Conservative Home,
Because he is your archetype Socialists isn’t he? 😉
http://conservativehome.blogs.com/thecolumnists/2012/04/andrew-lilico-is-it-possible-privately-to-own-land.html
Indeed, not only do businesses need to pass on the incurred taxes, they also have to pass on the cost of the tax compliance. And then there is the indirect cost of the regulatory system required to ensure the compliance has occurred and other related functions. It’s a lead-weight on the economy in its own right and needs to be brought to an end for the good of all.
Yes actually he is.
Perhaps it might be instructive to consider what rules for land apportionment might look like should a spaceship full of libertarian colonists land on an untouched planet. Not just for the immediate needs of the colonists but in establishing rules for children, intestate inheritance and suchlike. Would it really be a free-for-all “calling dibs” or would something more elegant be the order of the day.
There’s a real solution to the problem of taxation generally: have the state buy into the wealth-producing part of the economy and finance state-provided services with the income it produces for them, and with that income only. And if the state buggers the companies it has an interest in, or the economy generally, it has to make do with less money.
benj: Mr Lilico’s piece is simply lamentable. He demonstrates not the faintest acquaintance with English legal concepts in relation to the acquisition of easements and equitable interests in land.
PersonFromPorlock, I can’t see the state willingly making do with less money if that situation arose, but that aside, the main problem I would see is the state skewing markets in favour of the businesses it has interests in. At best, it would just screw over the few unfortunate enough to find themselves in competition with the state, at worst, it could lead to the effective nationalisation of huge swathes of the economy.
One other difference between a VAT and a sales tax which hasn’t really been discussed here is that the latter is completely transparent to the end (retail) purchaser, whereas the former is concealed from him. A VAT thus offers governments a much freer hand in increasing the rate of exaction without drawing the ire of the populace. In fact, it misdirects that ire onto the poor retailer, which is the one actually responsible for putting the higher prices on the goods. Increase the sales tax rate from 6% to 7% and you’ll have the populace up in arms. Increase a VAT from 20% to 21% and the only impact will be that customers are annoyed at the retailer. Thus a VAT rate increase can have the perverse (from my perspective) effect of enhancing the stature of government as the only apparent offset to the “rapaciousness” of Big Business. If you’re a fan of big (and growing) government you love a VAT.
Laird, although there is a difference between the two taxes, I’m not convinced the difference is significant. Both taxes are pretty poor in terms of clarity to the general populace, because they are levied on a “little and often” basis, so at the end of the year, it is unlikely that your average person could determine with any degree of accuracy how much of either they’ve paid.
If you want the payer to appreciate just how much tax they are paying, you really need to be charging it directly and infrequently (monthly or less). Property taxes score well on that front, with income tax probably coming in second.
The extent to which VAT regulations go should be astonishing. I recall reading of a difference in VAT treatment between bull and horse semen as the former is food-related whilst the latter is for livestock not habitually eaten throughout Europe.
It did occur to me that whoever it was who had sat in Brussels drafting those VAT regulations and discussing it in the office thoroughly deserved their fate.
That is a bit rich coming from someone who wants the state to push millions of people into making their non-producing residential land into rent-producing ones so they can pay the collectivists an ongoing ownership tax for the privilege of living in them. How’s that for ‘skewing the market’?
Laird: isn’t this purely incidental, rather than inherent in the difference in nature of these two taxes? I mean, the tax authorities can always decree that the retail price be displayed would include the sales tax – and likewise, they can decree that VAT be added at the checkout, no?
Mr Ed : “a quote from a debate in Parliament is not a statement of the law”
Just so, though what I linked was not a quote from a debate, but a Parliamentary written answer.
Mr Ed : “That is just folk law.”
Very possibly, but since it was a Parliamentary written answer it was also the considered view of the government as of 2009. It also agrees with several of the other links that I have posted, eg wikipedia. But until one of those eminent barristers comes along, I can’t produce any case law.
Mr Ed : ” If you have any statute or case law relevant to the Statute I have cited, I would be grateful to see it.”
Sorry.
Mr Ed : “The situation appears to be that for those who say that the Crown ‘owns’ land, they have no answer to S1 LPA 1925 and the estates in land, all other interests being equitable interests.”
I think this is where we are parting company. You are hanging your hat on the LPA 1925. I have been trying to explain why LPA 1925 is not inconsistent with the material that I have been posting, ie that the Crown is the ultimate owner of all land. The point is that LPA 1925 refers only to ESTATES and INTERESTS in land, that are capable of being created or conveyed in law. This is a different concept from the land itself. So far I haven’t spotted you explaining why this distinction is incorrect.
