of Taxing Land Value
Harry Pollard, head of the Henry George School of Social
Science in Los Angeles, expresses it this way: "Better to collect
Rent and throw it in the ocean than not collect it at all!" and explains
that this is because the economic effects of collecting Rent are incomparably
important than any revenue collected.
But most Georgists would also say that the revenue to be
collected this way would allow us to reduce or eliminate the taxes we now
place on labor, sales and buildings, to very good effect and in the service
of justice. (Other Georgists would collect it and distribute it as a Citizens'
Dividend, similar to the Alaska Permanent Fund.)
H.G. Brown: Significant
Paragraphs from Henry George's Progress & Poverty:
10. Effect of Remedy Upon Wealth Production (in the unabridged P&P: Part
IX — Effects of the Remedy: Chapter 1 — Of the effect upon the
production of wealth)
... Well may the community leave to the individual producer all that prompts
him to exertion; well may it let the laborer have the full reward of his labor,
and the capitalist the full return of his capital. For the more that labor
and capital produce, the greater grows the common wealth in which all may share.
And in the value or rent of land is this general gain expressed in a definite
and concrete form. Here is a fund which the state may take while leaving to
labor and capital their full reward. With increased activity of production
this would commensurately increase.
And to shift the burden of taxation from production and exchange to the value
or rent of land would not merely be to give new stimulus to the production
of wealth; it would be to open new opportunities. For under this system no
one would care to hold land unless to use it, and land now withheld from use
would everywhere be thrown open to improvement.
The selling price of land would fall; land speculation would receive its death
blow; land monopolization would no longer pay.* Millions and millions of acres
from which settlers are now shut out by high prices would be abandoned by their
present owners or sold to settlers upon nominal terms. And this not merely
on the frontiers, but within what are now considered well settled districts.
* The fact that a tax on the rental value of land cannot
be shifted by landowners to tenants, though recognized by all competent
economists, is sometimes a stumbling block to persons untrained in economics.
The reason such a tax cannot be shifted is that it cannot limit the supply
of land. Landowners are presumably, before the tax is laid, charging all
the rent they can get. There is nothing in a tax on the rental value of
land to make tenants willing to pay more or to make land more difficult
to hire. On the contrary, more land will be on the market, because of such
a tax, rather than less, since the tax puts a heavy penalty on holding
land out of use and unimproved for mere speculation. The competition of
former vacant land speculators to get their land used will make land cheaper
to rent rather than more expensive. And since only the net rent remaining
after the tax is subtracted is capitalized into salable value, land will
be very much cheaper to buy. H.G.B.
And it must be remembered that this would apply, not merely to agricultural
land, but to all land. Mineral land would be thrown open to use, just as agricultural
land; and in the heart of a city no one could afford to keep land from its
most profitable use, or on the outskirts to demand more for it than the use
to which it could at the time be put would warrant. Everywhere that land had
attained a value, taxation, instead of operating, as now, as a fine upon improvement,
would operate to force improvement. Whoever planted an orchard, or sowed a
field, or built a house, or erected a manufactory, no matter how costly, would
have no more to pay in taxes than if he kept so much land idle.
- The monopolist of agricultural land would be taxed as much as though
his land were covered with houses and barns, with crops and with stock.
- The owner of a vacant city lot would have to pay as much for the privilege
of keeping other people off of it until he wanted to use it, as his
neighbor who has a fine house upon his lot.
- It would cost as much to keep a row of tumble-down shanties upon valuable
land as though it were covered with a grand hotel or a pile of great
warehouses filled with costly goods.
Thus, the bonus that wherever labor is most productive must now be paid before
labor can be exerted would disappear.
- The farmer would not have to pay out half his means, or mortgage his
labor for years, in order to obtain land to cultivate;
- the builder of a city homestead would not have to lay out as much for
a small lot as for the house he puts upon it*;
- the company that proposed to erect a manufactory would not have to expend
a great part of its capital for a site.
- And what would be paid from year to year to the state would be in lieu
of all the taxes now levied upon improvements, machinery, and stock.
*Many persons, and among them some professional economists,
have never succeeded in getting a thorough comprehension of this point.
Thus, the editor has heard the objection advanced that the greater
cheapness of land is no advantage to the poor man who is trying to
save enough from his earnings to buy a piece of land; for, it is said,
the higher taxes on the land after it is acquired, offset the lower
purchase price. What such objectors do not see is that even if the
lower price of land does no more than balance the higher tax on it,
(and this overlooks, for one thing, the discouragement to speculation
in land), the reduction or removal of other taxes is all clear gain.
It is easier to save in proportion as earnings and commodities are
relieved of taxation. It is easier to buy land, because its selling
price is lower, if the land is taxed. And although the land, after
its purchase, continues to be taxed, not only can this tax be fully
paid out of the annual interest on the saving in the purchase price,
but also there is to be reckoned the saving in taxes on buildings and
other improvements and in whatever other taxes are thus rendered unnecessary.
Consider the effect of such a change upon the labor market. Competition
would no longer be one-sided, as now. Instead of laborers competing with
for employment, and in their competition cutting down wages to the point
of bare subsistence, employers would everywhere be competing for laborers,
wages would rise to the fair earnings of labor. For into the labor market
would have entered the greatest of all competitors for the employment of
competitor whose demand cannot be satisfied until want is satisfied — the
demand of labor itself. The employers of labor would not have merely to
bid against other employers, all feeling the stimulus of greater trade
profits, but against the ability of laborers to become their own employers
upon the natural opportunities freely opened to them by the tax which prevented
With natural opportunities thus free to labor;
- with capital and improvements exempt from tax, and exchange released
from restrictions, the spectacle of willing men unable to turn their labor
the things they are suffering for would become impossible;
- the recurring paroxysms which paralyze industry would cease;
- every wheel of production would be set in motion;
- demand would keep pace with supply, and supply with demand;
- trade would increase in every direction, and wealth augment on every
... read the whole chapter
H.G. Brown: Significant
Paragraphs from Henry George's Progress & Poverty:
12. Effect of Remedy Upon Various Economic Classes (in the unabridged P&P: Part
IX: Effects of the Remedy — Chapter 3. Of the effect upon individuals
When it is first proposed to put all taxes upon the value of land, all landholders
are likely to take the alarm, and there will not be wanting appeals to
the fears of small farm and homestead owners, who will be told that this
is a proposition
to rob them of their hard-earned property. But a moment's reflection will
show that this proposition should commend itself to all whose interests as
do not largely exceed their interests as laborers or capitalists, or both.
