This is Brompton Road tube station, an old abandoned London Underground station from
the 1930s.
About ten years ago, somebody wanted to turn this into a 1920s-themed spooky underground
restaurant and events space.
But he was beaten to it in the auction by corrupt, pro-Putin Ukrainian oligarch Dmytro
Firtash, who lives next door, by the way.
Anyway, what has Mr Firtash done with this building since buying it 10 years ago?
Absolutely nothing.
One day Dmytro will sell this building for much more than he bought it.
He will make millions from it, from doing nothing.
Because although the value of the building has only gone down as it has gotten more ruined
over the past ten years, the value of the land it is built on has gone up.
These days, land in Britain is two-thirds of real estate’s total value.
Why bother investing in the building when the land will do all the work?
Across the road is a dry cleaners.
A flower shop.
A cafe.
Next door is what I think is an insurance company.
All of these buildings have been contributing to society and increasing the value of land
in the local area.
And because the land value is increasing, so is the overall value of this tube station,
even though it hasn’t done anything.
It’s fair to say that Mr Firtash has done little to earn this wealth.
It’s not like investing in the stock market where the money you invest goes towards helping
a business grow.
This doesn’t help anyone.
All of his neighbours have earned their wealth.
They clean suits, they sell flowers, they handle money.
Yet while they pay corporation tax, capital gains tax, payroll tax, and income tax, our
billionaire friend pays nothing and reaps the benefits of what his neighbours have done.
But “land banking” isn’t the only way that landowners can get rich from doing nothing.
On the other side of Hyde Park is this: London’s most expensive parking spot.
For a quarter of a million pounds, somebody somewhere purchased the exclusive right to
park in this square for 88 years.
Note that I said they bought the right to park.
Not the parking spot itself.
Whoever owns this land just made 10 times the median UK salary from renting out a piece
of it and doing nothing.
No doubt you will be chuckling at the absurdity of the whole situation.
Some guy bought a piece of land he didn’t build, then convinced another guy to drop
250 grand on the right to park there.
But what if I told you...you’re doing that right now.
Paying a good chunk of your income to a landlord who doesn’t actually do anything that you
couldn’t do yourself.
Who offers you no extra protection.
No cleaning services.
No repair jobs.
Doesn’t tuck you in to bed and read you a story.
Just takes your money and spends it on themselves.
And you can’t escape it.
You can’t not live on land.
Unless you’re, I don’t know, Jesus.
Henry George was an American economist who lived from 1839 to 1897.
He noticed that whenever society improves, the value of land in society always goes up,
which will make the landowners very rich.
They can sell their land for more than they bought it, or they can charge higher rents
for the people who can’t afford to buy land themselves.
London has the highest wages in all the UK, but after housing costs, Londoners only take
home about 1% more pay than everyone else.
It’s the most productive city in the UK, but all their extra wealth they produce is
taken by the landlord.
George’s solution to this was Land Value Tax.
We calculate this by taking the rental value of the property and ignoring the value of
all the buildings or any crops you might have planted, leaving only the rental value of
the land itself.
This is what gets taxed every year.
All this other stuff you can do what you want with.
Build a night club and make a billion dollars, I don’t care.
Land in the big cities will obviously be taxed a lot, because it is the most valuable.
Land in rural areas or the suburbs will be taxed very little.
At the same time, taxes on workers and businesses would be abolished.
No property tax, no income tax, no VAT, no corporation tax.
People are free to make money from working hard or running a business, but cannot make
money from things they didn’t create: the land.
Isn’t this a fairer way to raise money for schools and hospitals and roads and so on?
The Duke of Westminster inherited 133,000 acres of land worth £9 billion.
But he pays no tax for owning this Birmingham-sized empire.
Meanwhile, the lowest tax band for us plebs is 32%.
We’re the ones who actually make his land valuable.
Without the engines of capitalism or the power of the workers, his land would be just...grass.
He should pay for our services.
Could land value tax fund the whole government?
Maybe.
At the very least, it lets us reduce taxes on labour and other forms of property, because
ultimately Georgism is about shifting the burden of society onto those with unearned
wealth, primarily those who gain wealth from nature.
Anything that takes advantage of the natural world gets taxed.
The air is limited and necessary for us to live, so tax pollution.
Same situation with the ocean.
Or mining.
Or rivers and lakes.
That means all other forms of ownership and economic activity can go untaxed, and there’s
more money and resources for the rest of us overall.
So back at Brompton Road.
The insurance firm, the flower shop, and the dry cleaners have nothing to fear.
They’re making money from their land, they could pay the tax.
Your average homeowner has no problem either because it’s just a cheaper form of council
tax, or property tax if you live outside the UK.
But our Ukrainian billionaire over here is making nothing, because the land value tax
takes away the value of the land from his investment – all he has is a decaying old
house.
