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116-436: Georgism is concerned with the distribution of economic rent caused by land ownership, natural monopolies , pollution rights, and control of the commons, including title of ownership for natural resources and other contrived privileges (e.g., intellectual property ). Any natural resource that is inherently limited in supply can generate economic rent, but the classical and most significant example of land monopoly involves

232-644: A land value tax (LVT). Some modern proponents are dissatisfied with the name Georgist . While Henry George was well known throughout his life, he has been largely forgotten by the public and the idea of a single tax of land predates him. Some now prefer the term geoism , with geo (from Greek γῆ gē "earth, land") being the first compound of the name George < (Gr.) Geōrgios < geōrgos "farmer" or geōrgia "agriculture, farming" < gē + ergon "work" deliberately ambiguous. The terms Earth Sharing , geonomics and geolibertarianism are also used by some Georgists. These terms represent

348-501: A single tax on land. They did not distinguish between the intrinsic value of land and ground rent. Their theories originated in France and were most popular during the second half of the 18th century. The movement was particularly dominated by Anne Robert Jacques Turgot (1727–1781) and François Quesnay (1694–1774). It influenced contemporary statesmen, such as Charles Alexandre de Calonne . The physiocrats were highly influential in

464-507: A 100% Georgist tax would destroy the incentive to search for natural resources and discover optimal locations for businesses, as the additional profits that would result from such discoveries would lead to a corresponding increase in the unimproved value of the land, and so be taxed away. Natural monopolies Too Many Requests If you report this error to the Wikimedia System Administrators, please include

580-417: A Georgist club in that city established in 1890. Years later, in his capacity as a city alderman, he was selected to serve as Houston Tax Commissioner, and promulgated a "Houston Plan of Taxation" in 1912. Improvements to land and merchants' inventories were taxed at 25 percent of the appraised value, unimproved land was taxed at 70 percent of appraisal, and personal property was exempt. This was calculated using

696-417: A conservation strategy, but they emphasize different aspects. Conservation is the central issue of ecology, whereas economic rent is the central issue of geoism. Ecological economists might price pollution fines more conservatively to prevent inherently unquantifiable damage to the environment, whereas Georgists might emphasize mediation between conflicting interests and human rights . Geolibertarianism ,

812-460: A country where land titles have already been granted. Georgists have observed that privately created wealth is socialized via the tax system (e.g., through income and sales tax ), while socially created wealth in land values are privatized in the price of land titles and bank mortgages. The opposite would be the case if land rents replaced taxes on labor as the main source of public revenue ; socially created wealth would become available for use by

928-580: A difference of emphasis and sometimes real differences about how land rent should be spent ( citizen's dividend or just replacing other taxes), but they all agree that land rent should be recovered from its private recipients. Compulsory fines and fees related to land rents are the most common Georgist policies, but some geoists prefer voluntary value capture systems that rely on methods such as non-compulsory or self-assessed location value fees, community land trusts and purchasing land value covenants . Some geoists believe that partially compensating landowners

1044-499: A good that is fixed in supply, such as land, does not change if it is taxed. By contrast, the price of manufactured goods can rise in response to increased taxes, because the higher cost reduces the number of units that suppliers are willing to sell at the original price. The price increase is how the maker passes along some part of the tax to consumers. However, if the revenue from LVT is used to reduce other taxes or to provide valuable public investment, it can cause land prices to rise as

1160-406: A high land value tax would cause people "to contribute to the public, not in proportion to what they produce ... but in proportion to the value of natural [common] opportunities that they hold [monopolize]". He went on to explain that "by taking for public use that value which attaches to land by reason of the growth and improvement of the community", it would, "make the holding of land unprofitable to

1276-529: A household. It later became subject to a land tax known as "geld". The physiocrats were a group of economists who believed that the wealth of nations was derived solely from the value of land agriculture or land development . Before the Industrial Revolution , this was approximately correct. Physiocracy is one of the "early modern" schools of economics . Physiocrats called for the abolition of all existing taxes, completely free trade and

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1392-428: A land value tax would cause the purchase price of land to decrease. George did not believe landowners should be compensated and described the issue as being analogous to compensation for former slave owners. Other geoists disagree on the question of compensation; some advocate complete compensation while others endorse only enough compensation required to achieve Georgist reforms. Some geoists advocate compensation only for

1508-570: A land-value tax, although Georgists endorsed multiple forms of rent capture (e.g. seigniorage ) as legitimate. The term Georgism was invented later, and some prefer the term geoism as more generic. Henry George is best known for popularizing the argument that government should be funded by a tax on land rent rather than taxes on labor . George believed that although scientific experiments could not be performed in political economy, theories could be tested by comparing different societies with different conditions and by thought experiments about

1624-556: A land-value tax. Following the 2008 Recession and city's 2013 bankruptcy , speculators bought cheap property, expecting to profit from the city's recovery. This plan to shift the cost of municipal services to owners of empty land, while exempting community gardens and parks, will require approval from the Michigan Legislature and Detroit City Council before being added as a ballot measure for Detroit residents. Various organizations still exist that continue to promote

