Wealth and Want
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What "Land" Includes...

When we think of land, we think of soil and of sites. But in the larger sense, Land includes many other kinds of things. And many of these are very appropriate objects of taxation. Since no individual or corporation or government entity can create more of them, these scarce items get bid up. Why should that value be subject to privatization? Why should they be sold from one corporation to another, as broadcast frequencies and rush hour landing rights at congested airports currently are traded? A better way, a just way, would be for the holders of those scarce resources to pay the rest of us for the right to use them. After that rent is paid, the profits should be theirs to keep, their rightful gain (as long as they haven't harmed the environment or others in the process.

Did you know that the royalties paid by oil companies today on oil extracted from under American soil were set in the 1870s? Do you think that the American commons is receiving the amount it should be receiving? How do you think that that shareholders of the oil companies are making out in this deal?

Bill Batt: Painless Taxation

Real tax reform could do away with those taxes that are resented by the large proportion of our population. We could replace all taxes on wages and on interest by instead taxing economic rent. Rent is windfall income; it is income that arises not from the efforts of any person or corporation; it comes about as a surplus gain from common social enterprise. There is ample moral warrant for society to lay claim to that which it has created, as well as to that which no individual or party has earned. Analysis increasingly makes clear that economic rent in all its forms is far larger than official government figures indicate; in fact it is likely sufficient to supplant all current taxes on labor and capital (wages and interest) which are acknowledged to have so many negative effects. Recovering economic rent in all its manifestations by taxing its various bases actually can foster economic performance and yield other benefits that make it the natural source of revenue for governments. Such a tax is essentially painless. ...

Any tax on capital has its downside effects, so that taxing savings causes people to save less, taxing consumption causes people to buy less, and taxing buildings causes people to build less. The result is that economists as well as businessmen usually frown upon taxing capital. Another alternative is to tax labor, but it is even more widely understood that taxing labor normally discourages people from working as much as they would in the absence of a tax. From this comes sentiment against taxing labor, even though for want of any alternative, people have today commonly come to accept it as a necessity. But electing to tax labor, just as for taxing capital, forecloses a discussion of the virtues of taxing land — not necessarily land as earth, but rather land as location. Yet land rent is the most attractive tax base of all, as rent is not earned; it is windfall income, entirely the result of being well situated in any market of scarce natural resources and where community demand (rather than one's own efforts) leads to an appreciation of that land's price. To be sure many people have learned to position themselves in situations where a land's market value is likely to rise — indeed these people come to think of themselves as astute investors. But the fact is that that market gain is not of their own doing at all; it is the result of common enterprise creating a surplus that comes to settle on land sites. An investment in land, in any form it might take, is speculation in greater or lesser degree.

Land in all its forms is a tax base that also conforms well to all the classic principles of sound tax theory as enumerated above. Land is classically taken to mean not just surfaces of the earth but places in time, in space, in any medium whether it be solid, liquid or gas, and even as a form of light, in the electromagnetic spectrum, and in life forms. One needs to return to 19th century classical economic definitions of the factors of production to appreciate the separate significance of land as it was understood in its manifold forms. One should ask how it is that land, so important to 19th century classical economic theory, has been given so little attention today in neoclassical economics. This is a story only now recovered from the dusty archives of academic economic history. Once understood and appreciated, it may be one of the greatest, if very silent, political revolutions of world history.[4] ... read the whole article

Mason Gaffney: Property Tax: Biases and Reforms

Priority #1. Safeguarding the property tax
Priority #2: Enforce Good Laws
  • Reassess Land Frequently
  • Use the Building-Residual Method of Allocating Value
  • Federal Income Taxes
Priority #3. De-Balkanize Tax Enclaves
  • A. Rich and Poor
  • B. Timber and Timberland
  • The Role of Timber and Timberland
  • Two More Areas Deserving Attention
    • Offshore Oil
    • Tax All Natural Resources Uniformly and Comprehensively
Priority #4. What Tax to Fight First?
Priority #5: Make Landowners Pay Their Taxes

Tax All Natural Resources Uniformly and Comprehensively

Advances in the arts and sciences keep disclosing new values in old resources. Owing to institutional lag, these values can grow huge without finding their way onto the tax rolls. A thoughtless reaction is, "Bureaucrats want to tax everything!" The point is to tax all natural resources uniformly and comprehensively, to end the lowering taxes on incomes. productive business, and sales! Land taxation will not win wide support, nor will it deserve to, if it is perceived as a tax focusing on median homeowners, farmers, and merchants, while exempting oilmen, media tycoons, and timber barons.

