This chapter obviously cannot undertake to deal with all of public finance and taxation even as these relate to agriculture. It perforce confines itself to phases of this subject that relate especially to land use.
One could, in line with much popular thinking of this subject, conceive of public expenditures and taxes simply as a distribution of income, as a fraction of the earnings of the population that unfortunately has to be spent to provide government. From this point of view, the larger the "tax burden" on land, the lower the final net income, and hence the lower are land values. Another conception of the subject views one part of the activities of modern life as being conducted under public auspices, and another part as conducted under private auspices, and applies to the first set the same standards as to the second -- namely, that of the ratio of output to input, and raises the question as to whether this ratio for any particular public use compares favorably with that for other uses of resources and income, both private uses and other public uses. From this point of view, a particular assessment of taxes on the land in a town for highway purposes is considered in terms of its effects on access to markets and jobs and residential use, and hence real income, as well as in terms of the contributions that must be made to its construction and maintenance. Almost needless to state, it is this second approach that will be taken in this chapter.
One of the major problems in public finance is to fit the tax to the benefit geographically; the extreme example of this is illustrated by New York City. Something like 16 per cent of the national income payments in 1940 were received in the state of New York, and the major portion of these in New York City. But this does not mean that they were all really earned there.