Friday, 19 July 2013

"Most people think Magna Carta is a document about justice..."

says Dan Jones in The Evening Standard:

... But, in fact, far more of its clauses concern tax. Magna Carta was a peace treaty attempting to stop a war that had broken out because of a tax rebellion.

Thus, much of it is actually composed of dull statements of England's tax code: limiting the amount a king could take from his subjects, whether in cash payments, horses and carts, foodstuffs or military service overseas.

So when we tip our hats to Magna Carta, we are in a sense celebrating the first great moment that the Crown was whipped into line over its tax affairs.

Aha, this is how the whole misunderstanding arose, the artificial distinction between "taxes" (bad) and "rents" (good).

Following the Norman invasion, the King appointed himself owner of all the land, entitled to all the rent. But for political-administrative reasons, he sub-contracted much of the rent collection to his mates, the barons, so they were allowed to collect the full rent from people living in "their" area and had to hand over the bulk of it to the King (in cash or in kind).

In practical terms, therefore, there were only a few dozen (or a few hundred) "subject" - the barons - who actually paid any money directly to the king. For some reason, the barons got away with claiming that they were not just sub-contractors of the king any more but somehow "owners" of their bits of land and hence entitled to collect the full rent from the common people,  however, that part of the rent which they had previously agreed to pass up to the king was not "rent" but "tax".

(It's a bit like a letting agent changing the locks and the title deeds and telling the landlord that he is now going to pocket the full rent paid by the tenant instead of just retaining his commission).

So all the supposedly liberating "tax breaks" in the Magna Carta did not benefit the common people in the slightest, and ultimately made them worse off...

Not only did they have to continue paying full rent to the local baron (or his sub-contractors, like the squires or whoever), but the king, now deprived of his natural and contractually agreed source of income started imposing lots of other taxes directly on the common people, from which the barons were of course largely exempt.

This whole double-dipping persists to this day of course. First, the official government ("the Crown") helps itself to large chunks of your earned income in publicly collected taxes, and out of what's left, you are expected to pay further large chunks in privately collected taxes (rent or mortgage interest) to the other, hidden branch of government, the landowners and banks ("the barons").

So when people say that Land Value Tax is "feudal", the rebuttal is, no, what we have now is "feudal"  - and in the worst possible way. Scrapping taxes on income and transactions and collecting LVT, spending the revenues on national stuff and dishing out the rest as a Citizen's Dividend or personal allowances (recognising the fact that location rents are national wealth) is "pre-feudal" - and in the best possible way.


Lola said...

Yep. This is a core part of my 'First Time Buyer' presentation. And mightily depressed - and grumpy - it makes them.

"So you want a mortgage to buy a house? Welcome to the new Feudalism" I say.
"Wot?" They say.
"Let me explain..."

Weekend Yachtsman said...

"further large chunks in privately collected taxes (rent or mortgage interest)"

Not sure I agree with this bit.

Tax is money you have to hand over and get nothing in return, or nothing you've really a right to believe in or expect.

Rent or mortgage payments are voluntarily entered into and you definitely get something from them - the right to occupy a tenanted property or - eventually - ownership of the mortgaged property. Voluntary is the key difference.

You can't really compare them imho.

DBC Reed said...

Not sure of all this paying taxes and getting nothing in return malarkey. Most ordinary people pay tax because it is a much cheaper way of getting education, a health service, police ,fire brigades roads ,etc than doing the same in the private sector. People got well pissed off with paying turnpike trusts for roads and there were some excellent Rebecca Riots in Wales where the "modernisers" got away with knocking down the trusts' gates while dressed up as women. Similarly private fire insurance was a disaster when rival crews turned up and fought over the water supply or the whole street went up because the fire took hold of buildings which were n't insured with anybody. Because rich bastards pay more tax than they do ,the tax system for most people is a better way of paying for things that matter than the private sector.

Mark Wadsworth said...

L, and what happens then?

WY, see next post for reply.

DBC, clearly, we as a collective get a lot in return for all the income tax which other people pay, but as an individual you get nothing in return (or else it would be silly) for the income tax that YOU pay.

Can you stop looking at the spending side and look at it from the point of view of each individual payer? With LVT, clearly it is voluntary and you as an individual get something in return, paraphrasing WY above.

Lola said...

Mw. They get very depressed....