One of the beauties of forming communities is that through our common spending,
we can together create amenities and provide services that benefit large
number of people, which individuals would have great difficulty in providing
or could only provide very inefficiently.
Most public spending creates more value than what it costs. Spend money
on a bridge, and land values rise on one or both sides of the bridge. Build
a subway system, and land values within a significant radius around the stations
go sky high. Improve the schools, and land values will rise. Provide trash
pickup, and land values will rise.
Judging a public spending project on the basis of whether it will produce
an increase in land values equal to the cost of the project makes a lot of
sense. For example, there are proposals to build a bridge to an island in
Alaska. One guess at the current land value of that island places the island's
value at about $450 million, and the cost of the bridge is about $223 million.
So if building the bridge results in a 50% increase in land values, the cost
of building the bridge will be covered! (And if building the bridge wouldn't
produce a 50% increase in land values, does the project make sense?)
Now we need to consider who it is that should pay for that bridge, and why
the current owners of the 60,000 or so acres of land on that island should
receive a windfall. If we believe that the federal taxpayer should pay for
it be paid
for via a tax on wages and other income, or should it be through a federal
tax on land values?
Something to think about.
Henry George: The Common Sense of Taxation (1881
The true purposes of government are well stated in the preamble to the Constitution
of the United States, as they are in the Declaration of Independence. To
insure the general peace, to promote the general welfare, to secure to each
individual the inalienable rights to life, liberty, and the pursuit of happiness — these
are the proper ends of government, and are therefore the ends which in every
scheme of taxation should be kept in mind.
As to amount of taxation, there is no principle which imposes any arbitrary
limit. Heavy taxation is better for any community than light taxation, if
revenue be used in doing by public agencies things which could not be done, or
could not be as well and economically done, by private agencies. Taxes could
be lightened in the city of New York by dispensing with street-lamps and disbanding
the police force. But would a reduction in taxation gained in this way be for
the benefit of the people of New York and make New York a more desirable place
to live in? Or if it should be found that heat and light could be conducted through
the streets at public expense and supplied to each house at but a small fraction
of the cost of supplying them by individual effort, or that the city railroads
could be run at public expense so as to give every one transportation at very
much less than it now costs the average resident, the increased taxation necessary
for these purposes would not be increased burden, and in spite of the larger
taxation required, New York would become a more desirable place to live in. It
is a mistake to condemn taxation as bad merely because it is high; it is a mistake
to impose by constitutional provision, as in many of our States has been advocated,
and in some of our States has been done, any restriction upon the amount of taxation.
A restriction upon the incurring of public indebtedness is another matter. In
nothing is the far-reaching statesmanship of Jefferson more clearly shown than
in his proposition that all public obligations should be deemed void after a
certain brief term — a proposition which he grounds upon the self-evident
truth that the earth belongs in usufruct to the living, and that the dead have
no control over it, and can give no title to any part of it. But restriction
upon public debts is a very different thing from restriction upon the power of
taxation, and reasons which urge the one do not apply to the other. Nor is increased
taxation necessarily proof of governmental extravagance. Increase in taxation
is in the order of social development, for the reason that social development
tends to the doing of things collectively that in a ruder state are done individually,
to the giving to government of new functions and the imposing of new duties.
Our public schools and libraries and parks, our signal service and fish commissions
and agricultural bureaus and grasshopper investigations, are evidences of this.
But while no limit can be properly fixed for the amount of taxation, the
method of taxation is of supreme importance. A horse may be anchored by fastening
to his bridle a weight which he will not feel when carried in a buggy behind
him. The best ship may be made utterly unseaworthy by the bad stowage of
a cargo which properly placed would make her the stiffer and more weatherly.
So enterprise may be palsied, industry crushed, accumulation prevented, and
a prosperous country turned into a desert, by taxation which rightly levied
would hardly be felt. ...
So long as we consider that community most prosperous which increases most
rapidly in wealth, so long is it the height of absurdity for us to tax wealth
in any of its beneficial forms. We should tax what we want to repress, not
what we want to encourage. We should tax that which results from the general
prosperity, not that which conduces to it. It is the increase of population,
the extension of cultivation, the manufacture of goods, the building of houses
and ships and railroads, the accumulation of capital, and the growth of commerce
that add to the value of land — not the increase in the value of land
that induces the increase of population and increase of wealth. It is not
that the land of Manhattan Island is now worth hundreds of millions where,
in the time of the early Dutch settlers, it was only worth dollars, that
there are on it now so many more people, and so much more wealth. It is because
of the increase of population and the increase of wealth that the value of
the land has so much increased. Increase of land values tends of itself to
repel population and prevent improvement. And thus the taxation of land values,
unlike taxation of other property, does not tend to prevent the increase
of wealth, but rather to stimulate it. It is the taking of the golden egg,
not the choking of the goose that lays it.
Every consideration of policy and ethics squares with this conclusion.
The tax upon land values is the most economically perfect of all taxes. It
does not raise prices; it maybe collected at least cost, and with the utmost
ease and certainty; it leaves in full strength all the springs of production;
and, above all, it consorts with the truest equality and the highest justice.
For, to take for the common purposes of the community that value which results
from the growth of the community, and to free industry and enterprise and
thrift from burden and restraint, is to leave to each that which he fairly
earns, and to assert the first and most comprehensive of equal rights — the
equal right of all to the land on which, and from which, all must live.
Thus it is that the scheme of taxation which conduces to the greatest production
is also that which conduces to the fairest distribution, and that in the
proper adjustment of taxation lies not merely the possibility of enormously
increasing the general wealth, but the solution of these pressing social
and political problems which spring from unnatural inequality in the distribution
of wealth. ... read the whole article
Henry George: The Condition
of Labor — An Open Letter to Pope Leo XIII in response to Rerum
God’s laws do not change. Though their applications may alter with
altering conditions, the same principles of right and wrong that hold when
men are few and industry is rude also hold amid teeming populations and complex
industries. In our cities of millions and our states of scores of millions,
in a civilization where the division of labor has gone so far that large
numbers are hardly conscious that they are land-users, it still remains true
that we are all land animals and can live only on land, and that land is
God’s bounty to all, of which no one can be deprived without being
murdered, and for which no one can be compelled to pay another without being
robbed. But even in a state of society where the elaboration of industry
and the increase of permanent improvements have made the need for private
possession of land wide-spread, there is no difficulty in conforming individual
possession with the equal right to land. For as soon as any piece of land
will yield to the possessor a larger return than is had by similar labor
on other land a value attaches to it which is shown when it is sold or rented.
Thus, the value of the land itself, irrespective of the value of any improvements
in or on it, always indicates the precise value of the benefit to which all
are entitled in its use, as distinguished from the value which, as producer
or successor of a producer, belongs to the possessor in individual right.
To combine the advantages of private possession with the justice of common
ownership it is only necessary therefore to take for common uses what value
attaches to land irrespective of any exertion of labor on it. The principle
is the same as in the case referred to, where a human father leaves equally
to his children things not susceptible of specific division or common use.
In that case such things would be sold or rented and the value equally applied.
It is on this common-sense principle that we, who term ourselves single-tax
men, would have the community act.
We do not propose to assert equal rights to land by keeping land common,
letting any one use any part of it at any time. We do not propose the task,
impossible in the present state of society, of dividing land in equal shares;
still less the yet more impossible task of keeping it so divided.
We propose — leaving land in the private possession of individuals,
with full liberty on their part to give, sell or bequeath it — simply
to levy on it for public uses a tax that shall equal the annual value of
the land itself, irrespective of the use made of it or the improvements on
it. And since this would provide amply for the need of public revenues,
we would accompany this tax on land values with the repeal of all taxes now
levied on the products and processes of industry — which taxes, since
they take from the earnings of labor, we hold to be infringements of the
right of property.
This we propose, not as a cunning device of human ingenuity, but as a conforming
of human regulations to the will of God.
God cannot contradict himself nor impose on his creatures laws that clash.
If it be God’s command to men that they should not steal — that
is to say, that they should respect the right of property which each one
has in the fruits of his labor;
And if he be also the Father of all men, who in his common bounty has intended
all to have equal opportunities for sharing;
Then, in any possible stage of civilization, however elaborate, there must
be some way in which the exclusive right to the products of industry may
be reconciled with the equal right to land.
