Historical Context
Georgism is named after the 19th-century American political economist Henry George. His seminal work, “Progress and Poverty” (1879), introduced the idea that individuals should own the value they produce themselves but that land and natural resources should belong equally to all members of society. George proposed that the most effective way to distribute the wealth generated by land was through a single tax on its unimproved value.
Types and Categories
- Classical Georgism: Stays true to Henry George’s original propositions.
- Modern Georgism: Incorporates more recent economic thoughts and addresses contemporary issues.
Key Events
- Publication of “Progress and Poverty”: Laid the foundation for Georgist philosophy.
- The Single Tax Movement: An early 20th-century movement advocating for land value taxation.
- Georgist Political Successes: Adoption of LVT in various municipalities and its influence on modern economic thought.
Detailed Explanation
Land Value Tax (LVT)
LVT is a levy on the unimproved value of land, excluding the value of buildings, personal property, and other improvements. The rationale is that land’s value is created by the community and thus should benefit the community.
Economic Models and Formulas
The value of land (\( V \)) in a given region can be determined using various appraisal methods. One simple model is:
Importance and Applicability
- Equity: Georgism promotes social equity by redistributing unearned income from land ownership.
- Efficiency: Unlike other taxes, LVT does not distort economic behavior.
- Sustainability: Encourages the optimal use of land.
Examples
- Pennsylvania, USA: Several cities have implemented split-rate property taxes, a variant of LVT.
- Singapore: Utilizes high land lease charges that reflect Georgist principles.
Considerations
- Political Feasibility: Landowners may resist LVT due to potential reductions in land speculation profits.
- Assessment Challenges: Accurate land valuation can be complex.
Related Terms
- Land Rent: Economic rent derived from land resources.
- Economic Rent: Surplus income above the opportunity cost.
- Property Tax: A broader tax that includes both land and buildings.
Comparisons
- Property Tax vs. LVT: Property tax includes both land and improvements, potentially penalizing property development, whereas LVT focuses on the land’s inherent value.
Interesting Facts
- Milton Friedman, a Nobel Prize-winning economist, praised LVT as the “least bad” tax.
Inspirational Stories
- Henry George’s Political Campaign: George ran for mayor of New York City in 1886, illustrating the appeal and support of his ideas.
Famous Quotes
“The earth belongs in usufruct to the living.” – Thomas Jefferson
Proverbs and Clichés
- “Land is the source of all wealth.”: Reflects the central tenet of Georgist philosophy.
Jargon and Slang
- LVT: Land Value Tax
- Geoism: Another term for Georgism
FAQs
What is Georgism? Georgism is an economic philosophy advocating for LVT as the primary source of public finance.
How does LVT work? LVT taxes the unimproved value of land, not buildings or personal property.
Why is LVT considered efficient? Because it doesn’t distort economic decision-making or burden productive activities.
References
- Henry George, Progress and Poverty (1879)
- Nicolaus Tideman, The Economics of Efficient Taxes
Final Summary
Georgism offers a compelling vision for equitable and efficient public finance through the implementation of Land Value Taxation. Rooted in the philosophy of Henry George, it aims to harness the unearned income from land to benefit society as a whole, promoting fairness and optimal land use. Through historical applications and modern adaptations, Georgism remains a relevant and thought-provoking economic paradigm.
graph TD;
A[Land Ownership] --> B[Land Value Tax]
B --> C[Public Revenue]
C --> D[Public Services]
D --> A
By understanding and potentially adopting Georgist principles, communities can strive for greater social equity and economic efficiency.
