|Wealth and Want|
|... because democracy alone is not enough to produce widely shared prosperity.|
|Home||Essential Documents||Themes||All Documents||Authors||Glossary||Links||Contact Us|
H.G. Brown: Significant Paragraphs from Henry George's Progress & Poverty, Chapter 6: The Remedy (in the unabridged: Books VI: The Remedy and VII: Justice of the Remedy)
Henry George: The Crime of Poverty (1885 speech)
Men are compelled to compete with each other for the wages of an employer, because they have been robbed of the natural opportunities of employing thems
they cannot find a piece of God's world on which to work without paying
some other human creature for the privilege.
There is no need for poverty in this world, and in our civilization. There is a provision made by the laws of the Creator which would secure to the helpless all that they require, which would give enough and more than enough for all social purposes. These little children that are dying in our crowded districts for want of room and fresh air, they are the disinherited heirs of a great estate.Henry George: The Wages of Labor
Did you ever consider the full meaning of the significant fact that as progress goes on, as population increases and civilization develops, the one thing that ever increases in value is land? Speculators all over the country appreciate that fact. Wherever there is a chance for population coming; wherever railroads meet or a great city seems destined to grow; wherever some new evidence of the bounty of the Creator is discovered, in a rich coal or iron mine, or an oil well, or a gas deposit, there the speculator jumps in, land rises in value, and a great boom takes place, and people find themselves enormously rich without ever having done a single thing to produce wealth.
Now, it is by virtue of a natural law that land steadily increases in value; that population adds to it; that invention adds to it; that the discovery of every fresh evidence of the Creator’s goodness in the stores that He has implanted in the earth for our use adds to the value of land, not to the value of anything else. This natural fact is by virtue of a natural law, a law that is as much a law of the Creator as is the law of gravitation.
What is the intent of this natural law of increasing land values? Is there not in it a provision for social needs? That land values grow greater and greater as the community grows and common needs increase: is there not built into this law a manifest provision for social needs — a fund belonging to society as a whole, with which we may take care of those who fall by the wayside — with which we may meet public expenses, and do all the things that an advancing civilization makes more and more necessary for society to do on behalf of its members?
Today the value of land in New York city is over a hundred million annually. Who has created that value? Is it because a few landowners are here that that land is worth a hundred million a year? Is it not because the whole population of New York is here? Is it not because this great city is the center of exchanges for a large portion of the continent? Does not every child that is born, every one that comes to settle in New York, does it not add to the value of this land? Ought it not, therefore, get some portion of the benefit? And is it not wronged when, instead of being used for that purpose, certain favored individuals are allowed to appropriate the fund of land values?
We might take this vast fund for common needs; we might with it make a city here such as the world has never seen before — a city spacious, clean, wholesome, beautiful — a city that should be full of parks; a city without tenement houses; and we could do this, not merely without imposing any tax upon production, without interfering with the just rights of property, but while at the same time securing far better than they are now the rights of property, and abolishing the taxes that now weigh on production. ... read the whole article
The value of land irrespective of improvements is the value that attaches to land by reason of increasing population and social progress. This value always goes to the owner as owner, and does not go to the user; for, if the user be a different person from the owner, he must always pay the owner for it in rent; while if the user be also the owner, it is as owner, not as user, that he receives it, and by renting the land he can, as owner, continue to receive it after he ceases to be a user. ... read the whole article
Henry George: Justice the Object -- Taxation the Means (1890)
We do not propose a tax upon land, as people who misapprehend us constantly say. We do not propose a tax upon land; we propose a tax upon land values, or what in the terminology of political economy is termed rent; that is to say, the value which attaches to land irrespective of any improvements — in or on it; that value which attaches to land, not by reason of anything that the user or improver of land does — not by reason of any individual exertion of labour, but by reason of the growth and improvement of the community. A tax that will take up what John Stuart Mill called the unearned increment; that is to say, that increment of wealth which comes to the owner of land, not as a user; that comes whether he be a resident or an absentee; whether he be engaged in the active business of life; whether he be an idiot and whether he be a child; that growth of value that we have seen in our own times so astonishingly great in this city; that has made sand lots, lying in the same condition that they were thousands of years ago, worth enormous sums, without anyone putting any exertion of labour or any expenditure of capital upon them.
