Land Value Taxation will solve many of the 21st century's most serious social, economic and environmental problems, and promote justice, fairness and sustainability. We CAN have a world in which all can prosper.
Progress and Poverty, by Henry George Here are links to online editions of George's landmark book, Progress & Poverty, including audio and a number of abridgments -- the shortest is 30 words! I commend this book to your attention, if you are concerned about economic justice, poverty, sprawl, energy use, pollution, wages, housing affordability. Its observations will change how you approach all these problems. A mind-opening experience!
Henry George: Progress and Poverty: An inquiry into the cause of industrial depressions and of increase of want with increase of wealth ... The Remedy This is perhaps the most important book ever written on the subjects of poverty, political economy, how we might live together in a society dedicated to the ideals Americans claim to believe are self-evident. It will provide you new lenses through which to view many of our most serious problems and how we might go about solving them: poverty, sprawl, long commutes, despoilation of the environment, housing affordability, wealth concentration, income concentration, concentration of power, low wages, etc. Read it online, or in hardcopy.
Bob Drake's abridgement of Henry George's original: Progress and Poverty: Why There Are Recessions and Poverty Amid Plenty -- And What To Do About It! This is a very readable thought-by-thought updating of Henry George's longer book, written in the language of a newsweekly. A fine way to get to know Henry George's ideas. Available online at progressandpoverty.org and http://www.henrygeorge.org/pcontents.htm
Where Else Might You Look?
Wealth and Want The URL comes from the subtitle to Progress & Poverty -- and the goal is widely shared prosperity in the 21st century. How do we get there from here? A roadmap and a reference source.
Reforming the Property Tax for the Common Good I'm a tax reform activist who seeks to promote fairness and reduce poverty. Let's start with the enabling legislation and state requirements for the property tax. There are opportunities for great good!
1. There are a lot of living costs that we don't pay for.
2. A higher gas tax could make the economy more efficient.
3. And so could taxes for all kinds of things.
4. But where do you draw the line?
Adam Davidson is asking some good questions here. Henry George provided some good answers to those questions. I recommend starting with "Social Problems" and then progressing to "Progress and Poverty."
I can easily imagine a great proprietor of ground rents in the metropolis calling attention to the habitations of the poor, to the evils of overcrowding, and to the scandals which the inquiry reveals, while his own income is greatly increased by the causes which make house-rent dear in London, and decent lodging hardly obtainable by thousands of laborers.
In the ocean-front Delaware town of Rehoboth Beach, seasonal parking fees provide a major revenue source:
In Rehoboth Beach, parking meters -- at $1.50 per hour -- are big business. They bring in $2.58 million for the city's $14.75 million operating budget.
Fines on expired meters add another $667,000, bringing the total to more than $3.2 million. More comes from parking permit fees, fines for parking without a permit and collections from a lot the city operates at the north end of the community. All told, parking is the largest single segment of the city budget.
Meters, some say, are one way the city can capture a revenue stream from the thousands of summer visitors who don't rent a cottage or stay in a hotel room, or who rent accommodations outside the city limits.
City Manager Gregory J. Ferrese said he believes meter and parking permits eliminate the need for beach fees, which are routinely charged in New Jersey resorts.
This is not to say that one can't use the beaches without paying for parking; Resort Transit brings people in by bus from the Coastal Highway, and the Jolly Trolley has been transporting tourists and others from nearby Dewey Beach for many decades.
But parking revenue is a great example of a user fee. One pays for what one takes, and if one doesn't need, one doesn't pay.
A few years ago, the price of parking varied according to location; more recently, they seem to have returned to a one-price-at-all-meters system, which puzzles me a bit. But after late September, the parking meters disappear until late spring, because there usually is plenty of parking to meet the demand.
I seem to recall reading that on-street parking is properly priced if about 15% of spots are available at any particular time. I suspect that that rule of thumb may not hold in RB in season, though I suspect that RB could charge more for ocean-block parking. (I suspect that nearly 100% of RB's parking spots will be occupied during most hours of peak season, at any reasonable price.)
Rehoboth is from the Hebrew for "space for all." One source says "City of Room" "Big City" "Broad Places, Streets" "Streets, Wide Spaces." Interestingly, when Rehoboth Beach was first laid out, by the Methodist diocese of Wilmington, as a camp meeting ground, the streets were designed to be wide and become wider as they approached the ocean, so all could have some view and access.
As a society, how do we create "space for all?" By structures and policies which encourage all of us to take only what we'll use. No land speculation, for example. (Rehoboth Beach fails on this count; its low property tax and use of 30+ year old assessments encourage people to hold onto empty land and unaltered cottages as a low-cost nest-egg; a new home far from the beach may pay far more in taxes than an older one close to it which sells for twice the price). And a 3% tax on transfers -- half to the city, half to the county -- discourages transactions.)
Some of RB's revenue comes from a 3% tax on rental income. I'm intrigued to know that parking brings in more than the tax on rentals.
Delaware, wisely, does not use a sales tax. Rehoboth Beach has 3 large outlet malls just beyond its borders, which attract shoppers from nearby Ocean City, Maryland, and even from southern New Jersey; the latter arrive by ferry for a day of tax-free shopping.
