Working Group 3 - 4 Advisors: Joshua Vincent, Ted Gwartney, Karl Fitzgerald, Jeff Smith, Paul Metz, Carol Wilcox, Nic Tideman, Bruno Moser

Current Task: Compiling examples

Next Task: Selecting which examples to do SWOT analysis

From Carol Wilcox, February 6:
The top Land Value Capture initiatives in the world would have to be:

1. Hong Kong - continually adjudged the top country for Economic Freedom, with rent for revenue playing a huge role
2. Japan's self financing Public Transport (recycling rents)
3. Alaska Permanent Trust Fund - Alaska the only US state to reduce it's wealth gap in the last decade
4. Harrisburg split rate Property taxes - huge reduction in vacant properties & spur to local business
5. Bahrain - captures all of its revenue from oil rents & property rates. Kuwait similar.
6. Brunei - oil rents enable citizens to pay no tax. Companies pay 30% though
7. Particularly no's 26 onwards of the Geonomist top 28 examples of LVT

Varied Methods, Worldwide, to Capture Land Values for Public Revenue and Benefits

Australia: This country's states have had significant experience in land value capture, reported in numerous studies over at least 60 years, proving the comparative advantages of the system.

• Victoria (state): 12 studies of rural communities show that towns using land value capture averaged construction and renovation growth of 29%, compared to 2.6% in neighboring communities which taxed buildings much more heavily than land values.
• Western Australia (state): 17 localities taxing land values only, experienced a 34% increase in total number of new dwellings built during the period studied, compared with 0.02% decrease in new dwellings in nine neighboring localities taxing buildings as well as land.
• Malvern (city): A marked construction spurt was experienced after the municipality adopted land value capture, the most extensive building occurring in Malvern's most blighted neighborhoods. Before the tax shift, they accounted for only 22% of building permits, but in the 5 years following initiation of land value capture, that percentage climbed to 47%.

Canada

• Vancouver, British Columbia: Buildings were exempted completely from taxation during crucial, post-fire years, 1910-18. From then until 1980, buildings were taxed less than land. The overall result is cohesive, relatively compact city development, though now valuations need to be more regular and more accurate.
• [Alberta (province): A commonwealth fund, based on the province's oil, helped this province to finance some of its own development.]

• New York City: After World War I, the city faced an acute housing shortage, with high rents and crime and unrest in slums. Construction of housing, halted during the war, had remained at a standstill. Industry blamed the crisis on shortage of investment capital and excessive labor costs. The state legislature, sensing that high taxes on buildings were the true impediment, passed legislation enabling the city to exempt taxes, for 10 years, on new buildings used only for dwelling, or buildings of four or more stories used only for dwelling above the ground floor. The healthy part of the property tax remained; land beneath such exempted new buildings continued to be taxed [and collected at a higher rate, because the land was being developed.??]
  
  A building boom commenced. No police powers or public expenditures were involved in this program. The rather moderate tax shift made housing an attractive investment. The construction industry revived, the dwelling shortage ended, civic panic subsided, and municipal revenues rose.
  
  Unfortunately, lessons from this tax reform soon disappeared. The exemptions were rescinded instead of being incorporated into permanent housing legislation. There were two reasons for this. First, when the housing crisis ended, real estate spokesmen contended that government should stop interfering with the free market. Since the building tax exemption was a market correction, not an interference, this was a self- serving argument by slumlords and land speculators. Second, the exemption did not lower rents for middle- and low-income tenants, as had been hoped. It is likely that, had the exemption been continued and applied to all city housing, old and new, benefits soon would have reached poorer residents, after housing desires of higher-income families had been satisfied or stabilized.
  
  Housing specialists, trying to bypass the market rather than restore it to health, then launched rent control and public housing programs. Decades later, New York City is plagued with homelessness, slums, and shortages of decent dwellings for low- and middle-income people.

The split-rate (also called two-rate) property tax falls more heavily on land values than on building values. An assessor appraises the separate market value of land and improvements (buildings) for each taxable parcel. However, instead of applying one tax rate to the total of these two values, a higher rate is imposed on the land assessment, a lower rate on building assessments. The rate differential is gradually increased over the years, land values thus bearing a growing share of the property tax.

