What "Land" Includes...
When we think of land, we think of soil and of sites. But in the larger
sense, Land includes many other kinds of things. And many of these are
objects of taxation. Since no individual or corporation or government entity
can create more of them, these scarce items get bid up. Why should that value
be subject to privatization? Why should they be sold from one corporation
to another, as broadcast frequencies and rush hour landing rights at congested
airports currently are traded? A better way, a just way, would be for the
holders of those scarce resources to pay the rest of us for the right to
use them. After that rent is paid, the profits should be theirs to keep,
their rightful gain (as long as they haven't harmed the environment or others
Did you know that the royalties paid by oil companies today on oil extracted
from under American soil were set in the 1870s? Do you think that the American
commons is receiving the amount it should be receiving? How do you think
that that shareholders of the oil companies are making out in this deal?
Bill Batt: Painless Taxation
Real tax reform could do away with those taxes that are resented
by the large proportion of our population. We could replace all taxes on
wages and on interest by instead taxing economic rent. Rent is windfall income;
it is income that arises not from the efforts of any person or corporation;
it comes about as a surplus gain from common social enterprise. There is
ample moral warrant for society to lay claim to that which it has created,
as well as to that which no individual or party has earned. Analysis increasingly
makes clear that economic rent in all its forms is far larger than official
government figures indicate; in fact it is likely sufficient to supplant
all current taxes on labor and capital (wages and interest) which are acknowledged
to have so many negative effects. Recovering economic rent in all its manifestations
by taxing its various bases actually can foster economic performance and
yield other benefits that make it the natural source of revenue for governments.
Such a tax is essentially painless. ...
Any tax on capital has its downside effects, so that taxing savings causes
people to save less, taxing consumption causes people to buy less, and taxing
buildings causes people to build less. The result is that economists as well
as businessmen usually frown upon taxing capital. Another alternative is
to tax labor, but it is even more widely understood that taxing labor normally
discourages people from working as much as they would in the absence of a
tax. From this comes sentiment against taxing labor, even though for want
of any alternative, people have today commonly come to accept it as a necessity.
But electing to tax labor, just as for taxing capital, forecloses a discussion
of the virtues of taxing land — not necessarily land as earth, but
rather land as location. Yet land rent is the most attractive tax base of
all, as rent is not earned; it is windfall income, entirely the result of
being well situated in any market of scarce natural resources and where community
demand (rather than one's own efforts) leads to an appreciation of that land's
price. To be sure many people have learned to position themselves in situations
where a land's market value is likely to rise — indeed these people
come to think of themselves as astute investors. But the fact is that that
market gain is not of their own doing at all; it is the result of common
enterprise creating a surplus that comes to settle on land sites. An investment
in land, in any form it might take, is speculation in greater or lesser degree.
Land in all its forms is a tax base that also conforms well to all the classic
principles of sound tax theory as enumerated above. Land is classically
taken to mean not just surfaces of the earth but places in time, in space,
medium whether it be solid, liquid or gas, and even as a form of light, in
the electromagnetic spectrum, and in life forms. One needs to return
to 19th century classical economic definitions of the factors of production
the separate significance of land as it was understood in its manifold forms.
One should ask how it is that land, so important to 19th century classical
economic theory, has been given so little attention today in neoclassical
economics. This is a story only now recovered from the dusty archives of
academic economic history. Once understood and appreciated, it may be one
of the greatest, if very silent, political revolutions of world history. ... read the whole article
Mason Gaffney: Property
Priority #1. Safeguarding the property
Priority #2: Enforce Good Laws
- Reassess Land Frequently
- Use the Building-Residual Method of Allocating Value
- Federal Income Taxes
Priority #3. De-Balkanize Tax Enclaves
- A. Rich and Poor
- B. Timber and Timberland
- The Role of Timber and Timberland
- Two More Areas Deserving Attention
- Offshore Oil
- Tax All Natural Resources Uniformly
Priority #4. What Tax to Fight First?
