It's Time for Land Taxes In Ireland

Photo by Wallace Bentt on Unsplash.

In John B. Keane’s play, The Field, set in a small, rural Irish village in the 1960s, “Bull” McCabe spends years labouring and toiling on his small plot of rented land, nurturing it and tendering it as though it were a doting child, stating that, “I nursed it. I nourished it. I saw to its every want”. His land is transformed from a sterile rockface to a fertile field. However, conflict is afoot. Bull McCabe is incensed when its owner, Maggie Butler, chooses to sell the field. The McCabe family intimidate and frighten those that seek to bid against them in the upcoming auction; the land is rightfully theirs. A man from England, William Dee, who had Irish ancestry, returned to the village with an ingenious plan to cover the field with concrete and gravel for his own purposes. His ideas will result in ecological degradation, and the displacement of local villagers.

The relationship between Irish people and land is a complex one; from the invasion of 1169 by the Normans, to the confiscation of land in Ulster for the benefit of Scottish planters in the early 1600s, Irish people have been dispossessed in extraordinary numbers. There are many “Big Houses” dotted all over the country to this day, which were built between 1720 and 1840. They housed the landed aristocracy. They were surrounded by ostentatious gardens and demesnes, shielding the landowners from their destitute workers. The treatment of land as a toy that cannot be shared with others and as a means of becoming wealthy, is hardly new, but it is bad for social cohesion.

I want to discuss why it is imperative that those that can give back to the wider community do just that. That is why I am proposing a tax on land, a novel form of “tax justice”. “Tax justice” merely ensures that everyone pays the right amount of tax, to ensure functional democracy. It is crucial that people know that taxing their land is not theft, or a signifier of suspicion towards them; it is a means of elevating everyone.

The idea of “land tax justice” has gained a lot of traction recently. In an 1879 book called Progress and Poverty, American economist Henry George, the originator of this deceptively simple idea, committed his ideas to paper, and it was a phenomenal success, selling more copies in America than any other book in the 1890s, second only to the Bible. His ideas were formulated in 1860s New York City. George saw both unimaginable wealth and intolerable poverty within the same city. Wealth was hoarded and extracted by the wealthy to the detriment of society as a whole.

As George himself bemoans, “The ownership of land is the great fundamental fact which ultimately determines the social, the political, and consequently the intellectual and moral condition of a people”. George described the tax as “the most just and equal of all taxes. It is the taking by the community, for the use of the community, of that value which is the creation of the community”.

In my view, a tax of land is difficult to refute. Land on its own has no inherent value; what we choose to do with it is far more significant. The supply of land cannot change; as Mark Twain famously quipped: Buy land, they aren’t making it anymore”. In 1978, free-market ideologue, Milton Friedman, described it as the least bad tax on the unimproved value of land, the Henry George argument of many, many years ago”.

In his 1974 book, Anarchy, State and Utopia, ultra-libertarian philosopher, Robert Nozick, laid out a somewhat bizarre yet intriguing thought experiment: “If I own a can of tomato juice and spill it into the sea, so that it’s molecules mingle evenly throughout the sea”, Nozick queried, “do I thereby come to own the sea, or have I foolishly dissipated my tomato juice?”. He argued that the latter was obviously true. Therefore, how can we justify the accumulation of wealth from land, if landowners don’t even have a basis for its ownership?

19th century English philosopher John Stuart Mill also noted the unfairness of landholding, proclaiming that “Landlords grow rich in their sleep without working, risking or economising. The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title”.

Let’s look at San Francisco, a city that was rebuilt by land taxes in the years that followed a devastating earthquake. In 1906, an earthquake, measuring between 7.8 and 8.2 on the Richter Scale, struck the city and killed about 3,000 people. The earthquake left over 200,000 San Franciscans without a home. A horrific event, but the speed with which the city recovered was remarkable. The city’s reformist mayor, Edward Robeson Taylor, who was one of Henry George’s closest confidants, implemented taxes on land, replacing the tax base (property and buildings) that had been lost in the earthquake. The city received no state or federal aid, yet the subsequent recovery was extraordinary. The population of San Francisco increased by 22% between 1910 and 1920, and by 25% from 1920 to 1930, becoming the tenth largest city in the United States. This mass influx of people occurred despite the fact that San Francisco’s land base did not increase. It became the second most densely populated municipal area in the US, trailing behind Manhattan.

The benefits of land taxes are impressive; there are many examples that can be considered. In 1993, following the breakup of the Soviet Union, Estonia introduced the Maamaksuseadus, a state level tax on land, with 100% of the revenues given to local authorities. Tax evasion is exceedingly rare; almost 99% of taxes due are collected. Since the value of land, and land itself, cannot be hidden in offshore accounts in tax-free havens, it is difficult to hide such receipts and profits from governments.

