Vince Cable

So said Nick Clegg today, when visiting some college somewhere with housing "supremo" Sarah Teather and national "bread head" Vince Cable to announce something or other about housing policy.

Oh yes, they want to take a bunch of my money, who does have a job but not a house, mash it up a bit in some kind of Westminster alchemy pot, which gives out less than you put in, naturally, and give it - yes, give it free, at least nearly half of it, or lend it "cheaply" to the others, to some people who own a spare sodding house but are too lazy or miserly to do anything with it, even if it would make them money if they did. 

Then, if I am lucky, which I won't be because there aren't enough of those spare houses here to make one iota of difference to me, because, you see, a lot of them are in places nobody actually wants to live, I can start shelling out to those same people to whom I have already had money stolen from me, there is no other word for it, stolen from me - I'll say it again - to give to them, to put a roof over my head.

Now, Vince and Nick, well they're both Vice-Presidents of the party's land tax campaign group, so one might think that they would know better.  Sarah, well we can forgive her cos she just glazed over when several of us tried to explain it to her a while back when we took a day off work (without expenses) paid to go to London (without expenses) for a meeting which turned out after we had arrived to be a bit inconvient for the three MPs (with expenses) we had arranged to meet with a month before.

Which Lib Dem manifesto theme does this fit into?  "Fairness"?  Bollocks does it.  Not unless fairness suddenly means taking from the beleaguered tax-payer and giving to the lazy landowner who can't be buggered to make use of the assets he or she owns.  Even if you believe it is the state's right to try and tell those landowners what to do with their property, giving them my money to do it is not "fairness".

Five years ago nearly now, when we sat around a table in a Westminster Hall committee room to inaugurate the Housing Policy Working Party the first question I asked was "when are we going to talk about Land Value Tax" to which the housing policy team responded that "oh, that's a fiscal measure, we can't discuss that, the Treasury policy team will deal with that when they do a review" and so we spent months developing housing policy with our best hand tied behind our backs.  And when the Treasury policy team, better known as the Tax Commission, did get round to discussing policy, they welched on Land Value Tax too.

Steve Goddard is a lucky man, our PPC for Oxford East is one of the nicest politicians you could want to meet, if that's not an oxymoron, and if it weren't for the fact that I so badly want Andrew Smith out of this seat, with policy like this, it might very easily be "the 964 club" rather than "the 963 club" tonight.

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It seems I might be a wee bit out on a limb here - a familiar position it has to be said; but this leopard (out on his limb you see) is not going to change his spots.

It seems colleagues from around the Lib Dems, including folks from ALTER, and also land tax campaigners from outside the party seem to think the so called "Mansion Tax" announced at Conference the other day, in which residential properties worth more than a million pounds will attract a new half pence in the pound property tax, is "A Good Thing" or a "Step In The Right Direction". I absolutely disagree.

I'll go further: I think it is "A Bad Thing" and a "Step In The Wrong Direction". It threatens to undermine a broader implementation of a proper land tax. It raises very little, by way of a tax deliberately targeted on a particular group of people; a group of people who have considerable clout, in the main, and who have already shown, through the successful agitation of a similar group in getting Tory policy on Inheritance Tax changed, to whip up the fear of an "envy tax" amongst people unlikely ever to fall under its regime.

It combines everything we know to be bad about the Council Tax with none of what we promote as good about Land Value Tax. It sends precisely the wrong signals about land tax - that it is about raising a bit more revenue, not creating a new fiscal system where tax can be used to benefit directly the least well off (in the case of the land taxes by reducing markedly their costs of maintaining a basic living in the form of their shelter).

It seems to me that it is primarily aimed at sating the desire for a particular type of modern liberal to hammer the wealthy in order to "redistribute" to the less well off, rather than to create a genuinely more equitable system in which taxation is transparent, applied as far as possible to everyone of a similar class - ie land owners or income earners and so on.

The greatest benefits of land taxes can only be gained when land taxes are applied to the sort of land that those of us struggling to find a home need to be cheaper - which means taxing all land. If we cannot show these benefits, and quickly, then the arguments for land taxes will go stale before the benefits are apparent, and this sort of measure will foreshorten that process.

