I would add that Watling's contention of failure is nonsense on a much simpler premise: The property interests in Britain are/were insanely powerful. The House of Lords vetoed the act in 1910 (not 2010); after the House was reformed, it passed, only to be buried in litigation. The opposition was extremely strong, and the law, as passed, was deeply weird as a result of pressure from monied interests. It applied on death or transfer and had no phased implementation, so revenue fell while valuations were still being fixed.
If I'm being as charitable as possible, I'll note this does raise another latent objection in Watling's argument, one that I wouldn't at all mind arguing about openly: "However one feels about LVT, it has deeply entrenched political opposition." Some people (such as Tyler Cowen) invoke this when discussing LVT.
Very often the positions "LVT is bad", "LVT is unworkable", and "LVT has strong entrenched political opposition" get muddled together and presented together. However, they're worth teasing apart and considering individually.
If LVT is BAD, then it doesn't matter if it's workable or politically viable, it's sufficient to oppose it on those grounds alone.
If LVT is UNWORKABLE, then we should ask *why* it is unworkable? Is it a matter of resources, knowledge, skill, or some fundamental law of human social dynamics or the universe itself? Can we do something to make it workable? After all, if we think LVT is GOOD, why shouldn't we endeavor to do this?
Finally, if LVT is FIERCELY OPPOSED BY ENTRENCED POLITICAL OPPOSITION, but we believe it is also GOOD and WORKABLE, then ... so what? Human history is rife with advances and reforms (the abolition of Kings, representative democracy, women's suffrage, the abolition of slavery, etc. etc.) that had fierce opponents. If we think things are good and workable we should fight for them.
I often feel that many opponents who make the "unworkable" and "has fierce opposition" claims also hold the position that they just think it's bad policy, and I'd rather they just be honest and lead with that.
Most people cannot think beyond the status quo, so can be safely ignored.
Of the rest, there are motivated reasoners, like speculative landowners, that are very powerful and very much do not want Georgism (or Socialism, or anything that threatens their status), and there are people who can hear what you are talking about.
As a person favorably inclined to George-ish ideas, the one thing I would like to see proponents address a bit more is not the theoretical or historical failures but the political failures. One can imagine a Bolshevik-style power grab where militant Georgists (ha!) seize control of government and enact LVT without concern for what anyone else wants. But short of that, history would suggest that the political interests arrayed against LVT tend to win over time. I would like that to not be true but it seems to be true nonetheless.
Can you clarify the difference between historical failures and political failures? Is the latter not a subset of the former, or am I missing something?
WWI seems to have disrupted a fair amount of progress that had been made and not always because elites ended the LVT so much as they took advantage of an exogenous event. I’m trying to be fair to the historical record in that a global war is a very extreme event and doesn’t necessarily mean George’s ideas were guaranteed to be doomed. Obviously there was a political component but it’s complicated by a literal global war.
I see, I do try to grapple with why Georgism went to sleep in the 20th century. My hypothesis is based on the opening and closing of the "automobile frontier":
So, essentially, a technological event (affordable mass-produced cars + extensive public highways) sufficiently ended the urgency of the Georgist movement (perhaps with some help from global events, etc). Which allowed elites to reassert control of the land tax debate since rents weren’t affecting a significant-enough political majority. If I understand correctly, it’s certainly plausible if mainly premised on an American context.
Yes that's about it. In Europe you've also got the shock of WWII, which has an effect similar to the aftermath of the black plague in Medieval times-- a catastrophic shock, destruction of tons of housing capital (and just the overall population) through bombing, and then a big rebound and social reset afterwards in which wages rise and house prices fall. The basic argument is that, right around the end of the 20th century, material conditions changed to relieve the pressure.
But then material conditions have changed again in recent decades, which is the main reason the movement has come back. I believe if everything I have written was posted back in 1990 or 2000, nobody would have cared.
This is another question I asked AI about why Henry George was not popular with White Southerners during his time; I think a lot of these sentiments still exist today in the 21st century among white southerners:
Henry George faced significant unpopularity among white Southerners due to his economic ideas and the socio-political context of his time.
Opposition to Land Taxation
George advocated for a land value tax, which threatened the economic interests of landowners in the South. Many white Southerners, who relied on land for wealth and status, viewed this proposal as a direct attack on their property rights.
Proslavery Sentiment
The prevailing proslavery arguments in the South emphasized land ownership as a cornerstone of Southern identity. George's ideas, which promoted economic equality and challenged the status quo, conflicted with these deeply held beliefs.
Political Climate
The political tensions following the Civil War and Reconstruction fostered a climate of resistance to any reform that could disrupt the existing social order. George's progressive views were often seen as radical and unwelcome in a region still grappling with the aftermath of the war.
Cultural Resistance
Many white Southerners were resistant to Northern ideas and reform movements, viewing them as intrusive. George's popularity in the North did not translate to acceptance in the South, where local sentiments often favored traditional economic structures.
Here is another answer from AI: What do you think of these two answers Lars?
Henry George's lack of popularity in the Southern United States can be attributed to several factors.
Economic Context
The South was primarily agrarian, with a social structure heavily reliant on land ownership and agriculture. George's ideas, particularly his advocacy for the single tax on land, threatened the interests of landowners who were resistant to any reforms that could disrupt their economic power.
Cultural Factors
The Southern states had a distinct cultural identity that often prioritized traditional values and social hierarchies. George's progressive ideas may have clashed with these values, making his message less appealing.
Political Climate
The political landscape in the South during George's time was dominated by conservative ideologies, which were often at odds with the reformist spirit of George's proposals. This environment made it difficult for his ideas to gain traction.
