Adam Smith observed that only 2 of the 3 groups made any real contribution to the production process.  The workers contributed their time.  The capitalists contributed their capital that they either bought, but is now used and worth less than before it was used.  The Rentiers contributed their land, but have lost nothing.  Once the manufacturing of the bricks is done, they get their land back and it is still worth the same as it was before.  Any income they made by renting out their land was made without work, and without risk to their assets.  There is a word for someone that only takes, but doesn’t give back: a parasite.  Smith and those who carried on his work used the nicer term, Rentier.  This is where the phrase “economic rent” originates.  It originally described a no value-ad landlord.

Adam Smith and future classical economists existed in a time where the noble families of medieval Europe were still the large landowners.  The nobles had just turned into Rentiers.  Because they owned the land, they were able to rent it out to capitalist and workers and claim a portion of their profits and wages by charging “rent”.  They were able to do this without ever working.  It was unearned income.

Much of the work done by economists from Adam Smith until the late 19th century was all about finding and identifying “rent-seeking”.  These classical economists didn’t want to overthrow capitalism, they wanted to free it from the “rent-seeking” parasites.

Eliminating economic rent is the main objective of Smart Taxes.  That is why we promote Land Value Taxes, Cap and Share and support charging for the use of common resources.  We also promote ending the financial free lunch of our current money system through the green alternative money perspective as well as that of Modern Monetary Theory.  Enough promo:- here is another snippet from Maddog.

In the late 60s and early 70s “economic rent” saw a small revival among select economists.  For those select few, “Rent-seeking” was no longer defined as just “ownership of the land”.  It can take several shapes.  Rent-seeking is any income that is unearned. An alternative definition is “profit without a corresponding cost of production”.  “Economic Rent” can come from ownership of land and just “renting” it out for money. It can also come from collecting so much capital that a firm now has a monopoly and can set the price independent of supplydemand considerations, It can be from government monopoly granting, control of other “land” like our rivers, broadband spectrum, or “mineral rights” of land.  It can come from control of financial assets like capital gains, dividends, and interest on loans(especially usury). It can also come from political favors from the government….

…Political Implications

Economic rent was something I’d learned about in school several years ago and quickly forgot about it once the class was over.  Now in a post bank-bailout world, I ran across it again one day while researching another article, It was like a light-bulb clicking on in my head.  (A high-efficiency light bulb).  This is what progressives are currently fighting against.  This is the concept, the vocabulary, the name for the rage I feel in my gut at what’s happened.  The rentiers have taken over our country by masquerading as capitalists.

Tipperary Farmland

The Irish have a lot of learning to do about property taxes.  Following the 1903 Land Acts, the new largely Catholic landowners who displaced the largely Protestant absentee landlords, immediately sought to deny their obligation to the people of the nation that had helped them win their fine farms.  The worst fears of the hero of the Land Struggle Michael Davitt, were realised as the newly minted nation of small freeholders turned its back on the landless labourer, the urban dweller and the poor.  Fianna Fail, the Political Party of the small freeholder grown to encompass the developer and land speculator, went on to first reduce, then abolish and then relieve with capital allowances every fiscal obligation on property owners during their years of uninterrupted power.  Town and country planning became an oxymoron as scattered mansions pimpled the hills and rural villages sprouted suburban dead-end appendixes.   Infatuation with the land’s ability to capture an easy slice of others’ productivity led to the culpable ignorance and over weaning confidence of a whole cohort of Irish politicians, bankers and professional class.  Still they sit on their hands – reluctant to take the first steps to redress the damage to economy and society of the ‘free rides and free lunches’ enjoyed by land ownership.  While a Site Value Tax is in the Programme for Government  as demanded by the IMF, ECB and ESFS, the Irish Department of Finance has made no move to undertake the research and preparatory work needed to implement it.  Word has it, the Department has not been given the political instruction to do so. No Fine Gael nor Labour politician has the ‘magairle’ for the popular backlash.  Translation here.

It is hard to credit that the only research currently being undertaken to prepare for a fair property tax is by a tiny underfunded NGO.  You guessed it -  Smart Taxes.

