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Land Value Taxation: Rebuttals to Common Objections

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Land Value Taxation: Rebuttals to Common Objections
« on: Dec 08, 2013, 12:33:10 am »


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For those unfamiliar with the issue of land value taxation, please see the following two introductory articles:


What is Land Value Taxation [LVT]?

Land Value Taxation is a method of raising public revenue by means of an annual tax on the rental value of land. It would replace, not add to, existing taxes. Properly applied, Land Value Tax would support a whole range of social and economic initiatives, including housing, transport and other infrastructural investments. It is an elementary fiscal measure that would go far towards correcting fundamental economic and social ills.

The value of every parcel of land in Britain [or in whichever country LVT is applied] would be assessed regularly and the land value tax levied as a percentage of those assessed values.

"Land" means the site alone, not counting any improvements. The value of buildings, crops, drainage or any other works which people have erected or carried out on each plot of land would be ignored, but it would be assumed that all neighbouring properties were developed as at the time of the valuation; other things being equal, a vacant site in a row of houses would be assessed at the same value as the adjacent sites occupied by houses.

The valuation would be based on market evidence, in accordance with the optimum use of the land within the planning regulations. If the current planning restrictions on the use were altered, the site would be reassessed.

The advantages...

A NATURAL SOURCE OF PUBLIC REVENUE. All land makes its full contribution to the Exchequer, allowing reductions in existing taxes on labour and enterprise.

A STRONGER ECONOMY. If we tax labour, buildings or machinery and plant, we discourage people from constructive and beneficial activities and penalise enterprise and efficiency. The reverse is the case with a tax on land values, which is payable regardless of whether or how well the land is actually used. It is a payment, based on current market value, for the exclusive occupation of a piece of land. In the longer term, this fundamentally new and different approach to revenue raising will stimulate new business and new employment, reducing the need for costly government welfare.

MARGINAL AREAS REVITALISED. Economic actitivities are handicapped by distance from the major centres of population. Conventional taxes such as VAT and those on transport fuels cause particular damage to the remoter areas of the country. Land Value Tax, by definition, bears lightly or not at all where land has little or no value, thereby stimulating economic activity away from the centre - it creates what are in effect tax havens exactly where they are most needed.

A MORE EFFICIENT LAND MARKET. The necessity to pay the tax obliges landowners to develop vacant and under-used land properly or to make way for others who will.

LESS URBAN SPRAWL. Land Value Taxation deters speculative land holding. Thus dilapidated inner-city areas are returned to good use, reducing the pressure for building on green-field sites.

LESS BUREAUCRACY. The complexities of Income Tax, Inheritance Tax, Capital Gains Tax and VAT are well known. By contrast, Land Value Tax is straightforward. Once the system has settled down, landholders will not be faced with complicated forms and demands for information. Revaluation will become relatively simple.

NO AVOIDANCE OR EVASION. Land cannot be hidden, removed to a tax haven or concealed in an electronic data system.

AN END TO BOOM-SLUMP CYCLES. Speculation in land value - frequently misrepresented and disguised as "property" or "asset" speculation - is the root cause of unsustainable booms which result periodically in damaging corrective slumps. Land Value Taxation, fully and properly applied, knocks the speculative element out of land pricing.

IMPOSSIBLE TO PASS ON IN HIGHER PRICES, LOWER WAGES OR HIGHER RENTS. Competition makes it impossible for a business producing goods on a valuable site to charge more per item than one producing similar goods on less valuable land - after all, producers and traders at different locations are paying different rents to landlords now, yet like goods generally sell for much the same price and employers pay their workers comparable wages. The tax cannot be passed on to a tenant who is already paying the full market rent.


The Single Tax: What It Is and Why We Urge It

by Henry George

An article published in The Christian Advocate in 1890 and thereafter reprinted in various magazines in the United Stated and England.

I shall briefly state the fundamental principles of what we who advocate it call the Single Tax.

We propose to abolish all taxes save one single tax levied on the value of land, irrespective of the value of the improvements in or on it.

What we propose is not a tax on real estate, for real estate includes improvements. Nor is it a tax on land, for we would not tax all land, but only land having a vaue irrespective of its improvements, and would tax that in proportion to that value.

Our plan involves the imposition of no new tax, since we already tax land values in taxing real estate. To carry it out we have only to abolish all taxes save the tax on real estate, and to abolish all of that which now falls on buildings or improvements, leaving only that part of it which now falls on the value of the bare land, increasing that so as to take as nearly as may be the whole of economic rent, or what is sometimes styled the “unearned increment of land values.”

That the value of the land alone would suffice to provide all needed public revenues—municipal, county, State, and national—there is no doubt.

To show briefly why we urge this change, let me treat (1) of its expediency, and (2) of its justice.



Below, in no particular order, are common objections to land value taxation, with rebuttals by me to each one:

Isn't land ownership the foundation of property rights, and thus of a free society?

No, self-ownership is. That is to say, the foundation of property rights (and the freedom which flows from those rights) is the property each person has in himself and, by extension, in the fruits his labor.

    "Though the earth, and all inferior creatures be common to all men, yet every man has a property in his own person. This nobody has any right to but himself."

-- John Locke, 2nd Treatise of Government, Ch. 5

    "The property which every man has in his own labour, as it is the original foundation of all other property, so it is the most sacred and inviolable."

-- Adam Smith, The Wealth of Nations, Bk 1, Ch. 10, Pt 2

    "The property rights that each citizen has in himself are the foundation of a free society."

-- James Bovard, Freedom In Chains, p. 86

    "Libertarianism begins with self ownership."

-- David Bergland, Libertarianism In One Lesson, 7th ed., p. 35

    "There is only one fundamental right (all others are its consequences or corollaries): a man's right to his own life. Life is a process of self-sustaining and self-generated action; the right to life means the right to engage in self-sustaining and self-generated action--which means: the freedom to take all the actions required by the nature of a rational being for the support, the furtherance, the fulfillment and the enjoyment of his own life…Since man has to sustain his life by his own effort, the man who has no right to the product of his effort has no means to sustain his life."

-- Ayn Rand, Capitalism: The Unknown Ideal, pp. 321-2

    "The right of life and liberty--that is to say, the right of the man to himself--is not really one right and the right of property another right. They are two aspects of the same perception--the right of property being but another side, a differently stated expression, of the right of man to himself. The right of life and liberty, and the right of the individual to himself, presupposes and involves the right of property, which is the exclusive right of the individual to the things his exertion has produced."

-- Henry George, A Perplexed Philosopher, p. 210

Won’t the land value tax (LVT) make all land the "property" of the government (and thereby make us all "serfs" of the government)?

No, because the government will have no authority to dictate when, how, or by whom land itself is used; it will have only the authority to ensure that the rent of land goes to everyone on an equal basis, since all individuals have an equal right of access to land.

Henry George puts it this way on page 8 of The Condition of Labor:

    “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 day 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....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.”

The only alternative to George's proposal is to treat land as the unconditional property of a mere subset of the population. The problem with this alternative is that, when taken to its logical conclusion, we find that the fruits of individual labor must inevitably be treated as conditional property for everyone else. Why? Because no one can produce wealth in the first place unless he or she first has access to land. Consequently, since all land is legally occupied, and since producing more land isn't an option, those who don't have titles to land cannot legally access the earth -- and thus cannot legally sustain their own lives -- unless they first "consent" to pay a portion of their earnings to those who do have titles to land. (This is why geolibertarians regard landed property as the “mother of all entitlements.”)

Land itself does not originate from labor; thus, "property" in land does not originate from labor, but from the law that confers ownership to an individual or group. Landed property is therefore -- in the words of Albert Jay Nock -- “law-made property,” and hence fundamentally distinct from “labor-made property.”

To compel a non-privileged subset of the population to pay rent to a privileged subset for mere access to the earth is therefore to elevate law-made property above labor-made property. And since the latter is an extension of self-ownership, to elevate the former above the latter is to strike a blow at the very foundation of property rights:

    "Disregard of the equal right to land necessarily involves violations of the unequal right to wealth."

-- Max Hirsch, Democracy vs. Socialism, p. 372

To this some might object that the LVT does just that -- compels one group to pay rent to another group for mere access to the earth. While this objection may sound logical at first, it is fatally flawed. Why? Because it ignores a universal law of today's economy: the fact that land rent gets paid either wayregardless of whether or not it gets diverted into the public treasury.

Thus, it is not a question of “if” land rent gets paid, but to whom and on what basis.

If it is paid exclusively to titleholders on the basis of the earth on which all must live yet which none produced being the exclusive, unconditional property of those titleholders, then, for reasons given above, the property that non-titleholders have in themselves and in the fruits of their labor is thereby violated. If, on the other hand, it is paid to the community on the basis of the individual members of that community each having an equal right to land, then said property right (the right to one's self and the fruits of one's labor) is thereby upheld for everyone -- both titleholder and non-titleholder alike.

Another common objection is that, if government taxes the economic “rent” of land, it automatically becomes the owner of land. This objection is based on the myth that the terms "rent collector" and "owner" are synonymous. While many rent collectors do, indeed, own the property on which they collect rent, there are, nevertheless, thousands of private rental agents and property managers all over the country who routinely collect rent on properties they do not own. Thus, one does not have to be an "owner" to be a "rent collector."  Government is no exception to this rule.

That doesn't mean the government of, say, North Korea does not assert ownership over the land on which it collects rent. It does. But it is not merely the authority to collect land rent, but the authority to dictate how land is used, that makes the North Korean government an "owner" of land. Critics of the LVT repeatedly insist that you can't have one authority without the other, but as mentioned above, the rent-collection services provided by non-owning rental agents and property managers prove just the opposite.

This becomes easier to understand once you realize that "property" refers, not to a single right, but to a bundle of rights -- the right to rental income being only one of them. The other rights include the right to possess, use, exclude, and transfer title. As any lawyer will tell you, those rights can be transferred in whole or in part.

    "The concept of a bundle of rights comes from old English law. In the middle ages, a seller transferred property by giving the purchaser a handful of earth or a bundle of bound sticks from a tree on the property. The purchaser, who accepted the bundle, then owned the tree from which the sticks came and the land to which the tree was attached. Because the rights of ownership (like the sticks) can be separated and individually transferred, the sticks became symbolic of those rights."

-- Fillmore W. Galaty, Wellington J. Allaway, & Robert C. Kyle, Modern Real Estate Practice, 14th ed., p. 16

This is precisely why, in the U.S., it is possible for city councilmen to collect a portion of land rent through property tax levies, yet be lawfully excluded from the land itself by whoever holds title to that land. Although the local government in this case has a legal right to a certain percentage of the land's rental value, the titleholder has all the other rights of the aforementioned "bundle." 

Not only will the titleholder retain those rights under a geolibertarian system, those rights will be strengthened by (a) the fact that he will no longer be taxed for being productive, thus making it far easier for him to afford whatever the rental charge is, and (b) the fact that the law will require any and all surplus revenue to be distributed equally as a Citizen’s Dividend. (The latter will provide a built-in incentive for citizens to bring enormous pressure to bear on government to limit its spending, since less wasteful spending will mean a greater surplus, and thus a higher dividend.)

Since people need food to sustain their lives, and since food, like land, is in limited supply, could not the same argument for taxing the value of land be used to justify taxing the value of food?

No, because (a) while food is in "limited" supply, it is not in fixed supply; and (b) with food starvation is not the only alternative to purchasing it from others, whereas with land it is.

With food, one can always produce instead of buy. Not so with land. Some might counter that one can always produce to earn the wages needed to acquire land, but this presupposes the very issue in question – access to land. While it is true people can always acquire land by earning the wages needed to rent or purchase it, one cannot earn wages to begin with unless one first has access to land, which brings us right back where we started.

Food is a product of labor; land is not. Thus, the notion that one has an exclusive right to the fruits of one’s labor is incompatible with the notion that there is a common right to the value of those fruits, while it is not incompatible with the notion that there is a common right to the value of land.

Won’t the LVT increase the price of land the way sales taxes increase the price of consumer goods?

No, just the opposite.

As Henry George explains here, in order for a tax to drive up the price of something, it must either decrease supply or increase demand. Does the LVT decrease the supply of land? No, because the supply of land is fixed. Thus, the only way it can increase the price is by increasing demand. Yet not even those who oppose the LVT argue that it increases demand, so it follows that the LVT does not increase the price of land, since it neither decreases supply nor increases demand.

In fact, it actually lowers the price of land by reducing the amount of privately pocketed rent that can be capitalized into a sale price.

Expressed in mathematical terms, the price of land p equals the annual rent r divided by the interest rate i, or:

                            p = r / i

If there is a tax rate t on the price of land p, then p equals the rent divided by the sum of the interest rate and the offsetting tax rate, or:

                            p = r / (i + t)

Thus, if the rent is $1,000, the interest rate is 10%, and the tax rate 40%, then the price would be 1,000/(.10 + .40), or $2,000. Without the tax, the price would be 80% higher -- $10,000. (More on this here and here.)

This is why there is no long-term benefit to cutting the LVT, because people in general, and the working poor in particular, end up paying back in higher rents and land prices what they presumably get from the tax cut. (The working poor of California had to find this out the hard way after the passage of Proposition 13.)

Unfortunately, because the property tax fuses the tax on land values with the tax on improvements, people have a tendency to equate one with the other, and thus falsely assume that a lower tax on land value yields the same benefits as a lower tax on improvements. It in fact has the opposite effect. A lower tax on improvements rewards people for putting land to productive use, which means more jobs and higher wages; a lower tax on land value rewards people for holding land out of use, which means less jobs and lower wages.

Single Tax advocate, Robert De Fremery, had this to say on the subject:

    "At the opposite extreme of the claim that land value taxation is wrong because landholders would be the only ones paying taxes is the claim that landholders would be paying no taxes at all. It is claimed that they would merely raise their rents in proportion to the increase in taxes falling on their lands. But this is one thing all reputable economists agree can not be done. If site A (land only) in the heart of a city is worth $1,000 per month to whoever uses it, while site B (land only) on the outskirts of the city is worth only $100.00 per month, then site A is worth only $900.00 more per month than is site B. A change in the amount of taxes falling on these two landholders cannot affect the relative value of these sites. Suppose, for example, that an attempt were made to get $2,000 and $200.00 per month respectively for these two sites just because each landholder were required to pay taxes of $1,000 and $100.00 respectively to the city. Obviously, the tenants in site A would move to lower cost land. Site A is not worth $1,800 more per month than site B. If it were, the landholder would be getting it in today's market. Although a tax on land values affects the price of land, it cannot affect its rental value. There is no disagreement among professional economists on this point."

-- Rights vs. Privileges, pp. 38-39
"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #1 on: Dec 08, 2013, 12:33:41 am »


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Isn’t the LVT based on Karl Marx's labor theory of value?

No. Karl Marx’s labor theory of value asserts that the exchange value of something is determined by the labor expended to produce it. Henry George flat-out rejected this view:

    "It is never the amount of labor that has been exerted in bringing a thing into being that determines its value, but always the amount of labor that will be rendered in exchange for it."

Why, then, do some mistakenly identify Marx's labor theory of value as being one of the core premises of the LVT? Because many LVT advocates often describe land value as being created by the community, and, in so doing, sacrifice clarity for brevity. What they actually mean is this: It's not that members of the surrounding community create land value itself, but that they create (or rather “produce”) the goods and services which give rise to that value.

As any real estate appraiser will tell you, the value of land is the value of “location.” And what determines the value of location? The degree to which people in the surrounding marketplace compete for access to that location, due primarily to the proximity it affords to such things as nearby schools, libraries, hospitals, parks, shopping malls, etc. -- all of which are provided mostly if not entirely by people other than the individual titleholder.

Hence Max Hirsch’s conclusion that:

    "The value of labour-products is the measure of the service which their rightful owner has rendered to the community. The value of land is the measure of the service which the community is expected to render to the owners of land."

-- Democracy vs. Socialism, p. 348

And hence Robert De Fremery’s observation that:

    “The difference between publicly created and privately created values, once seen, is never forgotten. Both result from the competitive bidding within society for the right to consume or use something. But it is of utmost significance that privately created values result from competitive bidding for goods and services produced by man, whereas publicly created values result from competitive bidding for something no man produced--the land upon which we live and work and whose value increases as the community in which it is located grows. In the one case men are bidding for goods and services produced by each other as private individuals. In the other men are bidding for the important right to use part of the earth's surface. In the one case you have privately created values. In the other you have a publicly created value.”

Isn't the LVT based on the Marxist idea that the right to land is a collective right?

No, it is based on the Lockean idea that the right to land is an equal right.

By that I mean: the idea that an individual has "property" in land only to the extent that there is, in the words of John Locke, "enough, and as good left in common for others."  In that sense, the right to land is not a collective right, but an individual right that exists independently of the collective (i.e., society). The “equality” of this right is merely a limitation that arises from the presence of others with like rights.

By contrast, a collective right to land dictates that an individual has no right to use any land unless society has granted him such right.

With the equal right to land, one does not require the consent of society to use land. The right to the use of land belongs at birth to each individual. So while the consent of others is not needed, it is, nevertheless, necessary that in the exercise of that right, one does not infringe upon the equal right of others -- i.e., violate Locke's proviso that there be "enough, and as good left in common for others." And since the rental value of land provides an accurate measure of the extent to which said proviso has been violated, "others" should be compensated in accordance with that value.

At the same time, of course, taxes on wages, sales, houses and capital goods should all be abolished, since they violate the exclusive right that each individual has to the fruits of his own labor.

It is, of course, an age-old tradition among royal libertarians to rail self-righteously against the notion that all individuals have an "equal" right to land (and hence to its rental value). Yet what they either fail to realize or refuse to admit to is that, in so doing, they are rejecting (in effect) the most fundamental "property right" of all -- that of self-ownership -- because one cannot even be a "self" in the first place unless one occupies a naturally-occurring geographic location on the globe.

In short, to "be" is to be -- "somewhere."

Thus, assuming everyone agrees with Michael Badnarik when -- in his book, Good to be King -- he defines a "right" as "something you can do without asking for permission," it follows that, whenever anyone suggests or implies that only those with land titles have a "right" of access to the earth on which all must live yet which none produced, that person is essentially saying that the countless millions without land titles have no "right" to life itself.

    "Place one hundred men on an island from which there is no escape, and whether you make one of these men the absolute owner of the other ninety-nine, or the absolute owner of the soil of the island, will make no difference either to him or to them.

    "In the one case, as the other, the one will be the absolute master of the ninety-nine--his power extending even to life and death, for simply to refuse them permission to live upon the island would be to force them into the sea.

    "Upon a larger scale, and through more complex relations, the same cause must operate in the same way and to the same end--the ultimate result, the enslavement of laborers, becoming apparent just as the pressure increases which compels them to live on and from land which is treated as the exclusive property of others. Take a country in which the soil is divided among a number of proprietors, instead of being in the hands of one, and in which, as in modern production, the capitalist has been specialized from the laborer, and manufacturers and exchange, in all their many branches, have been separated from agriculture. Though less direct and obvious, the relations between the owners of the soil and the laborers will, with the increase of population and the improvement of the arts, tend to the same absolute master on the one hand and the same abject helplessness on the other, as in the case of the island we have supposed. Rent will advance, while wages will fall."

-- Henry George, Progress and Poverty, pp. 347-8

That, incidentally, is largely why I regard the Austrian School's aristocratic concept of "liberty" to be a sick joke.

    “The Austrian School came into existence when a bunch of Viennese rent-gouging landlords didn’t want rent control on the rents they could gouge out of their tenants in old Vienna, so they hired a bunch of scribblers--and that’s the Austrian School.”

-- Webster Tarpley, World Crisis Radio broadcast, 9/27/08, 1st hour

Isn't the very concept of taxing land values rooted in Marxism?

No, it's rooted in classical liberalism, which long predates Marx.

The right-wing reactionaries who blindly insist otherwise are -- whether they realize it or not, and whether they have the intellectual honesty to admit it or not -- essentially accusing many of the Founding Fathers of being Marxists:


Why America's Founders Wanted a Property Tax on Land Value, And NOT a Sales Tax!

Why a Land Value Tax?

Land for ordinary citizens

William Penn wanted to keep aristocrats from grabbing up land as they had in Europe. He declared Pennsylvania a "commonwealth" where each landholder would pay a modest rent that "would put an end to taxes, leave not a beggar, and make the greatest bank for national trade." The first tax in Pennsylvania was a land value tax.

Thomas Jefferson also saw that land monopoly made ordinary Europeans poor, while cheap land made Americans rich. He also proposed taxes on real estate to prevent land grabbers from driving land prices up.

Keeping taxing power local

Under the Articles of Confederation, the federal government taxed each state on its land value. Each state would tax each county, and citizens would never have to deal with state or federal tax collectors. Our founders did not trust strong central governments. They believed that people govern their own communities better than powerful states can govern them.



Isn't concentrated ownership of land moral and just, so long as it's the result of "voluntary" transactions?

No, because if only some people "own" the earth, then only some have a "right" to live upon it.

All individuals must have access to the earth in order to exercise their right to sustain their own lives. Thus, to allow the earth to become the unconditional property of a relative few is to deny this right to everyone else, since it makes the latter obligated at birth to pay the former for mere access to the planet -- as if the former were responsible for the earth’s very existence.

While the private appropriation of land rent may seem harmless at a micro-level, at a macro-level it constitutes an entitlement scheme whereby Group A receives payment from Group B, even though Group A renders no service in return. In that sense, it violates the fundamental right that the members of Group B have to the fruits of their own labors.

    "As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed."

-- Adam Smith, The Wealth of Nations, Bk 1, Ch. 6

    “Given a stationary population and private ownership of all land, improvements in manufacturing methods do not, in the long-run, increase the earnings of labour and capital, but are absorbed by rent.”

-- Max Hirsch, Democracy vs. Socialism, p. 446

    "I am using the word wages not in the sense of a quantity, but in the sense of proportion. When I say that wages fall as rent rises, I do not mean that the quantity of wealth obtained by laborers as wages is necessarily less, but that the proportion which it bears to the whole produce is necessarily less. The proportion may diminish while the quantity remains the same or even increases."

-- Henry George, Progress and Poverty, p. 216

If some people fail to see this, it is because they, in the words of Henry Hazlitt, "overlook the woods in their precise and minute examination of particular trees." In this case they overlook the effect that the private appropriation of land rent has on the economy as a whole in their precise and minute examination of particular transactions, and how these transactions benefit particular individuals or groups. Overall, the payment of land rent to the few at the expense of the many imposes on the latter artificially high costs of living, on the one hand, and artificially low wages, on the other.

To learn more about why the current land market is anything but "voluntary," read the following article by Fred Foldvary:

As a general rule, taxation is wrong since it involves the use of force. Is a tax on land rent an exception to this?

Yes, for the simple reason that "force," as such, is neither good nor bad. If used to defend one's person or property from aggressors, or to enforce payment of a rightful debt, it is a good thing. If used to harm the person or property of a non-consenting other, or to enforce payment of a wrongful debt, it is a bad thing.

A tax on wages or capital-goods returns implies that the income one receives in return for the exertion of one's labor or the use of one's capital goods belongs (at least in part) to others. This conflicts with the basic libertarian principle that you have an exclusive right to the fruits of your labor.

A tax on land rent (or "rent" for short) implies that the income one receives for the value of the land one holds belongs to others. Since land itself (a) is not the fruit of anyone's labor, and (b) is that to which all have an equal right of access; and since the rent of land (a) is not a return to either labor or capital goods, and (b) reflects the extent to which Locke's proviso has been violated, a "tax" on rent does not conflict with the principle that you have an exclusive right to the fruits of your labor, but is in fact a just and necessary means of upholding that right.

Thus, the part of one's income that is taken via the taxation of wages, sales, houses and capital goods constitutes the enforcement of a wrongful debt, whereas the part of one's income that is taken via the taxation of rent constitutes the enforcement of a rightful debt.

As Henry George puts it on page 46 of Property In Land: "As to what constitutes robbery, it is...the taking or withholding from another of that which rightfully belongs to him. That which rightfully belongs to him, be it observed, not that which legally belongs to him." [Emphasis original]

Still, right-wing critics will argue, a tax on rent involves the use of force, and is therefore wrong. The problem with this argument becomes evident when they are presented with the scenario of a tenant no longer able to pay a titleholder for the value of the land he is using, and then asked whether or not it would be legitimate to use force to remove the tenant from the titleholder's land. They typically answer “yes” to this question, and when pressed for an explanation, finally concede that yes, there is such a thing as a legitimate use of force when it comes to upholding a rightful debt.

The dispute, then, is not over whether force, in and of itself, is right or wrong, but whether the debt in question is right or wrong -- i.e., whether or not the taxation of land rent conflicts with the libertarian principle that each person has property in himself and, by extension, in the fruits of his labor. Geolibertarians hold that it does not so conflict, since land rent, as mentioned before, is not a return to either labor or capital goods.

Land rent (as the term obviously implies) is in fact a return to land -- meaning the percentage of one's income one could receive simply by renting out the land one holds to someone else. Yet to whom does land’s rental value rightfully belong?  Since this value derives, not from what the individual titleholder does, but from the growth and activity of the surrounding community -- and since it reflects the extent to which "others" are denied access to land they wish to use, and to which they have an equal right of access -- it follows that this value is rightfully owed to these others, while wrongfully owed to titleholders.

In that fundamental sense, the LVT is not a fee for using land, but a fee for the government-enforced privilege of denying use of that land to everyone else. The more valuable the privilege, the higher the fee. That's why it's called the benefits received principle, and hence why the upper and upper-middle class titleholders who rail hysterically against the LVT are essentially saying that (double standard alert!) they should not be required to pay for the benefits they receive, but that working class non-titleholders should be required to pay -- not once, but twice -- for the benefits they receive.  

Won’t the LVT make it more difficult to acquire land, especially for poor people?

No, because land rent, as explained earlier, gets paid either way -- regardless of whether or not it gets diverted into the public treasury.

Even when you pay the sale price of land, you are paying land rent, since the sale price is simply capitalized rent (i.e., the rental value divided by the interest rate). And since land is fixed in both supply and location, decreases in land value taxation are invariably capitalized by titleholders into higher rents and land prices. Thus, people in general, and the working poor in particular, end up paying back in higher rents and land prices what they presumably get from the tax cut; and pay back even more in terms of (a) a lower margin of production (and thus lower pre-tax wages), and (b) a heavier reliance on wage and sales taxes.  

So, once again, it is not a question of if land rent gets paid, but to whom and on what basis -- to a mere subset of the population, on the basis of the earth on which all must live yet which none produced being exclusively "owned" by that subset; or to everyone equally, on the basis of the earth being that to which all have an equal right of access? Georgists and geolibertarians believe it should be the latter, since that is the only just and practical way of establishing true equality of opportunity without enforcing “equality of outcome” in the process.

