The Danes’ might and power that suppressed the people,
the Decline that made Equality and Common Welfare possible; and
the Democracy and happy land neither of which are perfect – yet.
Today’s REMARKABLY EVEN DISTRIBUTION of wealth in Denmark is due to centuries of fatal defeats and fall from great might and power:
This article is meant to turn the readers’ attention to the fact that the down-turn made equality and welfare possible to Danes in general who inhabited and today inhabit the remaining part of Denmark.
It also discusses why the Danish people, who in 2008 became known for carrying the heaviest tax burden in the world, and in the same year was registered as “the happiest people” in the world. In conclusion the article proposes how equality and democracy can be completed.
- Ascendance of a people and birth of a nation Page 2
- Territorial decline of the Danish realm. – 2
- The progress of Danish economics. – 4
- Natural Resources. – 4
- Community Power. – 5
- Transition of the Danish society. – 5
- Old land-value tax and today’s burdens on productivity – 6
- The burden of powerbrokers’ claim – 6
- The effects of heavy taxes – 7
- Solidarity, care and equality – 7
- The supreme power in Denmark – 8
- Kingdom – 8
- People’s voices – 9
- Development of Danish Democracy – 9
- The number of holders of exclusive rights – 10
- Democratic equal rights – 10
- Them missing clamour. – 10
- Reconsideration of taxes – 11
- Cut of taxes – 11
- Danish “happy-land” taxation vs. Direct LVT – 11
- Considerations – 12
- Neglected public collection of LVT – 12
- Direct collection of rental values of land – 13
- Evasion of tax on land values is impossible – 13
- Implementation – 15
- ASCENDANCE OF A PEOPLE – THE BIRTH AND EXPANSION OF A NATION
First time the word Danes was used to describe people living furthest to the north of Europe was in the 5th century after our calendar and they were located at the isle ruled by King Skjold [English: Shield] called Skjölland (today’s Sjælland – in English Sealand) and on the other side of the Sound at the peninsula’s southern part that was called Skaune – today spelled Skåne – , that the Romans called Scania, which word was extended to Scandinavia when describing the much bigger Nordic region.
In the 8th century, also the peninsula Jutland – where peoples such as Hards, Vandals, Cimbris, Juts and Anglis lived – and all isles between Jutland and Skaune together with Skaune were known as ‘the home of Danes’, a term that seems to have been used to describe locations so far north up on the Scandinavian peninsula as to and around the great lakes Vänern and Vättern.
First time an area was called Kingdom of Danes was in the 9th century; and the term Kingdom of Denmark became known from the 10th century. At the same time also the Kingdom of Norway became known, and the Kingdom of Sweden became known in the 11th century. Around the turn from the first to the second millennium of our calendar Norwegians and Danes had colonized parts of the British isles and the northern part of France. In many places of Britain they had settled down and integrated into the population when those who had settled down in Normandy in the northern part of France conquered Britain in 1066.
Denmark reached its largest extend in the first part of the 17th century then stretching West-East from Canada’s north-east border, including habitable parts of Greenland, Iceland, the Orkney isles, Shetland isles, Faroy isles, Norway, today’s Denmark, southern part of today’s Sweden including Baltic isles such as Gotland, Bornholm, and Ösel that today belongs to Estonia, together with realms along the southern cost of the Baltic Sea. From North to South it stretched from Svalbard in North to Lüneburger Heide in South. It also governed far away situated exotic stations and islands: in Africa three fortresses on the Gold Coast; in India Tranquebar, Serampore, Frederiksnagore, the Nicobars; and in West India three islands that today is known as the Virgin Islands.
2.TERRITORIAL DECLINE OF THE DANISH REALM
In 1645, at the Brömsebro peace agreement Denmark had to cede to Sweden two great Baltic isles: Gotland and Ösel, plus three Norwegian regions: Härjedalen, Jämtland and Tröndelagen; Tröndelagen came soon after back to Norway.
In 1658, at the Roskilde peace agreement Denmark had to cede to Sweden land of the size of 2/3 of the size of Denmark today: the three regions called Skåne, Halland and Blekinge. An important consequence of the latter peace agreement was that during the subsequent reconstruction of the State of Denmark its aristocracy of nobles had to give up their strong influence on the governing monarch and in 1660 absolute monarchy was constituted. The old Danish tradition of land-value taxation that had fallen into disuse for some time was now restored and called “hartkorn”-tax; it was levied on agricultural land in proportion to its yielding ability except on land belonging to the nobles’ estates.
The assessment of ‘hartkorn’
The assessments of the land’s ability to yielding crops was made up in units called “hartkorn”, meaning grains of rye and barley. Reasonably good land would be assessed to 1 hartkorn per half a hectare of land. Better land was assessed to more hartkorn; inferior land to less than one. This unit was used to express also indicate yield ability of other crops like hey, grass, poultry, etc.
The hartkorn tax was collected whatever the land was cultivated or not, which forced the owner to cultivate his land best possible or hand it over to somebody who would. Only crop failure due to unusually bad weather conditions (like flood, draught, tornados) would allow a reduction.
In Denmark in the 1780’s (the decade of the French revolution), “hereditary landed servitude” was abolished by decree of the absolute monarch and the nobles’ adscription of peasants was abandoned; and hundred thousands of smallholders were granted freehold of land against payment to the Crown of the annual rent of land, measured in “hartkorn”.
In 1801, the British navy (Admiral Horatio Nelson) in Øresund, the Sound between Sealand and Skåne, outside Copenhagen (in today’s Danish: København, founded 1100 as ’Kobmanna Hafn’ meaning Merchants’ Harbour) attacked and seriously damaged the Danish-Norwegian navy, that the British considered a threat during the “Napoleon Wars”.
In 1802, by Royal Decree agricultural land belonging to the estates of the nobles became subject to land-value taxation (the ‘hartkorn’-tax) in the same way as all other agricultural land in Denmark.
In 1807, during the continued Napoleon wars, the English navy again attacked, conquered and sailed off with the reconstructed Danish-Norwegian navy, and in 1814 at the Kiel peace agreements after the Napoleon wars Denmark had to give up its union through 400 years (as long as the Romans ruled Britain) with Norway, which then fell to Sweden (the Norwegians did not like this outcome, and few months later the Norwegians succeeded to get their own democratic constitution – 17th May 1814 – which date Norwegians have celebrated ever since).
Now very little was left of the Danish might and power of the past and Denmark could no longer collect duties from ships passing through the Sound, Øresund, between Skåne and Sealand. It became obvious that the Danes had to use their remaining resources wisely. But the remaining Denmark contained very little raw materials, so the most important resource was in fact THE DANISH PEOPLE. Therefore Enlightenment of the people and Democratic rights became essential.
During the rest of the 19th century, later in Denmark called “The Golden Age”, intellectual Danes lectured and preached, wrote and printed, drew, painted and sculptured over themes of the Danish people’s historical and spiritual background in sagas, myths, legends and metres about Norse mythology, kings and heroes of war, commerce, science, literature, poetry, etc.
In 1848 the absolute monarch, King Frederik 7, found that the time was right to give up his absolute monarchy that since its inauguration in 1660 had developed into Enlightened Despotism, and in 1849 he factually gave over his governing power to a Parliament consisting of two chambers.
Danish democracy was born; but it took it 67 years more to develop and include all Danes.
In 1864, as the result of a war against and won by Germany, Denmark lost its previous regions Slesvig, Holsten and Lauenburg including the great cities Lübeck and Hamburg. It was a loss of approximately 1/3 of the size of Denmark of those days. In 1920 – as one of the consequences of the peace agreement after World War I – the northern part of Slesvig returned to Denmark by referendum.
