Feb 27 2012

A tax that can curb corruption

Posted by: Nick Shaxson in: Thoughts

One of the ten recommendations at the end of Treasure Islands is to institute a Land Value Tax. I say:

“Whether or not that piece of prime real estate is owned by a Russian oligarch hidden behind a Liechtenstein anstalt, its bricks are rooted firmly in the soil, and the tax can be levied. Because land cannot move, this tax is proof against offshore escape. It encourages and rewards the best use of land, and keeps rents lower than they would otherwise be.”

I’ve just written a longer article about it at the Tax Justice Network blog. Read it here.

8 comments so far

JamesStGeorge 3st March, 2012 11.02 am

Unadulterated drivil. There is never ever any justification to tax any asset at all. Assets have NO income to pay with.

We already tax any income derived form assets, which is fair enough, new money.

This old LVT idea is in the dustbin of history for very good reason.

Nick Shaxson 3st March, 2012 3.35 pm

Hmm, how about reading up on the topic a bit? And how about justifying the claim that ‘there is never any justification to tax any asset?’ Why not? Plenty of countries do. And aa snitty point, but it’s ‘drivel’, not ‘drivil.’

JamesStGeorge 3nd March, 2012 12.27 am

Crossed swords on this silly LVT before with another proponent of it. He at least admits taxing assets is fundamentally wrong. But jumps though hoops to claim land is different. It is not.

Just because others do wrong does not make it right.

Assets have NO money to pay with! Basically your LVT is serial theft, by annual slices. Someone inherits an asset, could be anything say a painting by a family forebear, or land, even. They have no money, income, but you would tax their asset away from them. Or presumably insist they sold it to pay your immoral tax! But if they sold it they would not have it to be due tax on it! Taxing assets rather than any income from them is exactly the same as taxing the capital of savings people have in banks instead, or as well as, the interest they earn. Surely you can see how utterly wrong that is as a principle? Try proposing taxing peoples savings capital, see how you get on! All assets are the same in this regard.

It is utterly unacceptable to tax any asset for mere possession of it. There is no problem with taxing ‘gain’ from it, like rent charged, as there is an income of new money in existence, or reproduction fees of a painting, not just for owning a painting.

That is why LVT is from and in the dustbin of history, rightly.

On the whole you will have to rely on the spite element of the profligate who never save, to back your old tax idea, tax the ‘rich’ they have things I don’t envy maxim. Even as someone who owns no house or asset other than cash savings I will always oppose theft of assets by pernicious immoral unjust LVT tax.

Nick Shaxson 3nd March, 2012 9.37 am

all tax is theft, yawn, democracy is illegitimate, yawn, obama wasn’t born in the U.S. etc etc etc. lots of countries such as switzerland) have wealth taxes, because that’s what their societies want. go and argue with them if you like. lvt tax hits unearned income: the income of who reaps where they never sowed. as such, it’s the best kind of tax. There are few sane economists who disagree with the principle of lvt, once they understand it.

JamesStGeorge 3nd March, 2012 11.25 am

Oh dear I see you know you have no leg to stand on. Making up things so suit your prejudices. At no time did I say all tax is theft. I fully back all needed taxation on income and transactions as it should obviously be. I would even tax gain in value by grant of public building permissions 90-100% (I would exempt self build with conditions of family ownership and use until any sale, then take the change of use value.)

It is theft to take a slice of any privately owned asset. All income and gain is already covered by tax systems.

Unearned income if it is any income is taxed as income not for mere possession of an asset. Capital gain is also taxed at the decent point of realisation, sale, of that gain which is the only point at which it is real.

Again, just because some country has an immoral attitude to taxing assets does not change the fact it is wrong.

I love the conditional bit about economists, if they do not agree they do not understand it! Given their reputation as the modern day’s astrologers and as reliable, certainly no science, their rare backing may not help your lost cause.

There is no income at all from land just by owning it. None whatever earned or so called unearned. Ownership can not be taxable. It is a version of the old ‘window tax’ it is wrong.

Come on face up to it. Deal with the issue. Try on taxing assets like people’s cash savings, show that is a decent principle to do, if you can, rather than diversion. You have to know it is fundamentally wrong to tax assets, land included.

Nick Shaxson 3nd March, 2012 1.19 pm

Ok, the statement was too sweeping, and apologies for that, and yes, your point about economists is quite valid too. But hey. I am still struggling to see your point about taxing assets being wrong, other than this argument: “it is theft” or ‘it is immoral’ or ‘ownership cannot be taxable’. These are all versions of ‘i am right because i am right.’ In my book, if a democracy votes for a wealth tax, then who am I (or you?) to say it’s wrong?

JamesStGeorge 3rd March, 2012 12.36 am

Yes a democracies though, without going into the variability and considerable problems they have, can decide to do bad or wrong things. I also accept that right and wrong changes over historical time and culture.

The not taxing of assets is basic common sense though. It is why it is not common in the modern world. It is one thing to use for tax funds a portion of real money, when new amounts are earnt or traded, quite another to take a portion of something where no gain is there or real, or cash there to provide a share to society for societal use.
Owning any asset has no real cash. It comes down to cutting a piece off a Van Gogh every year so the tax man can have a bit. It is fundamentally, and practically, wrong. If you rent the picture out and have real cash income from it, that is reasonable to tax a share for collective use. It does not involve removing what is the possession of the individual or any annual portion of it.

To take something, or a portion, from someone that is already theirs is theft. Taxes are costs on gains, or part of the price of a transaction, of new and real money, before the residue or item becomes outright yours. Even when taxed we do we never go backwards, we gain usually the bigger portion of any new gain, and the tax gains some too. Your asset tax takes away things from people, takes them backwards. There is no sharing proceeds of gain, just taking away.

There is the problem of multiple taxing too. People are taxed on their incomes, they are taxed on their purchase of an asset, and you think it reasonable to tax them like a rent for owning it as well?

Assets also have a valuation problem from a practical point of view. All vary wildly over time, often short times, like BP shares before and after the oil spill. Or even owned for what period, days? months? Calendar year? ownership year? Bureaucratic nightmare.

So I guess in trying to get across something so basic and obvious the best way to explain it is the way your allowing the taxing assets, takes away something from people, where normal taxes share individual gains with wider society. So clearly the former is a form of theft as it is removing part of what is already yours. Of course those in power can sanction theft, but it does not make it right or moral by this time and place’s culture.

Individuals | Land Value Tax Guide 10th October, 2014 1.21 pm

[…]     Dr. Adam Leaver:   Senior lecturer, Manchester U. Business School 18.2.11          Nicholas Shaxson:     Journalist, Author , Researcher for Tax Justice Network. 06.4.11.         Prof. Prem […]

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