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Samizdata quote of the day “Taxing wealth reverses the relationship between citizen and state: rather than it being in charge of protecting our life, liberty, and property, we now work for it. There are no more proud freeholders; citizens become meek leaseholders with the government in charge. Our property becomes a temporary privilege, to be used until accumulated taxes return to the ultimate owner, the state.”
– Allister Heath, Daily Telegraph, 1 June. (Behind a paywall.)
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Hard to disagree with. But would anyone advocating the taxation of wealth actually find a problem with this (albeit they may not phrase it “work for it”)?
It’s not a bug, it’s a feature.
Watchman, the article is about the UK Labour Party’s proposal in its manifesto to introduce land value tax. LVT is sometimes championed by advocates of the free market as the least-worst way to raise revenue, on the grounds that because land is fixed in quantity (it isn’t, given land reclamation being a possibility) that taxing rises in the “unimproved” value of land will encourage owners to make more financially viable use of it, such as encouraging owners of small homes on very valuable plots to sell up and let property developers build skycrapers on it it, etc. The argument for LVT in terms of economic viability and efficiency has been fairly well analysed here. Another strong critique comes from Murray Rothbard, as explained and modified here.
At Samizdata in recent years we have got into debates with LVT advocates and “Georgists” (as in Henry George, who started the idea about LVT) and it tends to emerge that they support a sort of socialistic idea that because rises in the value of a natural resource such as land aren’t “earned” in some sense, that the State is entitled to tax all or some of it for the “common good”. The assumption is that land is, in some way different from our physical bodies and brains, a commons to which all are entitled to have access and that “unearned” forms of wealth stemming from it should be seized. Even free marketeers of some sorts have sort of conceded this point.
The assumptions underlying LVT and other wealth taxes are that what is “unearned” should be grabbed by the collective. Some of this is little more than envy dressed up in the garb of justice; some is based on a kind of communalist ideology that is, wittingly or not, hostile to the idea that one can enjoy several private property unmolested. This might all seem quite philosophical and high-brow, but it is absolutely essential for classical liberals to contest this mindset constantly.
Bgds.
“We are going to ask people earning high salaries to contribute a little bit more‘ is the sort of obfuscation about taxation that you hear from most British politicians, despite a tax assessment being followed by a ‘Demand’. The latest offering of the LVT is formalising what has long been the underlying assumption of the British political class ‘What’s yours is ours, unless we leave it for you, for now‘.
Funny how Labour were opposed to a ‘bedroom tax’ that wasn’t but not to a land tax.
Can’t see the article, but I assume he draws distinction between the taxation of gains in wealth (income) and the simpler taxation of some portion of what you already own.
The distinction goes to how we justify taxation. Government needs funds. Government (in some minds) makes it possible for us to earn money, by giving us a secure society through laws, military protection, police, and courts. Government helps society function by providing roads, water and sewers, and the like. To earn a dollar, I do depend in some part on what the government provides, and so I pay some portion of that dollar to government as its fair share.
The taxation of what I own, outside of any tax event, requires a different argument, one dependent much more heavily on the idea that my wealth is rightfully claimed on behalf of others. It’s no longer payment of a proper share of expenses in a productive partnership – it’s simply a demand that I share.
(I note that I don’t consider property taxes that pay for road improvements, utilities and the like that increase or protect my real property to fit into the pure idea of wealth taxation. I’m speaking more of the tax that takes a percent of my cash simply because I own it.)
Land Value Tax… where fascism and feudalism intersect, allowing ‘ownership’ provided you convenience the state by not just living on it as if you actually own it.
The Telegraph is read by affluent people who think that the state must protect their children’s inheritances by taxing everyone to pay for their old age care.
I sincerely hope that we aren’t going to go down the rabbit hole of LVT here once again. 😡
Johnathan,
Thanks for that, but I was commenting on the quote, and noting that socialists would actually agree with the outcome that Mr Heath is criticising.
