Wealth and Want
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Real estate is a much larger share of the American economic picture than most of us realize.  Further, land values are a much higher share of real estate value than most of us realize. Local assessments tend to underweight land and overweight improvements (see the page on assessment for why and how).  

Were we to move to land value taxation, there is good reason to believe that our economies, local and national, would benefit, and there would be widespread prosperity.  This would reduce the need for much of the spending necessitated by the large population of struggling people within our society.

Henry George called land value taxation the Single Tax.  Today, most Georgists believe that while a tax on land rent rent should be our primary tax, it will probably no longer be sufficient to meet all revenue needs.  But that doesn't reduce the moral imperative to make it the primary tax — the first tax, the underlying tax. It is probably sufficient to meet about 2/3 of our revenue needs.  If it alone isn't sufficient to meet the spending needs of government, then it can be supplemented by some of the taxes we rely on today whose perversity and injustice this website documents.   But let's tax first things first.


It is an axiom of statesmanship, which the successful founders of tyranny have understood and acted upon that great changes can best be brought about under old forms. We, who would free men, should heed the same truth. It is the natural method. When nature would make a higher type, she takes a lower one and develops it. This, also, is the law of social growth. Let us work by it. With the current we may glide fast and far. Against it, it is hard pulling and slow progress.

By making use of this existing machinery, we may, without jar or shock, assert the common right to land by appropriating rent by taxation. We already take some rent in taxation. We have only to make some changes in our modes of taxation to take it all.*

*Rent in the economic sense is not, as those unfamiliar with economic terminology may assume, the whole amount paid for the use of real estate. It is only that part of such amount which is paid for the use of the bare land or site employed, exclusive of the payment for the use of any buildings or other improvements on it. H. G. B.

In form, the ownership of land would remain just as now. No owner of land need be dispossessed, and no restriction need be placed upon the amount of land any one could hold. For, rent being taken by the State in taxes, land, no matter in whose name it stood, or in what parcels it was held, would be really common property, and every member of the community would participate in the advantages of its ownership.

Now, insomuch as the taxation of rent, or land values, must necessarily be increased just as we abolish other taxes, we may put the proposition into practical form by proposing --

to abolish all taxation save that upon land values.

As we have seen, the value of land is at the beginning of society nothing, but as society develops by the increase of population and the advance of the arts, it becomes greater and greater. In every civilized country, even the newest, the value of the land taken as a whole is sufficient to bear the entire expenses of government. In the better developed countries it is much more than sufficient. Hence it will not be enough merely to place all taxes upon the value of land. It will be necessary, where rent exceeds the present governmental revenues, commensurately to increase the amount demanded in taxation, and to continue this increase as society progresses and rent advances. But this is so natural and easy a matter, that it may be considered as involved, or at least understood, in the proposition to put all taxes on the value of land. That is the first step upon which the practical struggle must be made. When the hare is once caught and killed, cooking him will follow as a matter of course. When the common right to land is so far appreciated that all taxes are abolished save those which fall upon rent, there is no danger of much more than is necessary to induce them to collect the public revenues being left to individual landholders.

Wherever the idea of concentrating all taxation upon land values finds lodgment sufficient to induce consideration, it invariably makes way, but there are few of the classes most to be benefited by it, who at first, or even for a long time afterward, see its full significance and power.

  • It is difficult for workingmen to get over the idea that there is a real antagonism between capital and labor.
  • It is difficult for small farmers and homestead owners to get over the idea that to put all taxes on the value of land would be unduly to tax them.
  • It is difficult for both classes to get over the idea that to exempt capital from taxation would be to make the rich richer, and the poor poorer.

These ideas spring from confused thought. But behind ignorance and prejudice there is a powerful interest, which has hitherto dominated literature, education, and opinion. A great wrong always dies hard, and the great wrong which in every civilized country condemns the masses of men to poverty and want, will not die without a bitter struggle. ... read the whole chapter

Henry George: The Crime of Poverty  (1885 speech)

... Nature gives to labour, and to labour alone; there must be human work before any article of wealth can be produced; and in the natural state of things the man who toiled honestly and well would be the rich man, and he who did not work would be poor. We have so reversed the order of nature that we are accustomed to think of the workingman as a poor man.

And if you trace it out I believe you will see that the primary cause of this is that we compel those who work to pay others for permission to do so. You may buy a coat, a horse, a house; there you are paying the seller for labour exerted, for something that he has produced, or that he has got from the man who did produce it; but when you pay a man for land, what are you paying him for? You are paying for something that no man has produced; you pay him for something that was here before man was, or for a value that was created, not by him individually, but by the community of which you are a part. What is the reason that the land here, where we stand tonight, is worth more than it was twenty-five years ago? What is the reason that land in the centre of New York, that once could be bought by the mile for a jug of whiskey, is now worth so much that, though you were to cover it with gold, you would not have its value? Is it not because of the increase of population? Take away that population, and where would the value of the land be? Look at it in any way you please. ...

Now, supposing we should abolish all other taxes direct and indirect, substituting for them a tax upon land values, what would be the effect?

  • In the first place it would be to kill speculative values. It would be to remove from the newer parts of the country the bulk of the taxation and put it on the richer parts. It would be to exempt the pioneer from taxation and make the larger cities pay more of it. It would be to relieve energy and enterprise, capital and labour, from all those burdens that now bear upon them. What a start that would give to production!
  • In the second place we could, from the value of the land, not merely pay all the present expenses of the government, but we could do infinitely more. In the city of San Francisco James Lick left a few blocks of ground to be used for public purposes there, and the rent amounts to so much, that out of it will be built the largest telescope in the world, large public baths and other public buildings, and various costly works. If, instead of these few blocks, the whole value of the land upon which the city is built had accrued to San Francisco what could she not do? ... read the whole speech

Henry George: The Condition of Labor — An Open Letter to Pope Leo XIII in response to Rerum Novarum (1891)

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. ... read the whole letter

Louis Post: Outlines of Louis F. Post's Lectures, with Illustrative Notes and Charts (1894)

Note 13: Following is an interesting computation of the cost and loss to the city of Boston of the present mixed system of taxation as compared with the single tax; The computation was made by James R. Carret, Esq., the leading conveyancer of Boston:
Valuation of Boston, May 1, 1892
Land... ... . .. ... .. ... .. $399,170,175
Buildings ... ... ... ... ..$281,109,700
Total assessed value of real estate $680,279,875
Assessed value of personal estate $213,695,829
.... ....
... ... ... ... ... ... .... .... .... ... .... ... $893,975,704
Rate of taxation, $12.90 per $1000
Total tax levy, May 1, 1892 $11,805,036
Amount of taxes levied in respect of the different subjects of taxation and percentages of the same:
Land .... .... .... .... $5,149,295 43.62%
Buildings .... .... .. $3,626,295 30.72%
Personal estate .. $2,756,676 23.35%
Polls ... .... ... .... .... ...272,750   2.31%
But to ascertain the total cost to the people of Boston of the present system of taxation for the taxable year, beginning May 1, 1892, there should be added to the taxes assessed upon them what it cost them to pay the owners of the land of Boston for the use of the land, being the net ground rent, which I estimate at four per cent on the land value.
Total tax levy, May 1, 1892 ... ... ... ... .... .... .... .... .... ..... .... .... .... .... .... .... ..$11,805,036
Net ground rent, four percent, on the land value ($399,170,175)..... ... ... ...$15,966,807
Total cost of the present system to the people of Boston for that year ... $27,771,843
To contrast this with what the single tax system would have cost the people of Boston for that year, take the gross ground rent, found by adding to the net ground rent the taxation on land values for that year, being $12.90 per $1000, or 1.29 per cent added to 4 per cent = 5.29 per cent.
Total cost of present system as above .. .... .... .... .... .... .... .... .... ....$27,771,843
Single tax, or gross ground rent, 5.29 per cent on $399,170,175 ... ..$21,116,102
Excess cost of present system, which is the sum of
taxes in respect of buildings, personal property, and polls .... ...... .. $6,655,741
But the present system not only costs the people more than the single tax would, but produces less revenue:
Proceeds of single tax ... ... ... ... ..... .... .... ..... .... .... .... ..... ..... .... $21,116,102
Present tax levy ... ... ... ... ... .... .... .... ..... .... .... .... .... .... .... .... ....$11,805,036
Loss to public treasury by present system ... .... .... .... .... .. ..... ..$9,311,066
This, however, is not a complete contrast between the present system and the single tax, for large amounts of real estate are exempt from taxation, being held by the United States, the Commonwealth, by the city itself, by religious societies and corporations, and by charitable, literary, and scientific institutions. The total amount of the value of land so held as returned by the assessors for the year 1892 is $60,626,171.
Reasons can be given why all lands within the city should be assessed for taxation to secure a just distribution of the public burdens, which I cannot take the space to enter into here. There is good reason to believe also that lands in the city of Boston are assessed to quite an appreciable extent below their fair market value. As an indication of this see an editorial in the Boston Daily Advertiser for October 3, 1893, under the title, "Their Own Figures."
The vacant lands, marsh lands, and flats in Boston were valued by the assessors in 1892 (page 3 of their annual report) at $52,712,600. I believe that this represents not more than fifty per cent of their true market value.
Taking this and the undervaluation of improved property and the exemptions above mentioned into consideration, I think $500,000,000 to be a fair estimate of the land values of Boston. Making this the basis of contrast, we have:
Proceeds of single tax 5.29 per cent on $500,000,000 ... .... .... .... $26,450,000
Present tax levy ... .... ... .... .... .... .... .... ..... .... .... .... .... ..... .... .... ..$11,805,036
Loss to public treasury by present system ... ... ... ... .... .... .... ....$14,644,974 ...

