Toward an Ethical Tax Base:
Land, Labor, or Capital?
Robert A. Gilmour
[A paper published by the American Institute for
Economic Research, 1995]
I doubt that many serious economists today would attempt to defend
all, or even the principal aspects, of our current tax structure in
purely economic terms. The tax burden now is distributed across a
variety of taxes, most of whose economic effects are well understood
to be detrimental over the long run to standards of living everywhere.
It goes without saying that much human pain and suffering accompany
reduced standards of living - i.e., deterioration in public health,
shortened life expectancies, penury, crime and other social
pathologies, and the like. Presumably, therefore, any tax policy that
promotes such misery could, in a broad social sense, be said to lack
integrity, to be unfair, and to involve an injustice of a rather high
order. Lest we forget, in its most extreme form taxation is slavery."
Are Our Current Taxes Ethical?
For purposes of this discussion, it will be my view that policies of
any sort which tend to promote deterioration in standards of living
and, therefore, in human welfare, are quo ad hoc profoundly unethical.
I should emphasize that this view in no way implies that economic
growth for the sake of economic growth is desirable, or that there are
not many "off-balance sheet" factors that may contribute
toward improved standards of living. Indeed, those command regimes
that in recent memory have most single-mindedly pursued "the
bottom line" by adopting such goals as full employment,
production quotas, five-year plans, and the like as a matter of
national economic policy also have posted the worst records in
promoting both the general welfare of their populations and the
integrity of their natural environments.12 At the same time, concerns
about the environment, and the willingness to accept the costs of
environmental protection, are a byproduct of relative affluence.
Contrary to some notions, fostering environmental integrity is
entirely compatible with robust economic activity; in fact, it depends
on the continued growth of the wealth of nations.
It would be impossible in the time allotted to recite at length the
many "ethical" questions posed by different types of
taxation. But even a brief mention of some of the economic
consequences of the principal taxes that fund federal and state
government operations may suggest the extent of the problems involved.
I shall consider first three harmful taxes that are large sources of
current revenue, and which in the aggregate account for a major
portion of all government receipts.
Individual income taxes.
Individual income taxes are among the most deleterious of all taxes.
They constitute an enormous burden on labor; they are a major
disincentive to productive activity at the margin; and they invite
abuse both through the political process as votes are traded for "loopholes"
and through tax planning that diverts valuable resources away from
productive uses and toward those that receive favored tax treatment.
It often is remarked that the largest tax breaks are available to (or
used by) only those with substantial resources, and that in this
respect the Tax Code favors "the rich." However, the effects
of the individual income tax defy easy classification.
Under present arrangements, the behavior of both low- and high-income
taxpayers may be strongly influenced by tax considerations. Indeed,
the disincentive to labor (and therefore pay additional taxes) may be
strongest for those whose low incomes qualify them for tax credits mat
would be lost (and the effective marginal tax rate skyrocket) if they
earned additional income. On the other hand, in the aggregate the top
ten percent of income earners pays the overwhelming proportion of
individual income taxes. Those are the very taxpayers who possess
resources to invest in the economy, and the individual income tax
provides powerful disincentives to invest in ways that yield
reportable income, that is, to put capital to its most productive
uses, with profound consequences for the economy as a whole. As
advocates of capital gains tax reform have been trying to point out,
over the long run withholding unrealized gains from the financial
markets of capital in order to avoid taxes does far more harm to both
the economy and the federal budget than any alleged "losses"
that might accrue from a lower gains tax rate (or, more preferably,
indexed gains), regardless of whether it is "unfair" to tax
long-term gains as current income.
Perhaps most serious, the individual income tax tends to corrupt
human relations and beget social pathology. Income taxes invite both
avoidance, which is legal, and evasion, which is not. It is well known
that, especially where there are many cash transactions, only a
fraction of actual income may be reported. No one knows precisely how
widespread such outright cheating is, but resentment runs high even
against those who invoke all legal means available to reduce their tax
liability. And no wonder. With respect to the individual income tax,
the Tax Code has become a mirror of what "public choice"
economists refer to as the political marketplace. Those with clout get
the breaks; those without get the shaft. The income tax tends to
foster, in the words of the late Arthur Okun, the division of society
into "sharpies" and "suckers"- the privileged and
the put upon. The social effects of such a situation in the long run
are incalculably harmful to the voluntary cooperation upon which
transactions in market-based democratic capitalist economies depend.
