However, surely this is to advocate reducing income tax (which hits the money people who get off their backsides and go and earn). These views are entirely compatible with a modest tax on those individuals who have made huge capital gains on property, through no exertion of their own, but purely because the government has allowed loose monetary policy to create an asset (housing) bubble?

I think the above debate answers the question about why Vince Cable announced the policy he did in the fashion he did. First it was simple enough for the electorate to grasp in 30 secs of headline browsing the next day (modest tax on those with very big houses) unlike the intricacies of the debate above. Second by just sticking it out there he kept all this bad blood between party members in chat rooms rather than letting it spill on to the conference floor. Therefore right policy, right approach?

At the risk of starting another personal grudge match by picking up on another person’s specific comments – ‘a million pound house is not a lot these days’? Wow – even where I work in the City theres not many people with the chutzpah to drop a comment like that.

Of course LVT is about reducing taxes (rent is a tax on all of us – if it is captured for the “common good” – however that is done – instead of the “common good” taking the product of our labour – we only pay once, not twice) and cutting government services. That’s the whole dang idea of the thing, that the less inequality we have at the very start of the process of distribution of wealth the less the heavy, coercive hand of the state has to do, and the fewer of those other things that go hand in hand with states, like warmongering, surveillance and judicial murder, they are able to do.

The particular issue here is that I feel much of the concern I have about the “libertarian” position would be answered by the introduction of a form of taxation known as “Land Value Taxation”, which some from that position advocate. I am suggesting if they spent more time talking about that and its benefits, and less on saying things like “cut taxes and cut government services”, I would be happier with them. In particular, I feel it would help separate them from those who say “cut taxes and cut government services” because they are rich and don’t like the idea of a fairer society and are rich because they have managed to gain control of things like land which enables them to profit from the hard work of others without them doing any hard work themselves.

The point is over whether a small tax on very expensive houses would be a move towards this position or not. Jock is arguing that it is so far from a true Land Value Tax that it is a bad thing. I am arguing that although it is far from that, it does at least enable some of the issues which support that idea to get a discussion. On this point, Mark Wright, who like Jock but not me calls himself a “libertarian” agrees with me.

But where is any of us saying this spiteful or not of planet earth or any of what you wrote?

Such, I am afraid is your question so far as I can see. If someone chooses to build their magnificent eco-home on a plot that is more valuable to the rest of that community that’s their lookout. They do not create land/location value. They reap what they do not sow. Anyone with a real understanding of their own impact on the planet would realize that in a situation where the community creates high value in land it is because they have made inputs to it, whether your eco-homer considers they are drawing “very little from the outside world” – that’s not what the land valuation says. Indeed what’s happening here is that your underoccupancy of that plot is in fact cause others to draw more on the “outside world” to get around your plot.

On the other hand, if what you are saying is that you have bought a half acre of land in Pembrokeshire, built a fantastic eco-home on it which is worth £1m in the time, effort and super-materials that went into it (though personally I’d also doubt that since a decent earth friendly eco-home should cost less in most cases than conventional build because it will draw on local materials and vernacular styles to maintain and mediate temperatures for example), then you are right that, as capital and labour investment ought not to be taxed.

If you are not using the very community facilities that give a location value you are by definition wasting them, causing them to have to pass you by one step further and so on. A considerate eco-builder intent on dropping out of such modern value producing would not be building on a valuable plot that has access to them, I’d suggest.

Suppose you lived in a zero carbon house that was valued at £1m. You’d worked like a dog to get the money to build it. It has good sized grounds that contribute to that value, and you’re pretty much self sufficient utilising that land to its full potential. You didn’t build it to sell it on, and are pleasantly surprised that what you have done is valued so much for it to be valued at £1m. It was your dream to be able to have a minimal effect on the environment and do something that showed a way for the future. You draw very little from the outside world, but play a role in helping other people interested in similar projects. As a result your outgoings are very low and are covered by your income without much to spare. When embarking on this project you budgeted carefully for how you’d draw in enough money to survive. A tax on the value of your house and land of 0.5% would mean you’d have to radically rethink your plans – as you’d need to find £5000 to cover it – more than you’re earning a year at present.

