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Harmonious Tax Reform

Background

This page is the sister page for a more narrow initiative to bring land reform to the state of Texas - see Lone Star State Tax Reform

What follows is additional background and points for a proposed solution for solving deadlock in the political process and achieving the fundamental aims of both the so-called Left and Right. Some of it rests on moral arguments, but there are also economists and various "credible people" from a wide range of life to provide some appeal to authorities. Warning - in what follows, there will also be some hasty generalizations.

Consider and entertain: in American politics, the so-called Left seems to focus on everyone getting their "fair share", whereas those on the Right seem concerned about excessive taxes and entitlements. Neither side is really happy, but perhaps both are not wrong, but not entirely right either and would need to be willing to entertain the other side's concerns, for even a moment, in the hopes of resolution. Not possible? Well, consider that Kennedy and the leader of the USSR at the time, Khrushchev, managed to avoid global thermonuclear war. Try to keep an open mind in what follows, please.

Imagine that all of us just woke up here one day - no history, no governments, no houses. We'd all pick a nice spot to live and settle down. Life would be great until we started to run out of room and some were eventually forced to live on the North and South poles. Perhaps there is a way around such polarization? Consider, hypothetically, that if it were possible to claim ownership to the Sun and deny access to others? What if one could even sell access to the Sun light? Wouldn't that be sort of ... ridiculous? Of course. We could make a similar argument for the Ocean or perhaps the moon.

These examples are easy to see and everyone, Left and Right, can agree.

Those on the so-called Left will generally try to find ways to provide subsidies for the "common man", and those on the so-called Right will say things like "you can never own your property so long as you are paying property taxes".

Perhaps both make a fair point, but are also missing something? Let's say, hypothetically, that you did own your land - no effectively renting it from the "government" - would you also own the air above your land or is that something held, in common?


Rayos-de-sol.jpg


Do we treat land, a natural resource, differently, because we can divide it or claim it with force? Let's divide it:

Consider -none has an inherent / natural right to your labor or mine, any more than one could claim right to your grades in school. If you really think someone should have your grades, then probably best to go to another page. If not let's keep going.

The model of everyone picking a nice place to settle down breaks down as soon as someone starts claiming more than he needs or there are no more good spots for the new people being born.

Some will counter that not all labor is the same (e.g., the ditch digger works harder than the comedian perhaps) as justification to tax some people's labor more than others, but we can all agree that to survive in this world certain basics are needed: air, sunlight, water, shelter, food, etc. In our present system, we help the new people by laying claim to the labor of some folks via income, sales, taxes on the improvements on the land. These are all taxes on productivity - like putting an anchor on a boat. The money from taxes is used to make schools to give these new folks skills to buy their own place one day. Basically, the way our system is designed, new folks feed themselves, by being forced to to rely on the labors (taxes) of others. Depending on where born the result can be relatively painless or someone can be born into a ghetto environment. Is there any reason why a ghetto environment should exist in the first place? Can't we do better AND not take from the labor of others while doing so?

One thing to consider also - people being able to retain land for agricultural use arguably lowers cost for food and so forth. So there are some trade-offs to be considered.

Consider and entertain: Isn't the loss of jobs to foreign nations what gets Trump's supporters excited? Likewise, isn't the same thing in a different form, promises of more education, presumably to get better jobs, what motivates the Sanders' supporters? Can you see how it is sorta the same thing? Sorta?

What?

The Land Value Tax assesses a tax or rental fee on the value of the raw unimproved land, rather than on the improvements such as houses, or on sales which negatively impacts business, or on income which negatively affects capital and labor. In light of the increasing calls for fair shares and guaranteed income from the Left and calls to reduce Taxes and entitlements from the Right, with none really getting anywhere, is it time to revisit the old concept concerning property put forth by the great philosopher, Locke, himself and to revisit the ideas of founding fathers such as Thomas Jefferson or Thomas Paine on the matter. Locke stated that mixing one's labor with the land (natural resources) result in the creation of property. He had mentioned leaving enough in common for others to use, but this part is often left out of the conversation. Classical liberals such as Jefferson or even Paine commented that if land-property was the way to go, we needed to either assess a rental fee or tax, or make sure that non land holders weren't left without a recourse - having just as much right to the earth as anyone else, by virtue of being born here.

Regarding the fairness issue, consider and entertain: the station of the tribes living in South America who may have yet had human contact. Is it UNFAIR to them, that people in our neck of the woods may have an XBOX and they do not? Perhaps there are underlying reasons for the differences between different sections of humanity in the same way that there are underlying differences between male and female? And there may be a way to deal with this issue, at least in side of some States or counties, by revisiting our notions of what constitutes property. Fortunately, there is something built into our system - most states already support a property tax on the unimproved land itself in some form or another. There is still plenty of room for corruption in such a system, but that is a different discussion - ideally, the closer to the people, the easier it is to mitigate the role of corruption.

