Michael Hudson on Land, Banking and Socialism
Discussion
Tuna said:
edh said:
Interesting, thanks. A quick Google threw up a telegraph article that suggested it was between 2 and 6 % with opportunities for deductions. Better than nothing. I guess we won't know what the actual figure is / was.
If a business had £3bn worth of assets, what would it pay on those assets each year? Nothing - a business can retain assets indefinitely without paying a penny. In contrast, the Grosvenor payments could be around £300 million. Who knows what the Grosvenor payments were.. commercially confidential no doubt.
Tuna said:
And I suspect you don't have a clue how an estate of that size runs. They have 1000 staff to manage the place, who will be paid and paying tax themselves. They will pay tax on income from that estate. They will also be paying a small fortune in upkeep and maintenance. Basically, unlike your house, an estate of that size is a business, and like any business will be both generating value and employment and paying (sizeable) taxation.
If you re-read the discussions on LVT, the arguments are about the most efficient use of land - *not* that an estate like Grosvenor's isn't generating value. In fact a large estate would be better able to pay LVT (being run as a business) than you might (as your house generates no value of its own). It's a fundamental misunderstanding to think that LVT would level the playing field between the super rich and us mere mortals.
You have spectacularly missed the point. Grosvenors main assets are the real estate holdings in Mayfair. Their main business is collecting rent. Their country pile is neither here nor there really, nor is my "clue", as you so kindly put it, about how it runs.If you re-read the discussions on LVT, the arguments are about the most efficient use of land - *not* that an estate like Grosvenor's isn't generating value. In fact a large estate would be better able to pay LVT (being run as a business) than you might (as your house generates no value of its own). It's a fundamental misunderstanding to think that LVT would level the playing field between the super rich and us mere mortals.
btw if their country estate is a business, it is exempt from the periodic charge.
https://moneyweek.com/how-the-duke-of-westminster-...
edh said:
Who knows what the Grosvenor payments were.. commercially confidential no doubt.
You seem to be insinuating they're some sort of evil masterminds?edh said:
Tuna said:
And I suspect you don't have a clue how an estate of that size runs. They have 1000 staff to manage the place, who will be paid and paying tax themselves. They will pay tax on income from that estate. They will also be paying a small fortune in upkeep and maintenance. Basically, unlike your house, an estate of that size is a business, and like any business will be both generating value and employment and paying (sizeable) taxation.
If you re-read the discussions on LVT, the arguments are about the most efficient use of land - *not* that an estate like Grosvenor's isn't generating value. In fact a large estate would be better able to pay LVT (being run as a business) than you might (as your house generates no value of its own). It's a fundamental misunderstanding to think that LVT would level the playing field between the super rich and us mere mortals.
You have spectacularly missed the point. Grosvenors main assets are the real estate holdings in Mayfair. Their main business is collecting rent. Their country pile is neither here nor there really, nor is my "clue", as you so kindly put it, about how it runs.If you re-read the discussions on LVT, the arguments are about the most efficient use of land - *not* that an estate like Grosvenor's isn't generating value. In fact a large estate would be better able to pay LVT (being run as a business) than you might (as your house generates no value of its own). It's a fundamental misunderstanding to think that LVT would level the playing field between the super rich and us mere mortals.
Not only does land value tax not change their wealth (the arguments for it are for efficient use of land, not who owns that land), it may reinforce monopoly holdings - in that LVT is more easily dealt with by estates that run large numbers of properties as a business, than by individual house owners who only have LVT as a cost.
LVT *could* be an instrument to prevent businesses sitting on land banks that could otherwise be developed, but that has to be considered in the light of unforeseen consequences. The amount payable depends on the permissions granted on the land, so it may benefit businesses to buy up (for instance) agricultural land and leave it as such (LVT cannot be set to make agriculture unprofitable) meaning that we see land with permissions deliberately being allowed to lapse. Thus we end up in the situation where companies still run land banks, but the land available for immediate development actually decreases.
Breadvan72 said:
There 's been a long and detailed discussion about changing the main source of tax revenue, and that's interesting. What about other aspects of modern Capitalism that may be damaging? The private equity quick turn model has been a thing now for quite a while. Also, what sensible things could be done to reduce low pay and unfair employment practices?
