Progress without Poverty

Progress Without Poverty

A Case for Recycling Public Value

David Triggs

This article is a reproduction of a paper produced by David Triggs, which lays out the case for Recycling public value, by use of a Land Value Tax. It lays out clearly some of the main theories and values of the Henry George Foundation, as initially stated by Henry George himself, and as promoted by the foundation today.

Summary

In this paper I argue for a radical improvement of the tax system. I illustrate how our current system is unjust, uneconomic and ineffective.

• It is unjust because it conflicts with the fundamental economic tenet recognised in all civilised cultures that – ‘thou shall not steal’.
• It is uneconomic because it inhibits productive, and promotes negative, economic behaviour.
• It is ineffective because it causes or aggravates many of the economic and social problems that the revenue collected is intended to remedy.

I demonstrate how these shortcomings are unnecessary by showing that an efficient and just alternative is readily available. The scale of the problem and the benefits available from reform are discussed in the context of the deadweight losses to the GDP that are a feature of the current tax system.

Principle

My thesis is predicated on a belief and acknowledgement that everything is subject to ‘the laws of nature’ or Natural Law. Humanity and human society are both natural, and, whilst people and societies are certainly subject to man made law, and the will and actions of themselves and of others, they are first and foremost, subject to the laws of nature.

Artists, engineers or others who succeed in creating an object that corresponds with their intention must work in harmony with the nature of the materials they use and the natural forces that operate. Similarly, in the social science of economics, the systems that people devise to facilitate the creation and distribution of wealth, and the sharing of the gifts of nature, need to be in harmony with the nature of human beings and the forces that operate between people, and their natural environment.

Economic Models

I start with an economic model that describes an aspect of natural law that I believe is most relevant to the study of economics.

Figures 1 and 2 demonstrate a fundamental principle that underpins all economic production. The inner circle in each case represents economic production itself. It is styled ‘People’s Production – Wealth’ drawing attention to the fact that all wealth is produced by people. The outer dotted circle represents the all encompassing influence of the laws of nature or Natural Law. It indicates that everything within it is subject to it. In

Figure 1 the lower two points of the triangle represents the human and non human players in the productive process whilst in Figure 2 they represent the individual producer and society respectively. The base line in each case indicates the existence of a direct relationship and influence between them. Each of the two side lines of the triangle indicates the economically significant aspect of the respective players’ nature. The apex of the triangle indicates the importance of the conditions that exist where operation of these two natures interact. The point of showing the influence of natural law in this way is to note that whatever conditions prevail at the point of interaction, the basic model, and the relationship between the players, remains unchanged. Thus the model may be seen to be ‘true’ everywhere and at all times where ‘Humanity’ and the ‘Universe’ are the players as in the case represented by Figure.1. Similarly the model is always ‘true’ in the more limited, but important, case represented by Figure 2 where wealth is the product of Private Firms operating within the context of Civil Society.

In each case we may note the importance of human enterprise to the active side. This includes all human labour, skill, talents, knowledge, will etc. Similarly we may note the importance of Land on the passive side. In Figure 1 this is included in the term Gifts of Nature emphasising the importance of all that is given to mankind and that to which he may ‘add value’ by his enterprise and endeavour, and without which, he cannot exist.

In Figure 2 the term Land is made more explicit and we see the appearance of the economic term ‘Capital’. In fact capital is not shown explicitly in Figure 1 since it is included in the inner circle denoting ‘People’s Production – Wealth’, capital being that part of wealth that is used to facilitate the production of more wealth. This makes clear the important distinction between Land and Capital. Land is a gift of nature and is not man made, capital is always man made. Capital, for the purposes of economic analysis, is thus not to be regarded as a ‘Primary Factor of Production’ – it is itself a product. It is however a critical factor in all economic societies and is reflected in Figure 2 where its ability to enhance, both the human enterprise of the firm, and the productive potential of society and the land, is recognised.

The productive process itself is shown to consist of the interaction of two primary factors (labour and land) both assisted by capital and society. In a settled trading economy such as we have today the benefits of society are, like the land, intimately associated with location. Not only does society provide a framework for law and order but also provides a range of services and protections that vary in degree and value with their location. Two key and obvious facts, frequently overlooked, show themselves here.