I generally regard land valuation tax as a nonsense, as no doubt the largest land holder in the country (the government) would be excluded, so meaning they would have no driver towards economic use of their land… Plus taxing a stock, not a flow, is always a bad idea, since the flow of the stock should already have been taxed (unless someone happens to have lived since before the introduction of inheritance taxes).
About the LVT i have nothing to say, except that Perry (dH) seems to be hell-bent on proving again and again that he has a distorted view of fascism, and an even more distorted view of feudalism.
I’d like to know more about the Corbyn proposal, though: does he really want to tax land value, and NOTHING ELSE? I find that hard to believe.
About the QotD, let me do a bit of fisking:
This would only be true by substituting:
Taxing wealth –> Taxing income from work. (Not income from wealth.)
This is true.
This does not make sense as stated, but neglecting everything after “privilege” it does make sense, and it is true with the proviso that, in the long term, we are all dead.
Far from it, I am of course referring not to fascism in its entirety but rather the economic basis of fascism, which generally allows (the right kind of) people to nominal ‘own’ private property provided it is used in ways that conveniences the needs of the state.
And as for feudalism, well yes, it turns owners of land into vassals with the state as the land’s super-owner.
Snorri,
Since Feudalism was a system where a landholding was acknowledged by paying a lord services, often in its bastard form (bastard feudalism is still the best named economic system ever) replaced by cash payments, I’d say that was a reasonable use. Note feudal dues in Scotland existed into the 1950s incidentally, albeit at token rates.
And facism claimed control over resources for the good of the state (it was a form of socialism remember). So it is not inappropriate here, although I think socialism is more accurate as a description of the underlying ideology.
I think that we need the Sage of Kettering to give us the sort of illumination typically associated with the Trinity Test.
I’m interested in Johnathan Pearce’s comment.
I’ve been thinking about LVT for a while and I think the distinction between income tax and tax on ‘what you already own’ is pretty flimsy. Income is a function largely of your capital as an educated human (which you already own). It’s the marginal value of your labour to your employer/ clients.
Leaving aside the purist libertarian arguments about the merits of taxes per se, Johnathan’s point about choosing a tax metric that is the least disruptive to economic activity has merit. Here – with apologies to Laird if this had been done to death! 😉
In a country like the UK, where realistically everyone wants to live in broadly the same areas, land does have a scarcity value (and the UK sucks at big infrastructure like land reclamation these days). Isn’t it better to tax land value rather than labour when so much land is in the hands of someone whose great, great, great, great x whatever’s grandfather got porked by James VI Scotland or whoever? Also- much of the land is held in offshore vehicles which shield it entirely from tax which undermines democratic consent for private property per se. And it’s also used inefficiently – old people live in family homes because the tax system disincetivises moving (I know, I’ll get there). Also- quite a lot of people who own property in London don’t pay tax any other way.
Why not scrap council tax, national insurance and stamp duty and replace it with an LVT deductible against income tax. That way land which is held passively or under utilised has its externalities internalised. It could even be supported by a mortgage structure that would allow the land/ buildings to be passed on.
There’s also the market distortion that, in the UK, its next to impossible to borrow against anything other than property (unlike say HK where you can borrow to buy shares). Property is a different asset class than say, gold, as everyone needs somewhere to live. I personally think gold is crass and wouldn’t hold it as it has no intrinsic value to me.
In doing this, you incentivise work (or remove a disincentive) and increase the likelihood that land in prime spots is used efficiently.
Isn’t it a less bad path?
From a “minarchist” standpoint, one of the basic duties is “defense of the realm”, which is essentially governing the entire landmass, if you own more of it you should be paying more towards defending it. Another basic minarchist duty is “property rights”, and land is the original form of property. Again, the more you own, the more advantage you get from those rights, and you should be paying more.
Taxing property just because it changes hands is perhaps as equally questionable as LVT, but at least the latter can be made fairer, you can’t really hide it, and rational costs get passed down. There is also the Worstall argument that taxing the perceived productive value of land improves productivity overall (which is probably not the basis of Labour’s idea).
/2cents.
