Dilemmas of 21st century land value capture: Examining Henry George’s legacy in a new Gilded Age

Abstract

This essay reviews 20th century applications of Henry George’s thought by local and national policy makers in the Anglo-American context with the goal of better interpreting contemporary debates about land value capture (LVC). Proponents of LVC mechanisms argue that incentive zoning, planning obligations/exactions, special assessments, transfers of development rights, density bonusing, and tax increment financing can rebalance public and private wealth and promote economically redistributive development where direct government spending on social goods is not politically possible. Critical scholars question this stance, arguing that interventions pursued under the LVC banner often deliver publicly generated wealth to already-affluent parties while contributing to price escalation that harms low-income and middle-class citizens. An examination of Henry George’s foundational ideas sheds light on the challenges policy makers have faced in attempting to recover the “unearned increment” for the public. This analysis provides useful context for present-day debates about the advisability and practical effects of land value capture mechanisms.

Keywords

Land value capture property tax Henry George

It is seen that private property in land, instead of being necessary to its improvement and use, stands in the way of improvement and use, and entails an enormous waste of productive forces; [and] that the recognition of the common right to land involves no dispossession, but is to be reached by the simple and easy method of abolishing all taxation save that upon land values.

Henry George, Progress and Poverty, p. xvi (4th edn, 1897)

Writing at the height of the last Gilded Age, the self-taught political economist Henry George emphatically traced extreme inequalities in income and wealth to private property in land. As a theorist, George worked in the tradition of classical political economy, building on the insights of David Ricardo and John Stuart Mill as well as the ideas of the French Physiocrats. As a policy advocate, he dedicated himself to a proposal that he was confident would dismantle poverty and inequality for all time: a confiscatory tax on land. Land value, by George’s account, “expresses in exact and tangible form the right of the community in land held by an individual; and rent [i.e. land value conferred by locational advantage or through the state actions such as legal permission and infrastructure development] expresses the exact amount which the individual should pay to the community to satisfy the equal rights of all other members of the community” (p. 344). To restore to “the community” land value that belonged to the social collectivity but was being unjustly extracted by property owners, the polity needed to claim (or “capture”) this unearned value for itself and then redistribute it. The book in which George articulated this proposition, Progress and Poverty (first published in 1879) sparked the imaginations of several generations of social reformers and catapulted him to international celebrity. Land value capture was one of the first “mobile” policies, traveling throughout the world and influencing state fiscal interventions in a variety of political contexts.

The contributors to this special issue are engaged with the politics of land value capture in what some have termed a second Gilded Age. Reflecting on the notable increase in the concentration of wealth at the top of the distribution in many western economies, some macroeconomists have proposed that a chief explanatory factor in this can be found in rising prices for real property and the capital gains realized by those who finance, invest and trade in it (Ryan-Collins et al., 2017; Ryan-Collins, 2021a, 2021b; Stiglitz, 2015). Ryan-Collins et al. (2017) argue that much of the mounting wealth inequality in the UK originates from the gap in housing wealth, a large part of which is land (i.e. locational) wealth, and that windfalls to property investment are driving a “decoupling of wealth from the productive capacity of the economy” (p. 173). Similarly, Joseph Stiglitz explains ever-more-extreme differentials in U.S. household wealth over the past four decades partly with reference to successful rent-seeking by real property owners and investors. These are fundamentally Georgist formulations, as the economists themselves acknowledge. When Stiglitz asserts that “[a] tax on the return to land, and even more so, on the capital gains from land” would be effective as an inequality-reducing policy measure, he adds that the proposal is “an old idea, promoted most famously by George (1897: 443).”

This essay examines George’s ideas, and 20th century applications of them in the Anglo-American context, with an eye to what light they might shed on contemporary discussions about Land Value Capture (LVC). While mainstream policy makers have never adopted the confiscatory taxes on land-based capital gains that George advocated, the conviction has persisted that well-crafted land value capture measures are a decent substitute, generating revenue for the public sector while rebalancing public and private wealth. In recent years, Georgist formulations have undergone something of a renaissance in the world of public policy. For example, Manville (2021) and Korngold (2022) each contend that the application of land value capture measures, especially in the context of more intensive real property development unconstrained by density restrictions, offer a worthwhile way to deliver social benefit, especially at a moment when the fiscal capabilities of the state are at a low ebb. There is some disagreement as to what specific mechanisms qualify as value capture, as well as significant local and national variation in the tools available to policy makers. But increasingly, scholars and policy practitioners advocate for the use of incentive zoning, planning obligations and exactions, special assessments, transfers of development rights, density bonusing, and tax increment financing as ways of paying for public goods and achieving equitable outcomes (Calavita and Mallach, 2010; Kim, 2020a, 2020b; Lincoln Institute of Land Policy, 2022; Whitehead, 2017). Measures like these, it is argued, are a rational and effective means of raising revenue for social goods when direct government spending is politically unfeasible.

