Keeping up with the Joneses

If you watch these archeology programmes on telly, what's always striking is that the urge to show off is as old as mankind itself; they identify a civilisation by its jewellery, elaborate burial rituals, decorated pottery, cave painting etc, none of which is essential for actual day to day survival.

Modern capitalism "Buying things you don't need with money you don't have to impress people you don't like" isn't very much different is it?

1. For some reason, there is an inhibition in this country to simply say how much you are paid and have done with it. On the one hand, there is a risk that people who are paid less than you are will resent it, and on the other, there is a morbid fear that others round the table are paid twice as much as you are for doing a job which appears to be either dead easy or totally pointless. So we give clues to how much we earn by buying stuff, be it jewellery, new golf clubs, holidays, the first round in the pub etc.

2. A lot of British people also love boasting about how much they think their house is worth, but again, most only do it indirectly by saying how much a similar house on the same street sold for recently.

3. Again, we note that people are mildly averse to bandying about actual figures, and with house prices, who has the better trump card? The low earning couple who boast about how much they think their house has gone up in value since they bought it decades ago, even though they would be priced out now, or the higher-earning new arrivals who can actually still afford to buy one on the same street?

4. Also, people absolutely love complaining about how much tax they have to pay, but without mentioning an actual figure, as the more mathematically minded would be able to guesstimate their actual income (thus conflicting with Rule 1 above).

So my current thinking on Land Value Tax would go with the grain of all that.

We'd somehow have to work out a precise official figure for the rental value for each plot of land on which a home stands or could be built. These official figures would only ever be accurate to +/- ten per cent or so, but so what, it's only relative and not absolute values which matter, so we might as well adopt the concept used in Council Tax of putting houses into bands, I reckon that having twenty-six bands, from Band A to Band Z, where each band is twenty per cent wide would be sufficient.

1.2 to the power of 25 is about 100, so homes on plots of land allocated to Band Z would have a rental value and hence tax bill a hundred times as high as those allocated in Band A. Whether tax bills go from £100 a year to £10,000 or from £1,000 to £100,000 all depends on how you set the bands, how many houses fall into each band, how many other taxes you want to replace etc. (By contrast, there are only eight Council Tax bands (in England), they are 41% wide, homes at the bottom of the top Band H are only about ten times as valuable as those in bottom Band A and only have to pay three times as much tax.)

So if somebody simultaneously wants to:

(a) show off about how much their house is worth,
(b) boast about how much they earn and
(c) moan about how much tax they have to pay,

then all they have to do is drop into the conversation that their home is in, say, Band L (which costs, say, £10,000 a year).

Other players in this round of Joneses Poker then have a choice; maybe their house is in Band M (£12,000 a year), in which they win the round (but somebody in Band N on £14,400 can trump them); and the inverted snobs can win the parallel game of "Bugger the government, I pay as little tax as possible" by stating that they are quite happy in their Band J home and only pay £7,000 a year.

Recent purchasers will point out the obvious, that although their house is in a fairly high band, the purchase price was depressed accordingly, so every £1 extra they pay in tax is £1 knocked off the mortgage payments, so they aren't bothered. It is also possible to show off by saying how cheaply you managed to buy something.

Finally, those who over-borrowed or who over-occupy relative to their income will probably remain silent, as few people like admitting that they are struggling financially (unless they already have traded down, in which they can play the "Bugger the government etc" card as per above). Current political thinking is to construct the whole tax system round the very narrow interests of this small group of over-borrowers/over-occupiers and tax all the other people in the room to death on their earned income. Does anybody know why?