“Why own land and therefore have to pay taxes on it, when you can live subsidized by land-owners, who pay the governmental expenses required to run the state in the manner to which said gov (and its employee-members) have become accustomed?”
. . .
By the way, “Defense of the Realm” means defending the persons, and not just the property, of individuals. I think we should all have to pay a tax just for existing. –Oh, wait–
Mr Ed, you speaketh to me in tongues. What is the “Trinity Test”? Something to do with what I think I’ve seen called the “Trinity Term,” whichever that one is, at Oxbridge?
bobby b: Government (in some minds) makes it possible for us to earn money, by giving us a secure society through laws, military protection, police, and courts. Government helps society function by providing roads, water and sewers, and the like.
All of which combined of course constitutes a tiny fraction of government spending, distracting attention from the remaining >80% or whatever.
Jon, I vacillate between being bored to tears and enraged beyond words over the interminable LTV debate (and I fault Johnathan for stirring it up once again; he should know better!). So I will do my best to sit this one out, unless my better judgment should be overwhelmed by some comment of such rampant stupidity that I lose my self-control.
You were warned.
It’s a variant of “Only landowners s/have the vote, because they’re the ones with skin in the game.”
Balderdash. Anyone who lives under regime X “has skin in the game.” Onaccounta he lives under the regime.
. . .
And who the heck decides what constitutes “using land efficiently”? If I use a parcel in a way that gives me enough more pleasure than grief by my lights, I’m using it efficiently (although I might be able to improve my pleasure or diminish my grief in one way or another).
So, “efficiently” as judged by what standard, kemo sabe? There’s more to life than “productivity” in the economic sense.
If this were not so, you could easily enough build an argument that starts with such Productivity as giving the ultimate in efficiency, therefore LVT, and end up with Dr. Zeke (Emanuel)’s medical “ethics,” that argues for offing everyone except those who seem likely to be highly “productive” by age 25, and offing everybody over 35.
It is an enormous difference for both practice and philosophical reasons. The biggest practice difference is that a tax on income (or any exchange) has the means to pay intrinsic: the money is there and being made. When you tax an item of already own property without regard to ability to pay (i.e. not taxing the purchase or sale but the fact of ongoing ownership), you are effectively saying only people with the means to pay ‘rent’ may own an illiquid asset. You may not just acquire a piece of land and live on it without paying the state for the privilege even if you are a freeholder (indeed no one is a freeholder in any meaningful way when you tax the mere ownership of land (or anything else). If you are an old granny with little income but happen to live in a nice big house, tough shit, pay your tax for the privilege of nominal ownership or sell up and liquidate to pay the rent. It is an enormous difference when you tax ongoing ownership rather than monetary exchanges.
Julie,
Sorry, I thought that the Trinity Test was sufficiently ‘notorious’.
It spawned, eventually, the US Department of Energy, and other horrors.
Thanks very much, Mr Ed. I knew of the test, but not by name, and certainly not much about it. Link appreciated!
bobby b wrote:
Where we live, the largest chunk of our property taxes go to indoctrinating other people’s children, AKA the school district. Which brings me to Julie’s:
Our ISD recently proposed a large bond issue. They worked on it in secret, for over a year, while we only found out about it a few weeks before the election. They had their “Yes” campaign fully established, all their misinformation and spin in place and actively targeted people who either didn’t pay property taxes (renters, indigents, kids – they let the high school seniors cut class during early voting to go vote for it) or had their property taxes capped and wouldn’t be burdened by any increase (the elderly).
It passed and those of us who are going to have to pay for the damn thing didn’t get a look in. Worse, people who own business or commercial property in the district, but who live outside it, get the dubious privilege of paying for it while being barred from voting against it.
I get where Julie is coming from and am not inveighing against universal suffrage per se, but pure democracy has never been an unalloyed good and, increasingly, seems to lead to injustice like this.
The great difference between Western Civilisation and other civilisations was the relative security of property – especially landed property. A Western King could not, lawfully, take land from one family and give it to another family – on a whim. An Islamic Calph or a Chinese Emperor could do that.
