Debate Magazine

Killer Arguments Against LVT, Not (460)

Posted on the 10 June 2019 by Markwadsworth @Mark_Wadsworth

Sobers trotted out the time honoured classic: "Many people wouldn't be able to afford to buy their own homes at today's prices". The implication is, they wouldn't be able to afford to pay an annual tax on the value thereof either.
The statement is quite true - and a sign that something is very, very wrong, but the implication is completely and totally incorrect and this completely and totally irrelevant to the topic in hand.
1. It's only since Georgism Lite was abandoned (although the Tories are reintroducing some minor elements of Georgism Lite, on the basis that more owner-occupiers = more potential Tory voters) that we've had this bizarre state of affairs, that people who bought more than X years ago wouldn't be able to buy today. Once LVT is in place and bedded in, most people will be able to afford to buy their own homes, by definition.
2. The argument is trotted out whether you propose full-on LVT and massive cuts in taxes on earnings and output, or just a really modest LVT that merely replaces Council Tax and SDLT. Numbers and maths are nto the Homeys' strong points.
3. LVT is not based on selling prices, but on rental values. Even a full-on LVT, by definition, would be a certain proportion of the (full) rental value, anywhere between 0% in the really low value areas and about 80% in the poshest bits of super-expensive areas. For most people, that extra tax will be less than all the other taxes they will no longer be paying (again, by definition). For some it won't. Tough.
4. Mysteriously, tenants can afford to rent, but most could not afford to buy the home they are renting, or one similar to it (or else they would not be renting in most cases). So in the topsy-turvy Home-Owner-Ist non-logic, if you can't afford to buy the home you live in, you can't afford to rent it either, or even pay a fraction of the rent. But clearly tenants can. Hmmm.
5. The Homey view is that tenants can afford to rent, and are expected to pay a load of extra tax to subsidise owner-occupiers and landlords.
6. What does 'afford' even mean? As long as a household has enough left over for the basics, it can afford it. After paying rent/LVT, anybody with more than £10,000 or so a year to spend on everything else can survive at least. You want nicer stuff? Work longer hours or get a better job. Many tenants don't have much money left over after paying rent (partly because of the extra taxes they are paying) and get zero sympathies from the Homeys.
The KLN then segues nicely into another classic: "Low income people will be 'forced' to live in slums and high income people will get all the nice houses." How is that any different to the situation without LVT? In any event, under LVT, there would be far fewer slums; whether something is a slum or not depends largely on how many people in the area are working and how much they earn. Fewer unemployed and higher wages => fewer slums.
Overall, it would still be a huge win for low income people (and high income people), because that big slice of GDP that disappears into land values (landlords, banks and down-sizers) for nothing in return stays in the pockets of aforementioned low and high income people. Georgists are not taking sides between low and high earners any more than we are taking sides between employees and employers, that's a largely false dichotomy invented by Communists and Homeys alike to distract from the real issues.

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