The 7 minute video at http://digg.com/video/louis-ck-tells-a-joke is worth your time!
This is from a newsletter about 100 years ago --
SONS OF MARY — AND OF MARTHA
“Ninety per cent of the world of men
Are envying daily the other ten
Who somehow seem to cut the pie
As days and weeks and years roll by.
"They’re lucky guys" these other ten
Who are envied by the rest of men;
But the ninety wishers never seem
To sense it's the milk that makes the cream.
Beneath the surface the reason lies
Which proves the ninety are not "wise."
For why are they not like other men
These few we call the Upper Ten?
Once and for all the reason learn:
Because they Own instead of Earn!
Legalized privilege gives them gold
Beyond the dreams of a pirate bold.
The Community's natural income—rent,
To these sons of Mary is given and spent:
Become a ground hog, that's the wheeze
If you aspire to "raise the breeze!"
Well—what can the sons of Martha do
To unscramble this economic stew?
For public revenue let them take,
The rent, that everyone helps to make.
From all taxation thus set free
The human family will live in glee,
’Cause each will have what will be ‘‘bon,"
A full return from his brain and brawn.
Why do the Ninety suffer a flaw
To darken the mirror of Natural Law?
Lack of knowledge?-—there's the cat
That's eating the proletariat.
J. R. Dickson.
Posted on December 12, 2016 at 11:13 AM in a wedge driven through society, absentee ownership, all benefits go to landholder , cui bono?, Earth for All, economic rent, equality, fruits of one's labors, little people pay taxes, Natural Public Revenue, privilege, unburdening the economy, unearned income, unearned increment, untaxing production, windfalls | Permalink | Comments (0)
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TAXATION QUARTERLY October, 1927
It is impossible to talk taxes without talking government. One is justified is saying: No taxes, no government; no government, no taxes which is to say, if we had no taxes governments could not exist and if we had no governments no taxes would be necessary. All of us agree that society cannot exist without government, therefore taxes are a necessity. For just what food is to the human body, taxes are to government, and just as the human body can sustain life for a long time on poor food taken irregularly at wrong times and in wrong proportions, so government can be sustained for an indefinite period upon bad taxes that are oppressive, unjust, badly collected and in many respects injurious; but as bad food finally breaks down the health of the body so do bad taxes ultimately destroy the health and sometimes even the life of the body politic.
It is asserted that Rome owed its decline to bad systems of taxation as much as it did to slavery itself, for just at the time the 100 percenters were hollering the loudest the tax gatherers were so cruel and unjust in their efforts to squeeze the last cent out of the people that their morale was destroyed, their patriotism killed, and it became a matter of indifference to them under which taxing machine they lived. The same spirit was shown in our own country after this last war, when it was often said, “What's the use of trying to make money in your business when the government comes along and takes it away again?” Let this spirit become general and what happened to Rome will happen here. It only emphasizes the truth of the saying, THE POWER TO TAX IS THE POWER TO DESTROY. This power when used wrongly permits tyranny and robbery, all the more dangerous because they are carried on under the guise of law and because they are hidden.
Now the sickness of the body politic is shown and known as inequality, due largely to systems of taxation that fail to take into account natural rights. Wherein lies the difference between our form of government and every other form of government? And what is the object of government, anyhow? The difference lies in the assertion we make that governments derive their just powers from the consent of the governed, and that they are organized solely for the maintenance of natural rights, or, as some say, equal human rights. This doctrine of natural rights was enunciated and emphasized in the early history of this country by its early founders and no clearer expression of it can be shown than that contained in the declaration of the bill of rights, which states that all men are born equal and are endowed with certain inalienable rights. All other ideas of government are based upon the aristocratic and paternalistic concept which assumes that some people are born to govern the rest or, as Jefferson put it, as though they were born booted and spurred, to ride the rest of humanity.
These two ideas of government are constantly striving for supremacy in society at all times. The fact is, there never were but two kinds of government in the world since there was a world, and there can only be two kinds, no matter how long the world lasts: the paternalistic on the one hand and the democratic on the other. Between these two extremes are various gradations called by various names at various times, but the thought is ever the same. Such cries as, “That form of government is best which governs least,” or “Government is a necessary evil,” are but expressions of a belief in a democratic form. Those cries were much in use in the early history of our country, and the conflict between the two is still going on.
There are people today so imbued with the paternalistic idea that they would, and do, seek to regulate us in our private, personal habits, forgetting that whatever virtues we possess are not produced by government, that really government is but the expression of both our virtues and our vices and not the cause. Now the simplest definition of democracy can he expressed by saying “The democratic idea as applied to government demands that equality of fundamental rights be recognized as a natural endowment, to be protected as a public duty” fundamental meaning the right to life, the right to liberty, the right to own property and the right to make a contract. The right to the ownership of property rests on the proposition that to the laborer belong the fruits of his toil, and whether those fruits are the result of one’s own efforts or are the result of a contract or are a gift, they belong to the individual as against all the world, and no other individual, no mob, no TAXING POWER has any right to take of those fruits without the owner’s consent, unless the TAXING power can show that the one taxed is its debtor. And right here let me say, no one escapes taxes. I may own fifty houses, live in one and rent the other forty-nine; all the expenses on the forty-nine including TAXES are paid by the tenants.
Now the thing that shows the debtor relationship of the individual to the taxing power is the value of the location one occupies in a community. Location value is an absolutely sure reflection of the worth of government. To ignore the debtor relationship in apportioning taxes and to apportion them on any other basis is to ignore a person’s natural right to Ins property, which is taken away because the taxing authorities are given the power to take it. By the exercise of this power they deny the right of ownership to property as between the taxpayer and the taxing powers. But before going into this phase of the subject let us consider that there are some who deny there are such things as natural rights. For instance, some contend that questions of right are questions of expediency. They hold only that to be right which from experience appears to them to be wise. They say, further, that the distribution of wealth is a matter of human institution only, and that society collectively can do as it likes with things privately owned; it can place them at the disposal of whomsoever it pleases and on whatever terms it chooses; that even what a person has produced alone by his individual toil unaided by any one he cannot keep unless it is the will of society that he should do so. Today 90% of taxes are collected in accordance with this paternalistic or socialistic idea.
There should be a clear distinction drawn as to what are the legitimate functions of government. No government has any right to coerce an individual with regard to his individual concerns. What a person makes in his private business, either in a partnership or in a corporation, individually or professionally, is a matter of private concern. Yet we see our system of taxation (notably the income tax) ignore this and make public what should be kept private. In addition it arms with inquisitorial powers the tax office, which is permitted to nose into private affairs where by rights it has no business.
An effort is made through super-taxes to equalize wealth. The cry being that taxes should be levied according to a person’s ability to pay, one may well ask, Does the taxing power give me my ability? Usually if I have ability to accumulate 1 will also have ability to shift the tax to somebody else having less ability. The result is that the people are in reality taxed not according to ability to pay but to their inability to avoid paying. This is shown clearly by Otto H. Kahn of Kuhn, Loeb & Co., in a little booklet entitled “The High Cost of Living,” in which he says that the investor, in order to recoup a portion of his income tax, demands securities yielding much higher rates oi interest than formerly, thus enhancing the cost of capital; and when the cost of capital is enhanced the cost of the commodities that this capital enters into is enhanced also, and is finally paid by the ultimate consumer.
Mr. Babson, the eminent statistical authority, in one of his bulletins says: “Taxation and its effects on commodity prices and living costs are matters of too little general intelligence. For the majority of voters this field is left free to some who confuse it with propaganda for or against some issue at election time.” He says that by a natural law of readjustment in the long run taxes tend to distribute themselves over the whole community, no matter where the effort was made to collect them in the first place. It is a false theory that taxation can be used as an economic highwayman to bludgeon the rich so as to accomplish a permanent redistribution of wealth, and it: is surprising to find authorities agreeing that the tariff is a consumption tax and yet protesting against a sales tax on the ground that it puts a special burden on the consumer. What should be fixed in the public mind is this truth, that what governments pay out the consumers pay in. The only levy that can be depended on to lie where the government put it is the inheritance tax; a dead man cannot pass it along. I say this is the meanest kind of a tax, for it amounts to taking the penny off a dead man’s eye just at the time the family needs the money the most. The taxing authorities come along and reduce their income to one-third on an average. They practically put a pocket in the shroud so they can rob the dead, it being the case that taxes arc paid by the ultimate consumer.
The problem of taxation, then, revolves around this question: What is the proper measure to use in apportioning taxes to each consumer? In everyday talk we say we tax sugar, tea, coffee, houses, lots, stocks, bonds, etc. Now as a matter of fact we do nothing of the sort; what we really do is to tax persons. Persons pay all taxes, and the items mentioned are merely measures used to apportion taxes to persons. In 1920 the Federal Government collected from the citizens of the State of Maryland $1,085,000 from the consumption of candy, near-beer, ice cream, and soft drinks. In all seriousness it can be asked. Does the consumption of candy, near-beer, or ice cream show the consumer’s debtor relation to the taxing power, and should not that relation be shown? If the taxing power puts its hand into one man’s pocket and takes out $500, and into another man’s pocket and takes out $100, don’t you think the man who pays $500 has a right to ask why he should pay $400 more than the other? And what will the answer be today? “You got more, therefore you should pay more,” or, “You use more candy or tobacco or ice cream,” etc., when the proper answer would be, “Because you owe more.” Suppose I should put a pistol to your head and demand your money, under threat of bodily harm, what would my relation be to you? Wouldn't it be that of a robber to a victim? But suppose I met you and presented you with a bill showing you owe me $500. The relation then would be that of a debtor to a creditor. Now, when any government, federal, state, or municipal demands your money or property without using a measure which establishes your debtor relationship to them, then that government is in the first category and its act becomes robbery under the form of law.
Now the only thing that shows your debtor relation is the value of the location you occupy. If one lives in the woods or in a desert no value appears. An acre of land in Atlantic City on the Jersey Coast is worth more than a 1000 acres in Arizona. A sixteenth of an acre of bare rock in New York is worth more than a 1000 acres in Manitoba. Where people live together in close association as they do in New York, there is a profit in that association and that profit is called rental value or location value, which is rent capitalized. This value is a reflection of governmental worth which furnishes streets, schools, police and all utilities found necessary to be publicly carried on. All its activities are reflected in location values. By eliminating from the assessable basis all items of value except location value you have each one paying as he receives. A just formula for taxation purposes would be for everyone to contribute to the support of government according to the value of the privilege he enjoys under that government.
There is only one value that shows what the privilege of living in a community is worth, and that is location value. Where close association exists, rent is high and is the tribute which natural laws levy upon every occupant of land as the market price of all the social, as well as natural advantages attaching to a location, including one’s just share of the cost of government. It is therefore just that in apportioning taxes only that value that reflects social services shall be considered in fixing the assessment. By this means each one would pay the worth of the privilege of occupying a certain position in the community. He gains a certain profit by occupying that position, made possible by governmental action which furnishes security of tenure in the first place, and he should pay accordingly.
The view of taxation contended for here may seem extreme to some; none the less it is worthy of consideration. The economic effect flowing from the new plan advocated would create a tendency to put land to its full use. Improvements would be free from taxes; sites held for speculation undeveloped would pay more taxes and would press for use, creating a fuller and steadier demand for both labor and capital with ensuing greater production and a consequent higher standard of comfort. The repeal of all the various forms of taxation now in use with their consequent interference in private affairs is much to be desired, to the end that equality of fundamental rights may become a fact instead of a theory.
Posted on December 10, 2016 at 07:21 PM in capitalization, equality, financing education, financing services, financing war, fruits of one's labors, government's role, Jefferson, location, location, location, private property in land, privilege, taxation, urban land value | Permalink | Comments (0)
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THE basis of the agitation for prohibitory laws is the assumed right of the "good” people of the country to compel the "bad” people to do what they think is best for them. As I am one of the "good” people who do not like alcoholic beverages, I demand that their use by “bad” people shall be absolutely prohibited.
Small-minded persons have derided our claim that we are the ‘‘good," and have pointed out that history is full of cases where men assuming to be better than their fellows, have tortured and killed those who did not agree with them, in order to force them also to be good. There is a vast difference between the bigots who tried to make them religious by law, and ourselves. They only thought that they were good. We know that we are good.
The report of the "Committee of Fifty to Investigate the Liquor Problem” states that 80 percent of the adult male population of the country use alcoholic beverages. This shows that 80 per cent of the adult males are unfit to govern themselves.
I believe in majority rule when the majority favors prohibition. I favor minority rule in matters relating to the personal tastes of those whose ideas differ from mine, and want laws enacted that will put them in jail, if they persist in their wicked ways.
I believe that the people in general are incapable of deciding wisely as to their personal habits, and that the small and select minority, of which I am one, can regulate the private affairs of the majority a great deal better than they can themselves.
People who do not agree with me are either foolish or wicked. The foolish should be restrained by law from following their inclinations. The wicked should be punished for refusing to live as I do.
I hold that it is the duty of American citizens to impose by law their peculiar ideas of virtue and morality upon their neighbors. If the latter protest, they must be made to understand that they have no rights that we reformers are bound to respect.
It is claimed by the opponents of prohibition that the prohibitory laws of the various dry states have always failed to decrease the use of liquors. While this is true, it merely shows the inherent cussedness of human nature, in that men prefer to follow their own selfish desires, rather than obey the rules of conduct that we have wisely laid down for them.
The only way to make men truly moral and virtuous is to deprive them of temptation by unenforceable legislation. My idea of virtue is a man in a three-acre lot, surrounded by a six-foot-high barb wire fence.
The crying evil of the age is the selfish tendency of the great mass of people to attend to their own business, instead of meddling with other people’s affairs. I believe that. “Blessed are the busy-bodies, for they shall annoy the whole earth.”
The protection of fools against the consequences of their own folly is the highest function of government. and ensures the production of a bigger crop of fools.
Prohibition puts the ban of outlawry on the liquor traffic; drives all self-respecting and decent men out of the business: and makes it necessary for those who wish to drink to get their liquor from irresponsible dealers. This is deplorable: but I cannot allow facts to interfere with my determination to compel men to do as I do, instead of as they wish.
I believe that although prohibition promotes hypocrisy, and disrespect for law, it is far better to have laws that are not enforced, than to leave the people to their own devices.
The excessive use of alcoholic beverages is injurious to health. Excessive eating causes indigestion, auto-intoxication, and a host of other evils. Therefore, the manufacture and sale of food should be prohibited.
Mankind in general are so foolish that they cannot learn by experience what is good for them. It is therefore necessary that we, the wise minority, should assume the burden of regulating their personal habits.
Many cases have been known of poor people drinking. Their drinking habits must have caused their poverty. It is true that many rich people also drink, but drinking has nothing to do with their prosperity.
Opponents of prohibition claim that the simplest and easiest way to prevent the excessive use of liquors would be for the people who cannot drink in moderation to stop drinking. This might be an effective remedy, but what would become of us subsidized reformers and professional agitators?
I favor prohibition because I believe in personal liberty and the right of every man to do as he pleases, so long as he does what pleases me.
Lastly: I am for prohibition because I find no enjoyment in drinking, and I can see no reason why pleasures that are denied to me should be allowed
--- published in Reedy's Mirror, August 25, 1916.
Making ’Em Think
Editor of Reedy's Mirror:
The State of California has a Tax Commission, which, unlike most tax commissions, is disposed to study the question of taxation. It is agitating the subject of taxation by asking the people questions. Here is a list of eleven questions it has just propounded to the people of this State:
Would you favor the exemption from taxation of all factories and manufactured products? (Effort is being made along this line in several States, particularly New Jersey.) Give reasons.
If most of our public revenue continues to come from property taxation, do you believe any property should be exempt from paying in some way, its percentage of such tax? If so, what property would you exempt?
Would you favor the discontinuance of the tax on personal property and the adoption of a reasonable income tax in its place? (This has been recommended by various tax commissions, and has been partially put into operation in Wisconsin, and recently adopted in Massachusetts.) Give reasons.
Do you believe improvements on land (houses, trees, etc.) should be taxed in the same proportions as the land itself? Give reasons.
Do you favor the gradual reduction of taxation upon buildings, trees and vines and the assumption of that tax burden by the land? Give reasons. (This proposition has been discussed in New York and other States, and attempted in Canada, New Zealand, and elsewhere. It is estimated that land in California is assessed at about one-half its full value, and it has been argued that if it were assessed at full value, improvements could be exempted without increasing the tax rate.)
It is argued that land values in cities and other social centers are greatly augmented by the amount of population, and that the community itself, and not any effort on the part of the owner of the land, gives it the high value. If this is true, do you, or do you not, believe that a man who gains this extra wealth from the community, instead of by his own efforts, should pay a greater tax proportionately? Give reasons.
If you state in your answer to the preceding question that you are in favor of a greater tax upon unearned land values, then what percentage of this unearned value do you believe should rightly come bark to the community, instead of being retained by the owner? Give reasons.
Do you believe that land held for speculation should be taxed heavier than the land used for home, agricultural or business purposes? Give reasons.
Do you favor the idea of setting aside certain classes of property to be taxed for certain purposes (for instance, for State or county purposes solely) without regard to the relative burden of tax borne by the different classes of property? Give reasons.
Do you favor classifying property according to its earning ability and taxing it in proportion to that ability? Give reasons.
Do you favor a system of indirect taxation for city and county governments, similar to that now used by the State? Give reasons.
Such questions as these are likely in time to have disturbing results to entrenched privilege. They are calculated to make the people think, and that is always unfortunate for those who profit by popular thoughtlessness. If a man thinks long enough and hard enough he is likely to get back to the beginning of the subject. He is likely to become a convert to the Single Tax.
San Francisco, Cal.
This letter to the editor appeared in Reedy's Mirror, a weekly newspaper published in St. Louis, August 25, 1916.
See the Radical!
What, O Sage, do you mean to tell me that intelligent and earnest looking fellow is a Radical?
Then I have been misinformed. The editor of my paper always speaks of a Radical in the most contemptuous of terms, as if a Radical were the most reckless and the most ignorant of men.
The trouble is, my son, that your editor is careless in the use of terms. When he uses the word “radical” that is not what he means.
What does he mean, O Sage?
When he uses the word "radical” he means rabid.
But aren't those—synonymous terms? I always thought so.
Many people think the same way, but it is not so. A Radical is a man who is not content to be superficial, a man who goes to the bottom, to the root, of things. It takes a profound and earnest and careful man to be a Radical.
And one who is rabid?
Is one who flies off the handle because he is superficial. A rabid man would rather be angry than be studious.
Then tell me, O Sage, who would you consider the greatest Radical of the day and who the most rabid?
No, my son, in discussions of this sort it is not safe to be too personal.
From The Public, June 8, 1917
New York tenants should not be unmindful of the honor conferred upon them by King George, in making Baron Astor into a Viscount. A few years ago these New York tenants paid rent to a fellow citizen, a mere American, for the privilege of living on Manhattan Island. This is not to imply that Mr. Astor was lacking in any of the virtues, moral, intellectual, or spiritual, possessed by his tenants; but merely to note the fact that one American citizen was empowered by law to collect toll from other American citizens for the right to live in America. When Mr. Astor became a British citizen, his American tenants paid to a British subject for the privilege of living on American soil. Later, when Mr. Astor, because of lavish contributions of American dollars to British institutions and parties, was made Baron of Hever Castle, his New York tenants experienced the satisfaction of English tenants who live on lords’ estates. Now they have been raised to the exalted position of tenants of a Viscount. And the end is not yet. It is whispered in England that royalty must stop marrying into German royalty, and contract alliances with the commons. This opens up new possibilities. It is conceivable—the thought is put in this potential form to avoid an unwarranted raising of hopes—that with British princes contracting alliances with the commons, the children of Americans now living may pay rent to a British king for the privilege of living on American soil.
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But does it so very much matter whether tenants on Manhattan Island pay toll to a baron, viscount, prince or king in some European country rather than to Diederich van Rensselaer or Abraham Margolies in this country? When one gives a day’s labor for a blanket or for a pair of shoes there is the consciousness that one has paid the maker of the blanket or the shoes. The service given for a house raises the same thought, payment to the builder of the house. But when one gives labor for the use of land, what is the justification? Is it because the owner made the land? Can it be that Mr. Astor has rendered his former countrymen a rare service in visualizing iniquities of landlordism?
1— The Universe from our point of view = nature plus human nature
2— Human nature has needs only nature can supply
3— Civilized man has wants in addition to biological needs
4— That which will satisfy these wants is wealth
5— All wealth is derived from the land
6— For the most part only, however, as produced by labor
7— The accumulation of such labor-produced wealth is capital
8— The land belongs to nobody; or equally to all
9— The use-value of land—rent; of capitals interest; of labor—wages
10— Rent and interest are created by and belong to labor
11— Laborers constitute the majority in a democracy
12— If this majority appropriates rent for the community, nature will once more be accessible, and labor will get its full product in wages. And this will be done through the present machinery of government, without violent revolution, by merely abolishing taxes as we now know them, and enacting that the community appropriate to its own ends hereafter the wealth that the community creates which never should have been allowed to be diverted into private hands.
Two tidbits from The Public, June 1, 1917:
Justice consists in doing men no injury; decency, in giving them no offense.—Latin Proverb.
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If all mankind minus one, were of one opinion, and only one person were of the contrary opinion, mankind would be no more justified in silencing that one person, than he, if he had the power, would be justified in silencing mankind.—John Stuart Mill.
From The Public, May 25, 1917
An Idle Poor Man met an Idle Rich Man and asked him for assistance, but the Idle Rich Man was impatient. He tried to brush the other aside and pass on.
"Out of my way, you lump of uselessness. It is not right for you to solicit alms. Why don’t you go to work?”
“Why don’t you give me work?”
"There isn’t any work that I want done.”
"But there is work that I want done,” retorted the Idle Poor Man, “and I am willing to do it myself if I only had the opportunity.”
"Oh, yes,” contemptuously replied the Idle Rich Man, "I have heard all that before. There is plenty of work if you would only do it. I don’t believe you want to work.”
"Of course I don’t.”
“Ah, ha, I thought so.”
“Do you want to work?” inquired the Idle Poor Man.
“I don’t have to work,” evasively replied the other.
“Ah, ha, I thought so,” mocked the Idle Poor Man.
"I have an independent income," said the Idle Rich Man.
“Did you work for it?” asked the Idle Poor Man.
“No, but I came by it honestly enough. It was left to me by my father.”
“So. So. You’re no better than I am.”
“My poor deluded friend,” responded the Idle Rich Man in a fatherly tone, “I am really doing you a great favor in thus arguing with you, but I must say your knowledge of political economy is exceedingly limited. It may be true that I do no work myself, but by spending my money I make work for others which is of great social value.”
“Yes, you make work for servants and bootblacks and chauffeurs and valets and gardeners and diamond-cutters and many others, but you take good care that none of them shall make work for you. Your theory is all wrong. There is no virtue in making work for others to clean up. But even if that were the test, I still maintain that you are no better than I. I, too, make work.”
“Perhaps you do, but of a different kind.”
“Work is work. It is impossible to place certain values upon different kinds of work,” said the Idle Poor Man. “As a matter of fact, the workers I create are quite as much honored and respected as those arising through you. I am a problem, I am. A regular problem. As such I require the attention of real thinkers, or at least those who think they are thinkers. I give employment to academicians and learned sociologists and settlement workers and charity organizations and reformers and politicians and policemen and orators and writers and goodness knows who all. I am sure you have no monopoly on making work. It seems to me that the only difference between us as shown by this argument is a difference in the matter of honesty.”
“And of course you are the more honest,” declared the Idle Rich Man sarcastically.
“Honesty is so largely a subjective matter,” responded the Idle Poor Man, “that I am quite sure we could never agree on that point.”
The House having under consideration the bill (H. R. 3687) to amend an act entitled "An Act to prohibit the coming of Chinese persons into the United States," approved May 5, 1892,
Mr. MAGUIRE said:
The gentleman from Massachusetts [Mr. Morse] scouted the idea that ninety thousand or one hundred thousand Chinamen in this great country could be a source of any real hardship to the country, or any menace to our institutions, social, political, or industrial, and as one basis for his statement in that behalf he called attention to the magnificent, boundless, inexhaustible, natural resources of this country. Our natural resources are indeed measureless and inexhaustible, and if they were open to the people of this country on fair and equal terms — on the terms on which the great Creator gave them to mankind — the gentleman's argument on that phase of the question would be sound.
But these natural resources, without access to which labor can produce no wealth at all, are not open to the people. They are monopolized. Chinese labor would not and could not oppress American labor if our lands were free, but, as it is, land monopoly and cheap imported labor are the upper and the nether millstones, between which American labor is being ground into serfdom and pauperism, as I will presently explain. The natural resources of the Pacific coast, the natural resources of our entire country, are the private property of a few individuals.
This great country, which we are pleased to call ours, belongs, by legal title, to a few landlords whose number and proportion to the whole people are annually growing less.
Every cheapening of labor, by any means, increases the market value of the land and the rent rolls of its owners; thus, by a double process, widening the gulf between the landless poor and our growing landed aristocracy. American labor, driven from the natural sources of independent self-employment, is forced to enter the labor markets of cities and towns and compete for employment with the cheapest labor that is there offered for sale.
Mr. MORSE. Who is responsible for that condition?
Mr. MAGUIRE. The people are responsible, because they have the power to correct the evil and do not exercise that power; but it is to be hoped that the people will ere long relieve themselves of that responsibility.
The monopoly of the natural earth and its God-given resources is the colossal crime of modern civilization, beside which all other oppressions of the poor are insignificant. Land is the exclusive source of human subsistence. All wealth, all means of physical subsistence, are extracted by labor from the natural earth. Indeed, man is a land animal in every sense. His food, his clothing, his shelter, his very body, all come from the land and all to the land return again. He must live upon the land and from the land, if he lives at all. Even the sailor and the aeronaut are not exempt from these conditions of human existence, for the decks trodden by the one and the bars and ropes which support the other are of land.
The right to life, which we all regard as sacred and inalienable, cannot be more sacred than the right of access to the exclusive means by which life can be supported. "You take my life when you do take the means whereby I live."
Yet, in this land of unexampled and unparalleled political liberty, a few men own and control the only source from which the masses of the people can draw their subsistence.
Those few have, therefore, the unnatural power to dictate the terms upon which the masses of the people of this country can live — to fix the terms upon which they may have access to the natural resources that the Creator made necessary to the support of their lives. The Creator not only made and freely gave those resources as a common heritage to all his children for their support and sustenance, but he is constantly from day to day replenishing and improving them by the operation of his natural laws.
The creative power, by its changing seasons, by its sunlight and its rains, and its drifting winds, by. its processes of decay in the vegetable and the animal world, is ever building up and replenishing the elements of the land that yield subsistence for mankind.
The unquestioned legal right of our landed class to entirely exclude their fellow-citizens from the lands of our country involves the power to inflict all oppressions less than such exclusion.
We have, therefore, under the forms of the greatest political freedom, a land system which creates an absolute despotism, under which the land-owning classes are lords of the industries, the liberties, and even the lives of their landless fellow-citizens.
It is in connection with this institution and this condition that we must consider the question of Chinese immigration. To consider the question abstractly is not to consider it at all. Upon the abstract question of human rights we are practically agreed.
HOW LABOR IS DEGRADED.
The condition of land monopoly prevailing in this country tends to fix the wages of all labor according to the standard of living of the lowest class of laborers seeking employment in the country.
American labor is no longer free, because its natural opportunities for self-employment, although they are measureless and inexhaustible, as the gentleman from Massachusetts [Mr. Morse] has said, are closed against it by monopoly. It can no longer escape from an unsatisfactory labor market, but, in spite of the fact that wages bear no relation whatever to the value of labor, it must bid for employment against the cheapest labor that is offered there.
The tendency and the end of such competition in an over-crowded labor market where there is still an army of unemployed laborers, after all demands for labor have been supplied, is to reduce all wages to the line at which the unemployed surplus, facing the alternative of beggary and starvation, are willing to work.
I have seen the whole problem of labor's degradation worked out in practical life before my own eyes. Thirty years ago, sir, labor in California was comparatively free, because land was comparatively free there. Labor was then paid according to its production and not according to the lowest standard of living prevailing among the laborers as now. It was then worth what it produced and it was paid accordingly.
Laborers being then free to go upon the virgin soil and build their homes and establish their own industries, and being able there to comfortably feed and clothe their families and to educate their children in the standard branches of useful learning, were not obliged to remain in the labor market when it offered less favorable conditions. Then California was labor's "Promised Land." Then California was the last rampart from which the boasted and really glorious "standard of American labor" has been permitted to float.
Then there were in our land no tramps, few paupers, and no surplus labor in enforced idleness.
Then sparseness of population and the consequent lack of social advantages imposed the only hardships that were known. What wonder that those who knew the freedom and the happiness of those conditions yearn for their return!
I saw the change of social conditions come. I saw the shadow of land monopoly steal over and encompass our Golden State. I saw a few hundred men become the absolute owners and masters of her great natural resources, that were manifestly intended by their Creator to furnish homes and subsistence to 40,000,000 people. I saw an empire of her best and richest land pass by act of Congress under the dominion of a single, soulless corporation. I saw the gates of natural independence in home and industry closed against American labor.
I saw labor driven from its lucrative and independent retreats in the mountains and valleys into the markets of the cities and towns, there to be sold as a commodity at prices fixed by the laws of trade.
I saw the wages of American labor changed from the value of. ita product down to the price fixed by the alternative of pauperism, while the wealth-producing power of labor was increased, on the average, in all departments of industry, elevenfold.