If the Almighty be consistent with himself, it cannot be, as say those socialists
referred to by you, that in order to secure the equal participation of men
in the opportunities of life and labor we must ignore the right of private
property. Nor yet can it be, as you yourself in the Encyclical seem to argue,
that to secure the right of private property we must ignore the equality
of right in the opportunities of life and labor. To say the one thing or
the other is equally to deny the harmony of God’s laws.
But, the private possession of land, subject to the payment to the community
of the value of any special advantage thus given to the individual, satisfies
both laws, securing to all equal participation in the bounty of the Creator
and to each the full ownership of the products of his labor. ...
Nor do we hesitate to say that this way of securing the equal right to the
bounty of the Creator and the exclusive right to the products of labor is
the way intended by God for raising public revenues. For we are not atheists,
who deny God; nor semi-atheists, who deny that he has any concern in politics
It is true as you say — a salutary truth too often forgotten — that “man
is older than the state, and he holds the right of providing for the life
of his body prior to the formation of any state.” Yet, as you too perceive,
it is also true that the state is in the divinely appointed order. For He
who foresaw all things and provided for all things, foresaw and provided
that with the increase of population and the development of industry the
organization of human society into states or governments would become both
expedient and necessary.
No sooner does the state arise than, as we all know, it needs revenues.
This need for revenues is small at first, while population is sparse, industry
rude and the functions of the state few and simple. But with growth of population
and advance of civilization the functions of the state increase and larger
and larger revenues are needed.
Now, He that made the world and placed man in it, He that pre-ordained civilization
as the means whereby man might rise to higher powers and become more and
more conscious of the works of his Creator, must have foreseen this increasing
need for state revenues and have made provision for it. That is to say: The
increasing need for public revenues with social advance, being a natural,
God-ordained need, there must be a right way of raising them — some
way that we can truly say is the way intended by God. It is clear that this
right way of raising public revenues must accord with the moral law.
- It must not take from individuals what rightfully belongs to individuals.
- It must not give some an advantage over others, as by increasing the prices
of what some have to sell and others must buy.
- It must not lead men into temptation, by requiring trivial oaths, by making
it profitable to lie, to swear falsely, to bribe or to take bribes.
- It must not confuse the distinctions of right and wrong, and weaken the
sanctions of religion and the state by creating crimes that are not sins,
and punishing men for doing what in itself they have an undoubted right
- It must not repress industry. It must not check commerce. It must not punish
thrift. It must offer no impediment to the largest production and the
fairest division of wealth.
Let me ask your Holiness to consider the taxes on the processes and products
of industry by which through the civilized world public revenues are collected — the
octroi duties that surround Italian cities with barriers; the monstrous customs
duties that hamper intercourse between so-called Christian states; the taxes
on occupations, on earnings, on investments, on the building of houses, on
the cultivation of fields, on industry and thrift in all forms. Can these
be the ways God has intended that governments should raise the means they
need? Have any of them the characteristics indispensable in any plan we can
deem a right one?
All these taxes violate the moral law. They take by force what belongs to
the individual alone; they give to the unscrupulous an advantage over the
scrupulous; they have the effect, nay are largely intended, to increase the
price of what some have to sell and others must buy; they corrupt government;
they make oaths a mockery; they shackle commerce; they fine industry and
thrift; they lessen the wealth that men might enjoy, and enrich some by impoverishing
Yet what most strikingly shows how opposed to Christianity is this system
of raising public revenues is its influence on thought.
Christianity teaches us that all men are brethren; that their true interests
are harmonious, not antagonistic. It gives us, as the golden rule of life,
that we should do to others as we would have others do to us. But out of
the system of taxing the products and processes of labor, and out of its
effects in increasing the price of what some have to sell and others must
buy, has grown the theory of “protection,” which denies this
gospel, which holds Christ ignorant of political economy and proclaims laws
of national well-being utterly at variance with his teaching. This theory
sanctifies national hatreds; it inculcates a universal war of hostile tariffs;
it teaches peoples that their prosperity lies in imposing on the productions
of other peoples restrictions they do not wish imposed on their own; and
instead of the Christian doctrine of man’s brotherhood it makes injury
of foreigners a civic virtue.
“By their fruits ye shall know them.” Can anything more clearly
show that to tax the products and processes of industry is not the way God
intended public revenues to be raised?
But to consider what we propose — the raising of public revenues by
a single tax on the value of land irrespective of improvements — is
to see that in all respects this does conform to the moral law.
Let me ask your Holiness to keep in mind that the value we propose to tax,
the value of land irrespective of improvements, does not come from any exertion
of labor or investment of capital on or in it — the values produced
in this way being values of improvement which we would exempt. The value
of land irrespective of improvement is the value that attaches to land by
reason of increasing population and social progress. This is a value that
always goes to the owner as owner, and never does and never can go to the
user; for if the user be a different person from the owner he must always
pay the owner for it in rent or in purchase-money; while if the user be also
the owner, it is as owner, not as user, that he receives it, and by selling
or renting the land he can, as owner, continue to receive it after he ceases
to be a user.
Thus, taxes on land irrespective of improvement cannot lessen the rewards
of industry, nor add to prices,* nor in any way take from the individual
what belongs to the individual. They can take only the value that attaches
to land by the growth of the community, and which therefore belongs to the
community as a whole.
* As to this point it may be well to add that all economists
are agreed that taxes on land values irrespective of improvement or use — or
what in the terminology of political economy is styled rent, a term distinguished
from the ordinary use of the word rent by being applied solely to payments
for the use of land itself — must be paid by the owner and cannot
be shifted by him on the user. To explain in another way the reason given
in the text: Price is not determined by the will of the seller or the
will of the buyer, but by the equation of demand and supply, and therefore
as to things constantly demanded and constantly produced rests at a point
determined by the cost of production — whatever tends to increase
the cost of bringing fresh quantities of such articles to the consumer
increasing price by checking supply, and whatever tends to reduce such
cost decreasing price by increasing supply. Thus taxes on wheat or tobacco
or cloth add to the price that the consumer must pay, and thus the cheapening
in the cost of producing steel which improved processes have made in
recent years has greatly reduced the price of steel. But land has no
cost of production, since it is created by God, not produced by man.
Its price therefore is fixed —
1 (monopoly rent), where land is held in close monopoly,
by what the owners can extract from the users under penalty of deprivation
and consequently of starvation, and amounts to all that common labor
can earn on it beyond what is necessary to life;
2 (economic rent proper), where there is no special monopoly, by what the
particular land will yield to common labor over and above what may be had
by like expenditure and exertion on land having no special advantage and
for which no rent is paid; and,
3 (speculative rent, which is a species of monopoly rent, telling particularly
in selling price), by the expectation of future increase of value from
social growth and improvement, which expectation causing landowners to
withhold land at present prices has the same effect as combination.
Taxes on land values or economic rent can therefore never
be shifted by the landowner to the land-user, since they in no wise increase
the demand for land or enable landowners to check supply by withholding
land from use. Where rent depends on mere monopolization, a case I mention
because rent may in this way be demanded for the use of land even before
economic or natural rent arises, the taking by taxation of what the landowners
were able to extort from labor could not enable them to extort any more,
since laborers, if not left enough to live on, will die. So, in the case
of economic rent proper, to take from the landowners the premiums they
receive, would in no way increase the superiority of their land and the
demand for it. While, so far as price is affected by speculative rent,
to compel the landowners to pay taxes on the value of land whether they
were getting any income from it or not, would make it more difficult
for them to withhold land from use; and to tax the full value would not
merely destroy the power but the desire to do so.
To take land values for the state, abolishing all taxes on the products
of labor, would therefore leave to the laborer the full produce of labor;
to the individual all that rightfully belongs to the individual. It would
impose no burden on industry, no check on commerce, no punishment on thrift;
it would secure the largest production and the fairest distribution of wealth,
by leaving men free to produce and to exchange as they please, without any
artificial enhancement of prices; and by taking for public purposes a value
that cannot be carried off, that cannot be hidden, that of all values is
most easily ascertained and most certainly and cheaply collected, it would
enormously lessen the number of officials, dispense with oaths, do away with
temptations to bribery and evasion, and abolish man-made crimes in themselves
But, further: That God has intended the state to obtain the revenues it
needs by the taxation of land values is shown by the same order and degree
of evidence that shows that God has intended the milk of the mother for the
nourishment of the babe.