And further consideration will show that though the large landholders may
lose relatively, yet even in their case there will be an absolute gain. For,
increase in production will be so great that labor and capital will gain
very much more than will be lost to private landownership, while in these
and in the greater ones involved in a more healthy social condition, the
whole community, including the landowners themselves, will share.
- It is manifest, of course, that the change I propose will greatly benefit
all those who live by wages, whether of hand or of head -- laborers,
operatives, mechanics, clerks, professional men of all sorts.
- It is manifest, also, that it will benefit all those who live partly
by wages and partly by the earnings of their capital -- storekeepers, merchants,
manufacturers, employing or undertaking producers and exchangers of
from the peddler or drayman to the railroad or steamship owner -- and
- it is likewise manifest that it will increase the incomes of those whose
incomes are drawn from the earnings of capital. ... read
the whole chapter
H.G. Brown: Significant
Paragraphs from Henry George's Progress & Poverty:
13 Effect of Remedy Upon Social Ideals (in the unabridged P&P: Part
IX: Effects of the Remedy — 4. Of the changes that would be wrought
in social organization and social life)
... Give labor a free field and its full earnings; take for the benefit of
the whole community that fund which the growth of the community creates, and
and the fear of want would be gone. The springs of production would be set
free, and the enormous increase of wealth would give the poorest ample comfort.
Men would no more worry about finding employment than they worry about finding
air to breathe; they need have no more care about physical necessities than
do the lilies of the field. The progress of science, the march of invention,
the diffusion of knowledge, would bring their benefits to all.
With this abolition of want and the fear of want, the admiration of riches
would decay, and men would seek the respect and approbation of their fellows
in other modes than by the acquisition and display of wealth. In this way there
would be brought to the management of public affairs, and the administration
of common funds, the skill, the attention, the fidelity, and integrity that
can now be secured only for private interests. ...
To remove want and the fear of want, to give to all classes leisure, and comfort,
and independence, the decencies and refinements of life, the opportunities
of mental and moral development, would be like turning water into a desert.
The sterile waste would clothe itself with verdure, and the barren places where
life seemed banned would ere long be dappled with the shade of trees and musical
with the song of birds. Talents now hidden, virtues unsuspected, would come
forth to make human life richer, fuller, happier, nobler. For
- in these round men who are stuck into three-cornered holes, and three-cornered
men who are jammed into round holes;
- in these men who are wasting their energies in the scramble to be rich;
- in these who in factories are turned into machines, or are chained by
necessity to bench or plow;
- in these children who are growing up in squalor, and vice, and ignorance,
are powers of the highest order, talents the most splendid.
They need but the opportunity to bring them forth.
Consider the possibilities of a state of society that gave that opportunity
to all. Let imagination fill out the picture; its colors grow too bright for
words to paint.
- Consider the moral elevation, the intellectual activity, the social
- Consider how by a thousand actions and interactions the members of every
community are linked together, and how in the present condition of
things even the fortunate few who stand upon the apex of the social pyramid
suffer, though they know it not, from the want, ignorance, and degradation
that are underneath.
- Consider these things and then say whether the change I propose would
not be for the benefit of every one — even the greatest landholder?
... read the whole chapter
Henry George: Why
The Landowner Cannot Shift The Tax on Land Values (1887)
Here, for instance, is a piece
of land that has a value — let it be where it may. Its rent, or value,
is the highest price that anyone will give for it — it is a bonus which
the man who wants to use the land must pay to the man who owns the land
for permission to use it. Nor, if a tax be levied on that rent or
value, this in no wise adds to the willingness of anyone to pay more
for the land than before; nor does it in any way add to the ability of
the owner to demand more. To suppose, in fact, that such a tax could be
thrown by landowners upon tenants is to suppose that the owners of land
do not now get for their land all it will bring; is to suppose that,
whenever they want to, they can put up prices as they please.
This is, of course, absurd. There could be no limit whatever to
prices did the fixing of them rest entirely with the seller. To the
price which will be given and received for anything, two wants or wills
must concur — the want or the will of the buyer, and the want or will
of the seller. The one wants to give as little as he can, the other to
get as much as he can, and the point at which the exchange will take
place is the point where these two desires come to a balance or effect
a compromise. In other words, price is determined by the equation of
supply and demand. And, evidently, taxation cannot affect price unless
it affects the relative power of one or other of the elements of this
equation. The mere wish of the seller to get more, the mere wish of the
buyer to pay less, can neither raise nor lower prices. Nothing will
raise prices unless it either decreases supply or increases demand.
Nothing will lower prices unless it either increases supply or
decreases demand. Now, the Taxation of Land Values, which is simply the
taking by the State of a part of the premium which the landowner can
get for the permission to use land, neither increases the demand for
land nor decreases the supply of land, and therefore cannot increase
the price that the landowner can get from the user. Thus it is
impossible for landowners to throw such taxation on land users by
raising rents. Other things being unaltered, rents would be no higher
than before, while the selling price of land, which is determined by
net rents, would be much diminished. Whoever purchased land outright
would have to pay less to the seller, because he would thereafter be
called on to pay more to the State.
But while the Taxation of Land Values cannot raise rents, it
would, especially in a country like this, where there is so much
valuable land unused, tend strongly to lower them. In all our cities,
and through all the country, there is much land which is not used, or
not put to its best use, because it is held at high prices by men who
do not want to, or who cannot, use it themselves, but who are holding
it in expectation of profiting by the increased value which the growth
of population will give to it in the future. Now the effect of the Taxation of Land
Values would be to compel these men to seek tenants or purchasers.
Land upon which there is no taxation even a poor man can easily hold
for higher prices, for land eats nothing. But put heavy taxation upon it, and even a
rich man will be driven to seek purchasers or tenants, and to get them
he will have to put down the price he asks, instead of putting it up;
for it is by asking less, not by asking more, that those who have
anything they are forced to dispose of must seek customers.
