This document discusses the history and principles of land value tax. It argues that a land value tax would be more efficient than other taxes because it has no deadweight costs and encourages efficient use of land. It proposes replacing council tax and other property taxes with a 1% land value tax on all housing, which could raise a similar amount of revenue without new taxes. However, large landowners, bankers, and politicians benefitting from the current system oppose a land value tax.

1. The History and Principles of Land Value Tax Presentation by Mark Wadsworth to UKIP Bromley Branch 1

2. Premiership footballers’ pay 2

3. Anderson/Ricardo’s Law of Rent 3

4. Commercial rents 4

5. House prices and rents vs. wages 5

6. House prices vs. wages(2) 6

7. Closeness to London 7

8. Footballers – inelastic supply 8

9. Footballers – increased demand 9

10. Land – fixed supply 10

11. Land – increased demand 11

12. House prices, wages, rents 12

13. House prices increase faster than wages 13

14. House prices since 1953 14

15. Land – reduced supply 15

16. New housing since 1953 16

17. Land use in the UK Farmland and grassland – 63% Mountains, heaths and bogs – 16% Woods and forests – 12% Coastal and freshwater – 3% (of which 13% is classed as green belt) Urban - 6% 17

18. Land – reduced interest rates 18

19. Do rising house prices make us richer? The parents have made a £100,000 paper gain The adult children are looking at an extra £100,000 mortgage each! The paper gain is no good to the parents – unless they remortgage and run up further debts The extra mortgage is a real cost to the adult children – they’ll pay an extra £200,000 in mortgage repayments. Who benefits from all this? The banks! 19

20. Do rising house prices make us richer? 20

21. Do rising house prices make us richer? Rising prices are based on supply restrictions and a credit bubble Credit bubbles always burst in the end That’s no good for the economy Taxpayers and savers end up bailing out the banks We’ve been having these 18-year boom-bust cycles since the early 19th century, possibly longer 21

22. UK tax revenues (forecast 2011-12) Taxes on wages and profits - £419 billion Taxes on land values and wealth - £73 billion Fuel, alcohol and tobacco duty - £59 billion Other receipts - £37 billion Total revenues - £588 Total spending – £710 billion Deficit spending - £122 billion 22

23. Not at all taxes are created equal! Some are intended to discourage certain activities (smoking, drinking, gambling) Some are rationing measures (fuel duty) Some are user-charges. Land Value Tax is a kind of user-charge. Some are jealousy surcharges Most of them have huge dead weight costs 23

24. Supply and demand in a free market 24

25. Dead weight costs (1) 25

26. Dead weight costs (2) Higher prices for consumers Lower income for businesses Less employment, more unemployment Tax evasion – so honest people end up paying even more Off shoring, outsourcing Deficit on balance of trade 26

27. Dead weight costs (3) Worst is VAT (a tax on ‘value added’ or ‘gross profits’) Next worst is National Insurance (a super-tax on wages) A flat tax on all incomes would be preferable to these A flat tax on land values has no dead weight costs 27

28. The Laffer Curve (1) 28

29. The Laffer Curve (2) 29

30. Dead weight costs (4) Nobody really knows what the dead weight costs of VAT, PAYE, income tax and corporation tax are At a minimum, they are about £200 billion That’s over ten per cent of GDP! This is on top of the dead weight costs of all the rules and regulations (another ten per cent of GDP). 30

31. Who said that Land Value Tax was the best kind of tax? Adam Smith David Ricardo Tom Paine John Stuart Mill Karl Marx Henry George David Lloyd George Winston Churchill Milton Friedman 31

32. The Poor Law Act 1572 Introduced a tax on land owners in each Parish, called the ‘Poor Rate’ Agricultural Rates were scrapped in 1929 Domestic Rates was directly descended from this, scrapped in 1990 They still have Domestic Rates in Northern Ireland instead of Council Tax. Business Rates are still going strong – the closest thing we still have to Land Value Tax 32

33. The People’s Budget 1909 The ‘Terrible Twins’ David Lloyd George and Winston Churchill pressed hard for a Land Value Tax in the 1909 Budget The landed aristocracy in the House of Lords blocked this There were two General Elections in 1910 The Parliament Act 1911 prevented the House of Lords from voting on taxation Conveniently for the aristocracy, the 1914-18 war intervened 33

34. Land – without Land Value Tax 34

35. Land – with Land Value Tax 35

36. Land – with a subsidy 36

37. Land – phasing out a subsidy 37

38. Commercial land - Business Rates 38

39. Commercial land – Land Value Tax 39

40. Housing – Council Tax 40

41. Housing – Land Value Tax 41

42. Advantages of Land Value Tax Has no dead weight costs Is easy and cheap to collect, easy to avoid and impossible to evade It encourages efficient use of land and buildings Leads to low and stable house prices Dampens credit bubbles and the boom-bust cycle Discourages NIMBYism, makes being a landlord less lucrative and so increases the number of owner-occupiers or home-owners Could replace most other taxes 42

43. A modest proposal… (1) Council Tax - £26.1 billion Council Tax Benefit - £(4.8) billion Stamp Duty Land Tax - £5.8 billion Stamp taxes on shares - £3.3 billion Capital gains tax - £3.4 billion Inheritance tax - £2.7 billion Insurance premium tax - £2.9 billion TV Licence fee - £3.1 billion Total £42.5 billion 43

44. A modest proposal… (2) The total value of UK housing is about £4,000 billion Why not replace Council Tax, Inheritance Tax etc with a Land Value Tax of about 1% on the value of all housing (at today’s prices)? There’d be no need for an extra ‘Mansion Tax’ According to Eric Pickles, it would only cost £5 per home to do the valuations This would be similar to Domestic Rates in Northern Ireland (0.7% of 2005 values), where they also have a roll-up option for pensioners 44

45. Who’s opposed to this? (1) Large landowners Bankers MPs with second and third homes Politicians who know that rising house prices creates an illusion of wealth and keeps them in government until the next bust Newspapers get a lot of advertising revenue from banks and estate agents 45

46. Excuses they use... “What about a widowed pensioner with a small income, still living in the family home?” Winston Churchill had tired of hearing this one over a century ago Of course we will have exemptions or discounts or a deferment option for pensioners! Or even better, increase the state pension. 46