Priority #5: Make Landowners Pay Their Taxes
Tax All Natural Resources Uniformly and Comprehensively
Advances in the arts and sciences keep disclosing
new values in old resources. Owing to institutional lag, these values can
grow huge without finding their way onto the tax rolls. A thoughtless reaction
is, "Bureaucrats want to tax everything!" The point is to tax all natural resources uniformly
and comprehensively, to end the lowering taxes on incomes. productive business,
and sales! Land taxation will not win wide support, nor will it deserve
to, if it is perceived as a tax focusing on median homeowners, farmers, and
merchants, while exempting oilmen, media tycoons, and timber barons.
In addition to newly awakened resources,
many resources long known (like water)
are held in odd tenures that have not been recognized as taxable property,
although they should be. Any comprehensive move toward using resource rents
for public revenue must include these varied resources and tenures. I have
a list of 30 or so, too many to treat here. To give a sampling, they include
- pollution easements over air and water;
- aircraft landing time-slots and gates;
- benefits from covenants;
- access easements;
- power drops;
- the gene pool;
- grazing licenses;
- radio spectrum;
- shipping lanes;
- standing to sue;
- strata titles;
- use of the streets;
- wind; and
In tapping these many
varieties of resources and tenures for public revenues, citizens and their
representatives may have to set priorities. Two practical criteria rise to
Rev. A. C. Auchmuty: Gems from George, a
themed collection of excerpts from the writings of Henry George (with
links to sources)
HE term Land in political economy means the natural or passive element in
production, and includes the whole external world accessible to man, with
all its powers, qualities, and products, except perhaps those portions of
it which are for the time included in man's body or in his products, and
which therefore temporarily belong to the categories, man and wealth, passing
again in their reabsorption by nature into the category, land. — The
Science of Political Economy — unabridged:
Book III, Chapter 14: The Production of Wealth, Order of the Three Factors
of Production • abridged:
Part III, Chapter 10: Order of the Three Factors of Production
THAT land is only a passive factor in production must be carefully kept in mind.
. . . Land cannot act, it can only be acted upon. . . . Nor is this principle
changed or avoided when we use the word land as expressive of the people who
own land. . . .
That the persons whom we call landowners may contribute their labor or their
capital to production is of course true, but that they should contribute to production
as landowners, and by virtue of that ownership, is as ridiculously impossible
as that the belief of a lunatic in his ownership of the moon should be the cause
of her brilliancy. — The Science of Political Economy unabridged:
Book III, Chapter 15, The Production of Wealth: The First Factor of Production — Land • abridged:
Part III, Chapter 10: Order of the Three Factors of Production
I AM writing these pages on the shore of Long Island, where the Bay of
New York contracts to what is called the Narrows, nearly opposite the point
where our legalized robbers, the Custom-House officers, board incoming steamers
to ask strangers to take their first American swear, and where, if false
oaths really colored the atmosphere the air would be bluer than is the sky
on this gracious day. I turn from my writing-machine to the window, and drink
in, with a pleasure that never seems to pall, the glorious panorama.
"What do you see?" If in ordinary talk I were asked this, I should of course
say, "I see land and water and sky, ships and houses, and light clouds, and the
sun drawing to its setting over the low green hills of Staten Island and illuminating
But if the question refer to the terms of political economy, I should say, "I
see land and wealth." Land, which is the natural factor of production; and
wealth, which is the natural factor so changed by the exertion of the human
factor, labor, as to fit it for the satisfaction of human desires. For water
and clouds, sky and sun, and the stars that will appear when the sun is sunk,
are, in the terminology of political economy, as much land as is the dry surface
of the earth to which we narrow the meaning of the word in ordinary talk. And
the window through which I look; the flowers in the garden; the planted trees
of the orchard; the cow that is browsing beneath them; the Shore Road under
the window; the vessels that lie at anchor near the bank, and the little pier
that juts out from it; the trans-Atlantic liner steaming through the channel;
the crowded pleasure-steamers passing by; the puffing tug with its line of
mud-scows; the fort and dwellings on the opposite side of the Narrows; the
lighthouse that will soon begin to cast its far-gleaming eye from Sandy Hook;
the big wooden elephant of Coney Island; and the graceful sweep of the Brooklyn
Bridge, that may be discovered from a little higher up; all alike fall into
the economic term wealth — land modified by labor so as to afford satisfaction
to human desires. All in this panorama that was before man came here, and would
remain were he to go, belongs to the economic category land; while all that
has been produced by labor belongs to the economic category wealth, so long
as it retains its quality of ministering to human desire.