United States

• Pennsylvania (state): 20 municipalities, including Harrisburg, the state capital, have gradually shifted their local property tax systems away from taxes on buildings, to taxes on land values. In all cases studied, building permits increased in those municipalities, compared to others of similar size nearby. Buildings formerly vacated and boarded up were repaired, because owners realized it was better to have productive, serviceable properties than to speculate on future rises in land values, especially as they had now to pay taxes on their unused or underused land. With little or no grants or loans, these cities have increasingly been able to fund their needs for services, such as roads, fire and police protection, and environmental remediation.
  
  The decision to implement this form of land value capture was made by city officials. In the case of Allentown, the state's third largest city, however, it was the citizens who pushed for the tax shift reform, by means of a home-rule charter initiative. They voted for a municipal charter that froze or eliminated all other taxes and permitted tax increases on land values only, for 12 years. This city now experiences self-sufficient economic revitalization, the logical and expected result of this kind of tax shift. Allentown's new construction and renovation grew by 82% in dollar value, in the 3 years after the system began. This was 54% more than that of Bethlehem, a nearby city of similar size, despite the latter's receipt of much federal grant money.
  
  Virginia Polytechnical Institute/University, in a study of Pennsylvania's land value capture cities, found that, for all four categories of construction, an increase in the effective tax differential is associated with an increase in the average value per permit. For residential housing, a 1% increase in the effective tax differential is associated with a 12% increase in the average value per unit.
  
  Thus, analysis shows that the combination of lowering taxes on buildings and raising them on land values results in a measurable, significant increase in building values generated. The stronger the shift, the more the built environment improved.
  
  Other significant changes detected in similar studies of tax reform through land value capture:
  • Taxes on the majority of owner-occupied and rental homes are reduced.
  • Construction and rehabilitation of residential and commercial buildings are stimulated.
  • The serious escalation of housing prices and rent experienced by most United States cities was averted in these Pennsylvania cities because housing stock expanded.
  • Central business districts were revitalized because they attracted greater private investment.
  • More efficient land use resulted as a city's idle lots and underused buildings were put into productive use; this in turn reduced the pressure for costly and environmentally harmful urban spraw.

Hong Kong: A land lease method of capturing land values has been a significant boost to this Asian city. The government owns all the land. Assessment is basically an annual value system which, to a significant degree, captures land values for the public, with relatively low tax burdens on industry and labor. Inefficiencies that might have resulted from government ownership were minimized by creating markets for government-owned land and property leases, transmitting important information to both users and urban planners.

Owners of income-yielding land leases or buildings pay a standard rate of 15% on such annual income. Rates are levied on landed property [meaning developed or improved with buildings on??] at 5.5% of the estimated annual rental value. In 1993-94, for example, [traditional?] property taxes totaled HK $ 1.5 billion, while that from land leases totaled HK $ 10.8 billion. A large, subsidized public housing sector is made possible partly because the government already owns the land needed for such dwellings. In addition, the government further subsidizes this housing through grants and loans, at concessionary interest rates, to its housing authority.

Singapore: Its land lease system is similar to Hong Kong's, also with a large subsidized public housing sector. When it became an independent republic in 1965, Singapore faced many problems, including rapid population growth, a severe housing shortage, dilapidated buildings, squatter slums, and the need to create jobs. Most of the population were low-income and fairly recent immigrants. There were few large landowners, facilitating the government's legislation for land reform through land value capture.

In 1960 the government owned 44% of Singapore land; by 1985 this had increased to 76%. Under the State Land Rules, legislation provide for State land to be leased for a term not exceeding 99 years. A flat rate of 12% in the annual rental income of commercial property applies, as of 1996. A tax rate of 4% of estimated annual rental applies for owner-occupied residential properties. There is no capital gains tax on private sector real estate transactions. The Singapore government has instead relied on the process of land nationalization on a selective basis, to effect the process of land value capture. [Needs another (gentle) line of explanation??]

United States To finance public works, this country's states and smaller jurisdictions have at times used benefit assessment districts, with land value capture as the mechanism to pay for new or better public works projects. When a community petitioned for infrastructure benefits, such as paved streets, sidewalks, utilities extensions, or other amenities, a governing jurisdiction then designated a district embracing all benefitting properties. Costs were divided among properties according to each owners's ³front footage.² The length of lot lines facing a street provided a rough equivalent to the relative land values of the affected properties served by or adjacent to the facility.

A small number of such benefits districts remains, but most depart from the original design. Their taxes fall on total property value rather than on front, or land, value, and fully developed properties pay more. Such districts, therefore, now give a free ride to holders of vacant land or blighted properties.