In 1866 the upper chamber of the Danish parliament represented landed interests; dominated by the nobles and their supporters.
In the end of the 1800s began legislation of benefits to people being without private means, first small amounts to old age citizens unable to care for themselves. Soon after was introduced public baths, public medical treatment of people in general, public schools for children, public libraries, etc. With the exception of common schools for children that were free of charge, the publicly supplied services were not free of charge but available for people in general at reasonable low charges. Folk-high-schools for adults were established in many places around the country and met a public demand for cultural enlightenment and cultural and technical education. Co-operative societies were established in trade and industry.
In spite of the fact that the Danish climate was not excellent for agriculture the Danish farmers by organising co-operative societies for production succeeded in developing high quality dairy products whose trademarks became attractive on the world market. This encouraged a technical development that together with the traditional Danish skills in shipbuilding and trade opened for the modern development of high technological industry, which resulted in development of cities and towns that grew in importance. Cooperative societies were also used in other branches.
In 1903, because of the growing importance of cities and towns and the growing values of land in cities and towns, the ‘hartkorn’ tax system that had been levied only on agricultural land had to be changed. But instead of adjusting it to comprise urban land as well as rural land, the agrarian interests and industrial magnates who dominated both chambers of the Danish Parliament abolished the good old hartkorn-tax, tax on nature’s abilities to deliver additional results of labour, which abilities differ from one location to another (recognisable as the market values of land). The legislators replaced the hartkorn-tax by tax on income, in practice tax on the results of labour.
Sites of land mainly used for residences have values because of residents’ appreciation because of advantages available from the surrounding nature and from the surrounding society’s infrastructure, public services and many possibilities of employment or independent business. Tax on the values of residential land was pushed forward by Socialists and Georgists, but was always under pressure from landowners, who wanted and still want to get rid of every bit of land-value taxation.
In 1915 Danish women got equal rights to vote for seats in the Parliament, and the landed interests’ exclusive representation in the parliament’s upper chambers – Landstinget – was abandoned. (Landstinget was definitely abandoned 1953.) The Danish people were now guaranteed important democratic rights, namely: personal equal rights and political equal rights; whereas the claim that they should also have EQUAL RIGHTS TO THE VALUE OF DENMARK (recognisable as the annual market value of all land in Denmark) was raised only by few voices and suppressed by the dominating interests of landholders in power.
The general improvement of skill and knowledge, the improved democracy (yet still not complete), and the extended (but not to the utmost) equal freedom had pressed forward a growth in welfare (in Danish language welfare meant and means not only social security benefit, but good life in general), which proved to be a spur on economic progress.
The Danish West-Indian Islands that after abolition of slavery in 1848 suffered economic downturn were in 1917 sold to USA who then called them The Virgin Islands.
In 1918 Iceland was granted full sovereignty as an independent nation. Today (2008) Iceland’s economy ranges as the richest nation in the world measured per citizen, and Denmark’s economy is among the richest in the world measured per citizen, which has been achieved in spite of the fact that none of the two countries have considerable natural resources except from human intelligence.
- THE PROGRESS OF DANISH ECONOMY.
The topography of Denmark offers many natural harbours and busy straits that invite to pressing toll from ships passing by, which the Danes introduced in 15th century and continued for centuries creating foreign powers’ political annoyance and hostility towards Denmark and was ended in 1859 when Danish straits were declared international waters.
The Danish soil is fertile, but the weather is not excellent for agriculture. Nature offers important deposits, but nothing extraordinary valuable.
Nevertheless, the lack of extremely sought-after natural resources has not retained the progress of Danish economy, which raises the question about the importance of attractive natural resources in economics and will be discussed below.
- Natural resources
A closer look around the world reveals that in many places where people live on land with plenty of attractive natural deposits (oil, precious metals, minerals, stones, fertile soil and excellent weather, etc.) they are worse off than people living in places without very attractive resources; and in certain places they are so much worse off that it seriously damages the societies.
Some economists, politicians and businessmen say that this phenomenon is due to “the curse of natural resources” that
- attract power brokers, who by use of bribe and/or physical power infiltrate national and local politics and/or public administration, by which they secure for themselves privileges and monopolies, and make the values of attractive resources their private property;
- bribe and fear of terror then lead to corruption and demoralisation of the society, which destabilize the economy and productive activity, and create poverty and disintegration of society.
But countries like Norway, Sweden, and Finland in northern Europe, and on the southern hemisphere Botswana in Africa, and Australia and New Zealand are also rich of natural resources without having suffered from these problems; so the presence of plenty of attractive natural resources is not THE reason for the problems in suffering countries.
The real reason in suffering countries is that their governments do nothing to prevent values of attractive natural resources from falling to private people instead of being publicly collected and used for the benefit of all citizens on an equal footing. Therefore, the correct description of the phenomenon should be “the curse of privatised natural values”.
It seems to be crafty use of words when politicians, economists, social scientists and businessmen want us to believe that the reason for violence, theft and fraud against people in general is “the curse of natural resources”. This crafty wording is meant to blur the fact that the problem is bad ruling, unchecked greed and widespread corruption; and thereby to blur also that the problems can be mended by a reform of the society.
The means to immediate abolition of the curse is cancellation of private ownerships of values of natural resources; and the means to avoid it in the future is prohibition of privatisation of values of natural resources. The values of nature and society have to benefit all the country’s citizens on an equal footing. Some people say that that cannot be done; but so did some people say about the idea of ending slavery and nevertheless legal slavery was ended; privatised natural values will also end one day.
The shortcoming of natural deposits in Denmark kept serious and organised greed and corruption away from Danish territories, which was very important. Now let us return to the question about the reason for the progress of the Danish economy.
- Community Power
Community Power lay latent in the Danish society of the 17th century’s feudal Denmark having very little other natural resources but its citizens.
Community Power is a natural resource separate from individual manpower and it occurs when individuals cooperate. When working together two or more persons can produce results they cannot produce when working individually. They can move loads heavier than they were able to move individually. They may overcome stronger resistances when pressing together than by pressing alone. One may continue a job while the other rests. Two can easier catch an animal than one is able to. And so on.
Community Power is a natural power of another category than Power of Growth that counts for breeding and propagation. Power of Growth is independent of human being’s activity whereas Community Power is released by human cooperation. Human activity depends completely on the natural Power of Growth and very much also on Community Power.
When human beings are cooperating in large numbers their capability grows to the gigantic. Academics of today call this phenomenon ‘synergism’ or ‘synergy’. It occurs spontaneously as human beings intuitively understand the advantages of cooperation and they use it on a daily basis; but it may also be the result of organized planning.
The value of organised synergism should fall to the organiser as a reward for his/her effort, or be shared between the people who cooperate; but the value of spontaneous synergy that occurs all the time and all over the society – which is why I call it Community Power – should fall to the community and benefit all citizens on an equal footing, either by financing needed public administration and financing building and maintenance of wanted public infrastructure and institutions; or by distribution in equal shares it should benefit all citizens having citizenship to the country in question.
When people in modern societies work 5 days a week their exertions are able to provide for home, house, garden, transport facilities, food, clothes, education, entertainment and many other things and experiences for them and their families. That much is possible in a community of many people who take advantages of each other’s special virtues, abilities and aptitudes, specialised skills and education that in cooperation ignite the Community Power. Understanding of the huge importance of the power of the community becomes clear to anyone who is able to envisage the very little result individual person would be able to produce if working alone or in a community of only a few people.
