Consider these three facts.
- Britain is struggling to recover from a crisis caused in large part by a huge property bubble.
- Unemployment is painfully high and people are feeling the pinch.
- The government has a huge gap in its finances that cannot be filled by public-spending cuts alone.
What would you raise taxes on?
Astonishingly, Labour is proposing to raise already-high taxes on labour, through an increase in national-insurance contributions. Finance fails, so workers pay—this is not only unfair, it will also damage future growth by making labour more expensive and penalising effort.
Existing income tax and national insurance already increase labour costs by half, while a single person on two-thirds of average wages faces an effective tax rate of over 40 per cent on every additional pound they earn. Raising taxes on something the government wants to encourage—hard work—is perverse.
Another option is taxing harmful things, like carbon emissions. A charge of £30 a tonne could raise around £16bn and reduce emissions. Even better, if the tax per tonne rose as emissions fell, it would ensure a steady source of revenue. But still bigger gains could come from taxing an unproductive asset at the heart of our most recent bubble: land.
Britons have long seemed addicted to property speculation. Yet swapping more or less the same stock of houses with each other cannot logically create riches for society as a whole. Indeed, it has huge costs because it diverts funds from productive investment—while the resulting boom and bust, as we know, can cause havoc. Taxing land could curb property bubbles, and encourage productive investment elsewhere.
It would work by valuing land holdings every year (based on recent market transactions in the same area) and imposing a charge. If this was raised when land values were rising fastest, it would take the steam out of any bubbles—without affecting the rest of the economy, as interest rates do.
A land tax would be efficient as well as stabilising. Whereas taxing income from work is wasteful—less is produced, and no tax is raised on the lost output—land supply is fixed. So shifting the tax burden from labour to land would boost growth, according to an OECD study. No matter how heavily you tax it, land cannot move, or be spirited away to a tax haven.
And since land values in Britain are huge, even a low tax rate could raise big sums of money. The rate could be tapered so that small landholders pay very little while large ones pay much more.
Land already accounts for the bulk of property values, especially in expensive places like central London. But taxing its value, rather than that of property or any improvements to it, would not penalise people who do up their home.
It would also encourage the development of vacant and derelict land where planning permissions it.
Unlike stamp duty, a land-value tax would not be a tax on property purchases, so it would not discourage people moving. And it needn’t force a granny in a big house out of her home; payment could be deferred until her death if necessary.
Critics say the tax is problematic because land is hard to value. Nonsense. Property changes hands all the time; estate agents and surveyors routinely value property as part of their work.
Land-value taxes could be easily and cheaply collected. Hong Kong and Singapore both derive a large share of their revenue from variants of this system and have very low income taxes as a result. Denmark also has a long tradition of land-value taxation.
Perhaps most importantly, land taxes are also fair. Whatever you think of the merits of capitalism, there is nothing intrinsically desirable about the initial distribution of property rights in an economy. In most countries history means the distribution of land is highly unequal.
Land in Britain is more unequally distributed than in Brazil: there 1% of the population owns 49% of the land; here 0.3% per cent owns 69%.
Britain’s biggest landowner, the Duke of Buccleuch and Queensberry, owns 277,000 acres because he descends from a man who seized vast swathes of Scotland. Far from being taxed, he is rewarded with huge handouts from the Common Agricultural Policy.
What’s more, the value of land increases each year not through landowners’ striving, but that of others. As economic activity in London has soared through the ingenuity and toil of the masses of people who have flocked there, the value of the 300 acres of fields—now known as Mayfair and Belgravia—passed down to successive Dukes of Westminster over three centuries has sky-rocketed to an estimated £6.5 billion.
Wouldn’t it be better to tax that windfall gain rather than the work of those who really generated it? And since the distribution of land is so unequal, taxing it would be progressive too.
Likewise, when a government builds a new railway line and the value of the surrounding property soars, surely it is right that this unearned wealth be taxed. When the Jubilee line extension to Canary Wharf was built, property values adjacent to its stations rose hugely—by £2.8bn at Southwark and Canary Wharf alone.