Support

Overview

Using quotations to support an argument is often a logical fallacy - a type of appeal to authority. But, if something is said by someone who accomplished much in their life, somehow it is given more weight. So, consider the below quotations carefully. Where possible, context is supplied.


Tribal

At least some of the Native Americans seemed to think that the land belonged to all of us:

"The most common trait of all primitive peoples is a reverence for the life-giving earth, and the Native American shared this elemental ethic: The land was alive to his loving touch, and he, its son, was brother to all creatures." [1]

That sounds nice in principle, but beyond singing Kumbaya by campfire, how can this be made practical? The following quotes add some more background and detail.

Adam Smith

"Both ground-rents and the ordinary rent of land are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. Though a part of this revenue should be taken from him in order to defray the expences 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 a peculiar tax imposed upon them. Ground-rents seem, in this respect, a more proper subject of peculiar taxation than even the ordinary rent of land. The ordinary rent of land is, in many cases, owing partly at least to the attention and good management of the landlord. A very heavy tax might discourage too much this attention and good management. […] 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."

Locke

The founding fathers studied Locke. Here are some quotations of his:

  • "Though the earth, and all inferior creatures, be common to all men, yet every man has a property in his own person: this no body has any right to but himself. The labour of his body, and the work of his hands, we may say, are properly his. Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property. It being by him removed from the common state nature hath placed it in, it hath by this labour something annexed to it, that excludes the common right of other men: for this labour being the unquestionable property of the labourer, no man but he can have a right to what that is once joined to, at least where there is enough, and as good, left in common for others."

John Stuart Mill

  • "Whenever, in any country, the proprietor ceases to be the improver, political economy has nothing to say in defence of landed property. When the “sacredness” of property is talked of, it should be remembered that any such sacredness does not belong in the same degree to landed property." --Principles of Political Economy
  • "When land is not intended to be cultivated, no good reason can in general be given for its private property at all."
  • "The earth belongs in usufruct to the living and is given as a common stock for men to live and labor on."

Declaration of Independence

The DoI stated that: "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness". These words are borrowed from earlier works, but were modified - notably property was excluded.

As an aside, scholars have debated these source of these words, but a friend of mine has asserted that while Jefferson was the front man for the DoI, it was Paine behind the scenes who was the source, suggesting that Paine was perhaps too outspoken during the period for the Declaration of Independence to be associated with Paine's name. For similar reasons, it is widely understood that slavery couldn't be dealt with right away as there were a number of voices at the time who would not go along with the DoI if slavery were spelled out as an evil. Similarly, it is widely known that without the capital provided by rich land owners, at the time, the revolutionary war may not have succeeded. Whether this is speculation or not, as we will see shortly, Paine and Jefferson did offer many quotations where they seem aligned on the land issue, and we may also be able to wonder about property in land, just as some wondered about property in person (slavery) during the time period of the DoI.

Constitution

The word property is in the Constitution only once, and when mentioned it is under Article IV and is related to government property. It is also interesting to note that during the special ratification conventions held for the Constitution, the ordinary requirements for property (land) ownership were set aside, to allow a wider voice at the conventions.


The Articles of Confederation, which preceded the Constitution, directly stated about land value taxation, but sadly, also included the improvements.

"All charges of war, and all other expenses that shall be incurred for the common defense or general welfare, and allowed by the United States in Congress assembled, shall be defrayed out of a common treasury, which shall be supplied by the several States in proportion to the value of all land within each State, granted or surveyed for any person, as such land and the buildings and improvements thereon shall be estimated according to such mode as the United States in Congress assembled, shall from time to time direct and appoint."

The following is an explanation of the need for the Direct Tax Apportionment clause. It was written by Supreme Court Justice Paterson in Hylton v US (3 US 171 [1796]):

The constitution declares, that a capitation tax is a direct tax; and both in theory and practice, a tax on land is deemed to be a direct tax... The provision was made in favor of the southern states; they possessed a large number of slaves; they had extensive tracts of territory, thinly settled, and not very productive. A majority of the states had but few slaves, and several of them a limited territory, well settled, and in a high state of cultivation. The southern states, if no provision had been introduced in the constitution, would have been wholly at the mercy of the other states. Congress in such case, might tax slaves, at discretion or arbitrarily, and land in every part of the Union, after the same rate or measure: so much a head, in the first instance, and so much an acre, in the second. To guard them against imposition, in these particulars, was the reason of introducing the clause in the constitution.