Sure so this is hypothetical – but it’s not improbable. And I can’t see it as anything but wrong that someone who’s chosen to lead a life like this, that most of us would consider to be responsible (in terms or green living) if not virtuous, could have it blown out the water like this.

In a sense it seems almost regressive to state that people can only live in expensive homes (which they may have spent their whole lives working for) if they continue to have a notable income.

Interested in people’s take on this – or if I’ve just got the wrong end of the stick…

The public need to see the benefits to warm to it.

My point is that I do not see how they will see the benefits of LVT through a measure that is not only totally different but is in reality the antithesis of all the good things that LVT promises. People may be right that this idea will “sell itself” to most of the population, but it is not selling LVT and we will still have that job to do when we do decide to go for it, and against a measure of opposition from those people who have been negatively affected by this one – or who feel they might be one day.

Just like I dont understand those in the party who are desperate for voting reform but are fanatically opposed to anything but pure STV, likewise I think that LVT fundamentalism that opposes everything except pure and total LVT in one go is misplaced.

can I summarise by saying that libertarians who like the principles of Henry George (i.e. “left libertarians” and “geo-libertarians”), tend to be in the Lib Dems, and those that don’t, don’t.

“Tend” perhaps, though I can think of two at least – Mark Wadsworth and, so far as I am aware Duncan Pickard (the author of the farming and food scarcity chapter in our book) who are UKIPpers. I’m not sure what party, if any, Paul Lockett is in, or supports. When LPUK started there was much discussion about LVT, so I presume there are some proponents of it there, but it was not adopted as policy (too many Austrians perhaps?).

Still, I really do not see how doing precisely the opposite is going to help people understand LVT more. We already have party policy to replace NNDR with LVT. Vince has said that the case for LVT is won in the party. Though as above, I think that is mistaken if so many people tend to see it merely as a way of raising tax – there’s a nice quote toward the end of that Henry George piece Matthew linked to, to show that it was not understood that way back then:

As an English friend of mine puts it: No taxes and a pension for everybody; and why should it not be? To take land values for public purposes is not really to impose a tax, but to take for public purposes a value created by the community. And out of the fund which would thus accrue from the common property, we might, without degradation to anybody, provide enough to actually secure from want all who were deprived of their natural protectors or met with accident, or any man who should grow so old that he could not work…But all such benefits as these, while great, would be incidental. The great thing would be that the reform I propose would tend to open opportunities to labour and enable men to provide employment for themselves. That is the great advantage. We should gain the enormous productive power that is going to waste all over the country, the power of idle hands that would gladly be at work. And that removed, then you would see wages begin to mount. It is not that everyone would turn farmer, or everyone would build himself a house if he had an opportunity for doing so, but so many could and would, as to relieve the pressure on the labour market and provide employment for all others. And as wages mounted to the higher levels, then you would see the productive power increased. The country where wages are high is the country of greatest productive powers. Where wages are highest, there will invention be most active; there will labour be most intelligent; there will be the greatest yield for the expenditure of exertion. The more you think of it the more clearly you will see that what I say is true. I cannot hope to convince you in an hour or two, but I shall be content if I shall put you upon inquiry.

The arguments for LVT are so much more beneficial than this tax. As I said previously/elsewhere – one thing is that with a revenue neutral LVT every penny thus collected would effectively be returned in the form of the reduced cost of living for future generations – for every £100bn of LVT there would be not only the same government revenue fund available, but £100bn extra in the pockets of people to spend on productive enterprise instead of on the unproductive and bloodsucking property market. How good a deal is that to sell? And if we are judicious and clever about the other taxes that would be repealed such that they are as far as possible those which fall on the poorest most a greater proportion of that £100bn would go to those poorest, thus reducing further the need for government intervention to support them.

Anyway, as a Lib Dem libertarian and massive Henry George fan, can I summarise by saying that libertarians who like the principles of Henry George (i.e. “left libertarians” and “geo-libertarians”), tend to be in the Lib Dems, and those that don’t, don’t.

