Past Events

Karl FitzgeraldPast EventsLeave a Comment

Check out some of the events we have done in the past

Economics for Activist 08

The Recession We Could Have Avoided

Intentional Communities

Frank de Jong’s “Tools of Sustainability Tour”

2007 True Cost Economics report

2006 True Cost Economics Forum

Unlocking the Riches

Economics for Activists

Real Estate Bust of 2010

Land Supply & Housing Affordability Event report

Earth Rights Democracy Tour Report

Earth Rights Democracy Tour

Land Supply & Housing Affordability – more details

Karl FitzgeraldCommentaryLeave a Comment

The real issue forcing land prices up are the huge economic rents available to land speculators. With Jeff Kennett’s move away from Site Value rating to Capital Improved Value (CIV) rating, land speculators can purchase land, sit on it and wait for the property to grow in value. The constant attack on State Land Taxes ensures a continuing trend for them to be weakened, sending the signal to the marketplace that hoarding land is appropriate.

On a local level, the combination of these 2 factors has seen a growth of vacant land in inner urban areas in Melbourne. We believe the reduced supply of land from this speculative trend has applied greater pressure on land prices than Melbourne’s 2030 boundary. The huge upward trend in land prices happened well before the 2002 announcement of 2030.

The problem with land supply therefore comes from the private supply of land, dominated by speculators, rather than the public supply of land. What a good diversion plan by conservative forces!

A decade on from Jeff Kennett’s reforms and the results are mounting. The practical evidence abounds us. Cycle through Richmond (Melbourne) and rafts of vacant land can be seen. One 700m stretch of Elizabeth St sees 9 blocks of vacant land and another 4 vacancies in commercial property. However, the official REIV vacancy rates continuously quote at or about 2.1%. Efforts to find a qualitative definition on what constitutes a ‘vacancy’ have so far been fruitless.

On a Federal level, the upward trend in land prices was assisted by the 1996 Negative Gearing reforms. This was enhanced by the halving of Capital Gains (2000). A recent report by the UN Special Rapporteur on Adequate Housing, Miloon Kothari, said

“According to official figures, out of the 943,877 low-income persons receiving rent assistance, 35% (330,360) were spending more than 30% of their income on rent, and 9% (85,000 peoples) more than 50%.

With Australia’s negative gearing policy, perhaps the most generous of all developed countries (emphasis added), and the tax benefit from capital gains, a subsidy of $21 billion is given to the high end market. (Aug 06)”

As we can see, a combination of these policy changes have given speculators free reign around Australia. A decent holding charge on land is needed, as Julian Disney commented on Lateline (21st August, 2006).

Why should investors be encouraged to make ‘unearned’ speculative gains rather than profits from productive activity? A recent ANU paper by Atkinson & Leigh entitled The Distribution of Top Incomes in Australia revealed that just 20% of the income earnt by the top 0.01% of the population comes from productive activity.

Do we really want to continue this trend?

Share the rent with all and remove the unnecessary burdens of taxation, we say! Then local land supply will be used efficiently, reducing the need for urban sprawl through the encouragement of infill development. This has a cascading effect that soon reduces the cost of housing. It should be remembered that high housing prices are dominated by the cost of land. Land now represents about 70% of property sales prices, rather than the 30% it was in the 70’s when the tax system encouraged production over speculation.

Challenge Camp Photos

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A picture tells a thousand words!


Charlie interviews Margaret McDonald (ANGAIR)


A treehouse discovery on bushwalk

Students asking the tough questions


The Earth Share game – who wins?

The team prepares questions at the coal face


The Sunday sees Alcoa under the microscope from beyondzeroemissions.com


Inside the palace that is Opoeia Eco-Arts Retreat

Quotations

Karl FitzgeraldEndorsementsLeave a Comment

Margarita Arias, Costa Rica:

Only those who have fought for the right to protect their own bodies from abuse can truly understand the rape and plunder of our forests, rivers and soils.

Aristotle (384-322BC):

The whole of the land was in the hands of a few, and if the cultivators did not pay their rents, they became subject to bondage ..

Marcus Aurelius (121-180AD):

Poverty is the mother of crime.

Cesare Baccaria:

The history of mankind is an immense sea of errors in which few obscure truths may be found.

Ambrose Bierce “The Devil’s Dictionary”:

“LAND, n. A part of the earth’s surface, considered as property. The theory that land is property subject to private ownership and control is the foundation of modern society, and is eminently worthy of the superstructure. Carried to its logical conclusion, it means that some have the right to prevent others from living; for the right to own implies the right exclusively to occupy; and in fact laws of trespass are enacted wherever property in land is recognized. It follows that if the whole area of terra firma is owned by A, B and C, there will be no place for D, E, F and G to be born, or, born as trespassers, to exist.”

William Blackstone (1723-1780) “Commentaries”:

The earth, therefore, and all things therein, are the general property of all mankind, from the immediate gift of the creator.

