Feb. 28th, 2017

The Financial Times today printed a letter by someone else, referring to my letter. Here it is:

Tax gains in value from infrastructure projects

Sir, The radical application of a tax on land value as the primary source of government revenue, proposed by Henry George and advocated by Nicholas D Rosen(Letters, February 23), is certainly thought-provoking, particularly so in the US where the current tax structure is overly complex, clearly unproductive and eminently unfair. Such a revolutionary concept, however, no matter how meritorious, must produce a vast number of winners and losers, needing a cultural upheaval to accept the changes.

There is, nevertheless, a strong argument for a much narrower extension of the land value taxation inherent in property taxes: one designed to address a particularly pressing need pertinent now in the western democracies, where the inadequacy of infrastructure funding is acute. To deal with this critical issue, an apt source for such funding would be an effective means of taxing unwarranted gains in value to landowners stemming from government-funded infrastructure projects.

Passenger rail systems are rife with examples of worthy projects thwarted or delayed by lack of funding; those that proceed generally rely on funding from taxation of sources not benefiting from the project either directly or indirectly. In New York, for example, the desperately need Second Avenue subway as delayed for some 50 years awaiting funding; its first phase only starting in January, with public, federal, state and city funding. Not coincidentally, landowners are benefiting substantially, with median rents in the past six years on Second Avenue rising twice as much as those on neighbouring Third Avenue.

Analogous private land value increments from public transit improvements can be expected along the 42km Crossrail line through Lond and from the massive Metro expansion in Paris. Similarly, a 50bn, 25-year transit plan focused on light rail approved by voters here in Seattle in November will add value to land along its routes. It will be financed largely from federal funding and an array of local taxes, none directly aimed at the land value that is ring created.

A version of George's land value tax would be both rational and justified, and is sorely needed.

Robin H H Wilson
Seattle, WA, US
Former President, Long Island Rail Road

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