Mr Ed : “If the Crown does own land, it cannot do anything as a consequence of this ‘ownership’, and can claim no right as a consequence. It is at most, a legal fiction, or a legal myth.”
Largely yes. Though with minor exceptions like intestacy.
From my perspective, this horse is now dead.
I was just about to make another push for my suggestion that the government should just print the money it needs. After all, it would greatly simplify things, it would need no collection mechanism and it would fall somewhat fairly (for certain values of “fair”) across the economy.
Then it occurred to me. If it didn’t have to be used to pay taxes, who would use the government’s dodgy money in the first place?
Alisa, indeed. That’s already the case with gas and a few other items. I think the main obstruction is jurisdictional taxation. Counties and even cities can have their own tax on top of state tax. Now, that doesn’t necessarily mean that those couldn’t be integrated into the display price, particularly with modern technology but it would make it more complicated.
Paul L, for most people (at least here in the US) real property taxes are just as invisible as a VAT is in Europe. That’s because almost all mortgage payments (and most people have mortgages) include an escrow component for taxes and insurance. Yes, you do get a statement once a year reconciling the amount escrowed with the amount of taxes actually paid on your behalf (and usually increasing your monthly payment slightly because the taxes went up), but that’s ignored by most people. Thus property taxes are generally “little and often”, too. (So, for that matter, are income taxes, which are withheld by the employer and remitted by it directly to the government. If you want to raise public consciousness of the magnitude of their tax bill the most important thing to do would be to abolish employer tax withholding. I’ve argued for that for years.)
Alisa, while in theory I suppose that a VAT could be added at checkout, in practice the public wouldn’t stand for a (disclosed) 20% tax. A rate that high only works if it’s hidden. Which also answers your other question: I don’t believe that the difference between the two is at all “incidental”. The inherently deceptive nature of a VAT is a feature, not a bug. I don’t for a minute believe that anyone who supports it thinks otherwise.
The closest comparable I can think of is gasoline taxes. Here in the US there are both state and federal excise taxes on gasoline. Those are expressed as a certain number of cents per gallon (each state sets its own rate). Those taxes are built into the retail price, but are disclosed by signs on the pump. Most people ignore them, though, and complain about oil company “price gouging”, especially when prices are rising, even though oil companies make far less profit per gallon than the parasitic taxing authorities do. In fact, whenever gas prices decline it’s inevitable that you’ll hear some state legislator proposing increasing the tax rate to capture that benefit. Embedding taxes into the price paid is a proven method of hiding them from the public, hence their attractiveness to statists.
Laird, property taxes are clearly not little and often if their impact is revealed in an annual statement. If you received notification broken down over hundreds of smaller statements throughout the year, as with a sales tax, that would be little and often.
Paul L. factually wrong.
The property tax of South Dakota is not (as far as I know) a Land Value Tax (still less a claim that the government is the TRUE OWNER of all land) – and it is actually the Sales Tax (not the Property Tax) that gets more revenue for the State government.
The key point (that Laird keeps trying to hint to us) is that it is NOT the structure of taxation that actually matters – it is THE LEVEL OF GOVERNENT SPENDING.
Why does South Dakota have the second (the Alaska thing I have already covered)lowest tax burden in the United States?
Because it has the lowest level of STATE GOVERNMENT SPENDING in the United States (as a proportion of total income – all things must be calculated as a proportion of income).
Get GOVERNMENT SPENDING down – and the tax problem solves itself.
Laird.
“The deceptive nature of VAT is a FEATURE not a bug”.
I wish I had said that.
Indeed in future conversations I will claim it was me who said it.
Meanwhile back at the ranch………
The Bank of England and the Federal Reserve have now both announced they are totally committed to a Crack Up Boom.
They will go on creating extra money till they have totally destroyed the Capital Structure.
If I was a totally vain and disgusting human being I would say “I told you so”.
S……..
I TOLD YOU SO.
Why you say crack up boom Paul, I thought they were going to announce the beginning of tapering?
I understand that, Laird. What I still do not understand – and sorry for being obtuse – is what makes VAT more deceptive in nature (not in current practice, but in principle) than sales tax?
And Paul, I tend to disagree with your point about taxes vs spending – I think it is more of a chicken-and-egg kind of thing, where one feeds the other.
Alisa, a VAT is more deceptive in nature (not just in practice) because the fact that it is hidden from consumers is an inherent, inescapable element of it, whereas that is not the case with a sales tax. I suppose it would be possible to “embed” the sales tax into the posted price (that is sometimes done with small-ticket items, such as food for consumption at a fair, which might be priced at, say, $1 which includes the tax, so the real price is $0.94 plus $0.06 tax), but that is rarely done and, more importantly, is not an essential component of the system. Deception is an essential component of a VAT system, though.