In addition to newly awakened resources, many resources long known (like water) are held in odd tenures that have not been recognized as taxable property, although they should be. Any comprehensive move toward using resource rents for public revenue must include these varied resources and tenures. I have a list of 30 or so, too many to treat here. To give a sampling, they include

  • pollution easements over air and water;
  • aircraft landing time-slots and gates;
  • aquifers;
  • benefits from covenants;
  • access easements;
  • power drops;
  • concessions;
  • fisheries;
  • franchises;
  • the gene pool;
  • grazing licenses;
  • minerals;
  • orbits;
  • soils;
  • radio spectrum;
  • rights-of-way;
  • shipping lanes;
  • standing to sue;
  • strata titles;
  • use of the streets;
  • wildlife;
  • wind; and
  • zoning.

In tapping these many varieties of resources and tenures for public revenues, citizens and their representatives may have to set priorities. Two practical criteria rise to the top:

Rev. A. C. Auchmuty: Gems from George, a themed collection of excerpts from the writings of Henry George (with links to sources)

HE term Land in political economy means the natural or passive element in production, and includes the whole external world accessible to man, with all its powers, qualities, and products, except perhaps those portions of it which are for the time included in man's body or in his products, and which therefore temporarily belong to the categories, man and wealth, passing again in their reabsorption by nature into the category, land. — The Science of Political Economy — unabridged: Book III, Chapter 14: The Production of Wealth, Order of the Three Factors of Production abridged: Part III, Chapter 10: Order of the Three Factors of Production

THAT land is only a passive factor in production must be carefully kept in mind. . . . Land cannot act, it can only be acted upon. . . . Nor is this principle changed or avoided when we use the word land as expressive of the people who own land. . . .

That the persons whom we call landowners may contribute their labor or their capital to production is of course true, but that they should contribute to production as landowners, and by virtue of that ownership, is as ridiculously impossible as that the belief of a lunatic in his ownership of the moon should be the cause of her brilliancy. — The Science of Political Economy unabridged: Book III, Chapter 15, The Production of Wealth: The First Factor of Production — Landabridged: Part III, Chapter 10: Order of the Three Factors of Production

I AM writing these pages on the shore of Long Island, where the Bay of New York contracts to what is called the Narrows, nearly opposite the point where our legalized robbers, the Custom-House officers, board incoming steamers to ask strangers to take their first American swear, and where, if false oaths really colored the atmosphere the air would be bluer than is the sky on this gracious day. I turn from my writing-machine to the window, and drink in, with a pleasure that never seems to pall, the glorious panorama.

"What do you see?"  If in ordinary talk I were asked this, I should of course say, "I see land and water and sky, ships and houses, and light clouds, and the sun drawing to its setting over the low green hills of Staten Island and illuminating all."

But if the question refer to the terms of political economy, I should say, "I see land and wealth." Land, which is the natural factor of production; and wealth, which is the natural factor so changed by the exertion of the human factor, labor, as to fit it for the satisfaction of human desires. For water and clouds, sky and sun, and the stars that will appear when the sun is sunk, are, in the terminology of political economy, as much land as is the dry surface of the earth to which we narrow the meaning of the word in ordinary talk. And the window through which I look; the flowers in the garden; the planted trees of the orchard; the cow that is browsing beneath them; the Shore Road under the window; the vessels that lie at anchor near the bank, and the little pier that juts out from it; the trans-Atlantic liner steaming through the channel; the crowded pleasure-steamers passing by; the puffing tug with its line of mud-scows; the fort and dwellings on the opposite side of the Narrows; the lighthouse that will soon begin to cast its far-gleaming eye from Sandy Hook; the big wooden elephant of Coney Island; and the graceful sweep of the Brooklyn Bridge, that may be discovered from a little higher up; all alike fall into the economic term wealth — land modified by labor so as to afford satisfaction to human desires. All in this panorama that was before man came here, and would remain were he to go, belongs to the economic category land; while all that has been produced by labor belongs to the economic category wealth, so long as it retains its quality of ministering to human desire.