In short, it is difficult to think of a tax better calculated to "keep
the laboring classes down," to arm the political classes with the
means of selling favors, to corrupt individual behavior and foster
group resentments, and to curb economic activity and wealth creation -
and so thwart improvements in standards of living - than the
individual income tax. According to the view taken earlier, this is a
thoroughly unethical tax.
It should be recalled that for most of the nation's history, such a
tax was considered an unthinkable and unconstitutional infringement on
the individual's right to the rewards of his or her own labor. And
there is more man a little irony in the first (temporary) use an
income tax in the United States-to fund a war dedicated to ending
slavery. Although I will return to it in a few minutes, it also is
worth noting at this point that mere was no individual income tax
whatsoever when Henry George wrote Progress and Poverty.
2. Corporate profits taxes.
Corporate profits (or income) taxes, which first were levied in 1909,
once were the largest source of federal revenue. They now account for
about 10 percent of federal receipts. In fact, the combination of
lower nominal and effective tax rates as well as decreasing corporate
profit margins have meant that the amount of real resources diverted
to Government via the corporate profits tax has changed little during
die past 40 years.
Why tax profits? The simple answer is that the politicians want money
and corporations have some. However, since corporations could be made
to pay taxes on some other basis, at least some justification for
using profits seems to be required. It seldom is forthcoming. For
example, when, in 1983, President Reagan said (in an offhand remark to
a group of businessmen) "the corporate income tax is hard to
justify," it was widely reported in the media as some sort of
gaffe. But no discussion of the merits of Mr. Reagan's remark was
offered from any quarter. We can only speculate as to why corporate
profits taxes appear to be widely supported, or at least immune from
Apparently, some view profits as somehow sinful or "a cost to
society," and therefore a suitable object of taxation. However,
in our competitive economy, businesses that enjoy a "high"
rate of profit are more "productive." That is, they
accomplish more with their inputs of labor, materials, and capital
than those making low profits or losses. It is usually highly
profitable companies that are held in the highest esteem by their
employees, customers, suppliers, and investors alike. On the other
hand, businesses with low profits typically pay "sweatshop"
wages, sell inferior goods, are "slow payers," and have
little access to the money or capital markets. It would seem,
therefore, that profitability is, if anything, a measure of the
benefit to society of a business enterprise and not its cost - and
that a tax based on the latter notion simply gives credence to the
cynic's adage that "no good deed goes unpunished." A
possibly more valid reason for a profits tax is that it is "needed"
to protect the fairness of the income tax, i.e., that individual
stockholders avoid taxes on their shares of corporate profits to the
extent that the latter are not paid out in dividends. But this seems
valid only to the extent that taxing income is seen as an overriding
goal of tax policy - an economically devastating proposition.
Rather, it is not at all clear why the accumulation of wealth in the
form of business assets should in any way be considered undesirable or
inequitable. Until investors sell out or receive dividends (thereby
generating taxable personal income for themselves), any accumulation
of business assets would seem mainly to benefit employees and
Moreover, it is often asserted that dividend income is taxed twice,
both as corporate profits and as dividend income to its recipient.
This is somewhat debatable given the large uncertainty concerning the
question of who actually pays the corporate income tax. It is often
argued that the profits taxes become a cost of doing business, and are
passed on to consumers, like any other cost.
However, it is clear that this "double taxation" has had
the effect of encouraging debt over equity financing. For example,
with an effective corporate profits tax rate of 40 percent, a
corporation must earn $1.67 to pay $1.00 of dividends, but because
interest payments are deducted from profits subject to tax, a
corporation need only earn $1.00 to pay $1.00 of interest. To the
extent that such debt financing puts pressure on the credit markets
and drives up interest rates, it impedes economic activity.
It might also be argued that because corporations reporting current
losses are, unlike individuals, allowed to claim refunds of taxes paid
during prior years, the corporate profits tax acts as an "automatic
stabilizer" of the economy by helping troubled firms through lean
times. However, profits provide the signals needed to shift resources
toward the uses desired by consumers and away from those that are not.
By blunting such signals, the profits tax probably undermines economic
efficiency and well-being more than it benefits the economy through
any "stabilizing" effect.
However, by far the most insidious effect of the corporate profits
tax derives from the political process. For many years prior to the
enactment of the Tax Reform Act of 1986, the effective profits tax
rates (including state and local profits taxes) paid by nonfinancial
corporate businesses were generally substantially less than the
nominal federal tax rate alone. The discrepancy reflected the various
tax breaks granted by politicians to industries, and even specific
companies that they wished to favor. For years a huge and profitable,
but fundamentally unproductive, industry of lobbyists, lawyers, and
accountants has been based on obtaining and maintaining tax breaks and
applying them, often in situations never even contemplated by the
authors of the tax law.
