Charles Bowdoin Fillebrown.

The principles of natural taxation, showing the origin and progress of plans for the payment of all public expenses from economic rent online

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1 See Proceedings of the Twentieth Annual Meeting of the American Eco-
nomic Association, 1907, pp. 117-29; also The A B C of Taxation, pp. 187-90.
2 Quoted from an introduction to the edition of the Catechism which
was published in the National Magazine for November, 1912.


A Catechism of Natural Taxation 219

practical application. Thirteen editions of the Catechism have
been privately printed and circulated. They have given oppor-
tunity to make such changes as have seemed desirable after
considering the hundreds of criticisms and suggestions received
from critics, friendly as well as otherwise disposed. From
correspondents and other friends, indeed, so great assistance has
been derived that the Catechism has really become the joint
product of scores of collaborators.


1. Q. What is a tax?

r A. 'K tax is a compulsory contribution of individual
product or the value of such product toward the needs
of government.

2. Q. What is meant by the single tax ?

A. The payment of all public expenses from economic
rent, the normal revenue, thus eventually abolishing
all taxes.

3. Q. What is meant by economic rent?

A. Gross ground rent the annual site value of land
what land, including any quality or content of the land
itself, is worth annually for use what the land does
or would command for use per annum if offered in
open market the annual value of the exclusive use
and control of a given area of land, involving the en-
joyment of those "rights and privileges thereto per-
taining" which are stipulated in every title deed, and
which, enumerated specifically, are as follows: right
and ease of access to water, health inspection, sewer-
age, fire protection, police, schools, libraries, museums,
parks, playgrounds, steam and electric railway service,
1 Edition of 1916-17, fifteenth revision.

220 The Principles of Natural Taxation

gas and electric lighting, telegraph and telephone serv-
ice, subways, ferries, churches, public schools, private
schools, colleges, universities, public buildings utili-
ties which depend for their efficiency and economy on
the character of the government; which collectively
constitute the economic and social advantages of the
land which are due to the presence and activity of
population, and are inseparable therefrom, including
the benefit of proximity to, and command of, facilities
for commerce and communication with the world an
artificial value created primarily through public ex-
penditure of taxes. For the sake of brevity, the sub-
stance of this definition may be conveniently expressed
as the value of " proximity." It is ordinarily measured
by interest on investment plus taxes.

4. Q. What is the ethical basis of the single tax?

'A. The common right of all citizens to profit by site
values of land which are a creation of the community.

5. Q. What is meant by equal right to land?

A. The right of access upon equal terms preference to
be secured only upon payment of a premium that will
extinguish the equal rights of all other men.

6. Q. What is meant by a joint or common right to land ?

A. The joint or common right to the rent of land a
right such as heirs-at-law have to share the income of
or rent of an estate.

7. Q. What is meant by land value?

A. Its site value its selling or market value its net
value to the purchaser the capitalization of its net

A Catechism of Natural Taxation 221

rent the value supposed to be adopted by the asses-
sors as the basis of taxation.

8. Q. How about fertility value?

A. On the surface of the globe are countless varieties of
exhaustible fertility, i.e., chemical constituency, differ-
ing in kind and degree, from the nitrogen, hydrogen,
oxygen, and carbon of the soil to the carbon of the
coal, the gold, and the diamond. Fertility as an attri-
bute need not be predicated of agricultural land alone.
Economic fertility belongs equally to any other land
which yields to labor its product whether in food,
mineral, or metal. Land may be fertile in wheat, corn,
and potatoes. It may be fertile in cotton, in tobacco,
or in rice. It may be fertile in diamonds, in gold,
silver, copper, lead, or iron. It may be fertile in oil,
coal, or natural gas, in water power or water front.
The value of artificial fertility is an improvement
value. The value of natural fertility of any kind is
a site value.

9. Q. Does not the single tax mean the nationalization of


A. No; as Henry George has said, "The primary error
of the advocates of land nationalization is in their
confusion of equal rights with joint rights. In truth,
the right to the use of land is not a joint or common
right, but an equal right; the joint or common right
is to rent." It means rather the socialization of
economic rent. It simply proposes gradually to divert
an increasing share of ground rent into the public

The Principles of Natural Taxation

10. Q. What is the distinction between the taxation of land

and the taxation of rent?

A. Taxing land means, in the ordinary use of the words,
to tax the land upon its capital value, or selling value,
at a given rate per $100 or $1,000 of that value. Tax-
ing rent means taxing the annual value, or ground-
rent, at a given percentage of that rent. It is in one
case a tax on rent; in the other it is a tax on capi-
talized rent.

11. Q. Does not the common right to rent involve common

ownership of land?

'A. Not in the least. When the economic rent is appro-
priated by the community for common purposes, in-
dividual ownership of land could and should continue.
Such ownership would carry all the present rights of
the landowner to use, control, and dispose of land,
so that nothing like common ownership of land would
be necessary.

12. Q. Did not Henry George believe in the abolition of

private property in land ?

r A. Assuredly not. If he did, why was it that he suggested
no modification whatever of present land tenure or
" estate in land " ? If he did, how could he have said
that the sole "sovereign" and sufficient remedy
for the wrongs of private property in land was "to
appropriate rent by taxation"?

I 3- Q- What is meant by the right of property?

'A. As to the grain a man raises, or the house that he
builds, it means ownership full and complete. As to

A Catechism of Natural Taxation 223

land, it means legal title, tenure, " estate in land/' per-
petual right of exclusive possession, a right not abso-
lute, but superior to that of any other man.

14. Q. What is meant by the right of possession?

*A. As to land, if permanent and exclusive, as on perpetual
lease, it means the right to "buy and sell, bequeath
and devise," to " give, grant, bargain, sell, and convey "
together with the rights and privileges thereto per-
taining, in short, the same definition for possession
that the law applies to property.

*5- Q- What should be the limit of revenue under the single

*A. The same as under any other system of taxation, the
cost of government economically administered.

1 6. Q. Did not Henry George hold that the full ground rent

of land should be taken in taxation?

A. No! Not only did he concede a margin of rent to
the landlord, but as a matter of fact, as Thomas G.
Shearman, said, "not all the power of all govern-
ments" could collect in taxation all of ground rent.

17. Q. You would not say that land is a product of industry?

A. No; but the annual site value of land is a product of
the growth and industry of the community.

1 8. Q. You would not say that the supply of land can be

increased ?

A. No; but fresh demand is constantly requiring not only
an increase in the public equipment of land already in
use, but also the constant extension of such equipment
to new area.

224 The Principles of Natural Taxation

19. Q. Why should buildings and all other improvements and

personal property and capital be exempt from taxes?
A. Because a tax on them falls upon industry, and so in-
creases the cost of living, while continuing the invidi-
ous exemption of the present net land value.

20. Q. Why should stocks and bonds be exempt?

A. Stocks, because they are only paper certificates of
property which itself has been taxed once already.
Bonds, if legitimate, because a tax on borrowed money
is paid after all by the borrower and so becomes an
added factor in cost of production, and consequently
in the cost of living.

21. Q. What is meant by an " old tax " or a " new tax " ?

A. By the term "old tax" is intended the tax in force at
last change of ownership; by a "new tax," one im-
posed since then.

22. Q. What is privilege?

T A. Strictly defined, privilege is, according to the Century
Dictionary, " a special and exclusive power conferred
by law on particular persons or classes of persons and
ordinarily in derogation of the common right."

2 3- Q- What is today the popular conception of privilege?
A. That it is the law-given power of one man to profit at
another man's expense.

24. Q. What are the principal forms of privilege ?

A. The appropriation by individuals, or by public service
corporations, of the net rent of land created by the
growth and activity of the community without pay-
ment for the same. Also, the less important privileges
connected with patents, tariff, and the currency.

A Catechism of Natural Taxation 225

2 5- Q- Wherein does privilege differ from capital ?

r A. Capital is a material thing, a product of labor, stored-
up wages; an instrument of production paid for in
human labor, and destined to wear out. Capital is the
natural ally of labor, and is harmless except as allied
to privilege. Privilege is none of these, but is an
intangible statutory power, an unpaid- for and per-
petual lien upon the future labor of this and suc-
ceeding generations. Capital is paid for and ephem-
eral. Privilege is unpaid for and eternal. A man
accumulated in his profession $5,000 capital, which
he invested in land in Canada. Ten years later he
sold the same land for $200,000. Here is an instance
of $5,000 capital allied with $195,000 privilege. This
illustrates that privilege and not capital is the real
enemy of labor.

26. Q. How may franchises be treated ?

T A. Franchise privileges may be abated, or gradually
abolished by lower rates, or by taxation, or by both,
in the interest of the community.

27. Q. Why should privilege be especially taxed?

A. Because such payment is fairly due from grantee to the
grantor of privilege and also because a tax upon privi-
lege can never be a burden upon industry or commerce,
nor can it ever operate to reduce the wages of labor
or increase prices to the consumer.

28. Q. How are landlords privileged?

*A. Because, in so far as their land tax is an "old" tax,
it is a burdenless tax, and because their buildings' tax
is shifted upon their tenants; most landlords who let

226 The Principles of Natural Taxation

land and also the tenement houses and business blocks
thereon avoid all share in the tax burden.

29. Q. How does privilege affect the distribution of wealth?

A. Wealth as produced is now distributed substantially
in but two channels, privilege and wages. The aboli-
tion of privilege would leave but the one proper chan-
nel, viz., wages of capital, hand, and brain.

30. Q. How would the single tax increase wages?

A. By gradually transferring to wages that portion of the
current wealth that now flows to privilege. In other
words, it would widen and deepen the channel of
wages by enlarging opportunities for labor, and by
increasing the purchasing power of nominal wages
through reduction of prices. On the other hand, it
would narrow the channel of privilege by making the
man who has a privilege pay for it

31. Q. How can this transfer be effected?
A. By the taxation of privilege.

32. Q. How much ultimately may wages be thus increased?
A. Fifty per cent would be a low estimate.

33- Q- What are fair prices and fair wages?

'A. Prices unenhanced by privilege, and wages undimin-
ished by taxation. *

34. Q. Why does not an increase in ground rent tend to cause
an increase in prices?

A. Usually sales increase faster proportionately than rent,
thus reducing the ratio of rent to sales. The larger the
product, the lower the individual costs. The larger
the gross sales, the lower the competitive prices.

A Catechism of Natural Taxation 227

35- (? Why should land be singled out to bear the bulk of the
burden of taxation?

A. Because in the private appropriation of the net rent of
land is found the bulk of privilege.

36. Q. How much does this particular form of privilege

amount to?

A. It amounted for 1914 to approximately forty million
dollars for Boston and more than two hundred million
dollars for Greater New York.

37. Q. Does the single tax imply or involve the municipaliza-

tion of public utilities ?

A. No. A public franchise value is a land value which
the single tax would assess at the same rate as other
land values. The municipalization of the public util-
ities themselves is a different question, and is no nec-
essary part of the single tax.

38. Q. What are the three legs of the tripos, the threefold

support upon which the single tax rests ?

A. They are:

(1) The social origin of ground rent that the site
value of land is a creation of the community, a public
or social value.

(2) The non-shiftability of a land tax that no tax,
new or old, on the site value of land can be recovered
from the tenant or user by raising his rent.

(3) The ultimate burdenlessness of a land tax that
the selling value of land, reduced as it is by the capi-
talized tax that is imposed upon it, is an untaxed
value. Whatever lowers the income from land lowers

228 The Principles of Natural Taxation

proportionately its selling price, so that whether the
established tax upon it has been light or heavy, it is no
burden upon the new purchaser, who buys it at its net
value and thus escapes all part in the tax burden which
he should in justice share with those who now bear
it all.

39. Q. Is not land peculiar in that it is a gift of the Creator,

and is not a product of labor?

T A. Yes, that is true of land itself, but not of the value
of land.

40. Q. What is meant by a capitalized tax ?

'A. It is a sum, the interest of which would pay the tax.

41. Q. Why would the single tax be an improvement upon

present systems of taxation?

A. Because : ( i ) The taking for public uses of that value
which justly belongs to the public is not a tax; (2)
it would relieve all workers and capitalists of those
taxes by which they are now unjustly burdened, and
(3) it would make unprofitable the holding of land

42. Q. Should not all people pay taxes for the protection of

their property?

r A. Yes, and that is what they are doing when they pay
their ground rent. To tax them again, as is now done,
is double taxation.

43. Q. Do all people, then, pay ground rent?

T A. Yes, in proportion as they are users of land having
any value.

A Catechism of Natural Taxation 229

44. Q. Why, on similar lots of land, should one man with a

$10,000 building be taxed as much as another with a
$100,000 building?

2 1 . Because the value of the privilege of occupancy and
use is the same in both cases.

45. Q. Why tax $ i, ooo invested in a vacant lot while exempt-

ing $1,000 invested in New York Central stock?

A. Because: (i) the land is made worth $1,000 and so
maintained at public expense without any contribution
from the owner; (2) the $1,000 New York Central
stock adds nothing to the public expense, but a tax
upon it, if collected at the source, falls directly on the
road and thence upon the public, and so adds to the
cost of living.

46. Q. Would it not be confiscation so to increase the tax on


A. What would be "confiscated"? No land would be
taken, no right of occupancy, or use, or improvement,
or sale, or devise ; nothing would be taken that is con-
veyed or guaranteed by the title deed.

47. Q. What is the distinction between taxation and con-

fiscation ?

A. The sovereign state may appropriate private property
of its citizens in two ways: (i) by confiscation;
(2) by taxation. When one particular man by treason
or otherwise has forfeited his rights as a citizen, the
lands and houses and personalty of this one man may
all be " forfeit to the crown," while the validity and
sanctity of 9,999 other men's rights are in no way in-

230 The Principles of Natural Taxation

fringed. This is confiscation. On the other hand,
when the state, in order to obtain the revenue to meet
the expenses of government, levies tribute upon its
10,000 citizens impartially, this is taxation.

48. Q. But would it not be an injustice to the landowner?

T A. If it be an injustice to tax hard-earned incomes
(wages) to maintain an unearned income (net eco-
nomic rent) that bears no tax burden, how can it be
an injustice to stop doing so? There can be no in-
justice in taking for the benefit of the community the
value that is created by the community.

49. Q. What is the lesson of the inevitable " capitalization "

of the land tax?

A. It is that an unfair discrimination in favor of the land-
owner can never be overcome until all taxes are paid
out of ground rent; then all men will enjoy total
exemption equally with the landowner.

50. Q. How could the landowner escape the alleged burden

of an increase in his land tax?

A. Simply by assuming the legitimate role of a model
landlord, by putting his land to suitable use, in provid-
ing for tenants at lowest possible price the best
accommodations and facilities appropriate to the situa-
tion that money can buy.

51. Q. Does not a land tax increase house rent or store rent?

A. The landlord, as a rule, exacts the full ground rent
for the use of his land. Neither by taking $3 nor
$30 per thousand in taxation can land be made worth
any more for use.

A Catechism of Natural Taxation 231

52. Q. In old cities, is not nearly all the land in use ?

T A. About one-half the area of New York and Chicago is
classed by the assessors as vacant. In Boston the pro-
portion is : occupied, 45 per cent ; vacant, 43 per cent ;
marsh, 12 per cent.

53. Q. How would the single tax affect the farmer?

A. It would greatly reduce his taxes. His buildings,
stock, and crops would be exempt. His land is at pres-
ent assessed at nearly twice its proper unimproved
value, while town and city land is often valued at less
than one-half its actual value, thus subjecting him to
a more than fourfold disadvantage.

54. Q. What relief could it bring to strictly agricultural

towns, where the unimproved land values are very

A. However poor the town or heavy the taxes, it would
at least tend to equalize their present tax burden. The
assessed valuation of land in the three smallest towns
of Massachusetts, Alford, Holland, and Peru, is $282,-
335, or more than three times that of the buildings.
Allowing one-half of the assessed valuation of land to
be improvement value, the unimproved basis for taxa-
tion would be $141,168, or 60 per cent more than the
buildings. Thus an apportionment according to unim-
proved land values, increasing ever so slowly, would
seem to be fairer than one according to improvements,
which require constant renewal.;

55. Q. How would the single tax affect the tenant ?

A. It would neither increase nor decrease his land rent.
It would reduce his house rent by the amount of the
house tax.

232 The Principles of Natural Taxation

56. Q. How would it affect the man who owns the house he

lives in?

'A. In nearly every case it would reduce his taxes. Roughly
speaking, his taxes will be less or greater in proportion
as his house is worth more or less than his land.

57. Q. Would the single tax yield sufficient revenue for all

government purposes, local, state, and national?

A. Careful estimates by Mr. Thomas G. Shearman in-
dicate that all present taxes amount to not much
more than one-half of the annual site value of the
land. But, he said:

The honest needs of public government grow faster
than population and fully as fast as wealth itself. Local
taxation will increase rapidly; and it ought to do so.
.... This does not imply that ground rent will not
be sufficient to supply many, possibly all, of those addi-
tions to human happiness which Henry George has pic-
tured in such glowing words. But such extensions of the
sphere of government must take place gradually ; or they
will be ruinous failures, simply because the state cannot
at once furnish the necessary machinery for their suc-
cessful operation.

58. Q. What expected result of the single tax needs studious

emphasis ?

'A. That it would unlock the land to labor at its present
value for use, instead of locking out labor from the
land by a prohibitive price based upon the future
value for use.

59. Q. Is it correct to say that " land " is one thing, and the

"rent of land" another and quite different thing, and

A Catechism of Natural Taxation 233

that to take in taxation the rent of land it is not neces-
sary to take the land itself?

'A. Ninety-one professors of political economy have
answered " Yes." Twenty-three have answered " No."

60. Q. Do you believe that economic rent ought to furnish

a larger proportion of public revenue than it does now ?

A. One hundred and nineteen professors of political
economy have answered "Yes." Eight have answered

61. Q. Do you think there would be any injustice in taking

by taxation the future increment in the value of land ?

A. Fifteen professors of political economy have answered
" Yes." Ninety- four have answered " No."

62. Q. Would it be wise to take gradually in taxation say

one-quarter, one-half, or three-quarters of the future
increase in economic rent?

r A. One hundred and one professors of political economy
have answered "Yes." Twenty-nine have answered

63. Q. How could the single tax be put into operation?

r A. By gradually transferring to land all taxes not already
on it.

64. Q. How might such a plan be worked out?

A. If fifty cents per thousand should be deducted yearly
for thirty years from the rate on all property other
than land, the reduction would finally amount to $15
per thousand, and it would then be practically exempt
from all taxation.

234 The Principles of Natural Taxation

65. Q. But how could it be worked out in case of the land?
A. Recognizing that a right thing may be done in a wrong
way, it is insisted that a right way ought to be found
to do a thing that ought to be done. The following is
presented as a natural and convenient unit of calcula-
tion: To be exact, an average of about 20 per cent
of the gross ground rent of land is now taken in taxa-
tion, for instance, in Boston, as well as for the whole
state of Massachusetts. If an additional I per cent
should be taken each year for thirty years, it would
amount at the end of that period to 30 per cent, which,
added to 20 per cent, would make 50 per cent, or one-
half, which is about the average proportion that
present taxes levied on all property bear to gross
ground rent. Meantime few landowners would feel
the change, much less be prejudiced by it.

The following variable illustrations, A, B, and C, make

T A "Modus Operandi"

Increase of Present Tax

For instance, applied to the assessment of a specific lot of land

for which the user pays a gross ground rent of say $68.00

Of which amount there is taken in taxation, 1915 $18.00

Leaving a net income to the owner of $50.00

The selling value (presumably also the assessed valuation) would

be at 5 per cent $1,000.00

Proceeding to take yearly from now on i per cent additional of the

gross ground rent of $68 for a period of thirty years would

amount in all to 30 per cent of $68, equal to $20.40

Which, added to the tax already taken $18.00

Would give at the end of thirty years, from the $1,000 worth of

land alone, everything else being exempted, a total tax of $38.40

Which is not much more than one-half of the gross ground rent of $68.00

A Catechism of Natural Taxation 235

The opening exhibit in detail would stand as follows :

In 1915 the tax on this $1,000 worth of land was $18.00

In 1916 the tax would be $18 plus 68 cents (i per cent of the gross

ground rent, $68) ; equal to $18.68

Reducing the owner's net rent from $50 to $49-3 2 -

In 1917 the tax would be $18 plus $1.36 (2 per cent of the $68),

totaling . 6 , $19-36

Reducing the owner's net rent from $50 to $48.64.

In 1918 the tax would be $18 plus $2.04 (3 per cent of the $68), or $20.04

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Online LibraryCharles Bowdoin FillebrownThe principles of natural taxation, showing the origin and progress of plans for the payment of all public expenses from economic rent → online text (page 20 of 24)