|Wealth and Want
|... because democracy alone is not enough to produce widely shared prosperity.
You might be surprised to find that the term "factory farm" was already in use in 1889. See Henry George: The Great Debate: Single Tax vs Social Democracy
Henry George: The Land Question (1881)
Henry George: The Crime of Poverty (1885 speech)
You may see the same thing all over this country. See how injuriously in the agricultural districts this thing of private property in land affects the roads and the distances between the people. A man does not take what land he wants, what he can use, but he takes all he can get, and the consequence is that his next neighbour has to go further along, people are separated from each other further than they ought to be, to the increased difficulty of production, to the loss of neighbourhood and companionship. They have more roads to maintain than they can decently maintain; they must do more work to get the same result, and life is in every way harder and drearier. ... read the whole speechHenry George: The Wages of Labor
In the rudest social state, while industry consists in hunting, fishing, and gathering the spontaneous fruits of the earth, private possession of land is not necessary. But as men begin to cultivate the ground and expend their labor in Permanent works, private possession of the land on which labor is thus expended is needed to secure the right of Property in the products of labor. For who would sow if not assured of the exclusive possession needed to enable him to reap? Who would attach costly works to the soil without such exclusive possession of the soil as would enable him to secure the benefit?
This right of private possession in things created by God is, however, very different from the right of private ownership in things produced by labor. The one is limited, the other unlimited, save in cases when the dictate of self-preservation may terminate all other rights. The purpose of the one, the exclusive possession of land, is merely to secure the other, the exclusive ownership of the products of labor; and it can never rightfully be carried so far as to impair or deny this. While anyone may hold exclusive possession of land so far as it does not interfere with the equal rights of others, he can rightfully hold it no further. ... read the whole article
Charles B. Fillebrown: A Catechism of Natural Taxation, from Principles of Natural Taxation (1917)
The Social Justice of Site Value Rating
The Efficiency of Site Value Rating
How Valuations would be Made
Both for reasons of social justice and for reasons of economic efficiency, site value rating deserves a continued place in the programme of the Liberal Party.
The case for site value rating in terms of social justice is founded on two understandings: first, that the value of land in the absence of economic development is the common heritage of humanity, and second, that increases in the rental value of land arising from economic development and government expenditures should be collected by governments to finance those activities. What is meant by "land" is the unimproved value of sites and the value of extractable natural resources such as North Sea oil.
While there may someday be institutions capable of implementing a recognition of land as the heritage of all humanity on a worldwide basis, in the absence of such institutions each nation should implement a recognition that land within its boundaries is the common heritage of its citizens. This is accomplished not by making the nation a gigantic Common or by instituting government management of all land, but rather by requiring all persons and corporations that are granted the use of land to pay a fee or tax equal to what the rental value of the land they control would be if it were in an unimproved condition.
The case for site value rating in terms of economic efficiency is founded on the fact that a tax on resources that are not produced by human effort is one of the few sources of government revenue that does not reduce incentives for people to be productive. Two other revenue sources that have this virtue are taxes on other government-granted privileges such as exclusive use of radio frequencies and taxes on activities with harmful consequences, such as polluting the air. An economy will be more efficient if revenue sources that do not diminish productivity are employed to the greatest possible extent before any use is made of taxes that impede productivity.
What makes a tax efficient is that the amount of tax that is due cannot be reduced by reducing productive activities. When incomes are taxed, people can reduce the amount of taxes owed by working less. They do so, and the productivity of the economy falls. When houses are taxed, people can reduce the amount of taxes owed by building fewer house and smaller houses. They do so, and the housing shortage worsens. But when the unimproved value of land is taxed, there is no resulting diminution in the quantity of land. Thus taxes can be levied on land without diminishing the productivity of an economy. And shifting taxes from other, destructive bases to land will improve the productivity of an economy.
Subsequent sections explain in more detail these social justice and efficiency arguments for site value rating, describe procedures for implementing such a tax system, and explain why a variety of potential objections are without merit. ...
