Who Killed Land Value Taxation in Ohio?
Will the Killer Strike Again Elsewhere?

William S. Peirce

[A presentation at the annual conference of the Council of Georgist Organizations, held in Cleveland, Ohio, 6 August, 2009. William Peirce is Professor Emeritus of Economics, Case Western Reserve University. Reprinted from GroundSwell, November-December 2009]

Editor's note: During a session August 6, 2009 at the Council of Georgist Organizations conference in Cleveland, OH, Professor Peirce made a presentation, Who Blocked LVT in Ohio, based on this Lecture that was prepared for the Summer Fellowship Program at AIER, 28 July 2009. A portion of this lecture on Allen Ripley Foote has been edited out by your GroundSwell editor because of space constraints. It may be published later.


Economists who study the matter generally acknowledge that the Land Value Tax (LVT) is superior to the real estate tax levied in most municipalities. Nevertheless, the LVT is used in only a few locations worldwide.

In early 20 th century Ohio the movement to adopt LVT was led by strong and able politicians, yet the effort failed decisively. Examination of this episode sheds some light on the factors that have inhibited the adoption of LVT.

What is LVT

In this paper, "LVT" will be used to mean what some have referred to as "LVT-lite." That is, LVT is the tax that results from performing the following simple operation:

Take the Real Estate Tax of any municipal government, exempt buildings and other improvements, raise the rate on land so that total revenue is unchanged, and keep all of the other rules, regulations, and institutions unchanged. A two-rate system is a partial move in the direction of LVT in which the tax rate on buildings is lower than the tax rate on land, but is above zero.

Most of the discussion by Cohen and Coughlin refers to LVT-lite. (Cohen and Coughlin, "An Introduction to Two-Rate Taxation of Land and Buildings", Federal Reserve Bank of St. Louis Review, May/June 2005).

The full "Single Tax" is a more radical reform. As the name suggests, it means eliminating all taxes on labor, capital, transactions, and trade. Essentially the full quantity of land rents would be taxed away. The passion Henry George displayed in Progress and Poverty, and that many of his followers have exhibited since, is directed toward the full Single Tax and the concomitant elimination of all "Privilege", which a modern economist might refer to as the "rents" or special favors that firms or individuals seek from government.

The Single Tax is more interesting than the narrow technical change of LVT, but it also poses greater problems, especially within a Federal system where property taxes are not used to support the national government.

While this study deals with LVT, much of the public discussion a century ago was motivated by the Single Tax, and, indeed, the two were much closer then because the bulk of government spending was state and local at that time.

Cohen and Coughlin provide the standard mainstream economic evaluation of LVT.

Because the supply of land is, for all practical purposes, totally inelastic, a tax levied on the value of land produces no distortions in the use of land and, hence, no excess burden. This is what justifies Milton Friedman's remark that the LVT is "the least bad tax."

The advantages of LVT can be explained without resorting to economic jargon:

  • Land cannot move away.  Every other traditional tax tends to drive away sales, income, or investment.
  • Owners of vacant or poorly used land are pressured by every tax bill to put their land into its highest and best use.
  • Property owners who make improvements are not punished by being hit with a higher tax bill.
  • LVT encourages compact, high density development without stifling regulation.
  • LVT keeps the purchase price of land low, thus making access to land easier for entrepreneurs and dampening the amplitude of the real estate boom-bust cycle.
  • LVT takes the burden off work and transactions.
  • The incentive to improve property is universal and does not require political intervention.  Every property owner, whether in the residential neighborhoods or the prominent downtown locations, is rewarded instead of punished for improving his property.
  • If the shift to LVT could be made instantly, in most communities the median tax bill for homes would decrease slightly.  Vacant land, parking lots, and poorly developed commercial and industrial land would pay more.
  • In the long run, all property owners benefit from the increased economic development. 

It is worth noting that the bloodless economic discussion of "excess burden" distracts attention from the dynamics and excitement of the market response to removing the distorting burden.

A front-page story in the Sunday Cleveland Plain Dealer (Jan. 11, 2004) provides an excellent example: the reluctance of owners of prime downtown land to convert parking lots into the high rise apartments that Cleveland needs if it is to develop a vibrant downtown.