Now, the distinction between a tax on land and a tax on land values may at first seem an idle one, but it is a most important one. A tax on land that is to say, a tax upon all land — would ultimately become a condition to the use of land; would therefore fall upon labour, would increase prices, and be borne by the general community. But a tax on land values cannot fall on all land, because all land is not of value; it can only fall on valuable land, and on valuable land in proportion to its value; therefore, it can no more become a tax on labour than can a tax upon the value of special privileges of any kind. It can merely take from the individual, not the earnings of the individual, but that premium which, as society grows and improves, attaches to the use of land of superior quality. ...
Tax buildings, and you will have fewer or poorer buildings; tax farms, and you will have fewer farms and more wilderness; tax ships, there will be fewer and poorer ships; and tax capital, and there will be less capital; but you may tax land values all you please and there will not he a square inch the less land. Tax land values all you please up to the point of taking the full annual value — up to the point of making mere ownership in land utterly unprofitable, so that no one will want merely to own land — what will be the result? Simply that land will be the easier had by the user. Simply that the land will become valueless to the mere speculator — to the dog in the manger, who wants merely to hold and not to use; to the forestaller, who wants merely to reap where others have sown, to gather to himself the products of labour, without doing labour. Tax land values, and you leave to production its full rewards, and you open to producers natural opportunities. ...
What is the reason that land in San Francisco today is worth so much more than it was in 1860 or 1850? Why is it that barren sand, then worth nothing, has now become so enormously valuable? On account of what the owners have done? No. It is because of the growth of the whole people. It is because San Francisco is a larger city; it is because you all are here. Every child that is born; every family that comes and settles; every man that does anything to improve the city, adds to the value of land. It is a value that springs from the growth of the community. Therefore, for the very same reason of justice, the very same respect for the rights of property which induces us to leave to the individual all that individual effort produces, we should take for the community that value which arises by the growth and improvement of the community. Read the entire article
Henry George: The Single Tax: What It Is and Why We Urge It (1890)
What we propose is not a tax on real estate, for real estate includes improvements. Nor is it a tax on land, for we would not tax all land, but only land having a value irrespective of its improvements, and would tax that in proportion to that value. ...
Think about what the value of land is. It has no reference to the cost of production, as has the value of houses, horses, ships, clothes, or other things produced by labor, for land is not produced by man, it was created by God. The value of land does not come from the exertion of labor on land, for the value thus produced is a value of improvement. That value attaches to any piece of land means that that piece of land is more desirable than the land which other citizens may obtain, and that they are willing to pay a premium for permission to use it. Justice therefore requires that this premium of value shall be taken for the benefit of all in order to secure to all their equal rights.
Consider the difference between the value of a building and the value of land. The value of a building, like the value of goods, or of anything properly styled wealth, is produced by individual exertion, and therefore properly belongs to the individual; but the value of land only arises with the growth and improvement of the community, and therefore properly belongs to the community. It is not because of what its owners have done, but because of the presence of the whole great population, that land in New York is worth millions an acre. This value therefore is the proper fund for defraying the common expenses of the whole population; and it must be taken for public use, under penalty of generating land speculation and monopoly which will bring about artificial scarcity where the Creator has provided in abundance for all whom His providence has called into existence.
It is thus a violation of justice to tax labor, or the things produced by labor, and it is also a violation of justice not to tax land values. ... read the whole article
Charles B. Fillebrown: A Catechism of Natural Taxation, from Principles of Natural Taxation (1917)
Weld Carter: An Introduction to Henry George
The Ethics of Taxation
It was but a short step from the ethics of property to the ethics of taxation. George's position here was that as labor and capital rightfully and unconditionally own what they produce, no one can rightfully appropriate any of their earnings; nor can the State. On the other hand, land value is always a socially created value, never the result of action by the owner of the land. Therefore this is a value that must be taken by society; otherwise, those who comprise the social whole are deprived of what is rightfully theirs. Furthermore, to charge the owner for this value, in the form of taxation, is only to collect from him the precise value of the benefit he receives from society.