Contemporary advocates of LVC interventions proceed from a pragmatic politics that accepts a narrow range of motion for government actors in the context of fiscal austerity and constrained regulatory capacity. In this context, the potential or actual growth of property wealth in response to consumer and investor demand, public sector regulatory action, or public infrastructure investment is assumed to present a fiscal opportunity for government. Through inclusionary housing programs, developers create below-market-rate dwelling units in conjunction with the relaxation of height and bulk restrictions. Through a variety of obligations, levies, and exactions, owners who are benefiting from value-boosting planning permissions and new public infrastructure compensate municipalities in correspondence with the property value increases realized. By front-funding infrastructure or direct capital subsidy to developers with property tax increments gained in future years, local governments enable development that “pays for itself.” But some have questioned what they see as municipal attempts to produce fiscal gains through the hyper-commodification of real property. Critical scholars point to instances in which interventions pursued under the Land Value Capture banner deliver publicly generated wealth to already-affluent parties and strip revenue from the public sector (see Fisher et al., 2023). Others argue that the use of LVC tools in the context of financial market deregulation contributes to an escalating price spiral; value generated through public action, perversely, gets capitalized into land and produces property-holder windfalls while pushing prices up for renters and entry-level buyers (McAllister et al., 2018). This phenomenon is noted, for example, by Immergluck and Balan (2018) in their study of the tax-increment-financed Atlanta Beltline, by Sclar (2020) in his work on development rights transfer, and by Shih and Chiang (2022) in their analysis of density bonusing in New Taipei City in Taiwan. An emerging critical literature documents the difficulties contemporary government actors face in negotiating social benefit from private land development and argues that LVC mechanisms often serve to enable rather than moderate private sector rent-seeking (Balakrishnan and van Maasakkers, 2021; Stein, 2019; Wolf-Powers, 2019).

This paper’s analytic revisit of Henry George’s proposed response to unjust private claims on publicly created land value makes plain that when contemporary policymakers attempt to legislate or negotiate LVC mechanisms, the conflicts that arise have long-standing historical underpinnings. The dilemmas attendant on land value taxation in George’s own time have become the dilemmas of land value capture today. While George keenly perceived the socially transformative possibilities of changes to the fiscal relationship between the state and real property owners, he minimized the political and fiscal challenges that government actors would face in isolating and claiming unearned land rent. His acolytes asserted that professional administrators could expropriate unearned land rent efficiently, reducing the concentration of land ownership and producing revenue that would be fairly redistributed to the public. But George’s program, and the land policies that followed from it in the century following his death, skirted fundamental practical and political questions. This is why land value capture, both in theory and in practice, remains fraught and contested.

Henry George in his time

Born in Philadelphia in 1839 to lower middle-class parents, Henry George spent time at sea as a young man before settling in San Francisco and working in the newspaper industry as a typesetter and journalist. Sporadically unemployed, he often struggled to support himself and his family. As a witness to the rapid growth of San Francisco during the 1860s, George had occasion to ponder the question of how extreme poverty and deprivation could co-exist with technological progress and the accumulation of material wealth. He lit on the insight that the social process of urbanization (the agglomeration of people and enterprises and the provision of public infrastructure) elevated the value of land and location, furnishing individuals who claimed ownership of these resources with the opportunity to extract unearned economic rent from those who required land to produce wealth, or in fact merely to subsist. Progress and Poverty, published in 1879, adapted classical political economy (which had dealt with rent primarily in the context of agricultural land use) to the analysis of urban economic dynamics. It immediately struck a chord among social reformers, selling millions of copies. George became a wildly popular lecturer and subsequently moved to New York City, where he was nearly elected Mayor as a candidate of the United Labor Party in 1886. Though he never succeeded as a politician, George significantly influenced the Progressive and socialist movements in the United States and Europe. His ideas have been embraced or endorsed by influential figures including pragmatist philosopher John Dewey, civil rights leader Martin Luther King Jr., novelist and social theorist Leo Tolstoy, and, more recently, the economist Joseph Stiglitz.

