22 comments for “Land Value Tax

  1. dearieme
    August 12, 2017 at 09:41

    “Do you know much about it?” Just enough to say:

    (i) The economic case for it can be made to sound pretty attractive on the assumption that it replaces lots of other taxes. But if it merely supplemented those taxes it would be unattractive.

    (ii) Any party that adopted it would lose the next election, and the next, and the next, unless it were led by a political genius. See ‘Community Charge’.

    (iii) Can you imagine any government having the balls to rescind the old (Labour!) decision to exempt principal private residences from Capital Gains Tax? If not, then Luncheon Voucher Tax will never happen.

    • August 12, 2017 at 09:54

      Hmmmm. Seems the issue, doesn’t it – whether it would replace and not augment.

    • August 24, 2017 at 13:08

      LVT is competing for the same revenue stream as other taxes. If they are not phased out, the yield from LVT is restricted, pretty much on a $ for $ basis.

      This conclusion is a corollary of Ricardo’s Law of Rent.

  2. August 12, 2017 at 10:05

    I’m now even more puzzled than before.

    I thought that Stamp Duty was a charge on the transaction of transferring ownership and that LVT was a repeated (annual) charge on the (deemed) capital value of the (undeveloped) land.

    So I don’t see how there is (for each owner in his/her time of ownership) a gradual swap between the one-off Stamp Duty and repeated LVT.

    Where have I gone wrong?

    Best regards

    • August 12, 2017 at 11:58

      Not sure you have gone wrong. Frankly, I don’t understand the thing though, so my opinion’s not worth much in this.

    • August 24, 2017 at 13:11

      Scrap stamp duty (it is a bad tax) and a few other taxes as well, at the same time, and replace by LVT.

      The incidence of stamp duty is on the seller. If the stamp duty had not existed, the purchaser would have paid the same in total, but it would all have gone to the seller.

      Where is the difficulty?

  3. Lord T
    August 12, 2017 at 15:03

    It seems a much fairer tax all around but only if implemented correctly. Can our government do anything right? Ever?

    In your diagram is shows LVT to be about equal to Stamp Duty. Do you seriously think that the total tax take won’t go up? If you do please contact me I have a nice bridge in London to sell you.

  4. Wolfie
    August 12, 2017 at 17:32

    People still seem to think loose monetary policy can be sequestered by taxation. Tax just causes new problems.

    • August 24, 2017 at 13:13

      Whether tax causes problems depends on the tax. The Clock Tax of 1797 destroyed a flourishing industry within just one year.

      What problem would LVT cause and to whom?

  5. August 12, 2017 at 18:09

    So what is the best tax policy?

    • Wolfie
      August 12, 2017 at 22:21

      No land tax, no transaction tax. Regulate credit dispensation appropriately. You can’t fix the world with tax, people will then have more spending power and property will not bubble – thus enhancing the economy at large.

      • Wolfie
        August 12, 2017 at 22:24

        The government should live off income and capital gains tax with selective VAT (staples and property exempted, luxury items only).

        • August 24, 2017 at 13:16

          Income tax and VAT lead to massive deadweight losses and are subject to churning, so that the true yield is a fraction of the amount collected. Then there is fraud, avoidance and evasion, collection costs and compliance costs.

          It would be difficult to think of worse ways of raising public revenue.

    • August 24, 2017 at 13:23

      Adam Smith set out some criteria which are a good starting point.

      http://www.econlib.org/library/Smith/smWN21.html

      Most contemporary taxes fail to pass most of the tests.

  6. August 13, 2017 at 12:43

    In 2012 stamp duty was in the Australian Capital Territory and replaced with a gradual increase in the land value tax. Prosper Australia provides the story here.
    https://www.prosper.org.au/wp-content/uploads/2016/09/The-First-interval-Evaluating-ACTs-Land-Valur-Tax-Transition.pdf

    Not only did this occur, but a frenzied media and related doomsayers claimed it would most certainly be the end of the ACT Labour government at the 2016 election. In the event, they were proven wrong.

  7. August 14, 2017 at 07:56

    LVT is simple the least bad tax.

    It is better than other taxes on land values. Stamp Duty is crude LVT for several years payable in advance and Capital Gains Tax and Inheritance are crude LVT payable as a a lump sum in arrears. A small annual charge is a much more accurate and fairer way of doing things.

    It is clearly better than taxes on output (VAT) or employment (NIC) because taxes on those drag the economy down. A tax on land values is entirely neutral – whether a private landlord or bank gets the rent/selling price or the government is entirely irrelevant from the point of view of tenant or purchaser. Only if the government gets it then most of it will be re-distributed out again.

    Finally, which bits of government spending are beneficial, neutral or harmful is a separate topic to what sort of tax we have.

    • August 14, 2017 at 09:04

      For readers who do not know Mark, he is a super-accountant of many years and the doyen of LVT. Click his name above for his site.

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