…there is no foundation in nature or in natural law why a set of words upon parchment should convey the dominion of land.

Justice Louis Brandeis (US Supreme Court):

I find it very difficult to disagree with the principles of Henry George …. I believe in the taxation of land values only.

James Buchanan (1986):

The landowner who withdraws land from productive use to a purely private use should be required to pay higher, not lower, taxes.

Henry Thomas Buckle (1821-1862):

The landlords are perhaps the only large class whose interests are diametrically opposed to those of the people.

J Buma: “The Man from Georgia”

You’ll pay for the worst sin ever committed,
a sin that more than anything else
is dreadful in its consequences:
The natural source of life for all
you’ve treated as merchandise!
And trying to escape the outcome,
Of the world you’ve made a chaos.

Hon. Clyde Cameron, AO, Australian Labor Party Politician:

I am certain that the ALP will once again produce the kind of statesmen who in yesteryears had the intelligence and the integrity to be right (and support the economic philosophy of Henry George)…. that will one day make it possible for Christians to truly say, “Thy will be done on earth as it is in heaven”.

Thomas Carlyle (1795-1881):

Properly speaking, the land belongs to these two: the almighty God and to all his children of men. (Past and Present)

A God’s message never came to a thicker-skinned people..

Andrew Carnegie (1835-1919) US steel magnate:

The most comfortable, but also the the most unproductive, way for a capitalist to increase his fortune is to put all his monies in sites and await that point in time when a society, hungering for land, has to pay his price.

Rachel Carson “Silent Spring” 1962

The most alarming of all man’s assaults upon the environment is the contamination of air, earth, rivers and sea with dangerous and even lethal materials.

GK Chesterton (1874-1936):

A citizen can hardly distinguish between a tax and a fine, except that a fine is generally lighter.

Winston Churchill (1874-1965):

It is quite true that the land monopoly is not the only monopoly which exists, but it is by far the greatest of monopolies – it is a perpetual monopoly, and it is the mother of all other forms of monopoly.

Nothing is more amusing than to watch the efforts of our monopolist opponents to prove that other forms of property and increment are exactly the same, and are similar in all respects to the unearned increment in land.

I have made speeches by the yard on the subject of land value taxation, and you know what a supporter I am of that policy.

Richard Cobden (1804-1865):

You who shall liberate the land will do more for your country than we have done in the liberation of its trade.

Look not to the politicians; look to yourselves.

Confucius (551-479 BC):

Once, natural resources were fully used for the benefit of all, and not appropriated for selfish ends. This was the age of the Great Commonwealth of peace and prosperity.

Clarence Darrow, US lawyer:

Henry George was one of the real prophets of the world; one of the seers of the world….His was a wonderful mind; he saw a question from every side.

The “single tax” is so simple, so fundamental, and so easy to carry into effect that I have no doubt that it will be about the last land reform the world will ever get. People in this world are not often logical.

Patrick Edward Dove “The Theory of Human Progression”:

The land is for the nation, and not for the aristocracy.

Sir Ronald East, Australian engineer

We have gone wrong on the land question, and everything else has gone wrong automatically. I believe that there is no greater or more urgent task of leadership for the engineer than to help the community to a clear understanding of the simple economic laws that govern the distribution of benefits from human activities.

Albert Einstein (1879-1955):

Men like Henry George are rare unfortunately. One cannot imagine a more beautiful combination of intellectual keenness, artistic form, and fervent love of justice.

Ralph Waldo Emerson (1803-1882):

I find this vast network, which you call property, extended over the whole planet. I cannot occupy the bleakest crag of the White Hills or the Alleghany Range, but some man or corporation steps up to tell me it is his. Now, although I am very peaceable, and on my private account could well enough die, since it appears that there was some mistake in my creation, and that I have been missent to this earth, where all the seats were already taken, – yet I feel called upon in behalf of rational nature, which I represent, to declare to you my opinion, that if the Earth is yours, so also is it mine. All your aggregate existences are less to me a fact than is my own; as I am born to the earth, so the Earth was given to me, what I want of it, to till and to plant – I must tell you the truth practically; and take that which you call yours. It is God’s world and mine; yours as much as you want, mine as much as I want.
Lecture delivered on 7 December 1841 in Boston, cited in “Enclaves of Economic Rent”, Fiske Warren, 1929

Whilst another man has no land, my title to mine, and your title to yours, is at once vitiated.

Hon. Sir Allen Fairhall (Australian Liberal Party Politician):

I have no doubt that present political differences would be vastly reduced and the progress of the nation towards social harmony with prosperity in equity would be hastened if the basic truths of the Georgist philosophy could be understood, accepted and applied.

Henry Ford (1863-1947):

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.

Benjamin Franklin (1706-1790):

Our legislators are all landholders, and they are not yet persuaded that all taxes are finally paid by the land… therefore, we have been forced into the mode of indirect taxes.

