Louis Freeland Post.

Taxation of land values; an explanation with illustrative charts, notes and answers to typical questions of the land-labor-and-fiscal reform advocated by Henry George online

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whereasjn_Chart K, Rent is taken up for common use.
All the labor force ind icated with red in CharF^'does
not more than utilize the space to the le ft and part of
the adjoining spare nn Chart K ihis WOUld elevate
Wages to what could be produced with the given la-
bor force from the poorer of the two spaces. Thus.
in the figurfiS-jof-the-char-tyW^ei' wouM rise from 1
(Chart J) to -SO (Chart K) ; and increase of Rent



PLATE XIV



VACK

RtNT


/


/ (/) /


i




T


<^


J


^ (/) <?



CHART I



VACtS


//(/)//




iJ^^Ml'x




10 .


■'13^7




R[NT


//


// (/) ^ <?



CHART J



PLATE XV



VACC5 SO JO




J



/



RENT SO



CHART K



TAXATION OF LAND VALUES 49

would not enrich.Land-owners at the expense of other
intereat§*_hnt would enrich jthe_ y/hole_c2njnitmt^

As illustrated by those two charts, so would it be in
fact — let the degree be less or more — in the actual indi-
vidual and social life of mankind.

Section 6. — Land Value Taxation Tends to Retain
Rent-fo4i. Common Use. —— - ~-~~ -"~

To take up Rent for common use it is not necessary
to abolish land-titles, nor to let land out to the highest
bidder, nor to invent some new mechanism of taxation,
nor in any other way formally to change existing
modes of owning land, or existing processes for col-
lecting public revenues. "Great changes can be best
brought about under old forms."^^* Let Jani be Jbeld
nominally_asJt is jjow. Let taxes be c ollected bv_J :he
same processes ,^3, now. But abolish all taxes except
those that fa ll upon actual and potent ial Rent, ,that is
to say, upon land value s. Nothing else is necessary.
Nor is anything necessary further except t o increase
land valnc; taxeJi»,..aS-JB.efflLinagaaSS. If all revenue
taxes were centralized upon land values (even within
the limitations of the narrowest needs of government
economically administered) it is doubtful if Jand-own-
ers could any. longer confiscate enough Rent to make
speculation-in,. land monopoly very profitable^ Though
some surplus w ere still absorbed by them,, the .ge^tfihg
of Wealth by producing it would be so much more
easy Jhaa. by confiscating Rent to prixaiSJigS«J<L.g&y



so TAXATION OF LAND VALUES

nothing nf ^tc hping gn tnnrh tnr.ri» rpgppptaViV tl^g^

speculatijon. in Jaad .jcaJufiS. would..iose.4xui£hniD£-its at-
traqtujeness. At any rate the q uestion of su rplus —
Rent in excess of the necessities of government e co-
nomica.lly^dnUQistered — may be readily decided when
the Single Tax principle, that Rent justly belon gs to
the comnmnitY .and Wages jg the lndividual, shal l have
been recognized by society to the extent o f the Sin gle
TaAnJMadied — to the extent, that i s. of the adoptio n of

Section 7. — A Reminder.

It is assumed, of course, that the reader of this
chapter understands that LaruLdoeajiQLjneaiLagricul-
turalland ainnp ; that Rent Hapc nnt mpan pavmpnt.<; by
tenants to-ownrrs iiMJxaipuwry ofibiiildiTiss or other
use nf the-sft nr other im,prnv^^T]^fi^f,g ; that Wealth does
not mean stocks and bonds or land; and that Wages
does not mean alone the pajmients that an employer
makes to hired workmen.^''

Lest there be some such misapprehension, however,
frequent recurrence to Plates I to IV inclusive, and IX,
may be advisable.

"Wealth-" Ls .the terhniral tej m, ,f nr l,f,har- proHnrts.
"Labor" is the technical term for human effort of an
industrial character. "Land" is the technical term for
the natural resources of men that are external to them-
selves. "Wages" is the technical term for that share
in the aggregate of current production (currently



TAXATION OF LAND VALUES 51

produced Wealth) which remains after deduction of
enough of the whole to equalize advantages of location.
The technical term for this advantage-equalizing share
of current production is "Rent."