First – no two people (or firms) can occupy the same location at the same time; occupation is invariably ‘exclusive’!
Second – no two locations are identical – there are always differences. Arising from the first it is essential for a civilised and ordered society to adopt a means by which exclusive occupation of locations may be allocated to particular individuals and firms. This needs to be in a manner that provides each with security of tenure suited to the nature of their activity. Arising from the second basic fact is that the occupants of any location will enjoy advantages and disadvantages compared with their fellows who occupy other locations. Whilst the degree of the differences may be slight or great – differences there will always be.

With these two immutable facts in mind we may proceed to show first how production or value added is affected by differences in location advantage.

Simple ‘Economic Community’

Each column in Figure 3 represents the value added by a firm within a small economic community where each firm occupies a unique location, and each location, whilst of equal size varies in respect of its economic response to the input of human enterprise, capital and energy etc. In the interests of simplicity the economic community indicated here consists of only eight firms. The height of each column represents the value added on that site for a unit of input. Thus whilst inputs are equal, the differences in output, (value added), are due entirely to the inevitable peculiarities of each particular location. This phenomenon is a feature of every economic community – every village, town, city, country and continent – world wide. Its presence may be obscured by the very real differences in inputs that occur in the real world but the differences in output that arise as a result of differing inputs of enterprise, skill, capital etc., overlay the differences indicated here, they do not nullify them.

The importance of viewing an economy in this way i.e. setting the firm’s inputs as equal on all sites, is that it enables us to identify that part of the output that is due to the firm’s inputs only, and that part of the firm’s output that is due to advantages of their location, compared with others in the same community. In a money based trading economy the relevant output, since it is sold, is in fact it’s net ‘income’ and the income that is due to a firm on account of its inputs may be regarded as it’s ‘Earnings’. It represents the sum of the returns due to its component inputs viz. Labour (wages) Capital (interest) and Enterprise (profit), It is clear that firm ‘H’ occupies a site that enjoys no overall economic advantage when compared with any of the other sites within this community. The full value added by the firm’s inputs on this site is thus all ‘earned’ i.e. its ‘Earnings’. Since all firms are assumed to provide equal inputs they all ‘earn’ a similar amount i.e. equal to that earned on the least productive site in use (the margin) – site ‘H’.

The additional value shown on the seven sites A – G in excess of the general level of earnings (established at the margin ‘H’) is due entirely to the enhanced economic qualities that those sites enjoy. The occupants do not create that additional value by virtue of their own efforts or enterprise etc. but because the community permits and protects their exclusive occupancy of sites that happen to be superior to the least productive site in use (marginal site H).

We may thus see that this extra value added is by virtue of the services, infrastructure and protections that the community as a whole provides to each and every site occupant. As we noted earlier the extent of this benefit varies from site to site.

Ricardo’s Law of Rent

It will be apparent to many that we have here employed a model based upon one of the most basic and universally recognised theories of classical economics namely ‘Ricardo’s Law of Rent’ where this surplus is termed ‘The Economic Rent of Land’. It may be noted that in his original model Ricardo assumed that variations in productivity were due to varying fertility such that the crop yield reflected such variation. Here we make no such assumption but we do assume that each firm employs an equivalent amount and quality of human enterprise, capital equipment and energy on their location.

Figure 4

Figure 4 thus shows how the two Primary Factors of Production (labour and land) give rise to a Primary Division of Wealth consisting of two parts (earnings and rent). It should also be noted that this ‘primary division’ is not based upon any claims being exercised by any of the players in the economic process of production. It does not arise due to the relative strengths or weaknesses of anybody’s bargaining or market position but rather from the nature of economic activity itself, taking place within the context of civil society. We may thus contrast this ‘primary division’ (arising from economic ‘factors’) with the primary and secondary ‘distributions’ of wealth that take place in the economy today which are very much dependent upon the relative strengths of competing claims and claimants.

Private and Public Property

In the primary division of wealth identified above we may see a just basis for both private and public property. Private property can be seen to have arisen from the work of individuals or firms whilst public property has its origin in the actions of the community acting as a whole. A natural and just source of public revenue may thus be seen to be the economic rent of land.

Current Revenue Collection

We now explore the effect of collecting public revenue in the way it is currently carried out – through taxes levied upon all productive enterprises and individuals. We use the same economic model and hypothetical community as before and assume that taxes are collected from each firm or individual in proportion to the value added on their site. In the UK today taxes amount to around 40% of the total value added by all productive activity or GDP so this proportion has been assumed in the model illustrated in Figure 5. Another feature of current society however needs to be incorporated into our model – the fact of full land enclosure. This means that a claim is exercised on each and every site such that any firm wishing to engage in productive work is obliged either, to hold a recognised claim to the site themselves, or pay another (a landlord) for a tenancy.

