Foreword - land ownership

American Journal of Economics and Sociology, The,  Dec, 2000  by Warren J. Samuels

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Needless to say, the attempt to levy or to increase any tax is unpopular with the owners of the object of taxation. This has been particularly and acutely the case with landowners confronted with Georgist efforts to tax land values (the capitalization of rent). Such taxation was seen to be an attack on the institution of private property in general and landed property in particular. It was seen by some as a "taking" of the productivity of the land belonging to the landowner. It was construed by others as a challenge to the institution of land markets understood as a lottery, a mode of betting on the results of future population growth.

The history of economic thought has been to no small degree a history of struggle over the institutional bases of the distributions of income and wealth. The history of the reception and treatment of Ricardian and Georgist ideas on rent and the taxation of land values has been a part of these developments. Economists, on the one hand seeking a safe and secure status in the pantheon of intellectual disciplines, and on the other, notably in England, often employed by universities and worshipping in churches which received no small amount of their income in the form of rent (and tithes), often if not typically reacted with disdain if not horror to Georgist tax-policy proposals. Yet the aforementioned conclusion as to the suitability of land taxation follows as a matter of logic from a well-established corpus of theory, one which is not only well-established but has no substantial competitor in the explication of the origin and nature of rent.

Establishing the suitability of land values for taxation nonetheless requires an additional normative premise if such taxation is to be pursued. Thomas Robert Malthus, another original theorist of rent, added to the theory of rent a premise postulating the desirability of maintaining a ruling landed aristocracy and on that basis supported the Corn Laws which restricted the importation of food into England, thereby keeping rents high. Ricardo himself interpreted the Corn Laws from the perspective of the interests of workers and employers, thereby using the theory of rent to oppose the Corn Laws. Taxing land values on the basis of the theory of rent rejects all claims for protecting rental interests against the ideas that rent is due to the growth of society and is a residual largely immune from disincentive effect, and affirms the impropriety of unearned income while seeking to minimize the disincentive effects of taxes on earned income. The Ricardo-George analysis is compelling: the increase in land values i s due to the growth of society and is a fit object for taxation.

The taxation of land value has been undertaken around the world on both Georgist and non-Georgist grounds. At the very least, land is a ready target of taxation, if only because it is immobile and taxation can be correlated with land registry.

This work edited by Robert V. Andelson does several things: It surveys the systems of land-value taxation around the world. It indicates the enormous variety of land-value tax systems to be found. And it indicates the variety of problems which emerge in instrumenting and administering such taxes, problems which are due to (1) the nature of the tax, (2) the institutions and cultures in which the tax is levied, and (3) the level of economic growth of the economy in which it is levied. In all cases, the equity and financial case for land-value taxation must be juxtaposed to other considerations, however compelling the logic of Ricardian rent theory, and it is very compelling indeed.