See how close is the analogy. In that primitive condition ere the need for
the state arises there are no land values. The products of labor have value,
but in the sparsity of population no value as yet attaches to land itself.
But as increasing density of population and increasing elaboration of industry
necessitate the organization of the state, with its need for revenues, value
begins to attach to land. As population still increases and industry grows
more elaborate, so the needs for public revenues increase. And at the same
time and from the same causes land values increase. The connection is invariable.
The value of things produced by labor tends to decline with social development,
since the larger scale of production and the improvement of processes tend
steadily to reduce their cost. But the value of land on which population
centers goes up and up. Take Rome or Paris or London or New York or Melbourne.
Consider the enormous value of land in such cities as compared with the value
of land in sparsely settled parts of the same countries. To what
is this due? Is it not due to the density and activity of the populations
cities — to the very causes that require great public expenditure for
streets, drains, public buildings, and all the many things needed for the
health, convenience and safety of such great cities? See how with the growth
of such cities the one thing that steadily increases in value is land; how
the opening of roads, the building of railways, the making of any public
improvement, adds to the value of land. Is it not clear that here is a natural
law — that is to say a tendency willed by the Creator? Can it mean
anything else than that He who ordained the state with its needs has in the
values which attach to land provided the means to meet those needs?
That it does mean this and nothing else is confirmed if we look deeper still,
and inquire not merely as to the intent, but as to the purpose of the intent.
If we do so we may see in this natural law by which land values increase
with the growth of society not only such a perfectly adapted provision for
the needs of society as gratifies our intellectual perceptions by showing
us the wisdom of the Creator, but a purpose with regard to the individual
that gratifies our moral perceptions by opening to us a glimpse of his beneficence.
Consider: Here is a natural law by which as society advances the
one thing that increases in value is land — a natural law by virtue
of which all growth of population, all advance of the arts, all general
of whatever kind, add to a fund that both the commands of justice and the
dictates of expediency prompt us to take for the common uses of society.
Now, since increase in the fund available for the common uses of
society is increase in the gain that goes equally to each member of society,
not clear that the law by which land values increase with social advance
while the value of the products of labor does not increase, tends with the
advance of civilization to make the share that goes equally to each member
of society more and more important as compared with what goes to him from
his individual earnings, and thus to make the advance of civilization lessen
relatively the differences that in a ruder social state must exist between
the strong and the weak, the fortunate and the unfortunate? Does it not show
the purpose of the Creator to be that the advance of man in civilization
should be an advance not merely to larger powers but to a greater and greater
equality, instead of what we, by our ignoring of his intent, are making it,
an advance toward a more and more monstrous inequality? ... read the whole letter
Henry George: Thou Shalt Not Steal (1887
There is no need for poverty in
this world, and in our
civilization. There is a provision made by the laws of the Creator
which would secure to the helpless all that they require, which would
give enough and more than enough for all social purposes. These
little children that are dying in our crowded districts for want of
room and fresh air, they are the disinherited heirs of a great
Did you ever consider the full
meaning of the significant fact
that as progress goes on, as population increases and civilization
develops, the one thing that ever increases in value is land?
Speculators all over the country appreciate that fact. Wherever
there is a chance for population coming; wherever railroads meet or a
great city seems destined to grow; wherever some new evidence of the
bounty of the Creator is discovered, in a rich coal or iron mine, or
an oil well, or a gas deposit, there the speculator jumps in, land
rises in value, and a great boom takes place, and people find
themselves enormously rich without ever having done a single thing to
Now, it is by virtue of a natural
law that land steadily increases
in value; that population adds to it; that invention adds to it; that
the discovery of every fresh evidence of the Creator’s goodness
in the stores that He has implanted in the earth for our use adds to
the value of land, not to the value of anything else. This natural
fact is by virtue of a natural law, a law that is as much a law of
the Creator as is the law of gravitation.
What is the intent of this natural
law of increasing land values?
Is there not in it a provision for social needs? That land values
grow greater and greater as the community grows and common needs
increase: is there not built into
this law a manifest provision for
social needs — a fund belonging to society as a whole, with
which we may take care of those who fall by the wayside — with
which we may meet public expenses, and do all the things that an
advancing civilization makes more and more necessary for society to
do on behalf of its members?
Today the value of land in New
York city is over a hundred million
has created that value? Is
it because a few landowners are here that that land is worth a
hundred million a year? Is it not because the whole population of New
York is here? Is it not because this great city is the center of
exchanges for a large portion of the continent? Does not every child
that is born, every one that comes to settle in New York, does it not
add to the value of this land? Ought it not, therefore, get some
portion of the benefit? And is it not wronged when, instead of being
used for that purpose, certain favored individuals are allowed to
appropriate the fund of land values?
might take this vast fund for common needs; we might with it
make a city here such as the world has never seen before — a
city spacious, clean, wholesome, beautiful — a city that should
be full of parks; a city without tenement houses; and we could
this, not merely without imposing any tax upon production, without
interfering with the just rights of property, but while at the same
time securing far better than they are now the rights of property,
and abolishing the taxes that now weigh on production. ... read
the whole article
Henry George: The Wages
Take Rome, or Paris, or London,
or New York, or Melbourne.
Consider the enormous value of land in such cities as compared with the
value of land in sparsely settled parts of the same countries. To what
is this due? Is it not due to the density and activity of the
populations of those cities – to the very causes that require great
public expenditure for streets, drains, public buildings, and all the
many things needed for the health, convenience, and safety of such
great cities? See how with the growth of such cities the one thing that
steadily increases in value is land; how the opening of roads, the
building of railways, the making of any public improvement, adds to the
value of land. ... read the whole article
Louis Post: Outlines of Louis F. Post's Lectures,
with Illustrative Notes and Charts (1894) — Appendix: FAQ
Q2. Would the single tax yield revenue sufficient for all kinds of government?
A. Thomas G. Shearman, Esq., of New York, estimates that sixty-five per cent
of the rent that the land in the United States now yields actually and
potentially to its owners, would be sufficient. But whether it would or
not is as yet an unimportant question. If all revenues ought to
be raised from land values, then no revenues should be drawn from other
sources while any land value remains in private possession. Until
land values are exhausted the taxation of labor cannot be excused.
Q4. What disposition would you make of the revenues that exceeded the needs
A. The people who ask this question ought to settle it with those who want
to know whether the single tax would yield revenue enough. I do not believe
that public revenues under the single tax would exceed the just needs of
economical government; in better highways, better sidewalks, better wharves,
better schools, better public service of various kinds, we should find sufficient
demand for all our revenues. But the question of deficiency or surplus is
one to be met and disposed of when it arises. The present question is the
wisdom and the justice of applying land values to common use, as far as they
will go or as much of them as may be needed as the case may prove to be.
Q5. If the full rental value were taken would it not produce too much revenue
and encourage official extravagance? If only what was needed for an economical
administration of government, would not land still have a speculative value?
A. In the first part of your question you are thinking of a vast centralized
government as administering public revenues. With the revenues raised locally,
each locality being assessed for its contribution to the state and the nation,
there would be no such danger. The possibility of this danger would be still
further reduced by the fact that private business would then offer greater
pecuniary prizes than would public office, wherefore public office would
be sought for purer purposes than as money-making opportunities. As to the
second part of your question, the speculative value of land would be wiped
out as soon as the tax on land values was high enough and that on improvement
values low enough to make production more profitable than speculation. And
this point would be reached long before the whole rental value was absorbed
Q55. Our city raises $20,000 for fire protection. Is it fair to tax
land, which doesn't get that protection, and let houses go free though
they do get it?
A. Is not the land worth more with your fire protection than it would be without
it? Which would be better for the owners of land in your city, to pay the $20,000,
or to have no fire protection? Read notes 14 and 18. ... read
Charles B. Fillebrown: A Catechism
of Natural Taxation, from Principles of
Natural Taxation (1917)
Q2. What is meant by the single tax?
A. The payment of all public expenses from economic rent, the normal revenue,
thus eventually abolishing all taxes.
Q3. What is meant by economic rent?
