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Georgism, named after Henry George (1839-1897), is a philosophy and economic ideology that holds that everyone owns what they create, but that everything found in nature, most importantly land, belongs equally to all of humanity. The Georgist philosophy is usually associated with the idea of a single tax on the value of land. Georgists argue that a tax on land value is efficient, fair and equitable, and will accrue more than sufficient revenue so that other taxes (which are less fair and efficient) can be reduced or eliminated.[1]

Contents

Main tenets

Henry George

Henry George is known best for his argument that the economic rent of land should be shared equally by the people of a society rather than being owned privately. The best statement of this opinion is found in his publication Progress and Poverty: "We must make land common property."[2] Although this could be done by nationalizing land and then leasing it to private parties, George preferred taxing unimproved land value, in part because this would be less disruptive and controversial in a country where land titles have already been granted to individuals. With the revenue from this "single tax", three possibilities arise: either the revenue can be used to fund the state or it can be redistributed to citizens as a pension or basic income, or it can be divided between the first two options. If the first option were to be chosen, the state could avoid having to tax any other type of income, wealth or transactions. Introducing a large land value tax causes the price of land titles to decrease correspondingly, but George did not believe landowners should be compensated, and described the issue as being analogous to compensation of former slave owners.

A supply and demand diagram showing the effects of land value taxation. Note that the burden of the tax is entirely on the land owner, and there is not any deadweight loss.

Georgists also argue that all of the economic rent (i.e., unearned income) collected from natural resources (land, mineral extraction, the broadcast spectrum, tradable emission permits, fishing quotas, airway corridor use, space orbits, etc.) and extraordinary returns from natural monopolies should accrue to the community rather than a private owner, and that no other taxes or burdensome economic regulations should be levied. In practice, the elimination of all other taxes implies a great land value tax, and a corresponding decrease of the price of possession of land. Adam Smith first argued that there would not be any change of land rental prices in his book The Wealth of Nations:[3]

Ground-rents are a still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground. More or less can be got for it according as the competitors happen to be richer or poorer, or can afford to gratify their fancy for a particular spot of ground at a greater or smaller expense.

In every country the greatest number of rich competitors is in the capital, and it is there accordingly that the highest ground-rents are always to be found. As the wealth of those competitors would in no respect be increased by a tax upon ground-rents, they would not probably be disposed to pay more for the use of the ground. Whether the tax was to be advanced by the inhabitant, or by the owner of the ground, would be of little importance. The more the inhabitant was obliged to pay for the tax, the less he would incline to pay for the ground; so that the final payment of the tax would fall altogether upon the owner of the ground-rent.

Standard economic theory suggests that a land value tax would be extremely efficient – unlike other taxes, it does not reduce economic productivity.[1] The 1976 Nobel Memorial Prize winner Milton Friedman, agreed that Henry George's land tax is potentially beneficial because unlike other taxes, land taxes do not distort economic activity, and do not impose an excess burden (or "deadweight loss") on the economy. A replacement of other more distortionary taxes with a land tax would thus improve economic welfare.[4] Additionally, a land value tax would be a tax of wealth, and so would tend to reduce income inequality.

Modern environmentalists have agreed with the idea of the earth as the common property of humanity, and some have endorsed the idea of ecological tax reform as a replacement for command and control regulation. This would entail substantial taxes or fees for pollution, waste disposal and resource exploitation, or equivalently a "cap and trade" system where permits are auctioned to the highest bidder. This would also include taxes of the use of land and other natural resources.

Synonyms and variants

Most early advocacy groups described themselves as Single Taxers, and George endorsed this as being an accurate description of the philosophy's main political goal – the replacement of all taxes with a land value tax. During the modern era, some groups inspired by Henry George emphasize environmentalism more than other aspects, while others emphasize his ideas concerning economics.

Some devotees are not entirely satisfied with the name Georgist. Henry George is now little known and the idea of a single tax of land predates him. Some people now use the term "Geoism", with the meaning of "Geo" deliberately ambiguous. "Earth Sharing", "Geoism", "Geonomics" and "Geolibertarianism" (see libertarianism) are also preferred by some Georgists; "Geoanarchism" is another one. These terms represent a difference of emphasis, and sometimes real differences about how land rent should be spent (citizen's dividend or just replacing other taxes); but all agree that land rent should be recovered from its private recipients.

Influence

Several communities were initiated with Georgist principles during the height of the philosophy's popularity. Two such communities that still exist are Arden, Delaware, which was founded during 1900 by Frank Stephens and Will Price, and Fairhope, Alabama, which was founded during 1894 by the auspices of the Fairhope Single Tax Corporation.