Racial Dynamics
The racial tensions and the legacy of slavery in the South also played a role. Many white landowners were more focused on maintaining their social and economic status than on addressing issues of inequality that George highlighted.
One part of the country that has historically resisted Georgism is the American South. I typed in a question in Yahoo search engine and AI gave this answer below:
Henry George's lack of popularity in the American South can be attributed to several key factors.
Economic Context
The South's economy was heavily reliant on agriculture and land ownership, which made George's land tax proposals less appealing to landowners who feared losing their wealth and power.
Cultural Resistance
The South had a distinct cultural identity that often resisted progressive reforms, viewing them as threats to traditional values and social hierarchies.
Political Landscape
George's ideas were often associated with radicalism, which alienated many Southern politicians and voters who preferred more conservative economic policies.
Limited Advocacy
There was a lack of strong advocacy for Georgism in the South, leading to minimal grassroots support and engagement with his ideas
Great research! It ought to put the doubters to rest, or at least inspire them to create actual refuting arguments - the best of which is probably simply that there are imperfect assessments so it's often difficult to determine the true value of land apart from the structures atop them. But, as the new HG avatar (https://henry.hgsss.org/chat/henry_george/henry-george-dinner-hgsss/visit) available from the Henry George School of Social Science in NYC points out, this is a failure of application, not of theory or, as Lars says, of results.
So common is the ignorance and in some cases, just plain obstinance, that I've been using these first 23 out of 233 examples of LVT for years, since CGUSA's late co-founder Steve Cord and I summarized them into a single document.
Here’s How Your State Could Reduce Taxes For Most Taxpayers And Stimulate Your Economy
While Maintaining Complete Revenue Neutrality
Your state can gain these 2 advantages by taxing land assessments more and what is produced (like buildings) less. Find out the various ways to do this. It would be completely revenue-neutral since an economically beneficial tax would be reducing economically harmful taxes. This is what would happen:
(1) Most taxpayers would be taxed less because their tax reduction will exceed what they would pay with the higher tax on land assessments. All nonlandowning renters would pay less because there’d be less building tax passed on to them and in the long run the land tax cannot be passed on to them.
(2) New construction & renovation, in particular, would be more profitable because they’d be taxed less. Perhaps tax-exempt these activities entirely (not their land) for the first 7 years. Here’s how to stimulate your state’s economy.
Nothing in economics seems as well substantiated. Eight (8) American winners of the Nobel Prize in economics have endorsed this tax (ask to see their endorsements) but they didn’t know how to implement it. You can do so if you contact us.
Here follow 23 summaries of empirical studies showing that economic development
has always followed the exact equivalent of this proposal. We can also send you 233 more
such summaries, free upon request (no obligation).
SUGGESTION: If 23 brief summaries of empirical studies seems like more than you have
time for, then just read studies #10 (peer-reviewed) and #23 (the best one), then read any
3 other studies; then read them all. Your comments would be appreciated.
(1) The contiguous cities of Allentown and Bethlehem in eastern Pennsylvania are very
comparable as to size and economy. In 1997, Allentown started taxing buildings less than land; Bethlehem did not.
Allentown’s new private construction & renovation thereupon grew by 32% in
dollar value in the three years after the shift to land value taxation as compared to the prior three years. That was 1.8 times more than Bethlehem’s increase in private construction & renovation during the same time period, even though Bethlehem (but not Allentown) received much federal grant money in the prior three years.
These figures come from a study of building-permits on file in the Allentown and
Bethlehem city halls by Benjamin Howells (science researcher and one-time Allentown
councilman), William Kells (science-oriented businessman) and Steven Cord (professor).
(2) Washington and nearby Monessen (both in southwestern Pennsylvania) are roughly
comparable as to size and economy. After Washington started shifting some of its tax off buildings onto land in 1985, its new private construction & renovation increased by 33% in dollar value in the three years after its two-rate adoption as compared to the prior three years. But during the same time period, nearby one-rate Monessen’s new private construction & renovation actually decreased by 26%.
(3) Connellsville, Pa. saw its new private construction & renovation jump 3.46 times in
the three years after it adopted a two-rate LVT property tax as compared to the prior three years.
This jump over-shadowed the modest 1.07 increase in new private construction & renovation of nearby one-rate Uniontown during the same time period. The two cities are quite comparable, although Uniontown is the county seat and is somewhat larger (both are economic-development plusses).
(4) Aliquippa, Pa., after the closing of its large steel mill, shifted some taxes off building onto land values in January 1988. Result: most residents paid less taxes and its new private construction & renovation jumped 97% in the three years after the two-rate switch as compared to the three-years-before.
Nearby Ambridge, comparable except that it is closer to the Pittsburgh International
Airport and enjoys brisk tourist traffic at its Old Economy Shaker Village (both economic plusses), experienced a 30% decline in private building-permits issued during the same period of time. Nearby Beaver Falls, also comparable except that it is less hilly than Aliquippa and is the county seat (again, economic plusses) experienced a 7.2% decline during the same time period.
In July 1993, the Aliquippa School District adopted a two-rate building-to-land property tax. Its new private construction & renovation thereupon spurted: for 1994-95, it was 2.3 times greater than for 1991-92.
(5) In 1989, Clairton, Pa., an industrial suburb of Pittsburgh, was under direct state fiscal control, officially labeled “financially distressed.” It took the advice of the prestigious Pennsylvania Economy League and adopted two-rate LVT. Building assessments were taxed at 2.105% and land assessments at 10% (instead of both at 3.7%).
During the three-year period after the switch, its taxable building permits were 8.5%
more than in the three years before (based on building-permit records in Clairton City Hall). This is to be compared to the 5.8% decline in all U.S. building permits issued during the same time.
(The Clairton School District recently made a major tax shift from buildings to land.