A. Gross ground rent -- the annual site value of land -- what land, including
any quality or content of the land itself, is worth annually for use --
what the land does or would command for use per annum if offered in open
market -- the annual value of the exclusive use in control of a given area
of land, involving the enjoyment of those "rights and privileges thereto
pertaining" which are stipulated in every title deed, and which, enumerated
specifically, are as follows: right and ease of access to
* water, and
* health inspection,
* fire protection,
* steam and electric railway service,
* gas and electric lighting,
* telegraph and telephone service,
* public schools,
* private schools,
* public buildings --
utilities which depend for their efficiency and economy on the character
of the government; which collectively constitute the economic and social
advantages of the land which are due to the presence and activity of population,
and are inseparable therefrom, including the benefit of proximity to, and
command of, facilities for commerce and communication with the world -- an
artificial value created primarily through public expenditure of taxes. For
the sake of brevity, the substance of this definition may be conveniently
expressed as the value of "proximity." It is ordinarily measured
by interest on investment plus taxes.
Q57. Would the single tax yield sufficient revenue for all government
purposes, local, state, and national?
A. Careful estimates by Mr. Thomas G. Shearman indicate that all present taxes
amount to not much more than one half of the annual site value of the land. But
The honest needs of public government grow faster than population and
fully as fast as wealth itself. Local taxation will increase rapidly; and
it ought to do so..... This does not imply that ground rent will not be
sufficient to supply many, possibly all, of those additions to human happiness
which Henry George has pictured in such glowing words. But such extensions
of the sphere of government must take place gradually; or they will be
ruinous failures, simply because the state cannot at once furnish the necessary
machinery for their successful operation. ... read the whole article
note: the Canal which Churchill describes
was built by a corporation, not a government entity, but the story is
Winston Churchill: The
Fancy comparing these healthy
processes with the enrichment which comes
to the landlord who happens to own a plot of land on the outskirts or
at the centre of one of our great cities, who watches the busy
population around him making the city larger, richer, more convenient,
more famous every day, and all the while sits still and does nothing. Roads are made, streets are made, railway
services are improved, electric light turns night into day, electric
trams glide swiftly to and fro, water is brought from reservoirs a
hundred miles off in the mountains -- and all the while the landlord
sits still. Every one of those improvements is effected by the labour
and at the cost of other people. Many of the most important are
effected at the cost of the municipality and of the ratepayers. To not one of those improvements
land monopolist as a land monopolist contribute, and yet by every one
of them the value of his land is sensibly enhanced. He renders
no service to the community, he contributes nothing to the general
welfare; he contributes nothing even to the process from which his own
enrichment is derived. If the land were occupied by shops or by
dwellings, the municipality at least would secure the rates upon them
in aid of the general fund, but the land may be unoccupied,
undeveloped, it may be what is called 'ripening'
— ripening at the expense of the whole city, of the whole country, for
the unearned increment of its owner. Roads perhaps may have to be
diverted to avoid this forbidden area. The merchant going to his
office, the artisan going to his work, have to make a detour or pay a
tram fare to avoid it. The citizens are losing their chance of
developing the land, the city is losing its rates, the State is losing
its taxes which would have accrued if the natural development had taken
place; and that share has to be replaced at the expense of the other
ratepayers and taxpayers, and the nation as a whole is losing in the
competition of the world -- the hard and growing competition of the
world -- both in time and money. And all the while the land monopolist
has only to sit still and watch complacently his property multiplying
in value, sometimes manifold, without either effort or contribution on
his part; and that is justice!
reaped in exact proportion to the disservice done. But let us
follow the process a little further. The population of the
city grows and grows still larger year by year, the congestion in the
poorer quarters becomes acute, rents and rates rise hand in hand, and
thousands of families are crowded into one-roomed tenements. There are
120,000 persons living in one-roomed tenements in Glasgow alone at the
present time. At last the land becomes ripe for sale — that means that
the price is too tempting to be resisted any longer — and then, and
not till then, it is sold by the yard or by the inch at ten times, or
twenty times, or even fifty times, its agricultural value, on which
alone hitherto it has been rated for the public service. The greater
the population around the land, the greater the injury which they have
sustained by its protracted denial, the more inconvenience which has
been caused to everybody, the more serious the loss in economic
strength and activity, the larger will be the profit of the landlord
when the sale is finally accomplished. In fact, you may say that the
unearned increment on the land is on all fours with the profit gathered
by one of those American speculators who engineer a corner in corn, or
meat, or cotton, or some other vital commodity, and that the unearned
increment in land is reaped by the land monopolist in exact proportion,
not to the service but to the disservice done.
drag on enterprise It is monopoly
which is the
keynote, and where monopoly prevails, the greater the injury to society
the greater the reward of the monopolist will be. See how all this evil
process strikes at every form of industrial activity.
- The municipality, wishing
for broader streets, better houses,
more healthy, decent, scientifically planned towns, is made to pay, and
is made to pay in exact proportion, or to a very great extent in
proportion, as it has exerted itself in the past to make improvements.
The more it has improved the town, the more it has increased the land
value, and the more it will have to pay for any land it may wish to
- The manufacturer proposing to start a new industry,
erect a great factory offering employment to thousands of hands, is
made to pay such a price for his land that the purchase price hangs
round the neck of his whole business, hampering his competitive power
in every market, clogging him far more than any foreign tariff in his
export competition, and the land values strike down through the profits
of the manufacturer on to the wages of the workman.
- The railway company wishing to build a new line finds that
price of land which yesterday was only rated at agricultural value has
risen to a prohibitive figure the moment it was known that the new line
was projected, and either the railway is not built or, if it is, is
built only on terms which largely transfer to the landowner the profits
which are due to the shareholders and the advantages which should have
accrued to the traveling public.
Now let the Manchester Ship
Canal tell its tale about the land. It has
a story to tell which is just as simple and just as pregnant as its
story about Free Trade. When it was resolved to build the Canal, the
first thing that had to be done was to buy the land. Before the
resolution to build the Canal was taken, the land on which the Canal
flows — or perhaps I should say 'stands' — was, in the main,
agricultural land, paying rates on an assessment from 30s. to L2 an
acre. I am told that 4,495 acres of land purchased fell within that
description out of something under 5,000 purchased altogether.
Immediately after the decision, the 4,495 acres were sold for L777,000
sterling — or an average of L172 an acre — that is to say, five
six times the agricultural value of the land and the value on which it
had been rated for public purposes.
Now what had the landowner done
the community; what enterprise had he shown; what service had he
rendered; what capital had he risked in order that he should gain this
enormous multiplication of the value of his property! I will tell you
in one word what he had done. Can you guess it! Nothing.
But it was not only the owners of the land that was needed for
the Canal, who were automatically enriched. All the surrounding land
either having a frontage on the Canal or access to it rose and rose
rapidly, and splendidly, in value. By the stroke of a fairy wand,
without toil, without risk, without even a half-hour's thought many
landowners in Salford, Eccles, Stretford, Irlam, Warrington Runcorn,
etc., found themselves in possession of property which had trebled,
quadrupled, quintupled in value.
Apart from the high prices which were paid, there was a heavy
compensation, severance, disturbance, and injurious affection where no
land was taken -- injurious affection, namely, raising the land not
taken many times in value -- all this was added to the dead-weight cost
of construction. All this was a burden on those whose labour skill, and
capital created this great public work. Much of this land today is
still rated at ordinary agricultural value, and in order to make sure
that no injustice is done, in order to make quite certain that these
landowners are not injured by our system of government, half their
rates are, under the Agricultural Rates Act, paid back to them. The
balance is made up by you. The land is still rising in value, and with
every day's work that every man in this neighbourhood does and with
every addition to the prosperity of Manchester and improvement of this
great city, the land is further enhanced in value. ... Read the whole piece
Clarence Darrow: How to Abolish
Unfair Taxation (1913)
Fundamentally, all law recognizes the right to eminent domain, to take the
portion of any human being for the welfare of the public — that no
man's claim to any portion of the earth shall stand in the way of the common
This is a common law, but in practice it only applies where a rich railroad
wants to get the land of some poor widow.
Everybody who works is poor; nobody would work if they were not poor, and
nobody can get rich working. I never tried it, but I have seen others try it.
