Is Henry George’s land value tax fair, efficient, both, or neither?

By Mehta, Hetav

In the following essay, the ethical fairness, the magnitude of implementation and the
effectiveness of the single land value taxation philosophy, proposed by Henry George, are
discussed. To begin, the importance and the reversal of negligence shown to policies and
economic philosophies other than developmental economics must be rethought[1].
Western-centric economics seems to defend a form of recolonization under a faux appearance of
protection. Developmental economics has been in several crises for a long period. Poly Hill,
condemned developmental economics and suggested that the same was ‘western-centric’ with
her primary focus of condemning neoclassical developmental economics and its Marxist
counterpart.[2] It is fairly evident that western-centric developmental economics seems to pose a
significant problem and requires reform as suggested by the likes of John Kenneth Galbraith[3],
W. Arthur Lewis [4] and Eiman Zein-Elabdin[5].

Georgist Economic philosophy offers a potential solution.[6] Henry George’s policy centralises its
focus on the natural commodity, land, and the establishment of property rights. This not only
scrutinises but also surpasses the confutations present in Western-centric developmental
economics.
It also occurs as a medium to transform the economics and the systems in the “ non-western
regions of the world”.[7]

Land is a fundamental commodity that seems to be prominent in several communities such as

during the African - American emancipation period [8]. In more primordial communities, land
constitutes the majority of their assets. One might argue that western-centric developmental
economics too, has a place for land however it seems to majorly take its influence from new
institutional economics, at least, after the publication of the “property rights paradigm, 1973”[9].

1
I Outlining the Fairness of a Land Value Taxation Philosophy

The land is not a commodity, that can be ignored as one important in just rudimentary
economies. The land is an exhaustible resource thus depleting by the day, inflating its prices.
Land(s) can never be considered uniform in its/magnitude of productivity for it varies in
accordance to several factors such as fertility, location, surroundings et cetera, this causes the
value of land to fluctuate. The following graph depicts the importance and reaches of land as an
asset.[10]

A taxation philosophy based on the value of the land would be ethically and economically just.

Darrel Moellendorf proposes that the productivity of the activity on the land alone vests private
ownership of the land.[11] A different argument can be made. One can agree that when
individuals invest their time and put effort into an activity they must be reimbursed by a certain
value or commodity, Mollendorf suggests land. However, this compensation must be a
commodity passed down from one party to another and not land, which no one has made, this is
natural and is already, non-renewable. One might also argue that the discovery of a natural
resource, land, would produce the ownership for the same, however, simply being the first

2
member of a “natural” species to discover an already scarce “natural” resource does not justify a
monopoly over the same. This would restrict equal rights over natural resources, exercised by all
men.

There are two possible ways, Nicolaus Tideman suggests, per which land shall be owned.
Land can be owned if all citizens of a geopolitical region receive an equal amount of land. This
method is simply hypothetical in nature and non-executable due to the disparity between
population density and socio-economic conditions in diverse areas of the world.[12] The second
method that Tideman borrows from Henry George is that one must pay a proportional
compensation per the value of the land.[13] This would serve as monetary compensation, for
owning a natural commodity, to the government. The government here represents the citizens.
This compensation shall be the Single Land tax; the only tax; used for common benefit.
Individuals shall justify a temporary claim to land provided that the land, in its value, is
compensated to the general public however, no one should be able to indefinitely claim
ownership of land.

An argument can be made wherein ordinary land can be jointly owned by one or more
individuals living in that area. A clear rejection of joint ownership was made by George calling it
“a reductio ad absurdum”.[14]This loosely translates to reduction to the same is absurd. Joint
ownership, technically, nullifies the argument itself when the argument is on the side of private
ownership. G.A. Cohen said, “joint world ownership renders self-ownership merely formal.”[15]
This is because joint ownership would directly violate “ownership” in any sense as if one
mandates the consent of others for something he has rights on, he virtually has none. These could
be reduced to just namely rights. Violating the rationale of the argument, justifying the rejection
of joint ownership.

