Investing after AGR cancels the returns from sites

SLRG’s Professor Roger Sandilands answers the question of how we’d be invited to invest in productive enterprise once unproductive land speculation is cancelled with AGR/LVT.
Share certificates pretty much as today?
 
Answer: Yes; why not? Investors’ prospective returns would
 
(a) be reduced by AGR and its consequential effect on the value of the firm’s “capital” (i.e., land) values.
 
(b) be enhanced, we must assume, by a corresponding (at least) reduction in corporate taxes and by the general boost to the economy as deadweight effects disappear.
 
It is vital that AGR replaces taxes rather than supplements them.
 
As taxes fall, so the underlying AGR would be revealed (the ATCOR principle). But the higher AGR would be its new market-clearing value, a value that would be voluntarily paid by those who successfully bid for space. Thereafter, the wealth they produce through their work and enterprise would no longer be penalised by the high marginal tax rates they currently bear.
 
In short, AGR, as a genuine fiscal revolution, would incentivise investment instead of penalising it.
Entrepreneurs can issue shares or borrow from banks, but investors in the new regime would do so to produce wealth rather than engage in Rent-seeking.

Don’t pay for sites up front

Imagine a Scotland in which buying ‘property’ meant you didn’t pay for the site up front.

Just for the building and for transferring the deed.

Instead you’d pay the annual rental value of the site to the state in place of current taxes on wages and trade (which repress enterprise and reduce Scotland’s wealth) and Council charges.

AGR/LVT

Scotland would simply be collecting the stream of wealth we all produce together. This social wealth is today allocated to site owners who receive it as unearned income for doing nothing. That the rest of us get none explains social dislocation and unequal life chances across Scotland.

Worse, the sum is over half the gross income of Scotland: its absence from the public purse explains our starved public services.

Thinking a little further, the range of site rental values from the economic centre to the periphery builds automatic progressivity into AGR/LVT, permitting life and work to exist again at the margin.

For those intent on addressing Scotland’s housing crisis, starved public services, land speculation and banking, personal and government debt, premature deaths by zone, depopulation, cyclical recessions and perpetual deficits, AGR/LVT is where to look for the solutions.

Is the Scottish Government a public body?

Scot Gov, one of the 50 actions you promised in 2016 was to “place a new duty on public bodies to consider the impact their decisions could have on poverty and disadvantage.”

Scot Gov, are you a public body?

If so, why are you choosing to persist with Income Tax, inflicting deadweight losses on Scots to the tune of at least £12bn a year, when there is an alternative source of revenue (AGR/LVT) which inflicts none?

You are choosing to sustain and increase AVOIDABLE poverty and disadvantage for Scots in blatant disregard of the fine words penned in your Fairer Scotland Action Plan.

https://www.gov.scot/FairerScotland