Land-value taxes would pay for—and thus encourage—public investment in valuable infrastructure. It could fund, for instance, the high-speed rail network that Britain so desperately needs.
Conversely, landowners would be partly compensated for new developments that reduced the value of their land.
The concept has a fine pedigree. David Ricardo, the founder of modern economics, was a fan. So is Martin Wolf, the FT’s chief economics commentator, while Liberal Democrat shadow chancellor Vince Cable has proposed a “mansions tax”.
Perhaps the most eloquent case for land-value taxes was made by Winston Churchill in 1909.
Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains – and all the while the landlord sits still. Every one of those improvements is effected by the labour and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived.
A century on, the rest of us would benefit from finally facing down the ultimate vested interest: the big landowners who still own most of Britain.
This is an extended version of an article that appears in the new Prospect, which is on sale now.
I am a bit worried about that granny. What happens when you have no control over encroaching gentrification and are forced tomove to a poorer area? Starker ghettoisation presumably and more transient, fragmented communities especially amongst the poor.
I agree. Asset taxes, like a land taxes, have two great advantages over income taxes. First Government is to a large extent a fixed cost enterprise. Land taxes would match the revenue stream to the expenses and help avoid the overspending that is common in good revenue years and the painful cutbacks in bad. Second if there is a cost to owning something it has to be made productive to pay the cost. A land tax would force development and or sale of nonproductive land. As a result social mobility would increase as more people had a chance to participate.
Hi Emily,
Thanks for commenting. The hypothetical granny is the one that most people focus on. I’m not sure how you think the tax would force her to move, though. Since the tax could be deferred until death in such cases, and the rate would be lower for small landholdings, she wouldn’t be forced out of her home by a land tax.
The bigger point is that big landholders and their lobbyists always use the granny example as a cover to defend their own interests, when in fact the vast majority of grannies (and other people) in this country would be better off with a land tax. If you earn most of your income from labour, as most people do, and the tax burden shifts from labour towards land, only people with valuable landholdings – and in particular, people who earn a big chunk of their income from land – would be worse off.
Philippe
What you are really advocating is communism – in its purest form ie the ‘nationalization’ of all privately held assets, but, typically, you’re too cowardly to actually say so.
By the way, Britain’s riduculous house prices are caused by a perennial shrtage of accomodation caused by the massive uncontrolled immigration that you wet yourself in advocating.
Hi Mick
A tax on land values is hardly communism. Are Hong Kong and Singapore communist?
If you read my new book, Aftershock, which is out on 6 May, you will find a long section explaining why high house prices in Britain have scarcely anything to do with immigration.
House prices have fallen considerably over the past two years. Do you think that is because of immigration too?
It is the combination of planning restrictions and a property bubble that sent house prices skyrocketing over the past decade. The bubble has burst, but the planning restrictions remain.
Philippe
If the state confiscating a person’s estate on death (as you advocate withe ‘old lady’ example), to redistribute the assets as it sees fit, is not the purest form of communism, then I don’t know what is.
The principle you advocate is that the state has the overriding interest in supposedly ‘private’ ownership ie the state can confiscate wealth at will and apparent private ownership (the fruit of individual toil and effort) only a limited tenancy and apparent chimera.
Private ownership means just that.Private ownership, with property rights actually being respected.It’s not just an economic point, but a moral point cocerning individual liberty and individual rights.
I didn’t say confiscating a person’s estate on death, I said deferring tax payments. Do you think that taxes on labour are immoral too?
Obviously governments must make their money somehow.
All taxes started off as simple excise duties, tithes and poll taxes.
Income tax was a later development, and is perhaps the ‘fairest’ way to level tax, in that it is proportionate to the individual’s income.
What has long been avoided is the idea that the state has an interest in an idividual’s goods, chattels and property, the principle being that property rights are paramount and non-negotiable.
I agree with you that property rights are important. But so are other things. And in practice, the state – which ironically is the ultimate guarantor of property rights – compromises them all the time: for instance, through planning (zoning) regulations and property taxes. It also enhances the value of those property rights when it pays for infrastructure developments. There is also a big difference between property purchased with income earned in competitive markets and property inherited from a feudal system, violently seized or granted through the king’s patronage. In short, given that the state has to raise taxes from somewhere, and land-value taxes have the many practical benefits listed in the article, I don’t think that there is an overriding principle that should rule them out.
