Land values are sustained by government spending

Taxation is the price of a civilised society; civilised society and public services create land values; so let's fund public services out of 'service charges' on land values

The UK government, like governments in most developed countries, spends a lot of money on public services i.e. defence, law and order, transport, education, healthcare and protecting the environment. We don't need to argue the merits of these things (they are to some extent 'necessary evils'), the fact that every developed country does this to a greater or lesser degree gives us a clue that a country that didn't do so would fall behind or even fail.

Politically, nearly everybody is in favour of the government doing these things in some form. In a democratic society, a government that skimped too much would be voted out of office. If a dictatorship or Communist country skimped too much, there would ultimately be a revolution or an invasion by a stronger neighbour.

All of these things:
a) provide the conditions in which land values can arise in the first place. Try buying, selling or renting land in a war zone; or imagine what would happen to land values in the UK if they shut down the entire police force and released all prisoners, and/ or
b) make land in some areas more desirable. Think catchment areas of good state schools or business hubs in areas with the best universities (Oxford, Cambridge, London); areas with an unspoiled view; areas with good transport links or cheap/good public transport.

There are second order effects as well. The government can only do baseline stuff which enables capitalism and the free markets to thrive. Mass education makes it easier for businesses to succeed without having to pay (directly) for their employees' basic skills; the road system enables people to get to work and goods to be transported; so 'high achievers' sit on top of a pyramid of state-educated workers who arrived by road or public transport, and 'high achievers' buy homes in the nicest areas (pushing up prices of the land in those areas). Businesses tend to concentrate themselves geographically (shops in the town centre; banks in the City of London; manufacturing in the Midlands) and the places with the most successful businesses have the highest prices and rents.

Governments don't have any money of their own, so they have to collect taxes (or else the spending would lead to hyper-inflation). At present, in the UK (as in most countries), the bulk of taxes are collected from private sector output and employment. Although superficially, public services are supposed to benefit everybody and the whole economy, ultimately, all the spending (apart from pure corruption and waste) goes into higher land values.

However much you earn and however much tax you pay, if you want to get something back from our civilised society you have to buy or rent a home (or business premises) somewhere. Try being homeless for a while and see what the government will do for you - pretty much nothing. The price or rent you pay is merely paying for your share in the civilised society that you actually already paid for in taxes. So people who buy or rent a home are paying twice over.

On the other side are the landowners (landlords or people selling a home or business premises). The value of their land is sustained by government spending (which the productive economy is forced to pay for in taxes). So they are renting out or selling something which everybody but them paid for (private landlords in the UK collect twice as much in Housing Benefit as they pay in income tax).

So the system is rigged, it is a massive ongoing transfer of wealth from the productive economy to landowners. (Clearly, there are a lot of working age, owner-occupier households; they are being bribed with their own money - they complain about the taxes they pay but celebrate increases in house prices). It seems much fairer to pay for public services with a straightforward service charge proportional to the value of the benefits which each plot of land receives, i.e. a Land Value Tax. We don't even need to call it 'Land Value Tax', we can call it 'Public Services Tax', and break down tax bills into X% for law and order, Y% for road maintenance and public transport, Z% for education etc.

The flip-side is that taxes on output and employment can be reduced significantly. Ideally the tax shift would continue until
- the transfers of wealth from the productive economy to simple landowners (i.e. the selling price of land), and/or
- taxes on output and earnings (as distinct from monopoly income),
are reduced to £nil.

Land values are created by society

As any estate agent will confirm, the value of land depends entirely on its 'location, location, location' and not on the efforts of the current owner.

(This is distinct from the value of the buildings and improvements on any plot of land - the owner has spent money, time and effort on construction and maintenance.)

And what factors go towards creating and maintaining the location value? If is the services which can be accessed from that plot - be they publicly funded (police, public transport, schools, hospitals, public parks), privately provided (jobs, shops and leisure activities) or provided free by nature (good weather, nice views).

When a landowner rents out or sells a building, a large part of the rent or selling price relates purely to the 'location, location, location' value, which society as a whole creates and sustains.

If it is fair and reasonable for a tenant to pay for the value of these services, surely it is fair and reasonable to make the landowner pass on that element of the rent to society as a whole, i.e. pay it to the government in Land Value Tax.

A majority of homes are owner-occupied, but they are currently enjoying these services 'for free' (or nearly free, if we ignore Council Tax and SDLT) and/or denying others access to them, so it seems fair and reasonable for owner-occupiers to pay Land Value Tax as well?

Land is a natural resource

If a Bond-style villain sucked all the oxygen out of the atmosphere, and people had to buy containers of oxygen from his organisation or suffocate, most people would instinctively accept that this is wrong - only a few unscrupulous people would applaud his business acumen.

The maximum price that he can charge is unaffected by the costs of extracting and bottling oxygen, he would set it at whatever people are willing to pay, which is pretty much the whole of their income - as the alternative would be to starve to death.

Why is it any different if there were just one or many such Bond-style villains who between them control the whole world's oxygen supply?

And why is it any different if a minority of companies or families declare themselves to be owners of the entire earth's land surface?