Cash Bonus or Tax Cut?
Vic H. Blundell
[A response to an article by Steven Cord, "Land
Value Taxation: Six Steps to Meet Objections," published in the
May-June, 1983 issue of Land & Liberty. This letter appeared in
the July-August issue]
Sir: In your last issue, Professor Stephen Cord, in his article "Land
Value Taxation: Six Steps to Meet Objections", by conceding too
much to objectors, offers some very doubtful steps to meet them.
He says that under LVT, some small farmers would pay more taxes than
they are now paying, as would "some poor elderly houseowners".
But how can he know, unless he has already decided himself what the
rate of tax is to be and what particular taxes would be removed as a
Small farmers under LVT paying low or no income tax, property tax or
duties on their equipment etc., must find themselves better off. A
small farmer is not defined; he may be a farmer working marginal land
or land of very low value (in which case he would pay little or no
tax) or he may own valuable horticultural land.
However, one does not need to know the conditions of small farmers
and the elderly poor. If hardship arises, for whatever reason,
(possibly a change in taxation or a natural calamity), welfare
services should be available without recourse to corrupting the
principle of LVT, which requires those who enjoy the rent of land
either directly or indirectly to pay the appropriate charge.
Prof. Cord makes a good point when he argues that every attempt
should be made to secure overall political acceptance for LVT; at
first sight, the idea of a national dividend might appear attractive.
However, to give back part of the land value tax as a cash handout
would mean less provision for cutting other taxes. Surely the best way
to secure general acceptance for LVT would be to argue for the removal
of specific general taxes -those which the majority find most
objectionable. Would this not be the equivalent to a cash bonus? Even
the poorest people still pay taxes in one way or another. A cash bonus
sounds gimmicky and too obviously a scheme to buy votes.
As for an Agricultural Land Tax Index, I fail to see why land value
taxation should take account of bad and good years for farmers. When
people go into farming, manufacturing umbrellas, or selling ice cream,
they do so with open eyes and take the bad seasons with the good. The
most governments should be prepared to do is to postpone part of the
payment of a land value tax in a particularly bad year, recovering it
in a subsequent year - and do it for umbrella manufacturers as well if
they are suffering hardship!
However, if the valuation of agricultural land is done correctly, it
will reflect the rent people will pay, whatever the vagaries of the
weather. And what is to prevent the agricultural community from
establishing a cooperative insurance scheme funded from the good
The weather, and world prices, are not the only things that affect
returns to the entrepreneur. What of fashion, the invention of
substitute materials, change of habits, mechanisation, etc.? This is
all part of the free market. If concessions are made to sugar
producers along the lines indicated, then the producers of every other
kind would decide what ten per cent above normal price was, and what
20 per cent below normal production was? The scheme would be
hopelessly bureaucratic as well as unnecessary.
By all means let the land value tax be paid by instalments if
required, as indeed local taxes in the UK often are, and let an annual
reassessment of land value be the rule. As Prof. Cord says, this would
solve 'many problems and prevent a build-up of liabilities where land
values increase, but it would also serve the farmer better than the
The Tax Deferred idea of allowing a land value tax to remain a lien
on the property until it is sold or transferred is an excellent one in
cases of hardship, whether the owners be the elderly poor, widows,
orphans or just plain impecunious.
Prof. Cord's Purchase and Demolition (PAD) Guarantee to protect
property owners from marked changes in planning law which devalue the
market value of their building sounds a good idea and a form of
government compulsory purchase at previous market price for "blighted
buildings" seems a necessary step. After all, the higher land
values released should more than pay for the compensation.
I think Prof. Cord has opened up a useful and necessary debate, but
it is a pity he did not give just a little more thought to some of his