That long introductory rant  introduces Michael Hudson’s brilliant new piece in New Economic Perspectives on how the gradual reduction of US  property taxes has lead to a form of debt slavery for millions of Americans.  How much worse then it is for the Irish…

Untaxing real estate has served mortgage bankers by freeing more rental income (the land’s site value) to be paid as interest. Property taxes have not absorbed anywhere near the rise in debt-leveraged housing and commercial prices. However, this has not lowered the cost of housing for most people. New buyers must pay a price that capitalizes the property’s rental value. Less and less of this payment has taken the form of local property taxes. More and more has been paid to mortgage lenders as interest. So cutting property taxes has simply left more revenue to be capitalized into higher debt-financed prices.  (link to article)

Wednesday, June 1, 2011

A Comparison of Farmland Prices Around the World

How do farmland prices vary around the globe? I have created the following table by adapting, updating, and adding to a table from the 2011 Wealth Report by Citi Private Bank and Knight Frank Worldwide. Farmland prices are in constant flux, so these are rough estimates, and values vary greatly based upon quality, infrastructure, and water availability within each country and region.

Country:	Price per Acre:	Land Description:	Price change last year:	Type of Risk:
New Zealand	$9,312	Dairy Farms	-3%	Economic
England	$8,907	Average all land types	+13%
United States	$6,478	Quality dryland in cornbelt states	+8%	Economic
Argentina	$6,072	Buenos Aires Province
Canada	$5,100	Ontario province
Brazil	$4,858	Top sugar cane land in Sao Paulo	+24%	Political, Economic
Brazil	$2,834	Dryland double-cropping in Mato Grosso	+20%	Political, Economic
Uruguay	$2,800-3,600	good farmland, with easy access to the transport system
Brazil	$2,429	Dryland double-cropping in west Bahia	+6%	Political, Economic
Argentina	$2,024-$4,049	Central provinces	+10%	Political, Economic
Poland	$1,842-$3,289	Price dependent on size of holding	0%
Australia	$1,200-2,800	best wheat producing land
Australia	$648-$688	Dryland arable with reliable rainfall	+2%	Economic, Climate
Romania	$631-$1,315	Price dependent on size of holding	0%
Canada	$526	Saskatchewan province	+7%
Argentina	$486-$1,012	Northern provinces	+10%	Political, Economic
Zambia	$405-$607	Long Leasehold		Political, Climate
Russia	$121-$405	Price dependent on size of holding and progress of freehold application	-10%	Economic, Political
Brazil	$121	Native bush with high cattle potential in Para	+11%	Political, Economic
Ukraine	$61-142	5-10 year lease rights	0%	Economic, Political, Climate

Chart: http://bigpictureagriculture.blogspot.com/

What Should We Tax?

by Herman Daly

For some time a small group of ecological economists has been suggesting that we switch the tax base from income (value added to natural resources by labor and capital), and on to natural resources themselves. Value added to resources is something we want more of, so don’t tax it (either at each stage of production as in Europe, or at the final stage as income as in the U.S.). The resource throughput, beginning with depletion and ending with pollution (both real costs), is something we want less of in a full world economy, so let’s tax it. Even though resources in the ground and waste absorption services are free gifts of nature in the cost of production sense, they are nevertheless increasingly scarce in a full world. They need a price to be efficiently allocated and not overused. So let’s give them the needed price by taxing them, and use the revenue from the tax (or equivalent cap-auction-trade system) to substitute for the revenue lost from no longer taxing value added. The resource tax should be levied at the point of extraction (severance) so that the higher price will stimulate increased efficiency of use at all upstream stages of production, as well as in the final stages of consumption and recycling. Also depletion is spatially more concentrated than pollution, so in most cases a depletion tax is easier to monitor than a pollution tax.

In addition to this economic argument there is a political one. People do not like to see value that they added taxed away. They resent it, even while accepting it as necessary to fund public goods. But value that no one added, the original in situ value of natural resources and services, many people think should be common property, and most people think should at least be taxed for public purposes. If there is popular resentment it is against the resource owners who receive an unearned income (scarcity rent) over and above the value they truly add to the in situ resource by extraction and purification (echoes of Henry George). Of course oil and coal companies, and other extractive industries, will resist resource taxation (they currently enjoy government subsidies in addition to scarcity rents!), even though they would be expected to legitimately pass the tax on to consumers to the extent that markets allow. It is necessary that consumers, as well as producers, also get the higher price signal and become more efficient and frugal in consumption.