Results so far: as predicted).
(6) Oil City, Pa. adopted two-rate LVT starting in January 1989. Its private construction
& renovation increased 58.2% in the three following years as compared to the three-years before, while its nearby one-rate but otherwise comparable neighbor, Franklin, experienced a decline of 12.2% in the same time period.
(7) Pittsburgh, Pa. increased its land tax rate (but not its building tax rate) in 1979 and
1980; its building-permit issuance then became 3.57 times higher than in the previous years of 1974-1978 (source: Pennsylvania Economy League 1985 study, p. 16 chart) despite a steady decline in its steel industry. Compared to this 3.57 increase, U.S. office-building permits increased only 1.6 times (neither increase adjusted for inflation).
In 1984, Pittsburgh again increased its land tax but not its buildingtax. In the following two years, its new construction & renovation increased 6.2 times faster than U.S. construction & renovation (sources: City of Pittsburgh building-permit annual reports and table 1194, U.S. Census report C30), again despite the continuing decline in Pittsburgh’s steel industry.
Pittsburgh’s 1985 building permits increased 2.29 times over 1984; in 1986, they were 2.38 times greater than in 1984 (source: Pittsburgh Bldg. Inspection Dept.).
(8) Godfrey Dunkley, an economist and mechanical engineer, extracted statistics from the
official Municipal Yearbooks of the government of South Africa.
He compared 1959 building assessments to 1979 building assessments and found that the
one-rate towns (taxing land and buildings the same) increased their total assessments by 486%, but the two-rate towns (taxing land more than buildings) experienced a 561% increase; the 46 towns that taxed only land assessments experienced an 850% increase. Inflation affected all these figures equally, but note that the more a town taxed land values, the faster it grew.
Further substantiation from the same study: the eight towns that switched from one-rate
to two-rate increased their building assessments by 748%, and the 15 towns that switched to landtaxing-only increased their building assessments by 996%.
A later Dunkley study of a different time comparison yielded similar figures.
(9) Then there’s the study by professors Wallace Oates and Robert Schwab, both of the
University of Maryland. They reported that 15 large northeastern cities in the U.S. averaged a
decline of 15.5% in their annual value of building permits issued between 1960-1969 and 1980-1989, but two-rate LVT Pittsburgh recorded a 70.4% increase.
Columbus, Ohio was the only other city in the study that recorded an increase – a rather
modest 3.6%, but it had annexed some fast-growing suburbs in the interim.
! (10) In 1995, Professor Nicolaus Tideman of Virginia Tech University and his graduate student, Florenz Plassmann (now a professor at the University of Binghamton) completed a highly technical study of land value taxation in Pennsylvania entitled “A Markov Chain Monte Carlo Analysis of the Effect of Two-Rate Property Taxes on Construction.” It was published in the peer-reviewed Journal of Urban Economics (3/00, pp. 216-47) and concluded as follows:
“The results say that in all four categories of construction, an increase in the effective tax differential is associated with an increase in the average value per permit. In the case of residential housing, a 1% increase in the effective tax differential [on land] is associated with a 12% increase in the average value per unit… From the perspective of economic theory, it is
not at all surprising that when taxes are taken off of buildings, people build more valuable
buildings. But it is nice to see the numbers.”
This study completely confirmed all the Pennsylvania studies that had been done at the time (then 15, now 21).
(11) Harry Gunnison Brown, a prominent American economist, found that the suburbs
of Melbourne (Aus.) which were about five rail miles from Flinders Street in downtown
Melbourne and which taxed land values only, had 50% more dwellings constructed per available acre during 1928-1942 than similarly situated suburbs which taxed land and buildings at the same rate (source: Aus. govt. statistics).
Making a similar comparison for suburbs seven miles out, the land-value-tax suburbs did 2.33 times better; LVT suburbs 9.5 miles out did twice as well.
Suppose you own some vacant land and you read in the newspaper that the tax on land will be gradually increased in the ensuing years, wouldn’t you develop that land or sell to someone who will? So isn’t it a tax that creates development and jobs?
(12) A Pittsburgh City Council study (1976) concluded that a 1% earned income tax
would hit the city’s homeowners 3.59 times harder than an equivalent-in-revenue LVT increase.
If land were taxed, 73.6% of homeowners would pay less; all non-landowning tenants would pay less apartment rent in the long run.
(13) A Washington D.C. council-authorized study done in the 1970s concluded that if
only land was taxed (not building assessments), there would be these tax reductions: single
family homes 18.1%, two-family homes 20.9%, row houses 14%, walkup apartments 8.9%,
elevator apartments 22.5%.
(14) In 64 suburbs outside central Melbourne from 1955/56 to 1957/58, there were 42
new factories, of which half were in the 17 suburbs using only a land tax. Factory employment in these 17 LVT-only suburbs increased by 445 whereas in the other 47 suburbs, factory
employment decreased by 361 (source: Aus. govt. statistics).
(15) Twelve studies in rural Victoria found that the LVT-only towns averaged a
construction-and-renovation growth of 29% as compared to a 2.6% growth for their real-estate income- taxing neighbors in the same period of time (source: Aus. govt. statistics). The land tax was always adopted as a result of a poll of landowners only.
(16) If eastern Americans fall through the earth, they would emerge near Perth, Western
Australia (pop. 400,000). 17 nearby localities taxing land values only experienced a 34.36
increase in the total number of dwellings between 6/30/71 and 6/30/76. The nine nearby
localities taxing both land and buildings (presumably subject to the same economic-growth
influences) experienced a 0.02% decrease in the same time period (source: Aus. govt. statistics).
(17) In North Dakota, farmers paid no tax on farm buildings. A survey by a high official
of the North Dakota League of Cities revealed that this encouraged new farm construction (U.S. News & World Report, 4/3/78, p. 54).