I don’t think I can explain it more clearly than that.
I accidentally deleted benj’s latest ‘offering’ but it is here in the reply:
So LVT land-feudalism (i.e. you can ‘own’ land just as long as you can generate rent from it as that is what would suit the state) will make ‘us’ all wealthy eh? I think what you really mean is that even though you have not risked your capital buying some land from someone else, you are entitled to rents from people who have. Who do you think you are fooling?
You are a collectivist thug who wishes to weaken severalty itself and I doubt many people here think otherwise. It is people like you that make me wish more people owned guns.
Several, individual liberty, the only kind of liberty there is.
Laird, I think what Alisa is getting at though is that there is no reason why the price on the shelf couldn’t be the pre-VAT price with the VAT added at the register. Unless what you’re saying is that because the tax is paid at many points along the line, the actual shelf price would be the base price plus all the taxes paid by the people involved *before* the retailer. So instead of price+tax, you have price+some tax+some tax+some tax+some tax+some tax+some tax. So although the upshot is you’re paying the base price plus whatever ungodly amount VAT is these days, it can’t really be labelled as such. Does that sound right?
Though I have to say, one nice thing about including the VAT is that one can mentally total up the price as one shops and have exact change ready when checking out. I wonder if that has a direct effect on educational standards? But looking at sales tax US (around 10% here) vs VAT UK (20% is it now?) I have to say if it does, it’s not worth it.
Another inescapable problem with LVT is the usual indivisibility of land. If I lose my income, I can (probably) get another job, even at a reduced rate. If my salary decreases 20%, I can probably make proportional decrease in my spending (unless I’m the government of course and then I just order a couple more presses) and my tax decreases proportionately (ideally or more in a “progressive” system). If the same happens with an LVT, I’m on the hook for the same amount and it’s not as simple as decreasing my land holdings by 20%. I could, perhaps, move but that involves additional expenses and I may already be fairly far down the ladder and it may not be possible to move in a way that actually decreases my overall expenditure. It’s a vice with poverty as the outcome.
Though once again, I’ll add that current property taxes are little better.
Richard: yes, that’s what I offered myself as an answer before I began nagging here – but still, whatever the number is, in both cases the end consumer who pays a well-known and well-defined amount of tax, so I still see no problem (not a technical one) to add VAT at the register, rather than include it on the shelf price tag.
I notice you don’t want to answer the point.
Again, I’ll put it to you again, we are all wealthier if we share the Earth.
If we chose not to do that, we then start appropriating peoples earned wealth instead. This makes us less free and poorer to boot.
If you live in a society without laws your land is worth zero.
Now, if you are saying you would prefer to wind back the clock 20,000 years so we live in a hunter gatherer free for all, I can respect that position. For sure life was nasty, short and brutish, but at least you could be said to be “free” of social constraints. Not within your tribe of course, there would have been plenty there, but at least you could bugger off and live in a cave unmolested by anyone.
Is this want you really want? The life of Grisly Adams? Fair enough, some people do want that. It’s one of the of freedoms our finite planet no longer affords.
So, it comes back to sharing. Do you want to share or live in the cave?
…please ignore the ‘who’ there…
You point is “I am entitled to rent on what you have risked your capital on”. I got that many comments ago.
You are a collectivist thug, what more is there to say? I am all for the rule of law to underpin severalty. Indeed people need institutions to protect themselves from the predations of people like you, who want to use the power of the state to take what belongs to others. I on the other hand want to use the power of a minimal state to stop you doing that, as it is better that having to shoot you myself.
70% of Land in the UK is owned by 0.3% of the population.
They risked no capital, the land was acquired through violence and legalized robbery from the common people. The poor had no lawyers.
Why do “libertarians” always seem to line up behind the robber class?
Without the law that gives you the right to exclude your property is worth zero.
Your hiding behind the protection the law(that’s all of “us” btw) offers, but don’t want to pay compensation for it.
Nasty hypocrisy that for a freedom lover.
When you buy land with capital, there is no risk. It’s is not an investment. A capital investment requires more capital to sustain it’s value.
The unimproved value of land has no cost of production. No capital, enterprise or effort involved.
So, no I don’t want any return on your capital, because in land there is none. I just want you to pay for your monopoly privileges. All you’ve done is purchase a privately exchangeable licence that current lets you do this for free.