c. Significance of the Upward Tendency of Rent

Now, what is the meaning of this tendency of Rent to rise with social progress, while Wages tend to fall? Is it not a plain promise that if Rent be treated as common property, advances in productive power shall be steps in the direction of realizing through orderly and natural growth those grand conceptions of both the socialist and the individualist, which in the present condition of society are justly ranked as Utopian? Is it not likewise a plain warning that if Rent be treated as private property, advances in productive power will be steps in the direction of making slaves of the many laborers, and masters of a few land-owners? Does it not mean that common ownership of Rent is in harmony with natural law, and that its private appropriation is disorderly and degrading? When the cause of Rent and the tendency illustrated in the preceding chart are considered in connection with the self-evident truth that God made the earth for common use and not for private monopoly, how can a contrary inference hold? Caused and increased by social growth, 97 the benefits of which should be common, and attaching to land, the just right to which is equal, Rent must be the natural fund for public expenses. 98

97. Here, far away from civilization, is a solitary settler. Getting no benefits from government, he needs no public revenues, and none of the land about him has any value. Another settler comes, and another, until a village appears. Some public revenue is then required. Not much, but some. And the land has a little value, only a little; perhaps just enough to equal the need for public revenue. The village becomes a town. More revenues are needed, and land values are higher. It becomes a city. The public revenues required are enormous, and so are the land values.

98. Society, and society alone, causes Rent. Rising with the rise, advancing with the growth, and receding with the decline of society, it measures the earning power of society as a whole as distinguished from that of the individuals. Wages, on the other hand, measure the earning power of the individuals as distinguished from that of society as a whole. We have distinguished the parts into which Wealth is distributed as Wages and Rent; but it would be correct, indeed it is the same thing, to regard all wealth as earnings, and to distinguish the two kinds as Communal Earnings and Individual Earnings. How, then, can there be any question as to the fund from which society should be supported? How can it be justly supported in any other way than out of its own earnings?

If there be at all such a thing as design in the universe — and who can doubt it? — then has it been designed that Rent, the earnings of the community, shall be retained for the support of the community, and that Wages, the earnings of the individual, shall be left to the individual in proportion to the value of his service. This is the divine law, whether we trace it through complex moral and economic relations, or find it in the eighth commandment. ...

f. The Single Tax Retains Rent for Common Use.

To retain Rent for common use it is not necessary to abolish land-titles, nor to let land out to the highest bidder, nor to invent some new mechanism of taxation, nor in any other way to directly change existing modes of holding land for use, or existing machinery for collecting public revenues. "Great changes can be best brought about under old forms."109 Let land be held nominally as it is now. Let taxes be collected by the same kind of machinery as now. But abolish all taxes except those that fall upon actual and potential Rent, that is to say, upon land values.

109. "Such dupes are men to custom, and so prone
To rev'rence what is ancient and can plead
A course of long observance for its use,
That even servitude, the worst of ills,
Because delivered down from sire to son
Is kept and guarded as a sacred thing." —Cowper.

It is only custom that makes the ownership of land seem reasonable. I have frequently had occasion to tell of the necessity under which the city of Cleveland, Ohio, found itself, of paying a land-owner several thousand dollars for the right to swing a bridge-draw over his land. When I described the matter in that way, the story attracted no attention; it seemed perfectly reasonable to the ordinary lecture audience. But when I described the transaction as a payment by the city to a land-owner of thousands of dollars for the privilege of swinging the draw "through that man's air," the audience invariably manifested its appreciation of the absurdity of such an ownership. The idea of owning air was ridiculous; the idea of owning land was not. Yet who can explain the difference, except as a matter of custom?

To the same effect was the question of the Rev. F. L. Higgins to a friend. While stationed at Galveston, Tex., Mr. Higgins fell into a discussion with his friend as to the right of government to make land private property. The friend argued that no matter what the abstract right might be, the government had made private property of land, and people had bought and sold upon the strength of the government title, and therefore land titles were morally absolute.

"Suppose," said Mr. Higgins, "that the government should vest in a corporation title to the Gulf of Mexico, so that no one could fish there, or sail there, or do anything in or upon the waters of the Gulf without permission from the corporation. Would that be right?"

"No," answered the friend.

"Well, suppose the corporation should then parcel out the Gulf to different parties until some of the people came to own the whole Gulf to the exclusion of everybody else, born and unborn. Could any such title be acquired by these purchasers, or their descendants or assignees, as that the rest of the people if they got the power would not have a moral right to abrogate it?"

"Certainly not," said the friend.

"Could private titles to the Gulf possibly become absolute in morals?"


"Then tell me," asked Mr. Higgins, "what difference it would make if all the water were taken off the Gulf and only the bare land left."

If that were done it is doubtful if land-owners could any longer confiscate enough Rent to be worth the trouble. Even though some surplus were still kept by them, it would be so much more easy to secure Wealth by working for it than by confiscating Rent to private use, to say nothing of its being so much more respectable, that speculation in land values would practically be abandoned. At any rate, the question of a surplus — Rent in excess of the requirements of the community — may be readily determined when the principle that Rent justly belongs to the community and Wages to the individual shall have been recognized by society in the adoption of the Single Tax. 110

110. Thomas G. Shearman, Esq., of New York, author of the famous magazine article on "Who Owns the United States," estimates that sixty-five per cent of the present annual value of the land in the United States would pay all the present expenses of American government — federal, state, county, and municipal. ... read the book

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 of government?

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 in taxation. ... read the book

Charles B. Fillebrown: A Catechism of Natural Taxation, from Principles of Natural Taxation (1917)

Q36. How much does this particular form of privilege amount to?
A. It amounted for 1914 to approximately $40 million for Boston and more than $200 million for Greater New York.

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 he said:

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.

Q60. Do you believe that economic rent ought to furnish a larger proportion of public revenue than it does now?
A. One hundred nineteen professors of political economy have answered "Yes." Eight have answered "No." ... read the whole article

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

"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 proposition:

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. ...

