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Mansions Tax Is Half Right and Half Wrong

February 16, 2013

Tell us therefore what dost thou think, is it lawful to give tribute* to Caesar, or not? But Jesus knowing their wickedness, said: Why do you tempt me, ye hypocrites? Shew me the coin of the tribute. And they offered him a penny. And Jesus saith to them: Whose image and inscription is this? They say to him: Caesar’s. Then he saith to them: Render therefore to Caesar the things that are Caesar’s; and to God, the things that are God’s. Matt. 22:17-21

*i.e. pay taxes

Ed Miliband’s St. Valentine’s Day gift to his party’s fiancée, the Lib Dems (wedding day pencilled in for May 2015), was its beloved “Mansions Tax”. The Lib Dems have longed to tax homes, seeing them as a fantastic source of untapped wealth that they can use better than homeowners. As per my previous post, all governments of Britain (and the over-indebted West) will eventually take everything off us – pensions, savings and home equity, because they are hedonists who worship “now”. And they have dragged society into their nowist hell – when you live in “now” God is meaningless.

Following from the teachings of Christ, the Church accepts that taxing the economy is licit. However, the Church’s teaching on taxes is very different from all governments’ tax policies. The Church recognizes that there is an upper limit on how much tax labour can and should bear, and this is made clear in the social encyclicals. For example, according to Pope Leo XIII’s Rerum Novarum (1891):

“As effects follows their cause, so is it just and right that the results of labor should belong to those who have bestowed their labor.”

“The State would therefore be unjust and cruel if under the name of taxation it were to deprive the private owner of more than is fair.”

In Quadragesimo Anno (1931), Pius XI confirmed Leo’s teaching on the morality of limits on tax:

“Wherefore the wise Pontiff declared that it is grossly unjust for a State to exhaust private wealth through the weight of imposts and taxes.”

The problems of the UK’s economy are not the consequence of too little taxation in the past – Gordon Brown considered every penny earned as rightfully the Treasury’s. The problems are due, at root, to the legalized theft of wealth by usurers, leading to falling real wages so that labour is obliged to go further into debt to meet the necessities of life. The loss of purchasing power is due to the twin millstones of globalization, which constantly drives down nominal wages and inflation which destroys the real value of labour. Both of these phenomena are inherent in the capitalism that everyone praises so highly. People’s ignorance of basic economic facts is staggering. I’d find it amusing if their ignorance at voting time didn’t condemn me to live in the usurers’ paradise that is the region formerly known as Christendom.

A “Mansions Tax” is problematic for two reasons:

1)     The economy is overtaxed as it is and our debt burden grows daily. The tax will be an “as well as” not an “instead of”. Calling the homes tax a “Mansions Tax” is just propaganda to obtain popular support for it. Once the principle of taxing property is established, eventually we will all pay the “Mansions” Tax. The precedent for this is the P11D which taxes benefits of employment for those earning over £8,500 per annum. When it was introduced it was aimed at the top 5% of earners, but fiscal drag means thirty years later we all get taxed on the paltry few benefits we are lucky to get these days. Given the outlook for inflation, £2 million will not buy a mansion, but a maisonette in Hull.

2)    It taxes buildings/homes which are a depreciating asset. Who would improve the value of their home if it means additional tax to pay?. When buildings are taxed instead of land, the buildings are allowed to dilapidate while the underlying land increases in value. It has the same effect as rent controls, i.e. the value of the national housing stock deteriorates every year. The homes tax will be a rack-renters charter.

The Lib Dems’ political antecedent was the Liberal Party, which succeeded the Whigs in 1859. In 1909 the Liberal Chancellor of the Exchequer, David Lloyd George, “the Welsh Wizard”, wanted to ensure that the House of Lords could not stymie the will of the Commons over any matter. At that time, the Lords could stop legislation provided it didn’t pertain to finance bills. Thus, to precipitate a row with the Lords, Lloyd George introduced the “People’s Budget” in 1909, in which there were three measures to tax land, knowing that the Lords would never permit the bill to pass (they owned all the land) and create the constitutional crisis he wanted. The result of the Lords’ voting down the budget was the Parliament Act, which established Commons’ supremacy and led to the Lords being able to delay bills only, but not veto them.

The following quotations are taken from a book on the crisis, Mr. Balfour’s Poodle by Roy Jenkins, a former Labour Chancellor, Common Market lickspittle and cultural Bolshevik of the Labour governments of 1964-70 and 1974-79.

What their Lordships said about Lloyd George’s land value tax proposals:

It “means the beginning of the end of all rights of property.” Sir Edward “not one inch” Carson

“It is a monument of reckless and improvident finance.” Lord Lansdowne

“It is inquisitorial, tyrannical and Socialistic.” Lord Rosebery

They may have had a point, but is a tax on our income any more intrusive and confiscatory than a tax on land? I’d say less so because wages are earned by the sweat of our brows; most land has been inherited. Lloyd George had a different perspective on large landowners holding land for nothing:

“But the Lords may decree a revolution which the people will direct. If they begin, issues will be raised…and answers will be demanded then with authority. The question will be asked ‘Should 500 men [the House of Lords], ordinary men chosen accidentally from among the unemployed, override the judgment – the deliberate judgment – of millions of people who are engaged in the industry which makes the wealth of the country?’ …who ordained that a few should have the land of Britain as a perquisite; who made 10,000 people owners of the soil, and the rest of us trespassers in the land of our birth;…who is responsible for the scheme of things whereby one man is engaged through life in grinding labour, to win a bare and precarious subsistence for himself, and when at the end of his days he claims at the hands of the community he served a poor pension of eigthpence a day, he can only get it through revolution; and another man who does not toil receives every hour of the day, every hour of the night, whilst he slumbers, more than his neighbour receives in a whole year of toil? Where did the table of that law come from? Whose finger inscribed it?”

When the mansions tax is introduced, the State will be able to tax directly that which it can only tax currently via inflation. The Church is of the opinion that workers should be able to hold land, because property is a bulwark against the vicissitudes of life and can thus be an aid to living the moral life. Although the Land Value Tax (or the Single Tax) is not official Church policy, Catholics should inform themselves as to the economic rationale behind it because taxing all land (not exempting farms, grouse moors and bombsites in London – supposedly there are still two bombsites undeveloped since WWII) would prevent much of the abuse inflicted on labour by capital and reduce the need for the hedonistic State to intervene in our lives at every turn.

The following short video is an easy introduction to the Land Value Tax. The seminal book in the subject is Progress and Poverty (1891) by Henry George, ignoring his defense of usury.

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From → Chapter 1

One Comment
  1. An excellent little video, if a bit slow to the point… property is created when labor is mixed with natural resources. Land as property is worked, land, and limited by the ability to work it. islam has a rule that land can be taken after being 3 years fallow, and in common law we have adverse possession, the means to take unused law. If we are to have taxes, then the argument here is ineluctable.

    It does not mention who assesses value for the tax basis. I believe the ancient Greeks had an excellent system for assessment, the owner stated the value. Conflict of interest? Not at all, because the stated assessed value was also an offer to sell, the price at which the landlord would give up the parcel.

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