Wealth taxes take the West away from that – and towards the oriental despotism of both Islamic rule and the far Eastern Empires (Japan was an historical exception to this – there was a greater security of landed property against a despotic state in Japan).
Some things are inherently contradictory and universal suffrage vs. redistribution is an example. Either only taxpayers vote or redistribution is constitutionally prohibited. Allowing recipients of tax funds to vote for more of it is unsustainable.
rob,
That’s a good point, because it’s a rotten deal. I completely agree.
Of course, I wasn’t arguing in favor of “universal” suffrage, just using the analogy of putting all the political power in the hands of a particular class of citizens, at least formally, to putting the entire burden of paying for governmental services onto the shoulders of a particular class of citizens — that same class, in fact.
Neither of them is remotely “fair,” because the first removes the right of the rest of the citizens to have a say in how they’re governed, and the second relieves the same set of citizens from the need to pay their own expenses.
As a matter of fact, if you charge the non-landowners the same taxes as the landowners, AND you let the same people have a say in governance, then both of them would have the same interest in keeping taxes low and in good governance generally.
I do not expect to see this happy result in my lifetime. :>(
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The best, though imperfect, course is to cut out all government expense save only that which is both necessary (means NECESSARY!) and proper to fund its proper activities.
I don’t expect to see much agreement on what those activities are either. :>((
. . .
roué: Agreed.
In fact, that’s my preferred solution to the whom-to-tax problem, unless you want to go full radical and purchase the right to vote in a given election … with conditions. Wrote it up a long time ago….
roué: Agreed.
rob — my real point, at 7:31 above, is the argument from the point of view of the non-landowner (who doesn’t really get the ramifications and long-term consequences of his line of thought):
This I think is exactly what upsets you about the under-the-table dealings of your ISD. And it jolly well should!
Do you not already pay property taxes in the UK? Here in Washington state I pay almost $2000 a year in taxes on a house that I supposedly “own”.
I was under the impression that UK citizens already labored under a similar regime.
Ferox, don’t tell me your troubles!
You should see what we who live in Chicago or a suburb pay in property tax. 👿
Ferox,
We have a property tax called ‘Council Tax’ which varies with the value of your property, and includes levies for the police force and fire brigade. Typically ranges from around £1,000 pa to £3,500 pa and with discounts for sole adult occupants.
Perry (and Watchman):
Let me address feudalism first.
That is not strictly true, but never mind. Let’s assume for the sake of argument that feudal lords were leaseholders, with the Crown being the only freeholder. The fact remains that feudal lords were more secure in their property rights than we are, because they had private armies, and all what we have are pieces of paper. Kings could not unilaterally impose heavier obligations on the barons, not without provoking a baron’s revolt; modern States can increase our property tax rates at any time.
Even were property taxes to be revoked, the State would remain the only true freeholder. A freeholder does not give up ownership just by waiving payment of rent: as long as the State CAN demand property taxes/rent, it remains the only true freeholder.
(Laird might be pleased to note that i said nothing about LVT.)
We hold real property only until the State informs us, through eminent domain, that they’d like it back now, please.
As Julie seems to have hinted, all property is productive, even when it seems otherwise to some socialist or ignoramus, (the seen and the unseen productivity, as it were). I also agree with Perry that in practice LVT is more pernicious than taxes on transactions (income and spending). However, the latter also have pernicious aspects to them.
More importantly though, even though I agree that there is also a philosophical difference, it is not as deep as may seem on the face of it. Consider the minarchist model mentioned earlier, under which the only legitimate function of the state is to protect residents of a country, and so the only legitimate expenditure (that must be financed by taxation) is towards that end. So far so good, but for some reason everyone, even here, assumes that different people should be taxed differently. Then the discussion automatically moves on to the question of what should be the basis for such difference: should it be the difference in income, consumption, size of property owned, or all of the preceding (of course as things stand now and as some comments above show, the latter is currently the case everywhere I know of).
