15 October 2006

Land Value Tax 3 - My Counter To The Main Right Wing Objection

Third in this series on land value tax. LVT 1 and 2 posts linked here and here provoked an excellent debate and I learnt a lot more. Recommended reading is the "how land affects the average person" link at this website.

At this stage, I was planning to get on to the how of LVT, but I feel the need to counter the main right wingers' argument against LVT as set out in the comments section to LVT 2. Conservative councillor and blogger, Richard Bailey and an anonymous right wing poster were the most strident opponents to the principle of land tax.

Without wishing to deliberately oversimplify their objections the key elements of their argument were as follows;

"The right of private land ownership is as fundamental to our society as breathing air." and "not in further penalising people who have managed to retain assets despite the predations of socialist and successive wet so called conservative governments."

The Counter

Firstly, I could argue that many other "good" things such as hard work are well taxed. For example I could argue that the right to work is as fundamental to our society and should not be taxed. But, I won't make this argument, chiefly because the government needs the revenue from payroll taxes.

According to authoritative research the average value of an acre of UK development land was £404,000 in 2001. Obviously, this has risen further since then, but to be on the safe side, I will assume it holds. If you hold your £400,000 in undeveloped land, you pay no tax on that holding.

Imagine that instead of buying that land you have £400,000 in cash earning 5% interest per annum which equals £20,000 a year. 20% or £4,000 of that interest will be deducted at source by your bank and handed to the tax man.

After LVT is fully introduced, I imagine that a rate of 1% per annum would be reasonable - £4,000 in this example. Using this example, I think I can successfully argue that taxing land value merely balances up taxes on assets. Furthermore, unlike the private ownership of cash, private ownership of land necessarily deprives others of that land so there is a social cost to land, which ought to be borne by the landowners themselves. Any ripostes?

23 comments:

Peter Smallbone said...

Income tax on cash holdings is tax on the interest the holding accrues, not the holding itself. Unlike liquid cash, increased land value cannot be realised until the asset is liquidated or traded.

Therefore the equivalent approach would be a tax on the profit made from the sale of land. However, this has other ramifications, such as the owner's reluctance to sell due to the tax in the first place. It's not an easy debate, is it..?

Praguetory said...

I don't recognise the distinction you make. Dividend income and interest income (which are both taxed) arise as a result of the asset holding - a land value tax is analagous regardless of the liquidity of the underlying asset. Also, capital gains tax on sale of land already exists and probably causes some of the market rigidities that you describe. I would probably want to abolish CGT on land if LVT was brought in - as it would otherwise be double taxation.

Peter Smallbone said...
This comment has been removed by a blog administrator.
Peter Smallbone said...

I think what you're proposing is a tax on the asset itself (i.e. the land). This isn't the same as what happens to cash in a bank account. This isn't taxed - only the interest is taxed.

Moreover, cash interest is 'real money' immediately, and is divisible from the asset that accrued it. 'Interest' on a land holding isn't real until the land is disposed.

If you wish to tax 'interest' on land (which is your analogy to cash interest), you have two choices:

1. Some kind of body that works out how much a given piece of land has increased in value over the last twelve months, and taxes the increase accordingly. This is problematic because:
(a) This costs money.
(b) What do you do if land value somewhere falls (unlikely but possible).
(c) Where does the money come from? Tax on interest comes from the interest itself. A person charged land value tax would need to find the money from an alternative source.

2. Charging for 'interest' at the point of disposal. This is problematic because:
(a) It might mean owners hold onto their land for longer.

I don't think that I'm against an LVT per se - just pointing out some practical obstacles...

Praguetory said...

Appreciate your comments. I fear that I'm charging up a blind alley here. I wanted to present the argument that taxing land is not somehow pernicious, rather that our failure to do so leads to unbalanced consequences. My key argument for LVT remains that land will be used much more efficiently if land holdings are taxed.

