Land Value Taxation: Could It Work Today? (Land Lines Article)

Author(s): Netzer, Dick
Publication Date: March 1998

Inventory ID LLA980304; English

Article

Abstract
Decades before Henry George made a passionate case for the "single tax" in Progress and Poverty, the classical economists had recognized that, in theory, the land value tax was almost the perfect tax. There was a strong moral basis for the land value tax—land value increased over time because of growth in population and improvements made by the community, either as utility infrastructure or transportation investments by government and the private sector.

Today, many scholars and practitioners question whether land value tax is a serious contender as a revenue source. But, whatever its political potential may be, economists continue to find the theoretical case for land value tax compelling. This article examines the efficiency of the land value tax as well as land value tax as a substitute for other taxes;

Edwin Mills examines the issue of land value tax in the context of an urban economy, showing that the land value tax is indeed efficient in its effects on land use, as claimed.

Thomas Nechyba explores the land value tax in the context of a general model of the entire economy. He develops what is known as a "computable general equilibrium model" that quantitatively describes the changes in the macro-economy that will occur with the substitution of the land value tax for income taxation.

Author of this article, Dick Netzer, argues that, although the empirical evidence on land values is poor, some reasonable estimates suggest that, at least in the United States, the land value tax could replace the conventional local property tax at reasonable tax rates.

Andrew Reschovsky points out that the current balmy climate for state and local finance in the United States is likely to change radically, for the worse. State governments may be looking for substantial additional revenues. Is the land value tax the right, or the likely, choice for hard-pressed state governments?

Roy Bahl reviews the many difficulties and deficiencies in the use of property taxes by local governments in both developing countries and former Communist countries.

Edward Wolff suggests that substitution of the land value tax for the federal individual income tax would make the U.S. tax system less rather than more progressive with respect to income.

Advance page for full article.

Go to Page 1 2