CHAPTER V

CONCLUSION

In Propress and Poverty, after rea ching his con-
clusion that the c ommand of the land , which is neces-
saryit^lifitbor, is in effect command of all the fruits"of
lab or save enough to enable labor to e xist, Henry
George says :

So simple and so clear is this truth that to fully see it
once is always to recognize it. There are pictures which,
though looked at again and again, present only a con-
fused labyrinth of lines or scroll-work — a landscape,
trees, or something of the kind — until once attention is
called to the fact that these things make up a face or a
figure. This relation once recognized is always afterward
clear.^^' It is so in this case. In the light of this truth
all social facts group themselves in an orderly relation,
and the most diverse phenomena are seen to spring from
one great principle.

Many events subsequent to his writing have gone to
prove that He nry George was r ight. Each new phase
of the social problem makes it still more clear that the
disorderly develnprnent nf nnr civilization is e^^lained

■fiinflrina^^ntally not 1ly prP SSlire of pOpulatiOH. TIOT bv

the rplatinng nf employers and emplo ved. n pr by sc ar-
cit y of mo ney, nor by the drinking habits of the poor,
nor by individual differences in ability to produce

52



TAXATION OF LAND VALUES 53

wealth, nor by an incompetent or malevolent Creator.
It is e xplained, as he has said, by "inequality in the
o wnership of land. And each new phase makes it
equally cle ar that the remedy fpr poverty is not to be
found in famine and disease and war; nor in strikes,
which are akin to war; nor in suppression of strikes by
force; nor in coinage of money ; nor i n liquor pro hibi-
tion or high lic ense ; nor jn technical educatio n ; nor in
anything else, however excellent for its own purpose,
short of approximate equality in the ownership of
lan37 Remove all thOiSe tivilt,, and land monopoly
would be so much the stronger.

Equ ality as to the use of Mother Earth, that a nd
that alone secures to every one an equal opportunity
to par tjcipate in production and full ownersh ip by
each producer of his own share. This is justice, this
is order. Unless our civilization have it for a founda-
tion, new forms of slavery will assuredly lead on into
new forms of barbarism.^ ^^



PART FOUR
Answers to Typical Questions



CHAPTER I

ELEMENTARY

Q. Do you regard the Single Tax as a panacea for the
cure of all kinds of social disorder ?

A. Not a panacea but a necessary condition. When
William Lloyd Garrison the younger announced his con-
version to the Single Tax in a letter to Henry George, he
took pains to state that he did not believe it to be a pan-
acea, and Mr. George replied : "Neither do I ; but I be-
lieve that freedom is, and the Single Tax is the tap-root
of freedom." Your question may be answered in much
the same way. Freedom is to social order what pure air
is to physical health, and the Single Tax principle makes
freedom possible.



54



CHAPTER II

REVENUE PROBLEMS

Q._ Would the Single Tax yield revenue sufficient for
all kinds of government?

A. The late Thomas G. Shearman, Esq., the distin-
guished lawyer and economist of New York, estimated
that sixty-five per cent, of the Rent that the land in the
United States now yields or offers to its owners, would
be sufficient. But whether it would or not is as yet an un-
important question. If all revenues ought to be raised
from land values, then no revenues should be drawn from
other sources while any land value remains in private pos-
session. Until land values are exhausted, taxation of in-
dustry can not be excused either on moral or on economic
grounds.

Q. In an interior or frontier town, where land has
but little value, how would you raise enough money for
schools, highways, and other public needs ?

A. There is no town whose finances are reasonably
managed in which the land values are insufficient for local
needs. Schools, highways, and so forth, are not local but
general, and should be maintained from the land values
of the State at large or of the nation.

Q. What disposition would you make of the revenues
that exceeded the needs of government ?

A. They who ask this question ought to settle it with
those who want to know whether the Single Tax would
yield revenue enough. I do not believe that public rev-
enues under the Single Tax would exceed the just needs
of economical government. In better highways, better
sidewalks, better wharves, better schools, better public
service of various kinds, we should find sufficient de-
mand for,all our revenues. But the question of deficiency

55



56 TAXATION OF! LAND VALUES

or surplus is one to be met when it arises. The present
question is the wisdom and the justice of applying land
values to common use, as far as they will go or as much
of them as may be needed as the case may prove to be.

Q. If the full rental value were taken would it not
produce too much revenue and encourage official extrava-
gance? If only what was needed for an economical ad-
ministration of government, would not land still have a
speculative value?