Unfortunately, the remedies suggested in the article are ineffectual, expensive, and dictatorial. Ironically, Mayor (1901-1909) Tom L. Johnson, whose statue presides over Public Square, could have suggested the effective, market driven approach to solving the problem.

As the article points out, landowners operate parking lots because they can make more money doing that than they can building housing. Meanwhile, developers eager to build housing say they cannot afford the land. The remedies proposed include subsidies of various types and using eminent domain to take the land from one owner and give it to another more politically favored.

Yet the profitability of parking and the unprofitability of housing are the result not just of market forces (What will you pay to park downtown? What will you pay to rent or buy an apartment downtown?), but also of tax policy. If vacant land (including parking lots) pays a heavy enough real estate tax, people will not want to hold land vacant. The fact that parking lots in downtown Cleveland have sold for close to $4 million per acre indicates that owners are expecting substantial net income even after paying real estate taxes, as well as wages, insurance, and the other costs of operation. If the real estate tax on vacant land were to be raised, the land would generate a smaller net income and so the owner would be willing to sell the land for a lower price.

The Ohio Constitution specifies that the real estate tax must be levied at the same rate on land and buildings. Because of poor assessing, however, in practice the developer faces a low tax on vacant land and a higher tax if he builds a substantial building on that same land. When Tom Johnson was mayor, the city worked very hard to ensure that vacant and poorly developed land were assessed at full market value. By shifting more of the burden to land, the burden on buildings could be reduced. The state of Ohio a century ago did not permit the Johnson administration to shift the tax burden entirely to land and it would be at least as difficult politically today, but it is clear that intelligent and determined tax administrators can move toward that goal. It is a rare tax that provides revenue while promoting economic development. The portion of the real estate tax levied on land does that.

The Progressive Era in Ohio

The strongest and most sustained effort in the United States to implement LVT and other ideas of Henry George occurred in Ohio during the two decades prior to World War I.

The Historical Setting

Ohio at the beginning of the twentieth century was at the peak of its relative political and industrial power. Taft was finishing his term as President in 1912 as part of that string of eminent Ohio politicians, including his predecessors Garfield and McKinley and his successor (in 1920) Harding. The enormous private wealth that was accumulating in Cleveland and other Ohio cities was, perhaps, more impressive. Rockefeller's Standard Oil began with a refinery in his hometown of Cleveland. The firms that ended up controlling most of the iron ore of the Lake Superior district were headquartered in Cleveland, and much of the ore moved on Cleveland-owned fleets to Lake Erie ports. The coal mines of Appalachia were also pouring their rents into Ohio cities.

The private wealth was not limited to accumulated natural resource rents. The steel industry and the manufacture of machinery, automobiles, appliances, and textiles were also important. Even in these manufacturing industries, however, rent seeking, in the public choice sense, played a role. The steel industry then, as now, turned to Washington for trade restrictions in order to increase profits.

The rent seeking that attracted the most attention from the big city mayors, however, was the quest for public utility franchises. The street railway franchises, in particular, came to be symbols of the battle against "privilege," which would today be described in terms of rent seeking. The franchise was a grant to a private company of the monopoly privilege of running streetcars on a particular route. The franchise terms could specify fares that would make the company very rich. Franchises of long duration posed a special problem because costs in the street railway industry were declining rapidly because of technological change. The usual approach was alleged to be bribing the city council to agree to a very profitable franchise. In the rare cases where the mayor and council resisted, the company would, it was believed, bribe the legislature to award the franchise anyway. Similar facts were alleged for other public utilities, but the streetcar was a more potent political symbol because the streetcar lines gave freedom of location to the common man. No longer did the laborer have to live in a filthy, crowded, unhealthy slum beside the mill. If he could afford to take a streetcar, he and his family could enjoy the blessings of urban sprawl (Howe, City, 203-205).

