Topic: | Re:Re:Estate Agents against Mansion Tax Shock ! | |
Posted by: | Dave Wetzel | |
Date/Time: | 30/09/14 11:38:00 |
I've been reading this thread with great interest. I keep seeing the word "capital" banded about with abandon. We live on a planet provided free by a deity or nature. To produce man-made wealth (food, homes, consumer goods etc.) we need to apply our labour (i.e. human exertion - mental and physical) to our natural surroundings. Originally (and for most of the 200m years of mankind's' existence) we have been hunters and gatherers i.e. hunting animals and gathering wild plants, fruit, berries etc. for food, clothing and shelter. Originally with our bare hands but gradually we invented tools to increase our produce (even the most primitive? (enlightened?) tribes utilise spears, knives, needles, boomerangs, canoes etc.) These tools represent man-made wealth that has been created, not for consumption, but to increase our productive capacity. About only 10k years ago we domesticated animals and invented agriculture and the use of farm implements. This was very time-effective and greatly increased our productive capacity, so much so that some people had leisure time in which to think, to create arts, begin writing etc. etc. So let's get our thoughts in order. To produce man-made wealth we need three factors: 1. Our planet, all its natural resources and the benefits of the universe (sunlight etc. etc.). Confusingly, economists call all this "land". I prefer "nature's free gift" which includes the spectrum for our mobile phones, landing slots at airports, land (the dry surface of our planet), sunlight, fish in the sea, the wind for wind power and the tides created by the moon etc. 2. Labour. Our own human effort. 3. Tools created by 1. and 2. "Capital". In this context "capital" is not money in the bank and it can not be wealth being consumed nor any part of nature. Capital is man-made. Capital is man-made wealth used to produce more wealth or wealth in the process of production. So a car factory (the building) is capital. The robots, machinery, tradesmen's tools, computers, office equipment in the factory are all capital - as is the part-finished and finished cars until they reach the hands of a consumer. But the land on which the factory sits is NOT capital. In our economy we tax the return to labour (wages). We tax the return to capital (profit or interest) but we DO NOT tax the return to Nature's Free Gift - land and natural resource (economic rent). A house is not capital. It is a consumer good. Houses (including mansions) do not increase in value. I repeat - houses do NOT increase in value. It is the location of the house which increases in value - the LAND value. Commentators talk of a "housing ladder". I bought my car for £1600 last year. I'd like a second-hand car ladder and to sell my car for £20k in ten years time! But, like all man-made items (including houses and mansions) cars deteriorate over time and need constant maintenance and repair. If we tax houses - we reward owners who allow their homes to fall into disrepair with a lower tax and penalise owners who improve their property and thus make it more valuable with a higher tax. So let's forget Council Tax and the so-called Mansion Tax. Let's forget income tax, vat and all those taxes that currently fall on workers and the creators of wealth. Instead let's collect the rent of Nature's Free Gift. The Green Party calls this Land Value Tax and they and the Co-op Party are the only parties advocating it. |