The Single Tax Movement

Fra: Lipsey and Steiner: Economics, Part Six
Factor Pricing and the Distribution of Income
Page 384 (fourth edition)

The Single Tax Movement

Taxation of land value has had enormous appeal in the past.

What was its appeal?

The fixed supply of land, combined with a rapidly rising demand for it, means that the owners of land gain from the natural progress of society without having to contribute anything. Many people, including Henry George, have been incensed at this “unearned increment” and have proposed taxing away the huge fortunes accruing to landlords in a rapidly growing society. A further appeal of taxes on land values arises from the fact that economic rent can be taxed away without affecting the allocation of resources.

Two problems arise, however, in any attempt to tax this economic rent. 

  • First, the theoretical statement refers to economic rent, not to the payment actually made by tenants to landlords. Because what is called rent in the world is partly an economic rent and partly a return on capital invested by the landowner, the policy implications of taxing rents depend on being able to identify economic rent in practice. At best, this is a very difficult thing to do; at worst, it may be impossible.
  • The second problem is a normative one. If, in the interests of justice, it is hoped to treat all recipients of economic rent similarly, insurmountable difficulties will be encountered because economic rent accrues to factors other than land. It accrues to the owners of any factor that is fixed in supply and that faces a rising demand. 

Opera singers will gain in exactly the same way as landlords when the society becomes richer and the demand for opera increases without any corresponding increase in the supply of singers. 

No one has yet devised a scheme that will tax the economic rent but not the transfer earnings of such divergent factors as land, franchises, baseball players, and supreme court justices.

The appeal of the single tax has now receded both because of the difficulties mentioned above and because, with the great increase in the size of the government, even an effective tax on economic rent could hardly be expected to finance the majority, let alone the entirety, of government expenditures. The movement has left o curious anachronism behind in the tax policies of those cities that levy their real estate taxes at higher rates on the assessed value of the land than on the assessed value of the building erected on the land.

Definitioner fra samme bog:
(1) In macroeconomics, refers to the proportion of national income going to the owners of the factor of production, land.
(2) In microeconomics, a shorthand for economic rent
(3) In everyday usage, the payment for rental housing
Economic Rent
That part of the payment to a factor in excess of its transfer earnings
Transfer earnings
That part of the payment to a factor in its present use that is just enough to keep it from transferring to another use.

Kommentar /PMA
Er der mange misforståelser her?
1. Lipsey & Steiner (L&S) argumenterer ved at anvende alle 3 definitioner af termen Rent. Hvorfor mon? 
George ønskede at inddrage “Rent”, som i definition (1) ovenfor – ikke Economic Rent, som (2), og heller ikke daglig tale Rent, som i (3).
Og besynderligt nok: Hvis L&S ville inddrage Economic Rent (som i argumentet med operasangeren) ville provenuet vel kunne dække enhver velfærdsstats behov.