Back on thread I am very pleased that Vince raised this, and I’m sure he did it this way because he was finding certain other nameless front-bench MPs (who dont understand economics that well) were continually blocking attempts to move towards any kind of LVT, and s was left with no choice. On this I actually agree with Matthew and not Jock (gosh, libertarians can disagree? whatever next!??), and I’ll quote Matthew because it’s exactly what I would have said:

With the “mansion tax”, it was suggested as an idea, I felt it valuable because it did shift discussion away from the idea that the only fair tax was an income tax. I can also see that the arguments raised against it are the same arguments that would be raised – but on a hugely greater scale – against LVT. So it seems to me that even if the mansion tax is a very poor form of tax, it serves at least to start a useful discussion which could eventually lead to the case for LVT being better understood. It may also help iron out some of the practcal difficuties that would be involved in getting LVT going, most obviously the “poor widow in a big house” one.

Ian: I think we’ll just have to agree to disagree on this. There are US cities in particular that have introduced a measure of LVT by using split rate taxes where your property tax bill has two figures, one for the land and one for the improvements and slowly the proportion going to the land is increased and the improvements decreased. But we have explicitly rejected that approach because our property tax is so fundamentally broken it would do LVT no credit (and probably much damage in public opinion) to hitch it to that system. I think that whether it can be called “an LVT” or not depends on what its effects will be. If it does not have the effect of LVT – of promoting the efficient use of underused land for example, then it ain’t LVT, and anything which also taxes the improvements *cannot* produce such a benefit almost by definition since it is also taxing the capital involved in improvements. Nonetheless, a tax on the combined value of land and improvements was acceptable to Adam Smith (but not as enthusiastically as one on ground rents alone) so it’s not entirely without sensible backing!

Matthew, thanks for the latest round of “putting words in someone else’s mouth”. I’m sure it’s fun if you are not the victim. For what it’s worth:

None of the soi-dissant libertarians you come across most often enough to have a conversation with in Lib Dem circles are, so far as I am aware, well off. Most espouse LVT – though I noticed earlier you had a right lay into MattGB as well back in April saying that you believed he was just a part time friend of LVT too.

Outside of Lib Dem circles I don’t know many that are well off either. I know not a few who subsist on benefits, yet still proudly announce that they would benefit more if the state did not take so much off everyone and make them dependent on its largesse. Even amongst Austrian economics professors I know a fair few who live hand to mouth too – indeed over summer I responded to a desperate call from one whom I hardly know in Alabama for donations of a few dollars to see him through to his September pay packet – in his cased caused by state privileged institutions emptying his bank account and then some without due process or prior notice.

I think I fairly clearly made the point that the LVT type of approach to resolving the land issue was something that tended to disappear from much libertarian thought from around the thirties onwards, from the rise of the subjectivist and Austrian ideas (including Hayek) of marginal utility value, and as a reaction to the fact that governments had already stuffed up the US economy through the creation of the Federal Reserve and in response to the crisis partly predicated on that disaster were proposing, in the New Deal, what seemed even more predatory and confiscatory measures to clear up the mess they had helped to create. It seemed to them more important than ever to protect private property (especially real property) from a regime and system that was devaluing money hand over fist.

Nonetheless, few well informed modern Libertarians deny that there is a problem with land, they just do not accept that taxation is the way to deal with it. For example the seminal introduction to Libertarianism by the Tannehills suggests that on becoming a truly libertarian society all previous titles would be invalid since they would likely as not be more or less indefensible, and that a new system would have to register titles, starting with those of occupiers rather than those of people who held an ancien regime privileged claim to land they did not use.

Even Austrians accept there is a problem with land and landlordism, but believe that removing government restrictions on things such as land use would render such estates valueless and not worth holding on the part of the current landlords – ie it would be more productive to do some real wealth generating than to spend one’s resources defending a next to worthless title to land you are not using. Most Austrians do not really understand Henry George, from what I have heard of prominent ones lecturing and I for one am hopeful that I can produce a persuasive argument that allows them to accept George’s ideas as non-confiscatory, because I think their solution is not radical or quick enough to prevent their idea of a libertarian society becoming more polarized not less. Nonetheless I understand their philosophical arguments and have no doubt at all that their motives are sound in terms of social and economic justice.

I think your understanding of libertarianism is, therefore, considerably lacking and I won’t accept from you advice about what I should call myself. Libertarianism is a wide field of many different avenues of thought about how to deal with these big issues. It is you that cannot, it seems, differentiate any of them from each other.