I want to question that initial assumption, and ask why not tax everyone residing in a country a fixed amount, that could be adjusted periodically depending on the need to increase/decrease expenditure on military/police/courts. After all, defense is a service provided by the state to the residents. Under the minarchist setting, everyone must pay the same amount for the same loaf of bread, the same gallon of gas, the same square footage of residential property (through rent or purchase), the same cable service – why should physical defense and courts’ services be any different? ‘Some people can’t afford that’ is not a good answer, because some people can’t afford to pay some or any of those other expenses we all must bear. It seems to me that taxing different people differently, on whatever basis, is the same old redistribution of wealth, but by other means and under different set of excuses.
Yes, i forgot to mention eminent domain.
A feudal lord could not legally be dispossessed of his holdings by the King, except when a jury of his peers found him guilty of failing in his duties. If the King wanted to build an airport, he’d have to negotiate — or risk a barons’ revolt.
As for fascism, Perry wrote:
Perry’s mistake is the implicit assumption that the State knows what is convenient for its needs. One does not need to make a careful study of Hayek and the socialist calculation problem, to realize the problem with this assumption.
What corporatism (ie the economic basis of fascism) does, is compel nominal owners to use their property in ways that the government thinks will suit the interests of the State.
A bit of a straw man there; Perry does not appear to me to have made any such assumption, because in this context, ‘need’ and ‘want’ are clearly synonymous.
Alisa (June 3, 2017 at 8:51 am), the only valid reasons for taxing people differently are practical, but in my view they are very practical. In WWII, we did not conscript everyone and send them to the front: children were exempt and fit young men got sent to the sharp end very much more often than old men, women, etc. For similar reasons, people with money were taxed a lot more – you can’t get blood out of a stone, and taxing all equally would have drawn less wealth from Britian into the war effort. The overall efficiency of the economy was reduced as the cost of directing a high proportion of it to war expenditures – something a Tory like Churchill understood at the time (he tried to mitigate the cost effect where possible*).
When overall state expenditure should be low – which is most of the time – your proposal for an equal poll tax (no pay = no vote, I assume) might have merit (but alas be very very far from political possibility, at least where I live). But just as a state that denies conscription might not have survived WWII (the government in theory conscripted the whole UK military age adult population – many of my elderly female as well as male relatives were conscripted when young – and assigned individuals to such duties as it thought they could do), so a state that denies itself the right to tax more where there is more money might not have survived it.
* An example quote is Churchill, WWII, Vol iV, Appendix C, re some proposals for more petty rationing regulations: “it would be unwise to embark upon a lot of fussy restrictions in order to give, or try to give, satisfaction to the Fleet Street journalists, who are exempted from military service, have no burden of responsibility to bear, and live in the restaurants of the Strand.”
Niall, it’s not for nothing that they say ‘all’s fair in love and war’ – I am not talking about wartime, and I am yet to assume a clear position on conscription in times of national emergency, let alone taxing at such times.
No kidding 🙁
Roué le Jour:
Undoubtedly true. In my example, however, the result inures not to the benefit of most of those who voted for it, but rather to a group comprised of government employees, contractors and other cronies. Many of whom may live outside the district and thus benefit without having to pay the additional tax.
Exactly, Julie. There is a class of people, comprised of government types, public employees and others, who appear to see themselves as the new Barons and Earls. Taxation, whether of income or property, is then merely the just tribute to which they are entitled, by virtue of their positions.
This is, of course, not new but they do seem to be becoming more blatant about it. Which is how you get more Trump.
Here they are, the other rob.
There’s two kinds of collectivists, the material “real world” type and the religious type. ‘Two sides of the same coin. The religious type prefer to use legal and social pressure to force you to pay “tithes”, even putting you in stockades or local jail if you don’t, but since the advent of separation of church and state, they merely threaten you with after-death torture in a chamber of the king’s (king of king’s) making.
In the material world, they force you to pay taxes or put you in a real torture chamber called general population in federal prison of the government’s making.