But on the hither shore, in view from the window, is a little rectangular piece
of dry surface, evidently reclaimed from the line of water by filling in with
rocks and earth. What is that? In ordinary speech it is land, as distinguished
from water, and I should intelligibly indicate its origin by speaking of it
as "made land." But in the categories of political economy there is no place
for such a term as "made land." For the term land refers only and exclusively
to productive powers derived wholly from nature and not at all from industry,
and whatever is, and in so far as it is, derived from land by the exertion
of labor, is wealth. This bit of dry surface raised above the level
of the water by filling in stones and soil, is, in the economic category, not
land but wealth. It has land below it and around it, and the material of which
it is composed has been drawn from land; but in itself it is, in the proper
speech of political economy, wealth; just as truly as the ships I behold are
not land but wealth, though they too have land below them and around them and
are composed of material drawn from land. — The Science of Political
Book IV, Chapter 6, The Distribution of Wealth: Cause of Confusion as to Property • abridged
... go to "Gems from George"
Mason Gaffney: Sounding
the Revenue Potential of Land: Fifteen Lost Elements
kinds of natural resources, hitherto neglected or not classed with land,
show great revenue potential. Some examples are
- the radio spectrum;
- telecom relay sites;
- slots in the geosynchronous orbit;
- fishing quotas;
- quotas of all sorts on production and marketing;
- pollution permits;
- power drops;
- street parking spaces;
- driving on congested roads and through bottlenecks;
- mooring boats; etc.
forms of tenures to resources, omitted from standard tax rolls, show great
Leases on public lands give tenure, de
facto, but are often exempt because the public land is exempt.
- Often they are “sweetheart” leases, like grazing leases
in New Mexico and 16 other western states.
- Aircraft landing “slots” and “gates” are
protected by Federal power from local taxes.
- Water “rights” are mostly licenses, hence not real property,
hence generally exempt from property taxes.
- Resort homes and mineral claims and timber cutting rights
on Federal lands are “possessory interests,” sometimes not
on the tax rolls.
- Licenses assigning radio spectrum are “on” Federal property,
hence exempt from local taxes.
a class of “land-grabbing” capital whose value derives from its
ability to preempt common land.
- Vehicles on public land, whether parked or moving, preempt valuable
space and are a means of establishing a kind of mobile tenure. (Donald
Shoup reckons that potential revenues from street parking, now free, could
raise as much money as the entire property tax now does.)
- Boaters in large, fast, noisy, polluting vessels on small lakes
take over the lakes as if they owned them.
- Polluters in effect preempt de facto pollution easements over neighboring
lands, including the public lands in streets and parks.
- Owners of surfboards, ATVs, horses, snowmobiles, trail bikes, rifles
and the like impose a wide footprint over vast tracts of public and semi-public
land without paying rent.
Culturally we have a long way to go before
the American public realizes what our cowboy attitudes are doing to us, but
it’s time to start by collecting rent, directly or indirectly.
Leaseholds on the OCS (Outer Continental
Shelf) are outside state sovereignty, hence not subject to property taxes.
Their tenure was established by U.S. military might as recently as 1946, when
President Truman unilaterally extended our boundaries from the traditional
3-mile limit to 200 miles. That is not the end of it, however, for our military/diplomatic/financial
umbrellas undergird tenures of American nationals and allies in nations around
the world, and protect vessels at sea, even those flying foreign flags of “convenience” (i.e.
tax-avoidance). There is every reason why private beneficiaries of these tenures
should pay for their protection. Read the whole article
a synopsis of Robert V. Andelson and James M. Dawsey: From Wasteland
to Promised land: Liberation Theology for a Post-Marxist World
Beneath all ideologies, there are basic
factors and relationships that underlie economic behavior. To understand
the (otherwise inexplicable) omission of attention to land's economic importance,
it is useful to go back to these basics.
- The term "Land" refers to the whole material
universe, exclusive of people and their products. Not the creation
of human labor, yet essential to labor, it is the raw material from which
all wealth is fashioned. It includes not only soil and minerals, but water,
air, natural vegetation and wildlife, and all natural opportunities --
even those yet to be discovered. It is a passive factor of production,
yielding wealth only when labor is applied to it.
