Land Value Taxation will solve many of the 21st century's most serious social, economic and environmental problems, and promote justice, fairness and sustainability. We CAN have a world in which all can prosper.
Progress and Poverty, by Henry George Here are links to online editions of George's landmark book, Progress & Poverty, including audio and a number of abridgments -- the shortest is 30 words! I commend this book to your attention, if you are concerned about economic justice, poverty, sprawl, energy use, pollution, wages, housing affordability. Its observations will change how you approach all these problems. A mind-opening experience!
Henry George: Progress and Poverty: An inquiry into the cause of industrial depressions and of increase of want with increase of wealth ... The Remedy This is perhaps the most important book ever written on the subjects of poverty, political economy, how we might live together in a society dedicated to the ideals Americans claim to believe are self-evident. It will provide you new lenses through which to view many of our most serious problems and how we might go about solving them: poverty, sprawl, long commutes, despoilation of the environment, housing affordability, wealth concentration, income concentration, concentration of power, low wages, etc. Read it online, or in hardcopy.
Bob Drake's abridgement of Henry George's original: Progress and Poverty: Why There Are Recessions and Poverty Amid Plenty -- And What To Do About It! This is a very readable thought-by-thought updating of Henry George's longer book, written in the language of a newsweekly. A fine way to get to know Henry George's ideas. Available online at progressandpoverty.org and http://www.henrygeorge.org/pcontents.htm
Where Else Might You Look?
Wealth and Want The URL comes from the subtitle to Progress & Poverty -- and the goal is widely shared prosperity in the 21st century. How do we get there from here? A roadmap and a reference source.
Reforming the Property Tax for the Common Good I'm a tax reform activist who seeks to promote fairness and reduce poverty. Let's start with the enabling legislation and state requirements for the property tax. There are opportunities for great good!
This appeared in the Freeport News, and I thought it worth sharing:
Why is it so hard to understand the justice and benefits of capturing the community created value of land for the community?
Classical economists such as Adam Smith and Henry George, defined land as all free gifts of nature (urban land, harbors, etc.).
These get value because people, both local and foreign, want them for personal or commercial use.
So, no matter who 'owns' the gift of nature (land) there is a location value called economic rent which is exclusive of any production on or from that location.
When economic rent goes into private hands (i.e., beaches are given away to corporations, land values are uncollected) legitimate government revenue is lost and taxes like the proposed VAT are applied to the production process.
Not only is land speculation rewarded but building houses, trading goods and services, etc. are punished by taxes.
Naturally people try to avoid these taxes by smuggling and other forms of corruption.
When economic rent goes to honest government it encourages better use of locations as there is no tax penalty to build or work.
It reduces pollution and pays for infrastructure that helped create the economic rent in the first place.
Why is this so difficult to understand? Why is there so much ignorance of it and opposition to it?
Here are the opening paragraphs of a recent article about the complexities of Ground Lease contracts. I commend the entire article to your attention. It helps flesh out why and how the entire FIRE sector -- Finance, Insurance and Real Estate (as well as their attorneys) -- is receiving such a large share of the profits produced by the productive sectors of the economy. The owner of land, and the entities which lend on land, and insure the buildings and the revenue flow, all reap significant shares of what the tenants labor to create. Modern sharecropping. And the recipients of the ground rent get to parade as self-made men, people of awesome foresight and wisdom -- and even philanthropists (think Brooke Astor, the Fishers, and others in your own community) when they donate a small share back to a charity! As you read this, think both of Manhattan land and of land in your community's central business district, and along its major roads. (Location, location, location!)
If one wonders why (true) small business struggles, one might consider the complexity and expense of their ground leases, and contrast that with the Georgist alternative: that one's taxes would be simply the current rental value of the land, while the value of the building remains one's private property, not subject to taxation or going pouf! at the end of a ground lease.
The land lord is "supplying" something he didn't create. We ought to ease him out. Land value taxation is the obvious tool for reducing, and -- slowly or not -- eliminating, his "take" on those who do create. Think what it would mean if working people had that spending power, instead of the lords of the land.
All that land rent could be used to fund our community's needs, instead of lining the pockets of a few very "lucky" -- privileged -- duckies. (The analogies to chattel slavery are not a long stretch, once one starts to think about it. We should all own ourselves, and reap the fruits of our own labors.)
A lease is a lease is a lease – or so you may think. Yes, real property leases grant an estate in land to a tenant for a period of time. And yes, the tenant pays for that right of possession. But the action in a lease isn’t in the conveyance provisions; it’s in the contract provisions. Multiply out the rent and other annual monetary obligations by the length of the lease term (in years), and you’ll see that it might be (and often is) a big dollar contract. Even more important, unlike the vast majority of contracts whose obligations are satisfied in days or weeks, a lease contract goes unfulfilled for 50, 75, “99,” and even 500 years. That takes it beyond the life of the parties involved in its creation, and the future brings surprises. Neither Nostradamus nor Jules Verne got everything right.
Why a Ground Lease?
If a tenant has to build its own building (as is often the case), and has all of the burdens of ownership, why would it lease a property knowing that at the end of the lease term it has nothing left to show for its money and efforts? There are a number of common reasons, principal among them is that the owner won’t sell the land and the tenant has no alternative.
Real property often carries a long term unrealized gain, waiting to be taxed upon its sale.
Not every landowner is interested in making further active real property investments. This makes a like kind exchange unappealing.
Ground leasing the same land keeps ownership in the family. At the owner’s death, because of the current estate tax “stepped up basis” arrangement, the built in gain may never be taxed.
It began more than 90 years ago as a small tax break intended to help family farmers who wanted to swap horses and land. Farmers who sold property, livestock or equipment were allowed to avoid paying capital gains taxes, as long as they used the proceeds to replace or upgrade their assets.
Over the years, however, as the rules were loosened, the practice of exchanging one asset for another without incurring taxes spread to everyone from commercial real estate developers and art collectors to major corporations. It provides subsidies for rental truck fleets and investment property, vacation homes, oil wells and thoroughbred racehorses, and diverts billions of dollars in potential tax revenue from the Treasury each year.
The tax break also exposes one of the greatest vulnerabilities of the United States tax system: it depends on voluntary compliance. The I.R.S. staff is so outnumbered by tax lawyers and accounting departments at major corporations that there is often little to prevent taxpayers from taking a freewheeling approach to interpreting and administering the rules.
What’s more, the tax break is one of so many that it tends to escape attention. The independent Simpson-Bowles deficit commission appointed by Mr. Obama in 2010 raised the possibility of eliminating it and other tax expenditures, however, and some budget experts argue that the program should be severely limited or repealed.
Some financial planners and economists say that the tax break even favors real estate investors unfairly by allowing them to defer capital gains taxes that those who invest in securities and other ventures have to pay. And although it was originally intended to help farmers, some economists and lawmakers in agricultural areas say it has perversely contributed to suburban sprawl and the spiraling cost of farmland. Because it allows farmers to avoid capital gains taxes on land swaps, the tax break provides an incentive to sell farmland coveted by developers and buy property in less desirable and more remote areas.
Even as the debate over the tax break continues, there is a deep conviction in the real estate business that it is justified. Advocates for the real estate industry say that a large majority of transactions are conducted in strict compliance with I.R.S. regulations. Because the asset exchanges spur investment and help create jobs, industry officials say they would strenuously oppose any effort to end them.
“Historically, these exchanges are a very important consideration for a very important segment of the economy,” said Jeffrey D. DeBoer, chief executive of the Real Estate Roundtable. “I have no reason to believe that Congress won’t ultimately recognize that.”
A very important segment of the economy, or a very important segment of the financing of political campaigns? Land speculation doesn't create jobs for ordinary working people. Tax accountants, perhaps. Banks, perhaps. But land speculation is inert -- if what we want are jobs and widespread prosperity.
Recall that capital doesn't appreciate. Buildings and equipment, even with the best of maintenance, decline in value. What appreciates is land and natural resources -- and they rise in value for reasons which have nothing to do with the fellow, or corporation, who owns them. He is passive, inert -- and rent-seeking. We ought not to reward or even permit it. We can correct it through a better designed tax system.
This excerpt from an 1890 article in The Arena seems relevant as we look at gun violence and other contemporary problems created by lack of employment and income -- and hope.
It would be far better for society if instead of speculating on the
forms of punishment we turned our attention to the means of preventing
the crimes for which we punish the offenders. It has been observed that
most of the murders occur among the poor people, and upon the top floors
of tenement houses; that is to say, among the poorest of the poor. The
connection between poverty and the crime of murder, like the connection
between poverty and all other crime, is demonstrably close. If we could
cure the social disease of poverty, the seeds of crime would be
destroyed. The people rarely think of this. They think it is our
business to punish crime; but it is our best business to prevent it. Our
present organization of society manufactures criminals faster than we
can possibly take care of them. Poverty degrades men; it robs them of
leisure, which is absolutely necessary for the development of mind, and
the proper control of the passions; it keeps the people hungry and
fierce; it imbrutes them; it makes Ishmaels of them — their hand is
against society as the hand of society is against them. Plant a
generation of paupers, and you will reap a crop of criminals.
If we are wise we will turn our attention to the most important problem
of this or any age: how to so enrich the people that the temptations to
crime will be minified to the last possible degree. The solution of the
problem is as simple as it is important. For every millionaire we shall
have a thousand tramps; for every monopolist we shall have a hundred
burglars; for every woman who lives in idleness upon the fruit of
others’ toil, filched from them under the name of interest or rent, we shall have a score of prostitutes; for
every vacant land owner and money limiter — the twin man-starvers — we
shall have a murderer. One is the seed from which the other grows.
Eliminate your monopolists, the king of whom is the owner of vacant
land, and your problem of crime is settled. With open opportunities for
men to apply their labor to natural wealth productions, tenfold more
wealth would be produced and equitably distributed; and with wealth many
times multiplied and equitably distributed, a criminal would be more of
a curiosity than the original three-toed horse.
If memory serves, Hugh Pentecost was an Episcopal priest, perhaps in Newark. The title of the article from which these paragraphs come is "The Crime of Capital Punishment."
I like the word "minified." Maybe there is a useful slogan there: Minify Taxation! ("To make smaller or less significant; reduce.") We could collect the revenue we need with lower taxes were we to concentrate our taxes on land value, in all its manifestations. And in the process, we would reduce poverty, reduce the cost of living, reduce wealth concentration, reverse sprawl, naturally create employment and self-employment opportunities, and stabilize our economy. It seems to me that any one of these goals is worthy, and if this reform would move us closer to any of these goals, it is worth pursuing.
And, importantly, with less need to rely on a social safety net, spending could be signficantly reduced.
I stumbled across an excerpt from this in The American Cooperator, and when I couldn't find the material in any of George's other books, I went looking for the source, an 1887 book with chapters by 16 authors.
Enjoy! (It prints out as about 9 pages, if you're so inclined)
THE HISTORY, PURPOSE AND
POSSIBILITIES OF LABOR ORGANIZATIONS
IN EUROPE AND AMERICA; GUILDS, TRADES-
UNIONS, AND KNIGHTS OF LABOR; WAGES AND PROFITS;
HOURS OF LABOR; FUNCTIONS OF CAPITAL; CHINESE LABOR:
COMPETITION; ARBITRATION; PROFIT-SHARING AND
CO-OPERATION; PRINCIPLES OF THE KNIGHTS OF
LABOR; MORAL AND EDUCATIONAL AS-
PECTS OF THE LABOR QUESTION.
EDITED BY GEORGE E. McNEILL,
First Deputy of Mass. Bureau of Statistics of Labor; Sec.-Treas. of D. A. 30, Knights of Labor.
ASSOCIATE AUTHORS: TERENCE V. POWDERLY, G. M. W., K. of L.; DR. EDMUND J. JAMES, University of Pennsylvania; HON. JOHN J. O'NEILL, of Missouri;
HON. J. M. FARQUHAR, of New York; HON. ROBERT HOWARD, of Massachusetts; HENRY GEORGE, of New York;
ADOLPH STRASSER, Pres. Cigar Makers' Union; JOHN JARRETT, of
Pennsylvania; REV. R. HEBER NEWTON, of New York; F K. FOSTER, of
Massachusetts; P. M. ARTHUR, Chief Engineer Locomotive Brotherhood; W.
W. STONE and W. W. MORROW, of California; FRANKLIN H. GIDDINGS,
"Springfield Union"; JOHN McBRIDE, Secretary Coal Miners' Union;
D.J.O'DONOGHUE, of Toronto, Canada; P. J. McGUIRE, Secretary Carpenters'
NEW YORK: THE M. W. HAZEN CO.
Copyright 1886, by
A M. BRIDGMAN & CO.
CHAPTER XXIII. THE LAND QUESTION.
MAGNITUDE OF THE QUESTION — FIRST PRINCIPLES — THE
LAND-OWNER THE ABSOLUTE MASTER OF MEN WHO MUST LIVE ON HIS LAND — THE
ORDER OF NATURE INVERTED — EQUAL RIGHTS TO THE USE OF THE EARTH —
SELFISHNESS, THE EVIL GENIUS OF MAN — THE IRISH PEOPLE FORCED TO BEG
PERMISSION TO TILL THE SOIL — APPROPRIATION OF THE CHURCH-LANDS — LAND
IN ITSELF HAS NO VALUE — THE GREAT CAUSE OF THE UNEQUAL DISTRIBUTION OF
WEALTH — NO HOPE FOR THE LABORER, SO LONG AS PRIVATE PROPERTY IN LAND
EXISTS — NOTHING MYSTERIOUS ABOUT THE LABOR QUESTION — THE DIFFICULTY IN
FINDING EMPLOYMENT — NATURE OFFERS FREELY TO LABOR — NATURAL MEANS OF
EMPLOYMENT MONOPOLIZED — SPECULATION IN THE BOUNTIES OF NATURE.
BENEATH all the great social questions of our time lies one of primary
and universal importance, the question of the rights of men to the use
of the earth.
The magnitude of the pecuniary interests involved, the fact that the
influential classes in all communities where private property in land
exists are interested in its maintenance, lead to a disposition to
ignore or belittle the land question: but it is impossible to give any
satisfactory explanation of the most important social phenomena without
reference to it; and the growing unrest of the masses of all civilized
countries, under conditions which they feel to be galling and unjust,
must at length lead them, as the only way of securing the rights of
labor, to turn to the land question.
To see that the land question does involve the problem of the equitable
distribution of wealth; that it lies at the root of all the vexed social
questions of our time, and is, indeed, but another name for the great
labor question in all its phases, it is only needful to revert to first
principles, and to consider the relations between men and the planet
We find ourselves on the surface of a sphere, circling through
immeasurable space. Beneath our feet, the diameter of the planet extends
for eight thousand miles; above our heads night reveals countless
points of light, which science tells us are suns, that blaze billions of
miles away. In this inconceivably vast universe, we are confined to the
surface of our sphere, as the mariner in mid-ocean is confined to the
deck of his ship. We are limited to that line where the exterior of the
planet meets the atmospheric envelope that surrounds it. We may look
beyond, but cannot pass. We are not denizens of one element, like the
fish; but while our bodies must be upheld by one element, they must be
laved in another. We live on the earth, and in the air. In the search
for minerals men are able to descend for a few thousand feet into the
earth's crust, provided communication with the surface be kept open, and
air thus supplied; and in balloons men have ascended to like distances
above the surface; but on a globe of thirty-five feet diameter, this
range would be represented by the thickness of a sheet of paper. And
though it is thus possible for man to ascend for a few thousand feet
above the surface, or to descend for a few thousand feet below it, it is
only on the surface of the earth that he can habitually live and supply
his wants; nor can he do this on all parts of the surface of the globe,
but only on that smaller part, which we call land, as distinguished
from the water, while considerable parts even of the land are
uninhabitable by him.
By constructing vessels of materials obtained from land, and
provisioning them with the produce of land, it is true that man is able
to traverse the fluid-surface of the globe; yet he is none the less
dependent upon land. If the land of the globe were again to be
submerged, human life could not long be maintained on the best-appointed
Man, in short, is a land-animal. Physically considered, he is as much a
product of land as is the tree. His body, composed of materials drawn
from land, can only be maintained by nutriment furnished by land; and
all the processes by which he secures food, clothing and shelter consist
but in the working up of land or the products of land. Labor is
possible only on condition of access to land, and all human production
is but the union of land and labor, the transportation or transformation
of previously existing matter into places or forms suited to the
satisfaction of man's needs.
Land, being thus indispensable to man, the most important of social
adjustments is that which fixes the relations between men with regard to
that element. Where all are accorded equal rights to the use of the
earth, no one needs ask another to give him employment, and no one can
stand in fear of being deprived of the opportunity to make, a living. In
such a community, there could be no "labor question." There could be
neither degrading poverty nor demoralizing wealth. And the personal
independence arising from such a condition of equality, in respect to
the ability to get a living, must give character to all social and
On the other hand, inequality of privilege in the use of the earth must
beget inequality of wealth and power, must divide men into those who can
command and those who are forced to serve. The rewards which nature
yields to labor no longer go to the laborers in proportion to industry
and skill; but a privileged class are enabled to live without labor by
compelling a disinherited class to give up some part of their earnings
for permission to live and work. Thus the order of nature is inverted,
those who do no work become rich, and "workingman" becomes synonymous,
with "poor man." Material progress tends to monstrous wealth on one
side, and abject poverty on the other; and society is differentiated
into masters and servants, rulers and ruled.
If one man were permitted to claim the land of the world as his
individual property, he would be the absolute master of all humanity.
All the rest of mankind could live only by his permission, and under
such conditions as he chose to prescribe. So, if one man be permitted to
treat as his own the land of any country, he becomes the absolute
sovereign of its people. Or, if the land of a country be made the
property of a class, a ruling aristocracy is created, who soon begin to
regard themselves, and to be regarded, as of nobler blood and superior
rights. That "God will think twice before he damns people of quality,"
is the natural feeling of those who are taught to believe that the land
on which all must live is legitimately their private property.
recent migration of thousands of American farmers to the cold and
comparatively uninviting regions of western Canada has not been thru any
lack of opportunity, in the more attractive regions of Minnesota and
neighboring states, created by natural causes. Whatever lack of
opportunity or ''room" exists, anywhere south of the boundary line, is
the result of conditions wholly artificial in their origin. Chief among
these is the tying up of large bodies of the best lands in the hands of
speculators who are holding them for a rise. Take a trip on almost any
railroad leading out of St. Paul and all along its line it will be found
that the unimproved land exceeds in acreage the amount reduced to
cultivation. In great numbers of instances there has been no thought of
improving it by its present owners. They have bought it on speculation,
and when they sell, it is an even chance that the transfer will be to
some other speculator. Drive the speculator out of the field and the
vacant stretches between villages will soon be occupied by farms. At
present, even in the wonderfully fertile and productive region of the
Red River of the North, a vast acreage is unoccupied — held on
the Western farmers and legislators had formed a truer appreciation of
the fundamental teachings of Henry George in that remarkable book,
"Progress and Poverty," they would long ago have found a remedy for
conditions which prevent the settlement of lands in their own
neighborhoods, condemn the larger part of the fertile area in hundreds
of counties to unproductive idleness, curtail the revenues of the stale,
and double the burdens of the farmers who are really building up the
country. That remedy is the taxation of unproductive at the same rate as
productive land; the release from taxation of the farmer's house and
barn and crops and cattle, and the laying of the entire tax on the land —
including in the term "land" all franchises and monopolistic uses of
natural opportunities, like water power, etc. If the land speculator had
to pay the same tax, on every uncultivated acre, that the farmer pays
on the cultivated — the amount being increased by the abolition of the
personal property tax — he would soon be compelled to "sell out " at
such figures as would remove all temptation for the homeseeker to travel
to Canada or elsewhere in search of cheap land. That the clear, shining
virtue of Mr George's proposition should have been obscured by its
forced and unnecessary connection with the questions of individual land
owning and "free trade" is one of the misfortunes of the century.
