The new administration is seeking comments. I'd like to believe they'll be read. Here's what I posted at http://change.gov/ under "economy":
- It will stabilize our economy and reduce significantly the boom-bust cycles which cause such suffering, particularly among the lower 80% of the income and wealth spectrums.
- It will transform pork spending, which is difficult to eliminate, into a goose that keeps, month in and month out, laying a golden revenue egg. (That revenue is currently going into private pockets; it belongs in public coffers, as a replacement for wage taxes, sales taxes, and other taxes which damage the economy.)
- It will slow, and even reverse, urban sprawl, leading to better use of existing infrastructure, shorter commutes, the sort of density which makes possible effective public transportation systems, etc.
- It will lead to healthier cities, with prompt redevelopment of obsolete buildings. This will create venues for entrepreneurs to work their business plans on sites which are necessary to the health of their businesses. Landlords will no longer be in the driver's seat -- rather, they will be incentivized to put their well-located land to something approaching its highest and best use, and they'll replace decrepit, obsolete, leaky old buildings which serve a few tenants with modern taller technologically smart buildings which serve many tenants. Further, landlords will compete with each other for tenants, driving rents downward. Similarly, the selling price on office condos will be low, because the title will come with a more hefty land tax bill. This will also have the effect of freeing up the mortgage money that is now used for paying sellers for land, making it available for genuine investment -- the sort that creates jobs!
- Similarly, housing will become more affordable, and good urban land will be put to use meeting human needs. Housing will no longer be an investment. People will buy what they need, not what they think they can make a profit on. When they no longer need a family-sized house, they'll shift into something more suitable, freeing up the family-sized houses for those who need them. And since homebuyers won't be paying the sellers much for the land (because the lot comes with a more hefty monthly land tax), mortgage lenders will only be financing the houses themselves, and that money will be available for investments that create jobs.
- Wages will rise, because employers will be competing for workers, instead of workers chasing jobs and driving wages downward. But the rising spending power of workers will no longer drive up housing prices.
- Instead of homeowners paying a large share of their income to the mortgage lender and another large chunk in taxes, their payment of land tax will provide the revenue that government needs. Pay once, not twice. And pay the right party: the commons, not a land seller, not a landlord, not a mortgage lender.
- The classical economists recognized many other things as being like land, including natural resources. Today, we'd add to the list water rights, the privilege to pollute, broadcast spectrum (those airwaves which belong to the American people), parking, geosynchronous orbits, royalties on oil and other resources (why is Jed Clampett permitted to privatize value that nature creates??), landing rights at busy and constrained airports, congestion in cities, etc. The revenue sources are wide and deep, and we ignore them at our peril.
- Every investment in infrastructure helps increase land value. Why do we permit that value to be privatized, when it would be, by definition, more than sufficient to pay for any worthwhile project?
I've only begun to touch on the benefits. This is not a new idea. Henry George laid it out clearly in his amazing 1879 book, Progress and Poverty (add dot org to read a modern abridgment online, or search for it at wealthandwant or lvtfan). And the idea was not original with Henry George either - there were lots of precursors around the world. But he laid it out most clearly, and his name is commonly associated with the ideas.
And what I should have added was the suggestion that the reader look at Fred Foldvary's paper, The Ultimate Tax Reform: Public Revenue from Land Rent.