Also at conference, ALTER published their long awaited book of essays on the benefits and effects of land taxes. For those who read it, I cannot imagine that they would not conclude that land taxes are, in fact a "no brainer". We should get on and do it, or not at all. Not trifle around with a measure that will act to galvanize opposition to "any idea of a property tax coming out of the Lib Dems". In his foreword to the book Vince Cable says that, in contrast to 1909 we now need to know precisely what it is we want to implement and have a plan for doing so.

The "Mansion Tax" is part of neither.

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According to the BBC, today both Tories and Lib Dems will formally outline their current plans for dealing with the regulation of the banking sector in a post election world. Neither, it seems, are prepared to think "outside the box" as that early century cliche went: the Tories looking at returning banking oversight to the Bank of England, whence it came a few years ago, the Lib Dems more firm on plans to break up the biggest banks, starting at least with the ones in de facto public ownership. However, one thing we can be pretty sure of: neither will be proposing the single most important possible change to banking that would do the most to stabilize the money system and longer term the economy...Free Banking.

As a concept it's pretty simple: Free Banking is where banks, and potentially other organizations such as communities, trading companies and so on, issue their own currencies instead of trading in the "national" currency of the territory in which they are operating. These currencies compete against each other for users. The value of each rests solely on the soundness of the business practices of the organization issuing them. If one bank/issuer over-extends itself all the others who would normally accept their currency at par with their own (say when a business customer of theirs tries to deposit them at the end of each day) will want to pay less for them and the message will soon get round that the over-extended bank needs to change its business practices, its risk profile say, or risk complete devaluation of its issued currency. There are also lots of other mechanisms that, in a free market, but not a fiat system, would come into play to ensure the currency issuers play responsibly.

The system we have today, fiat currency "guaranteed" by the nation is whose name it is issued, is the result of a long term grab for power by the state. Why would they do that, in a market that functioned quite well? Well, there are profits to be had in issuing currency - so called "seignorage". However in the current system where fiat money tends to be introduced via lending by the commercial banks regulated to do so this seignorage profit has reduced, and has also been passed to those issuing banks rather than to the state. The big reason is inflation. We take it as axiomatic that inflation can be a good thing, if you are in debt. With your future repayments more or less fixed in numerical terms if you can inflate the money supply your payments will tend to fall in real terms with time.

Who are the biggest single borrowers in our economy? Well usually the government. So the government can inflate away the running costs of their debt. Well, okay, says you, but it also eats into the costs of everyone else's debt too, doesn't it - so we all benefit from inflation, right? Wrong. Lots of us may well be in debt, but after many decades of inflation and only a few of burgeoning private debt, the lenders have become savvy to this. How many of you are now on variable rate mortgages? Government induced inflation really assists really long term borrowers on fixed rates (ie gilt issuers predominantly).

And on that subject, on the other side of the coin, if you pardon the pun, inflation erodes savings. All of us need some of those, even if we are in debt - for example for our retirement. Inflation keeps eating into our pension funds - firms and returns have to grow faster in monetary terms just to maintain the value of our savings. But equally, if inflation undermines our savings, so it also undermines the money we have in our pockets now. If we think the prices are going to go up, we want to buy more now. Inflation actually drives us into more debt, transferring more in interest from less well off to the better off lenders, so we can buy now before the prices rise.

But inflation also distorts in all sorts of other ways - if it is more difficult for us to work out as individuals whether we should borrow to buy that new Hi-fi today and pay the interest, or wait until we don't need to borrow because it will still be there at the same, or perhaps a lower price, how much more difficult is it for people who have to make borrowing decisions about investing in capital goods? Inflation corrupts the signals that prices are sending to manufacturers for example - they don't know necessarily whether they are getting a better price because of inflation or because their product is in greater demand.

Since the US finally adopted central bank run currency, followed by a fully fiat monetary system a few years later, the state has overseen a devaluation in the currency of over 98% - roughly a period of a hundred years; the Federal Reserve system was established in 1913. But this most recent decade shows the problem at work perfectly and the government's part in it. At least until 1997 the government, through the regular collaboration between the Treasury and the Bank of England, was instrumental in setting the base rate as we call it here. That is used to create a signal to all the banks who are regulated to lend in sterling that they should lend more, if the base rate goes down, or lend less, perhaps call in loans, if the base rate goes up.