In 1920, the governor of New York, Al Smith, established land taxes in the city to address a shortage of affordable housing. The imaginatively titled “Al Smith Laws”, which were intended to expire in 1931, precipitated mass emigration of people into the city. The revenues from the new tax were used by city authorities to finance a world-class mass transit system, schools and social services. The construction of new housing, which was exempt from Smith's taxes, was ramped up drastically. These improvements were halted in the late-1920s, though, as landowners anticipated the imminent expiration of the land taxes. Construction was tempered down and recession set in. Some people believe that the decline in new housing stock was key in prolonging the Great Depression.

In 1957, a left wing government came to power in Denmark, with one of the coalition partners being the Retsforbundet (“Justice Party), which advocated Georgist principles. A tax on land was passed by the Danish Parliament, setting the wheels of the so-called “Ground Rent Government” in motion. The results of their justice reforms were striking. Between 1957 and 1960, annual inflation dropped from about 5% to just 1%. High unemployment was replaced with almost full employment. Wages rose significantly, and savings expanded substantially too.

In the midst of the Cold War, however, it was not difficult for opposition leaders and land-owning organisations to accuse the coalition government of far-left Communist activity, and it was voted out of office in 1960. The land value tax was repealed in 1964, with disastrous consequences ensuing. Denmark’s total land value increased from 17 billion kroner in 1964 to roughly 320 billion kroner in 1981. The rate of inflation rose from 1% in 1960 to about 8.6% in 1965. The nation’s foreign debt increased from 400 million kroner in 1960 to 3 billion kroner by 1972.

It frustrates me that a plurality of political parties in Ireland don’t seem to understand that taxing land is not the devil incarnate, or choose to ignore the advantages that it would have. It seems that none of them want to touch his political hot potato, and that’s highly unhelpful. Instead, it seems that income taxes are much higher than property taxes in Ireland, which hamper lower income workers and the young, as they own less property. Polemicist Fintan O’ Toole has documented that in 2015, when VAT was included, the bottom 10% of Irish incomes pay almost 30% of their incomes in taxes, whereas the top 10% only pay 6%. Even when VAT was not included, the top 10% pay 29% of their incomes in tax, with the equivalent figure for the bottom 10% being 28%. This position, which places an undue burden on those that are least able to pay, needs to be revisited.

It’s not like Georgist tax justice is new to Ireland. Michael Davitt, founder of the Irish Land League, was very sympathetic to George’s ideas. Davitt’s slogan was the land of Ireland for the people of Ireland”; he wanted to end the tyranny of landlordism that left vast swathes of the Irish people in abject poverty. Davitt met George in New York in 1880. The following year, George published a pamphlet entitled “The Irish Land Question”, advocating land taxes, and deriding English and Scottish landowners in Ireland for their extractive exploitation of the peasantry.

The Land League was reasonably successful. The group sought an end to eviction and unaffordable rents. In fact, the word boycott” comes from this period. The agent of a Mayo based landlord, called Captain Charles Cunningham Boycott, refused to lower the rents of tenants, and the tenants refused to negotiate with him again. Captain Boycott had to hire farmers from Ulster to work the land; the shunning of this land-agent by the Irish peasantry spawned the modern meaning of the word. Boycotting became a common means of civil disobedience that was used by the tenants.

I’ve tried to work out where the Irish fetishism for owning land came from, and there are a few prospective explanations. There are complicated cultural and socioeconomic forces at work here, and a look at Irish history is telling. The prestige of land ownership after the formation of the Free State 100 years ago was “the entrenchment of a decidedly individualist system of farm ownership”, according to historian Gearóid Ó Tuathaigh. Heather Laird has observed that the struggle against British rule was “all about owning the land – taking it back from landlords”, echoing Michael Davitt’s call for distributive justice. In 2018, Peter Casey increased his portion of the Presidential vote by referring to the Irish travelling community as “basically people camping on someone else’s land”. Though using our colonial past to explain hoarding of land can sound like a little bit of a sham excuse, it would be silly to reject this theory.

The scars of colonialism run deep, and that feeling that Ireland could be taken from Irish people by foreigners may still exist. The “outsider” that we met at the beginning of this essay, William Dee, is eventually killed. We should not look at the McCabes as primitive savages; they were the product of a state apparatus that left them behind, and oppressors that subjugated them under the boot of providentialism and Anglo-Saxon supremacy. Let’s pivot away from our dogmatic past; we have the resources and the material requirements to do so.

When landholding comes at the expense of affordable housing, and when land is seen as a speculative asset to make money, rather than as a commons to share with others, we must ask ourselves, “Is this the society that we really want?”, “Who should we be?”. Land taxes are not a new idea, and they are not a complex idea. It’s about giving back what you can to your community; who doesn’t want to do that? Let’s share our natural and human-made toys amongst each other; parks for walking, places to live, and communities that thrive.