In today’s societies most of the results of production are due to the community in which individuals are working and to former generations, back to long before the Stone Age. The value of today’s production is due to individuals’ ability to:
- experience advantages learned from older people and predecessors; to
- specialise their own skill and knowledge; and to
- cooperate with co-citizens who also have specialised skill and knowledge.
Therefore the value of the results of production should be shared between co-operators and the community.
- Transition of the Danish society
Community Power lay latent in the Danish society of the 17th century’s feudal Denmark, but it should be organised in the very best way. Did the inauguration of absolute monarchy help the progress of Danish economy?
That might have been the case; though the period of absolute monarchs from 1660 to 1848 like most other European societies was dominated by
1) Mercantilism’s many blunders like monopolising and taxing production and trade,
2) the Royal Court’s lavish lifestyle and rigid, corrupt and ineffective administration, and
3) very expensive wars;
yet the period changed the Danish society fundamentally from bondage via enlightenment and education onto parliamentarian responsibility and democracy.
When the period began the nobles controlled the peasants. Originally the nobles on behalf of the Crown collected taxes from the peasants based on the assessment of the crops the land could yield when cultivated, but the nobles had managed to withhold considerable parts of the taxes for themselves. Now the Crown enforced collection of this tax to the Court.
It may be difficult to clarify if the following development was led by the absolute kings in succession or by reformist nobles who managed to influence the absolute kings. Whoever led it, law books, the legal system and Courts of Justice were reorganized based on traditional common sense of justice and public conception of morality; later on nobles and clergymen were encouraged to select younger Danish citizens who were gifted for learning, and to inspire them and have them educated for the purpose of cooperation in teamwork either as staff members who would be needed in administrations of the state or local communities, or as leaders of their own enterprises of business or industry. A university was already in Copenhagen, now village schools were introduced in most communities.
Some nobles warned against education of the people because of the danger of revolution. Violent revolutions arose in other countries, but in Denmark political changes were implemented soon enough to prevent this to happen.
In the following periods the Cooperation between Danes with specialized skills and educations, and their Feeling of equality before the law encouraged a dynamic productivity that steadily increased the synergy, Community Power.
- OLD LAND-VALUE TAX AND TODAY’S TAX-BURDENS ON PRODUCTIVITY
In Denmark 350 years ago the rent of agricultural land was collected by the absolute Monarch, and for that revenue he delivered administration of the society, infrastructure, prestigious buildings, and a military defence; and part of the rent was allocated to an ecclesiastical organisation with which the monarch cooperated. When in 1848 the absolute Monarch gave up his absolute power, the parliament – then dominated by landowners – urged for ending public collection of rent of land, which they wanted replaced by tax on labour. In 1903 the legislature (landowners, industry magnates and merchants – all privileged) introduced what was called “income tax”, though an exact definition of “income” was never made clear (incremental values of exclusive rights to use of land and other privileges have never been due to “income tax”).
In Denmark today in the first decade of the 21st century the main part (more than 98%) of expenses to public infrastructure, public works and services are financed by taxes levied on Danish production, producers or their customers; while taxes levied directly on land-values cover less than 2% of all taxes.
- The burden of powerbrokers’ claim on the results of production
Immediately after implementation of new burdens on producers or their customers, and after increase of existing burdens, it is of course the persons who are burdened who suffer. But when the burdens have become foreseeable the encumbered individuals take them into consideration for the future, and after some these burdens reduce the amounts buyers and tenants can spend on location, meaning that landowners have to agree lower prices and/or rent for use of land than they could have charged had the burdens not been increased. The burdens in question are Taxes on production and consumption, but also the Extra-profits that holders of monopolies and privileges add to the prices they would have been satisfied with had they not had their monopolies/ privileges, and criminal Proceeds of offences against wealth:
- The coherence between financial burdens on citizens in general and the rent of land as described above means that when the authorities tax other sources but the market value of land, they reduce tenants’ and buyers’ ability to pay rent and therefore indirectly collect some of the rent of land; and when the Government subsequently spend the revenue on public infrastructure and public institutions that serve citizens in general it means that the citizens take advantage of some of the rent of land.
- Danish taxes altogether (including rent of land) amount to more than 50% of the Danish Gross Domestic Product, which is used to the benefit of people in general. Maybe that is the reason why the Danes are considered as being the happiest people in the world?
- It would of course be less complicated and much cheaper for the Government and the taxpayers if the Government would collect the rent of land directly from the landowners than it is to collect the same amount indirectly via many other sources. The only reason for not doing so is that so many of the Danish voters have got the idea that they don’t like land-value taxation and prefer many other taxes.
- Collection of the tax revenue from many different sources offers many possibilities for evasion of taxes, which will be closed when the revenue is shifted from income of production and collected directly from the landowners according to the market value of their land. Land is conspicuous – cannot be hidden, and the current value of it is known by estate agents, valuers, assessors, mortgage lenders, and others who in their daily profession estimate values of localities; so assessment of the rent of land is not a problem and can easily be assessed by experts such as the British VOA (Valuation Office Agency)..
- Taxes on many different sources do generally burden low-income people more than high-income people, and high income people’s ability to evade taxes on production, producers and products are usually more successful than low-income people’s ability to do the same.
- When taxes are collected directly from the landowners instead of indirectly by taxes on production, producers and products their tenants and customers will have more purchasing power and will be more inclined to pay higher rent for use of land.
- In the same way as described regarding taxes, also extra-profits – claimed by holders of monopolies and other privileges on top of the prices the market would have decided without privileges /monopolies – will in the beginning burden the customers, consumers and producers who need the goods or services for their satisfaction or for the process of their production. In the longer term, however, extra privilege-profits – in the same way as taxes – reduce the amount the landowners can claim from their buyers and tenants.
- The extra privilege-profits, however, cannot be collected directly from the landowners in the same way as described above regarding taxes. Extra privilege-profits have to be collected directly from each individual holder of privileges/ monopolies, etc. The Government who granted and currently protects privileges knows who the holders of all privileges and monopolies are and can easily collect the privilege-profit.
- The sizes of values of privilege/monopolies will be revealed when the Government asks the individual holder of each of the valuable privileges how much his/her privilege means to him, his family and/or his business, and how much he/she would pay annually to the Government for its continued protection of the privilege. When this amount becomes publicized other people may offer a higher amount for taking over the privilege. In the beginning the process may be a bit complicated, but it is not impossible to assess and collect privilege profits for the public purse – and it is really great money.
- In principle privileges should be abandoned and only allowed regarding privileges that provide advantages to people in general as is the case concerning landowners’ exclusive rights to use certain sites, and regarding exclusive rights for somebody to use certain bands of waves of the electronic spectrum for transmission of information that makes radio, TV and mobile phones etc. possible.
- If for some reason it turns out to be impossible to assess and/or collect the extra privilege-profit from the holder of a privilege that has been granted and is protected by the Government because it provides advantages to people in general, the Government must take over the activity and run it as a public monopoly. Then – unless the Government decides to skip the privilege-profit and reduce the prices – the profit will fall to the public and can be used for the betterment of people in general.
- Criminal proceeds
- When a criminal offence against wealth happens the victim will be the one who suffers. However, when criminal offences against citizens’ wealth (robberies, burglaries, shoplifting, etc.) are foreseeable and it is possible to estimate the values of the risks – maybe possible to pay a premium for the risk to be carried by an insurance company – these amounts reduce the purchasing power of potential victims and the rent the landowners can claim from their buyers and tenants will be reduced accordingly.
