Land Value Tax

[SkyBlueFlux]

I think this is an idea that has a growing momentum and is probably overdue a run out in the UK. Especially in city centres this seems to me to be the best way to ensure we don’t have speculators sitting on empty properties just waiting for their value to go up. It also eases the tax burden on asset poor renters and places it on those who are asset rich, something that might go some way to improving the generational chasm that exists in property ownership.

Already used in Australia, Canada and some countries in Europe. The best example of true Georgism LVT is probably Estonia where they have 90%+ rates of owner-occupied housing. Something we can frankly only dream of.

Wales looks at replacing council tax with a 'land tax'

Owners of large land plots in sought-after areas would end up paying more

www.walesonline.co.uk

No doubt the political will to make this happen doesn’t exist outside of Wales, private interests will always oppose this kind of change. But I’ll be watching this with interest.

 

[BrianW]

Daily Mail: 'Labour plans to tax your back garden.'

The vested interests would be all over this, trying to persuade Mrs Widow Penniless that the tax on her garden would be 5k a year. Never mind that it wouldn't, the Tory liars are good at this.

 

[inbetween]

I wonder if the Welsh government has asked the people of Wales if they want this?

It'll certainly go down well with farmers.

 

[roman totale]

Daily Mail: 'Labour plans to tax your back garden.'

The vested interests would be all over this, trying to persuade Mrs Widow Penniless that the tax on her garden would be 5k a year. Never mind that it wouldn't, the Tory liars are good at this.

Yep. You can always tell something is a good idea when right-wingers play holy hell over it.

 

[BrianW]

I wonder if the Welsh government has asked the people of Wales if they want this?

It'll certainly go down well with farmers.

If you have a farm with very poor land (like many in Wales) it isn't worth a right lot. Ergo, you will not be paying much tax, if any. LVT is based on land value. An acre in central London, for example, is worth a lot more than an acre on the Yorkshire Moors which no one can develop.

It is a strange anomaly that farming land has been exempted from rates since the 1930s. Why farmers should get a free ride when other businesses don't is inexplicable. A grouse moor, for example, generates much more profit than the average corner shop, and by some way. (But of course, the government is happy to subsidise rich people's hobbies.)

 

[SkyBlueFlux]

If you have a farm with very poor land (like many in Wales) it isn't worth a right lot. Ergo, you will not be paying much tax, if any. LVT is based on land value. An acre in central London, for example, is worth a lot more than an acre on the Yorkshire Moors which no one can develop.

It is a strange anomaly that farming land has been exempted from rates since the 1930s. Why farmers should get a free ride when other businesses don't is inexplicable. A grouse moor, for example, generates much more profit than the average corner shop, and by some way. (But of course, the government is happy to subsidise rich people's hobbies.)

Precisely. Also worth mentioning that some of countries exempt farms from LVT altogether providing they meet certain criteria (e.g. they are demonstrably using the land to create produce). It’s a more efficient way of doing things than having a system of tax + farming subsidies, just net the two off.

I think the idea with a policy like this would be to mimimise any impact on properties used for their intended purpose (e.g. as housing, industrial or agricultural land) and confine it to impacting those whose assets don’t contribute to society (speculators and people with multiple homes that they don’t use year round).

It’s weird to me that this sometimes gets labelled as a form of socialist policy when it feels so inherently capitalistic. It is promoting competitive and productive use of the space that’s available in a more pragmatic way. But I guess when did facts matter with these things.

 

[inbetween]

If you have a farm with very poor land (like many in Wales) it isn't worth a right lot. Ergo, you will not be paying much tax, if any. LVT is based on land value. An acre in central London, for example, is worth a lot more than an acre on the Yorkshire Moors which no one can develop.

It is a strange anomaly that farming land has been exempted from rates since the 1930s. Why farmers should get a free ride when other businesses don't is inexplicable. A grouse moor, for example, generates much more profit than the average corner shop, and by some way. (But of course, the government is happy to subsidise rich people's hobbies.)

Taxes like this are regressive, they punish people for owning land and nothing more. A land owner could be a struggling farmer or it could be a rich corporation. By attributing a tax to land value and not land use then there is no distinction between the two so it's hard to judge fairness or even effectiveness.

Either way, any tax rise on a business will be paid for by consumers so we can't then moan when prices rise as a result.

 

[ChicagoBlue]

In the States, we call it property tax. You have a land value and an “improved” value. Vacant land is very inexpensive, whereas an acre with a nice house on it has a large “improved” value.

Every 3 years, the property is reassessed based on market values.

FWIW, my house sits on 1/3 of an acre and I pay $12,000/yr (£9,000). I recently bought another place on 1 acre. That property is “only” $5,000/yr (about £3,700). The difference is the size and value of the houses on the respective properties. So, in the case of the “poor widow,” unless she’s sitting on a gold mine (in which case she’s not poor at all!), she’d be fine in her modest house on a modest plot.

We also have ZONING differences. You can own LARGE parcels of land, but if it’s zoned as Agriculture, you pay very little. And, you’re allowed at least 1 acre for any buildings (e.g. House & garage/barn) you want to build. I know many people who buy 10-50 acre properties and rent the farmland to an adjacent farmer who farms it. They get income, keep the low tax base, and the farmer gets more crops for less capital outlay!

Another “trick” is to buy property with at least a few acres of timber on it and apply for a “forestry” exemption that requires you to maintain X acres in timber in exchange for the lower tax base. In that instance, there’s no restriction on what you can build on the other acreage. Some people like to buy say a 10 acre wooded lot, build a road into it, put a big house in the middle and then get an 8-9 acre forestry exemption. Then, they gave a beautiful house deep inside a wooded area, but only pay residential tax on the 1-2 acres they actually developed, while getting the beautiful buffer of the woods for free! Oh, and they often then sell hunting licenses for the hunting season to further offset their costs.

People even donate parts of their land they don’t ever intend to develop to an “Open Spaces” or “wetland” designation. That vastly reduces the tax on the property because it is deeded to not be developed and remain as prairie/wetland.

There are a million ways to skin the tax cat. The problem is all the vested interests in the status quo, because they’ve structured their lives around the expenses they incur under current conditions.

 

[Mr Kobayashi]

Taxes like this are regressive, they punish people for owning land and nothing more. A land owner could be a struggling farmer or it could be a rich corporation. By attributing a tax to land value and not land use then there is no distinction between the two so it's hard to judge fairness or even effectiveness.

Either way, any tax rise on a business will be paid for by consumers so we can't then moan when prices rise as a result.

How can a tax on assets ever be regressive?

If you own too much non-productive land and aren't eligible for an exemption there's always the option to sell it?

 

[I'm With Stupid]

FWIW, my house sits on 1/3 of an acre and I pay $12,000/yr (£9,000). I recently bought another place on 1 acre.

Fucking hell, so you own the house outright and you still effectively pay a grand a month to live in it?

Whenever I see American wages, I'm always impressed. Until I hear what the rental prices are like over there nowadays. I saw a Youtube video of a woman renting a small 1 bedroom place in Washington DC and it was something like $2,400 a month. So nearly $30k a year just on rent.