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Land Taxes, Output Taxes, and Sharecropping: Was Henry George Right?

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  • Hoff, Karla

Abstract

Economists have generally argued that if a land tax is administratively feasible, then to increase efficiency it should be used to the exclusion of output taxes. This article shows that underlying this policy prescription is the assumption that institutions for pooling and spreading production risks are perfect. When account is taken of the imperfections in those institutions, some use of output taxes will be Pareto superior to a pure land tax regime and may induce higher output, as well. Henry George was wrong! These results generally apply even when the land tax is indexed to regional output, and when land is farmed under sharecropping. Even in these cases, a move from a pure land tax to a mix of land and low output taxes will reduce preexisting distortions in both consumption and production arising from the imperfection in risk markets. Copyright 1991 by Oxford University Press.

Suggested Citation

  • Hoff, Karla, 1991. "Land Taxes, Output Taxes, and Sharecropping: Was Henry George Right?," The World Bank Economic Review, World Bank, vol. 5(1), pages 93-111, January.
    • Handle: RePEc:oup:wbecrv:v:5:y:1991:i:1:p:93-111
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    Cited by:

    1. Catherine Araujo-Bonjean & Gérard Chambas, 2001. "Le paradoxe de la fiscalité agricole en Afrique subsaharienne," Revue Tiers Monde, Programme National Persée, vol. 42(168), pages 773-788.
    2. Harold Alderman & Christina H. Paxson, 1994. "Do the Poor Insure? A Synthesis of the Literature on Risk and Consumption in Developing Countries," International Economic Association Series, in: Edmar L. Bacha (ed.), Economics in a Changing World, chapter 3, pages 48-78, Palgrave Macmillan.
    3. Assunção, Juliano Junqueira & Moreira, Humberto Ataíde, 2004. "Land taxes in a Latin American context," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 526, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    4. Ali, Daniel Ayalew & Deininger, Klaus, 2021. "Does title increase large farm productivity? Institutional determinants of large land-based investments' performance in Zambia," 2021 Conference, August 17-31, 2021, Virtual 315328, International Association of Agricultural Economists.
    5. Indira Rajaraman, 2003. "Tackling Agriculture in a Developing Country: A Proposal for India," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0322, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    6. Alexander RYMANOV, 2017. "Differential land rent and agricultural taxation," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 63(9), pages 421-429.
    7. Black, Jane & de Meza, David, 1997. "Everyone may benefit from subsidising entry to risky occupations," Journal of Public Economics, Elsevier, vol. 66(3), pages 409-424, December.
    8. Roger R. Betancourt, 1991. "The New Institutional Economics and the Study of the Cuban Economy," Annual Proceedings, The Association for the Study of the Cuban Economy, vol. 1.
    9. Hoff, Karla & Lyon, Andrew B., 1995. "Non-leaky buckets: Optimal redistributive taxation and agency costs," Journal of Public Economics, Elsevier, vol. 58(3), pages 365-390, November.
    10. Khan, Mahmood Hasan, 2001. "Agricultural taxation in developing countries: a survey of issues and policy," Agricultural Economics, Blackwell, vol. 24(3), pages 315-328, March.
    11. Gelan, Ayele, 2004. "System-wide Impacts of Agricultural Export Taxes: A Simulation Experiment with Ethiopian Data," MPRA Paper 1490, University Library of Munich, Germany.
    12. Shantayanan Devarajan & F. Halsey Rogers, 2002. "World Bank Economists' Forum : Volume 2," World Bank Publications - Books, The World Bank Group, number 15227.
    13. Izvoranu Anca Marina & Călin Henriette Cristiana, 2019. "Land taxation," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 13(1), pages 883-888, May.
    14. Devarajan, Shantayanan & Go, Delfin & Schiff, Maurice & Suthiwart-Narueput, Sethaput, 1996. "The whys and why nots of export taxation," Policy Research Working Paper Series 1684, The World Bank.

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