This has been a corrosively corrupt process. It has also enabled the
politicians to indulge in "back door" economic planning that
has seldom produced useful results. In most instances an investment
made primarily for tax purposes is an investment diverted from a more
productive purpose. In addition, such "incentives" greatly
favor established producers who are paying taxes. They are useless in
start-up situations where there are no earnings yet. In short, the
corporate profits tax has all the shortcomings of the individual
income tax, but to a greater degree.
3. Payroll taxes (Social Security and Medicare taxes).
It is commonly asserted that Social Security taxes, which for many
wage earners now are greater than their income taxes, are regressive.
This is because the earnings subject to the Social Security tax are
capped, and people with earnings above the limit do not pay tax on the
excess. In 1994, for example, earnings above $60,000 are exempt from
the Social Security payroll tax. In addition, nonwage income is
entirely free from payroll taxes. High-earners escape some taxes, but
their untaxed earnings are not counted toward their benefits.
The amount one "contributes" through taxes and the amount
one eventually receives in benefits are indirectly linked, in that
both are based on earnings. But the level of contributions depends on
the payroll tax rate - which has travelled a separate legislative path
from the benefit calculations. Changes in the rate of payroll taxes
have not been motivated by considerations of fairness, in the sense of
balancing the taxes paid by an individual, or even by a generation,
with the benefits eventually received. Rather, Congress has tinkered
with the tax rate mostly for fiscal reasons, primarily when it needed
to balance the total revenues collected from current workers with the
total benefits paid to current retirees.
Because Social Security is a "pay as you go" system, its
architects have long recognized that it is mainly an intergenerational
transfer of income. Some have even lauded this transfer as a useful
replacement for the increasingly uncertain support of the aged by
their own children. However, financing today's inflated and untargeted
benefit levels places an astonishing burden on today's workers. From
the perspective of social ethics, it seems impossible to justify such
a transfer tax - one that takes from those who have not had the
opportunity to accumulate resources for their own well-being during
later years (i.e., the young) and gives to those who have had their
entire careers to do so. In effect, the payroll tax rewards some
elderly for their prior profligacy and subsidizes others who may have
no current need for benefits. At the same time, it punishes the young
with a burden that may well prevent them from accumulating savings of
their own. An apparent corollary to the adage cited earlier is that "no
extravagance will go unsubsidized."
Consider that a young family today, with earnings of about $40,000
per year (roughly the median family income in 1994), pays upward of
$3,000 in Social Security taxes. A like amount is "contributed"
by their employers, for a total of over $6,000. An indeterminate
amount of these taxes provides for payments in the event of
disability, or to survivors in the event of a wage-earner's death. For
the sake of argument, let us say that $1,000 of the annual Social
Security taxes attributable to this young family provides for such
contingencies and that the remaining $5,000 is for retirement income.
Saving that amount annually over a working lifetime of 45 years or so
could provide an amount sufficient to purchase an annuity paying
$40,000 per year, their current level of earnings, at age 65, and more
than double what current Social Security beneficiaries with comparable
earnings histories now get This very rough calculation assumes no
price inflation and an interest rate of 3 percent, but this probably
is as realistic as alternatives involving assumptions of increasing
earnings, taxes, and interest rates that compensate for price
The point is that the taxes levied on younger workers today would, if
set aside and invested, be sufficient to pay them annual retirement
incomes that would be roughly equivalent to what they now earn. This
will never happen. Even if the present benefit formulas are somehow
maintained during the years to come, future retirement benefits would
be substantially less than half our young family's annual earnings
immediately prior to retirement. In short, Social Security is a very
bad deal for today's younger workers. Conversely, today's Social
Security beneficiaries are receiving the equivalent of a fabulous rate
of return on the taxes they paid on their earnings. There is little,
if anything, ethical about today's payroll tax; instead, it is a model
of unfairness and injustice - if there be such a thing. And all the
more so since currently payroll taxes are levied in excess of the
amounts required to pay current benefits. Inasmuch as the so-called
Social Security surplus is used to fund other current Government
outlays and represents no "store of value" whatsoever, the
excess payroll tax is a sham of criminal proportions.