The original land value capture benefit assessments districts had the following advantages:

• The approach worked and citizens found it fair. Those receiving benefits bore the costs; others, who did not benefit, were not expected to pay.
• Orderly urban growth was fostered. Local government had more control over where infrastructure was to be extended.
• Benefit districts tended to be democratic and efficient. Projects went forward only if affected owners approved. Waste was minimized because those who had to pay took pains to confirm that facilities would be worth their cost.

• California: Local irrigation districts established in the early 20th century in the great Central Valley provide a lesson in the benefits of infrastructure funding by land value capture. State law enabled formation of local irrigation districts, with the capacity to issue bonds to finance irrigation works. These were paid from increased land values captured as a result of the improved water systems. Large ranch lands, now taxed at much higher values, were sold off in smaller tracts. Small farmers found land more affordable, and were able to farm more intensively because of expanded irrigation. This land value capture system brought prosperity and healthy, thriving communities. Town sites, too, whose values were enhanced by higher productivity of the surrounding farms, yielded higher taxes. Districts became multi-purpose, providing electric power, reclamation, and recreation, as well as water. Some five million acres turned green under this tax reform, which one analyst called ³an extraordinarily potent engine for the creation of wealth.²

• Ohio: After catastrophic floods in 1913, this state inaugurated a flood control system paid for by land value capture. Assessing the flood damage to each property approximated the land value beneath that would accrue to the owner, as a result of preventing future floods. Approximately 77,000 parcels along 110 miles of river valley were individually assessed within two years. Total calculated benefits to properties exceeded $100 million, more than three times the cost of the flood protection project. Such a cost/benefit ratio lends weight to the proposition that infrastructure can be self-supporting under a land value capture system, because it generates sufficient revenue.

• Pennsylvania: The Pittsburgh (second largest city) Improvement District, comprising 100 blocks of prime downtown land, is a successful example of a full land-only value capture special benefit district. This capture scheme pays for greater customer safety, better maintenance, and enhanced marketing to attract new businesses, [including many national corporate headquarters??], which both pay for and benefit by the additional assessment.

Taxation of motor vehicle ownership and usage also involves land values, although this is often unrecognized. To the extent that road usage rights represent rights to use of a land-related resource, taxing that right is completely in line with land value capture policy.

• Singapore: Motor vehicle taxation here is a form of regulatory capture related to land use. Road space is a valuable resource in this land-scarce city-State, and is priced accordingly for private motor vehicle owners and users. Road usage pricing has been implemented since 1975; as a result, traffic congestion is infrequent. Because of successful land value capture, revenue from land leasing and motor vehicle related charges are important sources of funding, and the Singapore budget has enjoyed healthy surpluses since 1968. At the same time, tax rates on income and productive enterprise have been steadily reduced.

• United Kingdom: To avoid overcrowding and wasting fuel as vehicles idle in traffic jams, London has recently introduced land value capture through traffic congestion pricing, also based on heavy or light use time of day. The City of London receives substantial revenue from vehicles fined for non-compliance, the number of vehicles in central London has been dramatically reduced, and traffic flows better. Expand??]

Land value capture, as an economy develops, can generate substantial funds. Land, in its fullest meaning, includes natural resources­all non-man-made matter­including oil and other minerals below the earth and in the seas, as well as the magnetic spectrum and others above the earth.

An excellent example of natural resource value capture is that of Alaska's oil, cited above. Under this state's constitution, natural resources are legally owned by the people as a whole. The Alaska Permanent Fund captures value from oil royalties, then places these moneys in an investment fund, which generates dividends paid annually to all individuals, including children, resident in the state for at least one year. More than $25,000 per person has been distributed in this way during the past 25 years. Alaska is the only state in the United States where the wealth gap has decreased during this period.

Worldwide, states and municipalities could establish such a system, drawing from various sorts of land, or natural resource, values in their jurisdiction, instead of, as now, continuing to throw away opportunities to capture vast amounts of land value­from rights to graze or fish, from water, and from airwaves, for example. At present, these natural resource values totally, or nearly, escape taxation, going instead to a few individual or corporate resource owners instead of to all citizens.

The constitutions of several countries and commonwealth governments already claim the land and natural resources on behalf of the people as a whole. Various methods of land value capture for public benefit could be [effected by insisting on] understood as securing these common ownership rights, already in their existing constitutions. Citizen movements to enforce their constitutional rights could model their efforts to establish land value capture systems on those like the state of Alaska, described above.