This situation provides the backdrop for four extraordinary mayors who made their reputations battling "privilege" in Cleveland and Toledo. (The most convenient source is Bremner.) All four were successful enough outside politics so that they could afford to be independent. Tom Johnson had made his fortune in business before being elected Mayor of Cleveland in 1901. He started poor and made his first fortune in streetcar lines, both through invention, hard work, and skillful management and through the usual financial manipulations. (These were variations on the capitalization of monopoly profits and franchise rents.) He then made additional fortunes in the steel industry, establishing Cambria Steel at Johnstown, Pennsylvania, and the Lorain, Ohio, mill that subsequently became part of U.S. Steel. By 1901, however, he had sold his businesses and retired to his palatial home on Euclid Avenue in Cleveland. He had been greatly influenced by the writings of Henry George and converted to the virtues of the single tax and free trade. Johnson used the battle against the streetcar franchises and for the 3 cent fare as the central theme is his campaigns, but his goal was that Cleveland should be "the city on the hill"-a place of pride and comfort for its residents, rather than a squalid industrial slum. Johnson lost the election in 1909 and died in 1911.

Newton D. Baker, one of the young men in Johnson's administration, was elected mayor in 1912. Baker was elected for a second term, but declined to run for a third in 1916. He then became Secretary of War until 1920, after which he made his fortune as a lawyer (Cramer). While not as colorful as Johnson, Baker was an extremely able attorney and shared Johnson's view that the city must be free to solve its own problems. Baker and Brand Whitlock (of whom more below) were the principal drafters of the municipal home rule that was adopted in large measure by the 1912 convention (Baker, xv) and also addressed the convention in support of it (105, 119).

Samuel Jones became mayor of Toledo in 1897, even before Tom Johnson returned to Cleveland. Jones, born in poverty, had worked his way up in the oil business and was an owner of the Ohio Oil Company, which was sold to Standard Oil. In 1892 he moved to Toledo and established the Acme Sucker Rod Company. His eccentrically humane management style, including high wages, citing the Golden Rule as the only company policy, and sponsoring a forum every Sunday afternoon at which reformers and radicals and others spoke and the crowd sang songs written by Jones seems to have been a very profitable formula for business. Through a set of accidents he was elected mayor in 1897 as a Republican and as an independent twice more after the Republicans abandoned him (Bremner, 23-33; Whitlock, Forty, 112-152; Howe, Confessions, 184-188). The humane style soon caused political problems for Jones and eventually the state legislature passed a special law to take control of the Toledo police department. Although Brand Whitlock, then working for Jones, was able to find a legal technicality to have the action overthrown, the episode contributed to the impression that the rural legislators did not understand big cities and their immigrant populations.

After Jones died in 1904, Whitlock ran in 1905 and served as mayor until 1912. Like Baker, Whitlock was an able attorney succeeding an extraordinary amateur politician. Whitlock, however, considered himself primarily a writer and continued to publish short stories and articles and work on novels while in office. Whitlock had a deep distrust of the criminal law as a result of his years as a reporter in Chicago and his work as a criminal defense lawyer. He continued the libertarian policing policies that Jones had adopted, arousing the same political opposition. After Woodrow Wilson's election Whitlock used his political contacts to have himself appointed the chief U.S. diplomat in Brussels. This would have been a sinecure had not World War I intervened.

The main issues for the mayors, however, were not issues of personality and style, but rather the situations leading to rampant rent seeking combined with the lack of local control. Baker suggested that some of the rural antipathy toward the cities was provoked by the rural depression that was, in turn, caused by the policy of maintaining high tariffs on manufactured goods (Baker, xiv). Thus, the rent seekers, or to use the term of the day "privilege" lay behind most of the difficulties faced by the cities. yes"> Although some interpreted the attack on privilege as a socialist attack on profits and the creation of wealth, the more perceptive progressives understood the difference:

"An examination of the conditions in city after city discloses one sleepless influence that is common to them all. Underneath the surface phenomena the activity of privilege appears, the privileges of the street railways, the gas, the water, the telephone, and electric-lighting companies. The connection of these industries with politics explains most of the corruption; it explains the power of the boss and the machine; it suggests the explanation of the indifference of the "best" citizen and his hostility to democratic reform. Moreover, it throws much light on the excellence of some departments of city life and the inefficiency of others, for the interest of the franchise corporations is centered in the council, in the executive departments, and in the tax-assessors. It does not extend to the schools, libraries, parks, and fire departments, departments which are free from the worst forms of corruption. But the city council awards franchises. It fixes the terms and regulations under which the franchise corporations may use the streets. The executive enjoys the veto power. He controls permits, and exercises an influence upon the council and public opinion. The assessor determines the appraisal of property as well as the taxes to be paid." (Frederic C. Howe, The City The Hope of Democracy, p.63.)

