Open letter to Gorbachev

On November 7, 1990, an open letter to then President of the Soviet Union Mikhail Gorbachev was published[1][2] and signed by a rank of thirty Western sources, most of whom were academics.[3][4] The contents of the letter made the argument to the Soviet head of state that while moving the economy away from a centrally planned system towards a free market mixed economy was a step forward, they warned the leader against following through with the West had done following the end of feudalism; privatising the land itself, instead opting towards a Georgist system of common ownership and the collection of public revenue through land-value taxation.[3][4] Nobel prize-winners Franco Modigliani, James Tobin, Robert Solow and William Vickery were among the letter's signees.[2]

Contents

While the signatories of the open letter praised the Soviet leader for moving his country towards a market economy, they warned that there was:

"...a danger that you will adopt features of our economies that keep us from being as prosperous as we might be. In particular, there is a danger that you may follow us in allowing most of the rent of land to be collected privately."[3][4]

The letter then further elaborated that Gorbachev had the opportunity to place much of the USSR's tax burden on the rent of land and forgo in introducing or increasing the rate of taxation on the other two factors of production: labour and capital, in lieu of Henry George's proposal, the Single Tax, from over one-hundred years earlier. The open letter then went on to explain the benefits of land-value taxation:

"First, it guarantees that no one dispossesses fellow citizens by obtaining a disproportionate share of what nature provides for humanity.

Second, it provides revenue with which governments can pay for socially valuable activities without discouraging capital formation or work effort, or interfering in other ways with the efficient allocation of resources.

Third, the resulting revenue permits utility and other services that have marked economies of scale or density to be priced at levels conducive to their efficient use."[3][4]

The letter then explained and elaborated on how land-value arises from three sources; it's productivity and fixed supply, the growth of the population occupied nearby the land, and lastly the provision of public services and goods.

The work then went on to argue against attempting to collect the net present value of land rents by auctioning off land to private owners, giving six arguments against.[3][4]

The letter ended with a list of the thirty signatories followed by an appendix on technical issues in regard to land-value taxation.

Signatories

A total of thirty signatories signed the open letter to Gorbachev.[1][2][3][4] They were:

Impact

Today, the former Soviet Republics of Estonia,[5] Russia[6] and Ukraine[7] each impose a degree of land-value taxation. British economist Fred Harrison worked closely with Russia's State Duma in regards to tax reform during the 1990s.[8]

According to Nicolaus Tideman, who organised the gathering of signatures for the letter, claimed in an email to a person that someone with access to Gorbachev's private papers had seen the letter with a notation spelling "This looks interesting. Perhaps we should follow up."[9]

Similar work

A similar argument in favour of the USSR moving towards a system of land-value taxation was made in an opinion piece in the New York Times authored by 'Achilles Fexas', titled "Gorbachev Can Test Henry George's Theory"[10]

See also

References

  1. Samuels, Warren J. (2003). "Why the Georgist Movement Has Not Succeeded: A Speculative Memorandum". The American Journal of Economics and Sociology. 62 (3): 583–592. doi:10.1111/1536-7150.00229. ISSN 0002-9246. JSTOR 3487812.
  2. Batt, H. William (2012). "Development and Wealth: A Georgist Perspective". American Journal of Economics and Sociology. 71 (4): 1004–1046. doi:10.1111/j.1536-7150.2012.00851.x. ISSN 0002-9246. JSTOR 41721436.
  3. Fitzgerald, Karl (2007-11-01). "Letter to Gorbachev". Prosper Australia. Retrieved 2023-03-16.
  4. Tideman, Nicolaus. "Now top economists advise Mikhail Gorbachev: SOCIALISE THE RENT" (PDF). School of Cooperative Individualism. Retrieved 2023-03-16.
  5. "Land tax | Estonian Tax and Customs Board". www.emta.ee. Retrieved 2023-03-16.
  6. "Land Tax | FTS | The Federal Tax Service of Russia". www.nalog.gov.ru. Retrieved 2023-03-16.
  7. Legal, Laudis; Timchenko, Accountancy-Kateryna (2021-08-17). "Taxation of real estate in Ukraine in 2021". Lexology. Retrieved 2023-03-16.
  8. "Fred Harrison / Russia: After the Cold War -- How to Win the Peace! -- 1992". cooperative-individualism.org. Retrieved 2023-03-16.
  9. Tideman, Nicolaus (1999-05-19). "Nicolaus Tideman comments on the open letter to Mikhail Gorbachev" (PDF). School of Cooperative Individualism. Retrieved 2023-03-16.
  10. "Opinion | Gorbachev Can Test Henry George's Theory". The New York Times. 1990-10-09. ISSN 0362-4331. Retrieved 2023-03-16.

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