One of the things which some LVT fans claim is that land is 'free', which is oversimplifying things somewhat. Dearieme countered with this:
"Is land "free" if it must first be drained, or fenced, or hedged, or defended from erosion or landslip, or have the boulders dragged out of it, or have windbreaks built or grown? I think of farmland in my boyhood - a lot of it had been conspicuously not free to those who reclaimed it from the wild. Hell, someone cleared the woodland off it."
I'll stop doing these posts when people stop trying to think up 'killer arguments' which just melt into nothing if you think about them in the context of 'real life' for a few seconds, as follows:
1. In real life, farmers pay income tax on the value of food they grow and they pay no tax on the value of their land (in fact, they get subsidies proportional to the value of the land they own, merely for owning it). And farmers do all this draining and fencing in order to be able to grow more food; so it would come to much the same thing whether you tax them on the value of the food they grow or on the value of improvements they have made.
But that is the whole point of LVT, it is not supposed to tax the value of the improvements because this is the same as taxing incomes; what it is supposed to tax is the location value, which in the context of UK farmland is a lot lower than the value of the duly improved land and barely worth taxing.
2. Our income tax rules are vaguely aware that farming is a long term thing and that profits can fluctuate strongly depending on how the harvest turns out, what commodity prices are each year and so on, that is why they have something called farmers' averaging, whereby they can average their profits over two years and pay tax on the average profits (this reduces the amount of higher rate income tax they have to pay).
Would it be so far fetched to average farmers' profits even further, and just charge them an annual quasi-income tax on the value of the food they are (or could be) growing, which by definition must be closely correlated to the value of the land they own? A tenant farmer wouldn't need to bother about declaring his income for income tax or paying the quasi-income tax, he'd just pay his rent to the landlord and that would be the end of it.
3. On a practical level, there is no need to tax farmland, as the total receipts would be about three per cent of the tax that could be collected from developed land. It'd be far more important to scrap the agricultural land subsidies first and see what happens.
That's farm land dealt with.
4. What Dearieme also deliberately overlooks is that LVT is supposed to collect the location value of residential and urban land. Just to remind you of what this means in £-s-d (all figures for bare land, excluding buildings thereon, of course):
Farmland - selling price up to £10,000 per acre
Residential land in most parts of the UK - selling price between £500,000 and £1,000,000 per acre.
Residential land in Chelsea - selling price £73,000,000 per acre (and there are parts of London far more expensive than that).
A value of up to £10,000 per acre might indeed relate to the previous efforts of the farmer/occupant; but the vastly higher figures for residential and urban land relates to the efforts of everybody else or 'society as a whole' or however you wish to define it. .
It is laughable in the extreme to assume that a farmer has to spend £500,000 in making physical improvements to an acre of land when he gets planning permission for residential (yes, there are cash costs, which we can politely refer to as 'bribes', that's a different topic).
And from the point of view of the vendor of that land in Chelsea, the £73,000,000 is more or less 'free', it is entirely unearned.
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