- The way to reduce criminal proceeds in matters of offences against wealth will be increase of the general level of morality and respect of properties belonging to co-citizens, followed up by an effectively working police force, and firm consequences imposed on the culprits.
- The effects of heavy taxes levied on different sources.
All taxes on production are dead-weights on the society’s productivity. It is so, whatever the taxes are levied on consumers, on producers, on traders, or on anybody else in the market system. The market is based on human beings’ natural inclinations to deliver goods and/or services that satisfy other people, who also provide something that satisfy other providers.
Industry and trade would operate much easier without taxes on production, industry or trade; but also taxes on consumers’ income and/or purchases hamper business in all branches. It would be an enormous relief to production, industry and trade if all taxes were levied directly on the rent of land where it doesn’t burden the society’s productivity.
Taxes on many different sources are complicated and expensive to administer; and the so-called income-tax system infringes citizens’ privacy by questioning information about the taxpayer’s daily life and business and by its keen control of the information. This system needs staffs with special knowledge of all branches of industry and trade. It would be much easier and cheaper to collect the rent of land directly from the landowners and omit burdening citizens, producers and consumers with tax declarations and demands for accounting; and arrangements the only purpose of which is to evade or lighten the tax burden will not be necessary.
Tax on Land Values – or public collection of the rent of land – doesn’t burden productivity at all. Land Values – or the rent of land – are not created by landowners, but are caused by nature and the society. The only objection against public collection of rent of land is that private ownership of rent of land has lasted so long that most of today’s landowners have bought it and paid for it by income earned by their manpower (physical and/or intellectual). However, the same objection was made against abolition of slavery; most slave owners had paid for their slaves. Nevertheless slavery was abandoned.
- Solidarity, care and equality
Through the centuries it took the Danes to build up today’s society of parliamentarian democracy the common attitude among them was in favour of equality and solidarity with vulnerable people (disabled, sick, children, elderly, refugees). But during the last half of the 20th century, when the worst of need had been gradually abolished or mitigated, this attitude of solidarity weakened; and in the recent decades the view has grown that solidarity and equality are bad as they hamper cleverer, stronger, and in other respects well gifted people in developing their potential. That attitude urges for freedom for cleverer and stronger citizens to use their gifts to the utmost and to take the advantages they can, including privileges that lead to tax relief to the richest, even if it means reticence on public expenses to weak and vulnerable co-citizens. Also public restrictions and administration is looked at as annoying bureaucracy that should be replaced by privatization wherever that is possible, which will further more private privileges.
If the point of view that the stronger and fittest shall be granted privileges to the detriment of weak and vulnerable co-citizens will grow and dominate the attitudes of Danes for a longer period of time the result might be that more of the rent of land will be led to private privilege holders. Then the most and best of production in the society and in other places of the world will be led to satisfy the cleverer and stronger citizens though in their capacity as holders of privileges they will not deliver any goods or services to their productive co-citizens who therefore have to put up with prices for goods, services and locations higher than they can afford.
When huge amounts of privilege-profits are allocated to few people only, poverty will grow and infest not only citizens of today’s lower class, but also citizens of today’s middle class.
Private or public administration
The idea that private management is always more effective than public management is an assessment that needs modification.
It is correct that big administrations are vulnerable to rigidity, inefficiency and corruption, which however is due to all big administrations whatever they are privately or publicly managed, and the more so when competition is missing or weak.
Competition is missing or weak where power brokers are involved, which is a risk in governmental administrations as well as in administration of corporations based on power protected monopolies/ privileges.
In order to take advantage of the effect of competition we have to further the following:
Public administration shall be privatized where it is practicable if it can be done without creating private monopolies/ privileges.
Private privileges of any kind shall be abolished in principle, but not when they provide advantages to people in general as is the case with
(1) exclusive rights to use of natural resources, such as use of land and use of electronic waves for radio, TV and mobile phone transmissions.
(2) governmental regulations protecting human beings’ health, life and the environment, such as production and handling of nuclear power, gen-modified food, certified medical drugs, serving of intoxicating drinks and drugs, dealing with poison, weapon, explosives, pollution, cremating and burying corpses, handling of household waste.
(3) the exclusive right to print and coin money, to issue electronic money, and to put it into circulation.
When private privileges are accepted because they provide advantages to people in general, we have to maintain the condition that the privilege-profit shall be forwarded to the public that will use it for the benefit of people in general.
If for some reason the privilege-profit cannot be assessed or cannot be publicly collected the privilege should be taken over and managed by the public.
- THE SUPREME POWER IN DENMARK
From Danish History we learn about powerbrokers who in past times fought over the superiority to forcefully claim tributes from people living and working on and from the land. It happened by raids and organised robberies, invasions and claims on tributes. Later it happened by political intrigues, privileges and taxation.
Early communities that wanted stability found it appropriate to make a contract with the strongest power broker in the area who was supposed to provide protection against raids, organised robberies, invasions and claims on tributes; and that usually meant that the community should pay to the power broker what it was able to produce over what the producers and their families needed to keep an acceptable lifestyle (reward for manpower); the powerbroker was usually called Chieftain or King and used the revenue to enrich himself and to build up a strong force for defence against rivals and other enemies. The society that was able to provide their king with the largest tribute and raise the strongest military force, could – if their king was a successful warlord – enjoy peace.
- Ideally liberty and sovereignty could be based on a healthy society able to meet challenges from neighbouring communities, whatever it was about industry and trade, or concerning military abilities.
- Practically kings/governments had to balance between on one hand: good life and high productivity of the citizens, and on the other hand: military strength.
Less strong societies – like Denmark has been since 17th century – would have to comply with the stronger of their neighbours and hope to be left in peace.
The sovereign king always had to rely on his henchmen who ideally would
- act locally on behalf of the sovereign,
- collect the rent of land for the sovereign,
- provide the sovereign with military units;
and as entitled nobles they were allowed to
- withhold some of the revenue they collected from the productive people.
However, this arrangement was vulnerable; some nobles would use their position to claim more revenue and more privileges from the subjects and from the sovereign and/or urge more influence onto the sovereign.
Privileges to rent-free landownership, or privileges to run certain industries like windmills, watermills and factories, or to supply attractive commodities such as salt, spices, oil, – sometimes called monopolies, licences or something else – were granted to nobles and knights and to other people who were able to further the sovereign’s interests in meritorious ways, including the sovereign’s interest in a sound and well working society. Sometimes the king granted, pledged or sold privileges or monopolies in return for money needed for governmental expenses to military arming, soldiers’ pay, prestigious investments, and infrastructure.
After absolute monarchy was inaugurated in Denmark in the 17th century some of the nobles’ privileges were cancelled.
- People’s voices
When in the beginning of 19th century Denmark began its development from mainly agricultural production and dealing mainly with agricultural products to also industrial production in larger scale, and crowds of people moved from rural areas to towns and cities, new groups of citizens raised their voices. They were industrial magnates, members of craftsmen’s guilds, organised farmers in the countryside, and gradually also workmen organised themselves. They all expressed their individual interests and claims, which had to be considered, and gradually emerged and developed the idea of a constitution based on parliamentarism.
In 1849 the parliament was institutionalised and over the next 66 years democracy developed. From 1915 it comprised all Danish citizens of adulthood living in Denmark. Today’s democracy in Denmark guaranties citizens Equal Personal Rights and Equal Political Rights; but the Danes are not guaranteed Equal Rights to the Value of the Danish Nature and Society, which is created not by individual persons, but by nature and all citizens in common..
Access to and use of some of the values of nature and society were and still are guaranteed to holders of monopolies and privileges. This clearly applies to exclusive rights to use of land and other natural resources, but applies also to exclusive rights to deal with certain professions, certain branches of craftsmanship, and trade in specially described goods and services.
