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... in 1879, George argued that land-value levies should replace all other taxation, leaving labour and capital to flourish freely, and thus ending unemployment, poverty, inflation and inequality.
tax drives the land price down by the capitalised value of the future levies—theoretically even to zero—until someone finds a use for the land. Collection is cheap. Unlike profit, you cannot massage land away or move it to Luxembourg.
If you do not pay, it can be seized and sold.
Though nobody likes extra taxes, new land-value levies could be matched by cuts in other taxes, especially those paid by poor people.
Rich people tend to own a lot of land, poor people very little. For that reason it wins favour with economists who worry about inequality, such as the Nobel-prize winner Joseph Stiglitz.
He argued in a recent paper that land and housing, rather than the distribution of income and productive capital, are the key to a fairer economy.
Adam Smith said “nothing could be more reasonable”; Milton Friedman termed it “the least bad tax”. Winston Churchill said scornfully that a landlord “contributes nothing to the process from which his own enrichment is derived”
But like many ideas that work beautifully in theory, the practical and political difficulties are daunting.
The biggest problem is that to raise money and change behaviour, the rate of land-value taxation will need to be quite high.
This arouses furious opposition from landowners, in most countries a potent lobby, see it as highly unfair.
They have got used to enjoying their rents and object to their sudden socialisation.
In effect, it is a breach of property rights: the owners have paid for their land out of taxed income, so why should its benefits now be confiscated by what is in effect an arbitrary tax on some assets?
Until a modern economy takes the plunge and introduces a land tax—and keeps it—it is hard to know if performance will match promise.
“It is a question of faith” admits Stuart Adam, of the Institute for Fiscal Studies, a think-tank which backs the idea.
Yet until its benefits are convincingly displayed, few politicians will feel like risking the wrath of the landowning lobby.
tax drives the land price down by the capitalised value of the future levies—theoretically even to zero—until someone finds a use for the land. Collection is cheap. Unlike profit, you cannot massage land away or move it to Luxembourg.
If you do not pay, it can be seized and sold.
Though nobody likes extra taxes, new land-value levies could be matched by cuts in other taxes, especially those paid by poor people.
Rich people tend to own a lot of land, poor people very little. For that reason it wins favour with economists who worry about inequality, such as the Nobel-prize winner Joseph Stiglitz.
He argued in a recent paper that land and housing, rather than the distribution of income and productive capital, are the key to a fairer economy.
Adam Smith said “nothing could be more reasonable”; Milton Friedman termed it “the least bad tax”. Winston Churchill said scornfully that a landlord “contributes nothing to the process from which his own enrichment is derived”
But like many ideas that work beautifully in theory, the practical and political difficulties are daunting.
The biggest problem is that to raise money and change behaviour, the rate of land-value taxation will need to be quite high.
This arouses furious opposition from landowners, in most countries a potent lobby, see it as highly unfair.
They have got used to enjoying their rents and object to their sudden socialisation.
In effect, it is a breach of property rights: the owners have paid for their land out of taxed income, so why should its benefits now be confiscated by what is in effect an arbitrary tax on some assets?
Until a modern economy takes the plunge and introduces a land tax—and keeps it—it is hard to know if performance will match promise.
“It is a question of faith” admits Stuart Adam, of the Institute for Fiscal Studies, a think-tank which backs the idea.
Yet until its benefits are convincingly displayed, few politicians will feel like risking the wrath of the landowning lobby.
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