The central social diagnostic of Progress and Poverty is the argument that because land and location derive a priori from the earth and not from human exertion, “to affirm the rightfulness of property in land, is to affirm a claim which has no warrant in nature” (p. 337). To accumulate wealth by virtue of owning something unearned (i.e. increases in property value due to urbanization and/or locational improvements attributable to others, or to nature) is the definition of rent-seeking, and was identified as a moral flaw of capitalism by classical liberals Ricardo, Mill, and Adam Smith. In Progress and Poverty George illustrates the injustice of land rent using both contemporary referents and historical ones. Describing the period of enclosures in early capitalist Britain, he notes that elites “over and over again expelled from large districts the native population whose ancestors had lived on the land from immemorial times – driven them off to emigrate, to become paupers, or to starve” (pp. 345–346). His account of the decline of prosperous democracies in ancient Greece and Rome recognizes that regimes founded on real property accumulation must necessarily stave off crisis through imperialism: “It was from this public domain, constantly extended by conquest, that the patrician families succeeded in carving their great estates. . .and the empire, while it embraced the world, became in reality a shell, kept from collapse only by the healthier life of the frontiers. . .” (p. 373).¹ To late 19th and early 20th century readers, George must have sounded like a kind of prophet, offering land policy reform as an escape from the otherwise inevitable decline of modern civilization.

How would the escape be accomplished? In the four chapters of Progress and Poverty dedicated to what George immodestly calls “The Remedy,” he elaborates his proposal for a confiscatory land tax that would “take for the benefit of the whole community that fund which the growth of the community creates” (p. 461) and explains how the government would use the proceeds of the tax to furnish the community with infrastructure and public goods. In other speeches and writings, he advocates for a universal basic income and social insurance, also made possible from the proceeds of the land tax. But his instructions for how to administer a tax on land rent are woefully underdeveloped. George considers and rejects the idea of nationalizing land by purchasing it from private owners at current market prices (such that the state would then collect rent from individual users), dismissing this course of action as too costly and vulnerable to corruption. He similarly finds fault with a proposal by John Stuart Mill which involved “fixing the present market value of all lands and appropriating to the state future increase in value,” (p. 361) on the grounds that this would preserve too much wealth in the hands of people who had gotten it unjustly. Instead, George favors “abolishing all private titles, declaring all land public property, and letting it out to the highest bidders in lots to suit, under such conditions as would sacredly guard the private right to improvements” (p. 403). A page later, however, he seems to lose his nerve, proposing “to accomplish the same thing in a simpler, easier, and quieter way” than through formal confiscation. Rather than creating “a needless shock to present customs and habits of thought,” he says, it would be better to let individuals retain possession of their land and to confiscate only the economic rent (pp. 404–405). A “single tax” on land, he argued, was uniquely capable of accomplishing this.

George’s ascent as a celebrated thinker and plausible contender for public office is attributable both to a compelling analysis of a major root cause of poverty amidst wealth and to a straightforward theory of change. His thought crystallized and extended the insights of classical political economy and made them relevant and actionable for a 20th century political audience. His stress on the centrality of land to both poverty and its remediation captivated many prominent men of wealth, at least two of whom endowed organizations devoted to the promulgation of his ideas.² In the century that followed, however, attempts by governments in a variety of contexts around the world to implement land value taxes fared poorly when judged by the standard of reducing the capture of unearned rent and making land ownership more universally available. Further, George’s ideas (along with the classical political economy that had inspired them) were largely marginalized in the academy.³ If economists and other social scientists encounter Henry George at all today, it is as an historical figure whose writing shaped the Progressive imagination in the late 19th and early 20th centuries. His proposal to tax unearned land rent has remained something of a curiosity, even among heterodox economists. Why?

Lack of a class analysis

One explanation is that George elevated the antagonism between landowners and rent-burdened tenants while dismissing tensions between labor and capital. George’s understanding of the unjust appropriation of social surplus, while it acknowledged all monopolies as problematic, identified the land monopolist as the primary adversary of a just and functioning society. He believed that the primary conflict was between productive and unproductive owners of resources, not between those who possessed wealth (whether land, industrial assets, or financial capital) and those who lacked or had been dispossessed of it. As Hudson points out, “the remarkable popularity of Progress and Poverty stemmed precisely from its juxtaposing the interest of labor and the public in general to that of the landlord” (Hudson, 2008: 14). Industrial and financial capitalists were not threatened by Georgist prescriptions; on the contrary, they welcomed the prospect of a polity in which revenue from a land tax made taxes on wage income, interest, and profit unnecessary. In contrast to Georgists, Marxists saw industrialists, financiers, and landlords as equally problematic and viewed the struggle over land rent as a distracting internecine conflict between fractions of capital. Marx wrote that George had become the unwitting mouthpiece of industrialists, who recognized the advantage of deflecting wage earners’ agitation away from themselves and toward “old money” landed elites (Hudson, 2008: 13). Indeed, Henry George’s support for nationalizing monopolies aside, his conviction that labor and (competitive) capital were equally vital productive forces led him to assume the best of non-rentier capitalists. In his view, a confiscatory tax on land rent would drive out absentee landowners and speculators and deliver real property into the deserving possession of owners who would put it to optimal use. Productive investment (and work) would be maximized, and wage earners, farmers, and small business proprietors would see their respective remuneration brought into line with the contribution of each to total wealth. What appeared to make this logic possible on George’s part was an unwavering belief that unproductive landowners were the main beneficiaries of unearned economic rent. According to his theory, a well-designed tax on land value appreciation would extract only the economic surplus rightly due to the polity, targeting speculative or monopolistic investment in land and freeing productive landholders, as well as others who were investing capital in production, to contribute to social welfare. Further, he implied, the state could and would use revenue raised through a land increment tax to eliminate material want and vastly reduce dependency on wage income.

