Amol Rajan: Tax is a terrible thing, and terribly necessary

One of the hardest jobs in politics is coming up with a decent slogan. I say this not with any particular experience of party politics, but rather a weary familiarity with the slogans of yore which fail to inspire. Remember "Back to Basics", for instance? Or "Vote Blue, Go Green"? Utter tripe, both. And what of Labour's corking re-election gambit in 2001, "A lot done, a lot still to do?". That sounded like something Alan Partridge would say at Glastonbury.

And though the competition is fierce, the offering plastered on lecterns at the Lib Dem conference this year – "Fairer tax in tough times" – is up there with the best of them. It's plodding, witless, and earnest. More's the pity, because the basic message, being a plea for social justice, is unimpeachable; and so, in the interests of our comrades now departed from Brighton, let me dare to venture an alternative.

TAX WEALTH, NOT WORK. There, I've said it.

I've banged on about it here before. In a masterful analysis of Vince Cable's plans to "soak the rich" yesterday, my esteemed colleague Hamish McRae made the point that income tax, national insurance, and VAT are the three best sources of revenue for the taxman. Wealth taxes, he argued, would raise awkward questions and not generate much. But that obviously depends on how you levy them.

Tax is a terrible, and terribly necessary, thing. It should be designed so that, as far as possible, it rewards socially desirable behaviour and disincentivises socially undesirable behaviour. Two things in the former category are: people going to work (especially very poor people, who might otherwise be welfare recipients); and entrepreneurs taking risks to start companies that create jobs. Two things in the latter category are: property bubbles (a chief cause of our economic woe); and old and rich people acquiring, through inflation in property and land value, wealth much faster than the young and poor.

Unlike income, property is visible and thereby hard to evade. The total value of land in Britain has been estimated at £50trn; tax that at one per cent and you get £50bn. Nice. If proper taxes on property and land – which make people rich not through effort and industry but good fortune and windfall gains derived from public infrastructure – were combined with radical tax cuts to income tax for all earners, and corporation tax for small businesses, even pleb-hating Tories ought to get behind it.