Land is a Big Deal

Bibliographic Information

• Author: Lars A. Doucet
• Publisher: Shack Simple Press, College Station, TX
• Year: 2022 (First Edition)
• Paperback ISBN: 979-8-9853225-2-1
• eBook ISBN: 979-8-9853225-3-8
• Origin: Expanded from articles on astralcodexten.substack.com and gameofrent.com; won Scott Alexander's Astral Codex Ten book review contest
• Endorsements: Scott Alexander, Noah Smith, Vitalik Buterin, Richard Florida

Core Thesis

Land remains a dominant economic force in the modern economy, and Henry George's proposed remedy — a Land Value Tax (LVT) on the unimproved rental value of land — addresses the root cause of unaffordable housing, wage stagnation, wealth inequality, and boom-bust cycles. The book defends three testable propositions against common objections:

1. Land is a really big deal — it constitutes the majority of urban real estate value, a large share of bank loans and personal assets, and its rents could fund a significant portion of government revenue
2. LVT cannot be passed on to tenants — because land supply is fixed, the tax is capitalized into lower land selling prices, not higher rents
3. Land value can be accurately assessed — modern mass appraisal methods can separate land value from improvement value with sufficient accuracy for practical policy

Structure

Key Empirical Data

Total US Land Value (Ch. 14)

Doucet synthesizes twelve estimation methods, producing a range of $19–$65 trillion:

Critique of the cost approach: The Fed method overvalues structures (using replacement cost minus depreciation, which exceeds actual market value of old buildings) and undervalues land. Michael Hudson noted the Fed once estimated nonfinancial corporations' land at negative $4 billion (Ch. 14).

Land Rents vs. Government Budgets (Ch. 15)

Converting selling values to annual rents at 5–8% cap rates:

Key comparisons (2019 federal budget = $4.4T): - Defense ($676B): covered by even the lowest estimate - Social Security ($1T): covered by even the lowest estimate - Federal tax receipts: land rents cover 30–103% - All government (federal + state + local): land rents cover 14–49% - Billionaire comparison: Expropriating 100% of all 745 US billionaires' wealth yields a one-time ~$5T; land rents raise $1.2–3.5T every year, and land cannot flee (Ch. 15)

Land as Share of Wealth

Citizen's Dividend Calculation (Ch. 17)

Using the most pessimistic land rent ($1.2T/year) split among ~209M US adults: - Anyone with property worth less than ~$230,000 → net positive under LVT + dividend - Two-adult household → break-even at ~$500,000 property value - "This is not a recipe for bankrupting the middle class." (Ch. 17)

Response to Critics

Paul Krugman (Ch. 11)

Krugman argued: "I don't think you can raise nearly enough money to run a modern welfare state by taxing land. It's just not a big enough thing." Doucet counters that even if LVT cannot fund the entire budget, it is worth doing for its other effects (ending speculation, rent-seeking, unaffordable housing, sprawl) and can offset significant inefficient taxes.

Matt Yglesias (Ch. 14)

Yglesias (2013) used the Federal Reserve method to estimate land at ~$15T. Doucet uses this as a conservative lower bound but argues it systematically understates land values because: (a) it relies on the flawed cost approach, (b) it uses assessed values far below market values, and (c) it excludes vacant land sales — the purest market data.

Milton Friedman

Friedman called LVT "the least bad tax" — Doucet cites this as the strongest endorsement from a non-Georgist economist (Ch. 15).

ATCOR and the Henry George Theorem (Ch. 15)

ATCOR (All Taxes Come Out of Rents), associated with Mason Gaffney: any reduction in taxes on income and capital causes a proportionate increase in land rental values. If true, a Single Tax policy always works — abolishing income/capital taxes shifts revenue to land rents, which 100% LVT then captures.

Henry George Theorem (Joseph Stiglitz, 1979): Under certain conditions, public goods spending is soaked up by land rents to such a degree that 100% LVT is sufficient to finance all public goods spending in perpetuity.

LVT Pass-Through: The Danish Natural Experiment (Ch. 20)

In 2007, Denmark redrew all municipal boundaries, causing a semi-random shuffling of LVT rates across 250 areas — an exogenous trigger. Høj, Jørgensen, & Schou (2017) found LVT is fully capitalized into property prices: the selling price of land goes down proportionately to how much land income is taxed away. Landlords eat the tax and cannot pass it on.