After the political turmoil caused by the events of "Black Wednesday" when speculation against the pound led the government to raise interest rates three times and to 15% at one point, we were left with hundreds of thousands of households who could no longer afford their mortgages. A housing slump ensued and led to a policy for the next few years of keeping interest rates as low as possible - lower probably than the economy deserved. Just as the housing market was getting back to relative values from before that crash, another asset was bubbling - the "dot com" stocks and shares.

When that bubble burst, there was a great concern in Treasuries on both sides of the Atlantic that the burst would turn to recession (and indeed it did in the US). Gordon Brown in the UK was so concerned that Labour's first term in twenty years would end with a recession that again base rates were kept artificially low, signaling to the commercial banks that were part of this cosy central-commercial bank cartel that they should lend even more, even more irresponsibly, and we had the housing price bubble that has resulted in the current economic carnage. All the way up that price bubble the least well off are encouraged to transfer more of their wealth to the lenders and now, all the way down, that cosy relationship means that the banks, the lenders, are the ones being baled out while everyone else will suffer vast capital losses with no compensation.

And finally, central banking and its bastard daughter inflation kills. Literally. You'll notice that the history of central banking has been closely related to when government wanted to borrow to fight wars. In the past century, more of this has been done via inflation than by direct government borrowing. If there's an inflationary surplus already in the economy, go to war, destroy some capital goods, and with it some human capital and all of a sudden there are things to spend that surplus inflationary money on. If you are already n a war, perhaps an unpopular one, and you cannot finance it via extra taxes or selling debt, inflate, inflate, inflate and you'll be able to buy up your war-goods before everyone else sees the inflation in the form of a reduction in the value of their money.

So, which of Vince, or George, will take such a brave step? Of course, we know the answer - what they really want of course is for themselves to be in charge of this vast power inflation gives. But wouldn't it be great if just for once, politicians made the right policy decision for us not them.

Jim Murphy first:

Whilst it is important to stress that the financial mess is not down to the effect of minimum wage strawberry pickers from overseas...

Warning over credit crunch racism

Scottish Secretary Jim Murphy will warn the country not to pander to "credit crunch" racism, when he addresses the Scottish Labour conference. He will outline the increasing pressure on jobs amid the financial crisis, while attacking "irresponsible bankers on £1m bonuses".

[From BBC NEWS | Scotland | Warning over credit crunch racism]

...the irresponsibility started, for electoral reasons, at number 11.

And now for Vince:

Vince Cable has called for highly paid executives in the private and public sectors to be named and shamed. In his speech to the Lib Dem spring conference, the party's deputy leader demanded full disclosure of salaries more than £194,000 - what the PM earns. [From BBC NEWS | Politics | Name and shame high paid - Cable]

...I commend the words of Winston Churchill a century ago this year:

I have no wish to hold any class up to public disapprobation. I do not think that the man who makes money by unearned increment [in land], is morally a worse man than any one else, who gathers his profit where he finds it, in this hard world under the law and according to common usage. It is not the individual I attack; it is the system. It is not the man who is bad; it is the law which is bad. It is not the man who is blameworthy for doing what the law allows and what other men do; it is the State which would be blameworthy, were it not to endeavour to reform the law and correct the practice. We do not want to punish the landlord. We want to alter the law.

From "Liberalism and the Social Problem", LAND AND INCOME TAXES IN THE BUDGET, available at Project Gutenberg.

I have no wish for my part to defend what have been obscene amounts of money paid to bankers who have ended up destroying their shareholders' wealth, but there is an increasing tendency, an ugly tendency, to blame a whole arbitrary group of people, call them bankers, call them fat cats whatever. The fact is that politicians wanted the bubble and bubbles eventually burst. They wanted it for electoral ends. In the process they have conned millions out of their money by making them pay more for their most basic need, shelter, and now that that bubble has burst and they are defending their friends in the City, they are going to be conning all of us out of our future wealth to pay for their bail-outs.

Of course for us proles, it's easier to think that someone creaming off loads of money is really to blame, and not those we voted for trusting in them not to screw us. And for those we voted for, they of course do not want the blame pinned on them. But for liberalism it is absolutely crucial that people understand that it is those in whom they naively trusted politically as well as with their savings who have conspired to create the current situation. That they understand and get angry about it. And that we use that anger to take power away from the institutions involved - the State and the City in equal measure.