1740-504: A market-oriented branch of Geoism, tends to take a direct stance against what it perceives as burdensome regulation and would like to see auctioned pollution quotas or taxes replace most command and control regulation . Since ecologists are primarily concerned with conservation, they tend to emphasize less the issue of equitably distributing scarcity/pollution rents , whereas Georgists insist that unearned income not accrue to those who hold title to natural assets and pollution privilege. To

1856-416: A means of raising public revenue is also a progressive tax tending to reduce economic inequality , since it applies entirely to ownership of valuable land, which is correlated with income, and there is generally no means by which landlords can shift the tax burden onto tenants or laborers. Landlords are unable to pass the tax on to tenants because the supply and demand of rented land is unchanged. Because

1972-428: A modern Georgist severance tax . Other contemporaries such as Austrian economist Frank Fetter and neoclassical economist John Bates Clark argued that it was impractical to maintain the traditional distinction between land and capital and used this as a basis to attack Georgism. Mark Blaug , a specialist in the history of economic thought, credits Fetter and Clark with influencing mainstream economists to abandon

2088-517: A negative dead-weight loss that boosts productivity. Because land value tax would apply to foreign land speculators, the Australian Treasury estimated that land value tax was unique in having a negative marginal excess burden, meaning that it would increase long-run living standards. It was Adam Smith who first noted the efficiency and distributional properties of a land value tax in his book The Wealth of Nations . Ground-rents are

2204-515: A net loss due to a shift of taxation to land value; most taxpayers would gain from the replacement of other taxes with a tax on land value. Historically, those who advocated for taxes on rent tax only great enough to replace other taxes were known as endorsers of single tax limited . Most early advocacy groups described themselves as single taxers and George reluctantly accepted the single tax as an accurate name for his main political goal—the repeal of all unjust or inefficient taxes, to be replaced with

2320-442: 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. The annual produce of the land and labour of the society, the real wealth and revenue of the great body of the people, might be the same after such a tax as before. Ground-rents and the ordinary rent of land are, therefore, perhaps, the species of revenue which can best bear to have

2436-405: A particular spot of ground at a greater or smaller expense. In every country the greatest number of rich competitors is in the capital, and it is there accordingly that the highest ground-rents are always to be found. As the wealth of those competitors would in no respect be increased by a tax upon ground-rents, they would not probably be disposed to pay more for the use of the ground. Whether the tax

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2552-481: A peculiar tax imposed upon them. ... Nothing can be more reasonable than that a fund which owes its existence to the good government of the state should be taxed peculiarly, or should contribute something more than the greater part of other funds, towards the support of that government. Benjamin Franklin and Winston Churchill made similar distributional and efficiency arguments for taxing land rents. They noted that

2668-559: A proper social function, which should be controlled and managed by and for the whole people concerned." Georgists were divided by this question of natural monopolies and often favored public ownership only of the rents from common rights-of-way , rather than public ownership of utility companies themselves. The early conservationism of the Progressive Era was inspired partly by Henry George , and his influence extended for decades afterward. Some ecological economists still support

2784-676: A public levy on land value does not cause economic inefficiency , unlike other taxes. A land value tax also has progressive tax effects. Advocates of land value taxes argue that they reduce economic inequality , increase economic efficiency, remove incentives to under-utilize urban land, and reduce property speculation . Georgist ideas were popular and influential during the late 19th and early 20th centuries. Political parties, institutions, and communities were founded on Georgist principles during that time. Early devotees of George's economic philosophy were often termed Single Taxers for their political goal of raising public revenue mainly or only from

2900-494: A result of efficiency gains if speculators stop hoarding unused land. Real estate bubbles direct savings towards rent-seeking activities rather than other investments and can contribute to recessions . Advocates claim that LVT reduces the speculative element in land pricing, thereby leaving more money for productive capital investment. At sufficiently high levels, LVT would cause real estate prices to fall by taxing away land rents that would otherwise become 'capitalized' into

3016-561: A result of higher productivity, by more than the amount that LVT removed. Land tax incidence rests completely upon landlords, although business sectors that provide services to landlords are indirectly impacted. In some economies, 80 percent of bank lending finances real estate, with a large portion of that for land. Reduced demand for land speculation might reduce the amount of circulating bank credit. While landowners are unlikely to be able to charge higher rents to compensate for LVT, removing other taxes may increase rents, as this may affect

3132-423: A still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground. More or less can be got for it according as the competitors happen to be richer or poorer, or can afford to gratify their fancy for

3248-468: A tax upon ground-rents, they would not probably be disposed to pay more for the use of the ground. Whether the tax was to be advanced by the inhabitant, or by the owner of the ground, would be of little importance. The more the inhabitant was obliged to pay for the tax, the less he would incline to pay for the ground; so that the final payment of the tax would fall altogether upon the owner of the ground-rent. Henry George (2 September 1839 – 29 October 1897)

3364-415: A tendency toward boom-and-bust cycles. According to George, people justly own what they create, but natural opportunities and land belong equally to all. The tax upon land values is, therefore, the most just and equal of all taxes. It falls only upon those who receive from society a peculiar and valuable benefit, and upon them in proportion to the benefit they receive. It is the taking by the community, for

