A Different Philosophy

George and Magie were not concerned with Basic Income, as their theories aimed to allow everyone to retain the wealth they generated through their labour — a different means to a more equal outcome. But LVT and UBI are natural partners, because they have one central idea that they share in common: efficiency. UBI streamlines the benefits system by paying a flat rate to everyone of working or retirement age. LVT streamlines the fiscal system by eliminating all existing taxes and replacing them with one single annual tax on the value of land.

LVT also aims to make taxation fairer, and to allow workers to keep the whole value of their labour. It is a tax on unearned wealth, while earned income is not taxed at all. For this reason it is a progressive tax, not only in that the rich landowners pay more than the ordinary workers, but that the tax paid is based on the quantity and worth of the land that is owned. Some land will be worth more than others, for example if it is in a city centre, has good transport links, or is fertile agricultural land. But there are more benefits to LVT than just its simplicity and incentives to work.

Land with good infrastructure and amenities will attract a higher value, so it incentivises government investment in public services. It might even be the case that landowners could lobby the government for greater investment, or that they might fund it themselves, if it would bring a greater return on their investment.

The increased value of the land is returned to the public purse, and to the ordinary workers and users of the land, through the correspondingly higher rate of LVT. While those who use the land will pay the landlord rent for the privilege, the LVT is like paying rent to the government, which makes sense when you consider that all the laws of the nation apply on one’s own land, and all of the support infrastructure, the emergency services, utilities are available to be used on that land. At present, these services are covered through Council Tax, which is regressive and penalises the poorest.

Taxes on goods and services are removed, which removes a large tax burden from low-earning workers. Whether or not retailers would then raise their prices correspondingly is unclear — it may be that the redistributed tax burden resolves this issue and others. This could only be accurately determined through simulation, or observing such a system in practice. Radically changing the fiscal system is bound to have consequences, some of which may not be obvious.

If a landowner chooses to hold on to land in anticipation of an increase in value, they must factor in to their budget the fee they will need to pay for owning that piece of land. They can still do it, but there is an incentive for them to make use of the land by renting it out. If it becomes more profitable for landlords to bring their land into use, or even if it’s financially prohibitive for them to not rent it out, it goes some way to resolving another inequality we see in present-day Britain: housing availability.