The land boomer comes along and gets good car service to this poor
man's home, and then charges him ten dollars per month instead of five. A lot of reformers
are trying to get parks laid out in the slums, which only make the poor move,
for they cannot pay the increased rent. The greater the population, the less
the worker gets. As the land becomes valuable, more and more goes to
rent. The bigger the city, the deeper the poverty; the bigger the city the more degradation,
there are the almshouses and gaols filled to overflowing. It is better
for the men who own the earth to have big cities — but for no one else. Every
man, woman, and child adds to the wealth of the land owner; the others must
secure land upon which to live, and they must bid with each other for the right
... The single tax theory is that the public should take all the value of
land, as it was made by the public. Land value goes up because of population,
and not because of the owner of the title deed, and the value should be
taken by the community, and thus create a natural fund from which to make
for the comfort of all, and thus make life easier. It would abolish poverty,
that crime of the century, which has always come with civilization; inequality
of wealth, which comes as the world grows older, and which we have never
been able to cure, because man wants to hold what he cannot use, and pass
future generations what they will not use.
The personal property tax always was a delusion, a humbug, and a snare; it
never could be administered justly. The conscientious man, the widow and the
orphans (whose fund is in trust) pay in full while the rich get off. It is
unscientific, it is bad as a fiscal measure. What we are after is the earth,
and it can be had in an easy, simple, direct way.
Every right-of-way of every railroad should be owned by the people; all public
franchises, every mine and every forest, all should belong to the community
itself. Then we would not need the repressive laws we have today.
Men love peace, and if not antagonized, they will behave, and until justice
is done in that good time to come, all the gaols on earth cannot make them
behave. It never did, and it never will.
The "single tax" is so simple, so fundamental, and so easy to
carry into effect that I have no doubt it will be about the last reform the
will ever get. People in this world are not often logical; in fact, there
is never any considerable number of them that are logical. I am pretty sure
people will never get started in the right direction; they will go a long
way around. ... read the whole speech
Charles T. Root — Not a Single Tax! (1925)
... let us lay down and briefly defend the proposition that —
Taxation as a means of meeting the proper expenses of government is oppressive,
unjust, inexpedient and unnecessary.
This proposition will strike a good many readers as absurd, but all must at
least recognize the timeliness of the topic and the importance of any contribution
to the discussion of a subject which is agitating the whole civilized world,
for the methods, subjects and amounts of taxation are among the pressing problems
of every country.
The most obvious question which arises in the mind of anyone who reads for
the first time the proposition above laid down is this:
"If taxation is unnecessary, what is to take its place? Government and
its functions are increasingly expensive. They require a lot of money. Where
is it to come from?" The answer may be placed in the form of a second
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
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. ...
But before this time the reader, unless he has given previous attention
to the subject, is full of objections to the above doctrine: "How about the
law?" he is asking. "Hasn't a man the right to buy a piece of land
as cheaply as he can, to do what he pleases with it, and hold on to it till
he gets ready to sell?" The answer is that at present he certainly
has this statutory right, which has been so long and so universally recognized
that most people suppose it to be not only a legal, but a real or equitable
right. A shrewd man, foreseeing the direction of growth of population
a city, for example, can buy a well-located block at a moderate figure
less far-seeing owner, can let it grow up to weeds, fence it off against
all comers and give it no further attention except to pay the very small
imposed upon vacant land.
Meantime the increasing community builds up all around it with homes, banks,
stores, churches, schools, paving and lighting the streets, giving police and
fire protection, etc., and at last comes to need this block so urgently that
the owner is fairly begged to sell it, at three or ten or fifty times what
it cost him. Quite often the purchaser at this enormous advance is the very
community which has through its presence and the expenditure of its taxes created
practically the whole value of the land in question!
It was said above that an individual has a statutory right to pursue this
very common course. That was an error. The statement should have been that
he has a statutory wrong; for no disinterested person can follow the course
of land speculation as almost universally practiced, without feeling its rank
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? ... read the whole
Frank Stilwell and Kirrily Jordan: The
Political Economy of Land: Putting Henry George in His Place
Indeed, one could say that the term ‘tax’ is a misnomer because
what is really involved is value created by the community being retained
by the community rather than being appropriated by private landholders. For
example, under current arrangements landowners receive ‘windfall’ gains
when the market value of their land rises as a result of publicly provided
infrastructure being built nearby, or when local government zoning decisions
reclassify their land as appropriate for further development. In this way, individual
landowners stand to reap huge benefits at the expense of community-generated
processes. Such arrangements create an odd incentive: allowing landholders
to appropriate the unearned wealth generated by rising land values, thereby
rewarding this unproductive activity, while taxing productive endeavour.
The Georgist land tax ‘remedy’, by contrast, would eliminate
such perverse incentives and thereby more effectively align private and public
interests in the use of society’s resources. ...
Georgist analysis strongly emphasises landownership as a principal source
of inequality. Because land is a strictly limited resource, its private ownership
necessarily excludes large sections of the community from its benefits. A
landowning class thereby gains political economic power. In George’s
own time the social identity and power of this landowning class was distinctive.
Those who could not afford to buy land were forced to pay rent to the wealthier
few who could. By taxing the value of land, George posited that publicly
created wealth could be recouped from the private landowners and redistributed
throughout the community more equitably in order to address social goals.
Are George’s arguments about land ownership and wealth inequality
relevant today? Australia provides an interesting example, because land is
the single largest item in national wealth. Laurie Aarons outlines the concentration
of farming land in particular in the hands of a few very wealthy corporations
and individuals – what he refers to as ‘corporate squattocracy’ (Aarons,
1999: 23). The relentless increase in urban land values in recent years has
also produced dramatic redistributions of wealth. In the State of New South
Wales, for example, land values increased by about $361 billion over the
period 1993 – 2003. The existing land-based taxes clawed back only
$44 billion in government revenues, comprising only about 12% of the land-related
economic surplus. So 88% was retained as ‘unearned income’ by
landowners (Stilwell and Jordan, forthcoming). A higher rate of land tax
with fewer exemptions could have substantially reduced this private wealth
appropriation. This is not necessarily to posit the desirability of recouping
100% through land tax, because that would certainly raise major problems
of people’s ability to pay, given that much of the increased wealth
resulting from land price inflation has not been realised as current income.
But it is indicative of the current imbalance between private and public
appropriations of the surplus arising from increases in land-based wealth.
... read the whole article
Joseph Fels: True Christianity
and My Own Religious Beliefs
Do you question the relationship
between taxation and righteousness?
Let us see. If government is a natural growth, then surely God's
natural law provides food and sustenance for government as that food is
needed; for where in Nature do we find a creature coming into the world
without timely provision of natural food for it? It is in our system of
taxation that we find the most emphatic denial of the Fatherhood of God
and the Brotherhood of Man, because,
- first, in order to meet our common
needs, we take from individuals what does not belong to us in common;
- second, we permit individuals to take for themselves what
to us in common;
- thus, third, under the pretext of taxation for public
purposes, we have established a system that permits some men to tax
other men for private profit.
Does not that violate the
natural, the divine law? Does it not surely
beget wolfish greed on the one hand, and gaunt poverty on the other?
Does it not surely breed millionaires on one end of the social scale
and tramps on the other end? Has it not brought into civilization a
hell, of which the savage can have no conception? Could any better
system be devised for convincing men that God is the father of a few
and the stepfather of the many? Is not that destructive of the
sentiment of brotherhood? With such a condition, how is it possible for
men in masses to obey the new commandment, "that ye love one another"?
What could more surely thrust men apart? What could more surely divide
them into warring classes?... read the whole letter
Joseph Stiglitz: October, 2002,
Q: Your academic work led you to formulate what you called "The Henry
George Theorem." This demonstrated that public spending — where
this was efficient — generated additional rental value that surfaced
in the land market. Other distinguished scholars, such as the late Nobel
prize winner, William Vickrey, confirmed your findings. You also noted in
one of your books, co-written with Anthony Atkinson, that the Henry George
Theorem was attractive both because it was the revenue-raiser that did not
distort private incentives and because "it is the 'single tax' required
to finance the public good." [Anthony B. Atkinson & Joseph E. Stiglitz,
Lectures on Public Economics, London: McGraw-Hill, 1980, p. 525] Now, public
investment, unless of the wasteful kind designed to serve the privileged
interests of rent seekers (the classic type being a land speculator), should
be viewed as working in partnership with the private sector and not a drain
on the community. How can the reputation of publicly provided services and
investments be rescued?