But George’s work made no provisions for how a taxing authority would distinguish between returns to land that resulted from productive investment and returns that resulted from the landlord’s expropriation of social surplus. He also neglected to specify how revenue collected through land taxation would be redistributed to the poor to reduce economic inequality. And, significantly, he ignored the fact that even in his time, much of the rental revenue collected by property owners was re-routed quickly to financial institutions in the form of mortgage interest. In not recognizing that finance “was taking on an independent life of its own” such that creditors would soon “become the ultimate recipients of the economy’s rental revenue” (Hudson, 2008: 20), George missed a crucial dynamic that would play a huge part in the operation of contemporary “land fictions” (Ghertner and Lake, 2021).⁴

George’s nearly monomaniacal focus on the “single tax,” together with the contradiction between his belief in abolishing private property in land and his belief that this could and must be accomplished with minimal state intervention, alienated him from the labor and socialist wings of the Progressive movement. After accepting the nomination of these groups as a fusion candidate for Mayor of New York City in 1886, he proceeded to strip most of the labor planks out of the platform to focus on the Single Tax proposal. Progress and Poverty rejected most proposals for government regulation, and all for taxation on assets other than land, on the basis that they represented “the substitution of governmental direction for the play of individual action” (pp. 319–320). Prominent socialist thinkers in the United States and Great Britain initially embraced George but became disillusioned by his inflexibility and by his stated antipathy to socialism. While his central idea struck at the heart of Lockean liberalism in a manner that seemed to point toward socialism, his politics ultimately located him within a tradition more accurately characterized as libertarian.

Political timidity and administrative ambiguity

Another reason for localities’ difficulty in adopting Georgist policies has to do with the dissonance between George’s radical views on property and his extreme incrementalism. There is something jarring about the way Progress and Poverty follows an eloquent demolition of the philosophical rationale for private land ownership and a full-throated argument for the nationalization of land with the assertion that it would be unwise to disrupt “customs and habits.” It may be that having been welcomed into the parlors and dining rooms of affluent liberals eager to see industrial society reformed and poverty ended without too much of a fuss, George came to identify with genteel reformism. But his success in bourgeois reform circles was still in the future when the first edition of Progress and Poverty was released in 1879, suggesting that George, despite his anti-establishmentarian theories, was never comfortable with the idea of confronting the powerful directly.

It stood to reason that a tax on land rent would be “easier and quieter” to implement as a policy measure than the outright socialization of land. As he says in the Preface to the fourth edition of Progress and Poverty, published in 1897, “the recognition of the common right to land involves no shock or dispossession, but is to be reached by the simple and easy method of abolishing all taxation save that upon land values” (p. xvi). But George left reformers with the dilemma of determining how government officials would administer such taxation. He did not countenance the complexity they would face in isolating, claiming, and redistributing unearned land value within a socio-legal order – that equated modern social and political citizenship with the ability to make individual claims on what had heretofore been a resource held in common or controlled by a single sovereign entity (Jacobs, 2020; Ryan-Collins et al., 2017).

Implementing Georgist ideas

Beginning in the late 19th century, reformers who shared George’s analysis strove to devise mechanisms to expropriate land rent for the government. While George himself had died from a stroke in 1897, his philosophy persisted as a major policy influence in many municipalities, including New York City, where the adoption of a policy to fully assess real estate (both land and buildings) in 1902 contributed to the city’s ability to finance the early subway system (see London, 2020). A purer application of Georgist principles came in 1911–1913, when state legislators in Albany introduced a series of proposals for a fiscal program whereby the city would gradually reduce taxes on improvements, leaving the majority of the tax burden to fall on land. The good government activists, housing reformers, and tenants’ rights advocates espousing these proposals went down to defeat, however, at the hands of a more potent coalition of real estate elites and working- and middle-class homeowners who rightly viewed the program as an assault on the future exchange value of their small-holdings.⁵ Georgists had failed to anticipate this political hurdle or to understand that rentiers would exploit it.