But on the hither shore, in view from the window, is a little rectangular piece of dry surface, evidently reclaimed from the line of water by filling in with rocks and earth. What is that? In ordinary speech it is land, as distinguished from water, and I should intelligibly indicate its origin by speaking of it as "made land." But in the categories of political economy there is no place for such a term as "made land." For the term land refers only and exclusively to productive powers derived wholly from nature and not at all from industry, and whatever is, and in so far as it is, derived from land by the exertion of  labor, is wealth. This bit of dry surface raised above the level of the water by filling in stones and soil, is, in the economic category, not land but wealth. It has land below it and around it, and the material of which it is composed has been drawn from land; but in itself it is, in the proper speech of political economy, wealth; just as truly as the ships I behold are not land but wealth, though they too have land below them and around them and are composed of material drawn from land. — The Science of Political Economy unabridged: Book IV, Chapter 6, The Distribution of Wealth: Cause of Confusion as to Propertyabridged

... go to "Gems from George"

Mason Gaffney:  Sounding the Revenue Potential of Land: Fifteen Lost Elements

Variant kinds of natural resources, hitherto neglected or not classed with land, show great revenue potential.  Some examples are

  • the radio spectrum;
  • telecom relay sites;
  • slots in the geosynchronous orbit;
  • fishing quotas;
  • quotas of all sorts on production and marketing;
  • pollution permits;
  • power drops;
  • street parking spaces;
  • driving on congested roads and through bottlenecks;
  • mooring boats; etc.
Variant forms of tenures to resources, omitted from standard tax rolls, show great revenue potential.

      Leases on public lands give tenure, de facto, but are often exempt because the public land is exempt.
  • Often they are “sweetheart” leases, like grazing leases in New Mexico and 16 other western states.
  • Aircraft landing “slots” and “gates” are protected by Federal power from local taxes.
  • Water “rights” are mostly licenses, hence not real property, hence generally exempt from property taxes.
  •  Resort homes and mineral claims and timber cutting rights on Federal lands are “possessory interests,” sometimes not on the tax rolls.
  • Licenses assigning radio spectrum are “on” Federal property, hence exempt from local taxes.
      There is a class of “land-grabbing” capital whose value derives from its ability to preempt common land.
  • Vehicles on public land, whether parked or moving, preempt valuable space and are a means of establishing a kind of mobile tenure. (Donald Shoup reckons that potential revenues from street parking, now free, could raise as much money as the entire property tax now does.)
  • Boaters in large, fast, noisy, polluting vessels on small lakes take over the lakes as if they owned them.
  • Polluters in effect preempt de facto pollution easements over neighboring lands, including the public lands in streets and parks.
  • Owners of surfboards, ATVs, horses, snowmobiles, trail bikes, rifles and the like impose a wide footprint over vast tracts of public and semi-public land without paying rent.
Culturally we have a long way to go before the American public realizes what our cowboy attitudes are doing to us, but it’s time to start by collecting rent, directly or indirectly.

      Leaseholds on the OCS (Outer Continental Shelf) are outside state sovereignty, hence not subject to property taxes. Their tenure was established by U.S. military might as recently as 1946, when President Truman unilaterally extended our boundaries from the traditional 3-mile limit to 200 miles. That is not the end of it, however, for our military/diplomatic/financial umbrellas undergird tenures of American nationals and allies in nations around the world, and protect vessels at sea, even those flying foreign flags of “convenience” (i.e. tax-avoidance). There is every reason why private beneficiaries of these tenures should pay for their protection. Read the whole article


a synopsis of Robert V. Andelson and James M. Dawsey: From Wasteland to Promised land: Liberation Theology for a Post-Marxist World