All the property that is necessary to a man for the conservation of the individual and the propagation of the species, is his natural right which none may justly deprive him of; but all property superfluous to such purposes is the property of the public.

Milton Friedman (1976):

I share your view that taxes would best be placed on the land, and not on improvements.

Professor Mason Gaffney, New Palgrave Dictionary of Economic Thought 1987:

George’s blend of radicalism and conservatism can puzzle one, until it is seen as a reconciliation of the two. The system is internally consistent, but defies conventional stereotypes.

Henry George (1839-1897):

For justice to be done between men it is not necessary for the State to take the land; it is only necessary to take its rent.

Our primary social adjustment is a denial of justice. In allowing one man to own the land on which and from which other men must live, we have made them his bondsmen in a degree which increases as material progress goes on.

A tax on land values is of all taxes that which best fulfils every requirement of a perfect tax. As land cannot be hidden or carried off, a tax on land values can be assessed with more certainty and can be collected with greater ease and less expense than any other tax, while it does not in the slightest degree check production or lessen its incentive. It is, in fact, a tax only in form, being in nature a rent – a taking for the use of the community of a value that arises not from individual exertion but from the growth of the community. For it is not anything that the individual owner or user does that gives value to land. The value that he creates is a value that attaches to improvements. This, being the the result of individual exertion, properly belongs to the individual, and cannot be taxed without lessening the incentive to production. But the value that attaches to land itself is a value arising from the growth of the community and increasing with social growth. It therefore properly belongs to the community, and can be taken to the last penny without in the slightest degree lessening the incentive to production. (- Introduction to Protection or Free Trade)

Samuel Gompers (1850-1924) first president American Federation of Labor:

I believe in Land Value Taxation. I count it a great privilege to have been a friend of Henry George.

Pope Gregory the Great (540-604 AD) in “Cura Pastoralis”:

Those who make private property of the gift of God pretend in vain to be innocent. For, in thus retaining the subsistence of the poor, they are the murderers of those who die every day for the want of it.

Walter Burley Griffin, designer of Canberra, and member of Chicago Single Tax Club “Progress” 1//9/1913:

Behind every radical movement you will find Single Taxers. Woodrow Wilson is surrounded by them.

Elbert Hubbard:

Of all modern prophets and reformers, Henry George is the one whose arguments are absolutely unanswerable and whose forecast is sure.

Aldous Huxley (1894-1963) in foreword to “Brave New World”:

If I were to re-write this book, I would offer a third alternative – the possibility of sanity – Economics would be decentralist and Henry Georgian.

Andrew Jackson veto of the Bank Bill 10 July 1832

Every man is equally entitled to protection by law; but when the laws undertake to add…artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society–the farmers, mechanics, and laborers–who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their government.

Thomas Jefferson (1743-1826):

Whenever there are in any country uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate their natural right.

Samuel Johnson (1709-1784):

Some men weave their sophistry till their own reason is entangled.

Helen Keller (1880-1968):

Who reads will find in Henry George’s philosophy a rare beauty and power of inspiration, and a splendid faith in the essential nobility of human nature.

John F Kennedy (1917-1963):

If a free society cannot help the many who are poor, it cannot save the few who are rich.

Martin Luther King JR Strength to Love, 1963:

Philanthropy is commendable, but it must not cause the philanthropist to overlook the circumstances of economic injustice which make philanthropy necessary.

A Testament of Hope: The Essential Speeches and Writings of Martin Luther King Jr:

…. Communism forgets that life is individual. Capitalism forgets that life is social, and the kingdom of brotherhood is found neither in the thesis of communism nor the antithesis of capitalism but in a higher synthesis. It is found in a higher synthesis that combines the truths of both. p.250

This revolution of values must go beyond traditional capitalism and communism. We must honestly admit that capitalism has often left a gulf between superfluous wealth and abject poverty, has created conditions permitting necessities to be taken from the many to give luxuries to the few, and has encouraged small hearted men to become cold and conscienceless so that, like Dives before Lazarus, they are unmoved by suffering, poverty-stricken humanity. The profit motive, when it is the sole basis of an economic system, encourages a cutthroat competition and selfish ambition that inspire men to be more I-centered than thou-centered. Equally, communism reduces men to a cog in the wheel of the state. The communist may object, saying that in Marxian theory the state is an ‘interim reality’ that will ‘wither away’ when the classless society emerges. True–in theory; but it is also true that, while the state lasts, it is an end in itself. Man is a means to that end. He has no inalienable rights. His only rights are derived from, and conferred by, the state. Under such a system the fountain of freedom runs dry. Restricted are man’s liberties of press and assembly, his freedom to vote and his freedom to listen and to read.

Truth is found neither in traditional capitalism nor in classical communism. Each represents a partial truth. Capitalism fails to see the truth in collectivism. Communism fails to see the truth in individualism. Capitalism fails to realize that life is social. Communism fails to realize that life is personal. The good and just society is neither the thesis of capitalism nor the antithesis of communism, but a socially conscious democracy which reconciles the truths of individualism and collectivism.