Nevertheless, to answer your specific points I think a much blunter, broad-based valuation system would be adequate (where only a sample of land values are made and you join the contours or the dots to assess individual plots.

Secondly, to pay for LVT owners will either have to pay from their own resources (presumably they can charge rental for use of their land) or sell a portion of their landholding (as I expect LVT to be 1% of the asset price this is hardly punitive). Pete, have you checked out the liverpool docks reference? It is handy reading.

Anonymous said...

I would like to make some points. What was said was:

"The right of private land ownership is as fundamental to our society as breathing air." and "not in further penalising people who have managed to retain assets despite the predations of socialist and successive wet so called conservative governments."

Firstly all land is owned by the state. You only hold "title" to the land. The title can be bought and sold. The state can take back the land at any time, and does in times or wars, etc.

Henry George said land is land and "property" is the items on it. Astute description. Land is not property, as we all in theory own all of it.

Walking on land is as fundamental to breathing air. We can't live without land. Why should people be allowed to hoard something that is fundamental to our existence? Much of UK land is not used productively. Land is held, with others excluded from it, for financial reasons. Last year some Laird in Scotland opened up his vast acres to the public for a few days. Much of the landscape was naturally superb, yet few had ever seen it, even people who lived not too far away. Nothing was grown on the land at all. We rule against business monopolies, however land is exempt from this - 0.66% of the population own 70% of the land. LVT would sort all this out.

People are on about the improved value of land and taxing it. It makes sense to do this, but difficult to implement. The Labour party three times have tried to make the "betterment" tax work, but it has failed each time. People will just not sell land at times.

In the late 1800s many people made a wedge from land because of the Manchester Ship Canal running thorough their land and being adjacent. Winston Churchill held this up as an argument for LVT as people gained masess of money through no endeavour or enterprise of their own. Recently people have legitimately griped about the increased land values on the Jubilee line extension, which collectively totally outstripped the cost of the extension. Again LVT would sort all this out in a natural painless way, with no cost to the taxpayer. Those who gain by the transport facility pay for it and still financially gain too - and enjoy the facilities on offer.

Which brings me to the notion of a community wanting better transport links. If a town or village wanted a rail station, they could work out the increased land value on all homes from having a station and all pay 50% of the increased value for the station - win, win all around. Again LVT naturally pays for all this - painlessly. No local bickering politics. No people saying I don't use a station, so why should I pay etc - they clearly gain when they sell the house. Some people do win the lottery in another way, and never even bought a ticket.

A company wants cheaper overheads to be competitive? All they do is move to an area with lower land values.

dearieme said...

I don't hold out much hope for arriving at sensible conclusions with arguments that include "Walking on land is as fundamental to breathing air." I can see a rational case for LVT but your simplified description has one awful flaw in it: it fails to compensate for mere inflation - as does the present way of taxing interest on capital. Logically, if you make 5% interest when inflation is 3%, it's only the 2% "real" income that should be taxed. So for a land tax, you could treat the capital value as if it is generating income at the same rate as long-maturity index-linked Gilts and simply add that imputed income to the income of the owner, and tax him at 0%, 10%, 20% or 40% according to what his total income becomes. That's better, surely? I take it that you'd also approve of an owner-occupier similarly paying a tax on an imputed rent for his house? If not, why not?

Anonymous said...

As the final anonymous poster who wrote about "socialist predations" and "wet" Conservatives I am grateful for your response; I am amused that you consider me right wing but that tells me more about what passes for Conservatism these days than anythging else. I am not sure your post address the points of principle made but I hope to consider your points in more detail later.

Just one point in the interim: tother anonymous's point about all land being held by the state is a bit of a red herring as anyone who had to study the Law of Property Act 1925 knows; it is simply an historic anachronism which does not imply one's property rights can be ignored (a simple perusal of the last 1000 years of our history will confirm that). A Land Value Tax is a bonkers idea worthy of the Lib Dems but surely not Cameroon Young Tories whether trustafarians or simply looking to get on the first rung of the property ladder.