An authority on municipal taxation estimates the present economic rent of the land embraced in the City of New York at from $350,000,000 to $400,000,000. Assuming the lesser of these figures and adding the receipts from licenses, fees and fines, New York City should receive, of her own income, enough to pay all her own legitimate bills, to make her proper contributions to county and state and build a new subway or its equivalent every year.

And this with nobody paying a dollar of taxes, or, if we except the fines, a dollar that he was not ready and glad to pay for his own advantage.

We repeat, this is not taxation; but for the sake of those who cannot grasp the idea of public revenue without taxation, let us state the matter in their own language.

Think of a tax which both assesses itself and collects itself, which burdens no one, which is paid voluntarily, and only by those who do so for their own profit or other advantage. Compare this with our present system of taxes, which everyone despises, which can be collected in full only from the very scrupulous and from the helpless, from trust funds of widows and orphans, or from estates which lie naked before the tax gatherer on the records of court; a system which drives men of property from state to state and town to town in flight from the assessor, and well-nigh forces many worthy citizens to practices of evasion which must make it hard for them to look into their own mirrors during the season for "Correction of Assessments;" there can be but one verdict upon such comparison. ... read the whole article

Mason Gaffney: Adequacy of Land as a Tax Base (1969)

Nic Tideman: Basic Tenets of the Incentive Taxation Philosophy

Replacing Existing Taxes
When we say that the appropriate recipient of rent is the public treasury, it should be understood that this is not in addition to existing sources of public revenue, but rather instead of existing sources of public revenue.
  • Those who contribute labor to productive processes should be allowed to keep the wages that result from their labor.
  • Those whose saving makes the creation of capital possible should be allowed to keep the interest that accrues from the use of capital.
  • But there is no one who has a corresponding claim to the return to land. This is the reason that fees for the use of land and other opportunities assigned by government ought to be the primary source of government revenue.
While one might call such fees "taxes," we consider that designation inappropriate, because the word "tax" connotes an exaction from someone of something to which he or she has a just claim, and we deny that there are such just claims with respect to land. We expect that the collection of fees for the full value of opportunities assigned by governments would provide adequate revenue for all necessary government expenditures. ...

Creating a More Productive Economy
The ideas we espouse are attractive not only for their embodiment of principles of justice, but also because they can be expected to lead to a more productive economy.

Economists agree that the imposition of taxes generally retards an economy. The reason for this is that with almost all taxes, it is possible for a tax payer to reduce total tax collections by doing less of whatever is taxed--work less, spend less, save less, etc. This means that taxes generate an incentive to be less productive.

With fees for the use of government-assigned opportunities, on the other hand, the only thing that a person can do to reduce the amount of money that he or she pays is to use fewer of these opportunities. But then the opportunities can be used by someone else, who will pay the fees, and total public revenue will be unchanged. There is no possibility reducing total government revenue by being less productive. Thus these fees can be collected without dragging down the economy in the way that existing taxes do.

Our ideas provide for the natural financing of any worthwhile public expenditure that makes a particular area more attractive or productive--parks, freeways, subways, sewer systems, etc. These public expenditures raise the rental value of land in their vicinity, and thereby raise the fees that can be collected for using the land. If the activity is worthwhile, the increase in rental values will be sufficient to pay for the activity.

Another way in which our ideas promote a more efficient economy is by eliminating the opportunity grow rich by having government promote one's own interest at the expense of others. Such distortions of the political process can occur either by persuading a government agency to spend money in a way that raises the value of land that one owns while others foot the bill, or by persuading a government agency to prohibit others from doing what one is permitted to do. In both kinds of cases, the person who promotes his or her own interest has no reason to take account of the costs that are thereby imposed on others, and typically these costs to others are greater than the self-seeking benefits. This makes the economy less productive.

Furthermore, the very possibility of growing rich by manipulating government action draws talented people into the effort to manipulate government decisions, when they could be employed doing something useful.  ...  Read the whole article

Robert V. Andelson  Henry George and the Reconstruction of Capitalism
Nobody, to my knowledge, advocates that it be instituted whole-hog overnight. But it could be phased in in easy stages so as to obviate the risk of shock and dislocation. And it is my considered opinion that, by the time the system were in full effect, the revenues produced by collecting land values alone would suffice to meet all legitimate public needs. This may not have been true during the Cold War, with its staggering burden of nuclear defense. But with that burden lifted, and with the need for welfare of all kinds evaporated because of the full employment and other social benefits that the system would naturally engender, and for other reasons, which time precludes my specifying here, I really think that we could dispense with taxes on incomes, improvements, sales, imports, and all the rest. If I am unduly optimistic in this belief, and the public appropriation of land-values were insufficient, this would be no argument against using it as far as it could go.Read the whole article

Nic Tideman:  Global Economic Justice, followed by Creating Global Economic Justice
WOULD THERE be enough revenue for the public sector? To address this question, one should consider different types of public activities separately. The type of public activity that can most readily be financed by charges for exclusive access to natural opportunities is local public services. When these are desired by voters and provided efficiently, they tend to raise the rental value of land by enough to pay for themselves, since a local public service provides a benefit in a limited region, and people will bid up the rental value of that land by the value of access to the service.2 Thus local services can be financed without even beginning to draw on the value of opportunities provided by nature.

Another broad area of public spending is national defense. While defense increases the value of land in a dangerous world, one might reasonably hope that the need for defense spending would be greatly reduced in a world that had adopted a general norm of acknowledging the equal rights of all persons to natural opportunities.

To the extent that defense costs are raised when a nation becomes a more attractive target-- because of increases in its stock of capital or in the productivity of its citizens--it would be efficient and not unreasonable to have an annual charge on capital and on talent (an asset protection fee) to defray these costs. Such a fee could be collected by a self-assessed tax. For capital, the tax could be enforced by an obligation to sell the capital at the self-assessed price. For talent, the tax could be enforced by a rule that if a person was injured in an accident and wished to sue for loss of earning power, the self-assessed value of the person's talent would be the upper limit on the damages that could be claimed. It is likely that a tax rate of two or three tenths of one percent per year would suffice to fund the current level of U.S. defense spending. But I would hope and expect that defense spending would fall substantially. Between the reduced need for defense spending and an efficient asset protection fee for the extra defense costs generated by increases in capital and talent, it should be possible to finance defense without exhausting the rental value of exclusive access to natural opportunities.

The next major area of government spending to consider is social welfare programs-welfare, social security, unemployment compensation, health insurance, etc. These would tend to raise the rental value of land to some extent, but they would generally not raise land rents by enough to pay for themselves, because their perceived value to individuals tends to be highly disparate, so that those who value access to such programs generally do not need to offer the full value of such programs in rent premiums in order to get access to them. Thus one cannot count on financing such programs by increases in rent. The disparate value of public education to families makes this public service subject to the same analysis.

Social welfare programs often have an insurance component, requiring payments by potential beneficiaries. If a program is so close to a true insurance program that virtually everyone receives an expected benefit that is as great as his or her assigned contribution, then it can be financed by the assigned contributions, and few will find the program objectionable. But social welfare programs rarely approximate true insurance programs.

The difficulty with financing social welfare programs with rent arises because those who design such programs usually seek to require some people to pay more than the expected value of their benefits. In a world that recognizes the equal rights of all persons to natural opportunities and the right of any person to emigrate, social welfare programs of this sort will be possible only to the extent that they reflect shared community values. If such a program draws on shared feelings of community responsibility, then people will be happy to contribute part of their shares of the value of natural opportunities, or even part of their earnings to such programs. If an attempt is made to implement social insurance that exceeds what people are prepared to pay for out of a sense of community, people will tend to emigrate or secede. Thus in a world that operates on principles of global economic justice, people will not be required to pay for social insurance that they object to. If people have potential needs that exceed what their fellow citizens are willing to provide, they will have to buy their own insurance before the need arises or rely on friends and family. If those who are never able to provide for themselves are to be provided for in a just world of limited generosity, parents will need to buy insurance against having children with special needs before they conceive those children. But I believe that feelings of community are sufficiently extensive that those who need help would receive it. Unlike the present situation, in a just world every person would have a share of the value of exclusive access to natural opportunities, which would provide a guaranteed income that would provide for many contingencies.  ...  Read the whole article

Nic Tideman: The Shape of a World Inspired by Henry George

How would the world look if its political institutions were shaped by the conception of social justice advanced by Henry George?

