Henry George

[Bodhi]

How many of you have heard of the economist/philosopher Henry George? I am becoming more and more persuaded by his views on taxation and land value, especially after April 15th!

To summarize, George advocated zero income tax for all individuals and corporations, because what you get through your own labor should be yours and yours alone. On the other hand, land is not created by anyone, and its value comes from its proximity to services and civic centers, which are a creation of the community. Consequently, land value is created by the community, and therefore a 'rent' on land use is owed to the community because everyone has an equal right to land and its fruits (this premise comes from Lock and other post-enlightenment philosophers). Lastly, land value and rent should be determined by the free market, not the government.

In conclusion, expropriating what belongs to the individual for the community is just as evil as expropriating what belongs to the community for the individual.

P.s. this is a very rough explanation, and I'm sure you can find more cogent explications of George's thought elsewhere on the web. I am attracted to this form of market capitalism because I don't like income taxation, but I agree with others that an end to all public services would be rather foolish, with the caveat that I'm willing to give up all government aid if there's a nice piece of land out there for me to settle on for zero $. /images/graemlins/grin.gif

[chaz64]

Hey Bodhi,

I also found his arguments to make a lot of sense. Unfortunately, I have the impression that most people today may regard him as something of a kook.

I'm a libertarian, with a small "l". I have often thought that one thing that turns voters off about the LP is that they think that we can (and should) completely eliminate all taxes some day and somehow finance the State through "voluntary" means. Most voters must see this as unrealistic. George makes an argument for taxing land (and natural resources like fossil fuels I think) that seems to me to be perfectly reasonable; his approach made sense to me, as being both ethical (what is your property vs. community property) and promoting a strong economy (take away the income tax, a disincentive to productivity, tax natural resources as an incentive to use them efficiently).

I wish more people knew about him; I've never really seen anyone refute his ideas.

[Chris Alger]

J.K. Galbraith was heavily influenced by George during the his early years. You might look for what he has to say.

[Bodhi]

Neither have I. I was introduced to George by an economist from Virginia Tech. University, who used to protest vacant lots when he was an undergrad in the '60s! /images/graemlins/laugh.gif

I guess George is one of those figures in history who had some very reasonable ideas, but could remain unappreciated by the public for many years to come. Perhaps his ideas are just too reasonable. /images/graemlins/smirk.gif

[chaz64]

I had the impression there were a good number of libertarians on this board. I'd be interested to know if any of them are of the "anarcho-capitalist" variety (I think the LP has lots of these folks) and how they view George's theories.

[dr_venkman]

I don't know much about George but it's clear that American citizens are taxed to death.

I'm 30, and have been working on the books for 16 years. I got my SS sumary page back the other day and it says I've made a total of about $220,000 in my time of working.

And yet here I am, in a house I don't own (mortgage), driving a car I don't own (car loan). With lots of bills to pay and very little money in my checking account.

Something has obviously gone dreadfully wrong with the American Dream when a hard working young person can work for a decade and have nothing tangible to show for it except a mountain of DEBT.

Working the same job in the same position, I managed to make LESS money in 2004 than I did in 2003. Hows that possible? Oh right, cost of living is increasing faster than the increase in wages.

Our generation is the first generation in many that makes less money than our parents and statistically has a shorter life span.

Even if Henry George is a "kook", I'd like to try a new system. Being a slave running on an endless wheel of debt just isn't my thing.

I can't imagine bringing children into this world and asking them to carry on this sad tradition. An infant that is born today is already $26,315.11 in the hole.

National Debt Clock (http://www.brillig.com/debt_clock/)

[Bodhi]

I'm in the same boat. It's amazing how I make as little money as I do, but still have to give 15-20% to the feds. Something is certainly wrong here, and if you make more money you can look forward to giving a greater % of your labor back to the government. I don't really see a difference here between the two major political parties (the difference is only in degree), which is a huge dissapointment.

I've never heard anyone call George a "kook." His ideas about taxation and land value are genuinely based on a rational philosophy of individual rights and sound economic analysis. Here, I found this url http://www.henrygeorge.org/

An interesting consequence of his system is that someone who lives rurally on land that is in proximity to little or zero public services could almost live 'tax' free. An exception might be if the land were rich in natural resources; then there would be a rent on the rights to the land which is meant to inspire the conversion of those resources into capital. This is not to prohibit the preservation of land for national parks and wilderness.

[Bodhi]

[ QUOTE ]
Although people usually do not like taxes, and governments can become so corrupt and misdirected that people revolt against paying taxes at all, most recognize the basic need for some public services, funded by some sort of taxation.

The free market is good at allocating goods and services that producers compete with each other to supply. Things are not allocated well when monopoly disrupts the process. But there are some things, real benefits to the entire community, which cannot be had without monopoly; they are monopolies by their very nature. Consider roads, for example. A highway is generally built along the most direct route available - what incentive is there to build another road to compete with it? If the highway were privately owned, the owner could charge "whatever the traffic would bear" for its use. Rather than award individuals such a huge privilege, most communities build roads collectively, financing them through taxation.