Divested of this connection, it affords the most direct and equitable
solution yet suggested for the multiform problems involved in the right
adjustment of taxation.
seems a hard thing for many to understand how the single tax, as
applied at Fairhope or elsewhere, can benefit both those who have little
and those who have much. They think that if the tax burden upon the
wealthy man's fine improvement is decreased, it must be at the expense
of his poorer neighbor; or on the other hand, if the poor man's burden
is lightened, it must be because it is shifted to the well-to-do. The
fact is that the wealthy man whose wealth is genuine wealth, houses,
stores, stocks (of goods) and other things which are the product of
labor — not the possessor of monopoly privileges — will be benefited by
the freeing from taxation of these forms of wealth, and the poor man
will be benefited by the exemption of his smaller improvement if he be a
home-owner, and if he be not, by the destruction of land speculation,
making it easy for him to secure land for a home or for cultivation, and
by an increased demand for his labor from others and the increased
ability of others to buy his products if he be a producer.
somebody must be hurt by your policy. You can't benefit everybody, the
beneficiaries of the present system as well as its victims," will say
the skeptic. To which we say: There is plenty of room for the argument
as to whether the enthronement of Justice ever did or can hurt anybody;
but so far as the colony is concerned, there are no beneficiaries of
injustice. No one has ever been given the privilege of collecting
tribute in the form of unearned land values, and the wealthy and the
poor are alike benefited by the taking for public use of that which
belongs and has been held from the beginning to belong to the public,
but elsewhere is made the privilege of a favored few.
the colony the application of the single tax to present conditions
would take somebody's privileges and profits, and it will be those who
are "reaping where they have not sown" in the collection of land values
rightly belonging to the public for the two highest reasons: first,
because their collection for the common benefit is necessary to insure
to each his inherent right to live upon the earth; and second, because
such values are the result of their joint presence and activity, and not
traceable to individual exertions.
-- Fairhope Courier, quoted in The American Cooperator (1903)
every city, old ramshackles and vacant lots are to be found even upon
the leading thorofares. Side by side with magnificent modern office
buildings are to be seen wooden shacks and tumble-down one or two
storied buildings which have long survived their usefulness. They
remain, however, because they enable the owner of the land to collect
rent enough to pay the taxes, while he profits by the increase in the
land values due to the growth of the community. Yet the man is not to
blame, it is our system of taxation which is at fault.
examples of these things may be seen in Toronto, and for purpose of
illustration we have selected the two northern corners of Bay and
Richmond streets. On the west side is the beautiful building of the
Foresters, a brick and stone structure eleven stories high and one of
the finest in the city. On the east side the same area of land is
occupied by seven buildings. Three of these are four storied brick
warehouses assessed at $18,000, while the remaining buildings are of the
assessed value of the land on which the Foresters Temple stands is
$35,157 and the building is assessed for $450,000. The opposite corner
about the same extent is assessed at $37,343 and the buildings at
$23,000. The tax upon the land is therefore about the same, but the
Foresters have to pay about $8,500 extra taxes every year because they
expended nearly half a million dollars in employing labor and
beautifying the city.
Can anything be more absurd? A
land owner keeps a vacant lot unimproved, or allows old buildings to
cumber the ground and we tax him very lightly, as tho he was worthy of
all encouragement. But when any one has the enterprise, or shall we say
the temerity, to erect a beautiful building, and thereby increases the
accommodation for men, employing labor and adorning the city, we treat
him as tho he was a bad citizen and levy a fine upon him. Call it what
you will, a tax or an assessment, it is still a fine, tho unfortunately
for him, it is collected not once but every year as long as the building
remains valuable. The facts that he has increased the accomodation
there is for business or provided homes for the people are not
considered as extenuating circumstances. The fine is in proportion to
the benefit he has conferred on society.
will men learn that the way to encourage the creation of wealth, the
erection of homes and. the carrying on of industries, is not to fine men
according to the benefits they confer upon their fellows, but to exempt
all these things from taxation and place the tax on the land value? It
must be remembered that land values are created by the community, not by
individual effort, and are therefore justly chargable with the expenses
of the community.
Alan C. Thompson in The Canadian Single Taxer, reprinted in The American Cooperator (1903)
no class of reformers do we find more clear thinking or a sounder
political economy than among the "single-taxers." Following the writings
of the late Henry George there is a considerable and important
literature upon this subject. Land monopoly and speculation should be
stopped. Labor should not be taxed. The resources of nature should be
made to minister equitably to the whole people. Now the weakest pay the
most tax. It should be the strongest and they whom the government most
A Baltimore Instance
single tax man of Baltimore, Mr John Salmon, expresses no little
surprise that Senator Hanna's candidate for governor of Ohio supposes
that the single tax has been a disastrous failure wherever tried. Of Mr
Herrick and his notion Mr Salmon writes: This stamps him as being a
twisted thinker and a loose observer. The single tax is in operation all
over the United States, flowing into the pockets of private
individuals, which is what single taxers object to. Here in Baltimore
more than in any other section of the country, it is strongly apparent.
We have the ground rent system in operation, 90 percent of the real
estate being held on leaseholds. The custom is an old English one
grafted on the Maryland colonies by Lord Baltimore and his English
compeers, and it has grown and flourished like a green bay tree. When
one buys a home here it is in nine cases out of ten subject to a ground
rent. These ground rents are dealt in as a form of investment the same
as a mortgage or any other form of investment; but the point to observe
is that they are a single tax, pure and simple, the price paid for the
use of the ground per se and for ground only.
last assessment separated the value of the land from the value of
improvements, and it is done every day in our community. Baltimore has
more houses per capita than any city in the country, due to the ground
rent system; and a house costing $1,200 to build is very often sold for
$800 or $900 in order to create a ground rent ranging from three dollars
a front foot to $20 and $40 a front foot. To explain more fully: Bonus
buildings are run up on plats of ground split up into lots of 15x90, and
a ground rent say of $6 per front foot is put on the lot, making $90 a
year ground rent, which the buyer agrees to pay, and in his ground rent
is a clause that he will also pay all taxes. This $90 is essentially a
single tax. The agreement to pay it is exactly the same kind of a
contract that is in vogue in Fairhope, Ala. With this extremely
important exception, that whereas we in Baltimore bind ourselves to pay
all the taxes, in Fairhope the company or lessor, agrees to pay all
taxes. Talk of its being a disastrous failure! Not on your life. Ground
rents are as scarce as hen's teeth, and can only be bought on a three
percent basis. They command as good a price as government bonds, and it
is estimated that $14,000,000 at least is raised in Baltimore alone from
this source — nearly twice as much as the city and state taxes amount
to. And what is this tax of $14,000,000 paid for? Why, merely for the
privilege of living in the city of Baltimore. That's all the payers get
for it. And the only kick we've got coming is that the private
individuals get that money instead of the city and state.
-- found in "The American Cooperator" (1903); "The Public" was a weekly newspaper, out of Chicago, edited by Louis F. Post, who went on to serve in Woodrow Wilson's administration.
Me voici, owner of some
four hundred well developed pines, a few thousand tons of granite
scattered in blocks at the roots of the pines, and a sprinkling of
earth. That's a town lot in Vancouver. You or your agent hold to it
till property rises, then sell out and buy more land further out of
town and repeat the process. I do not quite see how this sort of
thing helps the growth of a town, but the English Boy says that it
is the "essence of speculation," so it must be all right.
StarWatch investigation: State paid twice what some I-69 land was worth
To secure path for I-69, INDOT offered $7M for property appraised at $3.34M Written by Ryan Sabalow and Tim Evans | 7:47 PM, Nov 10, 2012
BLOOMINGTON, Ind. -- In 2006, Barry Elkins paid $850,000 for about 200
acres in Monroe County owned by former Indiana University basketball
coach Bob Knight.
$4,250 per acre
Elkins told a local newspaper he had no plans to develop the land. He
said he also was quite aware state officials planned to acquire at least
some of the property for the new I-69 freeway project.
Nonetheless, Elkins told a reporter: "It's a heck of a piece of ground."
Turns out, it produced a heck of a profit, too.
In July, state highway officials paid Elkins $2.41 million for an
easement covering 140 of the 200 acres. That's almost four times the
$658,800 that state appraisers said the easement was worth.
$17,214 per acre for the 140 acres.
$658,800 is $4,705 per acre.
The $2.41 million represents a profit of $1.56 million since 2006, still
leaves the owner with 60 acres with no easement and 140 acres with an
easement. The $1.56 million profit in 6 years on an $850,000 investment
is 84%! Quite a return! For what effort?
What did society get in return?
According to I-69 cost estimates INDOT provided this summer, $162.6
million in state and federal funds were spent on right-of-way purchases
along the new stretch of freeway.
He said the property payments also haven't caused the project to go over
budget. He said the I-69 project is 25 percent under budget estimates.
Officials this summer pegged the cost of the Evansville-to-Bloomington
project at $1.5 billion.
The land Elkins bought from Knight wasn't the only Monroe County
property along I-69's path that he sold to the state for far more than
its fair market value. He and two co-owners also got $348,600 for a
27-acre property appraised at $194,625; and $795,956 for 58 acres
appraised at $278,295.
As for the former Knight property, the state purchased the easement to
create an "environmental mitigation site" to make up for damage to
forests, wetlands, wildlife habitat and other natural resources caused
by the new freeway.
After the $2.41 million payday -- which was nearly three times the
amount Elkins paid Knight for the entire 200 acres -- Elkins still owns
the picturesque expanse of undeveloped pasture and woods about eight
miles southwest of Bloomington.
The easement forbids any development on 140 acres of the land but allows
Elkins to use it for "low-impact" recreational activities such as
hiking, photography and hunting.
And he doesn't have to pay property taxes.
One might reasonably ask what valuation Elkins was paying property taxes on before the transactions.
One might reasonably ask how much the labor costs on this project were -- what men and women got paid for their hours of labor put into building the highway, and then compare that to Mr. Elkins' and others' receipts as passive landholders!! Quite amazing that we treat the "rights" of landholders as more sacred than we make the rights of the community or of those who work.
One might reasonably wonder how soon the communities along the route of this new highway will revalue their land, and whether the communities will collect more from those whose land benefited from the presence of this highway (and less from those whose properties were in reality negatively impacted, should that be the case). In general, the aggregate benefits will far exceed the aggregate negative impacts, and would likely be enough to pay all the costs of the construction.
Mr. Elkins' free lunch did not come out of thin air. And likely, his heirs will continue to enjoy the benefit of it.
THIS is how wealth concentrates. This is why we are forced into taxing wages, and sales, and other things we have no business taxing!
As you read this, recall that a single acre of urban land can be worth $250,000,000 or more -- over 23,000 times what the recently-doubled farmland described in this article sold for!! Also, it seems worthwhile to point out that 160 acres (one quarter of a square mile), at $10,700 each, works out to $1.7 million -- currently well below the threshold for the federal estate tax!
Consider, too, what it is that the land speculator brings to the process of production, and what he is rightly entitled to in a fair and just society, and what society is entitled to, and what the workers -- the farmer and his employees -- are entitled to, and what the capitalist -- the fellow who pays for the buildings and equipment -- is entitled to. Seems like the land speculator is making out awfully -- awefully! -- well but isn't producing or creating anything!! Why do we do things this way? Did the absentee landlord deserve a share of the crop the farmer created? If the farmer has to pay rent to someone, shouldn't it be the community? Wouldn't it be better if America's investors were motivated to put their funds into better equipment (capital) or employing people (labor)?
November 8, 2012
Howard Audsley has been driving through Missouri for the past 30 years to assess the value of farmland. Barreling down the flat roads of Saline County on a recent day, he stopped his truck at a 160-acre tract of newly tilled black land. The land sold in February for $10,700 per acre, double what it would have gone for five years ago.
Heading out into the field, Audsley picked up a clod of the dirt that makes this pocket of land some of the priciest in the state.
"This is a very loamy, very productive, but loamy soil," Audsley said. "A high-clay soil will just be like a rock and that's the difference between the ... soils. And the farmers know this and the investors know this. That's why they pay for it what they do."
A Steep Surge In Prices
not just the value of Missouri cropland that's rising. Corn Belt
farmland prices from Iowa to Illinois and Nebraska to Kansas have been
sky-high lately, boosted by $8-a-bushel corn.
paid about $3.3 million for [about 650 acres] in Southeast Illinois in
2009," said Diggle, who is the CEO of Singapore-based Vulpes Investment
Management. The company handles $250 million of investor money, about 15
percent of which is in farmland.The
high commodity prices have helped encourage investors like Steve
Diggle, who have no connection to farming, to compete for their very own
acreage in the Heartland.
year we sold it at auction and we got $5.1 million," he said, referring
to the Illinois farmland. "That's 55 percent higher than we paid. Plus
we got two yields — one of 3.5 percent and one of 5 percent. So, you
know, as an investment, that's 63 percent over three years. [It] is
great and we're extremely happy with it."
says his firm also purchased a 1,400-acre tract in Illinois two years
ago. The company plans to hold on to it to make money through cash rents
and land appreciation.
value of your land may go up or down. But as long as bond prices remain
where they are, it's very hard to see how we'll have a sustained bear
market for agriculture," Diggle said. By comparison, he said, the
extremely low returns in the bond market are "just so inferior."
A Safer Investment
You don't have to be a billionaire to invest in farmland.
professor Andy Trupin, who lives in Delray Beach, Fla., bought a
155-acre tract of farmland in Lebo, Kan., two years ago because it
looked like it would make him more money than gold or the stock market.
He also owns another tract that's primarily pastureland.
seemed like a much safer vehicle to get an income stream even though
... it's not a high-income stream. At least it's more than you would get
on Treasuries at any duration," Trupin said. "And at the same time,
[farmland offers] price appreciation or to at least [holds] its value in
the event of an inflation period."
investment has paid off so far, Trupin said. He rented out the land to a
local farmer who grows corn, soybeans and wheat. Even the brutal
drought failed to knock down the investment.
we managed to get 20 bushels to the acre of corn even though the place
was as dry as Las Vegas last year," Trupin said. "I'm willing to let the
income from this thing fluctuate. In bad years, it's a slight loss —
maybe a couple of thousand on the year — and in good years, you gain up
to $10,000 on it."
found the land online and got help purchasing it by Realty Executives
of Kansas City. The company says 90 percent of its new customers are
investors like Trupin, and it holds seminars for investors that walk
them through the process of evaluating and buying farmland and how to
find local farmers to rent the land.
probably a higher percentage now of people who are strictly investors,
stock market people, money-market-type investors, and ... they're buying
all types of land," said Dale Hermreck, a broker for Realty Executives
who says he sold $21 million worth of farmland in Kansas last year.
have a lot of outside interest from Texas, Chicago, New York," Hermreck
said. "I get calls and inquiries all over the United States."
The Specter Of A Bubble
to University of Missouri agriculture economist Ron Plain all of this
sounds a bit like the housing bubble burst of 2006. He is concerned a
similar bubble could be happening in farmland.
get several years going up faster than that long-term trend of 6
percent [annual increases] and you're then in a situation where you're
sort of due for a correction," Plain said. "And the way you correct is
pull those land values down — or 'pop the bubble' ... and so there's
concern about that and it's kind of reasonable to worry."
said that with mortgage rates at their lowest in 60 years, it's
reasonable to expect the cost of borrowing to go up eventually. And if
crop prices retreat from record highs, he said, that means "less income
per acre and therefore less ability to pay for farmland."
a bubble burst, farmland might be harder to sell, especially compared
with other more liquid investments. But investors argue that any bubble
is still far off, and they believe that farm acreage will remain a solid
long-term investment so long as the demand for food continues to grow.
remains to be seen whether investors will be able to compete with
farmers for the small supply of high-quality cropland available in the
Midwest, says broker Hermreck.
have people call me all the time and I just don't have what they're
looking for," Hermreck said. "Simply supply and demand. It's just not
there. I could sell an awful lot more of this land if it was available.
And people seem to hang on to something that's making some money and
real popular. It's just real popular now to own land."
Fentress Swanson reports from Missouri for Harvest Public Media, an
agriculture-reporting project involving six NPR member stations in the
Midwest. For more stories about farm and food, check out harvestpublicmedia.org
U-z-r.-z-z.-7. went the bell every five minutes through- out the lower rents exhibit of the New York Congestion Committee. "Every time this bell rings." explained a pla- card, "land values increase $1,000 in New York. Who gets it? Land speculators. Who makes it? You. when you pay your rent." Oral Hygiene journal, January, 1914
The exhibit must have run for over a year, because I found a reference to a speech Mayor Gaynor gave on "The Single Tax" there on February 17, 1913.
The vacant land belongs to the landless. The simple fact that
the one is vacant and the other landless is of itself the highest
proof that they should be allowed to come together. Alas, what
a crime against nature that they should be kept apart.
— GERRIT SMITH, Smith's Speeches
in the U. S. Congress, p. 247 (1854).
The earth in its natural uncultivated state was, and ever would
have continued to be, the common property of the human race.
As I listen to the 2012 party platforms, I am reminded of what they ought to be focused on, embodied pretty well in this platform from 1886-87.
PLATFORM OF THE UNITED PARTY.
Adopted at Syracuse August 19, 1887.
We, the delegates of the united labor party of New York, in state
convention assembled, hereby reassert, as the fundamental platform of
the party, and the basis on which we ask the co-operation of citizens of
other states, the following declaration or principles adopted on
September 23, 1886, by the convention of trade and labor associations of
the city of New York, that resulted in the formation of the united
"Holding that the corruptions of government and the impoverishment of
labor result from neglect of the self-evident truths proclaimed by the
founders of this republic that all men are created equal and are endowed
by their Creator with unalienable rights, we aim at the abolition of a
system which compels men to pay their fellow creatures for the use of
God’s gifts to all, and permits monopolizers to deprive labor of natural
opportunities for employment, thus filling the land with tramps and
paupers and bringing about an unnatural competition which tends to
reduce wages to starvation rates and to make the wealth producer the
industrial slave of those who grow rich by his toil.
'“Holding, moreover, that the advantages arising from social growth and
improvement belong to society at large, we aim at the abolition of the
system which makes such beneficent inventions as the railroad and
telegraph a means for the oppression of the people and the
aggrandizement of an aristocracy of wealth and power. We declare the
true purpose of government to be the maintenance of that sacred right of
property which gives to every one opportunity to employ his labor, and
security that he shall enjoy its fruits; to prevent the strong from
oppressing the weak, and the unscrupulous from robbing the honest; and
to do for the equal benefit of all such things as can be better done by
organized society than by individuals; and we aim at the abolition of
all laws which give to any class of citizens advantages, either
judicial, financial, industrial or political, that are not equally
shared by all others."
We call upon all who seek the emancipation of labor, and who would make
the American union and its component states democratic commonwealths of
really free and independent citizens, to ignore all minor differences
and join with us in organizing a great national party on this broad
platform of natural rights and equal justice. We do not aim at securing
any forced equality in the distribution of wealth. We do not propose
that the state shall attempt to control production, conduct
distribution, or in any wise interfere with the freedom of the
individual to use his labor or capital in any way that may seem proper
to him and that will not interfere with the equal rights of others. Nor
do we propose that the state shall take possession of land and either
work it or rent it out. What we propose is not the disturbing of any man
in his holding or title, but by abolishing all taxes on industry or its
products, to leave to the producer the full fruits of his exertion and
by the taxation of land values, exclusive or improvements, to devote to
the common use and benefit those values, which, arising not from the
exertion of the individual, but from the growth of society, belong
justly to the community as a whole. This increased taxation of land, not
according to its area, but according to its value, must, while
relieving the working farmer and small homestead owner of the undue
burdens now imposed upon them, make it unprofitable to hold land for
speculation, and thus throw open abundant opportunities for the
employment of labor and the building up of homes.
