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NINE hundred and two years ago, William, Duke of Normandy, conquered England. Almost everyone knows that the date of this conquest, 1066, is one of the most important dates in English history. But most people, including those who have written of the Conquest, have under-rated the significance of William's first order, which was to make a general survey of England and to record it in a book. This book, the Domesday Book, was completed in 1086. Its purpose was to ascertain and record the king's fiscal rights in order to strengthen and maintain a strong central government. But the book records far more than mere boundaries. All manors are recorded, their rivers, meadows, woodlands, pastures, fisheries, plough-teams and other sources of revenue. All sub-tenants and peasants are listed, with their value. There are entries concerning the towns and the military service due by townsmen, and records of mints and markets, etc.

The task was not an easy one. There were about 8,000 sub-tenants and about 1,400 persons holding land directly of the king. About one fifth of the land was retained in the hands of the crown; perhaps three tenths was held by the Church and the other half was divided among the lay lords. At a time when only a few people were able to read and to write and when communications were difficult, the compilation of this information was a formidable task. And although the Norman conquerors were, according to William of Malmesbury, "the kindest of nations," they had to carry out this great work in the face of more or less open opposition by the conquered Anglo Saxons. 128 years after the conquest, in 1194, Roger of Wendover wrote that at this time there was a revolt in London led by William Fitz-Robert, surnamed "with the beard," because he, like his ancestors, never shaved "in anger against the Normans!" He adds: "This man said that he had registered an unjust decree for no other purpose than that all might bear an equal share of the public burden, and contribute according to their means."

William with the beard teaches us a valuable lesson. A tax may be a hard one, but people will not grumble so long as the burden is distributed in a fair and just manner, and so long as nobody is able, by way of exemption, privilege or tricks, to evade or circumvent the tax; otherwise the people will not only grumble, but revolt. There must be a yard-stick to measure the burden to be imposed upon the citizens. This yard-stick must be so simple that everybody, the learned man as well as William with the beard, can understand it. Today, there is no better and simpler yard-stick than the value of the land held, and it was so at the time that the Domesday Book was written. But in 1194 this book was already out of date; the entries had never been revised. It was necessary to revise the entries if the records were to be an accurate guide to land holdings. So we learn a second lesson: a register becomes eventually worthless unless revised by entering all changes.

The best tax is that based on an up-to-date register showing the subject matter of the tax, provided that the tax will be periodically revised also. This proviso is of great importance. At the time of William the Conqueror things changed their value rather slowly. But change they did, and the Domesday Book failed to take cognizance of this fact. The national land tax was based on this book, which was in conformity with the facts in the first years after 1086. But in time the book became hopelessly out-dated. Periodical revisions and adaptations would have made it useful, even after centuries. The failure to carry them out (which would have been possible at the time) converted the book into an historical document.

At the time of Domesday it was not possible to underpin the work already done by an exact cadastral survey: to draw up maps and plans on the strength of an exact survey; to print them, and to order that no transaction shall be valid unless registered in the Domesday Book. Today we are in a position to do that, but we should be careful. The law might say that an un-registered transaction shall be void; that the parties concerned will be punished. But in certain circumstances people will never-the-less go on with unlawful transactions outside the registry because they know the government would take advantage of the registration to levy heavy taxes on the transaction it revealed. And then, of course, an .unscrupulous neighbour might learn something to his advantage from the registration .

Thus people will do again the things their forefathers did: they . will conclude transactions outside the registry by hand-shake, without a written document, and then the whole system of registration will collapse. At first courts will declare that such transactions are unlawful and without legal effect. Then they will say that in some exceptional cases these transactions are binding, owing to prescription, long possession, by the rules of equity, etc.- and finally nobody will care for registration because people will feel that the law is a mere piece of paper, and that actual transfer of possession and a simple oral agreement are quite sufficient. Then the government will draw the obvious conclusions: Taxation will be made independent of registration, and property and transactions will be taxed in spite of the failure to register them.

Even if registration is compulsory, it is of no use unless there is something like the Domesday Book -- an original census and registration of all the existing rights and facts. People then appear before the recording clerk, declare to agree upon the transaction, sign some document -- and the clerk registers the transaction accordingly, without asking whether or not this right, or this land, actually exists. The law might declare that this registration does not imply the state's liability and responsibility, or that no-guarantee of title is implied, but the citizen does not understand this point. If he suffers losses in this way because the transferred property does not exist or because the title of the transferrer has a flaw, then he will refrain from such transactions in the future.