"For wealth without privilege does not organize to control parties, primaries, or conventions. The retail dealer, wholesale dealer, or manufacturer is not found in the council chamber." (op.cit., 73-74)

The Constitutional Convention

Although it was clear that a lot of people were interested in changing the Ohio constitution, it was not obvious that they had much in common. The liquor question was frothing up and some women kept demanding the vote. (Various German-American groups, however, kept insisting that they wanted to drink and did not want women to vote.) Herbert Bigelow, ardent single taxer and advocate of liberal causes from the pulpit of the Vine Street Church in Cincinnati took on the task of organizing first the call for the convention and then the election of the appropriate delegates. (The details of the maneuvering are recounted by Beaver [pp. 19-25].)

When the Ohio Constitutional Convention opened in 1912 Progressives could look forward to drafting the constitutional amendments that they had long advocated. Ratification by the voters might be a problem, but at least the convention should have been in their pocket. Much of the campaign to call the convention had been led by Herbert Seely Bigelow, the politically inclined pastor of the Vine Street Church in Cincinnati. He had worked throughout the election campaign for delegates to the convention to support the most progressive candidates and especially those pledged to "direct democracy," i.e., the constitutional provisions that would allow voters, by petition, to initiate legislation, to require referenda on issues passed by the legislature, to initiate referenda to amend the state constitution, and to initiate elections to recall public officials including judges. (Most of the discussion of direct democracy focuses on the Initiative and Referendum, which will be denoted as I&R, unless differentiation is necessary.)

The I&R was considered crucial to wrest control of the state away from the political bosses and lobbyists who were alleged to buy any laws they wanted from the ruffians elected by the people to represent them.

Progressives generally celebrated the results of the Convention. Not only did the I&R pass, the Convention sent a total of forty-two items to the electorate for ratification. The one that seemed most important to the mayors of the large cities, who had also ardently supported calling the convention, was municipal home rule. Several items on the progressive agenda passed the convention, but were rejected by the voters, including the abolition of capital punishment, limitations on the use of the injunction in disputes, women's suffrage, omitting "white" from criteria for voting, allowing women to hold public offices specifically dealing with women, and allowing the legislature to restrict billboards on private property near public roads. Voters did approve 33 of the 41 measures (the 42 nd was to vote "yes" or "no" on licensing the liquor traffic -- "yes" won). These included such items as the 8-hour day for public employees, a workmen's compensation system, allowing the legislature to regulate wages and hours, reforestation to provide animal habitat and control flooding, and abolition of contracting of prison labor.

Although the progressives achieved, in the convention at least, much of what they sought, they left the cities of Ohio encumbered by a disastrous property tax system. One of the offending clauses from the 1912 convention remains as Section 1e of Article II of the current Constitution of Ohio:

"The powers defined herein as the 'initiative' and 'referendum' shall not be used to pass a law authorizing any classification of property for the purpose of levying different rates of taxation thereon or of authorizing the levy of any single tax on land or land values or land sites at a higher rate or by a different rule than is or may be applied to improvements thereon or to personal property."

The other was passed as Section 2 of Article XII. It has since been amended, but in its 1912 form it stated:

"Laws shall be passed, taxing by a uniform rule, all moneys, credits, investments in bonds, stocks, joint stock companies, or otherwise; and also all real and personal property according to its true value in money, excepting... [existing state and local bonds, exempt public and charitable, etc. property] ...and personal property, to an amount not exceeding in value five hundred dollars, for each individual, may, by general laws, be exempted from taxation..."

The municipalities narrowly escaped having a 1 percent tax limit fixed in the constitution, as well. The amendment went on to permit the legislature to levy uniform or graduated taxes on estates or inheritances and on incomes. In addition, the legislature was authorized to pass excise and franchise taxes and "taxes upon the production of coal, oil, gas and other minerals" (1881-1882). The estate and income taxes were part of the progressive agenda, but they were controlled by the state, with not less than half returned to the municipality of residence of the taxpayer.

The focus here will be on the form and restrictions of the property tax, which remained the principal revenue source for local governments. How did it happen that the convention that was supposed to set the people and the cities free ended up by prohibiting the single tax and binding the cities to a totally unworkable concept of "uniform" taxation?