While thus simplifying government by doing away with the horde of
officials required by the present system of taxation and with its
incentives to fraud and corruption, we would further promote the common
weal and further secure the equal rights of all, by placing under public
control such agencies as are in their nature monopolies: We would have
our municipalities supply their inhabitants with water, light and heat;
we would have the general government issue all money, without the
intervention of banks; we would add a postal telegraph system and postal
savings banks to the postal service, and would assume public control
and ownership of those iron roads which have become the highways of
While declaring the foregoing to be the fundamental principles and aims
of the united labor party, and while conscious that no reform can give
effectual and permanent relief to labor that does not involve the legal
recognition of equal rights, to natural opportunities, we nevertheless,
as measures of relief from some of the evil effects of ignoring those
rights, favor such legislation as may tend to reduce the hours of labor,
to prevent the employment of children of tender years, to avoid the
competition of convict labor with honest industry, to secure the
sanitary inspection of tenements, factories and mines, and to put an end
to the abuse of conspiracy laws.
We desire also to so simplify the procedure of our courts and diminish
the expense of legal proceedings, that the poor may be placed on an
equality with the rich and the long delays winch now result in
scandalous miscarriages of justice may be prevented.
And since the ballot is the only means by which in our Republic the
redress of political and social grievances is to besought, we especially
and emphatically declare for the adoption of what is known as the
“Australian system of voting,” an order that the effectual secrecy of
the ballot and the relief of candidates for public office from the heavy
expenses now imposed upon them, may prevent bribery and intimidation,
do away with practical discriminations in favor of the rich and
unscrupulous, and lessen the pernicious influence of money in politics.
In support or these aims we solicit the co-operation of all patriotic
citizens who, sick of the degradation of politics, desire by
constitutional methods to establish justice, to preserve liberty, to
extend the spirit of fraternity, and to elevate humanity.
Mr. Henry George first formulated this idea, which has grown steadily in favor, in 1879. Single-tax men assert as a fundamental principle that all men are equally entitled to the use of the earth; therefore, no one should be allowed to hold valuable land without paying to the community the value of the privilege. They hold that this is the only rightful source of public revenue, and they would therefore abolish all taxation - local, state and national - except a tax upon the rental value of land exclusive of its improvements, the revenue thus raised to be divided among local, state and general governments, as the revenue from certain direct taxes is now divided between local and state governments.
The single tax would not fall on all land, but only on valuable land, and on that in proportion to its value. It would thus be a tax, not on use or improvements, but on ownership of land, taking what would otherwise go to the landlord as owner.
In accordance with the principle that all men are equally entitled to the use of the earth, they would solve the transportation problem by public ownership and control of all highways, including the roadbeds of railroads, leaving their use equally free to all.
The single-tax system would, they claim, dispense with a horde of tax-gatherers, simplify government, and greatly reduce its cost; give us with all the world that absolute free trade which now exists between the States of the Union: abolish all taxes on private issues of money; take the weight of taxation from agricultural districts, where land has little or no value apart from improvements, and put it upon valuable land, such as city lots and mineral deposits. It would call upon men to contribute for public expenses in proportion to the natural opportunities they monopolize, and make it unprofitable for speculators to hold land unused or only partly used, thus opening to labor unlimited fields of employment, solving the labor problem and abolishing involuntary poverty.
It will be thought an intolerable thing that men shall derive enormous increments of income from the growth of towns to which they have contributed nothing — that they shall be able to sweep into their coffers what they have not produced — that they shall be able to go on throttling towns, as they are well known to do in some cases. It is impossible to suppose that the system will not be vigorously, powerfully, persistently and successfully attacked.
—JOHN MORLEY, Speech at Forfar, October 4, 1897. The Times, October 5, 1897, p. 5, column 3.
Has no one in California figured out that when the calf is deprived of mother's milk, starvation is inevitable?
It has taken 34 years, but it is coming about.
Feeding calves grain, or seaweed, or sunflower seeds isn't as smart as letting it consume its natural food.
Taxing wages, sales and buildings isn't as smart as collecting the lion's share -- calf's share, if you will -- of the land rent for public purposes.
Proposition 13 was designed to make sure that the cows' milk was kept for the Irvines, the big landowners, the commercial property owners, and the longtime homeowners, while providing a diminishing fifth of it to the calf and supplementing with grain, seaweed and sunflower seeds.
The calf's digestive system has blown up because it was deprived of its proper food, and "nourished" with stolen fake food.
Thousands Sign Petition at a Mass Meeting Held in Union Square
Pastor Flays Legislature
Dr. John Haynes Holmes Says Bosses Have No Right to Stop the Expression of the People's Will
Petitions asking for a referendum vote upon the question of reducing gradually the tax rate upon buildings in New York to one-half the tax rate upon land, through five consecutive reductions in as many years, were signed yesterday by several thousand persons at a mass-meeting held in Union Square under the auspices of the New York Congestion Committee. The meeting was announced as a public protest for lower rents.
Benjamin Clark Marsh, Executive Secretary of the Committee on Congestion of Population in New York, was Chairman. Dr. John Haynes Holmes of the Church of the Messiah said that the Legislature "in the wisdom of the Big Sachem at Fourteenth Street has decreed that the people are not fit to register their judgment as to this bill. I, for one, desire to protest against the boss or set of bosses who presume to forbid the people to express their will on any question."
Frederick Leubuscher, representing the New York State League of Savings and Loan Association, said:
"It was admitted by some of the land speculators at the hearing of the Lower Rents bill at Albany that they were unable to answer our arguments. Nevertheless, a Democratic majority stifled the bill. As a savings and loan association man, I am interested particularly in the enactment of this proposed law. The stimulation of the erection of buildings and the making of improvements generally will be more market in the suburbs, where modest homes, costing from $2,000 to $5,000 to erect, are most in demand."
The purpose of the law was explained in a letter from Assemblyman Michael Schaap, who introduced the Salant-Schaap bill in the lower House of the State Legislature.
"If the tax rate on buildings had been half that on land this year," he wrote, "the rents of the average tenant would have been at least one month's rent less than it was; owners of small houses would have paid $15 to $25 less taxes than they do, and there would be fewer than 9,000 evictions for non-payment of rent.
"The taxes on all adequately improved property would have been reduced and the city would have recovered almost $20,000,000 more of ground rent which now goes to a few people of New York and to absentee landlords. This ground rent at 6% is over $273,000,000. The people of the city have created and maintain these values, but they get less than $84,000,000 of it -- the land owners get the other $189,000,000. Rent and taxes on homes and other buildings would have been reduced by at least $20,000,000."
The Rev. Alexander Irvine said that one family out of every 150 in New York City was evicted for non-payment of rent, because of the unjust taxation of improved property as contrasted with vacant land. Only 3% of the residents of the city own land, the speaker asserted.
John J. Hopper, Chairman of the New York State Independence League, said:
"A tax upon anything tends to lessen the supply of that commodity. By the same principle a tax upon buildings tends to lessen their number. A bill tending to reduce the tax upon buildings will bring about the construction of more buildings, and as a result there will be more competition and a corresponding reduction in rents.
"The Legislature refused to let us decide this question for ourselves, asserting that we did not know enough to vote on the subject of taxation. When we realize that for the expenses of the National Government each one of us pays $7.50 a year; for the state expenses, $5.50 and for the city expenses $38.50, making a total of $51.50 per individual, or $255 for a family of five, then we understand that we must think upon this subject of taxation.
Frederick C. Howe, Director of the People's Institute, said:
"Think of the stupidity of New York citizens. We talk about bankruptcy and lack of city credit and yet we give away each year at least $100,000,000 in the speculative increase of land values which the growth of the community creates. That is, the increase show by the tax valuation of the city. New York could pay a large part of its present budget out of the land speculation profits alone, if it taxed land and exempted buildings."
C. N. Sheehan of the Twenty-eighth Assembly District Board of Trade, Brooklyn, and J. P. Coughlin of the Central Labor Union of Brooklyn also spoke.
The following list comprises the most commonly asked questions about the concept of making land and resource rentals the source of revenue for government. As you continue this study, you will see the value from giving resources the respect they deserve and the benefits resulting from the freeing of labour, production and exchange from taxation. If you have any questions which are not covered here, or observations you would like to put to our panel, please feel free to do so by sending your question as an e-mail query and we will attempt to respond.
The inclusion of land and resources in the economic equation is central to any solution for revenue raising. A taxation solution which does not consider the nature of taxation itself and allows the continuing private monopolisation of community land and resources fails to recognise the essential role land plays in the economic equation and will not work. Land is the only element in the economic equation which is both fixed and finite. It can be monopolised. It is a unique class of asset which must be treated accordingly. If we were to wrest not the land itself, but its unimproved value from private monopolies and return the value to the community — whose very presence creates it — then we would have reduced many problems in one stroke with great benefit to production, to the environment and to the cause of individual freedom and justice.
On the subject of land and resource rents, Henry George said this:
The tax upon land values is the most just and equal of all taxes. It falls upon those who receive from society a peculiar and valuable benefit, and upon them in proportion to the benefit they receive. It is the taking by the community, for the use of the community, of that value which is the creation of the community. It is the application of the common property to common uses. When all rent is taken by taxation for the needs of the community, then will the equality ordained by nature be attained.
This item, from a Canadian library, seems to me to be a good short statement of the reform many of us seek; I particularly like the next-to-last paragraph.
1899 ADDRESS TO THE CHURCHES FROM THE FOLLOWING ORGANIZATIONS:
The Single Tax Association, The Trades and Labor Council, The Allied Printing Trades Council, The International Builders' Laborers' Union, The International Association of Machinists, The Toronto Typographical Union, The Toronto Street Railway Employees' Union and Benefit Society.
THE circumstances of the last few years have revealed a most serious condition in the social arrangements of this Continent. With an immeasurable endowment of natural wealth, with the improvement of machinery beyond all parallel, with the means of transportation perfected as never before, with the power of producing wealth in abundance vastly greater than in any other age, we still see the terrible sight of ghastly poverty, of oppressive want, of enforced idleness, and all this in the shadow of palaces with all the outward and visible signs of inordinate luxury.
Is it not true that the larger the city the more evident is the widening of the gulf between the haunts of poverty and the palaces of the millionaires? Is it not manifestly evident that somehow and somewhere in our social arrangements there is an unfortunate want of equity, a terrible miscarriage of justice? When some must toil like slaves and then secure only a fractional part of what they produce, and when others without doing the slightest productive act, can enjoy an abundance of superfluous luxuries, when with the most ample natural opportunities for employment, thousands find it so difficult to secure employment, how can the industrial classes be convinced that equity reigns and justice triumphs?
We trust you will pardon us for submitting to you the following enquiries: —
For whom did the Creator furnish this vast storehouse of natural wealth? What are we to understand by the terms "God the Father, maker of heaven and earth" and the terms "Dearly beloved brethren"? Are we to understand that he is the universal father and that every child of every generation can come to him with the same filial reverence and say, "My Father, am not I thy child, an heir of thy bounties?" Do you ask us to accept this doctrine of Fatherhood and Brotherhood, this doctrine of equal heirship for all, or are we to understand that herein is a serious mistake, that we are not all equally the heirs to his gifts, but that the bounties of the Creator were a special gift to one portion of humanity, to them and their heirs, "to have and to hold forever?" Are we to regard it as in accordance with equity, that one part of humanity may claim for themselves the power to exclude us from these bounties, and to demand from us an endless tribute for occupying the surface of the planet, so that no matter how abundant may be our productions, we must for ever surrender that abundance for the opportunity of getting access to the common heritage furnished by the Creator?
When the farmer produces food and the clothier produces clothing, and they exchange, we can at once recognize the equity and justice of the transaction. In this transaction we see the fulfilment of the Golden Rule, to do unto others as we would have others do unto us. This is service for service, burden for burden, sacrifice for sacrifice, enrichment for enrichment, and its equity is at once most clearly apparent. There is no difficulty in seeing the justice of the transaction that leaves both parties benefited by a mutual enrichment and we can at once recognize the brotherhood in the injunction: "Bear ye one another's burdens and thus fulfil the law of Christ."
Nor is there any difficulty in understanding that when men have raised crops, built houses, fabricated goods, when they have changed scarcity into abundance, then they have established an unquestionable right to claim abundance.
We ask you now to look at a marked contrast to these examples. The growth of population on this continent is proceeding with very great rapidity, especially in the cities, many of which double their population every ten years. With this increase of population there must necessarily come relative scarcity of land. While, therefore, industry is ever striving to produce abundance of commodities, increased population is necessarily making land more scarce. Now we would like to know by what principle of justice should we, who beget the abundance, have to surrender that abundance and thus have left for ourselves only scarcity, while speculators and other holders of land, claim the abundance that we have produced because land has become scarce?
Is there not something monstrously unjust, awfully inequitable in this arrangement? With every increase in population, with every public improvement, the land holder can claim from us more and more. As the years go by his claim may increase ten fold, twenty fold, fifty fold, a hundred fold or a thousand fold. Is this because he has increased the productiveness of his energies, and the abundance of his industry? Is it because of his industry that the harvest waves, that dwellings increase, that railroads develop? Not at all, but the very reverse. Does he give abundance for abundance, benefit for benefit? Not at all, but the very reverse. It is out of the abundance of our products that he is licensed by law to appropriate that abundance and to leave us but a meagre relict of penury. The transaction is not enrichment for enrichment, but while we enrich, the land holder impoverishes.
Could there be anything more contrary to the spirit of true religion than this method by which, as fast as one party does the enriching, another party appropriates the riches, leaving the producers in poverty?
The producers of abundance despoiled and left with scarcity; others allowed to appropriate the abundance because land becomes scarce; and by our present arrangements this may continue to the end of time, the obligation of the industrious classes ever increasing, thus insuring their endless impoverishment, the power of the land owner to appropriate the products of industry ever increasing, thus insuring the widening of the gulf between leisured affluence and overworked poverty. Can we be convinced that this is the fruits of righteousness and of that "love which rejoices not in iniquity"?
We have no difficulty in understanding why we should pay the farmer who feeds us, the tailor who clothes us, the teacher who instructs us, and any one who produces for us, or renders us a service; but we cannot possibly understand why we should have to pay any man for access to the land, the forest, the minerals or the other things that man never furnished, any more than we should have to pay him for the sunlight, the air or any other gift of the Creator, and it is equally difficult to understand why we should have to pay an increasing amount of our productions to land holders because the increase of population makes land more scarce. Is not the whole system of land speculation an attempt to secure the products of industry by the impoverishment of the producers; how can it succeed except by the spoliation and degradation of industry? Is it not a wrong that should receive the most emphatic condemnation of the whole church?
You urge us, you plead with us, you beseech us to come and unite with you and to yield ourselves to the claims of religion. But what kind of religion do you ask us to adopt? A religion that rejoices in equity, that loves justice and hates iniquity; or a religion that looks on the spoliation of labor, if not with complacency at any rate too often in silent tolerance or even acquiescence? A religion that recognizes every child of God as equally the heir of God, the heir to the bounties of the All-Father-Creator, or a religion that ignores the fact that the earth with all its potentialities is the gift of God to his children? A religion that seeks to secare all the benefits and rewards of an advancing civilization to those who bear the burden of begetting and supporting that civilization, or a religion that secures the benefits of civilization to the full and overflowing to those, who not merely contribute nothing whatever to its maintenance, but who by their mischievous dog-in-the-manger speculations, often stand in the way of its progress? A religion that demands obedience before sacrifice, or a religion that substitutes charity for justice and cast-off clothing for the principles of righteousness!
Is it not vain to expect men to join with enthusiastic devotion in the propagation of a professed religion that unfortunately ignores the highest claims of religion, that repeats, "Our Father who art in heaven," but ignores the fatherhood on earth, that initiates its service with "Dearly beloved brethren," and then splits society into lordlings and serfs, that enjoins honesty and then fosters and rewards despoiling speculations, that with the lips extols peace and unity, love and justice, but, alas! alas! maintains in operation lorces that beget hostility and discord, strikes and lockouts, riots and labor wars?
The universal and unvarying testimony of the ages endorses the truth, "As ye sow, so shall ye also reap." To sow the seeds of injustice and to expect the fruits of righteousness, to plant the apples of discord and then to look for the fruits of peace, is to look for limpid purity in the stream, while maintaining putrescent corruption in the fountain, it is to look for grapes from thorns and figs from thistles.
With all respect we submit to you these thoughts as transcendantly the most important to which we could call your attention.
It is well known that these materials and agencies, as fast as they become available, are in the main appropriated by individuals, through the agency or consent of the government, and are then held as private property. Such is the case with the soil and the minerals beneath it. The owners of this property charge as much for the use of it as if it were their own creation, and not that of nature.
— PROF. SIMON NEWCOMB, The Labor Question, North American Review, July, 1870, p. 151.
This is a paragraph from a book written about 100 years ago about Dr. Edward McGlynn, a much-loved Roman Catholic priest in Manhattan (St. Stephen's Church) who, with Henry George, was active in the Anti-Poverty Society in the last 15 years of the 19th century. It comes from a section listing "Thoughts of Dr. McGlynn."
It was told of a recently deceased Judge of the Supreme Court of the United States, a man who sat in the Senate of the United States, one of the most eminent men of his generation, how he, a poor lawyer, in a comparatively poor western town, had been able to accumulate some two or three millions of dollars worth of property. How? By "sagacity" in investing in lands at some distance from villages and towns, with foresight that in the course of a few years the growth of those communities, the industry, thrift, talent, virtue, patience of large communities would all keep adding to the value of his property, and in course of time cities, towns and villages would grow up on these lands, and he would be able to command an enormous price for land that cost him but a song. Now, while the law tolerated or even sanctioned what he was doing, he was guilty of an iniquity, of reaping where he had not sown, of exacting tribute where he had contributed nothing.
In the ocean-front Delaware town of Rehoboth Beach, seasonal parking fees provide a major revenue source:
In Rehoboth Beach, parking meters -- at $1.50 per hour -- are big business. They bring in $2.58 million for the city's $14.75 million operating budget.
Fines on expired meters add another $667,000, bringing the total to more than $3.2 million. More comes from parking permit fees, fines for parking without a permit and collections from a lot the city operates at the north end of the community. All told, parking is the largest single segment of the city budget.
Meters, some say, are one way the city can capture a revenue stream from the thousands of summer visitors who don't rent a cottage or stay in a hotel room, or who rent accommodations outside the city limits.
City Manager Gregory J. Ferrese said he believes meter and parking permits eliminate the need for beach fees, which are routinely charged in New Jersey resorts.
This is not to say that one can't use the beaches without paying for parking; Resort Transit brings people in by bus from the Coastal Highway, and the Jolly Trolley has been transporting tourists and others from nearby Dewey Beach for many decades.
But parking revenue is a great example of a user fee. One pays for what one takes, and if one doesn't need, one doesn't pay.
A few years ago, the price of parking varied according to location; more recently, they seem to have returned to a one-price-at-all-meters system, which puzzles me a bit. But after late September, the parking meters disappear until late spring, because there usually is plenty of parking to meet the demand.
I seem to recall reading that on-street parking is properly priced if about 15% of spots are available at any particular time. I suspect that that rule of thumb may not hold in RB in season, though I suspect that RB could charge more for ocean-block parking. (I suspect that nearly 100% of RB's parking spots will be occupied during most hours of peak season, at any reasonable price.)
Rehoboth is from the Hebrew for "space for all." One source says "City of Room" "Big City" "Broad Places, Streets" "Streets, Wide Spaces." Interestingly, when Rehoboth Beach was first laid out, by the Methodist diocese of Wilmington, as a camp meeting ground, the streets were designed to be wide and become wider as they approached the ocean, so all could have some view and access.