The three sources of land rent, the gift of nature, public services and community development, lead logically to the justice of three distinct taxes on land. The gift of nature is primarily the agricultural value of land, but also the value of natural resources and the extra value of land near rivers and harbors that arises because such land represents good places to put cities whether or not cities are presently there. This component of the rental value of land should be collected nationally and used to support a guaranteed income for all citizens. The part of land value that arises from public services is justly the income of the community that provides those services. When private individuals and firms undertake activities that raise the rental value of surrounding land, the value thereby created should justly be awarded to those whose actions create it. ...
One activity that is sometimes thought to be unfairly affected by site value rating is farming. To a substantial extent, this concern reflects a misperception of the relation between urban and rural rents. The vast preponderance of land rents are urban. Also, it is important to remember that the basis of site value rating is the unimproved value of land. Much of what farmers do increases the value of land in ways less obvious than buildings. Site value rating of agricultural land should be applied on the basis of what the rental value of the land would be in a completely overgrown condition. But there is an important element of validity in the argument of farmers that they are treated unfairly by site value rating. When site value rating is used to finance public services, farmers can justly say that their land does not benefit from public services in the way that urban land does. Indeed, it has been said above that public services should be financed from the increase in land rents above their value in the absence of economic development. Site value rating of agricultural land, and of the pre-development value of urban land, has as its basis the idea that provenance of nature is the common heritage of all citizens. If we wish only to finance local public services and to reward activities that increase surrounding land rents, then the agricultural value of land, and the pre-development value of urban land should be excluded from the tax base. These should be taxed only when the nation is prepared to accept, and be bound by the consequences of, the principle that the provenance of nature is the common heritage of all citizens. ...
A separate valuation process would be used to estimate the value of all land in the nation in the absence of economic development. These estimates would be checked by occasional auctions of unimproved agricultural land far from cities. The results of this process would be used to implement a redistribution of pre-development rent among localities, based on the principle that predevelopment rent should be shared on an equal per capita basis. ... Read the whole article
Karl Williams: Land Value Taxation: The Overlooked But Vital Eco-Tax
I. Historical overview
II. The problem of sprawl
III. Affordable and efficient public transport
IV. Agricultural benefits
V. Financial concerns
VI. Conclusion: A greater perspective
Appendix: "Natural Capitalism" -- A Case Study in Blindness to Land Value Taxation
Land value taxation (LVT) has often been omitted from the lists of natural resources for which eco-taxes are being advocated. LVT provides strong financial encouragement for land to be put to its optimal use and will eliminate speculation on land, as occupants must pay the full LVT whether the land is being fully utilised or not. This leads to better land management, a reduction in urban sprawl, less urban smothering of agricultural land, and less farmland being pushed into hinterland.
LVT makes the investment in resource-efficient infrastructure affordable because the resulting enhanced land values are "recycled" back into public coffers. One particular application of LVT to agricultural land provides much-needed financial incentives for organic farming. Unlike other ecotaxes which "sow the seeds of their own revenue demise," LVT actually increases over time as our environment is enhanced and is thus a stable revenue base.
This paper argues that the LVT assessment process shifts and refines our focus from monitoring human activity onto our use and abuse of natural resources, as any responsible form of stewardship should. It suggests that only if land users are prepared to pay the full cost of utilising resources should private resource holding be permitted.
"The depletion of natural resources and the despoliation of nature is due to a single reason: the failure properly to measure the rental value of all of nature's resources, and to make the users pay the community for the benefits they receive." F. Harrison, "The Corruption of Economics" ...
IV. Agricultural benefits
The application of LVT to agricultural land, with the assessment being based on "maximum sustainable yield," forces farmers to think long-term and provides much-needed financial incentives for organic farming. That is, farmers will be saddled with the same annual LVT dues whatever their yield (in addition to climatic considerations in assessing LVT) and will now have a powerful incentive to farm with a long-term perspective. If, for example, the land is degraded and yields consequently drop, then the financial consequences will properly be borne by the farmer. This is merely the briefest of explanations of an important adaptation of LVT, which calls for other measures such as the requirement for any user of the Global Commons to pay an appropriate Ecological Security Deposit and a transition period to allow farmers to unhook themselves from the conventional chemical circuit.
