Killer Arguments Against LVT, Not (252)

I sometimes get the impression that the Home-Owner-Ist élite and their lackeys are getting a bit nervous about losing their lovely income-tax-funded welfare system, because they have been really stepping up the propaganda lately:

ONCE again, Boris Johnson is making sense on tax. He is right to be calling for a lower tax economy (1) and to oppose increasing the tax on homeowners (2) – while simultaneously demanding the elimination of the loopholes that mean that the current system is riddled with problems, especially when it comes to corporation tax...(3)

The increasingly popular idea that taxing property would be an easy way of raising even more money is disastrously deluded.(4) Stamp duty was hiked to 7 per cent (or more in some cases) for homes worth £2m+ this year. In London, sales under £2m dipped one per cent in the third quarter. But sales of homes worth £2m-£5m collapsed 53 per cent compared to the third quarter of 2012, according to Land Registry data analysed by London Central Portfolio. This will have triggered a decline, not an increase, in tax receipts for that category of homes, in a stark illustration of Arthur Laffer’s famous curve.

Britain is obsessed with tax avoidance. This will only be solved through comprehensive tax reform. But most people are already appallingly over-taxed.(5) Their vast contribution to the Exchequer should not be forgotten.(6)

1) The rest of the article explains how high the actual tax burden on most of the working, i.e. wealth creating, population is, the average total marginal tax rate is about fifty per cent overall. We could do ourselves a huge favour by reducing these taxes on earned income. But the money's got to come from somewhere, so surely it is better to tax unearned income (no Laffer effects or deadweight costs etc) than to tax earned income?

2) He then moves seamlessly to bracketing in good taxes on unearned income (the rental value of land) with bad taxes on earned income, a traditional Home-Owner-Ist sleight of hand. The idea that taxes on the rental value of land are taxes on "homeowners" is a nonsense of course, if a house is owner-occupied, the tax is £x,000 and if an identical house next door is landlord/tenant, then the tax on the house next door is also £x,000. So it is not a tax on homeowners, landlords or tenants, it is a community charge for the benefits which the owners/occupiers of any particular plot receive from the community.

3) I don't get this obsession with corporation tax, that is one of the least bad taxes (give or take some stupid timing differences and disallowances, there is no corporation tax on reinvested 'profits', only on the cash surplus), although still inferior to LVT.

4) No it's not. He's not talking about a tax on the annual rental value of land, he's talking about a really stupid tax called "Stamp Duty Land Tax" which is a random percentage of the selling price of land payable every time it is sold, but which can be avoided by simply never selling. So if LVT is like a flat income/corporation tax, then SDLT is like making people hand over a whole year's salary every time they change jobs.

5) Earned income is indeed "appallingly over-taxed", but unearned income is "appallingly under-taxed" and "appallingly over-subsidised", it's "welfare for the wealthy"; the Poor Widows In Mansions are just a convenient human shield.

6) But The Exchanquer doesn't spend the money itself, does it? It's either stolen by quangocrats, paid out as old age pensions, spent on merit goods (in a rather inefficient manner) or spent on propping up the rental value of land. Can't we just short-circuit all this and charge land owners for the benefits they receive?