Explain the economic rationale for Henry George’s proposal for a single tax on land
What will be an ideal response?
Socialists have argued that land rent is unearned income, and that either land should be nationalized or land rents should be taxed away. Henry George in his 1879 book, Progress and Poverty, called for a single tax on land as the sole source of government tax revenue. The supply of land was perfectly inelastic, so George thought it came solely from increasing demand as the population increased. Landowners were receiving unearned income from their increasing rents even though they were doing nothing to increase productivity. George wanted to tax away this unearned rental income. George argued that this tax would be efficient because it would not affect the amount of resource in use. The most profitable use of land before it is taxed is the most profitable use after it is taxed from George’s perspective. To add popular appeal to his ideas, he suggested that the land tax would be the only tax needed by government to finance its expenditures.
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The Laffer curve shows the relationship between tax:
a. revenue and tax rates. b. revenue and take-home pay. c. revenue and government spending. d. rates and take-home pay. e. rates and government spending.
A maximum wage law, as opposed to a minimum wage law, would be considered a
A. price ceiling. B. price floor. C. tax on businesses. D. sales tax.
The price of an exhaustible resource sold in a perfectly competitive market in which technology and consumer preferences do not change over time will tend to
A. stay constant over time. B. always equal the price of the closest substitute for that resource. C. fall over time. D. rise over time.
The "other things being equal" clause in the law of demand does allow which of the following factors to change?
A. Consumer income. B. The prices of other goods. C. Consumer tastes and preferences. D. The price of the good being demanded.