Unprivileged producers (labourers, entrepreneurs and investors) will only enjoy the value of nature and society when the Government has provided public infrastructure (public roads, streets, lighting, transport facilities, education, health care, etc.), and they will enjoy a bit more of it included in their rewards for supply of strongly sought-after goods or services to holders of monopolies/ privileges.
When in the middle of the 19th century the absolute monarch handed over his power to a parliament of representatives elected by voters, it became possible for the people to get rid of privileges and monopolies and to let the values of nature and society benefit people in general. It did not happen at once; it began to develop.
- Development of Danish Democracy
In the last half of 19th century Danish legislators dominated by landowners, merchants and industrial magnates concentrated on
- making the newborn democracy work,
- improving democracy and the general education,
- institutionalising the labour market,
- improving health service and the life style of people in general,
- developing a new tax system.
In 1903 “Income Tax” was implemented as part of a new tax system that abolished the previous hartkorn tax.
Since the beginning of the 20th century the supreme power in Denmark has been and still is in the hands of the people who exact their democratic rights to elect representatives to the legislative assembly: The Danish Parliament. However, the representatives appoint a Prime Minister who proposes ministers to his Government, which the Royal Majesty will approve. Between elections the Prime Minister exerts the supreme power via his ministers. They rule the society in accordance with laws given by the elected representatives. Today the power of the Royal Majesty is very limited.
From 1925 to 2000 the Danes developed a tax burden that has been registered as the heaviest in the world. It finances a wide range of arrangements for all Danes including people at low income; it pays for new infrastructure and for maintenance of old infrastructure. Wages are decided by the labour market and the organised parties of the labour market; to middle and lower income citizens wages are higher in Denmark than in most other countries; but – as mentioned – taxes are high. Purchasing power of income-after-tax is very much like it is in neighbouring countries.
Taxes on market prices of land that the Government collects annually directly from the landowners are not insignificant in Denmark, but they are small compared to the market prices of land (less than 2%) and they collect less than 2% of all taxes in Denmark.
The Danes have the opportunity to use their democratic power to abolish monopolies and privileges, which they have not done. But since World War II monopolies and enterprises that dominated or were about to dominate the market have been under control by governmental bodies. After Denmark’s association with the ‘European Union’ much of this kind of administration has been transferred to EU, but still a ‘Danish Competition Council’ keeps control, examines questions, and enforces rules.
- The number of holders of exclusive rights
The number of holders of Governmentally protected monopolies, licences, etc. increased during the industrial development; and it is still increasing. These holders charge extra income on top of what the market would have decided had they not had their monopolies, privileges, etc. and by using the extra income as purchasing power they are able to extract from the market goods and services without delivering to the market goods or services in return.
Since the mid of the 20th century also the number of holders of exclusive rights to use of land increased considerably including those owning the land under their homes and/or working places. In some blocks of flats tenants became jointly owners of the land. Holders of rights to use of land are able to take advantage of incremental windfall-incomes that makes many of them feel in company with great landowners and other holders of privileges.
- DEMOCRATIC EQUAL RIGHTS
Since 1915 all Danes have enjoyed Equal Personal Rights (to walk about, to privacy, to be brought before a judge shortly after arrest, to equality before law and justice, etc.) and Equal Political Rights (to speak and write and print and distribute ideas, to assemble at meetings, to demonstrate attitudes, to stand for elections, to vote at secret polls, etc.).
These rights were and still are very much appreciated as important parts of Democracy; but they do not provide the perfect democracy. Democracy is not and cannot be perfect as long as it allows that some privileged citizens may capture considerable proportions of the values of nature and society that are not created by individuals or groups of individuals but provided by nature and by human beings in common and therefore morally belong to all citizens in common.
Equal Personal Rights and Equal Political Rights can, however, be the tools by which all Danes will achieve the missing Equal Economic Rights to the values of nature and society.
The only reason why the Danes have not already got Equal Economic Rights to the values of nature and society is that they never claimed it. We shall zoom in on that problem below.
- The missing clamour for Equal Economic Rights.
Unprivileged Danes have for millennia been unable to enjoy values of cultivated nature and values of organised society. Today unprivileged people can only enjoy values of nature and society when the government has invested publicly collected revenues in common nature (parks, forests, lakes, beaches), in common infrastructure (roads, rails, bridges, tunnels, air terminals, and nets of tubes, wires and relay systems for supply of power, water and communication) and common institutions (waste management, health care, public baths, propagation of common knowledge like education, libraries, museums and other collections of items, etc.), so far it provide advantages to people in general.
Holders of privileges extract for their own satisfaction considerable proportions of the values of nature and society. These values are not produced by individual citizens or groups of individual citizens; they are caused by the demand of human beings and by the synergy of cooperation among all citizens in the society, and they belong morally to all citizens on an equal footing.
Unprivileged citizens are cheated currently, twice every day year in and year out; firstly they do not get an equal share of the values of nature and society, and secondly the purchasing power of their wages are reduced when privilege holders use their privilege income to take out from the market goods and services without putting into the market goods or services wanted by other people.
In the 19th century unprivileged Danes claimed Equal personal rights and Equal political rights, and they succeeded to get it; but they never claimed Equal economic rights, and therefore they did not get it. Why didn’t they claim it?
The answer may be found in the fact that in the beginning of the 21st century statisticians could report that though the Danish tax burden was one of the heaviest in the world, the Danish people was registered as being the Happiest People in the world, producing a Gross National Product among the greatest measured per citizen; and the gap between the purchasing power of the wealthiest and the poorest Danes was among the narrowest in the world.
- Reconsideration of taxes
Maybe high taxes are not as bad as the rumour goes.
This paper agrees to the understanding that all economic burdens on production, producers or products such as taxes or increased monopolist prices, reduce the rent of land. That understanding is based on the fact that producers’ wages and profits after taxes are determined by the market that over time shifts such burdens onto landowners. This also means that when burdens on users of land (for production or for homes) are lightened they will pay more for location.
This coherence between (1) burdens on income and (2) the rent of land provided by nature and society, seems to be used by Danish authorities to provide Danes in general with proportions of the values of nature and society, that makes the Danes feel happy, though they don’t get exactly equal shares of it.
Through most of the 20th century the Danish society was led by a coalition between the biggest political party The Social Democrats and the nationwide union of Danish Trade Unions.
The Social Democrats were in governmental power most of the years from 1924 to 2000. So far back as from the end of the 19th century they urged for sound housing to people all over the country, and when they came into power they managed to live up to their promises. Simultaneously they created welfare institutions and managed to regulate the labour market, which in concert formed the base for a productive environment of trust and stability, on which the two sides of the labour market negotiated the conditions of production in ways that also satisfied public administration.
Danish Trade Unionists succeeded to improve the conditions of labour at working places by developing security rules that were agreed by the organisation of employers and the organisation of employees; agreements that in many cases were later adopted as laws by the legislators. In practice these rules were keenly enforced by well educated trade union shop stewards who were democratically elected by the organised shop workers. The shop stewards supported by the trade unions managed to keep the employers up to the marks. The Unionists also succeeded in raising wages of Danish manpower (physical and mental) to acceptable levels.
The Social Democrats on their side succeeded by its tax policy to capture for the market big parts of the value of nature and society that was not caused by individuals or any individual group, but caused by nature and the society. The revenue was used to construct and maintain generally wanted infrastructure and public welfare institutions that benefitted all or most of the Danish population.
