Objections, answered

Isn't a land tax just another tax?

It is a tax, so I won’t pretend otherwise. The difference is in what it falls on. Most taxes take a cut of something somebody did: a paycheck, a sale, a new building. Because they make that activity a little more expensive, we get a little less of it.

A land value tax charges for something nobody did. A lot downtown is worth more than the same lot in the desert because of the town around it, not because of anything the owner built. Taxing that value doesn’t make any land disappear, so it doesn’t shrink anything. That’s why George’s first test for a good tax was that it should weigh as little as possible on production, and why he proposed it in place of other taxes, not on top of them.

You don’t have to be a Georgist to see the logic. Milton Friedman, no friend of new taxes, said in a 1978 interview that “the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago” (The Times Herald, Norristown, Pa., December 1, 1978, as reprinted).

“That it bear as lightly as possible upon production”

Won't landlords just pass it on to tenants?

This is the objection I hear most, and it’s a fair one, because most taxes really do get passed along. But passing a tax on works only when the tax makes something scarcer. Tax buildings, and fewer get built, until rents rise enough to cover the tax. That’s the part of today’s property tax that tenants end up paying.

Land doesn’t work that way. The amount of land doesn’t change when it’s taxed, and a landlord already charges what the location will bear. The tax doesn’t give tenants more money to pay with or give them fewer places to choose from, so there’s nothing pushing the rent up. George walks through this in VIII.3, and he adds a twist: owners holding lots empty for a higher price would have a reason to rent or sell them, which means more competition for tenants, not less.

Modern economists put it the same way. A Chicago Fed explainer notes that because the supply of land is fixed, the tax falls on the owner, who receives lower rents, while the amount of land in use isn’t reduced. None of this is about blaming landlords. A landlord who keeps up a building is doing real work, and that’s exactly the part this tax stops taxing.

“A tax on land values does not add to prices, and is thus paid directly by the persons on whom it falls”

Wouldn't this crush farmers?

It sounds that way, because farmers hold a lot of acres. But a land value tax isn’t charged by the acre. It’s charged by value, and the most valuable land is in towns and cities, not out in the fields. George makes this point directly: the tax would fall hardest on the towns and cities, where land values are high, and lightly on farm country, where they’re low.

Meanwhile the things a working farmer actually built would stop being taxed: the house, the barns, the fences, the equipment, the crops and the herd. George’s conclusion was that the farmer is a worker and an investor as well as a land owner, and that the trade would leave him better off.

I’d add one honest caveat. Farmland near a growing city can be worth a lot, and those owners would pay more. I suspect that’s the right result, since that value comes from the city next door, but it’s the kind of thing a real proposal would need to phase in carefully.

“His loss would be nominal; his gain would be real and great.”

What about homeowners on fixed incomes?

George took this one seriously. His homeowner pays more on the lot but stops paying on the house and everything in it, and he also gets the higher wages and steadier work George expected to follow. On balance, George wrote, he comes out ahead.

For a typical house on a typical lot, I suspect the swap comes out close to even or better, because today’s property tax already includes the land. The people who would pay more are those with a small house on a very valuable lot. If you live on a fixed income, though, “on balance” isn’t much comfort when the bill comes due, and that worry deserves a real answer.

History gives a warning here. Pittsburgh taxed land more heavily than buildings from 1913 until 2001, when a countywide reassessment sharply raised land values, residents objected, and the city went back to a single rate (Chicago Fed). The lesson I take is that the shift has to be gradual and predictable, so nobody opens a surprise bill.

“He will not be injured; on the contrary, he will be the gainer.”

Isn't this just socialism?

George was clear that he didn’t want the government to own or run the land. People would keep their deeds, buy and sell, and leave land to their children exactly as they do now. Markets would set prices. Businesses would compete. What would change is that the rental value of the land, the part the community created, would go to the public instead of to whoever happens to hold the title.