There are many other taxes I might talk about-excise taxes, estate
and gift taxes, customs duties (of which Henry George had much to
say), and, of course, property taxes. But the three already discussed
account for the overwhelming proportion of current government
receipts. In my view, each in its own way is profoundly flawed, from
the perspectives of both ethics and economic science. And each is
largely the creation of a political world that came into being after
the death of Henry George. None of die major taxes - individual income
taxes, corporate profits taxes, or payroll taxes - existed when Henry
George set forth his tax program. And none of these major taxes
promises to get us out of the fiscal quandary that threatens to
overwhelm both federal and state budgets during the early decades of
the approaching century.
What About a Tax on Land?
However noble their intent, the fiscal policies adopted in the United
States over the past five decades or so have created an enormous
ethical problem. It is generally acknowledged that the principal
elements of the social welfare apparatus in the United States today
are unsustainable and that their chief effect over the past several
decades has been to transfer wealth in unprecedented magnitudes from
one generation (i.e., current workers) to another (i.e., retirees).
But as any actuary knows, we are sitting on a demographic time bomb
set to detonate early in the next century. As bad as the Social
Security situation is today, it will get worse. In the not-too-distant
future retirement benefits will represent the single largest
government outlay (assuming optimistically that debt service payments
will not take it all). The probability that these benefits will be
reduced at some time in the future is overwhelming. Simply maintaining
current levels of benefits for the large age cohorts of the baby boom
generation would require ruinous increases in payroll taxes - to as
much as 40 percent of payrolls, by some estimates. The problem, of
course, is that there will be far fewer workers per retiree throughout
the first half of the next century than there are now. If things stay
as they are now, the prospect is that both young and old face, through
increased taxes and reduced incomes, markedly lower standards of
living than they do today.
From a population perspective, the traditional "solution"
to such crises is to produce more children, many more. It will be
interesting to see if a "postindustrial" society with the
means of controlling population growth takes that premodern route.
From an economic perspective, however, there is one, and only one,
escape from this dilemma: productivity increases - which are the
source of all improvements in the overall standard of living in any
economy. If we are to avert the apparent calamity that awaits, the
national wealth must be enlarged at a greatly accelerated rate. During
the next three decades, by some estimates productivity must accelerate
fourfold if we are to beat the demographic odds. This means that so
far as it is humanly possible, all restraints on productive labor must
be removed and all obstacles to capital formation eliminated. Not to
do so almost surely will result in future injustices so vast that
current inequities pale by comparison - and invite "remedies"
that could very well spell the end of the American promise as we have
I know of only one hypothetical tax regime that would seem to fulfill
these requirements: very simply, &e elimination of all taxes that
currently inhibit productive activity in favor of a tax on land
values. A land tax would free capital and labor from the disincentives
to productive effort that are inherent in today's principal revenue
raisers - which both reward privilege and penalize human enterprise -
and would instead exact a fee for the use of the one factor of
production that nature alone has provided and in which the community
might legitimately claim an interest, land.
As you may gather, I am not talking here about minor changes in local
taxes - a partial shift in the tax rate from buildings to land here
and there, or even the adoption of a local land tax exclusively. As
desirable as such changes might be, they would remain "small
potatoes" in relation to the total tax burden. Even if every
community in the United States adopted a two-tier property tax
structure or even a property tax based solely on land, so long as the
hugely more burdensome detrimental taxes remained, the fundamental
problems would persist.
Nor do I think that environmental or land use issues in their
conventional sense, which I will address in a few moments, necessarily
occupy center stage in the Georgist paradigm. From a broad economic
perspective, the environmental benefits related to land use, which one
might logically expect to accompany a thorough-going Georgist tax
reform, are a sideshow (albeit a significant sideshow) to the main
event, which is the larger social benefit that would accrue from
untaxing labor and capital.
Could A Land Tax Generate Adequate Revenue?
Of course, the logical sequitur to this question is: How much is "adequate?"
The society within which Henry George's ideas were developed
presupposed limited government, the primacy of the individual, sound
money and credit, and balanced public budgets - all those things that
contemporary politicians say they yearn for. In such a context, land
would provide more than an adequate tax base for funding government
I should note that George himself would have been appalled at the
huge expansion of government via intergenerational debt shifting. He
had long been troubled by the public debt accumulated to finance the
Civil War, which was piddling in relation to today's public
indebtedness, and in
Social Problems stated his views explicitly, and perhaps
The institution of public debts... rests upon the
preposterous assumption mat one generation may bind another
generation. If a man were to come to me and say, "Here is a
promissory note which your greatgrandfather gave to my
greatgrandfather, and which you will oblige me by paying," I
would laugh at him, and tell him that if he wanted to collect his
note he had better hunt up the man who made it; that I had nothing
to do with my greatgrandfather's promises. And if he were to insist
upon payment, and to call my attention to the terms of the bond in
which my greatgrandfather expressly stipulated with his
greatgrandfather that I should pay him, I would only laugh the more,
and be the more certain mat he was a lunatic. To such a demand any
one of us would reply in effect, "My greatgrandfather was
evidently a knave or a joker, and your greatgrandfather was
certainly a fool, which quality you surely have inherited if you
expect me to pay you money because my greatgrandfather promised that
I should do so."
