Tuesday, June 25, 2019

What Henry George's Land Value Taxation Has to Do with Environmental Policy

     The following text is based on an e-mail which I wrote to Charles Johnson, an employee of the Sierra Club, in response to his question about what Henry George and Land Value Taxation have to do with environmental policy and the affairs of the Sierra Club.
     The original e-mail was roughly 1/3 the length of this text. I have expanded upon that e-mail where necessary to provide more details to the reader about the subjects discussed in that e-mail.


     Henry George's Land Value Taxation (abbreviated L.V.T., formerly known as the Single Tax) has much to do with environmental policy, since it holds land as the focal point of economic discussion.
     Land Value Taxation also holds land as the origin and source of all value; and, in that, all taxable value. Additionally, Land Value Taxation regards land as the foundation upon which all labor and capital are combined, and mixed together, and made into goods and services which have economic value.
     Abraham Lincoln understood that “labor is prior to, and independent of, capital”, but in addition to this, Thomas Paine and Henry George understood that land is prior to, and independent of, both labor and capital.
     Liberal economists (such as Thomas Piketty) and libertarian economists alike, consistently make the mistakes of lumping-in certain types of land as if they were capital (such as natural resources, and real estate), and lumping-in certain types of labor as if they were capital (such as entrepreneurship, “human capital”, and slave labor).
     But like other classical economists – and like the Marginalists, and the followers of Proudhon, Paine, etc. - Georgists are the rare economists who understand that land, labor, and capital are distinct factors of production, and that their importance comes in that order.
     Without land, there is no labor. Without labor, there is no capital; and there is also no capital without land upon which labor can be undertaken and supported. And labor can't be supported, unless the land it works, is capable of sustaining human life; capable of sustaining the people who work to produce that capital.

     Land Value Taxation focuses on land ownership, waste and destruction of land, and undeveloped properties.
     A Georgist taxation regime would see taxes levied (or, to use Georgists' own terminology, fees collected) on the basis of the cost it would take to return the land to its original stage, and/or on the basis of land usage by sheer area of untouched land.
     Georgism would involve taxation of the value of land, based on the cost to the community and its markets of refraining from developing the property; not based on the value of the property according to the current model (i.e., land value plus the value of the developments on top of the land).
     Land Value Taxation would involve no taxation of any structures built on top of the land, unless they are built or maintained at taxpayer expense. Nor would Land Value Taxation involve any taxation of the earning of income, nor of the buying and selling of goods, which occurs in and around those buildings.
     A Georgist taxation regime would also see fees levied against the destruction of land, and against the waste of lands which would otherwise be developed upon. Taxes would additionally be levied against undeveloped properties, especially if they are being maintained or protected at public expense.

     While the fact that undeveloped properties would be taxed at a high rate, does not seem to have much to do with the environment at first glance, it is worth noting that many undeveloped properties (and developments which have ceased being developed) were abandoned because of ecological hazards on-site and nearby.
     On and near those sites, these hazards prevent human settlement at adequate standards of health and safety. In a Georgist paradigm, the owners of hazardous, undeveloped, and blighted lands, would bear most of the burden of taxes, in addition to owners of vast expanses of land which are going to waste and could be used for development.

     Local governments should make it their priority to clean up wasted and toxic lands (and - if necessary - wasted, undeveloped, and toxic buildings which rest upon those lands), in order to improve the material quality of life for the poor who need land to survive (and also for plants and animals).
     We currently have a tax code which – whether it intends to or not – punishes productive activities, by taxing-away their product. These productive activities include earning income, trading, buying, selling, etc.. But do these behaviors deserve to be taxed? What did ordinary earners and consumers do to merit this punitive taxation; this taxing-away of all the gains they're trying to obtain through their work and their purchases?
     Instead of the government trying to tax the rich, and to tax people on the basis of how much income they earn or the value of the buildings they own, and then spend that money cleaning up the environment and retro-fitting buildings to be more green-friendly, local governments should tax environmental destruction, degradation, and waste directly. That's because those destructive actions are the most important things that we should be seeking to “punish” using the tax code.
     Not only that; acts of environmental devastation should be treated as crimes. Our criminal code should punish only criminal and fraudulent activities, and so should our tax code. Our tax code should not look to make criminals of people who only intend to earn money while doing no damage to valuable lands and waters in the process.