Constitutional Convention Debates of 1788

The following quote was by a supporter of the Constitution during the NC ratification debates, in response to a critique of the Constitution. A little setup is needed first. It begins by demonstrating that any one actually reading the Constitution would or should not think that complaints against the government would result in being charged for Treason.

"But the gentleman has gone further, and says, that any man who will complain of their oppressions, or write against their usurpations, may be deemed a traitor, and tried as such in the ten miles square, without a jury. What an astonishing misrepresentation! Why did not the gentleman look at the Constitution, and see their powers? Treason is there defined. It says expressly, that treason against the United States shall consist only in levying war against them, or in adhering to their enemies, giving them aid and comfort. Complaining therefore, or writing, cannot be treason. [Here Mr. Lenoir rose, and said that he meant misprision of treason.] The same reasons hold against that too. The liberty of the press being secured, creates an additional security. Persons accused cannot be tried without a jury; for the same article provides, that "the trial of all crimes shall be by jury." They cannot be carried to the ten miles square; for the same clause adds, "and such trial shall be held in the state where the said crimes shall have been committed."

The reason I included the above quote is to demonstrate how quickly the objector was somewhat proven correct via the Alien and Sedition Acts, which imprisoned persons critical of the government, or we may even want to consider the internment of Americans of Japanese descent during WWII.

Continuing with the issue of land:

"He has made another objection, that land might not be taxed, and the other taxes would fall heavily on the poor people. Congress has a power to lay taxes, and no article is exempted or excluded. The proportion of each state may be raised in the most convenient manner. The census or enumeration provided, is meant for the salvation and benefit of the southern states. It was mentioned that land ought to be the only object of taxation. As an acre of land in the northern states, is worth many acres in the southern states, this would have greatly oppressed the latter. It was then judged that the number of people, as therein provided, was the best criterion for fixing the proportion of each state, and that proportion in each state to be raised in the most easy manner for the people" [2] (search for page 236).

He's saying that land taxation would upset the balance between the states, so population was chosen instead, as a measure of what each state would owe to the federal government to pay for its protection of the States. I included this quote not as outright support for land value or similar tax schemes, but rather, to emphasize that land taxation was well understood during the time period. It wasn't just made up in the last few years and now a days many will assert that it is the basis for Liberty, and I would agree; however, I'd also suggest that population growth needs to be factored into the modern era when considering Liberty. The interesting thing to note is that taxation of the value wasn't noted in this debate, which would have reconciled the issue of land being more valuable in some states than others.

I should also add - the Articles of Confederation used a land tax scheme. This scheme was carried forward until the Whiskey tax was born. During the time, Whiskey was used as medium for transferring value by farmers who were further from the market - whiskey made it easier to transport their "corn" to market. It was also easy to pick on these folks since they were small farmers, as the story goes. The tariff would have made it much harder on smaller producers to carry, than on larger producers who already had the momentum to drive the smaller producers out of business. The leader who squashed the Whiskey rebellion was none other than George Washington, who at one time was the largest Whiskey producer in America. Whether he was up to no good or not, I don't know, but some have found this reality curious. Personally, I think he got into the Whiskey game too late for it to be relevant, but there were others already in the game who may have had influence. Further, there is the matter of wealthy land holders that may have exerted influence in the taxation scheme as well.

Paine

Paine is one of the unsung heroes of the founding period. HIs work helped provide the spark to the kindling present during the time of the Revolutionary war. Though he was apparently a Deist, during that time period, the word Deist also seemed to mean Atheist to many of the people of the period. It was not good to be associated with such things at the time, so he was too outspoken for many. Here is a quote of his:

  • “The present state of civilization is as odious as it is unjust…The contrast of affluence and wretchedness continually meeting and offending the eye, is like dead and living bodies chained together.”
  • “Man did not make the earth, and though he had a natural right to occupy it, he had no right to locate as his property in perpetuity any part of it; neither did the Creator of the earth open a land-office, from whence the first title deeds should issue. Thus, Every proprietor, therefore of cultivated lands, owes to the community a ground rent (for I know of no better term to express the idea)... Each individual attaining the age of 21, should receive the sum of fifteen pounds sterling, as compensation in part, for the loss of his or her natural in heritage, by the introduction of land property…and the sum of ten pounds per annum, during life, to every person now living, of the age of fifty years, and to all others as they shall arrive at that age.”
  • "But the earth in its natural state, as before said, is capable of supporting but a small number of inhabitants compared with what it is capable of doing in a cultivated state. And as it is impossible to separate the improvement made by cultivation from the earth itself, upon which that improvement is made, the idea of landed property arose from that parable connection; but it is nevertheless true, that it is the value of the improvement, only, and not the earth itself, that is individual property."