Both claim you can’t be moral unless you give to the cause, i.e. pay your tithe/taxes because people would (insert horrible thing here) if it weren’t for the church/government saving them. Both types of collectivists consider themselves to be WAY more moral than the general public, hence the need for threats from gov/god to those immoral unwashed masses to “pony up” for the good of the collective. Indeed, both sides say you can’t be moral at all unless you uncritically accept their world perspective.
Both sides say that to question their moral world view is itself immoral.
Both sides say that they’re unworthy as individuals, yet collectively the sole subject of god/governments’ attention.
There is absolutely NO rational basis for taxation. There’s no rational connection between funding the state and “you got it and we want it, therefore we’re going to take it”. There is absolutely no excuse for thinking that the only way to fund what everyone wants (nice roads, police, fire fighting services, hospitals) is by threats and force by G-men with guns and cages.
The idea that initiating FORCE is immoral, that people can be autonomous, that people can thrive without god/government intervention, i.e. divine providence/gov providence, that people can give to charities not associated with either gov or god, (govgod), is not on their radar screen. It’s simply something they can’t fathom.
And they consider people who lean towards liberty from their govgod to be wicked…or a joke.
Alisa wrote,
Indeed, in the book I’m writing, I refer to this as “Need*” (with an asterisk). It’s the collectivist statist’s view of need, which is “you got it, I don’t, and I want it”. In their world, “need*” justifies legal expropriation and “redistribution”. (As if wealth is distributed to begin with).
IMO, all collectivism is simply atavistic tribal tendencies (but not instinct) in the psyche of the human species. It may or may not be justified in a pre-neolithic, pre-civilized tribal world, but ideas such as “equality” (in the non-political sense) being a necessary value, the need for corporations to “give back”, and “the wealth gap”, i.e. growing personal wealth impoverishes others, are all based on the fallacious zero-sum view of the world. Such a world view might be relevant in a hunter-gatherer scavenger existence, but not pertinent or applicable in a positive-sum world where wealth is created by trade opportunities as well as outright innovation.
An additional note on corporatism, inspired not by Alisa but by this comment from Julie:
Actually, this is not an argument against taxation of real estate, as Julie seems to think: property taxes are the same irrespective of the use of the property, so they cannot be said to encourage or discourage any particular use. (They do, of course, discourage buying the property in the first place.)
Take Perry’s favorite granny for instance:
I could quibble with the logic, but i won’t, because i have promised myself that i won’t bore Laird with discussions of the LVT.
My remark is about another granny, for whom Perry seems to have no sympathy. Perry has sympathy for a granny with a good pension which allows her to live comfortably (as long as she does not pay property taxes — which she does, if she lives in the UK). Perry shows no sympathy for a granny with a meager pension which she supplements by renting out rooms from her house (she bought a big house specifically to rent out rooms) but has to pay a cut of her rental income to the State.
I mention this, because it seems to me that taxing rental income is the sort of policy which has reduced British residents to pay a fortune to live in a hovel.
An additional comment on grannies living in big houses.
First, though, i must say that my political philosophy is peculiar: what most interests me is what i myself should do to minimize the power that the government has over me; what policies the government should ideally follow, is only a secondary concern.
On the basis of this philosophy, a granny who has invested most of her wealth in a house bigger than she needs, is a fool, for the reasons given in my comment on feudalism (at 8:39): the government can, at any time, ask her to pay more taxes, or even confiscate her house. If she relied on the government doing what it is morally obliged to do, then she is not simply a fool, but utterly insane.
That is one reason why i admire the Jews: they have learned a long time ago that diamonds are safer than houses, because, when the shit is approaching the fan, they can leave the country taking the diamonds with them, hidden you-know-where.
(Apologies for the profanities.)
@ Snorri: “property taxes are the same irrespective of the use of the property”
Not true, at least where I live. Commercial properties are taxed at a higher rate than owner-occupied residential (rental residential is treated as commercial), and farmland even lower than residential. I’m talking about the millage rate here, not the assessed value.