Nic Tideman:  The Morality of Taxation: The Local Case

From a moral perspective, taxation is dubious or worse. We tell our fellow citizens that if they do not pay taxes that we say they owe, their property will be seized or they will be sent to prison. Why do we treat people this way? Is there a justification?

The dubiousness of taxation increases when we consider its origins. Government seems to have originated as roving bandits who learned that total destruction was less profitable than protecting their victims from other bandits and allowing them to keep a fraction of what they produced (Olson, 1993). In time, scheduled partial plunder evolved into taxation. Over the centuries, regimes that started as tyrannies evolved into democracies. The public sector evolved from an apparatus for implementing the will of despots into a mechanism for carrying out democratic decisions. But public finance continues to rely on the power of tax collectors, developed under early tyrants, to coerce citizen to pay taxes. The wrath that citizens feel toward tax collectors is probably the strongest antagonistic feeling that citizens have toward a governmental institution. Why do we allow ourselves to do this to one another?

There is a gentler side of taxation that provides some explanation of our tolerance of this coercion. Taxation can be the way that people achieve their common purposes. People may agree to be taxed so that there will be money to pay for public services that they want. From this perspective, taxation may be considered no more than the dues for belonging to a club that provides people with things that they would rather pay their share of than do without. However, to make this "voluntary exchange" theory of taxation relevant, people must be able to choose freely whether or not to "join the club," to be a citizen of the taxing jurisdiction. With all land claimed by some taxing jurisdiction, the choice isn't exactly free.

The problem of morality in taxation is the following:

  • How do we retain the possibility of people pooling their contributions to the cost of services that they agree are worthwhile, while eliminating the possibility of citizens treating their fellow citizens as targets of plunder?
  • What are the limits of obligations that we can justly impose on our fellow citizens?
  • And how do we set up a structure of government that will ensure that these limits are observed? ...
we would probably have a much more efficient public sector if every public expenditure required two-thirds approval in legislative bodies.

But to make taxation truly voluntary, the option to leave must be viable. If people could move costlessly from one jurisdiction to another, taking all of their belongings with them, then competition among jurisdictions would tend to eliminate oppressive taxation. This would leave only the fees that people were prepared to pay to have public services (Tiebout, 1956).

Of course, moving will always have some costs, so the ideal will not be attainable. But what can be imagined is a system in which all taxes were local taxes. Then people would not have to move nearly as far to escape from taxes that they regarded as oppressive. Higher levels of government would not need to disappear; if the services that they provide are desired, they could be financed by levies on lower levels of government. ...

...Thus communities would not be able to raise much revenue from income tax or taxes on capital before they would drive residents and investment away. It might seem that there would be no way that localities could finance themselves.

Such a conclusion would be unwarranted, because there is a very significant source of public revenue that can survive when localities compete for mobile residents. This source is land. When people are taxed in proportion to the land they possess, no land moves to another locality where taxes are lower. Thus two questions arise:

  • Would taxes on land be sufficient to finance the public activities that ought to be undertaken, and
  • would such a system be fair?  Read the whole article
Bill Batt: The Merits of Site Value Taxation
Stability refers to the ability of a tax to produce revenue in the face of changing economic circumstances. Income and sales taxes, for example, vary according to phases in the economic cycle; the property tax, in contrast, is highly stable regardless of the state of the economy.

In assessing the value of a tax it is also important, of course, to understand its potential to bring in revenue for the purposes of government, usually deemed revenue sufficiency. Income, sales and property taxes, along with corporation taxes to a lesser extent, have come to be regarded as the workhorses of the American revenue structure. But, as anti-tax politicians are quick to note, the higher these taxes are, the more they impose a drag on the economy. One recent study calculates that the deadweight loss due to taxes in the American economy is equal to $1 trillion every year, about a sixth of the total GDP.17 This is why one should ponder whether to consider raising taxes which have demonstrable distorting effects. ... Read the whole piece
Ted Gwartney:  Estimating Land Values

The economic market rental value of land should be sufficient to finance public services and to obviate the need for raising revenue from taxes, such as income or wage taxes; sales, commodity or value-added taxes; and taxes on buildings, machinery and industry. Public revenue should not be supplied by taxes on people and enterprise until after all of the available revenue has been first collected from the natural and community created value of land. Only if land rent were insufficient would it be necessary to collect any taxes.

The collection of land rent, by the public for supplying public needs, returns the advantage an individual receives from the exclusive use of a land site to the balance of the community, who along with nature, contributed to its value and allow its exclusive use. ...

While the major argument for raising public revenue from land rent and natural resources is because it is equitable and fair, it is also the most efficient method of raising the revenue which is needed for public facilities and services. Land is visible, can't be hidden and its valuation is less intrusive than valuations of income and sales. Taxes on labor and capital cause people to consider alternative options, including working with less effort, which produces less real goods. For example, a tax on wages will reduce after-tax net wages and weaken the incentive to work. A person might be willing to work hard for a wage of $20 per hour, but decide to drop out if the taxes take $8 and the net wage is only $12 per hour. Economists claim that present taxes account for a 25% loss in production in the United States. Production and consumption would be greatly improved if public revenue came primarily from land rather than a wage tax. The same would occur when buildings and machinery are taxed. The tax on building reduces the quantity and quality of buildings produced. A tax on sales, commerce or value added reduces consumption, production and net wealth. Sales tax evasion in the United States has exceeded 30% in recent years.

As new inventions and more efficient ways of producing goods are discovered, people's economic well-being is not improved, because they have lost access to land and must pay both rent and taxes. (5) Instead of rent being used to provide community services, capital and wages must be depleted, which obstructs private enterprise.

When the rent of land is taken for public purposes production and distribution are not held back. This is because the same amount of rent would otherwise have been taken by some private individual. The rent would be the same, the difference is how it is utilized. There is evidence that communities who raise their revenue from land, rather than from labor and capital, are more prosperous, many increasing productivity by more than 25%. (6)


In order to preserve the environment, it is necessary and possible to better utilize our communities. If the producers of the land market value (nature, government and people) don't utilize land rent, someone else will. This is why efficient land use fails under contemporary land systems in most countries. All countries collect some of the land rent, perhaps 10%, 20% or 30%, but none yet, collect all of the market rent of land.

Studies have been produced that demonstrate that communities prosper and succeed in proportion to the percentage of the land rent that they collect. The first communities that decide to collect all of the ground rent will have an enormous competitive advantage over all other communities. They will be able to reduce or eliminate regressive taxes on labor and capital. They will attract new business and industry and become prosperous.

To determine how much land rent the community should collect let's consider the alternatives. Whatever is not collected will be capitalized into market value by land owners. Buying land at inflated market prices is a block to new industry. Land owners sell the capitalized land rent (known as land value) which is uncollected by the community even though it is unearned income. This causes a disparity between landowners and non-landowners. In the United States 5% of the population, which does not include many homeowners or farmers, own 70% of the total national land and natural resource values.

People will come to a well run community because they will be better off than living by themselves or in an impoverished locale. A city must secure revenue in order to provide good quality services.

This revenue can best be procured when the community recaptures the value of the benefits and services that it provides. This is done by collecting the rental revenue from land that reflects the value of the services and facilities provided in that community. The land rent belongs equally to all people that live in the locale who helped to produce that value. In a well run community. there is sufficient land rent to provide adequate funding for the social purposes requested of, and provided by, the local city government

Cities which choose to collect land rent as their primary source of revenue have the advantage of not requiring burdensome taxes to be paid by workers, businesspeople, entrepreneurs or citizens. Individuals who work to create wealth should be allowed to keep what they produce. When labor is not taxed, greater production and consumption occurs. Investment capital is formed which is used to produce more wealth. New jobs are created and economic diversity results.