3480-491: A three or four percent tax on land values would fit this condition. After implementing land taxes, governments would purchase future land values at discounted prices and take ownership after 100 years. Marshall asserted that this plan, which he strongly supported, would end the need for a tax collection department of government. For newly formed countries where land was not already private, Marshall advocated implementing George's economic proposal immediately. Karl Marx considered

3596-463: Is a progressive tax , in that the tax burden falls on land owners, because land ownership is correlated with wealth and income. The land value tax has been referred to as "the perfect tax" and the economic efficiency of a land value tax has been accepted since the eighteenth century. Economists since Adam Smith and David Ricardo have advocated this tax because it does not hurt economic activity, and encourages development without subsidies. LVT

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3712-424: Is a politically expedient compromise necessary for achieving reform. For similar reasons, others propose capturing only future land value increases, instead of all land rent. Some libertarians and minarchists take the position that limited social spending should be financed using Georgist concepts of rent value capture , but that not all land rent should be captured. Today, this relatively conservative adaptation

3828-484: Is an effective method to promote transit-oriented development . The value of land reflects the value it can provide over time. This value can be measured by the ground rent that a piece of land receives on the market. The present value of ground-rent is the basis for land prices. A land value tax (LVT) will reduce the ground rent received by the landlord, and thus will decrease the price of land, holding all else constant. The rent charged for land may also decrease as

3944-562: Is associated with Henry George , whose ideology became known as Georgism . George argued that taxing the land value is the most logical source of public revenue because the supply of land is fixed and because public infrastructure improvements would be reflected in (and thus paid for by) increased land values. A low-rate land value tax is currently implemented throughout Denmark , Estonia , Lithuania , Russia , Singapore , and Taiwan ; it has also been applied to lesser extents in parts of Australia , Germany , Mexico ( Mexicali ), and

4060-432: Is caused by the concentration of population . That general rate should have to be spent on breaking out small green spots in the midst of dense industrial districts, and on the preservation of large green areas between different towns and between different suburbs which are tending to coalesce . This idea influenced Marshall's pupil Arthur Pigou 's ideas on taxing negative externalities. Pigou wrote an essay in favor of

4176-424: Is due to those investments classed as land values and natural monopolies and to competitive industries aided by such monopolies", and that "tax reform should seek to remove all burdens from capital and labour and impose them on monopolies." However, he criticized Georgists for failing to see that Henry George's anti-monopoly ideas must be implemented with a variety of policy tools. Commons wrote, "Trees do not grow into

4292-440: Is due to variation of building design and quality. Modern statistical techniques have improved the process; in the 1960s and 1970s, multivariate analysis was introduced as an assessment tool. Usually, such a valuation process begins with a measurement of the most and least valuable land within the taxation area. A few sites of intermediate value are then identified and used as "landmark" values. Other values are interpolated between

4408-409: Is everything that exists in nature independent of human activity. George explicitly included climate, soil, waterways, mineral deposits, laws/forces of nature, public ways, forests, oceans, air, and solar energy in the category of land. While the philosophy of Georgism does not say anything definitive about specific policy interventions needed to address problems posed by various sources of economic rent,

4524-423: Is impractical because of uncertainty regarding land titles and tenure . For instance, a parcel of grazing land may be communally owned by village inhabitants and administered by village elders. The land in question would need to be held in a trust or similar body for taxation purposes. If the government cannot accurately define ownership boundaries and ascertain the proper owners, it cannot know from whom to collect

4640-580: Is now often known as Georgism . Its relevance to public finance is underpinned by the Henry George theorem . After the 1868 Meiji Restoration in Japan, land tax reform was undertaken. An LVT was implemented beginning in 1873. By 1880 initial problems with valuation and rural opposition had been overcome and rapid industrialisation began. In the United Kingdom , LVT was an important part of

4756-463: Is plausible but was more likely to be true during George's time than now. An early criticism of Georgism was that it would generate too much public revenue and result in unwanted growth of government, but later critics argued that it would not generate enough income to cover government spending. Joseph Schumpeter concluded his analysis of Georgism by stating that, "It is not economically unsound, except that it involves an unwarranted optimism concerning

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4872-463: Is seen by some, including other opponents of Georgism, as relying on false assumptions and flawed reasoning. Austrian economist Friedrich Hayek credited early enthusiasm for Henry George with developing his interest in economics. Later, Hayek said that the theory of Georgism would be very strong if assessment challenges did not result in unfair outcomes, but he believed that they would. Economists Bryan Caplan and Zachary Gochenour have argued that

4988-401: Is that everything would be all right if ground rent were paid to the state." Richard T. Ely agreed with the economic arguments for Georgism but believed that correcting the problem the way Henry George wanted, without compensation, was unjust to existing landowners. In explaining his position, Ely wrote, "If we have all made a mistake, should one party to the transaction alone bear the cost of

5104-484: Is used. Because the supply of land is essentially fixed , land rents depend on what tenants are prepared to pay, rather than on landlord expenses. Thus, if landlords passed LVT on to tenants, they might move or rent smaller spaces before absorbing increased rent. The land's occupants benefit from improvements surrounding a site. Such improvements shift tenants' aggregate demand curve to the right (they will pay more). Landlords benefit from price competition among tenants;