As to the justice of taxes on products, George spoke of "...all taxes now levied on the products and processes of industry -- which taxes, since they take from the earnings of labor, we hold to be infringements of the right of property."
Of the justice of taxes on land values, he said, "Adam Smith speaks of incomes as 'enjoyed under the protection of the state'; and this is the ground upon which the equal taxation of all species of property is commonly insisted upon -- that it is equally protected by the state. The basis of this idea is evidently that the enjoyment of property is made possible by the state -- that there is a value created and maintained by the community, which is justly called upon to meet community expenses. Now of what values is this true? Only of the value of land. This is a value that does not arise until a community is formed, and that, unlike other values, grows with the growth of the community. It exists only as the community exists. Scatter again the largest community, and land, now so valuable, would have no value at all. With every increase of population the value of land rises; with every decrease it falls. ...
"The tax upon land values is,
therefore, the most just and equal
of all taxes. It falls only upon those who receive from society a
peculiar and valuable benefit, and upon them in proportion to the
benefit they receive. It is the taking by the community, for the use
of the community, that value which is the creation of the community.
It is the application the common property to common uses."... read
the whole article
Nic Tideman: Basic Tenets of the Incentive Taxation Philosophy
Equal Rights to Land
The component of this perspective that is likely to be most controversial is our belief that the value that individuals receive from the exclusive use of land should be collected publicly. As this idea is reflected in our name and central to our philosophy, we now discuss it in some detail.
It is because land was not created by human effort that land titles are privileges, for which fees are properly collected. A plot of land is a bit of space on the earth, with
All of these features that give value to a plot of land.
None of them resulted from effort on the part of the person who has title to the plot.
The unimproved value of land is in no way attributable to actions of the person who holds title to the land.
Of course, when land is used, people add improvements, and the value resulting from the addition of improvements to land is value to which a user of land can have a respectable claim. Thus the fee that the public can properly require of the user of improved land is the rent that the land would command if it were unimproved. This fee should not be higher for land that is extensively improved than for similarly situated land that is less highly improved. The art of assessment, discussed in a later section, deals with the estimation of such values.Nic Tideman: The Ethics of Coercion in Public Finance
Replacing Existing Taxes
When we say that the appropriate recipient of rent is the public treasury, it should be understood that this is not in addition to existing sources of public revenue, but rather instead of existing sources of public revenue.
While one might call such fees "taxes," we consider that designation inappropriate, because the word "tax" connotes an exaction from someone of something to which he or she has a just claim, and we deny that there are such just claims with respect to land. We expect that the collection of fees for the full value of opportunities assigned by governments would provide adequate revenue for all necessary government expenditures. ... Read the whole article
If land were uniform in its economic potential and there were no depletable natural resources, the application of such a rule would be straightforward. But land is not economically uniform and there are depletable natural resources, so the problem of equal access is conceptually more difficult.
To consider a simple case first, suppose that there is no disagreement about the relative value of land in different places and that there are no depletable natural resources. Equal access to natural opportunities is satisfied if the ratio of aggregate land rent to population is the same in all jurisdictions. Equal access is also satisfied if there is a set of transfer payments among jurisdictions, such that the ratio of the sum of aggregate land rent and net transfers received to population is the same in all jurisdictions.
The rent of land in these formulas is not calculated on a site-by-site basis, but rather on an aggregate basis, under the assumption that there are no man-made improvements in the territory being evaluated. Thus, in asking whether the United States was claiming more than its share of natural opportunities, one would ask what the rental value of the territory occupied by the U.S. would be if it were completely devoid of human improvements and human habitation, and the only bidders were other nations or their citizens. A similar calculation would be made for every other nation. Of course there can be no guarantee of agreement about such valuations, but agreement on the need to make such estimates and to try to reach consensus on their magnitudes would constitute enormous progress in global justice.
