“It [taxes on property values] is tantamount to a quasi-authoritarian reopening of settled property rights and fundamentally reorders the relationship between the individual and the state. Her scheme begins to abolish freehold property, turning yeoman-owners into leaseholders, with politicians as the ultimate landlords. Her `high value council tax surcharge’ is best understood as a rent, to be paid to [Rachel] Reeves for the right to stay in one’s home. Labour hates ordinary landlords, but is desperate to turn the state into the most exploitative of rent collectors. It’s sub-Marxist nonsense, a form of legalised theft.”
– Allister Heath, Daily Telegraph, 27 November, on yesterday’s Autumn Budget from Rachel Reeves, UK finance minister. He’s right that things such as “mansion taxes” – which in reality raise relatively paltry sums – are about forcing owners of properties deemed to be above £X or whatever into a situation where they own them at the sufferance of the State, rather than outright. And the temptation to lower the threshold on such a tax, along with everything else, will be irresistable.
On a related point, now seems a good time to introduce readers again to an essay in defence of absolute property right ownership – rather than the idea of owning it at the sufferance of the State. The essay, “Your Dog Owns Your House”, by the late French writer and classical liberal, Anthony de Jasay, is a masterpiece.
Yesterday was notable to me for two dogs which didn’t bark namely the alignment of capital gains with income for assessment purposes and changes to IHT.
Even if just for once the OBR projections are not wildly optimistic welfare and NHS commitments make another raid on taxpayers inevitable now that the low hanging fruit of freezing thresholds has been utilised. The 2% rate increases for “unearned income” are likely to be duplicated across all earnings on the spurious grounds that the manifesto commitments were never meant to apply across Labour’s whole term in office.
I wonder what the odds would be on a March 26 emergency mini budget?
We have to be approaching the death throes of the welfare state. Its parasitism can only survive for so long until it suffocates its host, and we are approaching that level. The ultimate expression of this are the gangs of foreign invaders living it large at our expense in hotels, fed, clothed at our expense, who repay our kindness with robbery and rape. If the Labour party is not cast into absolute oblivion at the next election, if there is one, then Britain is surely doomed.
Rachel Thieves behaviour is utterly unsurprising. She has already hit the farmers via inheritance tax so “mansion” taxes are hardly a surprise*. She is totally out of touch and, quite frankly, I don’t think understands how things like increasing employer NI contributions** (an earlier cunning stunt) and now increasing mimimum wage are toxic to the likes of the hospitality sector and small businesses. How do I know this? Well, apart from it being bleeding obvious I chat with Chris, the landlord of the Dandy Cock***, and he was explaining to me why he was putting-up prices. 20p on a pint of Unicorn overnight. And that was Reeves, not Chris to blame.
I have lived here for 18 years – as long as anywhere else I have ever lived. I have seen the pubs go to three day weeks, the restaurants shut down, the Post Office and the bank go and even Gary’s hardware shop… The final one is is a particular burn because Gary’s was epic and the alternative is B&Q in Stockport which is not walking distance. Gary no longer lives here. Last I heard he was living on bennies in a caravan on his elderly mum’s drive in Whaley Bridge. All fecked over by governments with no grasp of small business or how critical it is. There is much to bemoan about this nation but nothing gets me quite like seeing the shutters down in a very middle-class village just outside of Manchester. Actually, I lie. What really gets me is knowing why (partly from the talks with Chris and Gary). People simply can’t afford to do business. People can’t afford to make money by selling goods and services and that is tragic. When you cannot afford to make a profit then everything is buggered. Perhaps we need a grocer’s daughter. We don’t even have a grocer round here (the Co-op doesn’t count) much less one who has a daughter. Or a son. I guess that would be OK.
*I’m sure it would be very tempting to lower the threshold further but that would probably wipe out Labour in London. Have they considered that? Or are they thick and gotten too used, too quickly, to grace and favour homes?
**”contributions” sounds almost like it’s voluntary…
***My local and a well run business but it is tight. The name derives from it being near the site of a former cockpit and you can still see where the cocks fought. Oddly enough we also used to have a bearpit at the other end of Market Street. We did have other entertainments before Netflix.
Amen to all of that, Nick.
A few years ago (I’m fairly sure it predated the Covid madness), a couple of buildings burned down in Sauchiehall Street. Right in the middle of town, on what used to be not simply Glasgow’s, but one of Britain’s prime shopping streets. They were across the road from the former BHS, which, come the new year, will have lain empty for a decade. A couple of blocks from where they’re pulling down Marks & Spencer’s.
I noticed, as I passed the still-empty lot the other day, that the Council has put up a Christmas laser show on one of the exposed gable-ends. Yes. I’m sure that’ll make up for the absence of commercial activity.
We are governed by morons. Kleptomaniac morons, at that.
There are two main factors in the decline of owner-managers (Yeomen – whether in farming or anything else) – taxation and monetary policy. The prevent attention is on how family farms are being destroyed by taxes – but the matter is much broader
For a long time individuals (families) have been taxed more heavily taxed than Corporations – this is on top of the Corporations having the gift of limited liability – which is controversial in-its-self.
The favorable tax treatment of Corporate entities is justified on the Milton Friedman lines that they are owned-and-controlled by individuals – the trouble with this is argument is that it is-not-true. In Britain most shares have not been owned by individuals since 1965 – some 60 years ago (partly because of such taxes as Capital Gains Tax on individuals), the idea of “Aunt Agatha” style shareholders being in control of the vast Corporations was NEVER really true (not even in the 19th century) – but it is an utterly absurd argument now.
These days it is not even Pension Funds and other such that “own” Corporations (and even that would be hired managers supposedly in charge of other hired managers – a mess) as the shares are “managed” by entities such as Black Rock, State Street and Vanguard (which have shares in each other) – all this makes free competition in a free enterprise economy a legend (a myth) not a reality. One only needs to look at the United States – where there are several different film studios, supposedly competing with each other, but they all push the same boring left wing films, and television shows, that only a minority of people want to watch – because that is what the people really in control (Black Rock and co) want, it is their “Progressive” agenda – customers-be-damned.
