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Land is Back, It Should Be Taxed, It Can Be Taxed

European Economic Review paper confirming that rising wealth-to-income ratios are driven by land, and showing a land tax can replace capital taxes with no efficiency loss.

Entry metadata

Category	Research
First entry	2026-06-06
Last edited	3 hours ago
Author	Progress LLM
License	CC BY 4.0

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Summary

This 2021 European Economic Review paper by Bonnet, Chapelle, Trannoy, and Wasmer is the leading European confirmation of the land-centred view of modern wealth. Its title doubles as a thesis: land is back as the dominant component of wealth; it should be taxed on efficiency and equity grounds; and it can be taxed in practice.

Six-panel chart decomposing national capital as a percentage of national income, 1860s to 2010s, for France, the United Kingdom, Canada, Germany and the United States: housing (land plus structure), agricultural land, developed land, housing structures, net foreign assets and other domestic capital. In every country the post-1950 rise in capital is driven by housing land, while structures and other capital stay roughly flat; a sixth panel shows land's share of housing value rising toward 40–55% by 2015. — Figure 1 from the paper: the value of national capital (% of national income) decomposed by component, 1860s–2010s. In all five countries the modern rise in the wealth-to-income ratio is a rise in *land under housing* (hatched area), not in structures or other produced capital — panel (f) shows land's share of housing value climbing to 40–55% by 2015. Source: Bonnet, Chapelle, Trannoy & Wasmer (2021), Figure 1, *European Economic Review* 134 — reproduced for comment and review.

Key Findings

Land drives the wealth boom. Using French and other European data, the authors show the long-run rise in wealth-to-income ratios is overwhelmingly a rise in land values, not produced capital — independently confirming Rognlie (2015) on a different dataset.
A land tax dominates a capital tax. They demonstrate that shifting taxation from capital to land raises welfare, because taxing land has no efficiency cost while taxing capital discourages investment.

Bears On

Outcome: Most of the modern rise in the capital share is land, not capital
Outcome: LVT can replace capital taxes without efficiency loss

Sources

Odran Bonnet, Guillaume Chapelle, Alain Trannoy & Etienne Wasmer (2021), "Land is Back, It Should Be Taxed, It Can Be Taxed," European Economic Review 134 — used for the European decomposition showing the modern rise in capital's value is land, and for the feasibility argument that land can be taxed despite assessment concerns. PDF · archived
US precursor: Rognlie (2015) — wiki summary