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History of Public Revenue Without Taxation by John Deval

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Leonie Humphreys

Joined: 23 Sep 2008
Posts: 223
Location: West Dorset, UK

PostPosted: Sat Nov 01, 2014 1:46 pm    Post subject: History of Public Revenue Without Taxation by John Deval Reply with quote

The attached is a talk by John Deval concerning the history of public revenue without taxation in the UK and America during a specific period that he explains at the beginning. The talk was presented at the School of Economic Science in London during October. The following excerpt concerns his conclusions:

'.... In an article in the 1983 edition of Land and Liberty, entitled The Economic Consequences of John Maynard Keynes, John Allen observes:

"One of the great puzzles of Keynesian economics is its total failure to grapple with questions of taxation, notwithstanding the enormous importance of taxation in the modern economy, both in Europe and the United States.

It seems strange that the principles of taxation laid down by Adam Smith, applauded by Ricardo and endorsed by Henry George, should be so completely ignored. They are hardly mentioned by Marshall and, needless to say, by no economist since his time.

Modern taxation is therefore guided by no principle whatever except that of exaction and impost. This is part of the heritage of Keynes. Keynesian theory has no answer to the problems of rising unemployment and inflation. It cannot produce these answers because it has no theory of taxation."

If I was to summarise the different attitudes of the economic profession in America and in Britain towards the principles of public revenue without taxation over the period covered this afternoon, I would say that in America it was marked by hostility and distortion, in Britain by benign neglect.

So, in conclusion how does this history bear out Keynes assertion that ideas are more powerful than vested interests. On the face of it vested interests won the day. But they not only used their power to obstruct, they used ideas to fight, obscure and confuse. The concept of public revenue without taxation is still alive and showing renewed signs of vitality. But it has an even more powerful idea to contend with and that is the idea that land can be owned privately without any corresponding obligation. To trump that idea will require energy, passion, perseverance and eloquence. It will also require no little subtlety.'

Hope you find it as helpful as I have.


History of Public Revenue Without Taxation by John Deval

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Brian Chance

Joined: 09 Nov 2008
Posts: 115
Location: Croydon Surrey U.K.

PostPosted: Sun Nov 09, 2014 10:00 pm    Post subject: Reply with quote

John Deval poses the perennial question of how best to present the truth about public revenue without taxation. Perhaps we should give greater attention to the unfairness of taxation on earnings. John Allen explained that Keynesian theory does not grapple with questions of taxation and that……..’modern taxation is therefore guided by no principle whatever except that of exaction and impost’. Many taxpayers will agree with this and If we explain that it is also unnecessary except for the purpose of controlling the unsustainable use of the Earth, this might attract the attention of all those who work to produce real wealth and have to pay tax on their work.
A reasonable person can more easily accept the need to pay rent, which is to contribute an annual levy for the benefit that private occupation of land confers on some and for that reason removes from others. It then follows naturally that the rent should be paid to those who give up their claim to use the land for productive purposes, rather than to a landowner who, as landowner, does not produce anything.
It could also be explained that the rent could be a freely negotiated bargain with a government that would lose revenue if the site remained vacant.
John Deval rightly points out the need for subtlety in rebutting the powerful idea of owning land without any corresponding obligation. Perhaps we should initially give more attention to the lack of justification for the taxation of earnings?
The really difficult problem is that at present it is possible, by selling the land, to collect all the present value of future rent in advance. The trick is to call it ‘property price’. The problem is particularly relevant to residential land which forms the bulk of land value. Here it is called ‘house price’ and the hope of the purchaser is that when house prices are higher, the trick can be repeated and the purchaser can claim, as a vendor, the increase in future rent of the land. It is comparable to a Ponzi scheme and at the current stage the obligation to pay is so large that even at present low interest rates it is difficult to produce enough wealth to do so. In fact the payments are largely and often wholly interest rather than repayments of the mortgage loan. To add insult to injury, it is increasingly interest on money created by banks out of thin air at minimal cost.
The unpaid purchase price remains outstanding as debt and lifetime mortgages are now being mooted. Meanwhile the recipients are spending the money created by the bank.
In these circumstances, the proposed government levy would be a second demand for rent already due on purchase of the property which has not yet been paid. This cannot easily be justified. The logical answer would be to declare a jubilee in respect of the mortgage loans outstanding. Should we begin to contemplate the possibility of this, with all that it entails?
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