More than underestimating political opposition to a proposed land value tax, George’s acolytes failed to perceive that such a tax, once factored into property prices, could significantly reduce the fiscal gains realized. As Daniel H. London explains in his incisive history of New York City borrowing and fiscal policy, there was an inherent contradiction between advocating a land tax with the expectation that it would make the ownership of as-yet-unimproved property much less profitable (thus dramatically reducing housing costs for renters, and for those seeking to purchase modest homes built on land yet to be developed) and promoting the same tax with the expectation that it would raise enough revenue to replace all other taxation while offering a much higher standard of social protection than was currently in place. For the municipal leaders who advocated it, land-value taxation was “a means of elevating, rather than eradicating” real estate values—a way to support the accumulation of real property wealth while siphoning off a portion of that wealth to finance public goods (London, 2020: 81). But if the land tax had been effectively implemented, it would only have been a matter of time before prices adjusted in response, as property investors adapted to a situation in which windfall gains were less achievable. Within a few cycles, less revenue would have materialized for New York City to spend.

The Great Depression and the expansion of federal and state-level income taxation in succeeding years (see Hudson, 2008) shifted discussion of land value taxation to the margins in New York. But what remained after these debates had subsided was a widespread expectation that urban property values would inexorably rise over time, as buyers and sellers factored the unearned increment into the prices they offered and accepted (and as assessors took them into account when calculating tax liability). London argues that it is only by understanding how this expectation was established in the context of early 20th century fiscal struggles that we can understand the participation of American municipalities in debt-financed urban expansion in the 1920s and 1930s and indeed the persistence of such expansionist strategies into the present. The fiscal stability of cities continues to depend on high real estate values, with municipalities taking a share of both earned and unearned value increments while largely declining to distinguish between them in a way that might either hold prices down or isolate windfall profits for redistributive purposes. Under such a regime, rising municipal revenues in growing, prosperous places fail to provide the means for social provision adequate to counteract the “iron law of rent,”⁶ while in struggling municipalities, low property assessments translate to austerity budgets.

A major barrier to reformers’ advocacy for land value taxation in the United States was the fact that land policy—including property taxation policy—was diffuse and fragmented, the creature of thousands of local governments. The 20th century experience of Great Britain, where both fiscal policy and land use planning were more centralized, offers an example of how a Georgist-inspired system of land value capture played out as a national strategy. Between 1909 and 1979, Liberal and Labor governments promulgated “corporatist” policies that, while stopping short of full-on nationalization, effectively nationalized the right to develop real property.⁷ These policies sought actively to construct land markets in such a way as to redirect the “unearned increment” from individual owners to the state (Catney and Henneberry, 2019).⁸ Some of them entailed establishing the use value of land at a specific point in time and then appropriating some portion of any increase to that value which state action—development permission, infrastructure provision, or simply the enforcement of contracts—had conferred. Other policies relied on compulsory purchase of private land by the state or nationally chartered corporations at non-speculative prices, either to be owned in perpetuity by the public sector or to be sold land back to private owners at higher prices following state investment in infrastructure and public services. This second type of measure was integral to the design of the post-World War II New Towns program, which persisted through 1970.

To a greater extent than in the U.S., then, policies promulgated in the UK prior to 1979 rested on the idea that it made sense for the state to “obtain for the community (at least a significant share of) the increase in land value arising from its efforts” (Catney and Henneberry, 2019: 351). But there were problems here too, both political and conceptual, that echoed the U.S. experience. First, liberal and Labor governments were consistently hobbled by the “rearguard action” of landholders, who refused to participate in the reformed land market that legislation attempted to create (Booth, 2012; Catney and Henneberry, 2019; Crook and Whitehead, 2019). Again and again, landowners waited Labor and Liberal governments out. Again and again when they returned to office, Conservative leaders undid policies intended to expropriate unearned land rent.⁹ More fundamentally, the insertion of a social calculus into a system of market exchange in land was extremely complicated. Catney and Henneberry’s account of the implementation challenges faced by successive UK governments under the pre-1979 corporatist regime, which had dedicated itself to the public capture of land value from private landowners, demonstrates this. In a context where value was equated to price (following the standard microeconomic equivalence between these) it proved difficult to devise a method for isolating the portion of the “value” of a unit of land that should be ascribed to and expropriated for the community at large (Booth, 2012). Further, there was no guarantee that the state, having captured this value, would redistribute it in ways that alleviated poverty and social distress as George had imagined.

