Submission statement: Land Value Tax replacing council tax, stamp duty and business rates would not only grow the economy effectively, but it would also give most people more money in their pocket which would increase spending power.
“The correct and courageous thing to do is to scrap council tax, business rates and stamp duty – that’s about £80bn altogether – and replace them all with “land value tax” (LVT). LVT is an annual tax on the unimproved value of land, residential and commercial – probably the rate would be somewhere between 0.5% and 1% of current market values.”
“In economics, it has long been understood that it is sensible to tax factors of production whose supply is unaffected by its price. The stock of reproducible capital is the opposite of that. In a globalised economy with free movement of capital, such assets are extremely hard to tax, as is also true for mobile human capital. In both cases, the attempt to do so risks reducing the supply of capital and so incomes. But it is not hard to tax land, which is by definition immobile.”
“The authors of the paper estimate from one simple model that an increase in the tax rate on the value of land from a level of 0.55 per cent to 5.55 per cent, with reductions in taxation of produced capital and labour of 28 and 10 percentage points, respectively, would raise output by 15 per cent relative to trend. If policymakers want to promote growth, this is an obvious place to start: tax unearned rent far more and capital formation and people’s work far less.”
2 Comments
Submission statement: Land Value Tax replacing council tax, stamp duty and business rates would not only grow the economy effectively, but it would also give most people more money in their pocket which would increase spending power.
“The correct and courageous thing to do is to scrap council tax, business rates and stamp duty – that’s about £80bn altogether – and replace them all with “land value tax” (LVT). LVT is an annual tax on the unimproved value of land, residential and commercial – probably the rate would be somewhere between 0.5% and 1% of current market values.”
They reference this article: [https://www.ft.com/content/fadfbd9e-29ca-4d53-b69a-2497cc3ed95d](https://www.ft.com/content/fadfbd9e-29ca-4d53-b69a-2497cc3ed95d)
“In economics, it has long been understood that it is sensible to tax factors of production whose supply is unaffected by its price. The stock of reproducible capital is the opposite of that. In a globalised economy with free movement of capital, such assets are extremely hard to tax, as is also true for mobile human capital. In both cases, the attempt to do so risks reducing the supply of capital and so incomes. But it is not hard to tax land, which is by definition immobile.”
“The authors of the paper estimate from one simple model that an increase in the tax rate on the value of land from a level of 0.55 per cent to 5.55 per cent, with reductions in taxation of produced capital and labour of 28 and 10 percentage points, respectively, would raise output by 15 per cent relative to trend. If policymakers want to promote growth, this is an obvious place to start: tax unearned rent far more and capital formation and people’s work far less.”
https://preview.redd.it/rgbun83f6epg1.png?width=1088&format=png&auto=webp&s=9d817f6042c716aa95ad8ce10a7118bfebe3828d
Which references this paper
[https://www.maxwell.syr.edu/docs/default-source/research/post-corona-balanced-budget-super-stimulus.pdf?sfvrsn=4a481ae0_3](https://www.maxwell.syr.edu/docs/default-source/research/post-corona-balanced-budget-super-stimulus.pdf?sfvrsn=4a481ae0_3)
Just tax land