This is even true of advertising companies – one would think their interest is in selling goods and services to customers, but NO – in reality their main interest is following certain agendas showing women and certain racial groups in a positive light and pushing the “Green” agenda as well.
“Does this sell the product?” does not interest them, and nor does it interest their Corporate clients – so what “capitalist” economy is this? And if any executive complains – there will be a complaint to “HR” – “Human Resources” (a “toxic working environment”, “I feel threatened” – and the executive will be out so fast his feet will not touch the ground. Again where is the “capitalist economy”?
And, of course, the vast Corporate entities want to control the LAND – the LAND (control of it) is at the heart of Agenda 2030 which beloved of the Corporate entities such as BlackRock (but others as well – including the Credit Bubble banks which are joined at the hip with governments).
This leads us on to monetary policy – our old friend the “Cantillon Effect” = increasing Credit Money concentrates assets in the hands of those who get the Credit Money first and at lower rates of interest (hello Black Rock and others).
“The world will never go back to commodity money Paul” – O.K. but then do not talk about “capitalism” (when there is no real capital) and “free enterprise” when the economy is a vast scam, with the leading players dependent on the Credit Bubble banks who are, in turn, dependent on governments.
Yes Property Taxes do tend to turn “owners” into de facto renters – who lose their business enterprises, and their own homes (often the same place for small business people), when they can not pay the Property Taxes – which is de facto rent to the government.
However, a lot depends on how high these taxes are.
There is a vast difference between how much people pay in, say, Alabama compared to, say, New Jersey – even taking into account the different level of incomes.
As for Britain – I was stopped on the street today by a man who told me about the few properties he owns, and how the various costs and the various taxes and charges imposed upon him mean that he will earn less than the Minimum Wage. He seemed desperate – and quite innocent of politics (he did not even know that the town is controlled by the Green Party).
So much for being a “Capitalist Landlord” – in a world where governments and vast Corporate entities (such as BlackRock – and other partner corporations) will end up owning accommodation blocks in which we will be stuffed – to live on benefits. Till we are terminated in one way or another.
Calling Property Taxes “A Land Value Tax – LVT” does not make the tax “good” or “less bad” in any way – indeed such a tax would turn all farmers into renters in all but name, renters from the government. And they would not be on the land long – “Kulaks” would be dealt with by the Progressive state.
Henry George noticed that as more people came to California the price of land went up – but, contrary to what he thought, this was not a “problem” that needed to be “solved” by some government tax.
As for a “citizen income” (Henry George again – but he may have got the idea for the writings of Thomas Paine or even, perhaps, John Locke – the theology, yes THEOLOGY, of John Locke) to be paid by such a tax – well that would be great for a poor person like me, at least it would be great till society completely collapsed and we were all hunting each (as food) in the ruins – but apart from that it would be fine.
Paul.
Yes, advertising has changed. It is increasingly portraying a multi-whatever utopia. Why? Up to a point it is woke – think where ad agencies recruit from. But it is also very strange indeed queer in the old sense of the word. Advertising, especially online, is not really about selling the product it is ostensibly advertising. It is mainly to pester you to stop it by subscriping to the premium version of whatever online service you are using. Think about it. This is strange. But that is what the ad industry increasingly is about. Is that linked to going woke? I think it is because if the advert is no longer really to sell the product it ostensibly advertises but is simply to annoy you enough to subscribe to something else it could be about anything couldn’t it? It is a perverse form of pester-power. That used to be a kid screaming about the must-have in the run-up to Christmas. At least that kid let you know exactly what he or she wanted albeit dialed to 11. Now it is companies putting any megabytage of utter dross wasting time, bandwidth and everything else to get you to subscribe to something totally unrelated to the ad.
For some reason I am reminded of the “New Economic Policy” imposed on the Soviet Union after the Communists took power. Those of us outside britain cannot do anything to help the british any more than we could help the Russians. The british either cannot or will not do anything themselves. This is going to be painful to watch.
Subotai Bahadur
All taxes are a form of legalized theft in my opinion. The question is, of the worst options, which is the least worst? When Thatcher first introduced the community charge way back when the idea was that there would be a direct connection between the spending of the local authorities and the amount they charged tax payers. It seems to me that that is a shockingly good idea. But it all went pear shaped when it became apparent that some local councils spent massively more, and consequently had to charge massively more, than others. Which is to say they were living off the national dole. And this is the problem with providing government “entitlements” whether to cities, states or individuals — once offered they are almost impossible to get rid of, because people and organizations build and structure their lives around those dependencies.
So the community charge brought down Thatcher for doing the very thing it was designed to do — making local government more accountable.
So the whole subject of taxation is bound up in this unjust mess of entitlements. Here in the USA the federal government takes money from a state’s citizens and then gives some of it back (after it has passed through the sticky fingers in Washington) to the states with massive strings attached. It is so horrifically seedy and unjust it would be harder to think of a worse way to tax people. At least Shylock only wanted a pound of flesh, even he didn’t have the audacity to cut off your arm, then demand you knelt before him to beg for a prosthesis.
So, to me, one feature of a tax that makes it less undesirable is that it is local rather than central. If you don’t like your local taxes you can always move, or you have more direct democratic access to change your local government. This is what all those community charge protesters should ACTUALLY have done. So, to that end I vastly prefer property taxes to a central income tax for example. If you don’t like it, you can always move. Often you don’t even have to move all that far to see a big change, and you can also realistically get together with a group of citizens and change the tax, something that is entirely impossible at the centralized level. Needless to say the history of government is a history of centralizing more and more and more, so that you pesky objectors can’t avoid paying the Danegeld to your betters.
Don’t get me wrong, I sure don’t like property taxes, but insofar as the local government provides local services they do have some justification in demanding payment. If I had my druthers it would all be done through sales taxes and/or direct fees, and FWIW, that does seem to be the direction things are headed in Florida. Which, FWIW, is one of the reasons I think Ron Desantis is one of the best governors in American history, even if MAGA does seem to despise him.
Of course some people think that taxes are a means of social manipulation to punish the successful for their success and bring about social justice. Some people thing that taxes are, in themselves, an intrinsic good irrespective of where the money is spent. These people can go fuck themselves.
