Tax Leverage for Efficient Land Exploitation: A Differential Levy on Site Values as an Aid to Land Use Adjustment*
| Author | Donald B. Ibach |
| DOI | http://doi.org/10.1111/j.1536-7150.1941.tb00434.x |
| Published date | 01 October 1941 |
| Date | 01 October 1941 |
Tax Leverage
for
Efficient Land
Exploitation:
A Differential Levy
on
Site Values
as an Aid to
Land
Use Adjustment^
By
DONALD B.
IsACHt
THE THOUGHT of a tax on the
site value
of
land
is, of
course,
anathema
to
speculators
in
site values. Because
of
miscon-
ception
of the
effects, mention
of the
site value
tax is
often
disconcerting
to
many bona-fide fanners and urban property
owners
who
either live
on
their
own
land
or at
least have
a
primary interest
in
the security
of
control
of the
land and
in
obtaining
for
their investment therein
a
return comparable
to
what they could secure through investment
in
other lines.
Many economists who are
in
agreement with
the
principle
of
the
tax
consider attempts
at its
application futile, because
of
seeming inexpediency resulting from popular misunderstand-
ing
and
accumulated prejudices. Some
of the
misunder-
standing reflected
in
these attitudes
can be
attributed
to the
failure of economists to give to the subject attention equivalent
to that which
has
been given
by
pointing,
for
example,
to the
undesirability
of
governmental trade restrictions
in
terms
of
the principle
of
comparative advantage.
Much
misunderstanding
of
the site value tax
has been
caused
by those
of
its proponents who have over-simplified
its
appli-
cation (particularly with reference to agricultural land), have
over-stated
its
potential contribution
and
have insisted
on
referring
to it as the
"single"
tax. Its
present-day propo-
nents
do not
visualize
it as a
cure-all,
nor do
they believe
it
mbtmttad
for tht
appronl
of the
»atiKtr*i Mpnion
i» dte
^7
^^
°*
'
GoanmtkiD Suricc
tS ranwimrion Sorriot, Uattwl
Sum
DfiMrtmcnt
of
Atricdturc
1)
14 The American foumsl of Economics *nJ Sociology
could replace all other uxes. Because of tlwse facts, and be-
cause of the natural force of inertia, the site value tax is prob-
ably more grossly misunderstood by more people than is even
the case with respect to the impact on agriculture, labor,
and business, of our past maintenance of high protective
tariffs. Since such widespread misunderstanding prevails,
a considerable amount of space in this paper is devoted to the
nature of the tax itself and to its effects, as well as to a sug-
gestion for its differential use to promote conservation of
land.
The statement has been made in effect that two main atti-
tudes are maintained with respect to a tax on site values, (1)
that wWch
i$
favorable to it in principle, and (2) that which
reflects imperfect or incomplete understanding of the pro-
posal. No doubt this is stating the case too simply, since a
third group should probably be added, those who may under-
stand the effects of the tax but whose interests in future gains
resulting from increases in site values overshadow the inter-
ests they may have in securing productive returns from their
investment in fertility maintenance or other improvements.
It has long been established, though not widely understood,
that this last-named group comprises the only persons whose
economic interests are not in accord with any equitable appli-
cation of the tax. Perhaps it should be added that at least in a
relatively new country such as ours most of us, bona-fide
farmers included, are inclined to speculate. It is a natural
inclination, and as such is not to be deplored except as it in-
terferes with free competitive operations. The question is
whether it constitutes such interference when permitted to
operate in things the value of which is altogether the product
of society at
large.
Gains from this type of speculation repre-
sent "nice work if you can get it." It is time to con^der,
however, whether in the interest of security of tenure on
land, and for other reasons, society can afford to continue to
To continue reading
Request your trial