The Revenue Adequacy of Site Value Taxation in a Ricardian System of Economic Growth

A bstract . The federal administration has sought to reduce the growth of federal expenditures by shifting some government costs to state and local governments. An increased expenditure burden for the latter governments would require increased tax rates for existing types of taxes that have adverse impacts on economic incentives. Land taxes are considered as a source of revenue because of their efficiency aspects. Unfortunately this idea is all too often dismissed because of alleged revenue inadequacy. Thus an analysis is called for of the revenue adequacy of site value taxation in a Ricardian model of economic growth. The model allows analysis of revenue adequacy over time in an economic growth context that is suited for the long range tax-expenditure planning horizon with which local governments are faced. When revenue needs are primarily dependent upon the population size, and the fisc is initially operating at a deficit, for a land tax to permit attainment of balance, per capita rents must be increasing over time. Also when the economy's public service demand is primarily dependent upon income, deficits will not occur if rental share exceeds the share of income devoted to public output. Not all income goes to fiscal output, so rent eventually exceeds expenditures.     

An Address by a Georgist Sympathizer: Practical Issues in Georgist Thought

The justice and soundness of the taxation of land rent is acknowledged but problems in assessing imply a need to introduce better methods. This is particularly true when attempting to introduce the more saleable idea of two-rate tax systems because the allocation of total value of real estate parcels between land and buildings is even more arbitrarily done than determining the total assessment. The ideas fit best at the local level and there is little chance of replacing income or sales taxes. A 100% tax would be impossible since it would lead to an avalanche of tax appeals and the abandonment of some land since a high percentage of assessments are in error. The idea of a single tax does not fit modern times when revenue needs determine taxes, rather than the amount of revenue collected determining proper or necessary government expenditure levels. One tax source may be unpopular and regarded as a dangerous concept. Land is probably less important and less relatively valuable than it used to be because of technological change. Some advances in social legislation may mitigate the need for the drastic reform, George who was a moralist deeply concerned about poverty, felt reform was needed in his day. He was right about the impacts of various taxes on economic activity and income distribution.     

Site Value Taxation and Manvel's Land Value Estimates

Replacement of the existing property tax with a. tax on site value requires that the site value base be sufficiently large to generate the same revenue as the existing tax. The adequacy of the site value base is examined in view of Manvel's land value/property value estimates. The conclusion is that only partial replacement may be feasible in many cases, but this may still produce a desirable effect.     

The Built‐in Flexibility of Income and Consumption Taxes

This paper reviews, and synthesises within a uniform framework, a number of analytical results on the built‐in flexibility of taxation. Established results for income taxes are reviewed and integrated with recent results for consumption taxes. These help to provide a better understanding of the determinants of the revenue responsiveness properties of different taxes. They also provide convenient expressions for the calculation of tax revenue elasticities in practice. It is shown that the magnitude of revenue elasticities can be expected to differ substantially for alternative taxes, for different forms of the same tax, and for the same tax over time as incomes change relative to tax thresholds and as consumption patterns change. These results are especially relevant for the many industrialised countries which have undertaken major fiscal reforms in recent years with, often unintended, consequences for revenue elasticities.     

Land Prices and Tax Policy: A Study of Fiscal Impacts

A bstract . Various tax measures are in use in efforts to control the level of land prices and to moderate changes in them. These are the site value, vacant land, increment value and transfer taxes. Analysis indicates that sufficiently heavy site value taxes can help stem the rise in land prices and that relatively heavy vacant land taxes can be used to encourage the development of certain urban land. Both instruments may bring forward the time of development. Both are perhaps the best tax tools for controlling speculation. Significant problems seem likely to attend the use of land value increment and transfer taxes applied at high rates. Non-tax alternative or complementary measures are also analyzed.     

A Simple General Test for Tax Bias

A bstract .   The paper infers the biasing effects of taxes from their differential effects on the present values of rival uses for given tracts of land. After-tax wage rates, interest rates, and commodity prices are exogenous, hence not affected by taxes, which are therefore all shifted to land rents and values. The effects are differential among rival uses, hence change their ranking in the eyes of the landowner-manager. Most taxes downgrade the highest use into a lower use, inducing quantum leaps away from higher and better uses into lower and worse uses. The paper uses forestry as an allegory for all land uses. It compares yield taxes, property taxes, income taxes, and site value taxes. It finds that a change from the first three to the site value tax would induce quantum leaps from lower to higher uses of land.     