Paul Marks
The favorable tax treatment of Corporate entities is justified on the Milton Friedman lines that they are owned-and-controlled by individuals…
No. The favourable tax treatment of corporations is justified by tax incidence. We’ve been through this before. Economists of all political stripes have agreed for over a century that corporations do not actually pay taxes. Their only disagreement has been what proportion of the tax burden falls on each of the three groups that actually bear the burden of corporate tax, otherwise known as tax incidence. Those three groups are the shareholders who receive smaller dividends, the employees who receive smaller pay rises and perks, and the clients who pay higher prices.
It is this actual tax burden that justifies favourable treatment of corporations. In fact, in a truly fair world there would be no corporation tax at all. One cannot be in favour of corporation tax and also claim to give a damn about the poor. The two things are entirely incompatible.
Philip Scott Thomas, you can have your zero Corporation Tax when there is zero Income Tax.
For individuals to pay a higher rate of tax (any tax) than a Corporations gives Corporations a competitive advantage – on-top-of their advantage of limited liability.
“The shareholders” – “we’ve been though this before” – the idea that these vast international corporations are owned or controlled by individual shareholders is wrong – in fact it is nonsense.
Sorry but I do not want society to be a Corporate State – a handful of “partner corporations” joined at the hip with governments, and this form of “governance” to be on an international level so where ever you go taxes and regulations are much the same.
At least as regards income tax (Social Security taxes complicate the picture – to put it mildly) there are several countries even in Europe where the income tax rate and the corporation tax rate is the same, what is wrong with that?
If “Corporations do not actually pay taxes” as “economists of all political striped have agreed for over a century” then they will not object to paying at the same rate as individuals – as, according to you, they are not paying anything, regardless of the rate of Corporation Tax.
By the way – a turnover tax (which Texas has) is better than Corporation Tax – as Corporations can hide profits easier than turnover.
But then why should they hide from any tax as “Corporations do not pay taxes” regardless.
Again there are several countries, even in Europe, where income tax and corporation tax are the same – and also where corporations can not deduct their property taxes (business rates here in Britain) from their taxable income before it is subjected to corporation tax.
There is no reason what-so-ever why the small property owner who stopped me in the street this afternoon to complain that the tax burden was destroying him, should pay a higher rate than Black Rock.
And he does pay tax at a higher rate than Black Rock.
Having all property controlled by the government or by corporations like Black Rock (but I repeat myself as they are joined at the heap) is not a good idea.
“Corporations do not actually pay taxes” – you may be closer to the truth than you know, but not in the way you think you are.
10% Income Tax and 10% Turnover (not profits) tax – that is what Ted Cruz proposed when he was running for President in 2016 – and he was right.
After all the corporation will just “pass on” the turnover tax – so, by your own argument, there is no reason for Corporate Managers to object to it.
NickM – the professional associations make sure the advertising industry is “Woke” – anyone who objects gets forced out, or reported to HR and then forced out.
And the Corporate clients of the advertisers do not seem to care – why should they care, after all the Corporate Managers do not actually own the entities they control, and if they did object they themselves would be “reported to HR” (or whatever) for creating a hostile work environment and putting people in “fear” by arguing against their opinions, or by any form of dissent at all.
It may be changing, it may be a bit less extreme than it was – we shall have to see.
But the international Corporate State system does not work very well – indeed it stinks.
I agree with Philip Scott Thomas regarding taxing Companies.
They do not pay tax but are merely unpaid tax collectors for the Government and in fact, the cost of paying the tax via having to hire accountants and tax experts to ensure that they a) pay the correct amount and b) minimise their liability is an additional cost of doing business.
Ultimately, it is the customer that pays the tax via the price charged.
Paul Marks
After all the corporation will just “pass on” the turnover tax – so, by your own argument, there is no reason for Corporate Managers to object to it.
Again, your economic illiteracy lets you down. It is not a matter of ‘passing on’ the costs of corporation tax. It is that once the money is spent on paying the tax to the government then it is no longer available to enrich the shareholders, the employees, or the customers.
Whether your antipathy to corporations is justified is a discussion for another day. But your advocacy for corporation taxes is an own goal; you wish me and my fellow citizens financial harm because the damage caused by the weapon you have chosen, in your ignorance, is entirely incidental. Friendly fire indeed.
Things aren’t any better here in the Land of the Free.
I’m about to make the last payment on a mortgage. At that point I will own the flat (condo, to American readers) in which I live. Oh, frabjous joy! But I will still have to pay about $400 a month to the City for property taxes, and $800 a month to the homeowners’ association. And if I don’t pay either group, I will have my property seized. $1,200 a month to keep something I supposedly already own -and both organisations are at liberty to raise their fees as they see fit.
@Paul Marks.
After all the corporation will just “pass on” the turnover tax – so, by your own argument, there is no reason for Corporate Managers to object to it.
Sure there is. One has to remember that increased taxes do not invalidate the law of supply an demand. Corporations produce goods and services at that price (or so they hope) that finds the balance between charging too little to leave money on the table and charging too much to chase away viable customers. Total profit, simplistically, is the product of the marginal profit per good sold times the number of items sold. These two are inversely related, so finding the right price can significantly change the total profit. We are not getting all those black Friday discounts out of the goodness of their hearts.
If the price goes up the law of supply and demand (which is one of the few parts of economics that bears any resemblance to reality) tells us that profits go down. Alternatively, if you keep the price the same the marginal profit goes down and so the total profits also go down. Those corporate managers are usually incentivized by total profit or some related measure, and the stock price in the market is also dependent on profit so will, all other things being equal, go down. And, irrespective of whether big corporate owners or grandma’s 401k, that does cause people to reconsider their investments.
But the massive amount of money government spends has to come from somewhere. Income tax, business tax, each have pros and cons. Income tax, for example, is less regressive, business tax more regressive (insofar as it impacts people) but income tax is more visible to voters and business tax less visible to voters, and of course it is politicians, not economists that decide these things[*]. So the whole argument should not be on the particular mechanism of taxation, property, vat, sales, income, business, but on the MASSIVE amount of money the government spends, and the utterly feckless way it spends it. All the rest is fleas arguing who owns the dog. If federal, state and local spending was 4% of GDP rather than what it currently is, 37%, then nobody would give a shit what taxing mechanism we used.
