The Economics of Efficient Taxes on Land

Land can be taxed in a number of different ways. This review is concerned with taxes on land that have little or no detrimental effect on economic incentives. Therefore, it concentrates on taxes on land according to estimates of sale value or rental value. The author examines the classical views of taxes on land of such writers as Francois Quesnay, Adam Smith, David Ricardo, James Mill, John McCulloch, John Stuard Mill, and Henry George. The two issues that provoked the greatest disagreement among them were whether it was possible to separate the value of land from the value of improvements for tax purposes, and whether and to what extent a tax on land could be fair. The paper also deals with income effects on taxes on land, the adequacy of land as a tax base for financing local public services, and the ethics of taxing land.