Public Choice and Land Tax Fairness

Land value taxation (LVT) as desirable U.S. tax policy was brilliantly set forth by the American publicist and economist, Henry George, in the book Progress and Poverty, published 100 years ago. Economists concerned with state and local taxation have generally accepted the basic elements of George's analysis. The absence of substantial LVT legislation despite the economic efficiency and ethical strengths of land as a tax base arises from two sources. First, the public perception of land has not separated land's attributes from those possessed by other property. Second, land ownership data have not been gathered and publicized. Groups favoring taxes that promote economic justice and efficiency should support efforts to develop land ownership data. It would be an important first step toward fully utilizing the potential of LVT.     

ANSWERING THE QUESTIONS ON LVT

This article rebuts the arguments against land value taxation expressed by Oliver Marc Hartwich in the December 2006 'Economic Viewpoints'. This rebuttal argues that taxing land as a surplus is both feasible and consistent with modern economic concepts such as marginal productivity. Entrepreneurship is enhanced rather than hampered by eliminating taxes on wages and enterprise and shifting public revenue to the economic rent of land.     

How Much Revenue Would a Full Land Value Tax Yield?In the United States in 1981, Census and Federal Reserve Data Indicate It Would Nearly Equal All Taxes

Abstract . Most urban economists and particularly specialists in urban public finance consider the land value tax, because of its economic effects and its influence toward rational development, the tax of choice. But could it replace, in whole or in large part, taxes which now burden labor and capital and distort efficient allocation of resources? How important would a full land rent tax's yield be? The U.S. Bureau of the Census provides data which, adjusted for errors and omissions, indicates that the annual land rent for 1981 was $721 billion. Federal Reserve Board data, similarly adjusted, indicates annual land rent for that year was $590.38 billion Hence we may say that a full land rent tax would yield something around $658 billion in 1981, or 28 percent of the 1981 national income. This is nearly two thirds of all taxes levied by all levels of government in 1981, and, with user charges and similar fees continued, it is probably equal or nearly equal to burdensome taxes.     

The Jerome Levy Economic Institute Conference:

The Jerome Levy Economic Institute at Bard College presented a program arranged by Professor Kris Feder on “Land Wealth and Poverty,” on November 2-4,1995, Two of the talks presented are here reproduced with more to follow in subsequent issues of this Journal. J. Ted Gwartney, former senior appraisal officer of the Bank of America presented the view that a 4% tax on the value of land, as broadly defined, could provide revenue adequate for the removal of all other taxes. Professor Nicolaus Tideman argued the case of morality of taxation at the local level.     

Local taxation and the consequences of revenue distribution patterns

The economy of a small region. is modeled as an eighteen-equation system describing production, consumption, income distribution, factor supply, and a government sector. The government uses: independent taxes on land rents and capital rentals to collect revenue equal to 20% of what land rents would be in an untaxed equilibrium and distributes the revenue to local residents in four different patterns. The distribution of the tax revenue, as well as the mobility of the factor taxed, generates distinct patterns of impacts on regional population, capital stock and production structure wages rents and the incidence of the taxes.     

Revenue equivalence and income taxation

This paper considers the classical independent private values model of auction theory in the presence of income taxation. We show that revenue equivalence remains valid if income taxes are proportional. Progressive and regressive taxes lead, in general, to asymmetries between bidders with the well-known consequence that revenue equivalence no longer holds. However, if symmetry of the bidders is maintained, progressive (regressive) income tax implies a higher (lower) expected revenue in first-price than in second-price auctions. Financial support by theDeutsche Forschungsgemeinschaft is gratefully acknowledge.     

Annexation: An Economic Analysis

A bstract . Cost/revenue analysis is used to determine the economic feasibility for annexing various types of land uses into a municipality. Operating costs for municipal services within existing municipal boundaries are apportioned to land uses according to the percent of the service utilized by each. Capital expenditures Site averaged over the expected life of the capital facility Sind then allocated to land uses in the same proportional manner as operating expenditures. Tax yields by land use type are estimated by allocating property taxes and income taxes to land uses which generate them. For example, income taxes are allocated to the commercial and industrial land uses where the employment resulting in tax yields is found. Tax yields are then compared by land use through use of an areal average of one acre. Estimates of revenue to be produced through annexation would result from comparing tax yields with service costs using the same acre average. Thus a city is in a better position to make a decision about the economic merits of specific annexation proposals.     

Neighborhood Revitalization and New Life: A Land Value Taxation Approach

When a neighborhood declines, the poor get poorer, crime rises, and those who can leave the area. The tax base shrinks, so the rates paid by those least able to pay increase. The prevailing system of a low tax on land values leads to land speculation and private land banking, assuring that the landowner can hold out for a very high price for a very long time. A higher tax on land values (coupled with reduction in building taxes) creates an incentive to sell that land or do something with it rather than waiting. In cities that use land‐value taxes, real‐estate markets start to work again and neighborhoods recover. Clairton, Pennsylvania's adoption of a land‐value‐taxation system demonstrates the neighborhood revitalization to which it leads, as owner‐occupied residences and multi‐family units saw a relief in their tax burden. In contrast, vacant properties' contribution to the city budget tripled, providing the resources to pay for the education of Clairton's children and liberate working and middle‐class families from the bonds of labor and capital taxation.     