I have been told that we could not substitute resource taxes for value-added taxes because resource rents are a small portion of GDP while value added accounts for nearly all of GDP. You have to put the tax where the money is, I am told. But this is confusion between what is taxed and what the tax is paid with. All taxes are paid out of total income (money is fungible). But the question is, what is the tax proportional to — income or resource use? It makes much more sense for taxes to fall on resource use than on income. A resource tax falls on all citizens in proportion to their resource consumption, how much of a burden they impose on the biosphere, and not according to how much value they add to the resources necessarily extracted. Also, resource taxes are harder to evade than income taxes because, unlike resource depletion, income is not an easily measured physical quantity, but an abstract concept subject to manipulation by lawyers and accountants.

As to the reasonable objection that a resource tax is regressive with respect to income, that can easily be remedied by some combination of the following: (a) retaining an income tax on higher incomes, (b) spending the tax revenue progressively, including by abolishing existing regressive income taxes such as the payroll tax, (c) instituting a significant and progressive inheritance tax. Some object, less reasonably, that higher resource prices due to a resource tax will put us at a competitive disadvantage in international trade. But then so does an income tax, and it is not clear that there would be any net difference between the two in raising the same amount of revenue. In fact, any internalization of environmental and social costs would also raise prices and thereby create a trade disadvantage relative to countries that did not internalize those costs. However, the first rule of efficiency is to count all costs, not to run a trade surplus based on standards-lowering competition to externalize costs.

So why not shift the tax base from value added (earned income) and on to that to which value is added (natural resource throughput)? This would help us to count all costs and minimize depletion and pollution. It would stop penalizing the desired creation of value added by taxing it. It would reduce unemployment. It would use the revenue from natural resource taxes to substitute that from the eliminated value added taxes. The first value-added taxes to be eliminated would be the most regressive ones, thereby serving both efficiency and equity. This seems such an obvious improvement that one wonders why economists remain so in thrall to value-added taxation?

Hong Kong’s Retail Tetris

By Julia Levitt

Thursday, May 12, 2011 6:41 am

I see Hong Kong as a model of smart growth management and land use planning. It’s a city were policy dictates that development must concentrate on only 25% of the land area, with the remaining 75% preserved as open space. This policy ensures that the region’s lush green spaces remain intact. It also maintains scarcity and high land values in developable areas. This is crucial to the local government because its primary source of income is land leasing.

Looking at development in Hong Kong through Western eyes, I noticed another impact of the city’s tightly concentrated density: the compact clustering of residential and working populations supports a diverse, competitive, and often ingenious retail community.

My first up-close encounter with the retail streetscape occurred in Tsim Sha Tsui, an upscale neighborhood on the Kowloon side of Victoria Harbor (map). What struck me most was the extreme permeability at the pedestrian level. Few storefronts at the ground floor, save a handful of banks and higher-end boutiques, have full walls. Separated from the sidewalk by only a few inches of floor height, merchants do business in cheerful cubicle-sized spaces under fluorescent lights while people flow past, around, in and out.  (link to article)

The word “recession” implies that economic trends will return to normal almost naturally

Any dream of “recovery” in today’s debt-leveraged economy is a false hope. Yet high financial circles expect Mr. Obama to insist that the economy cannot recover without first reimbursing and enriching Wall Street. To re-inflate asset prices, Mr. Obama’s team looks to Japan’s post-1990 model. A compliant Federal Reserve is to flood the credit markets to lower interest rates to revive bank lending –interest-bearing debt borrowed to buy real estate already in place (and stocks and bonds already issued), enabling banks to work out of their negative equity position by inflating asset prices relative to wages.

The promise is that re-inflating prices will help the “real” economy. But what will “recover” is the rising trend of consumer and homeowner debt responsible for stifling the economy with debt deflation in the first place. This end-result of the Clinton-Bush bubble economy is still being applauded as a model for recovery.

We are not really emerging from a “recession.” The word means literally a falling below a trend line. The economy cannot “recover” its past exponential growth, because it was not really normal. GDP is rising mainly for the FIRE sector – finance, insurance and real estate – not the “real economy.” Financial and corporate managers are paying themselves more for their success in paying their employees less.
This is the antithesis of recovery for Main Street. That is what makes the FIRE sector so self-destructive, and what has ended America’s great post-1945 upswing.

There are two economies – and the extractive FIRE sector dominates the “real” economy

When listening to the State of the Union speech, one should ask just which economy Mr. Obama means when he talks about recovery. Most wage earners and taxpayers will think of the “real” economy of production and consumption. But Mr. Obama believes that this “Economy #1” is dependent on that of Wall Street. His major campaign contributors and “wealth creators” in the FIRE sector – Economy #2, wrapped around the “real” Economy #1.