It's subtle: "it is the value of the improvement, only, and not the earth itself, that is individual property".

Jefferson

  • "Legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children, or to all the brothers and sisters, or other relations in equal degree, is a politic measure, and a practicable one. Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise."
  • "Whenever there is in any country, uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. The earth is given as a commonstock for man to labour and live on. If for the encouragement of industry we allow it to be appropriated, we must take care that other employment be provided to those excluded from the appropriation. If we do not the fundamental right to labour the earth returns to the unemployed."
  • "It is too soon yet in our country to say that every man who cannot find employment but who can find uncultivated land shall be at liberty to cultivate it, paying a moderate rent. But it is not too soon to provide by every possible means that as few as possible shall be without a little portion of land. The small land holders are the most precious part of a state."

Source: Letter from Thomas Jefferson to James Madison on Private Property [ [3]]

Regarding Jefferson's last quote - some have argued that we have lost our social equilibrium - that the jobs have left the country. Trump is one of those. Others argue that a high-school education is hardly enough to raise a family anymore. Bernie is one of those. While smart folks may find themselves quickly moving beyond minimum wage, consider that for those who can't understand why or how a minimum wage MIGHT hurt them, that they may still want to raise a family.

Lincoln

  • "The land, the earth that God gave to man for his home, his sustenance, and support, should never be the possession of any man, corporation, society, or unfriendly Government, any more than the air or the water, if as much. An individual company or enterprise requiring land should hold no more in their own right than is needed for their home and sustenance, and never more than they have in actual use in the prudent management of their legitimate business, and this much should not be permitted when it creates an exclusive monopoly. All that is not so used should be held for the free use of every family to make homesteads, and to hold them as long as they are so occupied.
  • "A reform like this will be worked out some time in the future. The idle talk of foolish men, that is so common now, on 'Abolitionists, agitators, and disturbers of the peace,' will find its way against it, with whatever force it may possess, and as strongly promoted and carried on as it can be by land monopolists, grasping landlords, and the titled and untitled senseless enemies of mankind everywhere."

Henry George

The man wrote extensively on this topic. Pulling a few quotes is useless since his name is synonymous with this discussion :)

William Buckley

  • "Henry George said that the rent of all land ought to be public. … I am sympathetic with that particular analysis."
  • In an interview with conservative pillar, William Buckley interacted with a person participating in the interview using a telephone, and identified as CALLER:

"CALLER: I've heard you describe yourself as a Georgist, a follower of Henry George, but I haven't heard much in having you promote land value taxation and his theories, and I'm wondering why that is the case.

Buckley: It's mostly because I'm beaten down by my right-wing theorists and intellectual friends. They always find something wrong with the Single-Tax idea. What I'm talking about Mr. Lamb is Henry George who said there is infinite capacity to increase capital and to increase labor, but none to increase land, and since wealth is a function of how they play against each other, land should be thought of as common property. The effect of this would be that if you have a parking lot and the Empire State Building next to it, the tax on the parking lot should be the same as the tax on the Empire State Building, because you shouldn't encourage land speculation.

Anyway I've run into tons of situations where I think the Single-Tax theory would be applicable. We should remember also this about Henry George, he was sort of co-opted by the socialists in the 20s and the 30s, but he was not one at all. Alfred J. Nock's book on him makes that plain. Plus, also, he believes in only that tax. He believes in zero income tax." Source: an interview with Brian Lamb, CSpan Book Notes, April 2-3, 2000

Fredreich Hayek

"The usefulness of almost any piece of property in a city will in fact depend in part on what one's immediate neighbors do and in part on the communal services without which effective use of the land by separate owners would be nearly impossible. … The general formulas of private property or freedom of contract do not therefore provide an immediate answer to the complex problems which city life raises. It is probable that, even if there had been no authority with coercive powers, the superior advantages of larger units would have led to the development of new legal institutions—some division of the right of control between the holders of a superior right to determine the character of a large district to be developed and the owners of inferior rights to the use of smaller units, who, within the framework determined by the former, would be free to decide on particular issues. In many respects the functions which the organized municipal corporations are learning to exercise correspond to those of such a superior owner."


