Chapter 17: Problem 8

Each of the following is a valid criticism of Henry George's ideas except that (LO1) a) a tax on land would raise only a small fraction of needed government revenue b) landlords sometimes improve the land c) like rent, other kinds of income are unearned d) a tax on land would result in a decrease in the supply of land

Short Answer

Expert verified

Statement d is the only false criticism against Henry George's ideas, as the supply of land cannot be decreased due to taxation. The tax on land values would not affect the actual amount of land available, since land supply is inelastic.

Step by step solution

Statement a: Tax on land raising only a small fraction of government revenue

Taxing land values might raise only a small fraction of needed government revenue if the tax rate is too low or the tax base is too narrow. Additionally, if other taxes are still in place, the LVT may not be sufficient to fund all government programs. However, this criticism does not necessarily refute George's main idea of replacing other taxes with the LVT. It merely suggests that the implementation of the LVT may need to be adjusted to adequately cover government expenses.

Statement b: Landlords improve land

This statement is true and acknowledges the fact that landlords can sometimes make investments and improvements on their land. However, it does not necessarily contradict Henry George's ideas, since his focus was on taxing the unearned value of land, not the improvements made on it. Landlords could still be rewarded for their efforts and investments while still paying taxes on the land's value.

Statement c: Other kinds of income are unearned

Although George asserts that rent is an unearned form of income, he does not imply that all other kinds of income are unearned. Some other forms of income may be unearned, but this statement does not specifically contradict the principles advocated by Henry George. The focus of George's ideas is on implementing a single tax on land to address social inequality, regardless of the types of income.

Statement d: A tax on land would result in a decrease in the supply of land

This statement is false since the supply of land is inelastic and cannot be decreased as a result of taxation. A tax on land values would not affect the actual amount of land available, as it cannot be reduced or increased like other resources. Hence, this statement does not present a valid criticism of Henry George's ideas. #Conclusion# Having analyzed each statement, it is clear that statement d, which claims that a tax on land would result in a decrease in the supply of land, is the only false criticism against Henry George's ideas. The supply of land cannot be decreased due to taxation, so this statement is not a valid criticism of his ideas.

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Short Answer

Step by step solution

Statement a: Tax on land raising only a small fraction of government revenue

Statement b: Landlords improve land

Statement c: Other kinds of income are unearned

Statement d: A tax on land would result in a decrease in the supply of land

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