A. In the first part of your question you are thinking
of a vast centralized government as administering public
revenues. With revenues raised locally, each locality
being assessed for its proportion for the State and the
nation, there would be no such danger. The possibility
would be still further reduced by the fact that private
business would then offer greater pecuniary prizes than
public office would, wherefore public office would be
sought for higher purposes than as a money-making op-
portunity. As to the second part of your question, the
speculative value of land would be wiped out as soon as
the tax on land values was high enough, and that on im-
provement values low enough, to make production more
profitable than speculation. And this point would be
reached long before the whole rental value was absorbed
in taxation. It is doubtful if land speculation could thrive
if only 50 per cent., or even so little as 25 per cent., of
annual land values were taken for public purposes, pro-
vided improvements were exempt.

Q. If a land-owner builds, does not that increase the
value of his land and consequently the amount of the tax
he would have to pay? If so, would not he be taxed for
his improvement ?

A. No. Upon the value of the building he would
never pay any tax. It is true that his improvement might
attract others to the locality in such numbers as to make
land there scarcer and consequently dearer. His own lot
would in that case rise in value with the other land and
be taxed more, just as the rest would be. But that would
not take any of his labor in taxes ; he would still have his



JAXATION OF LAND VALUES 57

building free of taxation. Thus: If on a lot worth $1,000
a building worth $1,000 were erected, making the whole
worth $2,000, the tax would fall only upon the $1,000
which represents the value of the lot. If land then be-
came so scarce, relatively to demand for it, that the lot
rose in value to $2,000, the tax would be doubled; but
the owner's improvement would still be exempt. When
his property was worth $2,000 he was taxed on $1,000,
the value of the lot, leaving the other $1,000, the value
of the building, free; and now, though he is taxed on
$2,000, the value of the lot, his $1,000 worth of building
is still free.

Q. If a man owns a city lot with a $5,000 building on
it, what, under the Single Tax, would hinder another
man, perhaps with hostile intent, from bidding a higher
tax than the first man was able to pay, and thus ousting
him from his building ?

A. The question rests upon a misapprehension of
method. The Single Tax is not a method of nationalizing
land and renting it to the highest bidder. It is a method
of taxation. And it would not only hinder, it would pre-
vent the unjust ousting of another from his building.
The Single Tax falls upon land-owners in proportion to
the unimproved value of their land ; and this value is de-
termined by the real estate market — ^by the demands of
the whole community — and not by occasional and arbi-
trary bids. No one could oust a man from his building
by bidding more for the land on which it stood than
the occupier was paying; the Single Tax would not be
increased in any case unless the land upon which it fell
was in so much greater demand in the market that the
owner could regularly let it for a higher rent, and this
would not be so unless the neighboring land were sim-
ilarly affected.

Q. What would be the expense of collecting the Sin-
gle Tax as compared with that of collecting present
taxes ?

A. Much less. It is easier to assess fairly, and easier
to collect fully; the machinery of assessment and collec-



58 TAXATION OF LAND VALUES

tion would be simpler and cheaper, and it would not en-
able first payers to collect the tax with profits upon it
from ultimate payers.

Q. How would you estimate land values ?

A. As we do it now. As real estate dealers estimate
them. As appraisers in partition would estimate them.
Read Note 34 in Appendix.



CHAPTER III

SPECIAL INSTANCES

Q. How would you value the land of a farm when all
the land of the neighborhood was fully improved ?

A. By ascertaining the value per square rod of the
adjacent highway. The value of that, for the purpose of
adding it to the farms along which it runs, would de-
note the land value of the farms. Read Notes 11 and 34
in Appendix.

Q. How can mines be taxed without increasing the
price of the output?

A. By taxing the royalty — ^not the product, but the
royalty; or, what is essentially the same, by taxing the
capitalized value of the mine, not as a going concern, but
as a natural mineral deposit. This would tend rather
to lower than increase the price of the product and raise
miners' wages. Read Note 11 in Appendix.

Q. How would the Single Tax be assessed on a rail-
road which passes through a farm worth (without its
improvements) $30 an acre?

A. According to the value, not of the adjacent farms,
but of the total right of way ; much as the value of a nav-
igable river might be determined if it were private prop-
erty.

Q. How would you assess the land value tax of a
man who, by making levees, had reclaimed land from the
Mississippi ? Say that the land when reclaimed was worth
$50 an acre, but that the levees cost a great deal less.