     We must stop taxing activities simply because they are happening, and we must stop taxing goods simply because they are there and because they are being traded, solely to justify spending (often on some completely unrelated item). “If it moves, tax it” is hardly a comprehensive-enough outline for how a taxation system ought to work.
     If taxation cannot help but have a punitive effect, then we must tax criminal behavior, not productive activities; and, if possible, we must tax behaviors and activities, not people. Think of it as “Love the sinner, hate the sin”, but coming out sounding more like “tax land, not man” when the concept is applied to taxation policy.
     A person's income and home should not be confiscated, nor should they be priced-out of their neighborhood by the tax code, just because they happen to live on top of the private property of some actual owner. Especially not if that owner has not paid his fees to occupy that property, and especially not if that owner exercises any sort of right to exclude against the same public whose taxpayer funds keep that owner's property investments afloat financially.
     These actual owners include landlords, property developers, local banks, and foreign banks that hold municipal bonds in our communities. And if you consider that the government is, ultimately, the true owner of all land (since it registers all property claims through the Recorder of Deeds' offices, and issues or denies permits to access and develop lands), the set of actual owners of land, which we would want our governments to tax, include those very same local governments themselves.
     All developments to property, and improvements upon property, should be untaxed, and should be 100% the property of the people who built them. They should not the property of the landlord nor the developer (to take away through demanding a share of the value of all products grown or hewn on their land), nor the property of the government (to take as much as it pleases through taxes, fees, licenses, and permits).

     Modern Georgist economists estimate that approximately $7 trillion a year is available to be taxed in uncollected land value, but the vast majority of it is not being taxed. That's mostly because Land Value Taxation would require governments to tax the actual owners of the land, rather than the tenants.
     Despite the uphill battle which will undoubtedly be involved in actualizing the struggle for Land Value Taxation, the sheer amount of tax revenue which will be yielded from taxing unimproved land, is serendipitously convenient for its proponents. That's because $7 trillion a year, happens to be (approximately) the same figure as the total spending of all levels of American government combined (federal, state, and local).
     What this means is that, not only could Land Value Taxation conceivably pay for our current level of government; it could potentially even come to replace all other taxes in the process of transitioning to a full L.V.T. system (and I believe that it should).

     There are several Georgist organizations and publications which are active throughout the country, such as the Council of Georgist Organizations, the Henry George School of Social Science in Chicago, the activist group Common Ground, and the Georgist blog progress.org.
     I believe that it would significantly benefit environmental organizations – including the Sierra Club – to promote Henry George's ideas, and adopt Land Value Taxation as their preferred taxation system, when it comes to making headway towards their wider political and policy goals. For those environmental organizations which are already working with other pro-environment interest groups, and for those which are involved in lobbying for changes in legislative policy, adopting George's ideas will be especially helpful.
     Imagine the political influence could be mustered, if all activist groups and interest groups interested in saving the planet from catastrophe and decay, supported the same common set of principles regarding the way we manage the environment; in addition to the changes to taxation, land management, housing, the welfare system, and other topics, which the adoption of George's ideas implies and will necessitate.
     All organizations which are interested in preventing and punishing ecological devastation – whether they are directly involved in these efforts or not – should support Land Value Taxation, and support its implementation in local governments across the country.

     I hope that environmentally conscious people come to see George's Land Value Taxation as not only a necessary and helpful compromise between socialism and capitalism, and a market-friendly solution to environmental problems, but also as a set of economic proposals which is perhaps more focused on land and the environment (and their preservation) than any other economic system ever proposed.

     I hope that Georgism will enjoy the resurgence of popularity that it so badly needs. I also hope that “Georgism” will cease being seen solely as set of economic proposals or tax proposals, but instead as a profoundly Earth-centered, land-centered economic system, which would more appropriately be termed “geonomics”, or “Geoism” (another alternate name of Georgism).




Written on June 25th, 2019

Published on June 26th, 2019
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