I saw the beneficiaries of monopoly manipulating the labor market to keep the price of labor down. I saw them importing, in tens of thousands, the coolies of China, not for the benefit of the Chinamen, as Eastern philanthropists persist in believing, but for the double purpose of bearing the labor market, by maintaining a surplus and of teaching American laborers to live on the rations of Asiatic slavery. These beneficiaries, let me say to the gentleman from Kentucky [Mr. McCreary], are the Californians whose brass bands and streaming banners heralded the dawn of Asiatic slavery on the Pacific coast in the ratification of the Burlingame treaty; and they, sir, would again furnish bands and banners to celebrate the resumption of their slave traffic if the Geary act were repealed.
In the great State of California, whose natural resources are confessedly capable of supporting 40,000,000 people, I saw the horrors that are supposed to result only from overpopulation, prevailing with a population of only 1,000,000.
I saw the millionaire and the tramp, contemporaneous menaces tp our civilization, arise out of these conditions.
I saw the millionaire, without productive effort on his part, become a multi-millionaire, upon the tribute commanded by his purchased and granted privileges; and I saw the army of pauperism growing as he grew, and growing because of the conditions that made him grow — recruited by thousands from the ranks of unemployed labor — a ghastly procession of vice and crime, and rags and filth, and torment and despair, drifting listlessly, as "flotsam and jetsam" on the tide of our civilization, to whatever goal a just God may deem suitable at the close of their earthly hell.
These are the results as I have seen them on the Pacific coast, of land monopoly, supplemented by the importation of Chinese slaves. These are the conditions which we seek to mitigate by the enforcement of the Geary act.
The picture that I have drawn is no "distorted vision," no "distempered dream," but a stern tragedy in real life enacted in the open light of day. An awful tragedy on which the curtain rose within my memory, and upon the last act of which — the final triumph of humanity over monopoly — I hope to see the curtain fall within my lifetime.
These results of land monopoly are not (excepting the Chinese slavery phase) peculiar to California or the West.
They prevail throughout the civilized world, wherever our land system prevails; but in the older sections of our country the change from free conditions antedates the earliest recollections of the generation now upon the stage of public life, and the Chinese phase of our Western problem has no parallel east of the Rocky Mountains.
But it has a striking parallel in the history of the decline and fall of the civilization and power of ancient Rome.
Macaulay tells us that "in the brave days of old," when Rome was mistress of the world; when to be a citizen of Rome was esteemed the proudest privilege of manhood, her "lands were fairly portioned" among her citizens. In the period of her decline and fall the lands had become the property of a few great landlords who employed slaves to work them. The landless citizens, thus excluded from the poor privilege of working as laborers upon the lands which once their fathers owned, drifted helplessly to the cities and towns, and there, in the helplessness of enforced idleness, they sank into pauperism and vice. Their debased suffrage became mere merchandise in the market, thus extending instead of controlling the powers of the monopolists. The soldiers of Rome became supplicants for alms, and their children hereditary paupers. The outer form of her official life alone preserved the semblance of Rome's departed glory. Then Rome fell, and, over the sepulchre of her once splendid civilization, her epitaph was written: "Latifundia perdidere Italiam" ("Great estates ruined Italy").
Shall history be permitted to repeat itself? Shall the lords of our land be permitted to work it with slave labor? Shall they be permitted to exclude our brethren, and our fellow-citizens from the poor privilege of earning their living as hired laborers upon the land in which, by natural right, they have an equal interest with the landlords themselves?
Shall they be permitted for their private gain to bring upon our country the curse that shattered the Empire of Rome? Shall they be permitted to turn our civilization backward, and make the ages of its development droop again?
No; this is our country, this is our civilization. Their preservation is our first, and our highest duty, and is the truest friend ship to mankind.
We of the West do not yield to the people of New England in love of humanity. As a native son of New England I glory in her devotion to the cause of liberty and civilization. Our warfare is not against the unfortunate Chinamen. We would rather help them than hurt them.
We are struggling to preserve our own people from the hell of slavery that yawns beneath them. That accomplished, we will, in proportion to our numbers and our means, match every dollar and every effort that New England will contribute for the enlightenment and civilization of the Chinese, and for the betterment of their moral and social condition. Until American labor shall be made free we demand that it be protected from the competition of slavery. The emancipation of our own labor is the only just alternative for the exclusion and deportation of the Chinese. This brings me to the discussion of that alternative — the emancipation of labor.
The gentleman from Massachusetts [Mr. Morse] asked: "Who is responsible" for the condition of land monopoly prevailing in this country, and I answered that the people were responsible, because they have the power to correct the evil and do not exercise that power.
The question is pertinent and important, because if the greatest evil of Chinese immigration results from faults in our land system, it may well be asked why we do not cure those faults and let the Chinese remain.
The gentleman's question, touching as it does the very heart of the great social conflict now agitating the civilized world, deserves a more complete and a more detailed answer.
The remedy which I propose for the evil of land monopoly is simple, just, practical and unquestionably sufficient. It is this: To appropriate to public use, by taxation, for the support of our Federal, State, and municipal governments, the entire rental value of all land, irrespective of improvements, and to abolish all other taxes.
Would that be just? If it would not be just it would not be expedient. I hold that no permanent good ever resulted from an act of injustice. "Never yet did men or nations prosper finally in wrong." Entertaining these views and believing with Daniel Webster that "Justice, sir, is the great interest of man on earth," I am fully convinced, after mature deliberation, that the remedy is not only just in itself, but that it embodies the only means by which justice can be permanently and universally established among men.
Land is the common heritage of all mankind. It was freely given by the Creator, with all of its elements and all of its powers, for the equal use and sustenance of all mankind. It was not given to any one generation, nor to any class or classes in any generation, but equally to all mankind, from the first child of nature to the last human creature who shall inhabit the earth.
Land is the common heritage of every child of God — not as the heir of his natural father, not according to the possessions or the will of his natural father, whose right to land perishes with his own life — but as the direct heir of the Universal Father, from whom the right to life, to liberty, to air, to sunlight, are likewise directly inherited.
The true province of government is to regulate the use of this heritage by its citizens while preserving to each his equal right therein.
Why do men monopolize land?
To cure the evil of land monopoly the motive for it must be clearly understood in order that the incentive may be intelligently removed. Is the motive self-aggrandizement, or is it malicious, or is it mercenary? Our common experience is alone necessary to determine the question.
The motive is almost wholly mercenary. The desire for power over other men has its influence, hut it is purely incidental.
Profit, either present or prospective, is practically the sole inducement to land monopoly. That profit is yielded either in present groundrent or future enhancement of the land value.
What is groundrent, and why does land, the natural elements and qualities of which remain unchanged, continue to advance in value in all growing communities?
Who produces the rental value of land? What influence has Chinese slave labor upon groundrent?
Groundrent is the landlord's share of production. It is the tribute charged by the owner of the natural earth for allowing others to use it. Its measure is, referring to any given piece of land: "the excess of its product over that which the same application can secure from the least productive land in use."
In practice it may be generally stated that the rental value of any given piece of land is the difference between the average value of its product and the average cost (labor and capital) of production, for the period of the lease.
It is therefore manifest that whatever increases the value of the product, without increasing the cost of production, increases groundrent, as an increased demand for the product, resulting from increase of population or other cause, or an improvement in the quality of the product.
It is also manifest that whatever reduces the cost of production tends to increase groundrent, as: a reduction of the wages of labor, inventions of labor-saving machinery, and improvements in the methods of combining and subdividing labor.
Thus it is that, under our land system, every contribution to material progress, as well as every reduction in the wages of labor, attaches itself to the land and inures to the benefit of the landlords in increased groundrent.
For example, let as suppose that a given farm, or a shop or store site, which can be operated by one man, will yield a groundrent of $150 per year, when the standard wages of the required labor are $2 per day; if the wages of such labor be generally reduced to $1.75 per day, the cost of productively using that land will be reduced about $75 per year, and the amount of that reduction of cost can be added to the rent, unless, as another result of the reduction of wages the price of the product also goes down in the market.
Making an allowance of $40 on account of the reduction in the price of the product (a very liberal allowance), we have a net saving of $35 per year, which the landlord can add to his rent. This is the primary effect, only, of the reduction of wages upon the value of land. There is another effect equally important. A piece of land which will yield a certain amount of rent annually as a net income, is worth as an investment twenty times the amount of its annual rent.
Therefore, an addition of $35 per annum to the rental value of the land in question would increase its market price $700.
Thus, the reduction of 25 cents per day in the poor man's wages not only lessens his purchasing power to that extent, but actually adds $700 to the price of the home which it is his life's ambition to secure.
This is the result which every reduction of wages brought about by Chinese competition has produced in California.
This is the result which, with greater or less intensity, is being produced by land monopoly everywhere.
The displacement of labor by labor-saving inventions drives the displaced laborers into the market to swell the army of the unemployed. The natural opportunities for the redistribution of the labor thus displaced being closed by monopoly, competition among laborers is intensified, wages reduced, and rent correspondingly increased.
This is the process which is enslaving labor and exalting landlordism everywhere.
We have now seen, in brief outline at least, what groundrent is and how it arises. We have seen that it is an increment of value produced and imposed upon the natural earth by the presence, industry, enterprise, inventiveness, and virtues of the whole people of each community in which it arises.
We have seen that it absorbs all of the general advantages of the material progress of the whole people, that to the landlord it is in every sense an unearned increment to which as landlord he does not in any way contribute.
Merely permitting labor to use land productively is not a contribution to production, because the land, with all of its useful elements, was given to mankind by God, and would have been accessible to labor if the shadow of landlordism had,never darkened the horizon of our civilization.
The landlord is not entitled to the rental value of his location, because he does not produce it.
The community is entitled to the rental value, because the community does produce it. Every value belongs of natural right to him whose labor or service produces it, and without whose labor or service it would not have existed. It is immaterial whether the value be produced by one person, or by ten persons, or by a million persons. It belongs to those who produce it — individually, if it be individually produced; collectively, if it be collectively produced.
The argument in favor of leaving the accrued rental value of land, that is, the unearned increment which has already attached to land, to the present owners, is based upon a mistake of fact. There is no such thing as an accrued rental value attaching to any land. All future rental values of land depend upon what the people will do in the future, and not at all upon what they have done in the past.
It is, therefore, just for the people who produce the rental value of land to take that value by taxation for their public uses.
This rule applies to all land whether it be owned by landlords, or by speculators, or by its immediate occupants.
The value which the public gives to the location should be paid to the public by the person who is in a position to control or appropriate that value.
As the landlords have confessedly no moral or legal right to compel the people to put forth the enterprise and industry necessary to produce and to maintain the rental value of their lands, they certainly can have no moral right to privately appropriate any of the direct or indirect results of such enterprise and industry as the people may voluntarily put forth.
As to improvements, the man who plants an orchard, or digs a ditch, or builds a house or a fence should pay no more taxes upon his orchard or his field or his lot than he would be required to pay if he had made no improvements whatever.
The value of the improvements belongs to the man who makes the improvements, by the same rule of right which awards the value of the location to the people who produce it; and a wise concern for the public interest dictates the encouragement of improvements by exempting them from taxation, rather than the discouragement of improvements by placing any kind of burden upon them.
The man who builds a house or plants an orchard increases the means of satisfying human wants, and is a benefactor of mankind in spite of the fact that his motive may be purely selfish; while the man who keeps a foot of useful land out of use works a corresponding injury to mankind.
This expediency of raising all public revenues by a single tax on land values, as a substitute for all other forms of taxation, further appears in the fact that it would save nine-tenths of the expense and waste now involved in levying and collecting taxes upon personal property, upon imports, and upon business privileges, all of which taxes are regularly shifted from the primary payers to the ultimate consumers — falling principally upon the overburdened farmers and laborers of our country.
Besides it would require men to pay taxes according to the advantages which they receive from the community, and not according to their necessities, as now.
As such a tax would bear upon land according to its value, and not according to area, and as the value of farming land is very small, by comparison with the value of land used for commercial and other industrial purposes, the small farmers — the most heavily burdened class under our present system — would find the single tax less in volume and far less oppressive in method than the complex and accumulated burdens of the direct and indirect taxes which now fall upon them with notorious inequality.
A tax on land values is the only property tax that always falls with proportionate equality upon all owners and that cannot be shifted from the person paying it to the ultimate consumer or user. The reason that it cannot be shifted is that while a tax on any other kind of property tends to check its production, and thus, by the law of supply and demand, to increase its price sufficiently to cover the tax, a tax on land values forces idle land into the market, increasing the supply of land offered for sale or lease, and thus, by the same law of supply and demand, reducing, instead of increasing, the rent. Heavy taxation of houses increases the rent of houses by the amount of the tax, but heavy taxation of land values decreases the rent of land. All political economists are agreed on that proposition, and it needs no argument.
Such a change in our taxation laws would not be an impairment of any vested right of landowners, because the power and right of taxation, to the extent of taking the entire rental value, whenever the public good may seem to require it, has been absolutely reserved to our governments, national and State, against every foot of land that has ever passed into private ownership in this country.
The effect of such a system of taxation upon the monopoly of land in this country must be instantly apparent. It would at once make such monopoly unprofitable and wasteful to the monopolist. It would at once take away the only incentive that now exists for the monopoly of land. It would compel all landowners to use their land productively, or at once let it go to those who would so use it.
Every user of land could afford to pay the margin of production or economic rental value of his land in taxes; but no man, above the mental level of a fool, would pay taxes amounting to the economic rental value of his land for the mere purpose of monopolizing it.
It would put an end to land speculation and the train of evils that follow ever in its wake. It would put an end to the collection of speculative rent, to booms, and to industrial depressions.
It would encourage the productive use and improvement of lands by relieving them of all public burdens, while insuring permanency of tenure, security of improvements, and security in the fruits of all productive effort.
It would forever settle the conflict between capital and labor and, by improving the condition of labor, put an end to strikes and boycotts and lockouts.
It would make land freer to labor than it was in California forty years ago; freer than it was on the Atlantic seaboard two hundred years ago.
It would restore the once cherished dignity of American labor, and the grand individuality which was once the distinguishing characteristic of American citizenship.
As a relief to our overcrowded labor markets, it would be equal to the discovery of a new and free and fertile continent in the Pacific Ocean, and its advantages would be more permanent.
The people have not yet sufficiently learned that labor never can be free except where land is free.
Knowledge must ever precede right credence, and right credence must ever precede correct political action.
The people are reading and studying the philosophy of Henry George. Progress and Poverty, which a distinguished English writer has happily denominated "a glorious gospel of justice," is steadily and rapidly changing the credence of the world on the subject of land tenure.
It is the herald of the next great step in the order of social evolution.
It is a practical development of the principles of Jeffersonian Democracy. It is a justification of our Declaration of Independence. It is a vindication of "the ways of God to man."
The House having under consideration the bill (H. R. 1) to repeal a part of an act approved July 14, 1890, entitled, "An act directing the purchase of silver bullion and the issue of Treasury notes thereon, and for other purposes":
Mr. MAGUIRE said:
Mr. Speaker: This extra session of Congress has been called upon the theory that the industrial and commercial depression prevailing in this country has been caused by the silver-purchase provision of the so-called Sherman act of 1890, and that good times can be restored by the repeal of that provision.
The advocates of a single gold standard have made a desperate attempt to convince the people that the prevailing hard times are due to the disposition manifested on the part of our government to favor an extension of silver coinage, and to the fear that the displacement of gold in our National Treasury by silver bullion, under the provisions of the silver-purchase act, will naturally and necessarily force our Government to a largely extended coinage of silver, and thus enable the debtors of this country to pay their obligations in a depreciated silver currency. But the evidences of history and contemporaneous events are all against that claim. They show as conclusively as human evidence can show that our present industrial and commercial condition is not due to any legislation in this or any other country subsequent in the year 1837.
They further show that our deplorable industrial condition, with all its symptoms of crisis and panic, is very like the periodically recurring industrial depressions of the last sixty years. They show that the social upas tree, whose bitter fruit is now spreading ruin and desolation throughout our fair land, had its root and origin in laws or conditions which have existed in this country for at least sixty years. Our industrial depressions may be increasing in intensity, but they are not all changing in kind.
This is the seventh industrial depression through which we have passed in this country within sixty years, and each of these depressions has extended to all of the leading civilized nations of the earth. They have become a feature of modern civilization, and recur at intervals of from eight to ten years, with almost the regularity of changes in the moon's phases. They produce greater havoc and misery than the periodical wars and pestilences of the earlier civilization. They were unknown in the earlier stages of our civilization, and they are growing more frequent and more severe with the development of all that is considered good and glorious and useful in this era of unexampled progress. In earlier ages they had no hard times, except when crops failed, resulting in famine, or when wars or pestilences interrupted the industries of the people.
But industrial depressions come upon us now when nature smiles, when our harvests are most prolific, when we are at peace with the world, in the enjoyment of general good health, and when every natural condition seems radiant with the promise of prosperity and plenty. Suddenly thriving industrial and commercial enterprises become unprofitable. The capitalists who conduct them find that when their rents and wages have been paid out of their production they are not getting interest upon the capital which they have invested. They call a halt. They economize. They demand that labor shall share the loss which they are suffering. A conflict between capital and labor ensues, with its incidents of strikes, boycotts, and lockouts, unhappily sometimes attended with bloodshed and destruction of property. Compromises are from time to time reached, which are in turn broken as new conditions offer advantages to either of' the contending parties.
The waste of the conflict takes away whatever return might otherwise come to business. Production is checked in that quarter and the producing laborers are thrown out of employment. The purchasing power of the laborers thrown out of employment is destroyed. Their demand for other commodities is checked by the destruction of their purchasing power, and the production of such other commodities is likewise checked. These effects of the great primary cause speedily communicate their influence through the whole network of the world's productive agencies, diminishing profit by checking demand for productive effort. With the cessation of production in one quarter or in one line comes a corresponding suspension of demand for commodities of other kinds. The merchant cannot sell his wares because his customers have lost their purchasing power. He cannot collect the obligations due him for the same reason, and he cannot pay his debts to the wholesale merchant because he cannot collect his dues from his customers.
The wholesalers have arranged for commercial credit on a basis perfectly safe so long as sales continue and payments are made within the periods of ordinary trade credit, but wholly unsafe when collections from retail merchants fail. The wholesaler is pressed for the payment of his obligations. He in turn presses the retail merchant. The retail merchant presses his customers, but his customers are out of employment, not only unable to make further purchases according to their necessities, but unable to pay their comparatively small debts for past purchases.
Universal stagnation ensues. Merchants and manufacturers continue nominally to carry on business, although profits are gone. They pay rent out of their capital for the sole purpose of saving their locations, which have become an important part of their business. The glimmering taper of hope allures them even to the vortex of general bankruptcy. Financiers become alarmed for the safety of their investments and for the sufficiency of securities. They insist upon the sacrifice of securities for the satisfaction of their claims. The millions of small depositors in savings banks are forced to draw upon their bank savings to meet their obligations and to pay the expense of living, which in good times are paid out of their daily wages.
Those who do not need their deposits for such immediate use begin to feel that the risk of the bank's stability is too great for the interest which the deposits yield. They attempt to withdraw their deposits, panic seizes upon the minds of depositors generally, and run after run is precipitated upon such banks, which, having the bulk of the deposits loaned upon securities on which they cannot immediately realize, are forced to the wall. Their suspension of payment increases the panic and adds to the general distrust. Credit, upon which nine-tenths of our business is done in good times, is entirely withdrawn.
Every firm, corporation, and individual is employed in gathering and hoarding such money as can be obtained to meet the exigencies of his or its own business, for in the best of times our industrial and commercial systems are honeycombed with debt, and a capital of $10,000 floats a credit of at least $30,000. This enormous contraction of the instrument of exchange is fatal to what remains of business. The business of the whole country finally collapses under the strain. Then a new adjustment of rent, interest, and wages is made, and the wheels of industry and commerce revolve again, bringing the blessings of prosperity and peace. This is the history of every industrial depression, and the present depression is not in any respect exceptional.
Russell Sage, a distinguished financier, is reported as saying that this depression is exceptional because it has "touched bottom," as he expresses it. But every industrial depression of which I speak has "touched bottom"; that is to say, it has ultimately reached the land-owning class and has compelled that class to largely reduce its groundrent in order to give business a chance to pick up again. That is "touching bottom." Then by some process, as mysterious to the general observer as the beginning of the depression, times improve, business gets better, credit grows stronger, and an era of prosperity ensues which gives promise of perpetuity. For four or five years it continues to rise, then it is changed again, and the history of the former depression, through the course of another three or four years, repeats itself with marvelous exactness.
It is idle to attribute these depressions to local or temporary causes. Their cause must be as general as its results. A cause affecting this country alone will not explain an industrial depression existing at the same time in England, France, Germany, Belgium, and in all of the English colonies that girdle the world. Neither is it reasonable to attribute one of these depressions to a cause which manifestly did not contribute to any of the other precisely similar depressions occurring before it. During the past fifty-six years there were six of these industrial depressions in the United States, extending with equal virulence to Great Britain, including her colonies, to France, to Germany, and to Belgium.
A brief history of all of these depressions will be found in a volume entitled "Industrial Depressions," published by Honorable Carroll D. Wright, our National Commissioner of Labor Statistics, in 1886. The first of these depressions reached its climax in 1837; the second about the year 1847; the third about the year 1857; the fourth in 1866; the fifth commenced in 1873 and continued to 1879, reaching its climax about the year 1877; the sixth reached its climax about the year 1884. All of these depressions swept over all of the countries which I have named. The present depression likewise prevails in all of these countries. It commenced in the latter part of 1889, and has, we may reasonably hope, reached its climax at this time.
The McKinley tariff camp into effect shortly after this depression began, but it did not cause the depression. We had similar depressions under the low tariffs of 1847 and 1857, and under the high tariffs of 1866, 1877, and 1884. At most, the McKinley act has intensified the present depression. The cause of these depressions must be immediately associated with the primary factors in the production and distribution of wealth, and it must pervade the whole system of wealth distribution throughout the civilized world.
Philosophers, faithful in the pursuit of Truth and daring to follow her wherever she may lead, have traced to their primary and universal cause these periodical calamities which blast the happiness and desolate the homes of half the people of the civilized world once in every decade. That cause is the constantly recurring pressure of groundrent, as a factor in the distribution of wealth, against the profits of capital and the wages of labor.
The factors of all production are land, labor, and capital; land being the passive factor, freely provided, with all of its potential elements, by the Creator. Labor and capital are the active factors, contributed by human energy.
The factors of distribution are landlords, laborers, and capitalists, and their shares are called rent, wages, and interest.
It is manifestly of the utmost importance that the distribution of the wealth produced among these factors should be equitable.
If the distribution be inequitable it will certainly discourage the productive effort of the factor which receives less than its share.
For example: If labor should insist in taking the entire product in wages, landlords and capitalists would not assist it in production, because it would cease to be profitable to them.
If capitalists should insist upon taking the whole product, landlords and laborers would not assist in production, because it would cease to be profitable to them.
If landlords should insist upon taking the whole product as rent, laborers and capitalists would not further assist in production, because it would be unprofitable to them. And, as labor and capital are the only active factors in wealth production, productive effort would thus be brought to an absolute standstill.
These, of course, are extreme suppositions, but they bring strongly into view the universal rule that whatever tends to make wealth production unprofitable to any of the active factors in such production, tends to check and finally to stop productive effort on the part of that factor.
Laborers will work as long as they can get for their labor the standard wages fixed by competition, although they know full well that such wages are greatly less than their equitable share.
Capitalists will invest in productive enterprise and will continue such enterprise just as long as it yields, with ordinary security, the standard interest fixed by competition among capitalists.
Groundrent is the margin which production in any locality yields above the standard wages and standard interest necessary to induce laborers and capitalists to carry on the productive enterprise. When production yields no such margin there should be no groundrent. This law of rent, as accepted by all political economists, is thus stated:
The rent of land is determined by the excess of its produce over that which the same application can secure from the least productive land iu use.
This law is universal and applies to the locations or sites of stores and factories on which wealth is produced, as well as to rural lands from which wealth is produced.
If groundrent at any time rises above the margin of production, it is manifest that it must do so by eating into the standard wages of labor, or the standard interest (sometimes called profit) of capital, or into both wages and interest.
It is a matter of common observation that rent always advances in good times; that it keeps advancing while times are improving, and that it is always very high when times begin to get hard.
Groundrent is a tide that rises with prosperity and as high as prosperity, absorbing its fruits, without in any way contributing to their production, and it finally strangles the productive forces upon which it feeds. It takes such a large share of the wealth produced by labor and capital that it makes production unprofitable to the factors — labor and capital — which produce all wealth,
Labor and capital struggle with each other in vain attempts to shift the burden of excessive rent. The land monopolist who exacts the rent tribute is so strongly intrenched that neither labor nor capital thinks of trying to beat down the speculative rent tide which is strangling them both. Soon the wasteful struggle between, capital and labor ceases by the abandonment of production. In the midst of conditions which ought to make production uncommonly profitable, excessive toll in the form of groundrent has made it absolutely unprofitable. The laborer, willing to work, is forced to stand aside with his arms folded in unwilling idleness, consuming the small savings of his short period of prosperity, and trembling for the fate of his once happy family when his little store shall be exhausted.
The capitalist, with his investment idle, paying the exorbitant rent out of his wasting capital in order to save his location, stands half hoping, half despairing, waiting for the uncertain issue of bankruptcy or a return of good times.
The prior prosperity has brought the same pressure home to every other commercial and industrial enterprise in the civilized world. The checking of production at one point reacts upon the wages and profits of industry and commerce at all other points.
This destruction of the purchasing power of producers of one commodity lessens demand for other commodities, and consequently lessens the profits of their production; while the speculative rent, or toll, for the privilege of producing remains undiminished.
Production, by reason of this unnatural pressure of speculative or excessive rent, gradually becomes unprofitable everywhere. Stagnation ensues, and labor and capital, in utter helplessness, await the inevitable hour of their universal bankruptcy — the hour when landlordism, having absorbed their substance, driven thousands to suicide, hundreds of thousands to pauperism, and ruined and dismembered untold numbers of families whom God had blessed with love and happiness, finally reduces groundrent to the economic line and thus gives another breathing spell to the wealth-producing classes.
The moment that rent is reduced to the economic line business of every useful kind becomes profitable again, because every industry can, at all times, afford to pay, as rent, the margin of its production, while no business on earth can afford to pay more than that margin.
I have now given you, in general outline, the history and the philosophy of our industrial depressions. There is no mystery about them. They have been accurately prophesied upon scientific principles. They have been watched and studied in their courses. They have all disclosed the same symptoms, and have all produced the same results.
Their first outward symptoms are conflicts between capital and labor (natural allies in production), and they all end in financial panic — the natural and reasonable outcome of the prospective or present general bankruptcy of the debtor classes.
Amid the desolating depression of the last three years, rents have been collected at the rates prevailing during the prosperous year 1889. Every merchant and producer in the land (except the insignificantly small number of landowners among them) has been paying more than the margin of his production in groundrent.
Not in legislation for the contraction or inflation of our currency, but in legislation to prevent and destroy land monopoly, lies the cure of industrial depressions and the salvation of our free institutions.
The change may not come at once. It may not come in time to prevent another industrial depression. But it is coming, and the morning of the twentieth century will bring to us an era of justice and liberty, and peace, and permanent prosperity, such as the world has never known.
In that era mere privilege shall cease to collect toll from the producers of wealth, and service alone shall command a distributive share in the wealth produced by labor.
I have no idea that we shall be able to do anything at this session of Congress to relieve the existing depression.
Laws wiser and more universal than ours will cause a reaction to better times, as the same laws brought the reactions after the crises of 1837, 1847, 1857, 1866, 1877, and 1884.
This reaction will come regardless of what we may do or fail to do.
Some day it will be the province of this Congress, and of our State Legislatures, to remove the primary cause of these periodical scourges of our country and of our civilization.
In that day the triumph and the vindication of Democratic principles, of the principles of Thomas Jefferson and his illustrious disciples, will be complete, and equal rights and natural justice will be irrevocably established among men. [Applause.]
The House being in Committee of the Whole on the state of the Union, and having under consideration the bill (H. R. 4864) to reduce taxation, to provide revenue for the Government, and for other purposes, and the question being upon an amendment thereto offered by the gentleman from Tennessee (Mr. McMillan), providing for a tax on incomes, etc., the following proceedings were had:
MR. MAGUIRE. Mr. Chairman, I offer the amendment which I send to the desk. The amendment was read, as follows:
Amend the amendment by striking out sections 1 to 18 thereof, both inclusive, and inserting in lieu thereof the following:
"And be it further enacted, That a direct tax of $31,311,125 be, and is hereby, annually laid upon land values in the United States, and the same shall be, and is hereby, apportioned to the States and Territories and District of Columbia, respectively, in proportion to population as ascertained by the census enumeration of the year 1890.
"Sec. 2. That the said direct tax laid by this act shall be assessed and laid on the value of all land exclusive and irrespective of the improvements thereon; Provided, That all lands belonging to the United States, or to any State, county, or municipality, shall be exempted from assessment and taxation under this act; And provided further, That all land subject to taxation under this act shall be valued and assessed, for the purpose of taxation, at its full market value, on the first Monday in March of each year, the valuation for the fiscal year commencing on the 1st day of June, 1894, to relate to the first Monday of March, 1894.