5220-460: Is usually considered incompatible with true geolibertarianism , which requires that excess rents be gathered and then distributed back to residents. During Henry George's time, this restrained Georgist philosophy was known as "single tax limited", as opposed to "single tax unlimited." George disagreed with the limited interpretation, but he accepted its adherents (e.g., Thomas Shearman ) as legitimate "single-taxers." Georgist ideas heavily influenced

5336-535: The European Parliament 1978–1979. The influence of Henry George has waned over time, but Georgist ideas still occasionally emerge in politics. For the United States 2004 presidential election , third-party presidential candidate Ralph Nader mentioned George in his policy statements. Economists still generally favor a land value tax. Monetarist economist Milton Friedman publicly endorsed

5452-522: The Fabian Society , which would each go on to help form the modern-day Labour Party . The Liberal government included a land tax as part of several taxes in the 1909 People's Budget intended to redistribute wealth (including a progressively graded income tax and an increase of inheritance tax ). This caused a political crisis that resulted indirectly in reform of the House of Lords . The budget

5568-532: The Fathers of the Church laid down the duty of the rich toward the poor in no uncertain terms. As St. Ambrose put it: "You are not making a gift of what is yours to the poor man, but you are giving him back what is his. You have been appropriating things that are meant to be for the common use of everyone. The earth belongs to everyone, not to the rich." In addition, the Church maintains that civil authorities have

5684-483: The Kiautschou Bay concession , which had successful implementation of LVT, bringing increased wealth and financial stability to the colony. The Republic of China would go on to implement LVT in farms at first, later implementing it in the urban areas due to its success. Alfred Marshall argued in favour of a "fresh air rate", a tax to be charged to urban landowners and levied on that value of urban land that

5800-878: The Lincoln Institute of Land Policy was established in 1974 based on the writings of Henry George. It "seeks to improve the dialogue about urban development, the built environment, and tax policy in the United States and abroad". The Henry George Foundation continues to promote the ideas of Henry George in the United Kingdom. The IU is an international umbrella organisation that brings together organizations worldwide that seek land-value tax reform. The economist Alfred Marshall believed that George's views in Progress and Poverty were dangerous, even predicting wars, terror, and economic destruction from

5916-726: The Somers System . This Georgist tax continued until 1915, when two courts struck it down as violating the Texas Constitution in 1915. This quashed efforts in several other Texas cities towards implementing the Houston Plan: Beaumont , Corpus Christi , Galveston , San Antonio , and Waco . The German protectorate of the Kiautschou Bay concession in Jiaozhou Bay , China , fully implemented Georgist policy. Its sole source of government revenue

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6032-652: The Town and Country Planning Act 1947 , but it was repealed when the Labour government lost power in 1951. Senior Labour figures in recent times have advocated an LVT, notably Andy Burnham in his 2010 leadership campaign, former Leader of the Opposition Jeremy Corbyn , and Shadow Chancellor John McDonnell . The Republic of China was one of the first jurisdictions to implement an LVT, specified in its constitution. Sun Yat-Sen would learn about LVT from

6148-419: The United States (e.g., Pennsylvania ). It is also known as a location value tax , a point valuation tax , a site valuation tax , split rate tax , or a site-value rating . Most taxes distort economic decisions and discourage beneficial economic activity. For example, property taxes discourage construction, maintenance, and repair because taxes increase with improvements. LVT is not based on how land

6264-467: The early history of land value taxation in the United States . A participant in the Radical Movement , Thomas Paine contended in his Agrarian Justice pamphlet that all citizens should be paid 15 pounds at age 21 "as a compensation in part for the loss of his or her natural inheritance by the introduction of the system of landed property." "Men did not make the earth. It is the value of

6380-410: The "least bad tax", since unlike other taxes, it would not impose an excess burden on economic activity (leading to zero or even negative " deadweight loss "); hence, a replacement of other more "distortionary" taxes with a land value tax would improve economic welfare. As land value tax can improve the use of land and redirect investment toward productive, non- rent-seeking activities, it could even have

6496-524: The 1938–1939 Parliament, called the London Rating (Site Values) Bill. Although it failed, it detailed legislation for the implementation of a system of LVT using annual value assessment. After 1945, the Labour Party adopted the policy, against substantial opposition, of collecting "development value": the increase in land price arising from planning consent. This was one of the provisions of

6612-487: The Georgist land value tax as the "least bad tax". Economist Joseph Stiglitz stated that: "Not only was Henry George correct that a tax on land is non-distortionary, but in an equilibrium society … tax on land raises just enough revenue to finance the (optimally chosen) level of government expenditure." He dubbed this proposition the Henry George theorem . Several communities were initiated with Georgist principles during

6728-418: The Georgist policy of land value tax as a means of freeing or rewilding unused land and conserving nature by reducing urban sprawl . Pollution degrades the value of what Georgists consider to be commons . Because pollution is a negative contribution, a taking from the commons or a cost imposed on others, its value is economic rent , even when the polluter is not receiving an explicit income. Therefore, to