(18) California Irrigation Districts – a 1909 California law required that new irrigation
networks were to be financed by a tax on the affected land values only; all privately owned
improvements were to be property-tax exempt. The theory was that irrigation networks increased land values, so the expense of those networks should be borne by the affected landowners.
The result was beneficial to the local farmers, particularly the smaller ones. The irrigated
valleys are among the most productive in the world. This is what the Modesto Chamber of
Commerce stated in 1914 (according to a 1978 Congressional Research Service study, “Property Taxation,” p. 48):
“As a result of the change many of the large ranches have been cut up and sold in small tracts.
The new owners are cultivating these farms intensively. The population of both country and city has greatly increased. The new system of taxation has brought great prosperity to our district.
Farmers are now encouraged to improve their property. Industry and thrift are not punished by an increase in taxes.”
in August 1955. The most extensive construction took place in its blighted problem
neighborhoods: before August 1955, those neighborhoods accounted for only 22% of the city’s building permits, but in the five ensuing years that percentage jumped first to 35% and then steadily moved up to 47% in 1960 (these percentages are of continually larger construction figures) – per Victoria Bldg. & Construction Journal.
(20) In New Zealand in the late 1950s, ten large land-taxing-only cities had slightly less
tax defaults than three large non-LVT cities, indicating that tax defaults are likely to decrease if buildings are not taxed so much (H. Bronson Cowan, 1961 report of the Canadian Federation of
Mayors and Municipalities, p. 31).
(21) A city-funded 1980 study in New Castle, Pa. revealed that seven vacant and two
poorly developed downtown sites would be an estimated $150,851 more profitable to build upon with a land-tax-only property tax. If county and school taxes were also to tax only land values, then the extra profit would approximate $243,750 a year.
(22) Random-sample studies in sixteen U.S. cities substantiated that most home-owners
would pay less with a two-rate building-to-land property-tax shift. We can tell you how to
exactly ascertain how each voter would fare with this gradually implemented tax on land values before going public with the idea; you can look before you leap.
! (23) The Best Study of Them All: Pittsburgh had been taxing land assessments
more than building assessments ever since 1915, but in 2001, it reverted to taxing both types of assessments at the same rate.
Why did the city do that? Briefly, the well-to-do voters in Pittsburgh were suddenly
aroused to fever pitch about their property tax as never before because a county re-assessment increased their land assessments by five-to-eight times overnight – an absolute political no-no (most county council members lost their next election).
These voters thought they would pay less if they got the land tax rate brought down to the
building tax rate, so they pressured the city council to reduce the land tax rate; they were
completely unaware of the many Pittsburgh studies supporting land value taxation, and of course the property tax of most homeowners in the city shot up up.
>>>>>>> After the two-rate rescission, Pittsburgh’s private new construction (now
more taxed) declined 19.57% (inflation-adjusted) in the three years after rescission as
compared to the three years before, while the value of construction nationwide increased
7.7% (also inflation-adjusted).
A computer examination of the entire Pittsburgh assessment roll found that the rescission
caused 54% of all homeowners to pay more property tax. As for non-landowning tenants (office tenants also), eventually they all paid more space-rent because more building tax was passed on to them but the land value tax never can be. Since big cities generally have many tenants (both residential & business), they would particularly benefit from a building-to-land property-tax switch.
This LVT rescission has actually been a blessing in disguise because it enables us to examine the effects of a land-to-building tax switch.
Much more evidence for LVT could be cited, but enough is sufficient. Isn’t it common sense to expect that if production is taxed, there’ll be less of it? And that if you tax land values more, land-sites will have to be productively used (which by itself will increase production). Don’t let preconceived notions trump logic and hard evidence. Base your opinions on incontrovertible evidence. You hurt people if you do nothing.
The only way to reduce taxes on production is to tax land instead. If you encounter doubters, be sure to ask them to present empirical evidence.
Much more evidence for LVT could be cited, but enough is sufficient. Isn’t it common sense to expect that if you tax production, you’ll have less of it? And that if you tax land values more, land-sites will have to be more efficiently used? Don’t let pre-conceived notions trump logic and
hard evidence. Base your opinions on incontrovertible evidence. You hurt people if you do
nothing.
The only way to reduce taxes on production is to tax land instead. If you encounter doubters, be sure to ask them to present empirical evidence. They can’t.
I don't think it's any great mystery why someone like Watling opposes an LVT: he wants to make money from land speculation. It hasn't yet dawned on him that allowing people to do that creates a classic tragedy of the commons: privatizing communally-generated price appreciation ultimately destroys housing affordability.
Lars, this is exactly the kind of rigorous defence the LVT cause needs. The Houston and Vancouver examples alone should embarrass anyone who leans on Watling's "never implemented anywhere" claim.
For readers interested in what a concrete, ground-up LVT implementation might look like in a developing country context, I've written a thirty-year architectural blueprint for Bangladesh — covering urban site-value taxation, a progressive rural marginal land tax, title insurance pre-conditions, and a village-by-village transfer of full fiscal authority once local capacity is certified. Many of the valuation challenges Lars addresses here (no cadastre, disputed records, thin transaction data) are ones I try to design around directly, including a proxy system using satellite night-light data and utility consumption to get the system running before mass appraisal infrastructure exists.
Interesting article. I read the article that you are critiquing and also thought the author made claims that go far beyond what one can make from one historical example.
Brilliant analysis!
I would add that Watling's contention of failure is nonsense on a much simpler premise: The property interests in Britain are/were insanely powerful. The House of Lords vetoed the act in 1910 (not 2010); after the House was reformed, it passed, only to be buried in litigation. The opposition was extremely strong, and the law, as passed, was deeply weird as a result of pressure from monied interests. It applied on death or transfer and had no phased implementation, so revenue fell while valuations were still being fixed.