Each person has a right to keep what he or she produces, but no one has the right to waste what belongs to all people, the land which includes the natural environment. Each person should have an opportunity to use the best land for his business or personal needs, as long as they are willing to pay the land rent that other land users are willing to pay.

If the value of land rent exceeds the community's needs for public services a method of dispensing of the revenue can easily be found. To maintain an equitable society, where nobody has special benefits that they do not pay for, it is important to collect all of the land rent. The community should use what is needed for public services and improvements such as schools, hospitals, parks, police, roadways, utilities and defense -- and reserve a fund for emergencies.

An ethical proposal might be to then divide the excess revenue that is not needed for public facilities and services at the end of each year and send each citizen in that community an equal portion of the remaining revenue. This is similar to the method used in Alaska and Alberta. Equality of opportunity to be productive can only be accomplished by recapturing all of the market rent of land and ensuring that all people benefit from its value.

Not only is land rent potentially an important source of public revenue, collecting all of it would ensure that the equal opportunity to be productive would be available to all citizens. People could fund useful buildings, equipment and wages, rather than having to buy land at inflated prices. Many countries, including the United States, were started on the premise of using land rent to fund public services. Many countries suffer economic loss because they no longer collect the market rent of land.

The value of land can be estimated with an acceptable accuracy, at a cost which is very small compared to the revenue to be obtained. A proper system of assessment and taxation of land can provide for the proper economic use of the land. A land site should be available to the user who can make the highest and best use of the site and maximize the site benefits for all people. A land tax can provide a major source of public revenue which the local governing body could use for the benefit of all people. A land tax can prevent the dispossession of our children, the future producers in the society. Justice requires that land values, which are created by society and nature, be made available for public improvements. This is the responsibility of good government.Read the whole article

Joseph Stiglitz: October, 2002, interview

Q: I wanted to ask your view on the adequacy of land as a tax base. At one time, as you know, there was a "Single Tax" movement, for the purpose of deriving revenues sufficient to run the government solely from land value taxation. In your view, how feasible is that today?

JES: Most economists would say that you cannot run the US economy on the "Single Tax." In my mind, the "Single Tax" is the wrong way to think about it. The question is: "Would it be better if we had more taxation of land and natural resource, and more revenue from natural resource management, and I would include atmosphere and spectrum." And less tax on income and savings. And I would say, "Yeah." And I think many economists would agree with that. So, if you want to sell it as a "Single Tax," then, no, you won't get anyone to agree that there's enough revenue there. If you look at is a more "central" tax, then, yes, you will get most economists to agree with you. ... read the entire interview

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

Some economists agree taxing rent is efficient, but they claim the amount of revenue would be trivial. Salvatore and Diulio (1996), for example, have an exercise in their textbook: “What are the criticisms of the single-tax movement?” This was the movement for a single tax on land value, by the followers of Henry George. One criticism offered in that book is the assertion, provided with no evidence or citation, that “rents in the United States today amount to just about 1% of GNP,” ignoring the fact that the U.S. housing stock alone amounts to $15 trillion24 and research that indicates geo-rent is about 20 percent of GDP.

There will always be critics who concoct a huge cost in getting assessments correct down to the last penny, or claim, without any evidence, that real estate is a trivial portion of the economy. Such critics date back to the days of Henry George, when the landed interests felt threatened by his ideas. Those opponents have been thoroughly rebutted in the book, Critics of Henry George (the latest edition edited in 2004 by Robert Andelson). The reasons for such attempts to falsify and trivialize rent-based public finance, and even to eliminate the land factor from economics, are chronicled and analyzed in The Corruption of Economics, especially in the chapter by Mason Gaffney, “Neo-classical Economics as a Stratagem against Henry George.” This negative viewpoint is perpetuated by academics who learn of land value taxation from misleading secondary sources, not bothering to dig any further. ...

How much revenue?

Total land values or land rents are not reported in national statistics. The U.S. national income accounts have a number only for the “rental income of persons,” which excludes rent obtained by corporations and the rental value of government land. This “rental income” is after all expenses, including property taxes, and so includes only a tiny fraction of the geo-rent.40

The national rent in the United Kingdom has been estimated at 22 percent of national income, which exceeds the amount raised in that country by the income tax.41 Steven Cord42 estimated the annual economic rent of land in the U.S. in 1986 at $680 billion, 20 percent of national income, while Mike Miles (1990) arrived at a similar figure using data from the Bureau of Economic Analysis.43 The totals include government lands but do not include the increase in geo-rent that would occur with the elimination of market-hampering taxes.

Making up about one-fifth of national income, land value taxation would provide about 60 percent of current U.S. federal, state, and local government revenue, which would be more than adequate for government spending if it did not include transfer payments. The taxable value of the land in the economy would increase over time for two reasons.

  • First, a shift from taxing production to taxing land values would eliminate the lost output due to taxes — about $1 trillion per year.44 One-fifth of that would be rent, thus increasing rent by $300 billion.
  • Secondly, the economy would grow faster, which also would increase rent over time.

Tideman et al. (2002, 17) “estimate that the net gain (measured in real dollars of 2000), from shifting as much taxation to land as could be financed by collecting 90% of the land rent, would be $1308 billion or 14% of NDP in 2002 and $4,799 billion or 26.6% of NDP in 2042.” Even if only a fraction of government revenue shifted from the types of taxes we know today to a geo-rent tax, the efficiency gains could be substantial. Some critics simply do not believe these results, without bothering to read them. I have not seen a rebuttal of Tideman’s calculation.

Even if land value taxation does not yield the revenue that is desired, this is no argument against shifting as much public revenue as possible to rent-based sources. Public revenue from land values is the most complete application of “supply-side” economic policy. Supply-side policy attempts to increase production and the supply of goods by decreasing costs, such as by lowering taxes and eliminating excessive regulations and barriers to trade. A complete tax shift, away from taxing production to taxing land values, is the ultimate supply-side policy, since it removes the excess economic burden of taxation. The public collection of land rent is thus the ultimate in tax reform.

Land value taxation would also result in a substantial reduction in the cost of government. The administrative cost of land value taxes would be less than that of existing property taxes (which require a greater inspection of buildings and improvements), and the cost of enforcing income and sales taxes would be eliminated. By improving economic growth and allowing workers to keep all the money they earn, land value taxation would result in higher incomes, reducing the demand for government welfare programs. Decentralization, privatization, and the elimination of wasteful government programs would further reduce the amount needed to fund government. ... read the whole document

Karl Williams:  Land Value Taxation: The Overlooked But Vital Eco-Tax

I. Historical overview
II. The problem of sprawl
III. Affordable and efficient public transport
IV. Agricultural benefits
V. Financial concerns
VI. Conclusion: A greater perspective
Appendix: "Natural Capitalism" -- A Case Study in Blindness to Land Value Taxation

That public finance can be raised is a way that doesn't undervalue natural resources is, of course, a principle of all eco-taxes. But the amount of revenue that can be raised, while still sending these strong price signals, is also important to build infrastructure, social welfare, education, environmental rehabilitation etc. The funds that can be raised (or have been forgone thus far) from LVT are colossal by any estimate. ...

The whole field of eco-taxes cannot be viewed in isolation of the fiscal imperatives to raise sufficient public finance, and here we see another of the virtues of LVT. If people were required to pay the rental value of most natural resources they used (as many, in fact, already do - to private owners) an adjustment in patterns of consumption would follow. The environmental goals would be achieved - at the cost of fiscal goals.