Rather than continue to pay heavy taxes upon land yielding him nothing,
and from the future increase in value of which he could have no
expectation of profit, since increase in value would mean increased
taxes, he would be glad to give it away or let it revert to the State.
Thus the dogs in the manger, who all over the country are withholding
land that they cannot use themselves from men who would be glad to use
it, would be forced to let go their grasp. To tax Land Values up to anything like
their full amount would be to utterly destroy speculative values, and
to diminish all rents into which this speculative element enters.
And how groundless it is to think that landlords who have tenants could
shift a tax on Land Values upon their tenants can be readily seen from
the effect upon landlords who have no tenants. It is when tenants seek
for land, not when landlords seek for tenants, that rent goes up.
To put the matter in a form in which it can be easily
understood, let us take two cases.
- The one, a country where the available land is all in use,
and the competition of tenants has carried rents to a point at which
the tenant pays the landlord all he can possibly earn save just enough
to barely live.
- The other, a country where all the available land is not
in use and the rent that the landlord can get from the tenant is
limited by the terms on which the tenant can get access to unused land.
How, in either case, if the tax
were imposed upon Land Values (or rent), could the landlord compel the
tenant to pay it?
Here, let us say, is a lot on the
principal select street of a
city having an annual or rental value of $10,000. Such a lot would
now command a selling price of some $250,000. An increased tax upon
Land Values would not reduce its rental value, except as it might
have an effect in forcing into use unoccupied land at a greater
distance from the center of the city. But as less of this rental
value could be retained by the owner, the selling price would be
diminished. And if a tax on Land Values could be imposed with such
theoretical perfection that the whole rental value would be taken by
the community, the owner would lose both his income from its present
value and any expectation of profit from its future increase in
value. While it would be still worth as much as before to the user,
it would be worth nothing at all to the mere owner. Instead of having
a selling value of $250,000, it would not sell for anything, since
what the user paid for the privilege of using it would go in full to
the community. Under a tax of this kind, even though it could not be
imposed with theoretical nicety, the mere owner of land would
disappear. No one would care to own land unless he wanted to improve
or use it.
The general principle which
determines the incidence of taxation
is this: A tax upon anything or upon the methods or means of
production of anything, the price of which is kept down by the
ability to produce increased supplies, will, by increasing the cost
of production, check supply, and thus add to the price of that
thing, and ultimately fall on the consumer. But a tax upon anything
of which the supply is fixed or monopolized, and of which the cost of
production is not therefore a determining element, since it has no
effect in checking supply, does not increase prices, and falls
entirely on the owner. ...
read the whole article
Louis Post: Outlines of Louis F. Post's
Lectures, with Illustrative Notes and Charts (1894)
d. Effect of Confiscating Rent to Private Use.
By giving Rent to individuals society ignores this most just law, 99 thereby
creating social disorder and inviting social disease. Upon society alone,
therefore, and not upon divine Providence which has provided bountifully,
nor upon the disinherited poor, rests the responsibility for poverty and
fear of poverty.
99. "Whatever dispute arouses the passions of men,
the conflict is sure to rage, not so much as to the question 'Is it wise?'
as to the question 'Is it right?'
"This tendency of popular discussions to take an
ethical form has a cause. It springs from a law of the human mind; it
rests upon a vague and instinctive recognition of what is probably the
deepest truth we can grasp. That alone is wise which is just; that alone
is enduring which is right. In the narrow scale of individual actions
and individual life this truth may be often obscured, but in the wider
field of national life it everywhere stands out.
"I bow to this arbitrament, and accept this test." — Progress
and Poverty, book vii, ch. i.
The reader who has been deceived into believing that Mr.
George's proposition is in any respect unjust, will find profit in a
perusal of the entire chapter from which the foregoing extract is taken.
Let us try to trace the connection by means of a chart, beginning with the
white spaces on page 68. As before, the first-comers take possession of the
best land. But instead of leaving for others what they do not themselves
need for use, as in the previous illustrations, they appropriate the whole
space, using only part, but claiming ownership of the rest. We may distinguish
the used part with red color, and that which is appropriated without use
with blue. Thus: [chart]
But what motive is there for appropriating more of the space than is used?
Simply that the appropriators may secure the pecuniary benefit of future
social growth. What will enable them to secure that? Our system of confiscating
Rent from the community that earns it, and giving it to land-owners who,
as such, earn nothing.100
100. It is reported from Iowa that a few years ago a workman
in that State saw a meteorite fall, and. securing possession of it after
much digging, he was offered $105 by a college for his "find." But
the owner of the land on which the meteorite fell claimed the money,
and the two went to law about it. After an appeal to the highest court
of the State, it was finally decided that neither by right of discovery,
nor by right of labor, could the workman have the money, because the
title to the meteorite was in the man who owned the land upon which it
Observe the effect now upon Rent and Wages. When other men come, instead
of finding half of the best land still common and free, as in the corresponding
chart on page 68, they find all of it owned, and are obliged either to go
upon poorer land or to buy or rent from owners of the best. How much will
they pay for the best? Not more than 1, if they want it for use and not to
hold for a higher price in the future, for that represents the full difference
between its productiveness and the productiveness of the next best. But if
the first-comers, reasoning that the next best land will soon be scarce and
theirs will then rise in value, refuse to sell or to rent at that valuation,
the newcomers must resort to land of the second grade, though the best be
as yet only partly used. Consequently land of the first grade commands Rent
before it otherwise would.
