"Put to the vote: as many are of the opinion that a public tax upon the land ought to be raised to defray the public charge, say 'yea' "Philadelphia's first tax law, January 30, 1693

" Carried in the affirmative, none dissenting."

THE above wisdom is timeless, but today's sophisticated rent seeker knows better. Before the property market peaked, he demanded that council rates and land taxes be wound back because prices had been escalating and he'd been "slugged" badly. But as the real estate bubble bursts, he now says property-based revenues need to be wound back, because people holding real estate have been "hurt" enough already, and the last thing they need is property taxes causing more "damage". Property tax relief is necessary both on the upside and the downside, it seems.

The truth is that the public capture of publicly generated land rent never does harm to society. To the contrary; it may be dawning on politicians and analysts that the real estate bubble was the inevitable result of inadequate land-value capture. They may even consider extending and fortifying council rates and state land taxes in order to prevent damaging real estate bubbles from developing again in the future.

Unlike the late 17th-century Philadelphians, much of local government doesn't appreciate the ingenuity of the reasoning behind the rating system by which it is mainly funded. Therefore, it often won't defend it against those hostile ratepayers who attack it because they can. (Ratepayers are rarely to be seen knocking on the door of the federal treasurer, protesting against their income taxes!) Meanwhile, state governments reduce state land taxes, acceding to powerful landed interests whose property values must apparently be allowed to achieve nosebleed heights unfettered by land-based revenues.