The Separation of Tax and Geo-rent
- With all this talk of tax schemes I thought that it was worth
emphasising the philosophical separation of taxes and land rent (as Fred
touched on recently in "Re: [LandCafe] rent not a grant").
Land rent by definition is paid to the holders of the land - i.e. each
member of society.
Tax, by definition is paid to the authority within a society (whether
this be the people and bureaucracy in a democracy [the state] or some
other form of government).
Each individual member of society has a right to a certain proportion of
the commons and therefore a right to receive land rent.
Every society has a need for a common purse, to spend on commonly agreed
functions of that society - such as support for those unable to work.
The value of rent must be a combination of:
a) The land, the raw resource as it stands, that has intrinsic value of
its own to provide for human needs
b) The value of having people to trade with around it. This could
perhaps be defined as separate to land rent as it is much more to do
with benefiting from the presence of other people - location benefit
levy is a term that gets bandied around.
Perhaps where the community would be able to take [tax] a proportion of
land rent, is where the community purse has 'caused' some of that value.
However, this would imply that the more tax was collected, the more
public investment could be made, the more would be owed to the state
(for the benefit of that public investment) and the more tax could be
To take Dave Wetzel's Jubilee Line example where he would hope to tax
holders of land around the stations on that line for the location
benefit of many people being available to trade with and the enhancement
to wealth that that trade brings (allowing specialisation of jobs). Here
the location benefit levy would far outweigh the pure land rent as
caused by the intrinsic value of that land.
Location benefit is driven by the investment of people around your site.
If this investment is public investment then the returns should go back
to the common public purse, if it is the land holders who are making an
investment then it should go back to them.
So to sum up we have to consider three separate, but related, ideas:
1) Geo-rent - the intrinsic value of the common resource to provide for
the needs of life. This geo-rent is due in equal proportion to all
2) Location Benefit - the value provided by the proximity of other
people around you to trade with, and even the benefit of improvements
provided by those people.
3) Tax - the need for society to collect money to provide for some of
The biggest questions for me surround tax:
1) What does society need to provide for it's members.
2) How should the purse for this provision be collected.
The answer to question 2 might depend on the answer to question 1. For
example if you have a state that ONLY provides for the need of those
unable to work (and everything else is privatised) the state would not
be justified in collecting Location Benefit Levy for itself, as a tax,
but would rather have to redistribute it to the private investors.