Our tax system is almost completely wrong

There’s an excellent piece in the July 2014 Prospect magazine by Philip Collins called “What is tax for?” in which he notes that almost half of the tax raised in the UK is income tax (ie, a tax on work) and only around one-twentieth is tax on land and buildings. He calls the case for tax property and land “excellent”, and I agree. We went down the wrong path on this a couple of hundred years ago and have never recovered from it. He also calls for the re-imposition of capital gains tax on the primary residence: I’m not so sure about this, because I wonder if it might be better to abolish capital gains tax entirely in order to encourage more people to invest for their pension-free futures, but I’ll have to think about it a little more.

Talking about direct taxes, Collins calculates that a 1% tax on land value would be sufficient to abolish corporation tax entirely, which would surely benefit the nation in many different ways. Apart from encouraging more people to invest in businesses here, it would also begin to redeploy to the legions of clever people at accountancy firms who spend every waking hour trying to dream up tax loopholes to apply themselves to more productive enterprise.

In the future, everyone will be famous to fifteen people.