A. R. Prest's Investigation of the Case for Site Value Taxation

A bstract . Urban site value taxation —an application to one of the several types of land and natural resources of Henry George's proposals for recapturing for the public's benefit the value its presence and activities accord to land—has been investigated by a leading British fiscal economist, A. R. Prest. He finds that the taxation of urban land is badly in need of reform. Considering the options available, he declares: "With site value rating (land value taxation ) there surely is a very strong case for further experimentation." Professor Prest surveys the whole literature of the question in a strictly objective fashion.     

Public Spending, Land Taxes and Economic Growth: An Empirical Analysis of the Adequacy of Land as a Tax Base

Abstract . Site value taxation is often cited as desirable on efficiency grounds, but is all too often dismissed for alleged lack of revenue potential. This paper empirically tests the revenue adequacy of site value taxation. Revenue adequacy in this study is defined as the ability of the tax base to keep pace with community expenditure needs. The paper concludes that communities with higher than average rates of capital growth and with a relatively constrained land area will find land taxes when subsituted for present property taxes, quite adequate for future as well as present needs.     

Land and Its Taxation as Issues in Economic Theory: What Is the Reason for Their Eclipse?

A bstract . Despite the continuing practical importance of the subject, land and its taxation have lost their prominence in modern economic theory. This evolution in economic thought is traced briefly. An explanatory hypothesis is offered based on the theoretical bias of the two major traditions in neo-classical theory : the Marshailian tradition does not distinguish land from capital (treating land as only one among many forms of capital) while the Walrasian tradition cannot distinguish capital from land (treating capital as an "original" factor similar to land). Though both Alfred Marshall and Léon Walras had a considerable interest in questions of land taxation, their followers, on the whole, have been neither able to overcome nor have they even been aware of the confinement of their respective theoretical perspectives.     

The Economic Effects (Neutrality) of Taxes on Land

A bstract A recent review of the economic effects of land taxation by Steven Bourassa created the misleading impression that a tax on land will have pro-development or non-neutral effects where there are non pecuniary returns from land or where there are capital market imperfections preventing developers from obtaining all the land that they want for development This note argues that a tax on land value is generally neutral, and that this will be the case whether or not there are non pecuniary returns and capital market imperfections, provided that the existence and extent of the imperfections are independent of the tax     

Political Economy of Property Tax Reform: Hawaii's Experiment with Split‐Rate Property Taxation

Economic theory suggests that switching from a general property tax to a split‐rate tax increases land use efficiency and stimulates urban core development while preserving the environment and reducing urban sprawl. Under split‐rate property taxation, land is typically taxed at a significantly higher rate than improvements. Beginning in 1965 Hawaii experimented with a statewide split‐rate property tax system to encourage economic growth and effect land reform. The experiment was ended in 1977. Following the transfer of property taxing powers to the counties in 1978, some counties brought back the split‐rate property tax at times. Since 2006, Kauai County has adopted the unusual practice of taxing improvements at a higher rate than land for most property classes. This article chronicles and explains the rationale behind Hawaii's state and county experiments with split‐rate property taxation.     

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.     

Suburban Encroachment on the Old North 40: The Search for Effective Measures to Preserve Agricultural Land

A bstract . Since 1956, more than 40 states have passed some form of legislation to preserve agricultural land. These statutes or constitutional amendments invoke a variety of economic and/or legal strategies to obtain their objectives, but the most common strategy is that of the differential tax. None of the various strategies is entirely effective, however, although land resource allocation problems have prompted some economists to reexamine the merits of land value taxation. A survey of pertinent literature on land value taxation is examined in an effort to determine whether a system based on single tax principles might offer a simpler, more equitable, and therefore preferable solution to the problem of land resource allocation according to criteria believed to foster environmental conservation or social goals.     

Taxation for Low Cost Wood Fiber*

Abstract . If forest industry taxation is to be put on a sound economic basis, the Federal Government, the largest land owner, should pay the same taxes as any other landowner, so that the social and economic effects of taxation are realized. Specialists report that the form of the property tax preferred for the taxation of the property of the forest industry, under most circumstances, is land value taxation, not the property tax based on income realized at some point In the future which presumed the continued existence of virgin forests. This paper recognizes that the forest industry now is based on harvests of tree crops and proposes a further development of the land value taxation principle in the form of a forest tax composed of a land value tax combined with a tax on tree growth which increases as growth as a percentage of volume growth decreases with the tree's increasing age.     

TAXING LAND VALUE IS JUST ANOTHER QUESTIONABLE TAX

There has recently been much public debate about the introduction of a land value tax. To its supporters such a tax promises to achieve several goals simultaneously. On closer inspection, however, the arguments in favour of land value taxation are not convincing. On the contrary, the economic foundations on which proponents of this tax rely are dubious, and there are significant legal, moral and practical problems with land value taxation.     

Coordinating Opposite Approaches to Managing Urban Growth and Curbing Sprawl: A Synthesis

The purchase of development rights to farmland and open space has recently gained in popularity as a growth management tool. A purchase of development rights program pays the landowner for the unearned increment in exchange for strong deed restrictions, limiting the use of the property. On the other hand, land value taxation, a modification of Henry George's Single Tax, would tax land more heavily than improvements, thus encouraging the development of land. While land value taxation and the purchase of development rights appear to be opposing fiscal policies, they could be employed together as part of a regional planning strategy to encourage in-fill development within and near cities and to curb sprawl by retaining farm, forest, and ranch lands.     