"That, for the purpose of assessing said tax and collecting the same, sections 9 to 12, both inclusive; sections 14 to 48, both inclusive, and sections 53 to 58, both inclusive, of that certain act entitled 'An act to provide increased revenue from imports to pay interest on the public debt, and for other purposes,' approved August 5, 1861, are hereby re-enacted and made of full force and effect hi so far as they provide for the assessment and collection of direct taxes on lands and lots of ground, and for any and all methods and procedure in the levying, collection, and enforcement of such taxes."
Mr. MAGUIRE (continuing) said:
Mr. Chairman: The arguments in support of the pending amendment have all proceeded upon the theory that the proposed tax upon incomes, above $4,000 per annum, will compel the rich to bear a fairer proportion of the expenses of the Government than they now bear, and that the people will be satisfied with the accomplishment of that result. The people do, indeed, very much desire the establishment of such a system of taxation, and their claim for a more equitable distribution of the burdens of taxation is unquestionably just. But they are really desirous of substantial relief from the present power of the rich to use their wealth for the oppression of the poor; and they expert some measure of that relief to come to them through the income tax.
Such relief will not come from the income tax, nor will that change in our system of taxation even tend to curb the oppressive power of wealth. It simply puts a 2 percent tax mainly on the results of useful investments and of personal effort. The control of labor by wealth, in certain forms of investment, and the consequent unfairness in the distribution of the products of labor is a matter of infinitely greater importance to the people than the equalization of the burdens of government, which is sought to be accomplished by the income tax. I am in favor of the income tax, as proposed by the Committee on Ways and Means, because it is better than the system of taxation now prevailing; because the burdens which are laid by the income tax, wherever they may ultimately fall, are all for public uses, while under the tariff system three parts of the burden are laid for the enrichment of private individuals to every one part that is collected for public use.
As a choice between the income tax and any extension of tariff taxation, beyond that provided for in the "Wilson bill, I will unhesitatingly vote for the income tax.
But, sir, I seek by the amendment which I have just submitted to establish a system of taxation by which the revenues necessary for the support of this Government can be raised without any burden whatever upon either industry or commerce, and by which, at the same time, the power of accumulated wealth over labor will be destroyed. The power of wealth to oppress labor results almost entirely from the present investment of wealth in the control of the natural resources, from which alone labor can produce wealth.
Land is the storehouse in which the Creator has placed the raw materials of all wealth, and labor is the means by which those raw materials are changed into forms of usefulness for the satisfaction of human wants. Wealth is the result of labor applied to land, or to the products of land, and land furnishes not only this raw material for all wealth, but it constitutes also the home and the working place of all labor. All of these things the Creator freely provided for the use and sustenance and shelter and comfort of mankind by giving the land of the world, with its abundant resources, as an equal heritage to the whole human race. The same Creator made man a land animal. He must live upon the land, and from the fruits of the land, if he shall live at all. All of his food and clothing and shelter, and every other thing that will tend to satisfy his wants, natural and acquired, come from the land. Indeed, his whole physical body comes from the land, and goes back to the land again at the close of his life.
Separated from the land, man must perish, just as a fish would perish on being separated from the water, which is his element. Therefore, if man has a natural and inalienable right to life and to liberty and to the pursuit of happiness, he must have a natural and equally inalienable right to the means which the Creator, who gave him life, has freely and abundantly provided for his support. There can be no right to life more sacred than the right to the means of sustaining life. "You take my life when you do take the means by which I live." Liberty is impossible to one man so long as another man controls his means of living.
It does not matter whether the dominant person holds a bill of sale to another as his chattel slave, or holds an absolute title to the only means that the other has of sustaining his life, the dependent man is just as truly and just as completely a slave, in the latter case, as the chattel is in the former. Therefore, it follows that whenever, in any country, one class of men become the owners of the land, all other classes in that country are subject to their dominion, no matter what other conditions of freedom exist. The owners of the land have the power to fix the terms upon which all non-landowners may live in the country, and have the power, without performing any productive labor themselves, to compel all producers to give up to them, without consideration, such share of the wealth produced by labor as they (the landowning class), guided only by their own avarice, may determine.
This unnatural power of the landed class over the producers who are not landowners, naturally and inevitably begets a system of industrial slavery such as now prevails in this country, and in all other civilized countries of the world. But land ownership gives something more than the mere present power to exploit and oppress labor. In all growing communities there is a constant upward tendency of land values. This growth of land values results entirely from the presence, industry, enterprise, and virtues of the whole people of every such community. Land values are never produced by the individual owners of the land. They grow with the growth of population and in proportion to the enterprise and industry and inventiveness and virtues of the whole people. They result entirely from what the people, as a whole, do.
That value attaches to all land of the same character similarly situated, no matter whether the owner uses it or holds it in idleness; no matter whether the owner resides upon it or resides in some foreign country; no matter whether he daily cares for it or has never seen it. The people produce the value and the private owner is permitted to appropriate it to his private use.
This ever-growing value constitutes today a source of private income greater than all other incomes from invested wealth in this country combined; yet, the proposed income tax bill does not reach it at all, and it cannot be reached by any income tax that has been suggested.
Political economists call this steady increase of land values, resulting from public effort for the enrichment of private owners, the "unearned increment" of land. The private ownership of land is the only means by which individuals can secure to themselves the unearned increment, and this induces men to speculate in land that they do not want to use. Speculation in land closes its natural resources against labor, and places labor at an unnatural disadvantage in the struggle of life. It takes away from labor the natural opportunities which the Creator provided for it. It destroys the independence of labor and renders it a helpless commodity in the market, whereas, with those natural resources open, upon anything like the terms upon which the Creator gave them, labor would be free and independent as the Creator intended it to be.
The laws therefore, which permit private individuals to appropriate the unearned increment of land are the cause of land monopoly. Men do not monopolize land in order to oppress their fellows, although the effect of monopolizing it is to oppress and starve and degrade and injure the landless people. Men monopolize land solely because it pays to monopolize it. So long as the community allows the speculator to take to himself the unearned increment which the community gives to land, it will be profitable to monopolize land.
There is no other form of investment in which wealth oppresses labor, for every other form of investment depends upon production for its return, and in order to secure its return, must in some way promote production, thus extending, instead of limiting, the opportunities of labor.
But investments in land are made remunerative by limiting the opportunities of labor. Land speculation is, therefore, the only form of investment that is really injurious to labor, and the increment resulting from it is the only private income that is produced entirely by the whole people. If, therefore, there is any form of investment that should be discouraged, it is speculation in land. If there is any form of investment from which the people are entitled to a share of the income, it is speculation in land; because, as I have shown, the income from that form of investment results entirely from the general enterprise and industry of the whole people and not from what is done by the investors.
My amendment proposes a tax on that unearned increment as a substitute for the taxes on other incomes prescribed in the bill which has been offered as an amendment to the Wilson tariff bill. It seems to me, sir, that I have already specifically shown the justice and expediency of confining taxation for the purpose of meeting the expected deficiency in our Federal revenues, to incomes from the unearned increment of land; but, I am fully aware, and this House is fully aware, that the purpose of my amendment is not at all limited to the trifling burden which it purports at present to lay upon the enormous land values of this country.
It is understood, by you as well as by me, to be the assertion of a principle, which, if conceded to be sound, must ultimately transfer the entire burden of all taxation for the purpose of supporting our Federal, State, county, and municipal governments, from all other subjects, to the value of the lands of this country; ultimately appropriating the rental value of all land, exclusive and irrespective of its improvements, to public use. It is meet and proper, therefore, that in the primary discussion of the question there shall be no evasion, no deception, no concealment of premises, no obscuring of issues, and no avoidance of questions that must be fairly and honestly met and answered in extending the principle which I have here asserted to the ultimate and logical conclusion which I have stated.
It means, unequivocally, the assertion of the natural and inalienable right of the people of this country, in all generations and at all times, to the lands of this country "which God hath given them." It is not, as has been erroneously stated, a claim that the lands should be held by the people in common use, which is impracticable in a condition of civilization, but that it should be held in common ownership, with private individual use in severalty, secured and regulated by the Government, as trustee of the natural common right.
In view of the broad scope and ultimate purpose to which this amendment but points the way, I will avail myself of the privilege accorded by the House, of fully and fairly, according to my ability, presenting in general the whole argument in favor of the ultimate purpose, of which I have avowed this amendment to be the suggestion. Before proceeding to that discussion I desire to say a few words further upon the income-tax measure, for which it is offered as a substitute.
The income tax, while it will be infinitely better for the masses of the people than any form of tariff taxation, will be a grievous disappointment to those who have been its most ardent and honest supporters. It will not in any way check or limit the power of wealth to oppress labor, because it does not at all reach the source of that oppression. I have shown already that it leaves untaxed the greatest of all incomes from invested wealth, namely, the ever-increasing value of land, a value that has increased thirty-fold during the last sixty years, according to statistics, in the United States.
In addition to these objections, the great bulk of the income tax, falling as it does upon the results of productive effort, and upon returns from capital in use, can be shifted from the primary payers to the shoulders of the poor. It will not stay where it is put. For example, a manufacturer makes a profit of $50,000 next year, upon which he will pay an income tax of $1,000. Will he ignore that item in figuring on his contracts, or in fixing the prices of his commodities? Certainly not; he will figure it as an expense of his manufacturing business, and he will, as a sensible business man, add it with his other expenses, and a reasonable margin for the outlay, and to cover the uncertainty as to the amount of the tax, to the prices of his commodities, and it will follow the goods until it is finally paid, with its added percentages, by the farmers and laborers who consume the goods.
So it will be with the merchant. He will shift the income tax just as he now shifts all taxes that are levied on his goods. So it will be with the banker and the money lender. They never pay taxes. If they are taxed they add the tax to the interest which they receive for the use of their money. It does not matter to the manufacturer or the merchant or the banker or the private money lender, or to the railroad or steamship company, whether the tax is levied upon their investments or upon the incomes from their investments. It is precisely the same to them. The laws of trade determine what their net returns shall be, and every expense that is added by way of taxation or otherwise will be added by them to their gross prices, leaving their net incomes just as they are fixed by competition in trade.
The proposed income tax will catch the holders of such present mortgages as are not overdue, but it will be shifted by all future mortgagees, whether making or renewing loans. For example, the net rate of interest or which money is now loaned on perfect, untaxed security is 2 1/2 percent per annum. That is the rate upon which loans are freely offered on untaxable bonds of the United States Government. Proportionately higher rates are charged on private loans to cover risk, expenses (including taxes), etc., etc., rising as high as 60 percent per annum. If a tax were laid on Government bonds equal to the interest which they bear, they would become at once a dead investment and nobody would buy them except at a discount.
In order to sell the bonds it would be necessary to increase the interest so as to leave 2 1/2 percent per annum above the taxes to which the bonds were subject. It does not matter whether you lay the tax on the bonds or on the income derived from the bonds, the effect is to burden the investment, and the interest must be increased or the bonds must fall to a discount. So it is with mortgages; so it is with all investments of capital. The investments or loans are made for the purpose of securing the net return which the laws of trade prevailing generally throughout the world give to such investments. In countries which give the greatest security and impose the lowest rate of taxes, or no taxes, upon investments, interest will be lowest, because money will flow to such country for investment; and money will flow away from a country imposing heavy taxes upon that kind of wealth until the rate of interest rises sufficiently to cover the tax imposed, thus leaving the net return which capital will yield to the investor in the most favorable country.
Under the proposed income tax even the landlords could shift a large portion of the tax falling upon them; for, although tax on the rental value of land generally cannot be shifted, and tends to reduce rather than to increase groundrents, tax on the rent of land in use only is a burden on the use and not on the monopoly, and it can, therefore, be very largely shifted. This tendency would be intensified under the proposed system by the tax on incomes derived from improvements on land.
The tax on incomes from personal earnings could not be shifted, but the proposed tax on nearly all forms of invested wealth could and would be shifted. The financial world lives on percentages. It calculates them closely, and it never bears a burden, however slight, which it can possibly shift to a customer.
The financier is a lightning calculator and his business is to see that the net return, for which his investment is always made; is kept clear of all burdens. You cannot tax capital nor incomes from capital (land is not capital) by any process, short of confiscation, that has ever been devised. It will either shift its burdens or leave the country whose laws are unfavorable to its investment.
A general tax on land values cannot be shifted (all political economists from Adam Smith to Henry George are agreed on this point), because it falls equally upon idle land, held for speculative purposes, and land which is in use.
The burden upon the idle land forces it into the market to be either sold or leased, thus increasing the supply of available land in the market, and, by the universal iron law of supply and demand, forcing the rental and selling price of all land down, even as the tax is increased. This tax cannot be evaded, because neither the land nor its value can be concealed and the land cannot be removed from the jurisdiction of the taxing power. Heavy taxation will never drive landed property out of the country and will never diminish its usefulness.
Instead of being shifted to the shoulders of the tenant or to the consumers of the products of land, a tax on land values would not only relieve labor and capital of the tax burdens which they now bear, but would increase their share in distribution, by providing them with locations for homes and industries and with raw materials for their production, on better terms than those on which they can now be secured.
My proposition to impose all taxes for public purposes upon the value of land, exclusive and irrespective of the improvements thereon, and to abolish all other forms of taxation, necessarily involves 'the idea that there is an essential fundamental difference between private property in land and private property in other kinds of wealth. We assert that there is such a difference, and that it is not in the power of man to obliterate it.
There is a natural right of ownership in the relation existing between everything produced by labor and the labor that produced it.
That right springs from every man's ownership of himself and of his mental and physical powers.
Owning himself, he has a natural right of ownership in the things and values that his own mental and physical powers produce, and he can manifestly, without violating any principle of natural justice, transfer his right in such things to another upon any terms which may be satisfactory to him. That is a matter with which neither society at large nor any individual can properly have any concern.
The utility which would not have existed but for the voluntary exertion of the producer should as a matter of natural justice be at all times subject to his control and to the control of those to whom he has voluntarily transferred his right.
But there is no such natural right as a basis for private property in land. No man made the land. It is the common heritage of all mankind. It was made, with all of its powers, elements, and resources, by the Creator, and freely given by Him, as an equal, common heritage, for the use, subsistence, and comfort of all mankind, in all generations, from the beginning until the end of the world.
It is, moreover, with air and sunlight, the only means provided by the Creator for the support of human life. The denial to any man of access to that natural source of subsistence is equivalent to a denial of his right to live, and any interference with such right of access must correspondingly interfere with the comfort and happiness of the man and must correspondingly subject him to privation and misery. It therefore follows that the ownership of the land by one class of men, enabling that class to fix the terms on which all others may have access to it, gives to such class unlimited power of extortion and oppression over all landless people.
It creates a dominant and a servient class among the people of every community in which such ownership exists, and makes social and political equality between those classes . absolutely impossible, regardless of any nominal declaration of such equality in statutes or constitutions.
The right of eviction and exclusion from land, inhering in absolute private ownership, involves the power of life and death over the landless classes, and it consequently involves the power on the part of the landed class to extort all that the landless classes are willing to pay in order to avoid deprivation of their means of sustaining life.
Isolated cases of the merciless exercise of the extreme power of the landed class over the landless have in recent years occurred in nearly every community in the United States, and their recurrence is becoming painfully frequent.
In many great industrial districts of this country the laboring classes and their families are tenants of their employers, by compulsion. They are therefore subject not only to dismissal from service, but to eviction from their homes upon the slightest displeasure or whim of their employers.
In Ireland, the same power which landlords hold in this country is exercised more mercilessly, as a general rule, than it is here.
In that landlord-cursed country the landlords have a sort of protective league, to which the landlords of this country are rapidly approaching, and have for several generations maintained what are known as "Rules of the Estates," under which all tenants are forbidden, on pain of eviction from their own holdings, to give food, shelter, or comfort to any evicted tenant, or to his wife or children.
The merciless exactions and oppressions of Irish landlordism have directly caused the destruction of millions of innocent lives. Alfred Russell Wallace has shown us that the persecutions of the Scotch peasantry by the landlords of Scotland have been little less rigorous and little less destructive to human life than those of the Irish landlords. In England and Wales these fearful consequences are not far behind, and they are matched in the tenement districts and in the coal and iron regions of the United States. Already (as shown by the census returns of 1890) more than two-thirds of the families residing in the cities, and one-third of the families residing in the rural districts of this country are reduced to tenantcy.
The homes of one-fourth of the remainder are mortgaged beyond redemption, and the tendency to further concentration of landholding to the distinctive landlord class is increasing year by year.
We are already a nation of landlords, tenants, and tramps. The landlords own the country and the others are dissociated from its soil, having no more stake in the country than lodgers have in their boarding houses.
It thus appears that the monopoly element in our present system of land tenure is not only in contravention of natural rights, but is absolutely destructive of .the general happiness of mankind, and is wholly incompatible with the conditions of social and political equality, necessary to the perpetuation of popular government.
All economic writers, all religious teachers, all statesmen, and all thinking men in every walk of life, agree that the earth, with all of its natural resources, was originally the common heritage of all mankind.
To this point we are all agreed. Science and religion, with equal positiveness, support this conclusion.
The single-tax men assert that this common heritage is a continuing right, and is inalienable.
We hold that every child born into the world has, at once, an equal right with all other living persons in the earth and in all of its resources, regardless of any laws or contracts that may have been previously made for its partition. We hold, with Thomas Jefferson, that "the earth belongs in usufruct to the living," regardless of any attempts which the dead may have made to apportion it to private owners.
We hold, with the American Declaration of Independence, that the natural rights of men to "life, liberty, and the pursuit of happiness" are inalienable.
We hold that no man can sell his right to the natural means provided by the Creator for the sustenance of his life, his liberty, and his happiness, any more than he can sell his life, his liberty, or his right to the pursuit of happiness; and we hold that no man and no state has ever had the power or the right to sell the interests of unborn children in the common heritage provided for them by the Creator.
We hold that the true function of government is to preserve and not to sell the natural rights of its citizens in the lands which constitute the country.
We deny that the Creator has ever given any evidence of his intention to limit his gift of the earth to any one generation of men, to be afterward made the private property of any class or of any part of succeeding generations.
We assert that the original gift of the earth by the Creator was made as truly to the whole people of the last generation that shall inhabit it as to the people of any preceding generation.
To me these propositions seem to be manifestly and necessarily true — "so true that repeating seems cant" — yet they are positively and most vehemently denied by many theologians and statesmen and philosophers.
But thought is quickening on this great question. Not all theologians deny this natural right, not all statesmen ignore it, not all philosophers deride it. Within the last ten years this question has arisen in church and state and school all over the civilized world, demanding answer or recognition. It has not been answered, and the futile attempts that have been made to that end by the ablest and brightest of modern scholars afford tolerably conclusive evidence that it cannot be answered. Recognition and enforcement of that living and inalienable natural right is, therefore, the only alternative, and it must come to pass.
Never yet share of truth was vainly set
In the world's wide fallow.
"The land shall not be sold forever, for the land is mine." This we are told in the twenty-fifth chapter of Leviticus, twenty-third verse, is the command of the Lord to the children of men.
Woe unto them that join house to house, that lay field to field, till there be no place, that they may be placed alone in the midst of the earth.
This, we are told in the fifth chapter of Isaiah, eighth verse, is the curse of the Lord upon the monopolists of the earth. Yet land is monopolized in every civilized country by the few today, and the many are homeless, and the monopoly is defended from pulpits that are devoted to teaching the laws and the will of the Creator.
But, happily, there are indications everywhere that this paradoxical condition is not to last long. In the Roman Catholic Church, the oldest and strongest of the Christian churches, noble bishops and brave priests are here and there preaching and teaching the doctrine of man's equal and inalienable common right to the bounties of nature. Conspicuous among these is the Rev. Dr. Thomas Nulty, bishop of Meath, who in a masterly pastoral letter, basing his conclusions upon reason and revelation combined, thus declares his belief in that doctrine:
God was perfectly free in the act by which he created us, but having created us, He bound himself by that act to provide us with the means necessary for subsistence. The land is the only source of this kind now known to us. The land therefore, of every country, is the common property of the people of that country, because its real owner, the Creator who made it, has transferred it as a voluntary gift to them, terramn aulem dedit filiis hominum (the land He hath given to the children of men). Now, as every individual in that country is a creature and child of God, and as all His creatures are equal in His sight, any settlement of the land of a country that would exclude the humblest man in that country from his share of the common inheritance, would be not only an injustice and a wrong to that man, but, moreover, be an impious resistance to the benevolent intentions of his Creator.
Again, in the same pastoral letter, he says:
I think, therefore, that I may fairly infer on the strength of authority as well as of reason that the people are, and always must be, the real owners of the land of their country. This great social fact appears to me to be of incalculable importance, and it is fortunate, indeed, that on the strictest principles of justice it is not clouded even by a shadow of uncertainty or doubt. There is, moreover, a charm and a peculiar beauty in the clearness with which it reveals the wisdom and the benevolence of the designs of Providence, in the admirable provision He has made for the wants and the necessities of that state of social existence of which He is author, and in which the very instincts of nature tell us we are to spend our lives.
A vast public property, a great national fund, has been placed under the dominion and at the disposal of the nation to supply itself bountifully with resources necessary to liquidate the expenses of the Government, the administration of its laws, and the education of its youth, and to enable it to provide for the suitable sustentation and support of its criminal and pauper population. One of the most interesting peculiarities of this property is that its value is never stationary: it is constantly progressive, and increasing in a direct ratio to the growth of the population, and the very causes that increase and multiply the demands made on it increase proportionately its ability to meet them.
Six years ago Dr. Edward McGlynn, a priest of the Catholic Church, was silenced by the Archbishop of New York, and finally excommunicated from the Catholic Church, for persistently preaching and teaching the doctrine of which the amendment that I now propose is the practical assertion. But after six years of controversy he was exonerated from his excommunication and restored to his priestly office without condition or penalty, and he is now preaching and teaching the inalienable equality of human rights in the lands of the earth.
I might give other examples illustrating the trend of thought on this great economic question in the Catholic Church, but they could add nothing to the tremendous evidence of that trend of thought furnished by the vindication of Dr. McGlynn. In many of the other Christian churches illustrious bishops and ministers have publicly proclaimed their belief in the continuing equality of human rights in the Creator's bounty. In the national legislatures of England, France, and Germany, as well as of this country, its advocates are found and their number is increasing in all of the State and colonial legislatures of the United States and of England. In the legislative bodies of counties and towns, single-tax men have made their appearance and in many of them their influence has been strongly felt.
The colony of New Zealand has partially adopted the single-tax system, to the infinite advantage of its producing classes, and the new Parliament, as a result of its favorable experience, is expected to largely extend the system in that colony. In the conservative domain of philosophy, in which ten years ago Henry George was regarded and criticised as a brilliant crank, he has taken a fixed position as one of the leading economists of the world. "Progress and Poverty," has become a textbook of economic science, and the antagonist of the single-tax doctrine who has not read that book is universally regarded as insufficiently educated for the intelligent discussion of social problems and methods of taxation. Such is the status of the single-tax movement today. Such has been its advance during the past ten years. It has reached the halls of our National Congress by regular stages, and it is here to stay until it shall be finally settled and settled rightly.
In the course of my remarks in this House on the silver question in August last, I had occasion to present my views concerning the true cause of our regularly recurring industrial depressions. I then attempted to show that those depressions were due to the periodical absorption by the owners of land throughout the civilized world of so great a share of the results of productive effort as to render production unprofitable to labor and capital, and to cause production to cease until ground rents should fall to the economic line; thus, for another season, giving labor and capital a chance to engage in production at a living rate of wages and profit.
I attempted to show at that time that these industrial depressions could not be due to temporary or local causes, because they existed before any of the temporary causes to which they have been variously attributed had any existence. They have always extended over the entire civilized world, while the temporary causes to which they have been attributed have always been local. They occur with a regularity that indicates a permanent and general cause, alternately compressing and relaxing our industrial and commercial system, making times good and bad by periods. Natural conditions are as favorable in the bad periods as they are in the good, indicating that industrial depressions are not due to natural causes, but have their source in conditions created by man, and existing throughout the whole period during which industrial depressions have existed, and existing in all countries to which industrial depressions have extended.
There is only one general artificial condition, at all capable of bringing about industrial depressions, that has existed in all countries to which they have extended and throughout the whole period during which the world has been afflicted with industrial depressions. That cause is the private monopoly of land, the only source from which labor and capital can produce wealth; the only foundation upon which industry and commerce can prosecute the production and exchange of wealth. This monopoly control of the natural resources and of the exclusive means of wealth production, has enabled the monopolists to absolutely control production and to exact from labor and capital everywhere a share in the distribution of the wealth which labor and capital have produced, measured and limited only by the avarice of the monopolists themselves.
With this power in the hands of the landowning class, with no limit to its exaction of ground rents and royalties from industry, save its own avarice, there is a constant temptation and tendency on the part of the owners of land to take a larger share of the results of industry and commerce than labor and capital can possibly afford to pay, thus making production and exchange unprofitable to labor and capital and causing production and exchange to cease for the time being.
To illustrate this pressure of ground rent against production, let us suppose that a given piece of land, no matter whether it be for agriculture, or pasture, or manufactures, or commerce, has a productive capacity of 12; that the cost of capital used in the production is 4, and the cost of labor 4, leaving a margin of 4 over the cost of production.
This margin the landlord (or the community) may take, without in any way interfering with production. Taking the margin leaves the cost of production unimpaired. But suppose that the landlord, in order to make his land "pay decent interest on its value," should demand five parts, instead of four, as rent. What effect would that arbitrary increase of rent have upon labor and capital?
It would immediately make production unprofitable to them, notwithstanding the fact that the location would naturally yield a large margin over the cost of production. The landlords occupying the controlling position, capital and labor can do nothing but submit (and fight among themselves) until the landlord's exactions become unbearable, and then production ceases until either a reduction of groundrent or an increase in the natural margin of production, resulting from inventions or other causes, enables labor and capital to resume production at a profit.
The checking of production by this pressure at one point lessens the demand for production at other points, until finally the whole network of our industrial and commercial system becomes paralyzed — involved in an "industrial depression." This is the true cause of industrial depressions.
Every check given to industry lowers its margin of production, and ground rent — which is properly the margin of production only — should fall with that margin, but it does not so fall. It rises with every tide of prosperity and it follows prosperity to its highest point, but it does not fall when prosperity ceases. It continues its exactions until labor and capital have become practically bankrupt, and then it falls only to give the victims of land monopoly another chance to provide themselves with means to pay further tribute.
The single tax. in its unlimited application, would take for public use the exact margin of production, taking a share of production small enough to leave labor and capital their full rewards, but large enough to make monopoly at all times unprofitable.
This is the true cure for industrial depressions. Some day it will be universally adopted and then these periodical blights will cease to afflict our civilization.
What I have said of the course and cause of industrial depressions is equally true of this country and of every other country in which our system of land tenure prevails. They have afflicted the people of England for a longer period and more intensely than they have the people of our country. There, as well as here, the torture of these depressions to the suffering masses is intensified by the patent fact that the natural resources provided by the Creator for the satisfaction of all the wants which afflict them are lying, unused, around them in measureless profusion.
We are now in the midst of one of those crushing depressions. We have, I hope, passed its crisis. It has brought millions in this heaven-favored land to miseries and sufferings such as barbarians never know, except in years of famine, but which some fault in our existing civilization intensifies with every advance that we make in material progress. Every such depression increases the number and proportion of landless people and enormously increases the concentration of land ownership. A million of homes will pass away from their occupants to the ownership of the landed class during this depression in this country alone. Nearly all of the other small homes in our country will pass under the fatal shadow of irredeemable mortgages, the burden of which will grow until the crisis of another depression will bring fresh foreclosure and transform their owners into tenants of the landed class.
These conditions and this tendency are not new. The depression finding its culmination about the year 1877, was most graphically described by Henry George in Progress and Poverty. How well his statement of the conditions then existing would apply to the present time! Let me read his summary:
From all parts of the civilized world come complaints of industrial depression; of labor condemned to involuntary idleness; of capital massed and wasting; of pecuniary distrust among business men; of want and suffering and anxiety among the working classes. All the dull, deadening pain, all the keen maddening anguish that to the great masses of men are involved in the words "hard times" afflict the world today. This state of things, common to communities differing so widely in situation, in political institutions, in fiscal and financial systems, in density of population, and in social organization, can hardly be accounted for by local causes.
There is distress where large standing armies are maintained, and there is also distress where the standing armies are nominal; there is distress where protective tariffs stupidly and wastefully hamper trade, but there is also distress where trade is nearly free; there is distress where autocratic government yet prevails, but there is also distress where political power is wholly in the hands of the people; in countries where paper is money and in countries where gold and silver are the only currency. Evidently beneath all such things as these we must infer a common cause.
Again, after fully developing and reviewing the cause of industrial depressions, he says:
Whether in the present drifts of opinion and taste there are as yet any indications of retrogression it is not necessary to inquire; but there are many things about which there can be no dispute, which go to show that our civilization has reached a critical period, and that, unless a new start is made in the direction of social equality, the nineteenth century may to the future mark its climax. These industrial depressions, which cause as much waste and suffering as famine or wars are like the twinges and shocks which precede paralysis. Everywhere it is evident that the tendency of inequality, which is the necessary result of material progress where land is monopolized, cannot go much further without carrying our civilization into that downward path which is so easy to enter and so hard to abandon.
