Monday, August 30, 2010

Land value taxes: new UK push

Recently we blogged a well-informed article by Martin Wolf in the Financial Times about Land Value Taxes, which contained this memorable section:

"In 1984, I bought my London house. I estimate that the land on which it sits was worth £100,000 in today’s prices. Today, the value is perhaps ten times as great. All of that vast increment is the fruit of no effort of mine. It is the reward of owning a location that the efforts of others made valuable, reinforced by a restrictive planning regime and generous tax treatment – property taxes are low and gains tax-free. So I am a land speculator – a mini-aristocrat in a land where private appropriation of the fruits of others’ efforts has long been a prime route to wealth. This appropriation of the rise in the value of land is not just unfair: what have I done to deserve this increase in my wealth? It has obviously dire consequences."

Which goes a long way towards explaining, simply, why land value taxes are such a good idea. For more details, look at our recent edition of Tax Justice Focus. Now we have Andy Burnham, a high-profile British Labour Party member of parliament who is standing as a candidate for the party leadership, making this part of a political platform.

Today I am setting out a plan for a radical reform of the tax system. At its heart is a land value tax (LVT) – an idea so old-Labour it can be traced back to Thomas Paine. But it is also a plan that draws on the best instincts of New Labour.

The article outlines a set of particular features of land value taxation that he's interested in. We won't comment on most of that, which links it to the expenditure side of budgets, which isn't really our thing, and he supports abolition of the inheritance tax, which is very strange -- but we will say that this is, overall, a most useful contribution to the debate and the principle should be widely supported. And it should be widely supported around the world, as one element in a broader tax system.


Anonymous JamesStGeorge said...

This nasty spite based tax, of imaginary 'value', deserves no credence.

It is utterly immoral and wrong to tax any asset. You can not cut bits off and send them in!

Assets have zero ability to pay.
Any real, rather than imagined rent on land, will be taxed normally, properly, as income tax.

Tax has to be based on ability to pay.

Taxes on assets or imputed, imaginary rents, are a deceit hiding plain theft.

At least Martin Wolf (hidden behind a pay wall) is half way sensible with your report he 'supports abolition of the inheritance tax'. An asset tax and utterly immoral and destructive.

3:37 pm  

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