CityUnslicker said...

Imagine I am a property developer. I want to buy some land to build housing. I have a small deposit and want to borrow money from a bank to finance the rest.

can I? Bascially no, becuase I have no income from which to pay the interest. Banks will not lend UNLESS I can prove another source of income. This is a sensible commercial decision.

It highlights the point above about a land tax. People own an asset, they may or may not have access to £4000 a year. A bank would never have let them own the asset in the first place... think a socialist solution might be to this conundrum?

Trevor Ivory said...

Even if you brought in a land value tax, it would not enable land to be used more efficiently because the planning system is in such a mess. The market would quite happily ensure efficient use of land if allowed to function properly - you do not need another tax to achieve this.

John said...

Trevor Ivory said...
"Even if you brought in a land value tax, it would not enable land to be used more efficiently because the planning system is in such a mess. The market would quite happily ensure efficient use of land if allowed to function properly - you do not need another tax to achieve this."

True the planning system needs totally overhauling. This Stalinist system based on quotas, not local market demand, has to go. Thatcher reinforced this system too.

The market before the 1947 Town & Country Planning act, when planning was far easier, did not sort out the land ownership problem at all. Most of it has always been owned by the very stinking rich few, who are fat by doing no more than taking rent - other people do the producing.

I few people owning nearly all of Ireland was directly responsible for the famine. Ireland now has the highest percentage of home ownership in the world after re-distributing land. The Irish Land Commission was disbanded in 2001 - job done. The labnd re-distribution is atributed to the Irish economic miracle.

Does the UK need a famine to put things right? People are starved of affordable accomodation, because of an artificial land shortage ramping up house prices. Maybe this will be the spur to put thing right. On the other hand everyone thinks we are short of land with only 7.5% of the land settled, so maybe not. A few nore Peter Snow TV documentaries with swingometers is needed to tell them otherwise.

John said...

dearieme said...
I don't hold out much hope for arriving at sensible conclusions with arguments that include "Walking on land is as fundamental to breathing air."


Unless we have developed ways of walking on water what else do we walk on?

I can see a rational case for LVT but your simplified description has one awful flaw in it: it fails to compensate for mere inflation

If inflation rises so will land values too and LVT will tax accordingly. Seamless and the land value follows the economy.

Richard Bailey said...

Prague,

Your tax assault on land assets can be organised in a dozen different ways but none would be any less insidious.
All I see here is the politics of envy and the assumption that everything exists to be taxed.
The presumption that everyone wants land and that everyone is capable of looking after it is also dangerous in the extreme.
Worst of all, a tax might very well release land, but to what end? Unfettered development. People and houses everywhere. The wholesale destruction of the countryside.
Access to development land should be hard to come by precisely in order to ensure that development is evolutionary, needed and considered.
Control our population and the demand reduces.
Why is it so hideous to leave land fallow? Should you be taxed on that beautiful 1966 Corvette that sits idle in your garage lovingly polished and cared for but never driven? Of course not.
The argument about the State owning all teh land and only titles passing hands is also false. Tell that to the millions of people who "own" their own homes.
Finally is the question of what qualifies as taxable. The principle of taxation is applied to productivity and earnings. I mean what would be the point of taxing the assets as a whole, as they would only reduce and thus the tax take would reduce accordingly.
This is self defeating - a bit like green taxes (once they have worked, and you have altered behaviours, they dry up and you have to go looking for something else to tax).
No. In actual fact, the development tax the government have opted for is the right one. It taxes the increased value a piece of land realises when it is developed.
Note - it taxes the productivity of the land, not the capital asset itself. Thus the land can be taxed again and again without penalising its existence.
I object to the presumption of taxation.
I object to the politics of envy.
And I object to the stupidity of taxing the wrong part of the process.