6844-472: The United States, the United Kingdom and Australia are more than sufficient to fund all levels of government. Anarcho-capitalist political philosopher and economist Murray Rothbard criticized Georgism in Man, Economy, and State as being philosophically incongruent with subjective value theory , and further stating that land is irrelevant in the factors of production, trade, and price systems, but this critique

6960-417: The common blunder?" John R. Commons supported Georgist economics but opposed what he perceived as an environmentally and politically reckless tendency for advocates to rely on a one-size-fits-all approach to tax reform, specifically, the "single tax" framing. Commons concluded The Distribution of Wealth , with an estimate that "perhaps 95% of the total values represented by these millionaire [ sic ] fortunes

7076-595: The common goal among modern Georgists is to capture and share (or reduce) rent from all sources of natural monopoly and legal privilege. Henry George shared the goal of modern Georgists to socialize or dismantle rent from all forms of land monopoly and legal privilege. However, George emphasized mainly his preferred policy known as land value tax , which targeted a particular form of unearned income known as ground rent . George emphasized ground-rent because basic locations were more valuable than other monopolies and everybody needed locations to survive, which he contrasted with

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7192-475: The community, while the fruits of labor would remain private. According to Georgists, a land value tax can be considered a user fee instead of a tax, since it is related to the market value of socially created locational advantage, the privilege to exclude others from locations. Assets consisting of commodified privilege can be considered as wealth since they have exchange value, similar to taxi medallions . A land value tax, charging fees for exclusive use of land, as

7308-427: The costs of taxes and the benefits of public spending always eventually apply to and enrich the owners of land. Therefore, they believed it would be best to defray public costs and recapture value of public spending by applying public charges directly to owners of land titles, rather than harming public welfare with taxes assessed against beneficial activities such as trade and labor. Henry George wrote that his plan for

7424-457: The demand for land. Assuming constant demand, an increase in constructed space decreases the cost of improvements to land such as houses. Shifting property taxes from improvements to land encourages development. Infill of underutilized urban space is one common practice to reduce urban sprawl . LVT is less vulnerable to tax evasion , since land cannot be concealed or moved overseas and titles are easily identified, as they are registered with

7540-498: The details below. Request from 172.68.168.226 via cp1108 cp1108, Varnish XID 215314090 Upstream caches: cp1108 int Error: 429, Too Many Requests at Thu, 28 Nov 2024 07:41:19 GMT Land value tax A land value tax ( LVT ) is a levy on the value of land without regard to buildings , personal property and other improvements upon it. Some economists favor LVT, arguing it does not cause economic inefficiency , and helps reduce economic inequality . A land value tax

7656-399: The economic activity of communities, including public investments, the economic rent of land was the best source of tax revenue. This book significantly influenced land taxation in the United States and other countries, including Denmark, which continues grundskyld ('ground duty') as a key component of its tax system. The philosophy that natural resource rents should be captured by society

7772-417: The effects of a land value tax, pointing out how it would not hurt economic activity, and how it would not raise contract rents. Ground-rents are a still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for

7888-477: The effects of various factors. Applying this method, he concluded that many of the problems that beset society, such as poverty, inequality, and economic booms and busts, could be attributed to the private ownership of the necessary resource: land rent. In his most celebrated book, Progress and Poverty , George argues that the appropriation of land rent for private use contributes to persistent poverty in spite of technological progress, and causes economies to exhibit

8004-416: The elimination of corruption, fraud, and evasion with respect to the collection of taxes; the enablement of true free trade; the destruction of monopolies; the elevation of wages to the full value of labor; the transformation of labor-saving inventions into blessings for all; and the equitable distribution of comfort, leisure, and other advantages that are made possible by an advancing civilization. In this way,

8120-546: The extent that geoists recognize the effect of pollution or share conservationist values, they will agree with ecological economists about the need to limit pollution, but geoists will also insist that pollution rents generated from those conservation efforts do not accrue to polluters and are instead used for public purposes or to compensate those who suffer the negative effects of pollution. Ecological economists advocate similar pollution restrictions but, emphasizing conservation first, might be willing to grant private polluters

8236-417: The extent that society determines pollution to be harmful, most Georgists propose to limit pollution with taxation or quotas that capture the resulting rents for public use, restoration, or a citizen's dividend . Georgism is related to the school of ecological economics , since both propose market-based restrictions for pollution. The schools are compatible in that they advocate using similar tools as part of

8352-438: The extraction of common ground rent from valuable urban locations. Georgists argue that taxing economic rent is efficient , fair, and equitable . The main Georgist policy recommendation is a tax assessed on land value, arguing that revenues from a land value tax (LVT) can be used to reduce or eliminate existing taxes (such as on income , trade , or purchases ) that are unfair and inefficient. Some Georgists also advocate for

8468-590: The height of the philosophy's popularity. Two such communities that still exist are Arden, Delaware , which was founded in 1900 by Frank Stephens and William Lightfoot Price , and Fairhope, Alabama , which was founded in 1894 under the auspices of the Fairhope Single Tax Corporation . Some established communities in the United States also adopted Georgist tax policies. A Georgist in Houston, Texas , Joseph Jay "J.J." Pastoriza , promoted

