Land Value Taxation:
Implementation Along Another Way

Jan J. Pot

[A paper presented at the Joint Georgist Conference,
University of Pennsylvania, Philadelphia, Pennsylvania, 1989]

"In the name of the Prophet: figs!" Henry George exclaimed on page 363 of Progress and Poverty.

"If the land of any country belongs to the people of that country, what right, in morality and justice, have the individuals called landowners to the rent? If the land belongs to the people, why in the name of morality and justice should the people pay its salable value for their own?"

So Compensation: No!

Alas, in practice this is not feasible. What to do? Henry George says (page 405): "It is not necessary to confiscate land; it is only necessary to confiscate rent." Okay, not the land, but the value of the land in terms of rental. Rent for land has to be paid to the people: "We may assert the common right to land by taking rent for public uses."

"No," wrote Mr. Oesleby long ago in the Henry George News, "I do not agree to leave the rent in the hands of spend-happy officials. I will have my share of the rent of my country cash in hand."

Of course - and if we wish to live together in society, we need a government and have to pay our contribution in the expenses of government's tasks. Isn't that the right way to do it?

But 'taking the rent' (for public uses) has, for a century already, turned out not to be feasible. At best a fraction of it is being taken in some communities, in some countries. Can we not imagine a more up-to-date way of doing it? For 'taking rent' is taking value from those who've spent money to buy land, i.e. the privilege to occupy land. Their 'right' (of taking rent from productive land-users!) is guaranteed by common law.

Henry George will 'take' it, exactly as taxation 'takes' from personal property. In this respect taxation is robbery. And taking rent from landowners 'by taxation' is robbery as well. Henry George argues correctly that landowners have robbed the rent from the people for centuries already, and so they have no moral right to complain if Henry George turns the switch in the flow of rent from private to common. But in practice, this has turned out over the period of a century not to be feasible. Again: how to make it feasible?

Do you remember that Sir Fowlds c.s. in 1896 proposed in New Zealand that the State should buy all the land on mortgages, to be redeemed in the years to follow with the rise of rent in their developing country? They foresaw that New Zealand would have been tax free about the year 1925. So this country would have been tax free for half a century since.

Sorry, Henry, but with your moral principle we still pay taxes as usual, because landowners will take the rent as usual. So our a-moral state still continues. By the proposal of Sir Fowlds c.s. the people had to continue to pay taxes-as-usual during a quarter of a century, but no longer. Compare this with your moral proposal by which the world suffers still, and presumably will for another century or more to come.

Yes, sir, in the name of the Prophet: figs! But compare your moral way during a whole century virtually without success with a non-moral way during only a quarter of that time. Is it forbidden to me to repeat the New Zealand proposal? Well then, let people continue to pay taxes as usual during some decades to come, and let me propose to prepare in the meantime to shift to a tax free world as follows.

Property changes from one owner's hands to another's at least once every generation. So (most of the) land is inherited or put up for sale at least once every quarter of a century.

To start with, let the community buy the land every time it is put up for sale, and rent it to prospective owners. The best way for the valuation of rentals is to make land-value maps, open for inspection by the public and kept up to date on every occasion when the rental value goes up or down, for reasons of change in infrastructure, etc. It works: Denmark has had such maps for all the sites in Denmark, in both town and country, during more than half a century - kept up to date every four years by Statens Lignings-directorat.

The money to pay for the land should be borrowed by the community on mortgage. In this way the operation does not interfere with the financial budget of the community. The bookkeeping is absolutely separate. But a specific condition of this mortgage has to be that the debt may be paid down at will, that is every time the rent goes up, and this excess is to be used to reduce the mortgage. I've made a lot of calculations for different occasions, and every time it turns out that you can expect the mortgage to be redeemed somewhere between 15 and 25 years. Start now with this procedure and gradually the change-over will take place.

Another perfection of this procedure: how to get money for these mortgages? Mind that this always can be done, because 'mortgage' means that the land is there for the financial security: a loan with land-backing.

And for the last ditch: borrow the money from the one who sells his land. The fellow from whom you buy the land should not necessarily get the money at once, but through the mortgage act. The first year he will get the interest, and in the years that follow he will eventually get his money. The selling price will be redeemed in full.

At the expense of the people who have already been robbed for centuries? Yes, but only during some 15 or 25 more years, merely by paying taxes-as-usual, not a penny more. In this way we can solve the problem in half a century, compared with the whole century it has already been up until now, with hardly any success in most countries, Holland not excepted.

Foresight

Halfway through this procedure the general public will grasp the idea. Then people will wish to speed it up. Insurance companies, etc., will gradually be compelled by law to give up their land and switch their securities to industry.

I think this procedure is within common law, and that it can be accepted by every community separately. The proof of it can be seen already in those private enterprises which do the same for their own benefit. See the ads in the papers: they are prepared to build a home for you, but the land underneath it you can get only on long-lease - sometimes with the condition that the rent will be adjustable annually.