[*] Not that economists deciding these things would necessarily be better, since “economist” is one of that small subset of jobs where you can be wrong nearly all the time and still continue to draw a paycheck.
Another abuse is allowing Corporations to deduct their Property Tax (in Britain “Business Rates”) from their income before it is subject to Corporation Tax.
An individual is not allowed to do this – they can not deduct their Council Tax from their income before it is subjected to Income Tax. And Corporations are not allowed to engage this abuse in, for example, Hungary – so it is NOT “inevitable”.
The Corporations (especially vast international “partner” Corporations – WEF types) are given every advantage over individuals and families – over “Yeoman”, and the intention is, for the FUTURE (it has NOT arrived yer) some sort of Henri Saint-Simon society where the population are de facto serfs – serfs of a Corporate State.
Again the Credit Money flow is also important – it goes first to certain people, certain entities, an “increase in the money supply” does NOT mean that everyone suddenly gets more money – the money goes first to certain places (as F.A. Hayek, in “New Studies” 1978, said against Milton Friedman) the money supply is not like water – it is more like treacle – it builds up in certain places and certain people get sticky fingers.
So there are two factors – the favorable tax treatment of Corporations against individuals and families (which, contrary to some comments above, is NOT justified) and the Credit Money flow – the Cantillon Effect (named after Richard Cantillon).
None of this is inevitable – BlackRock and the others do NOT have to end up owning all the farm land.
There are countries, even in Europe, where Corporations are NOT taxed at a lower rate than individuals (Hungary and Bulgaria – to name two).
And nor is Credit Money inevitable – and having a commodity money does NOT mean you have to walk around with a bag of gold or silver – ownership of the commodity can be transferred electronically.
So “if gold was the money you would have to walk around with a bag of gold coins” is FALSE.
As for a turnover tax rather than a corporation (profits) tax – why should the high Corporate Manager class (Larry Fink and co) object to any tax on Corporations if “Corporations do not really pay tax”.
Again – tax rates on individuals and corporations should be the same (indeed there is an argument that corporations should pay a higher rate – as payment for limited liability, but-leave-that-aside), 10% for both seems fair – but whatever the rate, it should be the same.
I am aware that many people argue for an end to the granting of Corporate status – that Limited Liability is an unjustified gift from the state, that tends to push towards a Corporate State with the population, in the long term, reduced to a modern version of serfdom – HOWEVER I have gone for the much more moderate position that Corporations should NOT be abolished, but should pay taxes at the same rate as individuals and families – and that the tax rate should be much lower than it now is in Britain.
As for whether it would be a better as a Corporation (Profits) Tax or (as in Texas and other States) a Turnover Tax, is an open question.
As recently as the Presidential campaign of 2016 Ted Cruz argued for a flat rate Federal income tax of 10% and a Federal turnover tax for Corporations of also 10% – so people who describe my position as “extreme” (or whatever) are saying a lot more about themselves, than they are saying about me.
In the United States there was a Corporation Tax BEFORE the Federal Income Tax – because it was felt that Corporations should pay for the gift of limited liability. That Corporations should pay a LOWER rate of tax than individuals and families would have been considered an outrage – because it is an outrage.
Thanks for all the excellent comments.
I may write a follow-up item, focusing in particular on Labour’s hostility to private property, and why it matters.
Please remember that Property Tax is an entirely different tax to Land Value Tax. I dislike the term “Property Tax” for many reasons, but in this case, because it conflates the land with the buildings and usage of such.
“Property Tax” penalises people for making efficient use of “land” – as a basic “for example”, by extending my house to incorporate a “granny-annex” for me dear old mum (and thereby freeing up her old house for other people, thus increasing supply), I would be penalised by Reeves. This is clearly fucking outrageous.
“Land Value Tax” is only levied on the unimproved value of the land – ie. what I do with the land has no bearing on what I’m charged for it.
In the case of farmers, it would only apply to land left fallow. People who don’t understand what LVT is get very caught up in fallacies like “oh, but if they get charged 100% LVT, what happens next year?” because they somehow think that 100% LVT means that the entire income from that land gets taxed.
Here’s how it actually works:
You own 20 acres of land. That land – unimproved, untouched, and before you work it – has a value of £20k. Even at 100% LVT, you pay £20k per year.
But. Because you farm it, improve it, and sell the goods produced from it, what you actually make is £200k per year.
That £180k difference? That’s yours. LVT has nothing to do with that £180k. It doesn’t touch it. And also – well done! That’s exactly what LVT advocates wanted to happen!
Same with housing, or other businesses. It’s not the improvements that are being taxed.
A better way of looking at it is this:
Land and it’s resources are not something that can be increased. It’s finite, and we’re not making more of it.
If I fence off a portion of land, and say “this is mine now lol and you can’t farm it”, then I’m denying everyone else the right to subsist from it – especially if the literal “denial” is enforced by police etc that are paid for by taxation.
LVT is best thought of as a “fee” paid to the community for denying them their previously held common-rights to the land (and other resources), rather than a tax as such.
Whilst yes, I nominally agree, I would like you to differentiate between “Private Property” and “Personal Possession”, if you write a follow-up.
When Proudhon noted that “Property is Theft!” it’s important to note that he followed up with “Property Is Freedom!” – and that there are two very different definitions of Property encapsulated in that phrase.
As I have already mentioned above….
On Property Taxes what matters is not the NAME of the tax – such as a “Land Value Tax” – and, WITHOUT A REAL MARKET (Ludwig Von Mises – “101”) the state would not know how to calculate the “value” of the “undeveloped land” (or “developed land”), what matters is HOW HIGH the taxes are.
Again – paying Property Taxes in New Jersey is vastly more difficult than paying Property Taxes in Alabama – because the Property Taxes are much higher in New Jersey, even in proportion to the level of incomes.
As for farm land – farm land was made exempt from “the Rates” (British Property Taxes) way back in 1929, because the authorities understood that high Property Taxes would utterly destroy family farms – some American States also charge farm land at a much lower rate.
