It is interesting how the arguments against LVT so often have to postulate impossible situations. Here is an example from the Guardian's Comment is Free discussion group, as part of its present campaign against tax avoidance. The point put in favour of LVT was...
"If taxation is tied to the holding of land titles, then it can not be avoided. Everyone uses land. Nor can land be hidden or removed to a tax haven. The tax payable needs to be a proportion of its annual rental value. If this reform was implemented, then tax cannot be avoided."
The response that came back was...
Oh absolutely staggeringly brilliant. So in your system a company that is based on intellectual property - say Google- could rent some premises in the Outer Hebrides and basically pay no tax at all. Marvelous.
This produced two separate counters
All the FAQs answered at one in this comment by IanCb in the Guardian's Comment is free.
"A land tax as you propose would simply increase the cost of land and all it provides including food."
Land value is the residual value after all other costs have been met. That is standard economic theory and readily observable - there are numerous test situations which have shown this eg shops do not charge more for their goods if they are paying high rents.
The person who made this comment was asked if they could explain how a land value tax might push up prices, as it would have been very interesting to know what the mechanism was. No reply came.
How about this objection to LVT from the Guardian's Comment is Free?
"So people and organisations which don't 'own' land but just rent or borrow it won't pay any tax? Sounds like a top plan."
Everyone uses land. Either they own it or they rent it. Whatever the case, they make a contribution to the LVT.
Land doesn't matter any more, people often say. This is the sort of comment we often receive...
Are you stuck in the 17th century or
something? Land doesn't mean an awful lot when food can be shipped in
cheap from Africa and your entire business is an office.
The argument goes like this...
Land does not determine production of non-organic
goods. Since we discovered fossil fuels we have had a mineral energy
source that can produce huge amounts of energy and does not have to be
grown, like wood has to. With an unlimited supply of energy and
materials (for the last two hundred years and maybe another 50) the
West was able to industrialise, and land as a factor of production no
longer mattered. How else was Japan able to become an industrial giant,
when it is a small mountainous island with little of its own raw
The argument about land and housing may be applicable
to South-East England, but America? And America is where the trigger
for the financial collapse came.
We sometimes come across the objection that LVT would be unfair to people who had chosen to put their savings into property. A question that came up recently was that,
"People like me who have chosen
to put their savings into a property, and it is the main, if not only
source of their pension, would seemingly see this pension whittled away
by such a tax. It would unfairly advantage those on other forms of
pension, especially final salary schemes and, in particular, the gold
plated public sector pensions, for which a property asset is a meagre
replacement. How can one justify advocating a scheme which so dramatically favoured one form of pension saver over another?"
Very few people own both the land on which they conduct their
businesses and the land on which their homes stands. Most pay rent or
work for wages. So having to pay tax on land is no big issue for most
people. What is an issue for nearly everyone is having to pay
tax on the products of their labour - on
Nobody is proposing that the planning system be abolished, and planning
control is a major constraint on tall buildings. But it is the lack of
a land value tax that leads to persistent attempts to put up tall
buildings, often in unsuitable locations with poor access. This is
because so much land is underused or unused, that an artificial
shortage is created which makes it economically viable to over-develop
land. In reality the demand for housing and office space is not
infinite but constrained by population size, transport access, etc.
Nobody would want to put up an office block out in the middle of nowhere if
there was an ample supply of premises in central locations.
More arguments against LVT come from an advocate of the Flat Tax. The author suggests a 20% flat rate above £20k, Why 20%? Why 20k allowance? Would that be the same for a
big company as a one-man business? What counts as deductable expenses?
It isn't quite as simple as it looks at first glance.
The objector raises some complex and interesting points (below, italics) which are here answered.