A better world is possible - Global Commons Institute

Copyright Bruce Nixon 2010. All rights reserved. This electronic copy is provided free for personal, non-commercial use only.
www.brucenixon.com
benefit of everyone the "unearned income" which attaches to land and natural resources. Research by land
economists shows that this kind of "rent" is as much as one third of GDP in some countries—a more than
adequate tax base to pay needed public services and even then some which could be distributed as direct
citizen dividends.
The UN Habitat Agenda Section B.55 states: "Access to land and legal security of tenure are strategic
prerequisites for the development of sustainable human settlements affecting both urban and rural areas. It
is also one way of breaking the vicious cycle of poverty. Every Government must show the commitment to
promoting the provisions of an adequate supply of land in the context of sustainable land-use policies...".”
What Is LVT, and Why Is It Better?
Why are we burdened with high taxes? Most government spending tries to undo the injustice and economic
damage caused by unfair and destructive taxes and the uncompensated violation of people's rights --
especially the right to utilize the opportunities nature and the community provide.
Income tax, sales tax, VAT, etcetera, place a burden on the productive activity that enriches society, reducing
wages and increasing unemployment and poverty. Governments try to undo this damage by spending money
-- but they get the money by levying more of the same bad taxes that caused the damage in the first place!
There is a better way to fund public goods, a way that makes society fairer, greener and richer, not poorer.
Most people are familiar with property taxes. A land value tax (LVT) is simply a property tax on the
unimproved value of land (currently about 2/3 of average property value), not on improvements. Though
simple in concept, LVT offers great social and economic benefits.
A number of factors influence land value, but it ultimately comes down to “land rent” i.e. the economic
advantage gained by using desirable land (for an explanation, go to my website). This advantage comes from
the services and infrastructure government provides, the opportunities and amenities the community
provides, and the physical qualities nature provides. Whatever the owner provides may affect improvement
value, but by definition does not affect land value: the land is already there, ready to use, with no help from
the owner or any previous owner. Because the supply of land is fixed and a tax on its rent does not affect
user demand, LVT does not increase land rent. It is borne entirely by the landowner, and its burden cannot
be shifted onto tenants, consumers, or anyone else.
LVT high enough to replace the unfair taxes that harm the economy would recover all publicly created land
rent for public purposes. Land value would decline to a very low level, while wealth production would soar.
After all, earned income measures what the recipient contributes to the wealth of the community, while land
value measures what the community contributes to the wealth of the landowner. It is self-evidently better to
tax the latter than the former.
LVT Redresses the Biggest Subsidy of All
Under the current system, productive citizens pay income tax, VAT, etc. to fund the services and
infrastructure government provides, and must then pay land rent (or capitalized rent as a purchase price) to
landowners for access to the same services and infrastructure their taxes just paid for. The productive thus
pay for government twice so that landowners can pocket one of those payments in return for nothing. With
LVT, the productive pay for government only once -- directly, with a voluntary, market based, value-for-value
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