As for the poor people that right-wing ideologues, limousine liberals and foundation-funded poverty pimps all laughingly profess to care so much about, the LVT will actually make it much easier for them to acquire land, since it will (a) greatly reduce the “rack-renting” to which land speculation invariably gives rise, and (b) dramatically increase wages both by raising the margin of production and by reducing (and eventually eliminating) the need for either wage or sales taxes.
"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #2 on: Dec 08, 2013, 12:34:16 am »


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Won’t the LVT discourage production?

No, because the value of land has no reference to a cost of production; it is purely a function of demand.

This, among other things, led Adam Smith to conclude that:

    “Both ground-rents and the ordinary rent of land are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. Though a part of this revenue should be taken from him in order to defray the expenses of the state, no discouragement will thereby be given to any sort of industry....Ground-rents and the ordinary rent of land are, therefore, perhaps, the species of revenue which can best bear to have a peculiar tax imposed upon them."

-- The Wealth of Nations, Bk 5, Ch. 2, Pt 1

Nobel prize-winning economist, Paul A. Samuelson, reached the same conclusion roughly two centuries later:

    “The striking result is that a tax on rent will lead to no distortions or economic inefficiencies. Why not? Because a tax on pure economic rent does not change anyone's behavior. Demanders are unaffected because their price is unchanged. The behavior of suppliers is unaffected because the supply of land is fixed and cannot react. Hence, the economy operates after the tax exactly as it did before the tax--with no distortions or inefficiencies arising as a result of the land tax."

-- Economics, 16th ed., p. 250

What is even more "striking" is that Samuelson's remarks are only half-true. Not only will a tax on rent lead to no distortions or economic inefficiencies, it will actually stimulate the economy by (a) lowering the entrance barrier into the marketplace (the “entrance barrier” being speculative rents and land prices), and (b) encouraging much more efficient use of land within that marketplace. A well-documented case in point is the overall success of the "split rate" property tax (whereby land values are uptaxed and improvements proportionately downtaxed) in over a dozen localities throughout Pennsylvania:

It is the taxation of the other two factors of production -- labor and capital goods -- that penalizes and discourages production. Thus, it follows that the more we shift the tax burden off those two factors and onto land values, the more prosperous the economy will be overall.

Henry George put it this way:

    “To abolish that taxation which, acting and reacting, now hampers every wheel of exchange and presses upon every form of industry, would be like removing an immense weight from a powerful spring. Imbued with fresh energy, production would start into new life, and trade would receive a stimulus which would be felt to the remotest arteries. The present method of taxation... operates upon energy, and industry, and skill, and thrift, like a fine upon those qualities. If I have worked harder and built myself a good house while you have been contented to live in a hovel, the taxgatherer now comes annually to make me pay a penalty for my energy and industry, by taxing me more than you. If I have saved while you wasted, I am mulct, while you are exempt. If a man build a ship we make him pay for his temerity, as though he had done an injury to the state; if a railroad be opened, down comes the tax collector upon it, as though it were a public nuisance; if a manufactory be erected we levy upon it an annual sum which would go far toward making a handsome profit. We say we want capital, but if any one accumulate it, or bring it among us, we charge him for it as though we were giving him a privilege. We punish with a tax the man who covers barren fields with ripening grain, we fine him who puts up machinery, and him who drains a swamp....

    “To abolish these taxes would be to lift the whole enormous weight of taxation from productive industry. The needle of the seamstress and the great manufactory; the cart horse and the locomotive; the fishing boat and the steamship; the farmer's plow and the merchant's stock, will be alike untaxed....Instead of saying to the producer, as it does now, ‘The more you add to the general wealth the more shall you be taxed!’ the state would say to the producer, ‘Be as industrious, as thrifty, as enterprising as you choose, you shall have your full reward! You shall not be fined for making two blades of grass grow where one grew before; you shall not be taxed for adding to the aggregate wealth.’”

-- Progress & Poverty, pp. 434-5

There are some who still insist that the LVT will discourage production since the value of land cannot be separated from the value of houses, buildings and other improvements. Is that true?

No, it has long been common practice in the real estate industry to assess land separately from improvements:

    "Land value represents the present market value of the land. It does not include the value of improvements. Land value is arrived at through an analysis of current sales of comparable land in the general area. It is computed separately because land is not depreciable."

-- William L. Ventolo, Jr., Ralph Tamper & Wellington J. Allaway, Mastering Real Estate Mathematics, p. 115

The only people on the entire planet who blindly insist otherwise are brainwashed Austrian School types.

Some people claim there are documented examples of land being produced. Doesn't this refute the idea that land is in fixed supply?

No. Those who claim otherwise are confusing two different senses of the word land. In the every day sense, land usually refers merely to the dry surface of the earth; in the economic sense, however, it refers not just to the dry surface of the earth, but to the entire material universe -- excluding humans and their products. In other words, land is not merely matter that occupies space; it is space. While matter can certainly be manipulated within that space, space itself cannot be added to or subtracted from. This is precisely why the value of "land" is often and more accurately described as the value of "location."

    "The essential feature of land is that its quantity is fixed and completely unresponsive to price."

--  Paul A. Samuelson & William D. Nordhaus, Economics, 16th ed., p. 248

    "Land has no production cost; it is a 'free and nonreproducible gift of nature.'  The economy has only so much land, and that is that. Of course, within limits any parcel of land can be made more usable by clearing, drainage, and irrigation. But these are capital improvements and not changes in the amount of land itself."

-- Campbell R. McConnell & Stanley L. Brue, Economics, 14th ed., p. 604

    "Land, which is the earth's surface, is immobile. It is true that some of the substances of land are removable and topography can be changed, but still that portion of the earth's surface always remains. The geographic location of any given parcel of land can never be changed. It is rigid and fixed."

-- Wade E. Gaddy & Robert E. Hart, Real Estate Fundamentals, 4th ed., p. 9

    "Remember: No one is making any more land."

-- William H. Pivar, Real Estate Investing From A To Z, revised edition, p. 3

Won’t the LVT hurt farmers?

No, it will help farmers. In the first place, the LVT will fall primarily on urban land, not rural land, since land values are concentrated primarily in urban areas. In the second place, the increased cost of paying a higher tax on land values will be more than offset by (a) the savings incurred from paying lower taxes on everything else, (b) the reversal of urban sprawl (and thus of the inflationary pressure that sprawl has long imposed on the value of farmland), and (c) the increase in income that will result from both a higher margin of production and the resultant surge in overall economic activity.

For supportive empirical evidence, see the following:
For a more exhaustive treatment of the underlying principles, see: IX, Chapter 3

Since labor products such as houses, cars and computers are all composed of matter, and since humans are no more the “creators” of matter than they are the “creators” of land, doesn’t it follow that humans don’t really “create” anything, and that LVT advocates are therefore wrong in saying there’s a fundamental distinction between “labor-made” property and “law-made” property?

Believe it or not, I’ve actually encountered this objection many times over the years. It exemplifies the sort of mental gymnastics to which royal libertarians routinely resort in their desperate attempt to justify economic free-riding by overprivileged landlords.

The objection is, of course, ridiculous on its face, because -- as any professional real estate appraiser will tell you -- land, by definition, exists independently of human exertion, whereas labor products (as the term itself implies) do not.

What makes houses, buildings and countless other labor products fundamentally different from land is not that people “create” those things, but that they produce them:

    "We speak of productive work. What is productive work? We make things. How do we make them? Man does not create them. Man cannot create something out of nothing. All the things that we call making are producing; bringing forth, not creating.

    "Men produce coal by going down under the ground, hewing out the coal, and bringing it to the surface of the earth; they produce fish by going to the lough, or river, or ocean and pulling the fish out; they produce houses by bringing together timber and stones and iron into the shape and form of a house; they produce cloth by taking the wool of a sheep or the fibers of a plant and bringing them together in a certain connection; they produce crops by opening the ground and putting in seed and leaving it there for the germinating influences of nature--always a bringing forth, never a creation, so that human exertion--that is to say labor upon land, is the only way that man has of bringing forth those things which his needs require and which are necessary to enable him to sustain life. Land and labor--these are the two necessary and indispensable factors to the production of wealth."

-- Henry George, The Land for the People, paragraphs 4 & 5
"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #3 on: Dec 08, 2013, 12:34:43 am »


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Didn't Austrian economist Murray Rothbard refute the LVT?

No, but not for lack of trying. Rothbard's argument against the LVT is fatally flawed for at least two reasons -- one moral, the other economic. From a moral perspective, it completely ignores the unjust interference that the overextension of law-made property imposes on labor-made property. From an economic perspective, it is based on a false understanding of what conditions are necessary for land to have rental value.

In Libertarian Party at Sea on Land, LP activist Dr. Harold Kyriazi explains why Rothbard's attack on the LVT was misguided at best. The following is from pages 57-61 of that book (all emphasis original):


The only well-known libertarian writer whom I know to have explicitly, and at great length, opposed the idea of community collected user fees for natural resources is Murray Rothbard, which is odd, given his admiration for Albert Jay Nock and Frank Chodorov, who, in turn, revered Henry George. Rothbard apparently had extensive discussions with Georgists:

    If every man owns his own person and therefore his own labor, and if by extension he owns whatever property he has "created" or gathered out of the previously unused, unowned "state of nature," then what of the last great question: the right to own or control the earth itself? ... It is at this point that Henry George and his followers, who have gone all the way so far with the libertarians, leave the track and deny the individual right to own the piece of land itself, the ground on which these activities have taken place. (pp. 33-34, For a New Liberty.)

The following is taken from his The Ethics of Liberty.

    (p. 50, footnote 2): A modified variant of this "Columbus Complex" holds that the first discoverer of a new island or continent could properly lay claim to the entire continent by himself walking around it (or hiring others to do so), and thereby laying out a boundary for the area. In our view, however, their claim would still be no more than to the boundary itself, and not to any of the land within it, for only the boundary will have been transformed and used by man.

With this statement, Rothbard may seem to have carried the "first use" doctrine to its illogical extreme. (If walking over some land constitutes transformation and use, then is it just one's footprints that one owns? Or does one's rightful claim extend out to all the underbrush one has cleared away? Or, can one claim land as far as the eye can see? This is the very definition of the word "arbitrary.") But in his defense, to convert the claim into actual ownership would, Rothbard would say, require actual use (though we're again faced with the question of what constitutes "use" -- see p. 79, "Anti-Rothbard..."). For example, earlier, in a Robinson Crusoe paradigm, he stated that Crusoe's "true property--his actual control over material goods--would extend only so far as his actual labor brought them into production. His true ownership could not extend beyond the power of his own reach."

What, then, would Rothbard say about large American corporations owning, but not using, millions of acres of land, as some now do? He gives us his answer in an essay he wrote on Henry George's Land Value Tax idea, entitled "The Single Tax: Economic and Moral Implications" (FEE "Special Essay Series," 1957). Here are a few examples from that work:

    Well, what about idle land? Should the sight of it alarm us? On the contrary, we should thank our stars for one of the great economic facts of nature: that labor is scarce relative to land...Since labor is scarce relative to land, and much land must therefore remain idle, any attempt to force all land into production would bring economic disaster. Forcing all land into use would take labor and capital away from more productive uses, and compel their wasteful employment on land, a disservice to consumers.

Of course, LVT would and could do no such thing, as those who strive to put idle land into productive use would have to bid against other land users for labor, and only the best uses of labor and land would win out. Thus, rather than forcing all land into use, LVT would discourage all but the most productive use of land, just as any market tends to allocate resources most wisely. Another thing that would happen is that the earnings of labor would increase due to increased competition for it, and (ideally) none of the produced wealth would go to landowners qua landowners. Let me rephrase Rothbard's last sentence in a way that makes sense: Forcing land users to pass over ideal idle land and utilize marginal land instead, is wasteful of human labor and natural opportunities, a disservice to all mankind and a boon only to landlords and land speculators.

But here's the most embarrassing passage:

    A 100% tax on rent would cause the capital value of all land to fall promptly to zero.


    Since owners could not obtain any net rent, the sites would become valueless on the market.

False! They'd be valueless only to those market participants who wish only to speculate in land, not to those who wish to use land in some productive endeavor.

    From that point on, sites, in short, would be free.

Wrong again. While it's true there'd be no sale price for vacant land, one would still have to pay the ground-rent to use it.

    Further, since all rent would be siphoned off to the government, there would be no incentive for owners to charge any rent at all.

Wrong yet again. He's assuming the LVT would be set by an actual ground-rent charged by the landlord, rather than being an assessed value that would have to be recouped. And, I might add, total rental costs would tend to decrease as additional units come on the market as the monopoly stranglehold on land loses its grip.

    Rent would be zero as well, and rentals would thus be free.

He continues to pound a straw man.

    The first consequence of the single tax, then, is that no revenue would accrue from it.

He took a wrong turn, and just keeps going!

    Far from supplying all the revenue of government, the single tax would yield no revenue at all! For if rents are zero, a 100% tax on rents will also yield nothing.

Rothbard then goes on to state,

    Compelling any economic goods to be free wreaks economic havoc...the result is to introduce complete chaos in land sites.

Completely false. Even if LVT were applied at a national level, and there were no competition among municipalities for residents, people would still bid on the leases of occupied property, providing price information. (For more on this, see p. 97, "How would LVT work?")

In Power and Market: Government and the Economy (second edition, 1977), Rothbard went even further into the realm of irrationality in his attempt to refute Georgist land theory (p. 131):

    Contrary to Georgist doctrine, however, the land problem does not stem from free-market ownership of ground land.

I know of no Georgist who would ever use the phrase "free-market" in conjunction with our current, individual monopoly market in land.

    It stems from failure to live up to a prime condition of free-market property rights, namely, that new, unowned land be first owned by its first user, and that from then on, it become the full private property of the first user or those who receive or buy the land from him.

It is an obvious fiction that any use, however small or large the effort, should grant full private ownership for all time, unless we're talking about a make-believe world with unlimited land where access to all of it is instantaneous (i.e., where travel time is zero). This fiction ignores the fact that someone who, for example, puts up a fence and lets a cow graze, is much less the rightful "owner" of land than one who builds an industrial plant or a shopping mall. (For more on this, see p. 79, "Anti-Rothbard...")


In his contribution to Critics of Henry George: Volume 2 (see Chapter 31 of that book), Dr. Kyriazi provides an even more devastating critique of Rothbard’s fallacy-ridden arguments against Henry George’s Single Tax.

See also the following article by Gene DeNardo: (A Critique of Murray Rothbard's Critique of the Georgist Argument.)

Isn't land less important in today's economy than it was decades ago?

No. To understand why, simply ask yourself the following question. If the importance of land has indeed gone down, then why was the inflation-adjusted price of land so much higher in, say, 2006 than it was 50 years beforehand?

The answer is obvious: because, as the economy and population grow -- and as this, in turn, results in increasing numbers of people with higher incomes competing for access to the same amount of land -- the “importance” of land (as reflected in rents and land prices) grows along with them.

It is, of course, true that land values have recently dropped in many areas due to the collapsing real estate bubble. But as economist Fred Foldvary explains here, the speculation-driven real estate market tends to experience such price contractions about every 18 years, only to resume its former upward trend. If you made a historical chart depicting fluctuations in land values over the past century (adjusting for inflation), you’d notice an upward trend, not a downward one.

Are land values capable of generating the revenue needed for the legitimate functions of government?

The answer to this question depends on (a) how you interpret national income figures, (b) what you consider to be the "legitimate" functions of government, (c) the extent to which a reduction in taxes on labor and capital goods will drive up the rental value of land (and thus revenue capacity), and (d) the extent to which shifting to a land-based tax system will increase economic output (and thus the tax base).

With respect to national income figures, many economists accept (seemingly without question) the Commerce Department's claim that land rent makes up only 2% of the national income. Assuming for the sake of argument that this is true, that means a land-based tax system could yield no more than a few hundred billion in annual revenue.

Not all economists, however, subscribe to the belief that rent constitutes only 2% of the national income. For instance, in The Losses of Nations (1998), economist Fred Harrison explains how a study by Wall Street economist Michael Hudson revealed that the revenue capacity of land is actually about 14% of the national income, or what in 2009 would’ve amounted to approximately $1.7 trillion in annual revenue.

With respect to the "legitimate" functions of government, there are some who consider all current expenditures (including such things as corporate welfare and imperialist wars of aggression) to be "legitimate," in which case the LVT will need to generate well over $3 trillion in annual revenue for all levels of government. On the other hand, there are some who consider "legitimate" only those expenditures that go toward protecting individual rights (e.g., defending our national borders from military invasion, enforcing laws against force and fraud, adjudicating civil disputes, etc.) and toward maintaining some form of basic social safety net (particularly if provided with a minimum of bureaucracy, as a Guaranteed Income would do), in which case the LVT will need to generate no more than half of what is currently spent at the federal, state and local levels.

With respect to the reduction of taxes on labor and capital goods (“capital” for short), and the effect this has on the rental value of land, economists throughout history have observed that, when said taxes are lowered, land rents tend to rise proportionately. Why? For the simple and obvious reason that, the more people can afford to pay for access to a fixed quantity of land, the more titleholders are able to charge higher rents. If, for instance, the payroll tax were abolished, most of the resultant increase in take home pay would eventually be absorbed by higher rents. Thus, it follows that the more the tax burden on labor and capital is reduced, the more the revenue capacity of land is raised by a comparable amount. (Economist Mason Gaffney explains this more thoroughly in Ch. 7 of The Losses of Nations.)

And finally, with respect to economic output, it is common knowledge that, all else being equal, an increase in output means an increase in tax revenue (regardless of the tax system in place). It is also common knowledge that, all else being equal, an increase in output means an increase in the rental value of land (regardless of whether land rent is collected publicly or privately). The question thus arises: to what extent will a land-based tax system increase output, and hence the tax base? On page 147 of The Losses of Nations, economist Nicolaus Tideman estimates that

    "...a shift to public collection of rent as the principal source of public revenue in the U.S. in 1993 would have increased the output of the U.S. economy by $1,602 billion above its actual level for 1993, implying that the U.S. economy is producing only 77 percent of what it could produce with a better tax policy."

All that being said, if you take the Commerce Department at its highly suspect word on rent being only 2% of the national income; if you believe that current tax revenue outlays at all levels of government should be maintained; and if you ignore the extent to which both economic output and the rental value of land will skyrocket in the absence of taxes on labor and capital, then you will undoubtedly conclude that land rent is not an adequate source of public revenue. 

If, on the other hand, you agree with Dr. Hudson's conclusion that rent is approximately 14% of the national income (if not more), then even if you oppose a moderate reduction in overall spending; and even if you ignore the increase in both economic output and land values that would accompany any significant decrease in the taxation of labor and capital, the LVT will still allow for the abolition of the federal individual income tax. But if you believe that $1.7 trillion could easily fund the legitimate functions of government, and if you realize the extent to which both economic output and the rental value of land would increase in the absence of taxes on labor and capital, then you will almost certainly conclude, as I have, that land rent is a more than adequate source of revenue for all levels of government.

How will the LVT be implemented?

In short, the same way it is now.

Critics of the LVT are fond of pretending that land values are not already being taxed, when in fact they are (albeit to a limited extent) by existing property taxes. The machinery for the LVT is already in place. Thus, all that is necessary to implement the LVT locally is to exempt houses, buildings and other improvements from taxation, and thereby focus existing property taxes on land values only. In this way the property tax will be converted to a land value tax.

As for state and federal taxation, geolibertarians advocate a bottom-up system whereby a portion of the LVT-revenue generated locally is sent to the applicable state governments, and a portion of that, in turn, to the federal government.

    "The question naturally arises: How should Federal, state, and local governments obtain the rental value of land? The practical answer is that we should return to the constitutional provision that requires our Federal government to apportion direct land taxes among the states according to their respective populations. The states, in turn, should obtain this revenue and the revenue for their own support by apportionment among their counties, in the way Nebraska, Texas, Montana, and a number of other states still do. The counties, as agents of the states, should collect their revenue, and the revenue needed by state and Federal governments, from the rental value of their lands, using existing property tax collection machinery. These changes would reverse the trend of the last 50 years. Instead of lower levels of government becoming increasingly dependent upon higher levels of government for aid, thereby losing their independence, the higher levels of government would return to dependence upon the lower. That is as it should be if we wish to preserve our liberties."

-- Robert De Fremery, Rights vs. Privileges, pp. 39-40

Ideally, this will be phased in over a period of years. That is, as the LVT is moderately increased each year, taxes on everything else are proportionately decreased.

This process will continue until all taxation is abolished save for that upon on land rent, at which point we will finally be operating under Henry George’s Single Tax.
"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #4 on: Dec 08, 2013, 12:37:39 am »


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Sales Tax Destroys Commerce

by Dan Sullivan

Pennsylvania has virtually no shopping malls within 15 miles of Delaware, even though population density in that area is higher than anywhere else in Pennsylvania (and, for that matter, higher than in Delaware). Why the dearth of shopping malls? Because Pennsylvania has a 6% sales tax (7% in Philadelphia), and Delaware has no sales tax at all.


Taxes: 19th-century Sales versus 21st-century Rent

by Fred E. Foldvary
The Progress Report

The sales tax is a 19th-century tax that is becoming ever more unsuited for our global mobile 21st century economy. There is no logical or economic reason whatsoever for taxing sales. Yet there are those who advocate expanding this antiquated tax and forcing high transaction taxes on the global commerce of the internet.

It is unfortunate, and may even be a tragedy, that some USA tax reformers, seeing the evil of the income tax, advocate shifting to a national sales tax. This misguided movement for consumption and sales taxes is splitting the tax-reform movement and diverting energy and time away from realistic and beneficial tax reform.


What it's all about: The Book

The Book, "The FairTax Book", written by right-wing radio talk show host Neal Boortz, is the basis for and Bible for a recent right-wing cult-like movement to replace the current US tax code with a national sales tax. We suggest you familiarize yourself with it by purchasing or borrowing the book from your local library. We want you to be as informed as possible so that you can make a logical decision based on facts, and not on party loyalty or hype.

We consider the FairTax to be nothing more than a smokescreen for a huge tax cut to the wealthiest Americans and a gigantic tax increase for everyone else to make up for it. As you read, ask yourself what you would get from this plan if it was ever made into law. With critical thinking you will find that the FairTax is not only a lie and a scam, but it will throw many Americans into permanent poverty. We believe the FairTax plan taxes hard work - the sweat of our brows and the toil of our labor - while at the same time it makes free welfare money (inheritances, gifts, and capital gains), that wasn't worked for and wasn't earned, completely tax free.

The FairTax increases the size of government making all who sell or trade part of the Big Brother network. This new tax bill gives the government additional powers to rule the poor and literally grants additional rights to the wealthiest people in America. George Orwell would have been proud.

The FairTax is ANTI-FAMILY. The FairTax penalizes poor families for buying food, clothes, shelter, and medical care by taxing all the basic necessities of life. These things are NOT taxed right now (and shouldn't be) but they ARE HEAVILY TAXED under the FairTax plan. Remember this when you get barraged by a FairTax supporter that says the prebate will give you a portion of this additional tax back and you should be grateful to the new Big Brother Government for giving you anything back. The FairTax bill penalizes those who live paycheck to paycheck taxing every dollar spent to make ends meet while UN-TAXING the rich and wealthy who live off of inheritances, trusts, gifts, and old money.



By Claire Wolfe & Aaron Zelman

“Abolish the IRS!”

So goes the cry. And who could disagree? The income tax is unAmerican in the most profound way, punishing people for being successful. The tax code is vast and incomprehensible. The agency that enforces it is universally loathed.

Yes, let's abolish the IRS. And the income tax.

Unfortunately, the statement that usually comes next begins, “And replace it with ...” And there a new round of troubles begin.

Over time, proposals have included replacing the graduated income tax with a flat tax, a VAT (value added tax), or some form of consumption tax. For several years now, the buzz has been growing for a national sales tax. While other “abolish the IRS” reforms have languished, the national sales tax has, as they say, developed legs.

The most durable proposal for a national sales tax – called the FairTax – is promoted by an organization called Americans for Fair Taxation (AFT) ( A bill to implement that tax (H.R. 25; Senate Bill 1943)(1) was introduced in Congress early in the 108th Congress. The so-called “Fair Tax Act” has 54 co-sponsors as of this writing, plus the outspoken support of both Speaker of the House Dennis Hastert and House Majority Leader Tom DeLay. President George W. Bush expressed cautious support for the act in response to a pre-screened questioner at one of his campaign events. In his acceptance speech at the 2004 Republican Party convention, Bush strongly advocated a total revamp of the U.S. tax system. Although he made no specific proposal, his language was similar to that of the FairTaxers. And at the moment, the FairTax is the only serious tax-revamp proposal on the Congressional table.

Finally, many, many ordinary freedom-loving people, weary of the present outrageous system, are cheering the FairTax as a great improvement.

But it's not.

The FairTax is not only not an improvement. We believe it's UnFair, dangerous, and a disaster in the making.


Fair tax is a trap: Demand NO vote on H.R. 25

August 9, 2010

The other night on the boob tube I caught a commercial featuring a talk show host named Neal Boortz, Michael Reagan (adopted son of former president, Ronald Reagan) and the vile Newt Gingrich. All pushing for another dangerous taxing scheme that will not cure the cancer, only continue to feed the beast.

Boortz has been on this “fair” tax bandwagon for years. It’s obvious he has zero understanding of the Federal Reserve and why such a taxing scheme would only continue to steal the fruits of our labor to fund massive government spending.

Michael Reagan is also a talk show host who, like Boortz, has zero understanding of our monetary system and its feeding artery: the IRS.

Newt Gingrich sold out this country decades ago with his votes. Besides being a serial adulterer and ethtically bankrupt, Newt Gingrich is the global master’s trophy boy. He hopes the Republicans take control of Congress in November because there’s no doubt in my mind, Gingrich is out to be president of these united States of America. We can never let that happen. Do you know Newt was caught on tape saying the ridiculous “Contract with America” was nothing but a PR tool for incoming freshmen members of Congress? Yes, that’s a fact. They were obtained by Roll Call. Old Newt pulled a fast one on faithful conservatives. His votes killed MILLIONS of jobs and sent them south of the border and overseas.

In order to understand why H.R. 25 is just another tool of tyrants, you have to go back and see where and when the problem started. Prior to 1913, we had no federal income tax. There was no unconstitutional “Federal” Reserve Banking system and there was no Seventeenth Amendment. This nation thrived in agriculture, manufacturing and industrial output.

The shadow government that has been controlling Congress for almost a hundred years had the downfall of America well planned. First, an income tax to syphon off the fruits of our labor. Even though the Sixteenth Amendment wasn’t legally ratified and did not give Congress any new power of taxation, we all know what that Gestapo criminal syndicate will do to you if you don’t voluntarily submit (with a gun to your head) to looting your earnings.

Full article here

Prices and Taxation

by Fred E. Foldvary
The Progress Report
26 February 2012

Punitive taxes are those which harm the economy and society. All “taxes in substance” are punitive. Taxes in form are compulsory payments to government; taxes in substance are payments to government having no direct link between the payment and any benefit.