The Marginalists Who Confronted Land

A bstract .   Although the neoclassical turn in economics demoted land as a factor, important economists of neoclassical thinking, from neoclassical predecessors such Hermann-Heinrich Gossen through figures such as Leon Walras, did view land as a distinct factor of production. Walras, in particular, favored the use of land rent for public revenue. This paper examines the treatment of land by several neoclassical and Austrian economists and shows how, although the neoclassical school today has managed to bury land, some of the key figures who founded these schools did confront land as a factor. The burial of land is thus not inherent in neoclassical economics, but is a historical development that can be reversed.     

地利共享:土地财政的制度合法性

土地财政作为地方政府财政收入的重要来源,成为地方政府提供基础设施建设和社会公共服务的物质基础。在城市化的快速发展中,土地财政成为必不可少的动力。随着城市化进程的加速,土地管理法的修订,土地财政的合法性颇受争议。从合法性的制度视角看,地利共享是土地制度合法性源泉,体现在规制性、规范性和认知性三方面。但是,土地财政的地利共享合法性也面临着规制上的多变和复杂,规范上的迷离和离散,认知上的背离与缺失三方面的危机。化解土地财政的合法性危机,需要对土地财政地利共享的合法性进行重塑:规制层面上,完善土地管理法律体系,坚持土地使用的宪法底线;规范层面上,坚持土地改革的局部试点,谨慎推行全局式的土地改革策略;认知层面上,完善土地财政使用渠道,探索更加多样的土地增值分配方式。     

Economic Effects of Taxes on Land:

A bstract . Land taxes may not be neutral in their economic impacts due to liquidity effects. Liquidity effects of land taxes may be in the form of holding cost effects or capitalization effects. Holding cost effects may occur when land is being withheld from development for non-financial reasons, such as the direct benefits of landownership. Capitalization effects may occur when there are imperfections in capital markets which prevent the acquisition of land for otherwise viable projects. Contrary to the analysis by Bentick , no liquidity effects should be expected due to variations in streams of land rent generated by different hypothetical development projects for a given site. Bentick's analysis relies on a misunderstanding of the nature of land rent .     

Sources of Public Revenue that Make Nations Richer

Among sources of public revenue that make nations richer, the most beneficial are charges for harms, such as pollution and congestion, and charges for the private benefits from public services. Increases in the money supply sufficient to keep price changes in line with expectations are also beneficial. Taxes on concentrations of wealth are beneficial if wealth inequality is considered harmful. Properly administered taxes on land do no harm and are beneficial when markets are imperfect. Among taxes that cause harm, the combination of a tax on labour income and a tax on inheritances is probably the least damaging.     

房地产税改革与土地财政困局破解——基于对地方财政影响的情景分析

地方政府过度依赖土地出让收入是当前中国公共管理面临的重要难题。改革房地产税制并触发土地制度的连锁反应是破解中国土地治理困局的基本出路。通过预测不同改革方案下典型城市住房相关土地财政收入变化,评估房地产税替代土地出让（纯）收益成为地方支柱性收入源的前景。研究发现,如果合理设计覆盖城市存量和新增住房的房地产税,可在短期内保证地方土地财政收入的相对稳定,并在远期实现房地产税替代土地出让金成为地方财政支柱的目标,增强土地财政收入的可持续性。近期政府应改变“重流转、轻保有”的状况,将房地产税培育成为地方主体税种,远期应推进城乡一体化土地市场体系、土地出让制度和土地增值税制度联动改革,使地方土地财政收入从以一次性的土地出让纯收益为主向以持续的房产保有税、土地增值税等为主转变,促进政府土地管理本位职能回归,破解土地财政与政府治理困局。     

Land Value: Seven Major Questions in the Analysis of Urban Land Values

A review of the literature on land and its value reveals seven sources of ambiguity: 1) a precise definition of the type of land under investigation is frequently absent, 2) the temporal, and 3) the spatial aspects of the land value attributes might be inconsistently specified, 4) the relevance of the valuation methods used is often overlooked, 5) the separate land value is a mere by‐product of the total property value as a rule, and thus lacks proper focus, 6) the different agents involved in land markets are not always taken into account, and finally, 7) the explanations for the unpredictable aspects of land value are sporadic. This article explores each of these areas of ambiguity.