8584-629: The idea "that land is a unique factor of production and hence that there is any special need for a special theory of ground rent" claiming that "this is in fact the basis of all the attacks on Henry George by contemporary economists and certainly the fundamental reason why professional economists increasingly ignored him". Robert Solow endorsed the theory of Georgism, while being wary of the perceived injustice of expropriation . Solow stated that taxing away expected land rents "would have no semblance of fairness"; however, Georgism would be good to introduce where location values were not already privatized or if

8700-630: The idea) remains committed to a local form of LVT, as do the Green Party of England and Wales and the Scottish Greens . The 1931 Labour budget included an LVT, but before it came into force it was repealed by the Conservative-dominated national government that followed. An attempt at introducing LVT in the administrative County of London was made by the local authority under the leadership of Herbert Morrison in

8816-644: The ideas of Henry George. According to The American Journal of Economics and Sociology , the periodical Land&Liberty , established in 1894, is "the longest-lived Georgist project in history". Founded during the Great Depression in 1932, the Henry George School of Social Science in New York offers courses, sponsors seminars, and publishes research in the Georgist paradigm. Also in the US,

8932-503: The immediate implementation of its recommendations. Specifically, Marshall was upset about the idea of rapid change and the unfairness of not compensating existing landowners. In his lectures on Progress and Poverty , Marshall opposed George's position on compensation while fully endorsing his ultimate remedy. So far as land value tax moderately replaced other taxes and did not cause the price of land to fall, Marshall supported land value taxation on economic and moral grounds, suggesting that

9048-466: The improvements 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." This proposal was the origin of the citizen's dividend advocated by Geolibertarianism . Thomas Spence advocated a similar proposal except that the land rent would be distributed equally each year regardless of age. Adam Smith, in his 1776 book The Wealth of Nations , first rigorously analyzed

9164-446: The incentive to build on remote sites and so reduces urban sprawl . For example, Harrisburg, Pennsylvania 's LVT has operated since 1975. This policy was credited by mayor Stephen R. Reed with reducing the number of vacant downtown structures from around 4,200 in 1982 to fewer than 500. LVT is arguably an ecotax because it discourages the waste of prime locations, which are a finite resource. Many urban planners claim that LVT

9280-455: The landmark values. The data is then collated in a database, "smoothed" and mapped using a geographic information system (GIS). Thus, even if the initial valuation is difficult, once the system is in use, successive valuations become easier. In the context of LVT as a single tax (replacing all other taxes), some have argued that LVT alone cannot raise enough tax revenue . However, the presence of other taxes can reduce land values and hence

9396-453: The landowners who benefit from them. Thus, LVT captures the land value of socially created wealth, allowing a reduction in tax on privately created (non-land) wealth. LVT generally is a progressive tax, with those of greater means paying more, in that land ownership correlates to income and landlords cannot shift the tax burden onto tenants. LVT generally reduces economic inequality , removes incentives to misuse real estate, and reduces

9512-418: The less significant streetcar and telegraph monopolies, which George also criticized. George likened the problem to a laborer traveling home who is waylaid by a series of highway robbers along the way, each who demand a small portion of the traveler's wages, and finally at the very end of the road waits a robber who demands all that the traveler has left. George reasoned that it made little difference to challenge

9628-609: The marginal social cost of public services rendered to specific activities, and replacing them with taxes on site values, would substantially improve the economic efficiency of the jurisdiction." LVT's efficiency has been observed in practice. Fred Foldvary stated that LVT discourages speculative land holding because the tax reflects changes in land value (up and down), encouraging landowners to develop or sell vacant/underused plots in high demand. Foldvary claimed that LVT increases investment in dilapidated inner city areas because improvements don't cause tax increases. This in turn reduces

9744-453: The mere owner, and profitable only to the user". A high land value tax would discourage speculators from holding valuable natural opportunities (like urban real estate) unused or only partially used. Henry George claimed this would have many benefits, including the reduction or elimination of tax burdens from poorer neighborhoods and agricultural districts; the elimination of a multiplicity of taxes and expensive obsolete government institutions;

9860-556: The only direct effect of LVT in this case is to reduce the amount of social benefit that is privately captured as land price by titleholders. LVT is said to be justified for economic reasons because it does not deter production, distort markets, or otherwise create deadweight loss . Land value tax can even have negative deadweight loss (social benefits), particularly when land use improves. Economist William Vickrey believed that: "removing almost all business taxes, including property taxes on improvements, excepting only taxes reflecting

9976-436: The owners of valuable land who tend to be the rich, and since the amount of land is fixed, the tax burden cannot be passed on as higher rents or lower wages to tenants, consumers, or workers. Several practical issues complicate LVT implementation. Most notably, it must be: Levying an LVT requires an assessment and a title register. In a 1796 United States Supreme Court opinion, Justice William Paterson said that leaving

10092-570: The platform of the Liberal Party during the early part of the twentieth century. David Lloyd George and H. H. Asquith proposed "to free the land that from this very hour is shackled with the chains of feudalism." It was also advocated by Winston Churchill early in his career. The modern Liberal Party (not to be confused with the Liberal Democrats , who are the heir to the earlier Liberal Party and who offer some support for