One way that punitive taxes are destructive is by changing the information conveyed by market prices. A price is not just what one pays for stuff. The market-based price is a particular amount for a reason. Students of economics learn that the market price is set by supply and demand, at the quantity for which the quantity demanded equals the quantity supplied. That is the equilibrium, where all the gains from trade have been exhausted at that moment.

But let’s go deeper into the dynamics of market prices. Supply is based on the costs of production. The market price at some quantity comes from the cost of producing an extra amount of the good, the “marginal cost”. This cost is not just the cost of the scarce inputs for the firm, but more broadly the marginal cost of society’s resources.

Demand is based on the buyers’ willingness to pay, the most they are willing to pay for a good. The marginal willingness to pay at various quantities determines the demand, which plotted on a graph becomes the demand curve. Just as with supply, the demand more broadly reflects society’s marginal willingness to pay at various prices.

A free-market price reflects the interplay of scarcity and desire. At the market price, society’s willingness to pay for an extra amount just equals society’s cost of providing an extra amount. At a lower quantity, society’s willingness to pay is greater than society’s marginal cost of the resources, so it increases social wellbeing to produce more. At a quantity greater than equilibrium, the marginal cost is greater than the marginal benefit, so society should produce less. At the equilibrium price and quantity, society maximizes its welfare or wellbeing.

Now enters the punitive tax. The tax rudely interferes with the equilibrium price and quantity. Like a robber holding a gun, a sales tax forces they buyer and seller to hand over some money. The seller passes some of the tax on to the buyer, raising the purchase price. The tax reduces the gains from producing, which drives down the land rent that producers are willing to pay.

That sales tax does not just reduce the benefits to consumers and gains to producers and land-rent owners, but distorts the market signals provided by the price. At the higher price and lower quantity, the after-tax equilibrium no longer balances desire and scarcity. People would have benefited from more goods, and sellers would have employed workers to produce more, but the tax has voided the information provided by a free-market price. The price paid by the buyers is a distorted, skewed, falsified signal of desire and scarcity.

Suppose you were reading an instruction booklet, and somebody changed the wording, so that instead of inserting part A into tab X, you did something different. The product would become messed up. Free-market prices are instructions to producers and consumers on whether to produce and consume more or less. Punitive taxes change the instructions, creating a waste of resources and economic damage such as unemployment.

Even worse than the waste caused by punitive taxes are the distortions caused by rent-taking subsidies. By changing prices and moving away from the free-market equilibrium, subsidies cause a welfare loss similar to that of punitive taxes. But even worse, the explicit and implicit subsidies to land value generate an artificial speculative boom and subsequent bust that results in massive economic damage.

This deadweight loss or excess burden of punitive taxation and rent-seeking subsidy can be avoided by replacing taxes with the economic rent of land. Tapping the land rent is not a tax in substance but rather the prevention of an implicit subsidy to landowners as public goods generate land rent and site values. It is economically possible to finance government without the distortions caused by fiscal interventions.

The worst tax of all is the sales tax, because at least the income tax is zero if the profit is zero. The sales tax makes profit go negative if it is low or zero to begin with, forcing the company to shut down. If your wage is zero, you still have to pay sales taxes on what you buy. If you have to borrow funds, the sales tax forces you to borrow even more and then pay more interest.

Therefore what the national sales tax advocates are calling the “Fair Tax” is not only untrue, but deliberately deceptive. There is nothing fair about forcing people to pay much more for the goods they buy, and distorting the economic information provided by market prices. The “Fair Tax” advocates make false claims when they declare that sales taxes are better for the economy than land value taxes. They have not backed this claim with arguments, because they cannot.

The two real reasons for sales taxes are to force the poor to pay taxes, and to subsidize land values. The hidden agenda of sales-taxers is the subsidy to land value provided by public goods financed from sales taxes. Tenant-workers pay twice for public goods, once in taxes and then again in higher rent, while landowners get a rent and land value subsidy. There is no logical reason to want a sales tax other than to force a redistribution of wealth from workers to landowners.

The Destruction of the American Libertarian Party

by Fred E. Foldvary
The Progress Report
March 26, 2012

The American Libertarian Party is being destroyed in its ideology and philosophy. The moral philosophy of libertarianism was, until very recently, full-spectrum liberty. Libertarianism included full civil liberties, with no restriction on peaceful and honest human action. The libertarian economic policy was a pure free market, with no restriction or tax on acts that do not coercively harm others. The foreign policy was peaceful co-existence, defending the homeland while avoiding foreign interventions.

The core of government power and policy is taxation. Governments get funded by forcibly taking property from people. Since libertarians until recently believed in equal self-ownership, they regarded this taking as morally wrong. The slogan was “taxation is theft!” But what that really meant was appreciated only by the Georgist branch of the movement, the geo-libertarians who recognized that the provision of public goods by government generates higher land values, and that if the generated rentals are not paid back, that constitutes a subsidy. A pure free-market policy avoids subsidies, and thus requires that these rentals be paid back to society by landowners. So geo-libertarians recognized that “taxation is theft” applies to taxation in substance, not merely taxation in form, thus not to the repayment of value received.

But in 2012, American libertarians began committing ideological suicide. Today’s libertarians have not been as well educated as those in previous times. They don’t understand the moral philosophy of natural rights, and the economic effects of taxation. American libertarians today are embracing the violation of free trade, the subsidy to land values, and the quantum destruction of private enterprise that is entailed in a national sales tax.

Most libertarians are not anarchists. They are minarchists, favoring limited government. That implies a need for some revenue. Libertarians are aware of the moral and economic objections to the taxation of income, but they have rejected the source of public revenue that is compatible with self-ownership and a free market – public revenue from land rent. This rejection is described in the book by Harold Kyriazi, Libertarian Party at Sea on Land. American libertarians have even rejected the replacement of much of government by private communities financed from the rentals that they generate. No, the doctrine increasingly being embraced is domestic tariffs on trade.

There is a movement in the USA that advocates a national sales tax. Cleverly, they label this a “fair tax,” although there is nothing just or fair about violating free trade. The explanation for the compulsion to tax goods requires a psychological analysis. I have no credentials in academic psychology, but it seems to me that the core American creed is not liberty, but a combination of Puritanism and land grabbing. If the core American creed were liberty, the USA would not have upheld chattel slavery, nor would it have imposed punitive taxation from the beginning.

Economic puritans believe that consumption is bad. They favor the mercantilist policy of promoting production and exports, while stifling consumption and imports. Economic puritans seek to shift taxation from production to consumption. Secondly, Americans from the beginning have profited from land grabbing, first from the Native American Indians, then from the Mexicans and the Spanish, and then indirectly by overthrowing governments such as that of Guatemala, which did not allow American-owned plantation and mining land grabs. Americans are greedy for stolen land because they know it offers one of the best avenues to becoming rich with other people’s money.

Libertarians were once proudly counter-cultural, advocating the legalization of victimless acts, and opposing the welfare-state culture that has become a global religion. But now, US libertarians have succumbed to the core American cultural values, Puritanism and land grabbing. That is why libertarians have rejected explicit subsidies of money and price controls, but not the implicit and much greater subsidy to greater land values. Libertarians framed this policy as allodialism, the complete ownership of land and its rent by those who are “first claimants” by having title, ignoring the fact that imposed taxation pumps up that land value.

Having rejected public revenue from land rent, even from free-market private community rentals, libertarians have replaced liberty with economic Puritanism, the tax attack on consumption. The leading candidate for the Libertarian Party presidential nomination is promoting a national sales tax of 30 percent of the pre-tax price of goods. Endorsed by many state parties, he will surely be the Libertarian Party candidate. As taxation is the core issue, the American Libertarian Party will have been transformed into a national sales tax party. What was once the “Party of Principle” will have degenerated into the party of the ugly side of American culture, Puritanism and land grabbing.

Because the libertarian party is the public face of the libertarian movement, the implicit party slogan, “tax goods, not land” will infect the movement and philosophical base. Perhaps a million sales taxers will join the Libertarian Party, making it a permanent national sales tax party.

There are still some libertarians, especially geo-libertarians, who believe in pure economic freedom. Frustrated by a movement that is libertarian in name but no longer in substance, they may well join or form other parties such as Free Earth or a “Taxation is Theft” party. One can only hope that the attack on consumption by American pseudo-libertarians will not be copied by classical liberals in other countries.

Fortunately, Mason Gaffney has shown in his writing on “sales tax suicides” that governments such as that of pre-revolutionary Russia and France, which adopted high national sales taxes, committed economic and political suicide, and even puritan Americans will balk at the hardship and tax cheating that would be imposed by a high national sales tax on top of state sales taxes. Thus the American Libertarian Party is headed towards both philosophical and political ruin. It may well be that just as the term “liberal” became disassociated with liberty, the term “libertarian” will too become so corrupted by taxed trade that true liberty seekers will have to call themselves “classical libertarians” or free-earthers, and no longer just plain “libertarian.”

Political Parties and Taxation

by Fred E. Foldvary
The Progress Report
April 30, 2012

It is curious but understandable why none of the American political parties on the ballot are proposing the sound tax policies that would spur the U.S. economy to grow faster than China.

The mantra of the Democratic Party is “tax the rich.” They want to increase the marginal tax rates, the rate on extra income, of the wealthy. They say the rich can pay more without being affected. That flies against both economic theory and the evidence of history. Theory and experience say that the higher the tax rate, the greater the reaction of less production and less investment, and the reduction is proportionally greater than the tax increase. Theory says the ideal tax is on things that do not get reduced when taxed, the prime example being land. But the Democratic Party ignores economics, exploiting the ignorance of the masses to cater to the landed interests.

The chiefs of the Republican Party understand the concept of marginal tax rates, and seek to reduce them to spur growth, but to pay for this, they reject a tax shift to land value, and instead seek to cut government welfare to lower-income folks. If the Republican policy is implemented, we will see mass protests, violent occupy movements, general strikes, and an increase in crime. The Republicans don’t understand that before we remove the roof from a poor man’s house, we should first lay the foundation for a new house.

The Green Party seeks to stop the destruction of the environment, yet instead of a pollution tax, its members seek a wasteful welfare state financed by a graduated income tax high enough to prevent “excessive” wealth. They don’t seem to understand that the deadweight loss from high tax rates results in a waste of resources. They reject the free-market environmental policies that would protect nature with incentives and property rights.

The Constitution Party wants to abolish the income tax and levy excise and import taxes. In addition, that party would enact a "state-rate tax," with revenues apportioned among the states in accordance with their proportion of population. With the abolition of the income tax, and the shift of government spending more towards the states, it would be more difficult for the states to have their own income taxes, so tax competition would move them towards property taxes. The party also approves of taxing corporations, which legally taxes the privilege of incorporation. This is a much better tax proposal than that of the Democrats, Republicans, and Greens.

The most ridiculous tax proposal is that of the National Sales Tax Party. They seek what they call a “fair tax” on goods bought by households and governments. Used goods would not be taxed. The federal tax rate would be 30 percent. State sales tax rates have a national average of 6 percent, thus the combined rate would be 36 percent, leaving out higher rates caused by the conversion of state income taxes to sales taxes, and the added tax due to tax evasion.

The exemptions for used goods and businesses would cause huge distortions. For example, a new coin or bar with $1000 worth of gold would sell for $1360, so nobody would buy it at that price, since one could buy gold bought prior to the adoption of the national sales tax for $1000 as a used good. There would be massive tax evasion for new coins sold as used goods, as well as smuggling gold and silver from foreign sources. As for real estate, a new building that has a cost of production of $100,000 would be a new good, and sell for $136,000, while a similar building built prior to the enactment would have no tax. Real estate construction would come to a halt. In practice, Congress will not levy a ridiculous sales tax on buildings.

The “fair tax” movement recognizes that there would be a big incentive for tax evasion by starting a business and buying goods as a business expense. They acknowledge that there would be audits and registration requirements. There would be massive intrusion into both business and households to prevent tax evasion, but as with illegal drugs, much underground activity would happen anyway.

It is unrealistic to suppose that the federal government would let private enterprise be exempt from taxes, while imposing a tax on government. Under the “fair tax,” a private school’s purchases would be tax free, but a government school would have to pay the sales tax. This tax punishment of governmental schools would be politically impossible. In practice, government spending would be exempt from taxation, resulting in a sales tax rate higher than 30 percent.

Land is, of course, always a used good, and the sale of land would be exempt from taxes. As with the income tax, the tax policy of the National Sales Tax Party would provide public goods that subsidize land value. With the income tax, a business that makes no profit pays no tax. With a national sales tax, if a zero or low-profit firm cannot pass on the tax to customers in the global economy, it would shut down. Professor Mason Gaffney calls this a “quantum leap effect,” as high taxes on gross receipts would result in a massive shift of land use to firms that can pass the tax on, resulting in a massive destruction of production and employment.

The National Sales Tax Party was previously called the Libertarian Party. The party is holding its convention on May 2-6 2012 in Nevada. The party will elect Gary Johnson as its presidential candidate. He is popular as the former government of New Mexico and advocate of legalizing marijuana. Johnson also promotes a national sales tax to replace the income tax.

The federal budget and tax reform are the major issues of the 2012 presidential campaigns. By electing a sales-tax advocate as its presidential candidate, the “Libertarian” party will have transformed itself into a sales-tax party. It was to a large extent that already, as its previous candidates favored tariffs and excise taxes instead of free trade.

Now the transition will be complete, and if they still label themselves the “party of principle,” since the principle in 2012 is to tax goods and subsidize land value, the party should honestly call itself the National Sales Tax (and land subsidy) Party. I’m now confident that Gary Johnson will get millions of votes, but these will be sales tax votes by those fooled by the “fair tax” propaganda, not votes for liberty. Genuine libertarians and free-marketeers will either refuse to vote or else turn in a blank ballot.


A Bad National Sales Tax for the Deficit

by Fred E. Foldvary
The Progress Report
June 04, 2012

Everybody above the age of 3 now knows that the United States is heading towards a fiscal disaster unless there is a shift to land value taxation, or a big cut in government spending, or a economy-crushing increase in income and sales taxes. It is politically impossible for Congress to enact the best solution: the replacement of income and excise taxes with public revenue from ground rent. There may be some cuts in the growth of spending by not providing social security and medicare to wealthier folks, but that will not solve the deficit. The policy with the least political resistance seems to be the enactment of a national sales tax after 2012.

Members of the Republican Party will block large increases in income taxes. But many conservatives favor taxes on spending, because they want to encourage savings and investment. In the election campaigns of 2012, the biggest push for a national sales tax will come from the Libertarian Party candidate for president, Gary Johnson. Since taxes and the deficit will be the top campaign issues, tied to policy for the economy, the Libertarian Party advocacy of a national sales tax will push it to public discussion and also remove political obstacles, since if free-market Libertarians are for sales taxes, then conservatives can be for it also.

Whereas the “Fair Tax” advocates want a national sales tax to replace the income tax, with an exemption for business spending, the political reality is that Congress will seek to avoid fiscal disaster with a big tax increase rather than a replacement. So Congress will levy a national sales tax on top of the income taxes, and rather than exempting business, they will exempt government spending, to avoid burdening the state and local government which also are in fiscal trouble. There are already sponsors in Congress who have submitted sales-tax bills. There are Republican candidates for Congress who favor a national sales tax, and Democrats will go along as a tax increase that has Republican support.

Sales-tax advocates that wanted to shift taxes from investment to consumption will find instead that their advocacy will result in the worst of both, greater burdens on business from taxes on their purchases as well as on income. Governments see business as cows to milk and bulls to subsidize. Of course the US already has excise taxes on goods; higher national sales taxes would bring us back to the 1800s when the federal government relied on taxing goods.

The national sales tax will start with a three percent rate, just as did the first sales state sales taxes. They will say it is a small sacrifice, but the sales tax in California grew to nine percent, including local additions. It will be easy for Congress to start at 2 or 3 percent and then increase the rate gradually until it consumes a tithe of spending.

Another source of support for a national sales tax will come from the example of Canada, which has a national goods and services tax. We can be assured that a US national sales tax will exempt politically favored interests. There will be no sales tax on lawyer fees, but I will not be surprised if medical goods and services are taxed to help pay for medicare.

Can anyone doubt that a national sales tax will not be flat rate, but be as complicated as today’s state sales taxes? There will be various tax rates on different goods and services. Government will become ever more intrusive to catch sales-tax evaders. Many small businesses will have to shut down, as the will be unable to pass on the tax, due to global competition. There will be ships offshore that will seek to sell goods without sales taxes, and tax collectors all along the shore to inspect your goods to make sure you are not smuggling in goods tax-free, as all imports will be subject to the national sales tax.

These intrusions and costs could be avoided by accepting nature’s offer to pay for public goods. Nature provides a source of public finance in ground rent, which expands as the population grows. Tapping land rent or land value for public revenue would promote growth and reduce poverty. When people hear about the option of tapping land value, their reaction is not opposition but wonder, why they have not heard about this before.

The political pressure will increasingly be for a national sales tax, and Congress will pass it to avoid both huge spending cuts and the prospect of a Greek-style fiscal crisis. Get ready to lower your standard of living, because goods will become much more expensive. And don’t forget to thank the US Libertarian Party for promoting bigger government with a national sales tax.


^^  Something to think about the next time you see a conservative or right-leaning libertarian wrap the sales tax in the flag of "liberty."
"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #5 on: Dec 08, 2013, 12:51:46 am »


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Rebuttal to Arguments Against Land Value Taxation

by Fred E. Foldvary, Senor Editor
The Progress Report
February 28, 2011

On 18 October 2010 I wrote on "Arguments Against Land Value Taxation" (to see it, click here ). I now provide the rebuttals.

1. Critics say that the supply of usable land can be expanded by filling, clearing, and leveling. No, because that does not change the cubic meters of space within the boundaries of the area. The improvements are capital goods, not land. Taxing land value does not tax the improvements.

2. Critics say that the supply of land offered in the market is not fixed. Yes, the quantities offered for sale are not fixed, but the total amount of land available is fixed. The sale of land just changes the persons who have title. The total quantity is important in setting the market rent and price of land. The fixed total quantity, and the fact that land was provided by nature, makes land rent an economic surplus that can be tapped with no economic damage.

3. Critics say that there is plenty of bare land, so there is no shortage of land, and no land problem. Yes, there is much unused land, but what matters is the scarcity of land in locations people want to use.

4. Critics say that much of the value of land comes from services and improvements such as streets, parks, and security, so land-value taxation would tax the capital goods along with land. No, because if the added value comes from privately provided works, the payment would go to the providers by contract. If the public works are provided by government, then the added rental goes to the government to pay back value received and avoid a subsidy to landowners.

5. Critics say that people have much of their asset value in land, and LVT would result in great losses and also wreak financial markets as much of lending is for mortgages. Not if those with net losses are compensated with bonds. To see "How to end stinking taxes immediately" click here.

6. Critics of LVT claim that speculation is an essential part of a market economy, as entrepreneurs seek the best timing for development, and LVT results in premature redevelopment and causes too much building. No, because the tax on land value is independent of its actual use, based only on its potential in its highest and best use, and it is the lack of LVT that in some cases causes premature development expecting higher land value, and in other cases causes speculators to avoid developing, waiting for higher land values. LVT promotes the optimal timing as the opportunity cost of not developing is in money and thus has a greater impact. What is bad is not speculation as such but subsidized land value, distorting incentives.

7. Critics say that LVT redistributes wealth from landowners, but there is nothing morally wrong with an inequality in wealth and income. But when government provides public goods paid for by taxes other than on land, this pumps up rent and land value, redistributing wealth from workers to landowners. And for land value provided by nature, geoist ethics say that human equality requires an equal benefit from natural resources. Inequality in market wages respects equal self-ownership, while an unequal benefit from the natural heritage does violate our creation as moral equals.

8. Critics say that LVT is not fair to homeowners whose land goes up in value and whose wages do not rise. But LVT would provide an opportunity for companies to provide insurance against an unexpected increase in the land value tax. The insurance would have a cost at the time of purchase, so that the new titleholder would know if he could afford the payments. Also, retired folks with low incomes could postpone the payments until the property is sold or inherited.

9. Critics of LVT claim that much of wages is due to luck, connections, and talents, so a portion is wages is unearned. But as Henry George wrote, justice is the end, taxation only the means. It is just for the benefits of natural resource to be shared, and for landowners to pay back the rental generated by public goods. Self-ownership is also just, even if some have greater wealth due to luck. Nobody is coercively harmed if one person has more talent than others. If others own your luck, you become a slave to them, violating self-ownership.

10. Critics of LVT claim that rent is often earned as landlords actively seek out the best tenants and the best use of a site. But this is not rent; the return on this exertion is wages. Those seeking the best tenants and sites are in the role of entrepreneur, not landlord. Some of the rental that tenants pay is wages to the entrepreneur and to the manager.

11. Critics say that the tax burden should be shared by everyone, not concentrated on landowners, and that since tenants don’t pay taxes, they will vote for bigger government. But the rent tapped for public revenue is what is paid by tenants. The rent could be taken directly from tenants, skipping the landlord middleman. A “citizens’ dividend” or distribution of some of the rent to all residents would provide an incentive for people to avoid wasteful government spending, as that would reduce their cash dividend.

12. Critics claim that there is no precise method of separating land value from improvement value. They have not talked to professional real estate appraisers. Land value appraisal is needed for fire insurance, mortgages, the purchase of land with a building to be demolished, and other private transactions. Techniques to appraise site value include comparable sales of bare lots or lots sold for demolition, calculating the replacement costs of buildings minus depreciation, and maps of neighborhood properties.

13. Anarchist critics claim that LVT would finance government tyrants. But geoism is not just the taxation of land but equally sharing the benefits. Geoism opposes landlord tyranny.

14. Socialist critics claim that LVT leaves intact capital inequalities. But much of the historical inequality of wealth has come from land tenure. Over time, inherited wealth other than land dissipates or gets donated to charity. With good education and equal access to natural opportunities, inequalities in financial assets are not unjust so long as there is no force or fraud.

15. Critics of LVT claim that property ownership promotes civil values and stability. This has been disputed, but if true, the ownership of one’s human capital, future wages, buildings, and personal property should provide similar benefits.

For more detailed rebuttals, read the book Critics of Henry George.
"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
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The Failed Explanation

by Fred E. Foldvary, Senior Editor
The Progress Report
18 April 2011

Weekly “alternative” newspapers throughout the USA on 13 April 2011 published an article by David Cay Johnson on “The failed experiment” (SF Bay Guardian) or “Tax the Rich!” (East Bay Express) or “9 Things The Rich Don't Want You To Know About Taxes” (Willamette Week; To see the whole article, click here).

The author claims that “misplaced faith in tax cuts” and other “economic myths” are destroying the economy of the USA. He is correct that the economy of the USA, and other countries also, are being destroyed, but this not because of tax cuts. What has caused wreckage and will cause future economic catastrophes are huge subsidies to land value. But this economic reality is not obviously observable, and understanding it requires a knowledge of economic theory that very few journalists have.

The author claims that the US government has conducted an economic experiment in “supply-side economics.” He describes this policy as tax cuts that stimulate investment and growth, which then generates more tax revenue than before. But real supply-side economics only proposes that a reduction in the cost of production results in more production. Supply-side theory cannot claim whether tax revenues will increase or decrease, since that is an empirical result that has to be found from application.

There is indeed a revenue curve theorized by the Arab economist Abu Said ibn Khaldun (1332-1406), popularized by economist Arthur Laffer. The Khaldun or Laffer curve says that at very high tax rates, there will be less tax revenue than at lower rates, because if almost all income gets taxed away, there is less production. If tax rates are low, then higher tax rates do generate more tax revenue. But where the US economy is or has been on the Khaldun curve is an empirical matter; supply-side theory cannot provide any particular maximum-revenue tax rate.

Actually, tax revenues did rise substantially after tax cuts. There were tax cuts during the administrations of presidents Kennedy in the 1960s, Reagan in the 1980s, and GW Bush during the 2000s, and all resulted in more economic growth and lower unemployment. The problem was not the tax cuts, but that the economic growth got misdirected into speculative real estate booms. The misdirection was caused by massive subsidies to land values.

The author talks about the rich and the poor without differentiating or examining where the money comes from. He does say that “Big real-estate investors enjoy tax-free living” because they can deduct “paper losses like depreciation” against income. But the author does not mention the greatest subsidy of all, the generation of land rental from public works and civic services, paid for mostly from taxes on labor. Worker-tenants pay twice for public goods, once in higher rental, and again in taxes. Landowners get subsidized by getting higher land value, along with low tax rates on real estate, legal-fiction depreciation, tax-free property sales, and tax-deductible mortgages and property taxes.

The author complains about the rich who pay no taxes, but does not provide the most effective remedy: tap land value for public revenue. Advocating higher income taxes on the rich ignores the fact that many of the rich get the funds back via the government subsidy to their land value. The alleged purpose of the income tax was to get the rich to pay most of the taxes, and the rich do pay much of the income taxes, but there are other taxes such as on goods that the poor pay, and the rich will have the political clout to obtain tax deductions, credits, and exemptions.

The remedy is a constitutional provision that requires the collection of the economic rent of all land. Unlike income and financial capital, land does not hide, flee, or shrink when taxed. The real estate assessments would be a public record for all to see.

Supply-side economists are correct in saying that lower tax rates on labor and enterprise will generate more production, investment, and growth. They usually avoid taking the concept to its logical conclusion: have no taxes on labor and capital yields, but do tap the full economic rent of land. Taxing or tapping land value promotes the most productive use of land, since it is based on the rent paid when land is optimally used, regardless of current use or current tenant payments. But the author is evidently unaware of, or else ignores, land-value taxation.

The author states that the incomes of most Americans have stayed about the same, while the income of the very rich rose substantially. But there is no examination of the cause: much of the gains from economic growth is captured by higher rent. That is why the few who own much of the valuable real estate, such as commercial land, get rich, while most folks break even. When wages do go up, the increase is eaten up by higher payments for housing. Some middle-class homeowners thought they were benefitting from rising real estate prices, only to suffer great losses from the inevitable Crash of 2008.

The author finishes by advocating “a tax system that benefits the vast majority,” but does not say what that would be. Unfortunately, readers are left with the impression that the remedy is to hike up income tax rates. But if high tax rates are so good, Kennedy would not have advocated the tax reduction that created prosperity during the 1960s, until the country got infected by the Vietnam war, higher inflation, and a real estate boom that crashed in 1973.

An opportunity to provide real economic education was missed. “The failed experiment” was a failed explanation. Interestingly, the fact that the author, a writer for the web site, did not explicitly advocate higher income tax rates, indicates that perhaps he may be conflicted, perhaps knowing the truth, but not daring to exclaim it.
"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
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A Critique of a Critique of Georgism

by Fred E. Foldvary
The Progress Report
June 11, 2012

In February 2012, economist Bryan Caplan wrote “A Search-Theoretic Critique of Georgism” summarizing a working paper by him and Zachary Gochenour. This paper is interesting both because the authors deem Georgism important enough to critique, but also because the critics of geoism keep on having the same misunderstandings.

