Objection: The Public-Choice Critique (Government Failure Won't Stop at the Assessor's Door)

The Objection

Georgism rests on an asymmetry of assumptions: markets fail (land is monopolized, rent is privatized, cycles are land-driven) but the state that captures the rent is treated as a competent, public-spirited trustee. Public-choice economics — the tradition of James M. Buchanan and Gordon Tullock — insists on symmetry: model government with the same self-interested behavior you attribute to landlords. Once you do, three problems appear that the standard Georgist case does not answer.

1. Assessment discretion is a rent-extraction surface. A land value tax stands or falls on an official valuation of every parcel. Wherever a public official sets a number that determines a private tax bill, there is a market for influence: under-assess a friend, a donor, or a politically connected firm, and over-assess a rival. The assessment problem is usually posed as a technical one (can we measure land value?); the public-choice version is a political one (who controls the assessor, and what will they sell?). The discretion that mass appraisal requires is exactly the discretion rent-seekers buy.

2. The land tax is the perfect Leviathan tax. In The Power to Tax (1980), Geoffrey Brennan and James Buchanan model government not as a benevolent planner but as Leviathan, a revenue-maximizer whose appetite a constitution exists to restrain — a book, Buchanan wrote, "informed by a single idea--the implications of a revenue-maximizing government."[1] Their result inverts the standard efficiency case for LVT. Orthodox theory prizes a broad, comprehensive, inescapable base because it minimizes deadweight loss per dollar raised — and land is the textbook inelastic, inescapable base. Brennan and Buchanan argue this is exactly why a prudent taxpayer should be wary: "any widening of the tax base must open up further taxing possibilities for a revenue-seeking government."[1] The very features that make an LVT non-distortionary — a base that cannot flee, hide, or shrink — make it the ideal revenue engine for a state that cannot be trusted to stop at the efficient level of spending. Neutrality removes the taxpayer's escape route; behind a veil of uncertainty the constitutional taxpayer would "aim to constrain Leviathan to the maximum possible extent,"[1] not hand it the perfect tax.

3. The transitional-gains trap makes the reform nearly unenactable. Gordon Tullock's "The Transitional Gains Trap" (1975) shows why privileges, once granted, cannot be withdrawn: the benefit capitalizes into asset prices, so current holders earn only a normal return yet face a real capital loss if the privilege ends — and so they fight to keep even inefficient programs, whose "termination... would, in general, lead to large losses for the entrenched interests."[2] The right to keep land's unearned increment is precisely such a capitalized privilege: it is baked into every land and house price. An LVT that captures the rent is a capital loss on today's owners — many of them ordinary mortgaged households — who will mobilize to block it. Public choice thus predicts not a smooth Pigouvian reform but a durable political trap.

Taken together: rent-seeking does not stop at the assessor's door. It re-enters through valuation discretion, through a revenue-hungry state that loves an inescapable base, and through the entrenched interests any reform must dispossess.

Why People Worry About This

The worry is not hypothetical. Property assessment has a real record of political manipulation and regressivity: studies of US assessment (e.g., Christopher Berry's work on the systematic over-assessment of low-value homes and under-assessment of high-value homes) show that even routine property valuation is neither neutral nor uniformly accurate, and the errors track political and economic power. Special carve-outs, use-value assessment for favored classes (farmland, "agricultural" estates near cities), and abatements handed to mobile employers are ordinary features of real tax codes, not aberrations. The transitional-gains logic is visible wherever a licensed rent — taxi medallions, sugar quotas, grazing rights — has proven politically immortal despite obvious inefficiency. And the Leviathan concern is grounded in the plain fact that governments given a productive new revenue source have often expanded to absorb it rather than cut other taxes. A reader who distrusts concentrated power has every reason to ask why the state capturing the rent should be trusted more than the landlords who capture it now.

The Response

The public-choice critique is a serious symmetry argument, and the honest georgist response concedes its premise while contesting its conclusion. It divides into four moves.

1. The argument overreaches — it indicts all taxation, and LVT survives the comparison best. Public-choice failure is not a property of the land tax; it is a property of government, and it therefore burdens every revenue instrument. The relevant question is not "is LVT vulnerable to rent-seeking?" (every tax is) but "which tax offers rent-seekers the smallest surface?" On that comparison LVT does unusually well. Income and corporate taxation are the actual playground of tax rent-seeking: deductions, credits, depreciation schedules, carried interest, transfer pricing, and offshore shifting are lobbied-for privileges written into the base itself — the statute is the rent. Land cannot be moved, hidden, or restructured through a Cayman subsidiary; its value is spatially smooth and publicly checkable against neighboring sales. The base that gives Leviathan the fewest levers to sell is the visible, immobile one (see Foldvary on public revenue).

2. Assessment discretion is bounded and auditable — by design, not by hope. The public-choice worry about the assessor is strongest where valuation is opaque and discretionary and weakest where it is transparent and rule-bound. Land is the transparent case: because value is spatially smooth, a corrupt under-assessment of one parcel stands out against its neighbors and is trivially contestable, unlike a buried income-tax deduction. Modern mass-appraisal methods (CAMA, hedonic regression, Shapley land/building splits) replace official discretion with published models. And self-assessment mechanisms — the Harberger/COST tax, where owners name their own value and must sell at it — remove the assessor from the loop entirely, converting the discretion surface into an incentive-compatible one. Where assessment quality is poor the remedy is institutional investment, not abandonment (the practical program of Dye & England and the Lincoln Institute).

