Taxation Methods



One of the methods of raising public revenues is by Land Value Taxation.

Land value taxation is any tax[1] levied on land-owners in proportion to the value of their land, irrespective of its improvements.

In most countries land value taxes are familiar enough in connection with other taxes. This is so in the United States, where real estate taxes are (a) in part taxes according to the value of improvements, and (b) in part taxes according to the value of land.[2]

Land value taxation may thus supply (a) a greater or less proportion of the public revenues, the rest being obtained from taxes on improvements, personal property, incomes, business licenses, and so on; or (b) it may be exclusive, public revenues being raised from no other source.

When land value taxation is exclusive, it is appropriately enough called the Single Tax, meaning only one tax and that upon land values.

The Single Tax (exclusive land value taxation) may vary in degree, from (a) a rate that will supply revenues sufficient only for the bare needs of government, to (b) a rate high enough to appropriate to public use approximately the entire annual value of land.

The annual needs of a government might coincide approximately with the annual value of the land within its jurisdiction, in which case there would be no practical difference between a land value tax sufficient merely for public needs, and one high enough to appropriate approximately all annual land values. Theoretically, however, the difference is to be observed; for there is a difference in theory and there might be in practice.

We may make the following enumeration of different kinds or degrees of land value taxation:

  1. Land value taxation together with taxation on improvements and personal property. This is commonly known as the General Property Tax.[3]
  2. Land value taxation together with taxation on improvements, personal property being disregarded or exempt. This is commonly known as the Real Estate Tax.[4]
  3. Land value taxation to the exclusion of all other revenue taxes, but limited to the needs of government. This may be distinguished as the Single Tax Limited.[5]
  4. Land value taxation, whether exclusively such or not, which begins with a low rate or none on land of moderate value and increases progressively in rate on land of higher values, with a view to encouraging small holdings and discouraging large ones, is known as the Progressive Land Value Tax.
  5. Land value taxation to the exclusion of all other revenue taxes, and to the full rental value approximately of the land. This might be called simply the Single Tax.[6]

The first three items in the foregoing enumeration, being fiscal in character, belong especially in Parts One and Two of this volume. The fourth and fifth belong more strictly in Part Three, as methods of industrial reform. The chief object of the fourth is to discourage large holdings and to encourage small ones; the object of the fifth, comprehending that of the fourth, is to take land values for common use while leaving private earnings to individual earners.

It is to be observed, howeyer, that all are fiscal, for any of them would produce public revenues; and that all are industrial, for any of them would tend to promote freedom of industrial production and justice in the distribution of industrial products.



Land value taxation to the exclusion of all other revenue taxes, but limited to the needs of government, was proposed by Henry George in Progress and Poverty in 1879, as the best known fiscal method, and one that would moreover, by force of its own excellence for revenue purposes, develop into the simplest means of securing to the community as a whole the value of land, and to each individual the value of his work, thereby at once supplying abundant public revenues and settling the labor question on the basis of justice. Henry George expressed the idea in these words: "Abolish all taxation save that upon land values."[7]

This proposal, long known as The Single Tax,[8] is coming to be better and more favorably known as Land Value Taxation.[9] Under its operation all classes of workers, whether manufacturers, merchants, bankers, professional men, clerks, mechanics, farmers, farm hands, or other working classes, would, as such, be wholly exempt from taxation.

It is only as men own land that they would be taxed, the tax of each being in proportion, not to the area, but to the value of his land.

And no one would be compelled to pay a higher tax than others if his land were improved or used while theirs was not, nor if his were better improved or better used than theirs.[10] The value of its improvements would not be considered in estimating the value of a holding; site value alone would govern.[11] If a site rose in the market, the tax would proportionately increase; if it fell, the tax would proportionately diminish.

Land value taxation, therefore, when carried to the point of the Single Tax (whether limited or not) may be concisely defined as a tax upon land alone, in the ratio of value and irrespective of its improvements or its use.