Property owners should pay communities for increase in their land values
- Published: 17 November 2013
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20 November 2013
The Earth sustains all life. Whether we believe life originated through evolution, intelligent design, or divine creation does not change the fact that the Earth continues to sustain us today; it is a fact that anyone, regardless of nationality, worldview, or religion, can and must agree to.
But humanity is currently a fractured species at heart: we classify and divide each other to no end, whether by gender, nationality, race, religion, ethnicity, sexual orientation, social status, economic class, and so forth. In doing so we forget that every human being is a guest – a temporary visitor – to this beautiful blue marble floating through time and space, and that the Earth’s natural resources are what enable human life.
And so all of Earth’s natural resources are ‘on loan’, in a sense; there seems to be no more rational way of observing our present situation. It follows quite logically that the values of these natural resources need to be equitably shared. Yet we have deluded ourselves into thinking that some should profit from the Earth at the expense of others. If someone reaps a profit from selling a property due to increases in land values, for example, such a transaction is usually not seen for what it really is – thievery from the natural and social world.
While we as human beings disagree on almost everything under the stars, the recognition that each of us ought to have an equal and sustainable claim to the gross value of natural resources should be the foundation upon which all our perspectives and philosophies come to rest.
This recognition has to be the starting and ending point of any discussion of an economic model that is both efficient and just. Anything other than unconditional acceptance and an implementation of this truth is but a compromise and a muddling of an otherwise clear and universal principle: that no single human being has an intrinsic right to profit from that which belongs to all if doing so comes at the expense of others.
Privatized land values are nearly everywhere in our economy; they are endemic to the entire system: it is fair to say that most of the entire financial sector operates on the basis of privatized land values.
We do not consider the impact that our individual actions have upon the totality of life as we seek to grab as big a share of land as we can. Maybe a part of us knows, deep down, that our destructive economic system does not abundantly provide for those of us who do not profit from land in some shape or another, or maybe our desires just seem to keep growing in lockstep with our appropriation of material wealth. Either way, at the root of our motivation to take lies a gnawing fear: a fear of losing out and of not having enough.
If we are to share the value of land, it is certainly not necessary to abolish the private possession of land. On the contrary, the forcible seizing of land from individuals by government without just compensation can without doubt be called tyranny. The only thing we need to abolish is the mechanism by which people unfairly profit from land.
The solution is so simple that it is most often overlooked: property owners merely need to pay the communities from which they receive benefits the exact market value of the benefits that they receive.
Property owners – and all those with a vested interest in properties, including, and perhaps even especially, financial institutions – receive financial benefits from land values that are generated by the societies in which these properties are located. If the individuals and institutions receiving those benefits are not willing to pay for them, they are behaving like a person who walks into a grocery store, picks a number of goods from the shelf for personal use, and leaves the store without paying for these goods.
People in our society get arrested for such behavior; yet this theft from our larger community goes largely unnoticed and is broadly accepted. Currently, people pay very little for the value they receive through their ownership of land to the communities that create this value.
And so, to replenish their coffers for public expenditures, governments are forced to tax the production and consumption activities of their citizens. Meanwhile, the ongoing theft from nature by one segment of society at the expense of another will always, in time, lead to injustice and decline for any society overall. We will only create a world that works for everyone when we begin to share with each other that which was never exclusively ours to begin with.
Thus, if an entity – a human being, a trust, or a corporation – receives unearned benefits from society through its possession of land, that entity has to pay society for these benefits. It follows further that these fees need to reflect the approximate value of all the unearned benefits the entity has received from society. In other words, the community simply needs to be paid back for what it has contributed in the first place. In subsequent chapters we will examine exactly how such fees can be paid.
Whenever communities choose to replenish their accounts by charging people for the benefits that they receive from their ownership of land, those communities tend to prosper significantly:
? Such fees encourage the efficient use of land and therefore make land more widely available. They also lower the overall cost of land for those who use it intensively, such as farmers; this simultaneously leads to increases in productivity and to a lower cost of living for all members of society.
? Cities, towns and rural environments become more organized: paying for land use discourages urban sprawl and suburban dystopia, and also leaves more room for nature.
? By having people pay for the benefits that they receive from their use of land, we can avoid or minimize the taxation of wages, capital gains, and sales. This leads to significant increases in the productivity of society; people are no longer forced to work up to six months out of the year for no income in order to merely pay a tax on the value they provide through their work to society at large. Having people pay for the benefits they receive from their use of land is truly “good for business.”
? People only have to pay for wealth they receive, not for the wealth they create. As a result, wealth inequality will diminish considerably. As such, land fees are also economically just.
? Land fees help to restore ecological balance, particularly in areas where land is sparsely used but nature is nonetheless interfered with. If people cannot selfishly profit from land, they will be less inclined to use it with impunity; charging people for their use of land helps to prevent future environmental destruction, and encourages the return of huge areas of unused land to nature. Land fees can therefore be considered fees that will literally “save the environment.”
In a moneyed economy, human beings cannot escape paying for their use of land – payments for society’s benefits and privileges are just as much a part of our economy as payments for other people’s goods and services. However, we as a society can – and must – decide: whom shall we pay for the benefits we receive? Shall we pay a select group of individuals who grow wealthier at the expense of society and our environment, or shall we pay the society from which we receive these benefits in the first place?
Since our national economies create behavioral incentives for billions of people, and since our national economies by and large currently tend to incentivize the unequal sharing of land, we can effectively remedy a whole plethora of social, economic, and environmental issues if we significantly diminish those economic incentives.
Once we do that we can effectively change how billions of people behave economically, socially, and ecologically. If this conclusion indeed is true, we can potentially make the greatest difference for our planet and for humanity by focusing our efforts on encouraging people to share the profits from the Earth, and allow them to keep all of the wealth that they produce.
This is an edited excerpt from Earth, Our Home by Martin Adams. Reprinted with permission. Published by Sharing the Earth Media. Copyright 2013.
A business graduate and social entrepreneur, Martin Adams has been a student of economic reality both in school and on the ground. Over the course of his business career, he realized that a good economy could potentially improve the human condition on a far more effective scale than any social endeavor ever could. His experience led him on a quest to discover an economic system that would allow for a greater unfolding of human potential. Martin is the founder of Sharing the Earth Inc., a consultancy and media company, and lives with his wife in Northern California. He is the author of the book Sharing the Earth: A Proposal for a Tax-Free and Prosperous World.