I have seen hundreds of supposed killer arguments against LVT over the years. most of them revolve around Poor Widows In Mansions, the Army Of Surveyors and the misconception that land values represent wealth, but there are plenty of others.
None of them stand up to closer scrutiny and a lot of them are not only inherently false but contradict each other and thus cancel each other out. It's difficult to put them into logical order as they are not logical, but they can still be grouped under some main headings, the arguments against depend largely who is making them.
I wrote the bulk of this 'blog in January 2013. It will never be complete, there will always be new killer arguments to be debunked, calculations and links to be checked and updated (I have updated the embedded spreadsheets for tax rates and personal allowances for the year 2013-14), but I think I've covered 99% of it in reasonable depth.
Click the heading to go to the relevant article for rebuttals:
A. The Poor Widow Bogey
Doesn't relate to ability to pay
What about the asset rich/cash poor
Just because somebody owns valuable land doesn't mean they have the money to pay it
Poor Widows In Mansions
Elderly people won't be left with enough equity in their homes to pay for a nursing home
Elderly people will allow their homes to go to ruin if they have no equity in it
The deferment/roll-up option is just like Inheritance Tax
B. The Diagonal Comparison
The Poor Widow In A Mansion will end up paying more than the millionaire in the flat next door
C. Land doesn't generate income
There's no cash to pay the tax; you can't pay tax in slices of land
Taxes on land are "dry taxes"
People will be forced to sell or rent out their land
People will be forced to try and generate income from their land, even if that is a sub-optimal use
It would be OK to make landlords to pay more but why should I pay tax on my own home?
If they tax us on land, they might as well tax us on fresh air
D. Local taxation and the only fair tax is...
MYTH: I pay for local services out of my Council Tax
MYTH: The UK collects more tax from land than any other OECD country
The only fair tax is a Poll Tax
The only fair tax is income tax
The only fair tax is Sales Tax (VAT)
; Tax consumption, not production!
FOOTNOTE: The only fair tax is... Land Value Tax
FOOTNOTE: Will LVT be a national tax or a local tax?
BONUS: We have to have VAT because the EU says so
E. LVT is a tax on aspiration
LVT is a tax on aspiration
LVT is a tax on savings and thrift
LVT will increase the cost of buying a home
Tenants will end up paying nothing. They’ll always vote for increases.
Homeowners will end up paying all the tax
F. LVT is an attack on families
It's a tax on gardens
It's an attack on families who need big homes and gardens
BONUS: It's wrong to assume that employers will pass on their NIC savings as higher wages
BONUS: It's an attack on single adults
FOOTNOTE: The close correlation between build density and land values.
G. LVT would benefit the rich and hurt the poor
Landlords will pass on all the tax to their tenants
Poor people will be priced out of nice areas and forced to live in ghettoes
What if somebody loses his job? How will he pay the LVT?
Low earners will be forced to sell their homes to rich people who will end up owning all the land, so ultimately, it will benefit the wealthiest landowners
Landowners will evade the tax by registering land with offshore companies
Wealthy people will avoid the tax by moving into one-bed flats
Multi-nationals will relocate abroad and end up not paying a penny
H. LVT would raise too much revenue
The government will have LVT on top of existing taxes
The government will keep increasing the tax rate
People will never know how much tax they will have to pay next year
At least with income tax, if your income falls, then your tax bill falls
At least with income tax, there is a Laffer Curve which sets an upper limit to tax collection
I. LVT would not raise enough revenue
LVT will never raise enough money to pay for all government spending
LVT will never raise enough revenue to replace all taxes
Why focus on one narrow asset class? Taxes should be broad-based
The collapsing revenue theories:
Everybody will cram into the smallest houses, so not much tax will be collected
Rich people will avoid the tax by trading down/moving abroad
The best way to tax rich people is higher rate income tax or taxes on luxuries
J. There would be too much new construction
All public parks/school playing fields will be sold off for development
Owners of open spaces will [be forced to] build on them.
The Green Belt will be bulldozed/concreted over
What about churches and listed buildings?
K. There would be not enough new construction
It's like the Window Tax - a disincentive to improvements
People will wreck or abandon buildings to avoid the tax (Business Rates)
It will impede transactions (Stamp Duty Land Tax, capital gains tax)
Land taxes just don't work (Land Development Tax, s106 Agreements)
What if a developer has paid out under a s106 Agreement?
