We need a land and wealth tax to replace income and transaction tax.

cepheus

The OECD, the Paris-based thinktank, has argued that western welfare capitalism needs a rethink. No longer should governments rely so heavily on income taxes and transaction taxes, which are cyclical and encourage gambling on property at the expense of paid work. We need to switch to wealth and consumption taxes.

The west has wealth and not income, at least not in the way it once did, so it makes sense for governments to make the switch. Not to a jewellery tax, which Vince Cable dismissed last week, but to a tax on land that encourages building and discourages speculative hoarding. At current rates of building, Britain's largest housebuilders are sitting on around four years of land with planning permission, waiting for the most profitable moment to build.

Property is an obsession in the UK and the disease has spread to many parts of continental Europe. Land taxes, combined with lower income taxes, offer the prospect of a cure.

http://www.guardian.co.uk/business/2013/mar/03/top-economiesmust-shakeup-tax-regimes

Thrugelmir

cepheus wrote: »

The OECD, the Paris-based thinktank, h

Views are hardly surprising.

cepheus

With the powerful agricultural lobby in France I would have expected the opposite although it is only based in France.

antrobus

Thrugelmir wrote: »

Views are hardly surprising.

The Organisation for Economic Co-operation and Development is a tad more significant than a 'Paris based think tank'. It's more of an 'international organisation'. They ran the Marshall plan back in the good old days.

CLAPTON

Land values taxes seem a good idea as they encourage the more efficient use of land of which we have a limited supply. Parts of the USA have tried them out although I'm unsure of the practical details (how do you determine land values, how often are they revised etc etc)

dryhat

For anyone interested in this sort of thing, respected economist Fred Harrison has long been a supporter of such a move.

In this great video he explains what he calls "Ricardo'sLaw" ....

http://www.youtube.com/watch?v=6ZkfmY1PMng


(only 7 mins long and well worth a watch)

System

CLAPTON wrote: »

land of which we have a limited supply.

Really? I'd have thought it was the ultimate renewable resource, and could be recycled indefinitely?

antrobus

CLAPTON wrote: »

Land values taxes seem a good idea as they encourage the more efficient use of land of which we have a limited supply. Parts of the USA have tried them out although I'm unsure of the practical details (how do you determine land values, how often are they revised etc etc)

What you need to read is OECD Tax Policy Study No 20 - Tax Policy Reform and Economic Growth. Brief abstract - "The analysis suggests a tax and economic growth ranking order according to which corporate taxes are the most harmful type of tax for economic growth, followed by personal income taxes and then consumption taxes, with recurrent taxes on immovable property being the least harmful tax".

However as the report notes, the scope for switching to 'recurrent taxes on immovable property' is somewhat limited because (a) such taxes are levied by "sub-national governments" and are (b) unpopular. UK translation; sticking up Council Tax is difficult because it's controlled by local authorities and voters really don't like that sort of thing. It therefore recommends in practical terms a move to consumption taxes. So if you want to follow the OECD playbook on 'how to reform the tax system so as to boost growth' what you are supposed to do is increase VAT, cut Corporation Tax, and cut the higher rate of Income Tax. Since I've got the distinct impression that is exactly what Gideon has done, he may well have actually read the OECD Tax Policy Study No 20.

I'm not quite sure that the OP really understands that.:)

PaulF81

Never going to happen.

geoffky

Good article.

http://www.guardian.co.uk/housing-network/2013/mar/04/who-receives-government-subsidy-housing-2013

antrobus

PaulF81 wrote: »

Never going to happen.

What's never going to happen?