Much of the land rent in the typical municipality's central business district leaves town. The landholders are not local residents who might spend their "take" in local stores. Rather, they are family trusts, corporations, real estate investment trusts and other corporate entities.

What are we to do about that? Think outside the income tax box! Stop taxing wages. Stop taxing profits. Stop taxing buildings. Just tax the land values on the sites in the central business district. Keep that money in town, recirculating to fund next year's common spending, on schools, streets, emergency services. Why tax the tenants, whether they are the folks who rent their homes from someone else or those who own retail, professional, manufacturing or other businesses? It seems very odd that first we ask tenants to pay their landlords, and then we ask them, as wage-earners, to pay a portion of their wages, and/or a tax on their purchases, to fund the very services that make the site they work on valuable. Even more perverse is to tax the commuters who live elsewhere to pay for a portion of the services that cause their employers to pay higher rents.

Our landlords make out very well, while the rent-payers end up paying twice. No wonder they're poor.

And we haven't yet talked about people who buy their own homes. They pay the previous owner -- who didn't do anything particular to create the land value -- for the right to occupy the house and land. The previous owner leaves town with tens or hundreds of thousands of dollars' worth of appreciation -- land appreciation, since houses, bring manmade, are depreciating, just like cars and TVs -- and our young people must stretch to afford a home within a reasonable distance of their work. They pay large percentages of their salaries -- and both husbands and wives work in most couples -- to the mortgage lender, and then they pay again in the form of income and sales taxes. The lucky town-departer, though, leaves having been paid for occupying his house, or more precisely, his land, for all those years. He leaves with land rent too, just as the individual and corporate landlords do.

Is this any way to run a society??? Georgists don't think so. We think we have a much better idea. Tax the land value. Bring the price of land down to affordability. Don't reward people for holding land; ask them to pay the community, in the form of taxes pegged to the land's value, for the use of that site. Simple? Yes. Easy to implement? Yup! Just? Yep! Different from what we do now? Yes, just as the end of slavery was different from the period in which some Americans enslaved other Americans. Will it lead to a freer society, a more equal distribution of wealth, income, leisure and opportunity? We are persuaded that it will.

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 always adequate 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 Rent."

Briefly defined the land value or economic rent of any piece of ground is the largest annual amount voluntarily offered for the 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 unit 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. ...

An illustration has already been given of the case of a piece of farm land. Let us take an example in a large city. Let us take a corner lot centrally located in New York City, the title to which lot is held by, say, Mr. John William Rhinelastor. This lot was a part of an old Dutch farm, and is an heirloom. It did not cost the present owner anything, nor his father nor his grandfather. There is a little old building on it, which has always been rented at a figure ten times as large as the taxes imposed, so that the owner has been handsomely subsidized each year for storing his title-deeds during a period of the city's growth in which the increase in population and the expenditure of public money in that neighborhood have raised the value of this corner location to, say, two hundred times its early value.

About now, Mr. Rhinelastor decides that he will go abroad to live, and can't be bothered with this piece of property. But knowing that the pressure of population is sure to increase and that the expenditure of public money to the benefit of this land must continue, he will not sell it. So he gives a twenty-one year lease to the corner for, say, $20,000 a year net, with a privilege to the lessee of renewals at advancing figures. The lessee agrees to pay all taxes.

Now what is this net $20,000 a year, which will be regularly remitted to Mr. Rhinelastor, in Europe or wherever he may be, given in payment for? Not for the old building — the first thing the lessee does is to pull it down. Not for the land itself — it is all rock, which has got to be blasted out as part of its improvement.

Clearly it is paid for a location or site value, which the community, and the community only, has built up and paid for. In other words, the present $20,000 rental, and the larger one which that location will command in later years, is strictly a community product, and as such belongs to the community and not to Mr. Rhinelastor.

That the latter has no good right to it is at once evident when we remember that "When one man gets something for nothing somebody else has got to give something for nothing." Here are $20,000 that some men and women have got to work to earn every year to hand over to a man who does not render, and does not feel any obligation to render, one dollar's worth of public or private service in return. Such is the wild travesty of justice which we call law. It is not comical only because it is frankly tragic in its social results.

Now suppose this $20,000 and all the rest of this same community product — i.e., the site or location rent of its ground — were paid every year to its rightful owner, the treasurer of New York City, what would become of taxation, with its inseparable retinue, Fraud, Evasion, Perjury, Inequality, and an all-pervading public sense of injustice? ...

Now imagine for a moment the effect upon the appearance of a city and upon the comfort of its population which would result from the change of fiscal policy which this article proposes. At present, a tempting premium is placed upon keeping land unimproved or inadequately improved, while a heavy penalty is imposed upon improvement. Most land appreciates constantly. All buildings depreciate from the moment of completion. Yet the building is taxed equally with the land.

What incentive does such a system offer the speculative landowner to put up a commodious, well-lighted modern structure in place of the old ruin which now pays him so well? The old one cannot depreciate much more, and while paying a trifling tax because of its physical worthlessness, he is thereby enabled to collect and pocket the economic rent of the ground, which the community is continually rendering more valuable. The new building would absorb a large amount of capital, would begin to run down even before it could be occupied, and would be taxed to the limit. Why then is not the landlord justified in letting well enough alone, enjoying the growing economic rent, and waiting till he can get a fancy price for the right to collect it?

But reverse the conditions. Reclaim for the community its natural income, making it expensive either to keep needed land vacant or to withhold it from the ready and willing to improve it to the full extent of its possibilities.

Does it require severe intellectual effort to foresee the results? Better and better houses, apartments, tenements, offices and stores, more employment for labor in all enterprises now held back by the shadow of the tax-gatherer, an end of all tax-lying, tax-evasion and tax-injustice, and withal, a public revenue adequate to all real public needs.

What a contrast to the existing plan of pouring public money into the laps of individual landowners ... read the whole article