Academic journal article The American Journal of Economics and Sociology

Impediments and Counter-Arguments

Academic journal article The American Journal of Economics and Sociology

Impediments and Counter-Arguments

Article excerpt

BEFORE ATTEMPTING TO identify the kinds of opposition that a commitment to a land value rental regime might attract, it may be worth reiterating (a) that land value rental could only be fully implemented over a period of years in Western societies; (b) that, as a public revenue raising mechanism, it is revenue-neutral and does not imply any variation in the quantum of public revenue raised; and (c) that it is politically and ideologically neutral and equally adaptable to both capitalist and socialist economic systems.

One source of opposition may certainly be anticipated. Land value rental would be strongly opposed by anyone deriving--or hoping to derive--a significant income from speculative investment in land, or from the mere fact of landholding. Those with a vested interest in profiting from land would be vocal and influential and, if confirmation were needed, the strength and virulence of their opposition would be a measure of the profits that are currently being made from landholding. Overt defence of profiteering would be unlikely. Instead, inspired opposition would more likely be couched in terms calculated to evoke the spectre of "land nationalisation" in the minds of every property owner, however humble. Indeed, especially the humble. Abolishing the private appropriation of land value increases would be portrayed as "confiscation"; and the development industry would sound dire warnings about removing the "incentive" to "develop," and the alleged implications of this for employment. There would be emotive but erroneous evocations of "leasehold." (1) Probably even of "socialism" (or worse)--even though land monopolisation is the antithesis of individualism and free enterprise and eliminating unproductive land speculation would make access to land more affordable for bona fide industry and commerce.

While land value rental would enable all income earners (including land speculators) to be relieved wholly or substantially of the burden of income taxation levied on their labour, enterprise or investment income, a conspiracy to distort the reality of land value rental could nevertheless exploit initial apprehension among all landholders and delay their assimilation and acceptance of some of the consequential features of a land value rental regime.

On the face of it, for example, it could be disconcerting to realise that landholders would receive no selling price (other than any premium that a transferee might offer as an inducement) when they transferred ownership of their land--even though they would not have to pay any purchase price to procure alternative land. They would of course be able to sell the improvements on their land, and they would have to buy the improvements on any other land they chose to acquire. The value of real estate as a security for borrowing would likewise be confined to the value of the improvements. But, where the borrowing was for the purpose of acquiring other real estate, the borrowing requirement would be similarly reduced. These are the necessary consequences of accepting the logically unassailable distinction between unimproved land (provided by nature) and negotiable man-made improvements erected on it. However, if the transition to recouping the total annual rental value of all land for the community were to take place incrementally over a period of years, assimilating the impact of these changes would not be a significant problem.

Superficially it might be thought that farmers and pastoralists holding substantial areas of land would be disadvantaged. This is demonstrably not so. Land value rental is only concerned with the assessed market value of parcels of land regardless of their size. Theoretically, farmers or anyone else subject to seasonal fluctuations would in fact be positively advantaged by paying annually adjusted land rent instead of fixed interest instalments on their land purchase price.

In Australia, attitudes to land value rental are likely to be coloured by experience of "land tax," the history of which needs to be briefly recounted. …

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