And of course the Federal government is generous with paying for beach replenishment, which helps keep the renters and beachgoers coming, at little or no cost to the property owners in RB.
In any case, parking fees are Natural Public Revenue
21. The creation of a new subway line raises the land values near each of the stations. Who should pay for the building of the subway line?
A. Riders of the new subway line
B. Riders of all subways in the system.
C. Riders of all mass transit in the metro area.
D. Drivers of cars and trucks, all over the metro area, via taxes on their fuel purchases (that is, in proportion to miles driven and the fuel efficiency of their vehicles)
E. Drivers of cars and trucks, all over the metro area, via an annual surcharge on their registration
F. Drivers of cars and trucks, all over the metro area, in proportion to the value of their cars, owned or leased
G. Drivers of cars and trucks, via tolls when they use bridges and tunnels, or HOV lanes, or certain highways
G. The taxpayers, via increased sales taxes on their purchases
H. The tourists and business travelers, via hotel occupancy taxes and taxes on rental cars.
I. Passengers in taxis, via a surcharge on their fares.
J. The homeowners, via taxes on their homes
K. Drivers, commercial and individual, via taxes on fuel purchased within the city
L. Employees all over the metro area, via a payroll tax
M. The tenants of commercial buildings in the heart of the central business district
N. All landholders, paying equally (a parcel tax)
O. All landholders, in proportion to the size of their lots
P. Landholders, in proportion to the value of the land they hold, without regard to the buildings or their contents. Those whose land values are raised by their proximity to the new line will see a proportional increase in their share of the tax burden; those far from the new line will not.
2. Some of our busiest airports do not have sufficient runways, landing slots at preferred times, gates, tarmac, etc., to meet demand. Flights end up circling and arriving late, producing cascading delays for passengers across the country. Many airports are constrained by surrounding communities not to expand their acreage. It takes time to build a new airport further from the city, and is expensive to add the transportation infrastructure to serve it. How should scarce resources at existing busy airports be allocated?
a. The airlines who currently own a gate ought to be able to sell it off to the highest bidder, or rent it for whatever they can charge their competitor.
b. Landing rights ought to be sold once and for all to the highest bidder. When they no longer want them, or can no longer use them profitably, those rights should be theirs to auction off at whatever price they can get, even if it is double or triple -- or more -- what they initially paid.
c. Leases for landing rights at peak hours should be auctioned off, with a term of a few years, and the revenue should first support airport costs and air-traffic control expenses. Should there be an excess, it should not be returned to the leaseholders: it belongs to the community at large and should go into general revenue.
Today I'm starting a new series of posts entitled "The Land Questions." Eventually I'll accumulate them onto a website of their own, but before I do that, I think they could be improved. There's a tag at left if you'd like to look at just these posts.
I welcome your suggestions, rephrasings, additions, edits, etc, via the "comments" opportunity.
1. The skies are getting crowded with flights. Small planes and commercial jetliners take up large amounts of sky, and require equal attention from air traffic controllers. How should we allocate scarce airspace, particularly at peak travel hours?
A. Permit the corporate jets and individual flyers to have priority. After all, those who can afford their own jet or plane must be important people!
B. Require all planes, regardless of their size, to help pay for the air traffic control system, in proportion to the mileage they fly.
C. Whoever gets there first has priority.
D. Whoever has owned planes the longest has priority.
E. Charge large planes more, because they have more seats and can divide the cost among more passengers. A corporate jet would pay 5/200th of what a 200-seater would pay, even if it is a 737 carrying one executive and his immediate office staff, or one executive and his family .
F. Charge planes for the amount of airspace they use: so-called "heavy" jets with long swirling vortexes pay more than smaller planes which don't trail such large choppy areas.
How much is it worth to you to have the potholes and cracks in the roads in your town promptly filled in? Probably roughly what it costs you to have each of your cars fixed a couple of times a year.
So is it better for the local economy to (1) keep the tire retailers and alignment shops in business; or (2) to pay city employees or contractors to maintain the roads in a condition that minimizes damage to cars and tires?
Fans of small government might opt for the first choice. Fans of individuals having more money to spend on discretionary purchases or to invest toward their own futures might opt for the second one.
Some things ought to be done by the community, and financed by the community.
So how should we pay for this sort of public works?
Should we impose sales taxes on goods sold within the town providing services?
Should we impose a wage tax on workers within the town providing services?
Should we tax the buildings within the town?
Should we throw an extra tax on tobacco, alcohol, cell phone use, cable TV subscriptions, electricity use in the town?
Should we tax all the cars and trucks garaged within the city limits?
Should we tax the gasoline and diesel sold within the city limits?
Or should we finance this by taxing the land value within the town limits?
If you're new to this concept, all these may make equal sense to you. (Indeed, some people argue for "balance" in taxation, or for spreading taxes across many tax bases in order to "keep rates low." But I think there is one option that is far better than the others.