The LVT assessment process shifts and refines our focus from monitoring human activity, onto our use and abuse of natural resources, as any responsible form of stewardship should. The potential effect of such a focus on everyday attitudes is inestimable.
The process of monitoring and assessing LVT itself leads to a more subtle, more environmentally-appreciative understanding of how best to prioritise conflicting demands on land. Should a tract of land best be used for green space for local residents, a light rail corridor or employment providing development? LVT assessment inherently weighs the pros and cons of a whole range of intangible costs and benefits for the wider community now and into the future, and eliminates corrupting "NIMBY" motives and rent-seeking behaviour that influence existing planning and development decisions. In response to the accusation that LVT assessment is little more than a best guess at quantifying values that are inherently unquantifiable, LVT advocates respond "Guilty as charged!" However, they then add, "Our good guesses are based on solid, objective methodology and are better than wild guesses, and even most wild guesses are better than the decisions made today." Currently, many natural resources are almost assigned a worthless value because, not entering the mainstream marketplace, they usually have no $ tags hanging off them - hence the existence of externalities whereby the environment is plundered as near worthless. So even wild guesses at the value of land and other natural resources are better than the present situation, in which the "no guess" decision effectively assigns natural and community resources a zero value.
One way or another, it is necessary to quantify and prioritise the real value (in a broad sense) of natural resources to better account for economic externalities. In the end, only if a prospective resource user is prepared to pay the full cost of utilising land and other natural resources will resource extraction or development go ahead. The intrinsic nature of the LVT assessment process considerably assists in such cost estimation.
LVT's foundation of detailed land use assessments will also help expose the true costs of subsidies for natural resources, which effectively amount to negative eco-taxes. Subsidies come in all shapes and sizes, often barely visible, and urgently need to be exposed and evaluated. Even some harmful subsidies which are labeled land taxes have nothing to do with genuine LVT. Banks gives the example of a Brazilian tax which was levied on unimproved land but was reduced by up to 90% on land used for crops or pasture. Forests were classified as unimproved land and were therefore taxed at the full rate, which induced settlers to chop down the trees to reduce their tax liability."
The major dynamic behind such over-exploitation of parts of the environment is the process by which hundreds of millions of people are displaced onto marginal land by current tax-and-tenure systems. In desperation they overwork resources that ought to be carefully nurtured. Yet the practices of such desperate peasants can be largely halted when the principles of LVT are implemented and made clear. Daly makes the case that taking away by taxation the value added by individuals from applying their own labor and capital creates resentment but "taxing away value that no one added, scarcity rents on nature's contribution, does not create resentment. In fact, failing to tax away the scarcity rents to nature and letting them accrue as unearned income to favored individuals has long been a primary source of resentment and social conflict." ... read the entire article
Nic Tideman: Basic Tenets of the Incentive Taxation Philosophy
When the principle that the value of government-assigned opportunities should be received by the public treasury is violated, the result is "privilege," which from its Latin roots means "private law," that is, law that permits one person to do what others are not permitted to do. Thus what we stand for is an end to privilege.
Numerous examples of privilege are incorporated in our institutions.
This list of examples of
privilege, which is by no means
exhaustive, contains some privileges, such as acreage allotments and
import quotas, that would be best reformed by eliminating
restrictions and permitting all to do what now only some may do. For
other privileges, such as broadcast licenses and land titles, great
productivity results from the social understanding that a specified
individual will have the use of a given resource. For these
privileges, the best reform is the introduction of the requirement
that any person who is assigned such an opportunity must pay to the
public treasury an annual fee equal to what the opportunity would be
worth to someone else. ... Read
the whole article
II. The Private and Social Returns from Land Speculation
III. Effects of Land Taxes on Speculation
A. Taxes on the Rental Value of Land
B. Taxes on the Sale Value of Land
C. Taxes on Realized Income from Land
D. Taxes on Realized Gains from the Sale of Land
IV. Indirect Effects of Taxing Land
The optimal timing of development is an important allocative function that can be either enhanced or degraded by the impact of land taxes on land speculation. This paper discusses four types of taxes on land:
All four taxes reduce incentives for speculation in land, which is generally beneficial. The third and fourth produce distortions with respect to incentives to develop land, while the first and second do not. All four taxes have some beneficial effect of mitigating imperfections in capital markets. All permit reduction or elimination of taxes with significant dead-weight losses, such as those on improvements. ...