Good and Bad Systems of Land Registration

Today, land survey and land registration are known and applied throughout the world. We have punched cards, computers, and precise measuring devices; we have the printing press, exact and reliable maps and plans. Well-trained officials and learned professors specialise in surveying and registration, and in allied subjects such as economics and administration; and we have an accumulation of knowledge and experience. We should therefore expect our present system to be vastly superior to that introduced by William the Conqueror. In fact, we have built up so faulty a system that we are in no better position that our forefathers were in the eleventh century. Why? Because nobody bothered to explore the basic principles. We are still saddled with the old methods, inventing here a new gadget, improving there some technicality, but we failed to question whether or not we were on the right lines at all.

There are two systems of land registration:

The "Old" System. People sign a document, a deed of sale, a deed of lease, or a deed of mortgage; they present it to the land registry, and the registrar registers the transaction. He does not know whether or not the property in question really exists, whether or not the indicated boundaries are the true boundaries of the land, whether the area is greater or smaller than that indicated, and whether or not the transferrer is the true owner of the land. A title-deed is issued wherein it is certified that on this or that day Fox has declared to have sold to Miller a piece of land, the area of which has been declared to be one thousand square metres, the boundaries of which have been declared to be these and those; that Miller has agreed to buy it; that the price has been declared to be so and so much, and that he has registered the transaction. Cautiously, is added in writing: "No guarantee of title is implied" (lest government and registrar pay damages, if the whole thing is a hoax!)

I would not invest one single penny in lands registered in this way, because perhaps even this penny would be lost. Somebody may turn up and prove that he is the true owner of the land, or that he has acquired it by prescription. Or the land may turn out to be a figment of imagination only, maybe an outright falsification; or the land has been expropriated twenty years ago, and so on.

Nevertheless, even in parts of the United States, this miserable system is carried on. In order to protect themselves, prudent buyers carry out a careful search and research, tracing back the vendor's title to the original land grant, up to two hundred and more years ago. And even this does not give absolute protection. So they pay large sums of money to a title insurance company and this company .insures their title. This money often exceeds all fees, taxes and dues payable in other countries with proper registration procedures. And the insurance company can pay compensation only for damages, not more. If the buyer has to vacate the land, or if the land does not exist at all, no amount paid can be a real compensation. What of all the improvements a man has fixed in the land, trusting that he is the real owner of it? He loses them.

No fiscal policy can be built on such a system. Would one pay transfer fees for a certificate of transfer that is not worth the paper it is written on? How can a government hope to raise a betterment tax or an increment duty if the registration is practically worthless? The law might say that no transaction shall be valid unless duly registered, or that a man will be punished for making an unregistered transaction, but why should he bother? He will surely find a way to circumvent the law.

Property taxes and rates cannot be based on this system. One might assess a building and the land thereunder in accordance with the registered area, but the registration is not reliable. The figure registered is perhaps wrong. Moreover, if no transaction has been carried out, there will be no registration of this piece of land at all! So one has to prepare Property Tax Assessment Maps without consulting the register of lands. Now the tax man would like to send a demand note to the registered owner. If there was a transaction, the man might be registered. But you may be sure he will be able to prove that he is not the true owner, in spite of this registration!

The "New" System. A thorough cadastral survey is carried out, and maps are printed indicating the block, the parcel, and the area of each parcel. Then a land settlement officer makes a public investigation of all claims and sends a schedule of rights to the registrar of lands. Thereupon the registrar throws away all the old registers and opens a new one, based on the said schedule of rights. The new book is arranged by numbers of blocks and parcels. All zoning orders and planning restrictions are registered as "Notes." The value of the land Itself, i.e. without improvements, as assessed, is registered. Encumbrances are also registered.

I should emphasize that the above description is of the idea system. In fact, however, no actual system is perfect. Something is always missing -- either the planning notes, or the land value, or something else. I shall, in this paper, disregard all these shortcomings.