A. The fact that the levees cost less than the value
of the land when reclaimed, shows that the opportunity
for reclaiming such land has a value. That value, the
value of the opportunity to reclaim, is the land value of
the property and would be the basis of the tax.

59



60 JAXATION of: LAND VALUES

Q. How would you adjust mortgages to the Single
Tax scheme?

A. Mortgages are modified deeds, and mortgagees
are land-owners conditionally and in degree. I would
make no adjustment, but would warn mortgagors and
mortgagees to adjust their interests as they see fit when
they make their mortgages, just as I would warn buyers
and sellers of land to guard their correlative interests
between themselves by their contracts. Full notice has
been given that as soon as possible and as fast as pos-
sible we purpose inducing the people to bring about a
condition in which land values will be taken for public
use and improvement values be left for private use. Per-
sons who in the face of this notice neglect to protect
themselves in their contracts have no one else to blame
if, when the change comes, they suffer pecuniary loss in
the readjustment.

Q. How would the Single Tax affect leases already
made ? Would the loss of declining values fall upon the
owner or the lessee ?

A. That would depend upon the covenants in the
lease. It behooves tenants to see to it that their leases
contain provisions in this respect. If they fail to protect
themselves they can not complain in case they suffer
when the Single Tax comes into operation. They will
have had ample warning, and their misfortune will be
chargeable to their own negligence.

Q. Should the whole rental value of land be taken for
common use, or only enough for government purposes?

A. Only enough for government purposes. When the
people see that this method of taxation improves busi-
ness, increases wages, cheapens land, and generally pro-
motes prosperity, they will not hesitate to increase taxes
so long as public improvements are needed or public en-
terprises desired and land values are unexhausted. As
is said in Progress and Poverty (book viii, ch. ii) :
"When the common right to land is so far appreciated
that all taxes are abolished save those which fall upon
rent, there is no danger of much more than is necessary



TAXATION OF LAND VALUES 61

to induce them to collect the public revenues being left
to individual land-holders."

Q. How would the tax be collected from those who
neglected or refused to pay?

A. As taxes on real estate are now collected. Or, if
necessary or desired, as individuals collect rent from
tenants who refuse to pay — by suing for the tax, or
evicting the occupant, or both. I think, however, that
the public would deal more kindly with occupants than
landlords do. I think it would compensate them for loss
in respect of improvements where such loss was really
suffered.

Q. How would you reach the bondholder, or the man
with money alone?

A. Why should we wish to reach him if his bonds or
his moneys represent labor products to which he has hon-
estly acquired a just title? This question is a legitimate
offspring of the theory that men should be taxed accord-
ing to their ability to pay, the merits of which are con-
sidered in chapters ii and iii. It is a question which may
also have been suggested by the fact that "bondholders"
and "men of money" are so often men who have special
; privileges. There is a feeling that it would be unfair
to allow such special privileges to escape taxation, and
indeed it would be. But inquiry will show that the most
important of these privileges rest in the ownership of
land, and that the "bondholders" and "men of money"
whom the questioner probably has in mind, are in fact
great landlords; that is to say, that their fortunes con-
sist of evidences of title to landed privileges. When land
values were taxed, the great source of unearned incomes
— land monopoly — would be practically abolished, and
bondholders and men of money would be only those who
earn what they have. Such property no one should, and
few ever would, wish to expropriate.

Q. In your lecture you tell of a meteorite which a
poor man found, but which the law gave to the owner of
the land on which it fell. (See Note 105.) Wouldn't
the owner, or possessors or whatever you choose to call



62 TAXATION OF LAND VALUES

him, o£ that land get the meteorite just the same if the
Single Tax were in force ?

A. Yes, if only one meteorite fell upon his land. But
if meteorites got into the habit of falling there, the land
would grow in value; then the Single Tax would oper-
ate, by taxing land yalues, to take the value of those
meteorites for common use, less the labor expended upon
them, the value of which would go to the laborer. I told
of the one meteorite to illustrate a principle. But as a
practical question we need deal only with land upon
which, speaking in metaphor, meteorites have a habit of
falling. The occasional diamond, the nugget of gold, or
other valuable thing found here or there as one of the
accidents of the day, are of no practical moment ; it is
the diamond fields, the gold mines, the especially fertile
or conveniently located farming spots, the centers of
trade, and similar valuable opportunities for labor, that
are of moment as factors in social problems.