Back to my original question. Would you say, the more freedom enjoyed in a Country, the more economically successful it is? In which case, if LVT produces large gains in wealth creation, what does that say about the freedoms it does or does not curtail?
Hint. Monopolies are not freedom. They are a mechanism for economic enslavement.
Are you getting this yet?
BTW, I’m a professional BTL landlord for over 20 years, so you should refrain from making assumptions about collective thuggery 😉 I’m the monopolist gaining from freedom lovers like you. And most other people from the left and right to be fair.
Oh I am happy to pay for a state to keep thugs like you off my property. It is easier than having to shoot you myself.
LOL. So if I buy a property, and then sell it later, I am guaranteed to get more for it than what I paid for it, eh? I guess you don’t live in Ulster, haha.
Yup, but are you I wonder?
Well that is hardly a surprise. You want a tax that will matter very little to you as you have producing land (i.e. you gain rents from it and so can pay the state for the ‘privilege’ of nominally ‘owning’ it from your feudal overlord state). What you cannot stand is the idea that someone might not want his land to produce, he might just want to live on it. But you want a political system that will force him to make the land produce rents, because that suits the state. People like you cannot stand the idea of just leaving people alone. By all means tax rents if you like, that is a consumption tax for a service rendered which intrinsically has the ability to pay (rent -> tax, no rent -> no tax)… but you want to tax ownership. That is why you are a rent seeking thug.
Alisa, I believe that the problem is that the VAT is not added at the point of sale so it cannot logically be added at the register.
So let’s run this through as an example of, say, a chocolate bar.
Sales tax: Manufacturer buys cocoa beans for $5, sells chocolate bar to retailer for $10, retailer sells to you for $15, government takes (say) 10% bringing total price to $16.50. Straightforward. The tax you pay at the register is $1.50
VAT: Supplier buy cocoa beans for $5+.50 VAT. Supplier then sells to retailer for $10+($1)VAT but gets to claim back $.50 effectively making the VAT $.50. Retailer then sells to you for $15+$1.50 bringing the total price to $16.50. Same effect. But the retailer gets to claim back the $1 VAT they paid earlier, effectively making the VAT you pay at the register $0.50
I hope that suitably confused you. I had to knot my brain a few times to get through it.
So although the advertised VAT rate in this fictional encounter is 10%, the amount you actually end up paying at the register is 3.125% and, even better, this will change depending on margin (I think) so there is no simple rule.
It’s pretty despicable.
In the VAT example, please substitute “manufacturer” for “supplier”.
Problem is, you pay them for that but they find it easier and more profitable to hassle people going about their business and there’s no way to terminate their contract.
Alisa, I suppose that in theory you could charge the entire “VAT” amount to the consumer at the point of sale (although I still think that would create massive collection problems because we wouldn’t knowingly put up with a tax that large), but if you did so it wouldn’t still be a “value-added” tax, would it? You’ve changed it into something else entirely (i.e., a sales tax). A VAT, by definition, taxes the value added at each stage in the manufacturing/distribution process. Changing that changes it into an entirely different form of tax. (A more honest one, in my opinion, but a change in kind nonetheless.)
benj posits that “we are all wealthier if we share the Earth”, and therein lies the fundamental flaw in his argument. We are all wealthier if individual people control (and benefit from, and thus have a direct pecuniary interest in protecting) specific pieces of property (real or personal). If we “share the earth” we are all worse off. It’s called the Tragedy of the Commons. Look it up.
The opposite of us all sharing the earth would be one individual owning the entire earth.
I think we can probably agree that in that situation the majority of us would be poorer.
George – even if the Federal Reserve had announced tapering it would have been too late. And they announced that they were NOT going to.
In practice it makes little difference – even if they had announced tapering it would have been like a junkie saying “I am going to cut down – really I am”.
Would you have believed them? I would not.
As it is they have announced they are going to carry on shooting up for ever – or rather till everything collapses.
Laird.
Yes “benj” has outed himself as a collectivist (“share the Earth” indeed – mass-starvation-R-us) who pretends that the only alternative to collectivism is the atomistic individualism of Mr Adams in his hut, or some person in a cave.
Alisa.
You may have a point – at least at a State level in the United States.
When States are forbidden to run budget deficits (as, with various loopholes, most States are so forbidden) then limiting what taxes can be imposed does limit government spending.
For example, if the only tax was a Sales Tax (and the tax was imposed openly – an important point) pretending that higher government spending was for “the good of the poor” (the old LIE) would not be practical. As it would be obvious that the higher Sales Tax (to pay for the higher government spending) would hurt the poor.
Of course increasing any tax hurts the poor – a poor person may not directly pay a certain tax (say a property tax), but the economic harm done by increasing taxation hurts the poor worst of all.