….. The problems we now face must take us beyond slogans for their solution. In the final analysis, the right-wing slogans on ‘government control’ and ‘creeping socialism’ are as meaningless and adolescent as the Chinese Red Guard slogans against ‘bourgeois revisionism.’ An intelligent approach to the problems of poverty and racism will cause us to see the words of the Psalmist–‘The earth is the Lord’s and the fullness thereof’–are still a judgment upon our use and abuse of the wealth and resources with which we
have been endowed. pp.629-630

Nikolai Lenin:

“Henry George is the capitalist’s last ditch.”

Abraham Lincoln (1809-1865):

The land, the earth that God gave to man for his home, his sustenance and support, should never be the possession of any man, corporation, society or unfriendly government, any more than the air or water – if as much. An individual or enterprise requiring land should hold no more in their own right than is needed for their home and sustenance, and never more than they have in actual use in the prudent management of their legitimate business, and this much should not be permitted when it creates an exclusive monopoly. All that is not so used should be held for the free use of every family to make homesteads, and to hold them so long as they are occupied. A reform like this will be worked out some time in the future.

An individual or company should never hold more land than they have in actual use.

John C Lincoln:

The Lincoln Foundation was Founded to get people to see that ground rent belongs to the community and that it will be possible to abolish the taxation of wealth if it was collected by the community for community expenses.
“Ground Rent not Taxes: The Natural Source of Revenue for the Government. An Economic Study by John C Lincoln” Exposition Press, New York 1957

[Trustees of The Lincoln Foundation need to re-visit the great industrialist’s express wishes as expressed in the unalterable purpose clause of the corporation’s Articles, instead of financially supporting individuals and bodies often at odds with that purpose clause. Indeed, those trustees who no longer support Lincoln’s principal aim have absolutely no place on the Lincoln Foundation.]

John Locke (1632-1704) “Some Considerations of the Lowering of Interest”:

It is in vain in a country whose great fund is land to hope to lay the public charge on anything else; there at last it will terminate. The merchant (do what you can) will not bear it, the laborer cannot, and therefore the landholder must: and whether he were best to do it by laying it directly where it will at last settle, or by letting it come to him by the sinking of his rents, which when they are fallen, everyone knows they are not easily raised again, let him consider.

Whenever, in any country, the proprietor ceases to be the improver, political economy has nothing to say in defence of landed property. When the “sacredness” of property is talked of, it should be remembered that any such sacredness does not belong in the same degree to landed property.

When land is not intended to be cultivated, no good reason can in general be given for its private property at all. “Principles of Political Economy”

The earth belongs in usufruct to the living and is given as a common stock for men to live and labor on.

… all the learned of his [Jesus’] country, entrenched in its power and riches were opposed to him, lest his labors should undermine their advantages.

David Lloyd-George (1863-1945):

Take the question of over-crowding; the land question in the towns bears on that. It is all very well to produce “Housing of Working Class” bills; they will never be effective until you tackle the taxation of land values.

Macaulay (1800-1859):

Had the Law of Gravitation affected vested interests, it would have remained undiscovered.

Karl Marx (1818-1883):

Monopoly of land is the basis of monopoly in capital.

Rev Dr McGlynn (1837-1900):

I believe I am not guilty of any profanation of the Sacred Scriptures when I say, in all reverence: There was a man sent by God and his name was Henry George.

Mahatma Gandhi (1869-1948):

There is enough for everybody’s need, but not enough for their greed.

James Michener (Gen McArthur’s economic aide):

No nation can avoid land reform. All it can do is to determine the course it will take: bloody revolution or taxation.

John Stuart Mill (1806-1873):

Landlords grow richer in their sleep without working, risking or economizing. The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title.

Harvey Mitchell, Castlemaine “The Age” Melbourne 11/4/1990:

Economists are people who fail to comprehend at 40 things they would have no trouble in understanding at age four.

Moses (circa 1400 BC) Leviticus XXV:

The land shall not be sold forever; for the land is Mine; for ye are strangers and sojourners with Me.

Dr JFN Murray, Australian real estate valuer:

Valuation is the most important subject in the social sciences, but it has always been outside the scope of economics as taught in the universities…. It is maintained that a re-integration of the theory of valuation with the main body of economic theory would lead to an advancement of learning and to a soundly-based national economy.

Kathleen Norris:

Anyone who really fears a revolution in America ought to re-read Henry George’s “Progress and Poverty”, one of the great social documents of our time….I have never known his premises to be shaken in the least.

William Ogilvie: Preface to his “Birthright in Land” (1782)

Augustus M Kelley edition (1970), p.xix:

When a child is born, we recognise that it has a natural right to its mother’s milk, and no one can deny that it has the same right to mother-earth. It is really its mother-earth, plus the dew and sunshine from heaven and a little labour, that supplies the milk and everything else required for its subsistence. The monster that would deprive the babe of its mother’s milk, or would monopolise the breasts of several mothers, to the exclusion of several children, is not more deserving of being destroyed than the monster who seizes absolute possession of more than his share of the common mother of mankind, to the exclusion of his fellow-creatures.