No, I’m talking about the distinction between liberty and tyranny, such as the 18th century ‘enlightened’ parliamentarians used to talk about.
The state is the ‘guarantor of property rights’, perhaps, but the state is ultimately the servant of the people governing by consent of the people.In a free society such as the 18th century parliamentarians would have recognised the ultimate and uncontestable right of the individual to be master of his own property – free from any imposed state condition of any kind, was respected.Rightly they saw as tyrannical the apparatus of state having priority claim to what was free-born and god-endowed.
You pontificate about whether ‘property was seized in a feudal system’.Be that as it may the rights and title deeds of ownership of such estates are fully recognised and have been for centuries, trying to play ‘Che Guevara’ with the principles of English law is ridiculous.Ultimately, of course, ALL land holdings were ‘seized’ at some point, the fact is immaterial and only the communists (ie the right of private ownership is not respected) seem to have an issue with this.
Frankly, I don’t think many people would agree that a tax on land values is tantamount to tyranny or expropriation. Nor am I a communist, as you would know if you read my books. Anyway, let’s agree to disagree.
The great-granny is the biggest concern. There is one out there somewhere who bought her little slum terrace house with a big garden in 1938 for a few quid and now it is worth millions even though it still has no bathroom and an outside loo, and she has no living relatives.
The other problem is that the super-rich like football stars will avoid the tax by living in cardboard boxes in shop doorways.
@Mick Sayton
Land value is created every second by the presence and activities of the community. The historic injustice is happening NOW, at this moment.
There is a difference between land which is a gift of nature and all other property which is man made.
Henry Law,
On your facetious little comment:
1/. Mega-rich footballers employ top-notch accountants and will evade the land-tax by any number of cunning ruses.
2/.Land is private property just like any other good or chattel, with uncontested right of ownership being a firm principle in any free country worthy of that name.
@Mick Sayton
“1/. Mega-rich footballers employ top-notch accountants and will evade the land-tax by any number of cunning ruses.”
Such as what? The liability to pay the tax rests with whoever holds the land title. There is a valuation list and a list of owners. So how does the land holder avoid it?
“2/.Land is private property just like any other good or chattel, with uncontested right of ownership being a firm principle in any free country worthy of that name.”
Doesn’t that apply even more so to the hard-won earnings of the mega rich footballer? Does he not have uncontested right of ownership of all his wages?
And how can anyone own that which they have not made? What right do they have? The same argument you are using can be applied to justify the ownership of slaves. Presumably you are opposed to that.
I concede the point that taxes must be paid somehow – and of course this means the legal confiscation of individuals’ wealth by some means or another.
Taxes started off as simple poll taxes, tithes and excise duties, when the state was small (ie there was no welfare state, state education or health system), this usually sufficed in times of peace.
Income tax was only a later development, relying as it does on a well run bureaucracy and accounting systems.It was favored initially by politicians precisely because it hit the poorest the least ( previouly low earners were all exempt, until the state got too big), and it the taxation of actual *income* rather than wealth is a far more efficient and equitable system, being related as it is to actual standards of living, and being strictly proportionate.
As to your silly argument “how can anyone own what they haven’t made” – Well this right is ancient, as old as civilsation itself and common to every civilsation ruled by law throughout the ages – only the communists challenge it, and look what happened to them.
Anyway, big landlords won’t pay the ‘property tax’ – their tenants will pay for it.
@Mick Sayton
Taxes on wages are robbery. Income tax actually hits the poorest the most, since it prices many of them out of work entirely, so they then become a burden on hard-working taxpaying families who have to pay the government’s massive welfare bill. Are you happy that part of your wages should be taken and used to pay to keep people in idleness?
Income tax sends out exactly the wrong signal, since it is essentially a fine for honest labour.
