The first quote there seems pretty much to sum it up for me. I’d question how practical this implementation is but it’s the kind of thing we should be doing and I think most people would vote for it if it was presented as ‘you pay the same tax as a multi-millionaire, is that okay?’.

I think that this is a really great policy that was only buggered up by Cable pushing forward with it too soon.

In any case – I don’t need to justify myself to you Matthew on this, Stephen referred to me as an LVT advocate because he and every other Lib Dem colleague in Oxford East has heard about it from me till their ears bleed.

Ian, I think it is very different. Buy the book! (“THe Case for a New People’s Budget” published by ALTER and launched at conference). Despite the name, the main benefit in LVT is not in tax revenue raising – indeed the prominent Labour land tax campaigner Dave Wetzel has said “even if we collect all the land tax and throw the cash into the sea it will be a huge benefit” or words to that effect.

The Greens too seem to view LVT as a taxation measure, rather than for what Henry George proposed it – as a solution to the long standing problem that too much of the product of labour goes to “rent” instead of wages because land ownership, and particularly absentee land ownership is a type of state protectionism that puts labour at a disadvantage compared with land.

Its primary benefits are only really apparent when you tax the sort of land that everyone who cannot currently afford to occupy because of “rent” would benefit from – freeing up that unproductive land that hoarders keep to themselves, pushing up the cost of land and the cost of living for millions of householder. This mansion tax does not create “free land” as LVT does, indeed it seems to me that it is likely to create more distortions in the market as people vie with the valuers to depress the values of their properties to avoid the tax.

There is no suggestion that the Mansion Tax would develop into something that exempts the improvements. It is just a property tax, on the capital good and the land. Further, if it seen as a way in for land tax across the board, how is that to proceed? By reducing the threshold every so often, so that what was once understood as a “tax on the wealthy” is stealthily introduced to ever more householders? That is not the honest way to implement land taxes. And will lead to resentment in lots of groups I suggest as they are included and their neighbours are not.

LVT will hit those harder who use more and hoard more (especially) than their needs – a lot harder. In my research I worked out that the tax on the least well off household in England and Wales, in Bleinau Gwent (and always exempting the lowest quartile property in any case, would be around £3,000 – far less than an average tax bill for an entire household in the second quartile even there – where the average paid by those in the top quartile in K&C might be as much as £100,000 – far more tax, I’d suggest, than any of our top rate income taxes would take from them. (Matthew clearly does not understand this effect if he thinks I am shying away from taxing the rich – but then he has an irrational and ignorant opinion of my politics anyway).

However much this party and people in it may say they understand LVT, it is clear that many do not really understand it properly. If they did, it would not be a fiscal policy being handled by the treasury team at all (except in handling the process of implementation and the other taxes to be reduced of repealed); every single policy paper in the areas of transport, business competitiveness, banking, climate change, agriculture and food scarcity, housing and welfare would be putting it front and centre of their policy demands.

When I was on the housing policy working party I specifically asked whether we would be considering LVT to which the reply came that “no, that would be dealt with by the tax policy group later” – so we went through our housing policy discussions with our one radical hand tied behind our backs.

People say they understand it, say they want it, but until we rediscover the zeal for it of the likes of Lloyd-George and Asquith I won’t believe that they do really. There’s a very apt quote from Lloyd-George that encapsulated everything I have written here at the head of my chapter on housing in the aforementioned book – that “it is all very well passing “Housing of the Working Classes Bills” but none of them will work until we tax the land.”

Actually, I don’t think the real benefits of LVT are very easily understood by those who look at it as a tax for “redistributing” already existing wealth or income – it is not – it is about *discounting* (or as some call it *pre*-distributing – and Matthew, I’d have thought that as a distributist after Chesterton you too would understand this) the distorting factor of rent before the products of labour are distributed. It is a wholly different paradigm from *re*-distribution after the privileged have taken their unfair share.

I suspect I shall wait in vain for an apology from Matthew for his rant above.

Patrick: Vince criticised Lloyd-George in the foreword to our book for having made a right hash of how to implement LVT. This to me seems to be just as haphazard, confused and confusing an approach, if it can be called an approach at all.

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?

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.

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.

Nic, on my First Aid at Work course last week the instructor was forever complaining about how on so many of these things people always want to know the answers to things that have such an improbability o happening to them it makes the asking more or less meaningless – like “what should I do if a Jumbo jt crash lands on Cornmarket St, the Carfax tower is threatening to topple and there’s aviation fuel flowiing everywhere – should I go and try and help the tourist with her foot trapped hanging from the tower observation platform with the aircraft engine embedded in her ear”.

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.

Nic, what you’ve identified is the difference between the land value and the building value. A proper LVT would only tax the land value, and as Jock says you’d have to be mad to try that eco project in a city centre where the land was worth £1m. If you tried it out in the sticks where the land was cheap then it would be different and the land value would be low. The current plan works only on the combined value, which is a shame, but to end, remember that a £1m property would actually pay NO tax, because only the value above £1m is taxed…

I think JBK is a troll…

Funny, apart from leaving the ears of Oxford East Lib Dems bleeding on the subject of LVT; apart from having contributed a chapter of ALTER’s book on LVT; it seems to be the category most used on my blog. I really have no idea how much more might satisfy Huntbach!

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.