Snor,
First: Our zoning in the state that hosts a huge infestation of Demon Spawn also sets our tax rates in part based on zoning, as Laird testifies they also do in his state.
.
Also: In my comment from which you quote, I am pointing out that efficiency and even productivity are in the eye of the beholder. LVT theorists love to base their arguments on the loveliness of the “efficient” use of land, which they claim will be maximized in a tax regime including, if not entirely consisting of, taxes on real property. So in this particular discussion, “efficiency” or “efficiently” comes up in that context, and as for “productivity,” there’s this:
Earlier, Johnathan made an observation that included this:
Shortly after that, Jon writes something about “using land inefficiently,” and also includes this remark:
When I wrote the comment from which you quoted, I was arguing quite specifically against the viewpoint that “efficiency” or “productivity” in an economic sense is what’s pertinent in discussions of LVT.
This is not, by itself, an argument against LVT. It’s a point raised against an argument for LVT.
Not a fan of LVT, by the way.
Alisa wrote,
Two comments that I hope won’t be considered nit-picking.
1. -archy means rule or rule by. Ideally the government would not rule at all, but rather secure our rights. Oversight (acting on reports of fraud and criminal activity) is fine for government IMO as long as that oversight doesn’t evolve into a police state. I don’t know if being ruled by a small government is better than being ruled by a larger one, so I eschew the whole assortments of -archys.
2. Taxation, I would argue, necessarily involves the government using force to fund what everyone allegedly wants to begin with, (national defense, nice roads and schools, fire fighting, etc), which is a bit of a contradiction it seems. We should acknowledge that there are other forms of government funding that does not involve threats from G-men with guns and cages.
P.S. Trivia: Oversight is one of those weird words that mean two nearly opposite things. It means to both not see because you weren’t paying attention and it also means to see by scrutinizing diligently. ‘Strange.
If a British granny actually sells her house that she’s been living in for, say, 30 years, odds are she will do extremely well out of it, so hard to see her as either foolish or insane, even if I think its a terrible thing to make people sell up to pay taxes.
The point is that having lived there for 30 years, whether granny does well at the sale or not, she either enjoyed living there or mostly wore a hair shirt while she was there. And she made a call as to whether she’d be better off, by her lights, to stay or to sell.
Many of us have had to sell at quite a loss, for various reasons; that doesn’t mean we were “insane” to have bought in the first place, nor was I (after my husband died) to stay as long as I did (over 35 years), nor to leave when I did.
“Highest and best use” has always been expressed in financial terms, simply because every other possible language is subjective.
I might buy a vacant block in the middle of my downtown area and then satisfy my own desires by turning it into . . . a vacant lot, because my idea of the highest and best use of that land is as a vacant lot to make my downtown environment more peaceful and calming.
But that sort of emotional language has always lost the fight against the desires of surrounding owners to turn the use of my property into something that will help them maximize the economic value of their own surrounding property. How do we quantify my feelings of calm and tranquility and then compare that number to some number that expresses profit generated per square foot of property? Apples and oranges.
So we settle on some “highest and best use” that maximizes the profit per square foot, and we tax the property as if it were being put to that use, and woe unto the owner who isn’t generating sufficient monetary profit from the property to pay that tax.
This has always been how government maximizes the assessed value of its taxable assets, and thus its tax income. You can feel free to keep your lot vacant, but you’re going to be taxed as if it contains a gold mine.
If the government was consistent in such assessments … there would be brothels and stripclubs everywhere.
Julie near Chicago,
I would day that life is self generated, self sustaining action and that the basis of private property is that one owns what one has earned, and earning involves an extension of one’s life by effort. Arguably, owning ones own life involves what one has earned BEING ones life.
(Bear with me).
On some level, this is the basis behind the rather ancient “Let me in” folklore whereby gods and demons, and presumably any other spirit, can’t come into your home or body unless invited, because you own your own soul and your own life, and your body and property are, by extension, also your life. They can seduce you or even deceive you and gain entrance because you are responsible for what you choose to believe, and any negative aftermath would be your fault, the consequences of your choices, but to simply come in uninvited is to be on the unjustified, losing side of a spiritual battle, which they typically don’t want.
