This is to get the incentives entirely the wrong way around

There are two views we can take of profits. One is just the unearned moolah that the plutocrats gain. The other is an incentive to do something, something we might desire done. After all, profit made by the butcher, the baker, provides the incentive for our dinner to arrive. That first view is more generally held by the ill-educated and the left, but we repeat ourselves. Sadly, it seems to be shared by the current Tory government which isn’t the point of having one of those at all:

Councils would be able to strip landowners of large portions of profits from the sale of their land, under proposals expected to be unveiled in the Budget, The Sunday Telegraph can disclose.

An official review commissioned by Philip Hammond, the Chancellor, is to endorse controversial calls for the state to “capture” more of the increase in value of sites when they are granted planning permission.

Sir Oliver Letwin, the former minister carrying out the review, is expected to recommend that local authorities should be able to seize greater amounts of landowners’ profits in order to fund the construction of local infrastructure such as roads and affordable homes.

There are practical reasons why this is a bad idea. Section 106 agreements already strip much to most of the profit from such schemes to make such payments. There are even reports that some schemes don’t go ahead as they’re just not worth the candle any more, not what we desire at a time of purported housing shortages.

But to move up a level to something more like theory it’s to take the wrong view of those profits. It is only possible for there to be a profit if the output is worth more than the inputs. That’s the definition of profit in fact. And such creation of value, that’s the very definition of the creation of wealth more generally. So, we actually desire that more people transform low value farm land into high value housing. The profit by doing so is that increase in the general wealth. Why should we be taxing this punitively?

And from theory to practice again. Why does this profit exist? Because the planning system does not allow enough of such land to be transformed. So, even if you are pearl clutching at the idea that people profit the solution is simply to issue more permissions to do so, thus the value of each one declines.

The answer, as ever, is to blow up the Town and Country Planning Act 1947 and successors. There’s a certain wonder that a Conservative government doesn’t do this, remove one of the great socialist planning exercises of the post-war years.