It is not the individual we should attack; it is the system.  And so far there is no sign that politicians are willing to shoulder responsibility for that.  In any party.

Denying the State's, and her power hungry politicians', role in all of this is ugly and means we will try to fix the wrong problem, and that has the risk of plunging us into a really dark age of over-confidence in government and envy and hatred of individuals or groups who after all mainly helped do governments' bidding.

A number of others have kindly blogged about the interesting discussion at the ALTER conference fringe event last Saturday night. From the point of view of being on the platform for the first time it was all the more interesting for me. I wanted to pick up on some of the issues that were raised, not so much by the audience, though many were very insightful questions and observations, but the issues raised by both Tony Vickers in his introduction and especially by Vince Cable in his speech.

First, Tony Vickers introduced the whole event by saying that ALTER wanted to spend some time focussing on the second half of our acronym, Economic Reform more generally, rather than Land Tax which we have fixated on thus far. I'm afraid I rather brushed that aside with my little speech about our book, which will now focus more on land than anything else.

I have always taken the view personally that there is indeed more to the essential economic reforms we need to see in an equitable economic system that will benefit the greatest number of ordinary people than just land. I look to the great individualist anarchists and mutualists of the late nineteenth and early twentieth centuries, the fore-runners of the libertarian movement, who all held that there were four great monopolistic systems we needed to eradicate to level the playing field for all - land, banking, intellectual property and the state itself, or most especially the tariffs they use in pursuit of protectionist policy. Indeed my journey to understanding the land problem began with reading books about the debt-money system.

Colleagues involved in the editorial team for the book, whose economics education is far superior to mine, however, are more convinced that the land monopoly underpins all of these others, and whilst I am yet to understand their arguments fully I do I think see roughly where they are coming from. Essentially their argument is that by creating "free land" the power of the worker is increased by enough to offset the coercive power of debt money, that the ability of governments to manipulate a tax system based on market set values of land to effect protectionist policies is reduced and intellectual property becomes much more a negotiable part of an inventor's portfolio rather than something easily "enclosed" by big business as a result of the relative increase of the power of labour versus capital. At least I think that's how it goes.

But anyway, the upshot of all this is that the book will be more about land than about any of the other areas I have been interested in and which Tony suggested we would be looking at in the future. Though no doubt the chapters on each area of policy will show how "free land" feeds through into greater empowerment of the individual and worker.

Second, (we weren't ganging up on Tony, I promise!) Vince again turned the discussion around onto land tax. He said, I think, that we had largely won the theoretical argument on land taxes - that the party acknowledged its potential importance. But that there was much work to be done he said to produce "SMART" (my corporate bingo word, not Vince's) policies that can actually be sold to people (ie voters) and implemented. And on that theme I want to post a few separate thoughts of my own in separate posts in the near future.

James Graham rejoined that actually we need to make the "moral case" for LVT, what I would call, and agree with, the TINA (there is no alternative) argument - though my powers of persuasion in the housing debate on that position were clearly not very good! I could put it a slightly different way - "can we afford not to". And that, I think, is also shaping up to be the real message of the "Liberal Alternative" book.

I will end this introduction to a series of posts on "can we afford not to" with a thought on what seems to be a trait in Liberal Democrat policy making. Do we need to have such detailed plans for exactly how we would proceed from day one of a Lib Dem administration, or should we focus more on getting the "big messages" across. It seems to me that the last time we had a big ideological shift in British government, in 1979, that the Tories had a clear "direction of travel" but were not obsessed with landing in Number 10 with a full set of detailed measures to implement that. They may have had behind the scenes, ready to wheel out when the time was right, but the message to the public in the election was of the broad direction of travel.

This is not something we are alone in. Nowadays every party seems to have to have these details all thrashed out in order to give them credibility amongst the electorate that they would be competent to run the country. But I'm not entirely sure that that is what the voter actually wants - perhaps they want the big ideas rather than the detailed minutiae. I suspect this minute detail is a symptom of our modern managerial one-upmanship and the absence of ideological politics. But surely as a party we actually want to return to ideological politics that we think voters will engage with and be excited by.