Abstract from the continuous divisibility of land and suppose that land comes in "sites." At each moment in time, each site is in one of three states:
1. Suitable for agriculture.
While each site can be used for any activity, the net return will be greatest if it is used for the activity for which it is suited, provided that it remains in that activity long enough to fully amortize the associated capital that is state-specific, durable and immobile. What could keep a site from remaining in an activity long enough to amortize the associated capital is that from time to time a site makes a transition from state 1 to state 2 or from state 2 to state 3. These transitions are imperfectly predictable. When a transition from state 2 to state 3 occurs unexpectedly, the course of action that maximizes the net return to the site may entail scrapping prematurely the residential structure built there and building a commercial structure. In such an instance, one may be able to look backward and say that it would have been better not to have built the residential structure at all, but rather to have left the site in agricultural use until the transition to state 3 occurred. However, such reckoning can affect investment decisions only to the extent that transitions can be foreseen. ...
The speculative return from foreseeing future transitions arises from holding title to land when pending transitions become generally known. This return is a purely private return, with no corresponding social return, since the land will increase in value whether or not any given speculator holds it. The land-management return from foreseeing future transitions, on the other hand, arises from knowing not to employ capital on sites where future transitions will cause the capital to depreciate prematurely. This is a social return, since it involves improving the allocation of scarce resources. There is no necessary connection between the private return and the social return. ... Read the whole article
Nic Tideman: Private Possession as an Alternative to Rental and Private Ownership for Agricultural Land
I. The Concept of Private Possession of LandJeff Smith and Kris Nelson: Giving Life to the Property Tax Shift (PTS)
II. The Rental Value of Land in an Unimproved Condition
III. The Question of Tax Abatements
IV. Freedom to Transfer Titles of Possession
V. Market Determination of the Sizes of Farms
VI. The Absence of a Termination Date
VII. The Importance of Implementing Other Agricultural Reforms
One of the reasons that the debate is so fierce between the advocates of rental and the advocates of private ownership of agricultural land is that each position has important strengths as well as important weaknesses. This paper argues that there is a third possibility between rental and private ownership that retains the strengths of both while avoiding the weaknesses of both. The third possibility is private possession of land.
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. ...Jeff Smith: Sharing Natural Rents to Sustain Human Society
To bolster their local economies and fatten their tax base, local governments compete to attract large new employers. Hoping to recoup down the road when businesses pay full property taxes, elected officials offer such inducements as five-year abatements and low system development charges. Yet each locality must outdo others' incentives. Enterprise zones and tax privileges amount to major subsidies that would otherwise generate substantial tax revenues.
Already, Washington, Oregon, and other states employ a nonregulatory means to reward preservation of unbuilt-upon land. They assess farm and resource lands at current use rather than at market value to avoid pressuring owners to develop. However, as long as demand for land persists, and the more central locations are not offered in the market, then the temptation before farmers to sell out to developers also persists. ...
Another candidate for least sustainable is factory farming. What makes mechani-chemical agribusiness financially feasible is the ability to borrow against pumped up land values. Land dues end land's role as collateral, leaving growers little choice but to entertain the organic option. To ease the transition, the locality could disburse collected rent to residents. Plus, untaxing labor makes it more affordable to hire a helping hand. And, where cities are compacted, farms can stay closer to local markets. As Italy discovered centuries ago, nearby open space keeps fresh food -- whether grown, raised, gathered, or hunted -- readily available to satisfy the quality-sensitive urbanites. Further, as city folk enjoy more open space and grow closer to nature, they become a growing informed market, preferring local, organic, tasty, and healthy produce.
