Value Capture as a Policy Tool in Transportation Economics: An Exploration in Public Finance in the Tradition of Henry George

American Journal of Economics and Sociology, The,  Jan, 2001  by H. William Batt

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(11.) As this is written, the federal excise tax per gallon is 18.4[cent] on gasoline and 24.4[cent] on diesel fuel. Highway Statistics, 1998, Table FE-21E, at http://www.fhwa.dot.gov/ohim/hs98/hs98page.htm.

(12.) The best book recounting how highway interests were able to overwhelm competing forces in local communities is Robert Caro (1975), The Power Brokert: Robert Moses and the Fall of New York, Vintage Books, and this documented an era even before the Highway Trust Fund was established.

(13.) Under current practices the selling price of land balloons immediately after projects are announced because future rents are expected to increase. Rent is the present value of expected future net rents; the land value is now a function of expected rental value in the future. If half the rent is taxed, then half the future rents are taxed, and the present value of the land will be half the pre-tax value. So a tax on the land value is still equivalent to the tax on the rent. The relationship between the amount of rent taxed and the tax rate on the land value is: x = t/(i+t), where t is the tax rate on the price of land, x is the percentage of the rent that is taxed, and i is the real interest rate after deducting inflation.

(14.) Walther, Hoel, Pignataro and Bladikas 1991.

(15.) Spengler, pp. 443-445.

(16.) Henry George (1839-1897) was most famous for his book Progress and Poverty, which argued that taxing land according to its value instead of labor or capital would be both more just and more economically efficient. For an overview of Georgist approaches to taxation, see Lindholm and Lynn 1982.

(17.) The most comprehensive study of the value capture approach in Hagman and Misczinski 1978. Among other significant studies on the merits of value capture as an approach to infrastructure finance are the following: Allen 1987; Allen, Chang, Marchetti, and Pokalsky 1986; Callies 1979; Cervero, Hall, and Landis 1993; Monograph 42; Cervero 1994; Johnson, and Hoel 1985; Rybeck, assisted by Wade and Josephs 1981; Sharpe 1977.

(18.) Adam Smith's Wealth of Nations (1776) remains even today a starting point for students of tax design, for he captured, even at that early time, not just the sum of learning to that date but his own acute insights. See, for example, "Principles of Taxation, in Light of Modern Developments," Federal Tax Policy Memo, The Tax Foundation, Washington, DC. For further discussion of what students of tax policy regard as the principles which should guide their design, see, for example, Musgrave and Musgrave 1989; Break 1993; Tax Notes 1988; Davies, 1986; and Unleashing America's Potential; a Pro-Growth, Pro-Family Tax System for the 21st Century. Washington: Report of the National Commission on Economic Growth and Tax Reform (Kemp Commission), 1996.

(19.) See, for example, the discussion in the current leading graduate text in graduate public finance courses: Rosen Public Finance, 5th Edition. Homewood, IL: Irwin Press, 1999, pp. 486-495. See also Gaffney [1972] 1972; Heilbrun 1983; Aaron 1975; Geisler 1995; Reschovsky 1998; Wolff 1998; and Earthright: The Economics of Freedom, at http://www.geocities.com/RainForest/3046/