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Principles of Economics- Mankiw (5th) 164

Principles of Economics- Mankiw (5th) 164 - 170 PA R T T H...

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170 PART THREE SUPPLY AND DEMAND II: MARKETS AND WELFARE Is there an ideal tax? Henry George, the nineteenth-century American economist and so- cial philosopher, thought so. In his 1879 book Progress and Poverty, George argued that the government should raise all its revenue from a tax on land. This “single tax” was, he claimed, both equitable and ef- ficient. George’s ideas won him a large political following, and in 1886 he lost a close race for mayor of New York City (although he finished well ahead of Republican candidate Theodore Roosevelt). George’s proposal to tax land was motivated largely by a concern over the distribution of economic well-being. He deplored the “shocking contrast between monstrous wealth and debasing want” and thought landowners bene- fited more than they should from the rapid growth in the overall economy. George’s arguments for the land tax can be understood using the tools of modern economics. Consider first supply and demand in the market for renting land. As immigration
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