The land value tax, explained

The idea in one paragraph

A land value tax is a yearly charge on the value of a piece of land by itself, as if nothing were built on it. The house, the shop, the factory and everything inside them go untaxed. George proposed raising public revenue this way in place of taxes on wages, sales and buildings. He put the whole remedy in a sentence: keep land in private hands, and collect its rent for the public.

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

Where land value comes from

Picture two identical empty lots, one downtown and one an hour out of town. The downtown lot might sell for many times more, and the owner didn’t do anything to make that true. The difference comes from everyone else: the people who live nearby, the businesses that opened, the roads and schools the public paid for.

George called this value rent, and his law of rent explains how it’s set. The poorest land anyone needs to use sets a baseline, the margin. Whatever a better site produces above that baseline goes to whoever owns it, whether they work it or not.

Why George thought it would fix things

As a society grows richer, the margin gets pushed onto poorer land, so rent takes a bigger share of every gain and wages take a smaller one. That’s the heart of the argument in ten steps. Worse, owners who expect prices to rise have a reason to hold good land empty and wait, which forces everyone else onto worse land than they need to use.

“The increase of rent explains why wages and interest do not increase.”

What the tax changes

Three things follow when the public collects land value instead of taxing work and building.

First, building and working stop being punished. Put up a better building or hire more people, and your tax bill doesn’t rise. Second, holding land empty starts to cost money, so owners have a reason to use it or sell it to someone who will. George thought this would raise wages. Third, the value the community creates goes back to the community, and it can’t be passed on to tenants, because taxing land doesn’t make any less of it.

What it isn't

It isn’t a tax on your house. It isn’t the government taking land, and it isn’t a new tax on top of everything else; George meant it to replace the taxes that fall on work and trade. And it isn’t a judgment of anyone who owns land today. Owners are following the rules they were given. The case here is for changing the rules, gradually, so the gains of a growing town are shared by the people who make the town grow.

The objections page takes the hard questions one at a time: farmers, homeowners on fixed incomes, retirees, whether landlords can pass it on, and how land gets valued apart from buildings.

Has anyone tried it?

In pieces, yes. Pittsburgh taxed land more heavily than buildings from 1913 until 2001, and several other Pennsylvania cities have used the same “split-rate” approach (Chicago Fed). A split rate is a halfway step: it keeps some tax on buildings but leans on land. The results are encouraging but hard to separate from everything else going on in those cities, and the objections page covers what the best study found.

Read further

• Objections, answered, ten hard questions about the tax.
• The argument in ten steps, George’s whole case in five minutes.
• Key terms, including what George meant by land, rent and wages.
• Book VIII, Application of the Remedy and Book IX, Effects of the Remedy, in George’s own words with a modern version alongside.