LTC Reprint No. 114
U.S. ISSN 0084-0807

May 1974

Land Taxation and Land Reform by Geraldo W. Sazama and Harlan Davis

LAND TENURE

CENTER

University of Wisconsin-Madison 53706

Land Taxation and Land Reform*
Reprinted from ECONOMIC DEVELOPMENT AND CULTURAL CHANGE Vol. 21,No. 4, Part I, July 1973 01973 by The University of Chicago. All rights reserved. Printed in U.S.A.

Geraldo W. Sazama University of Connecticut Harlan Davis U.S. Agency for InternationalDevelopment, Brazil Land taxation frequently has been presented as a panacea for certain problems of agricultural development. More specifically, the land tax has been seen by many as aquick and easy substitute for land reform, especially in Latin America.' This type of thinking, unfortunately, can cloud the real and important contribution that land taxation can make to the develop­ ment process. Because of its ability to be relatively neutral in its economic effects on agriculture, land taxation isalmost unique among the many ways 2 available to convert surplus agricultural output into development capital. It is, however, no substitute for a direct land reform program; it merely complements a nation's direct efforts to improve the agricultural sector while it goes about its principal task of raising new public investment capital for the economy.3 This paper uses both theoretical and empirical analysis to examine the effectiveness ofa land tax as aregulatory tool. Weare particularly interested in evaluating land taxation as adevice to induce an increase in agricultural output and productivity and amore equitable and economic distribution of
* The authors appreciate the comments of John Strasma and Dale Adams. Author Sazama is grateful for financial support for this research from the Social Science Research Council and the University of Connecticut Research Foundation and author Davis for