I don't think I would be accused of disloyalty if I said that we are not going to be the party of government after the next election! So we spend a lot of time selling detailed policies that we will not get to implement before circumstances, most likely, change again. We have had most success with our "big themes" - we are known for PR, for opposition to war in Iraq, and for the idea, expressed through our previous tax pledges (though I hate to admit it in oh so many ways - not least that it will give succour to the likes of Evan Harris!) that we want "fair" taxation. We can sell LVT as "fair taxation" without minute details as to how it would be implemented, perhaps at most a broad timescale for a tax shift, as the Tories did with reducing income taxes in 1979 - something that actually took them three terms to really implement as far as the average voter would feel in their pocket.

Our detailed policy making produces a couple of not always welcome effects - that we are hostages to fortune - what we promise in one election might one day come back to haunt us several elections later when we make it to Downing Street, and it saves other parties a deal of work thinking for themselves when we create policies that they like to nick. We can of course take some pride in others wanting to use our policies, but people soon forget where they originated, and we risk being forever a glorified "think tank" rather than a party with the big ideas that will win us power. LVT is such an idea. We should not be afraid to tout it without trying to explain to people exactly how it would be implemented except in broad outline until we are closer to being in a position to do so. That will not stop the likes of us in ALTER, however, trying to show the party internally how it might work, but in the end, the detail is what the Treasury is for when we have control of the Great Court!

One last post on this, not because I care, but because I report "news" in this instance...

It was to be expected I suppose that the events of the past few days would be mentioned in Vince Cable's talk at the Oxford East constituency dinner this evening, and he didn't disappoint.

So for all of those out that are talking of splits in the party and and bad feeling, his message was quite clear.

There are no splits. We are (except perhaps for me) the most united party on the whole issue of Europe. There were differences of opinion over tactics; whether abstaining was going back on a manifesto promise, or rather whether abstaining specifically on the treaty rather than the constitution was going back on such a promise. Some people took that position. Those who resigned the front bench before voting did so with good grace and no rancour towards Nick or anyone else.

He did seem to me to suggest, but I'm sure not say explicitly, that the regrets are over the events of the last couple of weeks as a whole. The profile that by implication Nick has given to this one issue. For me of course, I think that's just the new boy not quite realizing in time he was being set up by the Tory Euro-shambles to take the fall for their own irresponsibility on the issue. And perhaps a regret that Nick was backed into a position in which he felt it was right to make it a three line whip issue.

Cameron has not faced such a media backlash for his massive rebellion because although it was a front bench position to abstain from Bill Cash's amendment, he had not insisted on whipping it - but the rebellion was larger than ours and shows up the Tory incoherence on Europe.

The parliamentary party are only too aware that they have caused headlines for the wrong reasons and are apologetic for that. But todays newspapers...

So I figured I would restart blogging with some feedback on what turned out to be an excellent South Central Regional Liberal Democrats' conference on Saturday here at Oxford Brookes University. Given that I see the place every day my motivation to get there in time for nine-thirty speeches on a Saturday morning was not great, and I actually arrived a few minutes into the first keynote speech by Evan Harris.

Some in the party and elsewhere give Evan a hard time I hear, but I have a lot of time for him. I get the impression he works his proverbials off in his constituency and has a penchant for minority interests which suits me. But listening to him on Saturday and then later hearing Vince Cable they between them seem to epitomize what one might call the "old" Lib Dems - leftist, statist, more interventionist - and the "emerging" Lib Dems - more liberal in every sense.

Evan restated his support for the fifty pence tax rate and bemoaned the federal conference at which it was removed from party policy, Vince emphasized that the new tax policy, trying to focus, as Churchill said, on not just "how much have you got" but also on "how did you get it", was in fact the most redistributive set of tax policies on the table from any party.

Harris's main point, as I understand it, was that the fifty pence tax rate sent a signal, even if it did not in fact promise to raise terribly much, that we were prepared to take more from the highest earners if need be to lift the poorest out poverty. It is a simple message to be sure, and easier to communicate than the "new" idea that we should be more carefully targeting tax on externalities and unearned privilege, but not one that adds to the progressiveness of the overall tax system one iota.