However, with taxes the poor do not pay directly this truth is easy to conceal – and politicians (and media and academia people) are past masters at concealing it.
You keep going on about shooting people. Are you ok?
Even in Ireland and Spain, land values will return higher than before. There’s no risk of this not happening, unlike a capital investment, which are always time limited.
If you mean is it possible to end up in negative equity, because you bought at the wrong point in the cycle, yes. But that’s a matter of timing, not a risk of capital.
You don’t have the faintest idea what you’re talking about do you? Banks and landlords(and the sectors that service them) are the only ones who earn a living from monopoly rents. If you took that away, they’d have to do something productive instead.
They are the only groups who lose out financially under LVT, because they would no longer be able to parasite off the economy.
Anyway, good luck with everything, and I hope your dreams of shooting people works out ok for you.
benj
Zzzzzz………
Benj, I have some property in Detroit you may be interested in… *
(Not actually true. I’m not that stupid).
I hate it when Land value taxes come up. I frequent a skyscraper city and quite in the discussion forums quite a few people have their own hobby horses. Land Value Taxes is one of them. To them it is the magical cure to our current economy, seeing over investment in property as a burden on our economy. As they are nearly all fans or development and tall buildings they also see it as a way making the owners of land develop land to it’s maximum (read tall) value, they also see it as a way to crush Nimbys’.
They see it as a way of lowering taxes on labour.
They of course refuse to see that even if it was advantageous the political problems of radically changing the tax system. Once you start listing them you never stop.
1. The problem of people who are cash poor being priced out of the own homes if the value of their property rises. Gentrification causes problems now, never mind if your mum is forced out her home when she is retired and told she has to live in a worse neighbourhood because her pension is lower.
2. The valuation problem, If a mistake can cost you thousands you can imagine the number of appeals.
3. Perverse incentives depending on how the valuation is done. If it’s just on land value alone, then what to stop an area of attractive homes being bulldozed for apartment blocks. If it’s on the total value of the property then no one has incentive in improving the value of their home.
4. All planning rules are a restriction on your ability to maximise the value of your land. But many planning rules are about protecting the values of all properties in a neighbourhood. So ugle unsuitbale development, for example does not lower the value of their neighbours home. What about historic preservation? We value it as a society but protecting it costs money.
As the majority would fight tooth and nail to keep the current planning system, you’d have to try and determine how each planning rule would effect the maximum value of each plot of land.
5 This effect spirals as all government decisions effect land value in one form or another. A new road can improve journey times for whole settlements, but devalue those suffering from increased pollution and noise
As they would say in Yes Minister, ‘a very brave decision Minister’.
The only country that has a Land Value Tax is Australia and they exclude residential property from it.
To conclude, it will never happen.
There is no such thing as good tax – all taxes cause harm.
And the key to taxation is to reduce GOVERNMENT SPENDING.
Yes I do. I own a home and you think I should pay scum like you for the ‘privilege’ of living there.
Yeah, property owners can make money from the property they own if they rent it out. Who knew? So tax the fucking rent, not the ownership.
Just people like you really.
Alisa, I think Richard Thomas and Laird are mistaken on the business of whether a VAT requires posting VAT exclusive prices and adding the VAT explicitly, or posting VAT inclusive prices. In truth, there is no inherent difference between a sales tax and a VAT on this point, either can be done either way.
With a VAT there is no difficulty in having a system in which the price is posted exclusive of all VAT in the supply chain, with the total supply chain VAT added explcitly, ie just like a US sales tax. In the first place the law is written so that the full (10% say) VAT is charged on the final sale. So if you buy Richard Thomas’s chocolate bar for $16.50 including $1.50 of VAT, the law says that the chocolate bar is being sold for $15, with 10% VAT. It is not saying that it is being sold for $15 plus whatever VAT has been charged earlier in the chain, plus a smaller amount of VAT on the finale sale. The distinction is between the tax charge and the collection mechanism. The VAT charged to the buyer is 10% at each and every stage of the chain. The double taxation is solved by allowing each person in the chain only to account to the government for the difference between the tax charged on sales less the tax charged on purchases. So the previous tax in the chain is essentially a tax credit to the next person in the chain, until you get to the final guy. Nor is there any administrative or accounting difficulty with showing the VAT exclusive price and the VAT separately. If you get a paper receipt or invoice it typically shows the VAT, and because VAT requires businesses to keep copious records, any business accounting system keeps track of the VAT quite separately from the VAT exclusive prices.