Consider now the relationship between the firm and its landlord. It hardly needs pointing out that the landlord is in a strong bargaining position – the firm needs his (or an equivalent) site far more than the landlord needs a tenant – particularly where the landlord can hold the site out of use without incurring any cost. If he wants any income however he must let the site to a tenant but he cannot charge him more than the tenant firm can afford to pay and stay in business. He will of course generally charge as much as he can however, leaving the tenant firm with just sufficient to pay the wages, interest and profit that is required to engage the requisite labour, capital and enterprise.

Figure 5
In Figure 5 we have assumed that at the margin ‘H’, the landlord’s claim amounts to 10% of the value added on that site leaving the firm with 50% after tax at 40% has also been paid. If we now regard this as the firm’s ‘earnings’ we see that it represents the least that people within the firm are prepared to accept. It does not relate directly to the product of their efforts and enterprise or the amount and quality of the capital they have employed but is a residual sum left after the tax man and the landlord have exercised their claims. We should now note the situation on each of the other sites. Their landlords also have, in general, no reason to claim any less than the most they can get. Thus they will now absorb all that remains after the earnings and taxes on value added have been taken. Tax, we have noted is a fixed proportion of the value added (40%), leaving an ever increasing share available for the landlord to claim on each succeeding site. We may note how the difference in landlords’ claim that arises between sites exaggerates the differences in Value Added that naturally arise between sites. The critical points to note however are firstly that it is the impact of taxation and landlord’s claim at the margin that depresses the general level of earnings throughout the economy. Secondly, that this renders sites that would otherwise be viable, unviable or sub-marginal and thus unproductive. Thirdly, those even normally productive firms, on any location, may be rendered only marginally viable with little scope to absorb any decline in market conditions.

Modern Taxation and Economic Theory

We may now explore the impact of modern taxation policies against a more recent and contemporary body of economic theory. Here we shall use the theories of supply and demand as they relate to the markets for particular goods and services.

Figure 6
Figure 6 represents the conventional view for goods and services that are relatively elastic i.e. the quantity that will be bought and sold in the market is quite sensitive to price. Thus where Price is represented on the vertical axis and the Quantity bought and sold is represented on the horizontal axis, the ‘Demand Curve’ is shown sloping in a downwards direction from left to right, the demand for the item being shown to reduce as its price increases. In contrast the ‘Supply Curve’ is shown sloping upwards from left to right indicating how if the market price of the item is seen to rise more supply will be forthcoming. New suppliers may be tempted into the market and existing suppliers may be encouraged to produce more. It should be noted that the supply curve in fact reflects the firm’s costs of production, so that to the left hand side where the quantity is small, it ifndicates that few suppliers, (with low costs) would find it profitable to produce the item for sale at this low price. In contrast, the right hand side indicates that many more suppliers, with higher costs of production would find it viable at a higher sale price.

Where the two curves intersect indicates both the quantity of the item that will be bought and sold and the ‘market price’ of that item assuming no external interference with the market. However under current circumstances there is invariably much interference in the form of taxation. This is shown in Figure 6. where it is indicated as a sum of money impacting from the left hand side Price axis as a ‘tax wedge’. We may note three important effects of the tax wedge. First, it increases the price of the item to the buyer. Secondly it reduces the price received by the seller. And thirdly it reduces the quantity that is bought and sold. Thus all those purchasers and suppliers to the right of the new quantity point are now to be disappointed. These buyers will now judge that they are unable to afford the item at the tax inflated price whilst the suppliers will find they cannot cover their costs at these tax reduced returns. Not surprisingly these losses are styled ‘Deadweight Losses’.

Economists generally acknowledge the existence of deadweight losses though they are not often high on their agenda and there seems little consensus with regard to their size, estimates varying from around 30% to around 100%. The UK treasury seems to be content with the lower figure at present and uses it when determining the true costs of infrastructure investment from public funds.

The supply curve indicated in Figure 6. is for goods and services where the quantity that is produced for sale by suppliers depends upon the market price of those goods and services. These will include most discretionary purchases (but not addictive items where hooked people are not deterred by price), virtually all labour services and of course enterprise itself.