Beneath all ideologies, there are basic factors and relationships that underlie economic behavior. To understand the (otherwise inexplicable) omission of attention to land's economic importance, it is useful to go back to these basics.
  • The term "Land" refers to the whole material universe, exclusive of people and their products. Not the creation of human labor, yet essential to labor, it is the raw material from which all wealth is fashioned. It includes not only soil and minerals, but water, air, natural vegetation and wildlife, and all natural opportunities -- even those yet to be discovered. It is a passive factor of production, yielding wealth only when labor is applied to it.
  • Labor includes all human powers, mental and physical, used directly or indirectly to produce goods or to render service in exchange. Labor is often thought of as work that is done for hire, at fixed wages, mainly excluded from the risk-taking and decision-making that is normally classed under the heading of "entrepreneurship". Yet labor, properly understood, includes all human exertion in production -- including mental exertion. The payment to labor is called Wages. And it is important to remember that the payment, or return, to labor does not include any returns that are the result of monopoly.
  • Capital is the economic term that is most profoundly misunderstood and confused. For the term to make sense in any systematic analysis of wealth distribution, we must define capital in its classical sense as "wealth which is used to aid in further production, instead of being directly consumed." Since production is not completed until the product is in the hands of the consumer, products on their way to market, or "wealth in the course of exchange," are also considered capital.
Now, the objective of all economic behavior is the satisfaction of human desires. Human beings always seek to satisfy their desires with the least exertion: this self-evident proposition lies at the heart of our concepts of economic value and exchange. The primary thing needed for satisfaction is, of course, the tangible things, made from natural resources, that satisfy human desires and have exchange value. Things that meet these four fundamental criteria are termed "wealth". But money, bonds, and mortgages are but claims upon and measures of this value; they are not the wealth they symbolize.

A clear understanding of these basic definitions points immediately to the primacy of land as an economic factor. Human beings have inescapable material needs of food, clothing and shelter. Regardless of how long a chain of exchanges they may pass through in a modern economy, these things ultimately have their source in the land; they can come from nowhere else. Human beings need land in order to live. But if we must pay rent to a private land "owner" for access to the gifts of nature, it amounts to being charged a fee for our very right to live. Read the whole synopsis


Mason Gaffney: Land as a Distinctive Factor of Production
The classical economists treated land as distinct from capital: "land, labor and capital" were the three basic "factors of production."  They were mutually exclusive.  They were comprehensive, including all economic agents. Each was also "limitational," meaning at least some of each was needed for all economic activity (v.  A9, below)1 They made a coherent system, like Humboldt’s Cosmos, in the spirit of The Enlightenment that spawned them both.

Neo-classical economists denied the distinction and undertook to purge land from economese. 
  • Many of them, following John B. Clark and Frank Knight, still deny the distinction as I explain in The Corruption of Economics, a companion volume in this series. 
  • Many treat the matter by seizing on and stressing all similarities of land and capital, while ignoring all differences. 
  • Some invent gray areas that seem to fuse land and capital, present them as typical, and quickly move on. 
  • Many more simply ignore land, which has the effect of accepting the Clark-Knight verdict in practice. 
  • Others uneasily finesse and blur the issue by writing "land" in quotes, or trivializing its value, or referring vaguely to "quasi-rents" to comprehend a broad spectrum of incomes both from land and other factors.
What ever possessed the neo-classicals to leave such a mess?  One needs to know something of their times and politics.  J.B. Clark and E.R.A. Seligman of Columbia University were obsessed with deflecting proposals, strongly supported at the time and place they wrote, to focus taxation on land.  Henry George, after all, was nearly elected Mayor of New York City in 1886 and 1897.  Frank Knight, founder of The Chicago School, followed them closely.  That explains why some of the points made herein may seem obvious to readers who have been spared the formal conditioning imposed on graduate students in economics.  In graduate training, however, the obvious is obscured, silenced, or denied.  Hundreds of books on economic theory are published with "land" absent from the index.  Denial is reinforced by dominant figures using sophistical, pedantic cant, which students learn to ape to distinguish themselves from the laity and advance their careers....

Common micro theory finesses Time.  It deals with economic relations as though they occurred at a point in time (and space as well); as though they were relations of coexistence, rather than a cavalcade of events in sequence.   Sometimes two points are allowed (short run and long).  Thus micro theory can ignore the birth of capital, its growth, maturity, senescence, death, burial, and replacement, vital elements of its difference from land.  Time, and relations of sequence, are hived off to the far satellite of "finance," usually not even taught in departments of economics.  ...