Henry George believed that businesses that are monopolies by nature should be run by the government, not left in private hands. It was George's conviction that the primary function of government is to secure the rights of its citizens - including labor's right to the wealth it produces.

The Canons of Taxation

The classical economists, with their powerful common sense, outlined four criteria of a good tax. Their skill is evident in the simplicity and comprehensiveness of the following provisions.

1) Taxation should bear as lightly as possible on production.

The very word "tax" suggests a burdensome load. Taxation is an allocation of wealth, which is produced by labor, to the needs of the community; nobody benefits if taxation inhibits production!

2) It should be easy and cheap to collect, and fall directly on the ultimate payer.

If great resources must be devoted to the collection of taxes, they are simply wasted! Indirect taxes (such as sales taxes, and tariffs) are imposed on sellers and importers, yet ultimately paid by consumers. Not only are such taxes unweildy and cumbersome; they also tend to be regressive - weighing heavier on those with lower incomes.

3) It should be certain.

The more complex the rules of taxation are, the more they can be subverted and evaded. As the tax code becomes a hieroglyphic that can be understood only by specialists, only those who can afford to pay the specialists can take advantage of its loopholes! Not only that: in a "democratic" society in which wealth distribution is grossly unbalanced, taxes on production are inherently disposed toward becoming more and more complex. Why? Because wealthy special interests can pay to influence legislation!

4) It should bear equally, so as to give no individual an advantage.

We have seen how regressive sales taxes fail in this regard. The conventional standard of tax fairness is "ability to pay." People with higher incomes are able to pay a greater part of the tax burden. The progressive income tax, for example, is based on ability to pay; in fact taxes are called "progressive" if they bear more heavily on those with higher incomes. But is the "ability to pay" principle really fair? No - because it makes no distinction between earned and unearned income. If individuals are more wealthy because they are efficient and honest producers, then taxing them according to their ability to pay burdens production, violating rule number one! A truly equitable public revenue system will not confiscate the legitimately produced wealth of some while allowing others to collect unearned incomes. The alternative principle of "benefits received" achieves fairness by levying taxes according to the value of the opportunities people have been given.

Broad-Based Taxation vs. the Single Tax

The favored public revenue strategy today is to make taxation as "broad-based" as possible - that is, to spread it out over as many different sources as are available. The reasons for this political as well as theoretical. The more different tax sources there are, the more they can be played against each other to favor special interests. Local taxes can be played against federal subsidies, property taxes against sales taxes, taxes on consumption against taxes on production; an endless variety of deductions, abatements, tariffs or subsidies can be applied to reward particular constituents.

The theoretical reason is that taxation is considered to be a burden on all economic activity. When such things as wages, sales, interest, etc. are taxed, it makes goods and services cost more, thus lowering demand - and demand is what stimulates production. So if all taxes are a burden on production, then they should be spread over as wide an area as possible to minimize the load on individual producers.

But there is one thing in the economy that can be taxed very heavily - to the full extent of its value, in fact - without decreasing the demand for goods and services. A tax on the rental value of land cannot diminish production, because land is not produced. A land value tax cannot increase the price of goods because those prices include the cost of land in any case, whether the rent is paid to a landowner or to the community.

The "broad-based" tax idea, failing to recognize the distinctive character of land as a factor of production, seeks to spread out the tax burden. In so doing, broad-based taxes - whether by accident or by design - provide all manner of opportunities for special interests to influence tax policies in their favor, at the expense of fairness and accountability. Land value taxation, on the other hand, is merely the collection by the community of the very fund that the community has created.

Can a tax on land values be shifted?

Taxes on commodities are usually passed on to the consumer in higher prices. What is to stop landowners from doing the same thing? That is, can a landowner increase the rent charged to tenants so as to pay the land value tax and still collect the same net rent as before?

Remember: land is not produced by labor. It is fixed in quantity and its price is a monopoly price (all the traffic will bear). A tax on labor products increases the cost of those products and this is reflected in the price. If the new price meets consumer resistance, the supply of that product is checked.

But a tax on land does not affect either its cost of production (it is not produced) or its supply (which is fixed). Thus its price is not increased (for it is already all the traffic will bear), and the tax falls directly on the owner. The rent of land is determined by the margin of production and it is a certain amount whether taxed or untaxed. A tax on land is simply a division of the rent between the owner and the community.

[/ QUOTE ]

http://www.henrygeorge.org/

[fimbulwinter]

[ QUOTE ]
Consequently, land value is created by the community, and therefore a 'rent' on land use is owed to the community because everyone has an equal right to land and its fruits (this premise comes from Lock and other post-enlightenment philosophers).

[/ QUOTE ]

whoops, and he was trying so hard.

fim

ps- never heard of lock. locke?