If you accept that anything can be owned, then people can be owned, and that justifies perpetual slavery, since the slave owner owns his slaves and all their descendants. By the same logic, you can argue that there was an original injustice that it is too late to remedy.
A land value tax cannot be passed on to tenants in the form of higher rents. To suggest that it can implies that landlords are not already charging the maximum rent the market can bear.
Taxes started off as payment in kind in exchange for land holdings granted by the sovereign. They were then replaced by money payments which declined in real terms due to inflation.
It is incidentally a legal fact the the sovereign owns all the land in England. “Owners” are only holders. That is why they are called freeholders – they hold free of any charge.
Henry Law,
I find all your arguments to be silly, emotonal and ill-considered.You have zero evidence that ‘income tax prices the poor out of work’. In fact the rate of income tax was much higher in the 60s than it is now, and in those days mass unemployment was unknown.
Similarly in modern Scandinavia income tax is very high by british standards but unemployment is low.Perhaps you’ve never heard of such concepts as ‘progressive tax rates’ or ‘income tax threshholds’, but i find I must devolve to baby-talk when trying to hold an intelligent debate with you or mass-immigration enthusiast Philippe Le Grain.
This ‘slavery’ straw-man of yours is ridiculous, you should grow-up.I might elaborate further by saying that historically slavery and property in human flesh WAS held to be legal and moral, but then in certain societies stoning to death of adulteresses is held o be legal and moral – all laws essentially are based on the moral compass of the hosy society.our society holds slavery in reugnance as it does murder and rape, and as I hope that moral and upright individuals hold the violation of property rights in repugnance.
You or the ‘state’ have no more right to my land than I have of marching into your house and taking away your computer for my own use – that’s the moral equivalent of what you advocate.
Simply put, you are envious of the fact that others have what you don’t have – and you wish to take it away from them in your fit of impotent rage.Most of us grew out of that phase as 5 year olds – it’s the real essence of communism, the hateful envy that motivated Stalin to slaughter the kulaks and starve 30 million to death, though points like that don’t bother you.
Blah, blah, blah about the monarchy and taxation.The Romans had tax when they were republic, every civil society had tax to pay for wars, public works etc.As you full well know the monarch’s ultimate claim to the land is symbolic only.
Grow up – and try and take that over toy-thrower, Mr. Legrain out of the pram with you.
And don’t you think that if private wealth is ever confiscated like you want it to be, that the actual wealthy and wealth creators will simply liquidate their assets, pump into sovereign wealth funds and decamp en masse to a society that actually respects human rights and defends against tyranny (ie Switzerland) living this country even deeper in the mire?
“I find all your arguments to be silly, emotonal and ill-considered.You have zero evidence that ‘income tax prices the poor out of work’. In fact the rate of income tax was much higher in the 60s than it is now, and in those days mass unemployment was unknown.”
Sorry that you find the arguments I am presenting silly, etc. Income tax prices the poor out of work because the burden actually falls on the employer. It is the difference between “gross pay” and “net wages” that results in high labour costs and low pay at one and the same time. So labour gets replaced by capital, or the work is sent abroad, or not done at all. It is not emotion, it is simple arithmetic.
“Similarly in modern Scandinavia income tax is very high by british standards but unemployment is low.”
Unemployment in Sweden is about 20%. The official figure is something else. Youth unemployment is, even officially, around 24% for ages 15 to 24. See graphs at top of page 5
http://www.scb.se/statistik/_publikationer/LE0001_2009K03_TI_02_A05TI0903.pdf
The Swedish tax system needs to change, and that is widely recognised.
“Perhaps you’ve never heard of such concepts as ‘progressive tax rates’ or ‘income tax threshholds’”
So you think it is OK to charge tax on employees at the national minimum wage? That is the effect of setting the threshold as low as it is. And in Sweden the threshold is reached after a few weeks of work – that is meant so that students do not pay tax on their vacation jobs.
“This ’slavery’ straw-man of yours is ridiculous, you should grow-up.I might elaborate further by saying that historically slavery and property in human flesh WAS held to be legal and moral, but then in certain societies stoning to death of adulteresses is held o be legal and moral – all laws essentially are based on the moral compass of the hosy society.our society holds slavery in reugnance as it does murder and rape, and as I hope that moral and upright individuals hold the violation of property rights in repugnance.”