Land does have distinctive qualities for economic analysis and policy.  This essay gives 10 primary reasons why land is distinct from capital (and of course from mankind itself) as an economic input.  Then it gives 18 important economic consequences thereof, and their policy implications.  Making land markets, land policy, and land taxation work well for the general welfare is a major challenge for economists and statesmen.  They have neglected it too long by crediting and following the peculiar neo-classical sophisms that obscure or deny all distinctions between land and capital. ...

Land is not produced nor reproducible
Land is not produced, it was created.  It is the world, the planet from which man evolved, with the sun that energizes it and the orbit that tempers it.  Land is a free gift, variously expressed in different philosophies as Spaceship Earth, the Big Blue Marble, God's Gift, Creation, Gaia, The Promised Land, or nature.  Mankind did not create The Earth with its space and resources, nor can we add to them.  We can only acquire them, often by fighting, or rent-seeking, or in other counterproductive ways.  Man at best improves and develops capacities inherent in the free gift.  It is disappointing, and should alert us and make us suspicious, that economic analysis would ever purge out this paramount, self-evident truth.

"Land" in economics means all natural resources and agents, with their sites (locations and extensions in space).  Land is not just the matter occupying space: it is space. It includes many things not colloquially called land, such as
  • water and the beds under it,
  • the radio spectrum,
  • docks,
  • rights of way,
  • take-off/landing time slots for aircraft,
  • aquifers,
  • ambient air (the right to breathe it and the license to pollute),
  • "air rights" to strata in the third dimension of cities,
  • falling water,
  • wild fish, game, and vegetation,
  • natural scenery,
  • weather,
  • the environment,
  • the ecology,
  • the natural gene pool, etc. 
  • Any franchise, license or privilege giving territorial rights is a species of easement over land. 
    • Your driver's license is a right to use land;
    • red lights remind us of the critical value of space at central locations, since two objects cannot occupy the same space at the same time. 
    • It is worth a lot to have the right-of-way, as railroads do.
Economic land excludes many things, too, that are colloquially called land.  It excludes land-fill, for example, by which many cities are extended into shallow waters.  The site and seabed are properly land; the land-fill is an improvement.  There is no "made land" in the economic sense: it is reallocated from other uses.  Expanding cities take farmland from producing food and fiber, much of it for the expanding city itself.  Filled land in shallow water near cities is taken away from anglers and sailors and viewers and ecologists, who now routinely  organize to prevent it being "made" away with.  Drained and filled wetlands are taken away from endangered species, as well as from their primal role as filters protecting coastal waters from river trash and pollutants.  Thanks to the myopia and dereliction of economists, it has taken militant environmentalists to carry home this truth, developing in their struggle to be heard and understood a deep skepticism of economists and their "way of thinking." Some economists and environmentalists are now coming to terms with each other, after decades of mutual shunning.  Too many modern economists, however, still use their "way of thinking" to seal out important new evidence that doesn't fit the model.

Capital (K) is that which has been produced but not yet used up.  Capital is formed by human thrift, forbearance, investment and production.  Only after mankind forms and makes capital does it bear much likeness to land, in that they coexist.  Ordinary micro-economics obscures the differences because it deals mainly with relations of coexistence, ignoring the continual formation and destruction of capital, ignoring time and relations of sequence.  Thus it excludes from its purview one of the prime differences between land and capital.  The life of capital, like that of people, is marked by major sacraments of birth, growth, aging and death - all missing from micro theory. Economic life is a cavalcade in which the birth and death of capital are dated events.   Micro deals mainly with how existing resources are allocated at a moment in time, not how they originate, grow, flourish, reproduce, age, die, and decompose.

Capital occupies space; land is space.  In common micro theory, resources and markets come together at a point not just in time but in space.  Again, it excludes from its purview one of the prime qualities of land.6
6.      It is ironic that economists purport or affect to ape the methods of physics, when they delete both space and time from their subject.  If they have borrowed from physics, they have taken the form without the substance.

For the reasons given, alone, land and capital are mutually exclusive. There are, however, nine more, which follow. ...

