Comments to the Silver Haired Legislature Finance Committee
(The following presentation was made by Carl Shaw on
Aug. 21, 2008 to the Finance Committee of the West Virginia Silver
Haired Legislature. The non-partisan and volunteer members to the
West Virginia Silver Haired Legislature House of Delegates and
Senate are elected by West Virginia seniors at county senior
centers. Those elected meet several days per year and enact
proposals which are forwarded to the regular legislature for their
Robert Kennedy often used a quote from George Bernard Shaw. "Some
people see things as they are and ask, Why? I see things that have
never been and ask, Why not?"
I favor a different approach to land ownership. It is not a new
concept. All wealth is created on land, using natural resources, by
human labor. Were you born with a tag fastened to your leg saying, "I
created this earth for all to use, but you will have to buy it from an
owner if you wish to use," Signed, GOD.
Have you ever wondered, "Why does land have a sales price?"
The air we breathe is free. So is the rain and snow we enjoy. When was
the last time you had to pay for sunshine? Land has a sale price
because left over rent gets capitalized into sale price. Highly taxed
land will not have a sale price. By left over I mean rent which is not
taxed. When land is taxed it is the site rent which gets collected by
the Sheriff. Today here in West Virginia only about 10% of the rent is
taxed. (8% in Calhoun County). One of the lowest land tax rates in the
USA. Land therefore becomes a GREAT Investment. Did God intend that
land and resources become an investment? I'll give you $25.00 for
every Holy Bible quote you can provide which says the land should be
Native Americans knew no such concept as buying and selling the land.
This idea was brought here by the earliest settlers. Economic
conditions in Europe were not good. Land cost money there. People
wanted something better. So they migrated here, bringing their private
land ownership ideas with them.
What would we call a reformer who wants overnight changes?
Revolutionist! Would you prefer reform overnight or over time? The
so-called Two Rate Property Tax is intended as a moral reform, but
over time, not revolutionary. It can be gradually changed over 15
years so that eventually only the land will be taxed, and the
improvements tax free. Several Pennsylvania cities are in the process
of eliminating taxes on buildings. Washington, Allentown, and
Harrisburg are gradually increasing the land tax rate while reducing
the improvement rate. 900 cities in Australia and New Zealand do not
tax buildings. New Hampshire made the change in the 1940s and today
taxes land at about 40% of the rent, highest of any state in the USA.
In the 1980s New Hampshire had the nation's 6th highest state income
per capita and 6th in population gain. And the first 5 states were
west of the Mississippi. New Hampshire has no sales or income tax.
These taxes only raise revenue, and do not encourage production. In
fact, in contrast to the land tax they discourage production. Denmark
taxes 50% of the rent and is Europe's highest per capita and lowest in
This tax change can be revenue neutral, so the homeowner will not see
any increase or decrease in his/her taxes.
Can you see a relationship between economic development and land
taxation? Suppose you owned a land parcel whose rent was $100.00 per
year. The current tax is $10.00. Suppose your land is little used.
Suppose the government announced that over the next 15 years the land
tax was to be increased to $100.00 per year. Would you leave it idle
or little used? Wouldn't you look around your area, decide what kinds
of businesses were needed, and begin planning how to make better use
of the parcel? Wouldn't you eventually run ads in the paper looking to
hire help, to construct a building, to develop a business? Wouldn't
this development reduce local unemployment? A business on that site
would help bring in the full $100.00 annual rent, which you would use
to pay the land tax. If we did not tax improvements, a great incentive
would be provided to develop the parcel. Your own taxes would not be
increased. The business would pay the increased taxes. The city would
look better with new construction. Jobs would be provided. The word
Unemployment would leave our language. West Virginians who had gone
elsewhere for work would return to W.V. Poverty would only exist where
some folks did not want to work.