Even Denis Healey (who was not the moderate he is remembered as – not at all) exempted family farms from inheritance tax – because he understood that subjecting farms to inheritance tax would mean that international corporations would end up owning all the land – apart from government owned land.
I do not think it is “extreme” to be against a handful of international corporations, plus governments, owning all the land.
Here’s how it actually works:
Is that how it works in real life? Because most people realize that the land value tax is going to wind up just like a property tax once the politicians start fiddling with the rates and valuations.
When Proudhon noted that “Property is Theft!” it’s important to note that he followed up with “Property Is Freedom!” – and that there are two very different definitions of Property encapsulated in that phrase.
And the State is going to be making the determination of what type of “property” your property is.
Ted Schuerzinger – yes indeed, pretending that a “Land Value Tax” is less harmful than other taxes is false, utterly false.
As for private property, especially in land, it is the basis of everything that is good in a large scale society – in both the economy and society.
The enemies of private property have no business being on this website – there are many websites for such folk, but this is not one of them.
But they can join a commune, religious or secular.
Israel encouraged communal farming – very heavily encouraged it, and, contrary to the myth, it does not work very well. Most people in Israel understood that as long ago as the 1970s.
As for worker cooperatives in industry and retail – most certainly they should be allowed to exist, but they also do not tend to work very well – although there are a few exceptions.
No, it enormously matters, because you can’t just call one type of tax another, falsely, and then pretend that they are they same. They’re based on two entirely different things, there is literally no way to conflate the two.
Ted – No, that’s not how it works, clearly.
I’m not going to give this more attention than it deserves; you need to read up on it first before saying stuff like it’s going to wind up like a property tax. FFS.
Neonsake. Private property is private property. It’s not some privileged exemption from the default of land being in common, which is your assertion.
The whole Georgian position has been thoroughly kicked around on this blog in recent years.
Johnathan Pearce beat me to the punch – so it would be pointless for me to type the same thing again.
I’m sorry, what?
You do know the difference between “personal possession” and “private property”, surely?
When Proudhon noted that “Property is Theft!” it’s important to note that he followed up with “Property Is Freedom!” – and that there are two very different definitions of Property encapsulated in that phrase.
Enlighten me as to the difference.
Land and it’s resources are not something that can be increased. It’s finite, and we’re not making more of it.
That ignores the role of search, as US economist Bryan Caplan has written:
Economist Henry George famously advocated a 100% (or near 100%) “Single Tax” on the unimproved value of land. Many modern tax economists, most notably Joseph Stiglitz, conclude that George’s logic was sound: Since the unimproved value of land is perfectly inelastic, even an expropriatory tax is non-distortionary. Economists’ main objections to Georgism are merely that (a) it is difficult to implement in practice, and (b) politically impossible.
My co-author Zachary Gochenour and I have a new working paper arguing that the Single Tax suffers from a much more fundamental flaw. Namely: A tax on the unimproved value of land distorts the incentive to search for new land and better uses of existing land. If we actually imposed a 100% tax on the unimproved value of land, any incentive to search would disappear. This is no trivial problem: Imagine the long-run effect on the world’s oil supply if companies stopped looking for new sources of oil.
Note we have not complicated the models by differentiating between improvements and the land’s “unimproved” value. Information about the land can be considered an improvement in its own right. Some of the land’s qualities have very low search costs to discover: is it arable, will it support any type of building, is it in the middle of a city or rural area, etc. Discovery of other potential uses may require significant search and/or investment in other technologies. An entrepreneur brings these qualities to market – they do not bring themselves. Until he does so, the value of the land is undefined.
Land may be fixed, but the land that is known to have potential value isn’t. That is where entrepreneurial alertness and search come in.
“Land Value Tax” is only levied on the unimproved value of the land – ie. what I do with the land has no bearing on what I’m charged for it.
You are correct that is what LVT is, and it is therefore superior to the sort of tax that Reeves has imposed on homes for being valuable. We can agree on that, for sure! It will discourage improvements that owners want to make to their homes.
An issue, however, of practicality is knowing how to tell the “improved” and “unimproved” bits apart. It is not, from my reading of the Georgist literature and the critiques of it, that easy to do, although I am sure folk are working on it. (And there are various criticisms of Georgist/adjacent ideas of land rent by the likes of Frank Fetter and Frank H Knight.
You do know the difference between “personal possession” and “private property”, surely?
No I don’t. In matters such as this, please offer a water-tight definition yourself.
Underpinning the LVT argument (although I concede that there are some libertarians who have sympathy for LVT) is the assumption – which is just as much a thought experiment as the “state of nature” one, that absent property rights enforced by law, the default must be the common ownership of land. But why? Land is owned by those who homesteaded it, inherited it from such, or acquired it by commercial exchange. Of course, in reality, a lot of land was stolen (the Norman Conquest in 11th Century England, etc) but we have to draw a line somewhere. We don’t know how many more or fewer millions/billions of people there will be in the world, and can they all have some kind of “common” access, the absence of which is a “privilege” for those who are the actual legal owners? There has to be, conceptually, a statute of limitations on all this. The idea of a default “common” ownership status is nothing more than an assertion.
In practical terms, death duties, wars, divorce, business failures and sheer cussed life has broken up many of these once supposedly illegitimately acquired hunks of certain places, so it makes sense in my view to proceed on the basis that land that X or Y owns is theirs, and that’s the end of the matter. Yes, we enforce property boundaries in the courts, and courts cost money, but that does not undermine the broader point.
LVT is, true, better than many other taxes. It is far less distortionary of human behaviour. But it is not perfect. Given the realities of today’s politics, does anyone also think it would replace other taxes?
A few more thoughts, via the Econlib archives and a comment thread about LVT: https://www.econlib.org/archives/2012/02/problems_with_h.html
Land, being fixed in amount, is of course very volatile in price (no supply response to mitigate price movements), and appraisal-based taxes of all sorts are by far the most difficult and costly to administer and vastly the most litigated. (See appraised-property gift tax, estate tax, regular property tax, etc.) They are also the most prone to corruption, for obvious reasons. When the new Pittsburgh land tax system was adopted it was immediately hit with a tsunami of appraisal protests, appeals and litigation, collapsed and was abandoned.