If anything, George wanted less government meddling in work and trade, because he wanted to abolish the taxes on them. He admired what the socialists hoped for, and he thought free markets on fair ground could get there. The page Capitalist or socialist? lays out where he agrees with each side and where he parts ways.

“It is not necessary to confiscate land; it is only necessary to confiscate rent.”

Doesn't land matter less in a software economy?

This is the objection that got me writing, so I’ll be brief here and point you to the essay. The short version: George never meant land as just dirt. He meant every natural opportunity, everything nobody made, including location.

Software still runs somewhere. Data centers need sites, power lines and water, and the cities where software gets written have some of the most expensive land there is. When demand for what we build goes up, the value of the scarce ground underneath it goes up too, and whoever owns that ground collects it. The rent didn’t disappear. It moved.

“The term land embraces, in short, all natural materials, forces, and opportunities”

How do you value land separately from the buildings on it?

It sounds hard, but most assessors already do it. George thought land was the easiest thing to tax, because it can’t be hidden or carried off. Modern practice backs him up more than you’d expect.

A Lincoln Institute survey found that 244 of 246 local tax offices it contacted valued land separately from improvements, and a later Lincoln Institute paper notes that 29 states require separate land and building values, even though almost every US place taxes both at the same rate. Where there are enough sales of empty lots, assessors use those. Where there aren’t, a common method is to take the value of the whole property and subtract what it would cost to replace the building, minus wear; the rest is the land (Lincoln Institute).

No method is perfect, and today those land numbers rarely change anyone’s bill, so there’s little pressure to get them exactly right. I suspect they’d get a lot better the day they started to matter.

“For land cannot be hidden or carried off; its value can be readily ascertained”

What about retirees whose savings are in their house?

This is the hardest case, and I don’t want to wave it away. Land prices partly reflect the rent a buyer expects to keep. If the public collects more of that rent, land sells for less. George admits the one homeowner who loses is the one who wants to sell and not buy again. That describes a lot of retirees planning to downsize and live on the difference.

They didn’t do anything wrong. They followed the rules everyone was given, and the rules are what should change, not the verdict on the people who played by them. That’s why I think the shift has to come slowly, over years, so prices adjust gradually and people can plan. One idea I like is letting older owners defer the tax until the house is sold. The details are open, but the principle isn’t: don’t spring this on people who saved the way they were told to.

“His only loss will be, if he wants to sell his lot without getting another”

Why not just build more housing?

We should build more housing, and nothing here argues against it. Zoning and permits matter a great deal. But today’s property tax works against building: put up a better building and your tax bill rises, while the owner of an empty lot next door pays very little to wait. George saw the result in every growing city, valuable lots held empty while the city spread outward.

A land value tax flips both of those. Building stops raising your bill, and holding a lot empty starts to cost money, so owners have a reason to build or sell to someone who will. It works alongside zoning reform, not instead of it.

There’s some evidence it helps. In 1979 and 1980 Pittsburgh raised its tax rate on land to more than five times its rate on buildings, and in the 1980s its building activity rose far above other cities in the region (Oates and Schwab, National Tax Journal, 1997). The authors are careful: a shortage of downtown office space and a big redevelopment program were doing much of the work, and the land tax played a supporting role (Chicago Fed summary).

“These lots, some of them extremely valuable, are withheld from use”

Isn't it unfair to people who bought land in good faith?

Yes, and that’s worth saying plainly. Nobody who owns land today invented the system. They bought under the rules everyone was handed, and many of them stretched to do it. I’d blame the game, not the players.

George himself didn’t think owners should be paid off for the rent they’d stop collecting; he argues against compensation in VII.3. But he was just as firm that what people built and saved stays theirs: their improvements and personal property would be secure. I’ll go one step further than he did. A change this large should be phased in slowly, so the people who bought in good faith have time to adjust.

“Let the land owners retain their improvements and personal property in secure possession.”