Land Value Taxation

URL = International Union for Land Value Taxation: http://www.interunion.org.uk

Description

Alanna Harzok:

"It is estimated that approximately 93% of taxes collected worldwide fall on labor and economic production. Removing the tax burden on all forms of labor and productive activity can greatly enhance private sector enterprise, especially small business. Freed from taxation, workers get increased purchasing capacity and investors more funds to invest.

Shifting taxation ONTO the economic base of land and natural resources has other positive consequences. Taxes would function as user fees for what is essentially common heritage resources. Investments in land speculation would be curbed, thus freeing funds for productive activities.

Taxing land sites according to land value promotes urban and rural land reform, providing affordable access to land for homes, businesses and farming. Sufficiently high resource rental fees, captured for public sector benefits, promote more careful and efficient use of natural resources by the private sector. Conversely, the undertaxation of natural resources leads to their over-exploitation. A high access cost for nonrenewable resources can also stimulate investment in renewable energy and other sustainable technologies, as less profit can be made on extracting irreplaceable resources.

The policy is to shift taxes OFF labor and productive capital (thus increasing everyone¹s purchasing capacity and wealth creation incentives) and ONTO land and natural resources (thus curbing speculation and private profiteering in the world¹s common heritage). Such a tax shift makes land prices affordable for housing, other basic needs production and infrastructure.

When we fail to tax land values adequately, as they rise during development, and tax wages instead, workers soon cannot afford housing and other basic necessities unless they work longer or go deeper into mortgage debt. What should be the true purpose of a market economy and development - to efficiently provide for the needs of all - is undermined. Under the current model which commodifies land and resources, land prices become a greater proportion of the costs of production as development proceeds.This primary cause of the widening rich/poor gap demonstrates the law of rent, a concept little understood even within the field of economics. As private profits accumulate from resource rents and interest payments, the gap between rich and poor keeps growing year by year.

Most "poor" countries are not poor. Rather, their people are poor, because the countries¹ valuable land and other natural resources are controlled by only a few. Land value taxation promotes both urban and rural land reform.

Land values rise because of population growth or concentration and because of infrastructure and other services provided by the public sector. Reducing taxes on wages and productive capital while recapturing the increase in land values (resource rents) BACK to the public sector assures both a fair and functional market economy and a continuing source of tax funds for the public sector.

The public fund can also be a source of low-interest loan financing to community members. Under this arrangement, the people themselves become beneficiaries of both resource rents and interest payments. The recapture of rises in land value and the revolving of loan monies all within the public sector enables countries to develop with less need for outside funds." (http://www.earthrights.net/docs/fin4devt.html)

Examples

"Harrisburg, the capital of Pennsylvania, was in 1980 on the Federal list as the second most distressed city in the United States. The city gradually reformed its municipal tax policy by shifting taxes OFF of buildings and ONTO land site values. Now taxes on buildings have dropped and land is taxed five times more heavily. With land sites freed from speculation and underuse and buildings less burdened by taxes, labor and capital went to work restoring the city, now considered to be one of the highest quality of life cities in the US.

Seventeen other municipalities in Pennsylvania have put this policy in place, all with proven benefits of economic regeneration as indicated by increased building permits and other criteria. This approach generates steady urban renewal in Sydney, Australia. Hong Kong and Singapore capture land rent primarily by nationalizing land and renting it out." (http://www.earthrights.net/docs/fin4devt.html)

The following examples are from Jeffrey J. Smith, geonomics.org (exact URL unknown for the moment):

• The “Four Tigers”, 1940s.

Apologists for state planning and state partnership with big business point enthusiastically to Pacific Rim Asia but overlook the fact that all these success stories began on a firm footing of land reform. The city-state Singapore, founded on Georgist tax principles, reached a tax rate on land of 16%. Hong Kong existed only on crown land, funding 4/5 of their budget with 2/5 of site Rent (Yu-Hung Hong, Landlines, 1999 March, Lincoln Inst., Cambridge, MA). The city uses land rent, not subsidy, to fund their new metro and in its suburbs grows much of its own food. Hong Kong enjoys low taxes, low prices, high investment, and often the highest per capita salaries. The city is often voted the world’s best city for business and the freest for residents.

Gen. Douglas MacArthur, an admirer of Henry George, forced the Japanese provisional government to write land reform into their new democratic constitution that limited Rent paid by tenants to owners. South Korea adopted a similar Rent reform. Gen. Chiang Kai-shek likewise forced land reform on Taiwan (below). A 1980’s World Bank study credited land reform with creating the basis for their economic miracles. Secure farmers can afford to consume manufactured goods. Soon successful industries can trade with other developed nations. Another World Bank report, in 1998 by Roy Prosterman and Tiom Hanstad, Chapter 10, “Land Taxation” by Jennifer Duncan: “Land tax is an important vehicle for transferring some of the benefits of land privatization to the public sector. Revenues from land tax can fund significant and increasing portions of infrastructure and social services, fostering public and local government support for privatization.” Today, to try to control their skyrocketing location values, both Japan and Korea have tried to tax land, tho’ still minusculely.

• Taiwan, 1940s.

Old Formosa was mired in poverty and fast breeding. Hunger afflicted the majority of people who were landless peasants. Less than 20 families monopolized the entire island. Then the Nationalist Army, led by Chiang Kai-shek, retreated to Taiwan. General Chiang figured he lost mainland China in part by not reforming land-holding. Chiang did not want to risk losing his last refuge – east of that isle lay nothing but open ocean.

A follower of Sun Yat-sen, the father of modern China and an adherent of Henry George, Chiang knew of the Single Tax. Borrowing a page from George via Sun, the new Nationalist Government of Taiwan instituted its “land to the tiller program” which taxed farmland according to its value. Soon the large plantation owners found themselves paying out about as much in taxes as they were getting back as Rent. Being a middleman was no longer worth the bother, so they sold off their excess to farmers at prices the peasants could afford.

Working their own land with newly marketed fertilizers, new owners worked harder. They produced more, and after years of paying taxes to cover the onerous public debt, at last kept more and lived better. From 1950 to 1970 population growth dropped 40%, and hunger was ended. (Altho’ Taiwan did receive a billion dollars from the US, it was mostly military aid, spread out over eight years.) Taiwan began to set world records with growth rates of 10% per annum in their GDP and 20% in their industry. (Fred Harrison, Power in the Land, 1983)

• Denmark

Denmark, 1950s. The Danes built on their land tax heritage. In 1957, the tiny Georgist Justice Party won a few seats and a role in the ruling coalition. Anticipating a higher rate on land, investors switched from real estate to real enterprise. One year later, inflation had gone from 5% to under 1%; bank interest dropped from 6.25% to 5%. By 1960, 100,000 unemployed in a country of just five million had found jobs and at higher wages, the highest widespread pay raise ever in Danish history. (The New York Times editorial, “Big Lesson From A Small Nation”, 1960 October 2)

Tho’ many people were better off, next election landowners spent enough money to convince people otherwise. The Justice Party lost its seats, the land rate lost its boost, and investors again became land speculators. Quickly inflation climbed back up to 5% and by 1964 reached 8%. Land prices began to sky-rocket, from 1960 to 1981 increasing 19-fold while prices of goods and services went up merely fourfold. (Knud Tholstrup, Dansk MP, A Third Way, 1986)

Denmark, 1960s. Before 1970, the annual income tax fell upon the previous year’s income; in 1969, the government taxed 1968 income. Then parliament decided to tax income in the same year it’s earned; in 1970, they taxed 1970 income. Earners realized that 1969 income would not be taxed. Their response, from 1968 to 1969, was to double the increase in production (4% to 8%), halve the inflation rate (8% to 3.5%), quadruple investment increases (5% to 20.5%), raise savings by a quarter (from 2.9 million kroner to 3.8), and employ nearly all workers. (Knud Tholstrup, A Third Way)

• Estonia, 1990s.

After the break up of the Soviet Union, each newly separate republic had to find its own way of raising revenue. Estonia, across the gulf from Finland, found the tax for farmland. Because neither land nor its value can be hidden, it was the most feasible way for the new government to raise funds. Collecting from farmowners was vastly more successful than trying to collect from others, succeeding over 95% of the time. The low rate of 2%, which even governmental owners of public land had to pay, was still enough to spur efficient use of land. (The Economist, 1998 Feb 28)”

DR. ADRIAN WRIGLEY challenges the above examples:

"You’re absolutely right that LVT is economically sound, and has proven its potential value in places like Denmark.

Unfortunately the examples given are not examples of successful, sustained LVT reforms being introduced by their nation’s government.

Singapore, Taiwan and Hong Kong had their systems imposed from outside. The Danish system seemed to be so successful that plans were scrapped – they now have hefty Income Tax and VAT, and a highly controlled property market. Estonia’s system was very limited in scope and scale, and the nation never recovered its GDP of communist times. It has been “taken out” by the international financial capitalists, and its prospects are bleak.

Singapore’s system taxes buildings and land improvements equally to the land itself, at a rate of 0.5% of property values for non-residential properties. Singapore has just (Jan 2011) abolished its property tax for home owners of homes under $$6m (US$4.7m), and the rate is only 0.2% up to $$29.5m (US$23m). The Singapore experience is interesting, but it is not Land Value Tax, and abolishing it for home owners confirms that property taxes are not politically stable. Singapore has VAT (GST), Income Taxes, Stamp Duty, and all the tax paraphernalia of “modern” bureaucratic production tax systems.

Hong Kong’s system is market-based using government leases, not tax-based. While not perfect, it confirms that the economic rent of land can be collected successfully without Land Value Taxation.

Denmark’s experience shows how powerful and fast-acting the economic effects of LVT are. But also confirmed that LVT is politically not stable as opposition swiftly shut down government ambitions for the system.

Perhaps Taiwan is the best example of LVT success in action, and that was imposed on the nation’s constitution from outside as the article points out.

One key insight is that the economic rent of land is now collected by the banks which exchange financial bookkeeping entries for the economic flow from property owners. This must be recognised as at the core of any credible LVT proposals.

Summary: There are no successful examples of LVT being introduced by a national government. Where LVT has been used, pressures to abolish or stunt it are irresistible. Local governments habitually shrink, distort or abolish LVT under political pressure. The good news is that market-based methods of collecting land rent (such as in Hong Kong) are economically efficient and politically stable. One way of achieving this is through Location Value Covenants (LVCs) advocated by the Systemic Fiscal Reform Group (SFR Group)." (https://blog.p2pfoundation.net/successfull-examples-of-land-value-tax-reforms/2011/02/05)

Discussion 1

What gives land its value ?

Alastair Parvin:

"What you’re paying for isn’t actually land value, its location value. It’s access to infrastructure, proximity to jobs, to schools, to trains, to culture, to community infrastructure to green space, or to a high status postcode full of attractive people, or a view of the sea or whatever.

If I said to you, I’ve got a plot of land in upper Siberia, it has no infrastructure it takes five days to get there, it’s roamed by bandits, and there’s no police, how much will you offer me for it?… You’d say ‘thanks, I’ll pass’. Its financial value is zero. But if I said I was going to give you the same size plot of land in Kensington, you’d look at me like you’d just won the lottery.

One of the best speeches ever made on this subject was made in 1909, and it was called ‘The Mother of All Monopolies’.

“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.” “To not one of those improvements does the 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.”

Incidentally the person who gave that speech was Winston Churchill. And I don’t include this as a blanket promotion of his character. Actually in a way, the recent increased focus on the darker sides of his character and record are quite an appropriate symbol for the way Britain is having to come to terms with some of the contradictions within its national story right now. Rather what I mean to show is that this is not a Left vs Right issue. It runs deeper than that.