Direct social housing provision in the UK ceased during the 1980s. As austerity then became “generalized as the primary mode of intergovernmental fiscal relations” (Bloom, 2020: 29), publicly held land came to be considered not a resource for social redistribution but as an asset from which the public sector might extract surplus for other purposes. Meanwhile, the once-ambitious policies that had attempted to nationalize future rights to develop had been jettisoned and replaced by a system of local taxes on development value (inclusive of land value) that municipalities negotiate case by case (see Campbell et al., 2000; Crook, 2016; Crook and Whitehead, 2019).

While this paper is confined primarily to the fate of George-inspired policy in the U.S. and UK, it is important to note at least briefly that George’s thought had a marked influence on the political philosophy of Sun Yat-Sen, founder of the Republic of China (Haila, 2007). Sun’s min sheng or “people’s livelihood” principle specified that in the interest of just distribution of resources under a socialist system, the government should appropriate future increases in land value beyond a certain baseline figure (land value exclusive of improvements as assessed at a particular moment in time). While this principle of so-called “land equalization” was later used to refer to the nationalization and public ownership of real property, Sun clearly meant to limit his application of Georgist thought to a policy that would tax future unearned increments.¹⁰ Yet public land ownership both in the Republic era and in the People’s Republic after the 1949 revolution came with abuses and depredations that rivaled those permitted in Western property capitalist societies. These experiences suggest that public sector ownership regimes are capable of engaging in the decimation of “community” property structures in ways every bit as aggressive as what is observed under so-called free market capitalism. Shih and Lake’s (2020) account of state-led peri-urban redevelopment policy in contemporary China provides ample evidence that a variety of institutional arrangements can and do produce circumstances conducive to commodification.¹¹

Value capture under neoliberalism

In the past several decades, scholars have observed the ascendancy of entrepreneurial urban governance approaches (Harvey, 1989; Jessop, 1998) and the emergence of real estate as a widely held, securitize-able, and liquid portfolio asset (Christophers, 2020). This integration of finance and real estate has changed the environment for land value capture (LVC) policies and renewed their prominence in the urban development playbook. Austerity politics have also played a role. As Sclar (2020) notes, in cities where developable land is scarce, planners’ decisions regarding the allowable height and bulk of new development are of “greater financial concern than was the case when zoning was first developed” (p. 38), thus increasing the appeal from investors’ perspective of value capture tools tied to zoning practice. Changes in public finance also furnish new LVC venues; as cities increasingly rely on non-guaranteed debt secured by future real estate tax receipts, they can be said to be engineering the “pre-capture” of property value that will materialize following development (Weber, 2020).

Unsurprisingly in this new context, unique histories and political economies inform different places’ adaptations of George’s thought. In the UK, the supplanting of centrally administered 20th century corporatist tools (compulsory land purchase, betterment levies) by locally negotiated Planning Obligations and Community Infrastructure Levies is a dramatic paradigm shift (Catney and Henneberry, 2019). In the past, officials conceived of taxation as a mechanism for recovering landowners’ unearned gains and using revenues either to fund infrastructure, provide social housing, or alleviate poverty. Contemporary local officials negotiating planning obligations and infrastructure levies are, in contrast, encouraged to see them as tools to “mitigate the adverse direct impacts of development,” with revenues used “to provide infrastructure to offset these impacts”—a much more circumscribed vision (Crook and Whitehead, 2019: 366).

This change in the UK brings that country into greater alignment with practices in the United States and Canada, where there were never corporatist national frameworks in place and where experiments with Georgist ideas were more piecemeal. In the United States especially, a patchwork of state-level policies, local codes, and planning cultures governs what local officials may ask of developers in the context of regulatory changes such as up-zonings (Kim, 2020a, 2020b). While local policy must be crafted to avoid falling afoul of the U.S. Constitution’s Fifth Amendment “takings” principle as interpreted in well-known Supreme court cases, it otherwise varies significantly. In the case of inclusionary housing, for example, there is extreme variation: some inclusionary housing programs some are negotiated while others are statutory, some are voluntary (developers “opt in” to take advantage of density bonuses) while others are mandatory, and some target moderate-income tenants while others stipulate deep affordability. Some require housing units to remain affordable in perpetuity while in others the homes become subject to market pricing after as little as 10 years (Jacobus, n.d.). Similarly, tax increment financing (TIF) arrangements, depending on their details, can either put municipal taxpayers at risk or safeguard them from the possibility of revenue losses if the expected value increment does not materialize. Different TIF agreements have different implications for whose property taxes rise and how much (Weber and Gooddeeris, 2007). But while the details of contemporary land value recapture differ from place to place, instantiations of it share an underlying logic that causes it to part ways with classical Georgism. Namely, there has been a sidelining of the principle that there is a public entitlement to the surplus created when land value uplift is generated socially rather than through the effort of a private owner. As Booth asks:

Is it a fundamental belief that value should be captured in the public interest and then applied for the public good? That was clearly Mill’s position and informs some of the attempts in Britain to tax betterment. Or is it simply a question of making developers pay for infrastructure needed to support their projects and to offset the impact the projects will have on their environment? (2012: 90)

If the answer is latter, the vision of redistributing the unearned increment in the interest of general social well-being is abandoned. While George (and Mill) stipulated to the idea that property in land is in some real way public, entrepreneurial forms of land value capture firmly locate both land ownership and land development rights with private parties and cast the state as an interloper.

