Tuesday, July 27, 2010

The religion of real estate

Martin Wolf of the Financial Times on Friday 9th July in 'Why we must halt the land cycle' attracted much on-line support. Martin Wolf does not actually use the term' land value tax' and Prof Roger Sandilands of Strathcylde University posted a response on 13 July (on-line) - extract: 

Unlike income taxes and VAT, a “tax” on the recurring annual rental values of land is not a tax at all. Rather, just as with parking charges, it is a fee for the benefits of exclusive occupancy of land (space) that none of us made but whose values are created by ever-growing pressure of demand and the community-created amenities that surround each plot. These community values rightly belong to the community.

On-line comments and print FT letters flowed in for a week afterwards giving much useful  information. A transformation  of taxation is needed, as Wolf says in the article:

I have long been persuaded that resource rents should be socialised, not accrue to individual owners. Yet, as Mr Harrison tellingly remarks, “as a community we socialise our privately earned incomes (wages and salaries), while our social income (from land) is privatised.” 

Unfortunately the opposition to change is entrenched in the form of a quasi-religion as Richard Harris (July 9 on-line) writes. In moving the focus away from housing, to  commercial real estate, he writes:
The Church of Real Estate has gathered many true believers. We could have an interesting discussion about who has been its High Priests. 

cfmmculloch on 9 July writes (o-l) 'who will vote for it?'

Exactly. The book The Free Lunch contends that an annual charge on land will get nowhere with the voters, as homeowners are in the majority. Think of this: 100 years after The People's Budget, which might have started a reform along Martin Wolf's lines, the House of Commons is now just as much in thrall to landowners as the House of Lords was in 1909 - the only difference is the amount of land owned per landowner with a blocking vote - minute now,  compared with the Lords' vast estates then. The Free Lunch takes the marketing view that unless we can sell a benefit from a change, to a majority of voters, we will get nowhere.  To a new land value charge/land value tax, must be added: reduction in income tax/vat etc. AND a non-means-tested citizen's income at a rate to cover the new charge to the many low income homeowners.  With two gains against one loss surely this is not beyond the marketing wizards?
posted by Charles Bazlinton

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