How the Federal Government Can Easily Reduce the Deficit
While Actually Reducing Taxes for Most Americans
& Promoting Economic Development
GroundSwell, November 2011]
The Federal Deficit is huge and growing out of control, threatening
the nations future, but fortunately two provisions of the
original U.S. Constitution as well as the 16th Amendment offer an easy
remedy. They permit the federal government to levy a land-assessment
tax that can accomplish these three goals:
(1) Reduce the Deficit.
(2) Reduce taxes for most voters.
(3) Promote economic development
To begin with, there is Article 1, Section 9 of the Constitution: No
tax shall be laid, unless in Proportion to the Census
This authorizes a federal land-assessment tax since it is a direct tax
and could be in proportion to the decennial census. As it happens, all
other Deficit reduction taxes would impair the national economy.
Article 1, Section 2 of the U.S. Constitution reads:
Taxes shall be apportioned among the several states
their respective numbers
Congress can therefore provide
that the states levy a land assessment tax because it is a direct tax
apportionable according to the decennial census.
For example, Congress can raise $100 billion to reduce the national
Deficit by requiring a state with 5% of the U.S. population to levy a
tax on land values raising 5% of $100 billion, or $5 billion, and
remit the proceeds to the U.S. Treasury Department.
A federal land tax could be adjusted to account for differences in
state income level. Just be sure to increase the tax gradually.
Congress might also recompense the states for the modest cost of
levying this tax. The economy would grow since actual production would
be taxed less and all land sites would be used productively.
The 16th Amendment also allows a federal land assessment tax. It
states that congress shall have the power to lay and collect
taxes on incomes, from whatever source derived, without apportionment
among the several states, and without regard to any census of
enumeration. The phrase from whatever source derived
was inserted to obtain the support land-value-tax congressmen.
Be it noted that Congress has four times levied a federal land tax,
in 1798, 1811, 1813, and 1861, using local land assessments. Only by
recourse to the U.S. Constitution can we prevent an eventual national
default a la Greece.
For political reasons, farmland could be exempted wholly or
partially; little revenue would be lost. Also exempt, in whole or in
part, the land of the poor, elderly, veterans, temporarily unemployed,
Only adherence to the Constitution can save us from a debilitating
national default. Let us hope we are equal to the task.
How to Prevent Under-Assessment. In order to prevent localities from
under-assessing land, the state or locality (or any public
land-assessing district) shall be permitted to buy the land at its
assessment plus 10% and charge up to 8% of the land assessment as
The Proposal. In order to painlessly pay down the federal Deficit, a
federal law should require each state to levy a statewide tax on land
assessments only equal to its proportion of the U.S. population and
remit the proceeds to the U.S. Treasury Dept. to be used solely for
federal Deficit reduction.
(Steven Cord, Professor-Emeritus, I.U.P., is the Research Director of
the Center for the Study of Economics.