On PE, the short term/5 yr model is waning in effectiveness as they crowd each other out.I was with a large PE/Mezz fund this morning who, like me, believe that there are better risk adjusted returns from longer duration and more complex projects.
As for low pay and unfair employment issues, it does come down to productivity. Happy employees are more efficient and in a world of full employment, businesses who don’t make happy employees will lose out. There is an argument for a higher minimum wage in my view, when you have effective full employment, as it drives up income, saves on benefits costs and improves productivity, even if some businesses will die as a result.
I think McDonalds is a good example at the moment...using tech to improve efficiency and the customer experience, and concentrating on improving staff training and morale.
Tuna said:
edh said:
Who knows what the Grosvenor payments were.. commercially confidential no doubt.
You seem to be insinuating they're some sort of evil masterminds?edh said:
Tuna said:
And I suspect you don't have a clue how an estate of that size runs. They have 1000 staff to manage the place, who will be paid and paying tax themselves. They will pay tax on income from that estate. They will also be paying a small fortune in upkeep and maintenance. Basically, unlike your house, an estate of that size is a business, and like any business will be both generating value and employment and paying (sizeable) taxation.
If you re-read the discussions on LVT, the arguments are about the most efficient use of land - *not* that an estate like Grosvenor's isn't generating value. In fact a large estate would be better able to pay LVT (being run as a business) than you might (as your house generates no value of its own). It's a fundamental misunderstanding to think that LVT would level the playing field between the super rich and us mere mortals.
You have spectacularly missed the point. Grosvenors main assets are the real estate holdings in Mayfair. Their main business is collecting rent. Their country pile is neither here nor there really, nor is my "clue", as you so kindly put it, about how it runs.If you re-read the discussions on LVT, the arguments are about the most efficient use of land - *not* that an estate like Grosvenor's isn't generating value. In fact a large estate would be better able to pay LVT (being run as a business) than you might (as your house generates no value of its own). It's a fundamental misunderstanding to think that LVT would level the playing field between the super rich and us mere mortals.
Tuna said:
All that I said still applies. Their rental properties generate taxable income, require staff for management and maintenance, cost a fortune in upkeep and repair (particularly listed properties in Mayfair) and pay local council taxes in accordance to their value. This is not an economically inactive business. My frustration with your view is that you appear to see people who are 'unfairly rich' and believe the lazy cliche that they sit on a pile of money doing nothing but evading tax and stealing from the poor.
Where have I written that? I do believe landowners are operating within the current legal framework which is weighted in their favour without them needing to act in any way illegally. My view is that we should shift the balance of taxation from work and consumption onto land. BTW council taxes are not really in accordance with value and the incidence is on the tenant / leaseholder. Business rates probably has more incidence on the landowner.Churchill's views on the idle landlord apply though...
Tuna said:
Not only does land value tax not change their wealth (the arguments for it are for efficient use of land, not who owns that land), it may reinforce monopoly holdings - in that LVT is more easily dealt with by estates that run large numbers of properties as a business, than by individual house owners who only have LVT as a cost.
The arguments for LVT are many and also include the capture of rent and planning gain. An outcome should be efficient use of land. Individual house owners should, in general, be better off as their taxes on work and consumption are reduced. Large property owners would not necessarily have commensurate tax reductions.Tuna said:
LVT *could* be an instrument to prevent businesses sitting on land banks that could otherwise be developed, but that has to be considered in the light of unforeseen consequences. The amount payable depends on the permissions granted on the land, so it may benefit businesses to buy up (for instance) agricultural land and leave it as such (LVT cannot be set to make agriculture unprofitable) meaning that we see land with permissions deliberately being allowed to lapse. Thus we end up in the situation where companies still run land banks, but the land available for immediate development actually decreases.
I'd take that risk... let's see the brownfield sites get developed, let's see housing being put to optimum use, rather than just build on agricultural land.I think we should move on from LVT now, I'm going to pick up some of BV's other points
loafer123 said:
Rents are set by affordability, demand and supply.