JES: That's a very good question. What we did when I was at the Council
of Economic Advisors was some studies to try to show what the social returns
would be to public investment in R&D, etc. And we became convinced that
the rates of return of those investments are very high. So you ask the question, "what
can we do to restore confidence in public investment?" We need to realize
how much we depend on them. I keep telling people, "The Internet." That's
one example. It was publicly funded. It's now a public-private partnership.
The government did the basic research, and the private sector ran off with
it. But, arguably, we would never have had the Internet if it were not for
government expenditure. So I think a major industry in the United States — biotech — is
based on NIH (National Institutes of Health). NIH does all the basic research.
Q: From the conference on "mondialization," I saw a major difference
in attitude among the French with regard to public investment. The French
believe strongly in public funds for public works, whereas Americans believe
they shouldn't be taxed more in order to support public projects. Which view
do you agree with?
JES: There's been a lot of so-called "bad rhetoric" in this whole
area. The real point is that we need to recognize that there are some things
in the area of "the public sphere." We're not having investment
in basic research; we need to have the government do it. And that's what
I've consistently been arguing; you don't want the government building steel
factories. But you do want the government doing certain research, and the
relative size of that depends on the society. Right now, we should be spending
far more on basic research. So what is the message. I think how much we depend
on the government. And the new economy, we take it for granted, but it is
the public sector. I think you're right that we have the wrong view. But
I keep saying, "The Internet." How much as it changed our lives?
And it's [the result of] the government. ... read the entire interview
Mason Gaffney: Neo-classical
Economics as a Stratagem Against Henry George
A state, provincial, or local
government can finance generous public services without driving away
business or population. The formula is simple: tax land, which cannot
migrate, instead of capital and people, which can. By eliminating the
destructive "Wedge Effect," the land tax lets us support schools and
parks and libraries and water purification and police and fire
protection, etc., as generously as you please, without suppressing or
distorting useful work, and without taxing investors in real capital.
... read the whole essay
Lindy Davies: The Cat in
When I taught at the Henry
George School in New York, our
Director, George Collins, used to give a stirring graduation speech
to students. He told them they would find that the gift of insight
they'd been given, in studying Georgist political economy, was also a
kind of curse: they would never look upon their city with the same
eyes. The land question and its ramifications, the malignant
absurdities of today's economic systems and the sheer obviousness of
the remedy, would shout at them in every day's news.
I was reminded of that when I recently visited New York. ...
Economists note in this budget
crunch, as in others the city has
faced, a curious disconnect between the fiscal crisis and the overall
economy. Tax receipts are way down and the budget outlook is indeed
scary, even while the underlying economy actually lurches toward
recovery. If it weren't for the large declines in the (admittedly,
very important) financial and tourism sectors, the city's economy
would not be performing badly at all. How
unfortunate, then, that New
York will see no other alternative than to choke off economic
recovery by raising income and sales taxes while cutting back on
public services. But what can they do? The tax base is declining.
Or is it? It
turns out that land values
in New York, while
modestly down in some areas, have not taken anywhere near the beating
that the Stock Market has, or the small business community, or public
services. No, the real estate market in New York City remains, all in
all, quite bullish. There are few bargains to be had. Residential
rents, of course, having been held artificially low by rent
stabilization, provide no relief even in a weak market.
So, no -- despite the dire
warnings, New York City need not endure
a fiscal crisis. Its tax base -- properly defined -- is robustly
capable of providing for public needs, while actually bringing
business into the city. They have
just been taxing the wrong things,
all along. Tourists, bulls and bears come and go, but New York City's
land values -- like its citizens -- are quite resilient.
Read the whole article
William F. Buckley, Jr.: Home
The real estate boom is a familiar phenomenon. Most people are predicting
that it will, if not burst, at least wilt. But the basic components aren't
going to change, not unless we have a catastrophe of sorts, something economists
don't feel obliged to integrate into their speculations.
The components are:
- a relatively wealthy community;
- the hard desire to own one's own house, along with the ambition to make
it more and more comfortable and pleasing;
- the dependence of building sites on immediate amenities (sewage, power);
- strategic sources of nourishment (jobs).
The convenience of infinitely available land faded as urbanization brought
on heavy dependence on elements that weren't always available to homes on the
range. Schools and hospitals are not only useful for educating children and
curing the infirm. They are necessary to attract affluent home buyers. ... read the whole
Weld Carter: A Clarion Call to Sanity,
to Honesty, to Justice
...Thus, the benefits of a tax-supported public work accrued once more
not to the benefit of the public at large, but to that of a very limited
and narrowly defined class, those who were rich enough to own land in that
There are undoubtedly many other problems to be resolved before the ills
of our society are cured; but what many do not recognize and understand is
the primacy of the adoption of land value taxation over all these other corrections.
The reason for that can be very simply stated: If any of these other measures
already adopted have no merit and have only added to the burden of our problems,
then they are disqualified at the outset. On the other hand, if they are
of themselves beneficial, any benefit from them will be immediately capitalized
into land values and will therefore exacerbate the very problems which otherwise
might be helped toward a cure. Thus it is that our first step toward
any possible remedy for the awesome plight into which we have been led increasingly
over the recent years must be the adoption of land value taxation. ... read
the whole essay
Ted Gwartney: A Free
Market Strategy to Reduce Sprawl
- Unused land is far more abundant than we realize.
- End the Public Subsidy of Land Speculation and Sprawl
- Counterproductive growth limitations and regulations
should be abolished.
- A Strategy for Urban Renewal
- A Strategy for Economic Development
- Public Finance by Self-Financing
It was estimated that the BART
transportation system in San
Francisco produced two times more land value than it cost to build.
The public recaptured only a small part of the cost from benefits
provided by land taxes and user fees. Most of the cost came from
external sources, unrelated sales and income taxes. Most of the
profits went into only a few pockets.
Thus, the claim that a community
is short of capital is
misleading. In fact, a community could become self-sufficient in the
supply of capital from internal sources. But a precondition for this
is the reduction of taxes on productive capital and labor. Examine,
for example, what would happen as a result of the elimination of
taxation of buildings. This decision, not to penalize people who
invest their savings in new buildings, leads to the stimulation of a
higher level of national income, higher saving, and the creation of
new capital. According to the study made by Tideman and Plassmann
(1998, The Losses of Nations, Fred Harrison, editor, Orthila Press),
shifting taxes off buildings, production and distribution, and onto
land and natural resources, could increase the gross national product
by 25%, or one trillion 1998
The Land Value Tax Shift from
labor and capital is not only a key
to reversing suburban sprawl and protecting rural environments -- it
is a key to realizing the dream and fulfilling promises of a truly
free market -- with liberty, prosperity, and justice for all. ...
Weld Carter: A Clarion Call to Sanity, to Honesty, to
Back in the early days of this
century, Winston Churchill saw and
recorded an example of this. There had been a ferry fare over the
river Thames for the common laborers who lived on the wrong side of
the river to pay in order to get to work. A spirit of nobility
prompted the absorption of this fare by the City, and almost
immediately rents in the working class area were increased by the
same amount as the fare had been. When this thing was done, the guys
who got the benefit were not the poor working class people, but the
owners of the homes in which they lived, or, more accurately and more
critically, the owners of the land on which those homes stood. The
laborers were thus charged a higher rent, and that rent diverted the
benefit from the seemingly intended beneficiary (i.e., the public) to
landowners in the affected area.
This occurs every day in this
country. A new road is built, or a
superhighway is constructed, which makes access to a particular site
much easier. We tell ourselves that we justify this as an
expenditure of public funds by the benefits that accrue to the
traveling public; but the benefits go, in the form of higher land
prices and rents, to the owners of the sites that are served by this
new road. If you doubt this, consider the jockeying for the insider
information or for influence over the selection.
Robert Caro, in his biography of
Robert Moses, recalls the time in
the early 1920s that Moses suggested to the authorities the building
of a causeway from the Long Island mainland over to Jones Island.
This proposal was rejected outright by the Long Island Park
Commission. Some months later, Moses presented them with a drawing
showing precisely where this causeway would run, and, after a
suitable period of during which these public employees could buy up
the land along the proposed highway, he resubmitted his proposal.