Churchill

"LAND MONOPOLY is not the only monopoly, 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. Unearned increments in land are not the only form of unearned or undeserved profit, but they are the principal form of unearned increment, and they are derived from processes which are not merely not beneficial, but positively detrimental to the general public. Land, which is a necessity of human existence, which is the original source of all wealth, which is strictly limited in extent, which is fixed in geographical position -- land, I say, differs from all other forms of property, and the immemorial customs of nearly every modern state have placed the tenure, transfer, and obligations of land in a wholly different category from other classes of property. Nothing is more amusing than to watch the efforts of land mo- nopolists to claim that other forms of property and increment are similar in all respects to land and the unearned increment on land." ~ Speech made to the House of Commons on May 4, 1909 [4]

Take note, Churchill switched political parties a couple of times. Was this out of principle? As far as I know, he never switched positions on land privilege however.

MLK

  • "Truth is found neither in traditional capitalism nor in classical communism. Capitalism fails to realize that life is social. Communism fails to realize that life is personal. The good and just society is neither the thesis of capitalism nor the antithesis of communism, but a socially conscious democracy which reconciles the truths of individualism and collectivism.... -1964 Nobel Prize Lecture
  • "An intelligent approach to the problems of poverty and racism will cause us to see that the words of the psalmist — "The earth is the Lord's and the fullness thereof" — are still a judgment upon our use and abuse of the wealth and resources with which we have been endowed." — "Where Do We Go From Here?," A Testament of Hope: The essential Writings and Speeches of Martin Luther King, Jr

Malcolm X

The following quote offers some violence and lots of colorful metaphors (pun apologies). I do not post it to encourage violence or support it because parts of it are downright sick, but I encourage the reader to look beyond the violence into the core of what is being said - land is at the core:

"Look at the American Revolution in 1776. That revolution was for what? For land. Why did they want land? Independence. How was it carried out? Bloodshed. Number one, it was based on land, the basis of independence. And the only way they could get it was bloodshed. The French Revolution -- what was it based on? The land-less against the landlord. What was it for? Land. How did they get it? Bloodshed. Was no love lost; was no compromise; was no negotiation. I'm telling you, you don't know what a revolution is. 'Cause when you find out what it is, you'll get back in the alley; you'll get out of the way. The Russian Revolution -- what was it based on? Land. The land-less against the landlord. How did they bring it about? Bloodshed. You haven't got a revolution that doesn't involve bloodshed. And you're afraid to bleed. I said, you're afraid to bleed.

long as the white man sent you to Korea, you bled. He sent you to Germany, you bled. He sent you to the South Pacific to fight the Japanese, you bled. You bleed for white people. But when it comes time to seeing your own churches being bombed and little black girls be murdered, you haven't got no blood. You bleed when the white man says bleed; you bite when the white man says bite; and you bark when the white man says bark. I hate to say this about us, but it's true. How are you going to be nonviolent in Mississippi, as violent as you were in Korea? How can you justify being nonviolent in Mississippi and Alabama, when your churches are being bombed, and your little girls are being murdered, and at the same time you're going to violent with Hitler, and Tojo, and somebody else that you don't even know?

If violence is wrong in America, violence is wrong abroad. If it's wrong to be violent defending black women and black children and black babies and black men, then it's wrong for America to draft us and make us violent abroad in defense of her. And if it is right for America to draft us, and teach us how to be violent in defense of her, then it is right for you and me to do whatever is necessary to defend our own people right here in this country.

The Chinese Revolution -- they wanted land. They threw the British out, along with the Uncle Tom Chinese. Yeah, they did. They set a good example. When I was in prison, I read an article -- don't be shocked when I say I was in prison. You're still in prison. That's what America means: prison. When I was in prison, I read an article in Life magazine showing a little Chinese girl, nine years old; her father was on his hands and knees and she was pulling the trigger 'cause he was an Uncle Tom Chinaman, When they had the revolution over there, they took a whole generation of Uncle Toms -- just wiped them out. And within ten years that little girl become a full-grown woman. No more Toms in China. And today it's one of the toughest, roughest, most feared countries on this earth -- by the white man. 'Cause there are no Uncle Toms over there."

Michael Kinsley

Consider this little jewel:

  • "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."
  • "Ownership of natural resources like land or oil does not 'create' or 'supply' anything. The profit from such ownership is a direct transfer from the rest of society."

Did you catch that? Income tax encourages consumption - which may mean it indirectly causes global warming, if you subscribe to man's role in that concept. How? The income tax system through its so-called write-offs tries to drives businesses towards spending their cash which would ordinarily be retained as profits/income on ventures or depreciable assets lest their profits become subject to tax. Use it or lose it, in other words. In other words, as a business - showing a profit is not advantageous from an income tax perspective, so business owners typically try to spend as much as they can investing in the business and many times these are things it doesn't really need. This results in much unnecessary expenditure and consumption.