Doucet surveys 13+ additional studies, with 12 supporting full capitalization and only one (Wyatt 1994) opposing — and Wyatt's strongest argument actually affirms the Henry George Theorem.

Land Assessment (Part IV, Chs. 22–25)

Three standard approaches: 1. Market approach: comparable sales (most common) 2. Cost approach: replacement cost minus depreciation (tends to overvalue structures) 3. Income approach: net operating income ÷ cap rate

Modern mass appraisal methods surveyed: multiple regression (MRA), nonparametric kernel regression, adaptive weights smoothing (AWS), semiparametric regression, and innovative land valuation models (iLVM). Assessment cost: ~€20/property (~1% of tax revenue), vs. 6–12% for income tax collection.

At 85% LVT, even ±15% assessment error stays within safe bounds (max 97.75% of true rent collected). The chronic problem is underassessment of land, not overassessment.

Policy Recommendations

1. Implement LVT at the highest practical rate (~85% suggested as realistic target)
2. Abolish taxes on improvements — remove the portion of property tax falling on buildings
3. Replace inefficient taxes — shift from income, sales, and capital taxes toward land rents (ATCOR makes this revenue-neutral or positive)
4. Distribute a Citizen's Dividend (UBI) — return excess land rent equally to all citizens
5. Improve assessment accuracy — raising assessed land values to true market values effectively increases the hidden LVT in existing property taxes
6. Repeal restrictive zoning — LVT-aligned cities have incentives to allow development
7. Deferment options for owner-occupiers — allow deferring LVT until sale/transfer (Nate Blair proposal)
8. Open real estate transaction data — push for public records and open-source mass appraisal tools

Key Quotes

"It is not necessary to confiscate land; it is only necessary to confiscate rent." — Henry George, quoted Ch. 10

"Rent, in short, is the price of monopoly, arising from the reduction to individual ownership of natural elements which human exertion can neither produce nor increase." — Henry George, quoted Ch. 6

"The least bad tax, is a property tax on the unimproved value of land, the Henry George argument of many many years ago." — Milton Friedman, quoted Ch. 15

"Most land rent is paid out as interest to banks and that bank credit is a major driver of increases in housing prices." — Michael Hudson, quoted Ch. 16

"The unaffordability of housing appears to be not a mere symptom of inequality but rather a key driver of it." — Doucet, Ch. 16

"Without doing one stroke of work, without adding one iota of wealth to the community, in ten years you will be rich!" — Henry George, quoted Ch. 7

"Nothing good ever came without a struggle." — Doucet, Ch. 26

Intellectual Lineage

• Adam Smith (1776) → David Ricardo (1817, Law of Rent) → Henry George (1879, Progress and Poverty) → Mason Gaffney (ATCOR, 2005) → Joseph Stiglitz (Henry George Theorem, 1979) → Lars Doucet (2022, empirical synthesis)

The Monopoly board game connection: Elizabeth Magie designed The Landlord's Game in 1904 to teach George's ideas. The original rules included a land rent tax funding public works and a social dividend. Parker Brothers stripped the Georgist rules (Ch. 2, 10).

Notable Economists Cited

Limitations

1. Land value estimates are contested: The $24T–$44T range reflects genuine methodological disagreement
2. ATCOR is a hypothesis, not a proven theorem: Doucet calls for empirical testing
3. No case studies in first edition: Pittsburgh is referenced (Bourassa 1987) but Detroit, England, Norway case studies are deferred to future editions
4. The book is advocacy, not neutral: Doucet is a self-identified Georgist
5. Page count not confirmed from EPUB: Approximately 400 pages based on content scope
6. Publisher discrepancy: Some sources list "Center for Land Governance" but the EPUB copyright page explicitly names Shack Simple Press

See Also

• The Corruption of Economics (book page) — Gaffney & Harrison's argument for keeping land separate from capital
• Radical Markets (book page) — Posner & Weyl's COST proposal extending George's land tax to all property
• Land Value Tax — The traditional Georgist proposal
• ATCOR — All Taxes Come Out of Rent
• Economic Rent — Rent as unearned income from land
• LVT Dampens Land Speculation — Evidence on LVT reducing speculation
• Boom Bust Cycle — Land speculation and the business cycle

Sources

• Doucet, Lars A. Land is a Big Deal: Why rent is too high, wages too low, and what we can do about it. First Edition. College Station, TX: Shack Simple Press, 2022. ISBN 979-8-9853225-2-1.