The underlying question in relation to both slaves and land is from whence are ownership rights derived? Is it seizure? Or first claimant? Do you accept the view of the origin of ownership as put forward by Locke? How do you decide what is rightly your*s, mine and our’s?
If you accept that what can, and can not, be owned is based on the moral standards within the society, then can this not equally apply to something that has been made not by human action but by God or nature?
“You or the ’state’ have no more right to my land than I have of marching into your house and taking away your computer for my own use – that’s the moral equivalent of what you advocate”.
No there is a difference. “Your” land was not made by human labour. The bricks and mortar of your house, and its contents are most definitely the product of human labour.
And you have not explained what right the state has to get its hands on your hard-earned wages before you have even had a chance to spend them.
“Simply put, you are envious of the fact that others have what you don’t have – and you wish to take it away from them in your fit of impotent rage.Most of us grew out of that phase as 5 year olds – it’s the real essence of communism, the hateful envy that motivated Stalin to slaughter the kulaks and starve 30 million to death, though points like that don’t bother you.”
Who is getting into a fit of rage? The proposal for the taxation of land values is the antithesis of communism. Advocates range from moderate social democrats with an inclination towards welfare-state socialism, to libertarians opposed to big government.
“Blah, blah, blah about the monarchy and taxation.The Romans had tax when they were republic, every civil society had tax to pay for wars, public works etc.As you full well know the monarch’s ultimate claim to the land is symbolic only.”
All human life is governed by symbols.
“And don’t you think that if private wealth is ever confiscated like you want it to be,”
Land value is not private wealth, it is a value created by the presence and activities of the community. I want the government to stop confiscating private wealth. That is what all the bureaucracies do every day through PAYE, VAT, NICS, etc, and very expensively too.
“I that the actual wealthy and wealth creators will simply liquidate their assets, pump into sovereign wealth funds and decamp en masse to a society that actually respects human rights and defends against tyranny (ie Switzerland) living this country even deeper in the mire?”
They can’t take the land to Switzerland. It will still be here for people to use, and frankly good riddance to those who through financial jiggery-pokery take the wealth that has mostly been created by other people.
The Swedish unemployment rate is a damned sight lower than the figure you claim (if you care to trwal the ILO figures), and your claim doesn’t lend any weight to your truthfulness and reliability as an authority.
And as I said earlier, the basic rate of income tax was higher than it is now throughout the 1950s and 60s, a time of full employment in Britain when employers actually had to seek out workers – try to lie yourself out of that one.Unemployment is caused by government economic policy.
Anyway, at the risk of making this correspondance a protracted bore, my point is based solely on the moral issue of individual human freedom and respect of ancient rights (understood by every democracy and every civil society since time immemorial) against state tyranny, such as the framers of the US Constitution would have recognised.Unfortunately, you don’t seem to have a moral compass and forceful theft seems to be acceptable to you, thus you invoke irrelevant straw men such as slavery, unemployment etc.
The property tax wouldn’t do a damn thing to ease Britain’s perennial housing shortage and high rents.This is caused solely by supply and demand considerations in a free market (something else that you probably can’t understand) and have sky-rocketed lately by the government’s policy of uncontrolled immigration.If the property tax is introduced no private developer will build housing for rent – simple as that, as virtually no social housing has been built in Britain in the last 35 years, and there’s no likelihood of this changing, the result will be even higher rents, more overcrowding and even Brazilian style shanty-towns.
Please answer the question of where ownership rights are derived from? You appear to be following Locke. The slavery thing is not a straw man. The same principle applies: a man belongs to himself and therefore so does all the product of his labour.
Land value is a current value, not some ancient thing. You still have not explained why it is acceptable for the government to take a claim on people’s earnings from the work they do but not to take a claim on the land they occupy, when the state guarantees and protects their right of occupation and it is the money spent by taxpayers that gives it much of its value.