10208-963: The politics of the early 20th century. Political parties that were formed based on Georgist ideas include the Commonwealth Land Party in the United States , the Henry George Justice Party in Victoria , the Single Tax League in South Australia , and the Justice Party in Denmark . In the United Kingdom , George's writings were praised by emerging socialist groups in 1890s such as the Independent Labour Party and

10324-409: The price of real estate. It also encourages landowners to sell or develop locations that they are not using. This might cause some landowners, especially pure landowners, to resist high land value tax rates. Landowners often possess significant political influence, which may help explain the limited spread of land value taxes so far. A land value tax has progressive tax effects, in that it is paid by

10440-400: The privilege to capture pollution rents. To the extent that ecological economists share the geoist view of social justice, they would advocate auctioning pollution quotas instead of giving them away for free. This distinction can be seen in the difference between basic cap and trade and the geoist variation, cap and share , a proposal to auction temporary pollution permits, with rents going to

10556-468: The public, instead of giving pollution privilege away for free to existing polluters or selling perpetual permits. The revenue can allow the reduction or elimination of taxes, greater public investment/spending, or the direct distribution of funds to citizens as a pension or basic income / citizen's dividend . In practice, the elimination of all other taxes implies a high land value tax, greater than any currently existing land tax. Introducing or increasing

10672-430: The public. Land value assessments are usually considered public information, which is available upon request. Transparency reduces tax evasion. Land acquires a scarcity value owing to the competing needs for space. The value of land generally owes nothing to the landowner and everything to the surroundings. The Catholic Church asserts in its 1967 " universal destination of goods " principle: Everyone knows that

10788-500: The return of surplus public revenue to the people by means of a basic income or citizen's dividend . Henry George popularized the concept of gaining public revenues mainly from land and natural resource privileges with his first book, Progress and Poverty (1879). The philosophical basis of Georgism draws on thinkers such as John Locke , Baruch Spinoza , and Thomas Paine . Economists from Adam Smith and David Ricardo to Milton Friedman and Joseph Stiglitz have observed that

10904-410: The revenue that can be raised from them. The Physiocrats argued that all other taxes ultimately come at the expense of land rental values. Most modern LVT systems function alongside other taxes and thus only reduce their impact without removing them. Land taxes that are higher than the rental surplus (the full land rent for that time period) would result in land abandonment . In some countries, LVT

11020-516: The right and duty to regulate the legitimate exercise of the right to ownership for the sake of the common good, including the right to tax. LVT considers the effect on land value of location, and of improvements made to neighbouring land, such as proximity to roads and public works. LVT is the purest implementation of the public finance principle known as value capture . A public works project can increase land values and thus increase LVT revenues. Arguably, public improvements should be paid for by

11136-446: The series of small robbers when the final robber remained to demand all that the common laborer had left. George predicted that over time technological advancements would increase the frequency and importance of lesser monopolies, yet he expected that ground rent would remain dominant. George even predicted that ground-rents would rise faster than wages and income to capital, a prediction that modern analysis has shown to be plausible, since

11252-451: The single-tax platform as a regression from the transition to communism and referred to Georgism as "capitalism's last ditch". Marx argued that, "The whole thing is ... simply an attempt, decked out with socialism , to save capitalist domination and indeed to establish it afresh on an even wider basis than its present one." Marx also criticized the way land value tax theory emphasizes the value of land, arguing that George's "fundamental dogma

11368-405: The sky—they would perish in a high wind; and a single truth, like a single tax, ends in its own destruction." Commons uses the natural soil fertility and value of forests as an example of this destruction, arguing that a tax on the in-situ value of those depletable natural resources can result in overuse or over-extraction. Instead, Commons recommends an income tax-based approach to forests similar to

11484-464: The supply of land is fixed. Spatial rent is still the primary emphasis of Georgists because of its large value and the known dis-economies of misused land. However, there are other sources of rent that are theoretically analogous to ground-rent and are debated topics of Georgists. The following are some sources of economic rent. Where free competition is impossible, such as telegraphs, water, gas, and transportation, George wrote, "[S]uch business becomes

11600-417: The supply of land is perfectly inelastic , land rents depend on what tenants are prepared to pay, rather than on the expenses of landlords, and so the tax cannot be passed on to tenants. Standard economic theory suggests that a land value tax would be extremely efficient—unlike other taxes, it does not reduce economic productivity. Milton Friedman described Henry George's tax on unimproved value of land as

11716-658: The tax. Clear titles are absent in many developing countries. In African countries with imperfect land registration, boundaries may be poorly surveyed, and the owner can be unknown. The owner of a vacant lot in a thriving city must still pay a tax and would rationally perceive the property as a financial liability, encouraging them to put the land to use in order to cover the tax. LVT removes financial incentives to hold unused land solely for price appreciation, making more land available for productive uses. Land value tax creates an incentive to convert these sites to more intensive private uses or into public purposes. The selling price of

11832-574: The territory was returned to the Republic of China . Georgist ideas were also adopted to some degree in Australia , Hong Kong , Singapore , South Africa , South Korea , and Taiwan . In these countries, governments still levy some type of land value tax, albeit with exemptions. Many municipal governments of the United States depend on real-property tax as their main source of revenue, although such taxes are not Georgist as they generally include

