The Fifth Amendment of the US Constitution guarantees that private property shall not be taken for public use without just compensation. The right of private property is seen as inviolable in a democracy -- what could be less controversial, except to socialists who claim that property is theft?
But controversial it is. One of the less-publicized but most hotly contested tenets of the "Contract with America" propounded by the 104th Congress's Republican majority is its "Takings" initiative. What is being "taken," and from whom?
The federal government is the main villain seen by the emergent "Wise Use" movement. According to them, the government does its "Taking" primarily by means of environmental regulations. Here's how it works: a speculator holds a piece of real estate, often in a fairly pristine area, planning to release the land for development when the price becomes right. The land has a market value based on the profitability of the resort hotel, say, or theme park that could be built there. But along come the feds, identifying an endangered species or fragile wetland habitat and regulating away the development rights! Suddenly the market value of that land drops to whatever the whooping cranes are willing to pay to nest there. Has not a "Taking" occurred?
The point is debatable. According to the 1972 Supreme Court decision in Just v. Martinette County, a landowner "has no absolute and unlimited right to change the essential natural character of his land so as to use it for a purpose for which it was unsuited in its natural state." This ruling led to many laws restricting development within environmental guidelines, and it is still almost universally conceded that private owners cannot do any wildly destructive thing with their land that they want. However, as shown in the 1992 ruling in Lucas v. South Carolina Coastal Council, the legal standard of what comprises environmentally permissible development is up for political grabs. In that case,
"South Carolina's coastal planners sought to ban further construction on a fragile barrier island, knowing the dangers that such construction posed. Sadly, many members of the Supreme Court -- particularly the decision's author, Justice Scalia -- simply could not or would not appreciate the harm that was involved. As best Scalia could grasp, the state's aim was simply to promote tourism or create some type of public park. Landowner David Lucas simply wanted to build a home, Scalia proclaimed. What land use could be more appropriate than home- building? What use could be less harmful?"
How are we to sort this out? The Constitution is clear: if private property is to be taken for public use, compensation is required. Legal precedents have established that the entire value of the property need not be taken; if a significant part of the value is taken, that is enough to require payment.
If land is private property in our legal system, then the Constitution does indeed require compensation for land values that are lowered by regulations. But how much, and which regulations? Our economy abounds in regulations that affect real estate values, from endangered-species protection to such commonplace practices as zoning, easements, rent regulations, and differential taxation for various uses such as housing or farming. All of these things can lower land values -- is compensation required in every case?
No, that would be wildly impractical and indeed absurd. So our legal system is left to wrangle out a "practical" standard for "Takings," there being no absolute standard that makes any political or economic sense.
Logic might impel one to ask whether "Wise Use" advocates, with their impeccable free-market credentials, have given any thought to the issue of "Givings." The community might occasionally do things that take land value away, but the opposite is far more often the case. In fact, it is the activity of the community that creates all land value (location value, that is -- considered apart from the value of improvements). To be consistent, those who advocate "Takings" compensation should be ready and willing to pay the community for any "Givings" for which the community is responsible -- which includes, in fact, the entire rental value of their land. The fact that land has a positive rental value indicates that "Givings" have occurred, for the value comes from nothing that the landholder, as such, has done.
The debate over "Takings" can never be resolved as long as we have a system of absolute private ("fee simple") land ownership. It is time that we recognize the real nature of "Takings" and follow the excellent advice that Henry George gave in his classic Progress and Poverty: "Abolish all taxation save that upon land values."
Lindy Davies - March 17, 1997
Here's what folks are saying:
Maybe you're right philosophically. But I want to benefit
from my land value! Everybody else does.
everybody what percentage of the world's population owns it
- Tuesday, March 25, 1997 at 18:28:44 (EST)
Hi Lindy! Great Page! I'll be having my website up in about 2 weeks...you mentioned a server I could access when I'm ready...can you get me the info on that? I'm going to hot link to this site if that is ok with you!
Mary rose <[email protected]>
Fort Bragg, CA USA - Friday, March 28, 1997 at 20:00:14 (EST)
schmoo everyone what percentage of the world's population was intended: re: hoarded resources don't they distort the distribution of wealth the size of the economy will take care of itself
- Friday, April 04, 1997 at 18:13:07 (EST)
If one steals from a land speculator, it is still theft. There are many other, less glamorous victims of current government takings. Arguments favoring the socialization of land, which George condemned, do not advance the argument for site taxation.
John Kelly <[email protected]>
Peoria, IL - Friday, April 04, 1997 at 21:44:28 (EST)
Well, certainly John is right that there are other more important government takings: try income and sales taxes for starters! Our position is that the entire rent of land belongs to the community and none of the wages and interest produced by pndividuals or corporations should be confiscated.
But in this discussion, John, where is the advocacy for land nationalization? We're simply calling for public collection of the rent of land.