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Twentieth Century Supporters of Taxing the Rental Value of Land: Right and Left, Then and Now H. William Batt, Ph.D. Center for the Study of Economics.

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Presentation on theme: "Twentieth Century Supporters of Taxing the Rental Value of Land: Right and Left, Then and Now H. William Batt, Ph.D. Center for the Study of Economics."— Presentation transcript:

1 Twentieth Century Supporters of Taxing the Rental Value of Land: Right and Left, Then and Now H. William Batt, Ph.D. Center for the Study of Economics Philadelphia, PA and Albany, NY;

2 Andrew Carnegie "The most comfortable, but also the most unproductive way for a capitalist to increase his fortune, is to put all monies in sites and await that point in time when a society, hungering for land, has to pay his price.” "Ninety percent of all millionaires became so through owning real estate. More has been made in real estate than in all industrial investments. The wise young man or wage earner of today invests his money in real estate."

3 Sun Yat Sen Leo Tolstoy The land tax as the only means of supporting the government is an infinitely just, reasonable, and equitably-distributed tax, and on it we will found our new system. People do not argue with the teachings of [Henry] George, they simply do not know it. And it is impossible to do otherwise with his teaching, for he who becomes acquainted with it cannot but agree....Solving the land question means the solving of all social questions.... Possession of land by people who do not use it is immoral -- just like the possession of slaves. Solving the land question means the solving of all social questions....Possession of land by people who do not use it is immoral -- just like the possession of slaves.

4 Henry Ford Joseph Fels The fundamental evil, the great God-denying crime of society, is the iniquitous system under which men are permitted to put into their pockets the community-made values of land, while organized society confiscates for public purposes a part of the wealth created by individuals. We ought to tax all idle land the way Henry George said - tax it heavily so that its owners would have to make it productive.

5 Theodore Roosevelt The burden of taxation should be so shifted as to put the weight upon the unearned rise in the value of land itself, rather than improvements, the effect being to prevent the undue rise of rents. From: Century Magazine, October 1931

6 Winston Churchill It is quite true that the land monopoly is not the only monopoly which exists, but it is by far the greatest of monopolies - it is a perpetual monopoly, and it is the mother of all other forms of monopoly. I have made speeches by the yard on the subject of land value taxation, and you know what a supporter I am of that policy.

7 John Dewey Henry George is one of the great names among the world's social philosophers. It would require less than the fingers of the two hands to enumerate those who, from Plato down, rank with him.... No man, no graduate of a higher educational institution has a right to regard himself as educated in social thought unless he has some firsthand acquaintance with the theoretical contribution of this great American thinker. John Dewey’s Introduction to Significant Paragraphs from Progress and Poverty, 1928

8 My ideal system of local finance would comprise user charges and land value taxation. [Dean, Graduate School of Political Science, New York University; quote from Property Tax Reform, Urban Institute, 1973, edited by George Peterson] Dick Netzer, Advisor to New York Tax Agencies and Commissions William Vickrey, Nobel Laureate Economics Economists are almost unanimous in conceding that the land tax has no adverse side effects....Landowners ought to look at both sides of the coin. Applying a tax to land values also means removing other taxes. This would so improve the efficiency of a city that land values would go up more than the increase in taxes on land. Landlords ought to be in favor of this proposal. If taxes on structures were removed, land values in New York City would go up much more. Remarks at the Henry George School in New York

9 Senator Paul Douglas, (D) IL U.S. Senator from Illinois and Chairman, U.S. National Commission on Urban Problems, 1968 Justice Louis Brandeis I find it very difficult to disagree with the principles of Henry George.... I believe in the taxation of land values only. We ask only that the men and women who make up society should be allowed to share in the increases in value which their presence and productivity have created. Unless there is such a public awareness and commitment, we shall repeat the history of the past and permit those who sit tight and hold on to a scarce factor of production to reap a large part of the product created by others. We are becoming properly aware of the need for land reform in the countrysides of Asia and Latin America. There is an even greater need for land reform in the cities and suburbs all over the world -- our own country included.