Prague, I may sue you under the trade descriptions act. Either the idea goes or the "tory" in your name!!!

Praguetory said...

Trevor - fancy doing a piece on planning. I was going to get an architect to do a piece on Building Regulations (another major obstacle). If you do, I'll link to you. However, just because there exists a mess elsewhere in the system doesn't mean that we shouldn't make a start with LVT.

Richard - "All I see here is the politics of envy and the assumption that everything exists to be taxed."

Given that

1. I posted at your website saying I wanted to see a Tory Chancellor look committed to tax cuts,
2. harangued George Osbourne at the "autistic" fringe event for refusing to listen to the Tory Tax Reform Commission's findings
3. consider Slovakia (flat rate 19% tax on VAT, income and corporate profits), Isle Of Man (£7,700 before you start paying income tax and no corporate tax available), and UEA (no income tax) to be the sort of tax regimes we should be aiming for and
4. Will be backing taxcutter and abolitionist Lee Rotherham for Mayor of London

I find it "interesting" to be attacked from the right by you, Richard. If I were involved in the PCP I'd be more likely to get my marching orders for having a Howard Flight moment than anything else. Maybe others in favour of land taxes have these motives, but please suspend your disbelief - I'm not one of them.

You advocate a development tax and have no problem with land lying fallow - well, they're certainly linked. The average house price is at a historically high level relative to income - electorally Labour couldn't have it any other way. Also, the average floor space of a dwelling has been falling. For how long should these trends be allowed to continue? (because they will if populations and council taxes continue to rise as they are).

This might not be an issue for you now but could become your problem when you have to help your kids get on the property ladder in a few years time.

I think that there is also an element of over-dramatising the impact of this. I am talking about a tax of 1% per annum (not dissimilar to what road tax equivocates to) - the way Richard characterises a world with LVT our green and pleasant land would turn into a large gypsy camp - this isn't credible when you think things through.

I am somewhat influenced by what I see with my eyes. When I was young I did a paper round in a Birmingham suburb. The largest two houses (at least 8 bedroom and both sitting in well over an acre of land) were owned by elderly single people. I do think that if people are taking valuable space from the community they should pay for it.

Does anyone dispute that LVT would be a policy that would greatly extend home ownership - what could be more Tory than that?

Anonymous said...

"I do think that if people are taking valuable space from the community they should pay for it." They did pay for it when they bought it: that is just the point. People take a risk and strecth themselves when young in the belief that over time that risk will pay off. No different from investing in a pension plan or any other basket of assets. Would you tax as well. You should not tax people out of their homes. Far better to given them incentives. If they waish to realise the value of the homes and spend it on something else fine. But to tax them out of their homes is odious. Would you tax people with a high liquidity preference for holding too much cash; would you tax people for holding stocks and shares on the basis that their gearing is too low. We should aim to cut and get rid of taxes rather than tahn seek to create more distortions. Richard is quite right.

Praguetory said...

You'll find me against LVT if it is brought in on top of what we already have just to dig us out of a fiscal mess of Labour's creation. However, if it is with a view to abolishing council tax, CGT, business rates and the license fee (as was basically proposed by the Tory Bow Group - also see posting by the eminent Tory Mark Wadsworth on LVT 1) then it will lead to a simpler and less distortionary tax system overall - which I am completely in favour of.

Serf said...

They did pay for it when they bought it: that is just the point. People take a risk and strecth themselves when young in the belief that over time that risk will pay off. No different from investing in a pension plan or any other basket of assets.

You miss the point that all other assets are not finite in the same way as land.

John said...

Richard Baily said.....

Your tax assault on land assets can be organised in a dozen different ways but none would be any less insidious.

LVT is overt, fair and honest. It is one tax. It does not tax a mans labour and efforts to progress. Hong Kong and Singapore use it to great effect.

All I see here is the politics of envy and the assumption that everything exists to be taxed.

LVT is ONE tax, no council tax, no income tax. Not taxing everything.

