Features of Capitalism – Land Tax and guaranteed basic income – by Cynthia King

There are 60 million acres of land in the UK – 40 million are owned by 6,000 people, the super-rich: the Queen, the Duke of Buccleuch, the Duke of Westminster, et al. Instead of paying land tax as they did in the 19^th century, they actually receive subsidies and have the ability to exploit tax loopholes (like the trust). The rest of us don’t.

Workers pay the most taxes – on their labour. 40% of government revenue comes from income tax and VAT.
Instead of taxing wealth that is earned, we could be taxing that which is unearned: land.

If a landowner wants the right to occupy it, rent should be paid to the community which has given that land value.

An excellent explanation of the way land tax works is given by Shruti Tripathi at ‘Critical Thinking’: £838/sq foot a year: Bond Street is the most expensive in Europe

“The question is: how is value created and to whom does it belong?

The simple answer is that the “price” or rent… is determined by supply and demand… Landlords will charge the maximum they can get away with. But what underpins the demand? Consider the shops on Bond Street, their value is the accumulated spending power of shoppers who like to shop there because of the cachet and perceived status of buying luxury brands in exclusive sales spaces. That demand is created by the tenant shopkeepers who cumulatively make the street a desirable location.

One luxury shop attracts wealthy customers, other luxury brand tenants rent adjacent properties forming a cluster of such shops, thereby attracting yet more expensive retailers, restaurateurs etc. to the street. In addition, the shoppers themselves create value by their presence, particularly in this celebrity conscious age…There is also the significant value created communally by the surrounding area and infrastructure, much of which is publicly funded. Consequently, the value of Bond Street is not merely created by demand for the shops themselves but by the cumulative efforts, desires and resources of the community.

The land (like other Commons such as resources, knowledge, the human genome, the radio spectrum, energy) originally belonged to no-one but conquest and subsequent legalisation of the theft of land from the commons means it is now owned by those who played the system, acquiring more and more land and growing ever richer as a consequence.” 

By not collecting this tax the government increases the inequality between rich and poor:

As it now stands, only the landlords – the rich – benefit from the rent. Money – which equals power – is therefore concentrated in the hands of a self-serving ruling class: the 1%.

Fred Harrison: “The West shaped a global civilisation whose operating mechanism is a culture of greed. Societies are regulated by a statecraft that is incapable of adopting the policies needed to challenge the existential crises of the 21st century. Financial mechanisms that would enrich people’s lives are politically taboo. Democracy must be reconceived as a therapeutic process, empowering people to escape the trauma inflicted when their ancestors were ruptured from authentic cultures and natural habitats.” 

I think the key is that a financial system that would “enrich people’s lives” is politically impossible in the existing neoliberal economic system. Those in power will certainly do everything they can to block this fairer distribution of rents. The Green party currently includes land tax in their platform but not to replace other taxes – it’s additional.

There has been much talk of a guaranteed basic income. If it doesn’t derive from a fair distribution of rents but from income tax and other sources, I don’t think it would necessarily put the poor in a better position – there would be many other issues to deal with that could be harmful. But I’m not an economist!

I suspect that if the basic income were to come from a tax on the rich instead of all people sharing the benefits of a land tax which is rightfully theirs, inequality and class divisions would be perpetuated – both rich and poor would grow even more resentful of each other than they are today.