I reply to David first and then to Roger.  
  
Suppose that A owns a piece of land that he values at  
$100. Entrepreneur B appraises the land and his unique  
entrepreneurial knowledge, which he has produced,  
leads him to appraise it at $200. The present value of  
the future income he expects after buying the land and  
diverting its use is $200. He is able to buy the land  
at $101 because A is not an entrepreneur. A year  
later, C's entrepreneurial knowledge leads her to  
appraise the land at $300. B's appraisal has not  
changed. C buys the land at $201 because B does not  
recognize the higher appraised value. Now B has  
enjoyed a capital gain of $100. $99 of that was due to  
his superior appraisal. $1 was due to his ownership of  
the land.   
  
Now if you threaten to tax all of the $1, you will  
take away the incentive to sell. If you tax the $99,  
you will take away the incentive to produce a superior  
entrepreneurial appraisal. If you tax a per cent, you  
will reduce the incentive to the degree that you tax.  
A low per cent tax will reduce the incentive to a low  
degree a high per cent tax will reduce the incentive  
to a high degree.  
  
  
The price of "the prime site in Oxford Street" is the  
consequence of the accumulated appraisals and  
reappraisals of countless individuals over a period of  
hundreds of years. No doubt there were lucky  
landowners who gained windfalls at particular times  
from those appraisals and the actions that followed.  
But we cannot tax them today. We can only tax their  
heirs, if we can find them and if they have anything  
left to tax.  
  
I cannot think of any way to tax the future windfall  
gainers without also taxing the entrepreneurship that  
causes the gains to occur and, at the same time,  
taxing the entrepreneurship that gives consumers the  
additional surplus because the prime site is used in  
the best way that the competing entrepreneurs know.  
  
I understand Roger's struggle, I think. One way to  
approach the issue is to make a concrete proposal and  
then to consider the likely effects of adopting it.  
  
What specific tax would George promote, as you see it?  
  
Pat Gunning