1. Mortgages for grannies. Could you let me know where I can get hold of a mortgage for a 75-year-old with only a modest pension for income? How is the mortgage to be paid? What period should be chosen?

2. Government as deus ex machina. Shall we have a regular department, or shall we set up some more quangos to handle the assessment and administration of the “tithing”? The (good) intention of the proposed fiscal reform is simplification. This goes in the other direction.

3. Government as repository of perfect information. Let’s say we implement the tithing option, and granny takes advantage of it. What happens if prices continue to go up? Her tax continues to increase, her net income is reduced by the need to pay the interest on the mortgage, and her outgoings increase further because her land tax continues to be driven up. Does she take out a second mortgage? The “tithing” system would only provide a satisfactory outcome if government were able to predict either that prices were at their peak, or to allow her to take out a Northern-Rock-style proportion of the present value, to allow for future rises in the valuation.

2. Government as deus ex machina. Shall we have a regular department, or shall we set up some more quangos to handle the assessment and administration of the “tithing”? The (good) intention of the proposed fiscal reform is simplification. This goes in the other direction.

3. Government as repository of perfect information. Let’s say we implement the tithing option, and granny takes advantage of it. What happens if prices continue to go up? Her tax continues to increase, her net income is reduced by the need to pay the interest on the mortgage, and her outgoings increase further because her land tax continues to be driven up. Does she take out a second mortgage? The “tithing” system would only provide a satisfactory outcome if government were able to predict either that prices were at their peak, or to allow her to take out a Northern-Rock-style proportion of the present value, to allow for future rises in the valuation.

4. Government cash-flow. This reform is supposed to balance the books. But if you introduce a system where government has to provide cash to a large number of householders during a rising market (i.e. inflationary period), and then recover the cash slowly in subsequent years, you will do great damage to the government’s budget during the inflationary period. A government needing to find more cash for this purpose, and with very much more limited means to respond (because you have scrapped many of its other sources of revenue) would have little choice but to borrow and/or print money. A significant increase in either during an inflationary period would be highly unhelpful. In fact, it would be remarkably similar to what we have just done.

5. Government losses. Prices rise and fall. You say that the government will recover the value of the rent it paid itself (que?) through capital gains. But what if they were capital losses? What if this system had been in effect during the past five years. How would the government’s budget now look? Reducing income from land taxes and no prospect of capital gains.

I’m sorry, but however you dress it up and try to justify it with abstract (and in my opinion unsound) theory, this is still simply Henry Georgism. Nice idea in theory (if you subscribe to certain schools of economics, to which I do not subscribe), but lousy in practice.

As for carbon tax and cap-and-trade, we agree (you can find a paper on this site where I set out many other reasons why cap-and-trade is a bad idea). But it is politically difficult to get governments to implement a carbon tax unilaterally, because they point out with justification that this will place an unfair burden on their nationals compared to others and simply offshore the carbon. You need some mechanism to achieve a politically-acceptable international share of the costs. I suggest one possibility to do so without the many disadvantages of cap-and-trade in another paper on this site.

My point was not that carbon tax is a bad idea (it’s not, it’s a good idea), but that you shouldn’t rely on it as the basis of a substantial proportion of government revenues, because the whole intention of a carbon tax, and the test of whether it is effective, is to achieve progressively reducing yields, reflecting the greening of the economy.

I don’t follow your argument for why that isn’t the case. If you are arguing that the rate of a carbon tax would continue to be increased as people’s carbon emissions fell, so that it maintained a steady revenue for the government, people’s obvious response would be to stop trying to reduce their carbon emissions, as it would have no impact on reducing their tax bill. There has to be a benefit to taxpayers from reducing their carbon emissions, or the mechanism won’t work.

2. Government as deus ex machina. Shall we have a regular department, or shall we set up some more quangos to handle the assessment and administration of the “tithing”? The (good) intention of the proposed fiscal reform is simplification. This goes in the other direction.

3. Government as repository of perfect information. Let’s say we implement the tithing option, and granny takes advantage of it. What happens if prices continue to go up? Her tax continues to increase, her net income is reduced by the need to pay the interest on the mortgage, and her outgoings increase further because her land tax continues to be driven up. Does she take out a second mortgage? The “tithing” system would only provide a satisfactory outcome if government were able to predict either that prices were at their peak, or to allow her to take out a Northern-Rock-style proportion of the present value, to allow for future rises in the valuation.

4. Government cash-flow. This reform is supposed to balance the books. But if you introduce a system where government has to provide cash to a large number of householders during a rising market (i.e. inflationary period), and then recover the cash slowly in subsequent years, you will do great damage to the government’s budget during the inflationary period. A government needing to find more cash for this purpose, and with very much more limited means to respond (because you have scrapped many of its other sources of revenue) would have little choice but to borrow and/or print money. A significant increase in either during an inflationary period would be highly unhelpful. In fact, it would be remarkably similar to what we have just done.

5. Government losses. Prices rise and fall. You say that the government will recover the value of the rent it paid itself (que?) through capital gains. But what if they were capital losses? What if this system had been in effect during the past five years. How would the government’s budget now look? Reducing income from land taxes and no prospect of capital gains.

I’m sorry, but however you dress it up and try to justify it with abstract (and in my opinion unsound) theory, this is still simply Henry Georgism. Nice idea in theory (if you subscribe to certain schools of economics, to which I do not subscribe), but lousy in practice.

One of the aspects that seems to me most suspect about the concept is that Henry Georgists are so keen to attribute rising land values to the impact of public works. As you put it, “Land value is the product of other people’s work, almost exclusively. A new hospital or school, a new road or rail-link, a park kept up by the local authority; all of these things raise land rent.” Almost exclusively? You must live in a different area to me, and to anyone that I know. Rising land values round here had little to do with public works. They had much more to do with the availability of credit. The idea that our local council and other providers of infrastructure and services increased the value to us of those services and infrastructure by (say) 50% in the last 5 years bears no resemblance to the reality that most people have experienced. And they would probably deny that their services and infrastructure have decreased substantially in value to the community in recent times. It seems to me that Henry Georgists see the world through a prism that distorts reality so that all developments can be explained by means consistent with their theory.