Land Value Taxation in Vancouver: Rent‐Seeking and the Tax Revolt

At the beginning of the 20^th century, Vancouver obtained international acclaim as a “single‐tax” city. Supporters claimed that land value taxation was responsible for the spectacular growth of the city. Even critics believed that it had produced a building boom and declining rents. Yet, over several decades, the system was scaled back and ultimately ended in 1984. This article argues that the property tax revolt can be understood with Mancur Olson's model of collective action. Property owners are better organized than other parties impacted by housing policy because they have financial resources and a salient economic concern in housing. Thus, the special interests of property owners in higher values and unrestricted use prevailed over the interests of tenants and prospective buyers. While the property tax revolt was often articulated in the progressive language of ability to pay, when confronted with progressive counterarguments, it collapsed into explicit arguments for rent‐seeking.     

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.     

OPTIMAL PROPERTY TAXATION IN CALIFORNIA: Is Greater Reliance on Land Values Feasible and Desirable?

Legal changes to Proposition 13 and fiscal imbalance provide, for the first time since 1978, the environment for serious consideration of restructuring property taxation in California. The background of the current situation is reviewed, and as a first approach to determining the optimal property tax system, Henry George's a priori case for taxing land is noted. Studies in the new public finance, especially optimal taxation theory and applications - for example, general equilibrium modeling in policy analysis - provide encouraging though limited support for greater reliance on site value taxation.     

Site Value Taxation on Australia

A bstract . Site value taxation is neither a new nor a strictly western concept. Taxing land based on location was proposed in India around 300 B.C. François Quesnay, David Ricardo and John Stuart Mill were among the economists favoring land taxes but Henry George is credited with bringing it about in several areas, notably Australia. That subcontinent has experimented with the land tax on the national as well as the state and local levels but it is presently used only on the latter two. Empirical tests of the tax instrument are few. Pollock and Shoup (1977) forecast that eliminating the tax on improvements would increase investment levels by about 25 per cent in the long run. Hutchinson (1963) found great differences in house values and stocks. This study evaluates the effects of site value taxation on the basis of multivariate regression analysis. It finds strong evidence that, where improvements are relieved of taxation and more revenues are obtained from land values, the average value of housing is significantly higher and the value of the housing stock substantially larger.     

Harry Gunnison Brown's Advocacy

A bstract . Harry Gunnison Brown's fifty plus years of active advocacy of land value taxation are reviewed in the light of two recent articles. One indicates a waning interest and even understanding of Brown's chosen cause while the other demonstrates quite the opposite: the persistence and relevance of land value taxation. Brown's strategies are examined, drawing on his correspondence as well as his publications. It is suggested that evaluation of Brown's success or failure is a moot question in the sense that there was no one with whom to compare him.     

In Pursuit of Equal Taxation: Jersey City's Struggle Against Corporate Arrogance and Tax-Dodging by the Railroad Trust

Abstract . Mark Fagan, progressive Republican who became Mayor of Jersey City in 1901, and his adviser, City Corporation Counsel George L. Record, both followers of Henry George, attempted to use taxation to break up the railroad trust and regulate the railroads. They believed that community wealth belonged to the people, whether it be land or franchises. Their efforts to achieve equal taxation made it a paramount state issue but it failed because the voters were not prepared to approve the social reorganization needed to overcome corporate arrogance and end corporate privilege. But to escape equal taxation the railroads accepted regulation.     

The distribution of real estate value changes: Metropolitan Boston, 1870–1970

This paper presents estimates of land value change and other measures of real estate value change for the Boston area's 78 towns and cities over the past 100 years. A flattening of the real estate value gradient over time is demonstrated. Given the pattern of land ownership in the Boston area, a higher rate of value increases at greater distances from the center is shown to imply a regressive distribution of capital gains with respect to wealth among the homeowner population. Returns to homeowning are compared with returns to alternative business assets indicating some possible factors in the persistence of wealth inequality.     

Sun Yat-sen and Henry George:

A bstract . Of Sun Yat-sen's "Three Principles of the People," the third principle, namely the People's Livelihood, forms the ultimate goal for social welfare. In this principle Dr. Sun tried to syncretize the economic theories of the West and adapt them within the Chinese context.
The equalization of land ownership through taxation of self-assessed land values, and the land value increment tax are the most essential ingredients of the third principle. Underlying Dr. Sun's concept of equalization of land ownership is the unearned increment theory of Henry George.
Dr. Sun conceived of agrarian reform as basic to the solution of the livelihood problem. Henry George also saw the cause of distress and destitution in the defective land tenure structure and the monopoly of land.     

On Modernizing Local Public Finance

Abstract . Urban economists tend to agree that land value taxation is both equitable and efficient. Then why won't American urban areas reform their property taxes into a land value tax? One explanation may be that the climate of opinion is that the taxation of wealth is wrong. This may be another of the legacies of the Great Depression. In the 20 years preceding, levels of property taxation increased very substantially; this was associated with rapid urbanization and big increases in public expenditures. Even with the collapse of property values urban governments extended expenditures and hence taxes on real property—as they did again with inflation in the 1970s. But in the 70s residents were predominantly owner-occupants—a result of counter depression policy. Their hostility to taxing unrealized capital gains is the obstacle advocates of land value taxation have to overcome.     

Site Value Taxation in a Declining City

A bstract . The relationship is analyzed between the economic decline of a central city and the likelihood that a site value tax will be politically acceptable. Public choice and land use models are combined to generate a scenario of land use changes and changes in improvements to land ratios which determine whether a specific property owner will gain or lose from a revenue-neutral site value tax. A case study is presented which substantiates many of the effects suggested by the model. In general, private and public sector responses to a city's decline result in an atmosphere that is relatively hostile to site value taxation.