CHAPTER IV

ECONOMIC EFFECTS

Q. Would not the Singletax increase the rent of
houses ?

A. No. It takes taxes off buildings and materials,
thus making it cheaper to build houses. How can house
rent go up as the cost of building houses goes down?
Read Note 18 in Appendix.

Q. Do not the benefits of good government increase
the value of houses as well as of land?

A. No. Houses are never worth any more than it
costs to reproduce them. Good government tends to
diminish the cost of house building ; how, then, can good
government increase the value of houses. You are con-
fused by the fact that houses, being attached to land,
seem to increase in value, when it is the land and not the
house that really increases. It is the same mistake that a
somewhat noted protectionist made when he tried to
show that there is an "unearned increment" to houses as
well as to lands. He did so by instancing a lot of vacant
land which had risen in value from $5,000 to $10,000
and comparing it with a house on a neighboring lot
which, as he said, had also increased in value from $5,000
to $10,000. At the moment when he wrote, the house to
which he referred could have been reproduced for
$5,000; and had he reflected or made inquiries, he must
have discovered that it was the lot on which the house
stood, and not the house itself, which had increased in
value.

Q. What difference would it make to tenants whether
they paid land rent to the community or to private own-
ers?

A. Much the difference that it makes to partners

63



64 TAXATION OF LAND VALUES

whether they pay money into the partnership or to out-
siders. When tenants pay to the community they are
paying in part to themselves ; and what others pay they
share in, for they are part of the community. They are
also exempt from taxes. And since there would be no
inducement to speculate in land if rent went to the com-
munity, building land would be more plentiful and rents
for residences would consequently be lower.

Q. Would not the merchant shift his land value tax
by adding it to the price of his goods ?

A. No. Read Note 15 in Appendix.

Q. Would not the tax on land values increase the
value of land?

A. No. Read Note 18 in Appendix.



CHAPTER V

LABOR QUESTIONS

Q. What good would the Single Tax do the poor?
and how?

A. Constantly keeping the demand for labor above
the supply of labor, it would enable them to abolish their
poverty by their industry.

Q. Hasn't every man who needs it a right to be em-
ployed by the government ?

A. No. But he has a right to have government se-
cure him in the enjoyment of his equal right to the oppor-
tunities for employment that nature and social growth
supply. If government secured him in that respect, and
he could not get work, it would be because (1) he did not
offer the kind of service that people wanted; or (2) he
was incapable. His remedy, if he did not offer the kind
of service that people wanted, would be either to make
people see that they were mistaken or to go to work at
something else; if he was incapable, his remedy would
be to make himself capable. In no case would he have
a right to government interference in his behalf, either
through schemes to make work, or by bounties, or tariffs,
or in any other special way.

Q. Would working people whose savings are in sav-
ings banks or insurance companies which own land or
have mortgages upon land, lose by the shrinkage in land
values ?

A. Not if the companies were managed intelligently.
Well managed companies would shift their investments
as they observed the persistent decline of land values.
They would do it even as soon as conditions appeared
that would naturally cause land values to shrink. But
working people could well afford to give up all their

65



66 TAXATION OF, LAND VALUES

present savings for the permanent employment and high
wages that the Single Tax would bring about. It is not
thrifty working people but rich idle people who would
lose by the Single Tax.

Q. If taxes have to be paid by labor, what difference
does it make to laborers whether they are levied in pro-
portion to land values or otherwise?

A. When taxes are levied upon earners in proportion
to earnings, they take what the earners would otherwise
keep ; but when they are levied upon land-owners in pro-
portion to land values, they take what the earners must
in any event lose.

Q. Under the Single Tax could employers cut wages
to the starvation point ?

A. No. Under the Single Tax employers would be
constantly bidding for workmen, instead of workmen con-
stantly bidding for employers as is the case now. It is
the "oversupply" of labor that makes starvation wages
possible, and the Single Tax would abolish that; not by
reducing the supply of labor, the Malthusian idea, but
by allowing effective demand for labor to increase freely.

Q. What effect would the Single Tax have on immi-
gration? Would it cause an influx of foreigners from


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Online LibraryLouis Freeland PostTaxation of land values; an explanation with illustrative charts, notes and answers to typical questions of the land-labor-and-fiscal reform advocated by Henry George → online text (page 4 of 14)