Substantial increases in the amount of land value captures can be gained simply by complying with assessment laws already in place. The city of Southfield, Michigan, U.S., is an interesting example of this. A state law held that all taxable properties were to be appraised at market value. In Southfield buildings were assessed at 70-80% of market value, but land at only 5-10%. When a Southfield citizen ran for mayor urging compliance, the city stopped exaggerating the value of new construction and renovations, and appraised all land according to highest and best use. James Clarkson was elected to four terms as mayor, each time winning on the issue of fair assessments. Taxes on average homeowners were significantly reduced. The tax base, enhanced by capture of true land values, rose by 20% a year during that time, affording many benefits to Southfield's citizens.

AFRICA

Various studies on land policy reform and taxation in Africa have point to the efficacy of a land value (also called site rating) capture system to stimulate land use. Africa's current tax effort is far lower than the average for other developing regions. The principal factors contributing to this poor performance, according to a World Bank study of evidence provided by revenue authorities in 1994, include poor compliance in the informal sector economy, inadequate coverage of existing tax instruments, and poor administration and collection. Improvements recommended suggest that local authorities desireland value taxes designed to:

1. encourage development of both rural and urban land,
2. broaden the local government's revenue base,
3. provide opportunities for streamlining the country's land tenure and cadastral records systems, and
4. streamline fiscal structure and provision of public services.

Kenya: All local governments in Kenya have taxing authority, including the right to levy a tax on property. Nairobi is one of six municipal governments and seven other county councils which have relied on land taxes to stimulate local development since the 1940s. In such areas, policies to encourage land registration and settlement have influenced land ownership patterns and the emergence of a land market. Nairobi was sufficiently urbanized to begin rates on land values in 1921, Mombasa following in 1949. After more than 50 years, property values have been compiled from sales transaction in all of Kenya's taxing jurisdictions. The system of property taxation adopted is a land value (site rating) tax, requiring application of property rates, using site value basis, to all land held by individuals and private corporations. The tax is on land value only, irrespective of buildings on the land. Property belonging to the government or used by public or charitable organizations is exempted. However, housing estates on city-owned land are required (and presumed) to include a tax element in rent charged to tenants..

Kenya requires survey and registration of all land parcels; this is strictly enforced once an area is declared a planning area. Copies of all land transaction, including evidence of sales and leasehold terms, are sent to the valuation office. Revaluations are required every five years; Nairobi performs mass valuations every three years. Valuation estimates derived are used in Nairobi and other cities to establish a citywide map of localized values per square foot. Data obtained is then used to establish standardized land tax rates for freehold and leasehold interests. In rural areas, however, a paucity of land market activity forced county governments to resort to a flat rate schedule, sometimes made more regressive by lowering the rate as the size of the holding increased. Nairobi's site value tax was set at 2% in the 1960s, remaining unchanged for several years. It generated 42% of local revenues in 1985. The system also contributes a small amount to central government revenue.

On the whole, land value taxation appears to function well enough to finance a significant portion of Kenya's local government expenditures. However, certain limitations continue to constrain its general effectiveness as a fair and efficient tax base. A major drawback is the absence of a comprehensive cadastral system for identifying each ratable unit and for classifying land uses. Values that are the intended base of the tax are supposed to be determined free of encumbrances. However, this cannot be ascertained without a legal cadastre in most African rural areas. Other questions arise about the value of unsold rural and peri- rural land parcels and about appropriate capitalization rates to use in most areas outside the highly urbanized and actively traded urban council ratings areas.

Additional complications may be attributed to the fact that most industrial sites are owned by the government or held by some para-statal organization, without any specified terms. These cannot be sold outright. The special valuation conditions created by the large number of public/private joint venture investments in development cannot be ignored. In response to these limitations, Kenya's county council employed a flat sum per acre, classified by broad land use categories and adjusted to account for differences in size of holdings. To strengthen the benefits of the land value capture system in this country, these problems need to be addressed. The land value tax needs to be increased substantially beyond the 2% rate, in tandem with reductions of taxes on labor and productive economic endeavors.

Malawi: This was formerly known as Nyasaland, a member of the Federation of Rhodesia and Nyasaland, under British rule. The Rhodesia Municipal Ordinance of 1914 introduced land value taxation, permitting differential taxes between land and improvements. Urban centers taxed land four times more heavily than improvements from 1915 to 1953. Since then total property tax yield as a share of costs of public services has declined. In 1971, the administration of land-based taxes was coordinated by the central government through the Ministry of Land and Valuation in Lilongwe. However, government data show that property taxes accounted for only 2.7% and 3.3% of revenues in 1977 and 1981, respectively.

