Baron Rothschild, a member of the German origin Rothschild banking family once said that ‘the time to buy is when there is blood on the streets’. The Rothschilds were (and are) a fascinating family, it all started with Mayer Amschel Rothschild, a financially astute money trader. There is a fascinating book called ‘Dynasties, Fortunes & misfortunes of the worlds great family businesses’ and it follows the rise and fall of many successful families.
The ownership of land has always been synonymous with wealth, before paper assets were common it was one of the few things that defined ‘wealthy’. That is where the idea of a ‘site value tax’ is so key, because it captures wealth in particular that of the value of land where the increase in the value was caused by public expenditure.
The idea of income tax is relatively new, in fact, it was Prime Minister William Pitt who created the modern income tax (there was a prior ‘tithe’ on income used to fund the religious wars known as the ‘Crusades’ in the late 1100’s) to fund the Napoleonic wars. It makes income tax a fairly modern innovation, it also hides the cowardice of William Pitt in introducing it, in fact, the then rational taxation thinkers of Britain had it repealed in 1816 believing it should have only been there to fund war time needs.
Why was Pitt a coward? Simply put, he avoided what he should have done, namely to tax the wealthy of the time, the landowners, but their constituency was too strong. There was also a structural issue of the House of Lords being made up of wealthy land owners who you needed on side to get things done. Pitt didn’t have the conviction (and perhaps from a pragmatic sense it was the correct choice) to face them down – rarely will you get anybody in power who will support legislation that has a massive negative impact on them.
The explicit connection between land ownership and the House of Lords only died out in living memory, it was in 1999 due to a reform by New Labour which took out hereditary seats.
The idea of a land value tax was perhaps most strongly voiced by the American economist Henry George, he believed in a ‘single tax’ that would be on land only, it is well worth reading up on his ideas, while it may be a little idealistic to hope for a ‘single tax on land’ as the only source of revenue raising, the idea itself is compelling.
Henry George would have been revolted by the idea of a household charge, in particular the brand that we got of a flat rate. However, there is also a current risk that we will see some broken kind of tax replace it such as a tax based on the value of a property or the size of a property. The ESRI has been in a spot of bother about a recent working paper on welfare, but personally their thoughts on property tax are as worrying if you are a support of a tax on land.
The things which can be measured for usage (such as water, or waste) should rightly be charged directly, after that it is a case of trying to cover local costs of councils, this is where we need to put the focus rather than on constructing a means to remove €500,000,000 from the population as a general levy.
Of course, the comments section is open so that you can add your two cents worth!
We are looking forward to hearing them!