Thanks!
If I'm being as charitable as possible, I'll note this does raise another latent objection in Watling's argument, one that I wouldn't at all mind arguing about openly: "However one feels about LVT, it has deeply entrenched political opposition." Some people (such as Tyler Cowen) invoke this when discussing LVT.
Very often the positions "LVT is bad", "LVT is unworkable", and "LVT has strong entrenched political opposition" get muddled together and presented together. However, they're worth teasing apart and considering individually.
If LVT is BAD, then it doesn't matter if it's workable or politically viable, it's sufficient to oppose it on those grounds alone.
If LVT is UNWORKABLE, then we should ask *why* it is unworkable? Is it a matter of resources, knowledge, skill, or some fundamental law of human social dynamics or the universe itself? Can we do something to make it workable? After all, if we think LVT is GOOD, why shouldn't we endeavor to do this?
Finally, if LVT is FIERCELY OPPOSED BY ENTRENCED POLITICAL OPPOSITION, but we believe it is also GOOD and WORKABLE, then ... so what? Human history is rife with advances and reforms (the abolition of Kings, representative democracy, women's suffrage, the abolition of slavery, etc. etc.) that had fierce opponents. If we think things are good and workable we should fight for them.
I often feel that many opponents who make the "unworkable" and "has fierce opposition" claims also hold the position that they just think it's bad policy, and I'd rather they just be honest and lead with that.
Most people cannot think beyond the status quo, so can be safely ignored.
Of the rest, there are motivated reasoners, like speculative landowners, that are very powerful and very much do not want Georgism (or Socialism, or anything that threatens their status), and there are people who can hear what you are talking about.
Talk to the third.
(Also I think you mean 1910)
Here I go again wanting to wish the 20th century away!
As a person favorably inclined to George-ish ideas, the one thing I would like to see proponents address a bit more is not the theoretical or historical failures but the political failures. One can imagine a Bolshevik-style power grab where militant Georgists (ha!) seize control of government and enact LVT without concern for what anyone else wants. But short of that, history would suggest that the political interests arrayed against LVT tend to win over time. I would like that to not be true but it seems to be true nonetheless.
Can you clarify the difference between historical failures and political failures? Is the latter not a subset of the former, or am I missing something?
WWI seems to have disrupted a fair amount of progress that had been made and not always because elites ended the LVT so much as they took advantage of an exogenous event. I’m trying to be fair to the historical record in that a global war is a very extreme event and doesn’t necessarily mean George’s ideas were guaranteed to be doomed. Obviously there was a political component but it’s complicated by a literal global war.
I see, I do try to grapple with why Georgism went to sleep in the 20th century. My hypothesis is based on the opening and closing of the "automobile frontier":
https://progressandpoverty.substack.com/p/what-happens-when-americas-monopoly
Curious what you think
So, essentially, a technological event (affordable mass-produced cars + extensive public highways) sufficiently ended the urgency of the Georgist movement (perhaps with some help from global events, etc). Which allowed elites to reassert control of the land tax debate since rents weren’t affecting a significant-enough political majority. If I understand correctly, it’s certainly plausible if mainly premised on an American context.
Yes that's about it. In Europe you've also got the shock of WWII, which has an effect similar to the aftermath of the black plague in Medieval times-- a catastrophic shock, destruction of tons of housing capital (and just the overall population) through bombing, and then a big rebound and social reset afterwards in which wages rise and house prices fall. The basic argument is that, right around the end of the 20th century, material conditions changed to relieve the pressure.
But then material conditions have changed again in recent decades, which is the main reason the movement has come back. I believe if everything I have written was posted back in 1990 or 2000, nobody would have cared.
This is another question I asked AI about why Henry George was not popular with White Southerners during his time; I think a lot of these sentiments still exist today in the 21st century among white southerners:
Henry George faced significant unpopularity among white Southerners due to his economic ideas and the socio-political context of his time.
Opposition to Land Taxation
George advocated for a land value tax, which threatened the economic interests of landowners in the South. Many white Southerners, who relied on land for wealth and status, viewed this proposal as a direct attack on their property rights.
Proslavery Sentiment
The prevailing proslavery arguments in the South emphasized land ownership as a cornerstone of Southern identity. George's ideas, which promoted economic equality and challenged the status quo, conflicted with these deeply held beliefs.
Political Climate
The political tensions following the Civil War and Reconstruction fostered a climate of resistance to any reform that could disrupt the existing social order. George's progressive views were often seen as radical and unwelcome in a region still grappling with the aftermath of the war.
Cultural Resistance
Many white Southerners were resistant to Northern ideas and reform movements, viewing them as intrusive. George's popularity in the North did not translate to acceptance in the South, where local sentiments often favored traditional economic structures.
Here is another answer from AI: What do you think of these two answers Lars?
Henry George's lack of popularity in the Southern United States can be attributed to several factors.
Economic Context
The South was primarily agrarian, with a social structure heavily reliant on land ownership and agriculture. George's ideas, particularly his advocacy for the single tax on land, threatened the interests of landowners who were resistant to any reforms that could disrupt their economic power.
Cultural Factors
The Southern states had a distinct cultural identity that often prioritized traditional values and social hierarchies. George's progressive ideas may have clashed with these values, making his message less appealing.
Political Climate
The political landscape in the South during George's time was dominated by conservative ideologies, which were often at odds with the reformist spirit of George's proposals. This environment made it difficult for his ideas to gain traction.