Land as "site" (location plus extension) does not normally wear out, depreciate, spoil, obsolesce, nor get used up by human activities incident to occupancy and production. In contrast, capital depreciates from time and use, routinely and by nature.  After being formed, it must be conserved from entropy by continual maintenance, repair, remodeling, safeguarding against theft and fire, and so on.7  Like our own bodies, it returns to dust; land is the dust to which it returns.  Inventories are depleted; moving parts wear out; fixed capital depreciates with use and time. ...

No one can get more land without others keeping less.  One can acquire more capital by forming it through saving and investing.  One can consume more by working more, while others work no less.  Land is different: it is the most common basis of market power, therefore.   ...

When demand grows for land in a specific area or neighborhood, land cannot immigrate to meet the higher demand.  It is true that land elsewhere can be converted to the specific land use that is demanded.  Some micro theorists argue that this makes land as "mobile" as anything else, equating land and capital.  It dovetails with and reinforces their paradigm centered on "the firm," a unit that can add unlimited inputs of all kinds in the long run, and among which competition drives all profits to zero.  This rationalization overlooks the hoary adage of real estate: "value depends on three factors, location, location, and location." What happens then is not that supply rises to meet higher demand, but ground rent rises.

Land is not convertible into capital, nor vice versa.  Exchange of land for capital has misled many into equating them, but only through inadvertence and the fallacy of composition.  Exchange is not interchange: exchange does not change the quantity of either land or capital.  Capital is convertible into any other form of capital each time it turns over, by using Capital Consumption Allowances, the proceedings of turnover, to hire people actually to produce new capital.  Capital may also be disinvested and consumed, or augmented by new saving and investment.  None of those is true of land.   ...

Land is indispensable to life, hence to economic activity.  The same is generally true of labor and capital, but less "absolutely".  Land can exist perfectly well without labor or capital, and support timber and wildlife, but labor and capital cannot exist at all without at least some land, and often a great deal of land.  Substitution is limited.  It will not do just to have 57 varieties of labor, or of capital.  There must be at least some land.  Remember, land includes space itself, and a time-slot in it.  It includes air and water, the environment and the ecology and all original matter itself.  Without land there is nothing.20 Coupling  this with the non-reproduceability of land, and its fixity, land is distinctive.
 20.     An old limerick puts it well. 
"A captious economist planned
to live without access to land. 
He nearly succeeded,
but found that he needed
food, water, and somewhere to stand."
"Homelessness," a modem plague, is essentially landlessness.  A popular ditty from the 1930s includes the catchy line, "If you can't pay the rent, you can live in a tent," but you can't do even that without a campsite.  Perhaps this is why modern economists have so little to say about homelessness.  Joblessness they have dismissed as part of the vital economic function of "job-seeking," with which they have persuaded at least themselves.  The next logical step is that the person sleeping in the doorway is not really homeless, but just engaged in the vital market function of "home-seeking".  Rather than seem totally absurd they are simply silent, except to stress the "exclusionary principle" of private property as the bedrock of their system, and their system as a panacea. ...

Land is traditionally subject to a host of legal and customary limits on use and ownership.  Covenants are found in land titles: seldom in titles to cars or canned goods.  Divided ownership is common, there is so much about land to be owned.   There are easements through, air rights over, mineral rights under, and neighbors and zoning all around any parcel of land.  Changing lot lines is unavoidably a social process, there is no other way.

A large share of the more valuable land in cities is held by estates.  Public and eleemosynary [non-profit] holders are preferentially tax exempt and often without any visible motive to economize.  Water licenses are held subject to "use it or lose it" traditions leading to appalling waste.  Broadcasting/telecasting licenses are highly political.  And so on.  Only a resource with the characteristics of land could be subject to such a wide range of non-economic pressures.   ....

Amassing land is always done, can only be done, by shrinking the holdings of others.  To expand is to preempt.  If A is to have more then B, C, D et al. must have less, there is no other way.  A can amass more capital by saving, creating new capital, leaving B, C, D et al. with as much as before.  A can increase his labor income by working longer, or harder, or smarter, producing more, leaving others with as much as before.  He and she together can also spawn more children: labor, like capital, is reproducible, and indefinitely augmentable.  Possessing land, however, means just one thing: bumping others.