- Labor includes
all human powers, mental and physical, used directly or indirectly to produce
goods or to render service in exchange. Labor is often thought of as work
that is done for hire, at fixed wages, mainly excluded from the risk-taking
and decision-making that is normally classed under the heading of "entrepreneurship".
Yet labor, properly understood, includes all human exertion in production
-- including mental exertion. The payment to labor is called Wages. And it is important to remember
that the payment, or return, to labor does not include any returns that
are the result of monopoly.
- Capital is the
economic term that is most profoundly misunderstood and confused. For the
term to make sense in any systematic analysis of wealth distribution, we
must define capital in its classical sense as "wealth which is used to
aid in further production, instead of being directly consumed." Since production
is not completed until the product is in the hands of the consumer, products
on their way to market, or "wealth in the course of exchange," are also
the objective of all economic behavior is the satisfaction of human desires. Human beings always seek to satisfy their
desires with the least exertion: this self-evident proposition lies
at the heart of our concepts of economic value and exchange. The
primary thing needed for satisfaction is, of course, the tangible things,
made from natural resources, that satisfy human desires and have exchange
value. Things that meet these four fundamental criteria are termed "wealth".
But money, bonds, and mortgages are but claims upon and measures of this
value; they are not the wealth they symbolize.
A clear understanding of these basic definitions points immediately
to the primacy of land as an economic factor. Human beings have inescapable
material needs of food, clothing and shelter. Regardless of how long a chain
of exchanges they may pass through in a modern economy, these things ultimately
have their source in the land; they can come from nowhere else. Human
beings need land in order to live. But if we must pay rent to a private land "owner" for
access to the gifts of nature, it amounts to being charged a fee for our very
right to live. Read the whole synopsis
Mason Gaffney: Land
as a Distinctive Factor of Production
The classical economists treated land as distinct
from capital: "land, labor and capital" were the three basic "factors
of production." They were mutually exclusive. They were comprehensive,
including all economic agents. Each was also "limitational," meaning
at least some of each was needed for all economic activity (v. A9, below)1 They made a
coherent system, like Humboldt’s Cosmos, in the spirit of The Enlightenment
that spawned them both.
denied the distinction and undertook to purge land from economese.
- Many of them, following John B. Clark and Frank Knight, still
deny the distinction as I explain in The Corruption of Economics, a
companion volume in this series.
- Many treat the matter by seizing on and stressing all similarities
of land and capital, while ignoring all differences.
- Some invent gray areas that seem to fuse land and capital, present
them as typical, and quickly move on.
- Many more simply ignore land, which has the effect of accepting
the Clark-Knight verdict in practice.
- Others uneasily finesse and blur the issue by writing "land" in
quotes, or trivializing its value, or referring vaguely to "quasi-rents" to
comprehend a broad spectrum of incomes both from land and other factors.
What ever possessed the neo-classicals
to leave such a mess? One needs to know something of their times
and politics. J.B. Clark and E.R.A. Seligman of Columbia University
were obsessed with deflecting proposals, strongly supported at the time
and place they wrote, to focus taxation on land. Henry
George, after all, was nearly elected Mayor of New York City in 1886
and 1897. Frank Knight, founder of The Chicago School, followed
them closely. That explains why some of the points made herein
may seem obvious to readers who have been spared the formal conditioning
imposed on graduate students in economics. In graduate training,
however, the obvious is obscured, silenced, or denied. Hundreds of books on economic
theory are published with "land" absent from the index. Denial
is reinforced by dominant figures using sophistical, pedantic cant, which
students learn to ape to distinguish themselves from the laity and advance
their careers.2 ...
Common micro theory finesses Time. It deals with economic
relations as though they occurred at a point in time (and space as well); as though they were relations
of coexistence, rather than a cavalcade of events in sequence. Sometimes
two points are allowed (short run and long). Thus micro theory can
ignore the birth of capital, its growth, maturity, senescence, death, burial,
and replacement, vital elements of its difference from land. Time,
and relations of sequence, are hived off to the far satellite of "finance," usually
not even taught in departments of economics. ...