Racial Dynamics
The racial tensions and the legacy of slavery in the South also played a role. Many white landowners were more focused on maintaining their social and economic status than on addressing issues of inequality that George highlighted.
One part of the country that has historically resisted Georgism is the American South. I typed in a question in Yahoo search engine and AI gave this answer below:
Henry George's lack of popularity in the American South can be attributed to several key factors.
Economic Context
The South's economy was heavily reliant on agriculture and land ownership, which made George's land tax proposals less appealing to landowners who feared losing their wealth and power.
Cultural Resistance
The South had a distinct cultural identity that often resisted progressive reforms, viewing them as threats to traditional values and social hierarchies.
Political Landscape
George's ideas were often associated with radicalism, which alienated many Southern politicians and voters who preferred more conservative economic policies.
Limited Advocacy
There was a lack of strong advocacy for Georgism in the South, leading to minimal grassroots support and engagement with his ideas
Great research! It ought to put the doubters to rest, or at least inspire them to create actual refuting arguments - the best of which is probably simply that there are imperfect assessments so it's often difficult to determine the true value of land apart from the structures atop them. But, as the new HG avatar (https://henry.hgsss.org/chat/henry_george/henry-george-dinner-hgsss/visit) available from the Henry George School of Social Science in NYC points out, this is a failure of application, not of theory or, as Lars says, of results.
So common is the ignorance and in some cases, just plain obstinance, that I've been using these first 23 out of 233 examples of LVT for years, since CGUSA's late co-founder Steve Cord and I summarized them into a single document.
Here’s How Your State Could Reduce Taxes For Most Taxpayers And Stimulate Your Economy
While Maintaining Complete Revenue Neutrality
Your state can gain these 2 advantages by taxing land assessments more and what is produced (like buildings) less. Find out the various ways to do this. It would be completely revenue-neutral since an economically beneficial tax would be reducing economically harmful taxes. This is what would happen:
(1) Most taxpayers would be taxed less because their tax reduction will exceed what they would pay with the higher tax on land assessments. All nonlandowning renters would pay less because there’d be less building tax passed on to them and in the long run the land tax cannot be passed on to them.
(2) New construction & renovation, in particular, would be more profitable because they’d be taxed less. Perhaps tax-exempt these activities entirely (not their land) for the first 7 years. Here’s how to stimulate your state’s economy.
Nothing in economics seems as well substantiated. Eight (8) American winners of the Nobel Prize in economics have endorsed this tax (ask to see their endorsements) but they didn’t know how to implement it. You can do so if you contact us.
Here follow 23 summaries of empirical studies showing that economic development
has always followed the exact equivalent of this proposal. We can also send you 233 more
such summaries, free upon request (no obligation).
SUGGESTION: If 23 brief summaries of empirical studies seems like more than you have
time for, then just read studies #10 (peer-reviewed) and #23 (the best one), then read any
3 other studies; then read them all. Your comments would be appreciated.
(1) The contiguous cities of Allentown and Bethlehem in eastern Pennsylvania are very
comparable as to size and economy. In 1997, Allentown started taxing buildings less than land; Bethlehem did not.
Allentown’s new private construction & renovation thereupon grew by 32% in
dollar value in the three years after the shift to land value taxation as compared to the prior three years. That was 1.8 times more than Bethlehem’s increase in private construction & renovation during the same time period, even though Bethlehem (but not Allentown) received much federal grant money in the prior three years.
These figures come from a study of building-permits on file in the Allentown and
Bethlehem city halls by Benjamin Howells (science researcher and one-time Allentown
councilman), William Kells (science-oriented businessman) and Steven Cord (professor).
(2) Washington and nearby Monessen (both in southwestern Pennsylvania) are roughly
comparable as to size and economy. After Washington started shifting some of its tax off buildings onto land in 1985, its new private construction & renovation increased by 33% in dollar value in the three years after its two-rate adoption as compared to the prior three years. But during the same time period, nearby one-rate Monessen’s new private construction & renovation actually decreased by 26%.
(3) Connellsville, Pa. saw its new private construction & renovation jump 3.46 times in
the three years after it adopted a two-rate LVT property tax as compared to the prior three years.
This jump over-shadowed the modest 1.07 increase in new private construction & renovation of nearby one-rate Uniontown during the same time period. The two cities are quite comparable, although Uniontown is the county seat and is somewhat larger (both are economic-development plusses).
(4) Aliquippa, Pa., after the closing of its large steel mill, shifted some taxes off building onto land values in January 1988. Result: most residents paid less taxes and its new private construction & renovation jumped 97% in the three years after the two-rate switch as compared to the three-years-before.
Nearby Ambridge, comparable except that it is closer to the Pittsburgh International
Airport and enjoys brisk tourist traffic at its Old Economy Shaker Village (both economic plusses), experienced a 30% decline in private building-permits issued during the same period of time. Nearby Beaver Falls, also comparable except that it is less hilly than Aliquippa and is the county seat (again, economic plusses) experienced a 7.2% decline during the same time period.
In July 1993, the Aliquippa School District adopted a two-rate building-to-land property tax. Its new private construction & renovation thereupon spurted: for 1994-95, it was 2.3 times greater than for 1991-92.
(5) In 1989, Clairton, Pa., an industrial suburb of Pittsburgh, was under direct state fiscal control, officially labeled “financially distressed.” It took the advice of the prestigious Pennsylvania Economy League and adopted two-rate LVT. Building assessments were taxed at 2.105% and land assessments at 10% (instead of both at 3.7%).
During the three-year period after the switch, its taxable building permits were 8.5%
more than in the three years before (based on building-permit records in Clairton City Hall). This is to be compared to the 5.8% decline in all U.S. building permits issued during the same time.
(The Clairton School District recently made a major tax shift from buildings to land.