Everywhere the increasing intensity of the struggle to live, the increasing necessity of straining every nerve to prevent being thrown down and trodden under foot in the scramble for wealth, is draining the forces which gain and maintain improvement. In every civilized country pauperism, crime, insanity, and suicides are increasing. In every civilized country the diseases are increasing which come from overstrained nerves, from insufficient nourishment, from squalid lodgings, from unwholesome and monotonous occupations, from the premature labor of children, from the tasks and crimes which poverty imposes upon women. In every highly civilized country the expectation of life, which gradually rose for several centuries and which seems to have culminated about the first quarter of this century, appears to be now diminishing.
Thomas Carlyle, writing of one of the industrial depressions of his time in England, said:
Descend where you will into the lower class, in town or country, by what avenue you will, by factory inquiries, by agricultural inquiries, by revenue returns, by mining-laborer committees, by opening your own eyes and looking, the same sorrowful result discloses itself. You have to admit that the working body of this rich English nation has sunk, or is fast sinking into a state to which, all sides of it considered, there was never any parallel. . . . Two millions of laborers sit in enforced idleness, in a kind of horrid enchantment. In silence; for, alas! What word is to be said. An earth all lying around, crying, "Come and till me, come and reap me"; yet here they sit enchanted. The sun shines and the earth calls, but by the governing powers and impotences of this England they are forbidden to obey. There is something that reminds me of Dante's hell in the look of all this.
Oh, what a waste is there of noble, and thrice noble, national virtues; peasant stoicisms, heroisms, valiant, manful habits — soul of a nation's worth — which all the metal of Potosi cannot purchase back.
These are the conditions to which land monopoly periodically brings the people of the civilized world. I say land monopoly without hesitation or equivocation, because, as a distinguished writer recently said in speaking of the evidences that land monopoly is the cause of industrial depressions, "It is too indisputable to be doubtful now to anyone." The evidences of its baleful influence are patent to all observers, even the most casual. They are spread around us in our homes and in our travels.
A few years ago I had occasion to travel through the beautiful and fertile region lying between San Luis Obispo and Soledad, in California. That region includes the fertile valley of Santa Marguerita, embracing some 54,000 acres of tillable soil, well watered, and rich and fertile as any land on the face of the earth. It is owned by a very excellent citizen of California, who has always used it as a cattle ranch, because that simple pastoral use involves less care and labor than any higher use to which it might be put, and yields an ample revenue for all the requirements of the proprietor, while the constant enhancement of the value of the land, with the growth of population, industry, and enterprise in California, is a source of great and gratifying enrichment to him.
It was inhabited at that time by half a dozen cattle-drivers whose only agricultural use of the land consisted in the cultivation of between five and ten acres for orchard and garden purposes for domestic use. That valley alone, if put to its highest productive use, is capable of supporting in comfort from five to ten thousand people in the agricultural, mechanical, and commercial pursuits, which its highest practical use would involve. Yet with the exception of the few cultivated acres which I have mentioned, no human hand had ever been permitted to call forth the treasures which its elements potentially contain. It lay open and uncultivated just as it came from the hand of the Creator.
In the course of the long and lonesome journey from its southern to its northern boundary, we met five immigrant wagons, each containing an American family, husband, wife, and children, some of them more than one family, ail looking for land on which to settle and build up independent American homes. Through that treasure-house of God's bounty, with weary limbs and aching hearts they were obliged to move on, hoping against hope that somewhere in that almost uninhabited country they would find land, free from the dominion of private monopoly, whereon to establish their homes and industries, and to rear their families in virtue and patriotism, under the protection of our Constitution and the sacred principles of freedom and equality symbolized by the flag of our country.
Yet, I venture to say that, like the fate of millions of others, their weary struggle was in vain, and that, with means exhausted and hopes blasted, they were finally obliged to seek the labor markets of the cities of California and there, in competition with the army of the unemployed, seek for a chance to divide with them the insufficient employment for which they were struggling. As I looked upon that striking example of the monopoly that our land system encourages, and the home seeking made hopeless and fruitless by that monopoly of natural resources, I thought of Duganne's poem on
"The earth is the Lord's and the fulness thereof,"
Said God's most holy word.
The water hath fish and the land hath flesh,
And the air hath many a bird;
And the soil is teeming o'er all the earth,
And the earth has numberless lands;
Yet millions of hands want acres —
While millions of acres want hands.
Sunlight and breezes and gladsome flowers,
Are over the earth spread wide;
And the good God gave these gifts to men —
To men who on earth abide.
Yet thousands are toiling in poisonous gloom,
And shackled with iron bands —
While millions of hands want acres,
And millions of acres want hands.
'Tis a glaring lie on the face of day,
This robbery of men's rights
'Tis a lie that the word of the Lord disowns,
'Tis a curse that burns and blights!
And 'twill burn and blight till the people rise
And swear, while they break their bands —
That the hands shall henceforth have acres
And the acres henceforth have hands.
I have cited the Santa Marguerita ranch case, first, because it is a striking illustration of the results of our land system; and, secondly, because the scene that I witnessed there made a strong impression upon my mind. But, in greater or less degree, the same system is producing the same results in every section of the American Union, and in every other country in the civilized world. These results are not confined to rural lands; they are more strikingly true of city lands, suited for manufactures and commerce and, for residence purposes, that are held for speculative purposes, under the inducements to speculation afforded by our laws.
The tendency of our present land system to drive laborers from agricultural and other rural employments into the cities, and the tendency of inventions and other improvements in the arts of wealth production to displace labor in the industrial centers, bring about a condition of constant congestion in the labor markets, and produce an intensity of competition there that forces the wages of labor always toward the lowest point at which laborers can live and work, thus increasing the power of monopoly over labor; increasing the share of production going to monopoly, and decreasing the share going to labor, regardless of the increase in the value of labor which comes with the advance of material progress. Whatever lessens the labor-cost of using land productively increases the market value and the rental of land, thus by a double process widening the gulf between the rich and the poor, and gradually making the condition of the laboring classes more hopeless and helpless as material progress advances.
The time has come when labor must be set free from the trammels and oppression of monopoly. What it needs more than all else is opportunity for the immediate redistribution of the displaced labor to productive employments. Every laborer leaving the labor market and going out upon the land would not only diminish the pressure of competition at the labor center, but would create a new center of industry, however small, calling for other labor, not only in that new productive industry, but in supplying that industry with its implements, tools, shelter, food, and clothing. Labor, after all, is the thing that creates demand for labor.
Capital is not in any true sense the employer of labor. Capital occupies an intermediate position between the laborers who want supplies and the laborers who make the supplies to satisfy the wants of the others. The wages fund theory has been absolutely and finally exploded. Capital would not employ labor in production if there were not demands coming from other producers to be satisfied. The farmer wants shoes, and the shoemaker wants bread. If the farmer should employ the shoemaker to make shoes for his family and should agree to furnish the shoemaker with bread in exchange for the shoes, no man would say that capital was employing the labor either of the farmer or the shoemaker.
So, if the farmer goes to a storekeeper to sell his wheat, taking shoes in exchange for it, while the shoemaker furnishes the storekeeper with shoes to be sold to the farmer and takes wheat in payment for his shoes, the relation between the shoemaker and the farmer is not changed . They still really employ each other, but instead of employing each other directly they do so through a middleman, who makes a profit out of both of them, yielding presumably full value to both for that profit. But the storekeeper would not employ the shoemaker to make shoes for his trade if there were not consumers of shoes ready to purchase them from him, nor would he buy wheat from the farmer if he had no customers willing to purchase wheat for their immediate or ultimate consumption.
So, if the shoemaker finds a sufficient demand for shoes to justify him in starting a factory, his workmen are employed really by the people who ultimately wear the shoes that they make. lie becomes a mere intermediary, and the number of workmen whom he will employ and the wages that he will pay do not depend upon the amount of capital that he has nor the amount of capital that he is willing to devote to production, but they depend entirely upon the demand for shoes among those who ultimately wear them and the ability of such persons to pay for shoes.
Labor is therefore interested, not in limiting production, but in extending it; not in narrowing the field of labor and seeking to control the so-called "wages fund," but in increasing in every possible way the opportunities of labor to engage in productive employments, and in checking the present tendency to congestion in the labor markets, by opening natural opportunities to surplus labor on better terms than they can now be had.
I have spoken of the interest of labor in opening up the natural resources of the earth, as if labor alone were concerned in it. In truth, however, all mankind have the same interest in the extension of labor's opportunities that laborers have. In the last analysis the interest of labor is the interest of all mankind, because the only possible way to elevate the superstructure of our social system is to elevate the lowest strata of its foundation. Labor is the indispensable and universal foundation of our social system. Its degradation is the degradation of the whole system, and its elevation is the elevation of all.
Dr. Edward McGlynn, when asked for a brief statement, showing the purpose of the single-tax movement, wrote this reply: "To make room at the father's table for all his children." I have often thought of the true simplicity and completeness of that laconic statement. The natural resources of this earth are indeed the bountiful supplies of the father's table for all his children. The trouble that we see in the world, which is manifested by the superabundant wealth of the few and the grinding poverty of the many, is due to the fact that the father's table, with its bounteous supplies, has been seized upon by the few to the exclusion of the many; and that the many, in order to get access to the supplies which the father has provided in abundance for all, are obliged to work their lives away in paying tribute to the few who have appropriated the table and its supplies.
Under the artificial system created by the grasping of the whole bounty by a few of those for whom God intended it, many of the masses are constantly left in such a position that they cannot produce enough to pay the tribute exacted by the monopolists, and they must suffer exclusion from the table while their necessities are oppressing and crushing their lives.
Cicero very happily compared this world with its resources to a theater furnished by the Creator for the entertainment and instruction of all his children, and in which he provided a seat for every child who should come into the world. He compared the monopolists of the earth to guests at the theater, who, coming first and finding the chairs vacant, have appropriated not only the seats required for their own use, but all of the seats, and are compelling their brethren to pay tribute to them for the use of the seats that the Creator freely provided for all.
Either illustration happily fits the situation, and the purpose of the single-tax movement may be aptly said to be to compel the monopolists of the Father's table and its supplies to relinquish all but the portion which they require for use, or to compel the early guests at the theater to let go of all of the seats which they are not using. It is not intended to place any man at a disadvantage, with respect to any other man, but it is intended to absolutely and forever take away the monopoly powers of those who now hold more than their share of the Creator's bounty. It is not intended to equalize wealth among men. Wealth is the stored-up product which labor has already produced from the natural earth. The single-tax men hold and recognize private property in that form of wealth to be a sacred thing. They give to it a sacredness that the present laws do not give to it, and they have no purpose or intention of interfering with its present distribution in any way.
Much of it has been very unjustly obtained by its present possessors, but in a worldwide sense that wealth is of very little importance, because it would satisfy the wants of the people of the earth for only a few days, while the natural sources from which it was produced are the reliance of mankind, for all future ages, for sustenance and comfort. All future wealth must be produced from those sources, and its distribution among the people will depend upon the freedom or the monopoly of those sources.
What we seek to bring about is, not an equal distribution of wealth, but an equal distribution of the opportunities for producing wealth. An equal distribution of wealth would accomplish very little good, and the same methods which have caused the present unequal distribution would very speedily reproduce the inequality and, in the double transition, much wealth and energy would be wasted. If, on the other hand, the natural opportunities for producing wealth be opened upon equal terms to all mankind, labor will be free to produce what it needs, and thrift can be relied upon to preserve what it requires labor to produce. When the Creator placed man upon the earth he gave him the raw materials of all wealth, freely and bountifully stored up in the earth, but he made labor the condition of their procurement, and he made labor free to procure them at will. This was nature's plan for human happiness, and it is better than any plan that human ingenuity has ever sought to substitute for it.
With natural resources free, the lowest condition of labor would be the kind of living which labor could independently produce from the earth. All "laborers would have that sort of living as the lowest possible condition to which they could be reduced. Then the ingenuity and inventiveness of man would be brought into natural play in combining and subdividing labor, so as to increase the wealth-producing power of labor, and to their great enterprises, either individual or co-operative, labor would be drawn by the offer of better terms and conditions than it could secure by independent self-employment.
It would be no longer driven into these great enterprises by the pressure or the fear of want, nor would it ever be compelled to accept the wages of slavery because of the presence of slaves competing for employment in the market. With the means of independent self -employment open to labor, employers, in order to get labor, would be obliged to offer not merely the same returns that the independent employment would afford, but such superior advantages, both in wages and conditions, as would induce the self-employing laborer to give up his personal independence so far as to take employment from another man.
Then every inventor and every captain of industry would become, as they should be real benefactors of mankind, whose skill and enterprise would tend to lighten the burdens and increase the comforts of mankind. Then production would be free and trade would be free. No man would have any share in the distribution of wealth who did not share in its production; then no man would sit as a toll-gatherer at the gate of another's industry, but each would take in distribution exactly according to his share in production.
The individual laborer would get a share exactly corresponding to his contribution to production. Capital would get the share necessary to replenish it, and to yield the value of its use, measured by the demand for capital.
The margin of production, which is now the share of the non-producer, would go to the entire community for the general benefit of all. This would be just, because the margin of production results in all cases from the presence, enterprise, and virtues of the whole community, except in so far as it represents the value of great natural deposits, such as coal, iron, gold, silver, copper, lead; petroleum, quicksilver, and the like under the earth, and forests over the earth, and these deposits and the forests were prepared and stored by the Creator for the general common use of all mankind. It is right that their value should be given to the whole people whenever private individuals extract them from the earth. That value, of course, will largely but not wholly depend upon the same elements that make up the margin of production in other cases, namely, the presence, industry, enterprise, and virtues of the whole people.
It is the purpose under the single-tax system to appropriate to public use the entire margin of production of all lands, and thus to cut off the unearned increment, to secure which land is now monopolized. By the "unearned increment" I mean that value which in every growing community attaches to land and increases with the growth of the community, whether the land be used or not used, and which now goes to enrich the private owners of land, although it is produced not by them, but by the whole community from year to year. The market value of land represents in capitalized form these two elements: First, the present rental value of land, and, secondly, the prospective future enhancement of that rental value.
By taking for public use the entire present rental value of all land, whether used or unused, with the declared purpose of taking for all time in the future for public uses all of that rental value as fast as it shall accrue, no inducement would be left for speculation in land. On the contrary, the ownership of idle land would become a burden and expense which no sensible man would assume or bear. Such land would be either improved for use at once or it would be abandoned, so that any man who might desire to use it would be free to do so without any first charge whatever, and subject only to the payment from year to year of its economic rental value, as such economic rental value might arise. The owners of improved lands would continue to lease them, paying over to the people in the form of taxes the entire rental value of the ground and retaining to themselves that portion of the rent representing the improvements; the improvements and the income derived from them being free from all burdens of taxation.
The single-tax system being a substitute for all other forms of taxation, direct and indirect, would relieve from taxation all improvements upon land and all personal property of every kind; it would do away with all poll taxes and all license taxes for the conduct of business, and would do away with all taxes on commerce, on goods, and on the consumption of wealth. Such taxes can always be shifted, and are always shifted, in the course of exchange from the person paying to the, consumer, upon whom they are finally saddled.
Whatever tax or burden of any kind is imposed upon any form of wealth produced by labor or upon the income therefrom is shifted to the borrower or user. Now, it is argued by analogy that the single tax on land values will also be shifted from the owner to the user of land, and that groundrents will increase in proportion to the tax burden imposed upon land values. Hence it is said that except in so far as the single-tax system will simplify and cheapen the assessment and collection of taxes it will afford no benefit to the landless classes, because what they will gain by exemptions from taxes on their personal property and upon their consumption they will lose by the increase of groundrents.
If this were true it would be a very serious objection to the single-tax system, and would entirely destroy the most important economic advantages which we expect to flow from it. But it is not true, and there is no analogy between the effects of taxation upon land values and the effects of taxation falling upon wealth produced by labor. The reason that taxes laid upon production, or upon wealth produced by labor, can always be shifted is that such a tax burdens production and constitutes one of the expenses of production, which must be paid out of the price charged for the product, or production of that commodity will be checked. With the checking of production the supply of the commodity will be limited in the market, and by the operation of the law of supply and demand the supply being diminished, the price will increase until it covers the tax.
If land were produced by human labor the heavy taxation of land values would tend to discourage the production of land until the price of land would rise sufficiently to cover the tax; but no man is engaged in producing land. It is a natural product, and its natural supply remains unchanged, regardless of the taxes levied upon it. But taxation has a direct effect upon the available supply of land in the market. The heavy taxation of land values forces land into the market at whatever prices can be obtained for it, thus increasing the available supply to purchasers and renters and, by the same law of supply and demand, reducing the rent and the selling price instead of increasing them.
Another effect of the single tax would be the exemption of houses from taxation, and this exemption would tend to encourage men to invest their capital in the building of houses, thus tending to increase the supply of houses and to further decrease the renting price by increasing the competition for tenants among the owners of houses. To illustrate both of these propositions, I need only refer to the vacant lots held idle for speculative purposes in the thickly, settled portions of all great cities. The owners can now afford to pay taxes upon these idle lots, because their average annual increase in value is very much greater than the amount of taxes paid.
It is therefore a profitable speculation to pay the taxes on such lots and keep them out of use. Besides, if the owners of the lots should build houses on them now, the people would compel them to pay a penalty of about 2 percent per annum upon the value of the houses, whether in use or idle, thus making the investment in such improvements less profitable, considering the risk of fire and other dangers, than an investment in land or in untaxed Government bonds. But suppose that the buildings to be erected on such lots should be untaxed, then at once an investment in such buildings, all other conditions remaining the same, would be 2 percent more profitable than it is at present, and capital would be attracted to building. The great importance of that exemption of 2 percent appears in the fact that net interest is only 2½ per cent.
Let us suppose that the owner of one of these lots, who now pays a tax of $1000 per annum, should be compelled to pay to the public something near the annual rental value of the lot — say about $4000 per annum, and that he would pay no more taxes if he had a building like that of the Washington Loan and Trust Company upon it — how long do you suppose he would keep the land idle and pay a tax upon it equal to its entire rental value? It would, of course, be as good for use as it is at present, but it would not be as good an investment for speculation as it is at present.
The increased burden of taxation upon the monopoly privilege of holding the lot would make it absolutely necessary to use the lot in such manner as to make it yield the amount of the tax, or to improve and lease it in order that the owner might be saved from the irreparable loss that would be involved in paying taxes upon it while holding it in idleness. Improvement and use would save him from burden, but the prospective increase of values would not enable him as now to reap a golden harvest by keeping it in idleness.
It is needless to multiply examples, for the effect which the single tax would have upon the particular lot in the case supposed, it would have upon all land — rural and urban — which is now subject to private ownership. Now, if the taxation of land values only would have a tendency, as I have shown, to encourage and to compel the erection of houses upon all vacant lots in cities, and the productive use of rural lands, thus vastly increasing the available supply of houses and holdings for sale and to let, does it not follow, with the clearness of demonstration, that the resulting competition among landlords to secure tenants and purchasers would compel them to reduce instead of increasing their rents and their prices?
How, then, can they shift the taxes upon their tenants? It would be utterly impossible for them to do so. Land rent is fixed by a law entirely independent of taxation. It is fixed by the value of the land for use, and no amount of taxation can increase that value. If you should build two stores exactly alike in all their appointments, one at Arlington and the other on the north side of Pennsylvania Avenue between Twelfth and Thirteenth Streets, you could get one hundred times as much rent for the latter as you could get for the former, not because of the difference in taxes upon the respective places, but because of the superior commercial advantages of the latter location.
To impose the same tax on the Arlington store that would fall on the Pennsylvania Avenue store would not improve the value of the Arlington store for use. It would not in the least tend to equalize the commercial advantages of the two locations, and the rent of the Arlington store could not be increased to cover the tax. So with rural lands. The tax could not be added either to the rent or to the product, for substantially the same reasons that I have already given in discussing its effects upon urban lands. But it is not necessary to discuss this phase of the question at greater length. All political economists, from Adam Smith to Henry George, are agreed that taxes laid upon land values cannot be shifted.
Adam Smith, in his Wealth of Nations (book 5, chapter 2, part 2, article 1), says:
A tax upon groundrents would not raise the rents of houses; it would fall altogether upon the owner of the land, who acts always as a monopolist and exacts the greatest rent which can be got for the use of his ground. . .
Whether the tax was to be advanced by the inhabitant or the owner of the ground would be of little importance. The more the inhabitant was obliged to pay for the tax the less he would incline to pay for the ground, so that the final payment of the tax would fall altogether upon the owner of the groundrent.
J. B. Say, the great French economist, in his work on Political Economy (volume 2, book 3, chapter 8, section 2), says:
An acre of vineyard or corn land will only produce a given quantity of grain or wine, whatever be the rates of taxation, which may take the one-half or three-quarters of net produce, or rent as it is called, and yet the land be tilled for the remaining one-half or one-quarter. The rent, that is to say the portion assigned to the proprietor, will be reduced, and that is all. The reason will be manifest to anyone who considers that in the case supposed, the land continues to raise and supply the market with the same amount of produce as before; while, on the other hand, the motives in which the demand originated remain just as they were.
If, then, the intensity of supply and demand must both remain the same in spite of any increase or diminution of the ratio of direct taxation upon the land, the price of the product supplies will likewise remain unchanged, and nothing but a change of price can saddle the consumer with any portion whatsoever of that taxation.
John Stuart Mill, in his Principles of Economy (book 5, chapter 3, section 2), states his conclusion on this subject in the following language:
A tax on rent falls wholly on the landlord. There are no means by which he can shift the burden upon anyone else. . It does not affect the value or price of agricultural produce, for this is determined by the cost of production in the most unfavorable circumstances, and in those circumstances, as we have so often demonstrated, no rent is paid. A tax on rent, therefore, has no effect, other than its obvious one. It merely takes so much from the landlord and transfers it to the state.
It thus appears, I think conclusively, that a tax upon the value of land falls always directly and finally upon the owner, and that with the exception of poll taxes, it is the only tax which cannot be shifted to the shoulders of the poor.
Having shown that the single tax would equalize the natural opportunities of all men, by giving them access on equal terms to nature's storehouse of material resources, and having shown that the single tax upon land values would fall and finally rest upon the owner of the land, it becomes highly important to inquire if such a tax would be just. If it would not be just I do not hesitate to say that it would not be expedient.
Never yet did men or nations prosper finally in wrong.
If it cannot be satisfactorily shown that it would be just, the proposed reform should be unhesitatingly and perpetually rejected. It is to be sincerely hoped that no scheme of social or political reformation shall ever find lodgment in the hearts or institutions of the American people which is not firmly based upon the eternal and immutable principles of justice. To this high test we submit our theory,
And poise the cause in justice' equal scales,
Whose beam stands sure, whose rightful cause prevails.
I shall not here repeat the argument which I made to show that of natural right the earth is, and ever has been, and must ever remain, the equal common heritage of all mankind; but proceeding from that premise, I will deal with the only other serious question which the controversy involves, namely, what regard are we morally bound to have for rights, contrary to natural justice, that have become vested under the sanction of our laws? It may well be that no human law can ever justly give any sort of title or vested right as against an inalienable natural right. But I shall not rest upon that position.
Prof. Sturtevant, in his excellent work on Economics, justifies the expulsion of the Indians from the lands of North America upon the following grounds:
We cannot admit in the first place that these savages ever did own the soil . They never did that which alone creates ownership. They never made any modification of the land by labor expended on it which fitted to be an instrument of production. They roamed over it like herds of buffalo, and lived on spontaneous products just as the wild beasts did. But by so doing neither the buffalo nor the savage acquired ownership, the latter no more than the former. He who gathers blackberries or shoots deer upon a piece of ground does not thereby become the owner of it.
No one owns a tree of the forest because on a single year or for many successive years, he gathered the nuts that grew on it. The European settlers of North America took possession of no capabilities of production which the labor of those savage tribes had created. As those savages retired before them they had exactly the same labor to perform which they would have had if there had never been any human inhabitants on the continent before them. In this respect the case was exactly the same that it would have been if wild beasts and not men had retired before them. What they took possession of everywhere was the work of the Creator and not the work of man.
Herbert Spencer, in Social Statics (chapter 9), says:
It may by and by be perceived that equity utters dictates to which we have not yet listened, and men may then learn that to deprive others of their right to the use of the earth is to commit a crime inferior only in wickedness to the crime of taking away their lives or personal liberties.
John Stuart Mill, in his Political Economy (book 2, chapter 2), declares that land considered apart from improvements
never was and never can be a proper subject of private ownership. . . When the sacredness of property is talked of it should always be remembered that such sacredness does not belong in the same degree to landed property. No man made the land. It is the original inheritance of the whole species. Its appropriation is wholly a question of general expediency. When private property in land is not expedient it is unjust.
Sir William Blackstone, in his Commentaries on the Laws of England (book 2, chapter 1), says:
The earth is the general property of all mankind from the immediate gift of the Creator. . . Thus the ground was in common, and no part of it was the permanent property of any man in particular. . . Thus, also, a vine or other tree might be said to be in common, as all men were equally entitled to its produce; and yet any private individual might gain the sole property of the fruit which he has gathered for his own repast. . . Accurately and strictly speaking, there is no foundation in nature or in natural law why a set of words upon parchment should convey the dominion of land. . . It is well if the masses of mankind will obey the laws when made, without scrutinizing too nicely into the reasons for making them.
Hon. William E. Gladstone, speaking of proposed restrictions on the vested rights of the landowners, says:
Those persons who possess large portions of the earth's space are not altogether in the same position as the possessors of mere personalty. Personalty does not impose limitations on the action and the industry of man, and on the well-being of the community, as possession of land does, and therefore I freely own that compulsory expropriation is admissible and even sound in principle.
James Anthony Froude, on the same subject,
Land is not, and cannot be, property in the sense that movable things are property. Every human being born into this planet must live upon the land, if he live at all. The land in any country is really the property of the nation which occupies it.
Prof. Newman, on the same subject, says:
To make away into mercenary hands, as an article of trade, the whole solid area on which a nation lives, is astonishing as an idea of statesmanship.
Alfred Russell Wallace, the great English scientist, says:
So long as a man can be evicted and banished from the local community at the will of the landlord there can be no independence and no possible freedom of self-government worthy of the name. ... By recognizing private property in land, the State has set up in its midst a number of petty lords more powerful than any government, and whose decrees, whatever injustice they may do or whatever misery bring to British subjects, no court of law or equity is able to reverse.
Hon. William Brodrick, M. P., speaking of English landlordism, says:
The landlord of the parish, or district, is invested with an authority over its inhabitants which neither the Saxon chief nor the Norman lord in the fullness of his power ever had the right of exercising; for the means of living, and the very right of the people to life itself, are equally under the control of those who are the exclusive owners of the land, which the Creator freely gave for the equal use and sustenance of all and without which no human being can possibly live.
Replying to the suggestion that any attempt to regulate ground rents, or to limit the conditions of tenancy as fixed by the landlords, would be an invasion of their vested rights, Mr. Brodrick said:
No man can have a vested right in the misfortunes and woes of his country.
No man has ever presented any basis or justification for the same exclusive private property in land that men have and of natural right ought to have in the products of labor.
No statesman, lawyer, philosopher, or theologian has ever presented any argument worthy of the name in justification of such absolute private ownership. It is contrary to natural justice; it is contrary to the condition on which the earth was given to man by the Creator; it is destructive to the last degree of justice and equal rights among men, and it is destructive of the liberties and happiness of the great masses of the people; reducing them, as it has done, to a condition of industrial slavery which keeps them continually face to face with the menace of pauperism, regardless of their ability and willingness to live by labor upon the conditions fixed by the Creator.
No attempt has ever been made to justify the exclusive private ownership of unused and unimproved land. Every defense of the private ownership of land is based upon the moral right resulting from its improvement and its actual use. The assertion of a vested right in land upon which no improvements have been made has no moral support of any kind which its defenders have ever been able to suggest. It is asserted that private property in land was established for the purpose of encouraging the permanent improvement of land and the care and productive use of land by the occupant, and that it is well adapted and essential to those purposes.
These elements of private property in land we concede to be essential to the permanent improvement, care, and use of land, and therefore essential to the well-being and stability of human society, namely, permanency of tenure, security of improvements, and security in the full fruits of whatever productive effort is applied to the land or exerted upon the land. All of these elements are fully secured under the single-tax system, and would thereby be more perfectly secured than under the present system. The other element that now attaches to private property in land is the right of the private owner to appropriate to his own use the unearned increment which results to the land from the presence, industry, and enterprise of the population of the district in which it is situated.
This element, the only one against which the single-tax system is aimed, does not encourage the owner to improve or care for or use the land productively; it encourages him to abandon all industrial pursuits and to endeavor to live upon the toll which his mere ownership enables him to levy upon those who use his land productively; and it encourages men to seek wealth and power, not by producing wealth, but by securing a monopoly control of the sources of wealth production and by taking advantage of the ever-increasing value which the growth of population gives to the land of which they secure control.
The only valid purpose of private property in land from the standpoint of public utility is therefore not accomplished by it. That purpose is actually subverted by it. That being true the violation of the natural rights of mankind involved in the establishment of individual private ownership of land has not the slightest foundation of social utility or expediency to sustain it.
Again, the rental value of land is, as I have shown, the result of the presence, industry, and enterprise of the whole people of each community in which it appears. It is produced as an indirect result of the general enterprise and industry of the community.
The community has, therefore, a moral right to appropriate it to public use, because the community has produced it. The universally recognized law of private property has its foundation in each man's ownership of himself. Every man is of natural right the owner of himself and of his mental and physical powers. As a consequence of that ownership of himself, he has a natural right of ownership in everything that he produces by the voluntary exercise of those mental and physical powers. The things that he produces are his, because he has produced them; because their forms of utility would not have existed but for his productive effort, and it is no hardship to any other man in the world to be deprived of that which would not have existed at all but for the labor of him who produced it.
