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Abstract
Henry George advocated a single tax, on land, and an appropriation of all rent. The theorm dubbed after him proves that such a tax is optimal indeed. After comparing the different sources of taxation, he showed that he was against taxation in certain areas. The paper indicates that other studies conducted also leads to the same result of Henry George. He tried to contribute to a more equitable distribution of wealth through sound economic principles. This note presents an exceedingly simple derivation featuring land. By taking land, not an acre less is supplied and the economy is not distorted. Landlords have a passive function, which is least prove to incentive problems. According to George, to let profit be dissipated into the hands of the landlords, constant returns to scale should consider production function with labor and land as inputs.
Introduction
HENRY GEORGE WAS a self-made intellectual. He did not even complete high school. That he nonetheless bore an imprint on economics is not exceptional, think of his near contemporary Karl Marx. From a modern standpoint, many contributions of that time were opaque. Particularly Marx' writing is very roundabout. Not so Henry George's writing. It is lucid. He gets to the point. His economic intuition is sharp.
Henry George wrote "Progress and Poverty" in 1879. It is best known for his tax proposal. The latter is two-fold. He proposed to abolish all taxation save that upon land values. Moreover, the land tax must appropriate. All rent. See George (1966, p. 130). He was quite radical. Nowadays politicians contemplate marginal variations in dozens of tax rates. Henry George, however, compared alternative sources for taxation. He was fermently against income taxation, as it would distort the incentive to accumulate wealth. Not only did he identify a source of taxation, he also advocated a certain level of taxation, namely 100% of land rent. One might wonder if...