He would have no choice but to make better use of it, or sell it to somebody who will.
But even if the philosophical reasons don’t convince you, the practical reasons to have
land value tax are even more enticing!
Nobody is coming.
Because this house has been empty since 2004.
Last time this house was occupied, Facebook didn’t exist, Marlon Brando was still alive,
I hadn’t even started school yet, and TommyInnit wasn’t even born.
It belongs to Timur Kulibayev, the son-in-law of Kazakhstan's former president.
He knows just how right Henry George was.
They all do!
As one local estate agent advertises: “Don’t wait to buy in Mayfair, just buy in Mayfair
and wait!”
Land Value Tax will put an end to land speculators hoarding houses by pushing them to sell to
people who actually need a place to live.
It will encourage developers to more build houses.
Why build one house when you can build a whole terrace on the same amount of land without
being punished with higher taxes?
This reduces house prices and solves the housing crisis that has plagued the country for years.
Denser streets will stop urban sprawl, protecting the natural world while making sure we all
have somewhere to live.
Not to mention the countless other benefits that density brings like reduced obesity,
lower crime, shorter commutes, and stronger local businesses.
Half the price of coffee is in the coffee shop’s rent and taxes.
Land Value Tax will lower rent and allow us to cut taxes, making goods cheaper.
Car parks and golf courses take up a lot of valuable space in cities.
Land Value Tax will encourage the owners to use the land more efficiently, like making
the car park multi-storey.
It will make homes better quality.
Currently, council tax is based on how valuable your house is.
So homeowners are incentivised to keep their houses crappy to pay less tax.
When house value is no longer a factor in your tax bill, you can improve your house
to your heart’s content.
And you know what, I’ll go as far as to say with nicer suburbs, communities will thrive,
curing the epidemic of loneliness and mental health issues in the west.
Try being a lonely shut-in when you live here.
Is there anything it can’t solve?
Pfft, male pattern baldness?
And the best thing about it?
The rich can’t avoid it, except by selling their land.
While you can dodge corporation tax by registering in the Cayman Islands, or dodge income tax
by officially not making any money at all, how can you dodge land tax?
Hide the land?
You can’t move the tax base out of the country if the tax base is the country.
Even the rich and powerful suffer from the same problem that we do: they still exist
on land.
Millionaires have big mansions, which sit on valuable land.
The CEOs have fancy skyscrapers, which are on valuable city land.
Silicon Valley, where all these tax-dodging tech companies live, is built on some of the
world’s most valuable land.
80% of McDonalds profits are from leasing their real estate to restaurant owners – they’re
not a fast food company, they’re a real estate company.
Now I know what you might be thinking.
“Won’t my landlord just increase my rent so that I pay the tax instead?”
Don’t worry sweet cheeks.
Land Value Tax is the only tax that can’t be passed on to the consumer.
Normally, consumer goods like, I don’t know, toothpaste, are sold at the lowest cost while
still making a decent profit for the supermarket.
But rent is always the highest people can afford – that’s why it takes up so much
of your income.
And why you just so happen to always get a rent increase whenever you get a pay rise
at work.
If, in a Georgist world, your landlord were to raise your rent, they would be admitting
that the land has gotten more valuable.
Thus raising taxes on themselves.
Again.
Meanwhile, more cooperative landlords might just take the hit to their incomes and lower
their prices.
Land value tax turns rent from a form of extortion into just another race to the bottom to get
the lowest price for consumers.
What happens to all that money collected by the land value tax?
It goes back to you.
Well, first it goes to building schools, hospitals, roads, defence, and all the other things the
government pays for.
But if there’s anything left, it gets divided up equally and given back to the public, in
what George called a Citizen’s Dividend.
After all, you helped make the land as valuable as it is.
Some of that value should be yours.
The Citizen’s Dividend will be a lifesaver to the poorest in our society, working families
will be able to invest it in their children, and everyone else will have a bit of extra
spending money to boost the economy with.
Money that would otherwise be sitting in a landlord’s bank account as a reward for
work that they didn’t do.
And with land being the nation’s most valuable asset, it’s almost certain that there will
be enough wealth to go around!
If all this sounds a bit communist-y to you, don’t worry.
Land Value Tax is one of those things that almost everybody can agree on, from across
the political spectrum.
Here’s Milton Friedman, who advised the economic policies of both Ronald Regan and
Margaret Thatcher; “The least bad tax is the property tax on the unimproved value of
land.
The Henry George argument from many many years ago”.
Adam Smith, the so-called Father of Capitalism once wrote; “Ground-rents and the ordinary
rent of land are, perhaps, the species of revenue which can best bear to have a peculiar
tax imposed upon them”.
According to one of the founders of liberalism, John Stuart Mill; “The value of land, arising
as it does from the efforts of an entire community, should belong to the community”.