As the sellers' price, under these circumstances, is arbitrary it cannot
be stated in the chart; but the buyers' price is limited by the superiority
of the best land over that which can be had for nothing, and the chart may
be made to show it: [chart]
And now, owing to the success of the appropriators of the best land in securing
more than their fellows for the same expenditure of labor force, a rush is
made for unappropriated land. It is not to use it that it is wanted, but
to enable its appropriators to put Rent into their own pockets as soon as
growing demand for land makes it valuable.101 We may, for illustration, suppose
that all the remainder of the second space and the whole of the third are
thus appropriated, and note the effect: [chart]
At this point Rent does not increase nor Wages fall, because there is no
increased demand for land for use. The holding of inferior land for higher
prices, when demand for use is at a standstill, is like owning lots in the
moon — entertaining, perhaps, but not profitable. But let more land
be needed for use, and matters promptly assume a different appearance. The
new labor must either go to the space that yields but 1, or buy or rent from
owners of better grades, or hire out. The effect would be the same in any
case. Nobody for the given expenditure of labor force would get more than
1; the surplus of products would go to landowners as Rent, either directly
in rent payments, or indirectly through lower Wages. Thus: [chart]
101. The text speaks of Rent only as a periodical or continuous
payment — what would be called "ground rent." But actual
or potential Rent may always be, and frequently is, capitalized for the
purpose of selling the right to enjoy it, and it is to selling value
that we usually refer when dealing in land.
Land which has the power of yielding Rent to its owner
will have a selling value, whether it be used or not, and whether Rent
is actually derived from it or not. This selling value will be the capitalization
of its present or prospective power of producing Rent. In fact, much
the larger proportion of laud that has a selling value is wholly or partly
unused, producing no Rent at all, or less than it would if fully used.
This condition is expressed in the chart by the blue color.
"The capitalized value of land is the actuarial 'discounted'
value of all the net incomes which it is likely to afford, allowance
being made on the one hand for all incidental expenses, including those
of collecting the rents, and on the other for its mineral wealth, its
capabilities of development for any kind of business, and its advantages,
material, social, and aesthetic, for the purposes of residence." — Marshall's
Prin., book vi, ch. ix, sec. 9.
"The value of land is commonly expressed as a certain
number of times the current money rental, or in other words, a certain
'number of years' purchase' of that rental; and other things being equal,
it will be the higher the more important these direct gratifications
are, as well as the greater the chance that they and the money income
afforded by the land will rise." — Id., note.
"Value . . . means not utility, not any quality inhering
in the thing itself, but a quality which gives to the possession of a
thing the power of obtaining other things, in return for it or for its
use. . . Value in this sense — the usual sense — is purely
relative. It exists from and is measured by the power of obtaining things
for things by exchanging them. . . Utility is necessary to value, for
nothing can be valuable unless it has the quality of gratifying some
physical or mental desire of man, though it be but a fancy or whim. But
utility of itself does not give value. . . If we ask ourselves the reason
of . . . variations in . . . value . . . we see that things having some
form of utility or desirability, are valuable or not valuable, as they
are hard or easy to get. And if we ask further, we may see that with
most of the things that have value this difficulty or ease of getting
them, which determines value, depends on the amount of labor which must
be expended in producing them ; i.e., bringing them into the place, form
and condition in which they are desired. . . Value is simply an expression
of the labor required for the production of such a thing. But there are
some things as to which this is not so clear. Land is not produced by
labor, yet land, irrespective of any improvements that labor has made
on it, often has value. . . Yet a little examination will show that such
facts are but exemplifications of the general principle, just as the
rise of a balloon and the fall of a stone both exemplify the universal
law of gravitation. . . The value of everything produced by labor, from
a pound of chalk or a paper of pins to the elaborate structure and appurtenances
of a first-class ocean steamer, is resolvable on analysis into an equivalent
of the labor required to produce such a thing in form and place; while
the value of things not produced by labor, but nevertheless susceptible
of ownership, is in the same way resolvable into an equivalent of the
labor which the ownership of such a thing enables the owner to obtain
or save." — Perplexed Philosopher, ch. v.
The figure 1 in parenthesis, as an item of Rent, indicates potential Rent.
Labor would give that much for the privilege of using the space, but the
owners hold out for better terms; therefore neither Rent nor Wages is actually
produced, though but for this both might be.
In this chart, notwithstanding that but little space is used, indicated
with red, Wages are reduced to the same low point by the mere appropriation
of space, indicated with blue, that they would reach if all the space above
the poorest were fully used. It thereby appears that under a system which
confiscates Rent to private uses, the demand for land for speculative purposes
becomes so great that Wages fall to a minimum long before they would if land
were appropriated only for use.
In illustrating the effect of confiscating Rent to private use we have as
yet ignored the element of social growth. Let us now assume as before (page
73), that social growth increases the productive power of the given expenditure
of labor force to 100 when applied to the best land, 50 when applied to the
next best, 10 to the next, 3 to the next, and 1 to the poorest. Labor would
not be benefited now, as it appeared to be when on page 73 we illustrated
the appropriation of land for use only, although much less land is actually
used. The prizes which expectation of future social growth dangles before
men as the rewards of owning land, would raise demand so as to make it more
than ever difficult to get land. All of the fourth grade would be taken up
in expectation of future demand; and "surplus labor" would be crowded
out to the open space that originally yielded nothing, but which in consequence
of increased labor power now yields as much as the poorest closed space originally
yielded, namely, 1 to the given expenditure of labor force.102 Wages would
then be reduced to the present productiveness of the open space. Thus: [chart]
102. The paradise to which the youth of our country have
so long been directed in the advice, "Go West, young man, go West," is
truthfully described in "Progress and Poverty," book iv, ch.
iv, as follows :
"The man who sets out from the eastern seaboard
in search of the margin of cultivation, where he may obtain land without
paying rent, must, like the man who swam the river to get a drink,
pass for long distances through half-titled farms, and traverse vast
areas of virgin soil, before he reaches the point where land can be
had free of rent — i.e., by homestead entry or preemption."
If we assume that 1 for the given expenditure of labor force is the least
that labor can take while exerting the same force, the downward movement
of Wages will be here held in equilibrium. They cannot fall below 1; but
neither can they rise above it, no matter how much productive power may increase,
so long as it pays to hold land for higher values. Some laborers would continually
be pushed back to land which increased productive power would have brought
up in productiveness from 0 to 1, and by perpetual competition for work would
so regulate the labor market that the given expenditure of labor force, however
much it produced, could nowhere secure more than 1 in Wages.103 And this
tendency would persist until some labor was forced upon land which, despite
increase in productive power, would not yield the accustomed living without
increase of labor force. Competition for work would then compel all laborers
to increase their expenditure of labor force, and to do it over and over
again as progress went on and lower and lower grades of land were monopolized,
until human endurance could go no further.104 Either that, or they would
be obliged to adapt themselves to a lower scale of living.105
103. Henry Fawcett, in his work on "Political Economy," book
ii, ch. iii, observes with reference to improvements in agricultural
implements which diminish the expense of cultivation, that they do not
increase the profits of the farmer or the wages of his laborers, but
that "the landlord will receive in addition to the rent already
paid to him, all that is saved in the expense of cultivation." This
is true not alone of improvements in agriculture, but also of improvements
in all other branches of industry.
