The Benefits of Land Tax

faustino1

"There is a massive hole in our tax system. Huge tax free profits, can be made by land speculators, at minimal risk. Meanwhile, governments use ordinary workers taxes to build the infrastructure that makes the speculators land more valuable."

https://www.youtube.com/watch?v=puqCZAfURIg

We're told a tax on land would have the effect of raising cost of land/property much like a tax on food increases the cost of food or an increase on fuel increases the cost of anything dependent upon it, including food.

But the opposite is true where a land tax is in effect because a poorly utilized piece of land is nonsensical to hold as an asset, which is what most speculators do...they buy land in order to simply hold it and in the long term make a profit which in my own opinion shouldn't be allowed.

A land tax would have the effect of driving down the cost of property, not up as we're led to believe.

However, it should be clear the proposed property tax by our government is not the same as what I'm proposing. There's definitely a distinction to be made here. A Land tax would include all land.

Why not have a land/real estate tax? It would no doubt push down the cost of property and benefit everyone in the long term.

faustino1

faustino1 wrote: »

Why not have a land/real estate tax?

Because land owners run the country.

shedweller

There' simply no way the big boys will bring in a system where they themselves get stung!

gobnaitolunacy

OP is clearly not a farmer...

donvito99

This is far to high brow for AH.

faustino1

gobnaitolunacy wrote: »

OP is clearly not a farmer...

Well, you could make exceptions depending on the circumstances.

For example, if the land is being utilized for agricultural purposes, they don't pay any tax.

I'm specifically talking about speculators that buy land just to make a profit.
It's treated as an asset...I don't believe it should be.

everdead.ie

Ireland has an awful lot of small farmers where a land tax would probably push them into poverty.

faustino1

Not necessarily because as I stated, if the land is being utilized productively, you wouldn't pay any tax on the value of the land.

I want to be clear, a good system definitely wouldn't be anti-farmer whatsoever, it would probably encourage more farming to be honest and wouldn't that be a good thing for the economy?

The Backwards Man

faustino1 wrote: »

Well, you could make exceptions depending on the circumstances.

For example, if the land is being utilized for agricultural purposes, they don't pay any tax.

I'm specifically talking about speculators that buy land just to make a profit.
It's treated as an asset...I don't believe it should be.

How do you decide who is a speculator and who isn't?

jimgoose

faustino1 wrote: »

Well, you could make exceptions depending on the circumstances.

For example, if the land is being utilized for agricultural purposes, they don't pay any tax.

I'm specifically talking about speculators that buy land just to make a profit.
It's treated as an asset...I don't believe it should be.

The International Accounting Standards Board would appear to disagree: "An asset is a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise."

And, any profit crystallised via the disposal of assets - including land and property - is subject to Capital Gains tax.

castletownman

God this reminds me of late nineteenth century Ireland.

Not that I was around back then of course.

mickdw

Surely if I buy a field for 10,000 and sell it for a million, I pay tax on the difference (Profit) via capital gains tax or similar?
I dont see how speculators are making a tax free killing.

jimgoose

mickdw wrote: »

Surely if I buy a field for 10,000 and sell it for a million, I pay tax on the difference (Profit) via capital gains tax or similar?
I dont see how speculators are making a tax free killing.

They aren't. I do believe the OP is a foaming-at-the-mouth Leftie type who thinks we should all live in a giant teepee or something, and piss into a communal tin bath. Well I'm sorry, but I do not wish to share the same space as you people and smell the hideous, rank odour of poverty, old cabbage and broken dreams emanating therefromtofore. Smithers - release the hounds!!

mikom

How about a "fuck off" tax?

faustino1

mickdw wrote: »

Surely if I buy a field for 10,000 and sell it for a million, I pay tax on the difference (Profit) via capital gains tax or similar?
I dont see how speculators are making a tax free killing.

Yep, except look what happened in Ireland and other countries with a property boom. A handful of speculators made huge profits while everyone else went into debt paying for it.