If the labor of a dozen men indistinguishably contributes to the production of anything of value it belongs, by the same law, not to any one of them, but to the whole dozen. So, if a value be produced by the indistinguishable labor of a community of one hundred thousand or a million people it belongs, by the same law of natural right, to all, and not to any individual, onto any number less than the whole. 'Therefore the rental value of land belongs to the community which produces and maintains it by the same natural right which gives to each individual man the wealth which his labor entirely produces.
But it is said that under the sanction of our laws men have invested their wealth in the ownership of land for the purpose of securing, as their return, this unearned increment which the community creates, and that it would, therefore, be unjust to deprive them of that unearned increment, or the margin of production, by any new law operating either directly or indirectly to that end. The complete answer to that proposition is that every foot of land now in private ownership was acquired by private owners, subject to the acknowledged and well-known reserved rights and power of the people, through their several governments, to take its rental value, or any part or portion of its rental value, that to them might seem expedient, by taxation, for public uses at any time.
The speculator inland has always invested, and now invests his money in land upon the assumption that the people will not deem it expedient to exercise that reserved right until he shall have made his expected profit out of his investment. If the people shall in the meantime choose to exercise that reserved right, the exercise of which is absolutely and solely in the discretion of the people, his speculation fails, simply and solely because he has miscalculated the purpose or future action of the people with respect to the enforcement of their acknowledged right.
There is really no question, in this proposed reform, concerning vested rights; because no man has, or ever had, any vested right to have his lands exempted from taxation, nor to have any limit set to the percentage of its value which may be collected for public uses. His right is simply that he shall be treated like all other landowners in the same taxation district. In view of this reserved right of the people at any time to practically nationalize the lands of this country, by the exercise of the power of taxation, it may be truly said that the lands of this country under the statute laws, as well as by natural right, have always been the common property, as well as the common heritage, of the whole people.
It is asserted that the complete establishment of the single tax would work a great hardship to several thousands of well-meaning people, who have, in good faith, invested their means in landed property, in order to secure an income sufficient to maintain themselves and families in such comfort as would result from the investment of the same means in productive enterprises, and that they would be placed at an unfair disadvantage with respect to those who have invested the same means, for the same purpose, in such productive enterprises.
No great social transition, from a condition of injustice to a condition of justice, can be made without imposing hardship, and often unmerited hardship, on those who, in accommodating themselves to the unjust condition, have become its beneficiaries. But the hardship that would result from this proposed transition is absolutely unworthy of consideration when compared with the infinite hardship which the great continuing wrong of land monopoly inflicts upon the great masses of the people who are now deprived of the independent means of subsistence for which the Creator made and gave the land.
The suffering caused by the present land system in a single hour will outweigh a hundred fold all the hardships that would ever result from the proposed change to all the people who would be affected by it.
Another claim which, although unsound, is deserving of serious notice, principally because it once received the solemn sanction of so great and wise and just a man as John Stuart Mill, namely, that while the people are unquestionably entitled to all future enhancement of the rental value of land, the private owners are entitled to appropriate at present and for the future the accrued rental value; that is to say, that private owners should be allowed for all time to take for their private use a portion of the rental value of their lands equal to the full rental value of those lands at the time that the people determine to take the accruing increment for public use.
But this position has since been demonstrated to be utterly without foundation. There is no such thing as an accrued rental value attaching to land, save and except that which has been already collected or is already due to the present owner, and of that we propose to take no accounting. But the future rental value of land all over the United States will result not from what the people have done in the past, but entirely from what the people shall hereafter do. If the people of the United States should withdraw from its lands entirely, without any probability of returning, and there being no probability of other people coming to inhabit the country, rental values and market values of land would disappear with the people, and the lands would be as worthless to the landlords in 1895 as they were in 1495.
So, if the people remaining here should entirely abandon all productive industries and become as shiftless and industrially worthless as the Indians who preceded them, the value of all land in this country would fall to nothing. If land is to have value in any community in the United States hereafter, that value must result from the future industry and enterprise of the people, and not from what they have done in the past. Of course, improvements upon land and present facilities for its use have their influence in connection with the presence of population in making and maintaining present and future land values. But without the presence, industry, and enterprise of the people, land values must absolutely perish, regardless of all that has been done heretofore.
The people's right to appropriate the rental value of lands to public uses, therefore, extends to the whole rental value of the bare ground, and public expediency requires that it shall all be taken, to the end that the natural opportunities of the whole people may be preserved in absolute equality, and that the monopoly of these resources may not be encouraged by allowing any part of the unearned increment of land to reward private speculators for such monopoly.
I have already stated that certain elements of the present system of private property in land are essential to the substantial and permanent improvement of land, for the best uses to which it can be put, and for the highest development of the means and arts of wealth production. These elements are permanency of tenure, security of improvements, and security to the occupant in the fruits of his productive labor. All of these elements are perfectly secured and sacredly guarded under the single-tax system. We propose no change in the present forms of private ownership of land.
We simply divert the margin of production — that is to say, the excess which production yields, at any given place, over the cost of production — from the private individuals who now appropriate it, without consideration, to the use and benefit of the whole people, who do produce it. It is said that this will discourage extensive improvement of land for its highest productive use. Fortunately we are able to demonstrate that it will not have such an effect. In the heart of the city of Chicago there are two blocks of land, owned by the city, and used by private individuals, who have erected their own improvements upon the land. They pay into the city treasury of Chicago the full rental value of the ground, just as they would pay it under the single-tax system.
Some of the private buildings on that land are among the finest in the city of Chicago: One of them is "The Rookery," an eleven-story office building, built of steel, granite, and pressed brick, at an expense of about $2,000,000; another is McVicker's Theater, well known to most people who have visited Chicago; another is the Tribune building, the other buildings on the blocks in question, while not so fine as those that I have mentioned, yet compare favorably with other buildings of the same age in Chicago or in any other city. No difficulty is experienced. The tenure of the private occupants has no limit, and the sole condition of tenure is the payment of the rental value of the ground to the city, that rental value being ascertained and fixed by methods not unlike those which would be adopted for the assessment of the single tax.
If the single tax system were in operation, however, the city and State taxes now falling upon the Rookery building and upon all of the furniture and fixtures and stock contained in its offices and stores would be remitted, and other occupants of lands of like character would be encouraged to improve the city and increase the business facilities and accommodations of its inhabitants by constructing similar buildings, which with their fixtures, furniture, goods, and business, would be free from all tax burdens.
It is said that the single tax would fall with undue severity upon the farmers of this country, because, in proportion to the value and returns of their industries, they occupy more land than other producers. If it were true that the single tax would seriously burden the farmers, who are already overburdened by direct and indirect taxation beyond endurance, it would be a serious objection to our proposition. But it must be borne in mind that the single tax is not a tax on land, according to area, but is a tax on land values, and therefore it would not be paid by the owners of the land in proportion to the area occupied or cultivated by them, but in proportion to the market value or rental value of their respective holdings.
A few days ago a lot of land was sold in the City of New York at the rate of $5,000,000 per acre, and it is said that in New York and also in Chicago there is land which is held in the market at the rate of $10,000,000 per acre. A few years ago a lot of land was sold in London at a rate which per acre would bring over $14,000,000. These are the great centers of commerce and industry, and land values are highest at these points, growing gradually less as the rural districts are approached, and finally in locations isolated from the centers of trade, shading to almost nothing.
Just as the rental value falls as you approach the rural districts, so will the single tax become light as you approach the farming districts, where land values are smallest. One acre of the land sold as I have stated, in the city of New York, would pay as much taxes, under the single tax system, as 1,000 farms of 100 acres each, worth on the average $50 per acre. The proportion of taxes now paid by farmers upon their lands and improvements and personal property and indirect taxes upon their clothing, farming utensils, etc., is very much greater, with respect to city property, than it would be under the single-tax system.
Under the present system the speculators in unimproved farm lands get the benefit of all that the working farmers do to build up the neighborhoods in which their lands lie, yet contribute nothing in personal service, and comparatively nothing in taxes, to either the public or private enterprises that build up the value of their lands. Under the single tax system the settlement of land would proceed by regular stages from the centers of industry and commerce. Every tract of land would have an improving and occupying owner, bearing his share of all common burdens and contributing to all public enterprises for the improvement of roads and the betterment of social and industrial conditions.
These and innumerable other advantages would come naturally to all farmers. But the census returns show that more than one-third of the farmers of the United States are now tenants, and that the transformation from occupying owners to tenant farmers is going on more rapidly than ever before in the history of the country. Surely they have nothing to fear from a system that would bring to them the advantages of which I have spoken and which would place the entire burden of taxation upon the margin of production which they how pay as rent to private owners.
Again, farm laborers are not to be overlooked in considering the effect of the proposed reform upon the interests of our farming population. To the farm laborers the single tax would open up unlimited opportunities for securing homes and farms, and for the independent prosecution of the industry in which they are now engaged in menial capacities. It would be a boon to them greater than any that has been offered to their class in the whole history of the world. The whole system of farm labor would be changed immediately. The farm laborers would become occupying owners on a small scale. They would work for the larger farmers at such times as their labor might be required, and instead of wasting their minds and energies during periods of idleness, as they do under the present system, they would devote such periods to the cultivation and improvement of their little farms and homes.
All groundrent in country and city would fall to the economic line and remain at the economic line, leaving to labor and capital always the full share of production necessary to make it profitable to those active factors. Production and exchange would go on uninterruptedly. Periods of industrial depression would pass into history and would cease to afflict mankind. The distinctions between dominant and servient classes, that are now so alarmingly growing in this country in spite of our theoretical political equality, would disappear like the shadow of a distempered dream, and a great commonwealth of free and independent American citizens would spring up, filled with a new sense of individual liberty; rooted to the soil of our country, and correspondingly devoted to our institutions; supporting and sharing her educational institutions; burning with the same high spirit of patriotism with which the independence of their homes inspired the yeomanry that were once the glory and the pride of England; their lives, their property, their sacred honor, at all times religiously pledged to the institutions of our country and to our country's flag, which would then most truly be the emblem of liberty, equality, justice; of independence in home and industry secured to all beneath its folds.
The decline of patriotism in recent years has been deplored, and it is deplorable, but it has a cause. Men love the institutions to which they are attached and of which they are substantially and efficiently a part; they love the country which secures to them liberty, equality, and justice, and independence in home and in industry. Just in proportion as the people are rooted to the soil, are free to engage in productive labor for the satisfaction of their wants, and are secure in the enjoyment of the fruits of their labor, their patriotism increases, even to intensity; and just in proportion to their severance from the soil, to the closing of natural opportunities against them, and to the power of classes to despoil them of the fruits of their labor, do they become unpatriotic and cease to sympathize with the institutions of the country which make them tenants in their home lives and slaves in their industries.
What constitutes this country? What is it that makes up the country that we call ours? Is it not the natural resources, the fruitful lands, the. mineral deposits, the stores of coal and petroleum, the forests, and all the raw materials provided by nature for development, by labor, into forms of utility? These constitute our country, and the owners of those resources are the owners of our country. They are the dominant class, and all others are here but by their sufference on the terms fixed by their arbitrary will, yielding tribute to them, as owners of our country, for the privilege of dwelling and laboring within its borders.
The power of eviction carries with it all lesser power of control. The monopoly of the earth upon which we live and from which we must draw our subsistence gives a power to the monopolists over the landless involving life and death. There can be no such thing as political or social equality between the landed and the landless classes. The landless class must ever be the industrial slaves of those who own the natural resources, and they can be freed only by the destruction of land monopoly. The multiplication of landowners will never improve the condition of the landless class, because it simply increases the number of petty tyrants whom the landless classes must support, as the price of their privilege of using the land.
The small landlord whose groundrent affords him a bare living is the most exacting and merciless of all landlords. This has been the experience of Ireland and of all Europe, and it is an experience with which the people of America are becoming rapidly and sadly familiar. To re-establish the political and social equality necessary to the perpetuation of our form of government we must extend land ownership to all. All citizens must be equal owners of the country and of all its natural resources. Then, and never until then, can the poor man say in truth, "This is my country." This condition the single tax, when carried into full operation, will accomplish. This condition the single tax will forever maintain.
It seems to me that the single tax is nature's own provision for the revenues required by the social organizations which spring from the natural gregariousness of men. It is God's fore-ordained revenue system.
Heretofore there has been no scientific system of taxation in the civilized world, because taxation has always been regarded as an arbitrary method of meeting the needs of purely arbitrary and artificial human organizations. Taxation has had no scientific basis because society has not been recognized as the outgrowth of natural laws, but as the mere creature of human contract, to which men were driven, not by any natural law of association, but by the wants and fears which they experienced in isolation.
Human association being regarded as purely arbitrary, it has not occurred to the statesman that there could be any natural provision for the payment of its necessary expenses; and so arbitrary methods of meeting those expenses have been constantly resorted to. They have never given satisfaction, and they have been changed with every recurring opportunity for legislation from the establishment of human governments to the present time. They have been repeatedly changed, but one arbitrary system has always been substituted for another, and they have all failed, equally, to give satisfaction.
The single-tax system has a scientific basis. It rests upon the idea that the Creator has made mankind gregarious; that men come together in societies in obedience to that natural law of gregariousness; that the organization of men in societies and communities gives rise to the necessity of public revenue for general common uses, and that the unearned increment of the land upon which each community, is established, which grows with the growth of population, and as the result of the presence, industry, and enterprise of the whole people; attaching to the locality on which the community is established; growing in exact proportion to the growth of the community's need for public revenue; growing by virtue of and as the immediate effect of the same laws which produced the necessity for public revenue, is nature's own provision for meeting the requirements of the community for such revenue.
This is in exact accordance with what we know of the universal correlation of natural laws throughout the entire universe. The law of natural compensations is so universal that scientists have unhesitatingly asserted that wherever a want is created by the operation of natural laws, the means of satisfying that want are produced by the operation of the same laws. So universal is that law that wherever a poisonous serpent crawls we are told that a plant grows near which is an antidote for the poison of his bite; that wherever the nettle grows, the nettle weed is at hand to deaden its sting.
To the student of nature, therefore, it is only necessary to show that human society is formed in accordance with a natural law of gregariousness, and that the necessity for public revenue arises out of such gregariousness, and the immediate conclusion with him follows that the operation of the same natural law must have produced a means of satisfying that want which, if resorted to, will not impose any burden upon individual men. We find the facts to correspond with the law, thus declared as the result of universal experience in the study of nature.
I remember when the first settlers went into the rich and fertile valley of the Salinas River in California. The land was public and open to settlement. The first settlers naturally sought out the richest and most fertile soil. It had no market value then, because equally good land was lying all around open to settlement. Soon the community numbered twenty to thirty families. Then came a general merchandise store to furnish them with their groceries, clothing, farming utensils, and the like. The storekeeper became the purchaser of the farm products and arranged for their shipment to the consuming markets. The farmers hauled their products to the store and returned with their supplies.
This made the store their common trading center. It was located on ground far less productive, from an agricultural standpoint, than the average land in the valley, but it was better situated as a trading point, because it lay in a direct line between the farming land and the landing place of the vessels plying between that section of country and the metropolis of San Francisco. When the blacksmith came to establish his shop he naturally located at this trading point as the place most convenient to his customers and most advantageous to his business. Then a common school was established by general consent at the trading center.
At this point in the development of the community, the necessity arose for a small amount of public revenue, for the building of a schoolhouse, the payment of the school teacher, and the graveling of the roadway constituting the main street of the village, over which the wagons of the entire community were regularly driven at least once a week. But with the experience of that need for public revenue, there came, as a result of the presence of that small population, a general desire for land situated near the trading center, and such land was worth a small premium over equally good land situated at a greater distance from the center. The population of the community grew. Its need for public revenue grew with its growth, and the value of the land, radiating from the center, grew in exact proportion to the increased demand for public revenue.
The appropriation of that land value to public use would have harmed no man, because the growth of the community made it worth the premium to any man who might use it. If it had been taken for public use, no tax of any kind need ever have been imposed upon the industries of the people for the purpose of meeting the requirements for public revenue. It was not taken for public use. Private owners appropriated it, as an unearned increment, and were thereby enriched at the expense of the community, which produced that increment, but failed to apply it to the public use.
What I observed in the growth of the town is exactly true of every other city, town, hamlet, and school district in the land. The city of San Francisco, with its 325,000 inhabitants, has a greater need of public revenue than has the town of Castroville, but that greater need of revenue is exactly proportionate to its greater population. With the coming of the greater population of San Francisco, the rental value of the land of the peninsula of San Francisco has increased in exact proportion to the increase of its need for public revenue.
New York has a greater population, and a correspondingly greater need of public revenue, than San Francisco; but the rental value of its land is correspondingly greater than the rental value of the land of San Francisco. London has a greater and denser population than New York. Its need for public revenue is correspondingly greater than that of New York, but its land value has kept pace with its need for public revenue, and bears the same proportion to it that the rental value of the land of Castroville bears to the needs of Castroville for public revenue.
The land values of San Francisco, of New York, and of London have risen as the result of the presence, industry, and enterprise of the whole people of each of those communities. Its appropriation to public use would at all times have satisfied all the needs of those cities for public revenue, while its appropriation by private monopolists, as an unearned increment, has not only imposed great tax burdens upon the people who produced the land values, but has also resulted in the encouragement of land speculation, the closing of the natural opportunities and resources against industry and commerce, and in making labor and capital tributary to a non-producing class.
We assert that the appropriation of land values to public use is the natural system of taxation — the natural means provided by the Creator for the satisfaction of social wants; that the right to appropriate the rental value of all lands to public use has been reserved by the people against every foot of land that has ever gone into private ownership; that it is not only just that it should be appropriated to public use, but that the failure to appropriate it is an injustice to every citizen who by reason of its private appropriation is compelled to bear the burden of any other form of taxation for the support of the government, and that it is an injustice to every citizen who by reason of the land monopoly that the private appropriation of this unearned increment of land encourages, is limited in his natural opportunities to establish an independent home or an independent industry.
The amendment which I have offered strikes out all of the sections of the amendment offered by the gentleman from Tennessee [Mr. McMillin], which provide for the levy and collection of a tax on incomes, and proposes to raise an equivalent amount of revenue by a direct tax on the value of land in the United States, apportioned to the States and Territories in proportion to their population.
The immediate purpose of my amendment is to provide a method better than the general income tax for $31,000,000 to meet a portion of the deficiency expected to arise under the Wilson tariff bill. I have shown that the income tax, proposed by the gentleman from Tennessee [Mr. McMillin], can nearly all be shifted from the immediate payers to the shoulders of the poor, or comparatively poor, who consume the products of the industries out of which the incomes arise, or who borrow the money upon which incomes, in the form of interest, are paid.
I have also shown that the greatest of all sources of income in this country is the unearned increment of land resulting to private owners from the presence, industry, and enterprise of the whole people, and that that form of income, equal to all other incomes from invested wealth combined, will escape taxation. I have shown that a tax on the value of land, exclusive and irrespective of improvements, will fall entirely upon the unearned increment of land; will burden only the margin of production and impose no burden whatever upon production; that it cannot be shifted; that its tendency will be to make land speculation unprofitable; to discourage land monopoly, and to open up the natural resources of this great country to the citizens of the country on equal terms.
I have freely and frankly admitted that my amendment is intended only as an entering wedge, to be followed, as rapidly as opportunity will permit, by other legislation on the same line and principle, until the whole burden of taxation for national, State, county, and municipal purposes shall be removed from industry and commerce, and from consumption, and shall all be levied upon the rental value of land, irrespective of improvements — not upon the rent of land, for that would be a tax on the use of land, but upon the rental value, which includes the rental value of all land, whether used or unused.
I have shown that the complete establishment of that system of taxation would make it unprofitable for any man to own or hold land for any speculative purpose. That land would therefore be held only for the uses for which it is best fitted, and that unused land would be open to the people for settlement upon the sole condition that they should pay its economic rental value to the public whenever it should acquire such rental value.
I have shown that such a system of taxation would entirely destroy the power that monopolists now have to levy tribute on labor; that it would open up natural opportunities for the immediate redistribution of such labor as, in the advances of material progress, is displaced by inventions and by improvements in the arts of wealth production; that it would set labor free from the dominion that wealth now holds over it; that it would do away at once and forever with the surplus labor now congregated in industrial centers, in enforced idleness; that it would immediately and forever do away with the degrading competition which results from the constant pressure of the presence of the "army of the unemployed," whose necessities, and not the value of labor, measure the wages that all labor shall receive.
I have shown that this restoration of natural opportunities to labor would do away with the class distinctions and class dominion that have already brought such wretched consequences to our country and that threaten its social and political destruction. I have shown that it would do away with industrial depressions by removing the power that the landed class now has to raise its groundrents so high as to make industry and commerce unprofitable to labor and capital. I have shown that it would make in this country the greatest and noblest commonwealth that has ever existed in the world; I have shown that it would give to every citizen an equal stake in the country, an independent home, and unlimited opportunities for independent self-employment.
In a word, that it would make the citizens of this country equal sharers in the common heritage — the measureless and inexhaustible resources of this country. I have shown that as a mere fiscal reform it would afford the simplest, least burdensome, most inexpensive, and least inquisitorial system of taxation which the ingenuity of man has ever yet suggested; and I have shown that in addition to producing ample revenue for the needs of all our government, it is also calculated to produce the highest and most desirable moral and material advantages to the whole people; that in addition to being the best system of raising revenue for public uses, it would be the most powerful of all conceivable agencies in establishing equality, liberty, and justice among all of our citizens.
The monopoly of land is a continuing wrong against mankind. It is not like the misappropriation of goods, a single wrong afflicting only the person against whom it is originally perpetrated. The monopoly of land afflicts the succeeding generations of the landless people just as severely as it does the people who were first despoiled. The monopoly of the land of Ireland works just as great a hardship on the present generation of the Irish people as the original appropriation inflicted upon the generation then living. This is because personal property is intended for the satisfaction of immediate wants, and the wrong of its misappropriation passes away when the time for its consummation has passed. But land is the source of subsistence for all generations, and its private monopoly wrongs and injures every generation against which it bears.
I do not expect the amendment which I have proposed to be adopted at this session of Congress. It is not offered with any such expectation, but its presentation and discussion marks a new era in the tax-reform movement.
I know that many members of this House are already favorably disposed toward the single-tax system, but I know that most of those who favor it feel bound to support the income tax, as a step in the right direction, and that they will not vote for this or for any other measure as a substitute for the income tax. But I wish the world to know that there are even three or four men in the present Congress who are willing to stand up and be counted for the great principle of human rights, to which, in my judgment, a large share of the future belongs .
I shall, therefore, when the vote is taken, without any desire to delay proceedings, call for a division; and I hope that those who vote for the amendment may be granted the privilege of having their names recorded in the Congressional Record. I shall esteem that record as a roll of honor, though I know at this moment of but two other members who are willing to rise with me upon my call for a division. The present is not auspicious to those who judge of the value of a measure by the number of its supporters, but the eternal power of truth is our reliance, and the future is ours.
True thoughts have moved the world before,
And so they shall again.
'Thought moves faster now than in the olden time, and the world is ever more and more inclining to be guided by reason.
A change cometh over our sphere
And the old goeth down to decay;
A new light hath dawned on the darkness of yore,
And men shall be slaves and oppressors no more.
We have reason to congratulate ourselves upon what to you must seem an extremely small beginning for a great undertaking. But we see the truth as you will see it when you have devoted yourself to its study as we have done. We know that the true scientific basis of taxation is to be found in the sanctuary of eternal justice. We know that we are proceeding along the lines of natural law, and to establish the true relations between society and the individuals who compose it; between mankind and the bounties which the Creator has provided for human subsistence and comfort.
We have confidence in the ultimate triumph of right, in spite of all the powers that may oppose it. We who have been in this struggle from the beginning have observed the fermentation and purification of thought upon this question as you have not seen it. We are filled not merely with the zeal which accompanies every struggle for the right, but with the knowledge also that the leaven of thought on this great question is working among the people. And we know that regardless of what we may do, or fail to do hereafter, the brightest and bravest of mankind are ready to take up the gage of battle where we leave it and to carry it to the goal to which our efforts point. In this struggle the champions of natural justice cannot win all of their battles, but they will continue their work through victory and defeat to final triumph. We do not now know who may be the future champions of this reform, but this we do know:
The strife begun shall never cease
Till all mankind are free.
The CHAIRMAN. The question is on the amendment offered by the gentleman from California.
Mr. McMILLIN. Let us have a vote, Mr. Chairman.
The CHAIRMAN. The committee has ordered that a vote be now taken on the amendment of the gentleman from Tennessee [Mr. McMillin], and any pending amendment. There is one pending amendment, that offered by the gentleman from California [Mr. Maguire] which the Clerk will now report.
The Clerk proceeded to read the amendment.
Mr. McMILLIN. That has been read once, and unless some gentleman desires to have it reread I ask that it be not read.
The CHAIRMAN. The gentleman from Louisiana [Mr. Blanchard] asks to have it reported.
The amendment was again reported.
The CHAIRMAN. The question is on agreeing to the amendment to the amendment.
The question was taken,, and the Chairman announced that the noes seemed to have it.
Mr. MAGUIRE. Division.
The committee divided; and there were — ayes 6, noes 180.
So the amendment was rejected.
Mr. JOHNSON of Ohio. Mr. Chairman, I desire to put on record the names of the gentlemen who have had the foresight and the patriotism to vote for this single-tax amendment. They are the gentleman from California, Mr. Maguire (the mover of the amendment); the gentleman from New York, Mr. Tracey; the gentleman from New York. Mr. Warner; the gentleman from Ohio, Mr, Harter; the gentleman from Kansas, Mr. Simpson, and myself.
Posted on March 03, 2016 at 09:03 PM in boom-bust cycles, direct taxation, Earth for All, equal opportunity, income tax, land different from capital, land monopoly capitalism, land speculation, landlordism, monopoly -- not the game, Natural Public Revenue, natural resources, opportunity, population growth, private property in land, rural isolation, single tax, unearned increment, urban land value, usufruct, wages | Permalink | Comments (0)
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The House having under consideration the bill (H. R. 1) to repeal a part of an act approved July 14, 1890, entitled "An act directing the purchase of silver bullion and the issue of Treasury notes thereon, and for other purposes":
Mr. MAGUIRE said:
Mr. Speaker: Since addressing this House on Wednesday last, my attention has been called to some very important facts, coming to us from the colony of New Zealand, which tend very materially to confirm the views which I then expressed concerning the real cause of, and the true remedy for, industrial depressions.
I then took the position that the constant upward tendency and pressure of groundrent, as a factor in the distribution of wealth, periodically made production unprofitable to the active factors — capital and labor — and thus unnaturally checked production when all natural conditions were conducive to prosperity.
I also suggested, merely suggested, because its discussion in detail was not in order, that the true remedy for this primary and universal cause of industrial depressions was the appropriation of the unearned increment, or rental value, of all land to public use by means of a single tax on land values.
About two years ago, sir, the government of New Zealand took the same view of the cause of our periodical depressions and amended its taxation laws on the lines of the remedy which I have suggested. The amendments were crude, but they were on the right lines. All reports show that those amendments to her taxation laws have been of wonderful advantage to that colony.
Our consul at Auckland, Mr. J. D. Connolly, stated in a recent interview that there had been no industrial depression and no financial crisis there.
Mr. Thomas Brown, a leading citizen of that colony now in this country, in a recently published statement says that work is plentiful at good wages, that the colony has not, during the past five years, suffered any disturbance of either credit or industry and that the future promises increased prosperity.
Mr. J. T. Farrell, of New South Wales, has just published a letter in the St. Louis Courier commenting on the marvelous escape of the colony of New Zealand from the depression and crisis which have desolated all of the other English colonies in that section of the world.
From that letter, sir, I desire to read the following extracts:
Under the rule of the new political element which came into action there at the last general election, the prosperity of the colony has been amazing. Today it is incomparably the best colony of the group for a majority of wage-earners, and its advantage increases. The latest returns show a great increase of imports and exports, a heavy surplus of current revenue over current expenses, made up of advances in the returns from every department of public service, great expansion of national wealth as shown by large deposits in the savings and other banks, and an almost total disappearance of the local unemployed.
A wholesale exodus of workers from all the colonies to New Zealand has been going on for months. The lands are being settled and used, and every indication points to a future of even greater prosperity. Good government and the taxation of monopoly have caused this result. It was predicted that the land and labor legislation would result in continual deficits in the revenue, but as a matter of fact last year they paid $1,000,000 of their national debt, besides carrying $500,000 into the public works fund, and the treasurer estimates the surplus this year at $1,650,000.
Landowners see that further taxation of land values is sure to come. These values are steadily falling and land speculation is dead. Therefore access to land for use is easier than ever before, and production goes on apace.
Why is New Zealand the only oasis in the industrial desert to which the civilized world has been reduced?
Is it because her reformed taxation laws have timely checked the monopoly of her natural resources? That is my conclusion.
I cannot personally vouch for the correctness of the statements, but I believe them to be true.
If they be true, the reformed taxation system of New Zealand deserves a prompt and thorough investigation by this Government. If New Zealand has discovered an effectual method of averting industrial depressions, as I believe she has, the people of this country must be saved from any further recurrence of such awful calamities.
