Interesting how the UK handles property taxes so regressively. It looks like a system biased in favor of the rich and as a way to maintain class stratifications.
One question comes to mind in terms of a land value tax. How would they fairly imposes this on farmers? Farmers barely break even most years but maintain large swaths of land and it would increase their financial burden. It seems like there should be a way to carve out special exceptions or discounts for farmers since they're so important to UK and EU food production.
I forgot about that protest, mostly due to being in the Trump distraction and corruption zone called the United States. However, I hope the UK government does the right thing by farmers and puts the screw on the royals, otherwise I assume Burnham will join the ranks of the short PMs?
Farmland is generally on some of the cheaper land there is, so their tax burden wouldn't be too bad actually. Plus, a national LVT would actually reduce development pressure from sprawl, reducing land costs in rural areas, which could actually help farmers stay farmers.
If it replaced inheritance tax then agricultural land prices would fall to be in line with the returns possible from farming.
What would that mean?
One of the most interesting effects might be to change the fundamental economic model of modern farming from gaining the greatest return in investment in labour and chemicals to one of the greatest return per hectare. Horticulture traditionally does that more effectively than intensive agriculture and so we might see higher levels of employment on the land!
This reminds me of how New Zealand's farm sector actually got way more efficient and robust after they removed all subsidies. A lot of these breaks just incentivize bad behavior on the tax payer's dime.
The part of this that shows up on the ground for us is how much good, buildable land just sits. Owners hold a parcel as a savings account because there's basically no carrying penalty for leaving it idle, so it never comes to market at a price that pencils, and the developer who actually wants to build something ends up priced out by the guy who'd rather do nothing with it. Whether or not the politics of an LVT ever land, the diagnosis underneath it is right, that we tax the building and tax the move and leave the speculation almost completely alone, which is close to backwards if the goal is getting more housing actually built.
Yes, and hopefully there can be more work done to point to these problems. The modeling studies linked are great and it’s good to see the distributional analysis of the switch, but also the UK will need much more narrative power around the problems created by the current system and the privatized land values
Interesting how the UK handles property taxes so regressively. It looks like a system biased in favor of the rich and as a way to maintain class stratifications.
One question comes to mind in terms of a land value tax. How would they fairly imposes this on farmers? Farmers barely break even most years but maintain large swaths of land and it would increase their financial burden. It seems like there should be a way to carve out special exceptions or discounts for farmers since they're so important to UK and EU food production.
We all know how the farmers in UK react to policy they do not like (https://en.wikipedia.org/wiki/2024%E2%80%932026_United_Kingdom_farmers%27_protests)
This exact thing will be one of the administrative concerns Burnham will be tasked with to take this from idea to reality.
I forgot about that protest, mostly due to being in the Trump distraction and corruption zone called the United States. However, I hope the UK government does the right thing by farmers and puts the screw on the royals, otherwise I assume Burnham will join the ranks of the short PMs?
I feel confident that any proposal would protect farmers, but we will see!
Farmland is generally on some of the cheaper land there is, so their tax burden wouldn't be too bad actually. Plus, a national LVT would actually reduce development pressure from sprawl, reducing land costs in rural areas, which could actually help farmers stay farmers.
If it replaced inheritance tax then agricultural land prices would fall to be in line with the returns possible from farming.
What would that mean?
One of the most interesting effects might be to change the fundamental economic model of modern farming from gaining the greatest return in investment in labour and chemicals to one of the greatest return per hectare. Horticulture traditionally does that more effectively than intensive agriculture and so we might see higher levels of employment on the land!
This reminds me of how New Zealand's farm sector actually got way more efficient and robust after they removed all subsidies. A lot of these breaks just incentivize bad behavior on the tax payer's dime.
The part of this that shows up on the ground for us is how much good, buildable land just sits. Owners hold a parcel as a savings account because there's basically no carrying penalty for leaving it idle, so it never comes to market at a price that pencils, and the developer who actually wants to build something ends up priced out by the guy who'd rather do nothing with it. Whether or not the politics of an LVT ever land, the diagnosis underneath it is right, that we tax the building and tax the move and leave the speculation almost completely alone, which is close to backwards if the goal is getting more housing actually built.
Yes, and hopefully there can be more work done to point to these problems. The modeling studies linked are great and it’s good to see the distributional analysis of the switch, but also the UK will need much more narrative power around the problems created by the current system and the privatized land values