You refer to ancient practice. How ancient do you want to go? In Saxon times land was not owned but held on behalf of all the people by the king. The Normans overlaid their feudal system, but land holding was always conditional on the holder, be it noble or church, providing some service. Some land was inclosed illegally after the Black Death but the population had shrunk so no problem was created until the population recovered. Then there was a shortage of land and that is the first we hear of sturdy beggars moving into the towns.
Over the period up to the Reformation, especially after King John and Magna Carta, the nobles gradually shrugged off their liabilities but kept their ownership. At the Reformation, land held by the church was taken by the king and given to those who would support him, which resulted in the collapse of social services that had formerly been carried out within the framework of the church. This collapse, together with the shortage of land and consequential poverty got so bad that the Poor Law was introduced in 1601 to deal with the problem, and that was paid for by the forerunner of the local authority rates.
In the seventeenth century, some Crown land was sold off by fraud, which was the origin of the Duke of Westminster’s estate. In the eighteenth century, ancient rights were set aside with the Parliamentary Inclosures between 1760 and 1844, which deprived the remaining peasantry of their access to land and they were forced to move into the cities, work in factories and live in slums. A similar process occurred in Scotland with the Highland clearances.
The ancient right you seem to want to defend is the right to steal from other people.
The figures I was quoting are from a Swedish publication that I gave you the link to, but unemployment, especially among young people, is an ongoing cause of concern in articles in the press. That can be relied on. It particularly affects young people and immigrants. The Swedish economy is in big trouble due to high labour costs which consist more than 50% of taxes of one sort or another. The big firms – SAAB motors, Volvo, SKF – have trouble. Small firms have trouble dealing with the tax bureaucracy. The self-employed, who are often immigrants with poor command of the language, are hounded by the tax authorities.
You refer to unemployment and basic rates of Income Tax in the 1950s. Circumstances were very different then. We were not in the EU, IT was in its infancy. Fewer women were in paid employment. There was purchase tax instead of VAT, which worked differently. And at that time, thresholds were relatively much higher so that the low paid were subject to little or no tax. The situation then and now are not comparable. Too many other things have changed in addition to income tax.
“The property tax wouldn’t do a damn thing to ease Britain’s perennial housing shortage and high rents.This is caused solely by supply and demand considerations in a free market (something else that you probably can’t understand) and have sky-rocketed lately by the government’s policy of uncontrolled immigration.”
Actually it would greatly alleviate the housing shortage, because vacant buildings would be brought into use and sites with planning consent would get developed, thereby increasing supply. That is the usual experience where there is land value taxation.
At the moment, there is no free market. On the one hand we have planning restrictions and on the other, owners can sit on vacant land without any penalty apart from loss of revenue, for as long as they want, whilst waiting for its value to go up. Which is what they do.
“If the property tax is introduced no private developer will build housing for rent – simple as that, as virtually no social housing has been built in Britain in the last 35 years, and there’s no likelihood of this changing, the result will be even higher rents, more overcrowding and even Brazilian style shanty-towns.”
We already have property taxes and housing gets built. Under LVT, the building is not included in the assessment, so there is more incentive to build. If what you said were true, nobody would ever build on leasehold land.
You don’t know what you’re talking about.
I’m ending this correspondence because reading your damned lies and falsehoods – not to mention your wilfull ignorance and your gutter-thief morality ‘because I haven’t got it, I’ll take it away from you’ , makes me sick to the stomach.
As the Good Lord engraved on the tablets
“Thou shalt not steal”.
The invective was not necessary. It is a pity you never got round to answering any of the questions relating to property rights, which have been the subject of discussion by eminent philosophers since the seventeenth century.
It is a pity, too, that you were unable to explain why a tax on land values is stealing but a tax on wages is not.
As you claimed to have enlightenment on the matter, why have you kept these insights to yourself?
Whilst on the subject of what the Good Lord said, there is this
“The land shall not be sold for ever: for the land is mine, for ye are strangers and sojourners with me.” Lev 25:23
and this
“The earth is the LORD’s, and the fulness thereof; the world, and they that dwell therein.” Ps 24
So who is breaking commandments?
