The 19th-century economist Henry George argued that the government should levy a sizable tax on land, the supply of which he took to be completely inelastic.

a. George believed that economic growth increased the demand for land and made rich landowners richer at the expense of the tenants who made up the demand side of the market. Show this argument on an appropriately labeled diagram.

b. Who bears the burden of a tax on land—the owners of land or the tenants on the land?

Explain.

c. Is the deadweight loss of this tax large or small? Explain.

d. Many cities and towns today levy taxes on the value of real estate. Why might the above analysis of George’s land tax not apply to this modern tax?