The Single Tax

Bigelow's known single tax proclivities (e.g., Bigelow, 1916) constituted a point on which the whole progressive agenda could be open to attack. Single taxers were rare in Ohio, but included the group that had worked with Tom Johnson, including Newton D. Baker, and also Brand Whitlock. Nevertheless, the only admitted single taxer at the convention other than Herbert Bigelow was Edward W. Doty of Cleveland, a master parliamentarian who wrote the rules and dominated the process of the convention through sheer force of intellect, but couldn't quite salvage the taxation proposal (1650-1675). In view of the lack of support within the convention or among the voters for the single tax, it seems surprising, at first glance, that it became an issue.

One factor that led to the focus on the single tax was the fact that Bigelow, in his long and extensive campaign for the convention and the I&R had been supported by the Joseph Fels Commission Fund, which was established by the prominent soap manufacturer to promote the single tax. To make matters worse, opponents of I&R;began to cite this and similar remarks made at single tax conferences: "We have cleared the way for a straight single-tax fight in Oregon. All the work we have done for direct legislation has been done with the single tax in view, but we have not talked single tax because that was not the question before the house."

Remarks attributed to W.S. U'Ren in a report to a single-tax conference in New York, November 19-20, 1910 (708).

The other factor is a little less transparent. A well known business lobbyist named Allen Ripley Foote wrote a pamphlet against the I&R published by the Ohio Board of Commerce. This was widely circulated and played on the alleged connection between I&R and the single tax. If it was intended to persuade farmers to vote against the I&R it might well have been successful, for farmers find it hard to believe that a tax on land value will not crush farmers. As usual, Brand Whitlock phrased the point more elegantly: "Johnson was a single taxer, supposed in Ohio to be a method of taxation whereby everybody would be relieved of taxation except the farmers who would be taxed according to the superficial area of their farms... The proposal for tax reform still waits, and will wait, I fancy for years, since it is so fundamental, and mankind never attacks fundamental problems until it has exhausted all the superficial ones." (Whitlock, Forty, 169).

Yet if the industrialists and utilities supporting Foote really believed that the single tax would be borne by farmers, surely they would have endorsed it. It seems, therefore, that the objective was to defeat the I&R and that they knew that the single tax was irrelevant, except to scare people. This leads to the question of why the delegates behaved as they did, however. The convention suffered through numerous lengthy speeches about the joys of homes and farms as an explanation for why the single tax had to be locked out so that it could never destroy Ohio.

Samples of the debate


"The other half of the voters, made up of the slums of our cities, single taxers, socialists and dynamiters...will vote for it" (688).


"Rich men, whose property is personal, are joining hands with socialism to throw all the burdens of government upon the soil and take from private owners all title to their income from land." (696).


"I'll stand here and defend the homeowners and the farmers of the state of Ohio against this monstrous single tax being put upon them until my tongue is palsied and clings to the roof of my mouth, if it be necessary." (713).

It took several hundred pages to palsy every tongue.

Uniformity or Classification

At first glance uniformity may seem like neutrality, and hence a good thing in the usual analysis of public finance. Before leaping to that conclusion, however, it is important to stop and consider the tax base to which uniform rates were to be applied. As noted above, the base consisted of "all moneys, credits, investments in bonds, stocks, joint stock companies, or otherwise; and also all real and personal property according to its true value in money." Delegates noted various objections to this tax base. One problem is that the intangible property was rarely declared and hard for the tax collector to find. Another problem is that financial transactions such as mortgages and debts bloat the measure of property. Some delegates spoke of netting out debts, thus turning this property tax into a true wealth tax. Other delegates pointed out that when you try to tax wealth, the wealthy move away and take their wealth with them. In the end, however, the base remained intact. Legend has it that the tax on intangibles was one of the main reasons why John D. Rockefeller moved away from Cleveland. Although this part of the constitution has been amended again, vestiges of the tax on intangibles remained on the books into the 1970s. Even more troublesome is the remaining vestige of the personal property tax, which still exists in the form of a tax on business inventories and equipment.