Bryan’s summary critique is that “A tax on the unimproved value of land distorts the incentive to search for new land and better uses of existing land.” This is false. By economic definition, what is “nature” is what is prior to human action. Land means natural resources, and the value of a natural resource is apart from the value added by human action. The economic rent of land is the market rental paid by a tenant minus the costs needed to put the land to its best use. Those costs include the search, analysis, and organization provided by the entrepreneur.

Caplan writes, “Imagine the long-run effect on the world's oil supply if companies stopped looking for new sources of oil.” It is a waste of time to imagine this, because a tax on rent would not have that effect.

Oil has a global market price, and the profit from oil extraction is the revenue -- the price of oil times the quantity sold -- minus the costs. The economic rent of the land containing the oil is the market value of the oil minus all the typical costs involved in extracting the oil. This is put into practice by a competitive leasing of areas containing oil to companies that explore for and extract the oil. When an oil firm bids a lease amount, the lease rent is its estimate of the surplus left after accounting for the typical costs of production.

Much of the production of oil, natural gas, and minerals comes from long-established sites. The exploration costs have long been amortized or paid for, and now the economic rent is the value of the resource minus the on-going typical costs, including the normal return on capital goods. There is no disincentive to explore new lands or to improve the productivity of existing operations, because a tax on economic rent only taps the surplus beyond normal costs.

Critics of Henry George have also made the opposite claim, that taxing most of the land rent would make companies extract water, oil, natural gas, and coal too quickly. If a firm has to pay a tax on the value of materials in the ground, they will extract it as quickly as possible. But that assumes a simplistic and foolish implementation of land-value taxation. These critics think that Georgists or geoists are fools who can’t even do the economic analysis that a student would do on the third week of his first economics course.

Properly tapping the economic rent of material land requires a sophisticated policy. A tap on that land value would include bids for leasing land and a lump-sum monthly tax on the estimated economic profit of the current extraction, based on the current price of the resource. The economic profit equals the revenue minus all costs, both explicit and implicit, including normal returns on assets. Possibly the economic profit could be zero, the operation providing only a normal return on the labor and capital goods.

The periodic lump-sum (a fixed amount of money) payment would provide an incentive to be efficient, since the marginal tax rate during that time would be zero, i.e. there would be no tax on extra profits, thus providing an incentive to minimize costs and maximize productivity. So the tap on the economic rent of oil extraction would not be based on the value of the oil reserve but on the anticipated surplus -- the leasing bid -- and on the economic profit from the extraction.

Caplan writes, “Suppose you could find a $1 [million] well by spending $900 [thousand] on exploration. With a 99% Georgist tax, your expected profits are negative $890 [thousand]." This is just another example of Tolstoy’s observation that nobody really argues against Henry George; these arguments are based on misunderstandings. The value of the land would be apart from the human action that costs $900,000. The $1 million of site value would be composed of $900,000 of capital goods and $100,000 of land. Evidently Caplan uses a physical definition of land, the physical oil, rather than the economic definition of land value, i.e. apart from the value of the human action needed to put the oil into productive use.

In their working paper on the same topic, Bryan Caplan and Zachary Gochenour write, “we have not complicated the models by differentiating between improvements and the land's ‘unimproved’ value. Information about the land can be considered an improvement in its own right.” Yes, information about land from search is capital good improvement, and the essence of George’s analysis is to differentiate labor and improvements from the value not provided by the title holder. By omitting the essence, the authors are beating up a straw man.
"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #8 on: Dec 08, 2013, 01:15:37 am »


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Land Value Tax

Conventional property tax falls mostly on improvements.

To levy a conventional property tax, assessors normally determine the value of the land and the additional value of the improvements. The two values are added together and the total value is taxed. As a result, property tax falls mostly on improvements.

As a result, property tax penalizes most home owners, who usually improve and maintain their homes better than absentee owners. The property tax on improvements also discourages construction while it rewards those who milk run-down properties or sit on vacant properties with light taxes.

Land value tax (LVT) untaxes improvements

Jurisdictions that levy land value taxes charge lower rates (or no tax at all) on improvements. Taxes burdens on well developed and well maintained properties fall and burdens on blighted and vacant properties rise until identical lots pay the same taxes no matter what the improvements on those lots are worth.

LVT is easier to assess

Land lies out of doors, and all features are fully visible. In contrast, assessors have no right to inspect the interior or buildings without the building occupant's consent, and considerably more skill is required to assess the value of structural integrity and amenities. Land can be assessed more accurately than buildings, at a fraction of the cost of assessing buildings.

LVT fosters honesty

Conventional property tax encourages people to hide improvements, sometimes by secretly remodeling without filing building permits. Such dishonesty to avoid an assessment hike can create fire and health hazards, as the main purpose of permits is to insure that safety codes are respected. Other taxes encourage people to conspire to not report, or under-report, income, sales, etc. These corrupting incentives work not merely on taxpayers, but on government itself. Who is to know when a tax collector has "looked the other way" or brokered a deal if the tax information is private? Land values are entirely public information, and the factors that determine land values are also public information.

Location, location, location

Land values vary tremendously according to location. A square yard of prime Manhattan land is worth more than a typical acre of New York State farmland. The value of land in the most affluent residential neighborhoods can easily exceed 100 times the value in the poorest neighborhoods, especially where undertaxation of land has encouraged speculation.

Most home owners pay less

Dozens of studies in dozens of cities have shown that most home owners pay less under land value tax than under property tax, and much less than under income taxes. The only exceptions we have seen are where only a small minority of residents can afford home ownership or where businesses have been so overtaxed that demand for business properties has been discouraged.

LVT encourages growth

Hundreds of taxing jurisdictions around the world have experienced increased construction and renovation after shifting to LVT, including over 20 taxing jurisdictions (mostly cities) in Pennsylvania. Pittsburgh, which had higher taxes on land than on buildings from 1913 to 2000, enjoyed a major "renaissance" after World War II, despite an abrupt reduction in the demand for armor plate, most of which had been produced in Pittsburgh. This renaissance was the subject of articles in at least 27 magazines. Another major surge in construction occurred in the early 1980s after Pittsburgh dramatically increased its tax rates on land value, despite the closing of its largest employer in 1979, Jones & Laughlin Steel. This second surge, dubbed "Renaissance II," was featured in the 1983 Fortune article, "Higher Taxes that Promote Development."

LVT helps small business

Small businesses are more land-effficient, while big businesses are more labor efficient. Shifting to land value tax gives a competitive advantage to neighborhood business districts over shopping malls, small merchants over chain stores, and full-time family farms over agribusiness. By keeping land prices low, it also helps new businesses, which must buy or rent land, compete with established businesses that own their land free and clear.

LVT keeps housing affordable

LVT has such a powerful dampening effect on idle land speculation that even the land portion of the real estate tax keeps housing affordable. Cities with the highest real estate taxes have the most affordable housing. Texas and California were the two fastest growing states in the second half of the 20th century. Texas, which relies heavily on property tax, having no personal income taxes, has four of the six most affordable cities in the nation. California, which dramatically curtailed its property taxes, has 23 of the 25 least affordable cities.

It is only logical that a tax on buildings would discourage construction and reduce the supply of buildings, increasing real estate prices and rents. However, LVT is such a potent disincentive to idle landholding that it has a much stronger opposite effect. We found a strong correlation between high real estate taxes and housing affordability.

LVT reduces foreclosure

Keeping house prices stable and affordable reduces foreclosures. Also, any real estate tax must be born by the bank or mortgage company that forecloses. This makes mortgagors more willing to negotiate in order to avoid taking possession of the tax obligations. Beyond that, tax impact studies in Pittsburgh, Clairton, Duquesne and McKeesport have shown that LVT saves mortgaged home owners even more than other home owners.

LVT costs renters nothing

Economists agree that LVT is not passed on to renters, because rents are determined by what the market will bear, not by landlords' costs. LVT benefits landlords by encouraging higher density and attracting more tenants, not by gouging existing tenants. Other taxes drive productive tenants away and depress rents by more than what the landlord would have paid under a land value tax. All taxes eventually come out of rent, and LVT is the only one that does not discourage economic growth.

LVT is naturally progressive

LVT is most burdensome to those who hold valuable urban land they are not using. Clearly, these owners have no cash-flow problems, or else they would sell their unused land to people who would develop it. It also shifts the tax burden from home owners to corporate-owned and absentee-owned property, although corporations and absentee owners who fully develop their properties still save. Because land value tax is not passed on to renters or consumers, and because it keeps housing prices low for home buyers, it is the most progressive of all taxes.

LVT helps keep government local

One of the excuses for centralizing government is that other taxes chase residents and businesses out of local taxing jurisdictions. Because land is the one thing that does not cross borders to escape taxation, it creates no rationale for shifting government to state and federal jurisdictions.

LVT reduces sprawl

The need for government services is naturally highest in urban areas, where land prices are also highest. Higher taxes in cities and inner suburbs drive development outward, and land speculation also causes development to leapfrog over better urban and suburban sites into rural areas.

Replacing taxes that drive people away with a tax that discourages land speculation draws development inward, reducing sprawl. Places that have adopted LVT enjoy not only more development, but more compact development.

LVT streamlines government

Encouraging growth reduces the rationale for economic development subsidies. Growth also creates jobs, reducing the costs of unemployment compensation and public welfare expenditures. Reducing sprawl reduces the need for transportation expenditures. Keeping housing affordable reduces the need for housing subsidies and public housing.

Every proposed public expenditure should increase land values by more than its cost. Governments that fund themselves from a land value tax tend to make more rational spending decisions.

LVT reflects taxpayer benefits

The value of land is the only value that is created by access to community-created and government-created advantages. Under a land value tax, every taxpayer pays in proportion to the benefits he receives, and does not pay on the fruits of his own labors.

LVT is the most endorsed tax

From the seventeenth century to this day, and from across the political spectrum, LVT has been endorsed by more outstanding icons of economics, philosophy and statesmanship than any other tax.

LVT has a rich and strong history.

LVT was a centerpiece of classical liberalism, the progressive movement and the early labor movement. It was embraced by many of America's founding fathers and written into the Articles of Confederation. The first two tax rebellions in the United States were led in opposition to taxes that shifted the tax burden off of early land monopolists.

LVT is fundamentally fair

Whether the criterion is ability to pay or reflection of benefits received, LVT is the most fundamentally fair broad-based tax available. The biggest obstacle to adopting LVT is that interest groups try to get benefits for themselves at the expense of others. Under LVT, everyone pays in proportion to the benefits they ultimately receive.

Privileged interests oppose LVT

The great difficulty in advancing LVT is that it shifts the tax burden onto those who not only have the most ability to pay, but have the most ability to influence political leadership and public opinion. Yet LVT has often been supported by wealthy people who put public interest ahead of their personal enrichment.

LVT is gaining momentum

The economic successes in cities that have adopted LVT, and the economic consequences of productivity taxation, have led more and more cities to embrace LVT in Pennsylvania, where it is already permitted, and has led other states to consider it as well. It also enjoys increased support in several other countries.
"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #9 on: Dec 08, 2013, 01:16:56 am »


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At the above link Wendy McElroy displays her mastery of the art of bashing straw men of one's own making and then pretending to have "refuted" the viewpoints in place of which one knowingly erected those straw men.

Excerpted from the comments section of that article is the following response by long-time geolibertarian activist, Dan Sullivan:


The Single Tax: A Refutation of Wendy McElroy's "Refutation"

by Dan Sullivan
June 21, 2012

The problem with the question and answer format is that it implies false “straw man” positions that are not actually Georgist positions at all, answering questions that are not Georgist questions, but questions that are wrongly assumed to be Georgist.

This probably stems from promising a refutation without having actually written one, and publishing a refutation without first privately running it past some actual Georgists to see if the refutation actually addresses the Georgist position or just addresses misconceptions about that position, and to see if it brings up anything new or unasnwerable, or just rehashes refutations that have themselves been refuted, over and over again.

There is also the problem of throwing a lot of arguments against the wall to see if any of them stick. I am inclined, therefore, to take each assertion, one at a time, in a separate thread.

False Georgist Question:

“How can someone justify claiming property by the ‘right of first occupation’ when everyone else has a similar claim to the same property?”

As I wrote in reply to the first half of this article, people at the extreme ends of the political spectrum tend to think in simplistic absolutist terms that prevent them from understanding people who set out to reconcile conflicting claims. To both Marxists and Miseans, something is either absolutely owned by the individual or absolutely owned by the collective, each denying any legitimacy in the other.

Wendy alludes to Locke’s idea of claiming a property by mixing one’s labor with it, not realizing that George repeatedly and enthusiastically endorsed Locke’s views on property, exactly and precisely as Locke wrote them.

Neolibertarians, on the other hand, jump at Locke’s endorsement of property through “mixing one’s labor” (a term Wendy used above), while pretending not to notice the qualifications Locke put on his endorsement. This is like being a Christian except for the parts about the poor being blessed and the rich man having to pass through the eye of a needle (which need not be so hard, because it actually means humbling himself). Just as the religious right contain many a la carte Christians, so does the neolibertarian right contain many a la carte Lockeans. Here is Locke’s essential statement, from Chapter 5, “On Property”:

Sec. 27: Though the earth, and all inferior creatures, be common to all men, yet every man has a property in his own person: this no body has any right to but himself. The labour of his body, and the work of his hands, we may say, are properly his. Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property. It being by him removed from the common state nature hath placed it in, it hath by this labour something annexed to it, that excludes the common right of other men: for this labour being the unquestionable property of the labourer, no man but he can have a right to what that is once joined to, AT LEAST WHERE THERE IS ENOUGH, AND AS GOOD, LEFT IN COMMON TO OTHERS [emphasis added].

This emphasized text is called “The Lockean Proviso,” and Locke makes reference to it no less than 15 times in 28 paragraphs. (It is actually one of two provisos, the other being that taking up land and wasting it makes one a “spoiler of the commons” and vitiates his claim. Some neolibertarians do recognize this lesser proviso, which got far less attention from Locke.)

Most neolibertarians who cite Locke are oblivious to his main proviso, and those who begrudgingly acknowledge it try to reduce it to a meaningless absurdity by saying there must only be enough left to others at the time of the claiming.

Well, of course there is enough left to others at that time, or else someone else would have already claimed it. If that is all that Locke had meant, then he was dwelling on a meaningless triviality. However, an honest reading of Locke shows that he meant that his proviso continues to apply long after the claim, and Locke gives an example that clarifies this.

Sec. 34. God gave the world to men in common; but since he gave it them for their benefit, and the greatest conveniencies of life they were capable to draw from it, it cannot be supposed he meant it should always remain common and uncultivated. He gave it to the use of the industrious and rational, (and labour was to be his title to it;) not to the fancy or covetousness of the quarrelsome and contentious. He that had as good left for his improvement, AS WAS ALREADY TAKEN UP, needed not complain, ought not to meddle with what was already improved by another’s labour: if he did, it is plain he desired the benefit of another’s pains, which he had no right to, and not the ground which God had given him in common with others to labour on, and whereof there was as good left, as that ALREADY possessed, and more than he knew what to do with, or his industry could reach to.

Here Locke clearly applies his proviso to land that has already been taken up, and says that the rival claimant should be denied because “there was [still] as good left, as that already possessed.”

In Sections 45-51, Locke acknowledges that this system (which was, in fact, the prevailing system under ancient Common Law) worked well enough until population growth made land scarce, and the use of money taught people that they could hold land in order that others would pay them to use that land, or would work on that land for the landholder’s benefit, which amounts to the same thing.

“[Prior to the use of money] what reason could any one have there to enlarge his possessions beyond the use of his family, and a plentiful supply to its consumption, either in what their own industry produced, or they could barter for like perishable, useful commodities, with others? Where there is not some thing, both lasting and scarce, and so valuable to be hoarded up, there men will not be apt to enlarge their possessions of land, were it never so rich, never so free for them to take:…”

That is, the homestead principle works fine prior to money, because nobody would rush to take up land in order charge others to work that land. However, with money, or what we would call a monetary economy, people will naturally take up more land and better land than they need, in order that someone else will pay them to let go of it. This is precisely where the Lockean Proviso becomes violated, and is also precisely where rent arises.

This is also where Locke precisely agrees with George, for it is at this point, says Locke,

“the several communities settled the bounds of their distinct territories, and by laws within themselves regulated the properties of the private men of their society, and so, by compact and agreement, settled the property which labour and industry began; and the leagues that have been made between several states and kingdoms, either expresly or tacitly disowning all claim and right to the land in the others possession, have, by common consent, given up their pretences to their natural common right, which originally they had to those countries, and so have, by positive agreement, settled a property amongst themselves, in distinct parts and parcels of the earth….”

Note that Locke endorses, neither of the tacit agreement nor the loss of a common right to land. He is just saying that people tacitly consented to whatever arrangements the state made, not that the consent was without duress. But rent arises at precisely the point where good land becomes scarce and money is in circulation, and arises all the same whether under an egalitarian system of governance or under a state.

That rent is also a precise economic measure of the difference between the desirability of the rentable land and the best land that can still be taken up for free. When the community, under whatever mechanism, collects that rent, the Lockean proviso is still in force. That is, the rentable land, after rent is paid to the community, has no greater market value than the best free land. The newcomer who has access to the free land has no valid claim on the occupied rentable land because, once the rent is deducted, the free land is as good.

This put’s George foresquare in alignment with Locke, for “mixing one’s labor” with land is essentially the same as improving the land, and George would exempt all improvements, all exchanges, and all non-harmful activity from any tax, restriction or prohibition.

Now, you might say that Locke did not actually endorse George’s single tax on land, and indeed he didn’t – in this particular treatise. However, Locke did write,

“It is in vain in a Country whose great Fund is Land, to hope to lay the publick charge of the Government on any thing else; there at last it will terminate. The Merchant (do what you can) will not bear it, the Labourer cannot, and therefore the Landholder must: And whether he were best do it, by laying it directly, where it will at last settle, or by letting it come to him by the sinking of his Rents, which when they are once fallen every one knows are not easily raised again, let him consider.”

The essential point is that George never denied a right of first occupancy. To the contrary, he explicitly endorsed it.

“Were there only one man on earth, he would have a right to the use of the whole earth or any part of the earth.

“When there is more than one man on earth, the right to the use of land that any one of them would have, were he alone, is not abrogated: it is only limited. The right of each to the use of land is still a direct, original right, which he holds of himself, and not by the gift or consent of the others; but it has become limited by the similar rights of the others, and is therefore an equal right. His right to use the earth still continues; but it has become, by reason of this limitation, not an absolute right to use any part of the earth, but (1) an absolute right to use any part of the earth as to which his use does not conflict with the equal rights of others (i.e., which no one else wants to use at the same time), and (2) a coequal right to the use of any part of the earth which he and others may want to use at the same time.

“It is, thus, only where two or more men want to use the same land at the same time that equal rights to the use of land come in conflict, and the adjustment of society becomes necessary.

“If we keep this idea of equal rights in mind — the idea, namely, that the rights are the first thing, and the equality merely their limitation — we shall have no difficulty.”

-- George, Henry, *A Perplexed Philosopher* [referring to Herbert Spencer] cited in “Common Rights vs. Collective Rights”

Locke also had two general provisos to people who undertook to discuss his book in an honest fashion, and I hope they will prevail here:

“If any one, concerned really for truth, undertake the confutation of my Hypothesis, I promise him either to recant my mistake, upon fair conviction; or to answer his difficulties. But he must remember two things.

“First, That cavilling here and there, at some expression, or little incident of my discourse, is not an answer to my book.

“Secondly, That I shall not take railing for arguments, nor think either of these worth my notice, though I shall always look on myself as bound to give satisfaction to any one, who shall appear to be conscientiously scrupulous in the point, and shall shew any just grounds for his scruples.”

Wendy’s Socialist Gambit:

Putting incorrect words in George’s mouth….

“As a matter of principle, you cannot claim a right to something you do not own – land – simply because you mix it with something you do own – your labor.”

As I already showed, George stated just the opposite, that you can indeed claim a right to something you do not own. You just cannot claim OWNERSHIP of something you do not own. This is hard for neolibertarians to grasp, because they are so absolutist about property that they have fallen into the trap of thinking that liberty flows from property, when in fact property flows from liberty.

For example, there are countless examples of saying a person must have liberty “because he owns himself.” No, he IS himself, and is not subject to ownership at all. His liberty and his rights derive from the fact of his existence, not from some self-ownership construct. Rather, any system of property must derive from liberty, limited only by the equal liberty of others.

In any case, George never said what Wendy claims he said, but now she uses an argument invented by socialists to muddy the waters:

“If this is true, then it proves more than I believe Georgists wish to accept. If I can make no rightful claim to the riches of nature with which I must mix my labor in order to produce bread, clothing, shelter, and the other necessities of life then I can never claim to ‘own’ the loaf I am baking, the dress on my back, the chair in which I sit, the roof over my head. I am in possession of these goods only because I deprived others of their equal claim to the raw materials consumed in their production.”

This is obviously false. Whether I rent space from a private landlord or from the government, what I produce is mine and mine alone. Does Wendy suppose that, because she made a cotton dress from material she acquired at Joanne Fabrics, that Joanne owns part of her dress? No, she paid for the material, and what she did with it is her own business.

Similarly, does she suppose that her dress and the Joanne Fabrics store are both partly the property of the cotton farmers from whose produce the dress was made? Or that all three are partly the property of the landlord on whose land the cotton farmers grew the cotton? No, I am confident that she does not believe any of that, because, when she is not in refutation mode, common sense surely prevails. Yet, mysteriously, if the cotton farmer owed rent to the community, and not to some private landlord, then somehow the cotton farmer, Joanne Fabrics, and her hand made dress are all property of that community. She does not really believe that, but she thinks that, but she says her misinterpretation of George “proves” it to be true, and she quotes Auberon Herbert basing the same argument on the same fundamental misconception.

However, the government has no greater moral right to the fruits of a person’s labor, provided he pays his rent, than the right of a private landlord to the fruits of a tenant’s labor, provided that the tenant pays his rent.

It is true that socialists tried to claim that everything is state property because everything is made from land, but this is just the flip side of misconstruing the labor-mixing argument. George and Georgists vehemently opposed socialism, and rebuked this nonsense, saying that labor owns all it produces:

“Our friend on the other [socialist] side says that the coercion is the monopoly of machinery, the monopoly of capital. Monopoly of what? Monopoly of capital? Well, let us stop a moment and see what is meant by capital. Is a factory capital? I suppose it is, with all its equipment of buildings and machinery. Is the ground on which it stands capital? If it is, then you are speaking of two entirely different things under the same name, and may be charging to capitalism evils that result from landlordism. Now, capital – machinery and all such things – is produced by labor itself, by laborers. How does it get away from them? It is not a question of the history of the past; It is a question of the present hour, because all the capital that exists today would last but a little while if labor ceased utilizing and maintaining it. Labor is producing it all the time. How does it slip away? It is not enough to say that it slips away because somebody has got it monopolized. You have to go deeper and inquire what are the conditions under which it is produced.

“We know that labor produces all that is produced. We also know that labor cannot create it. Then how can it produce it? Only by getting access to the natural source from which it must come. You have got to go to the land.”

-- Louis F. Post, Single Taxers Debate Socialists, 1903

So, yes, Wendy, those who produce anything should own it, and that is the Georgist position (and the reason George would abolish all taxes on productivity). Yet we see that those who have monopolized land (and those who have used banking privilege to monopolize money) collect rents (and debt interest) that do not rightly belong to them. In this way, they monopolize labor. Socialists would take the fruits of the laborer, and neolibertarians would allow landlords to take the fruits of the laborer. It’s just two roads to the same serfdom.

(My parenthetical comments about banking are just an acknowledgement that there is more than one fundamental injustice.)

The inseparability gambit:

“In Free Life (1898) Auberon Herbert commented on the adverse impact of such a tax. ‘The community is entitled to all values arising from land…that are not due to labor. But…it would surpass the skill of men to disentangle these intermixed values. It could only be done by guess work of a very coarse kind. If the principle were just in itself, it would still be used as a mask for taking from others….All taking of so-called unearned increment would be a farce—and a very mean farce.’”

This is simply not true. Assessing is a refined science, and easily can reach such a quality that disparities between the assessed value an the subsequent selling price can be traced to errors or lopsided pressures on the two parties. For example, it is well known that estates tend to liquidate properties for about 30% less their market value, and that out-of-town buyers tend to pay between 10-15% above market value. Yet good assessors predict future sales with a median variation of less than 10%. Were assessing is bad, it can be traced to political pressures and corrupting influences from large landlords – the same people who insist that taxes must not fall on real estate.

Moreover, the standard assessment practice is to assess land and buildings separately, even when they are only taxed in the aggregate. This is because the only way to get “comparables” in a complex community is to use matrix equations that separate variables. Unless one building is misplaced, meaning located where there is an inadequate market for such a building, the building values should be similar for similar buildings in different neighborhoods. By the same token, adjacent land values should be nearly equal regardless of the structures on them.

There are complications that need explaining to novices, but they pose no great problems to assessors. Market value is rather easily deduced, not arbitrarily imposed, in any community that has a genuine commitment to taxing real estate. There are also multiple appeals processes and other protections for the landholders.

Again, any arbitrary quality comes from the land monopolists themselves. The price of liberty is eternal vigilance, and the price of absolute property in land is eternal cynicism, followed by a landlord class and a tenant class.

A “Key Question” that misses the whole point:

“Herbert then asks a key question – do Georgists advocate making good the losses that occur as well as profiting from the gains? ‘A site falls in value owing to the movement of population—will the believers in unearned increment compensate the owner?’”

After a few paragraphs, I will show why the question is based on a misunderstanding of what Georgists actually propose, because, the landholder does not suffer when land values drop in a Georgist system. He only suffers from such a fate in a non-Georgist system.

But first I want to note the circular reasoning that occurs when apologists for unlimited property in land refer to the landholder as the “owner,” as Auberon Herbert does here. Isn’t the very question whether the landholder is a rightful owner, or just a claimant with rights that are limited by the rights of others?

Marx defined Capital as a device that exploits labor. So, of course, any argument that Capital does not exploit labor is incomprehensible to a dogmatic Marxist. By the same token, if we define the land holder as the owner, then any argument that he must pay rent on “his OWN land” becomes incomprehensible to a dogmatic defender of landlordism.

This kind of circular reasoning abounds whenever an institution is presumed to be just. Anyone who questions that institution is violating the sacred rights of property. In replies to the first half of this presentation, I noted several comparisons between land monopoly and slavery by famous abolitionists, libertarians and others. This same circular reasoning was also used to defend slavery. The defense was satirized by a little-known Georgist named Mark Twain, in Huckleberry Finn:

“Jim talked out loud all the time while I was talking to myself. He was saying how the first thing he would do when he got to a free State he would go to saving up money and never spend a single cent, and when he got enough he would buy his wife, which was owned on a farm close to where Miss Watson lived; and then they would both work to buy the two children, and if their master wouldn’t sell them, they’d get an Ab’litionist to go and steal them.