In case you missed the point, that could just as well be the voice of
the next generation speaking to us from the future.
But suppose we do not return to the days of Henry George, and
government remains vastly larger than it was then. Could land serve as
a tax base for governments of today's magnitude? In terms of "static
theory," it could - just as almost any tax base could if rates
were set high enough. Forget, for the moment, the delicate ethical
considerations of economic land rent and to whom such rent rightfully
belongs mat propel much land tax theory. Consider instead what would
seem to be an inescapably practical feature of the land tax: namely,
from the perspective of the tax collector, it is the "gotcha"
tax to end all "gotcha" taxes. You cannot move land; you
cannot hide land; you cannot hire a smart accountant to create a book
entry that makes your site an acre, or five acres, or five thousand
acres smaller than it actually is. And you have to live and work
With this in mind, it might even be possible to fashion a "balanced
budget amendment" based on a land tax alone - since the roughly
$5 trillion of estimated total land values in the United States today
(which, because of underassessments on land may be markedly lower than
actual market values) vastly exceeds all government spending. The
federal government spends about $1.5 trillion; state and local
governments together spend well under $1 trillion. One possible
version of such a balanced budget amendment might read as follows:
- The Secretary of the Treasury shall prepare an estimate of the
full fair market value of all land (exclusive of improvements
thereon, if any) owned by individuals, partnerships, trusts, and
corporations in the United States and its territories as of next
December 31 and as of each December 31 thereafter.
- As of next January 1, all income, payroll, excise, and estate
taxes shall be abolished. Also as of next January 1, and on each
January 1 thereafter, the Secretary of the Treasury shall levy a
tax on the total market value of land as determined in section 1,
in an amount equal to the total outlays of the Treasury during the
fiscal year ended on the preceding September 30, with each
landowner to pay a pro rata portion of the total.
If government spending were reduced to levels that did not exceed the
total of economic land rents, such a reform would accomplish two
highly desirable goals simultaneously. It would balance the budget
But, more importantly, it would slash the marginal rate of tax on all
forms of economic activity to zero. Now that would be a tax cut to end
all tax cuts!
Inasmuch as they could walk away from sites that were overassessed,
landowners under such a tax regime in effect would bid on market rents
through the tax mechanism. Over time, presumably assessments and land
taxes would accurately mirror market values. Whether such a mechanism
would yield revenue adequate to fund current government budgets, or
whether it might impose some natural limit on the amount of revenue
available, are questions that cannot now be answered. But one could
reasonably argue that such a mechanism would yield the maximum of
ethically derived funds for public use - and that governments'
ambitions ought to be adjusted accordingly.
But Would It Be Fair?
Under such a regime, some current landowners would win big. But some
others would be big losers. I can see the protest signs now: TAX
UNFAIR TO LAND SPECULATORS!
As with free lunches, there is no such thing as a perfect tax. While
the land tax, once in place, would meet the main requirements of a "neutral"
tax mat neither advantages nor disadvantages any type of capital or
productive activity, getting "from here to there"
(especially in a relatively short time) could itself create new
inequities and undesirable consequences. There simply is not time to
discuss all of these now, although I should mention that there is a
continuing debate among economists especially of the "Austrian"
school about the positive contributions of land speculation, which a
Georgist land tax would suppress.
A less controversial, if more fundamental problem, is that past and
current land prices have incorporated no land tax considerations. It
generally is agreed that as the proportion of economic rent of land
captured by taxes increases toward 100 percent, the land price
approaches zero. Those who bought land shortly before a shift to the
land tax at "pretax" peak prices and then had to pay a tax
that captured all land rent would see their investment (i.e., the
price they had just paid) completely wiped out through no fault of
their own. Would this not constitute an unethical taking of
unprecedented proportions? Unless adjustments were made, in my view
the disruption caused by a shift to a land tax under such
circumstances would defeat the entire reform.
