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some benefits of the georgist policy



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Dear Abhijeet,

the land value or the unimproved land value which is sought to be 
taxed, is actually the rent paid out to the landlord forever, 
capitalised to a present value taking the inflation rate into 
account. Now in the case you suggested that since all landowners are 
being taxed, they will raise the rents. That is true, but their 
tendency to raise the rents will be limited by the market. I do not 
mean other landwoners, i mean LAND itself. The tendency of the 
consumers of land will be to move out to a place with relatively 
cheaper land. The tendency of the rent will be to reduce to the state 
where the only rent paid to a builder will be the charge for his 
construction, i.e the 40 lakhs, i.e land will be almost valueless.
                             This proposal will, i agree be very 
heavy to those people who own large tracts of land now. It will 
discourage land speculation and allow for a more gradual and 
integrated development of cities instead of the incessant 
urbanisation we see today. It is also, a FAIR proposal of taxation, 
since it taxes something that cannot be hidden, is not made by your 
own effort - hence will not discourage production and does not 
penalise enterprise. I do not propose to add land tax as another to 
our list of burdens, but to replace our entire list of burdens with 
land tax. The regulation mechanism to monitor land tax is very snall 
when compared to the present mechanisms. With increasing complexity 
in the world with the advent of the internet, this is a fair and 
simple way to finance a minimal government. Also, another proposal in 
a related website was to give all citizens of a country a CITIZENS 
DIVIDEND when the rent is more than sufficient to finance the 
activities of the state. This will ensure that the benefits that the 
concentration of people are bestowing to the community are shared by 
all of the community.

c.prakash

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