But Evan is exactly the sort of person we want to attract to our book the ALTER executive are putting together to launch centenary celebrations of the 1909 People's Budget. We want to show him how rigourously applying what we have been calling the "liberal economic tradition" will in fact raise the lot of the poorest by increasing the returns to labour, by rooting out corporate welfare, and by allowing genuine competition to bring down the cost and increase the quality of all sorts of goods and services some take for granted are best delivered by the state. In short that there need be no dichotomy between "social" and "economic" liberalism.

Tory cartoonists seem to think so too:

ConservativeHome's Mr Bean posters:

ConservativeHome on Sunday included this little piece of hubris. Now, it is true that, somewhat inexplicably to me, Gideon's announcement about raising the Inheritance Tax threshold, something that everyone seems to acknowledge affects just 6% of estates (about 30,000 families each year) currently, seems to have done them a lot of favours, positioning them in the public perception at least as a tax cutting party.

But it would be quite wrong on a number of levels to say that they are lowering taxes:

• First, they are simply shifting the burden. Sure, it is shifting from a few relatively wealthy households (with average house prices once again below £200k having a housing asset over £350k is still in the top quintile nationwide) who can and generally do vote to a very tiny number of households who generally can't and don't vote. But shifting, rather than cutting, it undeniably is.
• Second, even if it were not the "revenue neutral" shift (after all they have also promised to stick to Labour's spending plans so need the money from somewhere) it would amount to a tax cut of just 0.88% of the government tax take (that's central government by the way - i.e. excluding local taxes). If a party that has regularly claimed to be managerially superior and capable of saving government wastage cannot "lose" less than a measly one per cent of its revenue in efficiency savings, they're clearly not the competent financial managers they would have us believe!

It astonishes me that a measure that would be felt my fewer than 30,000 families per year can be spun as some major step forward in tax shifting, let alone tax cutting. Compared to the Lib Dem proposals - abolishing the Council Tax (the tax most respondents found unfair in recent polling by the Tax Payers' Alliance) would be immediately felt by virtually all households; reducing national Income Tax by four pence in the pound would be felt by every individual earning anything more than the personal allowance, the Tory changes to IHT and Stamp Duty on homes, are small fry - mere plankton in fact.

But both parties of course propose changes that are "revenue neutral". Nobody seems to be advocating real tax cuts. And maybe when the population wakes up to this fact they will see through the spin and reject those attempting to hood-wink them into believing they will somehow be much better off. On balance of course, the Lib Dem proposals would leave far more people better off, if they tread lightly on the resources of the planet, for most of our tax cuts are to be funded by increases in taxation for environmentally damaging behaviour and life-styles.

Vince Cable - the best prospective Chancellor by far?

Our Green Taxes and local tax reform ideas have been criticized by others:

• as affecting the annual family holiday (wrong - they do however aim to penalize those very lucky tiny few who have the time, lack of domestic commitments and financial wherewithal to take weekend breaks abroad every month or two - where their flight costs pale into insignificance compared with hotel and entertainment costs)
• to hit the poorest households' motorists (wrong again - the 33% poorest households by and large still do not even have access to a private car and would in fact be likely to benefit from the resultant investment and better efficiency in public transport)
• or to greatly increase the income tax of those two young nurses of CK's fluffed interview (still wrong - the four pence in the pound reduction in national income tax is intended to more than cover the Local Income Tax and they won't be paying Council Tax on top).

So why can't we get that across to people? It's a far more compelling package than the Tories and their tax cuts for the rich - which is jam tomorrow for even those who might benefit and jam never for most of us.

Now, you would not expect me to comment on tax policy without mentioning my pet pair of elephants - Land Value Tax and Citizens' Income . I maintain that by adopting the "Single Tax" of Henry George - that is taxing the unimproved value of all land as a replacement for (most*) Income Tax, Capital Gains Tax, Inheritance Tax, Corporation Tax, and, if Europe were to agree, Value Added Taxes and returning most of even that Land Value Tax to the people to spend in the form of "an unconditional, non-withdrawable income payable to each individual as a right of citizenship" (the description used by the Citizens' Income Trust) would so transform our economy and environment that government expenditure could be reduced to just a fraction of the proportion of the national income it is today.