Results so far: as predicted).
(6) Oil City, Pa. adopted two-rate LVT starting in January 1989. Its private construction
& renovation increased 58.2% in the three following years as compared to the three-years before, while its nearby one-rate but otherwise comparable neighbor, Franklin, experienced a decline of 12.2% in the same time period.
(7) Pittsburgh, Pa. increased its land tax rate (but not its building tax rate) in 1979 and
1980; its building-permit issuance then became 3.57 times higher than in the previous years of 1974-1978 (source: Pennsylvania Economy League 1985 study, p. 16 chart) despite a steady decline in its steel industry. Compared to this 3.57 increase, U.S. office-building permits increased only 1.6 times (neither increase adjusted for inflation).
In 1984, Pittsburgh again increased its land tax but not its buildingtax. In the following two years, its new construction & renovation increased 6.2 times faster than U.S. construction & renovation (sources: City of Pittsburgh building-permit annual reports and table 1194, U.S. Census report C30), again despite the continuing decline in Pittsburgh’s steel industry.
Pittsburgh’s 1985 building permits increased 2.29 times over 1984; in 1986, they were 2.38 times greater than in 1984 (source: Pittsburgh Bldg. Inspection Dept.).
(8) Godfrey Dunkley, an economist and mechanical engineer, extracted statistics from the
official Municipal Yearbooks of the government of South Africa.
He compared 1959 building assessments to 1979 building assessments and found that the
one-rate towns (taxing land and buildings the same) increased their total assessments by 486%, but the two-rate towns (taxing land more than buildings) experienced a 561% increase; the 46 towns that taxed only land assessments experienced an 850% increase. Inflation affected all these figures equally, but note that the more a town taxed land values, the faster it grew.
Further substantiation from the same study: the eight towns that switched from one-rate
to two-rate increased their building assessments by 748%, and the 15 towns that switched to landtaxing-only increased their building assessments by 996%.
A later Dunkley study of a different time comparison yielded similar figures.
(9) Then there’s the study by professors Wallace Oates and Robert Schwab, both of the
University of Maryland. They reported that 15 large northeastern cities in the U.S. averaged a
decline of 15.5% in their annual value of building permits issued between 1960-1969 and 1980-1989, but two-rate LVT Pittsburgh recorded a 70.4% increase.
Columbus, Ohio was the only other city in the study that recorded an increase – a rather
modest 3.6%, but it had annexed some fast-growing suburbs in the interim.
! (10) In 1995, Professor Nicolaus Tideman of Virginia Tech University and his graduate student, Florenz Plassmann (now a professor at the University of Binghamton) completed a highly technical study of land value taxation in Pennsylvania entitled “A Markov Chain Monte Carlo Analysis of the Effect of Two-Rate Property Taxes on Construction.” It was published in the peer-reviewed Journal of Urban Economics (3/00, pp. 216-47) and concluded as follows:
“The results say that in all four categories of construction, an increase in the effective tax differential is associated with an increase in the average value per permit. In the case of residential housing, a 1% increase in the effective tax differential [on land] is associated with a 12% increase in the average value per unit… From the perspective of economic theory, it is
not at all surprising that when taxes are taken off of buildings, people build more valuable
buildings. But it is nice to see the numbers.”
This study completely confirmed all the Pennsylvania studies that had been done at the time (then 15, now 21).
(11) Harry Gunnison Brown, a prominent American economist, found that the suburbs
of Melbourne (Aus.) which were about five rail miles from Flinders Street in downtown
Melbourne and which taxed land values only, had 50% more dwellings constructed per available acre during 1928-1942 than similarly situated suburbs which taxed land and buildings at the same rate (source: Aus. govt. statistics).
Making a similar comparison for suburbs seven miles out, the land-value-tax suburbs did 2.33 times better; LVT suburbs 9.5 miles out did twice as well.
Suppose you own some vacant land and you read in the newspaper that the tax on land will be gradually increased in the ensuing years, wouldn’t you develop that land or sell to someone who will? So isn’t it a tax that creates development and jobs?
(12) A Pittsburgh City Council study (1976) concluded that a 1% earned income tax
would hit the city’s homeowners 3.59 times harder than an equivalent-in-revenue LVT increase.
If land were taxed, 73.6% of homeowners would pay less; all non-landowning tenants would pay less apartment rent in the long run.
(13) A Washington D.C. council-authorized study done in the 1970s concluded that if
only land was taxed (not building assessments), there would be these tax reductions: single
family homes 18.1%, two-family homes 20.9%, row houses 14%, walkup apartments 8.9%,
elevator apartments 22.5%.
(14) In 64 suburbs outside central Melbourne from 1955/56 to 1957/58, there were 42
new factories, of which half were in the 17 suburbs using only a land tax. Factory employment in these 17 LVT-only suburbs increased by 445 whereas in the other 47 suburbs, factory
employment decreased by 361 (source: Aus. govt. statistics).
(15) Twelve studies in rural Victoria found that the LVT-only towns averaged a
construction-and-renovation growth of 29% as compared to a 2.6% growth for their real-estate income- taxing neighbors in the same period of time (source: Aus. govt. statistics). The land tax was always adopted as a result of a poll of landowners only.
(16) If eastern Americans fall through the earth, they would emerge near Perth, Western
Australia (pop. 400,000). 17 nearby localities taxing land values only experienced a 34.36
increase in the total number of dwellings between 6/30/71 and 6/30/76. The nine nearby
localities taxing both land and buildings (presumably subject to the same economic-growth
influences) experienced a 0.02% decrease in the same time period (source: Aus. govt. statistics).
(17) In North Dakota, farmers paid no tax on farm buildings. A survey by a high official
of the North Dakota League of Cities revealed that this encouraged new farm construction (U.S. News & World Report, 4/3/78, p. 54).