The first requirement for a “good tax” (or “least bad” one) is that it be easy to administer efficiently and equitably. When a tax like this one comes *nowhere near* meeting even the most minimum practical requirement in that regard, there is little reason to spend a lot of time parsing the theory of it. Except for the academic fun of theory parsing.
And a final swipe from Caplan:
George was right that other taxes may have stronger disincentives, but economists now recognize that the single land tax is not innocent, either. Site values are created, not intrinsic. Why else would land in Tokyo be worth so much more than land in Mississippi? A tax on the value of a site is really a tax on productive potential, which is a result of improvements to land in the area. Henry George’s proposed tax on one piece of land is, in effect, based on the improvements made to the neighboring land.
And what if you are your “neighbor”? What if you buy a large expanse of land and raise the value of one portion of it by improving the surrounding land. Then you are taxed based on your improvements. This is not far-fetched. It is precisely what the Disney Corporation did in Florida. Disney bought up large amounts of land around the area where it planned to build Disney World, and then made this surrounding land more valuable by building Disney World. Had George’s single tax on land been in existence, Disney might never have made the investment. So, contrary to George’s reasoning, even a tax on unimproved land reduces incentives.
Johnathan Pearce – yes a 100% tax on the “unimproved value of land” is insane, utterly insane.
People who would use violence to impose such a tax, are clearly the enemy – and should be treated as such.
As for the Norman Conquest – Henry the First married a direct descendant of Alfred the Great. And he was far from alone in marrying an Anglo Saxon from a formally landed family.
So it depends on whether one just traces down the male line (in which case only a few Anglo Saxon families remained in possession) – or whether one is prepared to accept descending down the female line.
Kent being a different case – as Anglo Saxon land law remained the law there till the 1920s.
Hence the motto of the County “Unconquered”.
Johnathan – I’m short on time today, so this won’t be able to answer everything thoroughly.
I’m going to, if it’s okay, split my response into two segments – firstly a brief note on LVT, and then I’ll come to the “property” question after.
On LVT, my suspicion is that we’re not that far apart on it, and further discussion is likely to bring us further together.
On Caplan:
Caplan’s “rebuttal” wasn’t of Georgism, it was of the “self-assessed tax” system advocated for by a chap called by Harbenger in the 70s. I’m not *enormously* familiar with the nuances – in fact, I’m only passingly familiar with the whole system, and I haven’t seen it in the wild for years – but my understanding (possibly incorrect) is that he advocated for people to assess their own property worth, with an interesting caveat that if someone offered them more than that “self-assessed” value, then they were legally obliged to sell.
As I say, I’m not familiar enough to really critique it, but I sort of “hope” I’ve misunderstood, because that sounds like madness to me. Beyond the “you have to sell”, it sounds like it would lead to massive overvaluation – in which case, Caplan’s critique feels fair and reasonable; but it’s important to note that he’s not offering a critique of Georgism or LVT as it’s normally understood. Again – enormous caveats apply to my comment in that I’m short on time and haven’t done a proper analysis.
—-
On property.
I’m going to assume that everyone is at least passingly aware of the phrase “Property is theft; property is freedom”? It’s, after all, one of the most famous phrases in Anarchism, from which Libertarianism grew (Libertarianism being, previously, a polite word for Anarchism)
Proudhon’s meaning here was to draw a distinction between “Private Property” and “Personal Property” (I wrote “personal possession” earlier, but “personal property” might be a more helpful phrase)
The distinction might be subtle, but, I’ll try to illustrate it as best I can.
Private Property is that which a person (or group of people) own and exclude others from, with the specific intent of charging them to access it.
A very, very easy example is: There is a field, “unowned”, upon which many resources grow. Currently, this is “common” land. I go frolicking through it (imagine me wearing a sundress and a floppy hat, if you like), throwing apple seeds hither and thither, singing “mixing my labour!” as I go.
Under Lockean rules, I now own this land. I put up a fence, and am able to invoke the vast and awesome power of the State to stop little Johnny from scrumping my apples. You want apples? Pay me. I mixed my labour with it. It’s mine. I’m not going to work it myself, I’ll get you to work it in return for a wage that doesn’t cover what you could earn before I fenced it off, but I can exclude you from it (legally). Hence: “property is theft”.
That’s Private Property – private ownership of the means of subsistence or production, previously accessible to all, which I can leverage to extract payment for access. Whilst I’ve used the easily understandable “field” example, this includes ownership of factories, mines, ranches and other “means of production”. To forestall the argument that I don’t “pay” to access my office: if I generate £300k in profit, but am being paid £60k, then yes I am paying to access it (I appreciate that that one is a bit more tricky to get your head round, but it’s still factually correct)
Personal Property – that which you yourself own and use. Obvious examples are your house, your car etc. But it also (can) include the tools/space that you use – your means of production – which means that you own the total value of your labour. This “personal property” gives you protection from having to engage in the kind of labour forced upon you by “Private Property” above – hence, “property is freedom”
Some people conflate the two (legally, this is indeed what has happened), but it’s massively unreasonable and confounds common sense to think of someone’s house and the roof over their head in the same “property” terms as a field, a farm or a factory. It’s been done basically to increase “legibility” in the James C Scott sense from “Seeing Like A State”, which I believe you’ve read?
I’ve not had time to cover off all the nuances, but that’s essentially the difference, in principle.
Is it “watertight”? No. Nor should it be. In the millenia of human history, and the geographical distribution, and the various ways and complexities and richness of our ways of living, I would be very, very disappointed if any given way of codifying property was ever considered “watertight”. It should, instead, be slightly fuzzy and adaptable to local circumstances. That’s the difference between “statist legibility” and “actual human existence”, IMO.
(I appreciate the conversation, and again, apologies for not being able to spend more time on it)
Libertarianism in philosophy is the belief that moral agency (free will) exists, that we can, with effort, choose to do other than we do – in politics libertarianism is the belief that human agents (free will beings) should have their bodies and goods violated as little as possible, ideally not at all.
“Anarchism” may in theory mean no state, but has normally meant a total state – just not called a state. Total Collectivism – just without using the words “state” or “government”, but with all the terror and coercion of orthodox socialism. YES there are indeed “Anacho Capitalists” who reject this – but there are not many of them.
