4. Early History

LVT has never been introduced in Britain, although the idea has been discussed at government level and on several occasions almost been implemented.

An early history may be briefly summarized chronologically in the following events and publications:

1662: Publication of ‘The Treatise on Taxes and Contributions’ By William Petty (1623-87), Economist, Scientist and Philosopher, in which he mentions ‘Land Taxe’ as a means of raising revenue.

In 1692, amongst a package of other taxes on personal estate, movable goods and income from public office, a ‘Land Tax’ was introduced (which astonishingly endured until 1963).  Initially this tax was based on annual rental values, but after the first valuation no more were carried out.  From 1698, quotas based on acreages at the 1692 values, were established for each county, and remained fixed thereafter.  Consequently the amount collected diminished progressively, from 35% of total revenue at the start, to 17% in the 1790s and 11% by the 1820s.  By 1733 that part of the tax on personal income and moveable goods had proved too difficult to collect and was largely abandoned, so the tax became almost entirely based on the revenue from land.  The tax became gradually overshadowed by other taxes, but continued into the 20th century, raising eventually no more than the cost of collection. It was finally abolished in 1963, (1).

1758: Publication of ‘Tableau Economique’ by François Quesnay (1694-1774), Economist, Physician to Louis 15th and co-founder of the Physiocrats.  The Physiocrats considered that all wealth derived from the agrarian production of land and proposed a ‘Single Tax’ on land only.

1781: Publication of ‘An Essay on the Right of Property in Land’ by William Ogilvie, (1736-1819); Scottish landowner and classical scholar. In his treatise Ogilvie claims ‘the birthright of every citizen to an equal share in the value of property in land’, and explains that ‘land values have three parts; the original, the improved and the improvable; the first and third of these belong to the community and only the second to the landowner’.

1796; Publication of ‘Agrarian Justice’ by Thomas Paine (1737-1809), Political Theorist and Revolutionary. In his pamphlet he writes ‘Every proprietor owes to the community a ground rent for the land which he holds’.

1776: Publication of ‘The Wealth of Nations’ by Adam Smith (1723-90), Political Economist and Philosopher. Adam Smith is generally considered to be the father of modern economics. In his book he advocates the taxing of ‘ground rents’.

1817: Publication of ‘On the Principles of Political Economy and Taxation’ by David Ricardo (1772-1823). Ricardo is credited with defining the idea of the ‘Economic Rent’ or the ‘Law of Rent’.

1848: Publication of ‘The Principles of Political Economy’ by John Stuart Mill (1806-73), Political economist and Philosopher.  In book 5, chapter 2.28 he describes the benefits landlords gain from rents in which ‘They grow richer, as it were in their sleep, without working, risking or economising’.

1887; Publication of ‘Progress and Poverty’ by Henry George (1839-97), American Economist and Social Philosopher.  In his book George finally pulls together all the threads and comprehensively explains an economic system based on ‘Land Value Taxation’, which will become the definitive work and will give rise to a world-wide movement.

Smith, Ricardo and Mill were the founders of what came to be known as Classical Economics, in which land was considered an essential factor of production along with Labour and Capital, and the phenomenon of ‘economic rent’ was acknowledged.  In the 20th century the Neo-Classical school of economics arose in which Land became considered as a part of Capital, and so its significance virtually disappeared.  It is this Neo-Classical school that still dominates economic thinking but which is now being challenged by some eminent economists. (2)

References:

(1)   National Archives talk by Mark Pearsal:

http://www.nationalarchives.gov.uk/documents/land-tax.mp3

(2)   Martin Wolf:      http://www.eurotrib.com/story/2010/7/13/64728/5954

Prof. Steve Keen:   http://en.wikipedia.org/wiki/Steve_Keen