Milton Friedman

"There's a sense in which all taxes are antagonistic to free enterprise … and yet we need taxes. We have to recognize that we must not hope for a Utopia that is unattainable. I would like to see a great deal less government activity than we have now, but I do not believe that we can have a situation in which we don't need government at all. We do need to provide for certain essential government functions — the national defense function, the police function, preserving law and order, maintaining a judiciary. So the question is, which are the least bad taxes? In my opinion the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago." -- quoted from The Times Herald, Norristown, Pennsylvania (1 December 1978)

Piketty, a modern economist

  • A few years ago, a French economist by the name of Thomas Piketty made waves with the publication of Capital in the 21st Century, a prodigiously weighty economic tome that simplified the perpetual problem of inequality down to three symbols: “r > g”. Translated, this equation claims that wealth begets wealth faster than economic growth creates wealth, or in other words, the rich get more of the pie faster than the pie itself can grow the size of the slices for everyone. Assuming this is true, there is then no way around redistribution of wealth outside of another wealth-destroying world war or social revolution, because humans have their inequality limits.
  • The Internet, however, is full of surprises, and a critique of Piketty’s hypothesis by a college student called Matt Rognlie bubbled up from an online comments section to gain notoriety. Rognlie is now credited with adding an incredibly important insight to this discussion by pointing out that if one looked really closely at the letter “r” in Piketty’s equation, only one part appeared to be responsible for almost all the growth, and that lone part was land ownership." (todo: add source link).

Murray Rothbard

Nope, not a supporter of LVT. To my knowledge, he rejected the so-called Lockean proviso: Locke's contention that landed-property was fine so long as there was enough left in common. There are multiple rebuttals to one of his papers on the topic, but for purposes of working through is own thinking one of the principle author's of this site is working on his own analysis of Rothbard's critique of Georgist concepts.

David Nolan, a Founder of the Libertarian Party

Make no mistake, in the piece this quote is derived from, David Nolan does express an ideal state is for the State to exist without forced-finance or simply cease to exist, but in the interim, he expressed as follows:

"What kind of taxation is least harmful?….My own preference is for a single tax on land, with landholders doing their own valuation; you'd state the price at which you'd be willing to sell your land, and pay taxes on that amount. Anyone (including the tax collector) who wanted to buy it at that price could do so. This is simple, fair, and minimizes government snooping into our lives and business."

Walter Block

Walter Block doesn't directly support the idea, but he does so indirectly, perhaps without realizing it. In a paper discussing confusion in the use of the term rent and economic rent, he writes: "... an attempt to gain unfair advantage against innocent parties: competitors, taxpayers, customers, suppliers. It does not constitute outright explicit theft, but it is close enough such that the difference between the two makes no never mind. For example, when domestic steel producers lobby for, bribe, blackmail, extort, legislators to initiate or raise a tariff against the importation of substitutes from abroad, that is rent seeking. Or when Wall Street banks orchestrate a bailout, that constitutes rent seeking or when auto makers in Detroit arrange for a subsidy with the power brokers in Washington D.C., that again is an example of this phenomenon. Or when farmers are paid by government to not grow crops, or when big pharma uses the Food and Drug Administration to exclude competition. This is all pretty despicable activity" Source: THE RENT SEEKER by Walter Block

Regarding Walter Block's paper. The irony and why it appears he may not have realized the contradiction is covered by what seems to be some errors in Walter Block's article. This is from a wikipedia scrape:

"The term rent-seeking was coined by the British 19th century economist David Ricardo, but only became the subject of durable interest among economists and political scientists more than a century later after the publication of two influential papers on the topic by Gordon Tullock in 1967,[2] and Anne Krueger[3] in 1976. The word "rent" does not refer specifically to payment on a lease but rather to Adam Smith's division of incomes into profit, wage, and rent. The origin of the term refers to gaining control of land or other natural resources.

Georgist economic theory describes rent-seeking in terms of land rent, where the value of land largely comes from government infrastructure and services (e.g. roads, public schools, maintenance of peace and order, etc.) and the community in general, rather than from the actions of any given landowner, in their role as mere titleholder. This role must be separated from the role of a property developer, which need not be the same person.

Rent-seeking is an attempt to obtain economic rent (i.e., the portion of income paid to a factor of production in excess of what is needed to keep it employed in its current use) by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth. Rent-seeking implies extraction of uncompensated value from others without making any contribution to productivity. The classic example of rent-seeking, according to Robert Shiller, is that of a feudal lord who installs a chain across a river that flows through his land and then hires a collector to charge passing boats a fee to lower the chain. There is nothing productive about the chain or the collector. The lord has made no improvements to the river and is not adding value in any way, directly or indirectly, except for himself. All he is doing is finding a way to make money from something that used to be free.[4]

In many market-driven economies, much of the competition for rents is legal, regardless of harm it may do to an economy. However, some rent-seeking competition is illegal—such as bribery or corruption.