We may now contrast this with an item that is inelastic i.e. the quantity produced is not basically linked to the price of the item. The key item of economic significance here is land. As the old adage reminds us ‘they are not making it any more’ and with very rare exceptions land is ‘given’ not ‘made’. It is a free gift of nature available to all mankind. Thus whilst we have become accustomed to the existence of a market in land, the actual amount of land in the country is not affected by the price of land.

Figure 7
Figure 7. indicates the situation here where the supply curve is vertical. We may now see the effects of applying a tax on the price of land and note that the tax wedge does not affect the price that purchasers or users must pay but does reduce the amount that the supplier receives. However we should note here the likely effect on the quantity of land that land owners would make available to potential users as a result of a tax on land value. Owning and holding land out of use may be quite acceptable to many people who are attracted by the prospect of ever increasing capital land values. They are likely to get richer, not by working or enterprise but due to the passage of time and the growth of economic activity in the surrounding area – it costs them nothing. However the acceptability and attractiveness of this approach is likely to change if holding on to unused or underused sites carries with it a charge that reflects its value.

The effect of this is that more land is likely to be made available; the supply curve moves to the right and capital market prices reduce.

Comparison of Economic Models

We may now look at our two economic models drawn from different centuries and see how they relate to each other. We need first to reconfigure the Ricardian economic rent model so that instead of showing the varying value added on different sites by the input of a unit of human enterprise, labour and capital it shows the varying amount of those inputs to yield a unit of value added.

Figure 8
Figure 8 shows the same economic community in these two configurations.

Figure 9
Figure 9 superimposes the supply and demand curves shown in Figure 6. upon the unit value added configuration of the Ricardian model. The effect of the tax wedge may be clearly seen, the three most marginal sites are rendered unviable and stop producing, casualties of the deadweight loss.

It is now useful to place these theoretical findings in the context of current UK economic realities.

Figure 10

Figure 10. shows the UK government tax revenue and public expenditure. On the tax revenue side we note that the single largest amount is drawn from taxes levied on employment and enterprise directly whilst a very large share is levied upon trade, sales and value added. We should note however that whatever the appearance, taxes must ultimately be drawn from the value that is created by productive enterprise – there is no other source of new wealth. When taxes are drawn from trade and sales we should mark that these all feed back into the expenses that individuals must pay and pass on to the productive firms that employ them in determining the least they are willing to accept.

On the expenditure side we may note how small a fraction is spent upon both (a) the provision of essential services, needed by everyone but which by their nature are monopolies and (b) the protection of society by means of law and order provisions and defence. These may be contrasted with the large amounts it is necessary for government to spend upon both (a) the alleviation of poverty through the provision of a wide and widening range of social services and (b) health and education services that, while not natural monopolies, are beyond the means of most people to provide for themselves out of earned income. The link here, between this phenomenon of generally low earned income, insufficient for individuals and families to provide for themselves their essential needs, and the general depression of earnings operating on the firms and individuals that produce all the country’s wealth is stark. We see that earnings are depressed by two intimately related aspects of the tax system.

The government first fails to recognise the duty that individuals and corporations owe to the community that permits and protects them to enjoy exclusive possession of that which the community as a whole has provided, and a free gift of nature – the land itself. It then compounds the error by taking by force, or the threat of force, a large portion of that which people and corporations have created through their own efforts and enterprise.

The Effect of a Remedy

Let us now speculate upon the effect that remedying this injustice and mismanagement might have on the national economy.

Figure 11
Figure 11 shows the gross national product together with the tax take of around 40%. Taking the governments own estimate of the deadweight losses (30%) associated with their current tax arrangements we see how if the method adopted did not incur such losses (e.g. LVT replacing Income and other taxes) an extra 30% of value added would be added to the GNP.

This would increase the tax base and reduce the tax take as a percentage of GNP. Deadweight losses thus reduce further and a virtuous spiral is set in train. At the same time if Land Value Tax was the selected alternative the proportion of so called ‘unearned income’ would be reduced whilst more earnings would go to those who actually earned them. With more earnings available to those who work for a living there would be a reduction in the need for poverty relief expenditure and more people and families would be able to provide for all the services a modern and civilised society expects.