The Liberal party even tried introducing a land value tax to the UK, but the plans were
interrupted by the First World War.
We were so close you guys.
Maybe social democracy is more your thing: Well here’s Nobel-Prize winning social democratic
economist Joseph Stiglitz: Land taxes have a very big advantage.
I wrote a paper showing that LVT was actually an efficient tax for funding particularly
local public goods for local communities.
And even commie Karl Marx, who at one point accused George of “repulsive presumption
and arrogance” could not deny the efficiency of Land Value Tax.
There’s also Thomas Jefferson.
Helen Keller, Albert Einstein, Winston Churchill, Bertrand Russel, Martin Luther King Jr, Friedrich
Hayek, George Orwell, Henry Ford, Benjamin Franklin, Sun Yat Sen, Rutherford Hayes, Aldous
Huxley, H.G. Wells, David Lloyd-George.
All of them recognised “just tax land”.
If you’re a liberal, Georgism boosts the economy by making land use more efficient
and lowering the cost of living.
If you’re on the left, Georgism lessens the power of those bourgeois landowners and
landlords, while redistributing wealth to the poorest in society.
Libertarians get to live in a low-tax economy where the pesky government can’t steal their
income that they’ve worked hard for.
Even if you don’t care about politics, who wouldn’t want lower income tax and free
money?
The poorest in society get the best deal; they get lower rent and housing costs, no
taxes, and instead of a humiliating and bureaucratic welfare system they just get a lump of money
every month with no strings attached.
The only people who have anything to fear from a Georgist society are
1.
landlords, who will get slightly lower profits.
and 2.
the aristocratic gentry who own vast swathes of the country for horse riding or fox hunting.
Your heart just bleeds for people like this.
Theory is nice, but let’s take a look at two examples of Georgism in the real world.
Shortly after oil was first discovered in Alaska in the 1960s, residents became worried
that big oil conglomerates would swoop in, pillage the state of all its natural resources,
and then bail when the juice runs out, leaving Alaskans no better off from the exploitation
of their resources.
Alaska Governor Jay Hammond instead introduced the Alaska Permanent Fund via an amendment
to the state constitution in 1976.
When a company buys a license to drill for oil in Alaska, the money from that transaction
is invested by the state government into a public fund.
Most of that money is stored for future generations to use when the oil runs out; some of it is
used to fund the state budget, and some is given out equally to all Alaskan residents
as a citizen’s dividend.
Anything from $300 to $2000 per year, plus a half-payout for every child you have.
And the result is that Alaskans are some of the least-taxed in the entire United States,
with no state sales tax or state income tax – and this hasn’t come at the expense
of living standards.
Alaskans are just as well off as Virginians, Utahans, or Oreganos.
Governor Hammond’s reasoning being that the government is too corrupt and inefficient
to wisely spend money that belongs to the Alaskan people, so he would rather the people
get the money instead and spend it how they see fit.
Singapore is truly a marvel of modern infrastructure.
Roads as smooth as pool tables, an airport that looks straight out of Star Trek, sleek
on-time monorails, and towering skyscrapers.
But it wasn’t always this way.
When it became independent of the United Kingdom in 1965, it was just a small colonial outpost
reliant on its larger neighbour.
How did this transformation occur?
One of the reasons is their unique political system, which is a topic for another video,
but the other reason is their land use policy.
Singapore is a tiny island short on space; as the population has tripled since the 60s,
the old colonial buildings have come down with massive high-rises going up in their
place.
This presented an opportunity for the government; as we already know, with every shiny new building,
the value of the land underneath and in the surrounding area goes up.
So every time a new building is constructed, the government will tax the owner 70% of however
much the land value increased.
Once again, this encourages efficient use of land, while giving the government a safe
revenue stream.
The money from capturing this value is then spent on improving infrastructure around the
new building, creating the polished, efficient, and high-tech city we know today.
The proposals outlined in this video aren’t utopian science fiction, or anything particularly
radical.
They’re real and they work – very effectively.
To implement them on a wider scale would solve many of the issues we have today – lack
of affordable housing, empty homes, wasted land, poverty, and a complicated inefficient
tax system.
Wildlife would be protected from ever-expanding sprawl.
Polluting will become a financial impossibility.
We who keep society’s wheels turning – yes I had a haircut in the middle of a video - We
who keep society’s wheels turning should not have to pay for the society which we created;
it is those who made money from unearned wealth.
They should be the ones to fund society, seeing as they get the most benefit out of it.
From there, we will have a fairer society in which people are free to make money from
things they actually did, pursue their own ends, and generally live their best lives.
Unencumbered by high taxes and high rent.
Thanks for watching, I’ll see you in the next one.
Thanks, that’s it, that’s the last thing I need to do before I publish the video, bye.