Georgism, Part Eleven: The Fifth Amendment Problem

During my research regarding places where Georgism has actually been applied, I came across several instances–one being Houston–where Georgist principles were held to be unconstitutional. Although I believe that case involved an interpretation of the Texas constitution, similar problems loom because of the “just compensation” clause of the Fifth Amendment to the U. S. Constitution.

Here’s the issue in a nutshell:

If an arm of the government decides to run a highway through my property, the Fifth Amendment requires that I be paid “just compensation” for the loss of my land. Courts have differed on the exact meaning of that language, but for purposes of this blog, we can assume that I will receive some approximation of my property’s appraised value. So far, so good.

What’s all that got to do with Georgism? One could argue that if the government decides to tax my real property at a rate so high that the market value of my land goes to zero, then the government has, in effect, “taken” my property and therefore owes me “just compensation.”

My guess is that litigation surrounding an issue like this would stall Georgism in its tracks. Federal, state, and local governments, fearful of the many lawsuits likely to be spawned based on the Fifth Amendment, would shy away from Georgist tax reform, notwithstanding its many obvious benefits.

For that reason, I’m afraid an amendment to the U. S. Constitution would be required in order to short circuit the litigation. It would need to say something along the following lines:

AMENDMENT: Notwithstanding any other provision of this Constitution, the imposition of a tax on the unimproved value of real property in an amount up to its full rental value shall be permissible, but only in jurisdictions where all other taxes have been eliminated.

Or something like that.

Sounds revolutionary, right?

For an updated (2021) and edited collection of these essays on Georgism the following pamphlet is now available via Amazon and Kindle. Get it HERE.

Georgism: The Only Tax We Need? by [Philip Carlton Williams]