Who benefits when we make it less expensive to live within a particular community than it would otherwise be, as we do by improving road maintenance? Isn't it ultimately those who own land within the city limits -- the landlords (residential and commercial), the homeowners, the business community -- who benefit, both as individuals and as property owners, when people are more prone to drive in their community than in one which does not maintain its roads to the same standards? Even those who don't own cars benefit.
Some would say that this fails to collect from the tenants -- residential tenants, commercial tenants -- who also benefit, but I'd have to disagree with that argument. Their landlords can charge them more in the presence of such services than they could charge in the absence of that road maintenance. Should that benefit accrue to the landlords, or should it be passed through to the community whose spending created it?
I'll return to something a Tennessee business man wrote to his governor in 1873:
"Never tax anything That would be of value to your State, That could and would run away, or That could and would come to you."
The same is true of individual towns, too. Don't tax jobs, or workers, or buildings, or equipment, or products.
This is not a reason not to raise public revenue; rather, it is a reason to think carefully about what should be taxed -- and what should not be. Charge for that which the community's presence and activity creates, and the privilege of using that which nature or community provides in limited supply, e.g., water, electromagnetic spectrum, geosynchronous orbits, minerals, oil, natural gas; privileges like franchises for monopolies; landing rights at congested airports; on-street parking; etc.
I'd missed the article when it was published a week ago, but an LTE brought it to my attention. The author is Richard Thaler, a professor of economics and behavioral science at the newly re-named business school at the University of Chicago (forever to be recalled as GSB by some, despite stern orders in the alumni rag).
He proposes auctioning off "The Buried Treasure in Your TV Dial." But he isn't suggesting leasing it for some finite period of time, with a new auction at the end of, say, 5 or 10 or 15 years, but selling it forever. As one of the LTE's says,
Re “The Buried Treasure in Your TV Dial” (Economic View, Feb. 28), in
which Richard H. Thaler cites an estimate that the government could
reap $100 billion by auctioning the portion of the radio spectrum used
for over-the-air television:
How long would such a sum last, however, in an era of military
adventures and over 700 foreign military bases? What would be permanent
is the loss of both choice and the free reception of radio and
television programming. Ownership of electronic media, and access to
the privatized airwaves, would be as concentrated as cable and
satellite systems are today.
The column says that such an auction would have many national benefits.
But virtually all them, like faster broadband connections for schools,
could be obtained by federal policy, not a fire sale.
Those airwaves belong to the American people, and the American people ought to be collecting full rent on them -- year in, year out -- not giving away licenses and then permitting corporations to make a business in re-selling or leasing out what they choose not to use.
Here's Thaler's article. I look forward to his next suggestions; he has the germ of a good idea, but gets a very important aspect of it wrong. Don't sell our common asset to anyone. AUCTION OFF LEASES. Wait 5 years. Repeat.
HERE’S a list of national domestic priorities, in no particular order:
Stimulate the economy, improve health care, offer fast Internet
connections to all of our schools, foster development of advanced
technology. Oh, and let’s not forget, we’d better do something about
the budget deficit.
Now, suppose that there were a way to deal effectively with all of
those things at once, without hurting anyone. And suppose that it would
make everyone’s smartphone work better, too. (I’ll explain that benefit
I know that this sounds like the second coming of voodoo economics, but
bear with me. This proposal involves no magical thinking, just good
common sense: By simply reallocating the way we use the radio spectrum
now devoted to over-the-air television broadcasting, we can create a
bonanza for the government, stimulate the economy and advance all of
the other goals listed above. Really.
The reason for this golden opportunity may be in your purse or pocket:
that smartphone to which you could well be addicted. The iPhone, the
BlackBerry and competing devices are already amazing technologies. But
precisely because of the nifty features they offer, like the ability to
text photos, stream video and provide GPS directions, the radio
spectrum is looking as crowded as Times Square on New Year’s Eve.
Demand for spectrum is growing rapidly — a trend that will surely
The problem is that the usable radio spectrum is limited and used
inefficiently. Think of it as a 100-lane highway with various lanes set
aside for particular uses, including AM and FM radio, TV and wireless
computer technology. The government — specifically, the Federal
Communications Commission — is in charge of deciding which devices use
Because we can’t create additional spectrum, we must make better use of
the existing space. And the target that looks most promising in this
regard is the spectrum used for over-the-air television broadcasts.
These frequencies are very attractive on technological grounds. People
in the industry refer to them as “beachfront property” because these
low-frequency radio waves have desirable properties: they travel long
distances and permeate walls. We have already allocated parts of this
spectrum for mobile wireless, and the F.C.C. recently auctioned other
parts for $19 billion. That has left 49 channels for over-the-air
Why is the current use of this spectrum so inefficient? First, because
of the need to prevent interference among stations, only 17 percent of
it is actually allocated by the F.C.C. for full-power television
stations. (The so-called white space among stations is used for some
limited short-range applications like wireless microphones.)