The presumption that everyone wants land and that everyone is capable of looking after it is also dangerous in the extreme.
Worst of all, a tax might very well release land, but to what end?


It would spread wealth as is the case in Ireland - highest home/ownership in the world. It would also drop house prices as approx 2/3 of house prices is the land. The British live in the cheapest, flimsiest, pokiest homes in the western world - all with feet of each other if detached, but most having party walls.

Unfettered development. People and houses everywhere. The wholesale destruction of the countryside.

That is the propaganda view given out by the Countryside Alliance and the CPRE. The reality is that only 7.5% of the land is settled inc gardens, parks, green spaces, etc, which drops to about 2.5% of the land paved. We can't sprawl anywhere as there is too much subsidised land in the UK. The UK has a land surplus. Destruction of the countryside is mainly by factory farming land rapists, not homes for people.

Access to development land should be hard to come by precisely in order to ensure that development is evolutionary, needed and considered.

The shortage of millions of homes in the UK indicates housing is necessary. 500,000 homes are overcrowded (Shelter). The UK is ain a permanent housing crisis - it never goes away. Government have to step in using our taxpayers money to try to sort it out, when the free market can do 95% plus of that for us.

Control our population and the demand reduces.

Euthanasia?

Why is it so hideous to leave land fallow?

As long as you pay a tax on it then fine. The tax is based on the value of the land (LVT). If the value is low you pay little tax.

Should you be taxed on that beautiful 1966 Corvette that sits idle in your garage lovingly polished and cared for but never driven? Of course not.

Land is finite and necessary for our existence. We can always make cars, and cars and more cars.

The argument about the State owning all teh land and only titles passing hands is also false. Tell that to the millions of people who "own" their own homes.

That is the reality - the state owns all land. In time of war or emergency they can take it back and not pay compensation. People have the "notion" they own their land.

I object to the presumption of taxation.

That is woolly. :)

I object to the politics of envy.

So do I.

And I object to the stupidity of taxing the wrong part of the process.

So do I. I object to being taxed on my efforts to advance - my labour.

Read this article on land at:
http://www.saveliverpooldocks.co.uk

Go to:
Various Links
How Land Affects The Average Person

Read the article. In the links section there are three links to documents by the Policy Exchange (a right of centre think tank), mainly on planning. Read the article as primer then the documents in the order listed. Very interesting and all will be a lot clearer. :) Then read about LVT and Henry George.

Land belongs to a vast family of which many are dead, few are living and countless members are still unborn.
- Ashanti Tribal Saying, Gahana

How can you buy or sell the sky, the warmth of the land? The idea is strange to us. If we do not own the freshness of the air and the sparkle of the water, how can you buy them?
- Attributed to Chief Seattle, Suquamish Tribe, 1854

Ground rents are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. Ground rents are, therefore, perhaps a species of revenue which best bear to have a particular tax imposed upon them.
- Adam Smith (1720-1790) The Wealth of Nations

Landlords grow rich in their sleep without working, risking or economising. The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not the individual who might hold title.
- John Stuart Mill (1806-1873)

The earth belongs to the people. I believe in the gospel of single tax.
- Mark Twain (1835-1897)

People do not argue with the teachings of George, they simply do not know it. And it is impossible to do otherwise with his teaching, for he who becomes acquainted with it cannot but agree.
- Leo Tolstoy (1828-1910)

In allowing one man to own the land on which and from other men must live, we have made (these) his bondsmen in a degree which increases as material progress goes on. It is this that turns the blessings of material progress into a curse.
- Henry George (1839-1897)

Henry George showed us . the only organic solution of the land problem.
- Frank Lloyd Wright (1869-1959) The Living City, p. 162, 1958

Men like Henry George are rare, unfortunately. One cannot imagine a more beautiful combination of intellectual keenness, artistic form, and fervent love of justice.
- Albert Einstein (1879-1955)

