David Cooper is the secretary of something called Liberal Democrat ALTER (Action on Land Taxation and Economic Reform). No doubt, readers of ConservativeHome would like to alter the Liberal Democrats in a variety of ways, but for the moment Mr Cooper’s arguments do merit some attention.
As he explains in a blog for Prospect, ALTER’s big idea is Land Value Taxation:
If land value taxation is "the solution", then what is the problem? Cooper enlightens us by quoting Winston Churchill:
According to Cooper, landowners are still freeloading on a massive scale:
Though some of this money does finds its way into the public purse, there is a strong case to be made for taxing idle wealth in preference to wealth creating activity. The trouble is that a land value tax is a really bad way of doing it.
First of all taxation should always be related to the ability to pay. Just because someone owns land it does not mean they are making money from it. They could, of course, sell some or all of it to pay the tax – which could encourage more productive use of the asset; but when it comes to people’s homes, it is surely deeply immoral to apply such an argument.
Secondly, where property is rented, the cost of the tax would most likely be passed on to the tenants. In effect, the burden of the land value tax would fall upon the shoulders of the landless. Some irony.
These and other objections could be addressed if the tax was only payable when the property was sold and in proportion to the increase in its value over that period. However, this could be achieved (and to some extent already is achieved) through capital gains taxation.
In other words, there is no need for a separate land value tax, but rather a good look at what should and shouldn't be subject to CGT.