A word here may be called for with regard to the effects on the cost of housing as these tend to increase with people’s ability to pay. In fact of course, it is not the cost of the bricks and mortar that escalates but rather the value of the land on which a house stands. It is thus important that such a rise in the general level of earnings does not feed back into inflating land values and thus housing costs.

As we have shown, the effect of a Land Value Tax would be to exert a downward pressure on capital land values. We might note here that capital land values reflect the market’s estimation of the value of an indefinite stream of annual rental values. Where that full income stream is not available to the individual because government has collected a portion of it, the capital value can be expected to reduce. In this we should note that a Land Value Tax is not aimed at collecting a portion of the capital value (which would tend to decline over time) but rather the periodic rental value of the site. This might be expected to change over time with some locations becoming relatively more advantageous whilst others less so. The periodic re-assessment of their tax liability would reflect these variations and thus would truly reflect the (site owner) firm’s ability to pay.

The question of negative equity is usually raised at this point as it is noted that if capital land prices and hence house values fall those with large mortgages could find themselves in difficulty. Unfortunately this issue cannot be adequately addressed in this paper without increasing its length substantially; a few points however may be helpful.

• Negative equity becomes a problem for people with a mortgage when they are unable to keep up their monthly payments.
• It is thus linked to their employment and their level of earnings.
• The prospects for both are enhanced by a move away from currently damaging taxes and towards a benign tax on land values.
• The real problem with negative equity is one of debt.
• Unfortunately we have cultivated financial arrangements based upon the provision of so called ‘credit’ where the lender does not rely on the borrower’s capacity to produce new wealth themselves but rather on the collateral that he or she can provide.
• We have generated a system of creating new money that does not link directly to the wealth creating process (as true credit might be expected to do) but rather relies on an ever increasing growth of capital land values to guarantee past debts and fund new ones.

The advent of Land Value Taxation would thus be a stimulus to a long overdue and radical review of banking and money arrangements. This could lead to the establishment of financial institutions that were more concerned with facilitating the production of newly made wealth than with enabling the holders of money to make more money, whereby they are enabled to exercise a claim on the real wealth produced by others.

The Impact of Current Taxes

Staying with practical issues we now turn to one example where the irrationality of current taxation seems to be particularly conspicuous – income tax. It is remarkable that most of the people that pay income tax are people who receive in earnings from their work less than is necessary to provide for themselves and their families. Indeed even those earning less than the government’s declared ‘minimum wage’ are obliged to pay this tax and their employers must incur all the expense and trouble of acting as the government’s tax collectors. We might note in passing however that income tax is not the main tax burden that the poorest in society must pay. This shameful feature goes to those taxes that are levied on the goods and services that everybody needs or has become accustomed to regard as important to their welfare and happiness. According to the government’s own figures indirect taxes take away from people in the lowest income band as much as 34% of their disposable income when they spend it!

Figure 12

Figure 12 shows how the £111 billion of income tax revenue was collected from some 28.5 million UK citizens during the year for which the latest analysis is available. It is based upon Table 3.3 in HMRC Report for 2003/4. We may note how by far the majority of the revenue is collected from those whose income is at the top end of the ranges indicated. Two points on the graph have been highlighted.

• The first is at the point where it can be seen that 63% of the poorest taxpayers in the country some 17.6 million people pay only 20 % of the tax revenue (£22.2 bn.).
• The second point is where it can be seen that some 40% of the tax revenue is drawn from the 5% of taxpayers whose income is over £30,000 pa.

The scope for relieving millions of people and hundreds of thousands of firms from the tax burden is very clear. When one also considers that the government itself is the largest employer of low paid people and that its wage bill and costs are inflated by the tax it collects from its employees’ earnings the extraordinary state of affairs is seen as even more irrational.

Citizens’ Dividend

We close this excursion into the wonders and mysteries of the UK tax system with another speculative suggestion. It has been pointed out that the introduction of full land enclosure without the observance of a corresponding duty by the beneficiaries to the community as a whole has a profound influence on the way that wealth produced by human enterprise is distributed. Its main impact is noted at the margin of production where there is no natural ‘economic rent’ but where a landlord’s claim is recognised and exercised.

Without a landlord’s claim, marginal land anywhere would be freely available to all. Subject to sensible planning controls it would then be possible for any enterprising soul to set up on their own account, build themselves a house and start a business. They may also need credit for their initial capital equipment and that has been touched upon above. This feature of ‘free land at the margin’ is critical in providing all individuals with freedom from the bondage that comes with having to seek another’s permission merely to set up home and live.