3. The Leviathan inversion assumes away the spending side — and cuts against every efficient tax, so it cannot single out LVT. Brennan and Buchanan's argument is that an efficient base is dangerous because it is exploitable. But this is an indictment of tax efficiency in general, not of land: by the same logic a broad VAT or a comprehensive income tax is a "perfect Leviathan tax." If the worry is total government size, the public-choice remedy is a constitutional rate or revenue limit — a cap on how much rent is captured or spent — which is fully compatible with an LVT and is how Georgists from Henry George onward framed it (the rent funds a defined public purpose or a citizen's dividend, not open-ended spending). The efficiency of the base and the constraint on the level are separable choices; the critique conflates them.

4. The transitional-gains trap is real but symmetrical — the status quo is itself the trap. Tullock's mechanism does explain why LVT is hard to enact, and Georgists should say so plainly (this is the rigorous core of the transition-shock and homevoter objections). But Tullock's own logic implies the current regime — privately captured land rent, capitalized into prices — is the entrenched, inefficient program that "cannot be repealed." The trap is an argument for careful transition design (gradual phase-in, capitalization-aware rules, compensation funded by the rent itself under ATCOR), not for perpetuating the privilege. A reform can escape the trap by buying out the entrenched loss rather than denying it exists.

Limits and Caveats

• The symmetry premise is correct, and pages that assume a benevolent state are weaker for ignoring it. The strongest form of this objection is not answered by asserting good government; it is answered by showing LVT minimizes — not eliminates — discretionary rent-seeking. Some rent-seeking surface remains in every case.
• Assessment corruption is a live risk in weak-institution settings. Where courts, audits, and a free press are absent, the "auditable land value" response weakens sharply; the critique has most force exactly where state capacity is lowest — which is also where Georgist reform is hardest for many other reasons.
• The Leviathan concern about spending is genuine and unresolved by the tax base alone. Nothing in the efficiency of LVT guarantees the revenue is well spent; that requires the separate constitutional machinery (rate limits, dividends, earmarking) the response invokes but which is not itself part of the tax.
• The transition trap is a real cost, not merely a framing problem. Even a well-designed phase-in imposes losses on some current owners; "the status quo is also a trap" is true but does not make those losses painless.
• Rent-gradient note. This objection bites hardest on the land case, where a single official valuation drives the bill; for rents captured by auction or price (spectrum, carbon, congestion) the assessment-discretion surface is smaller, and the Leviathan concern correspondingly shifts to how the proceeds are used.

Net Assessment

The public-choice critique is the most intellectually serious "government failure" objection to Georgism, and its central premise — model the state as self-interested, not saintly — is correct and should be conceded. What it does not establish is that LVT is disqualified. Its three mechanisms are all real but all comparative: rent-seeking afflicts every tax, and among real taxes the land base offers the smallest discretionary surface (immobile, visible, spatially smooth, self-assessable) rather than the largest. The Leviathan inversion is an argument against efficient taxation in general, curable by a constitutional limit on the level of capture rather than by rejecting the base. And Tullock's trap, correctly applied, indicts the privatized-rent status quo as much as it warns against abrupt reform — turning it into a design constraint (phased, compensated transition) rather than a veto. The objection's lasting contribution is a burden of institutional design: an honest Georgist program must specify who controls assessment, how it is audited, what caps the level of capture, and how the transition buys out entrenched losses. Where those are unspecified, the critique stands.

See Also

• Brennan & Buchanan, The Power to Tax — the Leviathan anchor, read in full
• Tullock, "The Transitional Gains Trap" — the capitalization-trap anchor
• Rent-Seeking · Deadweight Loss
• Objection: land value can't be assessed — the technical sibling of the discretion worry
• Objection: LVT transition wealth shock · Objection: homevoters will block LVT
• Harberger Tax / COST — self-assessment as a discretion-removing mechanism

Sources

1. Geoffrey Brennan & James M. Buchanan, The Power to Tax: Analytical Foundations of a Fiscal Constitution, Cambridge University Press, 1980 (Collected Works Vol. 9, Liberty Fund). Full text (Liberty Fund OLL) · wiki summary — used for the revenue-maximizing "Leviathan" model, the inversion of the orthodox broad-base efficiency norm, and the constitutional aim of constraining the base (E- and C-claims; quotes ≤50 words, verified against the OLL full text).
2. Gordon Tullock, "The Transitional Gains Trap," The Bell Journal of Economics 6(2), Autumn 1975, pp. 671–678. Abstract (IDEAS/RePEc, free) · DOI · wiki summary — used for the capitalization-of-privilege mechanism and why capitalized privileges resist repeal (E-claim; quote ≤50 words, verified against the openly published abstract).
3. Christopher Berry, "Reassessing the Property Tax," University of Chicago, January 2021 — used for the empirical claim that ordinary property assessment systematically over-assesses low-value and under-assesses high-value homes, showing the discretion surface is real. SSRN · PDF (UChicago)
4. Richard F. Dye & Richard W. England, Assessing the Theory and Practice of Land Value Taxation, Lincoln Institute, 2010. wiki summary — used for the response that assessment quality is an institutional-investment program, not a fundamental barrier.
5. Fred Foldvary on public revenue — wiki summary — used for the georgist case that a land/resource base minimizes the discretionary surface relative to income and commodity taxes.