As a society, how do we create "space for all?" By structures and policies which encourage all of us to take only what we'll use. No land speculation, for example. (Rehoboth Beach fails on this count; its low property tax and use of 30+ year old assessments encourage people to hold onto empty land and unaltered cottages as a low-cost nest-egg; a new home far from the beach may pay far more in taxes than an older one close to it which sells for twice the price). And a 3% tax on transfers -- half to the city, half to the county -- discourages transactions.)
Some of RB's revenue comes from a 3% tax on rental income. I'm intrigued to know that parking brings in more than the tax on rentals.
Delaware, wisely, does not use a sales tax. Rehoboth Beach has 3 large outlet malls just beyond its borders, which attract shoppers from nearby Ocean City, Maryland, and even from southern New Jersey; the latter arrive by ferry for a day of tax-free shopping.
And of course the Federal government is generous with paying for beach replenishment, which helps keep the renters and beachgoers coming, at little or no cost to the property owners in RB.
In any case, parking fees are Natural Public Revenue
For ages sorcerers and magicians kept their secrets, their charms and enchantments to deceive the simple and unwary. At length most of such marvels are relegated to jugglers and sleight-of-hand performers, and we are amused to be deceived. We expect to see things come out of nothing; to see the unbroken eggs come out of the beaten scarf; the guinea pigs come out of the empty silk hat, the ducks come quacking out of the empty box; silver dollars come out of the boy’s ear or empty pocket. But there is yet one piece of magic in which many still believe. That is the magic of land values materializing from a vacant rubbish-covered lot or tract of land on which not a lick of work has been done.
Our modern sorcerers do the trick and roll up the hundreds of thousands of dollars out of nothing, and we look with gaping mouths, wondering where the big roll of bills came from. No question is asked. Something came out of nothing; that is all. Ah! if we could all learn the trick! No more work for anybody! Why should we work when we can produce money from nothing? Nobody investigates; we have the money on us, but sleep with untroubled mind, for no man can say “That is mine.” True, no man can say “That rake-off is mine”; but all the community could rise and say, “That rake-off is ours. We, all together, created the demand for the lands of the community by our presence and industry. Before we came, the values were not. If we should all go, they would disappear. Your money does not come from nothing, as some suppose. The whole community contributes to your roll. It should be ours to pay our taxes with. For lack of it we are ﬁned for our houses, furniture, machinery, crops, merchandise, etc.”
Oh, come off with your magic of getting something for nothing! Take your chances with the rest of us, who earn our money by work. We have been shown, and are on to your magic. We are going to vote for Amendment Number 20.” Thus will sorcery fade before reason. —Lona I. Robinson, in The Great Adventure, October 23, 1920
"A laborer turns a desert into a garden and then we increase his taxes. The speculator turns a garden into a desert and then we diminish his taxes. Verily we are a great people."
This quote is on a card for "The Landlord's Game" and I stumbled across my reminder to myself to look for its source. I found nothing definitive, but several mentions of the quote in newspapers from New Zealand from about 1894, and one from The Single Tax Review in 1914.
another excerpt from Dawson (1910 -- see an earlier post, below) -
IT is necessary now to consider more fully than hitherto the question, cannot society with right claim the increased value given to land by distinctly social causes? We have seen the various factors which tend to create what is generally known as "unearned increment." In one sense this term is very inaccurate. The increment is by no means unearned; what is meant, when the phrase is used, is that the landowner has not earned it. Society, however, has; and earned it honestly by heavy toil, by exertion of body and brain, by plodding industry, by bold enterprise, by culture and enlightenment, by progress in numbers, in wealth, and in morality. There is not a yard of land in the country — be it used for the growing of corn, the pasturing of cattle, or the habitations of men — whose value has not been enhanced by these social causes. It was the settlement of men with their various activities upon the land which originally gave it value, and the increase of population has been a constant and potent factor in value-growth since the primitive communities first established the institution of private property in the common soil. And yet, while society has for centuries been growing and labouring to increase the value of the land it required for its food, its industries, and its habitations, it has ever done so to its own detriment. While enriching the landlords it has impoverished itself.
This, indeed, is the greatest anomaly presented by the social increment problem. As a community develops and prospers, owing to its energy, enterprise, and enlightenment, it is all the time preparing a rod, armed with which the landlords will sooner or later turn upon it. A town's residents are punished for their industry and merited success by having to pay the landlords more and more money for the land they use. Did not tradesmen, by dint of perseverance and pluck, succeed and thrive, the demands made upon them would not increase; but simply because they reap in prosperity the reward of exertion, the landlords require growing tribute in the form of higher rents. And so it is in all departments of social life. In the eyes of the owners of the soil, human communities become, in fact, simply value-creators, rent-producers. The landlords reap where they have not sown, they gather where they have not strawed. Little of the value of that land which they lend and sell, at prices which are often so fabulous, has been created by them, yet they appropriate it all.
I'm reading a 1910 book by William Harbutt Dawson entitled "The Unearned Increment." I found these paragraphs particularly compelling. I think about the 2003 Schiller and Case article about the expectations of home buyers that their purchases would rise in value. The homebuyers of the last decade didn't understand why land should rise in value -- indeed, most of them weren't conscious of it being land appreciating, not the houses themselves -- but they seemed sure that it would rise forever, and they thought it essential to their own well-being that they get in on that appreciation.
100 years ago, there seemed to be a much better popular understanding of land economics than we have in 2012. It was widely discussed in quite a number of popular journals read by ordinary people. One might speculate on why we in the 21st century aren't better informed than we are on the subject. In whose interests is it that ordinary people not understand the importance and the dynamics land economics?
And here it will be convenient to refer to the plea often advanced that speculation in land is legitimate, and that there is no difference between making profits from the sale of land and making profits from the sale of ordinary commodities. Those who hold this view forget or ignore the fact that land differs from every product of man's hands in that, besides being a necessity of existence — the maintainer of life, it is a monopoly article. God made the earth as big as it is, and man cannot make it any bigger. There is so much land in the world, and no one, not even a Rothschild or a Vanderbilt, can add an inch to it. Hats, boots, and coats — manufactured goods in general — can be multiplied indefinitely. The supply is only regulated by the demand, and almost invariably the cost decreases as the demand is augmented. With the land it is otherwise: the absolute supply cannot be increased, and the cost grows with the growth of the demand. Moreover, in paying for the goods offered by the manufacturer, we pay largely for labour; but no amount of labour can produce land. It existed before man existed, and is not produced. Landed property is the one commodity of exchange in respect of which civilised society refuses to recognise absolute rights.
It may be granted at once, however, that it is impossible to artificially prevent the value of land from increasing. It would be absurd to try to check the operation of social forces which act from necessity. If there were no private ownership of land, but the State were the custodian and grand lessor, the value of that commodity would inevitably tend to increase owing to a multiplicity of causes which act independently of private and collective possession of the soil. Yet while it may not be possible artificially to prevent value-growth, it is possible and expedient to check artificial value-growth. Were the unearned increment secured wholly or even in part to society, there would be less inducement to speculation in land, and the increase in its value would be dependent upon healthier and socially more desirable causes. Men do not speculate commercially for amusement or the mere love of excitement, but for money, and if there were no prospect — or little prospect — of contingent gain, the great inducement to land speculation would be taken away.
At the idea of resistance to speculation the individualist will raise his hands in alarm and remonstrance. But these pages are written on the assumption that the interests of speculators cannot claim any partial consideration in the adjustment of the important problem under discussion — or, indeed, of any problem affecting the well-being of society. Those who hold the views here expressed would not dream of prohibiting speculation in land; all they say is, that society is not called upon to sacrifice its interests to the speculators, or to offer to the latter any facilities for doing it mischief. It cannot surely be considered a social advantage that a small class of men should be able, owing to their possession of a monopoly in land, to force up its value to fictitious and fabulous heights; nor can it be regarded as desirable that the value of land should be increased in order to allow of speculators enriching themselves. The result is to create extortionate rents, which, so far as trade and industry are concerned, make production dearer, and thus injure the consumer, and, so far as concerns dwellings, compel the householder to disburse an excessive proportion of his income in the mere sheltering of himself and his family within stone walls. Apart from the gains which fall to the intermediary speculator who does not buy land to keep, but to sell, the owners of the soil pocket the public tribute paid in the form of increasing rents. For their part, the house occupiers suffer in two ways by the growing value of land: they must pay more for the dwellings they live in, and more for the articles they use and consume. It cannot be to the interest of society that the rents of town dwellings should average, say, £20 instead of £15, and should increase 5% or even 2% every year. If such an increase fell to the whole community, the evil would not be so great, for those who paid it would in one way or another reap the benefit; but, as matters are, it all goes into the landlords' purse.
I've taken some liberties with the formatting, because sometimes bullet points help ... you can find the original in the online library at http://schalkenbach.org/ I was fortunate enoguh to meet Bob
The Earth is the Lord's
by Robert V. Andelson Professor Emeritus of Philosophy, Auburn University, Auburn, Alabama
George Bernard Shaw, in a letter written in 1905 to Hamlin Garland, describes how, more than twenty years earlier, he had attended Henry George's first platform appearance in London. He knew at once, he said, that the speaker must be an American, for four reasons:
"Because he pronounced 'necessarily' . . . with the accent on the third syllable instead of the first;
because he was deliberately and intentionally oratorical, which is not customary among shy people like the English;
because he spoke of Liberty, Justice, Truth, Natural Law, and other strange 18th-century superstitions; and
because he explained with great simplicity and sincerity the views of the Creator, who had gone completely out of fashion in London in the previous decade and had not been heard of there since."
George's magnum opus, Progress and Poverty (the centenary of which occurred in 1979), is characterized by the same moral and religious emphasis remarked by Shaw in its author's London lecture, an emphasis that rises in the final chapter to the noble declaration of a faith revived. It is, I think, therefore entirely appropriate that I focus today on the moral and religious aspects of his basic proposal for economic reform — his proposal to lift the burden of taxation from the fruits of individual labor, while appropriating for public use the socially-engendered value of the land.
For land value taxation is
not just a fiscal measure (although it is a fiscal measure, and a sound one);
not just a method of urban redevelopment (although it is a method of urban redevelopment, and an effective one);
not just a means of stimulating business (although it is a means of stimulating business, and a wholesome one);
not just an answer to unemployment (although it is an answer to unemployment, and a powerful one),
not just a way to better housing (although it is a way to better housing, and a proven one);
not just an approach to rational land use (although it is an approach to rational land use, and a non-bureaucratic one).
It is all of these things, but it is also something infinitely more: it is the affirmation, prosaic though it be, of a fundamental spiritual principle — that "the earth is the Lord's, and the fulness thereof."
It is the affirmation of the same principle to which Moses gave embodiment in the institution of the Jubilee, and in the prohibition against removing ancient landmarks, and in the decree that the land shall not be sold forever. It is the affirmation of the same principle to which the prophets of old gave utterance when they inveighed against those who lay field to field, and who use their neighbor's service without wages. It is the affirmation of the same principle to which Koheleth gave voice when he asserted in the fifth chapter of Ecclesiastes that "the profit of the earth is for all."
The earth is the Lord's! Consider what this means. It means that
our God is not a pale abstraction.
Our God is not a remote being who sits enthroned on some ethereal height, absorbed in the contemplation of his own perfection, oblivious to this grubby realm in which we live.
Our God is concerned with the tangible, with the mundane, with what goes on in the field, in the factory, in the courthouse, in the exchange.
Our God is the maker of a material world — a world of eating and sleeping and working and begetting, a world he loved so much that he himself became flesh and blood for its salvation. In this sense, then,
our God is eminently materialistic, and nowhere is this more clearly recognized than in the Bible, which, for that very reason, has always been a stumbling-block and an offense to those Gnostics, past and present, whose delicacy is embarrassed by the fact that they inhabit bodies, and for whom religion is essentially the effort to escape from or deny that fact.
Our God is not a dainty aesthete who considers politics and economics subjects too crass or sordid for his notice.
Neither is he a capricious tyrant who has enjoined an order of distribution that condemns retirees after a lifetime of toil to subsist on cat food while parasitic sybarites titillate palates jaded by the most refined achievements of the haute cuisine. It is men who have enjoined this order in denial of his sovereignty, in defiance of his righteous will.
The earth is the Lord's! To the biblical writers, this was no mere platitude. They spelled out what it meant in concrete terms. For them, it meant that the material universe which had been provided as a storehouse of natural opportunity for the children of men was not to be monopolized or despoiled or treated as speculative merchandise, but was rather to be used reverently, and conserved dutifully, and, above all, maintained as a source from which every man, by the application of his labor, might sustain himself in decent comfort. It was seen as an inalienable trust, which no individual or class could legitimately appropriate so as to exclude others, and which no generation could legitimately barter away.
The earth is the Lord's! With the recognition of this principle comes the recognition of the right of every man to the produce which the earth has yielded to his efforts. As the Apostle Paul says in his first letter to the Church at Corinth, if the ox has a right to a share in the grain which it treads out, surely a human being must have a right to the fruits of his labor. For the exercise of this right, he is, of course, accountable to God — but against the world, it holds.
To one who takes seriously, as I do, that insight about human nature which is expressed in the doctrine of original sin, there can be nothing self-evident about the rights of man. In the words of my friend, Edmund A. Opitz, "the idea of natural rights is not the kind of concept which has legs of its own to stand on; as a deduction from religious premises it makes sense, otherwise not." The French Revolution and its culmination in the Reign of Terror demonstrated that humanistic assumptions afford no secure foundation for the concept of human rights. That concept, for the believer, can be neither understood nor justified except in terms of what Lord Acton so eloquently speaks of as "the equal claim of every man to be unhindered in the fulfilment by man of duty to God."
This is what it comes down to: How can a person be "unhindered in the fulfilment of duty to God" if he be denied, on the one hand, fair access to nature, the raw material without which there can be no wealth; and on the other, the full and free ownership of his own labor and its earnings?
You who have studied the history of the Peasants' Revolt in sixteenth century Germany know that in calling for the abolition of serfdom and the restoration of the common lands, the peasants were simply voicing demands which were logically implied by Luther's doctrine of the priesthood of all believers — that the service of God to which all the faithful are elected requires, as I have said, access to the land and its resources, and the free disposal of one's person and of the guerdon [editor's note: reward] of one's toil. Despite the excesses that accompanied this uprising, Luther's part in the suppression of a movement which stemmed logically from his own teaching must always be a source of pain to those of us who revere him for his spiritual genius and integrity.
The earth is the Lord's! The same God who established the just authority of governments has also in his providence ordained for the major source of revenue. Allow me to quote from Henry George:
In the great social fact that as population increases, and improvements are made, and men progress in civilization, the one thing that rises everywhere in value is land, we may see a proof of the beneficence of the Creator . . . In a rude state of society where there is no need for common expenditure, there is no value attaching to land. The only value which attaches there is to things produced by labor. But as civilization goes on, as a division of labor takes place, as men come into centers, so do the common wants increase and so does the necessity for public revenue arise. And so in that value which attaches to land, not by reason of anything the individual does, but by reason of the growth of the community, is a provision, intended — we may safely say intended — to meet that social want. Just as society grows, so do the common needs grow, and so grows the value attaching to land — the provided fund from which they can be supplied (George 1889).
On another occasion he wrote:
The tax on land values is the most just and equal of all taxes. It falls only upon those who receive from society a peculiar and valuable benefit, and upon them in proportion to the benefit they receive. It is the taking by the community, for the use of the community, of that value which is the creation of the community. It is the application of the common property to common uses (George, P&P, 421).
And yet, my friends, in the topsy-turvy world in which we live, this provided fund goes mainly into the pockets of speculators and monopolists, while the body politic meets its needs by extorting from individual producers the fruits of honest toil. If ever there were any doubt about the perversity of human nature, our present system of taxation is the proof! Everywhere about us, we see the ironic spectacle of the community penalizing the individual for his industry and initiative, and taking away from him a share of that which he produces, yet at the same time lavishing upon the non-producer undeserved windfalls which it — the community — produces. And, as Winston Churchill put it, the unearned increment, the socially-produced value of the land, is reaped by the speculator in exact proportion, not to the service, but to the disservice, done. "The greater the injury to society, the greater the reward."
We hear constantly a vast clamor against the abuse of welfare. I do not for a moment condone such abuse. Yet I ask you, who is the biggest swiller at the public trough?
Is it the sluggard who refuses to seek work when there is work available?
Is it the slattern who generates offspring solely for the sake of the allotment they command?
Or is it the man — perhaps a civic leader and a pillar of his church — who sits back, and, with perfect propriety and respectability, collects thousands and maybe even millions of dollars in unearned increments created by the public, as his reward for withholding land from those who wish to put it to productive use.
Talk about free enterprise! This isn't free enterprise; this is a free ride.
But if that same person were to improve his site — if he were to use it to beautify his neighborhood, or to provide goods for consumers and jobs for workers, or housing for his fellow townsmen — instead of being treated as the public benefactor he had become, he would be fined as if he were a criminal, in the form of heavier taxes. What kind of justice is this, I ask you? How does it comport with the Divine Plan, or with the notion of human rights?
Let me make this clear: Acquisitiveness, or the "profit motive," if you will, is a well-nigh universal fact of human nature, and I have no wish to suggest that the land monopolist or speculator has any corner on it. Even when I speak of him as a parasite, this is not to single him out for personal moral condemnation. He is not necessarily any more greedy than the average run of people. As my late friend, Sidney G. Evans, used to say: "if you have to live under a corrupt system, it's better to be a beneficiary than a victim of it." But the profit motive can be channeled in ways which are socially desirable as well as in ways which are socially destructive. Is it not our duty to do everything we can to build an order without victims one in which the profit motive is put to use in such a way that everybody benefits?
I do not harbor the illusion that the millennium is going to be ushered in by any program of social betterment. My theological orientation does not happen to be one which minimizes the stubbornness of man's depravity. Yet to make the depth of human wickedness an alibi for indifference to the demands of social justice is to ignore the will of him who said:
Take away from me the noise of your songs; to the melody of your harps I will not listen. But let justice roll down like waters, And righteousness like an ever-flowing stream. (Amos 5:23-24)
To some of you, the promotion of specific programs for social justice is seen as part of the responsibility of the institutional church; to others it is not. But all of us, I am sure, can agree that the individual Christian (or Jew or Moslem, Hindu or Buddhist, as the case may be) has a solemn moral obligation to study the issues carefully, and then involve himself strenuously in whatever social and political efforts his informed conscience tells him best advance the cause of right.
O shame to us who rest content While lust and greed for gain In street and shop and tenement Wring gold from human pain, And bitter lips in blind despair Cry, "Christ hath died in vain!" Give us, O God, the strength to build The city that hath stood Too long a dream, whose laws are love, Whose ways are brotherhood, And where the sun that shineth is God's grace for human good.*
The earth is the Lord's!
* From "O Holy City, Seen of John" by Walter Russell Bowie. Copyright, 1910, by A. S. Barnes and Company. Quoted by permission.
As our time honored political maxims become hackneyed they are very apt to pass into what Grover Cleveland would call innocuous desuetude. We subscribe to the sentiment that "eternal vigilance is the price of liberty" and yet little is done to counteract those aggressive forces which nullify that freedom which we profess to prize so highly. Even the prayer, "Thy Kingdom Come," is repeated as a mere wish that something good would happen rather than with a determination to bring about those righteous conditions which make for a heaven on earth. Possibly the most neglected of all of our national ideals is our professed adherence to that most democratic of all maxims, "Equal rights for all and special privileges for none." For at the present time our country is honeycombed with special privilege that has become so entirely entrenched as to be regarded on all sides as vested right. Special privilege is condoned by force of its familiarity. Like vice it is endured, then pitied, then embraced.
