Nick Cohen writes in The Observer about the unwillingness of the British government to do something about tax avoidance by the super-rich, which he sees as “debauching British society”. Meanwhile new figures from the TUC show that since 2000 the pay of company executives has increased 17 times faster than average pay. It is true that the overall effect of tax and benefit changes made by Labour since 1997 has been to redistribute money from the rich to the poor, but it has not been sufficient to prevent a widening of the gap nor to outlaw the worst excesses of boardroom greed.
Central to Cohen’s argument is the observation that London
“is full of Russian oligarchs and American tycoons because, uniquely for a country that purports to be a serious nation, Britain allows the foreign super-rich to live here without paying tax on the foreign assets in which the bulk of their wealth is stored.”
Gordon Brown, he suggests, lacks the political courage to do anything about it and this is in keeping with Brown’s desperately timid way of doing politics. The Chancellor also lacked the political courage to implement the congestion charge scheme in central London, a policy which was pushed through by Mayor Ken Livingstone and has turned out to be a roaring success in policy terms while boosting the Mayor’s popularity among voters. More recently, having done well in commissioning the excellent Stern review on the economics costs of climate change, Brown flinched from implementing a green tax policy that would help Britain become a world leader in reducing greenhouse gas emissions.
As a large agglomeration, London offers many unique opportunities for those wishing to make a lot of money money and to enjoy spending it. But the sheer density of population means it also has its very real needs in terms of investment in infrastructure and measures to address social deprivation and urban blight. Why should the capital not have its own tax base, like many US cities do? If the Treasury is unwilling to raise income taxes on the rich across the board, why not allow the elected Mayor of London to levy a city-wide wealth tax? Hold that thought a moment, while we fly briefly to Kansas…
In the latest in scintillating series of exposés of the US farm subsidy system, Washington Post reporters have shown that the concentration of handouts in the hands of a few large farmers is accelerating the rise of corporate agribusiness. According to Gilbert M. Gaul, Sarah Cohen and Dan Morgan:
The very policies touted by Congress as a way to save small family farms are instead helping to accelerate their demise, economists, analysts and farmers say. That’s because owners of large farms receive the largest share of government subsidies. They often use the money to acquire more land, pushing aside small and medium-size farms as well as young farmers starting out.
Ask most people - in America or Europe - why they think farm subsidies exist, and they’ll tell you that it’s to help the small, struggling family farm and strengthen rural communities. The reality is exactly the reverse.
Could these dilemmas add weight to the case for a progressive land tax?
Kevin Cahill’s new book Who Owns The World documents the startling inequality in land ownership throughout the world. Land ownership is probably the most unproductive ways of storing wealth, and the prime example of how the rich get richer off the backs of the rest of society. In the UK and much of the developed world, land prices are so high as to be a significant drain on the productive resources of the economy. Hernando De Soto has shown that in the developing world, more equitable land rights are a critical precondition for generating the working capital that people need to lift themselves out of poverty.
A land tax combines economic efficiency with social justice. That makes it the first in a series of policy recommendations I’ll be making for Gordon Brown’s first 100 days as Prime Minister.
Incidentally, both Sarah Cohen of the Washington Post and Kevin Cahill will be speaking at the farmsubsidy.org conference in Budapest on 26-27 January 2007. Registration is still open - it should be a fascinating gathering.