Why Karl Marx Hated the Land Value Tax and Why He’s Wrong

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Conservatives calling Jesse Myerson a Communist for supporting ideas like Henry George’s land value tax is pretty amusing since Karl Marx himself described Georgist politics as “capitalism’s last ditch.”

The land value tax is basically just the property tax, except it taxes the land part of property at a higher rate than improvements. The land part of the property tax is only paid by landlords though and can’t be passed on to rental tenants, so shifting the tax burden onto land is basically just expropriating wealth straight from your landlord’s pocket.

That makes it a progressive tax in my book, but some progressives complain that flipping the two parts of the property tax around to penalize vacancy and promote urban infill development would be politically repugnant because it would reward our biggest buildings with huge tax breaks. We could get around those bad optics a bit with a 5-1 ratio for land to buildings, but there’s no denying that’s true, and it’s why Karl Marx hated the idea. But not being a Marxist, I think he’s wrong and Henry George has the better of the argument.

Henry George differs from Marx in this important respect: whereas Marx’s politics envisioned a bifurcated struggle between labor and capital, George’s politics placed labor and capital on the same side, with landowners on the other.

George’s idea is that you work for a living, and (contra Marx) that the honest-to-God investors who make stuff like buildings and machinery and national telecommunications networks and politics blogs make an honest living too. But your landlord doesn’t really work. He makes money by sitting around owning stuff, repairing your dishwasher sometimes, while you toil doing real work to pay him a third of your income or more.

What if we stopped taking so much money in sales, wage, and investment taxes from the people who work and invest for real, and started funding more of our public services with wealth expropriated from people who just own stuff.  Rent hikes would stop eating into wages so much, workers and businesses would have more disposable income to spend and invest in the real economy, and this would all create a much stronger economic foundation for cities.

This entry was posted in Land Use.

2 Responses to Why Karl Marx Hated the Land Value Tax and Why He’s Wrong

  1. Bram R says:

    Capitalism could use a “last ditch” right about now. The economy has been unkind to the middle and working classes for, how long?

    If the economic appreciation of the enterprise of land ownership was fairly taxed… and it’s extremely valuable, they’re not making any more of it… and building owners and tenants were given a modest break to make it revenue neutral, industry and new wealth creation would be encouraged. I’m not generally given to conspiracy theories, but I think this understanding among various segments of land owners is probably settled at one or more of those Bilderbergy forums. Long live Henry George and sustainable capitalism.

  2. Paying your community for your land instead of an individual is not only fair, since it’s the community who generate that value, but also efficient, because drives efficient use of land and, as noted above, makes possible deleting the ruinous taxes. And psychologically, Land Dues ought to strengthen our identity with both community and Earth. Long run, that should help. More at progress.org.