Landlords could not arbitrarily increase rents and expect to get them if their taxes rise, as we have recently seen.
So what do you think the landlord reaction to LVT would be, assuming it fell on owners not occupiers? Just suck it up, accept profitability slashed and get on with business as usual (albeit less profitably)? Or what? Landlords could not arbitrarily increase rents and expect to get them if their taxes rise, as we have recently seen.
del mar said:
Skimming through the thread.
Is the idea of a LVT in additional to Income tax and NI at their current levels, or would there be a changing of the current tax levels / structures ?
I did say I would move on but...Is the idea of a LVT in additional to Income tax and NI at their current levels, or would there be a changing of the current tax levels / structures ?
Every LVT proponent would advocate for significant reductions on taxes on work and on transactions - so VAT, SDLT, probably IHT would also be in the frame. Some people propose LVT as the single tax.
drainbrain said:
loafer123 said:
Rents are set by affordability, demand and supply.
Landlords could not arbitrarily increase rents and expect to get them if their taxes rise, as we have recently seen.
So what do you think the landlord reaction to LVT would be, assuming it fell on owners not occupiers? Just suck it up, accept profitability slashed and get on with business as usual (albeit less profitably)? Or what? Landlords could not arbitrarily increase rents and expect to get them if their taxes rise, as we have recently seen.
2. Suck it up? yes, probably.
In low land value areas it won't be significant. You might even be able to charge more as your tenants will no longer be liable for council tax so will have more disposable income.
In high land value areas, land should get cheaper, so renters will find buying a more affordable option. New landlords will also be able to outcompete you on price.
drainbrain said:
loafer123 said:
Rents are set by affordability, demand and supply.
Landlords could not arbitrarily increase rents and expect to get them if their taxes rise, as we have recently seen.
So what do you think the landlord reaction to LVT would be, assuming it fell on owners not occupiers? Just suck it up, accept profitability slashed and get on with business as usual (albeit less profitably)? Or what? Landlords could not arbitrarily increase rents and expect to get them if their taxes rise, as we have recently seen.
Just because landlords have increased costs does not mean their tenants will pay higher rents.
loafer123 said:
drainbrain said:
loafer123 said:
Rents are set by affordability, demand and supply.
Landlords could not arbitrarily increase rents and expect to get them if their taxes rise, as we have recently seen.
So what do you think the landlord reaction to LVT would be, assuming it fell on owners not occupiers? Just suck it up, accept profitability slashed and get on with business as usual (albeit less profitably)? Or what? Landlords could not arbitrarily increase rents and expect to get them if their taxes rise, as we have recently seen.
Just because landlords have increased costs does not mean their tenants will pay higher rents.
Tuna said:
All that I said still applies. Their rental properties generate taxable income, require staff for management and maintenance, cost a fortune in upkeep and repair (particularly listed properties in Mayfair) and pay local council taxes in accordance to their value. This is not an economically inactive business. My frustration with your view is that you appear to see people who are 'unfairly rich' and believe the lazy cliche that they sit on a pile of money doing nothing but evading tax and stealing from the poor.
273 staff as per 2016.
Turnover ~65 million
Profit £533,000
Staff cost 39 million
Company tax paid £390,000
Taxable income ????
Not only does land value tax not change their wealth (the arguments for it are for efficient use of land, not who owns that land), it may reinforce monopoly holdings - in that LVT is more easily dealt with by estates that run large numbers of properties as a business, than by individual house owners who only have LVT as a cost.
LVT *could* be an instrument to prevent businesses sitting on land banks that could otherwise be developed, but that has to be considered in the light of unforeseen consequences. The amount payable depends on the permissions granted on the land, so it may benefit businesses to buy up (for instance) agricultural land and leave it as such (LVT cannot be set to make agriculture unprofitable) meaning that we see land with permissions deliberately being allowed to lapse. Thus we end up in the situation where companies still run land banks, but the land available for immediate development actually decreases.
Is is rentier model putting enough back into communities?
With population growth, the land they have diminishes. The only way they can survive is making sure people pay rent.
273 staff as per 2016.