Second, over-the-air broadcasts are becoming a nearly obsolete
technology. Already, 91 percent of American households get their
television via cable or satellite. So we are using all of this
beachfront property to serve a small and shrinking segment of the
Suppose we put this spectrum up for sale. (The local stations do not
“own” this spectrum. They have licenses granted by the Federal
Communications Commission.) Although the details of how to conduct this
auction are important, they don’t make compelling reading on a Sunday
morning. Interested readers should examine a detailed proposal made to
the F.C.C. by Thomas W. Hazlett, a professor at the George Mason
University School of Law who was formerly the F.C.C.’s chief economist.
Professor Hazlett estimates that selling off this spectrum could raise
at least $100 billion for the government and, more important, create
roughly $1 trillion worth of value to users of the resulting services.
Those services would include ultrahigh-speed wireless Internet access
(including access for schools, of course) much improved cellphone
coverage and fewer ugly cell towers. And they would include other new
things we can’t imagine any more than we could have imagined an iPhone
just 10 years ago.
But some compelling technology that could use these frequencies already
exists, like wireless health monitoring — to check diabetics’ blood
sugar regularly, for example — and remote robotic surgery that can give
a patient in Idaho a treatment like that available in New York or
Who would oppose this plan? Local broadcasters are likely to contend
that they are providing a vital community service in return for free
use of the spectrum that was put in their hands decades ago. Whether
the local news or other programs are vital services is up for debate,
but their value isn’t the issue, because they can be made available via
cable, satellite and other technologies, including improved broadband.
Say there are 10 million households that still get their television
over the air, including those that can’t afford cable or satellite and
some that generally just don’t care for what’s on TV. (Yes, there are
people who don’t like “American Idol.”) But about 99 percent of these
households have cable running near their homes, and virtually all the
others, in rural areas, could be reached by satellite services. The
F.C.C. could require cable and satellite providers to offer a low-cost
service that carries only local channels, and to give vouchers for
connecting to that service to any households that haven’t subscribed to
cable or satellite for, say, two years.
Professor Hazlett estimates that $300 per household should do it: that
amounts to $3 billion at most. Compared with the gains from selling off
the spectrum, it’s a drop in the bucket. Or, as an interim step, we
could reduce the number of channels available in a community from 49
to, say, 5.
I KNOW that this proposal sounds too good to be true, but I think the
opportunity is real. And unlike some gimmicks from state and local
governments, like selling off proceeds from the state lottery to a
private company, this doesn’t solve current problems simply by
borrowing from future generations. Instead, by allowing scarce
resources to be devoted to more productive uses, we can create real
value for the economy.
Economists are fond of saying that there is no such thing as a free
lunch. Here we have an idea that is even better than a free lunch:
being paid to eat lunch. More paid-lunch ideas will be coming in future
The classical economists might never have heard a radio or seen a television, but they'd immediately recognize broadcast spectrum as "land" -- a gift of nature, finite and scarce -- and would have regarded it as our common treasure. Unfortunately, Professor Thaler is not a classical economist. He is a neoclassical economist, and his training in economics probably glossed over the truths the classical economists saw. And quite likely, that's how he teaches the subject, too.
We can concentrate more wealth in the hands of a few corporations, or we can collect the economic rent on this scarce and valuable resource. (See also Alaska Permanent Fund, in the topic cloud at left.)
According to CNN, JFK's
airport's busiest runway will close today for four months for reconstruction. "Officials are reducing the number of arrivals and departures at the
airport from about 1,300 a day to 1,050." Given the softness in the economy, this is a fine time to do the necessary work. (I wonder whether this is being paid for in part by stimulus dollars.)
1300 takeoffs and landings a day. 48 million passengers per year. One of two international gateways to -- and from -- NYC metro area.
Finite. There is no suggestion in the article that this project is going to increase capacity. The goal is to widen the runway by 1/3, and add taxiways, to ease air traffic congestion. The results should, I hope, include reducing fuel use by delayed flights, both on the ground and waiting to land; reduce time-wasting backups produced at other airports around the US caused by JFK delays. This will be good for the airlines, for air quality, for efficiency, productivity and stress levels of passengers. Its effects should reverberate through many other airports, here and abroad.
The project will cost $376 million. Quick and dirty, if there are 48 million passengers per year, a $1 surcharge on every ticket for the next 8 years would pay for the work.
So how should this be financed?
We ought to be treating landing rights at JFK (etc.) as our common
treasure, not the property of the airlines. Auction them off, 5 years
at a time. Lease them to the highest bidder at the price bid by the
second highest bidder. Use the revenue to finance airport improvements.
This is one the Bush administration's FAA director got right, but she
was shot down by what I assume were corporate interests or their very
Time to review that one, and get it right.
What the airlines are paying now is far below the amount they'd be willing to pay if we required them to bid for their slots. As I understand it, airlines own their slots, treat them as assets, and can sell them to the highest bidder, with no revenue going to we-the-people or to those who maintain the airports!
Airport landing rights might not have been known at the time of the classical economists, but they would immediately recognize them as "land" and thus rightly part of the commons, to be treated as our common asset rather than anyone's private property. Permitting the privatization of that economic value is a mistake.
A few lifts from an interesting paper. It speaks only to oil usage related to cars, putting aside heating oil and other uses of oil.
