But great as they thus appear, the advantages of a transference of all public burdens to a tax upon the value of land cannot be fully appreciated until we consider the effect upon the distribution of wealth.

Tracing out the cause of the unequal distribution of wealth which appears in all civilized countries, with a constant tendency to greater and greater inequality as material progress goes on, we have found it in the fact that, as civilization advances, the ownership of land, now in private hands, gives a greater and greater power of appropriating the wealth produced by labor and capital.

Thus, to relieve labor and capital from all taxation, direct and indirect, and to throw the burden upon rent, would be, as far as it went, to counteract this tendency to inequality, and, if it went so far as to take in taxation the whole of rent, the cause of inequality would be totally destroyed. Rent, instead of causing inequality, as now, would then promote equality. Labor and capital would then receive the whole produce, minus that portion taken by the state in the taxation of land values, which, being applied to public purposes, would be equally distributed in public benefits.

That is to say, the wealth produced in every community would be divided into two portions.

• One part would be distributed in wages and interest between individual producers, according to the part each had taken in the work of production;

• the other part would go to the community as a whole, to be distributed in public benefits to all its members.

In this all would share equally — the weak with the strong, young children and decrepit old men, the maimed, the halt, and the blind, as well as the vigorous. And justly so — for while one part represents the result of individual effort in production, the other represents the increased power with which the community as a whole aids the individual.

Thus, as material progress tends to increase rent, were rent taken by the community for common purposes the very cause which now tends to produce inequality as material progress goes on would then tend to produce greater and greater equality. ... read the whole chapter

Support for those who are unable to provide for themselves would come from this basic income, from the generosity of the fellow citizens of their community, and from insurance that their parents might reasonably be expected to provide for them in a world in which all parents received justice themselves.  ...

The scarcity that is distressing and frightening the whole country is a scarcity of employment. It is the unemployed for whom charity is asked: not those who cannot or will not work, but those able to work and anxious to work, who, through no fault of their own, cannot find work. So clear, indeed, is it that of the great masses who are suffering in this country to-day, by far the greater part are honest, sober, and industrious, that the pharisees who preach that poverty is due to laziness and thriftlessness, and the fanatics who attribute it to drink, are for the moment silent.

Nic Tideman: Improving Efficiency and Preventing Exploitation in Taxing and Spending Decisions

What, then, about public goods that have benefits over greater areas? If only a few localities are involved, one might expect them to negotiate voluntary compacts with reasonable efficiency. "Pork barrel" projects--all projects with benefits for only a small region of the country--should not be paid for with national taxes. The practice leads to the approval of inefficient projects as a result of the politicking of those who benefit, and it unjustly exploits those who do not benefit.

For truly national public goods, other ideas must be explored. One of the major national public goods is defense. In a perfectly just world, everyone would be so respectful of the rights of others, and everyone would feel so safe that no defense spending would be desired. In a less perfect world, many people, but not all, want public defense expenditures. How can they be provided justly?

Some financing of defense expenditures can be provided by a Pigouvian tax on the externality of accumulating capital, which makes a nation a more attractive target of aggression. If the U.S. requires a greater defense budget than Canada, which is larger in area, it is because the greater value of the assets in the U.S. makes the U.S. a more attractive target of aggression. Thus anyone who owns capital might reasonably be charged for the increase in the defense budget that is needed to make other citizens as safe as they would be if that one person's capital were not adding to the attractiveness of nation as a target. It would be interesting to know how much of the defense budget could be covered by such charges. I propose a self-assessed tax of, perhaps, 1% per year on the value of all assets and contractual rights, to pay the costs of defense. The owner assesses the value and pays a corresponding tax, and if anyone wants to buy the asset at the assessed value, it is sold. There could be a personal exemption of perhaps $50,000 per year, and an exemption for personal papers. There could be a local add-on to pay the costs of local police and courts.

An even greater share of the federal budget is used for various programs that provide help for people with special needs--welfare, Medicare, Medicaid, Social Security, unemployment insurance, disaster assistance, etc. Some of these programs (social security, Medicare, and unemployment compensation) are funded in part by payments by prospective beneficiaries. But all incorporate substantial elements of deliberate redistribution.

In a world that adhered to a classical liberal understanding of justice, there would be three sources of funding for people with special needs:

1) insurance that those with special needs had bought for themselves prior to the onset of their special needs,

2) donations from family, friends and other compassionate persons, and

3) local public expenditures that would be non-coercively financed, because anyone who objected to the financing could leave the locality.

In a just would, people would ensure, prior to conceiving children, that any expensive special needs that their children might have would be paid for, either by insurance that the parents would buy, or by voluntary conventions in their communities that the community would pay the costs of such needs.

Perhaps you object that some people would not be able to afford such insurance for all their children. If this is true, it implies one of two things.

• Either the parents of such children are behaving unjustly by conceiving those children, who will either lack what they ought to have or will be able to receive it only by the imposition of unjust taxes.
• Or else the parents have been treated unjustly by having started life without enough resources to provide for the children that they ought to have had the chance to bring into the world. I would guess that sometimes the first is true, sometimes the second, and sometimes both.

The possibility that prospective parents might be unable to afford to provide for the children that they ought to have the chance to bring into the world highlights the possible need for a one-time redistribution that would give everyone a fair starting point. This does not mean equality for ever. It does not necessarily even mean equality at the starting time. What it means is allocating initial rights in such a way that we do not mind requiring people to pay the costs of their choices, including the choice of conceiving children (unless they belong to communities that agree to pay the costs of some of their choices).

Whenever a one-time redistribution is proposed, a reaction of many economists is, "Yeah, right. Why would anyone one believe that it would be only one time?" What would make it reasonable to believe that such a redistribution would be a one-time event is its rationale: The recognition that some persons have had unfairly inadequate starting positions in life, and the determination to end that. If the purpose is achieved, there is no rationale for further redistribution, unless, at some future time, our society attains a new moral insight that implies that further redistribution is required. ... read the whole article