Land does have distinctive qualities for economic analysis and policy. This
essay gives 10 primary reasons why land is distinct from capital (and of
course from mankind itself) as an economic input. Then it gives 18
important economic consequences thereof, and their policy implications. Making
land markets, land policy, and land taxation work well for the general
welfare is a major challenge for economists and statesmen. They have
neglected it too long by crediting and following the peculiar neo-classical
sophisms that obscure or deny all distinctions between land and capital.
Land is not produced nor reproducible
Land is not produced, it was created. It is the world,
the planet from which man evolved, with the sun that energizes it and the
orbit that tempers it. Land is a free gift, variously expressed in
different philosophies as Spaceship Earth, the Big Blue Marble, God's Gift,
Creation, Gaia, The Promised Land, or nature. Mankind did not create
The Earth with its space and resources, nor can we add to them. We
can only acquire them, often by fighting, or rent-seeking, or in other
counterproductive ways. Man at best improves and develops capacities
inherent in the free gift. It is disappointing, and should alert
us and make us suspicious, that economic analysis would ever purge out
this paramount, self-evident truth.
"Land" in economics means all natural resources and agents, with
their sites (locations and extensions in space). Land is not just
the matter occupying space: it is space.
It includes many things not colloquially called land, such as
- water and the beds under it,
- the radio spectrum,
- rights of way,
- take-off/landing time slots for aircraft,
- ambient air (the right to breathe it and the license to pollute),
- "air rights" to strata in the third dimension of cities,
- falling water,
- wild fish, game, and vegetation,
- natural scenery,
- the environment,
- the ecology,
- the natural gene pool, etc.
- Any franchise, license or privilege giving territorial rights
is a species of easement over land.
- Your driver's license is a right to use land;
- red lights remind us of the critical value of space at central
locations, since two objects cannot occupy the same space at the
- It is worth a lot to have the right-of-way, as railroads do.
Economic land excludes many things, too, that are colloquially
called land. It excludes land-fill, for example, by which many
cities are extended into shallow waters. The site and seabed are
properly land; the land-fill is an improvement. There is no "made
land" in the economic sense: it is reallocated from other uses. Expanding
cities take farmland from producing food and fiber, much of it for the
expanding city itself. Filled land in shallow water near cities
is taken away from anglers and sailors and viewers and ecologists, who
now routinely organize to prevent it being "made" away with. Drained
and filled wetlands are taken away from endangered species, as well as
from their primal role as filters protecting coastal waters from river
trash and pollutants. Thanks to the myopia and dereliction of economists,
it has taken militant environmentalists to carry home this truth, developing
in their struggle to be heard and understood a deep skepticism of economists
and their "way of thinking." Some economists and environmentalists are
now coming to terms with each other, after decades of mutual shunning. Too
many modern economists, however, still use their "way of thinking" to
seal out important new evidence that doesn't fit the model.
Capital (K) is that which has been produced but not yet used up. Capital
is formed by human thrift, forbearance, investment and production. Only
after mankind forms and makes capital does it bear much likeness to land,
in that they coexist. Ordinary micro-economics obscures the differences
because it deals mainly with relations of coexistence, ignoring the continual
formation and destruction of capital, ignoring time and relations of sequence. Thus
it excludes from its purview one of the prime differences between land
and capital. The life of capital, like that of people, is marked
by major sacraments of birth, growth, aging and death - all missing from
micro theory. Economic life is a cavalcade
in which the birth and death of capital are dated events. Micro
deals mainly with how existing resources are allocated at a moment in time,
not how they originate, grow, flourish, reproduce, age, die, and decompose.
Capital occupies space; land is space. In common micro
theory, resources and markets come together at a point not just in time
but in space. Again, it excludes from its purview one of the prime
qualities of land.6
is ironic that economists purport or affect to ape the methods of physics,
when they delete both space and time from their subject. If they
have borrowed from physics, they have taken the form without the substance.
For the reasons given, alone, land and capital are mutually exclusive. There
are, however, nine more, which follow. ...