The reason for posting VAT inclusive prices in the store has nothing to do with the inherent design of a VAT system, it’s entirely to do with the politics of minimising the visibility of the tax.
Thanks Paul, I was confused because the financial “expert” who was on radio 2 told me that the federal feds announcement meant qe was over and the cost of borrowing would now rise.
The msm disinformation is visceral.
Yes, Lee, that is exactly the impression I get.
Richard, I was following you just fine, until this:
That got me knotting my own brain a few times, and I still think it is incorrect: the end consumer is the one who ends up paying the entire 10% of the retail price (in this case $1.50). But I could always be wrong…
Laird, I don’t see how the particular tax rate has anything to do with the specific structure of that tax. As far as I can see, there is nothing inherent in any tax that can prevent it from being set at 5% or 50%, or whatever other rate. As with the manner of display and disclosure (see Lee’s comment), this is entirely subject to the whims of politicians. But again, I could still be missing something.
In any case, thank you all for bearing with me so far:-)
If I understand this correctly, in 1066 William the Conqueror took over England and dispossessed the Anglo-Saxon nobility of all their property. He thus became the owner of all England, and proceeded to dole it out to his supporters. I expect at the time the idea was that what the king gave he could take away again, but clearly that concept has disappeared over time. Any attempt to justify a Land value Tax on the basis that the Crown owns all the land in England, and we are therefore tenants who must pay rent, strikes me as being fatuous in the extreme.
Yeah Magna Carta had a thing or two to say on that score 😀
John K.
Perry has partly replied.
And I have already done so.
But I will do so again.
Henry the First in 1100 (only 36 years after 1066) based his bid for the Crown partly on an appeal to a return to a LIMITED monarchy (not a William the Bastard or William Rufus [William II] despotism) on such matters as land.
Ditto the Great Charter of 1215, and Hampden in the 1600s, and the Revolution of 1688 and Edmund Burke in the 18th century (in defence of the Duke of Portland and others) – and on and on.
The idea that the King “owns all the land” in the sense of being able to tax it at will, or take land from one person and give it to another….. shows astonishing ignorance of English history and jurisprudence.
As you say it is “fatuous in the extreme”.
By the way – not quite all Anglo Saxons lost their land, and not just in Kent.
For example the old family (“Man is as Wolf to Man”) in Staffordshire who lost their land only a couple of years ago.
Rational Plan – excellent comments all.
There is nothing “monopolistic”, by the way, by a landlord renting out the property if that property has been justly acquired and hasn’t worsened the legitimate rights of others. If we start from a “State of Nature”, where Man homesteads and appropriates land in a way that does not leave anyone worse off overall (the Lockean test), then the debate must end there. In reality, of course, one can go back far enough and show that some land came into possession through violence and conquest. At most, though, this would justify a one-off redistribution, but after that, no further interference in the structure of property rights would be justified.
To repeat an earlier point: the Georgists – or some of them – seem to imply that there can be never any such thing as legitimately acquired land in any sort of absolute sense if it clashes with the wishes of a temporary majority in a particular territory. Ownership, so the argument goes, must be tolerated only on sufference of the collective, and only if there is some sort of utilitarian benefit. Otherwise, such Georgists regard land as a collective matter, and those with property rights are possessors of a temporary privilege, the cost of which they feel it right to squeeze and remove at the desires of the majority.
These people might try and claim the mantle of libertarians, but as this thread demonstrates, it does not take long to expose such an attempt as fraudulent.
I don’t know that I can add much to whatever has already been said, but:
I live in Malaysia, a former British colony that (despite a written Constitution) continues to derive a significant amount of its legal framework from the UK common and statutory law. In addition to what’s called ‘assessment’ (which is the equivalent of Council Rates in Australia and I gather property taxes in the US), which is paid to the local council, we also pay ‘cukai tanah’ or ‘land tax’ to the Land Office. The land tax on a piece of land 24’x80′ is about RM60 per year (the house + land is worth about RM1.5 mil).
I presume the LVT is something equivalent to this land tax? In which case, I am quite surprised that the UK is not already paying this, as I thought we imported the nonsense from you lot. And I do agree with Mr. de Havilland – we do not really “own” land in Malaysia because we have to pay this tax, however minuscule it is. On a practical level though, all our houses are walled and barred, and we can in fact tell everyone (except the State) to take a flying leap.
I also agree that I don’t like the idea of having to pay for something over and over again. And the fact of the matter is, ownership of land – in Malaysia at least – is limited in the sense that you have to ask for council approval before doing anything to your house. And I can tell you that freehold titles are very, very rare. For obvious reasons, the Malaysian Crown much prefers leasehold titles.