Malawi has defined more land and property interests in law in urban and rural areas than most African countries of equivalent size. It has the legislation and registration machinery necessary to administer a land value capture system, even at the national level. The history of rent taxation in the country also shows that either a rental value or a capital value system [unexplained so far!] can work. There is no presumption that land value taxation (called site value rating) cannot be applied to both freehold and leasehold land held by customary communal land titles. The framework for a national land tax system exists in the country. Implementation of recommendations to increase land value taxes and leasehold rents is being stymied, however, in part because of opposition from large landowners (and most senior government officials are also major landowners). This is unfortunate because land value capture, if robustly implemented, could solve a number of social problems in that country, including growing conflicts over land.

Republic of South Africa: After the establishment of the Union of South Africa in 1910, most municipal ratings were based on the total value of both land and improvements. In 1914 the Labour Party passed an ordinance which allowed for site value rating and prevented flat rating (same tax on total land and building value). This ensured a higher rate on land than on buildings. Johannesburg was the first to adopt site vate rating, in 1918. By 1984, of the 112 largest cities, 62 were on site value rating and accounted for 70% of the total value rating in the RSA. By then, only two of the largest cities were still on flat rating­Cape Town and Port Elizabeth. All the others collected a larger percentage from land values than from improvements.

Two surveys, on 20 years of ratings in South Africa, show that cities capturing value from land sites only drew twice the percentage of increased capital investment compared to those rating (taxing) on flat value. The two large cities on flat value ratings­Cape Town and Port Elizabeth­both major ports and tourist cities, one the capital, logically should have kept pace with the average growth of major cities. However, their percentage growth in all instances was low, compared to RSA average and particularly to site value rating cities. The latter grew in both total value and capital investment, in approximate proportion to the incidence of rate land versus improvements. As a group, their growth was between those on site value rating and flat rating, all conditions considered. [unclear??]

With the end of apartheid, the independent homelands have reincorporated into the republic. Industry in those ³bantustans² had been heavily subsidized and more lightly taxed than the rest of RSA. With the end of subsidies and the increase of taxes on production, industries that had employed thousands became unprofitable. Thousands of people lost jobs. The Department of Finance and its tax consultants refused to address this problem, forcing millions of people to migrate from the bantustans tosquatter camps around the cities. The struggle for land ownership and land tenure has reached serious proportions. Apparently the success of land value capture policy had not been well understood. If it had been, with the end of apartheid would have come a strengthening and extension of beneficial public finance approach. Inadequate proposals put forward by a 1994 tax commission recommended a tax on improvements as well as land values, limited to two percent, on rural land rather than all land. Lastly, the tax would not replace existing taxes that contribute to unemployment. It can be shown that, instead of capturing rises in land value, RSA taxes labor and productive activities, raising unemployment and mass migration to squatter centers.

Tanzania: A land policy passed in 1995 strongly recommended introduction of land value capture (rating), not only as an efficient revenue source for local governments, but also as the preferred instrument for developing urban sites and curbing land speculation throughout Tanzania. These policies are being implemented.

Uganda: As currently structured, the principal sources of public revenue are from taxes on labor and production. The Uganda Revenue Authority has considered use of land value taxation as a more fundamental solution to its chronic revenue shortfall. The chief advantages of this approach are its appropriateness to 1) determining ability to pay taxes, 2) identifying property owners as beneficiaries of public expenditure on social and economic infrastructure, and 3) superior (relative to income taxes) neutrality with respect to resource allocation.

EUROPE

Hungary: In 1917 the Budapest City Council adopted land value taxation levying an annual tax of one half of one percent on land values, with no exceptions except for publicly owned sites. At the same time, taxes on buildings were halved. Valuations were to be made every three years, with the greatest possible publicity. Each citizen had the right to appeal. Although the land value rate was low, this was a significant step, envisioning a fuller program of land value recaapture. Unfortunately, inflation seriously deflated the Hungarian currency in 1919. During the chaos following World War I, Budapest and other cities which had begun this reform either suspended or abolished it. Another attempt to introduce land value taxation was made in 1989. Computerization of the land registry system, now underway, will be the basis for better assessment. During debates reshaping Hungary's constitution, the proposal was been made that equal rights to land be secured by requiring all landholders to pay a percentage of the full rent [value??] of their land only, whether used or not, and excluding improvement values.

[Denmark??]