Thomas Paine (1737-1809):

Men did not make the earth…. It is the value of the improvements only, and not the earth itself, that is individual property…. Every proprietor owes to the community a ground rent for the land which he holds.

William Penn (1644-1718) “Fruits of Solitude”:

If all men were were so far tenants to the public that the superfluities of gain and expense were applied to the exigencies thereof, it would put an end to taxes, leave not a beggar, and make the greatest bank for national trade in Europe.

Philadelphia’s first tax law 30/1/1693:

“Put to the vote: as many are of the opinion that a public tax upon the land ought to be raised to defray the public charge, say ‘yea’. – Carried in the affirmative, none dissenting.”

William Pitt (1759-1806):

My Lords and Gentlemen: A direct tax of 7% would be a dangerous experiment and one likely to incite revolt. But there is a method whereby you can tax the last rag from the back and the last bite from the mouth without causing a murmur against high taxes, and that is to tax a large number of articles of daily use so indirectly that the people will pay without knowing it. Their grumblings will then be of hard times, but they will not know that the hard times are caused by taxation.

Plato (circa 427-347BC):

When there is an income tax, the just man will pay more and the unjust man less on the same amount of income.

Theodore Roosevelt (1858-1919):

The burden of taxation should be so shifted as to put the weight upon the unearned rise in value of land itself, rather than upon the improvements.

Jean Jacques Rousseau (1712-1778) “Social Contract”:

The first man who, having enclosed a piece of ground, bethought himself of saying, “This is mine”, and found people simple enough to believe him, was the real founder of civil society. From how many crimes, wars and murders, from how many horrors and misfortunes, might not anyone have saved mankind by pulling up the stakes, filling in the ditch, and crying to his fellows, “Beware of listening to this imposter; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody.”

There is no subjugation so potent as that which leaves the appearance of freedom.

Lord Bertrand Russell (1872-1970):

It is necessary that there should be rent, but that it should be paid to the state or to some body which performs public services.

Paul Samuelson (1970):

Pure land rent is in the nature of a “surplus” which can be taxed heavily without distorting production incentives or efficiency. A land value tax can be called “the useful tax on measured land surplus”.

George Bernard Shaw (1856-1950):

The greatest of evils and the worst of evils is poverty.

I went quite casually one night into a hall in London, and I heard a man deliver a speech which changed the whole current of my life. That man was an American, Henry George.

We have no more right to consume happiness without producing it than to consume wealth without producing it.

Herbert Simon (1978):

Assuming that a tax increase is necessary, it is clearly preferable to impose the additional cost on land by increasing the land tax, rather than to increase the wage tax ­ the two alternatives open to the City (of Pittsburgh). It is the use and occupancy of property that creates the need for municipal services that appear as the largest item in the budget ­ fire and police protection, waste removal, and public works. The average increase in tax bills of the city residents will be about twice as great with wage tax increase than with a land tax increase.

Adam Smith (1723-1790):

Ground rents are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. Ground rents are, therefore, perhaps a species of revenue which can best bear to have a peculiar tax imposed upon them.

As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed.

There is no art which one government sooner learns of another than that of draining money from the pockets of the people.

Adam Smith – Canons of Taxation:

Taxation should
(i) bear as lightly as possible on industry
(ii) bear equally on all
(iii) be easy to assess and collect
(iv) be paid by the person on whom it is levied
(v) be certain in amount

1st Viscount Philip Snowden (1864-1937) UK Chancellor of the Exchequer, in connection with the 1930s depression:

There never was a time when the need was greater than it is today for the application of the philosophy and principles of Henry George to the economic and political conditions which are scourging the world … Permanent peace can only be established when men and nations have realised that natural resources should be a common heritage.

Herbert Spencer (1820-1903) “Social Statics” Ch 9:

Equity does not permit property in land… The world is God’s bequest to mankind. All men are joint heirs to it….Our civilization is only partial….co-heirship of all men to the soil is consistent with the highest civilisation …and …equity sternly commands it to be done.

Baruch Spinoza (1632-1677) “Tractus Politicus”:

The fields and the whole soil….should be public property, that is the property of him who holds the right of the commonwealth: and let him let them at a yearly rent to the citizens, whether townsmen or countrymen, and with this exception let them all be free or exempt from every kind of taxation in time of peace.

Peter Stuyvesant (1592-1672) Dutch Governor of New Amsterdam (New York) regarding self-assessment of the value of land for the tax he imposed upon land speculation (15/1/1658):

It is left to the device of the Burgomasters either to take the lot at the owner’s price for account of the City and sell it at this price to anyone who desires to build conformably to the ordinance, or else to leave it to the owner until it is built upon by him or others, when this charge, for good reason laid upon unimproved land, shall be taken off.