“It most froze me to hear such talk. He wouldn’t ever dared to talk such talk in his life before. Just see what a difference it made in him the minute he judged he was about free. It was according to the old saying, ‘Give a nigger an inch and he’ll take an ell.’ Thinks I, this is what comes of my not thinking. Here was this nigger, which I had as good as helped to run away, coming right out flat-footed and saying he would steal his children — children that belonged to a man I didn’t even know; a man that hadn’t ever done me no harm.

“I was sorry to hear Jim say that, it was such a lowering of him. My conscience got to stirring me up hotter than ever, until at last I says to it, ‘Let up on me — it ain’t too late yet — I’ll paddle ashore at the first light and tell.’”

When people asked Mark Twain what Huckleberry Finn was about, he said, “superstition.” Circular reasoning is just superstition pretending to be logical.


Now, as to compensating the land “owner” if land values fall:

As soon as you start taxing land, the speculative values pretty much disappear, and after that, there is a lot less of a loss to compensate. Don’t take my word for it, though. Look at California, the state that gets the smallest percentage of its tax burden from real estate of any state in the nation, thanks to Prop 13. They had the most unaffordable housing of any state at the peak of the bubble in 2005, and they have had the most foreclosures of any state since that time, and the greatest drop in real estate values.

All across the nation, within population categories, the higher the property tax the greater the affordability (and the fewer the foreclosures):

So, if taxes had been falling heavily on land, the landholder would not have had to pay as much to acquire land in the first place, and has less land value to lose. If the full rental value were being assessed and collected, then landholders would have been acquiring land (and the tax obligation) for free, paying only for the value of the previous landholder’s improvements. There is nothing to compensate. Also, where the land value falls, so falls the assessment on which his taxes are based. So, yes, he is automatically compensated if his land value falls. If Auberon Herbert thought otherwise, it is because he did not understand the proposal.

The World Government Gambit:

“But the point remains that natural resources belong equally to everyone.”

Yes, we actually do believe that.

“Again, I doubt that Georgists wish to follow this argument to its logically conclusion because it would necessitate impartially dividing the benefits of all land among all human beings.”

No it would not, for several reasons but let us continue with what Wendy imagines to be the “logical” application of our perspective.

“If one area of the world was gifted with rich soil and abundant water, then it would owe a debt to areas of barren sand and drought. Any line drawn to include some people in the rich area’s advantages while excluding others would violate the Georgists’ own principle that the earth equally belongs to all. Thus, a single tax that benefits a small portion of the global community reveals itself as being inherently and manifestly ‘unfair’. And, yet, a globally ‘fair’ distribution of value would be nigh well impossible to achieve; it cannot even be envisioned without a sprawling global authority that collects data, assesses and taxes far beyond what libertarian-style Georgists would tolerate. Like absurdity, the impossibility of implementing a principle should make you reconsider it.”

First of all, one does not pay rent for using land, but for excluding others from using land. If rent is shared within a community, and there are no barriers preventing outsiders from migrating into that community, then the obligation is satisfied. As a matter of fact, the only barriers to migration into a particular US community are zoning laws, which most Georgists (and all geolibertarians) oppose.

As for international sharing, we would similarly owe nothing to residents of other countries if we allowed those residents to freely migrate to the United States, for we would not be excluding them.

At a deeper, metaphysical level, justice is a congruent relationship between individuals, whether organized into associations, municipalites, states, countries or planets. To say that we cannot be just with each other until the whole world is just with each other is like saying to my family that I should not have to stop beating my wife until all husbands have to stop beating their wives.

Even if global sharing of land and resources were an ultimate goal, it would be unreachable until we had a mechanism of global government that was something other than a federation of tyrannies. But does this mean that the cities of Aliquippa, Altoona, and Clairton PA, which all tax land and have little or no tax on buildings, have to stop being more internally just than other cities?

To the contrary, local reform is the only reform that is consistent with the decentralist principles of Jefferson and Paine (who both advocated taxing land to prevent monopoly, quite apart from its ability to raise revenue).

Stepping away from land and using the slavery example again, the question of what is just is quite separate from some notion that one community, state or country must impose its sense of justice on another. William Lloyd Garrison, the most famous abolitionist in American History, not only opposed talk of a Civil War, but led the draft resistance. Was slavery wrong? Absolutely. Did Garrison suppose that he had a right to forcibly impose his opposition to slavery on the people of the South? Absolutely not.

“Just in proportion as this spirit [of war fever in the North] prevails, I feel that our moral power is departing and will depart. I say this not so much as an Abolitionist as a man. I believe in the spirit of peace, and in sole and absolute reliance on truth and the application of it to the hearts and consciences of the people. I do not believe that the weapons of liberty ever have been, or ever can be, the weapons of despotism. I know that those of despotism are the sword, the revolver, the cannon, the bomb shell; and, therefore, the weapons to which tyrants cling, and upon which they depend, are not the weapons for me, as a friend of liberty. I will not trust the war spirit anywhere in the universe of God, because the experience of six thousand years proves it not to be at all reliable in such a struggle as ours….

“I pray you, abolitionists, still to adhere to that truth. Do not get impatient; do not become exasperated; do not attempt any new political organization; do not make yourselves familiar with the idea that blood must flow. Perhaps blood will flow – God knows, I do not; but it shall not flow through any counsel of mine. Much as I detest the oppression exercised by the Southern slaveholder, he is a man sacred, before me. He is a man, not to be harmed by my hand nor with my consent. He is a man, who is grievously and wickedly trampling upon the rights of his fellow-man; but all I have to do with him, is to rebuke his sin, to call him to repentance, to leave him without excuse for his tyranny."

-- Liberator 1858, cited in “Liberty and the Great Libertarians”

The key point that Wendy misses is that the argument for rent sharing not only requires no global government, but requires no government at all. Wendy is confounding the moral question of what is right with the political question of how (or even whether) such rightness is to be enforced.

Let us suppose an anarchist society where people are governed only by manners, a sense of mutual respect, and a desire to be respected by others. If, by pure reason, these anarchists agree that those who occupy the most desirable land, have a moral obligation to compensate those who are relegated to the most undesirable land. We will even suppose that, through voluntary subscription, they hire an expert to determine what that compensation should be.

Now, to be consistent with anarchist principles, let us further suppose that someone refuses to pay what the members of the anarchist community believe he should pay. There is no state eviction, no “land-assessing, tax-collecting authority [cemented] into the very concept of property.” There is just a shared belief that this person is behaving badly and is unworthy of the respect and esteem that other members freely accord one another.

If the community is truly functioning on these principles, I would expect this person to either make his case to them that he should not have to pay this assessment for whatever reason he has, to go ahead and pay the assessment, or to take some other action to put himself back in the good graces of his peers.

But suppose he does none of these things, and operates in contempt for the mores of the community. Being an anarchist community, it enforces no sanctions against him. But, neither does it enforce sanctions against others who might refuse to deal with him, might trespass on “his” land, or might even set about to take that land. Again, people might informally rebuke those who set about this person, just as others might rebuke the person himself.

The point is that even anarchist communities are not without laws and customs, but are merely without an enforcement hierarchy. People who hold more and better land either have a *moral* obligation to the community and/or the dispossessed members of that community, or they do not. How and whether that obligation is enforced is a separate question from what that obligation is.

The Majority Rule diverson:

Wendy quotes a ranting passage of rhetorical questions by Auberon Herbert, beginning with “Who decides…?

As an ad hominem criticism of Henry George, it has some merit, because George had what seems to be an unwarranted faith in the ability of the people to rise above various political influences and exercise what he considered to be good judgment.

Yet, in addressing the actual proposal, the question of “who decides” is something of a tangent. Whatever the proposal, someone decides, whether or not that someone *ought* to be deciding. John Locke and Adam Smith wrote within a monarchy, and so they made the case that it was in the interests of the landed aristocracy to pay taxes on land. (And, of course, Marx railed against him for doing so.) George, regardless of his unwarranted faith in electoral democracy, had no choice but to appeal to the voters. The golf metaphor for this is “playing the ball where it lies,” and making an economic or moral argument to those in power is not an endorsement of those in power, whether they be kings or the masses.

I happen to share a sense of hopelessness about majority rule, especially when the electorate is too large in number to deliberate with one another, and so are subjected to bombardments of propaganda and the finesse of political machinations. Often the elected candidate was not put in office by a majority at all, but by a majority sub-faction of a majority faction of a majority party, who had only risen enough to be considered through finessing majorities of majorities of majorities at lower offices. It is not the people who are stupid, but the process that is stupid.

Personally, my ideal process is to submit questions to a jury of randomly selected citizens or residents, to give them complete freedom to consider the question and to accept documents and interview experts as they see fit. But, if I must submit to elected officials, or to opinion makers, etc., then I will try to reason with them as I try to reason with anyone. That would certainly be more productive than trying to reason with powerless anarchists, except that I believe in the underlying principles of genuine anarchism, and have a special affinity for the most reasonable, most non-violent, and most non-blustery anarchists. My own sense of justice is enriched by them.

Still, when nasty old elected officials are about to make a decision about taxation, I am not too holy to attempt to reason with them. If we do not make an attempt to show them what we think is the right thing, where do we get moral standing to condemn them for doing the wrong thing?

In Conclusion, the most fundamental error of all:

Wendy’s concluding thought is as follows:

“Claiming a person owns his labor but not the material upon which it is expended is tantamount to denying the person’s ownership of his labor. Or, at the very least, to deny him the benefit of labor. With the exception of purely intellectual endeavor, work is always expended on something; a good is produced out of material that reduces to a natural resource. To say a worker owns the hands that fashion a wooden chair but he does not own the chair because he has no exclusive claim to that natural resource is to make a mockery or a semantic game of anyone ‘owning their labor’. Where is the advantage to owning your labor when you cannot control what it produces in order to feed yourself?”

Wow! Wendy nailed it! She could not have said it any better (or any differently) if she had copied George’s own writings word for word. Indeed, “To each the fruits of his labor” is almost a Georgist anthem. It’s the whole point of the single tax on land values.

For one example among many, Here is what George wrote in *Social Problems*, Chapter 10, “The Rights of Man.”

“Let us consider the matter. The equal, natural and unalienable right to life, liberty and the pursuit of happiness, does it not involve the right of each to the free use of his powers in making a living for himself and his family, limited only by the equal right of all others? Does it not require that each shall be free to make, to save and to enjoy what wealth he may, without interference with the equal rights of others; that no one shall be compelled to give forced labor to another, or to yield up his earnings to another; that no one shall be permitted to extort from another labor or earnings? All this goes without the saying. Any recognition of the equal right to life and liberty which would deny the right to property – the right of a man to his labor and to the full fruits of his labor – would be mockery.

“But that is just what we do. Our so-called recognition of the equal and natural rights of man is to large classes of our people nothing but a mockery, and as social pressure increases, is becoming a more bitter mockery to larger classes, because our institutions fail to secure the rights of men to their labor and the fruits of their labor.”

But, amazingly, Wendy writes, “Georgism is not merely a Single Tax but an assault upon the concept of ownership itself.”

Her is the Doublethink that makes such a conclusion possible. She rightly says that a person who does not own the material on which he expends his labor does not own his labor. Yet she says nothing about the fact that, where land is treated as absolute property, the overwhelming majority of laborers do not own the materials on which they labor, nor the facilities in which they labor. She fails to see that her own words are an indictment against unlimited property in land, which inevitably leads to a situation where those who labor pay tribute to those who do own the materials without which they cannot labor.

She supposes that a community that collects the rent and disperses it on a per capita basis is robbing the laborer, but that the landlord who collects the same rent and pockets it is not robbing the laborer. Even if we tie ownership to the homesteading principle, and even if we somehow determine that those who are relegated to poor land can take land back that other people have stopped using, we are left with the fact that two equally talented, equally energetic merchants can have very different returns, or “fruits of their labor”if one happens to hold a prime location while the other is relegated to a marginal location.

But as soon as we concede that a person may continue to acquire more land, so long as he (or his employees) put that land to use, we see that he may collect rent through the differential between what his workers produce and what they are paid. Either that, or we prohibit employers from holding land worked by employees, making such ventures as steel mills impossible without resorting to syndicalism or other artificial socialistic constructs.

As Albert Jay Nock, founding editor of The Freeman and author of Our Enemy, The State, noted,

“The only reformer abroad in the world in my time who interested me in the least was Henry George, because his project did not contemplate prescription, but, on the contrary, would reduce it to almost zero. He was the only one of the lot who believed in freedom, or (as far as I could see) had any approximation to an intelligent idea of what freedom is, and of the economic prerequisites to attaining it…. One is immensely tickled to see how things are coming out nowadays with reference to his doctrine, for George was in fact the best friend the capitalist ever had. He built up the most complete and most impregnable defense of the rights of capital that was ever constructed, and if the capitalists of his day had had sense enough to dig in behind it, their successors would not now be squirming under the merciless exactions which collectivism is laying on them, and which George would have no scruples whatever about describing as sheer highwaymanry.”

-- “Free Speech and Plain Language,” February 1935, p. 159

Nock is not only a giant among libertarians; he is a giant who had read Henry George’s works voraciously and even wrote a biographical essay (a full book, really) about him. I find myself wondering which of George’s books Wendy had read before writing this refuation.

"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #10 on: Dec 08, 2013, 01:17:43 am »


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A geo-libertarian review of Zeitgeist: Moving Forward


by Dan Sullivan,

(Reprinted with permission. Originally published 07 February 2012 at LVT. You can find him at Saving Communities)

                       Green Supercomputer | Argonne National Lab

Two hours and 41 minutes, and it’s just half-truths from beginning to end.

It’s easy to buy into the idea of rich people being obsessed with wealth and acquisition if you don’t actually know any rich people. This is the starting premise of their half-truths.

Then they get into a long digression about genetics vs. environment, partly to set up an “ain’t it awful” mentality, and partly to lull half the audience and to drive the thinking half away. I noticed some very unscientific statements, so I suspect these are not neurobiologists at all, but people picked because they contribute to the point they are eventually going to make.

They completely misinterpret Locke, and then substantially misinterpret Adam Smith. From this they launch into a confused (essentially Marxist) interpretation of money that jumps from point to point as if they were connecting dots, but they overlook the obvious questions of where money came from in the first place.

They make a huge deal about GDP being a poor indicator of well-being, as if everyone in economics didn’t already know that, and [then] they treat *all* increases in GDP as detrimental.

There’s more “ain’t it awful” moaning, in terms of the environment, but no cause and effect. They call our economy an “anti-economy,” but they ignore privilege and complain about competition. They condemn “cost efficiency” without having a clue as to what might distort cost efficiency. Will they suggest taxing the creation of social costs and untaxing labor? I suspect not, since they would not need such a long time to set up such a straightforward idea.

They make a naked assumption about “planned obsolescence,” and “cyclical consumption,” again without a clue as to what causes these. But ain’t it awful? The strategy of dwelling on how awful something is will induce people to buy into a proposal no matter how illogical it is.

Over an hour into the movie and they haven’t suggested a single solution, yet, since they’ve already smeared Locke and Smith, you can bet that their solutions will involve a lot of command and control, and the elimination of private property.

They complain about advertising, just as Marxists did a century ago, and, then as now, without a clue as to why this happens. Then they launch a gratuitous attack on several right-wing economists, including [drum roll] John Maynard Keynes! Is this some other John Maynard Keynes than the one all the right-wingers themselves attack?

They trash money demand, but they have no idea why there is a disconnect between money demand and need. Rather than to get to the bottom of that, they seem to be just into trashing monetary demand generally.

Oh, wait! They are talking about the debt money! Will they propose the direct issue of currency and the elimination of the fractional reserve! That would be so cool, because then very little else (other than land tax) would be necessary.

Nope, now they are on to something else – how evil it is to *trade* debt. They just glossed over the obvious solution that if there were no artificial debt, there would be no trade in artificial debt. Never mind that… more robots!

So let’s get this straight, rich people are acquisitive robots, consumers are robots, and investment traders are robots. So clearly we need more robots!

Oh, now we are off to public health, having talked about banking and a bunch of other things without actually proposing anything. Now we are talking about “inequality.” Will they go to the root, or are they just going to say, “ain’t poverty awful?”

It’s the “Monetary-Market System!” But what does that mean?

Project Earth! Now maybe they are going to talk about a solution! Only 60% into the movie!

“Science has no ego. It holds onto nothing and accepts everything.” (Really? Where did we get these egoless scientists?) But, I smell a solution coming!

“We” locate, identify and track all the resources in the world. “We” identify how fast trees grow, etc., and “track” the inventory of the world’s resources. “A global resource management system.” The ultimate in central planning. “There is simply no alternative.” This is the old left vs. right lie that either “we” must control everything or “they” must control everything, and “they” will screw it up. (That second part is true, no matter whether “they” are the plutocratic monopolists of the right or the bureaucratic monopolists of the left.)

Now they are going to govern how computers are designed. A central computer will tell us “the absolute best method for sustainable production.” They never heard of GIGO, I suppose.

The supercomputer will tell us to reduce the travel of goods as much as possible. Couldn’t a tax on fuels accomplish the same things without centralized coercion? It’s as if we couldn’t have an egalitarian, resource-efficient world without a supercomputer.

I’m sorry; I mean a “demand distribution tracking system” to prevent overages and shortages. But the true progressives knew that there was no such thing as excess production as a long-term phenomenon.

No ownership. “Strategic access” will replace it. “Centralized and regional access centers” will work like libraries. Then they show speedboats and water skiers. So, we will take speedboats out whenever we want and then return them. If only speedboats needed no more care and maintenance than books need.

Global abundance results. No explanation of *how* it results.

“The free enterprise system was great 35 years ago,” they say. No mention of what changed. They throw in some more nonsense about how objective scientists are. (We’re talking about economic science here.) This is exactly what Marx said in 1850. Free enterprise had its place, and we are grateful for the innovations, but now that we have the steam engine, what more is there to invent?

Now they are designing cities as a circle. No credit for Ebeneezer Howard, who designed exactly the same things in 1919. Never mind that Howard’s circles had lots of problems, and never mind that most of the world is not nice and flat. Most of all, never mind that the worst development patterns came on the heels of zoning laws.

Now we have a visage of total mechanization, as if that is somehow an improvement over craftsmanship. Never mind that mechanization consumes far more resources than craftsmanship – not only in the running of robots, but in the building of them. Robots can make robots that make robots that make chairs, consuming fuels and non-renewable resources at every step, or a craftsman can make chairs with hand tools. I guess once they put all the inputs into their supercomputer, they will see that. Or, perhaps not. Both monopoly capitalism and socialism are based on the myth of corporate efficiency, a myth that these people have swallowed.

They will have no money at all! Or so we are told. Centralized planning will tell me whether I would rather eat at a restaurant or go to a movie. I can have unlimited amounts of both! A computer will cook for me (exactly the way I like it), and make my life wonderful in every way. Obesity anyone?

Their example of “sustainable” automation shows a factory stamping out big plastic containers. If someone could make clues out of plastic, maybe they could buy one.

Next they trash incentives, as if the problem were that people were naturally rewarded for their efforts. Money is only a reward for “competitive mundane actions” that their supercomputer would replace. Yet I have done many jobs that, while not in the league of Thomas Edison, were quite creatively pursued, and I did them because they earned money.

The Wright brothers never showed a monetary incentive? They ran a bicycle shop for profit, and their interest in flight grew out of their professional and *profitable* business, making (and motorizing) profit.

Having not solved so many other problems, they are now not solving crime. What can’t they do?

They show really obnoxious Archie Bunker types calling these ideas Marxism, but it is more exactly and precisely Marxist than anything I have ever seen, outside of the tracts that had Marxism right on the header. They make the point that Marx hadn’t contemplated the reality of limited resources, but this is a trivial detail. The solution of abolishing profit, abolishing monetary choices, and ultimately abolishing labor, is right out of Marx. So far, I haven’t seen a word in their proposal that doesn’t fit into the phrase, “We must control the means of production.”

They condemn printing money with no collateral, which is exactly the right thing to do. Ain’t it awful, we’re running out of oil! Well, we are running out, and it is awful, but they are clueless about what to do about it – other than that they must control everything. Wouldn’t a stiff oil extraction royalty and a cut in income taxes let me make my own choices as to how I would use less oil?

There is no profit in resource efficiency. Well, why not? No clue. It’s just too awful to consider any approach less than complete centralized planning and the end of profit itself. So terribly awful.

As we drift into the last 15 minutes of the film, the “explosions of awfulness” increase in rapidity like the grand finale of a fireworks display. It’s an all-out “us vs. them” revolt of the masses. Then, magically, everyone has a love-fest and the rich withdraw all their money and throw it away in contempt.

Flash to the vision of utopia, orgasm and close. Their final lines are “This is our world. The revolution is now.” Yet they seem to have no clue what “This is our world” really means, and certainly no clue that we could each enjoy the world without some dictatorship of the super-computer telling us what our allotment is.
"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #11 on: Dec 08, 2013, 01:19:23 am »


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Taxes, from Best to Worst

Good Taxes

These taxes have generally beneficial effects on the economy, beyond funding government itself. That is, failure to collect these taxes creates problems. In a sense, they are payments for privileges, and not genuinely taxes at all. They are also the only taxes that can be based entirely on public information or collected in exchange for access to public amenities.

Land Value Tax

Land value tax reconciles free-market principles with the concept of the earth as a commons. It is the most progressive tax, because it is the only tax that is not passed on to users. It prevents the monopolization of land, stabilizes real estate prices, promotes economic vitality and efficient land use, and has been recognized for millenia as the most ethical tax. It is easily assessed and based entirely on public information. It also correlates better with benefits received than any other broad-based tax. All government expenditures that are not complete wastes of money increase or maintain land values.

Resource Extraction Royalties

Royalties take for the public a value that is otherwise a windfall for the owner of the mineral rights. Beyond a certain point, they slow the extraction of non-renewable resources and have a preservation effect. They inhibit economic vitality in the short run less than income taxes, and far less than sales taxes and payroll taxes. In the long run, preserving resources benefits economic vitality.

Pollution Charges

Those who pollute are, in effect, using public air and water as storage for their toxins. In doing so, they reduce the enjoyment of the air and water for everyone else. They should pay to do so, for the same reasons that people should pay for the land they hold for themselves.

Monopoly License Fees

In many cases, licensed monopolies are unnecessary, and the license restrictions should be abolished. Where licensed monopolies are necessary, the value of the monopoly premium should be collected by the public, not by the monopolist.

Congestion Charges

Congestion charges are the best way to prevent overuse of public amenities. They differ from user fees in that they are adjusted to prevent overuse, not to pay for the amenities themselves.

Bad but Tolerable Taxes

These taxes have good and bad elements, but should be resorted to only when the above options are not available.

Real Property Taxes

The property tax is really two taxes. The portion that falls on improvements is destructive, but the portion that falls on land value is so vitally important that, where a land tax option is not available, it is the best general-revenue tax. It is far more progressive than people realize, because it falls substantially on corporate-owned and absentee-owned property. It is not passed on to tenants, because it is more burdensome to landlords without tenants than to those with tenants. It is the best of the bad taxes.

General Wealth Taxes

Wealth taxes go beyond property taxes to fall on additional forms of wealth and on instruments that claim wealth. They are more progressive than income taxes, but less progressive and more economically destructive than the taxes listed above.

Inheritance or Estate Taxes

Estate taxes are general wealth taxes levied at the time of transfer from the (usually deceased) owner to beneficiaries. While they have the same general effects as wealth taxes, they also have an unnecessarily disruptive effect of a high rate levied at a single point, as opposed to a lower rate levied annually.


Inflation is a transfer payment from the holders of money and financial obligations to the indebted. If all debts were legitimate, inflation would rank much further down the list. If there were a way to separate legitimate debt from the results of banking privilege, it would rank much higher.

User Fees

The difference between user fees and congetion charges are that user fees attempt to defray some or all of the use.

Income Taxes

Income taxes generally are less progressive and more economically destructive than wealth taxes. All are bad, but some are tolerable.

Capital Gains Taxes

Capital gains tax rates should be at least as high as taxes on ordinary income. Genuine capital doesn't gain; what gains is the capitalized value of privilege. Low rates on capital gains do not promote genuine investment in productivity the way accelerated depreciation of genuine capital does.

Corporate Income Taxes

Income taxes generally are less progressive and more economically destructive than wealth taxes. They tax the right people the wrong way, and end up falling on poorer people indirectly. However, corporate privilege is very real, and there is no injustice in making the recipients of privilege pay for the privilege. Those who complain of "double taxation" should note that it is not strictly necessary for a business to incorporate. Clearly, the advantages of incorporation outweigh the costs of corporate income taxes, or else people would simply form unincorporated partnerships.

Graduated Income Taxes

A sharply graduated income tax falls on the right people the wrong way. That is, it falls on people who should be paying the good taxes above, but give them perverse incentives that tend to slow the economy, lower wages, and drive up rents and other prices. They reduce the funds with which rich people can monopolize land and bid up other privileges, but they also give rich people an incentive to apply what funds they have to assets that produce no income, and consequently create no wealth and provide no jobs.

Intolerably Bad Taxes

These taxes are so regressive and destructive that every effort should be made to eliminate them.

Flat Income Taxes

Flat income taxes fall just as hard on dollars needed to pay for food, clothing and shelter as on dollars used to bid up the value of privileges.

Sales, VAT and Gross Revenue Taxes

These taxes fall mostly on middle-income and low-inome people, who spend their entire paychecks, while more affluent people have the option of investing their income, sales-tax free. Exempting food and clothing makes these taxes less regressive at the very bottom, but such exemptions only single out middle-income people more. They are still regressive when middle income people are compared with affluent people.  Sales taxes also destroy commerce, and they give established businesses an artificial competitive advantage over start-ups.

"Sin" Taxes

Taxes on tobacco, alchohol, gambling, etc., mostly fall on people who are sinning against themselves, while the "good" taxes tend to fall on those sinning against society. While one could justify a tax on tobacco to fund lung cancer treatment or lung cancer research, using such taxes for general revenue is just taking advantage of the unfortunate. It is not even clear that these taxes discourage self-destructive behavior.

Tariffs and Excise Taxes

These taxes tend to benefit favored interest groups rather than benefit the public interest. A $1,000 tax on a foreign car allows the maker of an American car to charge $1,000 more. The better way to protect American jobs is to replace income taxes (particularly on workers) with the good taxes listed at the top of this page.

Earned Income and Payroll Taxes

These are the worst possible income taxes, collecting nothing from the return to privilege and everything from hard earned labor. They are usually levied at the state and local level because it is more difficult for ordinary workers to move to avoid taxes.

Deed Transfer Taxes

There is a mistaken belief that deed transfer taxes inhibit land speculation. However, the most destructive element of land speculation is in holding land out of use. Deed transfer taxes fall on those who let go of land so it can be used. Especially where there are adequate land value or real property taxes, deed transfer taxes slow the transfer of land from non-users to users.