What it misses is the fact that our incentives are aligned to create sprawl, and that until we realign them, we aren't going to get smart growth. Readers of this blog know that the first realignment -- necessary, if not sufficient -- is a reform of the conventional property tax, shifting taxation off buildings and onto land value, followed by a shifting of more of the tax burden off sales and wages and onto land value. When we tax land value heavily, only good things happen --
from the point of view of the environment,
from the point of view of efficiency,
from the point of view of the economy,
from the point of view of encouraging smart growth,
from the point of view of job creation and affordable housing,
from the point of view of dense cities and walkable cities and effective public transit which people want to use and are willing and able to rely on, day in and day out.
The NRDC is not going to achieve its goals without the tool of land value taxation. "Targets" and "funding" are all well and good, but they don't counteract the current disincentives that our system of taxation creates. I'd be happy to provide the NRDC folks with material which will help them understand the needed change.
Good public transit systems can be fully funded by the increased land value they create.
From their paper:
America’s dependence on oil is problematic in several ways, including the following:
The United States has less than 2 percent of the world’s oil supplies but is responsible for about one-quarter of the world’s oil consumption.2 We import almost two-thirds of our crude oil supply from foreign countries, and more and more of the world’s future supply will come from regions that are either politically unstable or unfriendly to U.S. interests.3
Our unstable supply of oil threatens our national economy, particularly since about 96 percent of our transportation system relies on oil.4
Oil consumption is a leading contributor to the greenhouse gas (GHG) emissions that cause global warming. In the United States, the oil-based transportation system is responsible for roughly one-third of our global warming pollution
Smart growth and public transit. States can reduce oil dependence by integrating land use and transportation policies and designing them to reduce vehicle-miles traveled and promote alternatives to driving. Nineteen states, including Hawaii, Georgia, Tennessee, and Maine, have adopted smart growth measures intended to curb sprawl and reduce the associated traffic and vehicle-miles traveled. Fourteen states have created an agency or other mechanism to develop and coordinate land use policies. Six states have set targets for reducing vehicle-miles traveled. In addition, some states — led this year by New York, New Jersey, and Washington — have prioritized the funding of public transit through the allocation of state funds and/or by transferring portions of their federal highway dollars.
Nineteen states have growth management acts. Among the most comprehensive ways of promoting smart growth is growth management legislation, such as Washington’s Growth Management Act (GMA). This GMA affects 29 counties (95 percent of Washington’s population) and requires, among other things, policies covering sprawl reduction, affordable housing, open space and recreation, environmental protection, natural resource industries, permit processing, concentrated urban growth, regional transportation, historic lands and buildings, and public facilities and services.13 Despite Florida Governor Crist’s weakening of his state’s growth management laws this year, growth management legislation was still one of the areas of greatest improvement from last year, when only 12 states had such laws.
Only six states have set targets for reducing vehicle-miles traveled. For instance, the state of Washington amended its GMA to make it even more effective at lowering oil consumption, calling for reductions in per capita vehicle-miles traveled (VMT) of 18 percent by 2020, 30 percent by 2025, and 50 percent by 2050.14
Fourteen states have an agency or other mechanism to coordinate development. Many states have recognized that several different state entities influence development, sometimes in potentially contradictory ways, and have created mechanisms to coordinate public investment that supports development. In 2003, Massachusetts established a powerful Executive Office of Commonwealth Development.15 Such coordination is a vital first step toward smart development, enabling a state to take into account the wide range of relevant influences. We encourage states to use coordinating mechanisms to promote smart growth.
Some states have prioritized the funding of public transit. Public transit systems, such as bus, commuter rail, subway, and light rail programs, are important components in state efforts to promote smart growth and reduce oil dependence. By creating or expanding reliable and accessible public transit programs, states can reduce the number of single-passenger cars on the road, consequently lowering average VMT. And strong public transit provides a critical transportation alternative as gas prices rise. A case in point: Americans drove 1.4 billion fewer highway miles in April 2008 than in April 2007 because of soaring fuel prices; many took trains or buses instead, leading to a surge in transit ridership.16 In 2008, public transportation saw its highest level of ridership in 52 years.17
States have the ability to “flex” certain federal funds that ordinarily would be spent on highway projects and use them to pay for public transit programs. States that choose not to transfer federal funds to transit programs are not necessarily neglecting transit funding, however, as they may be spending more state dollars on transit. The best way to understand state transit prioritization is to compare the amount of total state spending (including flexed federal funds) on mass transit with the total spent on highway programs, as shown in the far right column of Table 3. By this measure, the top five states prioritizing public transit spending are New York, New Jersey, Washington, Massachusetts, and Utah.
Another "find" in "The Public" from November 14, 1903:
A PROBLEM IN ETHICS.
Jones—Neighbor Smith. I am out of a job; how am I to make a living?
Smith—I have a proposition to make to you. Provide yourself with tackles and go to fishing, and I will give you half you catch.
Jones—I'll do that; thank you; you are very kind, indeed.
And the people laugh at Jones' foolishness and ask: "If he provides his
own tackles, what claim has Smith on the fish he takes? Ought not all
the fish belong to the man who catches them?"