Economy #2 is the “balance sheet” economy of property and debt. The wealthiest 10% lend out their savings to become debts owed by the bottom 90%. A rising share of gains are made in extractive ways, by charging rent and interest, by financial speculation (“capital gains”), and by shifting taxes off itself onto the “real” Economy #1.

John Edwards talked about “the two economies,” but never explained what he meant operationally. Back in the 1960s when Michael Harrington wrote The Other America, the term meant affluent vs. poor America. For 19th-century novelists such as Charles Dickens and Benjamin Disraeli, it referred to property owners vs. renters. Today, it is finance vs. debtors. Any discussion of economic polarization betweens rich and poor must focus on the deepening indebtedness of most families, companies, real estate, cities and states to an emerging financial oligarchy.

Financial oligarchy is antithetical to democracy. That is what the political fight in Washington is all about today. The Corporate Democrats are trying to get democratically elected to bring about oligarchy. I hope that this is a political oxymoron, but I worry about how many people but into the idea that “wealth creation” requires debt creation. While wealth gushes upward through the Wall Street financial siphon, trickle-down economic ideology to fuel a Bubble Economy via debt-leveraged asset-price inflation.

The role of public spending – and hence budget deficits – no longer means taxing citizens to spend on improving their well-being within Economy #1. Since the 2008 financial meltdown the enormous rise in national debt has resulted from reimbursing Wall Street for its bad gambles on derivatives, collateralized debt obligations and credit default swaps that had little to do with the “real” economy. They could have been wiped out without bringing down the economy. That was an idle threat. A.I.G.’s swap insurance department could have collapsed (it was largely in London anyway) while keeping its normal insurance activities unscathed. But the government paid off the financial sector’s bad speculative debts by taking them onto the public balance sheet.

The economy is best viewed as the FIRE sector wrapped around the production and consumption core, extracting financial and rent charges that are not technologically or economically necessary costs.
Say’s Law of markets, taught to every economics student, states that workers and their employers use their wages and profits to buy what they produce (consumer goods and capital goods). Profits are earned by employing labor to produce goods and services to sell at a markup. (M – C – M’ to the initiated.)

The financial and property sector is wrapped around this core, siphoning off revenue from this circular flow. This FIRE sector is extractive. Its revenue takes the form of what classical economists called “economic rent,” a broad category that includes interest, monopoly super-profits (price gouging) and land rent, as well as “capital” gains. (These are mainly land-price gains and stock-market gains, not gains from industrial capital as such.) Economic rent and capital gains are income without a corresponding necessary cost of production (M – M’ to the initiated). “Banks have lent increasingly to buy up these rentier rights to extract interest, and less and less to promote industrial capital formation. Wealth creation” FIRE-style consists most easily of privatizing the public domain and erecting tollbooths to charge access fees for basic necessities such as health insurance, land sites, home ownership, the communication spectrum (cable and phone rights), patent medicine, water and electricity, and other public utilities, including the use of convenient money (credit cards), or the credit needed to get by. This kind of wealth is not what Adam Smith described in The Wealth of Nations. It is a form of overhead, not a means of production. The revenue it extracts is a zero-sum economic activity, meaning that one party’s gain (that of Wall Street usually) is another’s loss.

Debt deflation resulting from a distorted “financialized” economy

The problem that Mr. Obama faces is one that he cannot voice politically without offending his political constituency. The Bubble Economy has left families, companies, real estate and government so heavily indebted that they must use current income to pay banks and bondholders. The U.S. economy is in a debt deflation. The debt service they pay is not available for spending on goods and services. This is why sales are falling, shops are closing down and employment continues to be cut back.

Banks evidently do not believe that the debt problem can be solved. That is why they have taken the $13 trillion in bailout money and run – by it out in bonuses, or buying other banks and foreign affiliates. They see the domestic economy as being all loaned up. The game is over. Why would they make yet more loans against real estate already in negative equity, with mortgage debt in excess of the market price that can be recovered? Banks are not writing more “equity lines of credit” against homes or making second mortgages in today’s market, so consumers cannot use rising mortgage debt to fuel their spending.