Mick Sayers – I was reviewing our correspondence. You put some valid points, they were answered, in some cases with further questions and requests for clarification. Most of the questions I put remained unanswered. You laced your responses was insult and invective and finally decline to engage in further discussion.
What does that look like? Does it enhance your credibility? Do you care?
@ Mick – are you going to respond with logic and reason to Henry’s questions on property. It would appear this is at the centre of your insults and seems to indicate that you either own or aspire to own a lot of land ?
@ Phillipe – I’m surprised you think the planning authorities are contributing to the housing bubble. Can you corroborate this claim given that:
1) there are a million + empty homes in the uk. There is plenty of housing to go around
2) the authorities always build the housing the govt demands, so long as the developer wants to build them
3) I sit on the local planning ctte and we have no real control of what gets built or not due to corruption of the authority by the developer and land owner
4) If the LPA does refuse to grant permission for the govt targets they always get sued and the council tax payer pays for that
I’d be happy to hear your view ?
Hello Phillipe,
I have read all your previsous books and look forward to this one also.
I see some great ideas in the book.
The website is pretty good after the re-design as well Phil.
Henry and Mick, can you guys please shut up, not getting your way and you guys behave like that.
Have some manner man. I would propose tax talk as well, that would keep you mought quiet and my ear clear.
You little gits
What has not been emphasised is that Land Value Tax (LVT) is ideal; for funding infrastructure . Infrastructure creates economic growth.
For example, a rail network can create economic growth in a community, but it may not break even to run, never mind extend or modernise it. Without the rail network there is no economic growth. It is a necessary part of the growth creation process – Thatcher could not understand this.
The loop right now is:
* The community builds a metro by its taxes.
* The metro creates economic growth
* The metro raises land values around it – the biggest gainers, a huge windfall gain
* The metro runs at at running loss, or even at best
* The metro is funded by the tax extracted from the incomes of the community – those who create the economic growth. They are penalised.
* The windfall gains created by the community in land values are pocketed by private individuals and companies.
* The tax from incomes is only enough to run the metro poorly – what we have now.
* The metro still creates economic growth
* The metro still raises land values and the value pocketed by private individuals.
* There is no money to expand the metro
The LVT infrastructure loop is:
* The community builds a metro
* The metro creates economic growth
* The metro raises land values around it
* The metro runs at at running loss or even at best
* The metro is funded by the tax extracted from the land values
* The metro is run & maintained properly
* The metro is extended using the LVT tax
* The metro creates economic growth
The Missing Link
Currently the link from the economic gains created by the metro – in land values – is not fed back into the loop to maintain and expand the metro to create more economic growth. The gains are creamed off.
THE SOLUTION
There is a simple solution to this injustice.
* We should place the cost of public services on the market “values” of land.
* Owners with houses in valuable locations would pay more than those who rent their homes.
* Owners with houses in valuable locations wouldn’t be able to claw back their taxes.
* Owners with houses in less valuable locations pay less.
* That way everybody pays for the services they receive and we are all treated as equals
This web page explains how land affects us all:
http://myweb.tiscali.co.uk/watercity/LandArticle.html
cheers
John
To ease understanding
THE PROBLEM
Three million children today are living in poverty. Children born to the poorest families suffer little or no social mobility. Successions of governments, of different parties, can’t change this due to the tax system.
Are politicians to blame?
The biggest scam in history was instigated on the people centuries ago by the Lords, Barons and Knights of the land. Governments used the tax system to milk the poor. The injustice has never been put right.
Why did the Lords, Barons and Knights do it?
To enrich the people who own land. It is operated by all democratic governments around the world. The biggest winners are those who own land or homes in the best locations.
People who rent pay rent to landlords and taxes to the government. People who rent pay taxes to fund the service that they receive: police, rail, roads, army, etc. That sounds fair. They pay for what they receive.
Britain’s top earners pay on average £1.25 million in taxes in their lifetime. The people who rent their homes are generally in the lowest income bracket. Over their working lives the poor pay over £0.25 million in taxes. The rich on average pay 5 times more in taxes.