Next, suppose that there are depletable natural resources. This raises two new issues: appropriate depletion and intergenerational equity. Appropriate depletion is depletion on a path that maximizes the present value of net returns from using a resource. Devising a set of incentives that identify and achieve appropriate depletion is not an issue of justice and is therefore outside the scope of this paper. ... Read the whole article
Mason Gaffney: Land as a Distinctive Factor of Production
High land values may also affect interest rates indirectly by reducing saving and the supply of capital. The existence of high land rents and values, like the ownership of slaves, tends to satisfy the need for accumulation of assets without any actual capital formation.
d. Public policy needs to promote capital formation but not land creation. For creating land, thrift is not needed, nor can it avail: no man can create land. Thrift creates no land, and the value of land, however high, stimulates no thrift. Land rent may be taxed heavily without discouraging capital formation. Indeed it would certainly encourage capital formation to lower the level of land prices, because there is a diminishing marginal utility of assets to private holders. The loss of land values would stimulate new saving to make up the loss.
Let buyers expect land's cash flow to rise annually by a growth coefficient, G, and the valuation formula is cash flow divided by the interest rate minus the growth rate (I-G), rather than I alone. Now let the interest rate double, and the present value is cut to less than half.
Or let land be yielding a nominal current cash flow and to be held in anticipation of a higher use to begin 10 years down the road, and thirty years after that to be renewed for an even higher use. Let there be a whiff of oil, or the floating value of a shopping center, or the possible extension of a freeway and a new water supply paid by others. Let there be a fear (or hope) that Washington will debauch the currency sometime again in this century, or that another Howard Jarvis will cut land taxes some more, or that future building costs will fall: any and all of these, which are common and familiar expectations, make present values of land more sensitive to discount rates than in the simple basic capitalization model which is based on assumed constant cash flow in perpetuity. Read the whole article
Walter Rybeck: The Uncertain Future of the Metropolis
The single element that makes me apprehensive about the future of our cities is our land system. Tentacles of our misguided land policies are choking almost every vital aspect of metropolitan life. This is doubly worrisome, because the full dimensions of the land problem have barely surfaced in the public consciousness. To put it in the vernacular, most of us don't know what's eating us.
We have scarcely begun to identify the causes of today's city land problems. This is not to denigrate the legions of good folk -- officials and citizens alike -- who are trying desperately to cope with the daily disasters. But without a better notion of what is producing these disasters, we are unlikely to stem the flood.
A major problem, certainly, is our distorted land system that operates around the clock and around the calendar, and under the full sanction of the law. It rips off the poor, saps small business, and deprives municipalities of their rightful revenue.
The people as a whole create land values, not only by their presence, but also through participation in government, as taxpayers. Schools, firehouses, streets, police, water lines -- the whole gamut of public works and services that enhance a neighborhood are converted into higher land values. The taxpayers of the entire country, through federal aid for our multi-billion-dollar Metrorail project, have been boosting Washington, D.C. land values mightily.
Not all land values are manmade. Inherent qualities also give land special advantages: fertile soils in farming districts, scenic views in residential areas, subsurface riches of coal, oil, and minerals. None of us, as landlords, tenants, or governments, can lay claim to having created these values. The people who have been drawing up an international law of the Seas have characterized these natural endowments as "the common heritage of mankind", where no people, individually or collectively, produce these land values, it is difficult to argue with the conclusion that they belong to all people equally.
If the institution of private property has a sound foundation, and I believe it does, then it rests on the principle that people have a right to reap what they sow, to retain for themselves what they themselves produce or earn. Land values, produced by all of society, and by nature, do not conform to this prescription. ...
Decade after decade, billions of dollars in urban land values are being siphoned off by a narrowing class that has no ethical or economic claim to them. To be outraged when a few ghetto dwellers, in an occasional frenzy of despair, engage in looting on a relatively miniscule scale, but to remain indifferent to this massive, wholesale looting, is worse than hypocritical. It is to ignore a catastrophic social maladjustment, more severe, I believe, than anything the U.S. has experienced since slavery. ...
But I sense that we are drifting rapidly towards a landlord-dominated society. ...
Before that happens, the opportunity awaits to see whether a reasonably free economy can still be made to work. Unless we tackle the land question, and the looting of America, that game may be forfeited.