104. "The cause which limits speculation in commodities,
the tendency of increasing price to draw forth additional supplies, cannot
limit the speculative advance in land values, as land is a fixed quantity,
which human agency can neither increase nor diminish; but there is nevertheless
a limit to the price of land, in the minimum required by labor and capital
as the condition of engaging in production. If it were possible to continuously
reduce wages until zero were reached, it would be possible to continuously
increase rent until it swallowed up the whole produce. But as wages cannot
be permanently reduced below the point at which laborers will consent
to work and reproduce, nor interest below the point at which capital
will be devoted to production, there is a limit which restrains the speculative
advance of rent. Hence, speculation cannot have the same scope to advance
rent in countries where wages and interest are already near the minimum,
as in countries where they are considerably above it. Yet that there
is in all progressive countries a constant tendency in the speculative
advance of rent to overpass the limit where production would cease, is,
I think, shown by recurring seasons of industrial paralysis." — Progress
and Poverty, book iv, ch. iv.
105. As Puck once put it, "the man who makes two
blades of grass to grow where but one grew before, must not be surprised
when ordered to 'keep off the grass.' "
They in fact do both, and the incidental disturbances of general readjustment
are what we call "hard times." 106 These culminate in forcing unused
land into the market, thereby reducing Rent and reviving industry. Thus increase
of labor force, a lowering of the scale of living, and depression of Rent,
co-operate to bring on what we call "good times." But no sooner
do "good times" return than renewed demands for land set in, Rent
rises again, Wages fall again, and "hard times" duly reappear.
The end of every period of "hard times" finds Rent higher and Wages
lower than at the end of the previous period.107
106. "That a speculative advance in rent or land
values invariably precedes each of these seasons of industrial depression
is everywhere clear. That they bear to each other the relation of cause
and effect, is obvious to whoever considers the necessary relation between
land and labor." — Progress and Poverty, book v, ch. i.
107. What are called "good times" reach a point
at which an upward land market sets in. From that point there is a downward
tendency of wages (or a rise in the cost of living, which is the same
thing) in all departments of labor and with all grades of laborers. This
tendency continues until the fictitious values of land give way. So long
as the tendency is felt only by that class which is hired for wages,
it is poverty merely; when the same tendency is felt by the class of
labor that is distinguished as "the business interests of the country," it
is "hard times." And "hard times" are periodical
because land values, by falling, allow "good times" to set
it, and by rising with "good times" bring "hard times" on
again. The effect of "hard times" may be overcome, without
much, if any, fall in land values, by sufficient increase in productive
power to overtake the fictitious value of land.
The dishonest and disorderly system under which society confiscates Rent
from common to individual uses, produces this result. That maladjustment
is the fundamental cause of poverty. And progress, so long as the maladjustment
continues, instead of tending to remove poverty as naturally it should, actually
generates and intensifies it. Poverty persists with increase of productive
power because land values, when Rent is privately appropriated, tend to even
greater increase. There can be but one outcome if this continues: for individuals
suffering and degradation, and for society destruction.
e. Effect of Retaining Rent for Common Use.
If society retained Rent for common purposes, all incentive to hold land
for any other object than immediate use would disappear. The effect may be
illustrated by a comparison of the last preceding chart with the following:
There is but one difference between this chart and the chart immediately
preceding. In that Rent is confiscated to private use, whereas in this Rent
is retained for common use. All the labor force indicated with red in the
first of the two charts would not more than utilize the space to the left
and part of the adjoining one, which would elevate Wages to what, with the
given labor force, could be produced from the poorer of the two spaces. After
that, increase of Rent would not enrich land-owners at the expense of other
classes; it would enrich the whole community.108
108. The laborer would receive in Distribution all that
he earned and no more than he earned in Production; and that is the natural
In social conditions, where industry is subdivided and trade is intricate,
it is impossible to say arbitrarily what is the equivalent of given labor.
Hence no statute fixing the compensation for labor can really be operative.
All that we can say is that labor is worth what men freely contract to give
and take for it. But it must be what they freely contract to take as well
as what they freely contract to give; and men are not free to contract for
the sale of their labor when labor generally is so divorced from land as
to abnormally glut the labor market and make men's sale of their labor for
almost anything the buyer offers, the alternative of starvation. Laborers
may be as truly enslaved by divorcing labor from land as by driving them
with a whip.
f. The Single Tax Retains Rent for Common Use.
To retain Rent for common use it is not necessary to abolish land-titles,
nor to let land out to the highest bidder, nor to invent some new mechanism
of taxation, nor in any other way to directly change existing modes of holding
land for use, or existing machinery for collecting public revenues. "Great
changes can be best brought about under old forms."109 Let land be held
nominally as it is now. Let taxes be collected by the same kind of machinery
as now. But abolish all taxes except those that fall upon actual and potential
Rent, that is to say, upon land values.
109. "Such dupes are men to custom, and so prone
To rev'rence what is ancient and can plead
A course of long observance for its use,
That even servitude, the worst of ills,
Because delivered down from sire to son
Is kept and guarded as a sacred thing." —Cowper.
It is only custom that makes the ownership of land seem
reasonable. I have frequently had occasion to tell of the necessity under
which the city of Cleveland, Ohio, found itself, of paying a land-owner
several thousand dollars for the right to swing a bridge-draw over his
land. When I described the matter in that way, the story attracted no
attention; it seemed perfectly reasonable to the ordinary lecture audience.
