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Sharing Rent

Mason Gaffney: How to Revive a Dying City

George's Constructive Program

The key to renewing cities is shifting from obstructive ways of sharing rent, like rent control; and destructive ways, like looting and subsidies; to constructive ways. Henry George showed us how equity and efficiency go hand in hand, how the magic of justice combines with the magic of incentive.

  • First, by George, equity need not be in kind. The monetary mechanism overcomes the clumsiness of in-kind equity. If four families inherit a one-family house, all four don't crowd in; they sell and divide the money, or one buys out the others. There is equity in money as well as in real estate. Money is often better; the reinvestment opportunity puts the house on a magic carpet to follow you anywhere. Money is wonderful!
  • Second, by George, use the tax mechanism. Do not divide land into unusable morsels, or shackle the market with rent controls, or dissipate rent in subsidies. Give land to the highest bidder, and tax ground rents to support government.

Power to Destroy or to Redeem

But we've always heard that tax destroys incentives. The news in Henry George is that we can tax all the rent out of land, and not one square foot will walk away, nor will God switch off the Creation. Man creates capital by saving; some Other Force created land, and sustains and serves it every day, undeterred by taxes.

Nor will Georgist taxes leave owners sulking on their land, but the contrary. A 1983 Fortune magazine article calls them "Higher Taxes that Promote Development." The fixed tax is levied on land value, based on opportunity cost. The owner uses land harder and improves it more to meet a fixed tax; or sells, releasing surplus land to those needing more space. Taxes stifle enterprise only if they increase with enterprise. Land tax increases only with opportunity cost, which is independent of the enterprise of the owner. The only activity this tax impairs is withholding land from use. ... read the whole article

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... because democracy alone hasn't yet led to a society in which all can prosper