Rent-seeking is distinguished in theory from profit-seeking, in which entities seek to extract value by engaging in mutually beneficial transactions.[5] Profit-seeking in this sense is the creation of wealth, while rent-seeking is "profiteering" by using social institutions, such as the power of the state, to redistribute wealth among different groups without creating new wealth.[6] In a practical context, income obtained through rent-seeking may contribute to profits in the standard, accounting sense of the word."

See more here: Rent-seeking


Dan Sullivan, Director of Saving Communities

Consider this quote:

  • "The classical liberal distinctions between land, labor and capital were greatly confused by socialists, and particularly Marxists, who substituted the fuzzy abstract term, "means of production," for all three factors. They also blurred the distinction between common property and state property, for socialists believed, as royalty also believed, that they were the people. Today, the confusions between land and capital and between state property and common property are shared by socialists and royal libertarians, and only classical liberals keep these distinctions clearly defined. Yet royal libertarians frequently duck the land issue by charging that it is the classical liberals, not the royal libertarians, who have embraced socialist ideas." See: Wealth and Want.

The same page states:

  • "We are libertarians who make the classical liberal distinction between land, labor and capital. We believe in the private possession of land without interference from the state, but in the community collection of land rent to prevent monopolization of land. We believe that all government activities should at least be limited to those which increase the value of land by more than what the government collects, and that government should be funded entirely from the land value increases it creates. We oppose direct state monopolization of land as well as state-sanctioned private monopolization of land, and advocate that state and federally held land pay land rent to the communities the same as private land. We advocate that government be allowed to spend only what is authorized by voter referendum or similar device and that it take for itself the minimum it is authorized to spend. Those who advocate collection of the full rent stipulate that the proceeds be divided among community members on a per-capita or similar basis, for the land, and the rent, belong to the people, not the state. We condemn the taxation of property improvements, and of all activities, productive, consumptive, or recreational, as invasions by the state into the private affairs of free individuals."

Additional Reading

Debate with yourself - did Japan's economic miracle originate from land reform, or was it merely stymied by lack of access to credit as a result of land reform? Was empirical data used? Comparisons before and after?

  • Consider a quote from this study backed by at least some empirical data and analysis:

"Empirical studies of the impact of land reform are rare since reliable estimation requires data from the pre- and postreform periods. In India there are numerous case studies of land reform (reviewed below), but few attempts to look at the overall picture. Discussion of the theoretical impact of land reform has been dominated by the frequently found inverse farm size-productivity relationship, whence small farmers are supposed to achieve higher yields (see Binswanger et al. [1995]). This suggests that finding means of evening the distribution of landholding should lead to productivity gains in addition to redistributive benefits. However, land reforms in India are rarely of a form that could directly exploit this possibility. Moreover, careful analyses, such as Banerjee and Ghatak [1997] show that the theoretical effects on productivity are inherently ambiguous when assessing the impact of tenancy reforms that allow tenants greater security. Our main finding is that there is a robust link between land reform and poverty reduction. Closer scrutiny reveals that, in an Indian context, this is due primarily to land reforms that change the terms of land contracts rather than actually redistributing land. Consistent with the antipoverty impact, we find that land reform has raised agricultural wages. The impact of land reform on growth also depends upon the type of land reform. Overall, there is some evidence that the gain in poverty reduction did come at the expense of lower income per capita. We show that all of these results are consistent with a simple model of agricultural contracting." Source: Land Reform, Poverty Reduction, and Growth: Evidence from India 
Author(s): Timothy Besley and Robin Burgess
Source: The Quarterly Journal of Economics, Vol. 115, No. 2 (May, 2000), pp. 389-430 Published by: Oxford University Press
 Stable URL: https://www.jstor.org/stable/2586998

Why?

The idea behind the land value tax is to provide a fair opportunity for those entering this world. Note: I did not say result! Fairness for what people have labored to create. No one has right to your labor, yet no one has right to that which he did not create! See another article here for a deeper explanation.

Those on the Right will say: consider the foolishness of taxing sunlight! Yes, there seems to be a balance - without a check, taxes eventually get to the point where they are harming the very people they are supposed to be helping, in the name of fairness! To deal with this issue, some of our founding fathers suggested measures such as cut-off points, thresholds below which there wouldn't be taxation by money and by age. The People need to have a place to hold out for wages or be self-sufficient as possible if they like.

How?

From a practical perspective, many states already have an existing property tax system. One proposal is simple - identify a county or even smaller subdivision, perhaps even a privately held tract, to run as a pilot program to test for feasibility of a land value rent system.

