Henry George theorem

The Henry George theorem states that, under specified conditions, aggregate land rents equal the cost of providing an efficient level of local public goods.

Public goods: Goods that are nonrival in consumption and, in the pure case, nonexcludable. Local public goods supply the shared benefits whose efficient provision the theorem finances.
Henry George: An American political economist and reformer who advocated taxing land values rather than productive activity. His argument that land rents could fund public needs gave the theorem its name.
Land value tax: A tax on the unimproved value of land, excluding buildings and other improvements. It can capture the rent base identified by the theorem without taxing construction.
Lindahl equilibrium: A public-goods equilibrium in which each person faces a personalized price matching their marginal benefit. It offers a distinct route to efficient public-goods finance, based on individualized benefit shares.
Land rent: Payment for using land, reflecting its value in a particular location. The theorem’s proposed revenue base is the rent generated by publicly supported locations.
Progress and Poverty: Henry George’s 1879 book arguing that land-value capture could address poverty amid economic progress. The book presents the political-economic idea later formalized as a rent-financing result.
Georgism: A social philosophy advocating public collection of land rent while leaving produced wealth privately owned. The theorem supplies an economic rationale for Georgist public revenue proposals.
Samuelson condition: The efficiency condition equating the sum of individuals’ marginal benefits from a public good to its marginal cost. It specifies efficient provision, while the Henry George theorem addresses whether land rent can fund it.
Benefit taxation: A tax principle that allocates payment for public services according to the benefits recipients receive. The theorem connects benefit-based charges to financing public goods through land values.
William Vickrey: An economist known for work on public finance, taxation, auctions, and urban economics. His work helped develop the theorem’s modern public-finance formulation.

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The Single TaxRelated: It later supplied a formal connection between land value and the cost of public services.