As an interesting aside, shortly after making that speech he and Asquith successfully got a radical Land Reform bill through the commons, only for it to be defeated in — not surprisingly, the House of Lords. But the point he was making in that speech is incredibly important, and timeless. It is one that had been made by Adam Smith and many others before him. That land value is not created by the owner. It is created by the taxpayer through our investment into infrastructure, and by the activity of the community, and our collective consent for development.

And yet our current land system allows that public value to be privately captured and monopolised. Not just by landlords in the form of rents. Also by freeholders. For example, being near to an Ofsted ‘excellent’ rated school adds between £40k and £100k to the value of a residential property. And yet we tell ourselves that our system of state education has no school fees. And we wonder why children from deprived backgrounds struggle to get an equal shot." (https://medium.com/@AlastairParvin/a-new-land-contract-684c3ba1f1b3)

The land value capture industry

Alastair Parvin:

"And this is where we get to the final twist of the knife of this broken land system. And it’s a fatal one. By allowing uplifts in the value of land to be captured by the current owner, we have basically created a multi-billion dollar land speculation market, which has essentially the same business model as ticket touts at a concert.

Basically the way it works is, you use capital to buy up all possible development land before it has planning permission — so its market value is, in theory, only a few thousand pounds per hectare. Then you just sit on it. Eventually, in desperation, the local council give planning consent for development — and the moment they do, the value of the land instantly goes from a few thousand per hectare to a few million. You then proceed to build out the cheapest, crappiest, tiniest, ugliest, least sustainable homes you can get away with, and provide the least possible number of social rented homes you can, swimming in a sea of tarmac. You also negotiate-down the amount of community infrastructure or business space you provide to zero, if possible.

And this is the dark, open secret at the heart of our built environment today.

Pretty much everyone broadly agrees on what we want: beautiful architecture, generous, affordable, healthy, zero-carbon, circular homes and resilient communities living in green, walkable, prosperous neighbourhoods filled with a thousand small, local businesses. Places where children can grow up happily, where the elderly can grow old in good company, and where everyone has the chance to flourish and realise the best version of themselves. And to create all that, we want a booming, innovative design and construction industry. But yet our land system is perfectly designed to never, ever give us that.

For example, we know buildings are responsible for around 40% of all carbon emissions. 29% of that is the energy required to run a home. 11% of that is embodied carbon, emitted during its production. Now, the 29% bit is a bit slower to bring down anyway because it involves upgrading our existing housing stock. But the 11% we could pretty much eliminate tomorrow. We know how to build zero carbon, circular buildings. But we’re not doing it. Why? Because the people who hold all the land and develop the homes we end up living in have no incentive to do it.

And you can say the same for pretty much every other aspect of the homes and neighbourhoods we create. Again, to quote Churchill, “the land monopolist reaps their reward in exact proportion not to the service, but the disservice done to the community”.

And I want to be clear, this is not because landlords and speculative land developers are not perfectly decent, well-intentioned people. Most of them are. I used to be a landlord, and I hope I am a reasonably decent person! This is not about punishing anyone. It’s about rehabilitating ourselves — fixing a broken game that we are all locked into, because it is taking us over a cliff.

Land monopoly is eating our economy, our society, our environment, our climate and our democracy, and yet to many it is still invisible.

The most extraordinary thing about this land system is that no-one, either Left or Right has a reasonable economic or moral justification for it. You will not find one. It is simply an accident of history — an obsolete bit of code — a legacy of the feudal system that has persisted simply through unconsciousness, vested interests, corruption and obfuscation.

And it’s time for us to wake up and fix it." (https://medium.com/@AlastairParvin/a-new-land-contract-684c3ba1f1b3)

Land is a Natural Commons

Alastair Parvin:

"So, if we were to go back to the drawing board and redesign a new 21st century land economy from scratch. What might it look like?