There lived in a Colorado city years ago a housewife who made convenient use of coal cars on the side track across the street from her dwelling with which to replenish her stock of fuel. This she did without any qualm of conscience but as a special privilege which, by the sanctifying touch of time had grown into a vested right. This woman doubtless was punctilious in the ordinary obligations of life and would have hotly resented any statement to the effect that she was stealing coal. She was guided by that all too common kind of honesty which is based upon expediency rather than principle. Not on any account would she have withheld what was due from her to a neighbor who would have suffered by her delinquency, but the advantage to her of getting this coal was so great and the loss to some impersonal owner of same, mine, railroad, or smelter, was relatively so negligible that the argument was all in favor of her acting in her own interest without question. No personal equation was involved and if at first there had been any hesitation on her part of this practice, that was long ago a thing of the past. But the railroad company put a watchman on guard and her supply of fuel was thereby stopped. She then turned to the local charity organization with request for a continuation of the supply which had thus been rudely taken from her and the very righteous indignation with which she told her story was ample proof of entire absence of comprehension on her part that she had been stealing.
This incident, which is a true story, illustrates very nicely the evolution and the nature of that special privilege which eventually becomes a vested right. And if the searchlight of analysis is turned upon our social system we may be surprised to find the presence of special privilege in unexpected places and of a volume that is, in the aggregate, enormous.
As a basis for this inquiry it may be well to state the fundamental truth that property may be secured in three ways only; first, by labor; second, by gift; and third, by theft. If this test is repeatedly kept in mind, the task will become easier. One of the commonest forms of special privilege is that which is provided under ninety-nine year leases on valuable business property sites. These leases convey to the owner of the land a stipulated income after the tenant has paid all taxes and expenses. In the parlance of political economy this revenue consists of what John Stuart Mill defined as unearned increment, a value which is produced by no individual but which is purely the result of population reflected upon desirable locations. For this revenue to be turned over to individuals as is now the unquestioned custom in all of our large cities and to an amount of billions of dollars annually is a procedure which is precisely in the same class as the stealing of coal from the railroad car by the Colorado housewife.
A much larger source of public revenue which is diverted to individuals is that of the rent of valuable property in excess of a fair interest return upon the intrinsic value of improvements on the property. This applies to practically all property located at the center of our large cities and involves enormous revenues. There is a mixture here of legitimate return on capital invested with the unearned increment which belongs absolutely to society but the case is not less clear on that account.
Another prolific source of public revenue which is diverted to individuals is that which comes from the lucky possession of oil wells. This possession frequently gives incomes of thousands of dollars daily to those who have no more claim on such revenue than is involved in the possession of the land upon which the wells were developed. The wealth that has by this means been given to certain sections of the country and certain groups of people has run into the billions of dollars. The Osage tribe of Indians in Oklahoma are said to have been made the richest people in the world due to this special privilege. Such beneficiaries are no more justly entitled to the revenue which they receive than was the Colorado woman justified in stealing coal from the railroad car. It will be said that the oil industry involves a great deal of capital and that many dry wells are paid for before a single producing well is developed. This is true and therefore makes the proposition somewhat more complicated but does not alter the conclusion.
Another source of revenue which diverts public funds into private hands is speculation in land. Purchase of inside property sure to increase in value is the one investment that has been invariably recommended by shrewd financiers. This speculation is far greater than has been generally realized. More than one-half the area of New York City consists in vacant lots which are held out of use for speculative purposes, and the same is true of all our larger cities. Incidentally, this speculation has the effect of enhancing the selling price of desirable land to artificially high figures. When land which is purchased with a hope of subsequent rise in value, the investor practically lays a trap by which he may secure values that rightfully belong to the community. And this process makes an artificial scarcity of land with consequent artificially high cost to those who must use it. This process of securing a profit, of getting something for nothing, is persistently the same in character as that by which the Colorado housewife secured her supply of coal. Here again objection may be interposed to the effect that land frequently has to be sold for less than it cost. This is an objection that was raised by no less an economist than Francis A. Walker, the foremost critic of Henry George during his lifetime. General Walker exclaimed, "Mr. George has much to say about unearned increment: He says nothing, however, about unrequited decrement." Mr. George's rejoinder to this was an expression on his part of his inability to discuss the problem with one who spoke of unrequited decrement in something which originally had no value. In other words, so far as society is concerned its interest is only in the rental value which is produced from year to year and which rises or fall accordingly as population grows or wanes. The important fact is that this increment, whether large or small, belongs to the community which produced it.
The most spectacular form of special privilege which we have to deal with today is that provided by the protective tariff. This protection enables the America manufacturer to secure an artificially high price for his product. The common argument in support of the protective system is that the American standard of living must be maintained by this artificial means, but this argument falls to the ground, if at the same time, we permit any improvement in labor-saving machinery which naturally has far greater effect upon the labor market than is produced by the competition of merchandise imported from abroad. The enormity of special privilege due to the tariff is perhaps more conspicuous in the State of Pennsylvania than elsewhere, a single family in Pittsburgh, the direct beneficiaries of the tariff on aluminum, being reputed to be worth in excess of $2 billion. There will be found that, with a few rare exceptions, the great fortunes of America are based upon special privilege of one kind or another.
Although there are many minor sources of special privilege which are embedded in our political and social institutions, those above enumerated are the principal ones.
The special privileges provided by legislative action at Washington are in a different class from those which have become a regular part of our system of taxation but are none the less to be condemned. The most flagrant of these in recent times was the appropriation by Congress and approved by President Hoover, of $500,000,000 of tax payers' money for the specific purpose of stabilizing or artificially enhancing the price of wheat, cotton, and other farm products. It was presumed by the makers of this law that it would have the effect of giving artificial advantage to the farming class, which would offset in a measure the special privileges which had been given so generously to Eastern interests by means of the protective tariff. The plea for this farm legislation was repeatedly based upon that consideration. It so happened that even the immense waste of money involved by the farm marketing act was negligible as an influence in the world wide markets and that it did not affect in any considerable degree the law of supply and demand upon the prices of the agricultural products which were supposed to be favored. But the very fact that this legislation was put through with little opposition furnished a very good illustration of the fact that special privilege legislation is regarded as perfectly legitimate. And this has been further illustrated in monstrous degree by the New Deal legislation under President Roosevelt.
There is everywhere consciousness of a mysterious force which is responsible for easily acquired fortunes on one hand together with an increase of unemployment and consequent lower incomes on the other hand. Each succeeding census report makes more appalling this undemocratic and unjust condition in our social fabric.
If prosperity is to be secure, there must be an end to special privilege of every kind, and a system of taxation inaugurated in place thereof which shall be based upon justice to all. Henry George has demonstrated how this should be done.
35. He worked hard. He played by the rules. He bought up land before the interstate highway was announced, and his widow and orphans now have a very valuable land portfolio, for which others will pay a high purchase price or high lease prices for generations. Is it right to exact an estate tax of 50% or so on the true market value of that estate?
A. No! Widows and orphans must be protected! We wouldn't want them to have to depend on the social safety net.
B. No! The dollars he spent to buy that land decades ago were already subject to an income tax -- maybe two (federal and state) -- and the heirs are entitled to keep all the increase from the purchase price, even if that is a 20% increase, or a 200% increase, or a 2000% increase, over the purchase price.
C. No! The man had foresight, and we ought to honor, reward and encourage that!
D. No! The interstate highway could have been re-routed, and the man and his widow and children could have been left high and dry. They took a risk, and we ought to reward them for their brilliance!
E. An estate tax is a good way to capture this socially-created windfall once per generation. After all, he can't take it with him. Half for the heirs, half for the community that created the value. Seems fair, and keeps them out of the social safety net.
F. An estate tax is better than nothing, but it is a poor alternative to collecting some significant portion of the rental value of the land, month in and month out, whether that rental value be low (before the interstate highway's route is determined) or high (after it is announced and built, and the community grows up around that highway).
36. He worked hard. He played by the rules. He bought up land before the interstate highway was announced, and his widow and orphans now have a very valuable land portfolio, for which others will pay a high purchase price or high -- and rising -- lease prices, for generations. Is it right to change our tax code to tax -- heavily -- year in and year out, the economic value of that land?
29. The states need money. Should they sell their toll roads to private companies?
A. Sure! That would provide a nice pot of money that would help with this year's budget and next year's, and after that, we can leave the problem to a future group of legislators and a new governor!
B. Sure! The private sector will take better care of them and turn a profit to boot!
C. No. The taxpayers paid for those roads to be built, and have a right to more control over them than would exist after privatization.
D. No. The taxpayers own that land, a unique right of way, and selling it off forever is irresponsible and wrong!
E. No. Our society -- any society -- is highly dependent on our infrastructure, and control over it must remain in the public sector.
F. No. Those highways are built on land that was bought or taken from individual property owners for the public good. To turn them over to the private sector, for profit, would be wrong.
G. No. Those highways will increase in value over the coming decades and centuries, and should not become anyone's private property, at any price. Both their economic value and the control over them belongs in the common sector.
H. No. Even if it looks as if it might make sense for our generation, what of future generations? Should we permit the privatization of a common asset they will likely be dependent on?
I. No. Future taxpayers will build more highways intersecting with these current tollroads, and increase their value; were these to be privatized, it would be the private corporation who would reap the benefit of that future public investment.
27. A new subway line costs $2 billion. Suppose that its construction increases the surrounding land values by $2 billion. (Assume 5 miles long, 10 stations, 0.5 mile radius, average lot size of 0.10 acre. How should the new subway line be financed?
A. Taxes on sales of groceries, clothing, etc. within those 1/2 mile radius areas
B. Taxes on sales of groceries, clothing, etc., all over the city the subway line connects to
C. Taxes on sales of services within those 1/2 mile radius areas
D. Taxes on sales of services of all kinds, all over the city the subway line connects to
E. Taxes on wages of those working in those 1/2 mile radius areas
F. Taxes on wages all over the city the subway line connects to
G. Taxes on wages of those living within the 1/2 mile radius areas
H. Taxes on capital gains and dividends of those living within the 1/2 mile radius areas
I. Taxes on capital gains and dividends of those with residence anywhere in the city
J. Taxes on all real estate within those 1/2 mile radius areas
K. Taxes on all real estate, all over the city the subway line connects to
L. Taxes on just the buildings within those 1/2 mile radius areas
M. Taxes on all the buildings, all over the city the subway line connects to
N. Taxes on the land value within those 1/2 mile radius areas
O. Taxes on the land value, all over the city the subway line connects to
P. Transfer taxes on either or both of buyers and sellers whenever a property within the 1/2 mile radius is sold
Q. Transfer taxes on either or both of buyers and sellers whenever a property anywhere within the city is sold
R. An inheritance tax when a house or commercial property is transferred from a decedent to a survivor.
Every year the young people go from this province and purchase land in the neighboring colonies, while much better and every way more convenient lands lie useless to the king and country. The reason of this is that the grantees themselves are not, nor never were, in a capacity to improve such large tracts, and other people will not become their vassals or tenants, for one great reason, as people's (the better sort especially) leaving their native country, was to avoid the dependence on landlords.
— Report of Cadwalader Golden, Surveyor-General, and afterward Lieutenant-Governor of the Province of New York (1732), Documentary History of New York, Vol. I., p. 384.
Man is a land animal as much as a fish is a water animal. Not only does man live on land but all of his wants are supplied by or from land. The earth is, literally, his mother. He will perish quickly if he has not access to the breast of his earth mother and will suffer and squall and become panicky if he has not free access to earth's breast and cannot obtain sufficient nutriment. His relation to land is fundamental and can be broken or disturbed only at great peril and loss to him and to society.
Production and consumption will always be in equilibrium and commerce and exchange will always flow smoothly, if all men at all times have equal and free access to nature's storehouse of wealth and if there are no dams -- tariff, -- etc. to interfere with the exchange of products. Free land and free trade are therefore, essential to economic justice; to give all an equal opportunity to produce goods and to exchange them without paying toll to anyone. When goods are produced and exchanged freely, it is reasonably certain that production and consumption will run so closely together that there can be no serious panics or long periods of depression. Serious maladjustment can and will occur only when production and exchange are interfered with and to the extent that they are interfered with.
The private ownership of land, that is, the taking of economic or land rent by private land owners, or landlords, most seriously interferes with some men's access to mother earth. Landlords are not only dogs in the manger; they are a class and about the only class, except the tariff beneficiaries, that consume without producing; that do not give a quid pro quo for what they get.
The capitalist supplies capital and is entitled to the interest that he gets. The laborer --wage, salary or fee earner -- produces goods or gives services and is entitled to what he gets in exchange. The landlord produces neither the land nor the land rent and is not, therefore, entitled to the rent that he takes. He is the only one who takes out of the economic pot without putting something into it. He is the only one who can and does live off the labor of others. He is the greatest of all economic leeches.
Professor Thorold Rogers said, in 1870:
"Every permanent improvement of the soil, every railroad and road, every bettering of the general condition of society, every facility given for production, every stimulus supplied to consumption, raises rent. The landowner sleeps, but thrives. He alone, among all the recipients in the distribution of products, owes everything to the labor of others, contributes nothing of his own. He inherits part of the fruits of present industry, and has appropriated the lion's share of accumulated intelligence."
If, as in ordinary times, the landlord takes only a moderate rent, that is, charges only the actual rental value of land to the capitalist and laborer who use land, production and consumption proceed normally, for society has fairly well adjusted itself to this unjust system. In times of great prosperity -- so-called -- when there is great speculation in land values and they rise rapidly, the landlords can and do take even more than the normal rental value of land; that is, more rent than is produced by society. Access to land then becomes so difficult and the prices that producers have to charge for food, clothing and shelter become so high that consumers are unable, after paying excessive rent, to purchase all of the goods produced. Hence, the glut in the market; the decline in the prices of commodities; the collapse of the over-extended credits; business failures; closed mills; idle labor and low wages. The business depression does not end until land values have declined to or below normal for the population. Soon thereafter business begins to revive, mills to open, unemployment to decrease, wages to advance and prosperity to return. Industry will continue on the up-grade until rents again become excessive. Most, if not all, periods of prosperity end with real estate booms. Even our present war prosperity will probably continue until there is a boom in city, farm, forest and mine land values.
20. What is the best way to insure that affordable housing -- for people of all ages and stages, all income levels -- is available, both for ownership and for rental, both near the center of activities and, if needed after the desire for housing near the center of activities is satisfied, on the fringes?
B. Community Land Trusts
C. Affordable Housing Regulations that require that for every 10 new condos built, 1 must be affordable to people earning less than the local median household income
D. Rent control
G. Habitat for Humanity
H. Relaxed mortgage lending rules and more private mortgage insurance
I. Land value taxation, to encourage the redevelopment of underused sites near the center of things
I came across this rather good letter to the editor, from 1938. (Trinity Church Corporation, a major landlord in downtown Manhattan, was the subject of a NYT article this past week, as well as the subject of a major series in the NYT in December, 1894):
1938-09-03 Letters to The Times
Collecting Ground Rent Single-Tax System Regarded as No Detriment to Building
TO THE EDITOR OF THE NEW YORK TIMES:
Fabian Franklin, in his letter to THE TIMES discussing the demolition of John D. Rockefeller's Harlem tenements in order to save taxes, writes:
"That objection is simply that virtual abolition of land ownership, which the single-tax plan is designed to effect, would make the building of houses in a city an extra-hazardous business, because, under the single-tax regime, in the great majority of cases the investment would result in a disastrous loss to the owner of the building. I was neither blaming nor praising Mr. Rockefeller for the demolition of Harlem tenements."
What is the so-called single-tax system? It is the collection by the government, through the taxing officials, of the entire economic or ground rent of land and the repeal of all taxes on buildings and other products of labor and capital. That ground rent is estimated to be 9% of the capital value of the land. New York City is now collecting one-third of this ground rent. The market value of the lots is the remaining two-thirds, capitalized. Dr. Franklin's thesis is that if the entire ground rent is collected no one would erect buildings, because "in the great majority of cases the investment would result in a disastrous loss to the owner of the building."
Some of the finest buildings in New York City are erected on leased land and the lessee pays the ground rent 100% besides a tax on the building. There are hundreds of buildings erected by lessees of lots owned by Trinity Church, Astor estate, Rhinelander estate, Sailors Snug Harbor and others. The lessees must pay all the taxes, both on land and building, amounting to 3% of the assessed value of both, and to the landlord 6% of the market value of the land.
Thus the entire ground rent is paid by the lessee, but only one-third to the government representing the people who made that value by their presence and activities, the remaining two-thirds to the landlord. Notwithstanding that they are thus obliged to pay 100% of the economic rent, bankers and business men erect buildings costing millions. Under the Henry George plan they would have to pay less, for the taxes on these costly structures will have been repealed.
Perhaps if Mr. Rockefeller had not been obliged to pay taxes on the buildings he might not have pulled them down; or, if he had, would have erected better buildings in their place in order to get a return on his investment in buildings. The ones who will benefit most from the adoption of the Georgian philosophy are the owners of humble homes. The average small homeowner's house is assessed for at least twice the assessed value of the lot. If the house is relieved from taxation and the lot taxed the entire ground rent, his tax will be less than it is now. The difference will be made up from vacant lots and lots that are worth more than the improvements.
After all, the building of houses is like any other business. The builder takes the risk of lessened demand because of changes in fashion, obsolescence, competition. It is estimated that 95% of new businesses ultimately fail. With the adoption, however, of the philosophy of Henry George, commonly called the single tax, failures in the housing and other businesses will be much fewer. This is because neither houses nor goods nor anything else will be taxed. The collection of the entire ground rent will not lessen the area of the surface of the earth one inch. On the contrary, it will open to occupation and use land that is now held for speculation purposes.
The taxation of any product of labor and capital will add the amount of the tax to the price, lessen demand and thus curtail production. The result is unemployment and misery.
Frederic Cyrus Leubuscher Essex Fells, N. J., Aug. 31, 1938
How to Bring The Cost of Housing Back within Reach of All American Families C. Lowell Harriss, et al. [A pamphlet published by the Robert Schalkenbach Foundation, 1978]
Introduction by Dr. C. Lowell Harriss, Professor of Economics, Columbia University
1. Land Supply Constraints in the United States Excerpt from the Final Report of the Task Force on Housing Costs, William J. White, Chairman
2. The High Price of Land by P. I. Prentice, Chairman, National Council for Property Tax Reform
3. Modernize, Don't Abolish, the Property Tax From a report by the Subcommittee on the City of the House Committee on Banking, Finance, and Urban Affairs of the U. S. House of Representatives, Rep. Henry S. Reuss, Wisconsin, Chairman
Introduction by Dr. C. Lowell Harriss
The number of Americans who lack adequate housing is much too high. While both opportunity and promise life in the long-established principle of providing satisfactory shelter for everyone, many are still not well housed. Population grows, and the existing stock of housing grows older. For years to come, much new construction, expansion, and modernization will be needed.
Rapidly rising costs, however, present formidable obstacles. One of the heaviest costs is one which also rises most rapidly. And it is the cost of something created not by sweat and thrift, but by nature.
It is land.
The rising prices paid for land itself must be distinguished from the portion of the price of a building site which represents cost of preparation for use. The land elements alone go up and up in price. But land price increases do not change the quantity of land in existence. Here is a rising price which does not add to supply.
Land is different.
In these three articles on land value taxation, the first, "Land Supply Constraints in the United States," points out that the sharp rises in land prices result in part from man-made factors. Arbitrary, artificial, and unconstructive restrictions on land supply boost prices and threaten our housing future. New building will therefore be kept below levels which unfettered economic conditions would otherwise achieve. But tax policy which would encourage use, rather than underuse and withholding of land can increase the effective supply. Need more be said?
