The real, just and useful tax is the tax on land
Frank E. Nelson
[Reprinted from the Wilmington, Delaware News-Journal,
20 April 1983]
DOES IT matter what we tax? Would the long-term effects of a new tax
on manufacturers' fixtures be important? What about the effects of
proposed increases in Wilmington's and New Castle County's property,
wage, head and transfer taxes, along with hikes in sewer fees?
We need sound, creative thinking about taxes and their effect on
economic behavior. Where higher revenues are absolutely necessary,
shouldn't they be raised by the only tax whose consequences would
encourage and reward productive activity - the Incentive land tax?
A few years ago, columnist Bill Frank suggested that Delawareans
might some day rediscover Pierre Samuel du Pont de Nemours This
patriarch of the Du Pont family, philosopher, economist and social
reformer, lived and died near Wilmington in the early I800s. Du Pont
in his native France was a leader of the Physiocrat Movement whose
members believed the land was the source of all wealth and should be
the sole source of public revenue.
In this country, du Pont shared with his friend Thomas Jefferson
belief that freedom and justice for the "common man" were
best served by assuring ample access to land and resources. Du Pont
believed this could only be secured through full public collection of
"ground rent" from landowners.
Advocacy of a single tax on land was later echoed and amplified by
another famous economist and philosopher in the latter 1800s. Henry
George, who was born in Philadelphia, gained fame as author of a
classic book on political economy, "Progress & Poverty,"
in which he championed the single tax concept.
If du Pont and George were alive they would certainly deplore our
dependence on taxes that wring from us the fruits of our labor and are
disincentives to employment and production. They undoubtedly would
link many of the distressing signs of our times with such taxation:
lack of affordable housing, especially rental, for low- and
middle-income families; boarded-up dwellings and deplorable housing in
the city; high unemployment; hunger; a crime rate rising faster than
courts and prisons can handle; urban sprawl and disappearance of
They would both probably regard as important the current debate over
whether plant equipment and fixtures (like tanks, pipes and pumping
systems) should remain exempt from taxation by the county, or be
classified and taxed as "improvements." They would allow
that fixtures are man-made improvements, since they are obviously not
part of the God-created land Having made that distinction, they would
hasten to argue what they believed should really be the proper basis
Du Pont and George, staunch defenders of free enterprise, wanted to
strengthen rather than shackle it. They strongly believed everyone was
entitled to keep all the fruits of his labor and that the community
was entitled only to a tax on what it itself created - land values.
Power to tax being power to destroy, too high a tax on income is a
disincentive to earning more. Tax homes, apartments, barns, factories,
buildings - and fixtures - too highly and there would surely be fewer
(and fewer of the jobs associated with them). Nobel economist Milton
Friedman agrees, urging that we "tax improvements as little as
possible, and tax land as much as possible."
What is so special about land values, and why a tax on them? Land is
not a product of human labor, and the value of a site is not something
created by an individual owner. It is created by the community by
having made that location attractive or profitable. City sites become
very valuable if near to commercial enterprises, offices, hospitals,
parking, shopping, dining and entertainment, along with streets,
sidewalks, lighting, water and sanitation, parks, fire and police
A tax on land values, which would collect ground rent, isn't really a
tax at all, since the community would only be recouping what it has
expended in creating these values.
The land tax also eliminates the privilege whereby landowners are
enabled to live off the efforts of production's active factors, labor
and capital, and off everyone's basic need for access to land for
Other advantages would include: lowered property taxes for most
homeowners; simplified assessments that could save most of the cost
for periodic reassessments; elimination of need to offer tax
abatements and subsidies to entice development; benefits to the
working farmer as taxes on incomes and improvements are lowered and
development of a more reliable tax base, not subject to tax evasion or
to the "underground economy."
We already tax land values as part of our existing property tax, but
only lightly. Land is generally far underassessed. Vacant land, urban,
suburban and rural, is usually assessed far below its market value.
Actual farmland is further protected from market values by tax
assessments based on its agricultural productive value.
Delaware's land taxes are the nation's second lowest as a percentage
of all other state and local taxes. This is just the opposite of, what
du Pont and George advocated. Such a low land tax encourages rampant
speculation and the holding of land out of use while waiting for
values to rise.
This is a major reason why downtown Wilmington remains a checkerboard
of nonproductive parking lots; why there are so many vacant, often
boarded-up dwellings; why, in defiance of the new vacant house-tax,
whole blocks of housing have-been demolished; why urban poor,
displaced by "gentrification," have no other private housing
to turn to, why the unsightly, unsafe steel skeleton of the Brookside
Towers building has remained a gross misuse of valuable commercial
site for over a decade; why farmland is snapped up by speculators,
driving prices beyond reach of younger, would-be, farmers.
The concept of placing greater reliance on land taxation has found"
acceptance with good effect in a growing number of states and
counties: Denmark, Australia, New Zealand, South Africa, Canada,
Hawaii, California, Pennsylvania, Alabama and in Delaware's three
residential communities, the Ardens.
Isn't it lime Delaware citizens had a chance to experience the'
reforms of du Pont and George that now benefit others around the