This time, they officially approved the suggested construction.
In the town of Antioch, Illinois,
there were two developments
underway almost simultaneously. In the one, roads were provided,
together with water and sewer lines, but no sidewalks; in the other,
just across a main road from the first, the mayor of the city had
storm sewers, curbs and sidewalks installed at public expense, for
which of course, any prospective buyer or tenant would gladly pay for
use of that land the higher price these added benefits provided. Any
reader will recognize this chain of events and set of economic
relationships as being the course of everyday life and business at
the local, state and national level. The cynic would say that a
primary motivation for entering local or even national politics would
be the opportunity for personal gain offered daily by publicly
Another example relates to a piece
of farmland in central
Pennsylvania. In the early 1940's, an 18-acre farm complete with a
two-story house with five bedrooms, a large barn that would among
other things hang 3 ½ acres of tobacco and store hay, straw and
corn on the upper level, with stalls for 6 milking cows and a half
dozen steers, housing for 100 laying hens and for fattening a few
hogs plus a shed for equipment – all in all, not a large farm by
local standards at the time – sold for $7,500. Twenty years
later, with about $12,000 in residential improvements, that land and
its buildings were sold for approximately $20,000. In those twenty
years, the neighborhood and the general economy in the county had not
changed a great deal. Within the next year, a decision was pending on
the exact location and routing of a new superhighway. The decision,
which was announced some time later, carried the route of the highway
via a bridge across the local road on which that farm was situated
and a cloverleaf access was built nearby. Soon, the value of that
piece of land jumped to $10,000 per acre, which, ignoring the value
of any improvements to the original piece of land, was an increase of
800%. That increase, from $20,000 to $180,000, benefitted the most
recent purchaser of the land. However, the increase resulted from the
effects of public (i.e., taxpayers') spending, and, in a more just
society, would have been returned to the taxpayers, rather than
accruing to the private benefit of an individual who either made a
good guess, had some private information, or even perhaps lobbied for
that particular routing of that publicly financed highway.
Thus, the benefits of a
tax-supported public work accrued once
more not to the benefit of the public at large, but to that of a very
limited and narrowly defined class, those who were rich enough to own
land in that location.
There are undoubtedly many other
problems to be resolved before
the ills of our society are cured; but what many do not recognize and
understand is the primacy of the adoption of land value taxation over
all these other corrections. The reason for that can be very simply
stated: If any of these other measures already adopted have no
merit and have only added to the burden of our problems, then they
are disqualified at the outset. On the other hand, if they are of
themselves beneficial, any benefit from them will be immediately
capitalized into land values and will therefore exacerbate the very
problems which otherwise might be helped toward a cure. Thus it
is that our first step toward any possible remedy for the awesome
plight into which we have been led increasingly over the recent years
must be the adoption of land value taxation. ... read
the whole essay
Mason Gaffney: How to
Revive a Dying City
(Equity in Kind)
Under the Code Napoleon, a French
testator must divide real estate
equally among all children. Money cannot substitute for land; the
Code requires equity in kind. The resulting fine subdivision is
called morcellement, and the
Code demands it without regard for
Each heir, in fact, must get an
equal share of land of each
quality: meadow, woodland, etc.
Today we approach French Equity
indirectly, and expensively. We
distribute land haphazardly, but seek to make every parcel equally
good by extending utilities and roads to all parcels on the same
terms, regardless of cost or location.
Economists call such schemes
"postage stamp pricing," because
postal rates do not vary with delivery costs. Manhattan has 64,000
residents per square mile; Montana has 5.4. It costs a lot more to
collect or deliver mail in Montana. The reason postal rates rise is
that the U.S. urban population is spreading out more like Montana and
less like Manhattan (which once had over 100,000 per square mile).
Here are five other examples:
- The British Columbia Ferry Service.
system has two urban lines that make money, but the whole system
hardly breaks even, because lesser lines serve remote areas. The
worst costs $12 for every dollar of revenue.
- British Columbia Hydro.
This socialized power
charges uniform rates throughout the Province. Users living in
high-density Vancouver are cheap to serve. A few live on the Yukon
border, where (I surmise) it costs hundreds of dollars to earn a
dollar of revenue.
- Water and sewer service in
Wisconsin. City investments have been captured, controlled,
and milked by suburban land development interests, helped by state
- State university campuses.
The legislative ethic
demands a prize, such as a university campus, in every electoral
district. Most of the eight UC campuses have excess land; some have
excess floor space. Sacramento solves rising enrollment not with more
intensive use of existing campuses, but with the costly creation of
new ones, each to enrich influential land speculators.
- Water supply in California.
The high real cost of
serving new settlements is passed on to older settled areas through
an accounting device called "melding," stirring all the accounts in
the same pot. Melding passes through several levels: a state
wholesaler serves the metropolitan district, which serves local
districts, which serve cities. At the end of the line, in Riverside,
it costs society $1800 to serve the marginal acre-foot (a unit of
water) selling for $20. This subsidy is worth fortunes to developers;
the cost is spread so others won't notice.
Problems with French
There are two problems with these
subsidies as an approach to
equity: they are not equitable, and they are wasteful.
achieved by regional cross-subsidy is not interpersonal, but
interregional. It is like U.S. "foreign aid" programs, which tax the
poor in rich countries to aid the rich in poor countries. Some
hold speculative land and enjoy subsidies are among the world's
richest people and cor-porations. Equity is not served by milking
middle-class neighborhoods to further enrich wealthy owners. "Public
works for private gain" is bad enough, but worse when profiteers are
- How about waste? Subsidy
creates waste in the amount of the
subsidy, almost by definition. The New York Regional Plan
estimates the social cost of creating a new lot on the urban fringe
at four times the lot's price (probably an underestimate). Why
develop a lot worth only one quarter of its cost? Because other
people pay the other three quarters. This process transfers ground
rent from areas of overcharge to areas of undercharge, but it
destroys much of the ground rent. To spread the surplus, we lose much
Has French Equity any merit? It
passed for a way to create jobs
when Keynes actually urged waste as a route to full employment. Those
ideas are now dormant, but we still do not understand the problem. If
we had to fire teachers or policemen each time a city extended
utilities to a campaign donor's raw acres, we would better sense the
true cost of public works for private profit. ... read the whole article
Ed Clarke: Geoisim
and the Practice of Public Economics
The Nation has long needed more effective decision-making mechanisms
for intergovernmental coordination of expenditures and regulations.
Efficient coordination can be achieved in an incentive-compatible way
where the effects of spending by any one subunit on another subunit can
be more effectively taken into account as compared with current
Effective coordination also relates to an important national
policy concern which is efficient and equitable spending and deficit
management. The need for better coordination is evidenced by fractious
Congressional debate (ie.,. the Congressional debate over welfare
reform) over how to implement acceptable reductions in
intergovernmental transfers, accompanied by reductions in Federally
mandated spending requirements.
Given the existence of decision-making mechanisms (ie., demand
revealing) that would motivate decision-makers to accurately reveal the
positive and negative effects of spending and regulatory decisions on
one another, why not use these mechanisms to achieve more effective
coordination? The Federal Government can establish an initial level of
entitlements (called a distributional status quo) and then, with
appropriate provisions for agenda-control, let the political subunits
decide what levels of actual spending, including Federally mandated
spending, is required. In effect, Congress determines the initial
distribution but allows more implementation flexibility to the
subunits, adjusting the financial flows to reflect external effects.
To illustrate, I will assume we are applying the process to a
Federal discretionary programs (about $500 billion annually, and
including National defense expenditures). Consider a subset of these
programs consisting of about $55 billion in programs (transportation,
communications and the environment) financed by Federal excise taxes.
Assume first that, we take the President's budget and allow a "citizen's advisory committee" to propose substitutes or eliminations
designed to "maximize the likelihood of minimizing harm" (a criterion
elaborated by Bailey, 1997). Subject to oversight by a "Commission", it
will allocate cost shares among political subunits (in this case
Congressional districts) so as to try to equalize per capita (or
household) net benefits among the jurisdictions (for example, by trying
to make the cost shares proportional to estimated benefits -- see
Clarke, 1980, Chapter V).
