An address by a Georgist sympathizer: practical issues in Georgist thought

American Journal of Economics and Sociology, The,  Oct, 1995  by Michael S. Johnson

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Next, consider the severe problems in tax assessment practices. How can you expect to garner support - in the name of justice and fairness no less - for a tax administered in an extremely arbitrary way? What would happen if you approached 100% land rent taxation given current assessments? My guess is the system would collapse entirely under the weight of appeals caused by the poor quality of tax assessing. Even worse, land would be abandoned - used for absolutely nothing - in those 30% or so cases where the rents would exceed true economic rents because the assessments are so close to being random. The economic damage could be lessened by less-than-100% tax collection of land rents, but the fairness issue would remain.

In his book Who Pays the Property Tax? Henry Aaron quotes an anonymous ditty about tax assessment. (56) It goes:

To find a value good and true, Here are three things for you to do; Consider your replacement cost, Determine the value that is lost, Analyze your sales to see What market value should be. Now if these suggestions are not clear, Copy the figures you used last year.

His observations about assessment made in 1975 have seen very little correction since then. I would think there is an important role for Georgist organizations to work toward improvement in assessment practices. I see the Lincoln Land Institute working on this, but much more needs to be done. You cannot have faith in the equity of a tax system if people [correctly] see the results as arbitrary. As unfair a penalty on effort as the income tax may be, or as poor of a benefit tax as the sales tax may be, most people view them as less arbitrary than the property tax. Further, the potential problems with a land-only tax are much worse than the current system of taxing based on a combined land-improvements assessment. This is because assessment practices are more concerned with achieving accuracy in the measuring of value for the total land-improvement bundle than for each individual item. Our pure land assessment techniques are weak and very inaccurate. In the otherwise excellent film on tax reform in Pennsylvania, A Tale of Five Cities, a local assessor (I believe from Philadelphia), exclaims how easy it would be to switch to a two-rate tax, since he already has separate numbers for both land value and improvement value. What he does not say is that he has wrong numbers for each! Georgist organizations should be at the forefront of offering state-of-the art help on using Geographical Information Systems and mass appraisal techniques to improve land assessment.

Finally, let me proceed to a different point that has bearing on land rent taxation. My reading of recent trends in the functional distribution of income is that there has been a fall in relative importance of land as a determinant of value and as a maker of fortunes. Mind-power and technological change in capital now drive the world more than location does. Because of changes in technology, especially in the realms of communication and transportation, we are in an era of globally "footloose" industries and massive economies of scale. A recent column in The Wall Street Journal discusses the current problems of California in comparison to nearby states. It is worth quoting at length: