Ricardo's Law House Prices and the Great Tax Clawback Scam

by Harrison, Fred

• ISBN13: 9780856832413
• ISBN10: 0856832413
• Format: Hardcover
• Copyright: 2006-11-30
• Publisher: Shepheard-Walwyn

Summary

'... without a knowledge of [the law of rent], it is impossible to understand the effect of the progress of wealth on profits and wages, or to trace satisfactorily the influence of taxation on different classes of the community' David Ricardo. When New Labour came to power it was on a wave of enthusiasm, based on the belief that, by abandoning Clause 4 and embracing humane market economics, they could usher in a more equitable social order - Blair's 'Third Way'. After three terms in office, they failed. The reason, Harrison reveals, is a hidden flaw in the market economy, which means that governments of all parties, who rely on the present tax system, transfer money from people on the lowest incomes to asset-rich investors. This was not the intention of the designers of the Welfare State: 'progressive taxation' was supposed to equalise people's life-chances. The reality emerges as the author traces the effect of taxes used to pay for public services. The process has remained unrecognised because the transfer operates unseen through the 'invisible hand' of market forces. Harrison exposes how this works by analysing the property market. Owners of high-value homes recoup what they pay in taxes through rising property prices. Much of this increase is the result of tax-funded state spending on infrastructure and public services - good state schools, for example, can add £20/30,000 to house prices. Lower-income earners, living in less desirable locations, and families who rent their homes, do not share this windfall. This is why the gap between rich and poor, and rich areas and poor areas, continues to widen, defeating the best intentions of governments. This outcome is not the result of market failure, as many argue, but the failure of governance. Economists and policy-makers choose to ignore the Law of Rent, also known as Ricardo's Law after the economist who provided the first scientific explanation of how it works.

Author Biography

Fred Harrison is the research director of the Land Research Trust. He is a former consultant to the Russian parliament on land and tax policies. He is a former chief reporter for the Sunday People and the author of Boom Bust, The Corruption of Economics, Land and Taxation, The Power in the Land, and The Losses of Nations.

Table of Contents

Prologue: Civil War by Other Means	1	(8)
Four Indictments	9	(12)
Part I: The Tax State
1 The Tax Clawback Scam	21	(12)
2 Ricardo's Law	33	(14)
3 Living on the Edge	47	(12)
4 Governance as a Science	59	(18)
Part II: Anatomy of a Dis-united Kingdom
5 Pulling Power: London	77	(17)
6 Castles in the Air: South East	94	(15)
7 To CAP it All: East of England	109	(10)
8 Economics of Life and Death: East Midlands	119	(13)
9 Brave New World: Yorkshire and Humberside	132	(15)
10 The Constituents of Tony Blair's Mind: North East	147	(16)
Part III: Barbarians Within
11 Beyond Hadrian's Wall	163	(16)
12 America's Constitution of Unhappiness	179	(20)
13 The Dis-abling State	199	(24)
Part IV: The New Financial Architecture
14 The Economics of Equality	223	(16)
15 First Law of Social Dynamics	239	(24)
16 The New Mercantilism	263	(14)
The Judgement	277	(18)
Epilogue: A Personal Word	295	(5)
Select Bibliography	300	(5)
Index	305	(8)
Acknowledgements	313	(1)
About the Author	314