Per Capita Taxes

The idea that each person (or each working person) should pay a fixed amount of taxes without regard to wealth or income is obscene.
"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #12 on: Dec 08, 2013, 01:26:55 am »


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Forget 9-9-9. Here’s a Simple Plan: 1

by Jill Lepore
New York Times
October 15, 2011

Jill Lepore is a professor of history at Harvard and the author of “The Whites of Their Eyes: The Tea Party’s Revolution and the Battle over American History.”
Cambridge, Mass.

IN the Republican debate on Tuesday, the restaurant industry executive Herman Cain, deftly countering a quip, said his “9, 9, 9” economic plan, which calls for a 9 percent corporate tax, a 9 percent income tax and a 9 percent national sales tax, “didn’t come off a pizza box.” Asked where it did come from, he said “the American people,” but added that he also has a team of economic advisers.

“One of my experts that helped me to develop this is a gentleman by the name of Rich Lowrie out of Cleveland, Ohio,” Mr. Cain said. “He is an economist.” Mr. Lowrie, a licensed stockbroker, is a wealth management consultant for Wells Fargo.

Lately, Mr. Cain has risen in the polls, buoyed by Tea Party populism, which is curious because when the word “populism” was coined, in 1890, it meant opposition to a monopoly on wealth held by businessmen and bankers.

Henry George, the most popular American economic thinker of the 19th century, was a populist before populism had a name. His economic plan was known as the Single Tax. His plan wasn’t 9-9-9; it was just: 1.

George was born in Philadelphia in 1839. He left school at 14 to sail to India and Australia on board a ship called the Hindoo. At the time, a lot of people were writing about India as a place of jewels and romance; George was struck by its poverty.

Returning to Philadelphia, he became a printer’s apprentice. He went to New York where he saw, for the first time, “the shocking contrast between monstrous wealth and debasing want.” In 1858, he joined the crew of a ship sailing around the Cape Horn because it was the only way he could afford to get to California. In San Francisco, he edited a newspaper; it soon failed. He spent most of his life editing newspapers, and, as with every other industry in the 19th century, many of them failed. In 1865, George was reduced to begging in the streets.

The 19th century was the Age of Progress: the steam engine, the power loom, the railroad. (Awestruck wonder at progress animated that era the way the obsession with innovation animates American politics today.) George believed that the other side of progress was poverty. The railroad crossed the continent in 1869. From the West, George wrote an essay called “What the Railroad Will Bring Us.” His answer: the rich will get richer and the poor will get poorer. In a Fourth of July oration in 1877, George declared, “no nation can be freer than its most oppressed, richer than its poorest, wiser than its most ignorant.”

In 1879, George finished a draft of his most important book. “Discovery upon discovery, and invention after invention, have neither lessened the toil of those who most need respite, nor brought plenty to the poor,” George wrote. He thought the solution was to abolish all taxes on labor and instead impose a single tax, on land. He sent the manuscript to New York. When no one would publish it, he set the type himself and begged publishers simply to ink his plates. The book, “Progress and Poverty,” sold three million copies.

George was neither a socialist nor a communist; he influenced Tolstoy but he disagreed with Marx. He saw himself as defending “the Republicanism of Jefferson and the Democracy of Jackson.” He had a bit of Melville in him (the sailor) and some of Thoreau (“We do not ride on the railroad,” Thoreau wrote from Walden. “It rides upon us.”) But, really, he was a Tocquevillian. Tocqueville believed that democracy in America was made possible by economic equality: people with equal estates will eventually fight for, and win, equal political rights. George agreed. But he thought that speculative, industrial capitalism was destroying democracy by making economic equality impossible. A land tax would solve all.

In 1886, George decided to run for mayor of New York. Democrats urged him not to, telling him he had no chance and would only raise hell. “You have relieved me of embarrassment,” George answered. “I do not want the responsibility and the work of the office of the Mayor of New York, but I do want to raise hell.” The Democrat, Abram Hewitt, won, but George got more votes than the Republican, Theodore Roosevelt.

In the 1880s, George campaigned for the single tax, free trade and ballot reform. The last succeeded. George is why, on Election Day, your polling place supplies you with a ballot that you mark in secret. This is known as an Australian ballot, and George brought it back from his voyage halfway around the world.

George ran for mayor of New York again in 1897 but died in his bed four days before the election. His body lay in state at Grand Central. More than 100,000 mourners came to pay their respects. The New York Times said, “Not even Lincoln had a more glorious death.” And then: he was left behind.

"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #13 on: Dec 08, 2013, 01:28:18 am »


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Can an LVT Save Us?

by Dr. Stuart Bramhall
Dissident Voice
July 27th, 2013

The Land Value Tax (LVT) is a “radical” form of taxation first proposed by Henry George in his 1879 Progress and Poverty (see What If Marx Got it Wrong?). What George proposes is to replace taxes on wages, purchases, and investments with a tax on unimproved land and natural resources. Fred Harrison’s The Traumatised Society: How to Outlaw Cheating and Save Our Civilisation (Shepheard-Wallwyn Limited, 2012) provides an exhaustive update of George’s original work.

As Winston Churchill famously observed, “History is written by the victors.” Nearly all history books written in the last 400 years were written by or on behalf of the ruling elite. The Traumatised Society is unique in that it recounts the history of the industrial revolution from the perspective of the 99%. Harrison also presents a simple, but elegant prescription for taking back power from the corporate oligarchy, ending economic inequality and the debt crisis, staving off ecological disaster, and preventing World War III. On the surface these claims appear extravagant and somewhat grandiose. Yet, in my view, Harrison makes his case very convincingly.

Adam Smith was the first prominent economist to propose the LVT as the most “moral” and least economically harmful tax in his classic Wealth of Nations. Neoconservative icon Milton Friedman also considered it the “least bad” kind of tax. The most famous contemporary Georgist is former World Bank Economist and Nobel Prize winner Joseph Stiglitz.

Basically the argument for an LVT goes as follows: because publicly funded infrastructure increases land values, this added value should return to the public. It shouldn’t return to the landowner, who has done nothing more than sit on his land. An LVT provides a valuable source of public revenue. It eliminates the need for governments to borrow from private banks without depleting the total wealth of the landowner.

Economies and personal freedom flourish wherever an LVT has been implemented. As Harrison reminds us, the economic surge known as the Asian Tiger didn’t start in China, but in Taiwan and Hong Kong – as a direct result of LVT-based economies. Moreover unlike China, economic growth in both Taiwan and Hong Kong has proved genuine and sustainable. In 2011, the per capita GDP of China was $8,400, while that of Taiwan was $37,900.

The Trauma of Cultural Genocide

The title The Traumatised Society is based on a severe dislocation Europeans experienced during the eighteenth century, a process remarkably similar to that of African slaves and indigenous people oppressed by colonization. The cause of this dislocation was The Enclosure Acts, a series of laws that drove our peasant ancestors off the communal farm lands that had supported them for a thousand years and fenced it to off as private property. In England alone, 160,000 freehold farmers were thrown off their land between 1700 and 1812. In addition to being stripped of their livelihood, our ancestors also experienced “cultural genocide,” as they lost a thousand years of cultural tradition linked to communal land ownership. This process is vividly described in the poems of 18th century poet John Clare, whose parents ended up in the poor house (i.e. jail) after being thrown off their land. Clare’s work was suppressed until the late 19th century, when the work of American journalist Henry George revived the British land reform movement.

The end result of this massive dislocation has been slavery, debt, alienation, depression, poverty (which was virtually non-existent prior to the Industrial Revolution), murder, rape, child abuse and alcohol and drug addiction. Counselors and therapists who work with African American and indigenous communities are very much aware of the trauma, which is passed from generation to generation, that results from severe economic dislocation and cultural genocide. Ironically, however, Europeans have no historical memory that we have been subjected to the same kind of trauma.

According to Harrison, the “moral evolution” of the human race ceased in the 1700s. This is when an authentic human culture of cooperation and interdependence was replaced with an artificial “cheating culture,” in which the highest ideal is to get something for nothing. The modern, free market version of Christianity is part and parcel of this phony culture – as is Marxism. Harrison feels Marx did us a great disservice by demonizing capitalism. The capitalistic funding model in itself isn’t the primary source of our major economic and social problems.

The Concept of Economic Rents

The Traumatised Society is written in classical economic language, in which “rent” refers to unearned income from the monopolization of land, natural resources, or the cultural commons (e.g. the public airwaves and money). Economic rent includes unearned profit gained from selling land that has increased in value (often due to land speculation). A “rent-seeker” is someone who derives unearned income from monopolization of these resources.

For most of human history land and resources were owned communally and any “rent” or unearned income went to finance public services. Beginning in the 18th century, this all changed. When “rent-seekers” privatized land and natural resources, they also captured control of government and shifted the burden of funding public services to workers. In this way modern capitalist society came to be divided into two classes, the Predators or rent-seekers, and the Producers, who engage in work to create economic wealth.

The Link Between Rent-Seeking, War, and Revolution

As more and more wealth is extracted from Producers, both as “rents” and as taxes, there is less and less money available to maintain public infrastructure. Eventually the number of Producers becomes inadequate to support the Predator rent-seeking class. At this point, the latter seeks to remedy the problem by conquering new lands and colonizing new populations, by using fossil fuel technology to increase productivity, by borrowing and extracting wealth from future generations, and/or by capital depletion (liquidating assets created by past production – like Greece).

Harrison believes competition between Western and Asian rent-seekers is bringing us ever closer to World War III. In his view, the best way to prevent war is to eliminate debt, reduce income inequality, and restore growth through widespread adoption of an LVT. He gives several historical examples of rulers who could have averted bloody revolutions if they had adopted an LVT. Shortly before the French Revolution, Louis XVI’s minister of finance strongly advised him to implement an LVT. Tolstoy gave Czar Nicholas II similar advice on the eve of the Russian revolution.

Britain’s Experience with an LVT

In Britain there have been several attempts to end predatory rent-seeking through the enactment of an LVT. As a result of Henry George’s 1879 international bestseller Progress and Poverty, Winston Churchill (still a liberal in 1909) became one of the most vocal proponents of the People’s Budget. The law, passed by the British parliament in 1909, sought to shift the burden of taxation from wages to land. It was never implemented because the British aristocracy went to court to block the land valuation required to assess the tax. In 1931 Parliament passed a revised version of the People’s Budget, which Chancellor of the Exchequer Neville Chamberlain simply deleted it from the law book in 1934. If the LVT had been fully implemented, Britain would have been spared the worst effects of the Great Depression.

How an LVT Might Have Altered the Course of History

Harrison moves on to explore how an LVT might have alleviated severe economic and political turmoil in other countries:

*  Ireland – rent seekers “sucked: out all the wealth of Ireland for 200 years, a process that didn’t end with independence. Ireland’s “Celtic Tiger” could have been sustainable if it had been funded by a LVT rather than debt. The result was a debt/real estate bubble that left the country even worse off when the bubble burst in 2008. In 2010, Harrison advocated for Ireland to pay off its debt by implementing a LVT. This would have provided the revenue the Irish government needed to stimulate growth. Instead the IMF bailout and austerity cuts has deeply suppressed growth.

*  China – made a fatal error by failing to implement an LVT when they began to privatize collectively owned land in the 1980s. China is currently facing slowing growth, thanks to a $1.7 trillion debt incurred by their city and provincial governments. While the central government was building up massive cash reserves by selling cheap exports, they forced regional governments to self-fund their public services. The only way they could do this was by selling land to property developers and by borrowing money.

*  Cuba – made a fatal error on November 11, 2011 when they began selling collectively owned land to rent-seekers, and allowed rents to be capitalized into land prices – instead of taxing them.

*  Russia – Gorbachev envisioned land remaining in public hands as part of Glasnost. After a threatened military coup forced him to step down, Harrison went to Russia trying to persuade Yeltsin to adapt an LVT. Instead Russia’s first president opened the country to the IMF and western rent-seekers. Both sucked out sufficient wealth to set the country’s standard of living back several decades.

*  Africa – South Africa’s current economic difficulties relate to a fatal error they made in 2004. They amended their LVT to add a tax on property improvements but should have done the opposite – increase the LVT and reduce other taxes. Much of the land in the rest of sub-Saharan Africa is still communally owned. Thus there is still great potential for emerging African economies to adopt an LVT. This would allow them to develop debt-free, sustainable economies that don’t leave the majority of the population in abject poverty.

*  The US – suffers from a “constitutional neurosis,” according to Harrison. Supposedly the Declaration of Independence and US Constitution were based on the Scottish Enlightenment. Whereas John Locke talked about a universal right to “Life, Liberty and Estate (Land),” our founding fathers changed this to “Life, Liberty and the Pursuit of Happiness” even before the Constitution was written.

The Future of LVT

As Harrison points out, at present rent-seekers are extremely powerful and have absolute control over government, media, and public education. Nevertheless as countries in the Middle East, North Africa and Latin America escape US military control, it’s imperative they have an avenue to escape the economic control of local and international rent-seekers. By adopting an LVT, they guarantee themselves sufficient income to provide government and public services – without falling into the predatory clutches of international bankers and the IMF.

In his 2011 book Re-Solving the Economic Puzzle, Walter Rybeck relates how the US contemplated LVT enabling legislation during the Carter administration. As an assistant to Representative Henry Reuss (D-Milwaukee), Rybeck helped Reuss (as chair of the House, Banking, Finance and Urban Affairs Committee) promote land and resource taxes as a way to address crumbling infrastructure in financially strapped cities and states.

Enter Sarah Palin

According to Rybeck, a number of communities (and one state) have already adopted variations of an LVT. Alaska’s oil/gas tax is the best example of a resource-based LVT. This tax provides 80-90% of Alaska’s general fund, as well as providing annual dividends to residents. As governor of Alaska, Sarah Palin introduced Alaska’s Clear and Equitable Share (ACES), which charges a 25 percent tax rate on oil profits, with the rate increasing progressively as oil prices go up.

Five other states have passed LVT enabling legislation -- Connecticut, Maryland, New York, Pennsylvania, Virginia, Washington -- to make it easier for local communities to adopt an LVT.

Other American communities that have already benefited from an LVT include California’s Central Valley, Fairhope in Alabama, Arden in Delaware, and Pittsburgh and other cities in Pennsylvania.
"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #14 on: Dec 08, 2013, 01:29:49 am »


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Land value tax – the best of all possible taxes

By: Merryn Somerset Webb

What gives a piece of land its value? Why is a 500 square-foot spot in London worth more than 500 acres of land in Angus? The answer is obviously its location.

The value of a bit of land is not in the land itself, but in the location of that land. And what gives the location value is what is going on around it. Think good transport links, good schools (a house in the UK by a good school is worth anything from 5 to 20% more than one near a bad school), hospitals and the infrastructure to provide jobs.

This brings us to the key question: who facilitates the provision of all these services? The answer to that, of course, is the taxpayer, via the state. But if it is the state that gives land some of its value (clearly there is also value in non-state provided things, such as beauty and mineral rights), why is it that all of that value generally accrues to individual landowners, rather than to the state?

That, in a nutshell, is the argument for land or location value tax (LVT).

An LVT is levied not on the value of a property but on the value of the land that property sits on. After all, it is not the actual bricks and mortar that make a flat in, for example, London’s One Hyde Park worth £6m-plus, it is the land on which it sits. So the LVT is just an attempt to collect tax on a regular basis on what economists used to call the ‘unearned betterment’ part of the value of a property – the part that is nothing to do with the actions of the owner and everything to do with the actions of the community.

In theory, it is not just an excellent tax, but the best of all possible taxes.

Once the initial valuations have been done, it is phenomenally easy to collect, and all but impossible to avoid. It also discourages speculation and stops in its tracks the endless cycle of investment in land and property purely to rent it out. It promises no more property boom and bust. But, as it is not collected on any improvements made to land or to buildings on land, it does not discourage productive activity. Instead, it encourages people to bring idle land into use, to improve land they own and to be as productive as possible (when you have a pure LVT, earned income isn’t taxed at all). The end result is, in theory at least, good for society, good for the state, good for equality and good for growth.

Most people these days have never heard of the idea of an LVT, but the idea that it is a perfect tax has been around for centuries. Adam Smith noted its efficiency; David Ricardo was all for it; and it was hugely promoted by the US newspaper editor Henry George in the US in the late 19th century. George believed that LVT should be a single tax – its efficiency and productivity-enhancing effects would be such that all other taxes could and should be done away with.

It was a hobbyhorse of Winston Churchill’s. He was convinced that “land differs from all other sorts of property” and put the LVT case like this: “Unearned increments in land are not the only form of unearned or undeserved profit, but they are the principal form of unearned increment, and they are derived from processes which are not merely not beneficial, but positively detrimental to the general public.”

"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #15 on: Dec 08, 2013, 01:31:34 am »


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End the 1 percent’s free ride: Taxing land would solve America’s biggest problems

Want a real overhaul of the tax code? Here's an elegant way to reduce inequality and mitigate poverty -- in one tax

Jesse Myerson
November 22, 2013

Appealing to the overwhelming majority of Americans who believe the tax code is so complex that it needs “major changes or a complete overhaul,” Senate Finance Committee Chairman Max Baucus, D-Mont., and House Ways and Means Committee Chairman Dave Camp, R-Mich., have adorably started a joint Twitter handle: @simplertaxes. The bipartisan love fest is no doubt a heartfelt effort, but not very convincing from men who acquired the fancy titles by opening and maintaining loopholes for the ownership class. Baucus’ hot-off-the-presses tax reform proposals predictably simplify the code very little.

At present, neither party advocates the tax code so elegant it can reduce inequality, mitigate poverty, stimulate productivity, prevent asset price bubbles, stem community-shredding gentrification and drain the distended Wall Street cabal of its ill-gotten gains – in just one tax.

Land value. If we want a real overhaul/simplification of the tax code, the way to do it is to tax land value. It might be the only tax we need. No sales tax. No income tax. No payroll tax to fill a Social Security trust fund. No corporate income tax that, as we can plainly see, offshores profits. No need to tax labor and industry at all. Just tax the stuff that humans had nothing to do with creating, and therefore have no basis to claim ownership over at all. You’ll find that almost all of it is “owned” by the fabled 1 percent.

And boy are they sucking a lot of money out of it. By far the most valuable asset form in the U.S. is real estate, and the majority of that is the value of the land, as distinct from the value of the human-made buildings. Economist Michael Hudson has assessed that the land value of New York City alone exceeds that of all of the plant and equipment in the entire country, combined. No one put any enterprise or cost into producing the land’s value – they simply bought it when it was cheap, sold it when it was dear, and waited for the check. “They” are the Finance, Insurance and Real Estate (FIRE) sector, and they capture 40 percent of the United States’ profits, despite the complete passivity of their profit-accumulation method.

Not only would a land value tax (LVT) drastically shrink that Wall Street bloat, it would have prevented the housing bubble in the first place. Land, after all, was the speculative commodity at play, not the houses themselves, which, as “Arrested Development” incisively suggested, were a bunch of crap. With an LVT, the cookie-cutter McMansions in suburban housing developments would only be worth the cost of their cheap paneling, artificial marble and the rest of it. Without one, they were wrongly assessed as being worth the value of the land they stood upon, which speculators bid up and up and up.

An LVT would stimulate urban property development without incurring the socially catastrophic ethnic displacement pattern we call “gentrification.” As that noted far-left rag the Economist notes, “Property developers … would be less inclined to hoard undeveloped land if they had to pay an annual levy on it.” Despite this, the new developments wouldn’t push rents up throughout the rest of the neighborhood, because the increased land value would be taxed. The rest of the apartment buildings in the area didn’t get any nicer. So why should they cost more? Urban land, scarce by definition, is very valuable. There is no reason to let a small group of rich landlords extract its value, when what created the value are parks, subways, local restaurants and other things the landlords didn’t provide.

"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #16 on: Dec 08, 2013, 01:32:28 am »


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Rent is 50% of a Nation's Income. Time to Collect it?

By Fred Harrison

To create a modern society based on freedom we need a financial system built on a clear understanding of the borders between

- what the individual citizen may retain as private property, and

- what must be recognized as the property of society.

The tragedy of the West is that a few people (the feudal aristocracy) privatized the rents that people generated. This created confusion between two pricing mechanisms:

1.    the prices charged in markets for consumer goods, and

2.    the prices charged to fund public services.

By understanding the differences between these two pricing mechanisms, it is possible to make the public and private sectors work together to create maximum welfare for both the individual and society.

But how much rent is produced in the economy? There is no answer to this question in the economic literature, so we have to go back to the beginning to work out the facts.

ATCOR: the Taxing Math

More than 300 years ago, English philosopher John Locke explained in Some Considerations of the Lowering of Interest and the Raising the Value of Money (1691) that it would be "in vain" for a country to lay taxes on anything other than land, for "there at least it will terminate".

- The merchant won't bear taxes, and

- the laborer cannot bear it. So they pass taxes on in higher prices.

But someone must pay: who? Locke was emphatic: taxes ultimately come out of a nation's rents.

- Taxes, when added to wages and profits, reduce what is left: the net income is then paid as rent.

- The reciprocal relationship between rent and the tax burden does not diminish rent; rather, a proportion of total rent is disguised.

Today, Locke's thesis is most thoroughly documented by Mason Gaffney, the American professor. He formulated an acronym for Locke's thesis: ATCOR. All taxes come out of rent.

To calculate a nation's total rents, we must first establish the amount people pay as "taxes".

- In the US in 2013, tax revenue was $5.3tn (GDP: $16.2tn). Using the ATCOR formula, we conclude that, if America was a tax-free zone, this revenue would revert back to rent.

About one-third of US income is converted from rent into "wages" and "profits" through anti-democratic political and bureaucratic channels.

But if revenue collected by government is ultimately out of rent, why argue for the need to collect that revenue directly? One answer: this would raise the productive capacity of the population. Why? Because taxes inflict "deadweight losses" on society.

If rent revenue is collected in a direct way, productivity is raised by a significant margin.

Rents in Private Pockets

The next question is about the proportion of a nation's revenue that is visible as rent. This is rent that is not collected by government. Economists have no idea of how much rent is circulating in the modern economy.

For current practical purposes, the prudent estimate is that rents in private pockets amount to about 20% of national income.

- In the UK, researchers found that rent was 22% of national income in 1985, rising to 29% in 1989. But 1989 was a peak year in the property cycle, just before the recession of 1992. Allowing for the distortions caused by land speculation, the "normal" year estimate for the UK would be for 1987: 21.8%.

- In Australia, researchers -- armed with one of the best official data sets in the world -- calculated that rent in private hands in 2012 was 26% of GDP. Rents in that year were inflated by abnormally high urban and commodity prices (one of the ripple effects of trade with China).

Adding up the "Rents"

If we take a random selection of 10 rich nations, ranging from Australia through the US to Sweden, Germany and Japan, the average tax-take as a percent of GDP is 37%. In ATCOR terms, most of this is rent in its disguised form (collected as if they were "wages" and "profits"). If we add to this the rent that is not collected by government, of around 20%, we find that rent exceeds 50% of national income. This first approximation of rent needs to be adjusted for several reasons.

1.    Taxes distort total income. They encourage the

- Under-use of urban land (which artificially raises rents). and they

- motivate behavior that damages the environment, as when polluters do not have to pay for dumping waste into the atmosphere (which artificially reduces rents).

2.    A small part of tax revenue may actually fall on wage earners, rather than being shifted (ultimately) onto rent. People with no bargaining power are particularly vulnerable.

Such considerations add to, and subtract from, rent. Further assessment is required, but the outcome would not significantly modify the conservative estimate that rent is about 50% of total income. This is more than sufficient to cover existing government financial commitments.

Nicolaus Tideman, a professor at Virginia Tech and State University, in the US, estimates that, five years into the financial reform, the average American family would be better off by $6,300.

"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #17 on: Dec 21, 2013, 03:46:28 pm »


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I've been calling myself a "geolibertarian" since September 1997, and the following essay is the primary reason why:


Are you a Real Libertarian, or a

by Dan Sullivan, founder, Geolibertarian Society, and
former chair, Libertarian Party of Allegheny County, (Pittsburgh) Pennsylvania

We call ourselves the "party of principle," and we base property rights on the principle that everyone is entitled to the fruits of his labor. Land, however, is not the fruit of anyone's labor, and our system of land tenure is based not on labor, but on decrees of privilege issued from the state, called titles. In fact, the term "real estate" is Middle English (originally French) for "royal state." The "title" to land is the essence of the title of nobility, and the root of noble privilege.

The royal free lunch

When the state granted land titles to a fraction of the population, it gave that fraction devices with which to levy, and pocket, tolls on the fruits of the labor of others. Those without land privileges must either buy or rent those privileges from the people who received the grants or from their assignees. Thus the state titles enable large landowners to collect a transfer payment, or "free lunch" from the actual land users.

The widow is gathering nettles for her children's dinner; a perfumed seigneur, delicately lounging in the Oeil de Boeuf, hath an alchemy whereby he will extract the third nettle and call it rent.

-- Carlyle

Tortured rationalizations

According to royal libertarians, land becomes private property when one mixes one's labor with it. And mixing what is yours with what is not yours in order to own the whole thing is considered great sport. But the notion is filled with problems. How much labor does it take to claim land, and how much land can one claim for that labor? And for how long can one make that claim?

According to classical liberals, land belonged to the user for as long as the land was being used, and no longer. But according to royal libertarians, land belongs to the first user, forever. So, do the oceans belong to the heirs of the first person to take a fish out or put a boat in? Does someone who plows the same field each year own only one field, while someone who plows a different field each year owns dozens of fields? Should the builder of the first transcontinental railroad own the continent? Shouldn't we at least have to pay a toll to cross the tracks? Are there no common rights to the earth at all? To royal libertarians there are not, but classical liberals recognized that unlimited ownership of land never flowed from use, but from the state:

A right of property in movable things is admitted before the establishment of government. A separate property in lands not till after that establishment.... He who plants a field keeps possession of it till he has gathered the produce, after which one has as good a right as another to occupy it. Government must be established and laws provided, before lands can be separately appropriated and their owner protected in his possession. Till then the property is in the body of the nation.

"But we're used to it"

A favorite excuse of royal libertarians is that the land has been divided up for so long that tracing the rightful owners would be pointless. But there can be no rightful owners if we all have an inalienable right of access to the earth. It is not some ancient injustice we seek to rectify, but an ongoing injustice. The piece of paper granting title might be ancient, but the tribute levied on the landless goes on and on.

One might as well have accepted monarchy under the excuse that whatever conquest led to monarchy occurred centuries ago, and that tracing the rightful monarchs would be pointless. Indeed, landed aristocracy is the last remnant of monarchy.

Phony Laissez Faire

After conquest and confiscation have been effected, and the State set up, its first concern is with the land....In its capacity as ultimate landlord, the State distributes the land among its beneficiaries on its own terms.