Nevermind_

speculators do pay tax on land profits, Capital gains tax and its 33%, not insignificant

Nevermind_

faustino1 wrote: »

Yep, except look what happened in Ireland and other countries with a property boom. A handful of speculators made huge profits while everyone else went into debt paying for it.

Ahh have you seen the news lately? most of these speculators reinvested the profits into guess what? more land and are now insolvent at best, and bankrupt at worst.
Unfortunately our esteemed leaders decided to socialise the losses of the banks and hence we all got fcuked, instead of just the banks and speculators getting a good fcuking which in a capitalist system is how it should have gone down

Victor

faustino1 wrote: »

But the opposite is true where a land tax is in effect because a poorly utilized piece of land is nonsensical to hold as an asset, which is what most speculators do...they buy land in order to simply hold it and in the long term make a profit which in my own opinion shouldn't be allowed.

Do you knot realise that speculator don't necessarily buy land - they buy options.

Options work like this:
1. During a recession, speculator offers a farmer €1,000/acre now and €10,000/acre when the sale is complete
2. farmer takes the 'free' money.
3. The economy improves, the land gets re-zoned and the value goes up.
4. A developer (someone who takes a site from being an empty field to buildings that can be sold seeks to buy the land.
5. Speculator buys land from farmer for €10,000/acre.
6. Speculator sells land to developer for €500,000/acre.

A land tax would have the effect of driving down the cost of property, not up as we're led to believe.

I think you are either being naive or deliberately obtuse. If you put a tax on something, while the nett price (not including the tax) will be lower, the gross price (including the tax) will be higher.

Gandhi

I think what the original video is about is Land Value Tax, which is a type of Property Tax that is based purely on the value of the Land, and not the sum of the Land and the buildings on it.

The theory is that conventional property taxes encourage speculators to let buildings deteriorate and fall into ruin, as it reduces their tax burden. Land Value tax encourages speculators to make use of the land or sell it on. I think commercial properties in Philadelphia were recently switched to a Land Value Tax from a conventional Property Tax.

A related, even more aggressive, proposition is a "vacancy tax" where commercial property owners actually pay a higher property tax if their property is vacant. This is to discourage commercial landlords from keeping a property vacant to either hold out for unrealistically high rents, or just sit on a derelict property to see if the neighbourhood improves. and prices go up.

Both these propositions tend to be very popular with community activists trying to revitalize older downtowns, where abandoned buildings and empty storefronts blight otherwise functional neighbourhoods.

JD DABA

jimgoose wrote: »

They aren't. I do believe the OP is a foaming-at-the-mouth Leftie type who thinks we should all live in a giant teepee or something, and piss into a communal tin bath. Well I'm sorry, but I do not wish to share the same space as you people and smell the hideous, rank odour of poverty, old cabbage and broken dreams emanating therefromtofore. Smithers - release the hounds!!

All politics aside that was a beautifully crafted rant.
Vivid. A+.

user2011

mikom wrote: »

How about a "fuck off" tax?

Think of the kids!

Suryavarman

faustino1 wrote: »

Not necessarily because as I stated, if the land is being utilized productively, you wouldn't pay any tax on the value of the land.

Define what you mean by productively.

I want to be clear, a good system definitely wouldn't be anti-farmer whatsoever, it would probably encourage more farming to be honest and wouldn't that be a good thing for the economy?

An excessive amount of farming would be bad for the economy.

Kichote

I hope Phil Hogan doesnt read this thread.

I can see it happening already, a tax every year on the house, now tax on the land it's on, then another one for actually living in it

Ulysses Gaze

No need for a land tax. Just abolish rent relief for landlords and save money that way

Cool Mo D

There is a whole political philosophy, called Georgism, that says that abolishing all taxes except for those on land (not including the value of buildings and improvements on the land) is the fairest and most efficient way to run a society.

Basically, the idea is that the land is a finite resource that should needs to be used as efficiently as possible. People are entitled to own anything that they create themselves, but since no-one created the land, the value of the land must be spread around all of society.

The big advantage of this approach is that it rewards those who try and make the most of their land, and removes the tax burden on employing people, starting businesses and other valuable economic activity.