The German protectorate of Jiaozhou Bay (also known as Kiaochow) in China fully implemented Georgist policy. Its sole source of government revenue was the land value tax of six percent which it levied on its territory. The German government had previously had economic problems with its African colonies caused by land speculation. One of the main aims in using the land value tax in Jiaozhou Bay was to eliminate such speculation, an aim which was entirely achieved.[5] The colony existed as a German protectorate from 1898 until 1914 when it was seized by Japan. In 1922 it was returned to China.

In the UK during 1909, the Liberal Government of the time included a land tax as part of several taxes in the People's Budget aimed at redistributing wealth (including a progressively graded income tax and an increase of inheritance tax). This caused a crisis which resulted indirectly in reform of the House of Lords. The budget was passed eventually - but without the land tax. George's ideas were also adopted to some degree in Australia, Hong Kong, Singapore, South Africa, South Korea, and Taiwan. In these countries, governments still levy some type of land value tax, albeit with exemptions.[6]

In Denmark, the Georgist Justice Party has previously been represented in Folketinget. It formed part of a centre-left government 1957-60 and was also represented in the European Parliament 1978-79.

Hong Kong is perhaps the best example now of a successful implementation of a high land value tax. The Hong Kong government generates more than 35% of its revenue from land taxes.[7] Because of this, it can keep other taxes low or non-existent, and still maintain a budget surplus.

In the 2004 Presidential campaign, Ralph Nader mentioned Henry George in his policy statements.[8] Also in the U.S., the Lincoln Institute of Land Policy is based on the ideas of Henry George[9] It should be noted that many municipal governments of the USA depend on real property tax as their main source of revenue, although such taxes are not "Georgian" since they generally include the value of buildings and other "improvements".

The periodical magazine Land&Liberty, established during 1894, is claimed by The American Journal of Economics and Sociology to be “the longest-lived Georgist project in history”.[10]

Criticism

Although both advocated for workers' rights, Henry George and Karl Marx were antagonists. Marx saw the Single Tax platform as a step backwards from the transition to communism. He argued that, "The whole thing is... simply an attempt, decked out with socialism, to save capitalist domination and indeed to establish it afresh on an even wider basis than its present one."[11] Marx also criticized the way land value tax theory emphasizes the value of land, arguing that, "His fundamental dogma is that everything would be all right if ground rent were paid to the state."[11]

On his part, Henry George predicted that if Marx's ideas were tried the likely result would be a dictatorship.[12] Fred Harrison provides a full treatment of Marxist objections to land value taxation and Henry George in "Gronlund and other Marxists - Part III: nineteenth-century Americas critics", American Journal of Economics and Sociology, (Nov 2003).[13]

More recent critics have claimed that increasing government spending has rendered a land tax insufficient to fund government, although the tax revenues would probably have been adequate for limited governments of the type that dominated during the period in which George was active. Also, George has been accused of exaggerating the importance of his "all-devouring rent thesis" in claiming that it is the primary cause of poverty and injustice in society.[14]

Georgism, which is nowadays associated with left-libertarian philosophy, has endured criticism from those right-libertarians who believe that common land ownership would result in an infringement of the rights of self-ownership and individual property.

Predecessors

Those who expressed similar thoughts before Henry George include:

Famous Georgists

Notes

  1. ^ a b Land Value Taxation: An Applied Analysis, William J. McCluskey, Riël C. D. Franzsen
  2. ^ George, Henry (1879). "2". Progress and Poverty: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth. VI. http://www.econlib.org/library/YPDBooks/George/grgPP26.html. Retrieved 2008-05-12.  
  3. ^ The Wealth of Nations Book V, Chapter 2, Article I: Taxes upon the Rent of Houses.
  4. ^ Foldvary, Fred E. "Geo-Rent: A Plea to Public Economists" (April 2005)
  5. ^ Silagi, Michael and Faulkner, Susan N., , Land Reform in Kiaochow, China: From 1898 to 1914 the Menace of Disastrous Land Speculation was Averted by Taxation, American Journal of Economics and Sociology, volume 43, Issue 2, pages 167-177
  6. ^ Gaffney, M. Mason. "Henry George 100 Years Later". Association for Georgist Studies Board. http://www.georgiststudies.org/george100years.html. Retrieved 2008-05-12.  
  7. ^ "'Land Tax' and high land prices in Hong Kong". Policy Papers. Hong Kong Democratic Foundation. http://www.hkdf.org/pr.asp?func=show&pr=24. Retrieved 2008-05-12.  
  8. ^ http://web.archive.org/web/20040828085138/http://www.votenader.org/issues/index.php?cid=7
  9. ^ http://www.lincolninst.edu/aboutlincoln/
  10. ^ The American Journal of Economics and Sociology, vol. 62, 2003, p. 615
  11. ^ a b Karl Marx - Letter to Friedrich Adolph Sorge in Hoboken
  12. ^ Henry George's Thought [1878822810] - $49.95 : Zen Cart!, The Art of E-commerce
  13. ^ 14 Gronlund and other Marxists - Part III: nineteenth-century Americas critics | American Journal of Economics and Sociology, The | Find Articles at BNET
  14. ^ Critics of Henry George
  15. ^ Are you a Real Libertarian, or a Royal Libertarian:
    Furthermore, Locke based his scenario on pre-monetary societies, where a landholder would find that "it was useless, as well as dishonest, to carve himself too much, or take more than he needed." With the introduction of money, Locke noted, all land quickly became appropriated. Why? Because with money, those who can take more land than they have personal use for suddenly have reason to do so, as between them they will have taken all the land, and others will have to pay rent to them. So, with the introduction of money, the Lockean rationale for landed property falls apart, even according to Locke. And while Locke did not propose a remedy specifically for to this problem, he repeatedly stated that all taxes should be on real estate.
  16. ^ Principles of Political Economy Book 5 Chapter 2:
    The ordinary progress of a society which increases in wealth, is at all times tending to augment the incomes of landlords; to give them both a greater amount and a greater proportion of the wealth of the community, independently of any trouble or outlay incurred by themselves. They grow richer, as it were in their sleep, without working, risking, or economizing. What claim have they, on the general principle of social justice, to this accession of riches? In what would they have been wronged if society had, from the beginning, reserved the right of taxing the spontaneous increase of rent, to the highest amount required by financial exigencies?
  17. ^ An Essay on the Right of Property in Land by William Ogilvie, of Pittensear, Professor of Humanity and Lecturer on Political and Natural History, Antiquities, Criticism, and Rhetoric in the University and King's College of Aberdeen 1782
  18. ^ Agrarian Justice paragraph 12:
    Every proprietor, therefore, of cultivated lands, owes to the community a ground-rent (for I know of no better term to express the idea) for the land which he holds; and it is from this ground-rent that the fund proposed in this plan is to issue.
  19. ^ The Wealth of Nations, Book V, Article I, "Taxes upon the Rent of Houses"
  20. ^ Social Statics Part 2 Chapter 9: The Right to the Use of the Earth
  21. ^ p684, The Story of Civilisation, Volume 1, "Our Oriental Heritage", Will Durant, Simon and Schuster, New York, 1942 (Tenth Printing)
  22. ^ http://en.wikisource.org/wiki/The_Devil%27s_Dictionary/L The Devil's Dictionary
  23. ^ Muse return with new album The Resistance "Sure, he has already launched into a passionate soliloquy about Geoism (the land-tax movement inspired by the 19th-century political economist Henry George)".
  24. ^ Carlson, Allan. The New Agrarian Mind: The Movement Toward Decentralist Thought in Twentieth-Century America Transaction Publishers, 2004 (pg 51).
  25. ^ http://www.wealthandwant.com/docs/Buckley_HG.html William F. Buckley, Jr. Transcript of an interview with Brian Lamb, CSpan Book Notes, April 2-3, 2000
  26. ^ Winston Churchill: Land Price as a Cause of Poverty
  27. ^ Transcript of a speech by Darrow on taxation
  28. ^ Lane, Fintan. The Origins of Modern Irish Socialism, 1881-1896.Cork University Press, 1997 (pgs.79,81).
  29. ^ Transcript of 1942 interview with Henry Ford in which he says, "The time will come when not an inch of the soil, not a single crop, not even weeds, will be wasted. Then every American family can have a piece of land. We ought to tax all idle land the way Henry George said — tax it heavily, so that its owners would have to make it productive".
  30. ^ People's Budget
  31. ^ The Life of Henry George, Part 3 Chapter X1
  32. ^ Co-founder of the Henry George Club, Australia.
  33. ^ Arcas Cubero, Fernando: El movimiento georgista y los orígenes del Andalucismo : análisis del periódico "El impuesto único" (1911-1923). Málaga : Editorial Confederación Española de Cajas de Ahorros, 1980. ISBN 8450037840
  34. ^ Justice for Mumia Abu-Jamal
  35. ^ Andelson Robert V. (2000), Land-Value Taxation Around the World: Studies in Economic Reform and Social Justice Malden, MA:Blackwell Publishers, Inc. Page 359.
  36. ^ Spence, Alan (1993), Sun Yat Sen -- Revolutionary Land Reformer, Land & Liberty, July-August 1993
  37. ^ .Article on Tolstoy, Proudhon and George. Count Tolstoy once said of George, "People do not argue with the teaching of George, they simply do not know it".
  38. ^ Archimedes[1], an article originally bylined "Twark Main"
  39. ^ "Oregon Biographies: William S. U'Ren". Oregon History Project. Portland, Oregon: Oregon Historical Society. 2002. http://www.ohs.org/education/oregonhistory/Oregon-Biographies-William-Uren.cfm. Retrieved 2006-12-29.  
  40. ^ Bill Vickrey - In Memoriam

See also

External links








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