I mentioned site rent. Rent, the payment for the use of land, is a
social product, created by all of us. Our economic activities, and the
so called infrastructure -- streets, schools, hospitals, etc. --
contribute to the rent. Where population is sparse, land values are
low. The rent of my Calhoun County land is $30.00 per acre. Downtown
Charleston land rent is $3.00 per square foot. If you and your friend
made something together, who should own it? What if your friend took
the product for himself? We all make the rent of land -- shouldn't we
all share the rent? Should moral standards play a role in operating
In residential neighborhoods today most of the property tax is based
on the improvement. In commercial neighborhoods where land values are
high, building taxes still account for much of the total tax.
Where does WV stand in regard to per capital income? I?ve lived here
only 25 years -- you know more than I -- W.V. is near the bottom of
lots of criteria, and near the top in some things nobody wants to be
tops in. Population growth is low with lots of poor housing.
In 1945 Taiwan, a Japanese colony, was about the 175th country in the
world in per capital income. Today Taiwan is the world's 30th country
in per capital income. Do you think this change came because of a
typhoon? Tidal wave? It came about because of economic reform
instituted by Chiang Kai-Sheik.
Are you aware that our young people move to other states for jobs?
Would you like to see the job situation reversed so that W.V. young
people would be encouraged to come back home, and people from other
states would move here for jobs?
Are you beginning to see a connection between land taxation and
economic improvement? Check it out. Land speculators, land hoarders,
are the primary group standing between us and economic prosperity.
About 4% of the population owns 95% of the privately owned land. Does
this sound fair? (US Dept. Agriculture Survey, 1978) (Ownership for
this survey means deed in hand.) We can certainly out-vote 4%.
My farmland is worth $30.00 per acre annual rent. The tax is $2.00
per acre. I pay the tax out of my "mad money." If the land
part of my property tax were to be gradually increased over 15 years
so that in 2023 all the site rent was taxed away for social benefits
(and the improvements were exempt of taxation), don't you think I
would either, 1) advertise for help in order to construct an
appropriate building to start a business on my property, to bring in
enough money to pay this increased land tax, or 2) walk away from this
more highly taxed parcel and allow someone else to operate it along
I pay $160.00 land tax annually, and $200.00 improvement tax. The
land tax should be $2,400.00. You can see that the land tax is so low
it is a great investment. Did the Creator make our earth so that a few
people can sell it at a profit to the rest of society?
A lot of famous people have sanctioned the land tax idea. Let's start
with Henry George, Leo Tolstoy, John Dewey, Francois Quesnay, Victor
Mirabeau (he said the single tax on land is one of the three greatest
inventions of all time, the other two being money and the alphabet),
Adam Smith, Thomas Paine, Thomas Jefferson, David Ricardo, Ralph Waldo
Emerson, John Stewart Mill, Abraham Lincoln, Karl Marx, Herbert
Spencer, Mark Twain, Joseph Fels, Sun Yat-Sen, and dozens more,
including 7 or 8 recent Nobel Prize winners in economics. Do you think
these people had greediness in mind when they spoke for the land tax
idea? Or did they believe in Justice.
Don?t you think this land tax idea is at least as important as is
taxing alcohol, or improving the Home Exemption law?
Can Labor and Capital produce wealth without land and resources?
Consider a system where labor and capital would have to BUY the land,
and would not be taxed when they produced goods and services.
If we start the two rate tax system and take it to its ultimate, W.V.
should rise to about the 4th state in the Union in per capita income,
based upon our location and resources.
Mechanically, how it is done:
- Realistically appraise the land and the improvements (assessors
should do this work daily).
- Reduce tax rates on improvements by 10% each year.
- Increase tax rates on land each year by enough to bring in the
same revenue as prior to the 2-rate system.
- Over time reduce the improvement tax to zero (15 years).
- Over time increase the tax rate on land so that all the site
rent is being collected (again, 15 years)
Some W.V. land is owned by people who live in other states. Do you
think they do this so they can enjoy the scenery? The Two Rate tax
would end this practice. Taxing all the site rent will ensure that
everyone will get to own as much land as they need and can afford to
own based upon the rent tax.
If you think I am idealist for my economic beliefs -- and you believe
we can operate a fair and prosperous system wherein a few people own
most of the good land sites and resources, it is YOU who are the