Well, the good news is that pretty much every major economist and philosopher who has looked seriously at this question, from Marx to Milton Friedman, from Martin Luther King to Mariana Mazzucato from Adam Smith to Abraham Lincoln, from the the ancient Israelites to Elinor Ostrom, has always come back with the same basic principle: that Land is a natural commons — it belongs to everyone, and that land value (rents) should be recaptured by the community, who create the value in the first place.

So, as a landowner, you shouldn’t be a Lord over anyone, you should be a steward; you are effectively renting a piece of land from Everyone for as long as you want it, and in return you should pay a proportionate ground rent — or ‘Land Value Tax’ (though I don’t like that term) — back to the community for its use.

What we might then use those rents to pay for is a matter for debate. If you’re towards the centre-right of the political spectrum, you might want to use it to cut other taxes on income, employment, or productive enterprise. And certainly I’d say there would be a clear case for getting rid of council taxes immediately. Essentially rent is a tax you’re paying anyway, so the moment it goes to the treasury instead of to landlords, government can afford to cut other taxes.

Or you could even pay some of it out directly as a citizens’ dividend to every single person. And I think even if it’s only a small symbolic amount, this might be a good thing to do. It would serve as a monthly reminder that the land belongs to all of us — and that we all have a stake in society.

Or, most obviously, you could reinvest that money into community services and infrastructure — including using the land revenues from overheated locations like London to invest in creating new location value in the rest of the country — to reverse this corrosive, unnecessary North / South divide that is perpetuated by our current land system.

But there’s an obvious problem.

Remember that the inflated value of property rights represent 83% of Britain’s ‘wealth’ — and that is propped up by banks’ mortgage loans. Introducing a Community Land Rent might well involve a write-off (or buy-out) of money (debt) on a scale probably not seen since the abolition of slavery.

A reform of this scale, however morally and economically justified, would require a government of extraordinary vision, courage and skill, to design the transition in a way that is fair to everyone. And you’d have to win a mandate to do it from the British public in the face of an unprecedented campaign of disinformation and misinformation. In reality, almost everyone is losing out in our current system (even homeowners, who think they’re wealthy, but aren’t really). But let’s not be naive: a very small number of very powerful vested interests would unleash a misinformation machine on the British public that would make Brexit look like a picnic.

So I’m not holding my breath." (https://medium.com/@AlastairParvin/a-new-land-contract-684c3ba1f1b3)

Discussion 2: Policy Proposals

Alternatives to a possibly politically unfeasible land value tax

Alastair Parvin:

"What are our other options?

1. Public land buy-backs

Instead of introducing a Land Value Tax another way for the public to recapture land rents is to simply buy the land ourselves. One proposition put forward by Martin Farley is the idea of land buy-backs. He has worked out that because of the way the cost of our failed land system is falling back onto the taxpayer anyway, we could actually buy every single private rented property in the UK, and as taxpayers we would actually be saving £6bn a year — and it could save renters £35bn a year too. With land values probably dipping now because of COVID, now would be a perfect moment to do that.

2. Land value capture

A second related move does involve a small change in legislation — but its one that already has cross-party support. Basically its a small change to the text of the 1961 Land Value Compensation Act, that would allow local authorities to buy agricultural and ex-industrial land at its current value — only a few thousand pounds per hectare– and then use the uplift that is created by us, the community, to pay for community infrastructure, or to keep the land affordable. It has been estimated this alone would reclaim an additional £9.3bn per year of public value.

3. Soft landings

Another idea put forward by the economist Beth Stratford is the idea of creating a National Land Trust and Building Society that slowly buys land from under people’s homes, and then leases it back. She is, as far as I know, one of the only economists looking explicitly at a ‘soft landing’ / climb-down strategy in the event of a crash, which would give home owners a way out of negative equity.

