Published: April 16 2009 03:00 | Last updated: April 16 2009 03:00
From Mr Chris Cook.
Sir, I am sure British correspondents will also be pointing out that it is not just the US tax code that is broken (“Mending America’s broken tax code”, Editorial, April 14), but this misses a deeper point.
The toxic combination of compound interest on debt and private property in land has once again, as it has since Babylonian times, concentrated wealth to an unsustainable extent in the hands of relatively few. The problem governments face is not the shortage of credit or money – that can be printed ad lib – but a shortage of the creditworthy. What is now needed is in fact systemic fiscal reform, and in particular a transition from taxes on earned income and corporate profits to taxes on privilege.
First, as advocated by the great US political economist, Henry George (and your own Martin Wolf and Samuel Brittan), a levy on land rental values, which is a tax on the privilege of exclusive right of occupation of the commons of land. Second, a levy on carbon use, and on other non-renewables; and finally a levy on investors’ privilege of limited liability through a tax on the gross revenues of corporations.
These levies are simple, fair, pretty much unavoidable, and likely to lead to massive reductions in deadweight costs in public and private sectors.
Linlithgow, West Lothian, UK
Copyright The Financial Times Limited 2009