In the region of the mind, the thing possessed may be shared by all with no diminution to anyone.  No one's pleasure In Shakespeare, or Beethoven, or understanding physics is any less because at the same time millions of others have the same pleasure.  Art, letters and science are the common property of mankind, open to all who care to acquire them.  The creative producer's pleasure is in proportion to the number with whom he shares.  The gratification is from sharing, not excluding.  The contrast with landholding is nearly total.35
35.     Paraphrased from Upton Sinclair, 1923, The Goose Step.

Amassing claims on wealth by creating and producing is not, therefore, a threat to others.  Amassing capital through saving does not weaken or impoverish others.  Producing goods does not interfere with others' doing the same.  One producer may drive another from a particular limited market, but glutting one market increases real demand for the products of other markets, and raises the real value of others' incomes by lowering prices.  Amassing land, however, has to deprive others, both relatively and absolutely.  Concentrated holding and control of land, therefore, have always been threats to the well-being of those left out.

Conversely, the only way the landless, e.g. in South Africa, can get land is from those who now have it.  "Growth" is often advanced as the solution to maldistribution, injustice and poverty, but that is mere temporizing because land does not grow.  When production and demand grow, land rents rise.  Of land it is starkly true, "the problem is not production, but distribution".  There is no production; only distribution. Read the whole article

Fred E. Foldvary — The Ultimate Tax Reform: Public Revenue from Land Rent

“Land,” in the language of economics, includes all natural resources: the three-dimensional space on the surface of the Earth (including space in and on water); material land such as minerals, water, and oil; the electromagnetic spectrum; wildlife (including wild animals and forests); and satellite orbits.

The most important potential source of public revenue from land is real estate sites. The income from land has been called “ground rent,” “economic rent,” or just “rent.” The term “rent” here will refer to the income only from the land, excluding what is paid for the use of the improvements. The “economic rent” with respect to land refers to the maximum that a tenant would bid for the use of the site. I have called this “geo-rent” to differentiate it from “rent” as a payment for any resource or from the actual amount a tenant may pay, which could be less than what the market could bear. ...

Impact on production

It is widely understood that when something is taxed, we get less of it. As discussed above, this reduction in labor, production, and investment is called the “excess burden” or “deadweight loss” of taxation. Income taxation discourages work, sales and value-added taxes discourage consumption, capital gains taxes discourage investment, and real property taxes discourage building and improving property. Those taxes make the asset or activity more costly, which then reduces the quantity bought of the thing being taxed.

What makes land different is that its supply is fixed, and it is independent of human action. When land value or rent is tapped for public revenue, the land does not shrink, flee, or hide.

Recall the definition above, that land means natural resources. Real estate sites consist of the three dimensional space within some boundary of title or jurisdiction. We cannot import land to expand the amount of space. There can be no land factories to produce more space. Chopping down trees, leveling inclined slopes, and draining and filling in water only change the material contents of the space, not the extent or location of the space. Building taller just makes more space usable; the three-dimensional space does not expand. ... read the whole document

Fred Foldvary: Geo-Rent: A Plea to Public Economists

“Land” includes all earthly space, not just solid surfaces. Land includes water areas and the electro-magnetic spectrum, but the most important potential source of public revenue from land is real estate sites.

The characteristics of land are well known.
  • Land has a fixed supply. The space within some boundary can be neither expanded nor contracted.
  • Land is fixed not only in extent but also in mobility, unlike people, who can migrate, or capital goods, which are more or less mobile.
  • Land cannot be imported. Even in the case of buildings and other permanent structures, they differ from land in that they are created by human enterprise, and in that their creators decide where the structure will be located.
  • Finally, land is not something to be discovered. Once people figured out that the earth was a sphere, and its approximate size, they knew that the land was “out there.” Entrepreneurship is vital in discovering the best routes to land areas, it is vital in discovering the potential value of those areas, but it is not vital in discovering that the land is out there. That was known all along.  Read the entire article

Bill Batt: Comment on Parts of the NYS Legislative Tax Study Commission's 1985 study “Who Pays New York Taxes?”

