Day: 2017/06/19

UK Media: Adam Smith Was a Marxist

Before the UK parliamentary election a few weeks ago, the Internet kept directing me to what I surmise was mostly conservative media reporting on the Labour Party’s proposed *horrors* land-value tax, aka “garden tax.” I’m not sure if “garden” here is the Anglo version of what I would think of as a grassy backyard, but it’s very surprising that collecting location rents for public finance was both a significant issue in the days before the election and didn’t result in a loss for for the party advocating it. That’s probably the best news I’ll report on all year.

Labour’s platform included a position in favor of “considering” replacing some taxes with a land-value tax. “We will initiate a review into reforming council tax and business rates and consider new options such as a land value tax, to ensure local government has sustainable funding for the long term,” reported the Mirror.

Yet the Conservative opposition treated “consider new options” as though Labour had a bill in hand, and the sputtering from Boris Johnson and Chancellor of the Exchequer Philip Hammond was illuminating. Articles published by The Telegraph and the Daily Mail quoted these men as saying that the tax would:

  • “Bring misery to every single family in Britain”
  • “Wreck the economy”
  • “Devastate farmers”
  • “Increase food costs”
  • “Attack land on Marxist principles”

A good chunk of this is politicized anti-tax paranoia. “They talked about taxes in their manifesto. That must mean they’re coming for you!” It’s interesting in itself, however, that the Tories’ audience must be yeomen landowners as opposed to renters or condo dwellers. Then there’s the Marxism stuff, which just demonstrates their ignorance. If they were familiar with capitalism’s talisman, Adam Smith’s Wealth of Nations, they would have come across book V, chapter 2, in which the author advocates taxes on the ground-rent of houses. So yes, Tories think Adam Smith was a Marxist.

More bizarre is the obsession with farmers. Supposing that a land tax did raise food-production costs, which it would not, why would it be somehow worse than the other taxes farmers pay? Is it because farmers are really connected to the land? Does that mean I work at a floating desk? Why don’t we hear about overtaxed urbanites who are really connected to commerce? Don’t taxes on their incomes raise their labor costs? (Hint: They do.)

Oh, and did I mention that Labour’s not advocating a tax on gardens but on the locational value of the space occupied by gardens?

Anyhow, the articles mistakenly cite 3 percent of the value of people’s property as the tax’s rate. Rather, the foundation for this statement originates with the Labour Land Campaign, which explicitly recommends beginning with a 0.85 percent rate on owner-occupied real estate—not 3 percent. (More here.) Neither of the articles’ factual errors have been corrected.

The Telegraph article also says, “Opponents of the tax say it would cause house prices to plummet, putting homeowners at risk of negative equity and forcing families to sell off their gardens to developers to lessen their tax burden.” First, it’s not a tax on houses—just where they happen to be. Second, why are housing shortages caused by undeveloped real estate a good thing? Third, why are the opponents against affordable housing? Notwithstanding the possibility of negative consequences to some homeowners, the Telegraph doesn’t find anyone to answer these questions.

And you thought American media was bad.

The good news is that Labour won (and no, I’m not a Corbynite), and the Labour Land Campaign’s thankless work resulted in positive coverage when anyone bothered to check their facts. It’s well earned.

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