While upon this subject I will read the following extract from a recent number of the Sydney (N. S. W.) Register:
Mr. Henry Matthews, late home secretary of England, says of New Zealand: "Altogether it seems to me a most desirable place to go to. They have the labor difficulty there, of course, as elsewhere. There seems to be so much scope for individual enterprise that it is well nigh impossible to obtain labor for ordinary purposes at reasonable rates. But this difficulty will, I suppose, be overcome in time."
You will notice, sir, that Mr. Matthews speaks deprecatingly of "the labor difficulty" existing in New Zealand.
But the context of his statement shows that it is not a labor difficulty which laborers have any cause to fear.
The labor difficulty which they (the laborers) fear is the difficulty of obtaining employment, not the difficulty of obtaining laborers to perform the work which offers.
The secret of the matter is that under the taxation laws, which have broken up land monopoly in that colony by making it unprofitable, the surplus labor of the colony has been readily distributed upon the land.
This has made it impossible to maintain an army of unemployed laborers in New Zealand to menace employed laborers at the centers of industry.
This sets labor free and enables it to control the situation and to secure to itself a larger share of the wealth which it produces, while rent, the toll-gatherer's portion, is correspondingly reduced.
Every man at all familiar with our industrial system knows how the army of unemployed laborers maintained in every industrial center of this country and of Europe enslaves the laborers who are employed.
The unemployed laborers, driven by the fear of want, and too often by actual present hunger, bid at every point for the places of those who are employed.
As their necessities become more pressing, their struggle to secure the places of their employed brethren becomes more intense.
They offer to work for lower and lower wages, regardless of the value of their labor, because a bare living is better than starving, or, as the homely adage expresses it, "Half a loaf is better than no bread."
This unnatural competition with hungry and helpless men, even in our land of "inexhaustible natural resources," forces all wages down to the starvation point (the bare living point), except in so far as labor unions have been able, by infinite toil and infinite waste of means, to resist the tendency.
This surplus labor should be distributed upon the unused land of our country. God made it for use, not for speculation, not for monopoly.
I do not say that all, or even a quarter, of the actually idle and destitute laborers who crowd our labor markets would, or could, go out upon the land if it were made free to them. But I do say that a large proportion of the laborers in the great centers, employed as well as unemployed, are better fitted for rural pursuits, and that rural pursuits would be more congenial to them than the intense struggles and privations of the city laborers life.
These would go out upon the land if it were reasonably free, as they have done in New Zealand.
Their going would relieve the unnatural pressure of competition in the labor markets, and their new industries would create a new demand for labor.
The wages of labor would then be fixed by the value of the labor, as they should always be, and not by the competition of starving men.
"Back to the land," in the language of the distinguished Irish prelate (Bishop Nulty), is the only way to industrial freedom.
LVTfan note: Bp. Nulty's letter is at http://www.wealthandwant.com/docs/Nulty_BttL.html
I found this bit of wisdom in The Public from early 1917:
In the establishment of justice, hot-heads are dangerous. The building of a higher civilization will come through the efforts of warm hearts and cool heads --- not cold hearts and warm heads.
Laurie J. Quinby
Today, it seems as if we have few of the warm hearts and cool heads to choose from -- and the "cold hearts, warm heads" don't seem willing to consider the need for them.
By Joel Fox
One of the more consequential cases to come out of California argued before the United States Supreme Court while Justice Antonin Scalia served was a test of Proposition 13’s constitutionality. Nordlinger v. Hahn was argued before the court on February 24, 1992. The plaintiff, a Los Angeles homeowner, claimed that she was not treated fairly under the equal protection clause of the constitution because she was required to pay more in property taxes when she purchased her home than her neighbors who had resided in similar properties for a number of years. Kenneth Hahn, the Los Angeles County Assessor at the time, was sued in his official capacity.
On an 8 to 1 vote, the Supreme Court ruled that Proposition 13 did not violate the equal protection clause of the constitution and that there was a legitimate state interest in protecting property taxpayers by the method created by Prop 13.
Justice Scalia spoke a number of times during the oral arguments, questioning attorneys on both sides and offering his thinking, often in his characteristic acerbic way.
We’ve never insisted that in any public policy field the State has to choose the most precise way of solving the problem. This is not very precise, but you must admit it solves that problem.
And it seems to be the main problem at which it’s been addressed, that people can’t keep up with constantly increasing taxes on unrealized gains in their home.
And therefore, to solve that problem we have this new tax system.
It’s rough and ready, it’s not perfect, but close enough for government work.
Scalia also noted the certainty Proposition 13 provided taxpayers. When Nordlinger’s attorney said that she had to stretch financially to buy her house, Scalia responded:
But she knows she won’t be stretched any further, doesn’t she?
She knows that next year it’s not going to be anything more than 2 percent worse, and the next year after that no more than 2 percent worse.
Isn’t that some advantage to the people of California?
Later, in considering the pluses and minuses of an acquisition-type property tax system, Scalia declared it a “good trade”:
What she is getting in exchange for that is the assurance that that little house, however much it cost her, is going to be hers and she is going to be able to afford it as long as she has her current level of income, and the people of California say that’s a good trade.
We’re willing to have the one for the other.
She may disagree with it, but why is that an irrational deal to make?
Scalia also posited that California could have solved the tax crisis that brought on Proposition 13 without resorting to an initiative.
Of course, an easy way to solve it would just be as inflation pushes the price up and up, just lower the tax.
There’s no reason why the fact that there’s an unreasonable inflation in the value of property has to result in unreasonably high taxes.
A simple solution…not pursued by those in government.
To read a transcript of the entire Supreme Court hearing on Proposition 13, go here.
Interesting that, like Milton Friedman, who over a period of nearly 40 years called a tax on land values the "least bad" tax, Antonin Scalia saw the answer --- but didn't push it!
Don't rock the boat!
This appeared in a 1943 Henry George School newsletter (which I'm pretty sure was edited by my grandmother, Marjorie Carter (1902-1963) -- something I'd not been aware of!) It is signed by Louis W. Weston.
The Henry George Idea in One Hundred Words
The rental value of land is due to our common human needs. No single individual -- the people as a whole produce that value. It grows larger as the population and its activities increase.
This natural law of rent gives the community the moral right to take all of this value which it creates.
The mistake is made of permitting a few to take this value, thus creating speculation in land, upsetting economic stability, necessitating unemployment and the recurring breakdowns in our civilization.
This fundamental wrong must be righted before wars and all injustice can be abolished.
Posted on February 14, 2016 at 07:11 PM in economic justice, economic rent, Henry George, land rent, make land common property, Natural Public Revenue, P&P Synopsis, peace, privatization, privilege, reaping what others sow, rent-seeking, unemployment and underemployment | Permalink | Comments (0)
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What is there in our economic life more significant than the fact that a majority must pay the relatively few for the privilege of living and of working on those parts of the surface of the Earth which geological forces and community development have made desirable?
And the great owners, who must lose their land in an upheaval, the great owners with access to history, with eyes to read history and to know the great fact: when property accumulates in too few hands it is taken away. And that companion fact: when a majority of the people are hungry and cold they will take by force what they need.
It is better to pay a small amount of rent on your block of land than to pay a large amount in income tax and indirect taxation.
Rent is not a tax. It is payment for the use of a location, determined by the higgling and haggling of the market, and it makes no difference to the land user whether he pays rent to the city fathers or to a private owner.
We abuse land because we regard it as a commodity belonging to us. When we see land as a community to which we belong, we may begin to use it with love and respect.
The men of olden times believed that above all moderation should be observed in landholding, for indeed it was their judgment that it was better to sow less and plow more intensively. To confess the truth, the latifundia [large landed estates] have ruined Italy, and soon will ruin the provinces as well.
Permanent peace can only be established when men and nations have realized that natural resources should be a common heritage, and used for the good of all mankind.
On Caswell's corner lot the Oldham office buildings stand.
He doesn't own the buildings but has title to the land.
The rent's a hundred thousand, but as everybody knows,
The Oldham folks will pay him more as population grows.
Old Caswell's been a lunatic for twenty years in chains.
Those proving the efficiency of industry and brains.
--- George A. Briggs, 1937
There are words there we wouldn't use today, but the point is are still relevant. See also http://www.wealthandwant.com/docs/Sinclair_CoLS.html which begins:
I know of a woman — I have never had the pleasure of making her acquaintance, because she lives in a lunatic asylum, which does not happen to be on my visiting list. This woman has been mentally incompetent from birth. She is well taken care of, because her father left her when he died the income of a large farm on the outskirts of a city. The city has since grown and the land is now worth, at conservative estimate, about twenty million dollars. It is covered with office buildings, and the greater part of the income, which cannot be spent by the woman, is piling up at compound interest. The woman enjoys good health, so she may be worth a hundred million dollars before she dies.
I choose this case because it is one about which there can be no disputing; this woman has never been able to do anything to earn that twenty million dollars. And if a visitor from Mars should come down to study the situation, which would he think was most insane, the unfortunate woman, or the society which compels thousands of people to wear themselves to death in order to pay her the income of twenty million dollars?
The fact that this woman is insane makes it easy to see that she is not entitled to the "unearned increment" of the land she owns. But how about all the other people who have bought up and are holding for speculation the most desirable land? The value of this land increases, not because of anything these owners do — not because of any useful service they render to the community — but purely because the community as a whole is crowding into that neighborhood and must have use of the land.
The speculator who bought this land thinks that he deserves the increase, because he guessed the fact that the city was going to grow that way. But it seems clear enough that his skill in guessing which way the community was going to grow, however useful that skill may be to himself, is not in any way useful to the community. The man may have planted trees, or built roads, and put in sidewalks and sewers; all that is useful work, and for that he should be paid. But should he be paid for guessing what the rest of us were going to need?
Before you answer, consider the consequences of this guessing game. The consequences of land speculation are tenantry and debt on the farms, and slums and luxury in the cities. A great part of the necessary land is held out of use, and so the value of all land continually increases, until the poor man can no longer own a home. The value of farm land also increases; so year by year more independent farmers are dispossessed, because they cannot pay interest on their mortgages. So the land becomes a place of serfdom, that land described by the poet, "where wealth accumulates and men decay." The great cities fill up with festering slums, and a small class of idle parasites are provided with enormous fortunes, which they do not have to earn, and which they cannot intelligently spend.
This condition wrecked every empire in the history of mankind, and it is wrecking modern civilization. One of the first to perceive this was Henry George, and he worked out the program known as the Single Tax. Let society as a whole take the full rental value of land, so that no one would any longer be able to hold land out of use. So the value of land would decrease, and everyone could have land, and the community would have a great income to be spent for social ends.
God made the land, men made fences ---
Stole the earth and lost their senses.
What's the use of idle dreaming,
Spending time in planning, scheming
How to neutralize the blunder
While men still retain the plunder?
Stephen Bell, on Solomon, Eccles. V. 9
Many are familiar with John Dewey's 1928 "An Appreciation of Henry George," which prefaced the book "Significant Paragraphs from Progress and Poverty," but this 1933 essay is worth knowing, too, and it is harder to find online. [See also Dewey's 1933 radio address, "Steps to Economic Recovery".]
I like his summation, in the first paragraph: "Practical Idealism."
John Dewey's Foreword to The Philosophy of Henry George
by George Raymond Geiger
THE life history of Henry George is typically American even though it has few parallels in this country. There are many instances of rise from poverty and obscurity to wealth or fame or both in the realms of business and politics, and there have been many self-made thinkers in various fields. But Henry George stands almost alone in our history as an example of a man who, without a scholastic background, succeeded by sheer force of observation and thinking that were dictated by human sympathy, and who left an indelible impress on not only his own generation and country but on the world and the future. He is an outstanding example of something of which we hear a good deal, but mainly in the way of unjustified boasting, since the quality in question is more marked in talk than evident in conduct: Practical Idealism. He is an example of what may be accomplished by unswerving devotion and self-sacrifice to a dominating idea. He was, we might say, a man of a single idea, but the statement would be misleading unless we also said that he broadened this one idea until it included a vast range of social phenomena and became a comprehensive social philosophy.
Henry George is typically American not only in his career but in the practical bent of his mind, in his desire to do something about the phenomena he studied and not to be content with a theoretic study. Of course he was not unique in this respect. The same desire has been shared by many British economists. John Stuart Mill's theoretical writings were ultimately inspired by interest in social reform. But there is something distinctive in the ardent crusade which George carried on. His ideas were always of the nature of a challenge to action and a call to action. The "science" of political economy was to him a body of principles to provide the basis of policies to be executed, measures to be carried out, not just ideas to be intellectually entertained, plus a faint hope that they might sometime affect action. His ideas were intrinsically "plans of action."
Unfortunately, in some respects, the American public was practical-minded in a much narrower sense and shorter range than was Henry George himself. It is perfectly true that the culmination and indeed the meaning of his social philosophy is to be found in his proposals regarding taxation. It is also true that many persons accept and are justified in accepting his taxation scheme without having knowledge of or interest in the background of principles and aims with which this scheme was organically associated in the mind of Henry George himself. But nevertheless the connection between the theoretical part and the practical part was vital in the thought of George himself. Something vital in acquaintance with his thought is lost when the connection is broken. One may understand the plan of tax reform by itself but one comes far short in that case of understanding the idea which inspired Henry George.
In spite, therefore, of the immense circulation of George's writings, especially of Progress and Poverty (which I suppose has had a wider distribution than almost all other books on political economy put together), the full sweep of George's ideas is not at all adequately grasped by the American public, not even by that part which has experienced what we call a higher education. Henry George is one of a small number of definitely original social philosophers that the world has produced. Hence this lack of knowledge of the wider and deeper aspects of his thinking marks a great intellectual loss. In saying this, I am not speaking of acceptance of his ideas but of acquaintance with them, the kind of acquaintance that is expected as a matter of course of cultivated persons with other great social thinkers, irrespective of adoption or nonadoption of their policies.
I should hesitate to write in this way, lest I might be thought to depreciate the practical importance of his plan of social action were it not for two things. One of these things is the fact which I have already stated. His theoretical conceptions and his program of social action are so closely united that knowledge of the first will inevitably lead on to a better understanding of the second. The other reason is more immediately applicable. Actual social conditions (like those for example of the present) are bound to raise the problem of reform and revision of methods of taxation land public finance. The practical side of George's program is bound in any case to come forward for increased attention. It is impossible to conceive any scheme of permanent tax reform which does not include at least some part of George's appropriation by society for social purposes of rental value of land. For instance, we are just beginning to understand how large a part unregulated speculation has played in bringing about the present crisis. And I cannot imagine any informed student of social economy denying that land speculation is basic in the general wild orgy, or that this speculation would have been averted by social appropriation, through taxation, of rent. To a large extent, then, some knowledge of the directly practical side of George's thought is bound, in the long run, to result from the movement of social forces. A corresponding knowledge of George's theory of the importance of land -- in the broad sense in which he uses the word -- in social development, of the causes of moral progress and deterioration, cannot be secured, however, without an understanding of his underlying philosophy.
The importance of a knowledge of this underlying philosophy is urged in spite of the fact that the present writer does not believe in the conceptions of nature and natural rights which at first sight seem to be fundamental in the social philosophy of Henry George. For, as I see the matter, these conceptions are symbols, expressed in the temporary vocabulary of a certain stage of human history of a truth which can be stated in other language without any serious injury to the general philosophy implied. It has repeatedly been pointed out that the real issue in the "natural rights" conception is the relation of moral aims and criteria to legal and political phenomena. Personally, I have little difficulty in translating a considerable part of what George says on nature over into an assertion that economic phenomena, as well as legal and political, cannot be understood nor regulated apart from consideration of consequences upon human values, upon human good: that is, apart from moral considerations. The question whether a "science" of industry and finance, of wealth, or of law and the State, can exist in abstraction from ethical aims and principles is a much more fundamental one than is the adequacy of certain historical concepts of "nature" which George adopted as a means of expressing the supremacy of ethical concepts, and on this fundamental question I think George was in the right.
This statement brings me to the connection which exists between the foregoing remarks and the work of Dr. Geiger to which the remarks are introductory. In connection with every topic he discusses, Dr. Geiger makes it clear that a vital connection between ends, human values, and economic means is at the basis of George's distinctive treatment. This fact alone gives a distinctive and timely color to this book. Moreover, the significance of Dr. Geiger's treatment does not stop at this point. There is no phase of the work and the influence of Henry George which is not considered. The account of his life and development forms a personal thread which binds all the parts together. Dr. Geiger has given us a book which meets the contemporary demand for an adequate interpretation of the thought and activity of Henry George regarded as a vital whole and not as an aggregate of isolated parts. It will enable the reader to obtain a clear and comprehensive view of one of the world's great social philosophers, certainly the greatest which this country has produced.
Single Tax as a fiscal policy
BY L. B. SCHWARTZ
of the St. Paul Bar
"OUR present taxing system,” the late Judge Jaggard of the Supreme Court of Minnesota, once exclaimed, “is the most asinine imaginable.” A strong statement that! And yet any student of taxation will tell you that it might be applied not only to the system in Minnesota to which the judge was referring, but to the fiscal policy of every state in the Union.
Benjamin Harrison, President of the United States as well as eminent constitutional lawyer, jokingly suggested as the only reform possible, an invitation to the rich men of the country to come forward and generously hand over all their property to the government. Every remedy seems to have been suggested from that of President Harrison to that recently made by a self styled “economist,” who urged that all property should be taxed, as the true principle, and to carry it out, that any property wilfully omitted from the taxpayers’ sworn statement should be unceremoniously confiscated by the state.
Wonderful, is it not? Pick out almost any of us, and ask him how he would manage it, if it were his own private business, and I would wager dollars to doughnuts, that he could in a jiffy have a system answering every canon of taxation and every dictate of justice. And yet there we stand, 90,000,000 of the most progressive people on earth (by our own admission), and what does Shakspere say -- “in apprehension so like gods?” — and heirs to all the wisdom of the gods that went before us, able to avail ourselves of their mistakes and experiences from hoary old Egypt’s time up to our very own, tinkering with the problem in over forty independent experimental stations, and yet, unable to evolve a better system of raising our public revenues than one characterized and generally admitted to be asinine.
Now what are the canons of taxation? The economists tell us—but let us not rely on what others tell us. What, shall another tell us how to run our own business? We, all the people, want to do the right thing, don’t we? So let us ourselves evolve a system which will do the right thing by all of us. What requisites, then, must a system of taxation have in order that it may deal justly with all of us and with each of us.
Well, first, it must be a just tax. But what is a just tax?
Qualification 1. A just tax must not have the effect of taking property from one of us and transferring it to another’s pockets; and conversely, it must not take something belonging to all of us and transfer it to one of us, nor take from one of us more than his share.
Qualification 2. A just tax should be certain, so that it shall not offer any incentive to graft and corruption, to injustice, and so that each one of us should be able to see that it works justly.
Qualification 3. A just tax should take from the citizen in proportion to the benefits he receives, value for value given, and no more.
Qualification 4. A just tax should not be oppressive, nor kill nor drive away the goose that lays the golden eggs.
Qualification 5. A just tax should be easily ascertainable and collectible, or inexpensive, as the expense also falls on the citizens.
Qualification 6. A just tax should stay put,-—one that cannot be shifted; for if the one paying it can shift it by adding the tax to the price of the article taxed, it will finally occur that some will be enabled to shift the whole burden to the shoulders of others.
Here I pause, when some “economist” cries out, “Oh, but you have left out the most important canon; to wit, that in order to be just, the tax should fall as equally as possible on all the members of the community, and that this merely means that each ought to pay according to his ability."
That sounds well, but let us see. Just imagine an office building, one of your 45-story modern sky scrapers, owned by its tenants in common. Now you have each tenant occupying a certain space. Its heating, gas, and water plants are its public utilities. Its elevator service is its traction system. It has its police and health department in its janitors. It perhaps has its private fire department, and possibly its own private hospital in its sick and resting rooms. A complete little government or city in itself. Now suppose you go to those tenants and ask them to raise the revenues for the support of that building by a tax, what would they call assessing each other equally? Say it costs $20,000 per annum to run that building, would they divide the expense among its two hundred tenants, assessing each $100? Or can you imagine them assessing each other according to their ability to pay, or the amount of business they did? Not if they were sane. What then? Manifestly they would assess each tenant according to the value of the space he occupied in that building. That, each would instinctively recognize as the just tax, as the one that treated all with equal favor, — equally, equitably, and justly. That tax or assessment would be easily ascertainable and collectible, would stay put, and could not be shifted from one tenant to another. It would take from each a value that belonged to all, and from no one, a value belonging to him alone. It would entail no corruption; for each would know how much space he occupies and the value of that space. It would be inexpensive, as one official could assess and collect all of it. It would not be oppressive, for you could not collect more than the value of the space each occupied; and if a tenant paid less than that value, other tenants would object to his taking part of a value that belonged to all for his own private pocket. If the amount collected was more than was needed, the surplus would be put in the public treasury for the benefit of all the tenants; and if they desired, they might with it add a library or any other improvement in the building that would add to their common use or enjoyment; or they might, if they desired, grant a pension out of the surplus to such tenants as were disabled in that building.
Suppose the tenants should, however, adopt your system of making each pay according to his financial ability. What would happen? Why the same thing that is happening wherever it is tried. How would you gauge the tenant’s ability to pay? Well, as we do now, by his sworn returns, of all his property, money in bank, etc. Second, by the kind of clothes and furniture he had. Third, by a system of spies prying into the private affairs of each tenant. Fourth, perhaps, by making each tenant pay a tax on everything he bought outside of the building. (This would, of course, serve the double purpose of raising revenue, and “protecting" the tenants.) Fifth, by an income and inheritance tax; and lastly, by assessing each tenant, in front of whose door you had repaired the hallway, so that tenants walking in and out of his office should not break their necks.
The result would be as follows: Most of the tenants would become perjurers, and swear they were paupers. The system of spies, euphemistically termed deputy assessors, would be rather expensive. The temptation to use bribery and show favoritism would prevail, as each tenant would try to get as low an assessment as possible. The more cunning and able who could control the election of assessor would pay less, and the weaker and honest, more. Soon you would have a “Boss,” who would by promises and favors control the election. The tenants, who like the farmers, must keep their property in full view, would get the worst end of the bargain, while the bankers and brokers who could conceal their assets, the best end of it. The tenants selling goods would add their assessment to their expense, and so shift the tax to the purchasing tenants, and so no one could tell who was actually paying the assessment. Some of the tenants would soon engage in smuggling in goods to evade the "protective” tax. Incomes and inheritances would be concealed as much as possible, the honest and the guileless alone paying their share. You would have a premium on crookedness and a fine on honesty. The tenants would be discouraged from buying good clothes and furniture, besides their purchasing power being diminished by the tax; and they would fight like steers, to keep the defective walk in front of their door from being repaired. Some of the more farsighted tenants would pre-empt as much space as they could get, and sublet to others as they came in, holding some of the space for a rise in value. Soon some of the tenants would discover that they did not need to work, that it paid better to sit back and let the other tenants work, and just pay them rent. This rent would of course go up with every increase in the prosperity of the working tenants, so that no matter what the working tenants produced, the increased rent would absorb it all. With every new tenant increasing the value of space in the building, and the space lords getting more rent than they could use, they would then loan it back to the other tenants as capital, and in the form of interest still further deplete the wealth of the working tenants. And why any sensible tenants should go to all that expense, trouble, and complication, when by assessing each according to the space each occupied it could all be avoided, is beyond the comprehension of a sane mind.
Yet is not that exactly what we, all of us, tenants in common of mother earth, — of city, county, state, and nation, — are doing? Here are a thousand and one proposals, a very babble of tongues, — tariff for revenue and tariff for protection, income, inheritance taxes, direct and indirect tax, — and there is the one plain thing to do, so evident to the single taxer, and yet all others seemingly unable to grasp the thought. For the single tax is nothing more nor less than this, — abolish all other taxes, tariffs, and assessments. Instead assess yourselves according to the value of the space you occupy.
Here some one objects, “Would you put all taxes on that little farm, or that little home, and exempt the stocks and bonds of the rich and the stock of the department store?” My answer can only be, that if that were the effect of the single tax, all the “interests” in the country would be clamoring for it, instead of fighting it tooth and nail, as they are doing in Oregon, Washington, Missouri, and Ohio. In the last state, at its recent constitutional convention, the large business interests there represented had a prohibition put in the new Constitution against the initiative and referendum, then adopted, ever being used to bring in the single tax. Now the initiative and referendum are always desired by the common people. The rich do not need it. They can usually get what they want more easily by lobbying through the legislature. And yet these rich interests put in a constitutional inhibition against the “mob” ever using the initiative to lift the burden of taxation from stocks and bonds and putting it on the small farm and home. Queer, is it not?
No, Mr. Objector, the only thing about the farm that would be taxed under the single tax, would be the site value of the land. His improvements, cultivation value, stock, buildings, and machinery would all be exempt, and so he would pay less than he does now. One lot in a city 40 by 100 feet, that is valued at $10,000 would pay more taxes than three farms of 160 acres each. And that lot in New York that recently sold for $800,000 would pay as much taxes as a whole county of farmers.
Under the single tax, most of the value of that lot in yearly instalments would go into the public treasury to meet the expenses of government, and so would take off the taxes now resting on the small home and farm. Now its value goes into private pockets, and is paid by the farmer and small home owner, when they buy the goods manufactured or sold on that lot. Having paid this, Mr. Farmer and Mr. “Small-home-owner” are taxed again on their piano, sewing machines, sugar, and what not, by a complicated system of taxes, tariffs, and licenses, all designed to “protect” him, yet it is estimated, strange to say, by taking away from $15 to $20 a month of his small earnings.
A lot on which a small home stands is probably worth $1,000. It is on that valuation that the single tax would be levied, the building, usually worth twice that sum, being exempt. Here Mr. Objector again demurs, "Here is a man that owns a lot on which stands a skyscraper worth $100,000, and next to it is a lot of the same size on which stands a “humble home.” Would you tax them both the same?” My answer is, that humble homes are not erected next to skyscrapers, as the land next to such a building is usually worth say $10,000, and humble home owners are usually not fortunate enough to possess anything more valuable than a thousand dollar lot under their homes. But why should the owner of that skyscraper be fined for building it? By doing so he has benefited the community. We want more buildings. More buildings mean more work and cheaper rent. The man who owns that vacant lot next door is conferring no benefit on the community. He is merely lying in wait, his land absorbing the benefit of every improvement in the community, of every person coming to or born in that community; and at the right moment he will get up, title deed in hand, and hold up the user of that land for a certain amount, which amount the community must pay in the last analysis, in the added price of the things sold or produced on that land. Thus, the members of the community will pay him a value that they have themselves produced. If anyone ought to be taxed more, it is the man who holds land idle, and not the one who puts it to use. But who pays that increased tax on the skyscraper? Not the owner, but the tenant. And who pays the tenant? The man who does business with him. So that it gets down again to Mr. Common-man. It is absolutely beyond the ingenuity of man to devise any tax on personal property that will not be shifted.
Can a tax on land be shifted? No. A tax on land, exclusive of improvements, puts a penalty on holding land out of use, and a premium on using, improving, it. It therefore forces more land into use.
The owners of land being obliged to either use it or sell, its price falls. And so, instead of the tax being added to its price, the tax cheapens its price.
“But why,” says Mr. Landowner, “should land alone be singled out of all property for taxation?” Well, Mr. Landlord, for one reason, because our canons of taxation point your way. If those canons are correct, there is but one conclusion possible. If they are not, it is for you to point out the error. For another reason, because the value of land is peculiarly the result, not of your labor, but the result of the working of the community. It is a community-produced value. Anything else that you own is the product of your own labor or some other person's labor. Did you make that land? You might have been in China without affecting its value. You might have never done a stroke of work, and still the value of that land would go up with every increase of population, and every improvement, public or private, in the community. There it is, as it was since the six days of creation. Fifty years ago, it was worth $10. Twenty years ago its value had increased to $200. Ten years ago its value had risen to $1,000, and to-day it is worth $10,000. Yet it is vacant now and always was so. That is the constant phenomenon of land values. Buildings —everything else deteriorates, decays, disappears, becomes cheaper as time goes on. “There is only one crop of land,” and that is ever growing dearer, absorbing the surplus value produced in the community. There in New York it increased $200,000,000 a year from 1896 to 1900. Who made that increase? The labor of its owners? No. Every man, woman, and child coming to the city, every new street laid, library, building, or home put up has made that value. Now if the value was produced by the community, why is not the community entitled to it? What I produce is mine. What you produce is yours. What we all produce is ours. And just as it would be robbery for me to appropriate what you produced, so is it equally robbery for any one of us to privately appropriate what we produce.
Notice further. Just as in that office building, we saw that as the tenants increased, and the building’s needs increased, its space value became dearer, and so the revenues increased; so in the community the same phenomenon appears. In your small village, its needs and expenses are small. So are its land values. As that village grows to the size of the metropolitan city, its land values rise in direct proportion to its needs. And when its expenses require millions, one little lot is worth a hundred thousand dollars or more. Now morally, the owner of that lot is not entitled to its value. Its value was produced bythe community, and it is therefore robbery for him to appropriate it. The single taxer points out that there is the natural source of the government’s revenues. There is the fund which belongs to the community, and to which it alone is entitled. And it is not entitled to one cent of money or property which I individually produced by my labor.
The owner of the land, you object, may have bought it, and gave the product of his labor for it. Suppose, however, he had bought a slave. By law, I admit, he might be entitled to the product of that slave’s toil. But morally, though he had paid a lifetime’s honest earnings for the slave, he would not be entitled to anything that slave produced. You cannot make something rightful property by purchase which is not so in fact. The title, defective at its source, remains defective, no matter how many times transferred.