But if you think I’m used to a loss of freedom (and therefore cannot feel what it’s like to lose it in the first place because I’ve never had it), consider the poor Aussies. Newer housing development projects have something called ‘encumbrances’, where YOU pay some authority, for that authority to then tell you what you can and cannot do with your property (this is, I think, properly called a covenantal encumbrance). Which does not happen in Malaysia that I know off.
Best of luck getting those collectivist dogs off your lawn, though it is far too late for us.
I haven’t the foggiest what this means. What old family in Staffordshire? Can you be a bit less cryptic Paul? 😀
The old Anglo Saxon family who got their land back in the 800s (ninth century) – whose motto is “Man is as Wolf to Man”.
Nothing cryptic.
Keep going Paul! I assure you, it is still very cryptic! What old Anglo Saxon family? Please elaborate! It sounds fascinating.
Google is your friend, Cynwulf.
My formatting skills are lacking, though. Here goes.
I was amused to spot this article from 1960 in which a later to be famous person explained the then system for subjecting to income tax the notional rent that owner occupiers forewent by occupying rather than renting out their property.
http://www.margaretthatcher.org/document/101063
Although she doesn’t say so explicitly, one senses that rather like Perry’s, her lip is curling with distaste as she writes.
Lee, that article is fantastic, the amount raised was significant at around £25,000,000 a year!
The whole scheme was based on a statutory fiction that by owning land you receive a taxable benefit of the rent you would otherwise have got from it had you rented it out. The system then builds in a number of reliefs, one arbitrary and one evidence-based, to create work for bureaucrats. It is really a capital tax disguised as income tax.
I wonder what the tax office approach would have been had you rented your house to a neighbour and vv at peppercorn rents, thereby receiving no rental income?
It’s roughly 0.1% of 1960 UK GDP. But since then house prices and rents have gone up much faster than GDP, and owner occupation has increased too, so I guess if they’d kept it (I think it was abolished pretty soon after Mrs T wrote her piece) it might be closer to 0.3%-0.4% of GDP – over £5 billion in today’s money, so certainly not trivial. (In fact it could be even more as it seems that in 1960 they hadn’t updated the notional rents since 1936 !)
I have a feeling that this system of taxing land may have been the original justification for allowing income tax relief for mortgage interest on owner occupied property – that lasted a few decades longer, but has also gone now.
Alisa – clearly I was in error, it was the 900s (the tenth century) not the 800s (the ninth century) as I (mis) remembered.
On the land tax versus general sales (excise) tax thing – I think there is a false choice presented.
For example, the English land tax was cast into definite form in 1692 (under pressure of the conflict with France) – it is a mistake to think of a national (as opposed to local rates) “Land Tax” as such under James II, yet he did NOT have a general excise (sales) tax, just a few duties on specific products.
Also what level of property tax are we talking about – 5% (one shilling in the Pound) of the rentable value as it was (at the low point) under Sir Robert Walpole?
To talk of tax without numbers is useless – and one can only get when one considers government SPENDING.
Of course in a democracy, where all adults have the vote, a land tax is not a suitable form of taxation – as most people do not own land (so might not see the need to keep the land tax down to a small number).
In a democracy sales taxes (as long as they are OPEN sales taxes) are a better system.
Especially LOCAL sales taxes – so that people can “vote with their feet” and thus keep the level of taxation down (by shopping in the cheapest areas).
Some decades ago (when Mrs Thatcher was still Prime Minister) I strongly urged that a local sales tax (rather than the “Community Charge” or “Poll Tax”) be adopted.
Even though I was not then the physical and mental mess I am now, my advice was not followed.
I wish it had been.
No, it is not, Paul. Some taxes are in principle worse than others. And, once you allow for a tax to be introduced, – along with the principle behind it, and even at a very low rate, it is only a matter of time before it grows like all taxes do. But the negative consequences of that growth would differ among taxes based on different principles.
I agree with Alisa. The LVT is the worst as a matter of practically *and* principle as it is cuts to the very notion of ownership and severalty as it is ongoing. It is the very definition of a ‘rent seeker’s tax’.
Note that in the US i don’t believe there is anywhere a LAND tax – only a real estate tax i.e. built-up permanent structure.
THis is why many people retire to TRAILER parks – these “mobile” structures are not subject to real estate taxes and so one can live essentially indefinitely. In addition when local gov gets all greedy and rapacious it’s up and away in a blink of an eye a few miles to the neighbouring county or state.
A bad principle will always produce bad results in practice – at least in the long run.
Good point Alisa.
Peter – yes this would explain why the poor often live in Trailer Parks (hence the hurtful name “trailer trash”).