Thanks for the Henry George speech. You will of course note that in it George is not advocating any massive government run “redistribution”. His idea was that only so much of the tax as was needed to sustain the sort of community assets that give rise to enhanced values would be spent on such and that the rest should be handed back as an entitlement (Citizens’ Dividend etc) to everyone. But that that was not the prime benefit – it was because such a tax would open up employment and entrepreneurial opportunities for all to whom they were previously denied because of the combination of the tariff system and the accumulation of rent in a few hands so that they could earn what they were really worth for themselves.

Perhaps you should look to your own nomenclature and purge those who are clearly not liberals, all those bansturbators and so on, from your ranks if you wish to remain calling yourself a liberal with any credibility?

The least off will be helped and this is a tax policy measure that will remain unequalled as the best example of `fairer taxes’ during all the Conferences.

It is true that some of higher rate `mansion tax’ payers would claim that they are home owners too but their taxation contribution is far less than this Government`s harsh taxing of the least earning 4 million families during this tough recession.

Labour taxes the worst off working class families and Vince Cable seeks to allow them all a £700 tax refund.

I suspect that many of the top tier property owners will also vote L/D in the coming Elections as history has shown in the `Peoples` Budget’ 1909, the landowning hegemonic power of the H of L`s was reformed, as a result of the watershed progressive taxation principle from Lloyd-George`s measures on land values, that paved the way for the first Old Age Pensions and Unemployment Benefit in 1911.

In both cases, the Liberal progressive national taxation was seen as being fairer and giving more control of earned income to the least off working families.

Vince Cable is destined to storm the country with his package of economic reforms that are fairer and progressive taxes than anything else on offer and by shifting help to those who need it most and by including savings on the daily wasted resources, in the NHS.

Since Henry George was himself a Libertarian, and practically no libertarian/anarchist/mutualist questioned the fact that the “land question” had to be solved somehow until the nineteen thirties, I am at a loss to follow your reasoning that because I am a libertarian I will therefore ultimately not want this to happen.

If everyone who called themselves a”libertarian” wrote as Henry George did, I would have far less to disagree with them than I do have. But my experience is that the word is used now by people whose sole concern is cutting down taxation and cutting down government services and so placing us all in the hands of big business. If LVT is a central part of it, I don’t hear people who call themselves “libertarians” saying so, and arguing as forcefully about the theft of land value as forcefully as they do about “evil gummint” and the sad plight of businessmen in today’s world and so on.

Maybe the word has been stolen from you, and I’m suggesting by hanging onto it, you’re keeping bad company. Otherwise, if you insist that modern “libertarians” are all really Henry George fans, well, it might help their case if they made that a little clearer and said a little which suggested that was so.

I think what is happening, however, is that vested interests will always take from an ideology what suits them and quietly drop the bits that don’t. So one can very easily see how it suits certain people with financial strength to claim to be “libertarian” but drop the LVT bit. We can very easily see how most forms of socialism have gone that way.

With the “mansion tax”, it was suggested as an idea, I felt it valuable because it did shift discussion away from the idea that the only fair tax was an income tax. I can also see that the arguments raised against it are the same arguments that would be raised – but on a hugely greater scale – against LVT. So it seems to me that even if the mansion tax is a very poor form of tax, it serves at least to start a useful discussion which could eventually lead to the case for LVT being better understood. It may also help iron out some of the practcal difficuties that would be involved in getting LVT going, most obviously the “poor widow in a big house” one.

You were quoted pouring scorn on “the desire for a particular type of modern liberal to hammer the wealthy”. I note that Henry George was not so reluctant to use strong language against the evils of poverty. I just looked at an example, here. I rather feel that if anyone were to come out with language like that today, the modern libertarian would be screaming abuse at him, saying he was just “envious”, and “enemy of wealth creation” etc. He would be just that sort of “modern liberal” you despise.

Here’s what I think. A property tax is actually two taxes combined: (a) a tax on the land value, and (b) a tax on the improvements made to the land. So, the tax under discussion is actually a LVT, but it’s also an improvements tax. If you remove the improvements tax element, then you’re left with LVT. I know that the value of my house was about 60% land when I bought it four years ago, since the insurance valuation was about 40% of what I paid for the house.

So, I’m not saying this is LVT (though it is in part), or that it’s a route to LVT (but it could be). Just that because it does have the effect of taxing land, and is progressive, it’s a step in the right direction.