Consider what is meant by the assertion of ownership to land. The assertion of ownership to this pen or suit of clothes implies the extension of that right to morally own any number of pens or suits, even to the extent of owning all the clothing now in existence. If I acquired all that clothing rightfully, that is, by giving the products of my labor in exchange therefor, no one could object to what use I put that clothing, so long as I did not create a nuisance. That is true from the nature of things. The amount of clothing that can be made is unlimited; and if I choose to refuse the use of my clothing, either by purchase or exchange, that is my business; and mankind must get busy and make other clothing, and until then, if necessary, use fig leafs to cover its nakedness. Presumably, when I acquired that clothing, I had given equal value therefor, — my labor or its product, for your labor or its product. But suppose I should purchase all the earth, its surface, space, or sites. I might have given the product of my labor, but would I be getting in return the product of anybody’s labor? No. All the sellers could give me or would be giving me would be the right (?) not to let anybody work on that land, until they either gave me or agreed to give me part of their labor. Just think what is implied, when I sell land to you and your heirs forever. I give you a perpetual mortgage on all the labor that shall ever be employed on that land from now until all eternity. Generations will have come and gone, I will have been long dead and forgotten, and yet your descendants and their assigns will be collecting a toll from everything produced on that land, — perhaps a half or a third or two thirds interest, — because you a thousand generations back gave me $10 worth of potatoes, and I gave you a piece of paper describing that land.
Now when I owned that clothing I could morally exclude all people from the use of that clothing. Could I, by owning all the earth, morally exclude all people from living on my earth? “Ah,” you say, you are merely pushing a qualified right to an extreme.” My reply is, that for the same reason that you qualify the right, you must also deny it. For why do you qualify the right? “Because,” you answer, “to give me the right to own all the surface of the earth were to give me the power of life and death over my fellow beings; and that right you cannot admit in anyone, because it is inconsistent with the equal right of all persons to be on this earth.” But, say I, the other persons could work for me and so by their labor purchase part of the earth’s surface from me. You then object that the right to sell implies the right to refuse to sell; and if I refused, I could make all people either quit the earth, or give me almost all their produce as rent. The right, you say, must then be restricted so that each person can own a limited portion of the earth’s surface. Well then, say I, let us divide the earth’s surface among all its inhabitants; surely that is reasonable. Now tomorrow a baby is born. He, in course of time, becomes a man. Say his father has sold or squandered his estate, or willed it away to another child. He also has a right to live on this earth, has he not? Must he quit the planet, unless he finds someone willing to sell him a portion of the earth’s surface? If so, then his life is dependent on somebody’s willingness to sell or not to sell. That is, they have the power of life and death over him. And I thought you said that all persons had an equal right to live. So that it seems that your qualified right when'examined becomes no right at all.
The single tax obviates the difficulty by taking the value of every piece of land, the rental value, for the benefit of all the people. Such land as had no value would of course pay no tax, being free to any user.
Government, society, is a benefit that all of us confer on each of us. The price of a benefit should not be graduated according to the ability of the person to pay, no more than when you sell clothing or office space, do you charge a rich man more than a poor man. Get any tax that does not satisfy our canons or qualifications, and it won’t work, that is all. Tax incomes and inheritances, and only the honest will pay it. It violates qualification 2, and so breeds corruption and perjury. It is beyond the ingenuity of man to devise an unjust tax that will work out justly. Tax goods, and you kill the goose that lays the golden egg. Your tax is added to the value, and so decreases the purchasing power of the masses. When you tax dogs you want less dogs. Do you want less goods or buildings? Besides the purchaser pays it, and so it does not stay put. Stocks and bonds are in the nature of mortgages, and no tax has yet been devised which the mortgagee could not shift to the mortgagor.
The tax on land values satisfies all the canons of taxation. It cannot decrease land, but will decrease its price. It can’t be shifted, because it cheapens land. It is easy of assessment. All of it is in view, and its value easily ascertainable. It takes from no one what he produced, and assesses each according to the value of the space he occupies. It is inexpensive to collect, and needs no espionage system. It is just, and free from incentive to graft and corruption. It stimulates the use of land. More land used means more demand for labor, and that means higher wages. More labor employed means more commodities produced, and that means cheaper commodities. High wages and cheap commodities spell, among other things, the solution to the high cost of living. But that is without the domain of my article. I was merely to discuss the single tax as a fiscal system, not as a social and economic philosophy.
and, more to the point, is there a better way to do things, if an efficient economy, more jobs, less income concentration are things we value?
Interesting that, according to these articles, the lords of NYC land will collect 6% or 8% of the land's value when the rent resets. 6 or 8%! (Typical property taxes in NYC for condos run less than 1% of the total value; see http://www.nytimes.com/2012/10/16/nyregion/many-high-end-new-york-apartments-have-modest-tax-rates.html, which includes this paragraph:
"In a study of 2010 nationwide property tax rates, the average homeowner paid a median of 1.14 percent of home value that year, according to the Tax Foundation, a research group. In Manhattan, that figure was 0.78 percent. For the $88 million apartment at 15 Central Park West, 0.78 percent would be $686,000. But this year, the property taxes due on that penthouse were $59,000."
Just think how much productive activity we could untax were we-the-people to collect some portion of that annual land rent for public purposes. And consider how unproductive the Lords of Land are. What have they done to earn that land rent? Is our "tradition" -- to let them keep it -- a wise or just one, or is it part of our wealth concentration structure?
Here are the two articles, with a couple of calculations added: (Notice that acreage is not even mentioned!)
NYC Trump Co-Op Dwellers Face Million-Dollar Bills
By Oshrat Carmiel Nov 6, 2014 4:16 PM ET
The ground beneath Trump Plaza, at 167 E. 61st St., is up for sale as land prices break records.
Manhattan’s surging land costs are leaving the shareholders of an East Side luxury co-operative with a tough choice: pay a hefty price to buy the land under the building, or face increasing bills to keep renting it.
The ground beneath Trump Plaza, at 167 E. 61st St., is up for sale as land prices break records. The co-op board has offered to buy the property for $185 million, a cost that would saddle residents with assessments that, for some, would top $1 million, said Adam Leitman Bailey, a New York real estate attorney who has been contacted by owners concerned about the deal before it goes into contract.
“People are calling me to stop this from happening,” said Bailey, who has reviewed board documents but hasn’t been officially retained. “People want to stop the assessment.”
The 31-year-old co-op, which makes annual rent payments to the family that owns the ground, is weighing its financial future at a time when rising prices for land make it attractive for investors to buy such property for a reliable stream of rental income. The board opted to put in a bid as it otherwise faces the prospect of a steep rent increase when the lease resets in 2024, Bailey said.
“The fact that the family put it up for sale should terrify the co-op,” said Joshua Stein, a Manhattan real estate attorney who isn’t involved in the transaction.
“Whatever opportunistic investor buys the land will probably be way more aggressive about the rent reset than either an estate or a group of heirs,” he said. “Someone who is buying it, is buying it specifically to squeeze out every last dollar of rent.”
Marc Cooper, president of the co-op board and vice chairman of investment-banking firm Peter J. Solomon Co., didn’t return a phone call left at his office yesterday seeking comment on the plan to purchase the ground.
Co-op residents buy shares in a corporation that owns the building, rather than getting a deed to the apartment itself, as they would in a condominium. Shareholders make monthly maintenance payments that collectively cover building costs such as mortgage payments, ground rent and operating expenses.
A Trump Plaza shareholder with a 1,000-square-foot (93-square-meter) one-bedroom apartment whose monthly maintenance fee is now about $2,100 would pay about $9,800 after the rent is recalculated in 10 years, Bailey said, citing a projection by the building’s co-op board. The rent increase would be about 8 percent of what the land value is in 2024, he said.
Buildable lots in Manhattan sold for an average of $657 a square foot in the third quarter, up 29 percent from a year earlier and an all-time high for the period, according to Massey Knakal Realty Services. Three purchases completed in the quarter were for more than $1,000 a square foot, the firm’s data show.
LVTfan here: That $657 per square foot is NOT per square foot of land (at 43,560 sq ft per acre, that would be just $28.6 million per acre, laughably low in Manhattan). Rather, it is per buildable square foot. Quick and dirty, if a, say, 20 story building can be built on a 10,000 sf footprint, constituting 200,000 sf, the calculation would be 200,000 times $657, or $131.4 million, for that 1/4 acre, which works out to over $500 million per acre. $500 million per acre -- compared to an acre of good agricultural land, at $5,000 per acre, that's 100,000:1. (And for those 3 purchases over $1,000 psf, add 50% to that ratio.)
Possibly difficult for those of us who see land which sells for $5,000 or $50,000 or even $500,000 per acre to fathom $500 million per acre. But that's reality!
Trump Plaza’s situation is different from most other co-operatives in Manhattan, which do own the land on which the building sits and make no rent payments. Co-op units with ground leases tend to sell at a discount because they have higher maintenance costs and buyers sometimes face challenges getting mortgage financing. Other ground-lease co-ops in New York include 995 Fifth Ave., the Excelsior at 303 E. 57th St. and Carnegie House at 100 W. 57th St.
The ground beneath the 324-unit Carnegie House was purchased for $285 million to a group that includes Rubin Schron’s Cammeby’s International and real estate investor David Werner, Christa Segalini, a spokeswoman for Cammeby’s, said today. The 21-story building, with an entrance on Sixth Avenue, occupies an entire block front from 56th Street to 57th Street, according to real estate website Streeteasy.com.
For shareholders at Trump Plaza, buying the land beneath them means coming up with large sums of cash up front. Each owner was assessed a fee of about $2,329.40 a share, according to Bailey.
A resident of a two-bedroom unit who holds 440 shares in the corporation, for example, would be charged $1.02 million, Bailey said. A 1,600-square-foot three-bedroom apartment, worth 671 shares, would get a $1.56 million assessment. Residents get more shares the higher up their apartments are in the 39-story building.
The 154-unit Trump Plaza, at 61st Street and Third Avenue, was completed in 1983, according to StreetEasy. A 2,800-square-foot unit on the 32nd floor with views of Central Park is listed for sale at $3.95 million. The monthly maintenance charge for the three-bedroom, four-bathroom apartment is $7,228, according to the website.
LVTfan here: One might reasonably wonder how much (a) the sellers of the land were paying NYC in property taxes; (b) how much of the monthly "maintenance charge" for the condo is paid by the condo complex to the city in property taxes (which pay for the schools and lots of other public services) and how much is for the building and its services to the condo owners; and (c) how much the land share of that 32nd floor unit is. If a 1600sf apartment gets a $1.56 million assessment, the 32nd floor apartment, at 2800sf should be roughly twice that, or about $3 million. Thus, the $3.95 million asking price on the 32nd floor is about 4/7 of the total value, or 56%; the other 44% is land value.
The sale of the ground beneath the tower hasn’t gone into contract yet. Douglas Harmon and Adam Spies, brokers at Eastdil Secured LLC, are representing the owners, who are listed in public records as the estate of Donald S. Ruth and members of the Ruth family. Spies declined to comment on plans for the sale.
A purchase of the land by the co-op ultimately would add resale value to the building’s apartments, Stein said. Extinguishing the ground lease permanently removes the threat that rents will reset to unaffordable levels. With that uncertainty gone, future buyers would be willing to pay more for a unit in the tower, he said.
“If you’re the co-op, getting rid of that threat is a really good thing,” Stein said. “There’s a lot of value being created.”
To contact the reporter on this story: Oshrat Carmiel in New York at firstname.lastname@example.org
To contact the editors responsible for this story: Kara Wetzel at email@example.com Christine Maurus
Here's the second article
November 06, 2014 11:30AM By Adam Pincus
David Werner, a Borough Park investor who has wowed New York City with a series of big buys this year, partnered with Rubin Schron and the Cohen family to pay $285 million for the land under 100 West 57th Street, sources told The Real Deal. The 324-unit Carnegie House cooperative building is the ground tenant on the property.
A person close to the deal said the investment group closed yesterday on the purchase of the property, which is located at the corner of Sixth Avenue and 57th Street.
This is the third major acquisition by David Werner this year. He purchased 5 Times Square for $1.5 billion and the leasehold for the Mobil Building at 150 East 42nd Street, for $855 million. Werner, Schron and the Cohen family’s Carlton Associates did not immediately respond to requests for comment.
Insiders expect to see more pricey sales of land under co-op buildings with resets looming.
In fact, the sale is being mirrored nearby with the marketing of the ground under the Trump Plaza at 167 East 61st Street, which has a rent reset in 2024. Eastdil Secured brokers Doug Harmon and Adam Spies have that listing.
The co-op building has a ground lease that runs for another 51 years with the property owner, currently paying about $4.4 million per year. In approximately 10 years, the rent for the ground lease payments will reset. That reset will be based on market values.
|an average of $13,600 per year per family -- ignoring the commercial tenants|
Ground resets typically price the new rent at about 6 percent of the current market value.
Investment sales broker Robert Knakal, chairman of Massey Knakal Realty Services, estimated the value of the land to be at least $1,200 per square foot and up to $1,500 per foot, if the value of the retail is taken into consideration. Knakal is not involved in this property.
At that value, the land with 377,000 square feet of development rights, would be worth $452 million. That could work out to an annual rent payment of $27 million per year, if reset today, according to an analysis by TRD.
|An average of $83,300 per family -- ignoring the commercial tenants|
To help fund the purchase, the group obtained a $180 million loan from Natixis Capital Markets in a deal arranged by Drew Anderman, a senior managing director at the mortgage brokerage firm Meridian Capital Group, insiders familiar with the deal said.
Posted on November 09, 2014 at 08:50 PM in a Manhattan acre, absentee ownership, all benefits go to landholder , better cities, cui bono?, financing services, income concentration, inherited wealth, land rent, land share of real estate value, land value created by community, leased land, Natural Public Revenue, NYS Property Tax Reform, Occupy Wall Street's values, popular ignorance of land economics, property tax, reaping what others sow, taxation, urban land value, wealth distribution or concentration | Permalink | Comments (0)
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At a conference Friday at Yale University in honor of newly minted Nobel laureate Robert Shiller, economist Karl Case of Wellesley College paid tribute to his long-time research partner with an original poem on the lessons of the real-estate bubble and its aftermath. In the 1980s, after many years of research, Case and Shiller together created what are now known as the S&P/Case-Shiller residential real-estate price indexes—the measures that led Shiller, in 2005 through 2007, to predict that home prices would collapse.
While economics professors are not known for their appreciation of rhyme and meter, Case’s poetic tribute received a warm round of applause from the academic audience. We reprint the full text of the poem here, with Case’s permission, a few tiny tweaks and without further commentary.
Reflection on the Housing Market: Seven Years After the Fall
By Karl E. Case
For the last dozen years we have shed many tears
Living through a recession
The world was broke and it was not a joke
When we talked of another depression
Fifteen million without a job
Foreclosures and banks that fail
401k’s became 201k’s
And everything’s up for sale
How could it be? What didn’t we see
That led to all of this trouble?
There is little doubt that the proximal cause
Was a bursting housing bubble
But other than that who can we blame?
And what do they lament?
Millions of people contributed to
This hundred year event
For me it began in ’76
With a house on Cleveland Road
At 54 thousand, I thought it a lot,
For a small three-bedroom abode
But 10 years later that very same house
Would sell for five times the price
I was glad that I bought … I remember the thought
“This may not be fair but it’s nice”
In Boston alone, that boom created
100 billion in wealth
We spent more, saved less, and I have to confess
It was good for our mental health
We had to know that it couldn’t go on
Someday prices would fall
We knew there were risks – to ourselves and our fiscs
If those prices were ever to stall
It all began in 2001
911 … the dot.com bubble
The Fed had to act because of the fact
A recession would mean big trouble
So the Fed Funds Rate, sitting just below eight
Was cut to under two
And you had to know with rates so low
That a refi boom would ensue
The volume of mortgages written back then
In a single quarter in 2003
A trillion in originations!
But something happened late that year
That caused long rates to rise
And that was the end of the refi boom
It came as quite a surprise
With refi’s gone so were big fees
But banks still had money to lend
And the search for buyers to fill the gap
Seemingly had no end
The Fed kept pumping through 2005
To keep short rates very low
With no sight of inflation across the nation
The target was simply to grow
Of course the key for all to see
Was a robust housing market
Buyers could borrow lots of cash
And a house was a good place to park it
A summer home … a new big house
No one seemed to care
Homes were made of bricks and land
The value would always be there
It didn’t matter what rate you paid
Or what you made in a year
For a while liquidity led to stupidity
“Just sign and see the cashier”
High LTV’s and Option ARMs
Negative Am’s and more
2-28’s with teaser rates
And ridiculous Fico scores
Competition was the force
That made the music play
As long as prices didn’t fall
Everything was OK
People could always sell their homes
For more than they had paid
That kept foreclosures and defaults low
And lots of money was made
Fannie and Fred were always ahead
Then Countrywide got in the fray
Then Lehman and Merrill and Goldman Sachs
Couldn’t be kept away
You can guess that MBS
Helped make the trading brisk
Investors, thought that the paper they bought
Was traunched with well measured risk
To that add leverage and default swaps
And then house prices fell
The intercept shift was very swift
And that was the closing bell
The very first city to see the drop
Was Boston in 2006
Then one by one they began to slip
Leaving us in a fix
We tried the tax credit which seemed to work
For a few months the markets came back
But when it expired the markets got mired
Resuming their downward track
The inventory of unsold homes
Still continued to grow
And we’re hardly building any new homes
With starts at a 50-year low
A number of problems remained as risks
As we wait for markets to turn:
The number of loans that still need to be marked
Is making stomachs churn
Twelve million who want to work
Don’t have jobs today
And slow is the pipeline of loans in default
Since no one wants to pay
In the longer run a lot depends
On the rate of household formation
That depends in part of course
On the rate of immigration
It also matters what kids do
Like living with Mom and Dad
Or doubling up till they get a job
To pay for their very own pad
For a while there was talk of a double dip
The recovery was in a stall
Consumers were down and beginning to frown
Jobs hadn’t come back at all
The Euro was falling, the banks were appalling
As we wallowed in bad sovereign debt
Europeans were asking aloud
Really … how bad can it get?
The guys at the Fed have repeatedly said
That their mandate includes employment
But with rates at zero no one’s a hero
No weapons are left for deployment
QE1 was lots of fun
Then along came QE2
We did the “twist” and we took on more risk
Not knowing just what they would do
So now we come to the end of this ode
Without much to say for certain
I hate to say, that’s where we are
Not beginning nor final curtain
The truth of the matter at the end of the day
Is that markets will make you humble
Just when you think that it’s time for a drink
They will turn and fortunes will crumble
That free markets work to provide what we want
Is a notion that’s not in dispute
The problem is that once in a while
And when they do in a market so large
A lot of people feel pain
In the blink of an eye many gave back
What it took 10 years to gain
Among those who are getting the blame
A few deserve to be flayed
But a forecast can only be judged against
What we knew at the time it was made
Sometimes the future is like the past
And sometimes it is not
But when it comes to what we know
The past is all we’ve got
Of course there is greed and there is a need
For moral hazard and rules
And for figuring out the effectiveness
Of the new financial tools
Politicians, of course, are starting to shout
That they want more retribution
It’s better, I think, if they used their time
Helping to find a solution.
LVTfan here -- all the questions, but where are the answers? Seems very agnostic, not particularly concerned about what changes in public policy could leave a better situation for the next generation. We can't leave it to the politicians. By our design, they are available to the highest bidders.
It appears that someone in Congress -- probably multiple someones -- feels that we're not giving away the Commons fast enough, and that the federal government ought to rely on other kinds of income rather than collecting the fair market rent on the land on which individually owned cottages sit within Forest Service lands, those rents ought to be reduced! They've asked the CBO to estimate the costs of this gifting.
A bit of calculating reveals that the owners of the 14,000 cottages are paying, on average, $2,142 in land rent annually, at 5% on older valuations of the land, suggesting that the average lot is currently valued at about $43,000 for land rent purposes. Interestingly, these are apparently longtime owners; average turnover is 400 per year, or 2.9%.
When we-the-people lower the rent below market value, what happens to the selling price of the homes? The selling prices go up. In other words, the leaseholders who want to sell can charge buyers more for the house. Aren't we nice to provide those homesellers such a gift?
Not only that, our gift is to be retroactive to the beginning of 2014, it appears!
They propose to cap the fees at $5,600, no matter what the updated valuation of the land might be. That is, no matter what the real value of the cabin's site might be, for land rent purposes, the impolite fiction would be that it is worth no more than $112,000. No matter what the view is, what the location is, how good the infrastructure is, what services the federal employees provide to keep the lot accessible. This sounds a bit like California's Proposition 13, which detaches property taxes from current valuations.
More typically, if a tenant gives up a lease, they are expected to remove their cottage from the lot and leave it clean for the next tenant. The landlord -- we the people -- shouldn't have to deal with abandoned cottages.
Below is a copy-and-paste of the PDF at http://www.cbo.gov/sites/default/files/cbofiles/attachments/hr4873.pdf; I've not bothered with the formatting of the tables.
Posted on September 12, 2014 at 09:43 PM in assessment, buildings depreciate, capital gains are land gains, common good, commons, cui bono?, economic rent, land appreciates buildings depreciate, land rent, location, location, location, Natural Public Revenue, pay for what you take, special interests, user fees | Permalink | Comments (0)
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By THE ASSOCIATED PRESS AUG. 20, 2014
Posted on August 23, 2014 at 02:27 PM in common good, commons, cui bono?, Earth for All, economic rent, financing services, government's role, land includes, land monopoly capitalism, Natural Public Revenue, natural resource revenues, natural resources, privatization, windfalls | Permalink | Comments (0)
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I posted this comment elsewhere, and thought it worth sharing here:
I've not read far into the book yet -- and it is available online as a PDF file -- but by the time I was into the first chapter, it was clear that Dr. Piketty's economic education, extensive as it might be, entirely omitted the ideas of the classical economists who described a 3-factor economy: land, labor and capital. Piketty, like nearly everyone educated in economics in the past 40 to 80 years, writes as if there were only two factors -- labor and capital -- treating land as if it were a mere subset of capital, with no reason to recognize it as differentiated.
Land -- not only urban sites, but also the other things the classical economists would recognize as Land, such as water rights, oil, electromagnetic spectrum (our airwaves which we all say belong to the American people, but which are in reality owned by corporations), landing rights at busy landlocked airports, geosynchronous orbits, urban street parking, the value of dozens of other non-renewable natural resources -- is completely different in character from that which is created by labor. To fail to recognize that difference lies at the bottom of our inequality problem.
That which individuals and corporations produce is rightly individual property. That which the community and nature produce is rightly common property, belonging to all of us. Conflating Capital and Land leads us to permit the privatization of that which is rightly our common treasure.
You might be interested to know that the Landlord Game, invented by 1902, was intended to teach this concept. You have probably played Monopoly, which was based on this game, played with very different rules.
Explore the ideas of Henry George. Between 1885 and 1900 or so, everyone knew the name and many well understood his ideas. You might start with "Social Problems" or the more analytical "Progress and Poverty," or his speeches, "The Crime of Poverty," "Thou Shalt Not Steal," among others, online at http://www.wealthandwant.com. See also http://lvtfan.typepad.com.
Dr. Piketty and others whose education in economics has omitted George's ideas should not be treated as experts; they've mixed apples and oranges and not noticed that what they've created impoverishes the vast majority of us -- and enriches a few. (Parenthetically, consider who donates heavily to our universities.)
Posted on August 08, 2014 at 10:31 PM in a wedge driven through society, capital gains are land gains, classical economists, Earth for All, ecosystem services, fixing the economy, Henry George, income concentration, inherited wealth, land different from capital, land value created by community, land, labor and capital, location, location, location, make land common property, Monopoly and The Landlord's Game, Monopoly and The Landlord's Game , one solution for many problems, Piketty, privatization, Progress and Poverty, reaping what others sow, rich people's useful idiots, socializing risk and privatizing profit, special interests, trickle-down economics, urban land value, wealth distribution or concentration | Permalink | Comments (1)
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I was listening to Bob Edwards interview Ralph Nader, on the occasion of the latter's publication of a new book, and Nader was talking about things the left and the right might be able to agree on. I was in traffic, and only half listening, but when Nader spoke of corporate subsidies, it hit me that one of the biggest corporate subsidies, and one which the average person isn't at all conscious of, is the unearned increment, the possession of unearned wealth.
It isn't that some individuals don't get to collect some, too -- particularly those who own land (with or without a building on it) in or near the major coastal cities, but the lion's share goes to corporations, and their shareholders, who tend to be the 1%.
For more about the unearned increment, start here.
"Our plan involves the imposition of no new tax, since we already tax land values in taxing real estate. To carry it out we have only to abolish all taxes save the tax on real estate, and abolish all of that which now falls on buildings or improvements, leaving only that part of it which now falls on the value of the bare land, increasing that so as to take as nearly as may be the whole of economic rent, or what is sometimes styled the "unearned increment of land values."
Can we get the leaders of the left and right to look at this, or are they owned by the corporations?
Better Insurance Against Inequality
APRIL 12, 2014
Economic View By ROBERT J. SHILLER
Paying taxes is rarely pleasant, but as April 15 approaches it’s worth remembering that our tax system is a progressive one and serves a little-noticed but crucial purpose: It mitigates some of the worst consequences of income inequality.
If any of us, as individuals, are unfortunate enough to have income drop significantly, the tax on that income will plummet as well — and a direct payment, or negative tax, might even be received from the government, thanks to the earned-income tax credit. In this way, the tax system can be viewed as a colossal insurance system, guarding against extreme income inequality. There are similar provisions in other countries.
But it’s also clear that while income inequality would be much worse without our current tax system, what we have isn’t nearly enough. It’s time — past time, actually — to tweak the system so that it can respond effectively if income inequality becomes more extreme."Respond effectively if"???
"There are a thousand hacking at the branches of evil to one who is striking at the root."
DCJ doesn't say it explicitly, but in general, it is mostly people in and near the major coastal cities (mostly the blue congressional districts) which reap the benefits. But he -- rightly -- comes close to pointing out that the benefits flow not to buyers of such homes, but to the sellers.
Imagine you make $50,000 to $75,000. Statistically you would save $75 a month in federal income taxes if you bought a house, the congressional study shows. Now which option would you prefer?
• Pay $300,000 for your house, the median for Sacramento in late 2013, and save $900 annually on your federal income tax by deducting the mortgage interest?
• Pay $200,000 for your house, but without being able to deduct your mortgage interest?
Assuming you borrowed the entire purchase price at 4 percent interest the initial mortgage interest savings would be $4,000 per year. Not only would you have more than $250 more cash in your pocket each month, you would have a much smaller debt to pay off. Of course, if you own that home, this is not such a good deal, which is why Camp proposes to phase in his modest change over several years, a change that would only affect new mortgages of more than $500,000.
Which brings me to a larger point. Suppose that, instead of paying $300,000 for your home, of which $150,000 is for the site, and $150,000 is for the home itself, under the tax design this blog proposes, you would pay the seller the $150,000 for the depreciated home and then pay your community approximately 5% of the $150,000 selling price of the site each year -- and that would be INSTEAD of paying income or sales taxes, and there would be no tax on the value of the building.
The downside? None of us would be treating our home as an "investment" or a "savings account" or an ATM machine. Offset that with the many benefits, including the reduction or elimination of the land-based ~17 year boom-bust cycle we are currently stuck with.
(In Bermuda, as I understand it, when young couples buy a home, both work two jobs for a few years to pay off the mortgage, and then live mortgage-free thereafter.)
Posted on March 16, 2014 at 03:39 PM in boom-bust cycles, bubble, buildings depreciate, capital gains are land gains, cost of living, economic rent, financing services, FIRE sector, free land, home equity, income tax, land appreciates buildings depreciate, land share of real estate value, land value created by community, land value taxation, make land common property, Natural Public Revenue, one solution for many problems, paycheck to paycheck, savings rate, untaxing buildings, untaxing production | Permalink | Comments (0)
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LibriVox recording of Progress and Poverty, by Henry George. Read by Tim Makarios.If you'd like to listen to the unabridged Progress and Poverty, you might like this webpage. You can download MP3 versions of P&P. So far, over 2,000 downloads have occurred.
Beating an Elephant With a Feather By Steve Hyle | Feb 12, 2014
LEWES, DE — Ever notice how many times we read or hear about the Demopublicans "Slamming " Obama for his latest blatant attack on the Constitution? I guess they're too stupid to realize that "slamming" Obama has about as much effect as beating an elephant with a feather. So they're really not serious in their sanctimonious outrage. They conveniently forget that they too took an oath to protect the Constitution which reads as follows:
The Congressional Oath of Office: I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God.
The key words are "support and defend the Constitution of the United States against all enemies, foreign and domestic." Therefore, I contend that the Demopublicans, on a daily basis, fail to honor their oath and are therefore derelict in their most critical duty…defending our Constitution. This applies to Members on both sides of the aisle. By their inaction, they are all complicit in the destruction of the Constitution of the United States.
It's human nature to want more, and to attempt to receive it in the easiest ways. (Henry George expressed it: "The fundamental principle of human action -- the law that is to political economy what the law of gravitation is to physics -- is that men seek to gratify their desires with the least exertion.")
But we don't have to structure our economy to allow some of us to receive significant shares of the total production of society that they didn't create, to steal from those who do produce, to privatize the value of natural resources or of that which the community as a whole creates.