But when I described the transaction as a payment by the city to a land-owner
of thousands of dollars for the privilege of swinging the draw "through
that man's air," the audience invariably manifested its appreciation
of the absurdity of such an ownership. The idea of owning air was ridiculous;
the idea of owning land was not. Yet who can explain the difference,
except as a matter of custom?
To the same effect was the question of the Rev. F. L.
Higgins to a friend. While stationed at Galveston, Tex., Mr. Higgins
fell into a discussion with his friend as to the right of government
to make land private property. The friend argued that no matter what
the abstract right might be, the government had made private property
of land, and people had bought and sold upon the strength of the government
title, and therefore land titles were morally absolute.
"Suppose," said Mr. Higgins, "that the
government should vest in a corporation title to the Gulf of Mexico,
so that no one could fish there, or sail there, or do anything in or
upon the waters of the Gulf without permission from the corporation.
Would that be right?"
"No," answered the friend.
"Well, suppose the corporation should then parcel
out the Gulf to different parties until some of the people came to own
the whole Gulf to the exclusion of everybody else, born and unborn. Could
any such title be acquired by these purchasers, or their descendants
or assignees, as that the rest of the people if they got the power would
not have a moral right to abrogate it?"
"Certainly not," said the friend.
"Could private titles to the Gulf possibly become
absolute in morals?"
"Then tell me," asked Mr. Higgins, "what
difference it would make if all the water were taken off the Gulf and
only the bare land left."
If that were done it is doubtful if land-owners could any longer confiscate
enough Rent to be worth the trouble. Even though some surplus were still
kept by them, it would be so much more easy to secure Wealth by working for
it than by confiscating Rent to private use, to say nothing of its being
so much more respectable, that speculation in land values would practically
be abandoned. At any rate, the question of a surplus — Rent in excess
of the requirements of the community — may be readily determined when
the principle that Rent justly belongs to the community and Wages to the
individual shall have been recognized by society in the adoption of the Single
110. Thomas G. Shearman, Esq., of New York, author of
the famous magazine article on "Who Owns the United States," estimates
that sixty-five per cent of the present annual value of the land in the
United States would pay all the present expenses of American government — federal,
state, county, and municipal. ... read the book
Lindy Davies: Land
Now it is interesting to note that the economic vision presented in the
bible is not a precursor of communism. Two of the ten commandments explicitly
the institution of private property, and the prophets consistently railed
against landlords and rulers who robbed the people of the fruits of their
laws of Leviticus, which Jesus said he "came not to destroy but to fulfill," envisioned
a community in which everyone was secure in his own home and property, "beneath
his vine and fig tree".
(Incidentally, the quote on the American Liberty Bell, from Leviticus,
chapter 25, was a direct reference to these principles : "Proclaim liberty throughout
the land and to all the people thereof." It was a reference to the Jubilee,
and the freedom it provided was from debt and servitude.)
The division is clear: there is to be a sacred right of private property
in the things that are made by people. But people were not to own the things
that were made by God. The 7th commandment sums up both principles in 4 words: Thou
shalt not steal.
Modern society has looked away from these principles, calling them quaint,
naive, inapplicable to the complexities of our time — yet, modern society
finds itself mired in chronic economic and social problems for which it can
find no solutions — and which threaten to pull down all the advances
of civilization into a dark age — occasioned by some combination of
war, financial implosion or ecological collapse.
If there is any way out of this dark future, it can only come by way of solving
the problem of land and justice.
Fortunately, there exists a plan for that.
This plan takes the shape of a "fiscal reform", because it applies
a definition of the relationship between the individual and the society that
is consistent with both economic efficiency and moral law. It calls for us
to respect the right of labor to create and to save wealth, and we acknowledge
that the value of land is created not by its “owners”, but by
the entire community.
Therefore, we will abolish all taxes on income, products and sales — and
collect the full rental value of land and other natural resources for public
What would happen, if we did this?
Let’s consider the great problems we were discussing earlier.
Land in cities would be used efficiently. Cities would not become over-crowded;
regulation of land use would still be in their power, as it is now. But urban
blight and decay would be banished. Public transportation, like other public
services, could be provided free, funded out of the value of locational advantages
that it created.
The unnatural pressure on farm land near cities would be eliminated as
development proceeded to “infill”. It would no longer be necessary
to haul produce halfway across the world.
Wealth production and employment would be released from the burden of taxation
that currently weighs it down. The banking system would be freed from its unhealthy
dependence on land for collateral. Combined with the newly-efficient use of
urban infrastructure, unemployment could be cut or even eliminated, even while
But the best benefits of all would be in the developing world. If they
were charged the market rental value of the land they hold, then neither
cronies nor the multinationals would hold onto it. Access to good farmland
would be restored, and the disastrous migration of peasants to ill-equipped
poor cities would be reversed. The resulting vitality would bring these
poor nations new sources of domestic economic strength — no longer
would they have to grovel to maintain foreign credit.
Despite the current flood of bad news on just about every conceivable topic — and
although I do accept that many things in my children’s world will probably
get worse before they get better — I am optimistic about our long-term
Eventually, I believe that human society will adopt the biblical and georgist
wisdom, and organize itself as it must, to achieve justice, efficiency and
Eventually we will have tried everything else. That's how Clarence Darrow — one
of the reform's many prominent supporters — saw things. He said this: “The “single
tax” is so simple, so fundamental, and so easy to carry into effect
that I have no doubt that it will be about the last reform the world will
People in this world are not often logical.”
True enough. Yet I have to believe that eventually the obvious truth will
start to dawn on us. ... read
the whole speech
Charles T. Root — Not a Single Tax! (1925)
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
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
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
with its inseparable retinue, Fraud, Evasion, Perjury, Inequality, and
an all-pervading public sense of injustice?
An authority on municipal taxation estimates the present economic rent of
the land embraced in the City of New York at from $350,000,000 to $400,000,000.
Assuming the lesser of these figures and adding the receipts from licenses,
fees and fines, New York City should receive, of her own income, enough to
pay all her own legitimate bills, to make her proper contributions to county
and state and build a new subway or its equivalent every year.
And this with nobody paying a dollar of taxes, or, if we except the fines,
a dollar that he was not ready and glad to pay for his own advantage.
