Ben Southwood seeing the wood, not the trees over at the ASI:
Land value tax advocates claim that a land value tax makes housing more affordable. But house prices rapidly adjust to take account of amenities, transport links, and expected taxes that the property owner will pay. These "capitalise in" so to speak. If you add £50,000 of expected taxes to a property (or, precisely, a net present value of that) its price will go down about that much. But it doesn't make the house more affordable! You pay £50,000 less for the house and £50,000 more in tax. No change. Once again, reasoning from the price change leads us astray.
It's an improvement on "landlords will just pass on the tax", I suppose. Ben Jamin's posted his own lengthy diatribe, here's my comment:
Why do you assume that the only purpose of LVT is to get selling prices down? It isn't, that is just a bonus. The main point is that it is simply much fairer and more efficient to tax land values (or any other form of rent) instead of turnover, employment, earned income etc.
As a knock on effect, the overall income of workers and businesses goes up and the overall income of landlords and banks goes down. The rental value of land does not disappear but more of it accrues to workers and businesses (however indirectly) and less of it accrues to landlords and banks.
Debate Magazine