The question still begs to be answered, “why tax land?” And what happens when we don’t tax land? Henry George answered this more than a century ago more forcefully and clearly, perhaps, than anyone has since. He recognized full well that the economic surplus not expended by human hands or minds in the production of capital wealth gravitates to land. Particular land sites come to reflect the value of their strategic location for market exchanges by assuming a price for their monopoly use. Regardless whether those who acquire title to such sites use them to the full extent of their potential, the flow of rent to such locations is commensurate with their full capacity. This is why John Stuart Mill more than a century ago observed that, “Landlords grow richer in their sleep without working, risking or economizing. The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title.”33 Absent its recovery by taxation this rent becomes a “free lunch” to opportunistically situated titleholders. When offered for sale, the projected rental value is capitalized in the present value for purposes of attaching a market price and sold as a commodity. Yet simple justice calls for the recovery in taxes what is the community’s creation. Moreover, the failure to recover the land rent connected to sites makes it necessary to tax productive activities in our economy, and this leads to economic and technical inefficiency known as “deadweight loss.”34 It means that the economy performs suboptimally.

Land, and by this Henry George meant any natural factor of production not created by human hands or minds, is ours only to use, not to buy or sell as a commodity. In the equally immortal words of Jefferson a century earlier, “The earth belongs in usufruct to the living; . . . [It is] given as a common stock for men to labor and live on.”35 This passage likely needs a bit of parsing for the modern reader. The word usufruct, understood since Roman times, has almost passed from use today. It means “the right to use the property of another so long as its value is not diminished.”36 Note also that Jefferson regarded the earth as a “common stock;” not allotted to individuals with possessory titles. Only the phrase “to the living” might be subject to challenge by forward-looking environmentalists who, taking an idea from Native American cultures, argue that “we do not inherit the earth from our ancestors; we borrow it from our children.” The presumption that real property titles are acquired legitimately is a claim that does not withstand scrutiny; rather all such titles owe their origin ultimately to force or fraud.37

If we own the land sites that we occupy only in usufruct, and the rent that derives from those sites is due to community enterprise, it is not a large logical leap to argue that the community’s recovery of that rent should be the proper source of taxation. This is the Georgist argument: that the recapture of land rent is the proper – indeed the natural – source of taxation.38

... read the whole commentary

Nic Tideman: Comments on the NTIA's Comprehensive Policy Review of Use and Management of the Radio Frequency Spectrum

Both on grounds of justice and on grounds of efficiency, a market-based system of allocating rights to use the radio frequency spectrum, with public collection of the value of rights granted, is best. The right to use the frequency spectrum is a scarce resource, whose value is derived primarily from the mere existence of the spectrum and not from the efforts of those who might be granted use. Thus the whole population has equal respectable claims to use. But efficient use of the resource requires exclusive assignment of frequencies within particular geographical areas. Therefore justice is served by requiring those who receive the privilege of use to compensate the rest of the population for that privilege. ... read the whole article

Charles T. Root — Not a Single Tax! (1925)

Every community, whatever its political name and extent — village, city, state or province or nation — has its own normal, unfailing income, growing with the growth of the community and always adequate to meet necessary governmental expenditure.

To explain: Every community has an indefeasible original right to the land on which it exists, and to all the natural, unmodified properties and advantages of that particular area of the earth's surface. To this land in its natural state, undrained, unfenced, unfertilized, unplanted and unoccupied, including its waters, its contents and its location, every individual in the community (which may consist of any political unit selected) has an equal right, while all the individuals together have a joint right to the value for use which society has conferred upon these natural advantages.

This value for use is known as "Land Value," or by the not particularly descriptive but generally adopted name of "Economic Rent."

Briefly defined the land value or economic rent of any piece of ground is the largest annual amount voluntarily offered for the exclusive use of that ground, or of an equivalent parcel, independent of improvements thereon. Every holder or user of land pays economic rent, but he now pays most of it to the wrong party. The aggregate economic rent of the territory occupied by any political unit is, as has been stated above, always sufficient, usually more than sufficient, for the legitimate expenses of the government of that unit. As also stated above, the economic rent belongs to the community, and not to individual landowners. ... 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