Thursday 16 August 2012

Henry George - Land Value Taxation - Wolf in Sheeps Clothing


Henry George (September 2, 1839 – October 29, 1897) was an American writer, politician and political economist ,who was the most influential proponent of the Land Value Tax.

Henry George in his book Progress and Poverty tries to marry the interests of the working class with that of the capitalist class against landowners. Henry George was an advocate of the free market and free trade against any form of protectionism. He believed in removing taxes from Labour and Capital and placing the burden of tax on landowners.

However whilst most Georgists are self confessed right wingers some on the Left like the Green Party in the UK have also adopted Georgist ideas. The object of Land Value Taxation is to ensure that the rent attributable to the natural value of the land , and to the value created by its fortunate location, is paid to society as a whole and not to individual landowners.

Whilst the Land Value Taxation ostensible target is the absentee landowner or speculators, LVT would also fall on every landowner however small and they would be under pressure to extract as much profit from their land as possible to pay the tax.

In a capitalist society such pressures would bring undesireable results like ecologically unsound exploitation of forests , peat bogs etc. Also low value properties with a larger acreage than high value properties would suffer from this tax Land Value Taxation in Urban areas would lead landlords to evicting tenants in persuit of profit and the elimination of low cost urban "Land withheld from use".

There have discussions about a special urban land tax in UK , to stop land speculation, rather than a universal land tax which would be equitable, but it appears to have been abandoned by its proposers as "unworkable" in the UK.

In broader political terms shifting the burden of taxation onto just the landlord and rent diverts the working class from redistributing the other elements of the economic surplus like interest and profit from the capitalist class.

People like UK Liberal Prime Minister David Lloyd George employed Georgist land rhetoric during his famous 1909 Budget. Henry George was not short on employing racist rhetoric against Chinese workers in USA. This free market racism from Georgism stays with us to this day which is why we describe Henry George as a wolf in sheeps clothing.

Interest rates by Banking capitalists and profit by Corporates are ring fenced for tax protection by Georgists who do not regard interest on capital or corporate profits as part of the economic surplus like Marxists.

Transaction taxes to reduce Financial market speculation are opposed by Georgeists has would any profits tax on corporates, this exposes the free market fundamentalism of Georgeism who Marx characterised as a "last ditch" defender of free market capitalism.

The new manifestation of Georgeism during the current economic crisis has social roots in the bourgeoisie and is the last ditch ideological defence of capitalism - it also exposes the bourgeois ideological class character of the "Greens" that have embraced Georgism.

Rhodri Jones.
 

1 comment:

  1. Public capture of land rent -- in lieu of taxes on housing and other property improvements, and in lieu of taxes on earned income -- would have very different results than you suggest. For one thing, removal of profits from owning land (as opposed to developing it to its highest, best use) would put into motion the development of land where infrastructure already exists (i.e., in the cities and towns) and high density development makes sense. Today, in almost every city somewhere between 15-30 percent of the land area is held vacant, often for decades. Vacant buildings scattered throughout cities would once again become occupied as land prices fell to a point where businesses could occupy them profitably or families could afford the price of residential housing.

    Communities do still need to adopt zoning and other regulations to set aside wetlands and nature preserves, parks and areas for recreation. However, doing so would be far less costly than today, when the public purchase of land or development rights often requires the issuance of bonds, adding to public debt and requiring even higher taxes on residents and businesses.

    Owning land is a static activity. The owner as owner produces nothing. However, by virtue of our need for land on which to build anything, the owner of land can extract payment from producers. What Henry George and those who have embraced his perspectives argue is simple: that owning land is a privlege and that the market rental value of land held is just compensation to society for the privilege enjoyed. Once this payment is made, the individual owes nothing more to the community or society in the way of taxation.

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