In the chosen microcosm, allow for exemption from most property tax or gradually reduce the taxation on structures and improvements to nil, and gradually raise the taxation, or rather, allow for economic rent to be extracted from the land- basically provide some compensation to members of the chosen entity to either distribute the funds or make improvements for the community as a whole. It sounds sort of strange, right? See here: for an example.

For a more detailed discussion see this video series. Many taxation systems may employ an exemption system and the land value tax could and has incorporated exemptions on the basis of homesteading or agricultural usage - this may mitigate the negatives of this system, at least from a perception standpoint.

Examples of Success?

In the State of Texas, significant portions of the University system is paid for using a form of LVT.

On a national level: Denmark, Singapore, Hong Kong, Taiwan, laid the foundation of the land value tax in their system and appears to have reaped the rewards; however, they eventually turned towards income taxes and the like. Why? It is my understanding that after using this system, eventually taxes drop lower and lower, which results in the system itself being dropped by the taxing authorities. See here for commentary and discussion.

Here is a sample quote: 

"Apologists for state planning and state partnership with big business point enthusiastically to Pacific Rim Asia but overlook the fact that all these success stories began on a firm footing of land reform. The city-state Singapore, founded on Georgist tax principles, reached a tax rate on land of 16%. Hong Kong existed only on crown land, funding 4/5 of their budget with 2/5 of site Rent (Yu-Hung Hong, Landlines, 1999 March, Lincoln Inst., Cambridge, MA). The city uses land rent, not subsidy, to fund their new metro and in its suburbs grows much of its own food. Hong Kong enjoys low taxes, low prices, high investment, and often the highest per capita salaries. The city is often voted the world’s best city for business and the freest for residents. "

Some towns in America have had success with one town, Fairhope, Alabama noting a key part of our current issues: 

"There was fierce opposition to the idea of taxing 100% of the rental value of land on the part of railroads, mining companies, land developers, and others, and the single tax was never implemented. In the 1880's when the single theory was being promoted, the responsibilities of government were such that the revenues from a single tax on land could probably have paid all government obligations of the time. As years went by, however, the role of government has changed to the point where a single tax on land could not generate the revenues required to fund the expanded government activities."

Note: "role of government has changed to the point where a single tax on land could not generate"


More discussion follows here: [5]

Economic Rational

A rental fee (that's what your property tax is currently anyway, so you have nothing to lose) on land owed to the local community (that's up to you and your community to figure out), results in unused land being put into production, rather than held in speculation. This increases the available "supply" (land patents for sale) for awhile, which in turn drives down the cost of land, which in turn drives down the taxes for individual land owners who have put their land to productive use, for while. Then the authorities, depending on how much power they have, will realize that the no longer have rich land owners greasing their pockets or fat government retirement packages to fund, and will say, we gotta raise taxes to match our spending, and abandon or weaken the system! Then they go back to taxing labor (sales, wages, capital gains, inventions, etc.), presumably to encourage more efficient labor, in the same way that putting a monkey on someone's back makes them more efficient. That's what usually happens.

But, if allowed to proceed further, land values start to level out, and with more land being in productive use, there is more access to labor, etc. etc. This is what happened in post war Japan, where the famed general implemented land reform. The land holders will typically oppose such a system, because it reduces their ability to make money through their holdings, and usually the land holders have control over the political process in one way or another. Please don't take land holders literally. All it means is that in order to produce, access to the natural resources is generally the basic input to the economy.


Challenges

All systems have their challenges, here are a couple for the LVT or similar proposals. LVT has its own set of issues if is implemented by a State/Country. See the Strengths and Weaknesses of Various Ideologies.

  • Some segments of the population may spend their inheritance on frivolous living
  • It may not deal well with derivative financial instruments
  • There may need to be homestead or other exemptions, similar to how 'unimproved' food is exempted in many sales tax systems.
  • Consider: [6]


Local Conditions

Local conditions may alter the value proposition or what makes sense. When I visited Iceland I learned that they have very cheap energy there. It has something to do with the island being on top of one big volcano.

The Game Plan / Next Steps

  • Join the Facebook group if you would like to support efforts to implement at a municipality, county, or local level. State level interaction may be needed for allowing municipalities to govern themselves in this area.
  • Create a bill to adjust Texas property tax system to make it easier to allow individuals to opt-out of per capita share of land taxation / additional government spending, while being denied the benefits for their choice.
  • Identify and recruit politicians to sell the idea in a pilot for an independent county, city, or school district. Personally, I don't think that large amounts of people will ever accept such notions, but I do believe they might allow it for some communities.
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