PropertyProf Blog

Editor: Stephen Clowney
Univ. of Arkansas, Fayetteville

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Monday, October 28, 2013

Should the U.S. Adopt a Land Value Tax?

Slate picks up on idea that's been floating around in academic circles:

For a long time the economics profession has quietly noted that a land value tax is economically efficient but, having sussed out its theoretical benefits, left the subject for more intellectually rewarding pursuits. The result is a frustrating dearth of scholarship on the subject. But the few detailed papers that do exist suggest land taxes can replace most levies on labor and capital which—if true—suggests that the failure to switch to land value taxes is a much bigger deal in practice than most economists realize.

The most comprehensive work on this subject I could find is Steven Cord’s 1985 paper in the American Journal of Economics and Sociology, "How Much Revenue Would a Full Land Value Tax Yield." His answer was that it could replace much more than half all taxes on labor and capital in that year. That’s stunning . . . .

[A] big benefit of land taxes is the incentive to bring land into intense use which, by definition, would be valued on the margin. Land taxes might not work, but that's an argument nobody is making.

Faithful blog commentator, Wyn Achenbaum, has been making some of these points for years.  Here blog is here: http://lvtfan.typepad.com

Steve Clowney

http://lawprofessors.typepad.com/property/2013/10/should-the-us-adopt-a-land-value-tax.html

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Comments

Historian Steven Cord's claim that a land value tax could generate as much revenue as he claims is not plausible. The total annual value of land's contribution to GDP is only about five percent, and taxing it at nearly all of its value, even if one neglects the enormous administrative costs of doing so, would not come close to the approximately one-third of all GDP that taxes at all levels take.

Posted by: William A. Fischel | Nov 2, 2013 3:17:30 PM

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