We repeat, this is not taxation; but for the sake of those who cannot grasp
the idea of public revenue without taxation, let us state the matter in their
Think of a tax which both assesses itself and collects itself, which burdens
no one, which is paid voluntarily, and only by those who do so for their
own profit or other advantage. Compare this with our present system of taxes,
everyone despises, which can be collected in full only from the very scrupulous
and from the helpless, from trust funds of widows and orphans, or from
estates which lie naked before the tax gatherer on the records of court;
a system which
drives men of property from state to state and town to town in flight from
the assessor, and well-nigh forces many worthy citizens to practices of
evasion which must make it hard for them to look into their own mirrors during
season for "Correction of Assessments;" there can be but one
verdict upon such comparison.
But again the voice of the objector is heard, possibly to this effect: "This
plan may be all right for the community, but how about poor Mr. Rhinelastor?"
In reality the landowner would not suffer so much from the restoration of
the public revenue as might at first appear. For one thing, whereas he is now
taxed, at least in theory, not only on land, but on buildings, cash, bonds,
and all other personal property, and perhaps on his income as well, he would
then have no taxes at all to pay. Furthermore the economic rent is not the
full measure of the possible earning capacity of the land, but will always
be less than the offerer expects to make out of its use.
Again, while it must be firmly insisted that the economic rent is the rightful
property of the community and not of the landowner, the community would probably
never take it all. Communal ownership of land is not desirable, even if it
were practicable. Individual ownership and management are best, and it is not
at all improper for the community to allow the owner something for caring for
the land to which he holds title, and for collecting and transmitting to the
treasury the economic rent.
But — and right here is one of the prime advantages of the abolition
of taxation — Mr. Rhinelastor, in order to get satisfactory return
from his land, must improve it. Unless he is satisfied with a small income
it, to wit, the proportion of the economic rent which the community chooses
to leave in his hands, he must put upon his land the best building the
location will warrant. The rents of this building will be his in their
one dollar of them being taken from him by taxation. If he is not prepared
or not willing to do this he would probably find it more profitable, before
he leaves the country, to sell the land to some one of the many persons
who are eager to build upon it. It will always be salable, although not
means at present figures.
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 to their own moral disadvantage and that of their
children, as well as the economic disadvantage of their neighbors, while constantly
cudgeling the civic brains, straining the public credit, impoverishing widows
and orphans, and increasing the exactions from every citizen and corporation
that can be caught, in the effort to raise more and more money to bestow upon
the same beneficiaries.
If the reader has followed thus far, he is perhaps ready to inquire why, if
the abolition of taxation is so desirable and so feasible, it should not be
put into effect without more delay. In partial answer, it may be said that
the body social has slid so far down from the right path in this matter that
climbing back to it is no short or easy process. The way up bristles with problems,
one of which is of course the opposition of a class of land speculators. ... read the whole article
Bill Batt: The Nexus of
Transportation, Economic Rent, and Land Use
Arriving at the appropriate
revenue formulas is the challenge.
Recapturing land rent is likely best achieved by setting the rates at
levels that stabilize the market price of landsites in the face of
speculative pressures. Because the collection of rents fosters economic
activity in the regions of highest value, it may just be that market
prices will remain stable even with very high levies. The downward
pressure on market prices exerted by a tax is countered by the
increased incentive to improve parcel sites with the highest value.
Many economists as early as the French physiocrats have argued that
ultimately all tax revenues come from rents in any case; that it is
only a question of how much they are shifted through to other sectors
of the economy before they are collected. Professor Mason Gaffney
explains this by noting that
After-tax interest rates are
in world markets and the local supply of capital funds is highly
elastic. So, local taxes on capital do not stick to capital. Even
national taxes on capital typically fail to stick, because capital is a
citizen of the world. Local labor supplies are also pretty elastic,
although not so totally. Local taxes on labor, therefore, do not stick
to labor, either. Payroll taxes drive people out of localities that
impose them, for example. Ditto for sales taxes. Customers move, or
shift their purchases, to where taxes are lower, or zero. Sellers
shift, too, to the extent they bear the tax. What else is left? Just
land, and land cannot emigrate or immigrate from the local jurisdiction.(22). .. read
the whole article
Bill Batt: The
Compatibility of Georgist Economics and Ecological Economics
And yet, for pricing to work at
all, there must be both supply and
demand; the lack of either results in there being no market price at
all. Is it possible, perhaps, that policies might be developed where
demand for certain resources are reduced to zero — and hence no price?
To some extent this is how the Georgist economics approach works. It
leaves certain realms of the commons unthreatened by exploitation for
the reason that the attention of the market is focused elsewhere. By
the collection of economic rent the prices of resources are effectively
shifted, so much so that the market arena is profoundly altered.
Resource prices are shifted in such a way that their use is curtailed
and their consumption concentrated. It was noted earlier, for example,
that collection of land rent tends to reverse the centrifugal forces of
sprawl, actualizing demand at the core of urban areas and leaving
remote regions uninhabited and
intact. Economic rent accrues to sites that have high demand and
frequent use; collecting that economic rent tends to concentrate their
use in ways that discourages speculative practices, allocate their use
to those who can best maximize their utility, and leave other sites and
commodities in remote areas less affected by human activity. So
with charges for other public resources such as radio frequencies and
airport landing slots. Pricing incentives are established in such a way
that economic activity is intensified, concentrated, and integrated
without the need of artificial CAC instruments such as zoning, urban
growth boundaries, community land trusts, and other devices which are
expensive to implement and have notable records of failure.
On the other hand, collection of economic rent, whether it be
use of land sites, fossil fuels, fishing grounds, solar and wind energy
settings, electromagnetic spectrum frequencies, airport landing
timeslots, and or even air sinks facilitates their highest and best use
while leaving less attractive settings unaffected. Where there exists
the possibility that environmentally sensitive sites or resources might
otherwise be exploited, then is the appropriate time to institute
focused CAC approaches, and with more attentive and efficient
administration for all involved. The practice of concentrating economic
activity in the more limited footprint that pricing creates is
consistent with approaches taken in ecological economics. This is
because the economy is recognized as only one component of human
experience and the world system, not coterminous with it. Daly, for
instance, draws concentric circles to illustrate the proper setting of
the economic system — inside the social and cultural system which
itself exists in a greater ecosystem. Collection
of economic rent has a
centrifugal and concentrating effect on human activity and hence upon
the ecosystem itself. It has a benign effect on ecosystems insofar as
it effectuates a steep and identifiable market gradient between areas
of heavy socio-economic activity and those that bring no price at all.