4. Fairhold

An overlapping idea that we have been beginning to look at is the idea of going back to that original piece of paper — and inventing a new form of land ownership, which we call Fairhold, where public authorities buy land, and instead of selling it to speculators, public authorities retain long term ownership of land and lease — or licence it — it directly to citizens or steward organisations, like community development companies or community land trusts; who in exchange have to pay a fair community ground rent. So essentially it’s creating an opt-in parallel land economy that can exist alongside the existing one: like a kind of lifeboat, to transition to as the old one fails.

This idea is something we’re hoping to test and design further in collaboration with Dark Matter Labs and as many other organisations as possible. But in its simplest form, it’s something councils could start using tomorrow without permission from central government, and if it was used at scale, it would effectively allow local authorities to end their housing emergency within a few years — for zero cost." (https://medium.com/@AlastairParvin/a-new-land-contract-684c3ba1f1b3)

Proposed creation of a Global Resource Agency for Land Rent and Dividends

Alanna Harzok:

"A Global Resource Agency, similar to the Alaska Permanent Fund, could collect global resource rents for distribution and investment. This would provide a stable source of finance for UN expenditures for peacekeeping, environmental preservation and restoration, and to finance justice institutions such as the World Court and the International Criminal Court. Some of the revenue might be distributed to all nations according to their populations, reflecting the right of every person in the world to a "global citizen's income" based on an equal share of the value of global resources.

A Global Resource Agency with this mandate would:

• encourage sustainable development worldwide;

• provide substantial financial transfers to developing countries by right and without strings, as payments by the rich countries for their disproportionate use of world resources;

• help to liberate developing countries from their present dependence on aid, foreign loans and financial institutions which are dominated by the rich countries;

• reduce the risk of another Third World debt crisis; and

• recognise the shared status of all human beings as citizens of the world.

This land ethic and policy has potential to benefit all and has deep roots in the history of economic justice. A full Jubilee 2000 and beyond plan would not only reduce or eliminate debt, but would also promote systemic reforms in land tenure and taxation. This is the kind of "structural adjustment" the people of the world really need.

The Financing for Development process could further this tax shift approach by (1) worldwide education and information, (2) encouragement of implementation on the local and national level, and (3) creation of a body of experts to assist with the transition to this policy. " (http://www.earthrights.net/docs/fin4devt.html)

Responding to Critics

John Howell:

"To those who know and love Land Value Tax (LVT) the case for it seems self-explanatory, compelling and unanswerable. Yet strangely it all too often turns out to be a very hard sell. Present economic theory rests on false assumptions established so long ago that people have forgotten what they are. So the difficulty in explaining the immediate relevance of LVT is that one has to clarify first principles at the same time. This is not so easy. An audience waiting to hear how to revive the economy will not want to be asked to revise basic concepts they think they already know.

1. ‘Land’ is regarded as ‘capital’.

Today’s economic thought assumes a bi-polar world of Labour and Capital only. Books on economics never mention ‘Land’. When people hear about ‘Land Tax”, they might think of a rural economy, because the advantages and disadvantages of different tracts of land to farming are fairly obvious, and indeed often taught. But most will usually fail to see how the land factor is relevant to urban industrial and trading economies, which have no obvious link with the natural resources inherent in land.

Land was deliberately removed from the economist’s vocabulary in the early twentieth century. Landed interests, alarmed by growing clamour for raising public revenue from land value, obscured the issue by founding university courses in economics that deliberately conflated ‘Land’ with ‘Capital’.

Helped by Adam Smith’s definition of ‘Capital’ as ‘that part of man’s stock from which he could derive an income’, they taught that because one could derive an income from land, it should be treated as ‘Capital’.

To Classical economists of the nineteenth century the terms ‘Land’ and ‘Capital’ were quite distinct. Labour interacted with land to produce wealth. ‘Capital’ meant any item of wealth [e.g. factory buildings, lorries, machine tools] intended to assist in further production. ‘Land’ was a gift from Creation. ‘Capital’ stemmed from enterprise and effort.

Crises in banking might be more easy to avoid were ‘Land’ and ‘Capital’ properly distinguished from each other. Borrowing by a gifted designer to produce an efficient wind turbine is one thing; borrowing to speculate on rising land values is quite another. At present both are covered by the worthy-sounding phrase ‘Capital Investment’.

2. Few see how radical Land Value Taxation’s benefits would be.

Many can accept that land values benefit when local infrastructure is improved and that site-owners should contribute. But LVT is often seen as no more than a useful ‘add-on’ to existing taxes – a way, perhaps, of targeting tax more fairly on those who benefit from government capital spending.

But what is usually missed is that raising public spending from land value, if carried to the full, deters anyone from holding more land than they actually wanted to use. Land would cease to be a privatised capital asset producing an income by being let to others or yielding speculative gains. Again, through LVT, marginal land of little value would no longer be driven out of production by the present weight of taxes on labour and enterprise.

Many do not realise just how much useful land is currently kept out of use by this unholy combination of private claims on public wealth in land and the ‘flat earth’ tax practices of charging the same PAYE and VAT everywhere. In London’s Mayfair it was recently reported that forty major residential properties stood empty. Battersea Power Station, and 25 acres of surrounding land, has remained out of use since it was decommissioned in the 1980′s. In other conurbations similar instances occur, and nationwide over half a million residential properties lie empty.

It takes time to get people to realise the immense benefits that the release of such land would cause. It would largely end unemployment by which wages are forced to minimum levels. Government spending to relieve poverty could then shrink and taxation be significantly reduced. Crucially, it would begin to re-establish the notion of preserving ‘Common Land’, by which land not wanted for immediate use would remain available for any natural growth of population or new immigrants. Without ‘Common Land’, nations inevitably see population growth as a source of internal stress, often leading to conflict with neighbours over territory and resources.

3. Other common objections.

a. ‘Poverty is inevitable so why bother?’

Dysfunctional economics have probably been with us since 1066 when the feudal system replaced the land taxes collected in Saxon times. Over the centuries, the public mind has come to see the resulting poverty as inevitable and many elegant and popular theories (e.g. Malthusianism) have been devised to explain and justify it.

b. ‘Current reforms will work eventually’.

Even when poverty is not considered inevitable, people are convinced that present economic reforms (e.g. common currencies, banking reform) will eventually bring prosperity, so there is no need to consider LVT.

c. ‘I will lose’.

Some fear LVT will leave them worse off. At present the distribution of wealth is much more uneven than it should be. But LVT would reduce the disparities, not by confiscating from the rich and giving to the poor, but more by eliminating poverty at its source. Everyone could be as wealthy as they wanted to, provided they worked for it. Of course the whole ethos of society would change, and perhaps the extravagancies that currently grip the minds of the super-rich might lose some of their appeal.

d. ‘LVT is too difficult to implement.’

Some say LVT is too radical to implement without disrupting society. The truth is of course that society is already disrupted precisely because of the lack of LVT.

Nevertheless, reform would need to be applied carefully step by step, beginning with registration of land and its valuation according to best permitted use [as opposed to current use]. The next step could be putting Uniform Business Rates onto a site value basis, as is current Liberal Democrat policy. Transitional arrangements would be needed for poor people occupying valuable land.

4. Conclusion.

To fully accept LVT, people have to abandon many current beliefs about economics, which is especially hard for the experts. However the present crisis has been a wake-up call for many, and those in academia or in power are perhaps more ready to listen." (http://smarttaxes.org/2012/10/17/why-people-fail-to-understand-land-value-taxation/)

More Information

For further information about these policy approaches and how they can be implemented contact the authors of this statement: In the US, Alanna Harzok (717-264-0957 or email: [email protected]) and Pat Aller (212-496-8256), UN NGO representatives for the International Union for Land Value Taxation and in the UK, James Robertson, author, co-founder of New Economics Foundation, and consultant on alternative futures, economic & social change. Email: [email protected]

• Land Value Taxation Around the World, Second Edition, edited by Robert V. Andelson, 1997, published by Robert Schalkenbach Foundation, http://www.schalkenbach.org