Applying the PTS to rural resources has the same conserving effect as on urban land. Sites yielding resources most easily would be used more intensely, forcing the abandonment of marginal sites. These sites could then revert to other uses, such as outdoor recreation or, once restored, natural habitat for other species. Here, too, the land dividend helps former loggers and miners adjust and become guides and foresters. Untaxing labor makes such new jobs more affordable to new companies. Other labor-intensive enterprises could compete with the capital-intensive ones. Recycling, which has the barest minimum of overhead, would grow more profitable as virgin extraction grows less. ...
A big problem needs a big solution which in turn needs a matching shift of our prevailing paradigm. Geonomics -- advocating that we share the social value of sites and natural resources and untax earnings -- does just that. Read the whole article
To get rich, or more likely to stay rich, some of us can develop land, especially sprawling shopping centers, and extract resources, especially oil. While sprawl and oil depletion are not necessary, they are more profitable than a car-free functionally integrated city. Under the current rules of doing business, waste returns more than efficiency. We let a few privatize rent -- ground rent and resource rent -- although rent is a social surplus. As if rent were not profit enough, winners of rent have also won further state favors -- tax breaks, liability limits, subsidies, and a host of others designed to impel growth (20 major ones follow herein).
If we are to sustain our selves, our civilization, and our eco-system, we must make some hard choices about property. What we decide to do with rent, whether we let it reward our exploiting or our attaining eco-librium, matters. Imagine society waking up to the public nature of rent. Then it would collect and share its surplus that manifests as the market value of sites, resources, the spectrum, and government-granted privileges. Then we could forego taxing labor and capital. On such a level playing field, this freed market would favor efficiency - the compact city - not waste - the mall and automobile. ...
Drawing their cue from the public, governments tolerate "rentention", the private retention of publicly-generated land values. Lacking this Rent, states turn to taxes. But to grow the economy, all governments -- left, right, or undecided -- hustle to stimulate development; they cut taxes and slop subsidies. Going beyond the call of duty, the state excuses producers' their routine pollution and limit liability, thereby cutting the cost of insurance. Companies that don't impose on nature, worker, or customer are not benefited at all but lose a competitive advantage. On this tilted playing field, one with the lumps of subsidies and the tilts of taxes, technologies lean and clean have a hard time competing as suppliers of materials, homes, food, rides, and energy. ...
Agriculture - "Mechemical" vs. Organic
To sustain that which we love, we must transform our relationships to nature, to government, and to each other. We need to become geonomists in worldview, theory, discipline, and policy. Geonomics creates an economy that's not at war with but aligned with the natural world.... Read the whole article
William Ogilvie: An Essay on the Right of Property in Land (Scotland, 1782)
It were unjust to censure the proprietors of land, however, for retaining and exercising, as they do, a right whose foundations have not been inquired into, and whose extent no one has ever yet controverted. It is the situation in which they find themselves placed that prompts their conduct; nor can they readily conceive either the injustice or the detriment which the public suffers, by permitting such rights to be exercised. On the other hand, the farmers and cultivators have no clear perception of the injustice and oppression which they suffer. They feel indeed, and they complain, but do not understand, or dare not consider steadily, from what cause their grievances take their rise. The oppressive rights of the one order, and the patient submission of the other, have grown up together insensibly from remote ages, in which the present state of human affairs could not have been foreseen.
...If those persons who spend their
the manufactures of velvet and
of lace could be induced to employ the same industry in raising grain,
potatoes, and flax, would they not, by increasing the plenty of these
necessary commodities, augment the real accommodation of a very
numerous class of citizens? And would not the happiness thence arising
more than compensate the scarcity of those frivolous refinements which
may be required for the gratification of a few?
If land and land rent are the strongest determinants to Georgists, energy is its closest counterpart to ecological economists. Just as land rent can be measured fully in terms the relative surplus it produces in any given socio-economic context, energy can be traced and calculated in calories, BTU’s or joules. Land rent is completely a human product — there is no rent where there are no people, as land has no market value. On the other hand, energy exists regardless whether people are present or not, as it is a component of nature itself. But not all energy is now recognized as relevant in economics; only that energy which is employed in the human economy, and we assume that the human economy is necessarily bounded. Wind, sunlight and lightening are as yet unpriced and are peripheral today even in ecological economics. Attention is given more to those natural resources potentially procurable or otherwise relevant to human dependency, and energy certainly is primary. So rather than regard energy as a free good and largely outside the economy as neoclassical economics assumes, energy will likely continue to be central — even the driving force — in ecological economics.
