Tuesday, May 30, 2017

Ground Rents and Coronets (2011)

The Cooking the Books column from the November 2011 issue of the Socialist Standard
The slump has led to a revival of long-forgotten nostrums. Last year the Times (10 June) carried an article advocating a single tax on land as a way out of the crisis. This proposal normally associated with Henry George (1839-1897), but Philippe Legrain chose to associate it with Winston Churchill. Hence the subtitle of his article: “Adopting Churchill’s plan would benefit wealth creators at the expense of the idle rich”.
It is true that a hundred years ago, when the Liberal government of the day was in a power struggle with the House of Lords over the budget, Churchill who was then a Liberal did support a tax on land as a way of getting at the landed aristocracy.
Some harsh things were said in the course of this struggle with the likes of the Duke of Westminster and Churchill’s cousin, the Duke of Marlborough, being denounced as “land monopolists” and the “idle rich”. As indeed they were. Those who own a piece of the Earth’s surface are able to extract an income from the rest of society as ground-rent without having to lift a finger; the higher the demand for their land, the higher their income. In capitalist society this has to come out of the surplus value created in capitalist agriculture and industry. Naturally it was resented by the capitalist class who at least have to arrange for their capital to be invested before they can obtain their property income.
Henry George’s idea was to tax away the whole of the ground-rent of landowners and use it to relieve the capitalist class of the need to pay any taxes. Churchill, Lloyd George and the others didn’t want to go that far, but they still wanted to tax the mere ownership of land. Legrain repeats their argument:
‘The country's biggest private landowner, the Duke of Buccleuch, owns 277,000 acres, not because of his talent or industry, but because his ancestors seized vast swaths of Scotland. These "land monopolists" — as Churchill dubbed them — get richer not through their own efforts, but that of others. The Duke of Westminster owns 300 acres of what was once fields and is now London's priciest real estate — Mayfair and Belgravia. And because so many people have established thriving businesses in the capital, that inheritance is now worth billions of pounds. Surely it would be better to tax that windfall gain, rather than the employees and entrepreneurs who generate it?’
The landed aristocracy lost the political battle and in 1911 the House of Lords had its wings clipped. But they kept their property. According to Legrain, in Britain today ‘0.3 percent of population owns 69 per cent of the land.’ The latest Sunday Times Rich List puts the Duke of Westminster as the 4th richest person in Britain with a pile worth £7,000 million. The Duke of Buccleuch is equal 381st with “only” £180 million, but that’s because land in the wilds of Scotland is less in demand than land in central London. Other bluebloods monopolising land in central London are Earl Cadogan (21st with £2,850 million), the Howard de Walden family (33rd with £1,820 million) and Viscount Portman (53rd with £1,200 million).
The Queen, who besides being the figurehead of the British capitalist state is a landed aristocrat in her own right, is equal 257th with £300 million. Other titled landowners with more than her are the Duke of Devonshire, the Duke of Sutherland and the Duke of Northumberland.
Their wealth is obscene and not justifiable even by capitalist standards. But Legrain is mistaken. Taxing away their rents would not benefit the real “wealth creators”, i.e. the wage and salary working class, but only the capitalist class by reducing the tax it has to pay.

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