This philosophical shift is readily visible in the practice of development viability appraisal, a technique that British scholars have examined more thoroughly than their North American counterparts. A viability determination, sometimes spearheaded by a developer, sometimes by a state actor, and sometimes an outside consultant, is a calculative assessment that addresses itself to the question of how much revenue or other public benefit can be exacted or captured from a project without making that project unprofitable. It typically relies on a residual land value calculation arrived at by subtracting the income value of a new potential development from the costs of developing it (see Balakrishnan and van Maasakkers, 2021; Crosby, 2019). Viability calculations are central to the new British value capture regime described above, but they are also used increasingly in Canada (Biggar and Siemiatycki, 2020) and the United States (Kim, 2020a; Rosen et al., 2017; Williams et al., 2016). Some critics have been concerned about the vulnerability of these assessments to manipulation; by varying inputs such as the cost of debt, the income capitalization rate, and minimum acceptable rates of investor return, those responsible for the analysis can produce very different estimates of what government can rightly claim (Balakrishnan and van Maasakkers, 2021; Catney and Henneberry, 2019; Crosby, 2019; Weber, 2015, 2020). In the case of exactions or development charges, the question of threshold or benchmark land value is also critical. If there has been speculation or front-running, the uplift in value expected as a result of a legislated density increase or air rights permission may already have been capitalized into a land price; it may then be argued that the new owner’s “unearned increment” is zero and that the developer cannot both offer a contribution to the public sector and realize competitive returns.¹² There has also been concern that a method designed to calculate developer obligation by discovering what will be “left over” after private costs and profits are factored in tends to result in the geographic concentration of benefits in high-wealth areas that already possess many amenities and privileges (Biggar and Siemiatycki, 2020; Cambell et al., 2000). More fundamentally, however, the development viability analysis enacts assumptions about property rights and the deserved accumulation of social surplus by private parties that were once contested, by George and others. Embedded within this kind of analysis is the idea that the right to commodify and extract profit from location belongs to private actors on which the public sector is parasitic.

Is progress possible?

The argument that extreme wealth inequality is intimately related to control over landed property is as compelling in 2023 as it was when Henry George first published Progress and Poverty in 1879. It has thus become more common to hear calls for the state to capture gains that occur when an increase in the value of real property is due not to the owner’s own intervention but to collective activity (i.e. social contributions to the desirability of a location) or public sector actions (such as upzonings or infrastructure development) (see Lincoln Institute of Land Policy, 2022; Stiglitz, 2015). In a 2021 article about the macro-economic dynamics of skyrocketing residential real estate prices, Ryan-Collins urges “land policy reforms targeted at reducing the potential for rent extraction and speculative profits from property ownership” (p. 480). Rybeck’s argument for “land value recovery and recycling” is expressly indebted to Georgist thinking and also incorporates a “smart growth” component; in addition to reducing land prices and making homes more affordable, he maintains, such a tax will also encourage more intense use of developable land near existing infrastructure and thus combat sprawl (Rybeck, 2019a, 2019b). England (2018) holds up the experience of early 20th century Vancouver as an example of a successful land value taxation policy eviscerated by interest group politics and expresses enthusiasm at the prospect of a political realignment capable of re-establishing the former regime.

But the revival of the land value tax as a policy instrument would face familiar obstacles. The first is technical and recalls London’s 2020 account of Progressive-era land value taxation debates in New York. Namely, the more successful a tax becomes at curbing speculation and the assetization of land, the weaker its revenue-raising capability. This is theoretically manageable through a balanced wealth taxation system and perhaps a rethinking of the centrality (in the U.S. especially) of real property taxation in local government budgets. But in the absence of that system, many Anglo-American municipalities consent to or sponsor the commodification of land, buildings, and even air (see Balakrishnan and van Maasakkers, 2021) to make the most of the opportunity to extract revenue via property taxation. Such a regime, while it may produce surpluses for the state, contributes to the growth of unaffordability, because it allows pre-announced policy interventions such as upzonings, density bonusing programs, and tax increment financing district formation to be capitalized into land value that is then claimed by private owners. This in turn increases property prices. In the current environment, Land Value Capture policies, even when they yield social goods, run the risk of delivering outsized value to landholders while making property—especially housing for renters, low-income homeowners, and would-be home-buyers—more expensive. And indeed, rampant price escalation is notably frequent in places where these kinds of policies have been applied (Biggar and Siemiatycki, 2020; Immergluck, 2009; Immergluck and Balan, 2018; McAllister et al., 2018; Sorensen, 2023; Stein, 2019). Entrepreneurial forms of land value capture are often not an ally in the effort to return an unearned increment to the broader community, in that they are likely to be regressive fiscally and to supercharge institutions that view land and housing purely as assets.

