For more information about how land reform can create meaningful work, restore our ecology, and bring more wealth into our local communities, I invite you to read my book Land: A New Paradigm for a Thriving World.

Our ability to own land outright leads to our ability to profit from it, and our ability to profit from land causes wealth inequality, poverty, involuntary unemployment, and even ecological destruction. Yet land values are community-generated: hospitals, schools, businesses, and so forth make nearby properties more valuable. Land values should therefore belong to those communities that create that value. If we are to remedy the financial and cultural poverty that pervades society, we are best advised to share the value of land. Traditionally, land values have partially been shared with local communities via property taxes. A more direct approach are land-value taxes, which are similar to property taxes but don’t apply to the value of man-made property improvements.

Land values are community-generated: hospitals, schools, businesses, and so forth make nearby properties more valuable. Land values should therefore belong to those communities that create that value. If we are to remedy the financial and cultural poverty that pervades society, we are best advised to share the value of land.

Yet few people tend to enjoy paying taxes—even the good ones. The word tax implies that the people being taxed have to part with something that belongs to them, since people pay taxes on their incomes, their sales, their capital gains, and so forth. The term land-value tax, therefore, implies that land users are being taxed on their land value, which to me seems incorrect, because communities make land valuable. Land-value taxes also use the sales price of land as a tax base to determine the land user’s tax obligation; to reference the sales price of land instead of its rental value psychologically already implies land ownership rather than a sense of land stewardship with which comes with a responsibility to the community one belongs to.

“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”
—Buckminster Fuller

The great visionary pioneer Buckminster Fuller demonstrated a deep understanding of the process of social change when he said: “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” (unsourced quotation) So rather than enforcing legislative change from the top down, we’re best advised to create change from the bottom up by embracing a new model on a local level that has the potential to make our existing model of land profiteering obsolete.

One such model was conceived by the late Cambridge academic Adrian Wrigley, who envisioned what he called a Location Value Covenant model, or what I call a land-use rights model. A land-use right is a voluntary program that involves a community and a property owner: When real estate is put up for sale, the local government—or a community land trust—advances funds to the new buyer to pay for the land value portion of the sales price. In exchange for these funds, the buyer acquires a land-use right for the property.

According to Wrigley: “Under the [land-use right], the owner of the property is required to pay an index­-linked sum to the community [for his property ownership] on a monthly basis in perpetuity. The land value mortgage paperwork is handled by a bank, and when completed, the government pays the bank and the bank lodges the [land-use right] in return. The bank has no further involvement with the arrangement.” A property tied to a land covenant should be exempt from property taxes. Payments for a land-use right made by the property owner should ideally be tax-deductible on a state and federal level as well.

The advantages of land-use rights are two-fold: First, participation is voluntary. Unlike taxes, which are enforced by governments upon property owners and tenants alike, a land-use right is a voluntary arrangement between an individual and the local community to which he or she belongs. This creates a mutually-beneficial bond between both parties: the community recognizes the voluntary nature of the transaction and tends to appreciate the willingness of the property owner to reimburse the community for the property owner’s use of land. And since property owners will have to financially invest in their local communities on an ongoing basis, they are more likely to become involved in their own communities. The property owner, meanwhile, will no doubt appreciate the ability to acquire a property at a fraction of the usual cost, since the property owner only pays upfront for a property’s improvements, not its land.

Land-use rights drastically lower the selling price of land; buyers would require little financing, if any, to purchase properties tied to strong land-use rights.

Secondly, a land-use right is one of the most effective ways for wealth to be retained at a local level: While a land-use right may require initial financing, communities receive a perpetual income from properties tied to land-use rights once communities repay their initial financial obligations. This model is markedly different from our current reality where every time a property is sold, financial institutions provide financing to buyers who have to pay higher prices as land becomes more scarce, and thus more valuable, over time. It is by this process that community wealth is privatized and siphoned off by the financial sector and by property owners. A land-use right, on the other hand, would counteract this tendency because land-use rights drastically lower the selling price of land; buyers would require little financing, if any, to purchase properties tied to strong land-use rights.

How can we create a world that works for everyone if we don’t create a world that works for anyone?

Given our present political, cultural and economic mass consciousness, sharing the value of land seems like a near-impossible task, especially since all of the land has already been parceled out. Yet as long as we continue to play this game of musical chairs in which there will always be winners and losers, we will end up having only losers, for how can we create a world that works for everyone if we don’t create a world that works for anyone?

For more information about how land reform can create meaningful work, restore our ecology, and bring more wealth into our local communities, I invite you to read my book Land: A New Paradigm for a Thriving World.

© Text Copyright Martin Adams rights reserved.
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