The value of the land on which the tax is based can be defined with the help of the demand for
the land where the two are directly proportional.[16] Most taxes are shared among all sections of
society as the price and amounts of the taxed goods change following the tax. The consequence
of a land value tax shall be contrasting. Because the quantity of land is fixed, the burden of the
tax falls entirely on landowners. The aristocracy owns or rather “ holds” most of a region’s land
as an investment or otherwise without proper utilization of the same. Such land, a natural
resource, is either acquired or inherited and such a monopoly only benefits the rich. In figure 1.2
we observe that the top 1% of the population owns approximately 167 times the land in value
than the median population owns.[17] This is a blatant representation of socially unjust use of
anciently acquired land as a means of creating more revenue when in truth, all citizens have a
fair claim on the land and should be adequately compensated for the same. The value of land is
determined by the demand for the fixed amount available. Such a progressive form of taxation
shall tax the rich proportionally, it being a greater proportion. This means that the majority of the
population would not face consequences and burdens on their income generated unless they own

3
exuberant amounts of land for no purpose but an investment. The rich here shall be affected
however their capital backup shall absorb the shock.

Taxation on land would ultimately force the aristocracy to consider two approaches. The first is
selling unutilized land as it shall constantly strain away money. They could also efficiently utilize
the land, enough to be profitable and thus it shall serve as a broad asset to society as a whole.
Single land value tax is also morally fair as it prevents economical atrocities that the generational
landowners commit on their “tenants”. Land value tax would prevent the landowners from
artificially inflating land prices when the majority of land in an area is owned by them. Even if
its value does not correspond to its price or “rent”.[18]

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II Application and Modern Efficiency of Henry George’s Philosophy

The second major question that emerges is about the efficiency of the single land tax. The major
task is applying and implementing a two-hundred-year-old taxation ideology in a modern context
and an urban setting. Edwin Mills depicts that the tax indeed renders more revenue by attaining
its goal of better utilization of land.[19] Thomas Nechyba also simulates taxation philosophy in a
modern context. He developed a computable general equilibrium model.[20] This model depicts
the effect land value tax substitution shall have on the macro-economy of a country. Nechyba
states that if taxation on income and other assets is reduced, it would lead to noteworthy
increases in land value. This occurs because the demand for the land, on which the less-taxed
capital is used, increases. This clearly shows that land value tax serves as beneficial to a modern
economy by generating more revenue comparatively, justifying its application.
Several modern economists deem the land value tax neutral in the option of its current
implementation or implementation at a later time.[21] They also show evenhandedness on the rate
of implementation of the land value tax stating that developing the tax now or later shall have
neutral consequences. The most forthright argument towards this neutrality is that developed by
Oates and Schwab.[22] Oates and Schwab measure and analogise the profits from the current
development of land value tax against the profits generated from developing the tax later.
Immediate enactment has more satisfactory consequences.

Current tax systems such as income tax take away a substantial amount of revenue an individual
generates. When an individual makes a certain amount of revenue and that revenue is taken away
it psychologically affects the individual. This leads to drag in productivity and performance. In
the case of land value tax, it is not subject to the income generation of the individual which the
individual retains completely, increasing productivity and ambition. This would substantially
grow the national economies of such countries. One may argue that the land value tax is purely
liberal in its concern and developed by liberals for like-minded politico-economists however this
argument is not accurate. Liberal economists such as Krugman and conservative economists such
as Milton Friedman agree on the fact that the land value tax does not reduce productivity but
augments it.[23] It can be introduced by slow substitution in place of taxes like labour, income et
Cetra. This would also not serve as a hindrance to government spending as the Land value tax
would compensate for these taxes. Slowly, this tax would supersede all the other taxes and
become the “ Single Land Tax”. This would also be prevalent politically for it would relieve the
citizens of their income “cuts”. The Land Value tax’s slow substitution would serve popular on
the right and the left.

Singapore is a perfect example of this process. It has applied components of Henry George’s
philosophy in a modern context. Industrial state-owned lands were leased to companies which
created revenue and employment and provided better utilization of the land. This method of

5
99-year leasing of households and areas has increased employment, battled inflation, kept wages
proportionate and also reduced homelessness.[24]

III Conclusion

Finally, regarding the question of the righteousness of a single land value tax, one can state that
despite the arguments offered, a land value tax with some modern reform shall be virtuously just
for the financially weaker sections of the society. It shall be ethically just for the middle and
upper-middle class and economically and socially just for the aristocracy. George’s taxation
philosophy importantly provides an answer to Keynes’ challenge: to reconcile economic
efficiency, social justice, individual liberty, and sustainable development.[25] This essay
communicates that George's single land tax can solve all these problems in an ethical and
modern context for it is fair and it is efficient. “ The tax upon land values is, therefore, the most
just and equal of all taxes. It is the taking by the community, for the use of the community, of that
value which is the creation of the community.”[26]