The future of the metropolis is uncertain. The choice is ours. We can intervene in the way society is now headed, to preserve the American dream. Or, we can continue along the present path and await the American nightmare. Read the whole article
Jeff Smith and Kris Nelson: Giving Life to the Property Tax Shift (PTS)
John Muir is right. "Tug on any one thing and find it connected to everything else in the universe." Tug on the property tax and find it connected to urban slums, farmland loss, political favoritism, and unearned equity with disrupted neighborhood tenure. Echoing Thoreau, the more familiar reforms have failed to address this many-headed hydra at its root. To think that the root could be chopped by a mere shift in the property tax base -- from buildings to land -- must seem like the epitome of unfounded faith. Yet the evidence shows that state and local tax activists do have a powerful, if subtle, tool at their disposal. The "stick" spurring efficient use of land is a higher tax rate upon land, up to even the site's full annual value. The "carrot" rewarding efficient use of land is a lower or zero tax rate upon improvements. ...
What's won or lost is a value generated by society. That is, land rises in value
While the PTS is already gaining attention, there are issues which, were they addressed, would facilitate the spread of the idea.
Jeff Smith: How Profit Shapes Urban Space
Without spending a penny of subsidy, cities can make urban renewal more profitable than suburban development. How is about as commonsensical as Einsteinian physics, but like "e=mc2", it works. The trick is to forget subsidies and lower one tax while raising another. That is, levy a tax or charge a fee to collect land value while eliminating any tax on buildings or improvements. ...
The present property tax works backwards, like an intruder from the anti-universe. It increases as owners improve their property; it decreases when owners let buildings dilapidate. "Save money, create slums," cities tell owners.
Some owners do keep prime sites covered with parking lots or abandoned buildings while waiting for land values to rise. "Good numbers are hard to come by," notes Bill Batt, former fiscal policy researcher for the New York legislature, "but easily a quarter of a US city is under-utilized." Thus urban cores decay, an entropy that seems natural and inevitable yet is policy-induced.
If the property tax is a centrifugal force that flings structures outward, its opposite is a land levy, a centripetal force that pulls development inward. To pay this charge, owners try to put their parcels to better use. "Owners of the most valuable sites, paying the most, try hardest," explains Tom Gihring, a Seattle-based consultant.. "Since the most valuable lots lie about the center, it is the center which draws development." In-fill happens. ...
The world looks different to owners dozing at the wheel, waiting for land values to rise. Title-holders keeping prime downtown sites vastly underutilized "now pay only, say, $25,000 per year in property tax for a half block," figures Dr. Mason Gaffney of the University of California at Riverside. "Post-PTS (property tax shift), these owners of parking lots and abandoned warehouses might have to part with three times that amount each year." At $75,000 per annum, no longer could they afford to let prime sites lie relatively idle. "They'll put their land to uses that generate much more revenue than does an empty building or car-covered lot," adds Gaffney. "They'll get busy building apartments, stores, offices, schools, theaters, mixing all uses together to maximize their return."
Post-PTS, would these speculators turned developers find customers? Or would potential customers continue to set up shop and home out in the cheaper 'burbs? Many house-hunters are drawn to where all the amenities are in walking distance. Many shopkeepers locate where people walk about. Other businesses collect themselves close to their suppliers and customers. There are plenty of takers for new downtown development.
At least that's what land values tell us. Land values merely reflect the desirability of locations. The more people want on, the more they must pay. The lots that people are willing to pay the most for are the heart of the city. ...
In New York, the city council keeps Manhattan’s Central Park unbuilt not because Greens rule the Big Apple but because property values overall are higher with the park than with luxury condos on the site. Land value is at its maximum when land use is at its optimum - mixed use including non-use. Batt adds, "the higher land value is, the more revenue there is for public benefit. Limiting a locality’s funding sources to land value puts government squarely on the side of the land’s health." ...
... Land value in many cities is astronomical. Tapping it, a locality could fund basic services, repeal other taxes, and pay residents this income supplement from the surplus, much like Alaska’s oil dividend (that Gaffney consulted on). Being included in the apportioning of ground rent, residents might be more likely to warm up to the idea and urge its adoption. And the bigger the share, the stronger the longing. ...
