Adam Smith, writing in The Wealth of Nations (Book 5, Chapter 2), reasoned that, “Ground-rents are a still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground.”
In modern speak, Smith was referring to the “Land Value Tax” (LVT for short). The name, however, is a misnomer as the Land Value Tax is not a “tax” at all. Rather, it’s a rent on the land that one uses. In this regard, paying LVT is not dissimilar to paying for a parking ticket. If John purchases a plot of land over which he demand autonomy and of which he demands the state’s protection, then he pays a rent back to the community. After all, if I ensnare a flat chunk of the universe with a picket fence and call it my own, I have taken land from the commons. Land that naturally belongs to everyone. Unearned capital that was given to us by nature. Therefore, it seems plausible that I owe a small debt of reimbursement to the community.
At this point, your neo-liberal alarm bells should be ringing. Claims that the land belongs to everyone have an eerily Marxist undertone, don’t they? Actually, Marx hated the idea, once referring to its progenitor, Henry George, as “utterly backward!”. In fact, the LVT has always marshalled its strongest defenders from free-market thinkers like Milton Friedman (who referred to the LVT as “the least bad tax”).
This modest solution packs a mighty punch. Even if you aren’t convinced that the LVT should replace all taxes (as its original proponents believed), an LVT of 3% (excluding homes and gardens) could raise over £33 billion. This money could be diverted from fiscal vanity projects to invest in green start-ups and conservation.
The tax also ensures a greener future by encouraging the use of brownfield land and land occupied by run-down construction sites. In so doing, the LVT sucks development away from the greenbelt. This, in turn, helps cut back on excessive urban sprawl. By treating the earth as though it belonged to everyone, we would be ushering in a revolutionary new perspective on land – with any luck, a greener one.
Amos Wollen is the winner of the under-18 category in our Young Writer on Liberty 2020 competition.