Land as "site" (location plus extension) does not normally
wear out, depreciate, spoil, obsolesce, nor get used up by human activities
incident to occupancy and production. In contrast, capital depreciates from time and use,
routinely and by nature. After being formed, it must be conserved
from entropy by continual maintenance, repair, remodeling, safeguarding
against theft and fire, and so on.7 Like our
own bodies, it returns to dust; land is
the dust to which it returns. Inventories are depleted; moving
parts wear out; fixed capital depreciates with use and time. ...
No one can get more land without others keeping less. One
can acquire more capital by forming it through saving and investing. One
can consume more by working more, while others work no less. Land
is different: it is the most common basis of market power, therefore. ...
When demand grows for land in a specific area or neighborhood, land
cannot immigrate to meet the higher demand. It is true that land
elsewhere can be converted to the specific land use that is demanded. Some micro theorists
argue that this makes land as "mobile" as anything else, equating land
and capital. It dovetails with and reinforces their paradigm centered
on "the firm," a unit that can add unlimited inputs of all kinds in the
long run, and among which competition drives all profits to zero. This
rationalization overlooks the hoary adage of real estate: "value depends
on three factors, location, location, and location." What happens then
is not that supply rises to meet higher demand, but ground rent
Land is not convertible into capital, nor vice versa. Exchange
of land for capital has misled many into equating them, but only through
inadvertence and the fallacy of composition. Exchange is not interchange:
exchange does not change the quantity of either land or capital. Capital
is convertible into any other form of capital each time it turns over,
by using Capital Consumption Allowances, the proceedings of turnover, to
hire people actually to produce new capital. Capital may also be
disinvested and consumed, or augmented by new saving and investment. None
of those is true of land. ...
Land is indispensable to life, hence to economic activity. The
same is generally true of labor and capital, but less "absolutely". Land
can exist perfectly well without labor or capital, and support timber and
wildlife, but labor and capital cannot exist at all without at least some
land, and often a great deal of land. Substitution is limited. It
will not do just to have 57 varieties of labor, or of capital. There
must be at least some land. Remember, land includes space itself,
and a time-slot in it. It includes air and water, the environment
and the ecology and all original matter itself. Without land there
is nothing.20 Coupling this
with the non-reproduceability of land, and its fixity, land is distinctive.
old limerick puts it well.
- "A captious economist planned
- to live without access to land.
- He nearly succeeded,
- but found that he needed
- food, water, and somewhere to stand."
"Homelessness," a modem plague, is essentially
landlessness. A popular ditty from the 1930s includes the catchy line, "If
you can't pay the rent, you can live in a tent," but you can't do even that
without a campsite. Perhaps this is why modern economists have so little
to say about homelessness. Joblessness they have dismissed as part
of the vital economic function of "job-seeking," with which they have persuaded
at least themselves. The next logical step is that the person sleeping
in the doorway is not really homeless, but just engaged in the vital market
function of "home-seeking". Rather than seem totally absurd they are
simply silent, except to stress the "exclusionary principle" of private property
as the bedrock of their system, and their system as a panacea. ...
Land is traditionally subject to a host of legal and customary limits
on use and ownership. Covenants are found in land titles: seldom in titles
to cars or canned goods. Divided ownership is common, there is so much
about land to be owned. There are easements through, air rights
over, mineral rights under, and neighbors and zoning all around any parcel
of land. Changing lot lines is unavoidably a social process, there is
no other way.
A large share of the more valuable land in cities is held by estates. Public
and eleemosynary [non-profit] holders are preferentially tax exempt and often
without any visible motive to economize. Water licenses are held subject
to "use it or lose it" traditions leading to appalling waste. Broadcasting/telecasting
licenses are highly political. And so on. Only a resource with
the characteristics of land could be subject to such a wide range of non-economic
Amassing land is always done, can only be done, by shrinking the holdings
of others. To expand is to preempt. If A is to have more then B,
C, D et al. must have less, there is no other way. A can amass
more capital by saving, creating new capital, leaving B, C, D et al. with
as much as before. A can increase his labor income by working longer,
or harder, or smarter, producing more, leaving others with as much as before. He
and she together can also spawn more children: labor, like capital, is reproducible,
and indefinitely augmentable. Possessing land, however, means just one
thing: bumping others.