In a perfect system, the registrar registers all the facts on punched cards. There are two cards for each property; one set of cards is arranged in accordance with the numbers of blocks and parcels, and the other set in alphabetical order of names of persons who are owners of rights in and over the property. As soon as any change takes place, a new card is printed and punched, and the former card is transferred to the collection of "dead" or "historical" entries. These concern changes of ownership, lease or mortgage, etc., succession, attachment and cancellation of mortgage, and, in addition, changes of planning orders or planning restrictions and of revised assessments of the land.

It might be desirable to issue a third card to be filed in accordance with the date of the transaction or change.

It is an open question whether or not the price actually paid for the land ought to be recorded. In most countries it is done. But is not such registration of prices a violation of the right to conceal the price paid? Why should I allow my neighbour to discover how much I have paid for my land? Am I not entitled, in a modern state and under the rule of law, .to enjoy a bit of privacy and secrecy in respect of my transactions? Of course, if the income tax office and the property tax office want to discover such prices in the registry, and if the law says they are entitled to do so, then prices ought to be registered. But do not forget that people will declare and register fictitious, not actual, prices paid, in spite of all the punishments provided for by the law.

The business machines that prepare, file and sort such cards are wonderful. You want to know all the owners of land in block 10813? The machine will print a list of them, complete with their addresses, the numbers of their parcels, their value, time of acquisition, time of assessment, etc., in seconds. The machine will also count the 'number of owners. You want a list of the properties owned by Mr. Walter Miller? Push a button, and the machine will throw out all the cards concerning that gentleman. And if you happen to be a statistician, and are interested in the number of transactions carried out in a given month, and in the aggregate value of all land sold in that month, the machine will tell you. All you have to do is push a button.

Wisdom -- or a Quick Buck for the government ?

As soon as the new system has been introduced, even in an imperfect way, the law should be amended so that no transaction shall be binding on either party unless it is registered at the land registry within a reasonable time after the completion of the deal. It should be a guiding principle that no exceptions should be permitted. Maybe there should also be a law imposing punishment upon any failure to apply for registration, perhaps the transfer to the government of land that is the subject matter of such unlawful transaction. Otherwise the system will not work.

There is a great temptation to impose land transfer fees amounting to a tax upon the buyer, and a land sales tax or increment duty upon the vendor. This is sheer foolishness. Neither the government nor the municipality should take financial advantage of the registration of changes.

The Ottoman legislators were wise people. They knew by experience that fees should be fees and not taxes. They fixed certain fees connected with land registration to cover only the cost of the paper needed for the document, and nobody refused to pay these small fees. As soon as transfer fees or other fees connected with land registration are more than the amount needed to cover the expenses incurred by government in connection with the land registry - as soon as they amount to real taxes - people will find ways and means to carry out their transactions outside the land registry, and then even the hardest punishment will not restore order. Such taxes destroy the best system.

Many people believe that a land increment duty or land sales tax (to be paid by the vendor) is a good thing. It is not. If it is a really heavy burden people think twice before they sell their lands, because if they deduct the tax from the purchase price, they get far less than the property is worth. They will continue to hold the land out of the market pending political changes, so that nobody can use it. If they stipulate that the buyer pays the tax, then the buyer pays more than the land is worth. In addition, experience has shown that the net proceeds of an increment duty (that is, after deduction of overhead charges) are so small, perhaps even negative, that it is not worth while collecting.

Income Tax-the Enemy of True Progress

Income tax, land sales tax, etc., are based on "occasions." A tax based on "occasions" has a very low "announcement value." Both these expressions have been created by Pigou. What do they mean?

The simplest form of taxation is the poll tax, an annual levy of a certain amount per head. You are alive, so you have to pay a poll tax of £10 per annum. This tax has the highest possible announcement value. You do not have to study complicated laws in order to know whether, and for what amount, you are liable. A simple announcement is quite sufficient. You cannot imagine court litigation over such a tax. The "announcement" is so clear that there is nothing to explain, to interpret, or to comment upon.

Land-value taxation also has a high announcement value, if it is pure and simple, with no exceptions, but all other taxes have little or no announcement value because they are built on "occasions." For instance, you earn for services rendered £100; this is the "occasion" on which income tax is built. You sell your plot of land for £2,000: this is the "occasion" on which land increment duty is built. It is also the "occasion" to take transfer fees from the buyer. You build a house on your plot. This is the "occasion" to levy a property tax.