- Cut of taxes
Since 2001 increase in taxes have been stopped, but further more certain taxes have been reduced including taxes on houses including land. That has happened in spite of the fact that in the period market prices of housing increased explosively until the economic stagnation began in 2008 and in 2009 developed into recession.
So, during the 20th century the political party The Social Democrats succeeded via taxes on production to capture considerable parts of the Rent of land for the community and the revenue was used for the benefit of people in general. In the beginning of the 21st century the coalition of anti-socialistic parties succeeded to recoup considerable parts of the value of Nature and Society to the pockets of landowners including homeowners.
- DANISH ‘HAPPY-LAND’-TAXES versus DIRECT LAND-VALUE TAXATION
Denmark’s tax policy through the 20th century seems to show that the rent of land can be collected indirectly by taxes on a wide fan of different sources; and that it has important advantages compared to the situation when the main part of rent of land goes to few privileged persons only.
But indirect public collection of the rent of land via taxes on many different sources doesn’t have all the good effects that direct public collection of rent of land has.
Direct public collection of rent of land is much easier, more accurate and much cheaper than collection indirectly from many different sources; and direct public collection of the rent of land puts an end to tax evasion because land cannot be hidden or removed to tax heavens.
The cadastre (in Denmark called: Matriklen; in England called: The Land Register) tells who own the sites, and experienced assessors, mortgage lenders, estate agents, developers, specialised tax experts, etc. are used to assess values of sites with sufficient accuracy. Openness and publicity about assessed land values will strengthen fair assessments and should be recommended.
- FREQUENTLY HEARD OBJECTIONS
Some people say that when the rent of land is publicly collected the value of land disappears, which assertion is based on an incomplete understanding of the function of the market.
It is correct that collection of new taxes or other burdens on landowners will tend to reduce the market prices of land, but is the revenue used in rational ways it has the opposite effect:
- Use of the revenue to reduce taxes on production, producers or products will increase the citizens’ purchasing power and increase the prices they will offer for access to land, which tends to increase land values;
- Use of the revenue to provide and maintain infrastructure and institutions wanted by people in general will also tend to increase land values;
- Use of the revenue for distribution of it in equal shares to all citizens will increase the purchasing power of people in general, which again will tend to increase land values.
These effects are opposite to what happen when all or most of the rent of land is captured by monopolists and holders of privileges; then it will
- hamper the productivity of the society (by increased burdens on production, producers and products),
- damage the economics (by diluting the purchasing power of producers’ wages and profits), and
- create poverty (by increased burdens on productivity and by dilution of purchasing power of people in general);
and the results of these effects are that the rent of land decrease or it doesn’t increase as much as it would have increased if holders of monopolies and privileges were prevented from capturing the rent of land for themselves.
High taxes will only reduce values of land if the revenue is unwisely wasted, by a lavish life style or by prestigious nonsense.
Other people say it is unfair if landowners should be burdened with all the taxes a government will need; but those who say so do entirely look away from important facts, such as:
- Areas of land are appreciated for their ability to satisfy human demands, either (1) directly without any labour (like a beautiful view, clean air, a spring of drinkable water, contents of sought-after materials, silence or other advantages available from surroundings of the site in question); or (2) by human labour (that produces good results on some sites, but minor or no results on others).
- The value of a certain site is determined by (1) potential users’ expectation of advantages they can get when they own it; and (2) of the highest bidder’s willingness and ability to pay more for it than other bidders.
- The value of land is not created by landowners; the value of land is created by human beings need for useful land and by the synergy of the Community’s citizens’ cooperation. Therefore, all values of land do not belong to landowners only, but to all citizens in common.
- So, it is absolutely fair that the society collects all values of land, and uses it for the benefits of all citizens.
- Avoidance of public collection of any part of the values of land – thus preventing it from being used for the betterment of people in general – is a violence against people in general.
- Landowners who are allowed to keep for their private satisfaction values created by Nature and/or by the Community damage the possibilities of satisfaction of all other people in the community. That injustice can and should be terminated as soon as possible
The injustice that today allows some people to rob common property from unprivileged fellow citizens has been legal practice in Denmark for more than a century (in Argentina for around two centuries, and in England for many centuries); and during that time many of such immoral ‘rights’ have been lawfully sold to buyers who have paid for them by money they have earned by honest production of goods or services.
When stolen goods have been sold to a third person and evidence of the stealing and selling has been established, Danish law demands that the buyer must deliver the stolen goods back to the original owner without compensation, even if the buyer bought the goods in good faith (Except things bought on a public auction before which the items have be available for public inspection).
But when the rights to keep rent of land on private hands have been sold and bought through centuries in accordance with legal practice Danish law looks upon it from another point of view, and privately appropriated rent of land cannot be claimed back to the public.
Nevertheless, Danish Law constitutes that the community has the right to tax Land Value; it is not considered as expropriation that would incur compensation. And no Danish law declares it illegal if LVT should become the main tax or the only tax.
When in Denmark a clamour will be raised for taxes only on land values and on other privileges, instead of many taxes on various sources, the transition must be implemented in a way that makes unwanted side effects as as possible. Many proposals have come up, and more proposals may come up; be aware that my proposal connects Land Value Taxation with Citizens’ Dividend and allows a Free Choice for people in critical situations to join the reform or abstain from it.
A very serious objection against implementation of LVT instead of other taxes is the one that emphasizes the situation of property-rich but income-poor people (typically elderly low-income pensioners, or a poor widow, in a valuable house). That situation is a consequence of the fact that the unjust tax system have been in force in the society for a very long time; so long that people have arranged their living around that system, according to which it was reasonable to buy one’s own house early in life and pay down the purchasing price over one’s active lifetime so it would became affordable to live in the house when income would cease. That situation needs special attention in connection with implementation of LVT instead of other taxes; and it is included in my proposal that combines Land Value Taxation to Citizens Dividend and offers the people concerned a Free Choice whether to join the reform or to reject to join it.
But the most important obstruction against implementation of LVT as the only or main source of public finances stems from the fact that Danes have got used to and adapted to the existing conditions; though these are based on unjust violation.
Another problem is the confusion that occurs after a period of postponement of correct valuations of land values and/or after a period of reductions or exceptions of collection of the correct charge. When administration returns to correct valuation and/or correct collection landowners may feel it as an extremely rough demand.
Psychologically the situation is very much the same as it was in the years up to the emancipation of slaves. The slave emancipation was agreed and implemented anyway; and one day also the slavery based on economic injustice will be emancipated.
The change will not be possible before people in general raise a clamour for it. And that will not happen before a majority of the population understand that the change will provide them all with considerable advantages. Therefore, what we have to do is to propagate the knowledge about these advantages:
1. People are generally gifted with many talents; some of which are more developed than others. Therefore people are different; and therefore people can serve each other; be valuable to each other. This is one reason for relationship between people; one reason for building up a community.
2. Though people are in many ways different, they are in many other ways equal, which is why they to a high degree understand each other and each others’ wants and needs. That enables them to use their individual talents and skills to provide goods or services that may satisfy other people’s wants and needs.
3. People are inclined to give a hand to help other people when they can; hoping that they may count on other people’s help should they need a hand. That is the background for trust and solidarity that allows for credit, without which a community cannot work well.
4. The inclination to exchange satisfying goods and services or money what they are able to produce of goods or services that will satisfy other people for good or services produced by other people that will satisfy the former producer. Voluntary deals satisfy both parts and consolidate the relationships that are the building blocks that raise and consolidate the society.
5. So free trade – trade where power is only used to prevent pressure, blockades, preferences, privileges, monopolies – is valuable to individuals as well as to the community as a whole.