However, under our present fiscal regime, governments are locked into a dependency on revenue from socially-harmful sources such as tobacco and gambling, and cannot raise the taxes on them to levels that would "kill the golden goose". Would such political realities change with eco-taxes? Because of the inherent problem with most eco-taxes that they reduce consumption of natural resources and therefore the tax base, they give rise to a financial inducement to hold the tax rate at a low enough rate so that a degree of pollution and wasteful consumption can continue.

The effects of conventional eco-taxes sharply contrast with LVT which instead is a renewable and naturally-escalating source of revenue which arises when people are willing to pay for the use of land the value of which is enhanced by natural resources which sustain healthy lives. In other words, the success of a cleaner and more secure environment would feed through to the land market, which measures the attraction of the natural environment for living and working. Because people are willing to pay higher rents for such benefits LVT, instead of eroding revenue, expands the public's revenue base so that everybody enjoys the benefits of cleaning up and conserving the natural environment. Under the current system of land tenure, the financial benefits of a cleaner environment accrue to landowners.  read the entire article
Fred Foldvary: Geo-Rent: A Plea to Public Economists
HOW LARGE IS THE GEO-RENT TAX-BASE?  One of the pitfalls surrounding the idea of tapping geo-rent is that it is closely associated with Henry George’s single-tax ideal society. Authors such as Mankiw (2004, 168) and McConnell and Brue (2005, 300) point out that geo-rent taxation alone could not cover the current levels of government spending. But that point works only as a criticism of eliminating all taxes aside from geo-rent taxation, not as a criticism of the principle of the idea of tapping geo-rent.

I have the further impression that many economists think that geo-rent is a tiny portion of GDP. That notion seems to lead some economists to figure that even if geo-rent taxation is efficient, it is empirically of small import. Dick Netzer (1998, 116) notes that the proposition that “the potential revenue from land value taxation” is insufficient “is widely held today.”

In a chapter entitled “rent, interest, and profits,” Salvatore and Diulio (1996) have an exercise, “What are the criticisms of the single-tax movement?” One criticism offered is that “rents in the United States today amount to just about 1% of GNP, while taxes are 25% of GNP” (355).

In the official GDP accounts by the Bureau of Economic Analysis in the Department of Commerce, the only category termed “rent” is "rental income of persons," which in 2004 was put at an annualized estimate of $150 billion, or less than 1.5% of GDP. This "rental income" is net of expenses such as property taxes and mortgage interest, but the bulk of such expenses are also returns on real estate which are being paid to lenders and the government!

The BEA’s “rental income of persons” includes rental payments for both the sites and the buildings, adjusted down for the deprecation or “capital consumption” of the improvements. Without capital consumption, the rental income is $166 billion, and that includes the imputed rentals of owner-occupied houses and the mortgage interest paid. This “rental income of persons” is personal income, excluding the rental income from land owned by corporations as well as the implicit opportunity-cost rental value of land held by governments and nonprofit agencies. Furthermore, corporate-owned land is severely understated in corporate reports, because land is valued at the historical purchase price, not current value.

That economists would believe that the GDP rental income figures comes anywhere close to being the total land rent is quite remarkable. Other official data come closer to the actual geo-rent. The Bureau of Labor Statistics of the Department of Labor reported that consumer units spent an average of $13,283 on housing in 2002, one third of total spending (BLS, 2004), including the imputed rental of owner-occupied dwellings. The BLS reports 112,108,000 "consumer units" (households), so the total spent for housing was $1.5 trillion, ten times the "rental income" figure of the BEA. That the $150 in BEA rental-income accounts have little connection with actual geo-rent becomes even clearer when compared to the 2003 home mortgage debt of $7.2 trillion (Financial Services Fact Book, 2005), total mortgages of $9.3 trillion in 2003 (Financial Services Fact Book, 2005), and a housing stock of $15 trillion (National Association of Realtors, 2005).

Property taxes in the U.S. are about $300 billion per year (Youngman and Malme, 1993), with $228 billion going to local governments (Fisher, 1999). If a landlord collects $20,000 in annual rent and pays a property tax of $9,000, the “rental income of persons” here (not subtracting depreciation) is only $11,000, because the reported amount deducts the landlord’s property-tax expense. Similarly, homeowner and condominium association dues are deducted out in arriving at “rental income of persons.” This category “rental income of persons,” then, both includes elements other than geo-rent (notably, rental payments for improvements such as buildings), and excludes much of the geo-rent of the land.

Moreover, as Gaffney (1970, 194) concludes, the untaxing of buildings, which is part of the geo-rent taxation proposal, will raise ground rent by an amount about equal to the loss of building taxes. Narrowing the property tax to geo-rent only, therefore, would increase the geo-rent tax-base by about the same amount as the building tax-based removed.

Studies of geo-rent have been conducted by Steven Cord, Mason Gaffney, Mike Miles, and others. Mason Gaffney (1970, 181) finds that site value is generally at least half of real estate value, which would imply that for the housing stock alone the site value would be about $7.5 trillion.

For private lands, much of the revenue from geo-rent is hidden in interest payments, corporate profits, and capital gains, implying that it isn’t showing up in “rental income of persons.” For example, the way that building-owners may treat “depreciation” is unrealistic and even nonsensical. Suppose Bob buys a building for $275,000 (excluding the land value) and rents it out for $40,000 per year. On the premise that a building is used up in 27.5 years, the tax code allows him to deduct $10,000 each year. And then he deducts his real expense (maintenance, etc.) of, say, $5,000, so the column shows only $25,000 in rental income. Suppose that after 27.5 years, Bob sells the building to Sam. Now Sam starts deducting depreciation all over again. Capital consumption is to a large degree a legal fiction.

One bids less for land that has tax liabilities and on which profits are lower. Untax the economy, and the economy would produce greater output, which would be capitalized into higher geo-rent. Even if the geo-rent today were accurately calculated, it would be far less than the potential public revenue, because of capitalization effects of the untaxing side of the scheme. As noted, the scheme would involve geo-rent payments from government agencies. That, of course, will brings a corresponding increase in government spending, so the matter of geo-rent of government lands is not pertinent to the present issue. However, it is worth noting that for government lands, the geo-rent is utterly opaque (Foldvary, 1989), and that would have to change.

Using a variety of data, Steven Cord (1985, 1991) puts geo-rent at around 20 percent of GDP. Mike Miles (1990) comes up with a similar figure using data from the Bureau of Economic Analysis. The totals include government lands, but these estimates do not include the increase in geo-rent that would occur with the elimination of market-hampering taxes.

The amount of actual and potential site revenues warrants much more research, but these findings indicate that the tax base is substantial, most likely in the range of 50 percent of all-level government tax revenues. Interestingly, if both punitive taxes and transfer payments were eliminated, the geo-rent would about equal government spending for goods and services, in accord with the Henry George Theorem! At any rate, any allegation that land rent is too small to be of policy significance would have to be well argued. Read the entire article

Mason Gaffney: Land Rent in a Tax-free Society - Outline of remarks for use at Moscow Congress, 5/21/96 
1. Rents are a taxable surplus. I estimate that this taxable surplus constitutes 35% or more of the national income in most nations with market economies, and more in resource-rich nations. ...
2. The value of rent is huge. Every economy produces a large excess over wages. To be sure, not all of it is surplus. Some of it goes to replace capital that wears out each year. This is not part of the net surplus, nor income to the capitalist; it is a return of capital. ...

The rest of the excess over wages is captured in the rent of land. It is a true taxable surplus. The amount is already huge, and will become huger yet when existing taxes are abated.

3. Rent will become huger yet when you abate taxes presently levied on production and exchange, because these now depress the rent of land. That is, in a tax-free market economy, the benefit of abating present taxes will lodge mainly in land rents. The taxable surplus simply shifts from one form to another. ...
5. Many varieties of natural resources generate rents. City land is the greatest single source. For example, one city, Vancouver, contains half the value of taxable property in B.C. - a province of 934,000 sq. kilometers, or 70% larger than France.