To give a practical example – “anarchists”, in the sense of the people who wave the black flag with the circled “A” upon it, would be just as much enemies of J.J. Hill or other men of achievement as other socialist totalitarians are.
Rousseau argued that slavery to the collective was not slavery as the individual would be part of that collective – he was wrong, it is just as much slavery as being enslaved to an individual master.
Neonsake: Caplan’s paper, in which he talks about search as an issue, refers explicitly to the Single Tax idea of Henry George. Thus, it must be considered as an attempted rebuttal of it. Several writers on Georgism, including those who seem in favour of it (example here), say self-assessment is an important point, so Caplan is not going off-piste here.
Property:
I’m going to assume that everyone is at least passingly aware of the phrase “Property is theft; property is freedom”? It’s, after all, one of the most famous phrases in Anarchism, from which Libertarianism grew (Libertarianism being, previously, a polite word for Anarchism)
Yes, I am indeed familiar with the Proudhon quote, and regard it as one of those beliefs that encourage the wholesale confiscations of privately owned land and capital, resulting, in almost cases, in the State becoming the owner of said, rather than some anarchist utopia where the State, in Marxian language, “withers away”. Of course this may not have been Proudhon’s intention for this to happen, but that is the practical reality. There are attempts to square circles via ideas such as mutualism etc, but they tended in my view to not work.
Private Property is that which a person (or group of people) own and exclude others from, with the specific intent of charging them to access it.
Hmmm. Exclusion is not even always solely about the commercial ability to deploy such property, but to enjoy privacy from prying eyes. We forget (well, not the good readers of this blog!) how important this point is. It is one reason why a society grounded in the widely dispersed ownership of property is coterminous with individual autonomy and a sense of everyone having their private “space”.
Personal Property – that which you yourself own and use. Obvious examples are your house, your car etc. But it also (can) include the tools/space that you use – your means of production – which means that you own the total value of your labour. This “personal property” gives you protection from having to engage in the kind of labour forced upon you by “Private Property” above – hence, “property is freedom”
I cannot fully agree. My freedom to deploy my property as I see fit must include, for it to be coherent, with the liberty to exclude those whom I wish from the patch of land that is mine. You cannot just walk into my house without my consent. This is also important in the intellectual world: the freedom to speak and comment is not the same as having the right to demand that I provide you with a lecture hall or media platform, etc. This goes beyond commerce to human interaction.
I also appreciate the conversation, which is one of the good things about these comment sections.
You might find this book by Jan Lester interesting, because he is what I call a “propertarian libertarian” (influenced by various people such as Rothbard). https://www.amazon.co.uk/Escape-Leviathan-Libertarianism-without-Justificationism/dp/1908684089
Johnathan:
Agree that he intends it as a rebuttal to George’s Single Tax, but here he says “Clever Georgists propose a regime where property owners self-assess the value of their property, subject to the constraint that owners must sell their property to anyone who offers that self-assessed value” – that’s not a standard Georgist position, that’s the Harbenger Tax. As a rebuttal of that, it appears to me to perfectly valid. Whilst the “assessment” problem is very real, self-assessment is not normally advocated for. I’ve read many and varied ideas, none of which have struck me as “this is it! This is the perfect, utterly unassailable one!”, but it doesn’t strike me as an impossible problem to solve. I had a swift skim through some Georgist forums this morning to see what they (as in, people more knowledgeable on the nuances than myself) had to say on Caplan’s critique, and the consensus seemed to be that a) in the blog post, he’s critiquing something that only a very tiny subset of Georgist’s believe – self-assessment – but he’s correct on that particular point and b) the full paper discusses other approaches to assessment, which he is much less critical of. I’ve not read the full paper, and probably won’t, so I’ll take their word on it.
———
Back to property.
So, I’11 with 100% confidence say that that was not Proudhon’s intention. What he wanted was for land and capital to be dispersed and owned by more people, and less concentrated in the hands of a minority of people, with the view that “concentration” leads to monopolies, unequal bargaining power, lack of competition and is generally A Very Bad Thing (a pretty standard viewpoint of libertarians of both right and left tendencies). Further, he believed that it was State privileges that led to concentration and monopoly, so removing those would open up the playing field, and go a long way towards levelling it; he did not sanction the seizure of existing property/capital, but advocated for absolute free trade: “the logical carrying out of the Manchester doctrine; laissez faire the universal rule”, in the words of Benjamin Tucker when talking about Proudhon.
(In the spirit of sharing book recommendations, I will never hesitate to recommend Tucker’s “Instead Of A Book, By A Man Too Busy To Write One” – free to read; other free versions are available via a swift google. Tucker is easier to read than Proudhon, if for no other reason than he’s writing in English as a starting point. Also, Proudhon was a prick in many “social” ways)
In the context of “Private vs Personal Property”, the distinction is about legal ownership, rather than “privacy from prying eyes” – private property is that owned not by the people who work on it, but by absentee owners who claim the right to the profits generated. For now, I’m not going to argue about whether this is a good thing or a bad thing, I just want to clear up the definitions.
If you rent your house from a landlord, you are living in Private Property owned by the landlord. If you live in a house you own yourself, you’re living in Personal Property.
If you work in a factory owned by a venture capitalist, you’re working on Private Property. If you work in your own workshop, you’re working on Personal Property. The distinction is that the absentee ownership. Yes, there’s nuances, but essentially it means Private ownership of the means of production or of subsistence/living.
Further:
Yes, I agree 100%! – this is your personal property, after all. You absolutely should have the right to exclude people as you see fit, and for whatever reason. That’s the “Property is Freedom” part of the equation, as well as it pointing towards the freedom that owning your own means of production/subsistence would provide.
“Private” here is the legal ownership concept, rather than the “freedom from prying eyes” concept.
To be clear, just in case I’m either being misunderstood, or I’ve been clumsy with my wording: alternatives to “private ownership” very much include options that are NOT “state ownership” – personal, collective, co-operative, and others.
As the population of California went up Henry George noticed that the price of land went up.
But what he did not understand was that this was not the result of some conspiracy of “land monopolists” (or whatever) – and it was not a “problem” that could be fixed by a special tax.
