Geoism Via Private Communities
by Fred E. Foldvary, Senior Editor
The single-tax movement has for 120 years been attempting to change tax systems world wide to what Henry George and the earlier French Physiocrat economists proposed, the abolition of all taxes except on land value. There have been successes and considerable influence on theory and policy, but the world's tax systems continue to be predatory, and all but a few people are utterly ignorant of the concept of tapping rent for public revenue.
George warned that there would be powerful pecuniary interests opposed to shifting taxes from labor and capital to land. World-wide the structure of mass democracy caters to powerful moneyed and landed interests who exploit public ignorance. It's time to switch strategies.
Geoists quite properly criticize narrow neoclassical doctrine that pretends that land does not exist or has no matter, but like in East-Asian martial arts, we can turn the enemy's might into our tool. Go with the flow and then some. We can physiocratize if we totally privatize.
We can advocate legislation to transform a neighborhood into a contractual association. The neighborhood association would take over local civic goods such as the streets and security. The members of the association would deduct from their tax liabilities what the government saves in not providing these services.
Voilà, the services previously paid for by taxes on labor and enterprise are now paid from dues or assessments based on site values. It's not called "land value tax" or "public collection of rent" but in substance it is the same thing.
We now go to the next step of creating a second-level association of 20 or 30 neighborhood associations and passing some of the dues to the second-level board. The second-level association, representing about 30,000 persons, can take over other services from the city or county, such as schooling or fire protection, further reducing tax liabilities.
The process continues until almost all services have been transferred to the contractual associations, and there are no more taxes on labor and capital, either on their earnings or spending. This has all been done by catering to instead of fighting against landlords. We privatize and contractualize the community, making landowners responsible for financing the services but without calling it a tax.
Psychologically, landowners are willing to pay dues, assessments, and rentals to civic associations, but not taxes to governments. Why fight psychology? Instead, harness it. If we are interested in the substance rather than the symbol, and appreciate the irony, privatizing governance makes land rent common property. Private communities cannot tax income or sales, because folks would flee. They therefore have to do the efficient and effective thing, tap the rent. Renters then enjoy civic services tax-free, since they would have to pay rent anyway.
Some geoists have been suspicious of private communities, seeing them as landlordist. But if the lords of the land have to finance the civic goods, they lose the subsidy that comes from the financing of the goods from wages. With economic judo, we give landlords more responsibility. Landowners would find this flattery hard to resist.
Physiocratizing by privatizing would get around the legal restrictions imposed to prevent the adoption of geoism. In California, for example, Proposition 13 put in the State Constitution the requirement to tax the whole real estate value, but limited to one percent, with increases of no more than two percent. But this does not constrain a residential association. Shifting public revenues to the assessments by private communities gets around this legal barrier.
So geoists, think about shifting the strategy. Economic judo may take us to economic justice much quicker than fighting the special interests who control governments.
-- Fred Foldvary
Copyright 2004 by Fred E. Foldvary. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieval system, without giving full credit to Fred Foldvary and The Progress Report.
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