Although society may have a feeble claim to many of the things it taxes, land value is precisely what society should not forgo. It’s not lone owners but the community who generates this value by its infrastructure and its mere presence. Leaving ground rent uncollected constitutes a "giving" that communities and eco-systems can ill afford. Let's wean owners from socially-generated site values and make urgent their hunger, and they'll hunt up their own built value where it's needed.
To use land wisely, her value needs to be disbursed fairly. Collecting land value while removing taxes upon buildings organically puts structures where they’re supposed to go. The PTS can do so as long as we ride this planet around the sun. Read the whole article
Herbert J. G. Bab: Property Tax -- Cause of Unemployment (circa 1964)
... The purpose of my talk is to show that the relation of property taxation to unemployment and lack of economic growth is that of cause to effect. ...
Ricardo believed that ground rents and the value of land have a tendency to rise continuously and that this benefits solely the landowners. The progress of industrialization and urbanization in the second half of the 19th century resulted in a rapid increase in the value of urban land and the owners of such land reaped tremendous profits. This led John Stuart Mill to observe, that "Only the landowners grow richer, as it were in their sleep without working, risking and economizing". He called for the taxation of land in order to recapture the unearned increment accruing to the land owners.
The apostle of land taxation is Henry George. In his famous book Progress and Poverty he develops his single tax theory. He tries to show that poverty and unemployment and other evils are caused by the land monopolists. Henry George's theory is similar to that developed by John Stuart Mill. Land values are based on ground rents which are created by the community and not by the land owners. Therefore the community is justified in recapturing these rents by a single tax on land. ...
A defect of our property tax system that is seldom mentioned is that it puts a premium on obsolescence and penalizes new housing. This is so because property taxes are ad valorem taxes. Every piece of real estate except land is subject to depreciation. Thus the owners of old and obsolete real estate will pay little in taxes, while newly constructed buildings will bear the brunt of the tax.
This characteristic of the property tax is obscured by the rising trends of land values, which in many cases offset the loss in value of the improvement. Increases in tax rates and differences in assessment procedures and practices further hide the fact that ad valorem taxes favor obsolete real property.
Let us now turn to that part of the tax that is assessed on land. Increases in population, immigration from the farms and other forces have led to a rapid increase in the population of our large cities and metropolitan areas. Population pressure is bound to increase the value of urban land. Yet an adequate system of land taxation could have prevented the steep rise in urban land values.
Economists agree that taxes on land can not be shifted but are capitalized. For instance a lot having a value of $10,000 -- will have an imputed or expected income of $500 -- assuming a 5% rate of capitalization. A 2-1/2% yearly "ad valorem" tax would reduce the imputed income by $250 -- or 50%. Such a tax would naturally reduce the value of the land by the same percentage. ...
For these reasons increases in land values can be prevented by taxing land at an appropriate rate. Yet urban land values have increased tremendously during recent years. For instance in Los Angeles county the assessed value of land increased from $1,972 millions in 1952 to $4,002 millions in 1962, an increase of a little over 100%. The assessed values, are supposed to represent 25% of the market value. Thus the unearned increment in land values during this period amounted to not less than $8 billions. Even this figure is an understatement because it is based on assessed values and land is greatly underassessed. While land values have risen by about 10% yearly, property taxes assessed on land averaged about 1.5%. Thus a person owning vacant or underimproved land would have earned about 8 1/2% per year just by withholding land from its proper use.
A higher tax on vacant or unimproved land would make it unprofitable to hold such lands. It will tax land into better use and it will lead to a spurt in construction activity. While all other taxes are deterrents to employment and economic growth, though to a varying extent, land taxes are the only genuine incentive taxes.
Inflated land values must necessarily increase the cost of new homes, the cost of home-ownership and rentals. It discourages residential construction, prices many families out of the housing market and aggravates the housing shortage. ...
Homeowners who bought their homes some time in the past can reap large profits when selling them. Old homes should sell at a lower price, because of the depreciation of the building, but in most cases the depreciation of the building is more than offset by the increased value of the lot. This increased value forces buyers to increase their down payments or to increase their loan are higher, many families are priced out of the market. ...