It is you who gives the "occasion" to levy taxes. If you do not give the occasion, no tax can be levied. You are free to give the occasion or not. You may build a house, but nobody compels you to do so. If you do not wish to pay taxes, refuse to build, and you are free from taxes because you did not give the occasion.

It is not only the fact of your building a house, receiving a dividend, or making a profit, that makes you liable for tax; it is also the legal form of your act. If transfer fees fall on the buyer of land, you may take the land on lease because the registration of a lease is not one of the "occasions." If the law says that the fees fall on a lease, too, you take a mere "permission" to use the land, and you go scot-free.

Legislation will be amended from time to time. The courts will say that this or that act falls within the legal definition of the occasion; but so long as you are free to give the occasion or not, and so long as the tax is based on occasions and has a low announcement value, you are stronger than the government and you can defeat the law.

Income tax is the worst of all bad taxes. The occasions mentioned in the income tax law (of any country whatsoever) are so complicated, so delicate, that mountains of decisions have been given by the courts, mountains of commentaries have been written on the subject, and whole professions exist and thrive on this fertile soil.

Some lawmakers tried to get rid of this problem by destroying the very foundation on which the law was built. They declared, in the case of income tax, that the books and vouchers of the tax-payers were to be disregarded, if, in the opinion of the assessing officer, the transaction was coloured or fictitious, and that the law should be interpreted in a manner befitting the official ideology, e.g. communism, national socialism, etc., or "in accordance with sound principles," whatever that may mean.

Likewise, in the case of property taxes, land increment duty and land transfer fees, legislators have ordered taxmen to take into account the transaction and to demand payment of the tax, even if the transaction has been carried out outside the land registry and has not been duly registered. In this way they create new and very vague occasions, instead of setting the law on a better foundation, and in so doing destroy the meaning and usefulness of the land registry - without getting one penny more for the government!

The New Domesday Book

All these shortcomings and flaws cannot arise in the case of land-value taxation, for it is not built on occasions at all. You own a plot of land, so you have to pay the tax. That is all. There is no tax evasion, no tax circumvention, no trick. You cannot alter the value of your land by any act or omission whatsoever. Therefore, land-value taxation has a very high announcement value. All you need in order to administer this cheaply and efficiently is an efficient system of land registration, a new Domesday Book, such as previously described.

The first Domesday Book enabled the Kings of England to impose a national land tax and to become financially strong. Man now has a new Domesday Book, or a similar wonderful instrument of administration that can be converted into a perfect one by some amendments. Why should we not use it in order to establish a wise and just system of taxation, and a healthy, prosperous economy? If we do, we can live without income tax, without property taxes, and without the whole host of annoying tax nuisances we have to bear at present.

The system is simple enough for unskilled men to handle. The land records will show everything one ought to know in order to assess the tax. The planning notes will show that one may erect on this or that plot so many houses per acre, or that no building exceeding two storeys may be erected, or that the land is reserved for agriculture, or that it is classified as a nature reserve, and so on. The assessing officer assesses the value of the best and worst land in the whole country. Within this framework he assesses the value of the best and worst land in each district, then for sub-districts, and finally he assesses the land values of each parcel within each sub-district.

The aim of this assessment is not so much to find out for how much a piece of land can be sold, but rather how much its value is compared with other lands. In other words the assessor wants to find out how to distribute the tax in relation to land values so as to arrive at a just and fair distribution. The taxpayer must have the right to lodge an appeal, but not in respect of the amount assessed; his appeal should concern only the question of whether his land is more valuable or less valuable than other assessed pieces of land.

If the zoning ordinance, the building code, the town planning scheme, or any other enactment, is altered, the land registry will make the respective amendment and enter new planning notes. The assessor, when dealing with the periodical re-assessment, takes due cognizance of changes and revises the assessment - if these amendments affect the value of the land.

Let me conclude with a warning. Domesday means the day of doom, the day of judgement - the judgement we shall have to face at the end of the world. Let us set up the new Domesday Book; let us create a tax system built upon this new Domesday Book, and history's judgement over us will be a favourable one. But if we fail to do so, then the judgement to be pronounced over us and our time will be one word only: doom.