In Support of Establishing a Land Trusteeship

William Truehart, Ph.D.

[Reprinted from a pamphlet issued by L.E.A.F. ("Land, Equality and Freedom") in 1974]

The land trustee, in exchange for exclusive use of his land site, would pay to society a sum approximately equal to an annual rental, or use value, of his site.

Economists call this the economic rent of land, which is a true surplus. By economic rent, of surplus, economists mean an excess received by a factor of production over and above what would induce that factor to work, or be used. Because of this fact, society's levy on this surplus rests where it is placed, and cannot be shifted to anyone in increased prices.

A levy of this economic rent is "neutral," meaning that it does not affect the allocation of resources. Resources would be allocated as optimally with as without the trustee's annual payment.

In contrast, the current property tax, as it impacts on improvements, tends to discourage construction and to increase prices on houses and buildings. As a result, "excess burden" is created, wherein the consumer, or user, gets less for his money.

The land trustee's payment, in addition, would tend to discourage land speculation, including the holding of land for less than its "highest and best use," as determined by the market.

Today's property tax on buildings tends to encourage lano speculation, "taxpayers" and slums. This tends to compound the problem of slums, because property taxes increase at least in proportion to the increased value of new buildings. With a trust the private renewal of slums and blighted areas is encouraged.

An adequate rent on the site value is needed to discourage urban sprawl, due in large part to desirable sites being held out of use for speculation. The result is "leapfrogging" over these sites to lower ones farther out, compounding the problem of air pollution caused by having to drive farther to work.

Land values are the only ones which are community and socially created, increasing in direct proportion to the increase of population and public services. Land, including valuable natural resources, is not "produced" in the same sense as a house or automobile. Therefore, there is a ring of equity in taking socially created values from a resource which is a gift of nature, for social purposes, through the land trustee's annual payment.