The Power to Tax: Analytical Foundations of a Fiscal Constitution

Summary

The Power to Tax (Cambridge University Press, 1980; reprinted as Vol. 9 of the Liberty Fund Collected Works of James M. Buchanan) is Geoffrey Brennan and James M. Buchanan's constitutional theory of taxation. By Buchanan's own account the book "is informed by a single idea--the implications of a revenue-maximizing government."[1] Instead of the orthodox public-finance assumption that the state is a benevolent social planner choosing taxes to fund public goods at least cost, Brennan and Buchanan model government as Leviathan — a revenue-maximizer whose appetite the constitution exists to constrain. "The very principle of constitutional government," they write (quoting J.S. Mill as the premise of their Chapter 2, "Natural Government"), "requires it to be assumed that political power will be abused to promote the particular purposes of the holder... because such is the natural tendency of things."[1]

The book matters to Georgism because it inverts the standard efficiency argument for a land value tax. Orthodox theory prescribes a broad, comprehensive, hard-to-avoid base precisely because such a base minimizes the distortion (deadweight loss) per dollar raised — and land is the textbook case of a perfectly inelastic, inescapable base. Brennan and Buchanan argue that under a revenue-maximizing government this prescription is exactly backwards.

The Core Inversion

Orthodox public finance holds that "personal taxes should allegedly be broadly based so that there is no (or minimal) discrimination... similarly, commodity taxes should allegedly also be broadly based... so as to minimize discrimination."[1] Brennan and Buchanan accept the efficiency logic but reject the policy conclusion once government is a maximizer rather than a servant: "any widening of the tax base must open up further taxing possibilities for a revenue-seeking government."[1] The efficient, comprehensive, inescapable base is not a gift to the taxpayer; it is the instrument that lets Leviathan extract the most. A constitutional taxpayer designing fiscal rules behind a veil of uncertainty would therefore "aim to constrain Leviathan to the maximum possible extent"[1] — deliberately choosing narrower, leakier, less "efficient" bases as a check on the total take.

Applied to land, the implication is uncomfortable for the Georgist: the properties that make an LVT attractive on efficiency grounds — a fixed base that cannot flee, cannot be hidden, and imposes no deadweight loss — are the same properties that would make it the ideal revenue base for a government that cannot be trusted to stop at the efficient level of spending. The very neutrality that disarms the excess-burden objection removes the taxpayer's escape route.

Scope and Limits (as the book itself frames them)

• It is a constitutional-choice argument, not an incidence claim. Brennan and Buchanan do not dispute that land is inelastic or that an LVT is non-distortionary in the static sense; their claim is about the dynamics of political power once such a base exists.
• The Leviathan model is an explicit worst case. The authors present revenue maximization as the assumption a prudent constitution-designer should adopt "not because it always is so," but as a maximin premise — leaving open how close real governments come to it.
• Land is used only by analogy in the book's own text. Chapter 6's "land" model is an analogy for money and inflation (a durable, government-monopolized asset), not a direct analysis of a Georgist land tax. The application to LVT is an interpretive extension the wiki draws from the book's general base-breadth thesis, not a claim the authors make about Henry George.

Relevance to the Wiki

This is the primary source behind the public-choice critique of Georgism: the strongest version of "government will misuse the rent" is not that land value cannot be captured, but that its very capturability makes it dangerous in the wrong constitutional hands. It sits alongside Tullock's transitional-gains trap as the two pillars of the public-choice objection.

See Also

• Objection: the public-choice critique — where this book is the lead anchor
• Rent-Seeking · Deadweight Loss · Economic Rent
• Tullock, "The Transitional Gains Trap" — the companion public-choice source

Sources

1. Geoffrey Brennan & James M. Buchanan, The Power to Tax: Analytical Foundations of a Fiscal Constitution, Cambridge University Press, 1980 (Collected Works of James M. Buchanan, Vol. 9, Liberty Fund). Full text (Liberty Fund OLL) · Full text (Econlib) — used for the revenue-maximizing "Leviathan" framing (Foreword, Ch. 1–2), the orthodox broad-base norm and its inversion (Ch. 3–4), and the constitutional prescription to constrain the base (all quotes ≤50 words, verified against the OLL full text).