But I digress.
The point is, to earn is to own and what one has earned IS one’s life/is one’s property. In America and presumably the UK as well, one can’t own property. If one has to constantly pay to maintain alleged ownership of a thing, then arguably, own can’t actually own it. At best, you’re leasing it. Yet another example of how taxation is immoral.
Thailover, I agree with you (with one exception that I won’t go on about here): Your property is an extension of yourself and while person and property are distinct concepts (to be really picky, I take person — the self — as antecedent to property: Property assumes a prior concept, namely an owner: the Person, the Self, although there does exist a counterargument there, based on word-meaning, which grows out of word-history). (Thousands cheer), in Reality property is an extension of person, of the Self.
. . .
bobby, that’s the difficulty. :>( … You are giving a description of How the World Works, and insofar as it describes what really goes on, you’re correct.
I understand that these words “value,” so forth, are “emotional” and impossible to quantify (even ranking them is difficult where it’s possible at all), and now what?. So in these sorts of discussions we are supposed to take the words only in the financial-economic context and that the discussion is restricted to that context.
But you cannot expect to make decisions that work and that are more-or-less just, if you restrict the arguments to those that throw out the full context. And yet, as you and Thai I know, to ignore the context is to make a decision or take an action based on partial information.
That’s why von Mises insisted that you don’t know for sure what a person wants until the instant he purchases it or walks away. The observer or theorist just doesn’t have the information — the whole context. (Personally I think “want” or “value” shouldn’t be used that way: a bridge too far; but not to be argued tonight.)
The context in which these decisions are to be made is more than just the “financial-economic” area. It includes values, all values, not just “economic” ones, and values are subjective in the sense that only the individual person knows what they are, and feels them. The same is true of “wants.”
I don’t know whether you were disagreeing with me or actually stating your own position. Either way, I think it’s a mistake to try to discuss topics like taxation or other socio-political ideas without taking valuing, in its full meaning, into account. If we do not, we do great injustices.
Mulligan, ran out of edit time :>(
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Thailover, I agree with you (with one exception that I won’t go on about here). Your property is an extension of yourself and while person and property are distinct* concepts, one’s property grows out of one’s Self: One’s body, mind, effort, time.
Gifts, inheritances (which are actually gifts) and property acquired through honest trade take their origin and their lineage as property, so to speak, with them at every (honest) transfer point — that is, with every change of ownership.
*To be really precise, I take person — the self — as antecedent to property: Property assumes a prior concept, namely an owner: the Person, the Self, although there does exist a counterargument there, based on word-meaning, which grows out of word-history.
Laird and Julie: property tax rates are indeed affected by what use you are allowed to make of the land, and that seems only fair and logical. They are not, however, affected by the use that you actually make of the land.
As for insanity, that applies only to people who, losing their property because of higher property taxes or eminent domain*, rant about the unfairness of it. People who say to themselves: “I knew that could happen, i took the risk, i lost” or: “I did not realize that could happen, i was a fool, now i know better” are not insane.
NB: after taking this philosophical attitude, you can still try to take legal or political action, just be aware that whatever moral rights you can claim, will be of little benefit in such action.
* Note that you can also lose your property if you have to pay damages which you cannot afford to pay without selling your property. If you have no real estate, only diamonds, you can pay or not, whatever seems fair to you.
That was actually a useful bit of “nitpicking”, Thailover – good points.
I am confused. Isn’t all land taxed where you come from? It is in the US; it provided the majority of the revenue for many municipalities and counties, and for certain states. Are you talking about a nationwide tax? What’s the difference anyway between different levels of government taxing land – a dollar (or a peso/pound/…) is a dollar no matter who takes it.
“Taxing wealth” in another progressive fraud. Wealthy people are business owners. Raise their taxes and they raise their prices to offset the taxes. In the end, any progressive tax becomes a flat tax. The wealthy are just co-opted to serve as defacto tax collectors.