In the region of the mind, the thing possessed may be shared by all
with no diminution to anyone. No one's pleasure In Shakespeare, or Beethoven,
or understanding physics is any less because at the same time millions of others
have the same pleasure. Art, letters and science are the common property
of mankind, open to all who care to acquire them. The creative producer's
pleasure is in proportion to the number with whom he shares. The gratification
is from sharing, not excluding. The contrast with landholding is nearly
from Upton Sinclair, 1923, The Goose Step.
Amassing claims on wealth by creating and producing is not, therefore,
a threat to others. Amassing capital through saving does not weaken
or impoverish others. Producing goods does not interfere with others'
doing the same. One producer may drive another from a particular limited
market, but glutting one market increases real demand for the products of
other markets, and raises the real value of others' incomes by lowering prices. Amassing
land, however, has to deprive others, both relatively and absolutely. Concentrated
holding and control of land, therefore, have always been threats to the well-being
of those left out.
Conversely, the only way the landless, e.g. in South Africa, can get
land is from those who now have it. "Growth" is often advanced as the
solution to maldistribution, injustice and poverty, but that is mere temporizing
because land does not grow. When production and demand grow, land rents
rise. Of land it is starkly true, "the problem is not production, but
distribution". There is no production; only distribution. Read
the whole article
Fred E. Foldvary — The
Ultimate Tax Reform: Public Revenue from Land Rent
“Land,” in the language of economics, includes all natural resources:
the three-dimensional space on the surface of the Earth (including space
in and on water); material land such as minerals, water, and oil; the electromagnetic
spectrum; wildlife (including wild animals and forests); and satellite
The most important potential source of public revenue from land is real
estate sites. The income from land has been called “ground rent,” “economic
rent,” or just “rent.” The term “rent” here
will refer to the income only from the land, excluding what is paid for
of the improvements. The “economic rent” with respect to land
refers to the maximum that a tenant would bid for the use of the site.
I have called
this “geo-rent” to differentiate it from “rent” as
a payment for any resource or from the actual amount a tenant may pay,
which could be less than what the market could bear. ...
Impact on production
It is widely understood that when something is taxed, we get less of it.
As discussed above, this reduction in labor, production, and investment is
called the “excess burden” or “deadweight loss” of
taxation. Income taxation discourages work, sales and value-added taxes discourage
consumption, capital gains taxes discourage investment, and real property
taxes discourage building and improving property. Those taxes make the asset
or activity more costly, which then reduces the quantity bought of the thing
What makes land different is that its supply is fixed, and it is independent
of human action. When land value or rent is tapped for public revenue, the
land does not shrink, flee, or hide.
Recall the definition above, that land means natural resources. Real estate
sites consist of the three dimensional space within some boundary of title
or jurisdiction. We cannot import land to expand the amount of space. There
can be no land factories to produce more space. Chopping down trees, leveling
inclined slopes, and draining and filling in water only change the material
contents of the space, not the extent or location of the space. Building
taller just makes more space usable; the three-dimensional space does not
expand. ... read
the whole document
Fred Foldvary: Geo-Rent: A Plea to Public
all earthly space, not just solid surfaces. Land includes water
areas and the electro-magnetic spectrum, but the most important
potential source of public revenue from land is real estate sites.
The characteristics of land are well known.
- Land has a fixed supply. The space within some boundary
can be neither expanded nor contracted.
- Land is fixed not only in extent but also in mobility,
unlike people, who can migrate, or capital goods, which are
more or less mobile.
- Land cannot be imported. Even in the case of buildings
and other permanent structures, they differ from land in that
they are created by human enterprise, and in that their creators
decide where the structure will be located.
- Finally, land is not something to be discovered. Once
people figured out that the earth was a sphere, and its approximate
size, they knew that the land was “out there.” Entrepreneurship
is vital in discovering the best routes to land areas, it is
vital in discovering the potential value of those areas, but
it is not vital in discovering that the land is out there.
That was known all along. Read
the entire article
Bill Batt: Comment
on Parts of the NYS Legislative Tax Study Commission's 1985 study “Who
Pays New York Taxes?”