Classification; i.e., setting different rates for different classes of property could have mitigated the damages, but every effort to pass it failed. One reason was the fear of what the legislature would do under the influence of the lobbyists. Ironically, the single tax fear instilled by Allen Ripley Foote probably sounded the death knell for classification, a device by which the single tax might creep in. Yet business could have made a strong case to the legislature for a low rate on machinery. Of course the farmers always felt that their land and buildings were more likely to be found by the tax collector than stocks and bonds and so a lower rate on intangibles would be a double injustice.

The Attack on the Progressive Agenda

The careful reader of Bremner's book, George and Ohio's Civic Revival, or of Hoyt Landon Warner's Progressivism in Ohio, 1897-1917 learns that Allen Ripley Foote was the arch enemy of progressives in Ohio, the master lobbyist for the forces of "Privilege." Reading contemporary sources strengthens that impression. Tom Johnson, the progressive mayor of Cleveland from 1901-1909, singled out Foote as one of his wiliest opponents, and Louis Post, editor of the progressive weekly The Public, described Foote as a tool of the special interests.

A modern economist, however, is most likely to stumble across the name of Allen Ripley Foote in the list of highly distinguished economists who have served as presidents of the National Tax Association. Indeed, Foote was a founding member of that professional association and served as president from 1907 to 1913. Ajay Mehrotra, in his dissertation on the NTA, describes Foote as a man "…with decades of experience with reform movements…[who]… set out to create an organization dedicated to making the fiscal machinery of government more effective and efficient." Similarly, the entry on Foote in Ohio History Central.org, the online encyclopedia of the Ohio Historical Society, states, "Like many other reformers during the Progressive Era, Foote opposed monopolies and firmly believed that the federal government and state governments should encourage competition among businesses." In the era of muckrakers and trustbusters, a devotion to encouraging competition would also place Foote among the progressives.

Who was Foote? Was he the dedicated reformer, founder of the association that tried to make a profession of the study and implementation of taxation, contributor to debates on public policy, spokesman for competition and improved transparency of corporate reporting through uniform accounting standards? Or was he a tool of the special interests who tried to torpedo every progressive reform to protect Privilege? Whatever the judgment of his ideology or motives, however, Foote certainly earned a place in a History of Economics session through the volume of his writing, his historical importance in the development of public policy, and his role as a founder of the NTA.

Who Killed LVT?

The smoking gun is clearly in the hand of Foote, but he had plenty of accomplices. Seligman, the intellectual and academic leader of the NTA, orchestrated opposition to the Single Tax. He did strongly advocate separation of tax sources for different levels of government, which would have allowed the use of LVT-lite to support local government. Foote's efforts in Ohio were financed by a subset of large firms that did not include the major manufacturers, although it is not clear to me that railroads and electric utilities would pay more under LVT than under an ordinary real estate tax. Of course, the owners of large amounts of undeveloped land can always be rallied to oppose LVT. The farmers, also, lived in fear of the Single Tax, although it is hard to prove that most active farmers would be disadvantaged by an LVT as a replacement for local property taxes, except, perhaps, in counties that shifting from agriculture to residential.

To a considerable degree the demise of LVT in Ohio can be attributed to self-inflicted wounds by its own supporters. The more extreme rhetoric of the Single Tax branded the moderate reform of the LVT, which was the only change that could be made at the state level. The maneuvering of the Fels Commission regarding I&R as a step toward LVT added to the feeling that it was all a plot to do something harmful. Herbert Bigelow, despite his energy and dedication, was a petulant and inept political leader. Once Tom Johnson died, LVT had no leader who combined intelligence, political skill, and extreme dedication to the cause.

Will the Killer Strike again elsewhere?

Followers of Henry George are still split over the question of accepting the LVT-lite Compromise or pushing for the whole Single Tax. The Single Tax is a national issue, and the associated rhetoric makes sale of the LVT more difficult at the local level. In many areas farmers are no longer a political force, but in agricultural areas the advent of highly capital intensive "factory farms" has intensified the opposition of the more land-intensive traditional farmers to LVT. On the favorable side, the hollowing out of the cities -- large and small -- across America provides an opening for any policy that promises to redevelop the urban wastelands. LVT will not, however, be supported by the major developers because they cut their own individual tax exemption deals with the politicians and have no interest in providing that advantage to every property owner in the city.

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