Yes. And in the second selection, "The High Price of Land," Mr. Prentice says more. He points to many avenues by which the harmful effects of restricted land supply spread through the economy. Developers and builders, laborers, supplier, subcontractors, and others all suffer. They have less work, operate under conditions of disadvantage, and receive poorer rewards because of essentially needless obstructions to the optimum use of land. The full and true price of land includes burdens above and beyond the dollar prices of building lots. We shoulder burdens of lost opportunity of many kinds. They are largely hidden but indeed real. The quality of too much new construction deteriorates instead of improving as an advancing society should expect. And, to repeat, the tragedy is that the rising prices for land do not create an more surface on the earth.
What to do? The third article, "Modernize, Don't Abolish, The Property Tax," points to the reform outlined generations ago but here presented in modern form: reduce the property tax burdens on structures and make up the revenue by higher tax rates on land value.
The benefits from relying more fully on taxation of land values, rather than taxation of buildings, would include greater pressure on landowners to put land to better use. Withholding land -- which reduces the current effective supply -- would become more costly if land value taxes were higher. Thus some land formerly held for speculation would be sold, and new building would be encouraged on the increased supply of land.
A careful study of probable results in Washington, D. C., showed, among other things, that taxes on present homeowners would generally fall. But this result is not the one which most justifies support for reform. More significant and constructive would be a combination of forces producing incentives for better land use. Upgrading of housing in older urban centers would be expected. Positive incentives at many points would contribute to improving America's housing.
In the files I've been digging through, from the late 50s to the early 80s, I found an early draft of a fine paper by Mason Gaffney about California's Proposition 13, for presentation at an August, 1978 conference. I dug around and found a published copy of that paper, and think it worth sharing here. Original title, "Tax Limitation: Proposition 13 and Its Alternatives"
First, a few of my favorite paragraphs, which I hope will whet your appetite for the whole paper. I won't attempt to provide the context (you can pick that up when you continue to the paper, below).
"There is a deferment option for the elderly, bearing only 7% interest (which is about the annual rate of inflation). In California, as also in Oregon and British Columbia, hardly anyone takes advantage of this deferment option. This fact, it seems to me, rather calls the bluff of those who so freely allege that the woods are full of widows with insoluble cash-flow problems, widows who are losing their houses to the sheriff and whose heirs presumptive, will not help keep the property, which they will eventually inherit."
We hear a lot these days about cutting the fat out of the public sector; but there is fat in the private sector too. I interpret "fat" to mean paying someone for doing nothing, or for doing nothing useful. Most economists agree that payments to people. for holding title to land is nonfunctional income, since the land was created by nature, secured by the nation's armed forces, improved by public spending, and enhanced by the progress of society. "Economic rent" is the economist's term, but in Jarvis-talk we may call it the fat of the land or "land-fat." It has also been called unearned increment, unjust enrichment, and other unflattering names. Howard Jarvis has said that the policeman or fireman who risks his life protecting the property of others has his "nose in the public trough." But it has seemed to generations of economists that the owner whose land rises in value because public spending builds an 8-lane freeway from, let us say, Anaheim to Riverside, and carries water from the Feather River to San Diego, is the first to have his nose in the trough. Nineteenth-century English economists who worked this out were more decorous. They said things like "landlords grow rich in their sleep" (John Stuart Mill), or the value of land is a "public value" (Alfred Marshall) because the public, not the owner, gives it value.
Some 43% of the value of taxable real estate in California is land value. When we lower the property tax we are untaxing not only buildings, but also land-fat.
The ownership of property is highly concentrated, much more so than the receipt of income. Economists in recent years are increasingly saying that the property tax is, after all, progressive because the base is so concentrated, and because so little of it can be shifted. But this message has not yet reached many traditional political action groups who continue to repeat the old refrains. Two remedies are in order.
One is to collect and publish data on the concentration of ownership of real estate. The facts are simply overwhelming and need only to be disseminated.
The second remedy is to note how strikingly little of the Proposition 13 dividend is being passed on to renters. This corroborates the belief of economists that the property tax rests mainly on the property owner where it originally falls, and not on the renter.
A high percentage of real property is owned from out of state and even out of the country. The percentage is much higher than we may think. It is not just Japanese banks and the Arabs in Beverly Hills. It is corporate-held property which comprises almost half the real estate tax base. If we assume that California's share of the stockholders equals California's share of the national population, then 90% of this property is absentee-owned; the percentage may be higher because many of these, after all, are multinational corporations with multinational ownership.
No one seems to have seized on the fact that half the taxable property in California is owned by people not voting in the state. Senator Russell Long has suggested the following principle of taxation: "Don't tax you, don't tax me, tax that man behind the tree." Property tax advocates have done well in the past and should do well again in the future when they make their slogan: "Don't tax you, don't tax me, tax that unregistered absentee. Don't tax your voters, they'll retaliate; tax those stiffs from out of state." Chauvinism and localism can be ugly and counterproductive, as we know; but here is one instance where they may be harnessed to help create a more healthy society. The purpose of democracy is to represent the electorate, not the absentee who stands between the resident and the resources of his homeland.
California's legislative analyst, William Hamm, estimates that over 50% of the value of taxable property in California is absentee-owned. This is such a bold, bare, and enormous fact it is hard to believe that Californians will long resist the urge to levy taxes on all this foreign wealth. They may be put off by the argument that they need to attract outside capital, but that carries no weight when considering the large percentage of this property which is land value.
Property income is generally more beneficial to the receiver than is the same income from wages or salaries, because the property owner does not have to work for it.
Property, particularly land, has been bought and sold for years on the understanding that it was encumbered with peculiar social obligations. These are, in effect, part of our social contract. They compensate those who have been left out. Black activists have laid great stress in recent years on the importance of getting a few people into medical and other professional schools. Does it not make more sense that the landless black people should have, through the property tax, the benefit of some equity in the nation's land from which their ancestors were excluded while others were cornering the supply?
A popular theme these last few years is that property owners should pay only for services to property, narrowly construed. Who, then, is to pay for welfare — the cripples? Who is to pay for schooling — the children? Who should sacrifice for the blacks — Allan Bakke? Who should finance our national defense — unpaid conscripts? The concept that one privileged group of takers can exempt itself from the giving obligations of life denies that we are a society at all.
Here is, perhaps, my favorite:
We can ask that a single standard be applied to owners troubled by higher taxes and to tenants troubled by higher rents. When widow A is in tax trouble, it is time to turn to hearts and flowers, forebode darkly, curse oppressive government, and demand tax relief. When widow B has trouble with escalating rents, that touches a different button. You have to be realistic about welfare bums who play on your sympathy so they can tie up valuable property. You have to pay the bank, after all. A man will grit his teeth and do what he must: garnishee her welfare check. If that is too little, give notice. Finally, you can call the sheriff and go to the beach until it's over. That's what we pay taxes for. Welfare is their problem.
Anyway, widow B is not being forced out of her own house, like widow A and so many like her. Jarvis said that taxes are forcing three million Californians from their homes this year. But in truth, while evictions of tenants are frequent, sheriff's sales of homes are rare. Those who do sell ("because of taxes," they say, as well as all their other circumstances) usually cash out handsomely, which is, after all, why their taxes had gone up.
Then there is the fruit tree anomaly. Under Proposition 13, a tree can only be assessed at its value when planted, with a 2% annual increment. The value of a seed thrown in the ground or even a sapling planted from nursery stock is so small compared with the mature tree that this is virtual exemption. This anomaly rather graphically illustrates how Proposition 13 automatically favors any appreciating property over depreciating property. The greatest gain here goes, of course, to appreciating land.
Finally, build no surpluses. Surpluses attract raiders and raiders are often organized landowners. "Property never sleeps," said the jurist Sir William Blackstone. "One eye is always open." Even though the surplus was built up by taxing income, Howard Jarvis made it seem the most righteous thing in the world that it should be distributed to property owners. He was geared up for this because his landlord patrons kept him constantly in the field.
Economists of many generations even before Adam Smith and continuing to the present — have preached on the advantages of land as a tax base. Let me enumerate a few of those.
A tax on land value is the only tax known to man which is both progressive and favorable to incentives. One can wax lyrical only about a tax that combines these two properties, because the conflict between progressivity and incentives has baffled tax practitioners for centuries, and still baffles them today.
A land tax is progressive because the ownership of the base is highly concentrated, much more so than income and even more so than the ownership of machines and improvements.
Also, the tax on land values cannot be shifted to the consumer. The tax stimulates effort and investment because it is a fixed charge based merely on the passage of time.
It does not rise when people work harder or invest money in improvements. Think about this. It is remarkable. With the land tax, there is no conflict but only harmony between progressivity in taxation and incentives to work and invest. In one stroke it solves one of the central divisive conflicts of all time.
The land tax does that because it cuts only the fat, not the muscle. It takes from the taxpayer only "economic rent," only the income he gets for doing nothing. If people could grasp this one overriding idea, then the whole sterile, counterproductive, endless impasse between conservatives who favor incentives and liberals who favor welfare would be resolved in a trice, and we could get on to higher things.
The final paragraphs speak directly to us in 2012. 34 years have passed since this was written.
Summing up, Walter Rybeck, an administrative assistant for Congressman Henry Reuss of Wisconsin, and head of the League for Urban Land Conservation, has sagely suggested that we distinguish two functions of business: wealth-creating and resource-holding. A good tax system will not make people pay for creating wealth but simply for holding resources. Most taxes wait on a "taxable event" — they shoot anything that moves, while sparing those who just sit still on their resources.
If we really want to revive the work ethic and put the United States back on its feet, we had better take steps to change the effect of taxes on incentives. Legislatures have got in the habit of acting as though persons with energy and talent, and with character for self-denial, should be punished, as if guilty of some crime against humanity. We cannot study the tax laws without inferring that Congress regards giving and receiving employment to be some kind of social evil, like liquor and tobacco, to be taxed and discouraged by all means not inconsistent with the rights of property. Little wonder the natives are getting restless. If we tax people for holding resources rather than creating wealth and serving each others' needs, we will be taking a giant step toward a good and healthy society.
If your appetite is whetted by these excerpts, you can read the entire article below:
It is frequently pointed out by Georgists that there are no really good rebuttals to land value taxation.
This excerpt from a 1971 letter to my grandfather from a colleague describes where the opposition comes from:
There may be be no "arguments that actually oppose LVT" as Bill says, but there are plenty of people who not only actually but actively oppose it. These are the people who are making hundreds of millions of dollars a year on the unearned increments land speculation gets as a result of land being so undertaxed that the landowner puts up only a trifling share of the enormous community investment needed to make his land reachable, livable and readily saleable. Of 7 million-odd New Yorkers I would guess that perhaps 70,000 people profit by today's misapplication of the property tax while 7 million lose by it, but the problem is that the 7 million have no idea of what they are losing while the 70,000 jolly well know that they have a good thing going for them and fight to keep it.
I've been trying for a year to get my friend, J___ C___, past president of the Realtors and Chairman of the Realtors Economic Research Committee to stop fighting LVT, but he keeps coming back to how his father bought some land near San Diego for $20 an acre before 1900 and sold it for $4,000 an acre around 1950 and his father could not have held it all that time if he had had to pay more than a nominal tax.
I don't think anyone should take the equity argument seriously. Just because the ownership of underused land has been subsidized for years does not entitle its owners to expect the subsidy to be continued forever, and likewise, for those who bought land in the expectation that the subsidy would be permanent. The equity objection to increasing the tax on land would apply almost equally to any other tax increase.
A week later, another letter includes this:
Just because landowners have had a wonderful subsidy racket going for them in the past should not give them any claim on having that subsidy continue ad infinitum. I do agree with Lowell that the transition to LVT would raise problems, and in any area with a high tax rat on property I can see that the transition would have to be staggered over a period of years, probably not less than five or more than ten, dpending on how big a tax rate was to be shifted off improvement values onto location values.
In the same file, a copy of a 1969 letter from the same person to Lowell (Harriss):
I don't see how tripling the tax on land could fail to force almost all owners of underused land to get busy and put it to better use. Conversely, I don't see how taking the equivalent of a 51% sales tax off improvements could fail to be a tremendous stimulant to improvements. If a 7% Federal tax credit on improvements was so effective, what would wiping out a 50% tax do!
Our argument for justice and liberty -- the doctrines of Henry George -- depends upon successfully synthesizing the social sciences and philosophy. Our scientific work in this area builds us a rostrum from which we can teach the fundamental principles of ethical democracy. ...
As Georgists we are interested
in establishing site value taxes and taxes on the economic rent of other resources,
in determining the economic and social impacts of all other taxes and constructing an intelligent tax system that abolishes speculation and unearned incomes and encourages productive labor, progressive entrepreneurship and socially progressive investments, while bearing the least heavily on labor and capital;
in promoting the free flow of goods, ideas and people across all boundaries, local and national;
in reducing State intervention in the economy and society to the minimum and developing effective and socially oriented self regulation in all occupations, professions and industries;
in reviving mutual aid and substituting it for State aid in the solution of economic, social and personal problems;
in establishing equality of opportunity in all areas of economic and social life and in ridding the economy and society of all vestiges of monopoly and privilege.
In a word, we seek to make it possible for each individual to become a free person developing his faculties to the highest in an ethical democratic free society.
Found in the files ... the phrase at the beginning of the 3rd paragraph caught my attention, and then the rest seemed worth sharing:
Thank you for letting me see Mr. ___'s thoughtful and thought-provoking paper on tax incidence.
I could go through this paper in detail, praising where I think it warranted and criticizing in other spots. However, it seems more constructive to offer, tentatively, a different set of parameters, which, for me at least, clarify the matter of incidence as no current author is doing. At least it will suggest a different viewpoint from which to analyze incidence.
In the first place, land values are the great catch-all of externalities, both positive ones and negative ones. To an extent, that is what Lowell [Harriss]'s conferences on "Subsidies and Other Government Spending: Effects, with Special Reference to Land Values" and the subsequent book "Government Spending & Land Values: Public Money and Private Gain" were all about.
In the second place, as his paper points out, taxes on land values are not shifted and taxes on improvements are shifted, and for the reasons he states: land is of fixed supply and improvements are not. This, ceteris paribus, is why they are built into price and paid for by the consumer in the one case and are reflected in a lower price in the other.
But there is a factor not cited in the paper, nor in the limited amount of the literature with which I am familiar: that is the current state of the economy -- whether we are in a boom or a bust. When the demand for office or residential space is lively, the lessor waits only for the expiration of the current lease (and only if he must!) to raise the tenant's rent; when the rental market is in the doldrums, he grins and bears it, or is foreclosed, or tears his building down, to escape taxes.
I think the idea of "backward shifting" is specious; I believe it is a conconction of dear old Harry Gunnison Brown's. It has certainly set thinking on incidence back generations, having muddied the waters of a simple phenomenon to the point where no one seems to know anything certain at this time.
Lastly, may I suggest that Mr. ___ dip into Homer Hoyt's "100 Years of Land Value in Chicago," Chapter 7, especially pp. 373-403, where Hoyt lists the order in which various phenomena occur from trough to trough. He counts twenty of them; the enclosed chart, based on Hoyt, expands the list to thirty, in the interest of elucidation. In this he will see how land values tend to lag on the upside somewhat at the beginning, then get out of hand completely, and finally again especially lagging on the downside. In this he may discover primary forces affecting the natural tendencies of incidence.
--at least, this is what I think I see in all this. Thanks again for the opportunity of studying this interesting paper.
--from a letter from Weld Carter to Arthur Becker
(professor of economics, University of Wisconsin-Milwaukee and
Mason Gaffney discusses them in his "The Great Crash of 2008" (see the LVTfan blogpost here).
and finally, Which Georgist first called LVT the "least bad" tax? contains a reference to Hoyt; this book was his PhD thesis at the University of Chicago, which Milton Friedman was likely aware of when he said, both in the 1970s and shortly before he died in 2006, that land value taxation was the "least bad" tax. (Incidently, that blogpost title does not refer to Friedman; it refers to Lowell Harriss, mentioned in Carter's letter.)
Finally, you might take a look at Carter's discussion of Hoyt in his Clarion Call.
Another goody from my grandparents' files. I searched for a version of this online, and, finding none, have transcribed it because I thought it good.
that the problems of poverty, hunger, illness and illiteracy have reached such proportions that they can no longer be neglected, and that they demand immediate, vigorous and adequate solutions;
that the rising levels of joblessness and homelessness can only be reduced through systematic adjustments that foster reversal of the widening economic gap between rich and poor;
that an adequate level of economic and social well-being must become more widespread if the political freedoms essential for a peaceful world are to be achieved and maintained;
that this requires that access to the wealth of the land, the oceans and other natural resources be made available to all on a basis of fairness and equity;
that the essential pre-requisite to solving these problems with justice for all is to relieve labor, industry and consumers of the onerous taxes they now bear;
and that this can best be done by raising revenue for public purposes from those values that are created by the public itself, namely, the economic values of land and other natural resources, which now flow as unearned income to those corporations and individuals who happen to hold title to them.
PURPOSES OF THE MOVEMENT
To fund public services from publicly-created land-value revenues, instead of from privately-created wealth, such as homes and other man-made structures;
To stimulate the general economy by lessening the need for income, sales and other kinds of taxes;
To encourage private construction of low-cost housing, industrial plants and other needed facilities by reducing taxes usually levied against buildings of all kinds;
To encourage proper maintenance of all structures by reducing the tax "penalty" usually incurred whenever major repairs or improvements are made;
To discourage land speculation, which drives up both land prices and rents, resulting in increased levels of tenancy and homelessness;
To reduce urban sprawl and the mounting pressures to convert nearby agricultural land to residential, commercial and industrial uses;
To strengthen political freedom by enabling more people to share in the economic and social benefits of owning one's own home and/or workplace; and
To reduce the risk of global war by promoting a widely-recognized remedy for a primary cause of conflict within and between nations.
Continuing through some old files, I came across this eloquent statement in the minutes of an executive committee meeting for the Robert Schalkenbach Foundation:
"Middle income homebuyers, especially, are having to pay a lot more for their homes because of the inflation in land prices. They are having to pay more for their financing, too, because financing also reflects land prices.
What land speculators can get for their land, they can get because of the enormous expenditures of tax money to make that land usable.
I do not think the American conscience is sufficiently sensitive to be aroused because land speculators get rich at the expense of the government, because the public has come to regard the government as a cow to be milked. It would, therefore, be unwise to place the emphasis on how speculators get rich at the government's expense. Rather ... we should emphasize that the homebuyers are the ones who have to pay, have to dig deep into their savings to pay speculators more for the land, not because the speculators did anything to earn a higher price, but because taxpayers spent millions to make it better."
-- Perry Prentice, 3/5/1965
California, with Prop 13, should take note. Anyone who wants a more stable economy should take note. Anyone who would like to see the cost of living for ordinary people be stabilized and reduced should take note.
This sermon identifies a/the source of something I posted a few days ago. It also fits in well with the "Earth for All" Calendar.
Man and Mother Earth Albert H. Jenkins [A sermon delivered at the Davies Memorial Unitarian Church, Washington, D.C., 7 October, 1962. Published by the Robert Schalkenbach Foundation]
When Khrushchev was here several years ago, he repeatedly said that in the United States "capitalism has replaced feudalism." Our newspapers and most of us accepted that statement as a self-evident fact, but I believe Khrushchev was mistaken.
I believe feudalism persists here in the midst of capitalism, and from this, I believe there flows a moral and economic wrong so enormous and fundamental that it is poisoning our human relations and destroying our civilization as it has destroyed other great civilizations in the past.
Of course, we do not have the outward and visible signs of ancient feudalism -- publicly recognized categories of kings, nobles and serfs. But though feudalism was a social system, it was basically an economic system also. It was the power of some men to command the labor of others through the ownership of land -- the Mother Earth of us all.
Does that power still exist today, right here in our own country as well as in others? If so, to what extent and with what results? Before we attempt to answer these questions, let us be good scientists and get our definitions straight. Let us get our mental feet on the ground and start from there.
For that purpose, we have the simple visual aids you see before you. The first is a global map of the earth. It represents what the economists call LAND.
That term includes not only the earth's surface, which is what most people think of as land, but also all of Mother Earth's other natural resources -- oil, natural gas, ores and minerals, water, and even the air we breathe. Everything on which and from which man lives and without which he cannot live, is LAND.
You will recognize the second visual aid as Rodin's "Thinker." However, I had our cartoonist put a suit of blue overalls on him. That is because he represents man as a worker of hand or of brain, or both. In short, he is what economists call LABOR.
LABOR, working on land - the surface of the earth and its natural resources - produces what is called CAPITAL. This term is represented by the railroad locomotive in the third visual aid.
CAPITAL, in the economic and real sense, is not money, nor stocks, nor bonds. It is factories, machines, railroads, trucks, ships -- anything which, after it has been produced from land, is used for further production, transportation or distribution of either capital goods or consumer goods.
Of this economic triumvirate -- land, labor and capital -- the most fundamental is LAND, because it is the source of everything else. Yet, nowadays, the land factor is almost forgotten in our economic controversies. That is understandable for several reasons.
First, in our complicated civilization, most of us are out of touch with land. It is buried under buildings and pavements in our cities. And everything we buy from outside our cities comes to us so many steps removed from the land that we seldom think of the source -- our Mother Earth.
Second, the most continuous and conspicuous economic controversies today are between labor and what labor thinks of as "capital" --the owners and managers of industry and business. Workers are in direct contact with employers in their daily lives, and winning wage raises and fringe benefits is the "bread and butter" of labor leaders.
Likewise, employers are constantly pressed by "labor problems," which concern them obviously and directly.
So it is natural that workers and employers seldom stop to think that the economic share they are quarreling about is what is left after landowners and land speculators have taken their portion, which comes first because they control the source of all things, and labor and capital can produce only by buying their permission to use the land.
That brings us to our fourth and last visual aid, this sketch. The water pouring into the bucket represents the hard-earned fruits of labor and capital working together in all stages of production. The water going out through the hole in the side of the bucket represents the unearned tribute taken by the modern feudal landlords. They get their share first. What is left in the bottom of the bucket is what labor and capital must divide between them. They quarrel over it, not realizing that both are being robbed by a third party who contributes nothing to production. Obviously, when someone gets something for nothing, someone else gets nothing for something.
Now, as our next step toward answering the question whether feudalism persists in the midst of capitalism, note this well, for it is the first of two key points:
No man created the land -- the earth. It was here millions of years before any man lived. Therefore, no man has a moral or an economic right to say to others: "Pay me for the privilege of living on the earth and using its natural resources."
The second key point is this: No man creates the money value of the land he owns. That value is created by the needs and deeds of all the people in the community and the nation, in both their private and their public capacities.
As more people are born in or move into a community, the price of the land in and around that community goes up because more people need it to live on, to buy for houses, factories, shops and other purposes. The community itself must establish streets, schools, parks, etc.
Federal and local tax money spent to put up a school, a post office, a government defense plant, or to establish or maintain a police or fire department, boosts the value of all nearby land. The man who spends his money to build a house raises the price of the vacant lot next to it. Landowners and speculators reap an unearned and increasing harvest from these activities.
In effect, they command the labor of other men through their ownership of land, and that is the essence of economic feudalism. The same is true of men who charge other men ever-increasing prices for using the oil, gas, minerals and other natural resources which, by moral and economic right, over and above the cost of extraction, should be the free gifts of Mother Earth.
Now let us bring this down to your own experience. Many of you own a house. You remember its price. Suppose it was $15,000. Little more than a decade ago, in 1950, the price of the lot averaged about 10% of the total cost of the new home. Now the lot cost has doubled to 20%, and is still rising.
At the 20% figure, the buyer of a $15,000 house pays $3,000 for the bare land on which it was built. How long does it take you to earn $3,000, or to save it out of your earnings? For that length of time, if you were that home buyer, you were the feudal serf of the man who sold you the land on which your house was built. In return for your $3,000, he gave you nothing but his permission to use land which he did not create, and the money value of which he did not create. He commanded, and if you have not yet paid off the mortgage, is still commanding, your labor for the time it takes your hard-earned savings to add up to $3,000.
And that's not all. That $3,000 was added to your mortgage. If it's a long-term mortgage, the interest you will have to pay will about double the final land cost to you. Therefore, as a result of the persistence of economic feudalism in this country, the former landowner and the mortgage moneylender are commanding your labor for as many months as it takes you to earn and save $6,000, If you live in a house as a renter, you pay the land cost, too.
Here's another example, from my own experience. In 1926 the railroad labor newspaper I work for bought a piece of land on Capitol Hill, right across Independence Avenue from the House end of the Congress building. That was an absolutely unique location having many advantages, but this land cost us only $24,000.
About 30 years later, Congress ousted us in order to put up the third House Office Building. We looked around for a site for our new building, and were offered a piece of land below Capita! Hill, across from the Capitol Plaza, and comparatively distant from the center of things and from the Senate and House office buildings.
That location is not unique in the way that our original one was and is far inferior in all respects. But the price asked was $1.5 million. That was too much for us, but later this same land was bought by the Carpenters' Union and we may suppose that they paid at least what was asked of us.
That huge sum will come out of the dues paid by the union's members. Land costs always come out of someone.
For our new building we finally bought a plot at the corner of First and D Streets, Northwest, still more distant from Congress and still more inferior to our original land, and very little larger. Yet the price was nearly $400,000.
The difference between that price and the $24,000 we paid 30 years before has to be made up by raising the price of our paper to its subscribers.
Now let us look at an example which concerns everyone of us in this room this morning. You know how hard we are trying to pay off the mortgage on the site we are buying for our church. A few years ago we would have faced no such obstacle because the price of suitable land would have been only a few hundred dollars. Ye we had to pay $16,000 for it and were lucky to get it at that.
Why? Because the owners and speculators in land for mile around Washington are holding it for unearned profits and in that way are creating an artificial scarcity of available land. They know that the population of this area is growing and that the need for land for useful purpose is increasing. So, the longer they hold out, the higher will be the prices and profits they hope to get.
What can, and what should be done to end this deadly hang-over of economic feudalism? Most liberals and labor spokesmen, unfortunately, offer no real remedy, only temporary palliatives which make the patient worse in the long run.
What they propose, and often get, are public subsidies and government guarantees to give the economic system a "shot in the arm" when it is being slowed down by rising land costs. Such artificial stimulation boosts land prices still higher, requires ever-increasing doses, and merely postpones the day of reckoning.
The government housing programs, particularly those for slum clearance and urban redevelopment, are good examples of how land profiteers are subsidized with public money supplied by the taxpayers who will take the losses if land speculators and mortgage-moneylenders run wild and cause a crash.
As a matter of fact, more and more urban redevelopment projects are being promoted by smart real estate operators. A public body buys the land at a high price, pays the heavy expense of clearing off the old buildings, then sells the land to a private developer at a fraction of the price the public body paid for it.
There just isn't enough public money to go very far in that kind of program, and slums are spreading faster than they are being cleared. Such a system has not worked and will not work.
Right here in Washington, the Washington Post recently reported that "Nathan Bernstein and his wife became the first individuals to get a piece of the vast southwest redevelopment project." They bought about three-fifths of an acre for $139,000. That's at the rate of more than $230,000 an acre, or $5 a square foot. And, since the report describes Bernstein as a small businessman, it seems obvious he got some of the least costly land in competition with wealthy real estate corporations.
Such huge land costs have two results, among others.
First, even with the public subsidies, apartments built by private redevelopers must, and do, rent for far more than can be paid by the low-income families for whom they are supposedly provided. In Washington's southwest redevelopment area, which is in this category, rents are reported to be as high as $300 a month.
Second, the comparatively low rents in publicly-built and publicly-owned housing require not only public subsidies for buying and clearing high-priced land, but also a continuation of these subsidies to keep the rents within reach of low- or even middle-income families.
Something different -- a real, fundamental remedy -- is needed. What can it be? Let us approach an answer in this way:
Slum property yields its owners profits of between 20 and 25% -- far more than any other kind of stable investment. That is largely because the more the buildings deteriorate, the lower their value is assessed, and the lower the taxes will be. Thus, the owner is rewarded for being a "slumlord" more ruthless than ancient feudal landlords.
But suppose this slumowner spends some of his money to convert his wretched old buildings into decent dwellings, or tears them down and puts up new ones? Either way he has not only increased the supply of good housing but he has also provided employment for workers in the building trades and in industries which fabricate and transport materials for construction. He has benefited manufacturers, merchants, architects, engineers and other professional men, as well as the economy in general.
Instead of being rewarded, however, this owner who redeveloped his slum property is penalized. The assessor comes around and boosts his valuation and from then on he must pay an annual fine in the form of increased taxes. In effect, he is treated as though he had committed a crime.
This tax system is upside down, according to a school of economic and moral thought fostered by the teachings of Henry George, an American, who long ago wrote a book entitled Progress and Poverty. It aroused controversy in its time, but has produced practical results in some parts of the world, and its teachings are now having a revival in our own country.
Those who agree with Henry George maintain that the man who should be encouraged and rewarded is not the one who lets his slum property run down, but the one who does a favor for everyone by improving his old buildings or tearing them down and putting up better ones.
How would this be done? By taxing the land under the buildings at its true economic value, which is usually much higher than the assessed value, and taking taxes entirely off the buildings or other improvements.
At first that may seem to be a startling thought, perhaps even an unjust one. But remember this, there is a fundamental difference morally and economically between land and buildings. No owner created his land, and its money value was created by the whole community. Is it unjust then for the creators of that value -- the people of the community -- to get the annual return on it in the form of taxes?
In contrast, buildings and all other improvements are man-made. They would not exist unless individuals had invested money and labor in them. When the community taxes them, it is taking something the community did not create.
The purpose of the tax system which Henry George advocated goes far beyond clearing slums by reversing the impact of local and state taxes. Its purpose is no less than to end persistent economic feudalism and its attendant evils. It proposes to do that by making it unprofitable to hold land out of use, or to use it inadequately while waiting for increasing population and public need to boost its selling price.
If landowners and speculators had to pay more taxes on their land, they would sell much more cheaply to people who need land for use. Thus taxes on land values tend to reduce land prices and the cost of living. In that respect, land values are unique. All other kinds of taxes in whole or in part operate to raise prices and living costs.
There is an old and true saying that "the power to tax is the power to destroy." Every dollar of tax destroys something for better or for worse. The question is what do you want to destroy -- the productive activities of labor and capital, or the feudalistic obstruction of men who command the labor of others through landownership and speculative profits?
Federal taxes as well as local taxes are full of favors for landowners and land speculators. Here is just one example:
Earned income pays federal tax rates ranging from 20 to 91%. Unearned profits from land pay only the capital gains tax, which ranges up to 25% at the most. What is more, Uncle Sam gives back to the landowner much of the local real estate taxes he has paid, because such taxes are deductible from taxable income. Thus a wealthy land speculator in the 50% tax bracket, in effect, deducts half his real estate tax from his federal income tax.
More and more people are awakening to the problem of economic feudalism and are seeking its remedy. I only wish I could say that the liberals and the laborites of our country were leading the search.
House & Home, a monthly magazine covering all phases of the home-building industry, is a Luce publication, and as such would generally be considered conservative. But on the land and tax question, House & Home is "radical" in the old American sense of that word, meaning that it goes to the root of things, seeks out and tries to remedy causes.
The Reader's Digest, scarcely a liberal magazine, recently published an excellent boil-down of the House & Home material under the title "Land Speculation and How to Stop It."
Feudal lords, big and little, are exacting more and more billions of tribute from the rest of the people. This will get worse as the population explosion puts heavier and heavier pressure on the land and other natural resources.
Warnings of this came long ago from the classical economists. One of them, David Ricardo, put it this way:
Advancing wealth and productivity bring more people, but they do not bring more land. As a result, those who own the land can command an ever greater return for an increasingly scarce resource. Meanwhile, capital and labor conflict with each other for the rest of the product, and get smaller and smaller shares while the landowners get more and more.
Therefore, Ricardo said, "the natural price of labor is that price which is necessary to enable the laborers … to subsist and perpetuate their race." This came to be known as his "iron law of wages."
Ricardo and other classical economists correctly foresaw that in times and places of rapid economic growth and relative scarcity of workers, wages could rise temporarily. But now the population explosion is on full blast and the industrial revolution, instead of creating more jobs, as it formerly did. is resulting in millions of workers who cannot find jobs even at Ricardo's "subsistence wage."
This economic insecurity will continue and grow worse until the land and tax question is answered, and answered right, for it is the inevitable result of the economic feudalism which has cursed mankind throughout the ages and lingers on in our own country.
Things move fast nowadays, and the time is growing short. Dare we delay too long in solving the biggest and most fundamental of our economic and moral problems -- the problem of Man and his Mother Earth?
I found this article in my grandparents' files. It comes from about 1962. Still seems timely.
Land Speculation, and How to Stop It
Too much valuable land in this country is tied up by speculators who merely sit on it and wait for an easy profit. This is economically unhealthy, nonproductive - and readily cured.
A Springboard for Discussion An editorial review by Wolfgang Langewiesche
The home building industry faces a crisis: in many areas it can no longer buy land at a price that makes building profitable. This is the conclusion of House & Home, in a special issue on which this article is based. House & Home, a Time Inc. publication, has examined the problem of land prices in terms of the housing industry, but it is a problem that touches every one of us, whether we rent or own or want to own. As the magazine points out, "A cutback in homebuilding throws more men out of work than a like cutback in autos, or steel, or oil."
Here are the key reasons behind high land prices, plus an examination of the radical remedy which House & Home proposes.
ON LONG ISLAND, builders are paying $16,000 and more for raw acreage they could have bought for $3500 in 1950. In San Francisco a builder paid $580,000 for a tract that was offered for $15,000 in 1948. North of Albuquerque a builder paid almost $1000 an acre for land that sold 10 years ago for $4 an acre. Since 1950, while building-material prices have climbed 21% and wages 68%, land prices have risen 100% in many areas, as much as 4000% in others!
These figures might give the impression that we are running out of land. But there is plenty of vacant and under-used land left close to our cities, even inside them. It is merely being held out of use, or kept in under-use, by speculators who are holding out for absurd prices.
For example: in 1961 only about 40% of the "suitable" land in the 22 counties of the New York metropolitan area was developed for "urban" use. The 6,500,000 people of greater Chicago use only one sixth of the land within the metropolitan boundaries. In Indianapolis, a special study by House & Home inside the city limits showed nearly seven square miles of level land, zoned for homes -- unused! Right around the city (well inside the present far-sprawling suburbia) are some 125 square miles suitable for housing -- enough, at the present growth rate, to accommodate the needs of Indianapolis for the next 35 years!
Operation Leapfrog. So the land is there. But speculators have it, and are holding out on us. The result is that developers have to leapfrog the closer-in, too-expensive land, and go well out in the country to find land cheap enough to build on. Then prices rise there, and further development has to leapfrog again and go still farther out. The result: suburban sprawl; millions of miles of wasted driving, at eight cents a mile, between home and work; extra highways at $500,000 a mile.
Speculation by the "investors" who buy 20 acres or 2000 acres outside of town and won't sell until they can triple their money, takes land out of the market. And when it is finally sold, much still has to be done to get it ready for building roads, schools, zoning, sewers, etc. -- and it takes years. This further strengthens the impression that land is scarce.
Room to Grow. But the land is there, and cities don't have to sprawl. Suppose, House & Home points out, you have a built-up city, more or less round, with the outskirts eight miles from the center. Suppose now you extend streets, bus lines, water and sewers outward by one mile -- putting the outskirts nine miles from the center. Well, in that one-mile addition all around, there will be space for 400,000 people in single houses at four families per acre. So why go 30 miles out?
Cities could even grow inward. There is lots of space downtown and right around it; we don't see it because much of it is covered by old buildings -- low-cost buildings known as "taxpayers": warehouses, decrepit factories and slums. In downtown Fort Worth the underused or derelict land had space for: a belt highway; parking garages for 60,000 cars; a 300% increase in office space; a new civic center; a convention hall-all that, and "green belts" too!
House & Home says that the land now being held speculatively far exceeds any possible demand for building land for generations to come. A lot of speculators are going to be left out in the cold! But, meanwhile, some of the blocked-out land is very much in our way.
Tax the Land. And how can we pry this land loose? House & Home says: Tax it loose.
It's not how much we tax, but how we tax. Most cities now tax land and buildings at the same rate. This is wrong. We should tax the land more heavily, the "improvements" more lightly or not at all.
The average homeowner might even be better off. He would save on house tax what he'd pay extra in land tax. The town treasury would come out even: the total tax take would be the same. But the system would radically change the climate in which our cities grow and sprawl.
The way it is now, it costs almost nothing to hold land as speculation. Taxes on it are low. As a matter of fact, a lot is usually assessed lower while vacant than the same lot is after it has a building on it! If land were heavily taxed and buildings lightly taxed, the owner of vacant land would find it less attractive to hold onto. Taxes year-by-year would eat too much of the profit he hopes for in the end; and taxes would be sure, the profits not. So he would be far more likely to put his land on the market, and at a price at which it would move.
Or perhaps he would use the vacant lot himself. For instance, instead of renting it out as a parking lot, he might build a ten-story parking-garage on it. He would not be penalized for building it by having to pay more tax; we would have ten times as much parking space!
Do Nothing. To make such taxation by cities effective, some federal tax regulations would also have to change. If you just own land and finally sell it, your profits are capital gains, taxed low. But if you do anything to your land, such as subdividing, building roads -- then your profits are "income" and are taxed twice as high or even higher. So, the smart man will sit on land like a bump on a log. And the only one who can afford to buy it from him is a rich man who will do the same!
The very idea of taxing "improvements" is a paradox -- just to say it slowly makes you stop and think. It's strange. That stern old Uncle in Washington seems to favor speculation, idleness and waste, and to penalize enterprise and creativity. Local real-estate taxes are deductible for federal income-tax purposes. This means the rich land speculator in the 75% income-tax bracket can deduct 75% of his land tax from his income tax.
Taxing the land, un-taxing the building, would also clear slums, House & Home claims. Slums are largely tax-made. The ratty old buildings are taxed low; so is the high-value land underneath. The "slumlord" is best off by leaving his slum a slum. Even if he merely did decent maintenance, his taxes would go up! Anyway, his real objective is to sell the underlying land someday at a big, low-taxed capital gain. In the end, because the rundown downtown neighborhood doesn't "renew" itself, it is bought up for "urban renewal" by the federal government, then resold to "re-developers" at about one third the cost. We taxpayers get hit for the difference.
The Power to Build. If land were more heavily taxed and buildings more lightly, the slumlord's situation would be reversed. He would no longer get a tax break from his ratty buildings; all buildings, ratty or not, would be tax-cheap. He would no longer find it tax-cheap to hold his high-value land for future gains; he would have to sell, to someone who would put up good buildings. Thus, by taxing land we could actually tax slums out of existence! The power to tax could be the power to build.
The idea is old. It has been tried and found to work. Pittsburgh taxes land value at twice the rate of building value. Pittsburgh is the example of an American city that has revitalized itself, especially downtown. In Brisbane, Australia, buildings are tax-free, while land value is taxed up to 10% per year. That's enough to make it unattractive to hold land you are not using; it keeps land available and keeps land prices down. There are no slums as we know them. In Denmark, increases in land value are taxed so high that they are practically confiscated. You can't make money by land speculation in Denmark, so you don't try.
House & Home does not mention the most successful use of the land-value tax. This is in California, in connection with irrigation; it started about 1880, but it's still going. An irrigation district is formed; and a stiff tax (used to finance the building of dams and canals and bring water) is laid upon all land in the district, while buildings and crops are totally exempt.