Dr Sun Yat-Sen (1866-1925):

The land tax as the only means of supporting the government is an infinitely just, reasonable, and equitably-distributed tax, and on it we will found our new system.

Tacitus:

When the State is most corrupt, then are laws most multiplied.

Henry David Thoreau (1817-1862) Walden:

I went to the woods because I wished to live deliberately, to front only the essential facts of life, and see if I could not learn what it had to teach, and not, when I came to die, discover that I had not lived.

Civil Disobedience: There are orators, politicians, and eloquent men by the thousand; but the speaker has not yet opened his mouth to speak who is capable of settling the much-vexed questions of the day…. They have no genius or talent for comparatively humble questions of taxation and finance, commerce and manufactures and agriculture.

There are a thousand hacking at the branches of evil, to one who is striking at the root.

James Tobin (1981):

I think in principle it’s a good idea to tax unimproved land, and particularly capital gains (windfalls) on it. Theory says we should try to tax items with zero or low elasticity, and those include sites.

Count Leo Tolstoy (1828-1910):

People do not argue with the teachings of George, they simply do not know it…. He who becomes acquainted with it cannot but agree.

Of all indispensable alterations of the forms of social life there is in the life of the world one which is most ripe…. The method of solving the land problem has been elaborated by Henry George to a degree of perfection that under the existing state organisation and compulsory taxation, it is impossible to invent any better, more just, practical and peaceful solution.

Quite difficult matters can be explained even to a slow-witted man, if only he has not already adopted a wrong opinion about them; but the simplest things cannot be made clear even to a very intelligent man if he is firmly persuaded that he already knows, and knows indubitably, the truth of the matter under consideration.

The only thing now that would pacify the people now is the introduction of the Land Value Taxation system of Henry George. The land is common to all; all have the same right to it.

Solving the land question means the solving of all social questions…. Possession of land by people who do not use it is immoral – just like the possession of slaves.

The earth cannot be anyone’s property.

I sit on a man’s back choking him and making him carry me and assure myself and others that I am sorry for him and wish to lighten his load by all possible means – except by getting off his back.

Archbishop Desmond Tutu:

When the missionaries first came, they had the bible and we had the land. Now we have the bible and they have the land.

Daniel Webster 1782-1852:

Labor in this country is independent and proud. It has not to ask the patronage of capital – but patronage solicits the aid of labor.

Brand Whitlock:

Henry George’s proposition, the single tax, will wait, I fancy, for years, since it is so fundamental, and mankind never attacks fundamental problems until it has exhausted all the superficial ones.

Woodrow Wilson (1856-1924):

All the country needs is new and sincere thought, coherently, distinctly and boldly uttered by men who are sure of their ground. The power of men like Henry George seems to me to mean that.



Given the current state of global ecologies and economies, is it not time to apply the solution advocated by these people, instead of accepting political prevarication?

World economies and the global environment currently cry out more than ever for the need to change discredited revenue systems.

Join us to help bring about this essential reform.

Geonomics: Recovery of Site-Rents for Urban Density

Karl FitzgeraldFeaturesLeave a Comment


Jeffery J. Smith, President, Forum on Geonomics
[A paper submitted to the BSA of the AIA, 2003]

Around the world, a few dozen cities collect ground rents – some of the money that people spend or are willing to spend on a location – rather than tax buildings and other economic goods. Besides raising public revenue more efficiently, these places also motivate efficient use of urban land. No longer taxed for improving their property, while prodded by a rent levy to make improvements, owners who had been speculating or procrastinating get busy and put their once under-utilized land to better use. Overall, better land use raises density in particular and livability in general – goals that other jurisdictions still long for.

Where jurisdictions did shift the property tax landward, owners built structures of higher quality, letting design express needs other than frugality. Their “re-filling” of the city shrinks distances, enabling more pedestrian transit while providing more riders for mass transit. Less driving of private cars cuts congestion, noise, and smog, improving everyone’s health.

Erecting new buildings includes new homes, lowering their cost. The “land dues” themselves lower the price of land, together improving housing affordability. Lower-priced land draws in more developers and buyers, shrinking the political leverage of any one player. Yet soon, making the city more livable draws in more people, driving up site values. By tapping these rising values, a locality can operate in the black and can afford to rebate a rent dividend to residents from the surplus. Yielding these benefits, recovering rents while not taxing goods is a tool that makes the job of planning easier.

Organic Density

Around the world, a few dozen cities and larger jurisdictions utilize an aspect of “geonomics”: they collect ground rents – some of the money that people spend or are willing to spend on a location – rather than tax buildings or other economic goods, a reform advocated by Frank Lloyd Wright. Besides raising public revenue more efficiently, these places also motivate efficient use of urban land. No longer taxed for improving their property, while prodded by a rent levy to make improvements, owners who had been speculating or procrastinating get busy and put their once under-utilized land to better use. Overall, better land use raises density in particular and livability in general – goals that other jurisdictions still long for. Thus recovering rents while not taxing goods can be a tool that makes attaining these goals by planning easier.