This situation seems ethically related to a question that apparently
went unanswered during the discussion of Robert Andelson's
presentation in this series, on "Ecology's Contribution to
Ethics." Namely, for future mortgages, what percent of liability
should be assessed to past and current landholders? In both of these
situations, a landholder acquires a liability unknowingly and through
no fault of his own (presuming that a former or current landholder
violated no law in creating the environmental harm now deemed a
The situation is somewhat analogous to the dilemma that faced
constitutionally minded abolitionists during the mid-nineteenth
century. In their view, the ownership of a human as chattel property
was fundamentally unethical (just as destroying the environment is so
viewed today). However, property in slaves was legal (just as former
activities that hurt the environment may also have been legal). To
declare slaveownership illegal without compensating the owner for his
loss created an ethical dilemma: an act of great morality (abolition)
was at one with, and the same as, an act of great immorality (the
unjust taking of legally held property). We know how the former
situation turned out But what we might recall is the alternative route
not taken, namely "compensated emancipation."
Without going into great detail, I believe it is possible to design a
system of compensation for landowners who would suffer such losses
through no fault of their own in the shift to a land tax, to be funded
out of current receipts and amortized on capital account It would, in
effect, represent the "compensated capture" of land rents by
It also is possible, in my view, to employ other relatively benign
taxes during the transition to a land tax regime as a means of
blunting the impact of an abrupt shift. Although it is not as "perfect"
as the land tax, a value added tax, which has the broadest tax base of
any tax, could be used as a replacement for the current payroll tax
and corporate income tax.
Would It Simplify Land Policy?
On this question, I may part company with some advocates of the land
tax who presume that such a tax would automatically redirect policy on
any number of land-related issues. In an economic sense, a tax on land
values does imply a land use policy of sorts: that is, it is an
unambiguous incentive to use land more intensively. Presumably, more
activity would be carried out on less land, which could imply a number
of salutary effects for both urban and rural environments.
For example, it has long been the view of the organization that I
represent that land value taxation that is needed to remove the blight
of urban slums. So long as slumlord land speculators are permitted to
hold their unimproved or deteriorating properties off the market
without punity, shortages of affordable decent housing are apt to
continue. And so long as landholders continue to be punished with
higher taxes for making improvements to their property, they will be
reluctant to make those improvements even if they are so inclined.
In rural lands as well the effects of a land tax could be highly
beneficial. Marginal agricultural lands that have nevertheless been
placed in (often environmentally wasteful) cultivation presumably
would be withdrawn from production and allowed to "return to
nature." Productive farm lands could be encouraged to be even
more so through sustainable agricultural practices. So much for the
The bad news is that a land tax might imply quite otherwise. Who
knows whether the incentive to intensify the use of land might not
instead invite overcrowding in the cities? Or exhaustive
overproduction and abandonment of spent farm lands? Or clearcutting of
timberlands? Or strip mining of mineral lands? Etc.?
The point is that a land tax might encourage certain economic
tendencies,16 and might simplify the implementation of an established
policy by empowering collectors with the tax to end all taxes, but it
would not provide a land use policy per se, if by that is meant a "master
plan" for the allocation or prohibition of specific lands to or
from specific uses. In my view, this is not necessarily a bad thing. I
do not know what might constitute a national land policy. But if it
entails resource allocation to foster certain outcomes according to
some preconceived strategy that either ignores or seeks to counter
market signals, it very likely will produce the same dismal results
that generally have emanated from, say, "industrial policy,"
"monetary policy," or "incomes policy" wherever
those have been adopted.
In any event, and especially in the United States, it is my view
that, in the information age of the microprocessor where multimillion
dollar businesses are run via computer modem out of rustic retreats
under the Big Skies of Montana and Wyoming or some other unlikely
locale, land per se may be viewed less as a factor of production than
as an article of consumption. In this circumstance, a tax on land,
whose principal economic impact is in untaxing capital and labor,
would be a fundamentally neutral element.
However, inasmuch as virtually all tax questions thus would revolve
around land, it could be expected to raise land use issues to
preeminence. Almost surely, political considerations would drive many
land use questions, just as they do in today's tax debates. It is a
matter of conjecture whether the range of new issues that might be
raised under such a regime would be limited only by the ingenuity and
imagination of the lawyers, accountants, and lobbyists who would
surely be drawn to such a novel tax industry. Presumably, however, two
benefits of the land tax are that such questions would be less opaque
than many of today's tax issues - and that all tax decisions would be
on public record. What all this implies, of course, is that the
Lincoln Institute of Land Policy and similar organizations are in
little danger of running out of things to do, which presumably this
audience will view as a good thing.