A second, political obstacle is the one progressive government leaders encountered in the UK and in Vancouver in the 20th century: mobilization by property owners who stand to have their wealth accumulation disrupted by significant changes in tax incidence, as well as resistance from financial investors whose fortunes are deeply imbricated with those of the real estate sector (Ryan-Collins, 2021a, 2021b). This goes to George’s political naivete and his incomplete thinking-through of how his proposals would be implemented. George believed it would be possible, without “shock or dispossession,” to draw on socially created value to redistribute land wealth from the undeserving rentier to value-producing members of society—making land cheaper and more accessible to a greater proportion of the population and, ultimately, eradicating poverty. But as noted above, he did not recognize the extent to which interest on mortgage debt is a significant form of economic rent (Hudson, 2008; Ryan-Collins, 2021b). Moreso, he did not recognize that the power to alienate land and its resources for the purposes of individual accumulation was a pillar of the social order he wished to reform. At the core of the Enlightenment-era liberal state, especially in the UK and its colonial possessions, was the assurance that government would protect real property as a tradeable commodity and as debt collateral for those who possessed it (Bhandar, 2018; Linklater, 2013; Ryan-Collins et al., 2017). The social contract proposed by modern liberal constitutionalism is a contract under which government protects an individual right to property and the increase it yields—whether that be understood as a natural or a politically constructed right, and whether or not the owner can make a colorable claim to have produced that increase through their own effort (See West, 2003). To disrupt this relation by even attempting to determine what portion of a property’s value is “unearned,” or produced socially rather than individually, is to defy the fundamental bargain on which liberal government rests.¹³ This is a large task for any individual fiscal policy intervention to confront. As England says of Vancouver’s land value taxation opponents:

[T]hey argued that their property rights superseded these communal goods. They viewed the land value tax as a violation of property rights because it reduced the price at which they could sell their property or encouraged its conversion to alternative uses. They argued for their rights to retain real or imputed returns from their property without any expectation that their tenure would be conducive to communal well-being (p. 63).

Conclusion

While fiscal systems that attempt to engage in taxation on the basis of a distinction between earned and unearned real property value have faced insurmountable challenges to date, the possibility remains that this could change. Long-running debates about property tax reform have yielded some implementable solutions in both Europe and the United States (see, e.g. Barton, 2011; Falk, 2020; Phillips, 2020; Schweitzer, 2018). There is increasing interest in ways to reframe land value taxation in terms that could make it more palatable and expose opposition to it as unprincipled rent-seeking (Rybeck, 2019a, 2019b). Increasingly, scholars and policymakers are subjecting regressive land value capture strategies to critical scrutiny (Fisher et al., 2023).

Nevertheless, as this historical review demonstrates, planners and policymakers attempting to implement modern strategies for harnessing socially created property value uplift confront daunting practical and political challenges. Where land is seen as interchangeable with capital and where its value and its market price are conflated (whether through academic orthodoxy, discursive practice, law, or all of these) it difficult to mount the argument that the proceeds of land value increase should be shared between private owners and the public at large, and still more complicated to create consensus around a calculus to accomplish the sharing. Calculative difficulties are compounded by the political resistance amply described in this essay. Because real property wealth, while still highly concentrated among the most economically privileged 5% of the population, has also become entrenched in much of Anglo-America as a staple element of middle class status (Piketty, 2022; Ryan-Collins et al., 2017), mobilized homeowners form a powerful interest group defending owners’ exclusive right to the proceeds of price appreciation, while also advocating to reduce the contribution of the standard property tax levy to the public fisc. Fiscally strapped municipal governments encourage property value appreciation despite its ultimately destructive consequences for affordability, because their short-term objectives are met when property and transfer taxes flow copiously from high-priced, commodified real estate (Wolf-Powers, 2022). The legacy of Henry George and the fiscal experiments his work inspired remain a backdrop for contemporary discussions of tax land taxation reform. It falls to future policy entrepreneurs to adapt Georgist proposals in ways that better anticipate both technical barriers and political resistance to the public appropriation of the “unearned increment.”

Footnotes

Declaration of conflicting interests

The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author received no financial support for the research, authorship, and/or publication of this article.

Notes

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