There is a troll who wastes our time over at the LVT Facebook group, Kj and I went into battle, and so far the best he could come up with is this:
Your LVT proposal doesn't have efficiency or effectiveness or fairness built into it…
"Fair" is a much overused word. Clearly LVT is far more "efficient" because people would have to pay for what they consume. The economy runs more efficiently when businesses and households have to pay market value for their inputs, whether that is food, electricity, labor or ground rent. Anybody who says that LVT is inefficient because landowners would have to pay the same as tenants might as well say that the economy would run more efficiently if a select group were provided with free or below market price food, electricity or labor etc.
… you could get much more out of a Google by taxing company profits than a low level LVT.
I'm not aware that anybody ever argued for LVT with the justification that Google would pay more tax. For a start, nearly all businesses would pay a lot less tax than now if we did a tax shift. Two-thirds of businesses rent their premises and the tax on that rental value would be payable by the landlord, not the business.
Under current rules, Google and other large corporations take the piss and pay a lower overall tax rate than smaller companies, and it is quite possibly the case that Google would pay even less tax with LVT, but so what? I don't see what harm they are doing, they are not causing pollution or anything and provide wonderful 'free' stuff like Google Maps. And in relative terms, smaller businesses would see a much larger saving as they are currently paying a much higher effective rate than Google.
On the facts, most of Google's profits spill over into the higher rents payable by their employees, who tend to be young and hence renting or looking to buy, so any 'shortfall' in what the government gets from Google (the company) would be compensated for by collected more tax from Google's employees' landlords.
You now have a tax shortfall to make up.
??? LVT can be set at any rate between 1% and 100% of the location premium/rent. However much or little it raises, this means that other damaging or regressive taxes can be reduced accordingly. There is no 'shortfall'.
Note there is already an LVT in place via tax on rental profits - so all you've done is rob yourself of company profit tax.
Yes, any system which just taxes income also taxes land values to a greater or lesser extent, because landlords/owner-occupier businesses pay tax on their rental/business income and tenant businesses pay lower rents. And by and large, higher earners pay more tax and buy or rent more expensive homes for a lower price out of their net incomes.
And, in the pantheon of taxes, a low-rate income tax or corporation tax (up to 20% let's say) is not the worst tax in the world. LVT receipts ought to be used first to cut any tax in excess of that (higher rate income tax, payroll and sales taxes). A flat-rate income/corporation tax would be the last to be phased out.
Earlier in the troll was of course bewailing that some businesses would pay more in LVT than they currently do in corporation tax. Clearly, those owner-occupier businesses who are not making optimum use of their sites would pay more - the result would be that they either pull their socks up or are replaced by more productive or profitable business.
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