MICHAEL HUDSON SUCCINCTLY DEFINES THE CURRENT FINANCIAL PATHOLOGY (# 3)

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Modern tax systems are based on the land’s usufruct, with governments having the right to tax this on the logic that:

(1) land still belongs to the state or community

(2) that its market price is created by a combination of public infrastructure spending (e.g., on roads and other transportation, water and sewer systems, and other public utilities) and by the general level of prosperity rather than by the landholder’s own efforts; and

(3) failure to tax the land would leave  its “free lunch” ground rent to be capitalized and pledged to banks for loans, thereby loading down a nation’s natural resources with debt service – while forcing governments to tax labor and industry, raising the cost of living and doing business.

Michael Hudson, “Fables of Land Ownership and of Who Obtained its Rent