We think so. But while about it, suppose you tell us the difference
between this proposition and the one that Brown made to Wilson when he
said: "Get your teams and plows and go to work raising potatoes, and I
will give you half the potatoes you raise."
Now, don't answer this question until you have thought over it just a little. — Living Issues.
Should we tax wages? Should indivdual (or corporate) landholders be permitted to pocket the land rent?
It seems to me that we as a society have a right to tax wages only after we've collected virtually all the land rent, and then only if we agree that the resulting revenue is insufficient to fund the legitimate purposes of government. (Reasonable people can differ about what ought to be done by the public sector; that's a separate conversation.)
Land rent here includes not only the rent on unimproved land values (that is, the value of each site before accounting for the improvements its owner has put on it himself or bought from someone else who did) but also on things like electromagnetic spectrum (the "airwaves"), primetime landing rights at congested airports, geosynchronous orbits, on-street parking in congested downtowns, the use of water where it is scarce, rights to pollute air and water, the withdrawal of scarce natural resources, etc.
I'm playing catch-up, after having been occupied with other work for the past month or so, and came across some articles from UK publications listing the sources of wealth for the 2000 or so most wealthy people in the UK.
See a few entries down, where Michael Kinsley laid it out this way in the Washington Post:
Perusing the Forbes 400
list of America's richest people, it's striking how few of them made
the list by building the proverbial better mousetrap. The most
common route to gargantuan wealth, like the route to smaller piles,
remains inheritance. The ability to pass money along to your kids may
motivate many a successful executive or investor to work harder, but it
can't possibly motivate those kids to inherit harder in order to pass
it along once again.
Dozens of Forbes 400 fortunes derive from the rising value of land or other natural resources. These businesses are fundamentally different from mousetrap building. Land does not need to become "better" to increase in value, and that value increase doesn't produce more land.
Yet other fortunes depend directly on the government. The large
fortunes based on health care and pharmaceuticals would not exist if
not for Medicare and Medicaid. The government hands out large fortunes
even more directly in forms as varied as
drilling, mining and mineral rights;
minority small-business loans; and
other special treatment.
We must conserve the earth -- yes. But we must also share its bounty with all, not permit the privatization of that bounty. Henry George put it this way:
We sail through space as if on a well-provisioned ship. If
food above deck seems to grow scarce, we simply open a hatch -- and
there is a new supply. And a very great command over others comes to
those who, as the hatches are opened, are permitted to say: "This is
It is a well-provisioned ship, this on which we sail through space. If
the bread and beef above decks seem to grow scarce, we but open a hatch
and there is a new supply, of which before we never dreamed. And
very great command over the services of others comes to those who as the
hatches are opened are permitted to say, "This is mine!"
In case it isn't obvious, I'm not opposed to fortunes which come from creating better mousetraps! I'm quite in favor of them. But we need to distinguish between what monopoly privilege creates, and what hard work creates, and LVT does that.
The schedule for the annual gathering of Georgists (that is, people who are persuaded that the economist and social philosopher Henry George (b. 1839, Philadelphia; d.1897, NYC), author of "Progress & Poverty" and a book of essays entitled "Social Problems," among others, pretty much had it right) is now online. It is in downtown Cleveland in early August.
Looking over the schedule, I see a lot of familiar names -- people I've come to know since I attended my first CGO meeting in 2001 -- and some people I've not yet met face to face but know online. I'm happy that we have few sessions running side by side, because virtually all of the programs are of interest to me.
My last visit to Cleveland was with 600 delightful women, and included a great and noisy party at the Rock 'n' Roll Hall of Fame. (I just had the pleasure of being on the host committee for the same group's 2009 Annual Meeting!) At that time, I didn't know the significance of the larger-than-life statue nearby of Cleveland mayor Tom L. Johnson. The book he holds in his hand is P&P.
If you would like to see an end to poverty, come join us.
If sprawl and its concomitants concern you, come join us; we know how to slow it and reverse it and channel it into reusing the land already well served by taxpayer-provided infrastructure.
If long commutes -- and the fuel, pollution, spending and time loss involved -- worry you, come join us.
If you would like to see a more stable economy, without the booms and busts which cause such widespread pain and ruin, we have answers.
If you would like to see healthier cities and a more vibrant economy, come listen to what some of these people have to offer.
If unaffordable housing troubles you, come talk to us.
If the extreme concentrations of income and wealth -- particularly of natural resource wealth -- trouble you, we know how to correct it gently and justly.
If you hate the income tax and recognize that sales and consumption taxes damage the economy, but still believe that there are some things government can do better than the private sector, we know how to finance that spending justly.
We come from all over the political spectrum, and share little except a major commitment to creating a better and more sustainable world and society and economy for all. (That's a lot actually!) It is a joy to spend a few days with people so passionate about social and economic justice and with a clear vision of how to get there.