If no tax is paid it would be less expensive in such places than in a house or apartment (and there is the time and emotional distress cost of the paper work also – do not underestimate the emotional cost of paper work, it is agony for some people).
And it also means that those who press for higher real estate taxes are pushing people into trailer parks – at the (non existent) mercy of savage weather.
Peter, that is simply incorrect. In the US land is certainly taxed. If undeveloped it is taxed as such based upon its zoning classification (unless one can get it classified as “farmland”, which generally is in a lower rate class); if developed, the land and structures are assessed separately but both are taxed and at the same rate.
As to mobile home parks, if they are the typical rental pads the land is taxed at commercial rates and that tax is embedded in the rent. (The mobile home itself is titled like a vehicle and subject to personal property tax, which is paid by whoever owns it.) If the occupant owns the land, the mobile home is usually permanently affixed to it (via a permanent foundation, removal of the tongue and axles, etc.) and it is “detitled” (a legal process) and taxed as real estate. In either case there is tax on the land. Mobile homes have lower taxes than most conventional structures simply because they are worth less.
Yes, Laird, of course you’re right about the “farmland” zoning. It’s a shame you brought this up, as you do not like me to rant *g*. But here’s the deal.
You are a developer, and you and your friends among the local realtors and your mutual great friends on the Town Council decide it would be to the advantage of all concerned (which does not include the farmers or owners of the farmland) to re-zone the farmland to a Residential, Business, or Commercial classification. This will give the developers and builders something to develop and build, the realtors some real estate to sell, the town or city additional Status as a Desirable Community for living and business as well as an increase in taxes, and the farmer or owner of the farmland an opportunity to sell the land since he cannot afford the increased taxes based on the new zoning classification.
So, with great reluctance, he sells the farm.
It would be one thing of this were the result of a truly free market. But over and over again it’s not — it’s rigged against the farmer, as described.
Of course, I’m talking about independent farmers, not those who farm land owned by holding companies or “Big Ag.”
Land taxes. Property taxes. Income taxes. Sales taxes/VAT. BAH! to all of them. Taxes are unnecessary and unjust, and open the door wide to all sorts of special pleading and graft. Instead, let each person who votes in a given election (or on a given issue) pay for the privilege.
…Sigh…and there will still be corruption. But, one hopes, less of it.
End of rant. Thank you for your attention to this important message. *Sound of tumbrils fading into the distance*
In the United Kingdom farms were “derated” (made immune from property tax) as far back as 1929 – because it was understood that if farms were subject to “the rates” farmers (being a small minority) would be crucified by wild spending (and short sighted) politicians.
One odd thing about this occurred in the next-door county to me (I live in Northamptonshire) – the county of Buckinghamshire. In Buckinghamshire the Conservative party has (as far as I know) never been out of office – yet the “rates” (when this system of local government finance was in place) were actually quite high in this historical period, cynical people suggested that this is because the party was dominated by farmers in Buckinghamshire.
When the “rates” were coming to an end as a system of local government finance (for individuals “business rates” were kept – but centralised on the Japanese model) there was a big debate on what should replace them.
The Scots (although they now deny it) were passionately against the property tax system – the rating revaluation (taking account rising property prices) caused massive opposition in Scotland.
So what to replace the property tax with – it was just a hopeless system (although people seem to have forgotten that).
Some people (of whom I was one) argued for a system of local sales taxes – so that people could “vote with their feet” to keep the tax down (if a local council increased taxes people would go shop in the next town). But the “Community Charge” was decided on instead (the “Community Charge” was basically a Poll Tax EXCEPT that the poor would get 80% written off and their benefits increased to cover the remaining 20%).
The new system fell apart – local councils wildly increased GOVERNMENT SPENDING, shoved up the Community Charge off into outer space, and blamed the Central Government and the new system.
So the “Council Tax” (a highly modified property tax) was brought in. This put people into “bands” rather than charging different taxes for each house (“your house is sort of like these houses – so you all in this band pay X”).
But this system is not liked either.
“To tax and to please is not given to men”.
Presently local government in England (the situation is not quite the same in Wales and Scotland – and Ulster is another case again) is having its central government support reduced.
Historically CENTRAL government provided most of the money to finance local government spending – this money is now being cut (really “cut” – not phony pretend cuts).
But local “Council Tax” is NOT going up (at least not here it is not) – so this means…
Yes, over time, local council SPENDING will have to go down (by various measures).
“Paul you sound strange – not as you do usually”.
This is because Paul Marks the libertarian is presently tied up in the corner of the room.
This comment was written by Paul Marks the local councillor.