Couple this with monetary reform that would see a national credit authority, free of government and politicians' interference, creating just the right amount of new currency needed by the economy to account for each year's growth in the economy instead of privatised debt creation doing the same job with a lot less stability as recent weeks in the financial markets have shown, we would have virtually no need for taxation at all (except perhaps as a behaviour modifying mechanism)

Pie in the sky? Well, it may be. But surely that sort of promise is worth investigating at the highest level. We assume the way we currently operate - coercive taxation and state capitalism - is the only one possible. It is true that, as the joke goes, in order to get to that fiscal nirvana one would not start from where we are, but the potential attractions are so enormous that we ignore them at our peril. Land Value Tax has some heavy-weight supporters historically - Adam Smith, J S Mill, Winston Churchill, Lloyd George, Albert Einstein, George Bernard Shaw, Milton Friedman and others cannot all have been wrong, surely?

I stumbled across this group of bloggers the other day called the "Low Tax Coalition" .  I considered applying to join their number, but so far as I can see not one of them even dares to imagine the sort of low/no tax economy I set out above.

*I say "most" Income Taxes (and possibly CGT too) because I am becoming more convinced that some of these taxes on (some of) the highest earners may be necessary in the short to medium term to recoup the "embodied advantage" they have gained under the current less fair system. For an example of what I mean, look at the current Sainsbury take-over where the shareholders are about to crystalize property values worth up to around £10bn effectively valuing the grocery business at nothing despite its obvious earnings history and potential.

Last week Vince Cable seems to have unilaterally added to Lib Dem tax plans in response to repeated more-heat-than-lght stories in the media about private equity bosses and their tax treatment, "non-domiciles" and their property in the UK going untaxed and the continued cris de coeur of middle England against Inheritance Taxes on their homes. Later in the week it seems George Osborne joined in, on what must be pretty unfamiliar Tory territory.

And then yesterday there was a story on the BBC about how buy-to-let property owners are able to avoid up to £2bn in taxes by offsetting their mortgage interest against their rental income before tax.

This seems to me to be something of an unhealthy return to the politics of envy, where the only question the taxman asks is "how much have you got?" As I wrote last week at the 1909 Group website, our Liberal forebears wanted to change that attitude. They realised that "equity" in the tax system was not solely a question of how much someone has, but just as importantly of how they got that wealth. Whether it was through healthy economic processes, creating new wealth, or by exploiting such things as protectionist policies, negative externalities or land and other natural monopolies.

Take supermarkets as an example. Private Equity firms have been circling Sainsbury's recently. Though they may have been seen off by other investors such as Robert Tchenguiz, he himself, a noted property tycoon, said he was investing in a "property company with a retain business". Indeed, with a Stock Market capitalization of £8.7bn, estimates value their property estate at more like £10bn - more than the whole business! If someone were to take over Sainsbury's they would not be creating new wealth but releasing the embodied profit of land ownership.

Many new entrepreneurs are basically leveraging land values to make a killing, hiding behind diverse operating businesses. INTO University Partnerships is an international English Language teaching business, but the partnership deals it forges with universities all seem to revolve around land acquisition and becoming a successful and profitable landlord to the students it brings from all corners of the planet. Last year, the HBOS banking group attempted to become a major player in the UK house building industry, pipped by Barratts in a contested bid for what had been the fifth largest house builder - this last is a double whammy - not only do they get to build your home, and capture the land value profit for themselves, but they get to charge you for borrowing the money to pay them for that land!

As to "non-doms" why should only they be penalised for owning property in the UK? Why not a land tax that would fall on everyone regardless of domicile status and instead of income and other capital taxes, including the hated Inheritance Tax? The non-doms would not be able to avoid it - and neither, incidentally, would the company involved in the outsourcing of the HM Revenue & Customs property estate, Mapeley, who subsequently off-shored the ownership of the property to avoid any taxes on it.

Anyway, the point is there are ways of making a tax system which is fair and equitable, that is not complicated, and doesn't seek to fleece people just because they have made money, but on the basis of how they make that money, and where that wealth is accumulated by processes like land ownership, where the value is created not by themselves but by others' need for their monopoly locations, they will be taxed the most, automatically, and according to market valuations not intrusive tax assessors. Land Value Tax.

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