However, many other resources yield rents. Some of them are also huge in value, even though some are inconspicuous. Here are a few varieties of them:

  • access points to transportation (by water, rail, highway, air, etc.);
  • clean air (or the license to pollute it);
  • aircraft time-slots and gates in airports;
  • amenities (good views, warm weather, soft breezes, freedom from pests, riparian access, etc.);
  • aquifers;
  • dam and reservoir sites;
  • water in arid zones;
  • rights of way;
  • preferential use of "common" lands (e.g. street parking in New York);
  • covenants over lands of others (e.g., covenants against competition);
  • easements (e.g. the right to pass over land);
  • fisheries;
  • forests;
  • franchises (exclusive right to sell in certain areas);
  • the gene pool;
  • geothermal energy;
  • grazing;
  • licenses;
  • minerals and gas (rent includes the rise of value of minerals in situ);
  • orbits;
  • some patents (giving effective control over minerals);
  • ability to wield political influence (meetings at private estates; special voting rights);
  • rights of way;
  • foreign holdings and ocean shipping routes protected by national forces;
  • soils;
  • spectrum (radio, TV, communications);
  • legal standing;
  • strata rights;
  • space on the streets;
  • advertising sites;
  • water;
  • wildlife (for hunting, viewing, etc.);
  • wind (for power);
  • zoning permissions; etc.

Some of those varied resources are highly valued. For example,

  • newly minted fishing permits offshore of Washington State sell for $1 million each. Their owners retire and rent the permits to working fishermen, creating an instant class structure where before there was equal opportunity. Imagine the value of an exclusive right to take Caspian sturgeon.
  • Radio spectrum amassed by the McCaw Company recently passed to AT&T for $13 billions.
  • Dmitri Lvov estimates that your oil and gas revenues alone could support the entire national government (Practicable Course of Economic Reforms in Russia. Moscow: Russian Academy of Sciences, Central Economics and Mathematics Institute, 1994). They might even surpass urban rents in value, if they were valued at world market prices.
  • In arid lands, access to water is life itself.   Read the whole article
Mason Gaffney: The Taxable Capacity of Land
The question I am assigned is whether the taxable capacity of land without buildings is up to the job of financing cities, counties, and schools. Will the revenue be enough? The answer is "yes."...   Read the whole article

Mason Gaffney: California's Governor-Elect

For better or worse, California has recalled its governor and elected Arnold Schwarzenegger (A.S.) to replace him. A.S. has revealed no specifics of how he will stanch our deficit. He campaigned on generalities: he is against taxes, against waste in government, against measures to rein in vehicle use, and nostalgic about the good old days when Governor Pat Brown was spending heavily on roads and water projects. No one seems sure how he will connect the dots. After his first visit to Sacto last week, he seemed not sure, either.

His choice of advisors, however, tells us A.S. will repeat Pete Wilson's performance from the early 1990s. Chief of Staff Patricia Clarey is a good soldier from Wilson's old staff; Auditor Donna Arduin is from Jeb Bush's Florida. The gurus who set the doctrinal tone give the clearest hints: they are neo-classical economists of deepest dye. These are advisors George Shultz and Michael Boskin from the Hoover Institution. Economics, to them, is a set of dismal choices. California's choice is to cut public services, or lose business and jobs. That is what they told Wilson in 1994. All taxes are the same, always "burdens," always driving away "business."  ...

Boskin and Shultz, posing their dismal choice for California, dismissed by silence that we can raise needed revenues while also spurring job creation and stimulating the economy. It is simple: restore that part of the property tax that falls on land, while continuing to cap the rate on buildings. ...

It is also alleged that land values are too small to support government. Let us test that idea. In 2003, at the current rate, there will be about 15,000 "confirmed" sales of owner-occupied urban California residences at prices over $1 million. That is from DataQuick, a standard source of current real estate data. 15,000 is about 2.7% of all confirmed sales. Some of those go much higher. The mean is probably over $2 million.

Turnover of costlier homes is lower than that of ordinary homes. (For example, turnover of existing homes is 30% greater in Riverside County, with lower values, than in Orange County, with higher values.) 2% a year is a fair guess at the turnover of homes valued at $1 million or more. If so, there are 50 x 15,000, or 750,000 homes in Calif valued at a mean $2 millions. Their aggregate value is 750,000 x $2million = $1.5 trillions.

These are not large buildings: they average 2864 s.f., with 4 bdrms, 3 baths. In the north end of Sta. Monica, a vacant lot alone is over $1m. They are not new buildings: only 9% are new. It's the land that makes them worth so much.

A tax of 1% on that value would yield $15 billions a year. That's from only 2.7% of the urban homes in Calif. The data exclude many sales, country manors, for example. Some well-known lands thus excluded are
  • the Lucas compound and the Pritzker family compound in Marin;
  • San Simeon;
  • the Reagan Ranch and similar holdings in the northern half of Sta. Barbara Cnty;
  • fashionable winery properties in choice valleys statewide;
  • the Chandler family's Tejon Ranch;
  • the 200,000 acres of James Boswell in the Tulare Lake Basin; etc.
There is also the other 97.3% of urban owner-occupied residential real estate. A lot of it is just under $1 million a pop. In Marin County, the median sales price of owner-occupied single-family homes was $700,000 when last seen, and rising. The mean is always higher than the median. Some L.A. County cities with median values just under $1 million include San Marino, Bel Air, Westwood, Brentwood, La Canada, Calabasas, and others. There is also all the other land: commercial, industrial, farm, forest, etc., which is 60% of the assessed property value in California, and a much higher fraction of the real value because it is so egregiously underassessed. ...

A high fraction of California real estate is absentee owned. The Sultan of Brunei, for example, owns several houses and sites in Beverly Hills and Bel Air. California's official Legislative Analyst, the highly respected William Hamm, estimated in 1978 that over fifty per cent of the value of taxable property in California was absentee-owned. ...

Some half of any reduction in California property taxes leaks to out-of-state owners. Nor is this the only leakage. ...

Yet no one has seized on this obvious case to show that local property taxes, substituted for absentee rent payments, creates multiple increases in local income. The whole intellectual apparatus is dominated by absentee investors and used for their benefit.

Many valuable land resources are held by license, rather than title, and escape the property tax almost entirely. ... Read the whole article

Mason Gaffney:  Sounding the Revenue Potential of Land: Fifteen Lost Elements
The revenue potential of land is greater than anyone thinks. This is a progress report on a study that finds, bares, and to some extent measures elements of enhanced revenue potential by using truer and more comprehensive measures of rent and land values. It should go without saying, but often does not, that the purpose of raising more land revenues is not to fatten vexatious bureaucrats. It is
  • to replace vexatious taxes,
  • to provide and maintain and operate needed public infrastructure and services (including a reasonable national defense),
  • to pay off old public debts and avoid new ones, and
  • to fund social dividends (including existing social dividends like Social Security and public schools).
There are at least fifteen elements of land’s taxable capacity that previous researchers have either slighted, or overlooked entirely. Read the whole article