-- Albert J. Nock, Our Enemy the State, p. 44

The English free-trader Cobden remarked that "you who free the land will do more for the people than we who have freed trade." Indeed, how can anyone speak of free trade when the trader has to pay tribute to some favored land-entitlement holder in order to do business?

This imperfect policy of non-intervention, or laissez-faire, led straight to a most hideous and dreadful economic exploitation; starvation wages, slum dwelling, killing hours, pauperism, coffin-ships, child-labour--nothing like it had ever been seen in modern times...People began to say, if this is what State abstention comes to, let us have some State intervention.

But the state had intervened; that was the whole trouble. The State had established one monopoly--the landlord's monopoly of economic rent--thereby shutting off great hordes of people from free access to the only source of human subsistence, and driving them into factories to work for whatever Mr. Gradgrind and Mr. Bottles chose to give them. The land of England, while by no means nearly all actually occupied, was all legally occupied; and this State-created monopoly enabled landlords to satisfy their needs and desires with little exertion or none, but it also removed the land from competition with industry in the labor market, thus creating a huge, constant and exigent labour-surplus.
[Emphasis Nock's]

-- Albert J. Nock, "The Gods' Lookout" February 1934

State land vs. common land

The distinction between common property and state property is lost on royal libertarians. Common property is that to which we all have inalienable rights. State property is that which the state actually owns, and can dispose of as it sees fit. For example, a public right of way is literally a right of way. Under principles of common law, nobody, not even the king, could close a traveled road and make it private property. A state maintenance truck, on the other hand, is state property, which can be sold if it no longer suits state purposes.

The earth, therefore, and all things therein, are the general property of all mankind, from the immediate gift of the Creator.

-- William Blackstone

It is a royal libertarian notion, and not a classical liberal ideal, to treat land as state property, for if land did not rightfully belong to the state, how could the state have granted it to favored citizens?

Classical liberals, not royal libertarians, are the ones who deny the state's right to appropriate the earth and allocate it to privileged individuals on favored terms. Classical liberals are also who hold the key to abolishing taxation, by suggesting that the community (not the state) charge a user fee to landholders based on the value of the land.

The ultimate user's fee

Classical liberals recognized that exclusive access to land, and especially to more land than one was using, was a privilege that should be paid for, thereby eliminating the need for taxes. It is not a fee for using land, but a fee for the state privilege of denying use of that land to everyone else.

Men did not make the earth....It is the value of the improvement only, and not the earth itself, that is individual property....Every proprietor owes to the community a ground rent for the land which he holds.

-- Tom Paine, Agrarian Justice, paragraphs 11 to 15

Another means of silently lessening the inequality of [landed] property is to exempt all from taxation below a certain point, and to tax the higher portions or property in geometrical progression as they rise.

-- Thomas Jefferson, letter to James Madison, Oct. 28, 1785

Today's land value tax advocates consider graduated land value tax to be unnecessary and problematic, leading to artificial subdivision (and phony subdivision) of land. The point is that Jefferson, to whom libertarians pay homage, considered land monopoly a great evil and land value tax a remedy, as did many other classical liberals:

Both ground-rents and the ordinary rent of land are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. Though a part of this revenue should be taken from him in order to defray the expenses of the state, no discouragement will thereby be given to any sort of industry....Ground-rents and the ordinary rent of land are, therefore, perhaps, the species of revenue which can best bear to have a peculiar tax imposed upon them.

-- Adam Smith, The Wealth of Nations, Bk 5, Ch. 2, Pt 1

Suppose that there is a kind of income which constantly tends to increase, without any exertion or sacrifice on the part of the owners: those owners constituting a class in the community, whom the natural course of things progressively enriches, consistently with complete passiveness on their own part. In such a case it would be no violation of the principles on which private property is grounded, if the state should appropriate this increase of wealth, or part of it, as it arises. This would not properly be taking anything from anybody; it would merely be applying an accession of wealth, created by circumstances, to the benefit of society, instead of allowing it to become an unearned appendage to the riches of a particular class.

Now this is actually the case with rent. The ordinary progress of a society which increases in wealth, is at all times tending to augment the incomes of landlords; to give them both a greater amount and a greater proportion of the wealth of the community, independently of any trouble or outlay incurred by themselves. They grow richer, as it were in their sleep, without working, risking, or economizing. What claim have they, on the general principle of social justice, to this accession of riches? In what would they have been wronged if society had, from the beginning, reserved the right of taxing the spontaneous increase of rent, to the highest amount required by financial exigencies?

-- John Stuart Mill, Principles of Political Economy, Bk 5, Ch. 2

Two different kinds of indirect taxation

One of the most perverted twisting of concepts is reflected in what Hamilton called "indirect taxation." To him, and to many royal libertarians, indirect taxation is "hidden" taxation, as a value-added tax or sales tax that is buried in the price of purchased goods. This kind of indirectness is hardly admirable, and is similar to the kind of indirectness involved in chicanery and duplicity. Small wonder Jefferson called Hamilton a monarchist.

The Articles of Confederation embodied an entirely different concept of indirect taxation. The United States was to levy a tax, not on individual property holders, but on each state, based on its aggregate land value. The assumption was that each state would levy a similar tax on each county, and so on down to the individual. In this way, the individual would never have to face a federal tax agent directly, and if the federal government did not have the full support of the states, it could not bully them as easily as it could bully individuals.

Unfortunately, states did not support the federal government to its satisfaction from the beginning (being strapped from the war). Rather than working things out patiently, Hamilton introduced power-centralizing measures into the new Constitution. One was the other kind of indirect taxation, the mosquito-bite kind that you don't see happening. Royal libertarians trumpet this covert taxation as a virtue over direct real estate taxation, even when it means that "free trade" is being taxed.

Socialist Confusions

The classical liberal distinctions between land, labor and capital were greatly confused by socialists, and particularly Marxists, who substituted the fuzzy abstract term, "means of production," for all three factors. They also blurred the distinction between common property and state property, for socialists believed, as royalty also believed, that they were the people.

Today, the confusions between land and capital and between state property and common property are shared by socialists and royal libertarians, and only classical liberals keep these distinctions clearly defined. Yet royal libertarians frequently duck the land issue by charging that it is the classical liberals, not the royal libertarians, who have embraced socialist ideas.

Blocking Locke

John Locke is often misrepresented by royal libertarians, who quote him very selectively. For example, Locke did say that:

Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property.

But Locke condemned anyone who took more than he needed as a "spoiler of the commons":

...if the fruits rotted, or the venison putrified, before he could spend it, he offended against the common law of nature, and was liable to be punished; he invaded his neighbour's share, for he had no right, farther than his use called for any of them, and they might serve to afford him conveniences of life.

The same measures governed the possession of land too: whatsoever he tilled and reaped, laid up and made use of, before it spoiled, that was his peculiar right; whatsoever he enclosed, and could feed, and make use of, the cattle and product was also his. But if either the grass of his enclosure rotted on the ground, or the fruit of his planting perished without gathering, and laying up, this part of the earth, notwithstanding his enclosure, was still to be looked on as waste, and might be the possession of any other.

Locke also restricted appropriation of land by the proviso, ignored by royal libertarians, that there must be

still enough, and as good left; and more than the yet unprovided could use. So that, in effect, there was never the less left for others because of his enclosure for himself: for he that leaves as much as another can make use of, does as good as take nothing at all.

Now if the situation is that there is enough free land, and as good, left after you take and cultivate your land, than your land has no market value, for who would pay you for land that is not better than land that can be had for free? So, besides the fact that Locke's justification of privatizing land is far more limited than royal libertarians portray it to be, it is irrelevant to the question of land value tax, as it applies only to land that has no value.

Furthermore, Locke based his scenario on pre-monetary societies, where a landholder would find that "it was useless, as well as dishonest, to carve himself too much, or take more than he needed." With the introduction of money, Locke noted, all land quickly became appropriated. Why? Because with money, those who can take more land than they have personal use for suddenly have reason to do so, as between them they will have taken all the land, and others will have to pay rent to them. So, with the introduction of money, the Lockean rationale for landed property falls apart, even according to Locke. And while Locke did not propose a remedy specifically for to this problem, he repeatedly stated that all taxes should be on real estate.

The tragedy of the common misunderstanding

In their search for excuses to deny any common right to land, royal libertarians are fond of citing Garrett Hardin's work, "Tragedy of the Commons." Or at least they cite the title, which is all most royal libertarians are familiar with. Hardin is himself an advocate of land value taxation, and has criticized misinterpretations of his work with the lament that "The title of my 1968 paper should have been "The Tragedy of the Unmanaged Commons.'" [Emphasis Hardin's]

Thoughtful Libertarian Party leadership

Fortunately, the bias toward royal libertarianism has been shaken off by many of the philosophical leaders of the party. Founder David Nolan supports land value tax as the only tax that does not fall on productivity, and the late Karl Hess often described land value tax as the one tax to levy until the state could be abolished entirely. It is mostly the von Miseans, the Objectivists, and the wishful thinkers who adopt the royal rationalization that they can hoard all the land to themselves with impunity.

The red, red herring

Royal libertarians are fond of confusing the classical liberal concept of common land ownership, particularly as espoused by land value tax advocate Henry George, with socialism. Yet socialists have always been contemptuous of George and of the distinction between land monopoly and capital monopolies. However, Frank Chodorov and Albert J. Nock (the original editors of The Freeman) were both advocates of George's economic remedies as well as lovers of individual liberty.

The only reformer abroad in the world in my time who interested me in the least was Henry George, because his project did not contemplate prescription, but, on the contrary, would reduce it to almost zero. He was the only one of the lot who believed in freedom, or (as far as I could see) had any approximation to an intelligent idea of what freedom is, and of the economic prerequisites to attaining it....One is immensely tickled to see how things are coming out nowadays with reference to his doctrine, for George was in fact the best friend the capitalist ever had. He built up the most complete and most impregnable defense of the rights of capital that was ever constructed, and if the capitalists of his day had had sense enough to dig in behind it, their successors would not now be squirming under the merciless exactions which collectivism is laying on them, and which George would have no scruples whatever about describing as sheer highwaymanry.

-- Albert J. Nock "Thoughts on Utopia"

Von Mises misses

Ludwig von Mises acknowledged in several places wholly unique distinctions between land and capital, but in his zeal to denounce land value tax, stated that,

Classical economy erred when it assigned land a distinct place in its theoretical scheme. Land is, in its economic sense, a factor of production, and the laws determining the formation of the prices of land are the same that determine the formation of other forms of production.

Or, paraphrasing Jay Leno, go ahead and buy up the land; we'll make more. The difference between land and capital is huge, and explains why the cost of silicon chips goes down as demand goes up, while the cost of Silicon Valley goes up as demand goes up. There is no natural monopolization of capital, but, with state sanction, there is monopolization of land. But von Mises would sooner obscure these distinctions in socialist fashion than to embrace a proposal he mistakenly thought to be socialist.

In his first edition of Human Action, von Mises attacked land value tax as based on the socialist principle that legitimate property flows only from labor. But that is also a libertarian principle, a classical liberal principle, an Austrian principle, and even the von Misean principle behind private property! So, by the third edition, von Mises changed his text to read that land taxers claim legitimate property flows only from manual labor.

This is much more logically consistent, but factually incorrect. It is a correct assessment of what many socialists believe, but it is not a correct assessment of what land taxers believe. Henry George, the most prominent land taxer of all, wrote in his magnum opus, Progress and Poverty,

Thus the term labor includes all human exertion in the production of wealth, and wages, being that part of the produce which goes to labor, includes all reward for such exertion. There is, therefore, in the political-economic sense of the term, no distinction as to the kind of labor, or as to whether its reward is received through an employer or not....

George also defended the ownership of property that flows from the employment of capital.

Perhaps von Mises was biased by his location in Europe, where classical liberalism had not fared as well as in America. He might also have first seen land value tax in the Communist Manifesto, and not realized that it was there as a socialist ploy to co-opt support from classical liberalism. (Marx expressed contempt for land value tax as a reform in its own right, and openly stated that his support of it was only to draw people to what he really wanted, which was to control capital.) If this is where von Mises got his first exposure to the idea, it would not be surprising to see him close his mind to it.

Ayn Rand comes sooo close!

Ayn Rand made arguments against perpetual intellectual property that are remarkably similar to arguments against perpetual landed property. She also saw the distinction between land and capital in terms of common vs. private property, but fell back into confusion at other times. She rightly chastised the Encyclopaedia Brittanica's definition of capitalism for confusing land and capital, which she quoted as follows:

Fundamental to any system called capitalist are the relations between private owners of nonpersonal means of production (land, mines, industrial plants, etc., collectively known as capital) [emphasis Rand's]

Then she quoted a John Galt speech in Atlas Shrugged in which Galt stated sarcastically, "A factory is a `natural resource', like a tree, a rock or a mud puddle."

By Jove, I think she's...

But are the heroes of Atlas Shrugged real capitalists? The inventor John Galt is, and perhaps Hank Rearden of Rearden Metals is, too, although one wonders where he got his ore and fuel. But Taggart Railways enjoys extremely valuable right-of-way privileges from the state. (Once land is parceled out, it is virtually impossible to build a railroad without either land value tax or eminent domain.)

Then there is Francisco D'Anconia, who owned the world's richest copper deposits, and who took delight in blowing up his mines and driving the price of copper through the roof--something that would not work nearly as well for a capitalist as for a resource monopolist, as there is no way competitors can make copper ore that doesn't already exist, and, buried or not, D'Anconia's copper ore still belonged to him.

The economics of Galt's Gulch

Most revealing of all is the Randian utopia, Galt's Gulch, which was financed entirely from, yes, land rents. Midas Mulligan owned the whole place, and was, in essence, the government. All the common services, from Galt's magic energy machine to Hank Rearden's village railroad, to their defense system (some sort of jammer that made the valley invisible to passing planes) were financed from ground rents collected by Mulligan from the landholders. Although politically Galt's Gulch was a monarchy, economically it was a Georgist Single-Tax community, with all community services paid for from the rent of land.

Who has the authority to collect land rent?

Many libertarians struggle with the legitimate question of how any governing body achieves rightful jurisdiction in a community, and we join them in opposing collection by such super-statist organizations as the United Nations, which is substantially a federation of tyrannies. However, royal libertarians raise the question selectively and rhetorically in regard to community collection of land rents. They acknowledge that there must be courts to settle, among other things, property disputes. It seems rather obvious that whatever entity has authority to rule on who gets the land also has authority to rule on who gets the land rent.

Fear of a funded government

There is also a well founded libertarian concern that land rent could provide funds enough to support a corrupt and oppressive government. Most libertarian supporters of the governmental collection of land rent therefore fall into two camps. One would give the people power to limit how much money the government can take, but would stipulate that all such money come entirely from ground rents and natural resource severance royalties. The other would take the full rent, but would stipulate that the government can still only spend what the citizens authorize it to spend. The rest would be distributed on a per-capita basis.

Ending excuses for big government

Much of the government spending to which libertarians strenuously object is made necessary by its taxing productivity instead of land values.

The property tax falls mostly on improvements, so less housing is built, giving the government an excuse to build public housing. Profits are taxed, leading to less employment and giving government an excuse to spend money on economic stimulus projects. Family income is taxed to the point that they have difficulty buying a house or sending their children to college, so government institutes subsidized mortgages and student loans.

Even the indirect effects are substantial. Land speculations gone sour chew up inner cities, so poor people turn to crime (if drug selling and prostitution be crimes) and the government gets an excuse to beef up the police state.

Politically connected real estate interests see that they can buy up land in the boondocks for a pittance and then get other taxpayers to build them a superhighway, increasing the value of their holdings by orders of magnitude. With land value tax they would have ultimately paid for their own highway or more likely would not have had it built in the first place.

Even welfare increases do not stay in the hands of welfare recipients, but are quickly greeted by higher rent demands from ghetto landlords. (The War on Poverty did little to end poverty, but it did a lot to enrich absentee owners of poor communities.)


"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #18 on: Dec 21, 2013, 03:48:41 pm »


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What Labor Does She Perform to Deserve This?

Queen's Income Set to Rise for Second Year Running

The Crown Estate owns lots of the UK. Why not own it all? And pay dividends to
not just one person but to everybody? This 2013 excerpt is from the BBC, June 6.

by the BBC

The Queen will receive a 5% rise in her income after the Crown Estate, from which she is paid, reported an increase in its profits.

The Sovereign Grant, which funds the Queen's spending as Head of State, will rise in 2014 from £36.1m to £37.89m.

The grant is calculated as a percentage of profits from the Crown Estate, which includes properties such as Windsor Park and covers most UK coastline, much of it is leased out to third parties.

Aside from the Queen's income, the profit goes to the Treasury to help with the nation's finances.

The value of Crown Estate's property portfolio is now £8.1bn, exceeding £8bn for the first time.

While Crown Estate runs the properties owned by the Crown, it does not own the private property of the Queen.

The Crown Estate's urban portfolio, which includes large parts of London's West End, brought in a total return of 10.6% on assets that are now worth £5.9bn.

Outside of London, the Crown Estate owns 15 retail parks in various towns and cities, including Liverpool, Swansea, Slough and Nottingham.

It also owns shopping centres in Worcester, Oxford and Exeter as well as offices in Birmingham, Manchester and Cambridge.

Because it owns and manages the seabed around the UK out to the 12-mile limit, the Crown Estate is heavily involved in offshore wind farms, where it saw an extra 1GW of power come on stream, with around 300 new turbines erected offshore.

The Crown Estate also made £13.1m from cables and pipelines that cross its land.

It holds around 144,000 hectares (356,000 acres) of the country's agricultural land and forests, as well as residential and commercial property outside urban areas.

To read more

JJS: Our phrase “real estate” comes from “regal estate”, in turn from “royal estate”, which means “the king’s landed property”. It's why returns to owners of resources are called "royalties". So if royalty -- now days government -- does own all land legally and individual owners just have titles granted to them for portions of the country, why not acknowledge the fact?

Government could recover the rents for all lands and resources and airwaves, etc ("royalties"). Seem farfetched? The British press does call for collecting land values, as in this New Statesman article of June 20: "Will anyone break the tax taboo?" By collecting the money it should collect, government could quit collecting the money it should not ever touch. It’d abolish all its taxes upon things that are not nature, such as our earnings, purchases, and buildings.

After covering a few operating expenses, government could disburse the rest of the recovered revenue not just to the head of state or today’s actual rulers -- the 1% -- but to everyone as a Citizens Dividend. No more economic injustice! Material security for all! To live better than bare comfort, that’s why one would work for wages and invest savings sagely. But as a society, we’d all benefit from land equally.

Rent 'unaffordable' for low-income families in third of UK

Mark Easton
BBC News
July 15, 2013

A third of Britain is effectively off-limits to lower-income working families because private rents are unaffordable, a new report claims.

The report comes from the Resolution Foundation, which campaigns on behalf of low to middle-income families.

It says most of southern England is now beyond the reach of less affluent households.

The housing minister said the report was "factually flawed" and failed to take housing benefit into account.

With social housing usually unavailable and home ownership unaffordable for many first-time buyers, renting privately is often the only option for households on lower incomes.

A BBC housing calculator also identifies how renting a modest two-bedroom home for less than £700 a month is almost impossible in London and much of the South East. Modest is defined as having a rent below 75% of similar properties in the area.

The Home Truths report identifies local authorities that are "affordable" for a couple with a child requiring a two-bedroom property on a household income of £22,000 a year. Affordable is defined as a rent that is no more than 35% of net household income.

On that basis, 125 of 376 local authorities in Britain (33%) are unaffordable for less-affluent working families.

"The private rented sector is now, in large parts of the country, the most expensive form of housing," says Vidhya Alakeson, of the Resolution Foundation.

"It is also the only option for most low to middle-income households, many of whom are faced with the unenviable choice of forgoing other essentials in order to pay for housing or living in overcrowded conditions to reduce their housing costs."


London rents are so high it is now cheaper to live in BARCELONA and commute in (and here’s how…)

*  Sam Cookney did the sums after becoming sick of rent prices in London
*  He found it would be cheaper live in Spain and fly to his job in the City
*  A four day commute from Europe worked out at £339 per-month cheaper

The Daily Mail
October 26, 2013

Rent in London is so high that one young professional has worked out it would be cheaper live in Barcelona and fly to work.

Social Media manager Sam Cookney, 30, wanted a less expensive way of travelling to his office near Liverpool Street station.

What he found was an unlikely solution: it would be more cost effective to relocate to the sun-kissed coast of north east Spain, more than 700 miles away.



"Queen Elizabeth II, head of state of the United Kingdom and of 31 other states and territories, is the legal owner of about 6,600 million acres of land, one sixth of the earth’s non ocean surface.

"She is the only person on earth who owns whole countries, and who owns countries that are not her own domestic territory. This land ownership is separate from her role as head of state and is different from other monarchies where no such claim is made – Norway, Belgium, Denmark etc.

"The value of her land holding. £17,600,000,000,000 (approx)."

              Pyramid of Royal Libertarian System (THE CORPORATION [10/23] Boundary Issues) (Webster Tarpley & Alex Jones: Royals and Obama) (Ricardo's Law ~ The Great Tax Clawback Scam)

Are you starting to make the connection yet?
"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #19 on: Dec 21, 2013, 03:51:51 pm »


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Fred Foldvary's Editorial


by Fred E. Foldvary, Senior Editor

The "gentry" in Great Britain are the class of people with property and high social standing just below the nobility. From that we get the term to "gentrify" meaning to change a run-down area of a city into an improved state by repairing and remodeling the houses and yards. As more affluent people move in, rents rise and the poor folk get evicted.

Some social activists decry and deplore this squeeze on the poor, so they advocate limits on gentrification. But if demand for sites in an area is growing, the economic pressure is for the rent to rise. Policy then typically responds with measures to treat the effects: rent control, living wage, subsidies to tenants. Rent control fails to distinguish the rent of land from the rental return to investments in capital goods such as the building, furniture, and maintenance, and buildings often deteriorate, making the slum worse.

The reason this is happening is because policy distorts incomes and incentives. Worker wages are artificially depressed by taxes on their income and sales, while land values are pumped up by spending on civic works not paid for by the landowners. The incentive in a growing economy is to obtain real estate, improve it, and sell it later at a vastly higher price. Such improvements would be socially good in a pure market, but today much of the speculative gain is instead caused by government works that increase the rent.

The effective remedy is to fundamentally change the policy. Shift public revenue sources from wages to land rent, excluding the rental return to improvements. That would raise wages and at the same time lower land costs, making it more affordable for lower- income people to rent or own housing, without subsidies. Then gentrification would be good for all, since it improves housing as well as the character of a neighborhood. Gentrification would take place as housing for current use, not for speculative gains due to infrastructure paid for by taxes on labor.

So long as this shift does not take place, should gentrification be stifled? As a general rule, when in doubt, do not intervene. Leave the market alone, even if it is distorted by intervention. If policy must help the poor, the best way to do it is with direct subsidies rather than with controls and limits on what residents and enterprises want to do.

The problem with any aid to the poor is that the landlords might soak much of it up. That's the theory of all-devouring rent. Winston Churchill told the history of what happened in London when a bridge toll was eliminated. Poor workers were crossing the bridge to go to work. The city council wanted to help the poor by eliminating the toll. But soon, the rents the poor had to pay went up by the amount the toll was reduced. The whole benefit went to the landlords.

So subsidies to the poor to enable them to pay rent may just increase the rent some more, leaving them little better off. Limits on gentrification may have the same result - it decreases the supply of new housing, and rents rise because the increasing demand hits an artificially limited supply of housing.

There is just no getting around that any bandaid policy will be ineffective when the underlying problem is the upside down fiscal policy of taking the bread from the mouth of the worker in order to subsidize the gains to the landlord. Policy will be dysfunctional until it confronts the reality of the wage and rent relationship. Wages go down and rents go up as production moves to less productive areas, as it ever must.

Only by using the land rent for public revenue can the problem of poverty be remedied. That's what the economist and social reformer Henry George discovered over 100 years ago, written up in his work Progress and Poverty. Powerful economic forces keep this remedy from taking place and even from public dialogue and even worse from being adequately explained in conventional economic texts (see the book The Corruption of Economics).

Only when the public becomes aware of the rent/wages economic relationship will there be mass pressure to change the system. Then gentrification will be recognized as a blessing to all rather than a curse to the poor and a problem for policy.,2419/?ref=auto

Report: Nation's Gentrified Neighborhoods Threatened By Aristocratization

The Onion
Mar 31, 2008

WASHINGTON—According to a report released Tuesday by the Brookings Institution, a Washington-based think tank, the recent influx of exceedingly affluent powder-wigged aristocrats into the nation's gentrified urban areas is pushing out young white professionals, some of whom have lived in these neighborhoods for as many as seven years.

Multibillion-dollar castles like this one have
been popping up all over Brooklyn.

Maureen Kennedy, a housing policy expert and lead author of the report, said that the enormous treasure-based wealth of the aristocracy makes it impossible for those living on modest trust funds to hold onto their co-ops and converted factory loft spaces.

"When you have a bejeweled, buckle-shoed duke willing to pay 11 or 12 times the asking price for a block of renovated brownstones—and usually up front with satchels of solid gold guineas—hardworking white-collar people who only make a few hundred thousand dollars a year simply cannot compete," Kennedy said. "If this trend continues, these exclusive, vibrant communities with their sidewalk cafés and faux dive bars will soon be a thing of the past."

According to Kennedy, one of the most pressing concerns associated with rapid aristocratization is the drastic transformation of the metropolitan landscape in a way that fails to maximize livable space.

Incoming aristocrats are easily spotted by
their distinctive dress and taste for chamber

"A three-block section of [Chicago neighborhood] Wicker Park that once accommodated eight families, two vintage clothing stores, a French cleaners, and a gourmet bakery has been completely razed to make way for a private livery stable and carriage house," Kennedy said. "The space is now entirely unusable for affordable upper-income condominium housing. No one can live there except for the odd stable boy or footman who gets permission to sleep in the hayloft."

Many of those affected by the ostentatious reshaping of their once purely upmarket neighborhoods said that they often wish for a return back to the privileged communities they helped to overdevelop just a few years ago. Among the first to feel the effects of the encroaching aristocracy have been local business owners like Fort Greene, Brooklyn resident Neil Getz.

"Around here, you used to be able to get a Fair-Trade latte and a chocolate-chip croissant for only eight bucks," said Getz, who is planning to move back in with his parents after being forced out of the lease on his organic grocery store by a harpsichord purveyor. "Now it's all tearooms and private salon gatherings catered with champagne and suckling pig. Who can afford that?"

"It's just a terrible shame," Getz continued. "There was this great little shop right across the street from my duplex apartment where I bought my baby daughter a Ramones onesie a couple of years ago, just after she was born. That whole block is an opera house now."

The aristocracy has adamantly dismissed claims that the sweeping changes are detrimental to the merely wealthy who have been displaced, and many persons of noble blood have pointed to aristocratization's benefits. These include lower crime rates attributed to new punishments, such as public floggings and the pillory, which are primarily meted out for maintaining direct eye contact with members of the highest class.