11948-417: The transition could be phased in slowly. George has also been accused of exaggerating the importance of his "all-devouring rent thesis" in claiming that it is the primary cause of poverty and injustice in society. George argued that the rent of land increased faster than wages for labor because the supply of land is fixed. Modern economists, including Ottmar Edenhofer have demonstrated that George's assertion

12064-444: The use of his ground. More or less can be got for it according as the competitors happen to be richer or poorer, or can afford to gratify their fancy for a particular spot of ground at a greater or smaller expense. In every country the greatest number of rich competitors is in the capital, and it is there accordingly that the highest ground-rents are always to be found. As the wealth of those competitors would in no respect be increased by

12180-533: The use of the community, of that value which is the creation of the community. It is the application of the common property to common uses. When all rent is taken by taxation for the needs of the community, then will the equality ordained by Nature be attained. No citizen will have an advantage over any other citizen save as is given by his industry, skill, and intelligence; and each will obtain what he fairly earns. Then, but not till then, will labor get its full reward, and capital its natural return. George believed there

12296-431: The valuation process up to assessors would cause bureaucratic complexities, as well as non-uniform procedures. Murray Rothbard later raised similar concerns, claiming that no government can fairly assess value, which can only be determined by a free market . Compared to modern property tax assessments, land valuations involve fewer variables and have smoother gradients than valuations that include improvements. This

12412-582: The value of buildings and other improvements. One exception is the town of Altoona, Pennsylvania , which for a time in the 21st century only taxed land value, phasing in the tax in 2002, relying on it entirely for tax revenue from 2011, and ending it 2017; the Financial Times noted that "Altoona is using LVT in a city where neither land nor buildings have much value". In 2023, Detroit mayor Mike Duggan and Michigan State Representative Stephanie Young proposed replacing existing property taxes with

12528-687: The vulnerability of economies to property booms and crashes. The philosophies and concepts underpinning land value taxation were discussed in ancient times, stemming from taxes on crop yield . For example, Rishis of ancient India claimed that land should be held in common, and that unfarmed land should produce the same tax as productive land. "The earth ...is common to all beings enjoying the fruit of their own labour; it belongs...to all alike"; therefore, "there should be left some for everyone". Apastamba said "If any person holding land does not exert himself and hence bears no produce, he shall, if rich, be made to pay what ought to have been produced". Mencius

12644-438: The vulnerability that market economies have to credit bubbles and property manias would be reduced. Income flow resulting from payments for restricted access to natural opportunities or for contrived privileges over geographic regions is termed economic rent . Georgists argue that economic rent of land, legal privileges , and natural monopolies should accrue to the community, rather than private owners. In economics, " land "

12760-498: The yield of such a tax." Economists who study land conclude that Schumpeter's criticism is unwarranted because the rental yield from land is likely much greater than what modern critics such as Paul Krugman suppose. Krugman agrees that land value taxation is the best means of raising public revenue but asserts that increased spending has rendered land rent insufficient to fully fund government. Georgists have responded by citing studies and analyses implying that land values of nations like

12876-538: Was a Chinese philosopher (around 300 BCE) who advocated for the elimination of taxes and tariffs, to be replaced by the public collection of urban land rent: "In the market-places, charge land-rent, but don't tax the goods." During the Middle Ages, in the West, the first regular and permanent land tax system was based on a unit of land known as the hide . The hide was originally the amount of land sufficient to support

12992-498: Was an important distinction between common and collective property. Although equal rights to land might be achieved by nationalizing land and then leasing it to private users, George preferred taxing unimproved land value and leaving the control of land mostly in private hands. George's reasoning for leaving land in private control and slowly shifting to land value tax was that it would not penalize existing owners who had improved land and would also be less disruptive and controversial in

13108-622: Was passed eventually—but without the land tax. In 1931, the minority Labour government passed a land value tax as part III of the 1931 Finance act. However, this was repealed in 1934 by the National Government before it could be implemented. In Denmark, the Georgist Justice Party has previously been represented in Folketinget . It formed part of a centre-left government 1957–60 and was also represented in

13224-509: Was perhaps the most famous advocate of recovering land rents for public purposes. A journalist, politician, and political economist , he advocated a " single tax " on land that would eliminate the need for all other taxes. George first articulated the proposal in Our Land and Land Policy (1871). Later, in his best-selling work Progress and Poverty (1879), George argued that because the value of land depends on natural qualities combined with

13340-579: Was the land value tax of six percent which it levied in its territory. The German colonial empire had previously had economic problems with its African colonies caused by land speculation . One of the main reasons for using the land value tax in Jiaozhou Bay was to eliminate such speculation, which the policy achieved. The colony existed as a German protectorate from 1898 until 1914, when seized by Japanese and British troops in World War I . In 1922,

13456-459: Was to be advanced by the inhabitant, or by the owner of the ground, would be of little importance. The more the inhabitant was obliged to pay for the tax, the less he would incline to pay for the ground; so that the final payment of the tax would fall altogether upon the owner of the ground-rent. 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

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