The question still begs to be answered, “why tax land?” And
what happens when we don’t tax land? Henry George answered
this more than a century ago more forcefully and clearly, perhaps,
than anyone has since. He recognized full well that the economic
surplus not expended by human hands or minds in the production
of capital wealth gravitates to land. Particular land sites come
to reflect the value of their strategic location for market exchanges
by assuming a price for their monopoly use. Regardless whether
those who acquire title to such sites use them to the full extent
of their potential, the flow of rent to such locations is commensurate
with their full capacity. This is why John Stuart Mill more than
a century ago observed that, “Landlords grow richer in
their sleep without working, risking or economizing. The increase
in the value of land, arising as it does from the efforts of
an entire community, should belong to the community and not to
the individual who might hold title.”33 Absent its recovery
by taxation this rent becomes a “free lunch” to opportunistically
situated titleholders. When offered for sale, the projected rental
value is capitalized in the present value for purposes of attaching
a market price and sold as a commodity. Yet simple justice calls
for the recovery in taxes what is the community’s creation.
Moreover, the failure to recover the land rent connected to sites
makes it necessary to tax productive activities in our economy,
and this leads to economic and technical inefficiency known as “deadweight
loss.”34 It means that the economy performs suboptimally.
Land, and by this Henry George meant any natural factor
of production not created by human hands or minds, is ours
only to use, not
to buy or sell as a commodity. In the equally immortal words
of Jefferson a century earlier, “The earth belongs in usufruct
to the living; . . . [It is] given as a common stock for men
to labor and live on.”35 This passage likely needs a bit
of parsing for the modern reader. The word usufruct, understood
since Roman times, has almost passed from use today. It means “the
right to use the property of another so long as its value is
not diminished.”36 Note also that Jefferson regarded the
earth as a “common stock;” not allotted to individuals
with possessory titles. Only the phrase “to the living” might
be subject to challenge by forward-looking environmentalists
who, taking an idea from Native American cultures, argue that “we
do not inherit the earth from our ancestors; we borrow it from
our children.” The presumption that real property titles
are acquired legitimately is a claim that does not withstand
scrutiny; rather all such titles owe their origin ultimately
to force or fraud.37
If we own the land sites that we occupy only in usufruct, and
the rent that derives from those sites is due to community enterprise,
it is not a large logical leap to argue that the community’s
recovery of that rent should be the proper source of taxation.
This is the Georgist argument: that the recapture of land rent
is the proper – indeed the natural – source of taxation.38
... read the whole
Nic Tideman: Comments on
the NTIA's Comprehensive Policy Review of Use and Management
of the Radio Frequency Spectrum
Both on grounds of justice and on grounds of efficiency, a market-based
system of allocating rights to use the radio frequency spectrum,
with public collection of the value of rights granted, is best.
The right to use the frequency spectrum is a scarce resource, whose
value is derived primarily from the mere existence of the spectrum
and not from the efforts of those who might be granted use. Thus
the whole population has equal respectable claims to use. But efficient
use of the resource requires exclusive assignment of frequencies
within particular geographical areas. Therefore justice is served
by requiring those who receive the privilege of use to compensate
the rest of the population for that privilege. ... read the whole article
Charles T. Root — Not a
Single Tax! (1925)
Every community, whatever its political name and extent — village,
city, state or province or nation — has its own normal,
unfailing income, growing with the growth of the community and
to meet necessary governmental expenditure.
To explain: Every community has an indefeasible original right
to the land on which it exists, and to all the natural, unmodified
properties and advantages of that particular area of the earth's
surface. To this land in its natural state, undrained, unfenced,
unfertilized, unplanted and unoccupied, including its waters, its
contents and its location, every individual in the community (which
may consist of any political unit selected) has an equal right,
while all the individuals together have a joint right to the value
for use which society has conferred upon these natural advantages.
This value for use is known as "Land Value," or by the
not particularly descriptive but generally adopted name of "Economic
Briefly defined the land value or economic rent of any piece
of ground is the largest annual amount voluntarily offered
exclusive use of that ground, or of an equivalent parcel,
independent of improvements thereon. Every holder or user of
land pays economic
rent, but he now pays most of it to the wrong party. The
aggregate economic rent of the territory occupied by any political
is, as has been stated above, always sufficient, usually more than
sufficient, for the legitimate expenses of the government
of that unit. As also stated above, the economic rent belongs
to the community,
and not to individual landowners. ... read
the whole article