Suppose that the allocation of beneficiary tax-shares resulted
pressures for spending changes that were nonuniform among the
districts. For example, spending may be cut about 10% (from $550 per
household on average to $500. Lower spending districts with lower cost
shares might end up with an average of $450 while higher spending
districts remained close to the original $550 average. Under the
system, compensating transfers in the form of interest on expenditures
of $50 plus a credit on the $50 principal would be made in the form of
an accounting transfer from the higher to the lower spending districts.
If the advisory committee recommended prudent changes that also
generated large net benefits and the compensating transfers were
designed to achieve equal or proportional per capita net benefit
increases for each district (that, say also averaged $500 per
household), then the proposed package of changes would be accepted
unanimously. (The result is that, relative to the original status quo,
the lower spending districts would be loaning $50 per household to the
higher spending districts and sharing in the social surplus created by
more productive investments).
Perhaps such transfers may seem fairly insignificant in each
household's budget. But what of the potential benefits to residents in
any district if they carefully scrutinize the entire $500 or so in
entitlements spent in or outside the district and can begin to effect
self sustaining projects that are, say, financed through land rent
increments and the appropriate marginal cost (user) charges? A resident
that in no way benefits may be saving $500 per year with accumulating
interest balances, accompanied by a significant incentive to make
his/her preferences known.
In the SEA paper referred to above, I explore the potential for
various "federalist" arrangements to govern district and National spending
decisions. They range between close approximations of Bailey's
"constitution" or "financial laws" to very simple, if less effective
means of constraining rent seeking, means of determining interest rates
to reflect disproportionate uses of Trust funds relative to initial
entitlements (see appendix). The strongest incentive system, based on
Bailey's work, is a use of the pivotal mechanism for agenda setting and
combined use of the pivotal mechanism and the Thompson "preference
revealing" approach in making final budget and regulatory decisions in
a manner that will achieve efficiency while minimizing redistributive
harm. (To illustrate the power of the Thompson incentive if budgetary
conflicts reached a referendum stage, the citizen would have a strong
incentive to reveal the $500 he is paying for a project with no benefit
to him and would receive up to one half that amount in compensation if
his less preferred option was chosen).
I'm also suggesting a very simple moral to the story. No one is
to seriously move forward on LVT when people think they can get what
they want largely for free. We need to live with that realization.
However, we often have episodic periods of reform when broad, if
discrete, administrative measures might be undertaken in conjunction
with an eye towards instituting what amounts to benefit taxation.
Imagine an alternative to a "Truth in Budgeting" bill that can take
Trust Funds off budget (which failed by one vote in the last Congress)
passing with the appropriate incentive-compatible allocation features).
One might find those with a strong bent towards benefit taxation (like
Dupont) working in tandem with those who have no strong ideological
bent towards the benefit tax idea (like Turgot).
One can always imagine the results of one's conversations with
overly agitated Finance Minister (who despite their calm exteriors are
often extremely agitated). Whether I've worked with one or more in a
functioning democracy here at home, in an autocracy (Morocco) or in
anarchy (Haiti), I often feel like a player in Waiting for Godot. The
mood is captured late in Act I when Estrogen (the assistant) turns to
Vladimir (the Finance Minister) and says: "Be Happy". Later (after
considerable reflection), Vladimir replies: Now That We Are Happy, What
Shall We Do? Later, Estrogen then says (not in the play): Let's Write
That Memoir". ...
Read the whole article
Mason Gaffney: Rent,
Taxation, Dissipation and Federalism
1. Public works. These enhance the value of specific private
lands and so attract support from specific benefited landowners. At
the same time they link new lands with old markets and, in the aggregate,
increase the amount of land that is usable in more intensive forms,
e.g. for urban housing, and thus have some redistributive effect in
favor of non-owners. This makes
for a wide constituency.
Because they are durable capital they appear to represent real assets. However
many are heavily subsidized or cross-subsidized and cost far more than their
benefits to anyone. In the aggregate they freeze up too much of the nation's
limited capital stock.
Services are not inherently wasteful, and capital is not inherently economical.
Economy is the key in either case. (When debt-financed, however, there should
be capital resulting.)
Capital is the more wasteful when we consider it is taken from the margins
of alternative uses where it may be very scarce today. Labor, on the other
hand, is in surplus.
Anti-growth movements burgeoning today manifest growing disbelief in the
benefits of subeconomic extensions of infrastructure. A small but growing
element is increasing awareness of the high degree of absentee and alien
ownership, highly concentrated, of the benefited lands.
Squandering the Alaska surplus is a splendid case in point. A social dividend
would have been efficient, and respectful of consumer sovereignty. James
Madison's dead hand stopped it (in part). (Zobel v. Williams.)
2. Subsidized public works
in tandem with exclusionary zoning.
Through revenue-sharing with categorical grants, many localities have built
expensive public works, e.g. sewer plants, designed to accommodate higher
populations. Then they turn around and impose exclusionary zoning, to limit
the benefits to a few.
In the B.C. Ferry Service the main lines make a little money and the branch
lines to small islands are heavily cross-subsidized, some making $1 of revenues
for $12 of costs. Residents of those islands, having sought and secured the
service, are now alarmed at the influx of population and are zoning it out.
Here we have public works turned into pure giveaways to a few landowners,
with no tokens for any wider constituency.
3. Hocking the revenues
Borrowing to spend worsens the public works problems. Worse yet is borrowing
to pay for current services, with some admixture of graft, as the NYC bankruptcy
illustrated, and much 3d-world borrowing illustrates today on a wider canvas.
... Read the whole article
Frank Stilwell and Kirrily Jordan: The
Political Economy of Land: Putting Henry George in His Place
George saw land as a community resource provided by nature, to which every
human being had an equal right. He argued that, since land was fixed in
supply, the system of private land ownership allowed the wealthy few to
enjoy exclusive rights to land and its benefits, while alienating the poorer
majority from land ownership and forcing them to pay rent to landowners
in order to access this necessary resource. Moreover, the collection of
rents by landowners allowed them to increase their wealth without contributing
to the productive efforts of society. As the population grew, so too did
the demand for land, forcing rents and land values ever higher. In addition,
increases in land value resulting from publicly-funded developments, such
as roads and public transport systems, unduly benefited landowners at the
expense of the community. Such unearned gains from landownership encouraged
speculation in land, pushing prices even higher, while exposing the economy
to the risks of speculative ‘booms’ and ‘busts’.
... read the whole article
Bill Batt: Comment on Parts
of the NYS Legislative Tax Study Commission's 1985 study “Who Pays
New York Taxes?”
The market price of a location depends not only on ground rent and taxes,
effectively its present value, but also upon the “discount rate,” or
interest rate, that prevails in the market used to calculate its returns
and costs. When interest rates go up, the market prices of sites fall,
just as for any other economic encumbrances placed on locational sites.
The market prices of sites also fall if taxes go up and nothing else changes.
However, an increase in taxes is often accompanied by improvements in any
obligations linked to parcel locations. These too are sometimes easily “commodified,”26
and may vary according to time period, changed neighborhood expectations,
emergency conditions, government regulations, and so on.27 These contingent
links often constitute services that raise the market prices of sites more
than the taxes depress them. Still another way of understanding the value
of locations is to see them as capitalized transportation costs.28 Savings
in transportation are likely to be expressed in the market price of sites.
One way or another people are willing to pay for access to exchange markets:
either in the form of site proximity or in the form of travel expenses.
It is the reason why urban cores have higher site rents than peripheral
areas and hinterlands. Hence the differential value of locations, dependent,
not on anything titleholders do, but rather on the quality of community
amenities. These all have a price.
The prices for services that raise land rents, like the services themselves,
should be regarded as flows rather than as stocks. But, ironically, our
payments for such services are not understood as flows affecting site values
at all, but are seen rather as related to stock prices. The values of our
property parcels are viewed solely as stocks, and therefore our taxes are
seen as stock taxes. ... read the whole commentary
Rick Rybeck: Using Value Capture to Finance Infrastructure
and Encourage Compact Development, at http://www.edrgroup.com/ted2006/T3_Rybeck_Rick.pdf.
Fred Harrison: Wheels of Fortune: Self-funding Infrastructure
and the Free Market Case for a Land Tax at http://www.iea.org.uk/files/upld-publication307pdf?.pdf.