Re-Solving the Economic Puzzle
by Walter Rybeck
Shepheard and Walwyn (2011)
In Re-Solving the Economic Puzzle Walter Rybeck, a former urban affairs official in the Johnson, Nixon and Carter administration, proposes to end the ruling elite’s monopoly on land and natural resources through land value taxation*, ie by gradually replacing income, company, sales, and property taxes with a tax on unimproved land and resources.
According to Rybeck, 3% of the US population own 95% of private land. Ted Turner alone owns two million acres, equivalent to nearly two Rhode Islands. In many cities, a few wealthy families own all the prime downtown sites would accomplish all these objectives. The US financial elite also enjoys a monopoly on scarce natural resources, such as oil.
Rybeck’s definition of land includes all the natural resources accompanying it – soil, forests, game, grazing rights, water, oil, gas, minerals and the electromagnetic waves (broadcast, cellphone, and wi-fi spectrum) above it. Like Henry George and modern Georgists, he argues that land and resources should be restored to the commons as public property. Because no one produced our land and natural resources, no one has a right to claim an exclusive monopoly over it.
Ending Real Estate Speculation
According to Rybeck, our current system of taxing labor and productivity is grossly unfair to all but the top 1% of Americans. Besides being more equitable, Land Value Taxation (LVT) also ends the real estate speculation that leaves vast areas of American cities vacant. The failure to adequately tax unimproved land inadvertently rewards landowners for keeping land vacant or turning it into parking lots.
The History of Land Value Taxation
Land Value Taxation, which taxes unimproved land, dates from pre-revolutionary times. Prior to the enactment of the Federal Income tax in 1913, most public services were financed locally via Land Value Taxation.
According to Re-Solving the Economic Puzzle, a variety thinkers across the political spectrum (including Patrick Buchanan, Milton Friedman, Michael Hudson, Martin Luther King, Paul Krugman and Joseph Stigliz) have all spoken in favor of Land Value Taxation. Progressives like it because it shifts the tax burden from small business and low and moderate income families to real estate developers and speculators. Conservatives like it because it shrinks the size and role of federal government, as well as leading to a reduction in company and income tax.
Cities and Countries Successfully Adopting LVT
The final third of the book relates the success stories of the 25 cities and five countries that have spared themselves economic disaster by adopting LVT. The communities Rybeck singles out include
- California Irrigation Districts (1887)
- Fairhope Alabama (1894)
- Arden Delaware (1890)
- Cleveland (1901)
- Pittsburgh (1913, 1979)
- New York City (1918)
- Miami (Ohio) Conservancy (1929)
- Rosslyn Virginia (1950)
- Southfield Michigan (1960)
- Harrisburg and 15 other Pennsylvania cities (1980-1990)
Sadly many of these communities subsequently caved in to special interests and began taxing capital improvements, rather than land values. Those who did so are confronting a major debt crisis, as well as decaying schools and infrastructure.
Pittsburgh and Renaissance II
Pittsburgh, one of the backsliders, saw the error of their ways in 1979 and instituted a gradual return to what Rybeck refers to as a two-tier land tax. At present, Pittsburgh taxes unimproved land six times as heavily as improvements. The resulting revival of their central city is referred to as Renaissance II. Thanks to their Land Value Tax, Pittsburgh didn’t experience the same real estate bubble as other US cities. Thus their housing market didn’t collapse in 2008. Also their current foreclosure rate is the lowest in the country.
Countries which have adopted LVT include Hong Kong (1843), New Zealand (1878), Denmark (1912), South Africa (1916) and Taiwan (1949).
To learn more about Land Value Tax, check out the LVT Facebook page: LVT
*Henry George first popularized the concept of Land Value Tax in his 1879 book, Progress and Poverty