Banks also are cutting back their credit card limits. They are “earning their way out of debt,” making up for the bad gambles they have taken with depositor funds, by raising interest rates, penalties and fees, by borrowing low-interest credit from the Federal Reserve and investing it abroad – preferably in currencies rising against the dollar. This is what Japan did in the “carry trade.” It kept the yen’s exchange rate down, and it is lowering the dollar’s exchange rate today. This threatens to raise prices for imports, on which domestic consumer prices are based. So easy credit for Wall Street means a cost squeeze for consumers.
The President needs a better set of advisors. But Wall Street has obtained veto power over just who they should be. Control over the President’s ear time has been part of the financial sector’s takeover of government. Wall Street has threatened that the stock market will plunge if oligarch-friendly Fed Chairman Bernanke is not reappointed. Mr. Obama insists on keeping him on board, in the belief that what’s good for Wall Street is good for the economy at large.

But what’s good for the banks is a larger market for their credit – more debt for the families and companies that are their customers, higher fees and penalties, no truth-in-lending laws, harsher bankruptcy terms, and further deregulation and bailouts.

This is the program that Mr. Bernanke has advised Washington to follow. Wall Street hopes that he will be kept on board. Mr. Bernanke’s advice has helped bolster that of Tim Geithner at Treasury and Larry Summers as chief advisor to convince Pres. Obama that “recovery” requires more credit.

Going down this road will make the debt overhead heavier, raising the cost of living and doing business. So we must beware of the President using the term “recovery” in his State of the Union speech to mean a recovery of debt and giving more money to Wall Street Jobs cannot revive without consumers having more to spend. And consumer demand (I don’t like this jargon word, because only Wall Street and the Pentagon’s military-industrial complex really make demands) cannot be revived without reducing the debt burden. Bankers are refusing to write down mortgages and other debts to reflect the ability to pay. That act of economic realism would mean taking a loss on their bad debts. So they have asked the government to lend new buyers enough credit to re-inflate housing prices. This is the aim of the housing subsidy to new homebuyers. It leaves more revenue to be capitalized into higher mortgage loans to support prices for real estate fallen into negative equity.

The pretense is that this is subsidizing the middle class, but homebuyers are only the intermediaries for government credit (debt to be paid off by taxpayers) to mortgage bankers. Nearly 90 percent of new home mortgages are being funded or guaranteed by the FHA, Fannie Mae and Freddie Mac – all providing a concealed subsidy to Wall Street.

Mr. Obama’s most dangerous belief is the myth that the economy needs the financial sector to lead its recovery by providing credit. Every economy needs a means of payment, which is why Wall Street has been able to threaten to wreck the economy if the government does not give in to its demands. But the monetary function should not be confused with predatory lending and casino gambling, not to mention Wall Street’s use of bailout funds on lobbying efforts to spread its gospel. (link to full article)

The unthinking classes have a lot to lose if land reform fails again in Britain,  as they are the fall guys for the big landowners and property speculators.  It is not without fostering damaging myths and media management that the landed gentry, the descendants of the Norman invaders, still own more than 80% of the land in Britain.  Bad as we are in Ireland, we have a far more democratic spread of land and property ownership than our nearest neighbour.

Below is a perfect example of UK property owner turkeys demanding that the traditional Christmas dinner continues.  Hat-tip to Dave Wetzel for this story.

LAND TAX ‘AN ATTACK ON MIDDLE CLASSES’

Friday August 7,2009
By Sarah O’Grady

Daily Express

A PLAN to scrap council tax in favour of a land levy was condemned last night as penalising hard-working middle-class families.

The Land Value Tax was proposed by Compass, a Left-wing think tank close to Gordon Brown’s inner circle.

It would raise even more than the £25.6billion a year currently taken by local authorities through council tax and would hit hardest those who have worked their way up the property ladder.

Owners of family homes on decent-size plots with a garden, a drive or a garage would be hit harder than those who live in smaller properties. And if the house is near good schools or public transport links, the land would be taxed even more.

Tory housing spokesman Grant Shapps described the idea as ­thoroughly unappealing.

“The Prime Minister’s favourite think-tank has come up with an idea which will disproportionately hit hard-pressed families who are aspirational and doing their best to get on,” he said.

“Why should they be penalised because they need a house with three or four bedrooms, or a garden or a driveway or a garage, all of which needs space? Annual re-assessments of the tax owed will worry cash-strapped mortgage payers. The plan is another attack on Middle England which this discredited Government is becoming known for.”

The report’s author Toby Lloyd said: “Social justice demands that the gains in land value be shared more equitably with the community than at present, and a tax system that could stabilise the housing market and reduce the chances of booms and busts is in everyone’s interest.