NORTH AMERICA

United States: The United States has always had a measure of land value taxation. After independence, major reliance on land taxes for public revenue lay at the core of the country's economic development. and had a large, positive impact on the character of American society. Before the 20th century, however, state and local governments turned increasingly to non-land taxes for added revenue. Wealthy individuals and corporations accelerated their ownership of natural resources and prime urban sites. The federal budget, in the meantime, began to exceed state and local expenditures and to support itself with taxes on production and income. [Today economists and reformers struggle against special interests and custom to demonstrate the advantages of land value capture in helping the country better cope with its many problems and soaring national, state, and local budgets.]

SOUTH AMERICA

Barbados: This country introduced a Land Valuation Act in 1969, to prepare a roll of values before shifting to land value capture. The roll was completed in 1971 and the Land Tax Act enacted the same year. However, legislation now in force defines land in such a way as to include ³houses and other structures,² and improved property is valued at its total assessed capital value. [define?] Moreover, since the same rate schedule applies to all improved properties, the more highly improved bear increasingly heavy tax burdens. Such a system hardly qualifies as land value capture, except that it imposes higher rates on completely idle land. Property taxes account altogether for only five or six percent of total tax revenue. Non-payment of property taxes was endemic until recently.

Belize: An oppressive land tenure system evolved under British rule, still persists. When emancipation took place in the 1830s, the Colonial Office adopted the policy of pricing land not already in private hands beyond the reach of the former slaves, who had no alternative but to work as wage laborers, at subsistence rates. When Belize became independent, land ownership was highly concentrated, much in absentee hands. (A British firm, Belize Estate and Produce Company, held 41%, and remains one of the largest landowners.) During the 1960s, two United Nations reports urged adoption of a land value tax of two percent. Even though this was insufficient to stimulate significant change in use or tenure, the reports seemed to have had the effect of reinforcing public awareness of the land problem. When independence was granted, an act providing for a national land tax on capital value of land, exclusive of improvements, was adopted in 1982. However, it turned out to be disappointingly modest, applying only to rural land, and the rate is only one percent of assessed market valuation. Consequently, absentee owners still tend to keep much of their land idle, waiting until values rise, when they can sell it at steep profits.

Chile: Total real estate tax revenues amount to only four percent of all Chilean taxes. Land assessments are far behind market values. This country should capture substantial land rent [value??] and at the same time reduce taxes on income and production.

Jamaica: The movement toward land value taxation began in 1943, with appointment of a Commission on Inquiry, which recommended basing the property tax system on taxing land values only, whether urban or rural. The Land Valuation Law was passed in 1957. After delays and interruptions, valuation was completed in 1977. Land tax rates are now graded, based on value, increasing gradually on higher values. With a sound basis for land value capture, Jamaica would now do well to consider increasing land value capture rates, while decreasing taxes on wage income and consumption of basic needs.

Montserrat: This island taxed land values more highly than improvements, generating more revenue than most other Caribbean governments. However, the total population has been evacuated because of volcanic eruptions.

[CONCLUSION]

The above examples represent a substantial body of experiences with land value capture. They can guide further development and refinement for implementation. They can enable governments to ensure access to affordable land for shelter and jobs, and to provide legal security of tenure as ³strategic prerequisites for the provision of adequate shelter for all and for the development of sustainable human settlements affecting both urban and rural areas,² as called for in the Habitat II Action Agenda, section on Ensuring Access to Land. (Addendum 3)

Two examples of how market distortions caused by improperly harnessed [focused??] tax systems interact with the law of rent to promote land speculation and private profiteering in land:

1) The law of rent operates worldwide. As China's economy rapidly heats up, those dealing in rising urban land values have been making a killing on real estate, while others are falling [ making a descent] into poverty. For instance, Yuchen Zhang, a Beijing real estate developer, has just completed his $50 million castle, complete with moat, uniformed guards, and a spiked fence to defend it. The 800 peasants who used to grow wheat on Zhang's 1.5 square mile estate are now landless.

2) The Rand Corporation (U.S. think tank), in its 2001 annual report, lists the April, 2001, sale of 11.3 acres of its Main Street, Santa Monica, California property for $53 million, or $4.69 million per acre. The gain on sale of Rand's land is listed as $44.984 million, making the original purchase price $8.016 million, or $709.38 per acre. Who created this land value boon for Rand? The 84,084 people of Santa Monica as a whole, who would have each received $534. if the land value increase had been captured by the city and distributed to all residents as their fair share of the profits from such a spectacular rise in city land values.