Nic Tideman: The Structure of an Inquiry into the Attractiveness of A Social Order Inspired by the Ideas of Henry George
 I. Ethical Principles
A. People own themselves and therfefore own what they produce.
B. People have obligations to share equally the opportunities that are provided by nature.
C. People are free to interact with other competent adults on whatever terms are mutually agreed.
D. People have obligations to pay the costs that their intrusive behaviors impose on others.
II. Ethical Questions
A. What is the relationship between justice (as embodied in the ethical principles) and community (or peace or harmony)?
B. How are the weak to be provided for?
C. How should natural opportunities be shared?
D. Who should be included in the group among whom rent should be shared equally?
E. Is there an obligation to compensate those whose presently recognized titles to land and other exclusive natural opportunities will lose value when rent is shared equally?
F. Can a person who is occupying a per capita share of land reasonably ask to be left undisturbed indefinitely on that land?
G. What is the moral status of "intellectual property?"
H. What standards of environmental respect can people reasonably require of others?
I. What forms of land use control are consistent with the philosophy of Henry George?
III. Efficiency Questions
A. Would public collection of the rent of land provide enough revenue for an appropriate public sector?
B. How much revenue could public collection of rent raise?
C. Is it possible to assess land with sufficient accuracy?
D. How much growth can a community expect if it shifts taxes from improvements to land?
E. To what extent does the benefit that one community receives from shifting taxes from buildings to land come at the expense of other communities?
F. What is the impact of land taxes on land speculation?
G. How, if at all, does the impact of shifting the source of public revenue to land change if it is a whole nation rather than just a community that makes the shift?
H. Is there a danger that the application of Henry George's ideas would lead to a world of over-development?
I. How would natural resources be managed appropriately if they were regarded as the common heritage of humanity?    Read the whole article
Herbert J. G. Bab:  Property Tax -- Cause of Unemployment  (circa 1964)
... Three criteria are generally used to judge the merits of a tax.
  • First, it must be satisfactory as a revenue producer,
  • second it must be equitable and
  • third its economic effects should not collide with the public interest.
For instance if full employment and economic growth are regarded as desirable, the question to be examined is what effects will this tax have on achieving these objectives?

The shortcomings of property taxes as revenue producers have been obvious for a long time and are widely known. The main difficulty is that revenues from property taxation do not keep pace with the ever-increasing requirements of local governments. Every county, every city official and every school administrator will testify, that there are not enough funds available to meet the requirements of local governments.

The inability of local government to raise enough revenues from property taxation has forced them to borrow at an ever-increasing rate. The debts of local governments have increased from about $16 billions in 1947 to over $61 billions in 1963, an increase of about 382%. During the same period private debt increased by 279% and federal debt by only 26%. ...

Professor Galbraith and others have expressed concern about the poverty of the public sector of our economy as compared to the affluence of the private sector. The appearance of our cities, the inadequate financial support we give our schools and poor public services seem to support this view. Yet, I can not agree with Professor Galbraith's conclusion that we need more public revenues to meet these needs. It seems to me that the spreading out of our cities over wider and wider metropolitan areas has immeasurably increased the financial burden of local governments. In other words, wasteful use of land caused by our property tax system is the real reason of the poverty of the public sector.

It stands to reason that the spreading out of our cities into wider and wider metropolitan areas is a very costly venture. For instance it was found that in the New York region suburbs have to make capital outlays of $68 per capita for new housing, while only $44 was required for new housing in the central cities and only $38 in the non-metropolitan area. Another survey found that it costs $80 per household to provide water in the outlying suburbs against $30 in the city.  Read the whole article
The Most Rev. Dr Thomas Nulty, Roman Catholic Bishop of Meath (Ireland): Back to the Land (1881) 
Land Rent for the Community a Design of Divine Providence.
I think, therefore, that I may fairly infer, on the strength of authority as well as of reason, that the people are and always must be the real owners of the land of their country.

This great social fact appears to me to be of incalculable importance, and it is fortunate indeed that on the strictest principles of justice it is not clouded even by a shadow of uncertainty or doubt. There is, moreover, a charm and a peculiar beauty in the clearness with which it reveals the wisdom and the benevolence of the designs of Providence in the admirable provision He has made for the wants and the necessities of that state of social existence of which He is the author, and in which the very instincts of nature tell us we are to spend our lives.

A vast public property, a great national fund, has been placed under the dominion and at the disposal of the nation to supply itself abundantly with resources necessary to liquidate the expenses of its government, the administration of its laws and the education of its youth, and to enable it to provide for the suitable sustentation and support of its criminal and pauper population. One of the most interesting peculiarities of this property is that its value is never stationary; It is constantly progressive and increasing in a direct ratio to the growth of the population; and the very causes that increase and multiply the demands made on it increase proportionately its ability to meet them.

Landlordism Takes the Patrimony of the People.
Let the democracy of England as well as of Ireland, learn the melancholy fate that has overtaken this splendid inheritance which God has placed in their hands, and which would have saved them eighty millions sterling which they now annually pay by direct and indirect taxation for the government of the country. That patrimony was once theirs by right, and by right it is theirs still; but, in fact, it is theirs no longer: a class has wrested the land from the people of the country and now hold a strict monopoly in it. They sell it out to the people as if it were an ordinary article of private property and solely the result of their own capital and labour.

The rents which the landlords draw from their lands is an income which they derive from the sale of what are avowedly God's gifts, which "no man made." If they had only claimed the right of selling the use of the permanent improvements they had made in the soil, by the capital and labour they had expended on it, no one could dispute the Justice of their demand; but any element of income that might possibly be derived from this source is called in the language of political economy, not Rent, but Profit.

Political economists who have written with scientific precision on the nature and properties of Rent, confine it exclusively to the moneys which the landlord receives for allowing the tenant the use of the original and natural productiveness of the soil. ...

Land Values intended by Providence for Public Purposes.
I have already observed that the chief peculiarity of the land of a country was that its value was never stationary, that it was always progressive and rising, that in fact it increased in a direct ratio with the growth of the population and the advancing progress of the industry of the nation.

It would seem as if Providence had destined the land to serve as a large economical reservoir, to catch, to collect and preserve the overflowing streams of wealth that are constantly escaping from the great public industrial works that are always going on in communities that are progressive and prosperous.

Besides the permanent improvements that are made in the land itself, and which increase its productiveness and value, there are other industrial works not carried out on the land itself, but on its surroundings and in its vicinity, and which enhance its value very considerably. A new road is made for the accommodation of a district; a new bridge is thrown across a river or a stream to make two important localities accessible to each other; a new railway passes close by and connects it with certain large and important centres of industry; a new factory or a new mill is erected, or a new town is built in the neighbourhood.

Industrial works like these add very materially to the value of all the land in their vicinity. It is a well-known fact that a new railway has in several instances doubled the value of the land through which it passed, in consequence of the increased facilities it had afforded for the sale of its agricultural products.

In every state of society, which is progressive and improving, such industrial works are continually going on, and hence the value of the land is rising also everywhere. But its value rises enormously with the enlarged growth of the population of a nation, and with the increased productiveness of its industry.  Read the whole letter

Bill Batt: How Our Towns Got That Way   (1996 speech)
In assessing the value of a tax it is also important, of course, to understand its potential to bring in revenue for the purposes of government. This is usually deemed revenue sufficiency. Income, sales and property taxes, along with corporation taxes to a lesser extent, have come to be regarded as the workhorses of the American revenue structure. But, as anti-tax politicians are quick to note, the higher these taxes are, the more they impose a drag on the economy. This is why one should ponder whether to consider raising taxes which have demonstrable distorting effects. In contrast, if you take the time to look at a tax on land value alone, it measures up so well that it looks like the perfect tax!... read the whole article

Bill Batt: The Compatibility of Georgist Economics and Ecological Economics
In the Georgist view, this economic rent is the public’s birthright,47 and the failure to collect it and to use it to pay for the general costs of government services is a moral as well as a public policy lapse. Georgists regard the private confiscation of public wealth as mistaken policy if not actually an immoral transgression — in a word, theft! He himself was an advocate of the public owning and protecting “the commons” and what is today often called “natural capital.” Studies have shown that if economic rent were collected in full as well as other appropriate revenues such as user fees and green taxes, the total income would likely be enough to pay not only the costs of all government services but provide a citizens’ dividend of significant amounts as well.48 Statistical data is difficult to compile, but what studies have been attempted to date indicate that economic rent in all its forms and from all its sources comprises approximately a third of the economy as it is currently calculated.49 Arrangements such as these are to the followers of Henry George a far more efficient and moral system of public finance. ... read the whole article

Mason Gaffney: Full Employment, Growth And Progress On A Small Planet: Relieving Poverty While Healing The Earth

See also Economic Democracy: The Political Struggle for the 21st Century, Chapter 24

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