Footnotes
1. "Rethinking Development Economics: Problems and Prospects of the Georgist Political Economy." Taylor & Francis, 15 2021,
www.tandfonline.com/doi/full/10.1080/09538259.2021.1928334. Accessed 29 May 2022.
2. Hill, Polly, Development Economics on Trial: The Anthropological Case for a Prosecution. Cambridge UP, 1986.
3. Galbraith, John K. The Nature of Mass Poverty. Harvard UP, 1979.
4. LEWIS, W. A. "THE DUAL ECONOMY REVISITED." The Manchester School, vol. 47, no. 3, 1979, pp. 211-229.
5. Elabdin, Eiman Z. "Economics, culture, and development." Economics, Culture and Development, 2017.
6. George, Henry. Moses, Apostle of Freedom: An Address. 1932. An address delivered by Henry George before the Young Men’s
Hebrew Association of San Francisco, and then in many other places
7. Obeng-Odoom, F. "Property Economics." Property, Institutions, and Social Stratification in Africa, 2020, pp. 65-79. Accessed 30
May 2022.
8. Darity, William. "Forty Acres and a Mule in the 21st Century<sup />." Social Science Quarterly, vol. 89, no. 3, 2008, pp. 656-664.
Accessed 30 May 2022.
9. Alchian, Armen A., and Harold Demsetz. "The Property Right Paradigm." The Journal of Economic History, vol. 33, no. 1, 1973, pp.
16-27. Accessed 30 May 2022.
10. The Rise and Rise of the Global Balance Sheet: How Productively Are We Using Our Wealth?" McKinsey & Company, 15 Nov.
2021,
www.mckinsey.com/industries/financial-services/our-insights/the-rise-and-rise-of-the-global-balance-sheet-how-productively-are-we
-using-our-wealth. Accessed 1 June 2022.
(Figure 1.1)
11. Moellendorf, Darrel. World ownership, p. 3. Accessed 1 June 2022.
12. Tideman, Nicolaus. “World Ownership, Self-Ownership, and Equality in Georgist Philosophy:”
13. George, Henry. Progress and Poverty: An Inquiry Into the Cause of Industrial Depressions, and of Increase of Want with Increase of
Wealth--the Remedy. PDF, 1883.
14. George, Henry. perplexed philosopher. 1879.
15. Cohen, G. A., and Gerald A. Cohen. Self-Ownership, Freedom, and Equality. Cambridge UP, 1995. (page 98)
16. Dye, Richard F., and Richard W. England. "Assessing the Theory and Practice of Land Value Taxation." Lincoln Institute of Land
Policy, 2010, www.lincolninst.edu/sites/default/files/pubfiles/assessing-theory-practice-land-value-taxation-full_0.pdf. Accessed 27
May 2022.
17. "A Land Value Tax for England – Fair, Efficient, Sustainable." Land Matters, 20 Dec. 2014,
www.andywightman.com/archives/2351.(Figure 1.2)
18. Monkey, Brit. "Georgism 101." YouTube, “www.youtube.com/watch?v=Li_MGFRNqOE” (I derived primary basic inspiration from
this video)
19. Mills, Edwin. An Aggregative Model of Resource Allocation in a Metropolitan Area , May 1967, pp. 8-9.
20. Nechyba, Thomas. "A Computable General Equilibrium Model of Intergovernmental Aid." 1996.

6
 21. Lincoln Institute of Land Policy,
www.lincolninst.edu/sites/default/files/pubfiles/assessing-theory-practice-land-value-taxation-full_0.pdf.
22. Oates, Wallace E., and Robert M. Schwab. The simple analytics of land value taxation, 2009.

23. Alexander, Scott. "Does Georgism Work?, Part 1: Is Land Really A Big Deal?" Astral Codex Ten | Scott Alexander | Substack, 9 Dec.
2021, astralcodexten.substack.com/p/does-georgism-work-is-land-really?s=r.
24. Phang, Sock-Yong. "Economic Development and the Distribution of Land Rents in Singapore."
25. "LIBERALISM AND LABOUR (1926)." The Collected Writings of John Maynard Keynes, 1978.
26. George, Henry. Progress and Poverty: An Inquiry Into the Cause of Industrial Depressions, and of Increase of Want with Increase of
Wealth--the Remedy. 1883.