Owners will have no spare cash to pay for maintenance
Construction companies will either go out of business or pass on the tax as higher selling prices
L. LVT would make people live where they don't want to
If you increase the tax on inner city/urban/suburban/rural land, that will force land owners to over-develop
If you increase the tax on urban etc land, that will price people out and force them away
Poor Widows will be forced to move away from their family and friends
Greedy developers will get planning permission for my land, forcing me to pay more
The disappearing homes conundrum
M. LVT is anti-free market
The government will effectively own all the land and thus own everything
Land use and land ownership are best left to the free markets
Landowners compete with each other and there is a free market in land
Landowners are doing us a favour by keeping some land out of use and/or deciding how it should be used
N. Valuations are impossible
Valuations are impossible, subjective, can’t be decided by government
The Army Of Surveyors
Endless appeals, will cost more to collect that it raises
What about leaseholds and freeholds?
What about unregistered land?
What about social housing?
Not all flats in a block are worth the same
What about protected tenancies?
O. Land values are real capital or wealth
Land is just capital like any other kind of capital
House prices will plummet and wealth will be destroyed
House prices will plummet and millions will be trapped in negative equity
House prices will plummet and banks will go bankrupt
Banks pay lots of tax, without them we will go bankrupt
House prices will plummet and the tax base will disappear
P. LVT is a wealth tax
If you tax one kind of wealth, it will end up being extended to all wealth
Why is there no tax deduction if you have a big mortgage?
It will increase the tax burden on London and the South East
It's an attack on wealth/the wealthy; wealth/the wealthy will disappear abroad
Q. Businesses would go bankrupt
Businesses which use lots of land will go out of business
Businesses need to own valuable land to use as security for borrowing
Business rates are killing the High Street
Retailers will push up prices
The construction industry will be hardest hit
FOOTNOTE: The rent-setting process
R. Farmers would go bankrupt
Farmers will all go out of business
Farmers will abandon their fields - what about food security?
Farmers will be forced to sell off all their fields for development
Agricultural land subsidies make food cheaper; LVT will push up food prices
What about the smallholder who is self-sufficient?
S. Land owners create land values; land owners have no influence over land values
Land owners create land values so it's double taxation
Larger landowners create their own rental values
Land owners have no influence on land values so it's unfair
The council decide land values with planning permission/restrictions
The government will push up land values with [wasteful] spending on infrastructure
The government will push up land values with easy credit and low interest rates
The government will push up rental values by paying higher Housing Benefit
T. Yeah, it all sounds nice, but...
LVT is not a panacea for everything
LVT would be a great idea if we started again from scratch, but it's too late now, it’s too difficult to implement
LVT won't prevent the boom-bust cycle
Hong Kong has LVT and it still has property boom-busts
LVT still takes money out of the economy as it has to be paid out of earned income
... everybody will still end up paying the same amount of tax as before. So what's the big difference?
There will be more losers than winners
You underestimate people's atavistic desire to "own" their own home because it makes them feel independent/like a fully-paid member of society
Over sixty per cent of voters are home owners and turkeys don't vote for Xmas
U. Rewriting history
If LVT is such a great idea, how come no country has ever tried it?
LVT is un-British as it is an attack on land ownership
Land ownership is the foundation of free enterprise
We are a property owning democracy
I've already paid enough tax
I've paid for my pension with my National Insurance contributions
I bought my home out of taxed income
An Englishman's home is his castle; if they try and take my home I will be waiting with a shotgun
LVT will lead to a break up of The Great Estates
Even if the original appropriation was wrong, I paid for my land in good faith and it is now all water under the bridge
It's nationalisation without compensation
Land ownership is widely spread and no longer a monopoly
W. I want to have my cake and eat it
It's just my home - it doesn't place a burden on anybody
All the new development will place a burden on me
My home is my pension
I want to leave my home to my children
Land is the only asset which has beaten inflation
With LVT, you will never properly own land
X. Semi-literate Faux Libertarian arguments
Even Karl Marx said that LVT wouldn’t work
Karl Marx later conceded that LVT would work
Ricardo's law only applies to agricultural economies
We are no longer a land-based economy
With the internet, locations are no longer so important
All taxes are equally bad. Private individuals spend money more efficiently than the government.
Y. We need more lending
We can help First Time Buyers with cheap loans or MIRAS
We can help people onto the property ladder by selling off council housing
What about people who exercised Right-To-Buy and bought their home off the council?
Without assets to use as security, people won't be able to borrow money
I can use the inflated value of my house as collateral to help my children borrow money to buy their own home
Z. LVT is a sledgehammer to crack a nut
We can sort out housing problems with more social housing
We can sort out the house price bubble with sensible bank regulation
We could make a modest start by having a Council Tax revaluation and more Council Tax bands
We can sort out the house price bubble with more new development
We can sort out the house price bubble by stopping immigration
We can sort out the house price bubble with a 100% capital gains tax
We need higher Inheritance Tax to redistribute wealth