Fourteen Aspects of Land-Value Taxation
Afffecting Government, Land Owners, Community and Ethics
David Chester
[2011]
Three aspects for GOVERNMENT
- Most of the ground-rent being collected as LVT, adds to the
national income. It allows the other taxes on earnings, purchases
and family/corporate ownership of buildings to be reduced and
eventually to be eliminated.
- The ownership of each land parcel is registered. Then the cost
of collecting the LVT is much smaller than for income tax and
other production-related taxes. Using regularly updated maps, the
rental value of each site (as if without buildings) is public
knowledge. Then the LVT is simple to understand, the amount of tax
is easily found and its payment by the land owner is impossible to
avoid.
- With LVT, the national economy stabilizes and no longer
experiences the 18 year housing boom and bust cycle, which was due
to the changing prices that arose from speculation in land-values
during town expansion.
Six aspects affecting LAND OWNERS
- LVT is progressive, the owners of the most potentially
productive sites pay the most tax. None is paid on marginally
productive sites, since their owners cannot claim ground-rent from
possible tenants.
- The land owner pays his LVT regardless of how the land is used.
When the land is leased to tenants most or all of the resulting
ground-rent is the tax.
- LVT stops the speculation in land prices because any
withholding of land from proper use is too costly.
- The introduction of LVT reduces the sales price of sites even
though their value (or potential usefullness) may continue to
grow.
- With LVT, land owners are unable to pass the tax on to their
tenant renters, due to the competition for land use. The users of
(untaxed) marginal sites price their produce according to the
costs of their labour, the use of the durable capital and the
added transport needs. Owners/occupiers who access more productive
land pay LVT/ground-rent and compete in their production, so this
tax cannot be added to what buyers willingly pay.
- With the introduction of LVT, land prices will drop.
Speculators in land values will tend to foreclose on their
mortgages and to withdraw their money for reinvestment. Depending
on the rate of these changes, bankrupcies can result. Then LVT
should be introduced gradually to allow the investors sufficient
time to transfer money to company-shares in durable capital goods,
where their greater use will meet the increased demand for produce
(see below).
Three aspects regarding our COMMUNITY
- With LVT, there is an incentive to use land for production,
rather than it laying idle or being partly used. An optimum amount
of urban land is brought into use, which reduces the spread of
suburbs onto rural land and avoids vacant city centers.
- With LVT, greater working opportunities exist due to cheaper
land and a greater number of available sites. Consumer goods
become cheaper because entrepreneurs have less difficulty in
starting-up and running their businesses. Demand grows,
unemployment decreases and with it a reduction in the polarization
of our class-society and its degree of poverty.
- As LVT is introduced, investment money is withdrawn from land
and placed in durable capital goods. The investors in company
shares tend to be wage-earners (as well as banks and monopolists).
Their decisions favour more competition and cheaper local
production without heavy transport costs, whilst the monopolists
have less control of prices and the unavailability of alternative
goods. This is a natural trend of our free-marketing social
system.
Two aspects about ETHICS
- The collection of taxes directly from productive effort and
commerce is socially unjust. The associated philosophy favours
coercive robbery and is "Robin Hood" in style. LVT
replaces this form of extortion by gathering the surplus rental
income which comes without exertion. Consequently LVT is a natural
system of money-gathering, which avoids the present-day distortion
of business economics.
- Bribery and corruption cease with LVT. Before, this was due to
the leaking of news of municipal plans for housing development.
However, the speculation in land values is no longer worthwhile
after LVT is in place.
to which might be added
- Ecological advantages of not continuing to have slag heaps and
other piles of waste material laying arround.
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