10 William F. Buckley, Jr. Steven Moore, now with The Club for Growth Henry George said that the rent of all land ought to be public....I am sympathetic with that particular analysis. The land belongs to those in usufruct. Firing Line, PBS January 6, 1980; and C-Span Book Notes, April 2-3, 2000. I have long been an admirer of the Henry George philosophy, as I think most of us here at the Cato Institute are. Communication to Georgist associates

11 The Economist Magazine By cutting taxes on labour, governments can remove one disincentive to join the job market; by cutting taxes on capital, one disincentive to save. But by taxing the use of natural resources -- be they oil, or cadium, or the dirt-absorbing capacity of the atmosphere -- governments can not only pay for lower taxes on labour and saving; they can also make markets work better, by ensuring that prices reflect the full costs of economic activity. May 5, 1990

12 As the late Henry George eloquently maintained in his classic "Progress and Poverty," landowning in itself is not a productive activity. Yet most of the tax benefits assigned to real estate in recent years have been redeemed chiefly by inflationary capital gains and condominium conversions. From a column published in the Wall Street Journal, 29 May 1986. Property taxes could profitably be revised to fall more heavily on land rather than, as at present, penalizing property improvements. From the book: An American Renaissance, p.94. George Gilder Jack Kemp

13 Michael Kinsley Molly Ivins Poor ol' Henry George must be down there in his grave spinnin' like a cyclotron. We, the people at large, build the freeways, the roadways, the airports, the schools, the wter and sewer connections, the bridges, the ports and the sports arenas; we have an raise the children (with ever less help from the government) who want to move t the far suburbs and so make the land more desirable, and then the landowners want us to pay them because we won't allow them to poison the air we all have to breathe or to pollute the rivers we all have to drink from. They say we are hurting their land values. Well, ex-cuuuse me. The air and the water belong to all of us; it's the polluters who are ruining our property values. Why should we be paying them? [From: "Henry George is spinning in his grave," Kansas City Star, March 9, 1995] Ideally, all taxes should be zero because all taxes discourage the activity being taxed. (The exception is the land tax, as Henry George famously noted, because land has nowhere to go.) Taxes on labor discourage work and encourage sloth. Taxes on capital discourage thrift and encourage consumption. [From: an editorial in The New Republic, February 12, 1992]

14 Ralph Nader We need a big debate on different kinds of taxation, to talk about how corporations are freeloading on public services and getting tax breaks while taxes are falling on workers and smaller businesses. We need to open a debate about land taxation and Henry George, to tax bad things, not good things, and not to tax people who go to work every day. Site-value property taxation may also spark greater development in cities by taxing land, not buildings. Unlike traditional taxation -- which rewards developers who put up cheap, tacky housing and strip malls -- site-value taxation gives developers the incentive to build gracious, durable buildings. Allowances for affordable housing, however, need to be part of site-value schemes. From Public Citizen booklet

15 "Left-wing" proposals call for society to achieve equity by redistributing most of the wealth. No distinction is made between the sources of income (land, labor or capital), and individuals control only a small portion of the wealth. In most cases this entails a large measure of social control, and a "planned economy." Dividing Fruits of Labor -- 1

16 Dividing the Fruits of Labor -- 2 "Right-wing" proposals hold that efficiency requires more wealth to remain in private hands (also making no distinction between rent, wages and interest), and that society, or government, should only get the minimum it needs for necessary services, e.g., the role of "traffic cop." This implies leaving the running of the economy to private interests.

17 Dividing the Fruits of Labor -- 3 "Middle-of-the-road" proposals seek a "balanced system" in the distribution of wealth and power between individuals and society - but make insufficient distinctions between earned and unearned incomes, and do not carefully define the proper spheres of society and the individual. The result is a hodgepodge in which efficiency and equity always appear to be at odds.

18 Dividing the Fruits of Labor -- 4 The Georgist proposal makes a distinction between the unearned income of land (rent) and the earned incomes of labor and capital (wages and interest). Rent to society, wages and interest to the individuals who earned them. The proper spheres of society and the individual are clarified. The Georgist proposal achieves the goal of "left-wingers" for security and social action, but without restrictions on liberty. It achieves the goal of "right-wingers" to attain freedom, but without privilege and monopoly. And it achieves a balanced system sought by "middle-of-the-roaders," but in a just rather than arbitrary way.

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