Indeed just about all other factors of production are essentially convertible from energy. Besides that used in households, industry, and transportation sectors, agriculture — at least linked to developed economies — is essentially energy driven. As Martinez-Alier has shown,86 modern agriculture is essentially unfeasible without reliance upon applied energy forms, and the diets of modern societies are heavily reliant upon energy in the forms of intensive fertilizer use, intensive application of machinery, and animal protein-fed farmers. By way of contrast, in pre-modern agricultural societies one could argue that human and animal energy account for all the foodstuffs produced, and were used in turn to assure the continuance of the agricultural cycle. Unlike modern societies they are in energy equilibrium. Hall87 argues that energy is the determining factor in the development success of all economies, posing momentous challenges for the future as projected shortages of fossil fuel sources loom on the horizon.... read the whole article
Mason Gaffney: Cannan's Law
Rich farm counties are not, generally, resource tax-enclaves (except by comparison with poor farm counties). The "rural" counties today with high values per head are resort counties, like Vilas and Walworth in Wisconsin, with their prized lake frontages; or "exurban" counties like Napa in California; or Berkshire in Massachusetts. In California, you might think that fruitful farming counties like Tulare have a lot more taxable real estate value per head than urban ones. Such is a durable belief, but it is wrong.
You might also think that Tulare, being rural, has a lot higher fraction of land value in its mix, but again, not so. The Land Share of Real Estate Value (LSREV) in Tulare County is 28%, compared to a statewide mean of 40%, and 47% in Orange County. Grazing and mining counties like Inyo have high values of LSREV, but they are a small share of the farm economy. Counties with intensive working farms, like those of the San Joaquin Valley, have low values of LSREV.
Switching just the local property
tax to land ex buildings will do
little to correct such disparities. It will therefore make little
progress toward overall distributive justice, and the wide support
that would evoke. There is, in fact, a natural cap on local property
tax rates imposed by local particularism. The City Council of
Beverly Hills will not raise land taxes in Beverly Hills to help
voters in Parlier and Lynwood move to Beverly Hills and share the
rents.... read the whole article
Mason Gaffney: 18 Fallacies
5. "The cost of water is passed through to consumers in higher prices"
Wrong! At last I'm in my own field. Prices are determined by supply and demand, not cost. If you sell in a national or world market, or even a competitive local market, you are a price-taker, not a price-maker. You can't pass cost hikes on to consumers; you have to eat them.
In addition, water (like energy) is an unusual kind of input whose high price may actually increase production.
It would be easy to assume, using the good old idea of diminishing returns, that dearer water would reduce intensity of land use.
It certainly cuts water use, but when you pay more for water you often switch to higher-valued crops. That is what Southern California farming is all about. You substitute capital and labor for water on the same land, and often raise yields per acre.
You cannot afford to dump high-priced water on barley, or alfalfa, or rice, or irrigated pasture, or any other of these domesticated phreatophytes that guzzle up most of our underpriced water today.
A number of fairways and cemeteries would also give way to higher-valued uses.
With dearer water you use less by controlling it better, switching from primitive furrow irrigation to sprinklers, spitters and drip.
This in turn lets you do new things like growing avocados on steep hillsides formerly barren, yielding more dollars of product for less water (and in this case on waste land).
The above facts point to a fascinating, portentous corollary: you can tax water withdrawals without wrecking the water economy.
On the contrary, such taxes (carefully crafted to be constructive) can encourage conservation, getting more bins and bales for the bucket, so to speak.
Americans are raised on anti-tax slogans masquerading as economic analysis, always presuming taxes destroy good incentives and wreck the economy.
Here is a kind of tax that raises revenue while strengthening the economy.
This corollary is too good to drop, and is highlighted later.... Read the whole article
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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper