Economic theory of rent

Meaning of rent in different economic theories. A special form of annuity. Modern theory of rent. Property taxes and charged for the possession or use. standard price of plot. Land tax problems and possible solution methods in the Russian Federation.

Рубрика Экономика и экономическая теория
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Plekhanov Russian university of economics

International business school

Coursework in microeconomics

Economic theory of rent

Student: Polozhay A.

Group: 510

Supervisor: Prof. Gromiko V.

Moscow 2014

Introduction

Wherever the forces of nature can be monopolized and provide additional profit to industrialist which uses them - whether it is a waterfall, or a rich mine , rich in fish water, or a well-located place for building - a person recognized by virtue of his title to a piece of land is the owner of these natural objects , catches from functioning capital this extra profit in the form of rent. Economists define the essence of rent in different ways. Some of them see rent as one of the types of income to property, owner's payment for the use of natural resources. Others consider the rent as regular income from capital or land obtained by their owners without business activities. Rent is determined and as a special kind of relatively stable income not directly related to entrepreneurial activity.

The analysis of rent formation allows to find out the sources of income for these two subjects of the leases, it allows to reveal the influence of natural factors and the legal forms of ownership on the mechanism of emergence of rent.

Determination of rent is inextricably linked with the concept of land. Externally annuity is a fee for use of the land , which it receives from the owner of the tenant. It is Obviously that this payment is the part of the products' cost recieved by an enterpreneur. And its nature, its sources and circumstances of rent formation shows theoretical analysis. First of all, it involves the identification of two main circumstances that determine its appearance: firstly , pricing characteristics and features of agricultural products, in which the natural resource has a decisive influence on productivity, secondly, the specific of achivement in this industry windfall profits and reasons for their stable reproduction. These circumstances are generated by the following features of inherent natural factors of production : 1 ) land and many other natural resources are not readily reproducible factors of labor, like the industrial tools and materials; 2) The limit of agricultural land in general, and land of the best and average quality determines the miserable elasticity of land supply.

But should also be borne in mind that the term "rent" has two meanings: legal and economic. In jurisprudence rent is an independent legal relationship concerning the direct relationship between the subjects of the rent contract, It is not associated with the rental property. Same economic relationship between the recipient and the payer of rent is directly related to the use of credits or renting property.

In this coursework I make a review of land theories, different types of rent, land tax with it problems and try to consider some solutions for them.

1. Meaning of rent in different economic theories

rent tax land russian

From the point of view of the Marxist economic theory - rent is a converted form of surplus value , along with profit, wages and interest rates. Marx wrote: "Whatever the specific form of rent is, all of them have in common the fact that rent-seeking is an economic form in which landed property is realized, and that the land rent, in its turn, assumes ownership of land ... "1. On the surface of the phenomenon, rent acts as a payment for land that gives the impression as if the earth itself generates this rent. However, the labor theory of value denies it, as the cost can only be created by living labor. Source of rent is unpaid surplus labor of hired workers in agriculture. This part of the surplus value, which is obtained by entrepreneurs - tenants of land , paid their landowners.

In the interpretation of the theory of factors of production and the marginal productivity theory rent is the reward that gets the owner of natural resources, particularly land, in accordance with the marginal productivity of these factors.

The essence of one of the interpretations is that the rent is not an independent form of income, but a loan interest on the capital that is embedded in land.

In accordance with the theory of the Physiocrats - rent is a pure product of nature, the only income that really gets society.

There is another interpretation that considers unfair parasitic rent income. In the United States criticized of the rent payments took the form of a single tax movement , which has received considerable support in the late XIX century. It was generated by the acclaimed book of Henry George , " Progress and Poverty ." George believed that the existence of rent is not fair , and that this income should receive society as a whole , and not the owners of the land. Therefore, he proposed to impose ground rent full (100%) and use tax for public purposes , and cancel all other taxes.

1.1 Modern theory of rent

According to many views of economists, the Ricardian theory of rent is too closely related to land. This creates on impression that rent is a peculiar earning of land only. The fact, however, is that other factors of production i.e., labor, capital and entrepreneurship may also be earning economic rent. The determination of rent, the modem economists say, can be explained in the same manner as the reward of other factors, that is by demand and supply forces.

The economists like Pareto, Mrs. Joan Robinson, Boulding, Stigler, Shepherd, have tried to simplify and generalize the Ricardian theory of rent. This creates on impression that rent is a peculiar earning of land only. The fact, however, is that other factors of production i.e., labour, capital and entrepreneurship may also be earning economic rent. The determination of rent, the modem economists say, can be explained in the same manner as the reward of other factors, that is by demand and supply forces.

Demand for a factor. The demand for a factor which may be land, labour or capital is a derived demand. Land, say for instance, is demanded for its produce. The higher the produce, the greater is the demand for land. A firm will pay rent equal to the marginal revenue productively of land. The rent diminishes as more land is used due to the operation .of law of diminishing returns. The demand curve of a factor is, therefore, negatively sloped which means more land will be used only at lower rents, other things of course remaining the same.

Supply of a factor The supply of land to a particular use (say industry) is quite elastic. It can be shifted to other uses by offering higher rent than that being earned by it now. The supply of a factor (to an industry) is, therefore, rent elastic. If higher rent is paid, the supply of a factor can be increased by withdrawing it from other uses. The supply curve of a factor (industry) slopes upward to the right.

Rent is a surplus return. The modern economists are also of the view that rent as a surplus can be earned by other factors also. It is not peculiar to land alone as explained by Ricardo. The modern theory of rent is that it is the difference between the actual earning of a factor unit over its transfer earnings. The transfer earnings of a factor of production is the minimum payment required for preventing that factor for transferring it to some other use.

1.2 Ricardian theory of rent

David Ricardo, an eminent economist of the 19th century. It is one of the earliest and popular explanations of the nature of rent. According to Ricardo, “rent is that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible power of the soil”. So according to him, rent is a payment made for the use of the “original and indestructible powers of the soil”. In other words, in the strict sense, rent is a payment made for the use of land. Ricardo believed that rent arose because of the differences in the fertility of land. Not all lands are equally fertile and so lands of superior fertility command an advantage over the others. Superior lands get rent. Rent is a differential surplus.

Explanation of the Theory

Ricardo explained his theory of rent with the aid of an example of colonization. Suppose some people go to a new country and settle down there. To begin with, they will cultivate all the best lands available. There may be no need to pay rent so long as such best lands are freely available. Suppose another batch of people go and settle down in the new country after sometime. Naturally, the demand for agricultural produce will increase. And in course of time, the first-grade lands alone cannot produce all the food grains that are needed. So the second-grade lands will have to be cultivated in order to meet the needs of the growing population.

If the second-grade lands are to be brought under cultivation, the price of the grain prevailing in the market must be sufficient to meet the cost of production in the second-grade lands. Otherwise, the second grade lands will go out of cultivation. Since under conditions of competition there will be only one price for a commodity, all the produce, whether it is from the first-grade lands or from the second-grade lands will have the same price. When the second-grade lands are cultivated, the first-grade lands will yield a surplus over and above their expenses of production. This surplus is called rent.

Rent arises because of differences in the fertility of land. Besides difference in fertility, rent may also arise because of situational advantage. Some lands enjoy situational advantage. For example, they may be nearer to the market. That may help them in saving a lot of transport costs. Even if all lands are equally fertile, lands possessing situational advantage command some superiority over other lands. Thus, rent arises because of differences in fertility and in situation.

Criticism of the Ricardian Theory of Rent4

1. Some of Ricardo's critics have raised objection against the order of cultivation described by him. According to Ricardo, the best lands are cultivated first. But there is no historical proof for this. Best lands are not always cultivated first.

2. Objection has been raised against the use of the phrase “original and indestructible powers of the soil.” It is argued that there are no such original powers of the soil and its powers are not indestructible. For, the fertility of lands may decrease in course of time by continuous cultivation.

3. Ricardo considers rent as a peculiar feature of land alone. But many modern economists feel that rent is not something that is specially applicable to land alone. It can be extended to other factors of production such as labor and capital. Whenever the supply of any factor is inelastic in relation to the demand for it, rent arises.

4. Many economists have attacked Ricardo's view that rent is determined by price and it does not get included in price. From the point of view of a single firm, rent enters price.

5. Scarcity is the basic fact of economic life. According to Ricardo, if all lands are of equal fertility and if they have the same situational advantage, rent will not arise. Rent arises because there are differences in fertility and situational advantage. But even if all lands are equally fertile, if there is scarcity of land in relation to the demand for it, rent will arise. Thus, Ricardian theory does not take note of scarcity rent.

6. Lastly, Ricardian theory is based on the assumption of perfect competition. Only under perfect competition, all units of a good are homogeneous and there is only one price for a good at a time. But in the real world, imperfect competition is the rule.

7. In spite of the above criticisms, it must be said that the Ricardian theory of rent underlines the point that increasing pressure of population on land will result in the cultivation of inferior lands.

2. Types of rent

2.1 Land rent

A special form of annuity is a land rent associated with the agrarian relations. Ground rent acts as part of the surplus product created by producers farming on the land. Land rent is a certain amount that the landlord gets from the tenant-owner, who took the land for temporary use of land for rent.

Land rent is formed not only in connection with the lease of land for agricultural production, the rent takes place in cases where the land is leased to entrepreneurs construction of buildings and structures, the development of subsurface . Ground rent has two basic forms - absolute and differential, due to the existence of two types of monopoly on the ground: the monopoly of private land ownership and monopoly on land as an object of management.

2.2 Absolute rent

Absolute rent is the result of the monopoly of private ownership of land by a certain class of society. In fact, the owner of the land in this capacity , knowing that all the land is needed for agricultural and industrial production - It makes people who want to use the land to pay for her rent. Indeed, the English word "rent" originally meant lease, and this category is shown with all the clarity and certainty simultaneously with the emergence of capitalist society. This rent consist of two parts: one corresponds to the percentage of capital already invested in the land and inseparable from it ( land reclamation, irrigation, construction , etc.); the other is always there and meets the transfer of rights to use land, or, as Ricardo said ,- "to use the original and indestructible properties of the land".

Formation of absolute rent is connected to the fact that because of the backwardness of agriculture compared to industry organic composition of capital invested in agriculture, lower organic composition of capital invested in the industry, and, consequently, in agriculture share of variable capital (spent on wage) is proportionally higher than the industry. It follows that the surplus value created in agriculture, above average profits, and cost of products higher than prices for products of capitalistic production. Proportionally to apportionment of the surplus value which is created in agriculture, land ownership prevents that, introducing a monopoly itself constantly claim to have a part of this surplus-value and assigns the difference between value and price of production. Thus, Land ownership inflates the price of agricultural products in the amount it charges as absolute rent and which is, therefore, a kind of tax imposed on society.

It should be emphasized that the historical backwardness of agriculture compared with the industry, which is one of the main manifestations of the law of uneven capitalist development does not derive from the nature of the land, and of social relations. Private ownership of land, which prevents invest capital in land and appropriates an increasing share of surplus value, is one of the main reasons for this underdevelopment. Explanation of absolute rent follows from the fact of a lower organic composition of capital in agriculture compared to industry.

2. Differential rent

Analyzing such a thing as pure economic rent, we consciously treated land, completely abstracting from ways of use of them in practical economic life. Naturally, that various plots of land differ in fertility, climatic characteristics, location, and not all of them are suitable for universal use. For example: Land in the Krasnodar region has many advantages for the cultivation of crops, and in the Kaliningrad region - for construction of ski resorts. For this reason (here there was a striking unanimity among all economists from David Ricardo), not all land areas bring equal income in the form of land rent in the markets competing sellers.

Differential rent is the most common form of land rent. This is the difference between the public and the individual value of agricultural products. Emergence of differential land rents is due to a difference in fertility, location of land and the effectiveness of additional labor and resources which should be spent on the land. Differential rent is a concept appearing not only in the markets of agricultural land and agricultural production; it emerges as an economic category in the case of any kind of resources that are not completely homogeneous in each of their classes.

So, for example, lawyers earn an average of more than drivers of commercial vehicles, which is accompanied with relevant in these cases, investment in human capital. Of course, in each case, there are some nuances. For example, a lawyer with a special gift to persuade jurors and to soften the judges heart, receives differential rent, far exceeding the opportunity cost of the education which he got.

2.4 Monopoly rent

In agriculture, there is another kind of annuity - monopoly rents. Exceptional natural conditions sometimes create opportunities for the production of rare agricultural products - special varieties of grapes, some citrus fruits, tea, etc. These products are sold at monopoly prices, the upper limit of which is often determined only in the level of effective demand. As a result of monopoly prices may significantly exceed the individual price of such products. This allows landowners to receive monopoly rents.

So, monopoly rents - is special form of ground rent, which appears at monopoly prices for exceptionally rare and irreproducible elsewhere agricultural products and minerals.

Thus, in agriculture as in other sectors, the capitalists, entrepreneurs receive the same return on capital isometric. Payments of rent by landowners are not carried out in violation of the law of value, and in accordance with it. However, since the competition can not overcome the barrier of private ownership of land, landowners take from the industrial capitalists significant portion of the surplus in the form of rent.

2.5 Economic rent

Economic rent is defined as any income attributable to the costs of production that exceeds its opportunity cost. The classical theory of economic rent back to the writings of economists of the classical school XVIII . Supporters of The Classic school treated land under production capabilities and benefits of definite land location. They believed that the supply of land in this sense is perfectly inelastic. However, we can not agree with the following thesis: no matter how high the price of land rent, the amount of land is strictly defined. On the other hand, even The lowest rents can not change the physical amount of land held by the society.

In terms of overall economic - economic rent is the difference between the actual price of the resource and the minimum price which must be paid to induce the owner of the resource to sell it. Minimum bid price of any resource in this industry market determine the opportunity cost of the resource sellers. If the price falls below the minimum price, the resource owners prefer to sell it in other markets, or to abstain from the sale. Thus, the excess of the income earned over the alternative income forms the economic rents of resource owners.

Economic rent exemplifies the wages of workers. Skilled workers can receive a steady surplus revenue, ie economic rent, which is similar to the concept of producer surplus in the market of the product.

2.6 Building rent

As regards land for building purposes, then Adam Smith showed how the rent of the land, as well as from other sites landowning governed basically actually landed rent. This rent is characterized , first, by the predominant influence , which here has a differential rent location ( it is very important, for example , the cultivation of grapes and building sites in large cities ); Secondly, a clear and complete passivity of the owner, the activity of which is ( in particular in relation to the mines ) just to use social progress , in which the owner does not bring anything in which he risks nothing ; and finally, the predominance of monopoly price in many cases.6 Developer must rent increases not only the growth of the population and increasing with it the need for homes, but also the growth of fixed capital, which is either attached to the ground or placed on it as all the industrial buildings , railways, warehouses , docks , etc. Mixing of paymrnt for hiring, as it represents the percentage of depreciation and capital invested in the house, it is impossible for rent to be here in this case, especially in those cases when in England, the landlord and building speculator are totally different persons. In this case, we should take into account two aspects: on the one hand, the exploitation of land for the production or mining industry, on the other - the land is the space that is needed as a condition of all production and all human activity. In this and in another case, land ownership requires its tribute. Demand for construction land increases the value of land as a basis of space and at the same time thanks to increased demand for the elements of earth, which serve as building blocks.

2.7 Rent for forest

A rent of forest is specific. Forest land as an object of use and management are economically valuable, not themselves, but their value are commercial resources - wood on the vine, products of side use, recreation. This is a fundamental difference between agriculture and forestry, and it is due to the only reason - the extreme duration of the reproduction cycle of forest ecosystems. No accident that the Russian forest legislation and land resources are considered in unity, as an entity, united by the common notion - Forest Fund. Payments for forest dependent on soil fertility indirectly. Factors which create rent itself are indicators of the quality and supply of forest resources. Therefore, the rent of land in forest lawfully called forest rent. Forest rent belongs to the owner of the forest fund. When state ownership of forest fund forest rent is usually taxed. Any payments for forest have rent tax. Rent tax may be less than, equal or more rent. Rent tax set smaller than annuity or not taken at all in the following cases: 1) the tenant-forest users bear the costs of reforestation and restoration of forest resources; 2) In addition to the reproduction of forest resources tenant is trusted to invest rental income as a public resource in the development of forest industry (on the basis that it will make entrepreneurs successful than civil servants). Rent tax is set equal to rent, if: 1) the reproduction of forest resources by government agencies of forest management from the budget; 2) part of the forest rent in excess of the costs of forest management is used for social and other nation-wide goals. Forest tax exceeds the rent when it is installed without studies and calculations. Excess tax over revenue forest can only have negative consequences: reduced profitability of harvesting and wages.

3. Land tax

Land tax traditionally refers to property taxes and charged for the possession or use. Like all property taxes, it does not depend on the results of operations. However, unlike other property taxes it is the same for all categories of taxpayers - individuals and legal entities, and therefore it belongs to the mixed taxes.

Receipt of land tax to the budget system is centralized: the federal budget - 0%, the budgets of the Russian Federation - 20% in local budgets - 50%. He stands in the income and expenditure of the respective budgets separately and used only on:

- corporate financing and compensation costs of landholder on Land

- the introduction of the land register

- land protection

- increase soil fertility

- development of new lands

- engineering and social landscaping

Taxation of land in the Russian Federation is regulated by the Federal Law "Paying for land" from October 11, 1991 № 178-1, Regulations Ministry of Russia "Application of the RF Law" On Land "from February 21, 2000 number 56, as well as local laws authorities specify the tax rate on land users.

Established forms of payment for land are:

- annual land tax

- rent itself and normative price of land

- Land tax is imposed on ownership and use of land (other than rent).

3.1 Subjects and objects of land tax

Payers (subjects) of land tax act landowners, land users (excluding tenants) and the owners of land in the territory of the Russian Federation. They include:

- entities (including foreign) and their subdivisions

- individuals (citizens and individual entrepreneurs)

Basis for establishing the land tax (rent) is a document certifying the ownership or lease for the land.

An object of taxation include: land, land shares by Category Facilities land. Depending on the specific object of taxation land tax (rent) is divided into species.

3.2 The land tax rate

Land tax rates are set in absolute terms (RUR) To the size of the area (per 1 hectare or per 1 sq.m) and differentiated by location and areas of urban values territory. The law established a basic standard (BLS) tax on agricultural land and non-agricultural purposes. BLS, the average rate on agricultural land is set on the subjects of the Russian Federation (republic, oblast) in rubles per 1 ha of arable land. Local legislative bodies claim specific, including minimum rates of land tax on land types (arable crops, pastures, etc.) and adjustment (K) on their location and annual indexation (K year). Under these rates agricultural land, plots within and outside the villages provided for private farming, gardening, horticulture, etc. are taxed.

Tax on agricultural land:

T= SI* BLS*K*K year

SI - owned land area

Average BLS of the land tax for not agricultural land is established in 11 economic regions of the Russian Federation. in rubles per 1 sq.m. Square. To calculate the exact tax rate for a particular area (location) of the land object coefficients are applied, increasing the amount of tax.

Tax for non-agricultural land=SI*BLS*Kstat*Kres*Kyear Kstat - is a coefficient of city status ; Kres - is a coefficient of recreation area

4. Land tax problems and possible solution methods

4.1 Agrarian sector

Some politicians and economists reduce the main essence of its reforms solely to private ownership of land. But unrestricted circulation of land does not automatically mean the emergence of effective owner. Be the owner of the land is important. But it is equally important to control the results of their work and know that they will be in demand by society. Obviously, with regard to the turnover of agricultural land is necessary to provide certain limitations, change their intended use, the concentration of land shares in the hands of one owner and the availability of professional experience from farmers. In the absence of the Land Code of the regions are forced to seek their approaches. For example, in the Belgorod region land use conducted on the ownership or on the basis of leases of land shares in the payment of rent by the user in the form of a fixed share of output. If the results of managing on his land did not satisfy an owner , he can rent it out to other farms that provide the transfer of the land not from the poor to the rich, and the poor from working effectively to the user. When considering the purchase of land needed purely practical assessment - that will give one or another approach to improve the financing of the agricultural sector and the formation of an efficient owner.

Basic conditions to raise capital in any sphere of the economy, including agriculture, are the return on capital and guarantees repayment of funds. However, the yield of agricultural activity is defined by its technological level, which today is very low. So simple thesis declaration of sale of land, although a prerequisite for raising capital in the agricultural sector, but does not solve these problems. In order to make an investor come into agriculture and form an effective owner, the State must demonstrate a real interest in the development of the agro-industrial complex, in particular, through government support loans secured by mortgages of land and use the land.

Principles of use of mortgages in the Russian context, in my opinion, are guaranteed by the State, bound by their reception in the calculation of all organizations and enterprises at nominal cost for the acquisition of modern (domestic and imported) technology and the implementation of advanced high-performance technologies. Every investor, willing and able to work on the land, should receive from the State mortgages in the relevant area of agricultural land on which it plans to operate. And having paid them for the supply of products, for example, 5 years old, he can become the owner of the land is already proving its viability. This approach will provide state regulation of land and construction of infrastructure of the land market, creating conditions to attract real investment in agriculture, and, ultimately, the appearance of the owner, ability to work effectively on the land.

4.2 Regulation of agrarian sector

Activities of the State Duma Committee on Agrarian Policy and Land can be divided into three areas - the regulation of land relations ( Land Code , the Law " On Land " , partly - the Civil Code and other projects) ; development of a regulatory framework for the various legal forms in the agricultural sector (Law " On Agricultural Cooperation " , amendments to the Law "On the farm " , the Law "On collective enterprises and private farms ," " On the state agricultural enterprise " and some others) and the formation of the system of state regulation of APC (primarily , the Law " On the Federal Budget ," Laws " On public procurement of agricultural products " and " On State Regulation of AIC" ).

Generally speaking, the country has already started to develop the land market, and in some regions there is even a monitor land prices. This allows you to talk about a different approach to the formation of the land tax. Unfortunately, this is outside the scope of monitoring government activities. There are possible other "no-rent" approaches to determining the price of land, for example, by assessing their plots by the land users, and then use these estimates for compensation in the event of withdrawal or in mortgage lending.

However, despite the foregoing, to postpone the adoption of the law was unacceptable. As to the land tax rate tied normative price of land, its absence inhibits many processes in the country, in particular, land privatization, the turnover of land shares in the reorganized agricultural. enterprises, compensation for land acquisition, etc.

4.3 Lending AIC (agro-industrial complex) (land banks)

As mentioned above, one of the most important conditions for the realization of economic ownership of the land for the agricultural sector is to provide them affordable and long-term loan. Since the issuance of a bank loan for this type of operation is very risky, it is possible to raise the question of long-term loans to rural producers the security of their land. In this regard, it is necessary to create specialized land banks. If we turn to the historical experience we can remember that in the days of imperial Russia, such organizations were fairly widespread. Land banks in Russia under the current economic situation should be created by the developed program is strictly subject to all sorts of economic factors. In my opinion, there are three important rules to their work.

1. Loans of land banks should not be issued to borrowers with very low economic culture, as borrower, taking a loan secured by the land, can not imagine the consequences of the commitments that it has spawned. In this context, agricultural commodity producer without the help of professionals is very difficult to make effective use of loan taken, timely payments and payments to avoid bankruptcy. As a consequence - the bank will be very low debt repayment on the loan.

2. Activity of land banks should not be based on the principle aspirations of seizure and sale by auction of land in case of default on the loan, because the accumulation of collateral objects - land from borrowers will grow. As world practice shows, the realization of pledged land at auction is very hard. First, the buyer has to his own expense to make long trips to explore the land. Secondly, in the case of acquisition of these possessions he has to pay all the outstanding portion of the debts. As a result, the land bank can turn into a giant landlord and incur substantial losses from the operation of the remaining land behind him. Banks will also incur losses from payments to seize pledged possession of appeal to the courts, pay fees, etc.

3. Operations Management of land banks should not be centralized. Branches of banks should not be located in the central cities and a considerable distance from their places of residence customers. They should have the right to decide the question of granting loans. Otherwise, the resolution of the Board to grant a loan from the bank and this permission prior to the actual grant money can take a very long time and this may lead to a denial of potential customers from the banking services. It should also be remembered that the granting of loans shall correspond to the real value of the land. Next I will try to formulate some principles of future relations with the owners of the land credit banks.

The first principle is a joint activity with lots of money, unionization of owners as their union allows people to borrow money on the credit once large sums of money that will be economically beneficial for both banks (loan size will be sufficient to cover the interest on it debt service costs) and for the owners (when issuing a large amount of the loan the bank takes a lower interest rate on it).

The second principle: the partnership that has received money under the overall responsibility, should give them to members only on production, or on any necessary needs. Consequently, it should establish a body to monitor the advances are producing and "internal" issue of loans to members of the partnership.

The third principle involves the creation by the same farmers centers to improve the skills, the aim of which should be learning, not the material side, ie training should not be undertaken on a paid basis.

It is worth noting that in the U.S., where such centers have been widely developed, market services to farmers provides a very high return rate loans (90 - 95%).

4.4 Payment for land

It is no secret that nowadays in the whole world landowners pay land taxes, even if the land is already owned by them. Currently in Russia for the use of land everyone should pay. The purpose of the introduction of fees for land I think is justified. This - replenishment, promotion of rational use of land.

So what is a land tax? Land tax is a certain amount that is required to make annual (pay) owner of the land, and the land user and landowner.

I would like to mention one unjust fact that farmers , as well as other subjects of land relations must pay the land tax in the form of stable payments per unit area per year , and that the land tax does not depend on the results of their economic activity. I believe that this is a big omission here and need a different approach . For example , you can offer would be to analyze the economic activities of the land owner and at some point take this activity and reduce this fee or tax increase , on the contrary (eg , setting a percentage of the increased income of a farm).

Some words about standard price of land. If we turn to the current legislation, there we find the definition of the standard price of the land , " is a measure of the cost of land and the location of a certain quality based on the potential income for the settlement payback ."

Standard price of land is determined on the basis of the land tax rate multiplied by 200 times and multiplied by the unit area of the corresponding land. And in this I do not quite agree , because, in my opinion , it is necessary to introduce new rate or interest rate on the sale of land to determine its price. For example : the sale of land to different segments of the population ( with different incomes and different social status ) , or for a different target destination , the price of one and the same piece can be different - one price to the farmer , the other cottagers and farm -third.

Conclusion

The main feature of economic relations associated with the use of land as unplayable, limited natural factor is the existence of ground rent. Paying rent land to entrepreneurs, landowners are paid a certain fee - rent.

Rent, which arises due to the difference of fertility of land (or difference of locations relative to the market) is called differential rent.

Absolute rent is the result of the monopoly of private ownership of land by a certain class of society.

In agriculture, there is another kind of rent - monopoly rents: a special form of land rent, which appears when monopoly prices exceptionally rare and irreproducible elsewhere agricultural products and minerals.

Land is not only subject to the lease, but the purchase - sale, and she has an irrational price based not on cost, but on the income that brings the use of the land owner. The price of land - is capitalized rent.

So, to use the land ownership efficiently (to get a profit ) we can in different forms of land use and when the tenant operates foreign land , and returning the land to its own mortgage , and if the owner of the land he owns it completely . This means that agriculture can flourish in pluralistic forms of land ownership . Crucial for normal income have the technical , organizational and economic conditions of production . Such conditions are thriving in large farms. As for small farms , they need the support of the state: they require financial assistance , serious economic incentives and modern infrastructure of agricultural production, which provides agribusiness. It connects productive manufacturing necessary means of production for agriculture , the very industry , agriculture and industrial processing of resulting products . The latest scientific and technological advances allow increasing the efficiency of labor in all sectors of the complex.

Endnotes

1. "Whatever the specific form of rent is, all of them have in common the fact that rent-seeking is an economic form in which landed property is realized, and that the land rent, in its turn, assumes ownership of land ... " - K. Marx, Land Rent

2. George believed that the existence of rent is not fair , and that this income should receive society as a whole , and not the owners of the land. Therefore, he proposed to impose ground rent full (100%) and use tax for public purposes , and cancel all other taxes. - Henry George , Progress and Poverty

3. Demand for a factor ,Supply of a factor, Rent is a surplus return - http://economics-exposed.com/

4. Criticism of the Ricardian Theory of Rent - hubpages.com/hub/Ricardian-Theory-of-Rent/

5. "to use the original and indestructible properties of the land" - David Ricardo, Ricardian theory of land

6. Adam Smith showed how the rent of the land, as well as from other sites landowning governed basically actually landed rent. This rent is characterized , first, by the predominant influence , which here has a differential rent location ( it is very important, for example , the cultivation of grapes and building sites in large cities ); Secondly, a clear and complete passivity of the owner, the activity of which is ( in particular in relation to the mines ) just to use social progress , in which the owner does not bring anything in which he risks nothing ; and finally, the predominance of monopoly price in many cases. - Adam Smith, Wage profit rent theory

7. The land tax rate - http://economics-exposed.com/ 116/819-1-renta.html/

Bibliography

1. Боголюбова С.А. Земельное право. М: Проспект, 2012

2. Борисов Е.Ф. Экономическая теория. М.: ЮРАЙТ, 2011

3. Валовой Д.В. Политическая экономия. М.: Проспект, 1999

4. Добрынина А.И., Тарасевич Л.С. Экономическая теория. М.: 2001

5. Жариков Ю.Г., Улюкаев В.Х. Земельное право. Москва, Былина, 2010

6. Земельный кодекс Российской Федерации. Москва, 2002

7. Лапина А.А. Все налоги России. Москва, Проспект, 2002

8. Камаев В.Д. Экономическая теория. Москва ЮНИТИ, 2012

9. Мугалимов М.Г. Основы экономической теории. ООО «Интерпрессервис»,

10. Николаева Л.С. Экономическая теория. Москва ЮНИТИ, 201

11. Сумцева Н.В., Орлова Л.Г. Экономическая теория. М.: ЮНИТИ-ДАНА, 2002

12. Чепурина М.Н., Киселева Е.А. Курс экономической теории. Киров «АСА», 2001

13. Черника Д.Г. Налоги. Москва «Финансы и Статистика», 201

14. Эйсмонд О.А., Петров П.Д., Логвин В.Н. Оценка лесной ренты и эффективность повышения рентных платежей. Москва, 2000

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