A fundamental feeling that the gifts of nature and advantages of society belong to all citizens in common.
Understanding that all citizens have equal economic rights and that differences in basic individual conditions of life only stems from different talents or different physical abilities that allow some people to serve fellow citizens in better ways that people in general can serve fellow citizens, and in some cases makes substantial support necessary, and makes it possible for well-gifted citizens to earn a deserved increase in income.
Profound harmony, solidarity and belonging that support trust and cooperation
End periodically booms in economics, and therefore end periodically busts of economics. Because investments in non-productive activities (such as house+land prices) are no longer more advantageous than productive investments (such as new houses). Because people no longer expect to earn windfall incomes from their landed properties. Because the increased values go from landowners via the community to equal distribution to all citizens.
Citizens’ Dividend that is an equal share of the amount by which the income revenue of land-values exceeds the amounts needed to cover the expenses to the tasks agreed by the democratically elected representatives in the legislature.
Because values of land currently will go via the community to all citizens, the banking system will no longer have to finance increased land-values caused by expected windfalls. Future landowners will only have to pay up the values of the house whereas the rent of land will be collected currently via the community to all citizens.
The greatest hindrance against making Danes in general accept that all values of land in Denmark belong to all Danish citizens in common, is that alternating Governments (for centuries dominated by landowners and their supporters) have omitted to collect the rent of land from landowners,. That lapse has led to the practice that buyers of exclusive rights to use land, typically the land under their homes, have also bought the right to collect future increases in values of land. Not only increases caused by the landowner, but also increases caused by development of the society, such as technologically improvements of tools and machinery, storage and transport and improvements in communication and trade. For these rights most buyers have paid money they have earned by honest labour (physical and intellectual); and those who have borrowed money for the purchase have furthermore on top of that paid heavy interests to lenders. Those who paid by their own deposit have missed income of interest they could have got form their deposit.
The effect of that has been that most of today’s landowners have worked hard for their rights to collect the present and foreseeable future incremental values of land; and they will not find it acceptable to give up what they – many of them through all their adult life – have paid for their privilege.
So, in order to make the change possible it might be necessary to allow today’s owners of land a reasonable arrangement.
Like it is impossible to abolish unemployment completely – 1-2% work seeking unemployed will be brilliant – it will also not be possible to collect all rent of land. Public collection of 95-98% of all rent of land will bring about all advantages to individual people and to the society, presupposed of cause that the revenue will be used for the benefit of the people in general on an equal footing.
- Neglected public collection of the people’s rent of land is a violence against the people
During the 20th century wealthy interests in USA lavishly sponsored economists who taught at universities or wrote textbooks, in which they explained economic phenomena emphasizing the virtues of privatization of natural resources and the virtues of what they called, but definitely wasn’t “free competition” that allowed monopolies and privileges.
Professors or teachers who criticised this favouritism or taught in conflict with it, were excluded. Over time this new trend built up what today is called Neo-classical Economics that suppressed the idea of all people’s equal rights to the rent of land and has been favoured by influential circles in other branched, such as journalistic in US as well as in other countries. The Neo-classical Economics confused and confuses teaching of classical economists, restricts the market they call, but isn’t “free”, allows economic boom-bust crisis to emerge periodically, and creates poverty.
When in Denmark in the last part of the 20th century ‘Adult Education Associations’ (Voksenundervisningsforbund) began to work it became difficult for the proponents for Land-Value Taxation to raise the interest of people who were overwhelmed by ten-thousands of various offers, such as hobbies (photographing, motoring, flying, painting, drawing, modelling, etc.), foreign languages, school subjects, cultural and spiritual and literary lectures, travel experiences, and much, much more.
Another obstacle to the rise of interest in knowledge about advantages of public collection of the rent of land was (and still is) the fact that well skilled specialized labourers had an income good enough to buy their own home, which many of them did. Then, though their property of land was very small and of low value compared to the total of all land-values of Denmark, they felt companionship with big landowners and other privilege holders. Though in general they were underprivileged, they were not at all interested in furthering the idea of public collection of the rent of land; and even worse, they transferred this negative attitude to land-value taxation to the members of their families.
No doubt, had the unprivileged and under-privileged Danes (homeowners in general) got the correct information about the advantages that individual people and the society in its entirety would gain from ‘Direct public collection of rent of land from landowners’, they might have supported the idea and been able to prevent the serious crisis that rose from the economic bust in 2007-08.
- Direct collection of rent of land from the landowners is much cheaper than many different taxes
Most politicians are well aware of the fact that direct Land-Value Taxation can be collected much cheaper than taxes from a broad fan of sources. Yet they prefer taxing the wide fan of sources and give the following reason for that attitude:
Our voters think it is injustice to collect tax from a single source only. And we do not want to annoy them.
But the voters got this information from the information media (electronic and printed) whose staffs, by their teachers who promote neo-classical skewed “knowledge”, have been told to avoid speaking about people’s equal rights to the values of nature and society. The ‘philosophy’ is: “The staffs are not supposed to work up a serious critic of the existing social order”.
Had the people been told that they are the original and rightful owners of the values of nature and society, and had it been explained to them that the state of social order – though it has been so for centuries – is the result of powerful protection of an injustice that can easily be re-adjusted as soon as the people want so to happen, then the people surely would have instructed the persons they nominate for election to the legislative assembly that they want the change to happen.
- Evasion of tax on values of land
It is completely impossible to hide land, and the Danish cadastral tells who own every single sites. The values of the sites are assessable by people who are accustomed to that metier on a daily basis (estate agents, lawyers, builders, mortgage lenders, assessors, investors, etc.). Assessment is not a problem, but has to be organised carefully, and to be updated regularly; and publicity about the assessments is essential to ensure correct assessments.
The system’s immunity against evasion is an important advantage of land-value taxation compared to taxes levied from a broad fan of sources. That is, however, also a very important reason for landowners to hate it as a plague. People who want to establish institutions that can prevent evasion of taxes find land-value taxation very attractive.
So, though the Danish “Happy-land” tax system obviously has advantages compared to many tax systems used in different societies around the world, it is not the very best choice of tax systems and it has important failures compared to direct collection of the rent of land.
New taxes or increase of usual taxes levied from anything else but the rent of land will in the beginning burden the persons who are taxed. It will take some time before the increased tax burden reduces the rent of land that the landowners are able to pick up, but after some time it will happen that way.
Otherwise when the taxpayer have difficulties in negotiating the size of their wages, whether it is because of language problems, or because the taxpayer simply is bad in “the art of negotiation” about the wage they want. The trade unions could be supportive in such cases, and the Danish unions were very active in that respect up to the first half of the 1970s, when it was secretly agreed that collectively wage negotiations should be kept low, which they have been since then.
Inflation is fuelled by increase of wages when privilege holders keep the rent of land for themselves.
In the first half of the 1970s the Danish government and the two main organisations of the Danish labour market agreed that general increase of wages to manpower should be restrained.
The reason for this agreement was that the economic boom at the end of the 1960s and the first half of the 1970s made the Danish trade unions urge for general increase in wages to the members of the unions with the argument that the labourers want a fair share of the economic progress. The organisation of Danish employers accepted considerable increases, but when wages in general rose, then rose also rent of land; then more money was put into circulation and then prices on goods rose.
This rise in general prices and in prices of land and housing made the unions claim a further general rise in wages to their members. Also this claim was met by considerable increases in wages, but had the same consequences as just described. This happened a few times more, but every time the wages were increased also the rent of land increased *).