“With an annual Land Value Tax, all land would be taxed on the unimproved site value, which would be revalued for tax purposes annually. It’s important to be clear here – we are not talking about a tax on property values.

A far more efficient and cheaper alternative to Nama is to copy what Barack Obama did with General Motors, and transfer ownership of Irish banks to their bond holders. In this way we can achieve well capitalised banks, run without political interference, at minimal cost to taxpayers.

By converting a portion of Allies Irish Banks’ approximately €40 billion of bonds, and Bank of Ireland’s €50 billion, into shares, each institution can be recapitalised. Transferring ownership to bond holders will not cost the taxpayer a cent and will avoid interminable legal battles over the transfer of assets to Nama.  Link to full article

It is a pity as my informants tell me, Morgan Kelly so set against looking at the fundamental cause of the property bubble i.e. the rise in un-taxed, free lunch land values in this country.

Ronan Lyons takes up their challenge here with a well laid out demolition of their (mainly) logistical arguments in his well researched blog.  Ronan does not seem to be aware of an even better proposal to taxes on property values, that of land value taxes. Land and taxes have yet to be permitted into the same sentence in the public media – but we are confident our time will come. Let us now take a back seat and enjoy the show provided by the brave proponents of property taxes who will bear the first volley of the outrage of landed interests.

Henry George’s big idea

The land value tax, an increased tax rate on land and a reduced tax rate on buildings and improvements, has been tried in the U.S. primarily in Pennsylvania, and in some cases has been abolished just as quickly as it was instituted. Henry George’s great idea—that taxing land and not buildings would encourage urban development and curtail speculation—seems to have had a checkered history in practice. A new book, Land Value Taxation: Theory, Evidence, and Practice, edited by Lincoln Institute visiting fellows Richard F. Dye and Richard W. England, sheds more light on this distinctive approach to property tax reform.
The book is a comprehensive review of theory and published evidence on the land value tax and explores the results of its implementation in the U.S., primarily in Hawaii and Pennsylvania, and abroad in Australia, New Zealand, Jamaica, South Africa, Estonia, and elsewhere. “There has long been a need for a careful assessment of the statistical evidence on land value taxation,” said Gregory K. Ingram, president of the Lincoln Institute of Land Policy, a think tank in Cambridge, Mass., whose founder, John C. Lincoln, was inspired by the writings of the 19th century philosopher Henry George, an early proponent of land value taxation. “We wanted to learn why a form of taxation regarded as highly efficient by economists is often tried but then discarded, and whether it has achieved desired policy goals.”
As an alternative to the property tax, a land value tax increases the tax rate on land and decreases or eliminates the tax rate on buildings. A tax on land is often claimed to be very efficient and produce few unintended economic costs, to increase the density of development, to reduce speculation in land, and to speed development generally. The authors conclude that theory supports the first two claims and indicates that a land tax will lower gain from speculation though not eliminate it. Land Value Taxation: Theory, Evidence, and Practice suggests that a land value tax does not alter the timing of development.
In addition, the authors found that the implementation and political context for the land value tax has been challenging, often due to problems in assessment and issues that arise concerning fairness. In Pennsylvania, the land value tax is in place in 14 municipalities, but was tried and discontinued in 7 others. Harrisburg, a distressed city in the 1980s, initiated the land value tax as a continuing part of its economic development program. In Pittsburgh, which began a land value tax in 1913, there was evidence of its favorable impact on building activity, but the tax became a scapegoat for poor assessment and rate setting practices, and Pittsburgh reverted to a traditional property tax in 2001. In Hawaii, the land value tax was blamed for overdevelopment in locations such as Waikiki, where singer Joni Mitchell was inspired to write the lyrics “They paved paradise, and put up a parking lot.” The land value tax was abolished there in the mid-1970s.
In many cases relatively mild versions of the land tax have been implemented—often a modestly higher tax on land than on buildings—and so produced only small increases in development density, for example, that are difficult to measure. To be politically and economically successful, the authors argue, a land value tax must be accompanied by a sophisticated assessment system, frequent re-assessments, a nimble rate-setting process, effective land use planning, and ongoing public education.
Land Value Taxation: Theory, Evidence, and Practice provides guidance for additional empirical work by identifying areas where existing studies are weak or contradictory, and informs new attempts to implement land value taxation. It settles some debates about land value taxation and initiates new ones, including issues of fairness and equity in land taxation, winners and losers when a land value tax is implemented, and what political coalitions are likely to form in support of and in opposition to the land value tax.