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RSF responds to the New York Times article titled “The ‘Georgists’ Are Out There, and They Want to Tax Your Land”

“As one-clause headlines summarizing century old movements go, “Georgists want to tax your land!” is not the worst, as it succinctly describes how Georgism would impact one particularly literate and tuned in class of people – landowners. But it misses the most important piece of George’s philosophy: that taxes on land ownership should help alleviate taxes on the productive activities that actually create that value. Take the Times’s home city: when they go to work, buy lunch, invest in businesses, or hire employees, New Yorkers contribute to the building up of the nation’s largest city. Yet at each of these steps they are taxed! George’s insight was simple – “we impose some taxes for the purpose of getting rid of things” – think here of cigarette taxes today  – “Why should we impose a house tax unless we want to get rid of houses? Why tax any man for having exerted energy in the production of wealth?” And when it is put that way, doesn’t a tax on the value of the land – which is of a fixed quantity whatever the tax, since no one made it – make more sense than one on houses or wages, which one assumes we want to maximize?”
-Matthew Downhour, President of the Board

“Yes, it is unrealistic to pretend that the Single Land Tax (good taxation) can replace all current sources of revenue. But it can certainly replace some taxes necessary to cover public expenses. This argument not only makes the Land-value tax feasible but necessary. The single tax raises money by taking a percentage of the annual yield of land value. This yield or rent is the result of assessing public investment and land-use regulations. It is only fair that landowners pay their fair share of public investment via taxation. The land-tax is not only a cost recovery mechanism but also a future infrastructure and services financing mechanism (value capture). If the Georgian contention is true, the rent of land belongs not to the individual but to the municipality to pay for old, current or future investment. Taxing only land means not taxing (punishing) investment and homeownership. George’s replacement of a volatile sales-based tax will secure recurrent, stable and more difficult to hide revenue; replacing a regressive income-based tax will give families a break and allow for more disposable income; and replacing, or splitting’ an unfair property tax will increase the supply of housing, reduce blight and improve the housing stock.” -Gabriel Nagy, Board Director

“Mayor Duggan’s “scheme” is not a “new tax plan.” Hazen Pingree, Detroit mayor 1889- 1897 and Michigan governor 1897-1900, applied Georgist tax policy in the city and then statewide. Relying on property taxes, Michigan boomed and Detroit grew faster than any other American city. But growth slowed after 1950 as assessments lagged and the state introduced a Business Activity Tax (1953), an income tax (1967), a Single Business Tax (1975), and a corporate income tax (2012), also raising the state sales tax to twice its 1933 rate (1994). See Mason Gaffney (2011), “What’s the Matter with Michigan? The Rise and Collapse of an Economic Wonder”. Georgist policy applications range far beyond affordable housing. Michigan is rich in oil, gas, timber, and mineral reserves, mostly controlled by a few oligopolistic firms. Charges for extracting, hoarding, or polluting such resources might raise considerable public revenue. At the macroeconomic level, privatization of land produces the speculation-driven cycle that gave us the crash of 2008 and that promises another bust around 2026. In short, a Georgist tax shift from makers to takers would radically improve productive efficiency, calm the boom/bust cycle, promote environmental sustainability, and reverse the primary cause of persistently rising economic inequality.” -Kris Feder, former Board Director

“Conor Dougherty’s article correctly points out that Mayor Mike Duggan’s plan for Detroit is reminiscent and closely follows Georgism. However, in his ensuing discussion of Georgism, it becomes apparent that Dougherty does not seem to appreciate the fact that Georgism is not strictly about economics but falls under the broader field of political economy, and thus encompasses ethics and morality, in addition to economics. By omitting the underpinnings of the Georgist land value tax, he fails to faithfully explain the strongest reason for proposing such policies. Georgism is highly relevant for us today. In a world badly in need of moral and ethical compasses, Henry George resurrected and reminded us of one the most basic of self-evident rights  – the understanding that Nature was not made for only a few but made for everyone. In the words of William Lloyd Garrison Jr. ‘It underlies the question of poverty, of intemperance, of the Indian and negro problems and others which command attention, but are merely symptoms of the social disease of which land monopoly is the unrecognized cause.'” -Mihali Felipe, Board Director

“Conor Dougherty’s column in the New York Times is an excellent profile of the land value tax (LVT). He notes that some “tinfoil hat” Georgists believe that all government revenues can be funded by a Single Tax on land. On its face, this does sound crazy: most OECD countries collect around 30% of GDP in tax revenues, but land rents are typically estimated at less than 10% of GDP. But Single Tax Georgism relies on a theory called ATCOR: All Taxes Come Out of Rent. This idea takes some explaining, but the short version is that existing inefficient taxes, like income tax, harm productivity and suppress land rent. If ATCOR is true, it means that as we use LVT to replace those other taxes, there will be more land rents to be captured. Perhaps even enough to fully switch to a Single Tax. Admittedly, this idea sounds far-fetched, but there are at least some pieces of evidence which suggest it might be at least partly true.Today’s Georgists are reasonably measured about this topic, typically believing that LVT should replace existing taxes wherever possible. If ATCOR turns out to be true, then great, we can go Single Tax! If ATCOR doesn’t hold, many are comfortable with retaining some other taxes to ensure that government budgets can be maintained.” -Steve Hoskins, Research Director

“The Georgists Are Out There And They Want To Tax Your Land,” introduced readers to the notion of a Land Value Tax (LVT), but failed to thoroughly explain the policy or its effects.  As Executive Director of the Georgist Foundation mentioned in that piece, I’d like to remedy that. An LVT is very similar to a property tax, but instead of applying a single rate to both land and improvements (usually buildings) it applies a higher tax rate to land values.  A new LVT is best phased in over several years and implemented in a revenue neutral fashion, but this simple mathematical shift completely recalibrates the signals being sent to the market.  Where land speculation was once cheap, it becomes costly.  Where new development was once penalized with higher tax bills, the barrier to investment is removed. The results of this shift are profound.  Studies of the ~20 Pennsylvania communities that have adopted an LVT have found increases in infill development, home values, and business investment; along with decreases in sprawl and residential tax delinquency and foreclosures.  An LVT also tends to be more progressive than a traditional property tax. For all of these reasons, an LVT makes sense for Detroit and beyond.” -Josie Faass, Executive Director

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