This tax broke a speculative blockage much like the one that now troubles our cities. Before the tax, it had been more profitable to hold irrigable land as speculation than to irrigate it and grow crops. The land was held in big blocs, and farmers could not find farm-size parcels to buy at prices that made economic sense. There was water, and there was land; the two did not get together!
Then came the land-value tax. The tax made it expensive to hold irrigable land idle, or to under-use it it as cattle range. Farmland appeared on the market, in small acreages, at economic prices. Farmers came, water started to flow and crops grew. The whole of California's immense irrigation agriculture stems from this one application of the land tax.
A LONG TIME ago, House & Home notes, young Winston Churchill put the case for the land tax succinctly. In a thundering speech he made in 1909 in Edinburgh, when he was president of the Board of Trade, he described "the landlord who happens to own a lot of land on the outskirts of a big city, who watches the busy population around him making the city larger, richer, more convenient every day, and all the while he sits still and does nothing. Roads are made, services are improved, electric light turns night into day, water is brought from reservoirs hundreds of miles off in the mountains-and all the while the landlord sits still. While the land is what is called 'ripening,' the artisan going to his work must detour or pay a fare to avoid it" -- just our present trouble.
Finally, the land having risen 20 or 50 times in value, Churchill's landlord sells. What is the moral difference, Churchill asked, between the land speculator's activities and those of the man who buys and sells, for instance, old masters?
Churchill: "Pictures do not get in anybody's way."
This came by email today, from my friend Mike Curtis, and, with his permission, I'm sharing it here:
Dear friends and acquaintances:
I am daily reminded of the passage: “the only thing that is necessary for evil to prevail is for too many good men to do nothing” I just heard on the radio that science is advancing in the realm medicine, energy, and agricultural. We are now able to multiply productivity in manufacturing due to the use of robotics. Yet in spite of all the gains in material progress poverty is increasing.
“It is as though an immense wedge were being forced, not underneath society, but through society. Those who are above the point of separation are elevated, but those who are below are crushed down.”
“This association of poverty with progress is the great enigma of our times. It is the central fact from which spring industrial, social, and political difficulties that perplex the world, and with which statesmanship and philanthropy and education grapple in vain. From it come the clouds that overhang the future of the most progressive and self-reliant nations. It is the riddle which the Sphinx of Fate puts to our civilization and which not to answer is to be destroyed. So long as all the increased wealth which modern Progress brings goes but to build up great fortunes, to increase luxury and make sharper the contrast between the House of Have and the House of Want, progress is not real and cannot be permanent. The reaction must come. The tower leans from its foundations, and every new story but hastens the final catastrophe. To educate men who must be condemned to poverty, is but to make them restive; to base on a state of most glaring social inequality political institutions under which men are theoretically equal, is to stand a pyramid on its apex.”
Henry George 1879 (Progress and Poverty)
I am not running for political office, but if I can enlighten anyone, I believe my efforts will have been worth it. The following my reaction to the prevailing wisdom from all the presidential candidates, including the one in the White House.
If you think my thoughts are worth consideration, please let me know, and forward them to others. If you think I’m wrong, please let me know where I went wrong.
Taxes kill jobs
"Taxes kill jobs" is the message of political candidates. The American economic system causes unemployment and recessions; that is true, but without revenue and the role of government the U.S. would surely be a third world country.
However, there is one tax system that actually creates jobs. It’s not based on the socialistic principle of “Ability to Pay,” like most of our taxes. It’s based on the value of the “Benefits Received” by the tax payer. It’s doesn’t confiscate a percentage of income, taking more from those who have a greater income, even when the benefits they receive are the same as others. It doesn’t tax wages, which are the earned income of labor; it doesn’t tax buildings, machines, or inventories, which were acquired from the people who made them; It doesn’t tax sales or consumption, which is the only reason anyone produces anything.
It is simply a charge for the value of the opportunities to which the taxpayer has been given exclusive control. It is a tax on the value of land. It can be taxed at 100% without in any way adding to the cost of production. It doesn’t add to the value of land or the value of things produced on the land. It simply collects what would otherwise go to the holders of land as an un-earned income when the land is actually used.
It insures that the government has ample revenue for the legitimate needs of society, while limiting the government to those values which cannot be attributed to the efforts of individuals or corporations, but are socially created by the community as a whole and attach to the land. It cannot be evaded, because the land cannot be hidden.
The reason wages no longer rise as inventions and new technologies increase the results of labor is because people have no independent way to employ themselves.
If you’re among the least skilled workers, no matter how little machines cost or how much those machines increase the results of your labor, you have to bid against other people who want the same job; the result is that wages tend to a bare minimum -- superseded by the legal Minimum Wage.
For workers with superior skills and knowledge, those with whom employers can increase their profits, it is simply a matter of supply and demand. The higher the pay, the greater the incentive to learn the skill and acquire the knowledge. The wages of any qualified worker will be determined by two opposing factors. First, the demand for the goods or services they produce will encourage employers to offer wages that tend to equal the greater value of their contribution to the product or service. But, as the higher pay stimulates others to acquire similar skills and knowledge the increased supply of superior workers competing against each other, brings wages down until the wages that reward the special skill are no longer high enough to stimulate others to acquire the same skill and knowledge required for the job. Remember when computer programers earned twice what they do now? The supply increased and their wages went down. They still make more than the average worker, because it’s not so easy to learn computer programing. The supply has not exceeded the demand.
Although the vast majority of workers have no way to employ themselves, and the general level of wages haven’t increased in 40 years, it is not a natural law that wages will always tend to remain static. The United States has 700,000 square miles of arable land. That is less than 450 people per square mile. France has more than 850. The U.K. has more than 2,500 and Japan has more than 7,500 people per square mile.
All production takes place on land. The reason why more workers are looking for employment than landowners are looking for workers is that an enormous portion of the arable land in America is unused or grossly under used; simply held as an asset.
Suppose that cities were developed to their full potential. The slums with empty houses and abandoned factories were redeveloped to their full potential; the surface parking lots were replaced with multi-story parking garages; the grossly underdeveloped sites in the high-rise business districts were put to their highest and best use. Suppose the suburbs were carefully planed and developed with wooded and open parkland instead of relying on land speculators posing as farmers to provide open space; suppose we eliminated sprawl with its leapfrogging patterns that increase the cost of the infrastructure, waste land, and separate people from work and social relations; suppose we created a disincentive to hold idle, mineral land that increases in value. That is to say: What would happen if the majority of now privately held idle land was put to good use? It would generate an increase in the demand for labor and create job opportunities for everyone who was willing and able to work.
What is required is a shift from confiscatory taxation, which we now have, to a revenue system that is based on the value of land, which measures the value of the benefits received by landholders from society. Land values include the surface rights, mineral rights, and all other natural opportunities like the electromagnetic spectrum used for communications.
Under this proposal, the rental value has to be paid whether the land is used or not. While the payment of rent is a payment for a benefit received, for those who leave their land idle, it becomes a penalty, and that insures an ample supply of land for all who need or want to use it.
It also insures that all workers and the owners of productive capital get to keep everything they produce by taking advantage of the natural opportunities that are equally available to everyone else.
The last two or three years have brought forth a flood of literature on the question of immigration. Very little attempt has been made to discover fundamental principles; restrictive nostrums have been freely recommended, each writer appearing to believe that the millennium only awaited the adoption of his panacea. It has seemed to me that these discussions have overlooked or ignored the very first and most vital principle. That principle is involved in the question, "Have men a right to migrate?" Is the right to move about from place to place on the surface of the earth a natural right that belongs to all men equally, or is it a privilege with which nature has endowed a few favored ones, leaving it to them to grant or withhold?
The mere statement of this question brings out its own answer. Whatever degree of freedom may justly be claimed for one must necessarily be conceded to all. There can be no freedom greater than equal freedom. Whatever right I claim for myself, that must I concede to my brother. Have you, my reader, a right to change your habitation from St. Paul to California? Most certainly. Then that same right you must accord to every other one of your fellow-men. Have you a right to expatriate yourself and become a citizen of England, China or Afghanistan? With equal emphasis you reply, "Of course I have." Then you must accord that right to every other person on earth. All rights must be equal. In short, each person must be free to choose for himself his place of abode; and so long as he encroacheth not on the equal freedom of his fellows, no one may deny him.
The favorite reply of the restrictionist is somewhat as follows: "Of course no one man may justly deny his fellows their equal right with himself to migrate from place to place; but all the people, through the regular channel of legislation, may make regulations and restrictions." If this is true, then the principle of equal freedom is a fallacy, and that part of our Declaration of Independence which asserts that all governments derive every just power from the consent of the governed is nothing but an iridescent dream.
No, the immortal Declaration is right. Governments can have no powers except such as rest originally and equally in each individual citizen. Consider, what is a just government? Simply an agent of the people, chosen by the people, to do certain things for the people. What are these things that the people may delegate to their ag«nt, the government? Only such things as each citizen would have a right to do for himself in the absence of government; and of these only such things as the citizens choose to delegate. You can't delegate to your agent a power you don't possess. Your right to interfere with other people's migrations is just nothing. No other citizen has any more right than you. Sixty-five million times nothing equals nothing. A creature can never have rights its creator does not possess; so governments can never possess powers which do not inhere in each individual citizen before they come together to create their government.
I am aware that there are certain classes of socialists who claim that the powers of governments are limited only by the will of the majority; but such claims rest upon investigations so shallow, and are so plainly at variance with the principles of equal freedom upon which our democratic republic is founded, that they should be regarded as cuiiosities instead of being seriously considered.
It is also claimed that, because the members of a family may justly resent encroachments on the sacred precincts of the home, therefore the people of any country may with equal justice drive away peaceable immigrants. The cases are not parallel. The peaceable immigrant enters no man's home unbidden. He simply comes here to make a home of his own, in his own way, and this he has the same right to do as had the Pilgrim fathers who planted their habitations on Plymouth Rock. The only limitation that may justly be applied to the peaceable immigrant, is the same that applies to every other citizen — simply this: he must not encroach upon the equal freedom of his fellows.
True, our Congress attempts to enact laws to prevent people from coming to this country; but all such laws are simply tyrannical usurpations of power, without the slightest shadow of right behind them. Public sentiment may sustain them, just as it sustained the superstition of the divine right of kings to rule and rob the people; just as it sustained for centuries the laws for the burning of heretics; just as it sustains today all sorts of laws that interfere with the divine right of every man to free thought, free speech, free labor, free land and free trade; but in the very nature of things all such laws are void for want of authority — void because there is no power on earth that has any right, or ever can have any right, to enact them.
II. BENEFITS OF IMMIGRATION.
Having shown that no people can possibly have the right to prevent peaceable immigration, I now desire to show that the coming of others not only does no harm to those already here, but really benefits them.
Imagine yourself alone on an island; or, if you please, alone on a world. How poor, how weak, how insignificant you are! You must supply for yourself all your own wants. You must plow and sow and reap and thresh and grind and bake, before you can eat bread. Your clothing, in every part and in every detail, must be of your own make. Whatever shelter you have, you alone must construct. You have no one to aid you, no one with whom to divide the cares and the joys of life! How gladly would you welcome the distant sail; with what heart-throbs of hope would you watch its nearing; with what ecstasy of delight would you note the fact that an immigrant was coming! Even one would make you glad, but many would bring greater gladness. And how doubly joyous would you consider it, if, among the many strangers coming, you could but note the happy smile of some sweet maid of your former acquaintance!
Attempt to restrict immigration! No, 'twould be the last thought to rise within you. Think of the blessings those immigrants would bring. Now the subdivision of labor is possible. Now each can devote his energy to the production of such things as he knows most about, and then exchange with all the others. Now the joys of home and fireside cast about you their holy influences, and soon the patter of little feet reminds you that immigrants from out the great unknown are doubly blest in coming.
Stop immigration? Never! Each one of the ten or one hundred now occupying the island can enjoy many times more of the comforts and blessings of life than before they came together to cooperate among themselves. How anxious you all would be to open up communication with the outside world, that you might exchange the surplus products of your labor with men beyond the sea, and thus get such comforts and luxuries of life as on your own little island you could not produce. With what scorn and contempt would you look upon the person who should seriously suggest that you ought to build a row of custom houses around your island and fill them with politicians whose duty it should be to protect you from the evil effects of swapping goods when you wanted to!
Isn't it always true that ten men working together can produce far more than ten times as much as any one of them working alone? So, also, a thousand, under conditions of freedom, can produce far more than a thousand times as much as one. This principle is universal. The greater the number of the people, the more completely the labor is divided, each doing the work he knows best — provided only they are left free to exchange their surplus products — the greater the wealth of each and the more each can have to enjoy.
Some one may here suggest that if all were permitted to come freely, the island might get too full of people. Nonsense — before the island got too full the people would stop coming.
III. WHY RESTRICTION SEEMS NECESSARY.
Why, then, does restriction of immigration seem necessary? Why does the incoming of our cousins from over the water seem to do harm? Why does it in reality intensify the competition among the workmen, and make immigration seem a curse when in reality it ought to be a blessing?
These questions can all be answered in one word — monopoly. All the good things for which men labor and strive and think and plan, must of necessity be brought forth from the earth by the exertion of man. In the language of political economy, "Labor produces all wealth." But labor can produce not one single particle of wealth unless it can have land to work upon. The food we eat, the clothes we wear, the houses that shelter us, even our very bodies — all are derived from the earth; all are the result of labor applied to land. Without the earth to use, human life is impossible.
What sort of a welcome does the immigrant receive who comes to this boasted "land of the free," seeking a place where he can use his energy and skill for the betterment of himself and all those who were here before him? Is he permitted to use the earth to satisfy his needs? Yes, if he can pay the price monopoly has placed upon land. May he not travel from place to place in search of cheaper land, or that he may find an employer to hire him? Yes, if he can pay the price that law-favored highway monopolists charge for a ride. Can't he go afoot and thus escape excessive transportation charges? No, he will be arrested as a tramp and put in jail, his only consolation being that some of those who helped make the laws that caused him to become a tramp will have to pay taxes to support him while he is there. Suppose he can pay the price demanded for transportation and for land, is he allowed to keep and enjoy the products of his labor, that he may thus become a good and self-reliant citizen? No, the tax gatherer is bound by law to fine him for every good thing he does, in order that some land speculator may the more readily blackmail his fellow-men.
Suppose, by hard work, he overcomes all these unnatural obstacles that stupid laws have put in his way, and has a surplus of wheat or other product, is he permitted to exchange that surplus in order to get the things he needs for the maintenance and comfort of himself and family? Yes, but oh condition; if he exchange with his brothers who live outside the imaginary line that separates this "great free country" from the rest of the world, then he must give up from one fourth to three fourths of all he gets to a legalized robber called a customs collector before he may go home with the remainder. Or if he choose to exchange with some one on this side the line, he must pay the monopoly price that our tariff was designed to enable the home producer to extort. Suppose he submits to all these robberies and finally gets home with the fragment that remains, is he let alone to enjoy it in peace? Oh, no; the tax assessor comes around and fines him every year for having it.
What a "grand and glorious free country" this of ours is, to be sure! Is it any wonder that immigrants coming here compete with "our own laborers" for a chance to work? How could they do otherwise, when we shut away the earth from them and compel them to beg employment of the favored few upon whom our system confers the privilege of owning the planet on which we live!
This is just as true of those immigrants who come through the natural channel of birth, as of those who come from distant lands in ships; and to restrict or keep out one class is no more logical or just than to pass laws to prevent the coming of the other.
Why, then, do the citizens of foreign lands come here, and why do so many of them come in spite of all these evils that await them? Simply because they are compelled to suffer more evils where they are. But the tyranny of old world despotisms is no excuse for ours. Because in one country a man is robbed of 90% of all he produces is no reason why in another he should thank God for the robbers who take only 75.
Thus it appears that the problem of immigration does not stand alone. Freedom of migration is as clearly the right, of every human being as is freedom to breathe the air. Monopoly alone is the cause of the evil.
IV. THE REMEDY.
What, then, is the remedy? Again the answer comes clear and plain: Abolish monopoly and restore freedom. These evils have been brought about by laws that restrict and interfere with the rights of man. The remedy must come through the repeal of those laws and the restoration to man of his natural right to be free. Not more laws added, but many existing laws repealed, is the kind of legislation we now need. Our watchword must be "More liberty."
We must erase from our statute books all laws that tax men in proportion to their industry. No man should be taxed more because he has made a piece of land useful, than another is taxed for holding an equally valuable piece of land idle.
The great iron highways of the country must cease to be the private property of such as the Goulds and the Vanderbilts, the Hills and the Huntingtons. They must be made real free public highways, and all must have equal rights to use them, just as they now use the lakes and rivers, the bays and oceans, the country roads and the city streets.
All existing laws that tend to currency monopoly must be repealed. The money of the country must not be made to favor either state or national banks, nor to give the owners of mines a greater price for their products than they will command in the free markets of the world.
But most important of all and first of all, land monopoly must be destroyed. We must recognize again nature's only title to land — the title that rests upon possession and use; and the value of land — that value which is produced by the presence of population and the evolution of society — the value of land must be taken for public use; not allowed to swell the private fortunes of mere title holders.
Look over this fair America of ours today, and see how few and how scattering are its people. More than all the inhabitants of the United States could live in peace and comfort east of the Alleghany Mountains were it not fo: the curse of land monopoly. Less than half the land even in New York City is really occupied and used. More than half is only partially used or is held idle by speculators who expect to reap large profits from the increase of value which always comes with increase of population.
Why do men hold land idle? For no other reason than to pocket the difference between the yearly value which the public gives and the yearly taxes which the public takes.
How can land monopoly be abolished? By making the yearly taxes which the public takes equal to the yearly value which the public gives. When the public takes what it produces, it won't have to rob individuals of the product of their labor under the pretence of taxation. Adopt the single tax, and the vacant-lot industry is a thing of the past.
All laws that pretend to grant to corporations or individuals any special favors must be abolished.
All men must be restored to their rightful condition of freedom, and then let alone to work out each one his own career, unaided by government bounties or favors, unhindered by repressive or restrictive legislation.
Democratic government is possible only under conditions of equal freedom; and that equal freedom must not be the variety proposed by restrictionists and paternalists, where all are equally oppressed by a governing class, but that broad and genuine freedom, where each person has perfect liberty to do whatsoever best doth please himself, so long as he does not interfere with the equal freedom of his fellows.
All men must have equal rights to be on the earth, to move about on its surface, and to use its materials to satisfy their needs. Each one must be the owner of his own powers and capacities. All that his labor of hand or brain can produce is his own; and he must never be compelled to yield to individual or state any part of the product.
The value of land, which is not in any sense a product of individual labor, properly belongs to the community that has produced it. When this value is put into the public treasury where it may meet all public requirements, taxes on labor will be unnecessary, and can be abolished.
This simple, practical change in our system of taxation on the one hand destroys land monopoly and restores to labor its natural right freely to use the earth; while on the other hand it takes the burden from labor's back and leaves it free from the crushing weight of indirect taxation.
Thus again we reach the same conclusion — that only in freedom for the individual man we shall find the cure for all our social evils; freedom to think, freedom to speak, freedom to act; freedom to use the earth to produce the things that are necessary to life, comfort and happiness; freedom, absolute freedom, to exchange the products of his labor with his fellow-men the wide world over, with never a custom house nor a collector to interfere with his trading; freedom to cooperate with his fellows in all things, and never to know that government exists, except when he pays for the value of the land he uses, or when he attempts to encroach upon the equal freedom of his fellows.
With freedom established and monopoly, especially land monopoly, destroyed, the problem of immigration is solved; its terrors have vanished. The innocent comer from over the sea is no longer an enemy to take our work away and reduce us to a meaner standard of living; but a friend who comes to help us, while we all rise to better conditions and heights of nobler manhood.