Who reads shall find in Henry George's philosophy a rare beauty and power of inspiration, and a splendid faith in the essential nobility of human nature.
- Helen Keller (1880-1968)

I believe that Henry George was one of the really great thinkers produced by our country.
- Franklin D. Roosevelt (1882-1945)

The teachings of Henry George will be the basis of our program of reform.
- Dr. Sun Yat-Sen (1866-1925)

If I were now to rewrite the book (Brave New World), I would offer a third alternative . the possibility of sanity . Economics would be decentralist and Henry Georgian.
- Aldous Huxley (1894-1963)

I would have written it (Ecotopia) with Georgism as the economic system .
- Ernest Callenbach

I have never seen a convincing reputation of Henry George's proposition .
- Alfred E. Kahn

I have made speeches by the yard on the subject of land-value taxation, and you know what a supporter I am of that policy.
- Winston Churchill (1874-1965)

Land should be taxed as much as possible, and improvements as little as possible.
- Milton Friedman

Property taxes could profitably be revised to fall more heavily on land, rather than, as at present penalising property improvements.
- Jack Kemp

Henry George told us this system [LVT] would work a hundred years ago.
- William F. Buckley

You can always trust the Americans to do the right thing, after they've tried everything else.
- Winston Churchill (1874-1965)

Jock Coats said...

Nice discussion. Since the 66 Corvette is being mentioned, you might be interested to know that Henry Ford thought LVT was a good idea as well...:)

Anonymous said...

I usually respect Serf's views but is he in favour of LVT?

If they ain't building land, so what? I do not think the fact that they are not building it (well at least in the UK they are not) is sufficent justification to give it a special tax.

I know I am now likely to be presented with a host of high brow economic arguments which are likely to be way over the head of someone whose knowledge of economics in the past was largely limited to reading the Sun whilst working as an investment banker. I do though feel there is an element of special pleading here (I know I am). People forget what a bum investent property can be. The Tories screwed the property market in the 90s with their last crack brained idea and I reckon a LVT would do the same. I appreciate what it is like when you cannot afford to buy your own place and have to rent from someone thirty or forty years older than you (as I did). You feel even worse if after buying somewhere its value drops 40% because someone thinks they are an economic or political genius so you wait a decade to move or else take a hit. Things look very different in a bear market, believe me. County Courts in the 90s were constipated by house repossessions. So, I actually think from experience a fixed supply of land is no argument for LVT as property is really quite fungible. Land prices go up, people take a view, hold, sell, or maybe develop. After all people do themselves switch between assets sometimes choose to rent when there is a downturn or if they are moving. Also if land prices go up there is an increasing incentive for it to be used more efficiently whether by letting it or developing it. People can also buy land elsewhere.

In a perfect Ricardian world all assets should be treated the same but I recognise that we do not live in a perfect world. We recognise housing is important. That is why (short term) tenants are very well protected at law. We also allow people to sell their homes without charging CGT. Well I would rather suffer CGT as part of a zero sum gain than LVT which should if applied to principle primary residences would in reality represent a wealth tax favouring the younger employed (ahem: perhaps the readers of this and similar blogs) with rising incomes and borrowing ability over perhaps older asset rich income poor property owners. Whilst I do not fall in the latter category, I do think such a tax would be wrong.

PS

I think PragueTory is somewhat naive when he says:

"to pay for LVT owners will either have to pay from their own resources" (which may well amount to an income tax on those who can least afford it; and

"(presumably they can charge rental for use of their land)" : has he ever tried; where I live people cannot find anyone to graze land and if they can it is for free;

"or sell a portion of their landholding (as I expect LVT to be 1% of the asset price this is hardly punitive)." Like I said before, fine if you want to sell your back garden (thus spoiling the amenity of the propert) and can get planning permission, but what about where I live where getting planning permission is almost impossible. It amounts to a wealth tax on many who are not wealthy.