To recover ground rent, a public authority could levy a site-value tax, shift its property tax off buildings, onto locations, charge a land-use fee, or raise the deed fee to full-market value of the location then annualize it. By whatever method, government could raise enough revenue to forgo taxing buildings (and possibly sales and incomes). Both parts of geonomic revenue reform – (a) having owners pay their community a site rent while (b) exempting their improvements from taxation – spin off benefits, raising the quality of design, the livability of the city, and the health of the environment.

Design Quality by the Pacific Ocean

Where jurisdictions did shift the property tax landward, owners built structures of higher quality, letting design express needs other than frugality. In Hawaii, Honolulu raised its rate on land, not buildings, to spur construction along Waikiki Beach. Thanks to the tax shift, developers erected new hotels about 25% more valuable than they otherwise would have. (1) The resultant rise in land values proved too tempting to land speculators who persuaded Honolulu to abandon the land tax after it had done its work. Today, in a state where land is scarce (it’s an island, after all) and pricey, only the County of Hawaii still levies a land tax.

For decades in Australia and New Zealand, more towns taxed land alone, not buildings at all, and left an impressive legacy. While Sydney still taxes only land (albeit lowly), Canberra, the capital, which once existed entirely on public land, still leases commercial sites to building owners but is now selling residential ones to homeowners. Until the late 1990s around Melbourne in the state of Victoria, about half the towns taxed land, half taxed both land and buildings. In the former, owners built structures that totaled 50% more built value per acre than structures in towns wielding the conventional property tax. (2) During the last recession (mid ’70s), while the state overall suffered a bankruptcy rate of 20% among manufacturers, in the land-taxing towns, the number of factories actually increased by 10%. (3) Resiliency to recessions keeps the planning profession resilient, too.

Re-fill in Pennsylvania

While the density of towns taxing land has not been compared to that of towns taxing buildings, too, their building starts have been. Places that issue more building permits indicate more in-fill than their neighbors, and in-fill raises density. In Pennsylvania, about 20 jurisdictions levy a rate on land higher than their rate on improvements, and all issue more building permits than their neighbors. Their greater construction generates more economic activity, even in the midst of Appalachia; compared to their neighbors, the output of towns recovering more site rent is 16% greater each year (4). Better economic health grants planners more resources for renovating cities.

The biggest of the geonomic cities was Pittsburgh. For over 20 years, Pittsburgh levied a rate of 6:1 (land to improvement), which helped keep land prices low and enabled new construction. The city renewed its urban core without massive federal subsidy but by attracting private investment, and converted its most valuable location – where the three rivers meet – into a park without a grassroots effort to overcome developer resistance. Outside downtown, the new construction augmented the housing stock. Among major metro areas, Pittsburgh enjoyed the most affordable housing, which in turn yielded stable neighborhoods and low crime rates, also the best in the nation. Citing these factors, Rand-McNally named the Steel City “America’s Most Livable” for two years, 1985 and 1986. In 2000, the real estate lobby persuaded the city to revert to the conventional property tax. While construction starts have fallen across the state by about a percent, in Pittsburgh they’ve fallen almost 40%. (5)

Harrisburg still levies a higher rate on land. After its shift of the property tax, the state capital went from being the second most distressed city in America (199th out of 200) to being a geonomic success story; it attracted millions of new investment dollars, converted abandoned buildings from being the targets of arsonists to being renovated homes, and generated thousands of new jobs filled by residents. The mayor, Steve Reed, gives credit to the city recovering rent; Harrisburg has since been named an “All-American City” twice. (6) Allentown, whose plight crooner Billy Joel made famous in a pop hit song, in the mid 90s voted in a higher rate on land twice (after the first vote, the real estate lobby tried to rescind it) and also generated much new construction. For making itself more attractive to young entrepreneurs, Allentown earned a citation in the book, The Rise of the Creative Class, by Dr. Richard Florida.

Transit in Hong Kong, Environment everywhere

The “re-filling” (in-fill and redevelopment) of a city places buildings side-by-side, cutting heat loss and energy bills, mitigating one set of environmental problems. Meeting the demand for new shelter (while liberalizing zoning constraints if need be) lets neighborhoods integrate all urban functions – business and pleasure, shopping and learning – shrinking distances, enabling more pedestrian transit while providing more riders for mass transit, mitigating another assault on the environment; less driving of private cars cuts congestion, noise, smog, and oily runoff, improving everyone’s health. To date, none of these factors – nor the number of cars entering the town daily, cars per residents, parking spaces per resident, etc – for towns taxing land have been compared to those of towns taxing buildings, too.