If you're curious about Henry George, you might start where I started, with four of his speeches. I found these as pamphlets in the files of my late grandparents when I took possession of their library and file cabinets and some sentimental treasures. My first pass was for genealogical information. Shortly after that, I started reading a speech entitled "Thou Shalt Not Steal," and it clicked. My paternal grandparents (three of them, actually: my own grandparents, and my step-grandmother, whose first husband was a dear family friend, too, in the 1940s and 50s) were all Georgists. For every landmark occasion in my young life, their gifts included a lovingly inscribed copy of Progress & Poverty (just in case I'd misplaced the previous ones!) But I'd not done more than thumb through it. When I first did get around to reading it, I was in my late 40s; my grandparents were quicker studies, and devoted the second half of their lives to promoting these ideas. My first read of P&P was a slow slog; a friend shocked me when she said she found it a page-turner, a mystery whose solution she was anxious to get to. Now I admit I read it for, and with, pleasure.
Another piece you might read is my grandfather's "An Introduction to Henry George" or my grandmother's more humorous article, "My Introduction to Henry George;" she went on to write delightful short stories for Ladies Home Journal, Colliers, the Saturday Evening Post and many other magazines in the 40s. Things have come full circle -- I'm on the board of two Georgist foundations, including the one my grandfather worked for and with for over 30 years, the Robert Schalkenbach Foundation. And following in the example of my late stepgrandmother, who tried to write an activist letter every day, I try to post comments on either my blog or other blogs or articles online every day. I mostly succeed, though in the past month or two, I've fallen short. And I've created a website to make Henry George's ideas accessible to people coming from a wide range of interests and points of view: http://www.wealthandwant.com/
A few weeks ago there was a brief piece in the NYT Magazine entitled "Gallons Per Mile." It got me thinking; my noodlings follow the article itself:
As gas prices rose earlier this year, consumers started paying a lot
more attention to their cars’ miles per gallon. Good luck with that.
The apparently simple unit of measurement is a highly misleading one,
as two Duke management professors demonstrated in a June issue of
Science. They favor an alternative measure of fuel economy: gallons
consumed per 10,000 miles.
The problem with m.p.g., argues Richard Larrick, who wrote the article
with his business-school colleague (and carpooling partner) Jack Soll,
is that it leads consumers to significantly underestimate the gains in
fuel efficiency that can be achieved by trading in very low m.p.g.
vehicles — even for one that gets only a few more miles per gallon.
Less detrimentally, m.p.g. also misleads people about the fuel savings
achieved by moving from an ordinary family sedan into a Prius.
The tax on payrolls, expected to be less than one half of 1 percent, would apply to businesses in the 12-county area served by the authority. It would be paid by businesses, not employees. The tax would be designed to raise $1 billion a year or more.
It would be coupled with the new bridge tolls, which would generate about $600 million a year, after the cost of maintaining the bridges and collecting the tolls is accounted for. Drivers would pay a higher rate on the East River bridges than on the Harlem River bridges under the plan.
There would be no toll plazas: Most tolls would be collected through a system of E-ZPass readers. Drivers without E-ZPass would be identified and could be billed using digital cameras that snap a picture of each vehicle’s license plate.
Control of those bridges, which are owned by the city, would be transferred to the authority under the plan, although it was not clear how that would be achieved.
The third main element of the proposal is a more modest increase for next year in fares and existing tolls on the bridges and tunnels already controlled by the authority.
That increase would allow Mr. Ravitch and his supporters to argue that the cost of running the system was being shared by all those who benefit from it.
So we've got a proposal that the way to pay for the shortfalls in providing the public transportation on which the NYC economy is vitally dependent is from taxing employers, imposing tolls on previously free bridges into Manhattan, and raising existing bridge tolls (which fall on those who don't use public transportation [except perhaps bus commuters?]
Most interesting is the final sentence quoted above:
That increase would allow Mr.
Ravitch and his supporters to argue that the cost of running the system
was being shared by all those who benefit from it.
Ah, but he has omitted from his analysis something vitally important: paying in proportion to the benefit received. One of the biggest -- huge!! -- beneficiaries would pay next to nothing! To whom am I referring? The landlords of New York.
transit systems across the country, BART has experienced record
ridership this year. In 2007, Americans took 10.3 billion trips on
public transportation, the highest number since the Model T and its
progeny took over the nation.
Back in 1926, Americans each year took 147 transit rides per capita.
By 1950, Americans took just 113 transit rides per capita, and by 1956 that number had plummeted to just 66.
By 2006, Americans took just 33 transit trips a year per capita. In the
decades since World War II, it has been only in the dense financial
centers, like New York, Chicago and San Francisco, where transit has
been able to stubbornly resist the rise of the car, remaining a major
way for many residents to get around.
In 1960, some 12 percent of all U.S.
workers used transit to get to work. By 2000, that number was down to
4.7 percent, and in the past couple of years it has just barely ticked
up to 4.9 percent.
Since the early '80s, 15 major American cities, including San Diego, Portland, Ore., Denver, Houston, St. Louis, Salt Lake City and Los Angeles, have built new light-rail
systems from the ground up. Dozens of other cities are considering proposals for similar systems, or have them in development, such as Phoenix and Seattle.
