Today I am setting out a plan for a radical reform of the tax system. At its heart is a land value tax (LVT) – an idea so old-Labour it can be traced back to Thomas Paine. But it is also a plan that draws on the best instincts of New Labour.
The LVT, an annual tax on the market rental value of land, would allow for the abolition of stamp duty – a tax on the aspirations of young people to put down roots and get on in life.
Furthermore, it’s not the only incidence of the land value tax being supported by electable British parties: the Liberal Democrats, one of the parties in Britain’s current governing coalition, has a pressure group urging adoption of the land value tax. The UK Green Party, which elected its first MP to Parliament in the last election, also supports a land value tax (PDF).
While the land value tax was originated by America’s classical liberal tradition-the forerunners to modern libertarianism-it seems that we’re falling behind in implementing it. Which is a shame, because of all the things that a government can tax, this might be the only thing that would be justified. Taxing land that nobody made is certainly more just than the government declaring that it has a right to a percentage of your labor. Income taxes, in a real way, are slavery. And sales taxes are no better-they hit the poor disproportionately hard, and constitute the government stealing a little piece of every transaction that you make.
However, we all have equal right to something that none of us made, the land. The land is the common heritage of its people, and the government, acting in its rightful capacity as the representative of the common interest, the rightful administrator of it, the guarantor of the equal distribution of its benefits and the truest collector of its rents.
Furthermore, taxing land values would be the shot in the arm that our economy needs. Forget stimulus packages, deficits, income taxes and the like-research on the topic done in 2000 indicates that those cities and counties that have a land value tax report more construction, economic activity and, above all else, jobs than similar areas without it.