Dear list: Warren Samuels and I have had a private discussion on this issue that he believes is worth sending to the list. So I agreed to send it. It is slightly edited. Warren's initial message was posted on May 17 and inadvertently reposted on May 24. The correspondence began when I replied privately to his reposting. Warren's most recent message, to which Larry Moss responded, neglected to include the correspondence that he meant to send. FIRST IS GUNNING'S REPLY TO THE SAMUELS COMMENT: Regarding "my" "refutation" of George, you know, of course, that I am really representing the ideas of others who, for reasons other than being wrong, have been disregarded. It seems to me that the burden is on you or others to identify what you claim are classes of unearned increments in the price of land -- i.e., to tell how you would set about separating the income due to improvement and superior appraisal from some unearned increment. To me and my dead economist colleagues, the unearned increment is like the legendary animal that is always hiding behind me but which I could never see. Citing Henry George, as some others have done, is clearly insufficient. I doubt that one can meaningfully distinguish between improved and unimproved land. But even if one could, the problem is not even close to being solved. If the land is unimproved, who wants it? The demand for unimproved land, it seems to me, is practically non-existent. Even the poorest peasant who occupies land aims to improve it from his or her point of view. Let us imagine that somewhere in the world there is a parcel of unimproved land that nevertheless has market value. Then I maintain that the market value is due to one of two things, unless someone has made a grave error. First, it could be due to an expectation that the land will have use value after it is improved. Such expectations vary from entrepreneur to entrepreneur. Second, it could be due to a speculation that some entrepreneur will find a valuable use and be willing to pay a higher price than the current one. In either case, the focal point, it seems to me, should be on the entrepreneurial appraisal not on the physical nature of the earth. Finally population does not cause land rent to rise. There are poor countries with very large populations where the price of land is quite low (the refugee camps in Sudan, for example) and there are places where the population density is very low but the price of land is very high (a private beach on the coastline). There may be a correlation between the two but that does not imply causation, one way or the other. SECOND IS SAMUELS' REPLY TO GUNNING'S REPLY My answers to your points are as follows: 1. Land value taxation has been adopted around the world. Even when not adopted the improved/unimproved distinction enters into appraisal. 2. Like most anything else, appraisers have conflicting theories when it comes to valuation. Years ago I studied the subject but have not kept up. I also learned, from other sources, that the value of property varies for different purposes, as odd as it may seem: taxation, purchase, sale, insurance, ... So I am neither disturbed nor surprised at imprecision. 3. A substantial part of the portfolios of the ultra rich in every country--the details varying between countries--is holdings of land for long-term growth due to population pressure. 4. During the final years of the USSR a petition was sent to Gorbie's regime proposing Georgian taxation. Signers came from every wing of economics. 5. The problem which pervades Georgian taxation is choosing an historical base point for the calculation of economic rent. I think that the foregoing should cover most if not all of your concerns and objections. THIRD IS GUNNING'S REPLY TO SAMUELS' REPLY TO GUNNING'S REPLY: Warren, I know that the land tax has been adopted around the world. So have tariffs. In any event, I am not claiming that land taxes are a worse way for to raise revenue than, say, income taxes. I am just claiming that they won't achieve George's goal. I am not disturbed or surprised by imprecision either. Yes, the rich own land; but I will bet that this is because land is ordinarily a good hedge against inflation or because its services yield rental income. In any case, if you want to accomplish the objective of increasing taxes on the rich, there is a more direct way to do it. Too many wings of economics, I would suggest, tongue in cheek. In my view, it is impossible to choose a base year without entrepreneurship paying practically the entire tax either in retrospect or in prospect. If it is to pay the tax in prospect, the entrepreneur will simply shift to using his entrepreneurship somewhere else that is less in the interests of consumers. END Pat Gunning