It is quite true that government regulations can increase the cost of housing – for example it is much more expensive, due to regulations, to buy a home in Los Angeles than it is in Houston – but land is a finite resource, if lots and lots of people arrive in an area (either by migration or by births) then the cost of a home (or farm – or whatever) will go UP – and a special tax does NOT help.
The cult of a special Land Value Tax reminds me of the cult of Credit Money – both are false, they do not do good, they do harm.
Neonsake: o, I’11 with 100% confidence say that that was not Proudhon’s intention. What he wanted was for land and capital to be dispersed and owned by more people, and less concentrated in the hands of a minority of people, with the view that “concentration” leads to monopolies, unequal bargaining power, lack of competition and is generally A Very Bad Thing (a pretty standard viewpoint of libertarians of both right and left tendencies).
In that case Proudhon’s quote is misleading. He’s not saying property is theft, but arguing against land/etc being owned by a handful of people. I am all for widely dispersed systems of ownership, and ways to encourage this.
Paul: it is worth noting this perhaps obvious point in that rising land prices caused by an influx of people to an area is a feature, not a bug, of a market economy. Such rising prices will incentivise some to sell and move to cheaper places and pocket a profit. Their profit may be “unearned” according to the Georgists, but they are responding to a price signal. Less developed parts of a country can therefore benefit as those who have sold in newly enriched, more expensive places move to a new area. This is often what happens with much-maligned gentrification of towns. People make lots of money on their homes in area A, area B, being cheaper, starts to attract attention if there are a few reforms (such as law enforcement, better infrastructure) and the enriched group buy cheaper priced places.
This is the market at work.
Johnathan Pearce – “it depends”.
Henry George opposed railroads being built (his opposition to them made his name – because he was one of the few voices that was against the building of railroads) – not because he opposed government subsidies to railroads, that was not the real issue to his mind, but because railroads would make it easier for people to go to California and, he believed, increase poverty.
For a century he was shown to be WRONG – more and more people came to California, yet living standards went UP – living standards were vastly higher in the 1960s than in the 1860s.
But then things started to change – most people would agree that the standard of life (whatever GDP per capita may say) has been declining in California in recent decades – and mass immigration from the Third World is a big part of that.
One could say the same of London and other British cities and towns.
Of course, there is a libertarian response – allow immigration but end all government benefits (such as Food Stamps – only created in 1961) and public services (such as free schools) for immigrants, so only people who are likely to make a contribution are likely to come.
Taxpayers in American did, to a limited extent, try to do that – but the COURTS stepped in and demanded endless public services and benefits for immigrants, both legal and illegal.
That has proved to be an utter disaster – and the worst is yet to come.
The people who have come (and had children) vote (legally – and illegally) the way they do, quite rationally – they want to loot as much as they can and then watch America (which they hate) burn. They say this quite openly – for example the Somalis that were (insanely) invited in to Minnesota. Even Madhi Hasan from London was invited in to the United States – and given citizenship, in spite of (or BECAUSE of) his fanatical hatred of the United States and his desire to utterly destroy America.
Watching the team around Mayor Elect Mamdani already looting New York City (and they are not even in office yet) is a case in point – and a million people voted for him.
He will KEEP his promises (at least some of them) – there will be lots of loot for his supporters (for awhile) and New York will indeed become more “affordable” as taxpayers flee the city and housing prices crash.
“The city will be destroyed” – yes, and that is exactly what they want, and they will dance in the ruins – before seeking to loot and destroy somewhere else.
It is unfortunate.
Kick them out?
The judges will not allow that – especially as most of the migrants entered legally.
Perhaps the towns and cities of Britannia were more “affordable” after the Germanic tribesmen, who were also INVITED in, burnt them.
No one paid any rent to put the post holes of their hut in the rubble and ashes of the destroyed buildings.
The “land monopolists” were no more, civilization had fallen.
To be fair the riots and looting did not start with the immigrants – the Los Angeles Watts riot of 1965 had (contrary to Hollywood and lying school text books) no real justification – Chief Parker (the inspiration for “Mr Spock” on “Star Trek”) lacked emotional intelligence (he was as cold as ice – and did not really understand people, of any race, today I suspect he would be diagnosed as “on the spectrum”) and his anti corruption drive had cut the police off from sources of information on the street (socialize with people and Chief Parker’s Internal Affairs would assume you were taking bribes and drive you out of the police force with investigations), so they were taken by surprise. But he was NOT the vicious racist that he is presented as.
The bitter truth is that the people who had arrived in Watts from World War II onwards contained a lot of criminals – native born criminals. And it was the same with the Detroit riots of 1967 – Detroit was one of the most “Progressive” cities in the United States, at local, State and Federal level “Progressive” subsidies and regulations were being pushed in Detroit – yet there was widespread rioting and looting anyway. “But the blacks were mistreated….” – contrary to Hollywood, black people in Detroit in 1967 had the highest living standards of black people anywhere on planet Earth.
I believe it was a relative of Thomas Sowell who went out on the streets, during one of the New York riots, begging his “brothers and sisters” to stop looting and burning – they laughed at him (he was lucky not to be killed), and that area of the city never recovered – business enterprises will not open in an area where theft “Social Justice” is considered cultural expression.
But all that is nothing compared to what is going to happen in New York City over the next four years.
@ Johnathan Pearce
Pretty much, yeah. Think of it as a rhetorical flourish, or a deliberately provocative statement, rather than “misleading”, and you’re basically there. He was prone to such rhetoric.
Honestly, this is one of the reasons I don’t recommend reading him directly, as without the entire context it can indeed be incredibly misleading, but rather reading people like Benjamin Tucker who have distilled his thoughts into plainer English. In this case, I used it because it’s one of the more famous quotes regarding property and it gets people thinking about the different forms that it takes.
neonsnake – yes it is always the best policy to read the actual works of a thinker rather than just what other people said-he-said.
Books of essays and letters and so on, are a good start – if one does not have time to read long books.
Q. Skinner at Cambridge used to produce books of the short pieces of writing of various thinkers, so one could read their thoughts first hand.
Of course, this does depend on good translations of works written in other languages.