Turnover ~65 million
Profit £533,000
Staff cost 39 million
Company tax paid £390,000
Taxable income ????
Not only does land value tax not change their wealth (the arguments for it are for efficient use of land, not who owns that land), it may reinforce monopoly holdings - in that LVT is more easily dealt with by estates that run large numbers of properties as a business, than by individual house owners who only have LVT as a cost.
LVT *could* be an instrument to prevent businesses sitting on land banks that could otherwise be developed, but that has to be considered in the light of unforeseen consequences. The amount payable depends on the permissions granted on the land, so it may benefit businesses to buy up (for instance) agricultural land and leave it as such (LVT cannot be set to make agriculture unprofitable) meaning that we see land with permissions deliberately being allowed to lapse. Thus we end up in the situation where companies still run land banks, but the land available for immediate development actually decreases.
Is is rentier model putting enough back into communities?
With population growth, the land they have diminishes. The only way they can survive is making sure people pay rent.
Edited by AuBull on Friday 27th October 10:13
MDMetal said:
That's only valid because if one landlord raises his rents then renters just go elsewhere, there's no rental cartel just lots of individuals of different sizes, rents are governed by demand as much as costs, most properties have rents above the mortgage payment costs so money is being made. However if you put a large "global" increase into the market all the individuals will raise there rents by a similar amount, renters will have little choice, of course some undercutting will still occur but prices will be above current levels clearly.
Find me an economist who would support this assertion... it's one of those "common sense" ideas that doesn't stand up under examination.edh said:
MDMetal said:
That's only valid because if one landlord raises his rents then renters just go elsewhere, there's no rental cartel just lots of individuals of different sizes, rents are governed by demand as much as costs, most properties have rents above the mortgage payment costs so money is being made. However if you put a large "global" increase into the market all the individuals will raise there rents by a similar amount, renters will have little choice, of course some undercutting will still occur but prices will be above current levels clearly.
Find me an economist who would support this assertion... it's one of those "common sense" ideas that doesn't stand up under examination.The root of the problem as with many things is this is a problem which can't be solved in less than 1 parliamentary term, it needs a long term plan that gets rolled out over a long period so changes can be absorbed and systems re-balanced. What party is going to put that forward though and realistically think they can put something in motion that won't just be stopped before anything useful happens by a different party? You might say a large supranational body like the EU but it's clear they can't sort the basics out let alone anything complex, they need to get to a single economic model before they can think about fixing whatever model it is they have.
In an attempt to broaden the debate again 
Stiglitz on monopoly & its damaging effect in the US..
https://www.thenation.com/article/america-has-a-mo...
I thought it was interesting.....
Stiglitz on monopoly & its damaging effect in the US..
https://www.thenation.com/article/america-has-a-mo...
I thought it was interesting.....
loafer123 said:
drainbrain said:
loafer123 said:
Rents are set by affordability, demand and supply.
Landlords could not arbitrarily increase rents and expect to get them if their taxes rise, as we have recently seen.
So what do you think the landlord reaction to LVT would be, assuming it fell on owners not occupiers? Just suck it up, accept profitability slashed and get on with business as usual (albeit less profitably)? Or what? Landlords could not arbitrarily increase rents and expect to get them if their taxes rise, as we have recently seen.
Just because landlords have increased costs does not mean their tenants will pay higher rents.
Residential property renting's a 'funny' business, and a very very old one. Hates change. Loves sleepy regularity and routine.
MDMetal said:
The root of the problem as with many things is this is a problem which can't be solved in less than 1 parliamentary term,
The other issue is that the utopian dream of simplifying the tax system is that half of the point of the tax system is to obfuscate how much tax we are paying. The average worker pays almost as much again in indirect taxes (council tax, VAT etc.) as direct taxes - so moving to a system that makes it painfully obvious just isn't possible. I think the average worker effectively pays just short of £1000 in taxes a month. If you compare that to the average take home pay, that is huge - can you imagine a single government who'd lay that on the line?In addition, taxation is used for social reinforcement - encouraging particular behaviours - so to remove all of those levers that encourage people to work, to use particular forms of transport, to save for their old age, to keep themselves insured and so on would be disastrous.
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