Sometimes a picture emerges with extreme clarity. One of the reasons why I take part in internet discussions is that it forces one to refine one’s thinking. This was a response to a comment in the Daily Telegraph.
Governments create money to pay for their expenses. It should then be
removed through the tax system. To ensure that taxes were paid with sound money, the government paid its expenses by putting into circulation an official coinage impressed with the seal of the sovereign; hence ‘Render unto Caesar’.
A primary
function of government is to defend the territory and the land rights of
the inhabitants. Rights of land occupation are normally achieved
through land titles, which the government defends through the legal
system. Government also provides the infrastructure without which land
would be worthless. Thus, owners of land titles are able to collect the
economic rent of land which has been created by the money spent by
government. The cycle would be completed if governments then collected
this rent as a result of their activities; rent of land is not created
by private individuals and companies but is a stream of wealth over and
above that.
Unfortunately, most of those responsible for the design of our tax
systems have failed to notice that the process is a cycle: governments create money and spend it to protect land rights and sustain land values. The cycle should be completed by the collection of the land value thereby generated. Because this connection is not recognised, people throughout the world are saddled unnecessarily with taxes which appropriate by force the products of labour and enterprise.
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