Dear list:  
  
Mason and I have had an exchange that seems to address issues that   
others also are concerned with. So I attach the most recent part of the   
exchange here.  
  
Mason wrote:  
  
1, If rents are fully taxed there will be no increments to land prices;  
  
2, If rents are not fully taxed, a property tax of the American kind,   
based on the estimated selling price of land, automatically taxes   
current increments as they accrue. That is because the current increment   
(in a perfect market) is proportional to the selling price, and the tax   
is also proportional to the selling price.  
  
However, it is not clear to me how you are defining unearned   
increments".  You may be identifying them with current land rent, in   
which case I must rewrite my point using your preferred vocabulary.  
  
Mason  
  
  
My Response:  
  
Dear Mason:  
  
The philosophy behind the Georgist program is based on the assumption   
that there is an unearned increment. This means that the person who   
received an income did not work or even use his brainpower to receive   
it. In the context of a market economy, this usually also means also   
that he has not contributed anything to the satisfaction of others' wants.  
  
"Unearned" is not my term. It was Davenport's way of making sense of   
what the Georgists claimed was a non-distorionate source of tax revenue.   
Surely you would not deny that George aimed to tax that part of a   
person's income that is unearned in this usual sense? If you deny this,   
we have no where to go and the discussion should stop.  
  
Certainly "rents" as you use the term in your first point is less   
descriptive and useful than "unearned increment." The term "rent" has a   
number of meanings in everyday speech. In the history of economics, it   
also has a number of meanings.  
  
Regarding your points, if you think that it is possible to tax "rents,"   
as you appear to define them, then you also must believe that it is   
possible to distinguish, in both theoretical and practical terms,   
between "rent" and profit. That is, you must believe that some practical   
plan exists that would not result in an unwanted taxation of profit.  
  
I have not yet seen a practical plan, just a bunch of rhetoric and an   
assertion. A practical proposal would have to first deal with the   
problem of distinguishing rent and profit in theory. Then it would have   
to tell how rent and profit could be identified by the tax authorities   
for tax purposes. Finally, it would have to give an argument that actual   
taxation by a government agency would not lead individuals to change   
their behavior in such a way as to thwart the efforts to tax "rent."  
  
The only hint of a practical plan that people on this list have made is   
the unsupported assertion that a tax assessor could identify "pure   
rent." Not only does this assertion have no meaning without a   
theoretical base; it is, in any  case, an assertion, not an examination   
of the problem. And it does not address the issue of distortion.  
  
You certainly have not provided such a plan. Neither, in my and   
Davenport's opinion, did George or the Georgists. On the contrary, the   
arguments you and other Georgists make are all over the map. Many of   
them are about issues that are irrelevant to the main point.  
  
Best wishes,  
  
Pat Gunning