LVT is a bonkers idea but that has nor stopped the Tories in the past. If WERM does not resonate with you, how about the Poll Tax. (Don't answer that, that was a great idea in principle too.)

Praguetory said...

The latest anon does not have the strongest arguments. One, if property prices fall from where they are when the Tories get in, don't blame them - it will be economic reality setting in. It always does eventually. Current prices are unsustainable on many levels. Also, "Where I live people can't find people to graze the land". It's land value tax not land tax. If there is negligible land value there will be negligible land value tax. Next, as the average area of a built property is about 50m2 and an acre is 80 times that the LVT on a property without a garden would be maybe £50 a year (v £4,000 a year for a development acre) I don't think anyone should lose any sleep.

David B. Wildgoose said...

Those arguing against a Land Tax appear to be arguing that a young family trying to establish themselves should have their income taxed, but those who have inherited huge estates from ancestors who brutally oppressed our ancestors should be allowed to keep what they stole (as recently as the last Enclosure Acts) without any payback.

Sorry, I don't agree.

I'm a libertarian, not an anarchist. I believe in a small state, but even a small state must raise some taxes. Land Taxes are one of the most equitable means of doing so. Scrap Inheritance Tax, (which penalises thrift), lower (or scrap) Income Tax which penalises hard work, but institute a Land Tax which has very little economic penalty, and indeed some economic advantages.

Jock Coats said...

The last anon does make some interesting points worth addressing though...

He is right that the longer term effect of LVT would be to reduce the capital value of land.

Land is valued (even though home owners do not particularly see it this way) as several years of capitalised rent. That's what you are paying for when you buy property; the building and several years (sometimes unspecified as in freehold, sometimes specified as in leasehold premia) of future years ground rent. That's what the present owner is giving up when he or she sells.

Now, as Churchill kept asking, "where did you get [that rental value] it?" Well, most of it is to do with the location relative to other things. Things that are often provided by public money, but are pretty well always provided by someone other than the owner of the site in question. In other words the improvements around that site rather than on it. These may be infrastructure - roads and other transport links, proximity to some community or collective activity or facility or natural asset (Oxford exists because the Thames was shallow enough to ford - what has that got to do with anyone who happens to have owned land nearby?) .

So, in an LVT system what you are saying is "hey current owner, you've not done anything as owner of that site to alter the circumstances surrounding it, therefore the change in land value should not all accrue to you". And when you buy land, you buy a whole package - however much capitalised ground rent one allows the vendor to keep, plus an ongoing liability for some of the annual rent to go to the public purse.

So yes, it would reduce the cost of land (just as, since Anon was talking about the city, when Docklands was developed the LDDC charged no rates for a decade and land values shot up), but it would do so everywhere. For home owners the big issue is whether what they are in now will pay for what they want next. So if all land falls in capitalised value by ten per cent, it makes very little difference to the owner-occupier unless it is their last home and they want to release some of the land value for other things.

Anon is right - land and property has not been a great investment. It goes through prolonged booms (which as over the past decade make us feel that they are never going to end and we need to charge in at eight times earnings because it's only ever going to go higher) and sharp disastrous busts. LVT would smooth these out. Far more economically beneficial to everyone is if you stopped paying so much for the dead ground beneath your home and invested what you saved in real economic output.

But also, Anon makes the point about LVT in a falling market. I would question whether markets fall everywhere and at the same pace. If we get LVT any time soon, one expected benefit might be to shift some economic activity away from the overheated south east (which might result in land value and therefore tax take falls in that region) and shift it to the north east where taxes are lower but which will rise to some kind of equilibrium as economic activity moves there.

So the combined effect of levelling out land value increases over time, and levelling out land value changes geographically will make for a more certain and stable market and a more stable source of revenue - whether for government or for a citizens' income, whichever type of Georgist you happen to be. And still leave people with more to invest in proper investments (ones which will provide them with a genuine income when they need it!)