Business: Trying to Change an Unfair Tax

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Most experts want to lighten or even abolish taxes on buildings and make a corresponding increase in taxes on land. This would deter land speculation and force property holders to put half-idle metropolitan property to better use. The change would also help hard-pressed center cities by giving businessmen more incentive to keep their corporate headquarters and factories in town.

Almost a century ago, Economist Henry George won an army of ardent followers by proposing that governments raise all their revenues by doubling the taxes on land. Now that federal, state and local governments consume nearly a quarter of the nation's G.N.P., George's idea is no longer feasible. Yet there is a powerful argument for sharply increasing land taxes. Says Dick Netzer, a tax expert and dean of the graduate school of public administration at New York University: "Land values rise mostly because of other people's investment, community development and population growth, not because of actions by individual owners. The community as a whole creates the unearned increments of value, and it has every right to recapture them by taxation." More than that, the public has every right to a fair shake, and local governments have every need to get rid of the evil side effects of the existing property-tax system.