Authors note

● The word aristocracy refers to a class of people who hold high social rank and lands that they have inherited over a large
sum of time.
● I have used several sources such as journals, fragments of books and websites to develop my own opinion and form
counterarguments to the already produced works.

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16-27. Accessed 30 May 2022.

Darity, William. "Forty Acres and a Mule in the 21st Century<sup />." Social Science Quarterly, vol. 89, no. 3, 2008, pp. 656-664.

Accessed 30 May 2022.

Elabdin, Eiman Z. "Economics, culture, and development." Economics, Culture and Development, 2017.

Galbraith, John K. The Nature of Mass Poverty. Harvard UP, 1979.

George, Henry. Moses, Apostle of Freedom: An Address. 1932.

An address delivered by Henry George before the Young Men’s Hebrew Association of San Francisco, and then in many other places

Hill, Polly, and Hill Polly. Development Economics on Trial: The Anthropological Case for a Prosecution. Cambridge UP, 1986.

LEWIS, W. A. "THE DUAL ECONOMY REVISITED." The Manchester School, vol. 47, no. 3, 1979, pp. 211-229.

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Obeng-Odoom, F. "Property Economics." Property, Institutions, and Social Stratification in Africa, 2020, pp. 65-79. Accessed 30

May 2022.

"Rethinking Development Economics: Problems and Prospects of Georgist Political Economy." Taylor & Francis, 15 2021,

www.tandfonline.com/doi/full/10.1080/09538259.2021.1928334. Accessed 29 May 2022.

Moellendorf, Darrel. World ownership, p. 3. Accessed 1 June 2022.

7
Tideman, Nicolaus. “World Ownership, Self-Ownership, and Equality in Georgist Philosophy:”

George, Henry. Progress and Poverty: An Inquiry Into the Cause of Industrial Depressions, and of Increase of Want with Increase of

Wealth--the Remedy. PDF, 1883.

George, Henry. perplexed philosopher. 1879.

Cohen, G. A., and Gerald A. Cohen. Self-Ownership, Freedom, and Equality. Cambridge UP, 1995. (page 98)

Dye, Richard F., and Richard W. England. "Assessing the Theory and Practice of Land Value Taxation." Lincoln Institute of Land

Policy, 2010, www.lincolninst.edu/sites/default/files/pubfiles/assessing-theory-practice-land-value-taxation-full_0.pdf. Accessed 27

May 2022.

"A Land Value Tax for England – Fair, Efficient, Sustainable." Land Matters, 20 Dec. 2014,

www.andywightman.com/archives/2351.(Figure 1.2)

Monkey, Brit. "Georgism 101." YouTube, “www.youtube.com/watch?v=Li_MGFRNqOE” (I derived primary basic inspiration from

this video)

Alexander, Scott. "Does Georgism Work?, Part 1: Is Land Really A Big Deal?" Astral Codex Ten | Scott Alexander | Substack, 9 Dec.

2021, astralcodexten.substack.com/p/does-georgism-work-is-land-really?s=r.

George, Henry. Progress and Poverty: An Inquiry Into the Cause of Industrial Depressions, and of Increase of Want with Increase of

Wealth--the Remedy. 1883.

"LIBERALISM AND LABOUR (1926)." The Collected Writings of John Maynard Keynes, 1978.

Lincoln Institute of Land Policy,

www.lincolninst.edu/sites/default/files/pubfiles/assessing-theory-practice-land-value-taxation-full_0.pdf.

Mills, Edwin. An Aggregative Model of Resource Allocation in a Metropolitan Area , May 1967, pp. 8-9.

Nechyba, Thomas. "A Computable General Equilibrium Model of Intergovernmental Aid." 1996.

Oates, Wallace E., and Robert M. Schwab. The simple analytics of land value taxation, 2009.

Phang, Sock-Yong. "Economic Development and the Distribution of Land Rents in Singapore."

Alexander, Scott. "Does Georgism Work?, Part 1: Is Land Really A Big Deal?" Astral Codex Ten | Scott Alexander | Substack, 9 Dec.

2021, astralcodexten.substack.com/p/does-georgism-work-is-land-really?s=r.

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8
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www.tandfonline.com/doi/full/10.1080/09538259.2021.1928334.

"The Rise and Rise of the Global Balance Sheet: How Productively Are We Using Our Wealth?" McKinsey & Company, 15 Nov.

2021,

www.mckinsey.com/industries/financial-services/our-insights/the-rise-and-rise-of-the-global-balance-sheet-how-productively-are-we

-using-our-wealth.

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