Nicolaus Tideman

I. Ethical Principles

A. People own themselves and therefore own what they produce.

B. People have obligations to share equally the opportunities that are provided by nature.

C. People are free to interact with other competent adults on whatever terms are mutually agreed.

D. People have obligations to pay the costs that their intrusive behaviors impose on others.

II. Ethical Questions

A. What is the relationship between justice (as embodied in the ethical principles) and community (or peace or harmony)?

Proposed answer: Justice is what people must settle for (if they are lucky) when they have not achieved the sense of identification with one another, or with a higher purpose, that might permit them to live in harmony with one another in a structure of differentiated opportunities and obligations.

One form of community is a voluntary association of persons who agree to abide by rules that have no right to impose on others. The principle of freedom allows individuals to form such communities. We have a much better chance of achieving a peaceful world if we begin with justice.

B. How are the weak to be provided for?

Proposed answer: The obligations of the strong to provide for the weak are obligations of community, not justice. A person who shrinks from these obligations denies his or her humanity. But justice is the rule of division that permits us to separate ourselves from the rest of humanity if we choose. In a just world, parents will bring children into the world only when, through their own resources and through insurance, the parents are able to provide their children with the resources and opportunities needed to become independent adults.

Every adult will provide his or her own insurance. Thus a world that reflected these principles of justice would not need coercive taxes to provide social insurance.

C. How should natural opportunities be shared?

Proposed answer: By public collection of the value of exclusive access to natural opportunities (the rental value of land in an unimproved condition, the interest and depreciation on extractable resources, the value of access to limited fishing opportunities, etc. All such value will be called rent.)

D. Who should be included in the group among whom rent should be shared equally?

Proposed answer: All competent adults in the world. The practical way to do this is to have rent collected at the local level, and then have redistribution among localities to achieve equality in pre-development rent per competent adult. Higher levels of government would be financed by charges on localities.

E. Is there an obligation to compensate those whose presently recognized titles to land and other exclusive natural opportunities will lose value when rent is shared equally?

Proposed answer: Such individuals may have claims against those who sold them land. They may have claims against those who imposed a regime of private appropriation of rent. But they do not have claims against future generations.

F. Can a person who is occupying a per capita share of land reasonably ask to be left undisturbed indefinitely on that land?

Proposed answer: No, what constitutes a share may vary over time, depending, among other things, on the preferences of those who are not adults yet. People who want a guarantee that the land they identify as theirs will not rise in relative value must buy insurance against that contingency.

G. What is the moral status of "intellectual property?"

Proposed answer: Giving inventors and creative artists the right to exclude others from the use of the inventions and creative works that they produce is often an attractive way to motivate them to produce things with widespread benefits, but any such rights to exclude others are voluntary grants by society rather than moral entitlements.

H. What standards of environmental respect can people reasonably require of others?

Proposed answer: The standards desired by the median voter. Departures from these standards should be paid for according to the costs that are generated.

I. What forms of land use control are consistent with the philosophy of Henry George?

Proposed answer: When land use controls take the form of permission that is given to some persons and not others, the philosophy of Henry George would require anyone with such permission to pay for it according to its market value. Land use control might also take the form of making no distinctions in what different persons may do, but requiring all persons to pay for the adverse impacts of their actions.

III. Efficiency Questions

A. Would public collection of the rent of land provide enough revenue for an appropriate public sector?

Discussion: In recent years, several economists have written about the "Henry George Theorem." This is the proposition that, under specified conditions, a worthwhile public activity will increase rent by enough to pay for the activity. The conditions are: benefits that diminish with distance from the site of the activity and eventually fall to zero, enough people with the highest observed valuation of the activity to more than fill the region of positive benefits, and zero moving costs. When there are modest departures from the conditions, the theorem is "nearly true." Thus public collection of the rent of land might at least provide enough revenue for all worthwhile "local public goods."

It would be good to have an empirical investigation of the extent to which public services actually do raise land values.

B. How much revenue could public collection of rent raise?

Discussion: Answering this question requires a detailed model. Note first that reducing taxes on buildings and raising the same revenue from land can be expected to raise land prices, because the average piece of land pays as much tax as before, but can now be further improved without being subject to additional taxes. The amount of revenue that could be raised is roughly interest on present land prices, plus present taxes on land, plus present taxes on buildings, plus something for the extra value that land would have if other factors were not taxed.

C. Is it possible to assess land with sufficient accuracy?

Discussion: This question is worthy of a detailed investigation. At present, land tends not to be assessed accurately for a variety of reasons. Some assessors have compassion for the owners of unused land because they have no income from the land with which to pay whatever taxes are assessed. Owners of large holdings of unimproved land are sometimes able to use political influence to keep their taxes down.

When land and building are taxed at the same rate, there is no particular need to ensure that the total value of improved property is divided properly between land and improvements.

If only land were assessed, the task of assessment would be simplified by the fact that land values tend to be spatially continuous.

An investigation might measure the precision with which land is assessed in different places by looking at coefficients of dispersion in the ratio of selling price to assessed value. One might the inquire into the techniques used by those who assessed land with the greatest precision.

Assessing the value of agricultural land poses a different set of challenges, since unimproved agricultural land is almost non-existent. There should be a separate inquiry into the accuracy with which the unimproved value of agricultural land can be assessed.

D. How much growth can a community expect if it shifts taxes from improvements to land?

Discussion: This is the subject of my current investigation in Pennsylvania. A number of other investigations have been made as well.

One potential source of growth, discussed by Mason Gaffney, is that taxes on land that lower the selling price of land can be expected to make land relatively more attractive to persons who face high borrowing rates because of imperfections in capital markets. Gaffney suggests that such persons tend to be more entrepreneurial, so that giving them greater relative access to land will increase productive activity.

E. To what extent does the benefit that one community receives from shifting taxes from buildings to land come at the expense of other communities?

Discussion: I believe that there are reasons based on economic theory for concluding that the loss to other communities is extremely slight. But this needs to be worked out in detail.

F. What is the impact of land taxes on land speculation?

Discussion: Henry George and other advocates of public collection of rent have argued that taxing land will curb land speculation. Some economists have argued that if a tax on land is neutral, as is often claimed, then it should have no effect on land speculation. This apparent paradox is resolved by noting that the conclusion that taxes on land will not affect land use rests on an assumption of complete and perfect markets. In the absence of a perfect futures market for land, those who believe they have superior knowledge regarding future rent must buy land to profit from that knowledge. By reducing the profit from land speculation, a tax on land reduces the amount of land that speculators find it profitable to hold. It would be valuable to see how this theoretical conclusion is borne out in practice.

G. How, if at all, does the impact of shifting the source of public revenue to land change if it is a whole nation rather than just a community that makes the shift?

Discussion: The larger the territory that makes the shift, the more that territory will find that capital and labor are supplied less than perfectly elastically. It would be interesting to investigate the extent to which variations in income levels and growth rates among nations can be explained by variations in tax policies.

H. Is there a danger that the application of Henry George's ideas would lead to a world of over-development?

Discussion: To avoid this danger, the social value of open space, rain forests, etc. must be recognized, and those who use the land they control in such ways must be rewarded for doing so, according to the social value that they generate.

I. How would natural resources be managed appropriately if they were regarded as the common heritage of humanity?

Discussion: Resources such as small petroleum deposits, where efficient use involved rapid complete depreciation would be sold to the highest bidder. More enduring resources would be leased on the basis that the lessee would pay interest on the value of the resource plus depreciation. There would be rewards for the discoverers of resources.