We have discussed the sharp increase in the level of rents that has taken place during these last years. These increases reflect the steep rise in land values that have taken place in almost all sections of our cities. The tax assessed on the improvements has discouraged the construction of more and better housing. At the same time, the tax assessed on land has been too low to induce owners to sell, improve, or replace their rental properties.
Property taxes shape the pattern of our cities.
Relatively low taxes on land and high taxes on improvements will discourage the owners of vacant lots or underdeveloped land, such as that used for parking lots, gas stations, hamburger stands, etc., from improving their land. It will encourage them to keep the land out of use and to sell later at a profit. This will create an artificial shortage of land, which in turn will lead to urban blight and irregular, leapfrog city growth.
This urban sprawl makes our cities look ugly, but it has many disadvantages besides:
It is generally believed that zoning laws are a very effective tool to control the growth of our cities. Zoning laws determine the best possible use of urban land. Yet nobody can be forced to improve his land and to build unless there is an incentive. This can be achieved by taxing land at a rate that will make it unprofitable to hold it without improving it.
The city planner needs land taxation just as he needs zoning laws. With both these tools the orderly growth of our cities will be assured, but -- as experience has shown -- without land taxation rational and efficient land usage becomes impossible. ...
The most serious defect in the administration of property taxation is the continuous, widespread and enormous underassessment of land. A survey made recently found that in 9 California counties, vacant lots and acreage were assessed at only 5.3% of the cash value, while residential property was assessed at 19.3% of its value. The illegal underassessment of land deprives local governments of millions of dollars of revenues. Moreover, it further aggravates the serious defects of property taxation.
We have analyzed the effects of property taxation on improvements as distinguished from those caused by the incidence of these taxes on land.
The paradox of property taxation consists in the fact that lower rates on improvements produce the same results as higher rates on land and conversely higher rates on improvements produce the same results as lower rates on land.
The reform of our property tax system must be regarded as one of the most urgent and important task we face today. ... Read the whole article
The Most Rev. Dr Thomas Nulty, Roman Catholic Bishop of Meath (Ireland): Back to the Land (1881)
Land Values intended by Providence for Public Purposes.
I have already observed that the chief peculiarity of the land of a country was that its value was never stationary, that it was always progressive and rising, that in fact it increased in a direct ratio with the growth of the population and the advancing progress of the industry of the nation.
It would seem as if Providence had destined the land to serve as a large economical reservoir, to catch, to collect and preserve the overflowing streams of wealth that are constantly escaping from the great public industrial works that are always going on in communities that are progressive and prosperous.
Besides the permanent improvements that are made in the land itself, and which increase its productiveness and value, there are other industrial works not carried out on the land itself, but on its surroundings and in its vicinity, and which enhance its value very considerably. A new road is made for the accommodation of a district; a new bridge is thrown across a river or a stream to make two important localities accessible to each other; a new railway passes close by and connects it with certain large and important centres of industry; a new factory or a new mill is erected, or a new town is built in the neighbourhood.
Industrial works like these add very materially to the value of all the land in their vicinity. It is a well-known fact that a new railway has in several instances doubled the value of the land through which it passed, in consequence of the increased facilities it had afforded for the sale of its agricultural products.
In every state of society, which is progressive and improving, such industrial works are continually going on, and hence the value of the land is rising also everywhere. But its value rises enormously with the enlarged growth of the population of a nation, and with the increased productiveness of its industry. ...
Landlords Sow Not, But They
Mark Twain Archimedes
I know of a mechanical force more powerful than anything the vaunting engineer of Syracuse ever dreamed of. It is the force of land monopoly; it is a screw and lever all in one; it will screw the last penny out of a man's pocket, and bend everything on earth to its own despotic will. Give me the private ownership of all the land, and will I move the earth? No; but I will do more. I will undertake to make slaves of all the human beings on the face of it. Not chattel slaves exactly, but slaves nevertheless. What an idiot I would be to make chattel slaves of them. I would have to find them salts and senna when they were sick, and whip them to work when they were lazy.