So how do we go about making our cities and towns mass-transit-friendly? Seems to me that measures that lead to increased density will help support mass transit ... and that mass transit will support increased population density.
The best measure I know is shifting taxes onto land value. Sites well-served by infrastructure (e.g., roads, bridges, highways, airports, public transportation systems, ports, city water and sewer, stormwater runoff and, where needed, levees or hurricane protection, etc.) -- and services(e.g., schools, emergency response for small- and large-scale emergencies, public health, courts, etc.) -- and in places made desirable by nature(e.g., good views, waterfront, access to recreation, an appealing climate, a reliable supply of clean water, etc.) and good laws(e.g., limiting pollution, unpleasant smells, noise, etc.), efficient and uncorrupted government, and a healthy economy (with smart incentives and few disincentives to productivity, good infrastructure, logical and efficient services provided by the government, particularly in natural monopolies) have tremendous value. For a good example of this, see this post.
When we tax land value lightly, those who own choice sites can choose whether to sit and wait -- without lifting a finger -- for the rise in land value they can reasonably expect to occur, or put the land to good use now. Putting the land to good use now creates jobs, housing, offices, retail spaces, density. Sitting and waiting produces nothing on that site, and leads to sprawl at the fringes. Should our landholders have that choice, or is putting such sites to something approaching their highest and best use sufficiently important to the community as a whole that we ought to have incentives to good land use? I'd say that reducing and reversing sprawl is sufficiently important that we ought to be taxing land value heavily.
And there are many other good reasons to do so beyond this one.
One candidate speaks of spreading the wealth. The other derides the notion as socialism. But I suspect that neither of them have read, or thought deeply, or discussed in any context what sorts of wealth OUGHT to be spread around, and what sorts OUGHT NOT to be spread?
Not all wealth is the same. We can divide it first into that which is created by individual or corporate human effort and that which is provided by nature or by the workings of the community as a whole. The former can rightly be privatized. The latter must not be.
Rent is something most of us give little thought to, and most of those who think about it are not thinking about the sort of rent to which I refer. The rent I'm talking about is not the payment which goes from tenant to landlord each month.
Rather, the rent to which I refer is the return to land, just as wages are the return to labor and interest is the return to capital. And, just to expand it a bit further, "land" in this usage refers not just to the sites under our feet, but equally to the remainder of the natural creation and to that which our common investment in infrastructure and services has added to the natural creation: the access created by bridges, highways, railroads, subways, airports, river locks, etc, the value created by schools, parks, public health, courts, systems set up to respond to individual and widescale emergencies, etc. Land includes natural resources, such as oil, water and air, the electromagnetic spectrum (those airwaves that belong to the American people); airport landing slots (where demand exceeds supply), etc.
Rent happens. It happens whenever more than one party wants to use a specific piece of land. Who should benefit from it? A small group of us? the first to arrive? Or all of us?
annual value of land, cui bono?, economic rent, infrastructure, land rent, landed gentry, playing by the rules, population growth, reaping what others sow, rent, technological progress, triple net lease
He who sees the truth, let
him proclaim it, without asking who is for it or who is against
it. This is not radicalism in the bad sense which so many
attach to the word. This is conservatism in the true sense.
-- Henry George, The Land Question
A few days ago I received a mailing from a friend, incorporating (with permission) something I wrote a while ago, and had mostly forgotten about. I think it is worth sharing here; I'll expand on bits and pieces of it, as the spirit moves me.
It has been said that a budget is a moral document. Usually that is construed to refer to the spending side of the budget. But it is equally and importantly true of the revenue side. When we tax the wrong things, we get undesirable effects. When we fail to tax that which we should tax, we get undesirable effects as well. [I might add that an individual's revenue which comes from stealing from others is also a very poor idea -- even when the theft is legal! Chattel slavery certainly fit in this category, as did the industrial slavery Douglas Blackmon described in his recent book.]
With other Georgists, I seek a shift in how we tax ourselves which will produce a better world for all of us. Land value taxation will have important effects in many areas which concern most Americans:
slowing, stopping and reversing urban sprawl
improve wages, without raising the cost of living
spur job creation -- here
reduce long commutes
excessive energy usage
reducing greenhouse gases
The term LAND includes not just the value of urban land, which is huge (and currently underreported and thus ignored, despite being the underlying source of huge fortunes), but also the rest of the natural creation ...
broadcast spectrum -- those airwaves which we all say (complete the sentence) ... belong to the American people, but which have been sold to corporations
water rights (ditto)
natural resources, particularly the non-renewables
congestion in the skies and at location3 airports
and many others -- see Mason Gaffney's paper, The Hidden Taxable Capacity of Land: Enough and to Spare,here
Land Value Taxation (LVT) can solve a lot of problems and set the stage for solving many others. Most of us believe that without this taxation reform, none of these problems are solvable; all we can do is place small bandages on them and spend a lot of money on programs which help relatively few victims.
The LA Times ran an article entitled Can California survive 'no new taxes'?, and I thought it merited a comment. However, it turns out that they only accept comments of 650 CHARACTERS or less. Here's what I tried to post...