"These accusations are pure, slanderous rubbish," said Lord Nathan Dunkirk III, the owner of a prodigious manor house that, along with its steeplechase course and topiary garden, sits on what was once the Haight-Ashbury district of San Francisco. "If anything, the layabouts and wastrels have been afforded a veritable glut of new and felicitous opportunities as bootblacks and scullery maids."

Other aristocrats have echoed Dunkirk and have additionally deflected blame onto regification, a process by which they say they were priced out of their vast rural holdings by kings who wished to consolidate property and develop monumental palatial estates.
"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #20 on: Dec 21, 2013, 04:21:27 pm »


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Despite unprecented levels of labor-saving technology and aggregate wealth, the privilege-induced rent-wage gap continues to paradoxically create the deepest levels of poverty precisely where wealth most abounds -- just as Henry George said it would:


New York’s Homelessness Worst Since The Great Depression

Zero Hedge
March 6, 2013

State and local governments nationwide have struggled to accommodate a homeless population that has changed in recent years – now including large numbers of families with young children. As the WSJ reports, more than 21,000 children – an unprecedented 1% of the city’s youth – slept each night in a city shelter in January, an increase of 22% in the past year; as homeless families now spend more than a year in a shelter, on average, for the first time since 1987. New York City has seen one of the steepest increases in homeless families in the past decade, advocates said, growing 73% since 2002, and “is facing a homeless crisis worse than any time since the Great Depression.

Homeless advocates said the Obama administration has focused on more visible problems, such as those sleeping on the streets, taking resources away from families. The steep rise has reignited questions about whether New York’s economic turnaround of the past two decades has helped the city’s poorest residents as they note (despite today’s Dow record highs), “the economy is nowhere near where it was.

The blame apparently lies at the cessation of ‘entitlements’ as the DHS adds, since the end – in Spring 2011 – of a state-funded program that subsidized rent for people leaving shelters; homeless families have gone up 35%; but they also added that the city was working to find employment for the homeless, “a long-term solution.” Boston and Washington DC are also seeing homeless numbers surge.

Via WSJ,


Study: Record Number 21 Million Young Adults Living With Parents

August 2, 2013

A record number of young adults are living with their parents.

A new study from Pew Research finds that 36 percent of Millennials – young adults ages 18 to 31 – are living at their parents’ homes, the highest number in four decades. A record 21.6 million young adults were still living at home last year.

“Most of my friends that have graduated end up living back home because even if they have a job they can’t afford to pay rent and pay back their loans at the same time,” Stephanie Levonne, a 20-year-old college student living at home, told CBS News. “I know a lot of people that took out almost half or more of their tuition in loans which is $50,000 so it’s impossible to pay rent and live in New York City while paying off your loan.”

Read More

In New York, Having a Job, or 2, Doesn’t Mean Having a Home

The New York Times
September 17, 2013

On many days, Alpha Manzueta gets off from one job at 7 a.m., only to start her second at noon. In between she goes to a place she’s called home for the last three years — a homeless shelter.

“I feel stuck,” said Ms. Manzueta, 37, who has a 2 ½-year-old daughter and who, on a recent Wednesday, looked crisp in her security guard uniform, waving traffic away from the curb at Kennedy International Airport. “You try, you try and you try and you’re getting nowhere. I’m still in the shelter.”

With New York City’s homeless population in shelters at a record high of 50,000, a growing number of New Yorkers punch out of work and then sign in to a shelter, city officials and advocates for the homeless say. More than one out of four families in shelters, 28 percent, include at least one employed adult, city figures show, and 16 percent of single adults in shelters hold jobs.

Mostly female, they are engaged in a variety of low-wage jobs as security guards, bank tellers, sales clerks, computer instructors, home health aides and office support staff members. At work they present an image of adult responsibility, while in the shelter they must obey curfews and show evidence that they are actively looking for housing and saving part of their paycheck.

Advocates of affordable housing say that the employed homeless are proof of the widening gap between wages and rents — which rose in the city even during the latest recession — and, given the shortage of subsidized housing, of just how difficult it is to escape the shelter system, even for people with jobs.

“A one-bedroom in East New York or the South Bronx is still $1,000 a month,” said Patrick Markee, senior policy analyst with the Coalition for the Homeless, an advocacy and housing services group. “The jobs aren’t enough to get people out of homelessness.”


Harvard Study Finds: The Rent Is Too Damn High

By Peter Coy
December 09, 2013

                  Photograph by Kathy Kmonicek/AP Photo

                                                                                     Source: Joint Center for Housing Studies
Since the 1980s, rents (right scale) have risen, while incomes (left scale) have fallen. Both series are adjusted
for inflation

If you can’t afford to own, you can rent. But what if you can’t afford to rent, either? Millions of Americans are in precisely that situation, according to a study released today by the Joint Center for Housing Studies of Harvard University. The availability of apartments, especially cheaper ones, hasn’t nearly kept up with demand, and the problem has worsened since the 2007-09 recession, the study says.

“In 1960, about one in four renters paid more than 30 percent of income for housing. Today, one in two are cost burdened,” according to the study, America’s Rental Housing.

“Cost-burdened” means you’re paying more than 30 percent of income for housing and “severely cost-burdened” means you’re paying more than half. “By 2011, 28 percent of renters paid more than half their incomes for housing, bringing the number with severe cost burdens up by 2.5 million in just four years, to 11.3 million,” according to the Harvard study, which was conducted with partial funding from the MacArthur Foundation.

The boom in housing prices made ownership unaffordable for many families, and the subsequent bust forced others into foreclosure. You would think that all of those foreclosed homes would make great rental properties, and they have. “Remarkably,” though, the study says, “soaring demand was more than enough to absorb the 2.7 million single-family homes that flooded into the rental market after 2007.”

The result of the spike in rental demand is a seller’s market: “From a record high of 10.6 percent in 2009, the vacancy rate turned down in 2010 and has continued to slide, averaging 8.4 percent in the first three quarters of 2013.”

As usual, the pinch is hardest on the poor, those with incomes under $15,000 a year who pay at least half their incomes on rent. “With little else in their already tight budgets to cut, these renters spend about $130 less on food—a reduction of nearly 40 percent relative to those without burdens.”



And what does the Keynesian-dominated "Left" propose as a solution? To implement still more cosmetic reforms that, as such, only perpetuate the failed and morally bankrupt policy of taxing the privately-created values of labor and capital to death while leaving the publicly-created value of land comparatively untaxed, even though that's the very anti-Georgist tax policy that created this mess in the first place!

And what does the Austrian-dominated "Right" propose as a solution? To make publicly-created land values even more privatized than they already are, even though this will not only make the rent-wage gap even wider than it already is -- and thereby make the society-destroying wealth-and-income gap even wider than it already is -- but force governments to rely even more on job- and small business-destroying taxes on labor and capital than they do now!

How much more ridiculously concentrated must wealth and income become in the hands of a privileged few before a critical mass of people finally awaken to the fact that Democrat-vs.-Republican is not the only "false paradigm"?
"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #21 on: Dec 21, 2013, 04:30:37 pm »


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Why Not Tax Monopoly Rents?

David Bollier

Some interesting material coming out of Prosper Australia is a Melbourne-based organization and its partners, Earthsharing Australia and the Land Values Research Group.  A new report entitled “Total Resource Rents:  Harnessing the Power of Monopoly” (pdf file) finds that nearly one-quarter of Australia’s GDP comes from unearned income, not the 2% that neoclassical economists claim.

This means that ten times greater revenue could be raised through taxing unearned income from monopolies than previously thought.  It also means that nearly half of Australia’s government revenues could be raised through channeling revenues from the real estate boom to more productive purposes.  In the process, income, company and sales taxes – along with 122 other current taxes – could be eliminated.

Report author Karl Fitzgerald, “the Renegade Economist,” describes the implications of the findings of the report:

“Unearned incomes equate to 23.6% of GDP and could be taxed without pushing up pricing structures. Most economists dismiss economic rents at just 2% of GDP. This report finds the free lunch driving the wealth gap is ten times greater than mainstream economists acknowledge.

“Prices could fall by some 20% by reducing the number of taxes from 126 to 24” stated Fitzgerald. “The compliance and deadweight losses are a huge cost that fall disproportionately on small business.”  This reform offers a more efficient and equitable economic system, valuing productive over speculative activities.



"A tax on rent...would fall wholly on landlords, and could not be shifted to any class of consumers."

"A tax on rent falls wholly on the landlord. There are no means by which he can shift the burden upon any one else."

“The striking result is that a tax on rent will lead to no distortions or economic inefficiencies. Why not? Because a tax on pure economic rent does not change anyone's behavior. Demanders are unaffected because their price is unchanged. The behavior of suppliers is unaffected because the supply of land is fixed and cannot react. Hence, the economy operates after the tax exactly as it did before the tax--with no distortions or inefficiencies arising as a result of the land tax."

-- Paul A. Samuelson, Economics, 16th ed., p. 250

"At the opposite extreme of the claim that land value taxation is wrong because landholders would be the only ones paying taxes is the claim that landholders would be paying no taxes at all. It is claimed that they would merely raise their rents in proportion to the increase in taxes falling on their lands. But this is one thing all reputable economists agree can not be done. If site A (land only) in the heart of a city is worth $1,000 per month to whoever uses it, while site B (land only) on the outskirts of the city is worth only $100.00 per month, then site A is worth only $900.00 more per month than is site B. A change in the amount of taxes falling on these two landholders cannot affect the relative value of these sites. Suppose, for example, that an attempt were made to get $2,000 and $200.00 per month respectively for these two sites just because each landholder were required to pay taxes of $1,000 and $100.00 respectively to the city. Obviously, the tenants in site A would move to lower cost land. Site A is not worth $1,800 more per month than site B. If it were, the landholder would be getting it in today's market. Although a tax on land values affects the price of land, it cannot affect its rental value. There is no disagreement among professional economists on this point."

-- Robert De Fremery, Rights vs. Privileges, pp. 38-39

Why The Landowner Cannot Shift The Tax on Land Values

By Henry George
An Editorial reprinted from The Standard, 1887

A very common objection to the proposition to concentrate all taxes on Land Values is that the landowner would add the increased tax on the value of his land to the rent that must be paid by his tenants. It is this notion that increased Taxation of Land Values would fall upon the users, not upon the owners of land, that more perhaps than anything else prevents men from seeing the far-reaching and beneficent effects of doing away with the taxes that now fall upon labor or the products of labor, and taking for public use those values that attach to land by reason of the growth and progress of society.

That taxes levied upon Land Values, or, to use the politico-economic term, taxes levied upon rent, do not fall upon the user of land, and cannot be transferred by the landlord to the tenant is conceded by all economists of reputation. However much they may dispute as to other things, there is no dispute upon this point. Whatever flimsy reasons any of them may have deemed it expedient to give why the tax on rent should not be more resorted to, they all admit that the taxation of rent merely diminishes the profits of the landowner, cannot be shifted on the user of land, cannot add to prices, nor check production.

Not to multiply authorities, it will be sufficient to quote John Stuart Mill. He says (Section 2, Chapter 3, Book 5, “Principles of Political Economy”) “A tax on rent falls wholly on the landlord. There are no means by which he can shift the burden upon anyone else. It does not affect the value or price of agricultural produce, for this is determined by the cost of production in the most unfavorable circumstances, and in those circumstances, as we have so often demonstrated, no rent is paid. A tax on rent, therefore, has no effect other than its obvious one. It merely takes so much from the landlord and transfers it to the State.”

The reason of this will be clear to everyone who has grasped the accepted theory of rent — that theory to which the name of Ricardo has been given, and which, as John Stuart Mill says, has but to be understood to be proved. And it will be clear to everyone who will consider a moment, even if he has never before thought of the cause and nature of rent. The rent of land represents a return to ownership over and above the return which is sufficient to induce use — it is a premium paid for permission to use. To take, in taxation, a part or the whole of this premium in no way affects the incentive to use or the return to use; in no way diminishes the amount of land there is to use, or makes it more difficult to obtain it for use. Thus there is no way in which a tax upon rent or Land Values can be transferred to the user. Whatever the State may demand of this premium simply diminishes the net amount which ownership can get for the use of land, or the price it can demand as purchase money, which is, of course, rent or the expectation of rent, capitalized.

Here, for instance, is a piece of land that has a value — let it be where it may. Its rent, or value, is the highest price that anyone will give for it — it is a bonus which the man who wants to use the land must pay to the man who owns the land for permission to use it. Nor, if a tax be levied on that rent or value, this in no wise adds to the willingness of anyone to pay more for the land than before; nor does it in any way add to the ability of the owner to demand more. To suppose, in fact, that such a tax could be thrown by landowners upon tenants is to suppose that the owners of land do not now get for their land all it will bring; is to suppose that, whenever they want to, they can put up prices as they please.

This is, of course, absurd. There could be no limit whatever to prices did the fixing of them rest entirely with the seller. To the price which will be given and received for anything, two wants or wills must concur — the want or the will of the buyer, and the want or will of the seller. The one wants to give as little as he can, the other to get as much as he can, and the point at which the exchange will take place is the point where these two desires come to a balance or effect a compromise. In other words, price is determined by the equation of supply and demand. And, evidently, taxation cannot affect price unless it affects the relative power of one or other of the elements of this equation. The mere wish of the seller to get more, the mere wish of the buyer to pay less, can neither raise nor lower prices. Nothing will raise prices unless it either decreases supply or increases demand. Nothing will lower prices unless it either increases supply or decreases demand. Now, the Taxation of Land Values, which is simply the taking by the State of a part of the premium which the landowner can get for the permission to use land, neither increases the demand for land nor decreases the supply of land, and therefore cannot increase the price that the landowner can get from the user. Thus it is impossible for landowners to throw such taxation on land users by raising rents. Other things being unaltered, rents would be no higher than before, while the selling price of land, which is determined by net rents, would be much diminished. Whoever purchased land outright would have to pay less to the seller, because he would thereafter be called on to pay more to the State.

But while the Taxation of Land Values cannot raise rents, it would, especially in a country like this, where there is so much valuable land unused, tend strongly to lower them. In all our cities, and through all the country, there is much land which is not used, or not put to its best use, because it is held at high prices by men who do not want to, or who cannot, use it themselves, but who are holding it in expectation of profiting by the increased value which the growth of population will give to it in the future. Now the effect of the Taxation of Land Values would be to compel these men to seek tenants or purchasers. Land upon which there is no taxation even a poor man can easily hold for higher prices, for land eats nothing. But put heavy taxation upon it, and even a rich man will be driven to seek purchasers or tenants, and to get them he will have to put down the price he asks, instead of putting it up; for it is by asking less, not by asking more, that those who have anything they are forced to dispose of must seek customers. Rather than continue to pay heavy taxes upon land yielding him nothing, and from the future increase in value of which he could have no expectation of profit, since increase in value would mean increased taxes, he would be glad to give it away or let it revert to the State. Thus the dogs in the manger, who all over the country are withholding land that they cannot use themselves from men who would be glad to use it, would be forced to let go their grasp. To tax Land Values up to anything like their full amount would be to utterly destroy speculative values, and to diminish all rents into which this speculative element enters. And how groundless it is to think that landlords who have tenants could shift a tax on Land Values upon their tenants can be readily seen from the effect upon landlords who have no tenants. It is when tenants seek for land, not when landlords seek for tenants, that rent goes up.

To put the matter in a form in which it can be easily understood, let us take two cases. The one, a country where the available land is all in use, and the competition of tenants has carried rents to a point at which the tenant pays the landlord all he can possibly earn save just enough to barely live. The other, a country where all the available land is not in use and the rent that the landlord can get from the tenant is limited by the terms on which the tenant can get access to unused land. How, in either case, if the tax were imposed upon Land Values (or rent), could the landlord compel the tenant to pay it?

It may be well to call attention to the fact that a tax on Land Values is not a tax on land. They are very different things, and the difference should be noted, because a confusion of thought as to them may lead to the assumption that a tax on Land Values would fall on the user. Barring such effect as it might have on speculation, a tax on land — that is to say, a tax of so much per acre or so much per foot on all land — would fall on the user. For such a tax, falling equally on all land — on the poorest and least advantageously situated as fully as on the richest and best situated land — would become a condition imposed on the use of any land, from which there could be no escape, and thus the owners of rentable land could add it to their rent. Its operation would be analogous to that of a tax on a producible commodity, and it would in effect reduce the supply of land sufficient to pay the tax. But a tax on economic rent or Land Values would not fall on all land. It would fall only on valuable land, and on that in proportion to its value. It would not have to be paid upon the poorest land in use (which always determines rent), and so would not become a condition of use, or restrict the amount of land that could be profitably used. Thus the landowners on whom it fell could not shift it on the users of land. This distinction, as to nature and effects, between a tax on land and a tax on Land Values, it is necessary to bear in mind.

It is also necessary to bear in mind that the value of land is something totally distinct from the value of improvements. It is a value which arises not from the exertion of any particular individual, but from the growth and progress of the community. A tax on Land Values, therefore, never lessens the reward of exertion or accumulation. It simply takes for the whole community that value which the whole community creates.

While it is not true that a tax on Land Values or rent falls on the user, and thus distributes itself through increased prices, it is true that the greater number of taxes by which our public revenues are raised do. Thus, speaking generally, taxes upon capital fall, not upon the owners of capital, but upon the users of capital, and are by them transferred to the consumers of whatever the capital is used to produce; taxes upon buildings or building materials must ultimately be paid in increased building rents or prices by the occupiers of buildings; imposts upon production or duties upon imports must finally fall upon the consumer of the commodities. This fact is far from being popularly appreciated, for, if it were, the masses would never consent to the system by which the greater part of our revenues is raised. But, nevertheless, it is the vague apprehension of this that leads by confusion of ideas to the notion that a tax on Land Values must add to rents. This notion will disappear if it be considered how it is that any tax gives to the person first called on to pay it the power of shifting it upon others by an increase of price.

A tax on matches, for instance, will, as we know by experience, enable the manufacturer or dealer in matches to get a higher price. How? Evidently by adding to the cost of producing matches for sale, thus checking the supply of matches that can be offered for sale until the price rises sufficiently to compensate for the tax. It is this knowledge that the tax will add to the cost of production, and thus, below a certain price, check competition in supply, that enables the dealer to mark up the price of his stock of matches as soon as the tax is imposed, or compels him to mark it down as soon as the tax is remitted.

But a tax on Land Values does not add to the cost of producing land. Land is not a thing of human production. Man does not produce land! He finds it already in existence when he comes into the world. Its price, therefore, is not fixed by the cost of production, but is always the highest price that anyone can give for the privilege of using a particular piece. Land, unlike things that must be constantly produced by labor, has no normal value based on the cost of production, but ranges in value from nothing at all to the enormous values that attach to choice sites in great cities, or to mineral deposits of superior richness, when the growth of population causes a demand for their use.

Hence a tax on Land Values, instead of enabling the holder of land to charge that much more for his land, gives him no power to charge an additional penny. On the contrary, by making it more costly to hold land idle, it tends to increase the amount of land which owners must strive to secure tenants or purchasers for. Thus the effect of a tax on Land Values is not to increase the rent that the tenant must pay the owner for the use of the land, but rather to reduce it. And since the tax must be paid out of what the land will yield the owner, its effect would be to reduce the price for which the land could be sold outright.

Here, let us say, is a lot on the principal select street of a city having an annual or rental value of $10,000. Such a lot would now command a selling price of some $250,000. An increased tax upon Land Values would not reduce its rental value, except as it might have an effect in forcing into use unoccupied land at a greater distance from the center of the city. But as less of this rental value could be retained by the owner, the selling price would be diminished. And if a tax on Land Values could be imposed with such theoretical perfection that the whole rental value would be taken by the community, the owner would lose both his income from its present value and any expectation of profit from its future increase in value. While it would be still worth as much as before to the user, it would be worth nothing at all to the mere owner. Instead of having a selling value of $250,000, it would not sell for anything, since what the user paid for the privilege of using it would go in full to the community. Under a tax of this kind, even though it could not be imposed with theoretical nicety, the mere owner of land would disappear. No one would care to own land unless he wanted to improve or use it.

The general principle which determines the incidence of taxation is this: A tax upon anything or upon the methods or means of production of anything, the price of which is kept down by the ability to produce increased supplies, will, by increasing the cost of production, check supply, and thus add to the price of that thing, and ultimately fall on the consumer. But a tax upon anything of which the supply is fixed or monopolized, and of which the cost of production is not therefore a determining element, since it has no effect in checking supply, does not increase prices, and falls entirely on the owner.

In view of the efforts that are made to befog the popular mind on this point, I have deemed it worth while to show why taxes on Land Values cannot be shifted by landlords upon their tenants. But the fact that such a tax cannot be so shifted is realized well enough by landowners. Else why the opposition to the Single Tax, and why the cry of “confiscation?” Our national experience, like the experience of every other country, proves that those who are called on to pay a tax that can be shifted on others, seldom or ever oppose it, but frequently favor it, and that when once imposed, they generally resist its abolition. But did anyone ever hear of landlords welcoming a tax on Land Values, or opposing the abolition of such a tax?


More on this at...
"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #22 on: Dec 21, 2013, 04:35:32 pm »


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The difference between land and capital is huge, and explains why the cost of silicon chips goes down as demand goes up, while the cost of Silicon Valley goes up as demand goes up.

The anti-Georgist tax policy known as Proposition 13 continues to create the deepest levels of poverty precisely where wealth most abounds, proving once again that Henry George was right and that both his left-wing and right-wing critics were (and are) wrong...

The Jungle: Thousands of Homeless People Live in Shantytowns at the Epicenter of High-Tech, Super-Rich Silicon Valley

Residents of Silicon Valley’s largest homeless encampment illustrate the widening divide between the nation’s haves and have-nots.

By Evelyn Nieves
December 15, 2013

Photo Credit: Evelyn Nieves

By mid-morning on Thursday, the sun was shining hard enough to dry wet blankets and the residents of the Jungle began surfacing, letting each other know they were still alive.

Six straight nights of freezing temperatures had tested their tenacity, not to mention their tarps and tents. It was so cold that the raccoons that raid the trash bins every night disappeared, a first. Ditto the crows, squirrels and feral cats. Life in the Jungle, 75 wooded acres off Interstate 101 in San Jose that comprises Silicon Valley’s largest homeless encampment, came to a standstill.

With the hard ground thawing, the Jungle looked as if spring had sprung. People strolled the dirt paths, rode their bikes and walked their dogs. Everyone in the Jungle—200 men and women, give or take—looked ready to celebrate surviving the earliest, coldest cold snap on record.

“We were lucky,” said Troy Feid, a former carpenter, squinting into the bright sky. “Not everyone was.”

Four homeless men in Silicon Valley did not make it through the season’s first bout of sub-freezing temperatures. Over the last two weeks, three of them froze to death on the streets of San Jose, not far from the Jungle.

That people live and die on the streets of Silicon Valley is no news to the poor, of course. With more than 6,500 tech companies in all, Santa Clara County is home to the biggest stars in the tech universe, including Google, Facebook, Yahoo, eBay and Apple. But the land of high-tech milk and honey is also a prime example of the widening divide between the nation’s haves and have-nots.

For all its stock-option millionaires, the San Jose/Santa Clara County region (pop. 1.8 million) also has the nation’s fifth largest population of homeless (after New York, Los Angeles, Seattle and San Diego), according to the U.S. Department of Housing and Urban Development. The main culprits? Budget cuts that have frayed the safety net and sky-high housing costs. These days, a three-bedroom, one-bath starter home in San Jose, the county seat and one of its most affordable cities, costs a cool million. Rents for a two-bedroom apartment go from $2,000 to $5,000 a month, and those on the low-end are scarce.

While homelessness remains off the radar of the Silicon Valley titans, it keeps getting worse, up 20 percent in two years. More than 7,600 people sleep on the streets every night. Dozens of encampments dot the landscape, and thousands of people live in temporary quarters—shelters, motels, friends’ homes. Several private and public organizations in Santa Clara County are dedicated to helping the unhoused receive medical care, supplies and assistance in finding shelter. But funds and available units to move homeless people into permanent housing are meager.

"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #23 on: Dec 21, 2013, 04:36:59 pm »


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What's All the Land in America Worth?

By Matthew Yglesias

After yesterday's post on the aggregate value of all the housing in America, a couple of correspondents noted to me that for recent decades you can actually compute the value of all the land in America from the Federal Reserve's Flow of Funds report (PDF). The short answer is that all the privately owned land in America is worth about $14.488 trillion—which is a lot.

Here's how the math works. Table B.100 "Balance Sheet of Households and Nonprofit Organizations" has a line for real estate in its nonfinancial assets section. It tells us that households and nonprofits own $21.61 trillion in real estate. Then at the bottom on line 45 it tells us that the replacement cost of all the structures owned by households and nonprofits is $13.8 trillion. So all you need to do is subtract the replacement cost of the structures from the total value of the real estate to reach the conclusion that a little bit over one-third of the total real-estate value—about $7.812 trillion—is land.

Then you repeat the procedure for B.102 "Balance Sheet of Nonfinancial Corporate Business." Here we learn that corporate America owns $9.867 trillion of real estate and that the replacement value of the structures on it is about $8.109 trillion. Subtract and we conclude that there's $1.758 trillion* worth of land in the corporate sector.

Last we turn to noncorporate business, which owns $9.704 trillion in real estate and has a replacement cost of structures of $4.786 trillion, giving us $4.918 trillion in land.

Add it all up and you get $14.488 trillion in land value.


Sounding the Revenue Potential of Land: Fifteen Lost Elements

by Mason Gaffney

Text of an address delivered at the annual meeting of the Council of Georgist Organizations, held in Albuquerque, July 2004


You see, my dear Watson, but you do not observe.” - Holmes

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.

*  Items 1-3 below correct for the downward bias in standard data.
*  Items 4-11 broaden the concepts of land and its rent.
*  Items 12-15 show how exempting production, trade and capital uncaps potential tax rates.



^^  Still think wages, sales, houses and capital goods can't all be exempt from taxation without having to eliminate or even cut essential government services in the process?

Note: "Essential government services" obviously do NOT include (a) imperialist wars of aggression, (b) domestic police state measures, (c) corporate welfare subsidies, (d) banker bailouts, nor (e) interest on the national debt (which can and must be eliminated via the implementation of a debt-free money system) -- the combined annual taxpayer cost of which easily exceeds $1 trillion.

You've been lied to, folks. The Austrians lied to you. The Keynesians lied to you. The Marxists lied to you.

We can reconcile the alleged and falsely perceived conflict between economic freedom, on the one hand, and social justice, on the other, simply by implementing both...

*  The NEED Act

*  The Single Tax
"Abolish all taxation save that upon land values." -- Henry George

Re: : Land Value Taxation: Rebuttals to Common Objections
« Reply #24 on: Feb 27, 2014, 02:51:49 pm »


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"Abolish all taxation save that upon land values." -- Henry George


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