China is looking for new methods of raising revenue to support its government and services for its people. This paper will introduce the concept of collecting land rent which will provide the needed public revenue for Chinas economy. It will show how to implement the concept of collecting land rent and methods for valuing land rent. An example of a proposal to fund all of California state and local governments from land rent is presented.
Real estate consists of land and buildings. The nature and characteristics of land and buildings are totally different and the revenue raised from each has totally divergent effects on people, communities, commerce, growth and economic well-being. Buildings are created by man’s labor and incur a cost to produce. They deteriorate over time, lose value and need to be replaced. They should be built in suitable locations in order to preserve farm land and natural resources. Land is defined as everything that is freely supplied by nature, which includes all natural resources, such as air, soil, minerals, airwaves, forests and water. Everything not made by man, is categorized as land. Land has no cost to produce and is natures gift to mankind. Lands uniqueness stems from its distinctive location, fixed supply and immobility. Land is required in the production of all goods and services. Land is our most basic resource and the source of all wealth.
Land rent is the value created from ecological and social endowments, not the personal activities of individuals. Land rent is an amount that should be paid annually for the exclusive right to use a land site location or other natural resource. Land rent varies by location and available amenities. It changes by people’s competitive desire to use the same land site. Since land is fixed in supply and cannot be expanded, demand is the sole determinant of land rent. As land demand increases, the rent will increase proportionally. Buildings are not a part of land rent. Land rent is the only source of public revenue that could be taken for public purposes without having any negative effect on the productive potential of the economy. When a community collects land rent for public purposes, both efficiency and equity are realized.
