Why Not?
If, as this website has clearly and unambiguously indicated, that morally legitimate and economic efficient public finances are best derived from the rental value of economic land, and that taxation of capital and labour is both morally wrong and inefficient, then the question must be asked why such a model is not more widespread.
A genuine problem that has been found in practice with Land Value Tax lies in the valuation process. The notional value for taxation purposes sometimes diverges from market value. If this goes too far, it leads either to people paying an unfairly high or low amount of tax, or to sudden large changes in the level of the tax owing to the politically unpopular revaluations to market value occurring in a single year.
Karl Marx was a significant critic of the site rental movement, arguing that it was little more than a capitalist plot to distract workers from his version of socialism. "The whole thing is...simply an attempt, decked out with socialism, to save capitalist domination and indeed to establish it afresh on an even wider basis than its present one." He also argued that Henry George did not understand class struggle: "Theoretically the man [Henry George] is utterly backward! He understands nothing about the nature of surplus value and so wanders about in speculations which follow the English model but have now been superseded even among the English, about the different portions of surplus value to which independent existence is attributed--about the relations of profit, rent, interest, etc. His fundamental dogma is that everything would be all right if ground rent were paid to the state."
However by 1875, Marx recognized the monopoly power of the land. In a letter, he wrote (making much of his earlier criticism on taxing land values moot): "In present-day society the instruments of labour are the monopoly of the landowners (the monopoly of property in land is even the basis of the monopoly of capital) and the capitalists … the capitalist is usually not even the owner of the land on which his factory stands.".
In practise, countries ruled by Marxian socialism have generally adopted a command approach to economic land; that is, although much land has become public (at least in theory), its use has not been in accord to free market relations. The end result is that the state socialist nations ended up resembling something close to political feudalism.
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The proper application of Georgian taxation of land values is a tax upon the mentality of a people beyond the capacity of a Nation not ten percent of whom have learned to read. They can't understand it. They can only understand socialism at present. Some day, with a higher level of intelligence, we may adopt the taxation of land values and enjoy economic freedom, but not now. Lenin, as quoted by Raymond Robins after an interview following the war, Globe Democrat, St Louis, Jan 27, 1934 |
Other critics of site value include a number of neo-classical economists. There is no doubt of course of important elements that neo-classical economics introduced, in particular marginal analysis. However a significant number of neoclassical economists abandoned classical political economy in the process and have conflated land and capital as one and the same. The result of this combination has meant that the landlord class has formed an effective political alliance with a portion of the capitalist class, in particular in those countries where there is a long history of a landed property class.
Where site value is introduced as a means for public finance, it is shown to be very successful leading to improved productivity, employment, land usage, and lower taxation. Where it is not introduced there is increasing suppression of economic activity, unemployment, high taxes and an expanding welfare state which is notorious for "punishing the victims". These effects are as economists have predicted.
However, in order to implement social change in this world, merely having the best results and the best theory is insufficient when there are powerful vested interests at stake. Thus the site revenue movement also requires political support and the advocacy by politicians with a modicum of courage.
