The supply of land offered for sale in the market often changes — so why do Georgists say that land is a monopoly?
How would rent be apportioned? With only one tax, how would it be divided between local, state and federal governments?
One proposal is to collect all rent at the local level: the local governments would pass a percentage to the state governments, which in turn would pass a percentage on to the federal government. This is the method usually used between state and local governments when property taxes are levied by the state. It was also used by the federal government when it levied property taxes between 1789 and 1861, apportioned among the states according to population, as specified by the US Constitution.
Another proposal is for each level of government to impose the tax directly on respective types of land — municipalities on land within their areas; states on land within their areas outside the municipalities, such as farm land; and the federal government on such natural resources as oil fields, mines, forests and waterways. In practice, this method is also partially observed.
Under the Single Tax, how would land values be estimated? How could you separate the value of the land from the value of the improvements?
In much the same way as it is done today by real estate dealers and appraisers. The value of land is customarily estimated simply by knowing its size and location. When a building is destroyed, land value remains. Frequently, the owner of the land and the owner of the building are two different parties. Modern Geographic Information Systems (GIS) mix databases, such as those kept by land assessors, with maps — making the maintenance and display of land value data much easier.
Despite the fact that land values can be precisely estimated with relative ease, many jurisdictions today do not assess land values accurately or consistently. There are many reasons for this. Property taxes are just one of the many tax burdens placed on individuals and businesses, yet because they are administered locally, they can be more effectively protested and resisted. Local assessment rolls are not frequently updated. Because building values can be depreciated for income tax purposes, they are often overstated relative to land values.
Accurate assessment of land and buildings is more difficult than assessing land alone, because assessment of buildings requires detailed inspection. A shift to greater reliance on land values for public revenue would tend to improve the quality of public land assessments.
A rich man has a large mansion; a poor widow has a small house on an adjoining lot with the same value. Is it right that they both pay the same tax?
There is no reason in justice why the community should not charge poor widows as much for monopolizing valuable land as it charges rich men. In either case it is a special privilege which should be paid for. In our sympathy for the rare widower in this situation, let us not forget the hosts of working people who not only do not live next to mansions but have no place to live but by some landlord's consent. They would find it much easier to get a place to live under the Single Tax than now.
How can homeowners pay a land value tax, if their land goes up in value and their wages do not rise?
If the majority of land rents were collected by the community, the land market would become much less volatile. Speculative booms and crashes in land values would be greatly dampened, if not completely eliminated.
During a transition period, in which land values were becoming a greater share of public revenue, there would be an opportunity for companies to provide insurance against an unexpected increase in the land value tax. The insurance would have a cost at the time of purchase, so that the new titleholder would know if he could afford the payments. Also, retired folks with low incomes could postpone the payments until the property is sold or inherited.
Shouldn't there be a free, private market in land, in order to allocate land sites to their most efficient uses?
No, because the tax on land value is independent of its actual use, based only on its potential in its highest and best use. In many cases the lack of LVT causes premature development expecting higher land value, and in other cases causes speculators to avoid developing, waiting for higher land values. LVT promotes the optimal timing, because the opportunity cost of not developing is explicit: the tax must be paid regardless of how the site is being used. Without land value taxation, land value is subsidized, distorting incentives.
Critics of LVT claim that rent is earned as landlords actively seek out the best tenants and the best use of a site. But this is not rent; the return on this exertion is wages. Those seeking the best tenants and sites are in the role of entrepreneur, not landlord. Some of the rental that tenants pay is wages to the entrepreneur and to the manager (who could be a different person than the landowner).
Though some people have made money by owning land, haven't others lost? Do not the losses offset the gains?
Possibly; but what the land speculator loses, the community does not gain. What the land speculator gains, however, the community does lose. As between land speculation and the community, losses cannot be justly charged against gains. The taxation of land values, incidentally, will put an end to these "unearned losses" as well as to unearned gains.
If someone buys land in good faith, under the laws by which we live, would that person not be entitled to compensation for individual loss if we taxed away the value of his land?
Even at present, if a landowner does not pay taxes, his or her land is confiscated by the government without compensation. Land grants and taxation are clearly matters of the general public policy; they are legislative and not contractual in character. Titles to land values and privileges of exemption from taxation are voidable at the pleasure of the people. The reserved right of the people to terminate grants of land value is a part of every grant of land.
Since Progress and Poverty was written, there has been a considerable body of public opinion in favor of land value taxation, and the proposal has been put into application in several parts of the world. Notice, therefore, has been served that there is an effort in progress to accomplish community collection of rent by proper methods. As this movement grows, people cannot be allowed to make bets that it will fail and then, when they lose their bets, to call upon the government to compensate them for their loss. Note too that land titles will remain. The land will be just as good as before — even better — for building or producing.
Is a tax on land values a really tax?
This depends, of course, on what is meant by "tax." If a tax is a sum of money levied by government on any income or asset, then LVT is a tax. However, if we see taxes as a burden on the production of wealth, we must realize that a levy on land values does not fall in this category. This is because of land's particular character as an economic factor: it is fixed in supply, and needed for all production. Land rent is paid in any case — if not to the community, then to the private landholder. Compared to other levies that burden production, such as income or sales taxes, LVT has the character of a "user fee" — it is the public appropriation of an economic surplus, and does not burden production at all.
Is land rent a sufficient source of public revenue?
That's a complex question. We consider it in our next section.