It is analogous to the liberty that is denied a slave and as has been pointed out by others it would have made little difference to Man Friday if Robinson Crusoe had owned either Man Friday himself or the whole island! We have then a problem if we are to respect the idea of private ownership of land without collecting the full economic rent for the community. One possible line of approach that is attractive to this writer is that which does not just use the public revenue collected from land values to fund community expenditure but uses some to redistribute to all citizens in recognition of their contribution to the welfare of all.

The term Citizens Dividend has been adopted by some who advocate this approach. It has several attractive features. First it might mean that every citizen could be in receipt of a sum of money such that they could afford to pay the landlords claim that applies at the margin of production. It is important to note that this would not be effective in the absence of a Land Value Tax since it would merely inflate the landlords claim accordingly. This would not be viable for the landlord where land value tax was applied since it would inflate his tax liability.

Secondly it could reinforce, and for some establish, the link between citizenship and the welfare of both the community and all individuals. Everybody could have something to loose if they failed to observe their duties as citizens. Fines would become a practical alternative to prison for offenders who chose not to obey the laws of society. From a political standpoint within a free democracy the fact that everybody, and all voters would be recipients, could make the introduction of land value taxation much more easily acceptable. It would of course also provide a measure of reassurance to those householders that found themselves in a position of negative equity.

Figure 13

Figure 13. shows how this might work where the unit input approach gives rise to the same citizens dividend on each site.

Advantages of a Land Value Tax

(Compared with current taxes on Income, Employment, Value Added, Trade and Profits etc.)

A summary list might include the following:

1. The landowner must pay the tax himself – it cannot be passed on. The ‘owner’ (landlord) cannot pass the tax on to any tenant since the tenant will already be paying the full commercial rent value to the landlord. If the landlord is working the site himself and producing goods or services for sale he cannot pass the tax on to his customers in increased prices since, (assuming a competitive market) he is a price taker and cannot charge more than the market price. Others (at the margin) will already be producing similar goods profitably at the market price and they will have no LVT to pay. It may be noted in this connection that whilst rent does not influence the price of goods or services available in a particular area the value that people place upon given goods and services in a particular area may affect the rent or land value in that area. The causal link is that way round!

2. The subject matter of the tax (the land) cannot be hidden. Tax avoidance and evasion become impossible. ‘Confiscation’ by the community is a readily available remedy to evasion attempts.

3. LVT is a progressive system, falling most heavily where the benefit from the community is greatest and most lightly where the benefit is least.

4. LVT will tend to increase the amount of land (already designated for use by the community) available for such use since it will provide a major disincentive to holding this land derelict and out of use. The tax is due on the land value itself as permitted by the community – not on current use (or non use) value.

5. LVT would reduce speculation in land since there is little point in hoping to gain from an increase in capital land values where any gain is accompanied by an increase in the land value tax that is payable. If the tax were to be 100% of the annual rental value, the site would have no capital value! This is because the capital value only expresses the capitalised value of an anticipated indefinite stream of rental incomes.

6. In replacing other ‘malign’ taxes it would reduce the burden of taxation at the margin of production.

7. LVT would stimulate economic activity at the margins of production where land has already been approved for economic activity they would be brought into productive use by a new breed of entrepreneurs.

8. LVT would encourage optimum economic use of sites and employment of people since there is a major incentive for the most productive people to employ themselves on the sites with most productive potential. For a given rental value they will add most value.

9. The tax has no distorting effect on economic choices or valuations. Those enterprises that were viable before the tax remain viable after the tax. This may be contrasted with, for example income tax or VAT which render unviable certain forms of economic activity which would be viable without the tax. The negative effects on employment, unemployment, and the general level of wages of income tax and VAT are very important.

10. Investment in land (‘sterile’ since it generates no new land) is rendered less attractive whilst investment in productive enterprise including buildings becomes more attractive.

11. Collateral based credit is rendered less available whilst genuine ‘producer credit’ is encouraged.

12. LVT represents a vital ingredient of any system of charging for the use of common resources. The underlying philosophy is the basis for all environmental protection measures.

13. LVT reflects the natural laws pertaining to wealth creation and wealth distribution in that it enables individual producers to better enjoy the products of their efforts whilst returning to the community that value which it makes available to the individual producer. There is no theft!