That sounds fair. Doesn’t it?
Income tax is the more you earn, the more you pay. Called Progressive taxes. Sounds fair as the richer pay more. But!!! Progressive taxes has exactly the opposite effect.
Rich people complain that they pay a lot of money to the government. But, the government pays it all back to them.
How do they do this?
Governments spend our tax money on infrastructure, such as:
* Schools
* Universities
* Hospitals
* Rail networks
* Roads
This infrastructure raises the productivity of the economy resulting in economic growth. Because of the way the market economy works, those economic gains are crystallised as land values. Then these gains surface as windfalls or capital gains in the property market.
Those capital gains are not shared out equally amongst all of us, as the taxpayers who rent their homes for example, are excluded.
The windfalls are pocketed by people who own land. The rises in property values more than offsets the taxes they pay into the public purse.
Then who pays for the services the rich people use?
The families on the lowest incomes.
Every increase in house value for top earners offsets any tax they contribute. During boom times it’s possible to claw back a lifetimes taxes in just three years. Meanwhile…the lowest earners and those who pay rent, pay more overall.
Families on the lowest incomes subsidise the lives of the rich.
Is that fair?
There is only one way to make the tax system fair. Parliament has to tell the taxman to stop collecting taxes from people’s wages.
We need a kind of tax reform that Winston Churchill and Lloyd George nearly introduced in Parliament 100 years ago. But, the landlords blocked them.
The only war Winston Churchill lost was the war against the British landlords.
If we cancel the tax on people’s wages, how do we pay for public services?
By levying a charge on the value of land. People who live in valuable locations will pay much more than those who live in less expensive properties. That’s fair. It also happens to be the most efficient way to fund the service we all share in common.
THE SOLUTION
There is a simple solution to this injustice.
* We should place the cost of public services on the market “values” of land.
* Owners with houses in valuable locations would pay more than those who rent their homes.
* Owners with houses in valuable locations wouldn’t be able to claw back their taxes.
* Owners with houses in less valuable locations pay less.
* That way everybody pays for the services they receive and we are all treated as equals
This web page explains how land affects us all:
http://myweb.tiscali.co.uk/watercity/LandArticle.html
cheers
John
@Mick Sayton
Mick, LVT and no income Tax is more capitalist than we have now. Land ownership stays the same business the behaviour stays the same. I personally wish the Planning system was upturned and people allowed to build where they want to – SSSIs, National Parks, etc excepted.
“All” land is subject to LVT. This will in time redistribute land naturally. The history of the UK is one is great injustices of by large landowners to its population for personal gain. I personally would pop open a beer if that land was just taken from them. But, no need to, as LVT does it. If Lord Whoesisname wants to own half of Scotland, then he pays for the privilege. If he cannot pay the LVT, he sells to others who can make good productive use of the land.
Full Geoism is LVT, no income tax, no tax on savings, no inheritance tax, no Council Tax and no speculation on the resources of land. So no copper derivatives, etc. Then a fully stable and level playing field for private enterprise to play on.
Where do you get this Communist notion? Just understand what LVT is and does. When you do, you will be converted like on the road to Damascus. A bulb will light up in your head.
@Emily said….
“I am a bit worried about that granny. What happens when you have no control over encroaching gentrification and are forced tomove to a poorer area? Starker ghettoisation presumably and more transient, fragmented communities especially amongst the poor.”
Once the new fiscal system was in place, just about everyone’s net incomes would be greater than before. So responsible people would be building up their private pensions. However, people now coming up to retirement would naturally be concerned about their future under the new arrangements. They ought not to be, because provision must be made for the transitional period.
The policy initiative that would reassure elderly owners is the one in which they could opt NOT to pay the charge on their land value. Instead, by arrangement, the fiscal authority would take out a lien on the property, to reclaim the charges once the property was either sold (if the owner decided to downsize), or from the deceased’s estate.
The attraction of this is that the owner’s disposable income, during her remaining years, would actually rise. This financial model, in effect, is already being applied today. Owners “withdraw equity” through mortgages from banks, which are reimbursed on death or sale.
Cheers
John