No, it is not good enough. Under the system I propose the fools would imagine they were all free. I would get a maximum of results, and have no responsibility whatever. They would cultivate the soil; they would dive into the bowels of the earth for its hidden treasures; they would build cities and construct railways and telegraphs; their ships would navigate the ocean; they would work and work, and invent and contrive; their warehouses would be full, their markets glutted, and:
That everything they made would belong to me.
It would be this way, you see: As
I owned all the land, they would
of course, have to pay me rent. They could not reasonably expect me
to allow them the use of the land for nothing. I am not a hard man,
and in fixing the rent I would be very liberal with them. I would
allow them, in fact, to fix it themselves. What could be fairer? Here
is a piece of land, let us say, it might be a farm, it might be a
building site, or it might be something else - if there was only one
man who wanted it, of course he would not offer me much, but if the
land be really worth anything such a circumstance is not likely to
happen. On the contrary, there would be a number who would want it,
and they would go on bidding and bidding one against the other, in
order to get it. I should accept the
highest offer - what could be
fairer? Every increase of population, extension of trade, every
advance in the arts and sciences would, as we all know, increase the
value of land, and the competition that would naturally arise would
continue to force rents upward, so much so, that in many cases the
tenants would have little or nothing left for themselves. ...
the whole piece
Everett Gross: Explaining Rent
Sometimes it's difficult for people to understand the meaning of "rent" as an economic concept. One way I have of explaining it doesn't use the word rent. I just use a little analogy.
I'm from Crete, Nebraska. It's a small town of 5,000 people.
Suppose a man comes to Crete, and he wants to start a business. He needs a building, but first he needs a piece of ground to build this new building on. So he looks up a real estate agent, describes what he wants, and the real estate agent shows him a parcel that's just right for his needs. The man asks the agent, "All right, now how much money do you want for this land?" The agent says, "It's worth $50,000." The man says, "Why is it worth $50,000?" And the real estate agent points out that "The school is good, the roads are good, the police department is good, the rescue crew is good and very fast, and business is good here."
Now I don't need to use the word "rent" in that explanation.Mason Gaffney: Cannan's Law
Alfred Marshall, disguising his boldness under a mousy writing style, proposed an even stronger supplement to the land tax. He would make the tax base the capital value of land, rather than the annual cash value, to tap "the part of the real annual value of land which does not appear in a money form … ". Repeating himself for emphasis, he says that taxing capital value will "bring under taxation some real income, which has escaped taxation merely because it does not appear above the surface in a money form." That is, Marshall wants the national tax to fall on imputed land income, an enormous annual flow of value that now totally escapes income taxation.
And what is the value of land under old buildings? Marshall writes no nonsense about seeking the depreciated value of the old building first. Land value is the opportunity cost of the site itself: what land would bring "if cleared of buildings and sold in a free market." (32) Imagine how that set of policies, from this prissy pillar of property and propriety, would radicalize national taxation in any modern state. ... read the whole article
Fred Foldvary: A Geoist Robinson Crusoe Story
Once upon a time, Robinson G. Crusoe was the only survivor of a ship that sunk. He floated on a piece of wood to an unpopulated island. Robinson was an absolute geoist. He believed with his mind, heart, and soul that everyone should have an equal share of land rent.
Since he was the only person on
this island, it was all his. He
surveyed the island and found that the only crop available for
cultivation was alfalfa sprouts. The land was divided into 5 grades
that could grow 8, 6, 4, 2, and zero bushels of alfalfa sprouts per
month. There was one acre each for 8, 6, and 4, and 100 acres of
2-bushel land. For 8 hours per day of labor, he could work 4 acres. So
he could grow, per month, 8+6+4+2 = 20 bushels of alfalfa sprouts, much
more than enough to feed on.
Robinson realized that it did not matter which lands he possessed. He could possess better land, but so long as the rent is split equally, if the wage rate is equal, their income will not be affected. Lawyers say that possession is nine tenths of the law, but the law of rent says, possession does not matter.
If the rent is split equally, those who possess land and want to maximize their income will possess only that amount that maximizes income for all. If they possess too much land, they would drive wages down and rents up, leaving less for the possessors. So it does not matter who owns what land, if the rent is equally split. ... Read the whole piece
to email this page to a friend: right click, choose "send"
Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper