A Georgist Perspective of Petroleum Taxation

Abstract

Over a century ago, the town of Arden, Delaware, was founded on a unique single-tax-community system that radically altered the popular concept of land ownership.1 This system was premised on concepts developed by a man few know today but who was a major figure in economics during the 1800s, Henry George.2 George’s public finance theory has been described as having received “intermittent attention over the years, with many eminent names in economics making at least a passing comment, but it has seen comparably little action in the policy debate arena and has been largely ignored by the modern era of academic economics.”3 Although George’s original plans for a single-tax system have failed to gain momentum in economic and tax policy circles, his single-tax-system philosophy is exemplified in twenty-first century natural resource taxation (most prominently in the taxation of oil). An application of the economic and procedural rationales that underpin George’s single-tax system indicates that petroleum taxation should be based on a severance tax system that promotes the efficient distribution