One of the few mass transit systems to operate without a penny of subsidy is Hong Kong’s. Once the best example of geonomics, Hong Kong, existing on public land, leases plots to building owners and collects an immense amount of rent, enough to keep taxes on merchandise and incomes quite low. Before it reverted to mainland communist control, Fortune Magazine routinely named Hong Kong “the world’s best city for business” while Libertarians named it the freest jurisdiction on the planet (both neglected to mention the high site-rent payments). Altho’ a very populous city, Hong Kong is so dense that it raises most of its own food in its suburbs.

As cities densify, they leave less demand unmet to become sprawling development. A computer model of Boston showed the city’s periphery rolling back toward the center following a shift of the property tax from buildings to land. (7) Another way to show densification from shifting the property tax landward may be to compare building starts or farmland conversion around cities taxing land vs around cities taxing both site and improvement.

Lower Entry Fees

While developers may long to build on central urban land – an action that would densify the city – the cost of those prime locations is perhaps the biggest obstacle to their building. A sure way to lower land price is to raise “land dues”; as the community collects more site rent, that leaves less for the owner to try to capitalize into price. Lower-priced land in high-demand cities could quickly sprout new construction. Johannesburg, South Africa, when it taxed land more than buildings, had the fastest site-recycling rate in the world; almost every site was put to a more intensive use about every 22 years. (8)

Making urban land more affordable lowers the “entry fee”, drawing in more developers and buyers. With more players on the stage, any major owner of local real estate or a small cadre of investors (often outsiders not even living in the area) who had enjoyed a special relationship with local government would face more competition in both the political and economic arenas. If that major player or cadre had been opposed to density or car-free, carefree pedestrian malls, or pocket parks on corners, or day-lighting streams, having those parties wield less clout permits more progress. Since such urban amenities benefit most residents, democratizing urban land use decisions – by empowering a greater number of smaller builders, re-modelers, and owners – may help improve the urban environment.

Erecting new buildings includes new homes; adding to the housing stock lowers the cost of housing. Meanwhile, raising the tax rate on land lowers the price of land. Together, less costly land and less costly buildings greatly improve housing affordability. When New York City used this tax reform in the 1920s, it more than tripled new construction while in other major cities it barely doubled. Not only did the increase in supply make housing more affordable, but also the new construction provided workers with more income for affording it (as working in Ford’s factory enabled a worker to buy a Ford). The expiration of that property tax reform was why the city economy imploded even before the impact of the stock market crash could be felt. (9)

Rent Dividends

Since density correlates closely with land values, raising density – whether by planning or by shifting the property tax – raises urban site values, making urban living less affordable for many residents. So that they can stay residents in their hometowns, it’d help to augment their incomes. Shifting taxes off wages and businesses, onto locations, increases workers’ income.

Plus, with rent-recovery in place, localities could afford to rebate a rent dividend to residents, the key feature of geonomics. As civic improvements draw in more people, driving up site values, city governments could collect these site rental values, including from the steeply upwardly inclined downtowns. Enjoying a surplus, localities could pay residents dividends, similar to how Alaska pays residents a dividend from oil rents.

Whenever land values rise, so would one’s rent dividend, so residents would be secure in their homes. This positive feedback loop of rent-recovery, re-fill, higher density, and magnified land values, makes cities, their economies, and their polities sustainable indefinitely. Even after population growth levels off, efficient land use coupled with untaxed income will keep up site values, land dues, and rent dividends.

Geonomics spreads

With rent recovery in lieu of taxes on efforts, the urban economy automatically generates higher quality design, affordable housing, stable and safe neighborhoods, density, compact settlement, riders for mass transit, and low entry costs for would-be builders. To capture these benefits and others, more jurisdictions turn to the property tax shift. Philadelphia debates the shift while both Mexicali and Estonia recently made the shift (10). Winning these benefits also make the job of planners easier.

References:

1) Pollack, Richard & Donald C. Shoup. Land Economics 53, no 1 (1977), p 67-77.
2) Lusht, Kenneth M. Site Value Tax & Residential Development. Cambridge, MA, USA: Lincoln Institute Monograph Series, 1992.
3) Bennett, John. The Effect of Rating; a Compendium. Melbourne, Australia: SRD Group, 1996.
4) Tideman, Nicolaus; & Plassmann, Florenz, in The Losses of Nations. Harrison, Fred, ed. London: Othila Press, 1998.
5) Cord, Steven, ed. Incentive Taxation, 2002 May. Philadelphia, PA, USA.
6) Andelson, Robert V., ed. Land-Value Taxation Around the World, 3rd Edition. New York: Robert Schalkenbach Fdn, 2000.
7) DiMasi, Joseph. The National Tax Journal, 1987 Dec.
8) Dunkley, Godfrey. That All May Live. Roosevelt Park, RSA: A. Whyte, 1990.
9) Post, Charles Johnson. “How New York Solved Its Housing Crisis”, 1931?, Schalkenbach Fdn.
10) The Economist, 1998 Feb 28, “Estonia adopts Henry George’s tax proposal”.