Because it led to increased amounts of circulating money that caused inflation, made the government suck up money by taxes. Unfortunately the government had decided not to increase taxes on land-values because of the experiences from 1960 and 1965 when the voters so clearly expressed their annoyance with land-value taxes**); therefore the government dared only tax producers and/or consumers, which was not popular either, but accepted by the voters as long as the new taxes did not completely eliminate the rise in wages.
But the increased taxes could not break the still growing vicious spiral that fuelled inflation. It had to be stopped in another way and that was the reason for the secret agreement between the government, the Unions and the organised employers. The former chairman of the Nationwide Federation of Danish Trade Unions, Thomas Nielsen, declared in the beginning of the 1970s that the Unionists – in coalition with the Social Democrats – through the century had indeed been victorious, but to rack and ruin.
The fact was – still is – as described by economists living before 1900 that it is impossible for labourers to get a share of the rent of land by raising wages. Had the Danish Unionists and the politicians of the Social Democrats understood this, they would probably also have known that the only way in which labourers can get their fair share of the rent of land is by public collection of it and subsequent public use of the revenue to the benefit of all citizens, either via public supply of generally wanted infrastructure and institutions; or by equal distribution of the revenue in equal shares to all citizens.
The Unionists in coalition with the political party of Social Democrats had the power for a very long period; they also had sufficient economic resources and well functioning organisations, and they had an information system (schools, teachers, newspapers and magazines) that are needed for making citizens understand that the rent of land belongs to all citizens on an equal footing. The Unionists and the Social Democrats could have carried through the necessary shift of taxes from the income of productive labourers and entrepreneurs to the unproductive landowners’ – including homeowners’ – income of rent of land.
Had they then used the revenue as they usually used revenues of other taxes: for the benefit of all citizens; then they would have been able to provide all Danes with fair shares of a still increasing rent of land. Then the victory of the Unions and the Social Democrats would have been complete. Instead they mis-spent the victory (to rack and ruin).
The un-implemented policy would have up-rooted the core of inflation that was caused – not as described in those days’ Danish news media: by the rise of wages; but caused – by the combination of raised wages and of public collection of the rise of rent of land that fell to individual landowners who were allowed to keep it for themselves.
Had the rent of land been publicly collected and used for he benefit of all citizens in general it would not have fuelled inflation. The revenue could have made it unnecessary for those days’ Danish Finance Minister to raise again and again heavy loans from abroad, which turned into more taxes burdening the people.
As neither the leaders of the Unionists nor the leaders of the politicians of the Social Democrats had this knowledge, and they did not listen to proponents of the direct public collection of the rent of land, they were frustrated and admitted that they could no longer use their power to urge for general increase of wages to their members.
The very sympathetic and honest Danish Prime Minister, Anker Jørgensen, who always worked for the Danish trade unions and for the political party of Social Democrats and had been Prime Minister of two governments felt in 1975 that he should give up his seat as Prime Minister. He voluntarily, without any constitutional reason for it, dissolved his government and gave the power to the Conservatives; a very unusual reaction of a socialistic prime minister.
*: This was described in popular terms in some of the verses of a popular song from a Danish revue: “Swings and Carousels” sung by the entertainer Preben Uglebjerg.
**: At the general election in 1960 the three parties of the so called “Ground Duty Government” that had urged for land-value taxation lost seats in the Parliament; the Danish Justice Party lost all its seats. At a referendum in 1965 about a set of updated ‘land laws’ that had already passed the Parliament, the laws were rejected.
Another bad effect of ‘indirect collection of rent of land via a broad fan of other sources’ is that when it burdens the citizens, it burdens them differently. Most taxes burden low income people more than they burden well-off people. Collected as direct tax on land-values also called public collection of the rent of land it doesn’t burden anybody at all, it is collection of an unearned income that holders of privileges including landowners are able to pick up, though it morally belongs to the people in common and private withholding of a disproportionally large part of it is a violence against people in common.
So, the many advantages of ‘Direct public collection of the rental values of land from landowners’ compared to ‘Indirect public collection of rent of land via a broad fan of sources’ make us recommend: Direct collection of the rent of land.
The Danish society is a democracy. Changes can only be implemented if they are supported by a majority of the people. People are emotional. They will be interested in a proposal if their feelings are touched in favour of it, or if they think they will benefit of it.
In the case of abolition of slavery their feelings were touched in favour of it to an extent stronger than their economic interest in profit of slavery.
In the case of protection of the environment many people are touched in favour of it, but only a few are willing to sacrifice economically for the case. Maybe it was also so in the case of slavery until politicians took heart and began to move the case forward.
In the case of ‘direct public collection of the rent of land’ it should be possible to touch the voters’ feelings against the continuously ongoing injustice that has to be brought to an end; and it should be possible also to make them aware of their individual interest in common ownership/equal sharing of the entire nation’s immense values of nature and society. The following procedure should further this to happen:
First of all, the proponents should
- agree in propagating the basic idea; maybe propagating a slogan like:
Nature and Society are for all citizens – Values of both are for equal sharing!
Next, it is important that the proponents
- estimate the size of the total annual value of Denmark’s nature and society so they are able to emphasize for the citizens the importance of the proposal. It is as big as all taxes + all privilege-profits captured by holders of privileges and monopolies + the rental value of all land in Danish towns and countryside + incremental values caused by the end of distorted productivity and liberation of it.
When above mentioned slogan(s) are decided and the estimate is as clear as it possibly can be, the proponents should
- list how the revenue of publicly collected rent of nature and society MIGHT be used:
- Citizens Dividend, also called other names such as Citizens Income, Citizens Bonus, Citizens Wage, or Basic Income Guarantee;
- Construction of generally wanted and governmentally decided new public infrastructure and maintenance of existing;
- Reduction of other taxes (regarding income tax it should be discussed if the reduction should be by equal amounts deducted from every taxpayers´ individual burden, or by equal percentages deducted from every taxpayers’ burden).
- Repayment of public debt; which will reduce future need for revenue.
A discussion about preference of possible use of the revenue should not take place before the sufficient number of people want the reform implemented because they want to end the ongoing collective unjust.
Also, but less important than the above mentioned three items, the proponents must
- list the supposed advantages of the proposed reform, such as:
- Smoother economy; (try to avoid speaking in favour of free trade or free competition, which many people have personal reasons to really hate);
- Abolition of “free lunches” going exclusively to holders of monopolies and privileges;
- Abolition of the most serious cause of the periodically occurring boom/bust circles, economic stagnation, and unemployment;
- The feeling of harmony among equals that appears from equal rights for everyone to the advantages of society and nature, which is basic for mutual trust and respect, and for trust and respect in public authorities.
At last the proponents have to discuss
- The practical implementation of the reform.
THEN DEMOCRACY HAS THE CHANCE TO DEVELOP IN THE BEST POSSIBLE WAY
The Value of Land (market price) is determined by
- advantages the current or potential users can have by using the site in question,
- burdens an owner or user of the site has to carry either by physical exertions or by paying money, and
- current and potential users’ ability to pay (a lump sum or rental payments) for taking over the owner’s rights to use the site. The ability to pay includes available amounts of cash, deposits, and/or credibility for new loans. Also the ability to pay is influenced by the society’s current economic situation that might be instable because of criminal activities, unrest or war. The ability to pay may be affected by a heavy tax-burden or by burdens of privilege profits claimed by holders of privileges and monopolies.
Equality Solidarity Humanity
No economic preference without compensation to
under responsibility Caring and Sharing
No recognition of economic privileges without compensation
No exclusion from natural or societal advantages without compensation
Holders of economic privileges or monopolies must compensate the excluded.