(18) California Irrigation Districts – a 1909 California law required that new irrigation
networks were to be financed by a tax on the affected land values only; all privately owned
improvements were to be property-tax exempt. The theory was that irrigation networks increased land values, so the expense of those networks should be borne by the affected landowners.
The result was beneficial to the local farmers, particularly the smaller ones. The irrigated
valleys are among the most productive in the world. This is what the Modesto Chamber of
Commerce stated in 1914 (according to a 1978 Congressional Research Service study, “Property Taxation,” p. 48):
“As a result of the change many of the large ranches have been cut up and sold in small tracts.
The new owners are cultivating these farms intensively. The population of both country and city has greatly increased. The new system of taxation has brought great prosperity to our district.
Farmers are now encouraged to improve their property. Industry and thrift are not punished by an increase in taxes.”
in August 1955. The most extensive construction took place in its blighted problem
neighborhoods: before August 1955, those neighborhoods accounted for only 22% of the city’s building permits, but in the five ensuing years that percentage jumped first to 35% and then steadily moved up to 47% in 1960 (these percentages are of continually larger construction figures) – per Victoria Bldg. & Construction Journal.
(20) In New Zealand in the late 1950s, ten large land-taxing-only cities had slightly less
tax defaults than three large non-LVT cities, indicating that tax defaults are likely to decrease if buildings are not taxed so much (H. Bronson Cowan, 1961 report of the Canadian Federation of
Mayors and Municipalities, p. 31).
(21) A city-funded 1980 study in New Castle, Pa. revealed that seven vacant and two
poorly developed downtown sites would be an estimated $150,851 more profitable to build upon with a land-tax-only property tax. If county and school taxes were also to tax only land values, then the extra profit would approximate $243,750 a year.
(22) Random-sample studies in sixteen U.S. cities substantiated that most home-owners
would pay less with a two-rate building-to-land property-tax shift. We can tell you how to
exactly ascertain how each voter would fare with this gradually implemented tax on land values before going public with the idea; you can look before you leap.
! (23) The Best Study of Them All: Pittsburgh had been taxing land assessments
more than building assessments ever since 1915, but in 2001, it reverted to taxing both types of assessments at the same rate.
Why did the city do that? Briefly, the well-to-do voters in Pittsburgh were suddenly
aroused to fever pitch about their property tax as never before because a county re-assessment increased their land assessments by five-to-eight times overnight – an absolute political no-no (most county council members lost their next election).
These voters thought they would pay less if they got the land tax rate brought down to the
building tax rate, so they pressured the city council to reduce the land tax rate; they were
completely unaware of the many Pittsburgh studies supporting land value taxation, and of course the property tax of most homeowners in the city shot up up.
>>>>>>> After the two-rate rescission, Pittsburgh’s private new construction (now
more taxed) declined 19.57% (inflation-adjusted) in the three years after rescission as
compared to the three years before, while the value of construction nationwide increased
7.7% (also inflation-adjusted).
A computer examination of the entire Pittsburgh assessment roll found that the rescission
caused 54% of all homeowners to pay more property tax. As for non-landowning tenants (office tenants also), eventually they all paid more space-rent because more building tax was passed on to them but the land value tax never can be. Since big cities generally have many tenants (both residential & business), they would particularly benefit from a building-to-land property-tax switch.
This LVT rescission has actually been a blessing in disguise because it enables us to examine the effects of a land-to-building tax switch.
Much more evidence for LVT could be cited, but enough is sufficient. Isn’t it common sense to expect that if production is taxed, there’ll be less of it? And that if you tax land values more, land-sites will have to be productively used (which by itself will increase production). Don’t let preconceived notions trump logic and hard evidence. Base your opinions on incontrovertible evidence. You hurt people if you do nothing.
The only way to reduce taxes on production is to tax land instead. If you encounter doubters, be sure to ask them to present empirical evidence.
Much more evidence for LVT could be cited, but enough is sufficient. Isn’t it common sense to expect that if you tax production, you’ll have less of it? And that if you tax land values more, land-sites will have to be more efficiently used? Don’t let pre-conceived notions trump logic and
hard evidence. Base your opinions on incontrovertible evidence. You hurt people if you do
nothing.
The only way to reduce taxes on production is to tax land instead. If you encounter doubters, be sure to ask them to present empirical evidence. They can’t.
In brief: land tax good, building tax bad.
Who wants to place a bet that Sam's in the pocket of a landowner or two?
I don't think it's any great mystery why someone like Watling opposes an LVT: he wants to make money from land speculation. It hasn't yet dawned on him that allowing people to do that creates a classic tragedy of the commons: privatizing communally-generated price appreciation ultimately destroys housing affordability.
Lars, this is exactly the kind of rigorous defence the LVT cause needs. The Houston and Vancouver examples alone should embarrass anyone who leans on Watling's "never implemented anywhere" claim.
For readers interested in what a concrete, ground-up LVT implementation might look like in a developing country context, I've written a thirty-year architectural blueprint for Bangladesh — covering urban site-value taxation, a progressive rural marginal land tax, title insurance pre-conditions, and a village-by-village transfer of full fiscal authority once local capacity is certified. Many of the valuation challenges Lars addresses here (no cadastre, disputed records, thin transaction data) are ones I try to design around directly, including a proxy system using satellite night-light data and utility consumption to get the system running before mass appraisal infrastructure exists.
Would welcome any pushback from this community: https://mdnadimahmed888222.substack.com/p/the-land-tax-manifesto-for-bangladesh
Interesting article. I read the article that you are critiquing and also thought the author made claims that go far beyond what one can make from one historical example.