It is easy to become addicted to taking for oneself that which others create. We imprison some people for it; others we permit to call themselves "self-made" men.
Asking some to share 25% with others, out of the goodness of their hearts, seems to be a very shallow substitute for restructuring the entire system.
Mr. Polk seemed to be on the right track when he raised the question, “ 'But isn’t it better for the system as a whole? I asked. The room went quiet, and my boss shot me a withering look. I remember his saying, 'I don’t have the brain capacity to think about the system as a whole. All I’m concerned with is how this affects our company.' ”
We need the brain capacity to think about the system as a whole.
I've not found any analysis of "the system as a whole" that was more relevant and descriptive than that of Henry George.
“Families born by accident, rather than design, are bad for men, bad for women and really bad for kids,” said Kathryn Edin, a poverty researcher at Harvard.
“Rising inequality and declining prospects for people at the bottom have created a situation where it doesn’t matter that much for these teenagers,” she said of the very low-income teenagers who are more likely to have a child. “It does not seem like their life prospects are going to be significantly harmed by having a child, because they’re so disadvantaged already.”
Land Value Tax Land value taxes of one form or another already exist in this country as well. Pennsylvania seems especially fond of them. Most recently, the city of Altoona, Pa., switched over to a pure land value tax, replacing the more conventional property tax it used to levy. The proposal to levy a land value tax should be the most non-controversial on the list. Municipalities already tax land value to some degree because property taxes are levied against land value as well as the buildings that sit on top of the land. Obviously it is not absurdly impossible to change from assessing taxes on land plus buildings to assessing taxes on just land.
Implementing this tax has some normative appeal insofar as nobody makes land and so taxing its value does not run afoul of any notion that people should not be deprived of the product of their labor. But more than that, most arguments for the land tax center around its ability to encourage economic production and growth. Taxing land allows you to reduce taxes on things like the construction of buildings (subjected to property taxes), work (subjected to income taxes) and investment (subjected to capital gains taxes). If conservatives believe their own arguments about how devastating to growth such taxes are, switching to a land value tax should be a huge priority for them.
As with the UBI, this proposal has also scored substantial support from those on the right side of the political perspective. The person credited with coming up with and popularizing it, Henry George, was a libertarian.
By Charles Kanjama firstname.lastname@example.org
Sometime in the 19th Century, somewhere in Europe, a busy town was separated from a poorer residential quarter by a river crossed by a footbridge built by the town authorities. Any person crossing the footbridge had to pay some money, say ten shillings, to cross one way or the other. Then a benevolent town council decided to ease the situation of the poor labourers by abolishing the bridge levy.
After several months, it was noticed that the rents in the poorer quarter had generally increased by about five hundred shillings, thus absorbing the labourers’ monthly savings gained from the abolition of the bridge levy. In 1879, American writer Henry George wrote his groundbreaking work, “Progress and Poverty” to explain this phenomenon. His main economic idea was that growing population as well as infrastructure investment raises the value of adjacent land regardless of the economic activity carried out on the land itself. Henry George was a brilliant writer and an incisive thinker, and he inspired fervent disciples, though mainstream economics treated him largely with contempt. He was derisively called ‘a single-taxer’ due to his proposal to abolish all forms of taxation save for land value taxation.
What George really supported was an intelligent approach to capturing the resulting value from public investments for the whole society. For example, in the European town above, the footbridge had been a form of economic value creation. Once the levy was abolished, the value was captured, not by the labourers as planned, but by their thriving landlords. This was a perverse form of value capture. A century later, the impressive economist and Nobel Prize laureate Joseph Stiglitz supported George’s insight, now called the Henry George Theorem. Stiglitz demonstrated that spending by government on infrastructure often increases aggregate land values by a proportionate amount. So for example, land values along Thika Road increased substantially due to the construction of the modern super-highway. These increases in value were captured mainly by the adjacent land owners and by transporters.
Likewise, a substantial injection of value from the Mombasa-Nairobi-Malaba standard gauge railway project, as well as from the proposed Lamu-Garissa-Isiolo-Moyale/Lodwar LAPSSET Corridor Project, will be captured by landowners within a certain radius of the service points or railway stations to be established along the line. Of course, the improved efficiency in transportation will create value in other areas, including job creation, and relative reduction in the cost of both industrial and consumer goods.
If government was clever, it would include a value-capture approach in project financing. The economic speculation in the land adjacent to the proposed Lamu port, to the planned Isiolo Resort city and to the Mlolongo railway exchange is a pointer of the anticipated value creation from these public investments. Value capture uses multiple approaches to allow government to recoup a portion, say half, of the returns from its investments.
One acceptable approach is land value taxation, or alternatively government land-purchase-and-resale schemes. The former is more legally apt, but under Kenya’s Constitution can only be levied by county government (art.209(2,3)). Another acceptable approach, which is now overdue considering the state of our economic development, is the reintroduction of capital gains tax. This tax was suspended in 1985, the idea at the time being that Kenyans should be encouraged to save and invest, including in the securities market.
However, from the perspective of tax equity today, it is scandalous that capital gains tax, which mainly affects the wealthy, still remains suspended. Of course Kenya must avoid going down the path of European socialist nations like France, which has recently introduced a top-bracket 75 percent income tax for the ultra wealthy. We cannot afford ‘to sock the rich’, as it will discourage investment and trigger capital flight, as well as entrench greater tax evasion. This does not mean that a well-designed capital gains tax cannot work for both property and equity investments.
Still, there is a need to avoid an obsession with traditional but costly approaches for funding Kenya’s mega infrastructure projects. Importantly, the electromagnetic spectrum that is now the focus of government-media disputes over digital migration is a potentially large source of public funds. Also the issuance of oil and other mineral exploration and extraction licences, which should be backed by a credible mining royalties and taxation regime that allows government to recover a substantial portion of mineral value. My New Year wish is that both national and county governments can progress useful infrastructure projects through creative financing that does not unduly stretch our debt leverage ratio but which directly contributes to our economic and social welfare.
"Your great city church stands yonder — your grand cathedral. It is named after a tent-maker — after the man who said "If a man will not work, neither shall he eat." Let us suppose the Apostle Paul coming amongst us and seeing how people lived. We will not suppose his going to the West-end and seeing how those got on who never did a stroke of work in their lives, but we will imagine him paying a visit to certain of our societies, and finding them engaged in devising means to help the poor. "Why do they not work?" would be the Apostle's first and natural question. If he were told that there was no work for them to do, what would he say? 'No work? Why do they not go out and catch some fish?' 'Oh the fish are PRESERVED -- and the game is PRESERVED.' The Apostle might go on to ask, 'Then why do they not cultivate the land?' 'Oh, the land is OWNED,' would have to be the answer. I thought of this, could not help thinking of it, as I traveled over miles and miles of land in coming here. 'The land is owned,' would be the answer given to the Apostle, and what would he say to such a state of society?"
HENRY GEORGE at St. James's Hall, London.
Nov. 19, 1884.
quoted in The Church Reformer, January 15, 1885
The ground lessor’s position at 625 Madison Avenue, in Manhattan’s Plaza District, has been purchased by Ashkenazy Acquisition Corp., of New York, for $400 million from 625 Ground Lessor L.L.C., Cushman & Wakefield, which represented the seller, announced last week.
The site is occupied by a 17-story, 563,000-square-foot Class A office building, with retail, that spans the entire block on the east side of Madison Avenue between 58th and 59th streets. Polo Ralph Lauren occupies 70 percent of the building.
The price represents a going-in yield of 1.15 percent based on contractual ground lease payments through June 2022, according to Cushman, “reflecting historically low interest rates, escalating land values due to the strength of the residential and retail market, and the scarcity of ground lease offerings.”
The leasehold at 625 Madison is owned and operated by SL Green Realty Corp., of New York. The ground lease expires in June 2054.
The building’s website indicates that the office space is fully leased.
The Cushman & Wakefield team consisted of Brian Corcoran, Helen Hwang, Steve Kohn, Frank Liantonio, Marc Nakleh, Nat Rockett, Karen Wiedenmann and Sujohn Sarkar.
“The investment benefits from strong sponsorship, long-term upside and a truly irreplaceable location at the core of one of the most luxurious commercial, residential and retail corridors in the world,” Hwang, an executive vice president, said in a release.
“Leased fee/ground lessor positions are rarely offered in Manhattan, so the opportunity was of great interest to investors around the world,” said Steve Kohn, president of Cushman & Wakefield Equity, Debt and Structured Finance.
The contract that culminated in the deal was signed in late September, The New York Post reported on Oct. 1.
One key to the sale, according to the Post, is that SL Green’s current $4.6 million rent will reset in 2022 and 2041, with the rent reportedly expected to soar to about $50 million a year at the next reset.
Formerly known at the Revlon Building and the Plaza Building, 625 Madison Ave. was completed to its current height in 1956 and extensively renovated in 1988.
John Rawls, the brilliant 20th-century philosopher, argued for a society that seems fair if we consider it from behind a “veil of ignorance” — meaning we don’t know whether we’ll be born to an investment banker or a teenage mom, in a leafy suburb or a gang-ridden inner city, healthy or disabled, smart or struggling, privileged or disadvantaged. That’s a shrewd analytical tool — and who among us would argue for food stamp cuts if we thought we might be among the hungry children?
As we celebrate Thanksgiving, let’s remember that the difference between being surrounded by a loving family or being homeless on the street is determined not just by our own level of virtue or self-discipline, but also by an inextricable mix of luck, biography, brain chemistry and genetics.
For those who are well-off, it may be easier to castigate the irresponsibility of the poor than to recognize that success in life is a reflection not only of enterprise and willpower, but also of random chance and early upbringing.And perhaps Mr. Kristof might consider also that the same forces and structures which make some people poor make others rich, very rich. Henry George described a wedge being driven through society. Random chance may help determine whether one falls into one group of the other. I take the liberty of lifting a long list of quotes from Henry George's book "Progress and Poverty:"
Yes, in certain ways, the poorest now enjoy what the richest could not a century ago. But this does not demonstrate an improvement – not so long as the ability to obtain the necessities of life has not increased.
Poverty is a diabolical predicament that not only makes scarce one’s physical comforts, but drains away one’s spiritual strength. It damages hopes and dreams, and having deficits among those things is when the soul begins to die.This is a single paragraph from an excellent piece by Charles Blow.
By Catherine Cashmore | Monday, 25 November 2013
There’s been a lot of debate around property taxation in Australia - significantly negative gearing, which allows an investor to use the short fall between interest repayments and other relevant expenditure, to lower their income tax.
The policy promotes speculative gain meaning the strategy is only profitable if the acquisition rise in value rather than holding or falling - therefore, in Australia, investor preference is slanted toward the established sector – the sector that attracts robust demand from all demographics and as such, in premium locations, has historically gained the greatest windfall from capital gains.
Aside from the impact this creates in terms of affordability (pushing up the price of second-hand stock, burdening new buyers with the need to raise a higher and higher deposit just to enter ownership), it also negatively affects the the new home market, which traditionally struggles to attract consistent activity outside of targeted first home buyer incentive; albeit, the headwinds resulting from planning constraints and supply side policy should also not be dismissed.
Additionally, capital gains tax and stamp duty have also received much debate. Both are transaction taxes, and therefore have a tendency to stagnate activity, acting as a deterrent to either buying and selling.
Stamp duty, as modelled by economist Andrew Leigh, is shown to produce a meaningful impact on housing turnover, leading to a potential mismatch between property size and household type – a deterrent to downsizing and therefore selling.
Additionally, it burdens first time buyers by increasing the amount they need to save in order to enter the market and frequent changes of employment concurrent with a modern day lifestyle, are hampered as owners, unwilling to move any meaningful distance outside their local neighbourhood, search for work in local areas alone.
But, outside of academia and intermittent articles, there is scant debate in Australian mainstream media regarding land value tax and it’s practical impact.
The theory is taken to its extreme and best advocated by American political economist and author, Henry George, who wrote his publication Progress and Poverty - an enlightened and impassioned read - and subsequently inspired the economic philosophy that came to be known as ‘Georgism.’
The ideals of Henry George reside in the concept that land is in fixed supply, therefore we can’t all benefit from economic advantage gained from ‘ownership’ of the ‘best’ sites available without effective taxation of the resource.
George advocated a single tax on the unimproved value of land to replace all other taxes – something that would be unlikely to hold water in current political circles. However, his ideals won favour amongst many, including the great economist and author of Capitalism and Freedom, Milton Friedman, and other influential capitalists such as Winston Churchill, who gave a powerful speech on land monopoly stressing:
“Unearned increments in land are not the only form of unearned or undeserved profit, but they are the principal form of unearned increment, and they are derived from processes which are not merely not beneficial, but positively detrimental to the general public.”
In essence, raising the percentage of tax that falls on the unimproved value of land has few distortionary or adverse affects. It creates a steady source of revenue whilst the landowner can make their own assessment regarding the timing and type of property they wish to construct in order to make profit without being penalised for doing so.
However, when the larger percentage of tax payable is assessed against the value of buildings and their improvements – through renovation, extension or higher density development for example – not only can those costs be transferred to a tenant, there is less motivation to make effective use of the site. This has a flow on effect which can not only exacerbate urban ‘sprawl’, but also increase the propensity to ‘land bank.’
The Henry tax review commissioned by the government under Kevin Rudd in 2008 concluded that “economic growth would be higher if governments raised more revenue from land and less revenue from other tax bases,” proposing that stamp duty (which is an inconsistent and unequitable source of revenue) be replaced by a broad based land tax, levied on a per square metre and per land holding basis, rather than retaining present land tax arrangements.
The Australian Housing and Urban Research Group attempted to mimic the proposed changes using their AHURI-3M micro-simulation model in a report entitled The spatial and distributional impacts of the Henry Review recommendations on stamp duty and land tax .
And whilst it’s difficult to qualify how purchasers may factor an abolition of stamp duty into their price analysis, perhaps adding the additional saving into their borrowing capacity, and therefore not lowering prices enough to initially assist first homebuyers. It does demonstrate how over the longer-term falls in house prices have the potential to exceed the value of land tax payments, assisting both owner-occupier and rental tenant as the effects flow through.
Additionally, increasing the tax base would provide developers with an incentive to speed up the process and utilise their holding for more effective purposes.
And importantly for Australia, it can provide a reliable provision of revenue to channel into the development of much-needed infrastructure.
The rational for this is coined in the old real estate term ‘location, location, location.’ Everyone understands that in areas where amenities are plentiful – containing good schools, roads, public transport, bustling shopping strips, parks, theatres, bars, street cafes and so forth – increases demand and therefore land values, invoking a vibrant sense of community which attracts business and benefits the economy.
The idea behind spruiking a ‘hotspot’, such a common industry obsession, is based on purchasing in an area of limited supply, on the cusp of an infrastructure boom such as the provision of a new road or train line for example, enabling existing landowners to reap a windfall from capital gains and rental demand for little more effort than the advantage of getting in early and holding tight whilst tax payer dollars across the spectrum fund the work.
Should a higher LVT be implemented, the cost and maintenance of community facilities could in part, be captured from the wealth effect advantaging current owners, compensating over time for the initial outlay. Imagine the advantage this would offer residents in fringe locations who sit and wait for the failed ‘promises’ offered, when they migrated to the outer suburbs initially.
Take New York for example – between the years 1921 and 1931 under Governor Al Smith, New York financed what is arguably the world’s best mass transit system, colleges, parks, libraries, schools and social services shifting taxes off buildings and onto land values and channelling those dollars effectively.
The policy influenced by Henry George ended soon after Al Smith’s administration, and eventually lead to todays landscape - a city built on a series of islands, with limited room to ‘build out’ facing a chronic affordable housing shortage with the population projected to reach 9.1 million by 2030.
More than a third of New Yorkers spend half their pay cheque on rent alone yet like London, there is little motivation for developers to build housing to accommodate low-wage workers concentrating instead on the luxury end of market, broadening the gap between rich and poor as land values rise and those priced out, find little option but to re-locate.
New York’s Central Park is the highest generator of real estate wealth. The most expensive homes in the world surround the park with apartments selling in excess of $20 million, and newer developments marketed in excess of $100+ million.
Like London it’s a pure speculators paradise – in the 10 year period to 2007, values increased by 73% - owners sit on a pot of growing gold and there’s little to indicate America’s richest are about to bail out of their New York ‘addiction’ with an expansive list of A-list celebrities, high net worth individuals, and foreign magnates, owning apartments in the locality.
New mayor-elect, Bill de Blasio, who won his seat, based on a promise to narrow the widening inequality gap - preserve 200,000 low and middle income units, and ensure 50,000 affordable homes are constructed over the next decade, will struggle to subsidize plans whist facing a deficit reputed to be as much as $2 billion in the next fiscal year.
Yet economist Michael Hudson has recently assessed land values in New York City alone to exceed that of all of the plant and equipment in the entire country, combined.
Currently more than 30 countries around the world have implemented land value taxation - including Australia - with varying degrees of success not only based on the percentage split between land and property, but how those funds are channelled back into the community and the quality of land assessments in regularly updating and estimating value.
Pennsylvania is one such state in the USA to use a system which taxes land at a greater rate than improvements on property – I think I’m correct in saying 19 cities in Pennsylvania use land value tax with Altoona being the first municipality in the country to rely on land value tax alone.
Reportedly, 85% of home owners pay less with the policy than they do with the traditional flat-rate approach. When mayor of Washington county, Anthony Spossey, who also served as treasurer from 2002 to 2006 and under his watch enacted an LVT, was interviewed on the changes in 2007, he commented:
“LVT ..helps reduce taxes for our most vulnerable citizens. We have an aging demographic, like the county, region and the state. Taxpayers everywhere are less able to keep up with taxes, and that hurts revenue. LVT helps us mitigate the impact both to them and the city. It’s a win/win.”
Until fairly recent times, another good example to cite is Pittsburgh. Early in the 1900s the state changed its tax system to fall greater on the unimproved value of land than its construction and improvements.
Pittsburgh’s economic history is a study in itself, and has not been without challenges. For those wanting to research further, I strongly advocate some of the writings of Dan Sullivan - (former chair of the Libertarian Party of Allegheny County, (Pittsburgh) Pennsylvania) - who is an expert on the economic benefits of LVT and has written extensively on the subject.
Sullivan demonstrates that Pittsburgh not only enjoyed a construction boom whilst avoiding a real estate boom under a broad based LVT system, but also effectively weathered the great depression whilst maintaining affordable and steady land values along the way.
In comparing it to other states struggling to recover from the recent sub-prime crisis he points out:
“In 2008, just after the housing bubble broke, Cleveland led the nation in mortgage foreclosures per capita while Pittsburgh's foreclosure rate remained exceptionally low. Since then, the foreclosure rates in Las Vegas and many Californian cities, none of which collect significant real estate taxes, have passed Cleveland's foreclosure rate. However, on September 15, 2010, The Pittsburgh Post-Gazette reported that while at the end of the second quarter of 2010, 21.5% of America's single-family homes had underwater mortgages (the American term for negative equity), only 5.6% did in Pittsburgh. As a result Pittsburgh was top of a list of the 10 marketswith the lowest underwater mortgage figures.”
When land value tax is implemented - with the burden taken of buildings and their improvements, ensuring good quality assessments and sensible zoning laws – it not only assists affordability keeping land values stable, but also benefits local business through infrastructure funding, discourages urban sprawl, incites smart effective development of sites, reduces land banking, and as examples in the USA have demonstrated – assists in weathering the unwanted impacts of real estate booms and busts.
Despite the numerous examples across the world where a broad based land value tax has been deployed successfully, changing policy and bringing about reform is never easy and rarely without complication.
Additionally, the implications of a yearly tax on fixed low-income retirees must be handled with care and understanding, as there are ways to buffer unwanted effects whilst changes are implemented.
Therefore, the process adopted in the ACT which is abolishing stamp duties over a slow transitional 20 year period to phase in higher taxation of land is not altogether unwise.
With any change to the tax system, the headwinds come convincing the public that it’s a good idea. In this respect balanced debate and conversation is necessary, as questions and concerns are brought to the fore.
The increased tax burden also falls on those who have significant influence across the political spectrum; therefore strong leadership to avoid lobbying from wealthy owners with vested interests is essential.
Albeit, as I said last week, we have a new and growing generation of enlightened voters who are well and truly fed up with battling high real estate prices, inflated rents, and care not whether it’s labelled as a ‘bubble’ – but certainly care about their future and that of their children.
Therefore – I do see a time when all the chatter around affordability, will finally evolve into real action – and a broad based LVT should form an important part of that debate.
At present, neither party advocates the tax code so elegant it can reduce inequality, mitigate poverty, stimulate productivity, prevent asset price bubbles, stem community-shredding gentrification and drain the distended Wall Street cabal of its ill-gotten gains – in just one tax.
Land value. If we want a real overhaul/simplification of the tax code, the way to do it is to tax land value. It might be the only tax we need. No sales tax. No income tax. No payroll tax to fill a Social Security trust fund. No corporate income tax that, as we can plainly see, offshores profits. No need to tax labor and industry at all. Just tax the stuff that humans had nothing to do with creating, and therefore have no basis to claim ownership over at all. You’ll find that almost all of it is “owned” by the fabled 1 percent.
With Connecticut following Pennsylvania’s century-long lead by enacting legislation this year that applies the work of the Gilded Age economist and reformer Henry George, it is timely to look back at similar efforts in the U.S. of his Progressive Era followers, known then as Single Taxers. Author of the world-wide 1879 best-seller Progress and Poverty, Henry George — following in the line of the classical economists Francois Quesnay, Adam Smith, David Ricardo and John Stuart Mill — argued that land and natural resources should be rented out by the community to those holding title to them and the resulting revenue used in place of taxes on wages and production. Single Taxers took their name from Henry George’s proposal that all taxes on productive activity should be replaced with a “single tax” on the value of land and natural resources, and they often simultaneously worked for public ownership of natural monopolies to keep their prices at or below costs.
The basic principles of the Single Tax program were illustrated in “The Landlord’s Game” a Progressive Era precursor to the board game “Monopoly,” which was developed by a Single Taxer named Elizabeth Phillips (nee Magie). Under this game’s alternative Single Tax rules, individual players were paid rent for any buildings they had on their properties but all land rent for the properties was paid into the kitty and divided among all the players instead of concentrating in the hands of a single winner. Also, once cash in the game’s Public Treasury from land rents reached a sufficient amount, it was paid to the holder of the railroads, trollies and utilities for the purchase (through condemnation) of their operations, which were then publicly owned and operated so they could provide their services free of charge.
New York City
Compared to their peers, cities following the Single Tax program in the Progressive Era grew in notable spurts, most impressively in New York City as the era ended. NYC’s growth had been slowing down just before the “Al Smith Act” of 1920 let NY City, County, and Schools exempt new housing construction (but not land values) from the property tax from 1921 until the end of 1931. The law applied to all the five “boroughs,” in New York County, and also to its coterminous school district taxes. The Act authorized ALL units of local government to exempt building values below a modest cap. This thoroughgoing “root and branch” attitude in New York reveals the existence of a strong, long-standing political movement. The New York Act sprang from a political history that links it to the movement Henry George left behind in New York, as well as to other Single Tax strongholds like Cleveland, Detroit, Toledo, Jersey City, Milwaukee, Pittsburgh, and Chicago. Gov. Al Smith took the visible lead, but he, like most political leaders, had to be pushed.
Who was it that pushed? A major force was the group of single-tax clubs of NYC, the enduring legacy of Henry George’s runs for Mayor of NYC in 1886 and 1897. After George’s death, his influence survived him in his adopted home.
Before Smith was governor, Albany had blocked several single-tax bills in the years 1909-16. Earlier, as majority leader of the Assembly and a Tammany wheelhorse, Smith himself had blocked a 1911 Single Tax effort (the Sullivan-Shortt Bill) along similar lines. Smith turned around after 1911, his change triggered by the awful incineration of 150 people trapped in the Triangle Shirtwaist Company workroom—a traumatic, watershed event of the times. When first elected governor in 1918, Smith was a changed man with a new power base. We may surmise, also, that his success in reviving NYC helped boost him to the Democratic nomination for U.S. President in 1928, and that was on his mind.
NYC, in granting this tax holiday for new housing, was not “racing to the bottom” in terms of public spending. NYC financed one of the world’s best mass transit systems, and the nation’s best city college system (the “poor man’s Harvard”) with an impressive roster of graduates in the professions. Its parks and libraries were outstanding; its schools and social services above the national norm. NYC was not lowering taxes, but shifting them off buildings and onto land values. Exempting buildings had the effect of raising land values, thus preserving and even augmenting the overall tax base.
After 1932, the forces of tax limitation rallied, financed by the likes of the Rockefeller Brothers, the Seth Low family, A.A. Berle, and others. And so New York City’s remarkable growth spurt tapered off, leaving it larger, but otherwise much like many other older cities.
In Cleveland, the city’s population grew by 109% from 1900 to 1920. For most of this time it was under the administrations of single-taxers Tom L. Johnson, 1901-09, and Newton D. Baker, 1911-16. In 1906, Mayor Johnson inaugurated a low 3-cent trolley fare which entailed possible deficits he intended to meet by taxing real estate. To this day a bronze statue of Johnson stands in downtown Cleveland, holding a book out for all to see, and on it engraved so clear, Progress and Poverty.
Johnson’s City Solicitor and ally, Newton D. Baker, was another remarkable leader, who later nearly edged out FDR for the Democratic Presidential nomination in 1932. Baker won the mayoralty in 1911, after an interregnum of just two years. Baker implemented single tax policies until President Wilson appointed him Secretary of War in 1916. This high-level appointment recognized the political power of the single-tax movement in that era, a power that later historians and economists have wrongly trivialized. After 1916, though, Cleveland slowly fell into old-line Tory hands.
The soaring growth experienced by Detroit from 1890 to 1930 obviously involved the auto industry, but why did that industry focus on Detroit? There was no St. Lawrence Seaway—that opened in 1959. Growth began under Mayor, then Governor Hazen S. Pingree. Pingree had called Tom Johnson to Detroit in 1899 to help beef up its street car system and lower fares, under public ownership. It is one of the great ironies: The Motor City, whose auto firms did so much to destroy mass transit, originally attracted them by providing cheap mass transit for their workers. The sensational collapse of Detroit came after 1950 when Detroit’s leaders, auto-oriented, forgot the Pingree policies that had launched Detroit earlier.
Milwaukee grew fast for 30 years under its Socialist Party Mayors Emil Seidel (1910-12) and Daniel Hoan (1916-40). Hoan’s tenure was the longest of any Mayor of a large American city; he was nationally recognized as the best mayor in the country, and Milwaukee under Hoan was the best-governed city. Hoan’s brand of what others labeled “sewer socialism” consisted in keeping transit and utility user-rates low, and meeting deficits by raising property taxes.
The formula for growing and revitalizing cities seems to be the same, whether under a “socialist” like Hoan or a colorful populist like Johnson: supply infrastructure, keep user-rates low, raise land taxes, attend to the details of assessment, and go easy on taxing buildings.
From 1890-1900, Chicago grew by 54%, but it did not just spread, it pioneered the skyscraper, and centralized its transit system as few other cities ever did. From 1900-30 it continued to grow at higher percentage rates than most other cities, and much higher absolute rates, confirming its status as America’s second largest city. Who was Chicago’s Tom Johnson? It was not one person, but a large and shifting group. Chicago lawyer John Peter Altgeld, humanitarian and reformer, was Governor of Illinois, 1892-96. His administration contained several single-taxers, including young Brand Whitlock, future Mayor of Toledo, whom Altgeld inspired. Altgeld directly corresponded and worked with Henry George, and, according to Whitlock, “understood” George’s ideas like few others.
Today’s infuential “Chicago School” of economists at the University of Chicago take it on faith that unions obstruct economic growth, but one could not illustrate it from the City of Chicago, a major center of union activity during its period of fastest growth. These unions supported Altgeld, and Single Tax ideas.
Chicago’s low transit fares and utility rates were an integral part of single-tax ideology in those days. At the same time Chicago, like San Francisco and New York, pioneered city parks and public spaces on a grand scale, laid out in the Daniel Burnham Plan, developed while the Single Taxer Edward F. Dunne was Mayor.
Born-again San Francisco, 1907-30, makes an edifying case study in regenerative tax policy. Historians have focused on the earthquake and fire of 1906, but blanked out the recovery. We do know, though, that in 1907 San Francisco elected a reform Mayor, Edward Robeson Taylor, with a uniquely relevant background: he had helped Henry George write Progress and Poverty in 1879. It was a jolt to replace the lost part of the tax base by taxing land value more, but small enough to be doable. This firm tax base also sustained S.F.’s credit to finance the great burst of civic works that was to follow. Taylor retired in 1909, but soon laid his hands on James Rolph, who remained Mayor for 19 years, 1911-30, a period of civic unity and public works. “Sunny Jim” Rolph expanded city enterprise into water supply, planning, municipally-owned mass transit, the Panama-Pacific International Exposition, and the matchless Civic Center.
Population growth is not always a goal of civic policy. But it is vital to the interests of labor to have cities vie to attract people by fostering good use of their land. That is, indeed, the main point of Henry Geroge’s thesis in Progress and Poverty. A healthy economy generates surpluses that belie the Chicago School slogan that “There is no free lunch.” Land rents are the free lunch, and perhaps Connecticut’s move this year indicates that this time-proven wisdom is beginning to spread once again.- See more at: http://onthecommons.org/magazine/forgotten-idea-shaped-great-us-cities#sthash.WKn4gQm7.dpuf