And yet by facilitating closer contact between members of the
community, it also fosters exchanges of a nature
that are outside the market economy — family relationships and
The consequences of collecting economic rent are to increase
for achieving sustainable development. This is because fiscal
instruments constrain the use of natural resources more than do either
CAC approaches or fiscal measures inspired by neoclassical approaches.
Collecting full royalties by competitive auction for nature’s harvests
reverses the exploitation of nature that presently obtains.
Establishing proper prices for such materials and services would likely
reduce their appropriation. All this enhances efficiency and
productivity in ways that are consistent with sustainable economics,
and gives recognition and space to elements of the ecosystem so that it
is less threatened with extinction and exhaustion. Site value taxation
works to circumscribe the domain of economics relative to the natural
world. Its greatest impact, presently evident in the consumption of
energy and land area, is turned inward on itself. Space, time, energy,
and nature are thereby conserved and spared insofar as their economic
costs become dearer. The centripetal forces encouraged by the
imposition of land value taxation and which induce the proximity of
land use configurations have a salutary effect on the
health and vitality of social community. Using Daly’s language again,128
instead of mindless growth one encourages development, quality over
quantity. Ecological economists have been in the vanguard of opposing
the globalization of the economy, believing that its disruptive effects
on local communities outweigh any gains in potential diversity,
economies of scale, and competitive advantages that might obtain. Henry
George himself was an ardent free trader a century ago, but this, as
Daly points out, was before capital had the mobility that it does
today. In Ricardo’s time, capital remained largely within a nation’s
borders, not true today. Whatever competitive advantages localities
might have had during the early industrial revolution are vitiated
today by the speed with which money can be transferred in seconds from
one nation to another. Notably, the late E.F. Schumacher was a strong
supporter of both Georgist economics and of local currencies.... read the whole article
Weld Carter: An Introduction to
However, what is the effect on
production of taxes levied on
products and of taxes levied on the value of land?
Of taxes levied on products,
George said: "The present method of
taxation operates upon exchange like artificial deserts and
mountains; it costs more to get goods through a custom house than it
does to carry them around the world. It operates upon energy, and
industry, and skill, and thrift, like a fine upon those qualities. If
I have worked harder and built myself a good house while you have
been contented to live in a hovel, the taxgatherer now comes annually
to make me pay a penalty for my energy and industry, by taxing me
more than you. If I have saved while you wasted, I am mulct, while
you are exempt. If a man build a ship we make him pay for his
temerity, as though he had done an injury to the state; if a railroad
be opened, down comes the taxcollector upon it, as though it were a
public nuisance; if a manufactory be erected we levy upon it an
annual sum which would go far toward making a handsome profit. We say
we want capital, but if anyone accumulate it, or bring it among us,
we charge him for it as though we were giving him a privilege. We
punish with a tax the man who covers barren fields with ripening
grain, we fine him who puts up machinery, and him who drains a swamp.
How heavily these taxes burden production only those realize who have
attempted to follow our system of taxation through its ramifications,
for, as I have before said, the heaviest part of taxation is that
which falls in increased prices" (1879, rpt. 1958, p. 434).
Turning to taxation levied on the
value of land, George went on to
For this simple device of placing
all taxes on the value of land
would be in effect putting up the land at auction to whosoever would
pay the highest rent to the state. The demand for land fixes its
value, and hence, if taxes were placed so as very nearly to consume
that value, the man who wished to hold land without using it would
have to pay very nearly what it would be worth to anyone who wanted
to use it.
And it must be remembered that
this would apply, not merely to
agricultural land, but to all land. Mineral land would be thrown open
to use, just as agricultural land; and in the heart of a city no one
could afford to keep land from its most profitable use, or on the
outskirts to demand more for it than the use to which it could at the
time be put would warrant. Everywhere that land had attained a value,
taxation, instead of operating, as now, as a fine upon improvement,
would operate to force improvement (1879, rpt. 1958, p. 437).
A few pages before this he had
told us that, "It is sufficiently
evident that with regard to production, the tax upon the value of
land is the best tax that can be imposed. Tax manufactures, and the
effect is to check manufacturing; tax improvements, and the effect is
to lessen improvement; tax commerce, and the effect is to prevent
exchange; tax capital, and the effect is to drive it away. But the
whole value of land may be taken in taxation, and the only effect
will be to stimulate industry, to open new opportunities to capital,
and to increase the production of wealth" (1879, rpt. 1958, p. 414).
In other words, according to
George, taxation of products checks
production, whereas taxation of land values stimulates production.... read
the whole article
Bill Batt: Comment on Parts of
the NYS Legislative Tax Study Commission's 1985 study “Who Pays New
Little justification exists for taxing buildings, or improvements of
any sort, so this question is easily disposed of. The practice is explained
largely as a matter of historical inertia. Only in the recent century or
two have buildings represented any significant capital value; prior to
the rise of major cities, the value of real property lay essentially in
land. American cities today typically record aggregate assessed land values – at
least when the valuations are well-done – at about 40% to 60% of
total taxable value, that is, of land and buildings taken together.31 Skyscrapers
reflect enormous capital investment, and this expenditure is warranted
because of the enormous value of locational sites. Each site gets its market
price from the fact that the total neighborhood context creates an attractive
market presence and ambience. By taxing buildings, however, we impose a
penalty on their optimum development as well as on the incentives for their
maintenance. Moreover, taxes on buildings take away from whatever burden
would otherwise be imposed on sites, with the result that incentives for
their highest and best use is weakened. Lastly, the technical and administrative
challenges of properly assessing the value of improvements is daunting,
particularly since they must be depreciated for tax and accounting purposes,
evaluated for potential replacement, and so on. In fact most costs associated
with administration of property taxation and appeal litigation involve
disputes over the valuation of structures, not land values. ... read the whole commentary